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Answering Jim

April 13, 2009

Hello Jim Grant,

Thanks for your comment.You raise a very interesting point, and I haven’t figured out the answer. So I’m just thinking aloud here.

Some patterns may perhaps be conceived as linear, while actually they aren’t. In those cases there may be randomness at play. Ordinary Gaussian dice throwing randomness, or – as Nassim Taleb (author of Fooled by Randonmess and more recently The Black Swan) argues, a different kind of randomness, which partly may be captured by chaos theory / fractal math (Mandelbroth) and for the most important part is totally unpredictable, sitting firmly in the complex domain of the Cynefin model. The last ten words are utterly mine – I don’t know whether Taleb knows this model.

Here are some links in case you want to delve some more into Taleb’s work and way of thinking:
* Edge video: Reflections on a Crisis
* Library of Economics and Liberty podcast: Taleb on Black Swans
* Edge article: The Fourth Quadrant
* McKinsey article: Taking improbable events seriously
* FT article, opinion: Ten principles for a Black Swan-proof world

The worth of investments over time is certainly non-lineair if you look at the graphs, and except for quite short periods of time only seemingly predictable by using models like exponential growth and Gaussian probability. I mean the fact that the current financial crisis came unexpected for loads of people who were heads over heels into Gaussian prediction math, shows the fallability of this model. I think Dave Snowden would call this ‘bounded applicability’ (or, depending on his mood and audience, ‘plain stupidity’).

I would have to look way deeper into birth rates, rainfall, average temperatures, and other natural phenomena to answer you on those. But actually, I haven’t said anything about rainfall, average temperatures, and natural phenomena in my posts. I just said something about – and referred to sources on – population and environmental effects which should be taken account because of being directly and clearly effected by pop growth. Like energy production / consumption.

Concerning population: however much birthrates drop and rise in certain regions during certain times, until now, if you add it all up, overall world population has grown since some millenia BC. I know we’ve only started to officially ‘measure’ birth- and death rates since a relatively short span of time and in just some regions, but archeologists and historians tell the same story. The trend is more people, not less. And the trend is more need for energy, not less. And the trend is that we use more natural resources, not less, each and every year. Not just oil, which just goes on since we discovered the combustion engine. But also space, wood, and so on. This will become a problem (if it’s not already), not because we’re bad or something, but because we live on a spherical globe dancing along in space, which has a limited surface and limited resources.

Intellectual analysis and philosophical hair splitting aside, I think the question is when this clash between growth and finiteness will happen, not if. People like Chris Martenson think we’re living through this change right now, and has adjusted his life accordingly.

Again, thanks for your comment. I’m thinking aloud here and made a separate post out of this because I took so long.

Best regards,

Mireille

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