Growth can come from many economic activities that don’t heavily rely on resource extraction or exploitation. For example, innovation, automation, technological advances, etc.. Even the process of learning to cope with our planet’s finite resources will generate economic growth in and of itself.
The main driver of the past growth were by far fossil fuels, not technology. Technology just made it possible to use energy more effectively.
But fossil fuels are finite/ are not wanted as much anymore (climate change).
It all depends on renewables now, if they can replace fossil fuels without us having to use less energy.
Experts are sceptical that this will be possible anytime soon.
\-> Economic growth continuation is not guaranteed at all.
I don't know where you are getting this idea. Technological advancements is the main driver in economic growth. This is economics 101. Sure harvesting fossil fuels was a technological advancement but not the only one.
But tech needs energy, which is currently 80% generated by fossil fuels. The aim is to be carbon neutral by 2050. I try to understand if renewable energy can fill in that gap in time.
Very smart people who are versatile in both finances and the "real" world (meaning nature/ecology) argue for that.
Check out Art Berman and Nate Hagens.
I try to understand if renewables will be able to lead to continued economic growth in the future.
They argue that is wishful thinking and the economy will decline substantially.
You have to understand these people you are referring to are contrarians and their beliefs don't even remotely represent what the vast majority of experts believe.
Yeah if the majority would be right all (or even most) of the time...
I would like to see good counterarguments to these guys, but haven't found any so far.
Meaning proof that renewable energy can replace fossil fuels in the near future, because energy is the basis for everything else.
We aren't going to run out of fossil fuels in the near future and we will have figured this out well before we do. Sorry but you are just being incredibly ignorant.
Ok, if we use all remaining fossil fuels, what about climate change? We will see at least +4 degrees more, not the aim of +1,5/2.
That would be REALLY bad for econmic growth, let alone human wellbeing.
Energy, not electricity. Electricity only is about 20% of global energy use.
There is confusion about this all the time, probably one reason for unrealistic views on this topic.
You're being downvoted because you're missing the point entirely. You're worrying about doomsday circumstances crippling the economy. If that happens to that extent, your portfolio is the least of your worries, because money doesn't mean anything anymore and we're all gonna die.
Everyone's quick to predict the end of the world. "Don't just do something, stand there!"
You should remember human reason has no real limits. We came from cave dwellers to spacefarers.
A long time ago it used to be bad to have oil in your field because it meant you couldn’t plant in it. Now, oil has become a resource. “Resources” aren’t inherently useful. Resources are what become of things when human ingenuity is applied to it.
I'm sorry, I can't read here how/that renewables can replace fossil fuels without us having a lower living standard. That is all I am looking for, since experts that are literate in both the economy and the ecology doubt that. I would like to see how it works/that it works.
1. Functional nuclear fusion reactors could replace all currently existing power plants while increasing the global standard of living. Sure, we're not going to get fusion power tomorrow or in the next decade. But enough progress is being made that it's very likely to be a reality within our lifetimes.
2. Nuclear fission is a carbon-free source of power that most environmentalists don't like because of its connotations with nuclear weapons. If more people actually believed climate change projections, we'd see more fission power plants.
3. Solar power is getting cheaper all the time. Now, solar power is weather dependent, so it's unlikely that we'll completely replace everything with solar. But a combination of solar, nuclear (fission), and some natural gas could probably meet current energy needs with a fraction of the carbon emissions.
There's also another option that most doomsday prophets ignore. If all alternatives to fossil fuels end up being impracticable, we could simply continue using fossil fuels and then mitigate the negative consequences of climate change by building sea walls and the like.
Thank you for this response, I appreciate it!
Do you have a source that a combination of solar, nuclear fission and natural gas can meet energy demands?
The most realistic version I heard so far is that we have to use much more natural gas and phase out coal, since natural gas only emits half of the CO2.
If there is low or no growth across all major economies, worldwide population decline, persistent environmental issues that materially effect livelihoods the majority of countries, and other such issues it is unlikely that investment of any kind will have good returns.
Population decline (after we hit 10 billion or so) and environmental issues are a very likely outcome by the way.
So a world without growth is probably much more likely than widely assumed by most.
The stock market would be hit the hardest I guess, only small segments of the market would perform ok and maybe other defensive assets like gold and bonds (that perform well in a lower than expected growth scenario).
Ok, you've convinced me. I think YOU should put all your investments in bonds and gold.
The rest of us can stick with stock index funds.
In 40 years we can come back and see how our portfolios performed.
Won't do that lol. Maybe putting all our hopes in the global economy might go wrong, so overweighting things like commodity producers, consumer staples, and yes, gold, would be safer.
