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Posts Tagged ‘compound-interest’

Doubling Time: Interest and Population Growth.

Mon ,15/02/2010

It is easy to calculate the approximate doubling time for compound interest, credit card debt, or population growth. A simple rule of thumb to get doubling time is to divide the growth rate into 70. For example, an investment at 7% compound interest would double in 70/7 = 10 years. After 10 years, a $100 investment would double to $200, in another 10 years it would double again to $400, and in 10 more years to $800. Not bad. This will also work for credit card debt. If your interest rate is 20% and you only make the minimum payment, your debt will double after 70/20 = 3½ years. You might think again about buying an expensive item on your credit card if you realize that a $1000 purchase, unless paid off, will cost you $2000 after 3 ½ years and $4000 after 7 seven years. Everyone with a credit card should know this simple rule of thumb.

The rule also works for population growth. The world now has about 6 ½ billion people and the rate of growth is about 2%. That means that the Earth’s population will double in about 70/2 = 35 years to 13 billion people. It will then double again in 35 more years to 26 billion people. If you think the roads are crowded now, just wait until 2080. Unlimited growth is considered good for business as the number of consumers just keeps going up. However, we should realize that the current growth rate is unsustainable, as at some point we will begin to run out of resources. Economists say the law of supply and demand insures we will never actually run out of resources. As the supply decreases, the resources will just become increasingly expensive. Nevertheless, those who have little money will soon run out of resources. Then what, wars over resources? Also, our contribution to air and water pollution increases with our population growth. Studies of populations in nature show that when a population exhausts its resources or strangles in its pollution, the population doesn’t just reach equilibrium and stop. There is a massive die off.

In the past, population growth was considered a good thing. More people meant more workers, more soldiers, and more offspring to carry on our values and our genetics. Times have changed, but the old thinking remains. Some countries that have reduced their population’s growth have been criticized as being “weak”. Other countries have claimed efforts to help them with population control are an attempt at “genocide”. Many religions have prohibitions against certain birth control practices. And, many businesses see an increasing number of consumers as more profit. Nevertheless, the path we are on is unsustainable and we must control our population growth. How to do that is the problem.

Certainly, it must be done through education. We firmly believe in our right to choose how many children we have and our right to act in ways consistent with our religious beliefs. Perhaps if people realized that we are on an unsustainable path, they would make personal decisions to help ensure the survival of their descendants. Perhaps people would not bring more children into the world than they can feed and care for if they had the knowledge and methods to avoid doing so. There is a method of birth control acceptable to most every religious belief and the world’s religious organizations must help to educate people in those practices and the necessity of using them wisely. Finally, those who profit from increasing population growth should realize that developing a sustainable economy is in their best interest. What is the point of amassing wealth for your descendants if they cannot live comfortably on the Earth?