Urban DecayedEconomics of an Apocalypse

Who am I?

Michael Taillard, PhD MBA– Education

• PhD Financial Economics• MBA Int’l Finance, & Int’l Management• BSci Int’l Economics, AA Bus. Admin• Army Trade Certificate Logistics Management

– Experience• Economics Professor at Universities Around the

World• Economic Consultant for Global Companies,

Government Agencies, and Non-Profits• Researcher Specializing in Behavioral Strategy• Multiple-Published Author• Media Personality and Public Speaker

Scientific Method

• Apply the scientific method to the study of zombie outbreaks

• Experiments and theoretical exercises improve our understanding of the sciences

• Valuable in furthering our knowledge of how any widespread destructive event will impact our lives– Natural disasters, disease pandemics,

war, zombies, etc.

• FUN!

Scientific Method• Ceteris Paribus

– Translation: All other things remaining equal

– Allows us to isolate variables to measure cause and effect

– Zombies do not exist making functional experiments impossible

– Use existing information to measure individual variables and infer implications

Economics

• The study of how humans distribute a limited number of resources

• Includes a wide array of subjects- Business operations - Healthcare- Finance - Migration- Trade - Environment- Governments - Behavior- Agriculture - And More

Zombies

• Dead or otherwise soulless human bodies that actively pursue other humans– Typically have intent to harm other

humans– May be result of any number of

causes:• Voodoo, witchcraft, or other mysticism• Astronomical radiation• Biological or chemical weapons• Infectious disease• Parasitic Infections

Resident Evil®

• Zombies not interested in economics• Only resource of value is human

flesh• Relentlessly seeks out this resource

without concern for distribution or rationing

• With no mediating variables they will soon exhaust their food source and starve themselves to an minute pop.

Scarcity of Human Flesh

• Models zombie infection using pandemic modeling

S=susceptible people; Z=zombies; R=removed (dead)π=Starting population; β=Infected humanα=killed zombie; ζ=reanimated dead; δ=killed human

• We use it as a population growth model for the zombie population

Epidemiology

Philip Munz, et al., 2009, p.136

• Most accurate estimates show survival of a very small percentage of humans

• Other estimates show total human annihilation

• Model assumes human-zombie interaction will be consistent and inevitable

• As with disease, outliers will exist to skewed results, geographically– High: Infection from sources other than zombie contact– Low: Infection resistance/immunity; isolated geography

Epidemiology

Health Economics

• Studies the availability, efficiency, efficacy, and behaviors of healthcare in a region

•Zombies will reduce the efficacy and availability of healthcare

•Physicians more urgently needed over wide areas

• Assume an inability to predict source of original infection – Leaves no chance for preparation or prevention– General increase in hygiene and safety limits potential

for speed and scope of infection

• Models show disease will spread too fast to create a cure in time to stop pandemic-level infections

• Kill the infected as soon as possible, preferably using means that won’t waste supplies

• Focus only on treating the living

Efficacy

• Institutional Medicine Unavailable• Necessary Return of Wandering Doctors

– Called Chakara in Buddhism– Regular practice in the Pre-Hippocratic Period– Currently common in areas without proper availability

Availability

Doctors Without Borders

Economic Geography

• The study of the distribution, movement, and spatial activities of resources

• Introduction of zombies:– Alters the movement of assets– Disrupts the organic processes that influence

movement– Reverses trade gravity and related activities

for something like “trade anti-gravity”– Causes capital flight and brain drain to create

“economic jet lag” through dispersion and inefficient utilization of assets and skills

Reverse Urbanization

• Highly populated areas have highest risk– More total survivors but higher ratio

of infection and death– The flu never chased your ass

through the streets - hand sanitizer won’t help

– Zombies don’t require ready access to conveniences or each other causing increased dispersion and urban sprawl

Reverse Urbanization• Low population areas have lowest

risk– Low population density results in lower

rate of infection– Zombie likely to starve or get hit by

truck before finding food

Arkaroola, Australia

Reverse Urbanization• Survivors move from cities to rural

regions– Minimize risk of zombie attack– Closer to source of new food as

scavenged food goes bad– Some resourceful people may find a

way to survive in regions inaccessible to the infected

Trade Anti-gravity• People and production move away from

urban to rural areas• Large cities will repel trade due to high

risk and low availability of primary resources

• Economic Jetlag leaves cities drained after flight– Capital Flight: Capital repelled from cities– Brain Drain: Skilled labor repelled from cities

