And now for something completely different...

[Zenda]

One of the biggest problems in environmental protection issues is often thought to be the economic cost. Now, a study "shows that benefits of renewables in terms of security of supply and fighting climate change can go hand in hand with economic benefits". They are expecting as much as 2.8 million new jobs in the renewable energy sector of the EU. It is likely imo, that the US will see the same kind of benefits, possibly to an even greater extend.

http://europa.eu/rapid/pressReleasesAction...&guiLanguage=en

[kandrathe]

One of the biggest problems in environmental protection issues is often thought to be the economic cost.

True environmental conservation is economically viable.

What I fear is that non-viable psuedo-environmental ideas get promoted as green solutions when they are really waste in disguise. Corn based ethanol or biodiesel are an examples of programs that here in the midwest USA has been over promoted to the detriment of our environment, and have taken important resources away from better solutions. Now, ethanol as a fuel additive is important for helping reduce automotive emissions, so some amount of ethanol production is a great idea. Light rail is another area where politically the rails never seem to be built to relieve congestion, nor do they have the capacity to replace highway lane miles. It would be much more effective to create commuter hubs and incentives for people to car pool. I'm afraid that without proper planning, even wind and solar generation may become net energy losers when the maintenance of all the additional power lines is factored into the equation.

My way of thinking is to promote changes to the societal norms, such as having everyone commute to work in the first place. How about we *really* get rid of the excessive amount of paper we consume, and establish the norm of every document being available electronically. I think economically, it would be a great idea to rethink the economic models where progress is measured upon ever increasing amounts of consumption. And, finally, nations need to agree upon strategies to encourage net zero population growth, because the problem is not just over consumption, but also world over population.

[eppie]

True environmental conservation is economically viable.

What I fear is that non-viable psuedo-environmental ideas get promoted as green solutions when they are really waste in disguise. Corn based ethanol or biodiesel are an examples of programs that here in the midwest USA has been over promoted to the detriment of our environment, and have taken important resources away from better solutions. Now, ethanol as a fuel additive is important for helping reduce automotive emissions, so some amount of ethanol production is a great idea. Light rail is another area where politically the rails never seem to be built to relieve congestion, nor do they have the capacity to replace highway lane miles. It would be much more effective to create commuter hubs and incentives for people to car pool. I'm afraid that without proper planning, even wind and solar generation may become net energy losers when the maintenance of all the additional power lines is factored into the equation.

My way of thinking is to promote changes to the societal norms, such as having everyone commute to work in the first place. How about we *really* get rid of the excessive amount of paper we consume, and establish the norm of every document being available electronically. I think economically, it would be a great idea to rethink the economic models where progress is measured upon ever increasing amounts of consumption. And, finally, nations need to agree upon strategies to encourage net zero population growth, because the problem is not just over consumption, but also world over population.

Indeed the biofuel is a good example of subsidizing farmers and (correct me if I am wrong, oil companies). In theory converting biomass to fuel is a good thing, but if you need to cut rainforrest (for palm oil in brazil) or use land that is normally used for food production it is of course not working.
My question is how government think of these things in the first place. I think they just want to show that they something for the environment but at the same time lets them transfer tax payers money to their voters.
If instead they would use the money to start up a few wind and solar power plants, then at least the money goes to the pay checks of the people working there, creating jobs and not destroying rainforrest or valuable crops.
In a while biofuel will be made from plant waste, but untill then biofuel should not be hyped.

Putting a halt on population growth is indeed important but the idea on how to do this is the most difficult thing. The most population growth occurs with dirt poor people. As long as these people remain this poor they will keep getting many children.....or you need to setup a china style one child policy but that is ethically very wrong of course.
Anyway, in terms of food and energy an average first world inhabitant uses the same amounts as many many africans....and for us population growth means economy growth. So the only viable option I see is a change in economic model. And being not an economist I can't tell you how exactly, but I think stepping of the need of continuous growth is one important point.



Zenda, I don't want to hack your thread; but it would be nice (to keep in the positive mood) for people to write their little plans and schemes that allow us to save or convert energy in envirnonmentally friendly and cheap ways.

[--Pete]

Hi,

I'm going to take a bit of liberty with the order of your statements in your post.

Putting a halt on population growth is indeed important but the idea on how to do this is the most difficult thing. The most population growth occurs with dirt poor people. As long as these people remain this poor they will keep getting many children.

