Is there enough? v0.0.1


The whole world wants to get rich, or at least developed. And with free market economics being more or less the last theory standing, they're likely to get there. Are there enough resources to fuel this ambition? Currently, no and that's the fundamental problem facing the world. v0.0.1

The problem is manifold. First, to get up to a first world standard, let's say, $15,000 USD per capita, requires the creation of a great deal of capital. How much more, nobody really knows as capital is not deployed with equal efficiency anywhere. You would have to tote up all the available ideas worldwide to increase incomes sufficient to hit your $15k target and their associated capital cost. The obvious reality would be that capital would be drained from the 1st world and proportionately be shifted to underdeveloped, poorer nations. The risks and challenges of such a Red Queen economy would be great.

Second, there needs to be a great deal more energy produced from any source than is currently available. Currently worldwide energy production is generally measured in quadrillion BTUs and the 2001 figure is 401 quads produced. Here is an excel spreadsheet with relevant figures for 2001. In the same spreadsheet, you can find the additional energy production needed to get the less developed world up to a per capita income level of $15,000. The figure is an additional 611 quads, slightly more than 1.5x current worldwide production which would drive up energy production to somewhat north of 1 quint. This is a daunting increase in energy production and it runs up against limits of current technology. A great deal of the problem goes back again to a lack of capital. Efficient factories tend to be more capital intensive. The limits of available capital mean that many third world countries simply operate very inefficiently.

If the less efficient below $15k per capita world were to create GDP at an efficiency the same as the US, the additional energy needed to create that GDP would be 446 quads. At Japanese levels of efficiency, it would require 417 quads. Even efficient third world economies mean that we need to have a massive increase in energy production to get them all to a decent level. Add to that the fact that world population is increasing and the numbers become even higher over time. Certainly, lowering the target per capita income floor will lower the number of quads needed but in any reasonable scenario, there's a great need for extra production if failed and non-integrating states are to be brought successfully into the functioning core.

At some point the pumps will start to be fully primed and the earlier investments will start spinning off capital of their own. But how long will it take? After a decade, has E. Germany made it? How long would it take N. Korea to do it under new management? How long until Iraq makes the transition?

Posted: Sat - October 4, 2003 at 10:40 AM        

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