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October 31, 2011 ...

What is Going on with the Economy, Life and the Universe?

In a thousand words (plus footnotes) allow me to paint a picture to give you a touchstone for deciphering many things.  Way back in 1977 and 1978, your webmaster here published in The Colorado Engineer  magazine of The University of Colorado a couple of articles which gave a scientific model to forecast where we are now.  In the footnotes below are links to scanned copies of the original articles along with the front covers of the magazine. The Colorado Engineer lives on at http://cem.colorado.edu/
Here, I summarize the articles and bring you forward 33 years.

The primary source referenced in the articles is systems ecologist Howard T. Odum (1924-2002). I first met Howard at a small lecture in Gainesville, Florida when Donna and I were attending The University of Florida in 1975. The message for today is as follows: the entire world is decelerating from a centuries long rush of New World exploration, cheap and exploitable resources and high birth rates. It is settling into a sustainable steady state. This is not a pessimistic forecast. It has a scientific basis across many fields. It has expected consequences, many of which we are seeing unfold in the 21st century.

Since you are reading this within a real estate website, let's unravel the housing and banking crisis. As you well know, we humans have learned to frame houses and buildings quickly and cheaply. Too cheap for our long term good. The low-cost building era is almost over. It was possible because the energy and material costs for building have been at an historic low as we mined what was easiest to exploit in terms of labor and resources. The thick and clear woods in older homes are no longer affordable. Today, one can no longer build a home for the cost of what one can buy a used home. The costs for new construction continue to rise to meet new code requirements, higher tap fees and also the higher expectations of buyers (as in being warm and dry in January, gourmet kitchens, fine baths, double garages, media rooms). The buying opportunities on older homes, even just 5-year old homes, continue to be very tempting. There may even be a generational shift in which people of all ages are not as interested, capable or experienced in new home design and construction.

There is a generational or millennial shift away from doing improvements and building up sweat equity
in one's home.  For the young, there could also be a skill barrier or a familiarity barrier.
Young boys do not grow up with saws and hammers. Their excitement is not in creating a fort,
but instead in making something virtual and online. Maybe that's a phase that has peaked. 
People can rediscover the satisfaction in dreaming up and assembling real and tangible designs from scratch.
We didn't get the flying cars of the future (they never made gravitational sense), however, we have
arrived upon the the George Jetson button-pushing desk jobs.  Our time at work and play in this
electronic age is moments of stillness punctuated with button pushing (key pressings and mouse clicks). 

Existing homes and their infrastructure may not be as efficient and as low maintenance as what can be achieved with new construction.  "You get for what you pay"  still applies. Value-for-Value, your existing home is just as tradeable for like property in value as it has always been.

If you have a substantial mortgage on your home or second home, the "value-for-value" formula can be severely warped, thanks to the temptations of easy credit and a tip of the hat to the financial wizards in Wall Street, Washington and beyond.  The underlying basis for the financial and banking crisis is world wide; economies are shrinking and entering a steady state pattern as Odum predicted. Cheap and exploitable energy and labor have diminished, and finally there are fewer babies being born from Italy to Japan to the USA. Young talent and easy to tap resources are no longer pouring into governments and economies. Furthermore, after centuries of advances in medicine and safety, people are living longer ... and better! These are welcomed improvements; our prayers have been answered! So why all the whining, desperation and violence?  Ah, 'tis easier to be young than to grow up.

So just what is the bright future into which we are headed? Here it is in one word: QUALITY. Invest in Quality. Buy Quality. Its rival, Quantity, is becoming an anachronism. Embrace excellence. Say "Hello" to individuality in people, places and times.