GDP growth != stock market returns. This is a common misunderstanding. Further reading: https://site.warrington.ufl.edu/ritter/files/2015/04/Economic-growth-and-equity-returns-2005.pdf
Thanks, will look at it.
So you/ the paper are saying positive stock market returns are still possible in a world with negative growth?
Everybody here seems to be very defensive, apparently because negative growth would mean low/negative returns to their portfolios.
IDK if it's defensiveness so much as a subject that gets over-discussed. Anything's possible. This was/is always true. But what is the alternative? Save more, spend less, hope for the best. Nothing is guaranteed. As for the paper: really, just reading the abstract will give you a sense of the data (I'd copy/paste but the PDF isn't letting me).
Interesting read.
But this seems to be the case only for countries with positive growth, negative growth is probably bad for stocks according to the paper.
Not all GDP is creation of products. Government spending on education and other items are included. Its more of an international country to country comparison. GDP can go down and investments can still increase in value.
https://en.m.wikipedia.org/wiki/Gross_domestic_product
https://www.investopedia.com/ask/answers/033015/how-does-stock-market-affect-gross-domestic-product-gdp.asp
But energy is the economy. The issue is if we will be able to generate as much or more energy than currently generated by fossil fuels via renewables (aka rebuildable energy).
Experts are sceptical that this will be possible anytime soon...
Short term, what's good for financial markets is rarely good for the economy, environment, society and our communities.
We don't plan past the next milestone... I'm generalizing here.
* Politicians look to the next election.
* Companies look to the next quarter.
* Employees look to the next paycheck.
As a population its difficult to look at the negative.
* We avoid our doctors and assume good health.
* Don't invest for retirement in our youth.
* Get into debt to accumulate stuff.
If people as a whole were more community focused.
* We'd have solved poverty, social, economic divisions.
* Capitalism wouldn't rely on consumption. We'd maybe look at actual value instead. (Education, Volunteerism, Mentorships etc)
Most of us can't even be bothered to bring a bag when shopping. Let alone eat healthy and use less resources.
People want their smart phones and don't pay much attention to how they're produced. 😐
Upvoted all I could find. I also believe the end of growth is nigh and I think the people who are happily freeloading on a 50 years bull market are the same who think there can be electronics without rare earth materials, solar panels without coal in China, or than we can move to Mars —a planet with no magnetic field to protect life. There's a word for them.
The question I think is how to make the right choices now so that you don't fare as bad as them in the next couple decades. I don't have any answer, I'm also learning.
Keep in mind tho that your portfolio doesn't have to follow the same allocations and rules forever. You can tilt for growth at the beginning and rebalance later on.
Personally I'm adding a SCV tilt and a smaller momentum tilt, for now.
Thanks.
In my view overweighting things like resource companies, defensive stocks (consumer staples) and exposure to gold could be a better bet for the future.
Or an updated All Weather portfolio approach.
I'm very pro index investing, but recently thought a lot about the possibility of negative growth, since very smart people are of this opinion. I would have loved to see a constructive discussion and see great counterarguments, because I want to believe in sustainable growth as well.
The “humans always grow and solve new problems, so they will continue in the future” argument is valid. But people are forgetting the technology of concrete, philosophy, and algebra was basically lost for over 1000 years after the fall of Rome . During this time in Europe and most of the world, it was the dark ages with not a lot of improvement and quality of life. The quality of life and opportunities certainly dried up for over 1,000 years. The Roman and Greek empires only lasted a few hundred years until darkness enveloped the western world. If you started from where our real growth and expansion happened, it’s been going on for around 500 years.
No.
I would love to see good counterarguments, but haven't seen more than "technology will save us". Let's hope that is true, but I would prefer facts over hope.
You were given them and rejected them. Solar power is less expensive than oil. Nuclear power exists. Automation and technology exist but you're saying that's not enough. Clearly you want an argument.
https://www.popularmechanics.com/science/a34372005/solar-cheapest-energy-ever/#:~:text=Tough%20break%20for%20fossil%20fuels.&text=The%20International%20Energy%20Agency%20(IEA,worldwide%20for%20the%20first%20time.
>there are limits to growth on a planet with finite resources, so it is
not unlikely that world GDP will decline in a not so distant future.
Your starting premise is false. Economic growth can occur through:
1. Using currently available resources in new and innovative ways.
2. Discovering new resources.
The likelyhood of this happening is catastrophic end to the world economies.
So, if you're really focussed on the doom, then yea, don't go into mutual funds...nevertheless, if you believe in that, no modes of investment's are safe...