This is *the* most important (maybe even the *only* important) ecological question. A reduction of the world population by a factor of ten to a hundred would make this a much better planet for all species, including ours. This reduction needs to start soon, preferably within the next decade. To drop the population by a factor of, say, 10 in the next hundred years would require a (negative) growth rate of approximately -3% per year. This may be unrealistically high. Consider a simple model: each generation produces half as many children as its population. Then a reduction by a factor of ten will take over three generations. That's about a century. Needless to say, this is a very long term problem. But it must be solved, for there is no such thing as a sustainable growth rate (except zero growth).

In theory converting biomass to fuel is a good thing, . . .
. . .
In a while biofuel will be made from plant waste, but untill then biofuel should not be hyped.

Not even in theory. Bio-fuel is still carbon based. Using it solves the 'problem' of making Arabs richer. It does not solve global warming. And, in a world were hunger is a problem, diverting resources from growing food to growing fuel reduces the amount of food available and increases the cost of food. The use of some bio-mass for fuel *is* a good idea, especially if that would be bio-mass that would otherwise be wasted. However, that is not that great an amount, since most bio-mass can be composted to return the nutrients it contains to the soil. Your second statement is very true.

If instead they would use the money to start up a few wind and solar power plants, then at least the money goes to the pay checks of the people working there, creating jobs and not destroying rainforrest or valuable crops.

Wind, tide, wave, solar, etc. are all good options from two perspectives. They are 'renewable' and they have a minimal carbon footprint. If one looks at these technologies from end to end, some meet neither the economic nor the ecological objectives. Wind, where the conditions are right, seems to be the best. Tide and wave require pretty specialized conditions, and the necessity of having to work in a salt water environment puts high demands on the systems. Demands that generate high costs in production and maintenance.

Whether you left out nuclear by oversight or intentionally, I do not know. However, it is the best energy source available to the world now. Modern designs of nuclear plants are extremely safe, even if operated by ignorant people. The actual cost of building a plant, when calculated over its lifetime energy output, is very low (however, the cost of battling the ignorant does drive the price up quite a bit). And the claim that the available fissionable material is too small to make nuclear power viable is a half-truth. If the material is used once and dumped, it is indeed too little, and it does generate large quantities of waste. But if the material is reprocessed, it increases the energy that can be produced per unit of ore by three or more orders of magnitude. And it decreases the amount of waste by about the same factor.

You mentioned economic growth as a driving factor. My question is, why does there have to be economic growth? Why should we (the world) not strive for economic balance? Why is a coffee house that sells the same amount of coffee to the same number of people in the same neighborhood this year as it did last year considered a 'failure'? If last year it generated enough cash to pay the workers a reasonable wage, to cover its expense, and to generate some return for its investors, why does it need to do more? Figure that out, and you come close to figuring out part of the problem (and maybe part of the solution).

--Pete

[eppie]

Hi,

I'm going to take a bit of liberty with the order of your statements in your post.
This is *the* most important (maybe even the *only* important) ecological question. A reduction of the world population by a factor of ten to a hundred would make this a much better planet for all species, including ours. This reduction needs to start soon, preferably within the next decade. To drop the population by a factor of, say, 10 in the next hundred years would require a (negative) growth rate of approximately -3% per year. This may be unrealistically high. Consider a simple model: each generation produces half as many children as its population. Then a reduction by a factor of ten will take over three generations. That's about a century. Needless to say, this is a very long term problem. But it must be solved, for there is no such thing as a sustainable growth rate (except zero growth).

I fully agree. But if the major part of westerners already start plotting against their own government if petrol prizes go up, how do you think you can force people to get less children?
Most rich european countries have negative population growth already (apart from the immigrant populations) but as I said in 2nd and 3rd world countries it is not going to happen.
One option might be to cut all development support to poor countries and close the borders for immigrants....this is however a far from nice perspective.

Not even in theory. Bio-fuel is still carbon based. Using it solves the 'problem' of making Arabs richer. It does not solve global warming. And, in a world were hunger is a problem, diverting resources from growing food to growing fuel reduces the amount of food available and increases the cost of food. The use of some bio-mass for fuel *is* a good idea, especially if that would be bio-mass that would otherwise be wasted. However, that is not that great an amount, since most bio-mass can be composted to return the nutrients it contains to the soil. Your second statement is very true.

I guess much of the biomass is wasted now, but you are right, it will not be a huge contribution to an energy solution.