Howard Odum had a nice way of diagramming Quality while accounting for the 2nd Law of Thermodynamics. Some of you might remember the author of Zen and the Art of Motorcycle Maintenance coming out with a philosophy about Quality. The scientific background of your webmaster here is not so much in Odum's work as it is in fundamental physics along the lines of  Einstein and Niels Bohr. A couple of years ago there was a resurgence in understanding how increases in quality set the stage for a downslope run to greater entropy (see footnotes) and create the driving forces in nature and human affairs. It is quality experiences that give you the energy and drive to rise and shine to perform well. This quintessence can be quantified. What is rare and unusual is indeed precious. You always knew that, and yet, the masses demand and get everyday predictably low prices. Their wishes are granted with a Walmart or McDonalds within minutes of wherever they may be. Yes, one can pretty much buy a meal cheaper at McDonalds than anywhere else or prepare at home (when you include your shopping time, refrigeration and waste). Fast food is like mass housing. You get  for what you pay. And yet, the fast-food tract-home uniformity destroys the first law in real estate: Location, location, location. Today, what the ancients called the genius of location has been undermined by identical stores and products repeating themselves every few miles. Who ordered that? We did, because it was all so easy and tempting in the era of exponential growth and mass advertising. The penalty has been cookie-cutter uniformity. To compensate and put the "surprise" back in a meal, McDonalds created the "Happy Meal".

The sanctity of Location and Quality is still valid. It is coming back. The laws of physics, energy and entropy are on its side. Notice how convenient and efficient things are when you know where important items are located and when information and memories can be quickly retrieved. That's a happy low entropy condition. When a stage is properly set, you are ready to do great things. Left to its own, such a state of affairs runs down; it diffuses and is quickly lost in the sands of time.

A source of low entropy can fuel processes as surely as can a barrel of oil. A quality product or experience is a compression of time and knowledge.  It requires an intelligent control of resources and talent. The low-entropy high-quality product can be the DNA in an organism ... or a single well prepared meal. Quality experiences give you the lightness of being and drive to do more. Quality is the new energy.

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FootNotes:
Wiccapaedia on Howard Odum: http://en.wikipedia.org/wiki/Howard T. Odum

Howard's latest book  A Prosperous Way Down, University Press of Colorado (2001) reiterates and continues the same themes used in The Colorado Engineer articles.  A related article by his wife Elizabeth is here: http://www.unicamp.br/fea/ortega/energy/B.Odum.pdf

Click here for pdf images of my technical article inspired by Odum  in the October, 1977 edition of the Colorado Engineer.

Click here for pdf images of my Visions of the Future follow up article  in the January, 1978 edition of the Colorado Engineer.
Below are some excerpts from this article and then a somewhat technical description of how changes in entropy can account for the appearance of forces.

"Only through an unprecedented use of fossil fuels has our present world come into being. But today world energy developments are climaxing. Considering how much energy we expend in our present efforts to obtain energy, one realizes that net energies are less today than ever before. As our present energy base powers down and shifts into long range patterns, the entire world will progress into a steady state system."

"Free enterprise will prevail. However, money will not be able to generate more money as easily as it does today. The high costs of energy will prohibit rapid growth and the fulfillment of many investments. Deregulation of our energy industries will allow them to mushroom in size while still delivering little net energy. Inflation will be rampant. Businesses will not be able to spur on growth by simply advertising. Opinions will not be so easily molded when energy is limited. Advertising must appeal to the new long rang goals of steady state systems."

"Public works projects will focus on restoring and maintaining existing buildings rather than constructing new ones. More open malls like Boulder's and Aspen's will appear. Many office buildings will become dwellings for people who work in the immediate vicinity. Noise levels will drop, the air will be cleaner, and windows will open."

Lots more like that is predicted in the 1978 article ~ some of it is accurate, some of it is still pretty far off.

"During the transition to a steady state, civil disorder, heart disease and cancer will increase. .... wild fluctuations in climate and human conditions will occur. Like an immense ship with its stabilizers withdrawn, direction of this planet will be difficult, challenging and exciting."

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Scroll down for novel ways of describing and working with entropy.