F = -exp[βo+β1ln(M)-β3ln(D)]η

F=trade; M=GDP; D=Distance; n=error expectation

Agricultural Economics

• Studies food production, distribution, land usage, and related variables

• Introduction of zombies may create infected food by contaminating water used to hydrate crops through physical contact

• Assuming no infection of plant, soil, water, or animal, all agricultural production systems should be left in working condition

• Damaged only to the extent that farm workers are exposed to infection

• Already noted that these regions at less risk than average

• Production infrastructure still intact and working properly (i.e.: land, seeds, and water undamaged)

• Framework for human survival available

Producing Produce

Fertile land; No Distribution

• Focus on foods which are nutrient-dense and have low input/output ratios

• Learn how crop rotation works• Stay healthy & keep your energy high;

long-term nutrition requires planningGrain:  Veg: Fruit: Dairy:

5oz/day 2cup/day 1.5cup/day 3cup/day150oz/month 60cup/month 45cup/month 90cup/month1825oz/year 730cup/year 547cup/year 1095cup/year

Protein:  Fats/Oils: Water: Note:5oz/day 5tsp/day 8cup/day All values per person150oz/month 150tsp/month 240cup/month1825oz/year 1825tsp/year 2920cup/year

• Fridgeless Preservation methods:• Dry, jar, pickle, smoke, salt, ferment

Producing Produce

• No properly available utilities or infrastructure to distribute agricultural goods to population in urban or rural regions– Destroyed by zombie attack, lack of

maintenance, or natural causes

• Access to agriculture available only to those in immediate area

• Rural areas see higher long-term survival rates with growth and attract others

Dysfunctional Distribution

Trade Theory

• Studies the process of exchanges between individuals and groups of people – Includes influence on/impact of exchanges

• Introduction of zombies will segment trade to a patchwork of very small groups– Fewer people, higher risk, poor transportation– Caravans and towns will replace nations– Neighboring towns could create trade

agreements to form blocs

• All trade starts with surplus agriculture and food supply– Farmers grow more than they need

and trade surplus for other services– Makes urbanites with no agricultural

experience useful and offers hope of survival for others

• Maintain a small degree of separation of labor– e.g.: Farmers produce food for

everyone while others work to build fortifications against zombie attack

A Growing Economy

Skill Diversification• Each person takes on more

roles– Many roles of the supply

chain; vertical diversification– Described by Adam Smith in

“The Wealth of Nations”

• Examples:– Carpenter:

• Tool maker, Lumberman, Stone Cutter, Architect, Builder, Mason, Handyman

– Textile Maker:• Fiber cultivator, carder, tapestry

maker, tailor, cobbler, designer

• People must develop a generalized set of skills– Learn many trades to be self-reliant and

useful; horizontal diversification– Fewer people reduces potential for trade and

skill specialization

• All people must be soldiers first– Able and ready to fight off attacks of zombies

Skill Diversification

Farming Tailoring Security

Fishing Sewing Smithing

Carpentry Weaving Mining

Masonry Bowyer Sanitation

Husbandry Veterinary Cooking

Baking Medical Teaching

Preserving Fletcher Tanning

Brewing Hunting Spinning

Butchery Botony Midwife

Cobbling Economics Milling

Critical Skill Sets

Microeconomics

• Studies the decisions of individuals and firms when allocating limited resources

• Production schedules will be indirectly altered through functional and seasonal limitations

• Zombies can’t have a direct impact on microeconomic fundamentals ?

“Micro… what!?”

Production Schedules• Constant Production

– Output produced at a constant rate – No rationing required– Price will remain relatively constant– Some primary sector goods

• Stone, lumber, water, etc.

– More secondary sector goods• Metal goods, rope, preserves, textiles, etc.

– Most tertiary sector goods• Education, sanitation, cooks, security, etc.