Wind, tide, wave, solar, etc. are all good options from two perspectives. They are 'renewable' and they have a minimal carbon footprint. If one looks at these technologies from end to end, some meet neither the economic nor the ecological objectives. Wind, where the conditions are right, seems to be the best. Tide and wave require pretty specialized conditions, and the necessity of having to work in a salt water environment puts high demands on the systems. Demands that generate high costs in production and maintenance.

Yes that is true, but these are all jobs for people. And seeing as in the beginning we need to have some subsidizing anyway, why not to these industries.

Whether you left out nuclear by oversight or intentionally, I do not know. However, it is the best energy source available to the world now. Modern designs of nuclear plants are extremely safe, even if operated by ignorant people. The actual cost of building a plant, when calculated over its lifetime energy output, is very low (however, the cost of battling the ignorant does drive the price up quite a bit). And the claim that the available fissionable material is too small to make nuclear power viable is a half-truth. If the material is used once and dumped, it is indeed too little, and it does generate large quantities of waste. But if the material is reprocessed, it increases the energy that can be produced per unit of ore by three or more orders of magnitude. And it decreases the amount of waste by about the same factor.

I am not a big fan but that is another discussion (one we had a few month ago if I remember correctly)

You mentioned economic growth as a driving factor. My question is, why does there have to be economic growth? Why should we (the world) not strive for economic balance? Why is a coffee house that sells the same amount of coffee to the same number of people in the same neighborhood this year as it did last year considered a 'failure'? If last year it generated enough cash to pay the workers a reasonable wage, to cover its expense, and to generate some return for its investors, why does it need to do more? Figure that out, and you come close to figuring out part of the problem (and maybe part of the solution).

--Pete

Again I agree with you, but that is not what capitalism thinks.

[naverone]

You mentioned economic growth as a driving factor. My question is, why does there have to be economic growth? Why should we (the world) not strive for economic balance? Why is a coffee house that sells the same amount of coffee to the same number of people in the same neighborhood this year as it did last year considered a 'failure'? If last year it generated enough cash to pay the workers a reasonable wage, to cover its expense, and to generate some return for its investors, why does it need to do more? Figure that out, and you come close to figuring out part of the problem (and maybe part of the solution).

That sounds a lot like damning the invisible hand :D

In order for investors to receive the same return every year a company needs to keep growing. Equity is the part of the company that investors "own". If a company pays out less than 100% of its earnings as dividends then a portion will flow through into equity. Investors who demanded a 10% return on equity the previous year are going to want at least the same return this year. Return on equity is calculated as (net income/equity) and the numerator must increase too.

The key is technological growth. If we can use technology to produce more with less than that same business can lower costs and maintain ROE.

Also, given the typical inflationary enviroment a business must keep earning more nominal dollars to earn the same real dollars.

Cheers,
Naverone

[Zenda]

Zenda, I don't want to hack your thread; but it would be nice (to keep in the positive mood) for people to write their little plans and schemes that allow us to save or convert energy in envirnonmentally friendly and cheap ways.

I didn't create this topic to start a discussion, and hardly expected replies. But that shouldn't stop you:)

You mentioned economic growth as a driving factor. My question is, why does there have to be economic growth? Why should we (the world) not strive for economic balance? Why is a coffee house that sells the same amount of coffee to the same number of people in the same neighborhood this year as it did last year considered a 'failure'? If last year it generated enough cash to pay the workers a reasonable wage, to cover its expense, and to generate some return for its investors, why does it need to do more? Figure that out, and you come close to figuring out part of the problem (and maybe part of the solution).

Wow. I never brought this up, thinking this idea would meet too much resistance here, but those are exactly my thoughts.

[weakwarrior]

And, finally, nations need to agree upon strategies to encourage net zero population growth, because the problem is not just over consumption, but also world over population.

Whether you left out nuclear by oversight or intentionally, I do not know...

And if you don´t think nuclear energy is safe then you can solve kandrathe´s problem with Pete´s solution.

Anyway, I doubt we will make it another century without a world war, and to quote Einstein "I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones" after which all these problems are solved.

This is *the* most important (maybe even the *only* important) ecological question. A reduction of the world population by a factor of ten to a hundred would make this a much better planet for all species, including ours. This reduction needs to start soon, preferably within the next decade. To drop the population by a factor of, say, 10 in the next hundred years would require a (negative) growth rate of approximately -3% per year. This may be unrealistically high. Consider a simple model: each generation produces half as many children as its population. Then a reduction by a factor of ten will take over three generations. That's about a century. Needless to say, this is a very long term problem. But it must be solved, for there is no such thing as a sustainable growth rate (except zero growth).