A pithy exposition of how entropy and quality can be computed would be helpful. The background material has been around for centuries and can still be retrieved, albeit not easily or comprehensibly if you don't already know exactly what to find. 
Here is a scientific link to a January 6, 2010 article on how gradients of entropy create all of the familiar natural forces:  http://arxiv.org/abs/1001.0785v1  Click on the PDF link in the upper right corner of the page that opens to see this article by Eric Verlinde titled: "On the Origin of Gravity and The Laws of Newton."  This article has been cited (respectfully) in the physics community a thousand times since it was published.

For a mnemonic device to help you understand entropy, I give you Pascal's Triangle.

Pascal's Triangle
        Binomial Expansion to (x+y)^12

As you drop down from each entry in the triangle, one shifts down to the left or to  right. This can be a representation of a pin-ball rolling down an incline with a fifty-fifty chance at each bumper of veering to the left or to  right. Or it can be grains of sand dropped vertically and forming a pile. Mathematically, each row is the coefficients for the expansion of (x+y) raised to the Nth power. The apex is (x+y)^0 = 1. The bottom row is the coefficients for (x+y)^12. The sum of the numbers across row N is 2^N.  Each number in the triangle is the sum of the two numbers directly above it. One can use this property to add more rows further down. This works because each number is a count of the number of ways to zig-zag back to the top. The diagram below indicates what we mean by these routes. Pascal's Triangle is often associated with coin tosses or "Bernoulli Trials" (statistically independent events). Each move to the left can be Heads; each move to the right would be Tails. The numbers in row N are an indication of the frequency of heads or tails after N tosses of a fair coin. If you divide each entry in a particular row of Pascal's Triangle by the sum of all of the entries 2^N, you get the probability of reaching that entry after N independent coin tosses or trials. The even numbers in the triangle form triangles within the larger triangle.

counting ways
        back to the top; complexions
ENTROPY is all about counting the number of ways a state can occur. The 2nd Law of Thermodynamics says that an initial state will most likely run down from its Apex to lower states which have the most routes to them. Left to its own, without an improbable source of energy or quality to raise it back to an unusual state, an initial low entropy state will naturally "decay" to higher entropy states for which there are more pathways to be reached. Because they have more ways to occur, the higher entropy states are more probable or frequent. The states with the highest entropy have the greatest number of ways of coming into being and are therefore the most likely to be found.  The total number of potential pathways after each trial increases exponentially, so to keep the numbers manageable, physicists use the logarithm of this number as the measure of entropy and thereby get a measure that follows the laws of simple addition.

Without being more technical, you now have a glimpse of how gradients of entropy can give the impression of systems being pressured to move in predicable ways as though there were forces acting upon them, when in fact, these "forces", even gravity, have more to do with available pathways than anything else.

When you purposely configure things in an improbable manner, as when you tidy a room or better, create a special and unusual product, your new arrangement can put you back at an apex and give you the energy and boost to do new things as your initial state runs down. Little pockets of order are physically equivalent to reservoirs of potential energy.  This is why excellence can be energizing. It is worth noting, however, that whether you tidy a room to create order or instead work towards messing up a room, either way, there is sweat energy involved and heat losses which cause the total entropy to increase. What we are focusing on here is how tiny localities and moments of time can be highly improbable (by luck 'n pluck or by direct human intervention) and thereby be energizing and uplifting. And this brings us back to the first rule in evaluating real estate: Location, location, location. By location, we include every pathway and decision involved in how a particular home, place and time has been configured and arranged.

Can't get enough of The Colorado Engineer, published since 1903? Click here to see the Rocket Science article by yours truly.
It's a primer on Einstein's Theory of Special Relativity. When it was published in October of 1978, I was the business manager of the
magazine. This is back when one literally had to cut and paste things. The glue didn't hold for the caption to one of the drawings,
so a caption got lost somewhere in the production process. There was also a tremendous difficulty in getting our typesetter to do
the equations correctly (a couple of errors managed to slip through). The typesetter who had bid for the magazine's production,
initially tried to charge The Colorado Engineer one hour of labor for each equation that was set. Those were the days.
The magazine was well funded by large corporations like General Electric, advertising to attract graduating students
to come and work for them.


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