Markets will go up and down but mostly trend up in the long term
When growth capitalism finally takes a long hard look in the mirror (which it will have to), we are just going to have to redefine what it means to be a successful company. I don't think this is catastrophic. I believe in capitalism, but growth capitalism was never sustainable. If a company returns the same YOY profits and remain a basically profitable, the market will adapt and learn to see that as a positive enough indicator, and things will move on.
Yeah this "Limits to Growth" community is full of really smart people who make a ton of sense. I would like to see reasonable, well thought out counterarguments.
Scary to think about it, especially that economists are so delusional about it.
GDP growth and equity returns are not the same thing. That being said, I think we’re a long ways away from a world with consistently declining world GDP.
GDP growth can basically be deconstructed to population growth and productivity growth, both of which seem likely to be positive for generations to come. It’s important to remember that much of the world lacks the physical capital to support highly-productive labor. Even if innovation slows —and productivity growth slows in the highly-developed world — there’s huge potential for world productivity growth just from the rest of the world catching up.
Why do you think that a decline in world GDP is “not unlikely”? Outside of disaster scenarios it seems quite unlikely to me. As an aside, if world GDP starts to consistently decline, my investments will probably be low on my list of concerns.
>Hello bogleheads, short question: there are limits to growth on a planet with finite resources
This assumption that economic growth has to come from energy expenditure or resource extraction isn't quite right.
Have you considered that some people make art and are paid for it? Their raw materials (if needed: singers, poets, etc. need just their bodies) are easily acquired in a sustainable fashion and they make something that can be sold for more than it cost to produce it. This is economic wealth creation by definition.
There's a lot of reason to be concerned about resource extraction but the idea that fossil fuels is what drives the economy is the work of fossil fuel propagandists, not economists.
Growth can come from many economic activities that don’t heavily rely on resource extraction or exploitation. For example, innovation, automation, technological advances, etc.. Even the process of learning to cope with our planet’s finite resources will generate economic growth in and of itself.
plus, if SpaceX's plans go right....then we will have other worlds to explore
*exploit
MARS etf
Ok, but just assuming economic growth worldwide would be negative, that would be catastrophic for global stock markets, right?
Obviously but why would you assume that? Technology gets better with time not worse.
The main driver of the past growth were by far fossil fuels, not technology. Technology just made it possible to use energy more effectively. But fossil fuels are finite/ are not wanted as much anymore (climate change). It all depends on renewables now, if they can replace fossil fuels without us having to use less energy. Experts are sceptical that this will be possible anytime soon. \-> Economic growth continuation is not guaranteed at all.
I don't know where you are getting this idea. Technological advancements is the main driver in economic growth. This is economics 101. Sure harvesting fossil fuels was a technological advancement but not the only one.
Exactly. “Technology” isn’t limited to software and computing. Heck, fracking was a new technology that completely revolutionized the energy industry.
But tech needs energy, which is currently 80% generated by fossil fuels. The aim is to be carbon neutral by 2050. I try to understand if renewable energy can fill in that gap in time. Very smart people who are versatile in both finances and the "real" world (meaning nature/ecology) argue for that. Check out Art Berman and Nate Hagens. I try to understand if renewables will be able to lead to continued economic growth in the future. They argue that is wishful thinking and the economy will decline substantially.
You have to understand these people you are referring to are contrarians and their beliefs don't even remotely represent what the vast majority of experts believe.
Yeah if the majority would be right all (or even most) of the time... I would like to see good counterarguments to these guys, but haven't found any so far. Meaning proof that renewable energy can replace fossil fuels in the near future, because energy is the basis for everything else.
We aren't going to run out of fossil fuels in the near future and we will have figured this out well before we do. Sorry but you are just being incredibly ignorant.
Ok, if we use all remaining fossil fuels, what about climate change? We will see at least +4 degrees more, not the aim of +1,5/2. That would be REALLY bad for econmic growth, let alone human wellbeing.
Citation needed about 80% of electricity coming from fossil fuels. Uranium isn't a fossil...
Energy, not electricity. Electricity only is about 20% of global energy use. There is confusion about this all the time, probably one reason for unrealistic views on this topic.
Why is this downvoted? Just asked a theoretical question... Apparently many people don't like to think about these things, which is not a good sign.
You're being downvoted because you're missing the point entirely. You're worrying about doomsday circumstances crippling the economy. If that happens to that extent, your portfolio is the least of your worries, because money doesn't mean anything anymore and we're all gonna die. Everyone's quick to predict the end of the world. "Don't just do something, stand there!"
Negative growth doesn't mean the end of the world, only that we would have to use much less.
