101-hardin_living_within_limits_ch_8 - Growth Real and...

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Growth: Real and Spurious Chapter Eight from the book: Living Within Limits Ecology, Economics, and Population Taboos by Garrett Hardin Copyright (c) Oxford University Press (1995) ISBN 0-19-507811-X Reprinted on www.GarrettHardinSociety.org by permission of Oxford University Press, Inc www.oup.com Ordering information: http://www.oup.com/us/catalog/general/subject/LifeSciences/Ecology/?view=usa&ci=9780195093858 Transcription and proof by Jerry McManus Edited for the web by Fred Elbel Living Within Limits Chapter 8: Growth: Real and Spurious 1 By Garrett Hardin
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Growth: Real and Spurious One of the Rothschilds is credited with saying that "Compound interest is the eighth wonder of the world." How so? Because interest makes money grow , supposedly without limit . Ecologists regard the claim as arrant nonsense, for it implies a denial of Epicurean conservation. Like putative records of lifeless money in savings banks, real populations of living organisms grow by compound interest, but this biological reality does not move scientists to reverence. Biologists know that the growth of animals or plants does not violate conservation principles; biological growth merely involves the transfer of matter from the nonliving world to the living. Though new arrangements of matter -- new chemical molecules -- are created, the quantity of matter/energy remains the same. Before delving deeper into population theory (the topic of the next chapter) we need to see what scientific sense can be made of growth phenomena in the world of finance. In developing the argument there will be quite a bit of manipulation of numbers, but no great precision in numbers is called for. The conclusions reached will be robust , a curious academic word that means that the illustrative data can be varied over quite a wide range of values without affecting the practical conclusions. Growing Rich by Sitting Tight To accept compound interest at face value is to be confronted with an apparent creation of wealth. A bank account earning 5 percent compound interest per year doubles in value every 14 years. Let us indicate the initial deposit by D and time (in units of l4 years) by t . (For instance, when the number of years is 28, t = 2.) The value of the account at the end of time t is given by a simple equation: Value =  D x 2 t Since time ( t ) is written as an exponent of the number 2 we speak of this as an exponential equation and say that the value of the account grows exponentially . (There are other ways of representing the growth function, but they too involve exponents.) 1 Figure 8-l is a graph of the exponential growth of a bank account that draws compound interest. Note that the curve becomes ever steeper with the passage of I time. This is not the sort of thing we expect of natural processes, which run down after awhile. After a few decades of living the strength of human muscles diminishes, memory becomes less reliable, and vigor fades. By contrast a bank account, growing exponentially, increases at the same relative rate
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101-hardin_living_within_limits_ch_8 - Growth Real and...

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