It is worth noting that in the short term a population decrease hurts the aging population since there are fewer working people feeding more mouths. Of course in the end the aging population will die anyway and you are left with a new population with a stable base.

[kandrathe]

And if you don´t think nuclear energy is safe...

I do. I omitted it to give Pete something to add. :) I've been pro nuke, even before TMI. It is a modern example of Galileo's house arrest, that is, crushing useful science because of superstitions and fear. Because, radiation is invisible and scary.

It is worth noting that in the short term a population decrease hurts the aging population since there are fewer working people feeding more mouths. Of course in the end the aging population will die anyway and you are left with a new population with a stable base.

A better bet is to use science to allow the elderly to be healthy and functional longer. Its one of those cultural norms that needs to shift. One of my grandfather's retired from the police force at age 55, which was the standard retirement age in his time. He had a house here in Minnesota, and a house in Miami, and enough pensions and savings to live another 20 years. So he retired. Trouble is, due to medical advances, he lived another 45 years. He had said many times that had he known at 55 he would live so long, he would have waited to retire another 20 years.

People in third world countries, mostly in Asia and Africa now, bear as many children as is possible since there are no social safety nets. It is a way to enhance the families economic future, including to insure a safe retirement for the parents. In agriculture, everywhere, including the US, having a large family insures the availability of a dedicated cheap labor source.

Yes, China has implemented a harsh policy, but hardly as harsh as waiting for the next war to cull the herd. I believe that Pete's suggestion would be a good start, and good if it would be accepted for all nations. With immigration and emigration in the world being what it is, it does no good for Europe to shed a million people, if that slack is just added to India. I think even establishing the norm of two children per family would be a good start and this could be done simply by limiting the tax break to two children only.

[kandrathe]

The key is technological growth. If we can use technology to produce more with less than that same business can lower costs and maintain ROE.

And, it has. Automation and technology in business have skyrocketed the past 30 years, and yet we still expect a person to commute through rush hour to the job, arrive at 8am, take lunch from 12 to 12:30, and work until about 5:00pm, then commute home through rush hour again. It is customary, and unnecessary.

We also have a socio-economic system that only rewards the worker, so social stability rests upon achieving near 100% employment. But, with more and more technology, efficiency, and automation, the society needs fewer and fewer workers. Therefore, the excess workers in our society do meaningless "make work" jobs for meager wages. Technology has increased productivity which has allowed companies to shed jobs, and increase profits. But, through it all workers have lost the power to affect a social change. So perhaps we could rethink the nature of work to include something simple like, a four day, 30 hour work week, or additional vacation time per year.

Consider an isolated town with not imports or exports. If you have a stable population of say 100,000 people in a town, then it makes sense that you can sell them at most a stable amount of widgets, or services. That same 100,000 people have a fairly stable income, so their same "disposable income" would also be the target of all goods and services offered in that town. The only way to increase the economy would be to grow the population, or grow the pool of "disposable income". Barring population growth, the only means to grow the pool of "disposable income" would be to reduce the costs of living, and the costs of doing business. In other words, increasing the efficiency of the entire socio-economic system. The savings would be diverted into peoples pockets. There is of course a limit to how efficient a system can get.

[weakwarrior]

I've been pro nuke, even before TMI. It is a modern example of Galileo's house arrest, that is, crushing useful science because of superstitions and fear. Because, radiation is invisible and scary.

I agree with this part and it frustrates me to no end when people discuss the energy ´crisis´when there is a solution sitting right there.

2 points though:
1) The more proliferated nuclear energy becomes the greater the chance that some enriched uranium may end up in the wrong hands/be stolen.

2) What do you do about countries, such as Iran which do not have nuclear weapons but want nuclear energy plants. Of course it´s possible, and perhaps economically profitable, to sell excess energy to foreign countries, however to me it seems immoral to enforce a monopoly by not allowing them to make their own energy, while we make it and sell it to them. So here´s the catch - as long as the U.S. believes (pretends to believe) that nuclear energy is a dangerous way to make energy they can try and prevent other countries from using/developing it. Once they accept it as safe they would be morally (in my opinion) obligated to allow other countries to develop it. They could try and insist countries only use it for energy and not enrich further for the purpose of bombs, but as I understand it is much more difficult to enforce/monitor that.

Yes, China has implemented a harsh policy, but hardly as harsh as waiting for the next war to cull the herd.

