I sent this letter off to a local politician a couple of days ago.

I do not expect a response, but am I on the right track in my understanding/fluency?

Regards,

Matt Blain

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Dear Sir,

I write in response to the question you posed earlier this week on 3AW, “Where are all the promoters of growth?” It’s an interesting question, and one that may tie all our issues, both grand and personal, closer than we think. Though I am not an expert on such matters – indeed, I’m just your Average Joe, married 25 years, 3 kids, mortgage, too-little saved – I did reacquaint myself with some basic maths a few years back. I’ve concluded the effort to sustain steady growth may prove unachievable.

We know when something grows, it will eventually double in size. Whether it’s money earning interest, a living thing or even a whole economy. How fast that thing grows depends on the *rate *of growth. For example, $100 at 10% annual growth becomes $200 after roughly 7 years. The Chinese economy at 10% annual growth doubles in size in the same period. A tree that grows at 10% annually, same thing... Simple compounding maths we should all be aware of [should]. Yes, in reality external forces bump such figures around, however the basic premise remains: Something that grows must eventually double in size. And something that *continues *to grow, doubles in size again and again.

While this “doubling effect” looks fantastic on paper (indeed, is essential for our future nest eggs), I’ve been asking myself this... How many *times *can a thing double in size? In *reality*. That is, is there a limit to how large a thing can grow?

**The Tree**

At 10% annual growth, our tree doubles in size *every seven years* (* see below for more detail)...

Planted in 1960, 1 metre tall

1967, 2 metres tall

1974, 4 metres tall

1981, 8 metres tall

1988, 16 metres tall

1995, 32 metres tall

2002, 64 metres tall

2009, 128 metres tall

A mere 10%, year on year. By 2009, after a few short decades, our tree is taller than a Californian Redwood and half it’s total growth occurred in the last seven year period. It seems that compounding maths involves considerable acceleration.

Our tree took 40 years to reach its physical height limit. Can it rise anymore? By next year can the tree be over 200 metres tall? The answer of course is no; the tree cannot physically push/pull nutrients up that high and overall weight becomes an issue; branches will get too heavy and snap. Granted, there’s room for a bit more girth, however there’s neighbouring trees to consider and an escalating fight for limited nutrients. So does it simply stop growing?

Of course, trees don’t grow this way in reality, at a fixed rate. Nothing does. But there exists a pattern nonetheless; something slowly takes hold, then burgeons very rapidly for a period, then slows gradually, eventually stops. Growth remains dynamic.

Still, the basic maths of compounding growth can be plotted and measured and extrapolated to other forms, such as the Chinese economy mentioned above (it doubled in size several times over in a similar period). But economies, like trees and anything else that grows, require two basic ingredients... Energy. And Stuff. For mankind, energy comes in the form of fossil fuel (crude oil is the key, as it is permits global distribution of Stuff) and physical human activity. Stuff is everything taken from the earth (iron ore, copper, silica, crops, etc).

In short, for an economy to grow, it requires greater and greater (forever accelerating) amounts of energy and stuff. That’s what “sustained growth” is. But without an *increasing *supply of energy and stuff (required for the doubling effect), growth must slow and eventually cease. It’s this basic and fundamental.

Given the current diet of human endeavour – more people wanting more – and challenges of keeping energy cheap (it will be interesting to see what a barrel of Arctic Oil sells for in the coming years), my questions to my fellow man remain... Where on our tree timeline do you believe we are? Can we achieve impossible heights? Or are there truly limits to growth? It’s a question for a global scale.

Mr Abbott describes our current financial position as having “significant challenges”. Indeed. There is no public discussion of growth limits, compounding, nor the doubling effect. I wonder if privately they look at the basic maths? I truly hope they do. It affects us all.

Thank you for your time.

Kind regards,

Matthew Blain

Concerned parent

*

1960, 1 metre tall

1961, 1.1 metres tall (1 metre + 10%)

1962, 1.21 metres tall (1.1 metres +10%)

1963, 1.33 metres tall (1.21 metres + 10%)

1964, 1.46 metres tall (1.33 metres + 10%)

1965, 1.61 metres tall (1.46 metres + 10%)

1966, 1.77 metres tall (1.61 metres + 10%)

1967, 1.95 metres tall (1.77 metres + 10%) - rounded to 2 metres for purpose of this demonstration

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