The top 100 stock
market authors
selected for publication
market authors
selected for publication
Thursday, December 17 2009 |
01:56 EDT |
DJIA (DIA)
S&P 500 (SPY)
- We know about the laws of supply and demand, but what if economics violates the laws of physics? Some academics are arguing that a model for consistent economic growth ignores diminishing energy supplies. As one professor puts it: "Neoclassical economics is inconsistent with the laws of thermodynamics."
-
The Seeking Alpha 100
See all
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Joseph L. Sha...
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This news story has 45 comments:
The argument about diminishing energy is also a reflection of our incomplete understanding of physics (the laws of which we wrote - they are only as good as our knowledge to date).
This brings us back to the fusion example. If our knowledge of physics was improved such that we could build a better containment device, the world would essentially have unlimited power within a few decades. I cannot image the oil companies would want this.
The paradigm of indefinite and exponential growth of consumption is physically impossible, and none who comprehend the exponential function would dispute this obvious reality. The question is when, not if, this paradigm breaks down. Neoclassical economics presumes that "when" is far enough into the future, that we need not worry about it now. My own opinion, for what its worth, is that the limit to this paradigm is impending, within the lifetimes of many of our younger people, if not due to energy supply limits, then due to environmental degradation effects.
BTW: I just purchased a 2010, 38 MPG (non-GM, non-UAW made) car last week. There will be no rebates for me. Socialism is not designed to reward responsibility.
The GOP solution is to start a useless war kill more young to reduce gasoline demand. Don't forget the financial mess happen on Bush watch.
The current answer is wrong if you believe, in a black and white way, that: The US is capitalistic, the markets are efficient, and businessmen do what is best for their companies.
And if you believe that you have some motivated blind-spots and not looking at what has and is occurring.
I do not like what is going on from either the government or the greed side. But, I do not have a solution. Do you have a solution ?
On Oct 24 10:13 AM Mad_Max_A_Million wrote:
> Mike, please, get a flippen clue. The financial system has been evolving
> in the wrong direction for 100s of years. To say that any one president
> had the power to totally screw things up, even when congress was
> controlled by another party is sheer buffoonery. Please, Mike, do
> some research.
We also need to cut the big financial companies down to size. They threaten not only the global economy, they have also, through their money and influence, compromised our democratic system of government...they need to be reduced in size and influence and never allowed to rise to such power again.
Nearly every economic depression we've had -- and we have one every 36 years -- has been caused by greedy bankers fearful that time was running out on the tolerance of their theft of the consumer.
Those are a few things we need to do.
Also, we are not going to be able to afford to be the world's police force any longer (Capitalism's police force). We spend a LOT of money each year sustaining our empire, fighting wars for ourself and for others. We need to remember that wars cost A LOT of money these days, costs we cannot afford in our current state of indebtedness.
Reform of our political process needs to help change our national and local political process so that it looks less like an NFL season, stretched out for ever, and allows also the non-rich, the non-lawyers, and the non-corruptable to participate in our government. Take away the high cost of running a campaign and you take away some of the influence of lobbyists and Big Money that have taken over our government through bribery and lucrative job offers AFTER service in government is completed.
There is a lot we can do.
On Oct 24 10:27 AM thotdoc wrote:
> Please give us your specific alternative to the 'socialism' occurring
> at the moment. No political rhetoric. You do not like what's going
> on....great. What is your specific answer.
>
> The current answer is wrong if you believe, in a black and white
> way, that: The US is capitalistic, the markets are efficient, and
> businessmen do what is best for their companies.
>
> And if you believe that you have some motivated blind-spots and not
> looking at what has and is occurring.
>
> I do not like what is going on from either the government or the
> greed side. But, I do not have a solution. Do you have a solution
> ?
"probably doom obama 2012 campaign"
TSHTF party will control the next election even without corporate donations.
On Oct 24 09:27 AM Michael2343 wrote:
> Keep in mind a breakthrough in fusion containment or a few-fold increase
> in solar efficiency will solve this problem for a time, after which
> the next breakthrough will solve it. If this were a real problem,
> human beings would never have gone from using manual labor to using
> windmills and horses. And so on.
>
> The argument about diminishing energy is also a reflection of our
> incomplete understanding of physics (the laws of which we wrote -
> they are only as good as our knowledge to date).
>
> This brings us back to the fusion example. If our knowledge of physics
> was improved such that we could build a better containment device,
> the world would essentially have unlimited power within a few decades.
> I cannot image the oil companies would want this.