I was only partially serious in the first place but I don´t know exactly what you mean here. There is nothing harsh about waiting for a war to cull the herd. I did not say we should make a war to cull the population. I said the war will come whether we like it or not and that will solve the problem. Controlling the population by other means seems irrelevant to whether the war will happen. The war happening, on the other hand, affects whether we need to control the population. As an example people will die of old age which helps with overpopulation and should be considered when coming up with solutions. We wait for this, but as long as we don´t try and rush this process along, I see nothing harsh in including that in our considerations.

[kandrathe]

I agree with this part and it frustrates me to no end when people discuss the energy ´crisis´when there is a solution sitting right there.

2 points though: 1) The more proliferated nuclear energy becomes the greater the chance that some enriched uranium may end up in the wrong hands/be stolen.

Yes, that is a problem, but one that has been solved with any number of deadly chemicals. For example, ricine from castor beans, or Sarin.

2) What do you do about countries, such as Iran which do not have nuclear weapons but want nuclear energy plants. Of course it´s possible, and perhaps economically profitable, to sell excess energy to foreign countries, however to me it seems somewhat immoral to enforce a monopoly by not allowing them to make their own energy, while we make it and sell it to them.

The problem is not nuclear reactors in Iran, it is the threats often recited by people in high places in their government, especially those in the IRG. Also, from recent inspections by the IAEA, it is clear that Iran is probably hiding its weaponization programs. I'm not worried about nuclear energy in Iran, it is the Shahab 3 (nuclear or not) landing in Israel, or elsewhere we should be worried about.

The war happening, on the other hand, affects whether we need to control the population.

Perhaps it is the lack of sustainable resources that compels us into war in the first place. Isn't it interesting that most of the trouble spots in the world are also the most impoverished? Iran is the notable exception. People tend to take more risks when they have nothing to lose.

[--Pete]

Hi,

. . . how do you think you can force people to get less children?

Not force, persuade. Education for the 30% who think and propaganda for the rest;)

I guess much of the biomass is wasted now, . . .

Unfortunately, yes. And the compost it could have created is replaced by artificial fertilizers at the cost of much resources and energy. A double waste.

--Pete

[--Pete]

Hi,

Let us dispense with inflation first. A fully balanced economy would have, almost by definition, no inflation. But, if you don't like that, then take my statements to be in the context of an inflation adjusted system.

In order for investors to receive the same return every year a company needs to keep growing.

Only if the return is greater than the profits. Again, coffee shop example. Inflation adjusted to keep it simple. A certain amount of coffee has to be sold at some price to cover all expenses and to pay some ROI. As long as that amount keeps being sold, all the expenses and the ROI are covered. No growth necessary. Inflation adjustment is simply done by increasing the cost of the product to match the increase in the expenses.

In reality, even this simple case will have year to year variations. Some years expenses will be above average because equipment needs to be replaced, etc. Other years, expenses will be below average (everything is holding out for a while).

Investors who demanded a 10% return on equity the previous year are going to want at least the same return this year.

There is the problem. Investors should not *demand* any particular return. It is these, often unreasonable, demands that cause the problem.

--Pete

[--Pete]

Hi,

Anyway, I doubt we will make it another century without a world war, . . .

It depends. If the world follows leaders who are divisive, who preach national, cultural, racial, or religious superiority, then you are probably right. If, instead, the world follows leaders who are inclusive, who search for similarities rather than differences, who go for the mutual advantage, then perhaps it may be avoided.

And Einstein was wrong. Roaches don't use tools, and they will be the only ones left to fight WW IV.

--Pete

[Occhidiangela]

Hi,
Not force, persuade. --Pete

Mao and his lads also had an effective method.

I'd like to point out that eppie and I agree on something: the biofuels nonsense the Bushies tried to foist off as responsible environmental and energy policy is and was rubbish. Energy demand won't go down, so, I agree with Pete: population must. (Recent Scientific American article by a guy named Brown who says the max the earth can sustainably support is 8 billion humans. I think he's off by about 4 billion, personally.)

But with a billion Chinese already here, and not going anywhere any time soon, population control will require a massive correction, usually taken in the form of starvation, epidemics, and war. Bring it on, for the sake of humanity, say I.

The "I hate America" crowd and the "globalism is the future crowd" ought to take a good hard look at China, the leader of their brave new world about twenty five years from now.

Is this who people want as the preeminent global hegemon? (God, why did I throw that paper away? No One wanted to lisetn in the early 1990's, and nobody wants to listen now.)

