On Growth

There is a fundamental assumption in almost every business news article. That assumption is that growth is necessary. I submit that this is a false presentation, and that those stating it should know better.

There is only so much sunlight coming down onto the earth. Photosynthesis, despite fibs that copying plant chemistry will be more efficient, is only about .25% efficiency. A decent photovoltaic is about ten, perhaps toward 20, percent. What this means is, using only plants to feed ourselves, there is a limit to how much food can be grown and how many human beings can be supported. I suspect the planet is actually beyond that limit now. Famines occur all too regularly. (For the facto-geeks, I’ve seen the power of sunlight estimated at four watts per square metre. That means a megawatt at ten percent requires ten million divided by four, or about 2.5 million square metres of solar cells. And sunlight.)

The population of the planet should, ideally, stabilize. (Until it does, expect every group and special interest to try to get as much more than their share as is possible.) With stability of numbers should come stability of needs. Only “progress” items, real improvements, will create new markets. Only “value” items, with real added value, will have an initial high price before commoditization and mass production make it reasonably affordable.

In this potential, stable, future world, it will not make sense to borrow on the assumption that any business can automatically expect to grow. Market share will only be available at the cost of competitors. Sensible governments (unlike ours, pushed about by lobbyists) will enforce anti-price-fixing and anti-monopoly laws.

Meanwhile, when company X is being excoriated for not meeting its analysts’ growth targets, ask yourself, is this in a naturally growing market, or are we expecting monopolization, or is this just a sort of Ponzi scheme whereby we believe that X should be borrowing to make itself bigger. (There is a hidden assumption here that growth can exceed the interest rate cost, eh? How come in today’s near-zero interest rates, nobody’s investing in real job creation as opposed to robotization?)

If the world is limited in its resources, once these are distributed equitably, or even stably, growth as an expectation should be laughed at. It just isn’t mathematically possible, just as a Ponzi scheme can’t run forever.

Once the limit is reached, things break. As sensible people, we should be writing letters and perhaps marching, with the message that, the limits should be approached cautiously and not overstepped.

In the case of global warming, it is probably already too late. Now there is one potential growth industry: creating mechanisms to sequester carbon dioxide and perhaps methane. Too bad our Prime Minister loves the tar sands so much; the extra cost to the extractors is not going to be asked for under his, and his lobbyists, watch.

Gas prices, and other dumb questions

Gas prices are going up. Oil prices are going down. I feel that we are all being screwed. The excuses in the news media are pretty thin: a shortage of refinery capacity in the USA should merely lessen the demand for Canadian oil. A shortage of refinery capacity in Canada was, imho, engineered by the companies because they can forecast how much gas we are going to burn: they can predict economies, climates, and social choices.

Even more annoying, the oil prices quoted aren’t strictly oil prices: they are the prices of oil futures, which are supposed to be used by those needing to get or sell oil to manage future price risk. In fact they are mostly used by traders to make a profit out of panic and other sources of market volatility. I am reminded that a very large fraction of commodity contracts get washed, ie they don’t actually get delivered.

Even more annoying, companies like EXXON are making record profits.

So, now for today’s dumb questions:

  • Why did the government back out of PetroCanada? By having a presence in the fuel market, it had a chance to influence that market and reduce gouging.
  • Why do oil companies get interesting tax breaks?
  • Why do we not charge higher royalties for extraction, especially of oil, and especially of tar sands oil?

I am reminded that at one time the Province of Ontario ran a Savings Office to have a presence in the banking / trust company business at the retail and small business level. The province eventually shut the operation down, thereby taking away one lever of control on that business sector.

So, the final dumb question:

Is there a reasonable list of functions that are so central to all our daily lives that the government should run, control, or regulate them? I suggest the following:

  • Energy. Gasoline, natural gas, electricity, diesel, hydro, wind power, photoelectric.
  • Energy distribution
  • Airports
  • Roads
  • Health care. Universal cross-country qualification and coverage.
  • Education. Standard tests throughout high school.
  • Education. Scholarships for the exceptionally bright. Cheap loans for everyone.
  • Banking

There must be others. Housing, for example, but that sounds to socialist to successfully ask for. If all homes were built at the same price regardless of location, the building industry might stop buying up farmland, perhaps even stop lobbying to rezone green space.

The Penny Drops

It appears that, to save money, we are going to stop producing pennies. It is claimed that rounding of prices will average out to no effect. So, the first dumb question is, how many prices have you seen that end in .99 or .98, as opposed to .96 or .97? The latter two will round down, and the more common first two will round up. The second dumb question is, why would any sensible government communication hack make such a clearly incorrect statement?

The third dumb question is, why do this now? Here’s my cynical answer.

This issue is one we can all understand. The USA still has a small coin, as do other economies. There will be a lot of heat and light over this. In the end, the government may retreat, or not, but their real (imho) purpose will have been achieved: distraction.

We are supposed to forget (which the Toronto Star is making as hard as possible) that the F-35 decision is a crock, was made either incompetently or near-illegally, and is a bad and expensive idea. We are supposed to forget that the procurement of what is for sure a weapon has been taken away from the defense ministry. And we are supposed to forget that Peter MacKay was involved. (For some reason Stephen Harper keeps giving MacKay new jobs, despite a lack of shining achievement in previous ones.)

So, in short, are we dumb enough to fall for this? This is the Harper version of panem et circenses (bread and circuses) that was used to distract the populace of Rome as its decadence was eroding its ability to sustain itself. We get mean-minded distractions, instead of food and entertainment. Onward to austerity!