I believe that we need some 'socialism' and some 'capitalism'; we need a mixture of a good government that provides leadership in social legislation and oversight of corporate behavior and we need an ingenious entrepreneurial business community that builds jobs for the community and competes to keep prices of basic services and goods low. We don't need insane periods of price inflation to enrich the CEO's and shareholders, which leads eventually to the need for insane periods of price deflation to try to free consumers from mountains of debts they have been forced to take on in service of inflationary-capitalism.
In terms of principles, we need both this and that, strong business and strong government, pursuit of profits and pursuit of ethical and environmentally-enhacing business practices AND a government that assists AMERICAN business to succeed and punishes businesses that break the law (American AND foreign).
We to put America first. It is naive to believe that other nations are not putting their countries first.
We need to be generous with our own people, help to make their lives valuable and decent and we need to reward hard-work and traditional values. We also need to be generous to other countries and the citizens of other countries when we can.
We need to understand that Nature has cycles. When we have a business expansion (these last 18 years), we need to save and prepare for its opposite, business contraction (these also last 18 years). We need lower interest rates at the beginning of the expansion and we need higher interest rates at the end of the expansion. We do not believe that Nature goes one direction. We understand that Nature has a Day followed by a Night -- and that a nation has an expansion of opportunity and wealth followed by a contraction -- and we design our government around this understanding. We do not honor individual genius that is criminal in amassing huge personal fortunes to the detriment of the society but we do honor individual genius that provides breakthroughs in science, technology, medicine, literature, philosophy, history...and which helps American fulfill its role as a great civilization.
Those who want America to go back to 1776 and start over often have good intentions. But we can't go back to the beginning. Time doesn't go backward. We have to take what we can form our origins in terms of the understanding of basic principles and then carry them forward into the world and time in which we find ourselves.
We need a political process that values common sense. Did our Founding Fathers REALLY want such a loose interpretation of the Constitution that freedom of expression could be used as an excuse to justify pornography, live-sex-on-stage clubs across from the town church, and child-molestation? Clearly they did not. Freedoms ARE limited by nature. Common sense decides how limited these freedoms might be. Freedom also implies responsibilities. Freedom of expression is a dear right that we must always treasure. But let's not allow this right to be abused to justify criminal behavior -- in business, government, or in social organizations. Law is about justice; not about technicalities of precedence; and not about providing wealth to a group of parasites who have this country by the throat, the lawyers themselves, who, in fact, exist and exist very well, because they are on the side of rich criminals and are getting paid to teach the criminals how to profit by breaking the laws (and not getting caught).
No Problem... Stop spending money we don't have to prop up losers who fail because they are:
A.. Too dumb to plan ahead.
B. Simply don't care because they are too big to fail.
C. Entitled because they block voted for a particular candidate.
D. Used to getting bailed out every time they make a mistake.
What's your "No rhetoric" solution?
The ultimate answer starts with creativity and ends with increased asset productivity. The biggest problem with the current solution is that it subsidizes the status quo and anesthetizes innovation. The capital we have is going to recreate the past rather than build a better tomorrow.
And I would apply this logic to energy. We are going to make better use of it as it becomes more scarce. And it is possible to say that we don't appreciate its scarcity, but it is very heavily taxed. This means that we may not appreciate scarcity but price does. This is why all of the autos have hybrids on the market, and will release better ones in 2010.
On Oct 24 10:27 AM thotdoc wrote:
> Please give us your specific alternative to the 'socialism' occurring
> at the moment. No political rhetoric. You do not like what's going
> on....great. What is your specific answer.
>
> The current answer is wrong if you believe, in a black and white
> way, that: The US is capitalistic, the markets are efficient, and
> businessmen do what is best for their companies.
>
> And if you believe that you have some motivated blind-spots and not
> looking at what has and is occurring.
>
> I do not like what is going on from either the government or the
> greed side. But, I do not have a solution. Do you have a solution
> ?
Mike,
I am guessing that you are going to blame the Tech bubble on Bush Sr.? Bush Jr. inherited a financial mess, which he and everyone in Washington allowed to grow. So it happened on Bush's watch, Pelosi's watch, Reid's watch, Greenspan's watch, Paulson's watch, CNBC's watch...
To say that it occurred on someone's watch at all, implies that someone is watching.
On Oct 24 10:04 AM mike mohr wrote:
> "and they will quickly put out FREE 10,000 dollar rebates (your money)
> to all those gas hogs so they can buy that hybrid car. That is the
> socialist way."
>
> The GOP solution is to start a useless war kill more young to reduce
> gasoline demand. Don't forget the financial mess happen on Bush watch.