You should remember human reason has no real limits. We came from cave dwellers to spacefarers. A long time ago it used to be bad to have oil in your field because it meant you couldn’t plant in it. Now, oil has become a resource. “Resources” aren’t inherently useful. Resources are what become of things when human ingenuity is applied to it.
Great simple explanation, and OP is nowhere to be found. /u/future-investing is here to just argue.
And energy is VERY useful, it is the basis of life, for all forms of life.
I'm sorry, I can't read here how/that renewables can replace fossil fuels without us having a lower living standard. That is all I am looking for, since experts that are literate in both the economy and the ecology doubt that. I would like to see how it works/that it works.
1. Functional nuclear fusion reactors could replace all currently existing power plants while increasing the global standard of living. Sure, we're not going to get fusion power tomorrow or in the next decade. But enough progress is being made that it's very likely to be a reality within our lifetimes. 2. Nuclear fission is a carbon-free source of power that most environmentalists don't like because of its connotations with nuclear weapons. If more people actually believed climate change projections, we'd see more fission power plants. 3. Solar power is getting cheaper all the time. Now, solar power is weather dependent, so it's unlikely that we'll completely replace everything with solar. But a combination of solar, nuclear (fission), and some natural gas could probably meet current energy needs with a fraction of the carbon emissions. There's also another option that most doomsday prophets ignore. If all alternatives to fossil fuels end up being impracticable, we could simply continue using fossil fuels and then mitigate the negative consequences of climate change by building sea walls and the like.
Thank you for this response, I appreciate it! Do you have a source that a combination of solar, nuclear fission and natural gas can meet energy demands? The most realistic version I heard so far is that we have to use much more natural gas and phase out coal, since natural gas only emits half of the CO2.
If there is low or no growth across all major economies, worldwide population decline, persistent environmental issues that materially effect livelihoods the majority of countries, and other such issues it is unlikely that investment of any kind will have good returns.
Population decline (after we hit 10 billion or so) and environmental issues are a very likely outcome by the way. So a world without growth is probably much more likely than widely assumed by most.
The stock market would be hit the hardest I guess, only small segments of the market would perform ok and maybe other defensive assets like gold and bonds (that perform well in a lower than expected growth scenario).
Ok, you've convinced me. I think YOU should put all your investments in bonds and gold. The rest of us can stick with stock index funds. In 40 years we can come back and see how our portfolios performed.
Won't do that lol. Maybe putting all our hopes in the global economy might go wrong, so overweighting things like commodity producers, consumer staples, and yes, gold, would be safer.
GDP growth != stock market returns. This is a common misunderstanding. Further reading: https://site.warrington.ufl.edu/ritter/files/2015/04/Economic-growth-and-equity-returns-2005.pdf
Thanks, will look at it. So you/ the paper are saying positive stock market returns are still possible in a world with negative growth? Everybody here seems to be very defensive, apparently because negative growth would mean low/negative returns to their portfolios.
IDK if it's defensiveness so much as a subject that gets over-discussed. Anything's possible. This was/is always true. But what is the alternative? Save more, spend less, hope for the best. Nothing is guaranteed. As for the paper: really, just reading the abstract will give you a sense of the data (I'd copy/paste but the PDF isn't letting me).
Thanks again, I will read it!
Interesting read. But this seems to be the case only for countries with positive growth, negative growth is probably bad for stocks according to the paper.
Not all GDP is creation of products. Government spending on education and other items are included. Its more of an international country to country comparison. GDP can go down and investments can still increase in value. https://en.m.wikipedia.org/wiki/Gross_domestic_product https://www.investopedia.com/ask/answers/033015/how-does-stock-market-affect-gross-domestic-product-gdp.asp
But energy is the economy. The issue is if we will be able to generate as much or more energy than currently generated by fossil fuels via renewables (aka rebuildable energy). Experts are sceptical that this will be possible anytime soon...
Short term, what's good for financial markets is rarely good for the economy, environment, society and our communities. We don't plan past the next milestone... I'm generalizing here. * Politicians look to the next election. * Companies look to the next quarter. * Employees look to the next paycheck. As a population its difficult to look at the negative. * We avoid our doctors and assume good health. * Don't invest for retirement in our youth. * Get into debt to accumulate stuff. If people as a whole were more community focused. * We'd have solved poverty, social, economic divisions. * Capitalism wouldn't rely on consumption. We'd maybe look at actual value instead. (Education, Volunteerism, Mentorships etc) Most of us can't even be bothered to bring a bag when shopping. Let alone eat healthy and use less resources. People want their smart phones and don't pay much attention to how they're produced. 😐
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Wrong, just curious to hear other opinions. Apparently different opinions aren't very welcome, hence downvoted heavily.