This link ought to sober some people who are, by either dollars or detestation for America on a dozen different grounds, blinded by their perspective on the future.

http://www.msnbc.msn.com/id/31086212/

For the Greek Chorus here, and the lurkers, think about this"

why was "We Shall Overcome" written in English rather than in Chinese?

Our system self correts each 4 to 8 years, somewhat,

China doesn't correct as frequently, if at all. Note the ban hammer laid upon internet and Tweet in the article.

Pay attention people, this is your new champion.

You can freakin' have him.

@ zenda: on the topic of the original post here, I have been trying to talk my son into civil engineering with specialty in enviro science. He wants to be a doctor. I am not convinced he has the tools for the latter, but I hope he succeeds at that.

Occhi

[--Pete]

Hi,

I do. I omitted it to give Pete something to add. :)

Thanks :P

A better bet is to use science to allow the elderly to be healthy and functional longer.

The problem is that we actually need fewer people working, not more.

I believe that Pete's suggestion would be a good start, and good if it would be accepted for all nations.

Clearly a global problem needs a global solution.

I think even establishing the norm of two children per family would be a good start and this could be done simply by limiting the tax break to two children only.

Explain to me why, in an overpopulated world, there exists any tax break for children? Indeed, given the burden that children have become to society, shouldn't there be a tax penalty? And that would be in line with the propaganda. As it stands, a tax break sends the message that having children is good and the state partially subsidizes it. A tax penalty would send the opposite message; we don't need any more people -- if you want them, you pay for them.

Yeah, I know. I like kittens and puppies, too. Trouble is, they grow up and you can't do a thing with them.

--Pete

[Occhidiangela]

The problem is that we actually need fewer people working, not more.

Logan ran on that platform, and he won, in one version of the future.

Clearly a global problem needs a global solution.

Really? I'd say it works best from the ground up, like democracy. Enter your propaganda campaign ...

Explain to me why, in an overpopulated world, there exists any tax break for children?

Who besides America gives tax breaks for children?

America isn't overpopulated.

The tax breaks ain't the problem. My view is "If you can't feed them, don't breed them." (Borrowed from a T shirt I saw in Vegas at the Bellagio in 2008. I suspect there is irony in there, somewhere. )

Indeed, given the burden that children have become to society, shouldn't there be a tax penalty?

Sure, as per Mao. See my other post.;)

Yeah, I know. I like kittens and puppies, too. Trouble is, they grow up and you can't do a thing with them.

Kittens are fine, cats suck. Puppies are fine, and so are dogs.

You made an apples to oranges comparison there, or maybe, a kittens to puppies comparison.:D Oh, wait, that's exactly what you did, uh, sort of?

Occhi

[--Pete]

Hi,

But, with more and more technology, efficiency, and automation, the society needs fewer and fewer workers.

Thank you. Exactly my point in rebutting your statement about having people work longer.

So perhaps we could rethink the nature of work to include something simple like, a four day, 30 hour work week, or additional vacation time per year.

In the early 70's, I worked for Western Electric (before the Ma Bell explosion). We had already gone to a 37.5 hour work-week and 35 was in sight. Of course, that was a protected industry, a 'natural monopoly' if you will. Then came Japan, competition, globalization, and engineers in New Delhi that would work 80 hour weeks for half of what we got.

So, if we want to compete with the French, we can take July and August off and work a twenty hour week. Our products and services would be so expensive that no one would want them. Pretty soon, we could be working a zero hour week -- as so many are already doing.

There is of course a limit to how efficient a system can get.

True, but that wall is still a long way off. Had commerce and industry modernized and automated at the full possible rate, the food and labor riots would have started a decade or more ago. As it is, objections by labor and incompetence by management has staved off the day.

--Pete

[naverone]

In reality, even this simple case will have year to year variations. Some years expenses will be above average because equipment needs to be replaced, etc. Other years, expenses will be below average (everything is holding out for a while).
There is the problem. Investors should not *demand* any particular return. It is these, often unreasonable, demands that cause the problem.

--Pete

Investors should require a certain level of return.

Anyone can invest in treasuries which are widely viewed as risk free and earn a certain rate of return. Why would he accept a smaller return when more risk is involved? How is this unreasonable?

Taking this idea then applying statistical principles and arbitrage techniques (spot yields, put-call parity, bootstrapping, etc) we find ourselves in our current situation where investors demand a certain return on their money.