On Oct 24 11:41 AM a fat panda wrote:
> "Don't forget the financial mess happen on Bush watch."
>
> Mike,
>
> I am guessing that you are going to blame the Tech bubble on Bush
> Sr.? Bush Jr. inherited a financial mess, which he and everyone
> in Washington allowed to grow. So it happened on Bush's watch, Pelosi's
> watch, Reid's watch, Greenspan's watch, Paulson's watch, CNBC's watch...
>
>
> To say that it occurred on someone's watch at all, implies that someone
> is watching.
1) Growing total accessible raw energy. Even if we've reached peak oil, we're no where near peak uranium, peak solar, peak wind, peak coal, peak geothermal, peak hydroelectric, etc.
2) Growing efficiency of converting raw energy into usable energy: The efficiencies of solar cell, motors, etc. is increasing.
3) Growing efficiency of converting usable energy into economic outcomes: GDP per joule has improved nearly 40% in the past 30 years.
No doubt, there are physical limits but they are orders of magnitude away from where we are right now. Perhaps when we have a Dyson sphere and are capturing 100% of the Sun's output, then we'll need to worry.
On Oct 24 11:41 AM a fat panda wrote:
> "Don't forget the financial mess happen on Bush watch."
>
> Mike,
>
> I am guessing that you are going to blame the Tech bubble on Bush
> Sr.? Bush Jr. inherited a financial mess, which he and everyone
> in Washington allowed to grow. So it happened on Bush's watch, Pelosi's
> watch, Reid's watch, Greenspan's watch, Paulson's watch, CNBC's watch...
>
>
> To say that it occurred on someone's watch at all, implies that someone
> is watching.
Not only are current oil reserves at the highest level in history (that's right, not decreasing as the doomsayers promote, even before shale-oil sources are added in), but there are thousands of years of coal and natural gas at current consumption rates. Furthermore, nuclear energy could provide near-unlimited amounts of clean energy.
All the above is before consideration that modern technology now increasingly allows us to harness solar, wind, and, perhaps, even tides, as we've had no means to do in prior history.
The future outlook for the world's energy needs is one of abundance. The greatest impediment to achieving economical and plentiful energy is obstructionist politics, particularly in the U.S., which prevents the use and development of all the most readily available available sources of energy. Instead, artificial scarcity is created by demanding too quickly that energy be supplied from sources, like ethanol, solar, wind, etc., that require further development to become economically efficient.
"France is the world's largest net exporter of electric power, exporting 18% of its total production (about 100 TWh) to Italy, the Netherlands, Belgium, Britain, and Germany, and its electricity cost is among the lowest in Europe.[2][3]"
en.wikipedia.org/wiki/...
This "professor" is just another talking head or talking ass trying to explain away our decent into economic fascisim. www.banned-books.com/t...
Granted Bush never saw a spending bill he didn't like, but mostly it was more than he asked for.
On Oct 24 11:53 AM market mojo wrote:
> What are you talking about? Bush Jr. inherited budget surpluses which
> he quickly turned into deficits with 6-7% annual budget spending
> increases, tax cuts for the wealthy and unnecessary wars. If he had
> maintained fiscal responsibility we wouldn't have a budget crisis
> today. So yes, Bush Jr. is highly responsible for today's dire situation.
>
>
> On Oct 24 11:41 AM a fat panda wrote:
I never said that Bush wasn't responsible. Just partly responsible.
You really need to rethink your view of the Clinton years. The surpluses you are talking about included capital gains on MCI, Enron, Cicso, and the rest of the tech bubble. The idea that Clinton was fiscally responsible is insane.
When the bubble exploded (well before Bush arrived) the projected surpluses were gone. Bush inherited a mess (yes one he made bigger) Those people who talk about surpluses either don't remember the bubble or don't know what bubble means. It means that capital gains become capital losses which are charged against income.
On Oct 24 11:53 AM market mojo wrote:
> What are you talking about? Bush Jr. inherited budget surpluses which
> he quickly turned into deficits with 6-7% annual budget spending
> increases, tax cuts for the wealthy and unnecessary wars. If he had
> maintained fiscal responsibility we wouldn't have a budget crisis
> today. So yes, Bush Jr. is highly responsible for today's dire situation.
>
>
> On Oct 24 11:41 AM a fat panda wrote:
Interesting definition.
During the Clinton years there was a mandate to balance the budget. Voted and approved by a democratic congress. This mandate was allowed to lapse during the Republican administration (congress + white house).
On Oct 24 12:49 PM a fat panda wrote:
> "What are you talking about? Bush Jr. inherited budget surpluses
> which he quickly turned into deficits with 6-7%"
>
> I never said that Bush wasn't responsible. Just partly responsible.
