Consider two points-of-view we have discussed in lecture that are seemingly cont

Question

Consider two points-of-view we have discussed in lecture that are seemingly contradictory:

-A mineral resource company’s primary focus on “growing the business” to assure ever-increasing profits

-Professor Al Bartlett’s video-link lectures on humanity’s difficulty in understanding exponential growth

1)Discuss how both the ‘profit motive’ and the ‘exponential curve’ problem can be mutually exclusive (namely, both cannot exist at the same time).

2)Discuss how you would deal with this conflict should you pursue a career in the mineral resources sector.

Explanation / Answer

Q - 1)Discuss how both the ‘profit motive’ and the ‘exponential curve’ problem can be mutually exclusive (namely, both cannot exist at the same time).

Ans - To create an environmentally sustainable society, we need to get as close as possible to production of goods on an “as needed” or “on demand” basis. That means we only produce a good when there is an established demand for that good. We repair and upgrade to the greatest degree possible. Products are built to last as long as possible. In the not-to-distant future, products will be created in your own home by machines that can print and assemble the parts.

Any monetary transactions involved will likely involve you purchasing the raw materials and possibly paying a small royalty to the patent holder. If the production of most material goods happens automatically in your own home, then what happens to all the people who worked in manufacturing. It actually gets worse than that because the retail industry – one of the largest employers in the western world – has just become obsolete. Machines are displaying skills that they’ve never had before. Computer algorithms can write documents with flawless prose; robots can stock shelves and organize products several times faster than their human counterparts. Cars can drive themselves. Translation apps can do in minutes that which used to require hours of human labor. With these new innovations, work as we understand is going to change drastically. Some people fear a situation similar to what you see in WALL-E, with robots doing all the work while humans sit around doing nothing.

That is not a very likely scenario. Humans will be doing work that requires creative problem solving. Machines doing the procedural, repetitive work means no more sweat shops, no more drudgery and toil. People are freed up to pursue more intellectually stimulating endeavors. However, work that is largely focused on creative problem solving requires us to rethink our understanding of compensation. In order to keep people employed, society produces an overabundance of goods.

More goods than people can actually use. We need to reduce production and deal with the issues of employment by rethinking economics. I believe we need to go one step further. We need to ratify access to food, water, medicine and education as basic human rights. Exponential increases, and decreases, pop up quite often in various contexts. The word is generally used as an impressive adjective to imply something happening really fast and getting faster. This isn’t always sensible.

In fact exponential decreases start fast and get slower, hence the problem with radioactive waste hanging around for ages. True exponential increases and decreases occur whenever the rate of change of something is proportional to the thing itself. Population growth can be exponential because the number of new people (or bugs, or bacteria) being produced at a given time is proportional to the total number of people (bugs, bacteria) around at that time.

Radioactive decay is exponential because the number of atomic nuclei breaking up at a given moment is proportional to the number of nuclei that actually exist at that moment. The same logic applies to any particle decay, even the exotic ones we produce at Cern with at the Large Hadron Collider. Similar situations occur all over the place, and not just in biology and physics. This equation can be solved, and the answer is an exponential. Indeed, one definition of an exponential is the very fact that it solves that equation.

Q - 2)Discuss how you would deal with this conflict should you pursue a career in the mineral resources sector.

Ans - Normally resource-rich countries have done even more poorly than countries without resources. They have grown more slowly and with greater disparity—just the opposite of what one would expect. After all, taxing natural resources at high rates will not cause them to vanish, which means that countries whose major source of revenue is natural resources can use them to finance education, health care, development, and redistribution. To explain this “resource curse,” and civil-society groups (such as Revenue Watch and the Extractive Industries Transparency Initiative) have been established to try to counter it. Three of the curse’s economic ingredients are well known:

- Resource-rich countries tend to have strong currencies, which impede other exports;

- Since resource extraction often entails little job creation, unemployment rises;

- Unstable resource prices cause growth to be unstable, aided by international banks that rush in when commodity prices are high and rush out in the downturns.

Moreover, resource-rich countries often do not pursue sustainable growth strategies. They fail to recognize that if they do not reinvest their resource wealth into productive investments above ground, they are actually becoming poorer. Political dysfunction exacerbates the problem, as conflict over access to resource rents gives rise to corrupt and undemocratic governments. Unfortunately, many countries have already signed bad contracts that give a disproportionate share of the resources’ value to private foreign companies. But there is a simple answer: renegotiate; if that is impossible, impose a windfall-profit tax. All over the world, countries have been doing this. Of course, natural-resource companies will push back, emphasize the sanctity of contracts, and threaten to leave. But the outcome is typically otherwise. A fair renegotiation can be the basis of a better long-term relationship. Equally important, the money gained through natural resources must be used to promote development. The old colonial powers regarded Africa simply as a place from which to extract resources. Some of the new purchasers have a similar attitude. Great poverty despite natural resource wealth is known as the 'paradox of plenty' or the 'resource curse'. In many countries, such abundance often goes hand in hand with poverty, poor governance and armed conflict and seems to hinder rather than help sustainable development. But even industrial nations with well-functioning systems of governance are not immune.

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