Production SchedulesSeasonal Production

Seasonal variations in supply and demand will have a much bigger role. Demand for weather-specific products will go up, and supply will vary with seasonal product potential

Food is especially subject to seasonal variations as plants and game vary during the year

Production Schedules• Goods that can no

longer be produced– Industrial supplies and

high technology– Must be rationed

carefully– Ammo of particular

rationing concern

– Value continuously goes up over time as supply is depleted

• Apply oil politics to Twinkies

Commodities Investor

Woody Harrelson in Zombieland

Financial Economics

• Studies the role of money and other money-measured assets in exchanges and agreements

• Money is a physical representation of the value of goods and services owed to the owner as a result of having produced and given away something else of value

• Introduction of zombies will leave money nearly useless but not more so than any other type of apocalypse

• Money loses usefulness– Low total availability of production

means that your skills must be needed by those whom you wish to solicit

– No competition means no standardization of value

– The value of each service in the exchange must be negotiated in advance

– The value placed on a service is measured in terms of other services

Barter Systems

• Possibility for isolated use within individual communities– Must be enough people and competition within

the community to make money a viable means of exchanging value

– Monetary value an arbitrary measure and not likely to translate properly outside the community

– Salt, spices, & silk likely to be used as currency alternatives

– Dollar bills only as useful as the material they are printed on

Money

Macroeconomics

• Studies the behavior of production and distribution of assets across the entire population of a particular group or region

• End of large, organized governments and reduced importance of money eliminates all normal policy development

• Small, local control with strict concern for increasing production will prevail

• Governments composed of community leaders– Manage small, self-sustaining

communities of several people or families

• More involved role in managing resources– Focus on ensuring adequate

production to ration during the winter or during zombie swarms

Managing Resources

• Monetary policy– No money means no monetary policy

• Fiscal policy– Units of production stored vs. rationed;

same mechanism as taxation and expenditure

– Bartering without money makes long-term measures difficult

• Option1: Standardized system• Option 2: Trust your customers during

crisis

Monetary and Fiscal Policy

• Inflation– Low demand-pull

inflation– Production needs

determined by ration requirements

– Still possible through cost-push influence

– SRPC will resemble LRPC

Monetary and Fiscal Policy•Employment

-Employment will remain at 100%- High production demand with scarce labor markets

Energy Economics

• Studies sources and utilization of energy• Ancient Sources

– Human effort, animal effort, limited wind (windmills), limited water (water wheels), limited oil (animal oil lamps)

– All mechanical energy, none electrical

• Modern Sources– Oil, gas, coal, wind, water, nuclear, geothermal,

hydroelectric, and more– Abundant electrical energy

Going Off-Grid

•Energy infrastructure will disappear

•No ability to refine gas, oil, or nuclear material

•No infrastructure for the distribution of major hydroelectric or geothermal energy

•Small-scale solar/wind energy will last for decades•Strong for 1 product life-cycle, scavenged parts and replacements for years afterward

•Lost use of industrial energy will cause per capital production to drop to pre-industrial revolution levels

•Economic growth potential severely limited

Developmental Economics

• Growth: Volume of production issues– Wealth, GDP, Income, etc.

• Development: Quality of life issues– Education, health, environment, etc.

• Sustainability of each a key concern

• Zombies bring a trade-off – Poor education and health infrastructure– Improved environment via low production– Improved sustainability via low population

• Zombies: Good for the Environment Bad for Businesses– Consume very few resources– Release no toxic byproducts into the

air, land, or water• Exception: If one falls in the water making

that water unsafe

– Very high ratio of zombie population means lower impact on environment

• Much lower production volume

Going Green

• Environmental Restoration– Consumption currently at degradation levels;

more than can be sustained– Seeking steady-state consumption

• Consumption rates equals renewal rates• e.g.: Cut trees at rate equal to growth

– Zombies constantly have rate of consumption within renewal levels

– Remaining human infrastructure gradually destroyed by returning plants and animals.

Going Green

Life After People on History Channel

• Human flesh consumption reaches steady-state sustainability– Human communities survive and

reproduce– Zombies continue to seek us out as we

attempt to evade them– Zombies mitigate human growth,

maintaining sustainable levels

Sustainability

• Human development measured by Human Development Index (HDI)

• Where:

• Result of Zombies: All decreased– Much Increased in Future Potential– GNI Growth w/ Lower Pop. Growth

• Greater GNI per Capita

Human Development

Life Expectancy Education Index GNI/Capita Index

• Improved Equality Among People– Measured by Gini Coefficient

• Shift in AS and labor decreases value of G by increased reliance

Human Development

Summary

• Zombie apocalypse will fix the economy– Ample supply of agriculture– High employment and low inflation– Improved socioeconomic disparity– Environmental restoration– Resource sustainability

• Zombies keep the real threats at bay– Human excesses and overpopulation– Degradation status fixed by killing more people– Sustainable human development achieved

Michael Taillard, PhD MBAFreelance Economist

Consulting, Teaching, Research

Writing, Public Speaking, Media