>
>
> You really need to rethink your view of the Clinton years. The surpluses
> you are talking about included capital gains on MCI, Enron, Cicso,
> and the rest of the tech bubble. The idea that Clinton was fiscally
> responsible is insane.
>
> When the bubble exploded (well before Bush arrived) the projected
> surpluses were gone. Bush inherited a mess (yes one he made bigger)
> Those people who talk about surpluses either don't remember the bubble
> or don't know what bubble means. It means that capital gains become
> capital losses which are charged against income.
On Oct 24 12:29 PM philais wrote:
> Uh... Since when does the President make and approve the budget?
> That is the responsibility of Congress. He may ask for things but
> he may or may not get them. Reagans budget requests were aways DOA
> on the Congress door step and he most always vetoed theirs.
>
> Granted Bush never saw a spending bill he didn't like, but mostly
> it was more than he asked for.
TK
On Oct 24 10:27 AM thotdoc wrote:
> Please give us your specific alternative to the 'socialism' occurring
> at the moment. No political rhetoric. You do not like what's going
> on....great. What is your specific answer.
>
> The current answer is wrong if you believe, in a black and white
> way, that: The US is capitalistic, the markets are efficient, and
> businessmen do what is best for their companies.
>
> And if you believe that you have some motivated blind-spots and not
> looking at what has and is occurring.
>
> I do not like what is going on from either the government or the
> greed side. But, I do not have a solution. Do you have a solution
> ?
The problem is this: Many economists warp outcomes to essentially server their masters, be it government or private business - even those at the universities are under pressure to conform.
One of the economist I most respect, by the way, Dr. Joseph E. Stiglitz, actually started out his studies in physics.
I studied at UCLA and believe me, gravity is gravity is gravity... Things do not go up, up, up if there is not a force keeping it there. Be it shilling the markets or whatever...
On Oct 24 11:53 AM market mojo wrote:
> What are you talking about? Bush Jr. inherited budget surpluses which
> he quickly turned into deficits with 6-7% annual budget spending
> increases, tax cuts for the wealthy and unnecessary wars. If he had
> maintained fiscal responsibility we wouldn't have a budget crisis
> today. So yes, Bush Jr. is highly responsible for today's dire situation.
>
>
> On Oct 24 11:41 AM a fat panda wrote:
> Diminishing supplies of energy? What, is this guy nuts?
>
your reply to the above is correct but colloquially I think diminishing energy is actually taken to mean diminishing cheap oil (for vehicles).
Also, while we may have a 1000 years worth of coal, we currently have a nut job fringe element with political clout who have it as their mission to shut the coal industry down. And we can't use nuclear because that is bad too. So while in practice we do not have diminishing energy (on a timescale of the lives of everyone currently living), in reality we do because our (meaning the western world) political leaders are captive to nut jobs who want to close down our energy sources or alternatively tax the bejesus out of it and thereby impose an unnecessary economic burden on citizens.
I can see a day in perhaps 30 years when landfills are mined to recover all the metals etc that have been piling up in them for the past 100 years.
And even if we had (almost) free energy, there are many other shortages looming, such as water and raw materials. As far as getting any kind of x-fold increase in solar panels, it ain't gonna happen - for the same reason - the laws of physics.
On Oct 24 09:27 AM Michael2343 wrote:
> Keep in mind a breakthrough in fusion containment or a few-fold increase
> in solar efficiency will solve this problem for a time, after which
> the next breakthrough will solve it. If this were a real problem,
> human beings would never have gone from using manual labor to using
> windmills and horses. And so on.
>
> Economics does not "violate the laws of physics," as stated... It
> uses the same math as physics , etc., etc.
In many ways that's the problem isn't it? Molecules and sub atomic particles behave "rationally" and have identical preferences. Humans don't.
For anyone interested "More Heat Than Light" by Mirowski gives a good account of the economics/physics evolution in the late 19th century.
Clinton projected that the budget would be balanced. The prospects of that were long gone before he left office. Once Capital Gains revenue was eliminated so was the possibility of a real balanced budget.
I would welcome someone's article on the Clinton budget. He was the person who invented TIPS and eliminated 30 year debt. You have to believe that lowered his interest costs. But how many people on this website think that short-term financing of long term debt is bright?
On Oct 24 01:06 PM Michael Clark wrote:
> "Those people who talk about surpluses either don't remember the
> bubble or don't know what bubble means. It means that capital gains
> become capital losses which are charged against income."
>
> Interesting definition.