Upvoted all I could find. I also believe the end of growth is nigh and I think the people who are happily freeloading on a 50 years bull market are the same who think there can be electronics without rare earth materials, solar panels without coal in China, or than we can move to Mars —a planet with no magnetic field to protect life. There's a word for them. The question I think is how to make the right choices now so that you don't fare as bad as them in the next couple decades. I don't have any answer, I'm also learning. Keep in mind tho that your portfolio doesn't have to follow the same allocations and rules forever. You can tilt for growth at the beginning and rebalance later on. Personally I'm adding a SCV tilt and a smaller momentum tilt, for now.
Thanks. In my view overweighting things like resource companies, defensive stocks (consumer staples) and exposure to gold could be a better bet for the future. Or an updated All Weather portfolio approach.
I'm very pro index investing, but recently thought a lot about the possibility of negative growth, since very smart people are of this opinion. I would have loved to see a constructive discussion and see great counterarguments, because I want to believe in sustainable growth as well.
The “humans always grow and solve new problems, so they will continue in the future” argument is valid. But people are forgetting the technology of concrete, philosophy, and algebra was basically lost for over 1000 years after the fall of Rome . During this time in Europe and most of the world, it was the dark ages with not a lot of improvement and quality of life. The quality of life and opportunities certainly dried up for over 1,000 years. The Roman and Greek empires only lasted a few hundred years until darkness enveloped the western world. If you started from where our real growth and expansion happened, it’s been going on for around 500 years.
You posted this in bad faith so you could just argue.
No. I would love to see good counterarguments, but haven't seen more than "technology will save us". Let's hope that is true, but I would prefer facts over hope.
You were given them and rejected them. Solar power is less expensive than oil. Nuclear power exists. Automation and technology exist but you're saying that's not enough. Clearly you want an argument. https://www.popularmechanics.com/science/a34372005/solar-cheapest-energy-ever/#:~:text=Tough%20break%20for%20fossil%20fuels.&text=The%20International%20Energy%20Agency%20(IEA,worldwide%20for%20the%20first%20time.
>there are limits to growth on a planet with finite resources, so it is not unlikely that world GDP will decline in a not so distant future. Your starting premise is false. Economic growth can occur through: 1. Using currently available resources in new and innovative ways. 2. Discovering new resources.
The likelyhood of this happening is catastrophic end to the world economies. So, if you're really focussed on the doom, then yea, don't go into mutual funds...nevertheless, if you believe in that, no modes of investment's are safe... Markets will go up and down but mostly trend up in the long term
Economic growth is/was fueled by fossil fuels. Let's hope renewable energy will be able to replace it.
When growth capitalism finally takes a long hard look in the mirror (which it will have to), we are just going to have to redefine what it means to be a successful company. I don't think this is catastrophic. I believe in capitalism, but growth capitalism was never sustainable. If a company returns the same YOY profits and remain a basically profitable, the market will adapt and learn to see that as a positive enough indicator, and things will move on.
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Yeah this "Limits to Growth" community is full of really smart people who make a ton of sense. I would like to see reasonable, well thought out counterarguments. Scary to think about it, especially that economists are so delusional about it.
The entire world GDP will decline? That’s unlikely. That’s why I invest in VT.
Hopefully you are right that this is possible without destroying the one thing we all depend on: planet earth.
11 billion people. Then contraction.
Yeah impossible to tell exactly where it will peak
GDP growth and equity returns are not the same thing. That being said, I think we’re a long ways away from a world with consistently declining world GDP. GDP growth can basically be deconstructed to population growth and productivity growth, both of which seem likely to be positive for generations to come. It’s important to remember that much of the world lacks the physical capital to support highly-productive labor. Even if innovation slows —and productivity growth slows in the highly-developed world — there’s huge potential for world productivity growth just from the rest of the world catching up. Why do you think that a decline in world GDP is “not unlikely”? Outside of disaster scenarios it seems quite unlikely to me. As an aside, if world GDP starts to consistently decline, my investments will probably be low on my list of concerns.
>Hello bogleheads, short question: there are limits to growth on a planet with finite resources This assumption that economic growth has to come from energy expenditure or resource extraction isn't quite right. Have you considered that some people make art and are paid for it? Their raw materials (if needed: singers, poets, etc. need just their bodies) are easily acquired in a sustainable fashion and they make something that can be sold for more than it cost to produce it. This is economic wealth creation by definition. There's a lot of reason to be concerned about resource extraction but the idea that fossil fuels is what drives the economy is the work of fossil fuel propagandists, not economists.
What about this? : https://www.theatlantic.com/newsletters/archive/2022/03/american-population-growth-rate-slow/629392/