Monday October 23rd 2017

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‘Exponential growth’ Archives

The Corporate Challenge

We will never succeed in creating a sustainable society until we overcome the death-star like power, and evil, represented by the modern corporation. Seem a tad extreme? Let’s look at a few facts.

Corporations only make up 20% of US firms but they account for 85% of all US business revenue.

The economic power of the largest corporations boggles the mind — of the100 largest economies in the world, 53 of them are corporations!

There are only 10 COUNTRIES that have economies larger than Exxon Mobil. Or to put it another way, Exxon Mobil is economically larger than 180 countries in the world.

We now have 63,000 multi-national corporations in the world — huge monoliths that transcend national boundaries and operate beyond the legal jurisdiction of any national legal system.

The massive economic wealth of corporations overwhelms most political systems, including ours, and weakens democracies around the world. Our political process moves, or is blocked, at the whim of corporate sponsors and lobbyists.

We have no one to blame but ourselves — we are the mad scientists that have created these economic Frankensteins. How so?

First, we made it LAW, that the directors and managers of a corporation have a duty to act in the best interest of the corporation, which has been interpreted as an obligation to do whatever it takes to maximize the wealth of shareholders. This, the “best interest of the corporation” principle is one of the greatest obstacles in allowing corporations to become more socially responsible institutions.
If polluting the nearby river maximizes profit, the managers are obliged to do it. If the corporation can maximize dividends by closing a factory and moving to another country, shut her down. If carcinogenic ingredients help keep costs down, and therefore profits up, well, then a bit of cancer is the “price” of doing business.

Under our current system, a corporate manager is being UNETHICAL if they consider policies that would promote positive social, health, or environmental impacts if they would reduce profits. Really. No, really, that is the system that we created.

If an individual acted this way we would call him or her a sociopath, but if a corporation does it, it is “just business.”

Second, we further encourage such diabolical behavior by limiting the liability of shareholders for the action of their companies. Limited liability is why corporations must be chartered by a government authority — in the US the states do this. They are supposed to supervise and regulate the corporations but it is rarely done in practice. Shareholders might take more care if they were held financially accountable for the misdeeds of their companies (think BP and the oil disaster for a current example).

Third, in the US we have granted corporations “personhood” allowing them protection under the constitution just like a flesh-and-blood person. Corporations are now allowed to spend as much money as they like to influence elections.

Corporations have become not only the most powerful economic force on the planet, but the dominant political force as well. This concentration of power is increasingly unaccountable to you and me, to our government, or the planet.

How do we fix this? A few ideas:
  1. Revoke corporate charters of companies violating the public trust
  2. Roll back limited liability
  3. Corporate directors and top managers should be personally liable for gross negligence
  4. Extend liability to shareholders under certain circumstances
  5. Eliminate corporate personhood (Learn more here)
  6. Change the legal mandate that requires the corporation to strictly pursue its own self-interest and to give primacy to maximizing shareholder wealth.
    (Maryland has taken a step in the right direction by creating the legal framework for the “Benefit Corporation.” (Learn more here))

Ultimately, we need to rethink the whole nature of the corporation and its role in society. It is clear that the mindless pursuit of short term profits, regardless of consequences, is ultimately doomed to failure — not only for the company but for society at large.

Dying to Grow….

What represents the greatest threat to mankind?  Climate Change?  A massive earthquake?  An asteroid from space?  Believe it or not the most likely candidate is this:

This is a graph of exponential growth and it represents one of the most powerful forces on the planet.  If nothing else, remember the shape of it.  Growth is exponential when it grows at a fixed rate.


Let’s say we have $1000 in savings and this amounts grows at 7% each year.  After one year our savings have grown to $1,070 (7% x $1,000 = $70).  In year two we now multiply 7% by $1,070 (7% x $1,070 = $75) and our new total is $1,145.  In year 3 we will multiply 7% by $1,145 and add $80 and our new balance will be $1,225.  Notice that although the rate is fixed the amount we add each year is getting bigger.  Anything that grows at a fixed RATE will follow this pattern.  If the growth rate is relatively small (say 1%) the flat part of the graph on the left will extend over a longer period of time.  But eventually, all exponential functions will make a dramatic turn and skyrocket upwards.  Again this is because with each year the function is adding a larger and larger amount so eventually the amounts added become gargantuan.  In the world of mathematics the function heads toward infinity.  There is no infinity in our world, and that is where the danger comes in.  Let me give you some examples of exponential growth happening right now.

Population Growth

It took humanity millions of years before, finally in 1804, we reached 1 billion people on the planet.  Miiiilllions of years.  We added another 1 billion people in just another 123 years!  We added another billion people in just 33 years.  In a mere 200 years we added 6 billion people to the planet. 

Say hello to the power of exponential growth.

The Great Collision

These graphs are from this book.

Just back away from your computer a few feet and take it all in.  James Gustave Speth refers to this as the Great Collision — the global economy is crashing against the earth.  We are obliterating the planet’s resources and life support systems.

  • Half of the world’s tropical and temperate forests are gone.  In the tropics we are losing about an acre a second.
  • Half of all wetlands and third of mangroves are gone
  • 90% of all predator fish have been wiped out
  • Every 20 minutes a new species goes extinct (about 1000 times the normal rate)
  • Water use is skyrocketing.  The water tables in the United States, India and China are dropping rapidly — these are the three major food producers in the world.
  • We are losing 24 billion tons of top soil each year.
  • Fertilizer use is growing exponentially (much of it runs off into our rivers and streams causing massive destruction)
  • Carbon dioxide concentrations are growing exponentially in the atmosphere driving global warming.
  • The number of cars on the highways is growing dramatically.  China is now adding 14,000 new cars to the road EVERY DAY.
  • In just the United States we used almost 30 billion (with a “B”) plastic bottles in one year.  And growing.

Pick just about any material or resource that you can think of and I get you a graph that looks those above.  Pick a toxic waste, chemical or pollutant and I will find a graph that shows how we are dumping exponentially more every day.  Exponential growth is happening all around us.

In 1992 (18 years ago), 1,500 of the world’s leading scientists, including a majority of living Nobel Prize winners issued a warning  (the full statement can be found here)

The earth is finite. Its ability to absorb wastes and destructive effluent is finite. Its ability to provide food and energy is finite. Its ability to provide for growing numbers of people is finite. And we are fast approaching many of the earth’s limits. Current economic practices which damage the environment, in both developed and underdeveloped nations, cannot be continued without the risk that vital global systems will be damaged beyond repair.

Kenneth Boulding said it best:

Anyone who believes that exponential growth can go on forever in a finite planet is either a madman or an economist.

Our economy is based on exponential growth.  Just listen for the word.  Growth.  In the news, in magazines, on TV.  Profits must grow.  Sales must grow.  Gross Domestic Product must grow.  Stock prices must grow.  Everything must grow for our system to function.  We have to sell more.  We have to build more factories to make more stuff for us to buy.  We have to cut down more trees, use more water, mine for more minerals…all on a planet that is not getting any bigger.  You don’t need a PhD to see the folly in this.

That is the path we are on.  If we keep living our lives like we did yesterday.  If we do nothing to change this trajectory, the earth will solve the problem for us.

Solutions?

  • Learn about the issues that really impact your life
  • Discuss and share with others
  • Take action
    • Ask you elected leader what they are doing about this.  Demand action. 
    • Buy less.  
    • If you must buy, buy local
    • Work fewer hours.  
    • Drive less.  Not feasible?  Demand public transportation so it is possible.

Watch this GREAT video explaining why exponential growth is so important. (it gets a little geeky at times, but watch till the end, it has some great visuals)

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