But more frightening to me is that fact that "he" (the George W you mentioned) got into the Oval Office under a completely democratic process. This fact is even more troubling to me since his plurality reflected the approval of the ethnic majority, the endorsement of the GOP party apparatus; and equally troubling, the failure of the Democrats to field a viable strong candidate.
TK
On Oct 24 03:15 PM Niner wrote:
> I totally agree with Mojo. The George W years were a disaster for
> this country. A disaster we may never fully recover from.
Who are these guys spreading this phooey?!@
On Oct 24 04:00 PM Wildebeest wrote:
> On Oct 24 02:45 PM bottoms-up wrote:
For example, consider the Sun as a source of energy. It converts four millions tons per second of matter into energy. Of that vast amount of energy some 0.000000032 percent reaches the Earth.
Humankind over the course of one year uses about as much energy as the sun delivers to the Earth in one hour, or 0.01% of the available solar energy. If we were able to capture a measly 5% of this we would increase our energy supply by a factor of 500.
Now consider the idea proposed by Freeman Dyson that advanced societies will build a hollow sphere encircling their Suns in order to capture their energy potential. If humanity were to do this and collect this solar energy it would result in an increase in the available energy by a factor of 30 125 000 000 000, or about 30 trillion.
So give me a call when our economy has grown by a factor of 30 trillion and then I'll tell you about more advanced forms ways of generating energy that make a Dyson sphere look piddly.
Conquest, war, famine, death.
Technologhy leverages the population higher, however, the cycle doesn't end.
You're a well-respected SA commentator; but give me a break here now - Mr. Dyson's (no doctorate) "hollow sphere encircling the sun" is a science-fiction concept (meaning that there is a lot fiction but too little science IMO). You might recall a while ago the NASA astronauts had trouble fixing their toilets in space. Such concepts are fine except that the cost and the risks with maintainig it far outweights the benefits. Ask Mr. Dyson for a Business Case Analysis (BCA).
TK
On Oct 24 06:51 PM bricki wrote:
> The premise of this article is utter malarkey because the limits
> of what is possible under the laws of physics are not remotely approached
> by human technology.
>
> For example, consider the Sun as a source of energy. It converts
> four millions tons per second of matter into energy. Of that vast
> amount of energy some 0.000000032 percent reaches the Earth.
>
> Humankind over the course of one year uses about as much energy as
> the sun delivers to the Earth in one hour, or 0.01% of the available
> solar energy. If we were able to capture a measly 5% of this we would
> increase our energy supply by a factor of 500.
>
> Now consider the idea proposed by Freeman Dyson that advanced societies
> will build a hollow sphere encircling their Suns in order to capture
> their energy potential. If humanity were to do this and collect this
> solar energy it would result in an increase in the available energy
> by a factor of 30 125 000 000 000, or about 30 trillion.
>
> So give me a call when our economy has grown by a factor of 30 trillion
> and then I'll tell you about more advanced forms ways of generating
> energy that make a Dyson sphere look piddly.
I'm not a big fan of Clinton. Clinton was like Nixon: he'd do ANYTHING to survive politically, climb into bed with anyone (Clinton literally, Nixon figuratively).
On Oct 24 04:13 PM a fat panda wrote:
> I am not sure what you mean by interesting definition. I am just
> applying basic accounting standards. First, Clinton never balanced
> the budget without the benefit of Social Security premiums. So "balanced
> budget" is an interest definition in and of itself.
>
> Clinton projected that the budget would be balanced. The prospects
> of that were long gone before he left office. Once Capital Gains
> revenue was eliminated so was the possibility of a real balanced
> budget.
>
> I would welcome someone's article on the Clinton budget. He was
> the person who invented TIPS and eliminated 30 year debt. You have
> to believe that lowered his interest costs. But how many people
> on this website think that short-term financing of long term debt
> is bright?
On Oct 24 07:21 PM ebworthen wrote:
> Reality = populations grow until they consume more resources than
> are available, then there is a large population reduction.
>
> Conquest, war, famine, death.
>
> Technologhy leverages the population higher, however, the cycle doesn't
> end.
Its the iid properties that make molecular models Gaussian and the absence of them in humans that makes markets fat tailed.
On Oct 24 06:29 PM bricki wrote:
> Actually they behave in a purely random fashion. It is only as a
> statistical whole that they behave in a predictable manner. The reason
> you don't see phenomena like all the air molecules suddenly collecting
> in one corner of a room is that there are so many of them that the
> odds of this happening are very very small.
>
> On Oct 24 04:00 PM Wildebeest wrote: