Exponential Growth

Just read a great article by Dr. Albert Bartlett on Arithemetic, Population and Energy. The main take-away is one that I'd learned a long time ago, but definitely needed a refresher.

Dr. Bartlett shows that if you want to figure out how long something takes to double, divide 70 by the annual growth rate and you'll get the number of years until you're doubled. An example of this is to consider inflation. At an average of 3% annual inflation, it will only take 23.3 years for all prices to double. Another example that Dr. Bartlett uses is population growth. At a nominal growth rate of 1.3%, the earth's population will double to 12 billion people in 53.86 years. The natural conclusion is that we'll need double the infrastructure that we have now in order to support the population in 53.86 years.

I did a few calculations of my own. In 53.86 years, given an average inflation rate of 3%, everything will cost 4 times more than it does now. Will wages follow this trend?

Fortunately, according to the US Census bureau the population growth of the US is 1.1% and is expected to drop to .54% between 2040 and 2050 with a final population projection of 392 million by 2050. Taking into account economic globalization and the fact that the global growth rate is higher than the US growth rate, it's readily apparent to me that the US isn't going to remain at the top of the heap forever in terms of resource utilization. This is causing a shift that's been apparent for many years where we see the manufacturing jobs leaving to other countries where they are cheaper. The consequence is that there is a greater and greater emphasis on education in the United States.

Interestingly, this all leads me to predict that eventually all manufacturing will come back to the US and that we'll be a global manufacturing superpower. Why? Consider that as the US population growth declines and levels off, our emphasis leans more and more towards being educated and using our minds to create things. Over time, the US will take the lead in lean process automation to the degree that we can manufacture things far cheaper than even the cheapest labor because we'll be able to do it without labor. Other countries will follow suit of course, but as long as we have an intelligent and informed workforce, the lead we gain while other countries lap up our manufacturing jobs, will enable us to permanently stay one step ahead of the rest of the world.