I think you misunderstand "growth" as wall-street profits. The world GDP today is $80T. If you divide that by world's working population (which is ~65% of total population), you will arrive at about $9/hr wage rate for average human. The growth is the improvement in value of time for an average human being. This is obviously very broad view because returns are extremely unevenly distributed but when GDP grows, many people benefit by having their standard of life elevated by that little bump. Continuous growth is what led to dramatic reduction in massive poverty in India and China compared to 1970s and now also starting to take place in Africa. There is most definitely need for continuous growth.
What's interesting is that you don't follow your own reasoning to it's almost completely Marxist end: continuous growth is only necessary _because of_ the extremely uneven distribution of wealth, and it follows that the need for continuous growth is then _exacerbated_ by the continuous increase in income disparity.
"(...) Beginning in the 1970s, economic growth slowed and the income gap widened. Income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow strongly. The concentration of income at the very top of the distribution rose to levels last seen 90 years ago".[1]
Income disparity and need for continuous growth are not strictly dependent on each other. Assume that everyone was given exactly equal portion of global GDP. This will still end up everyone at $9/hr. While this might be above poverty line, no one would be able to afford virtually any expensive technological advances. The bottom line is that current total world GDP is not sufficient to experience full technological advances by all humans which calls for further growth.
> When it gets down to it–we're talking trade balances here–once we've brain-drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwaves in Tadzhikistan and selling them here–once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel–once the Invisible Hand has taken all those historical inequities and smeared them out into a broad global layer of what a Pakistani bricklayer would consider to be prosperity–y'know what? There's only four things we do better than anyone else: music, movies, microcode (software), high-speed pizza delivery.
> and it follows that the need for continuous growth is then _exacerbated_ by the continuous increase in income disparity.
Not necessarily, not only is growth not bound to income disparity; once people's basic needs are meet (health care, minimum living benefits while out of job), the disparity is no longer a humanitarian issue.
More yet, what today goes to middle class in most developed and developing countries used to be the best upper class could get. There is a lot that can be done, of course, but the general state of humanity is on an upwards trend with economy.
No, that reasoning would hold only if the total amount of resources to divide between people would be static. That is not the case and so growth is good.
No, the need for growth is not related to uneven distribution. You can have perfectly even distribution of a really unproductive economy and everyone will be just as poor.
If we want to get enough food, shelter, and medicine for the population of the world to just not be in the brink of starvation, homelessness and death from simple diseases, we need more economic growth.
The economic output of a society is independent of the wealth distribution mechanisms. We wouldn’t magically gain all of the output we needed by just switching to socialism.
A simple example is a workforce building houses without tools and a workforce building houses with tools. The latter will have more economic output than the former and will be better for society overall, regardless of what share of the profits the workers get.
My interpretation of the parent was that there is some hypothetical point at which basic needs (whatever they are) of all humans are satisfied and additional growth is about more comfort/less work. At that point one could in principle stop with growth. And with very skewed distribution, this hypothetical point is way further into the future than with even distribution.
That sounds like "trickle down economy". I.E. the idea that when the top capital experiences growth it manifests in growth for working and poor people.
While it does to some degree, it's rather debunked as I understand it.
At the current rate 9$/hr on average for Africa would mean a massive increase in standard of living, so you could achieve the same goal you imply by better distribution of wealth without growth (though that has it's own problems).
What I'm trying to say is that continuous growth isn't necessary to improve standard of living.
Besides history has shown us that growth isn't continuous, rather it's cyclic with a general upward trend.
It's more like humanity is playing a growth-sum game. If growth is positive then people can improve their lot without reducing someone else's, which creates all sorts of scenarios where it's rational to cooperate, making things better for everyone. If growth is at or below zero, then people have no incentive to work together except to defeat other people.
I like the theory, but I'm curious how climate change as a prisoners dilemma would play into your hypothesis. Optimizing finance rather than the environmental externality... Maybe we just don't see how it's in our best interest to cooperate?
These days, Africans might have no running water but they have mobile phones. Sounds like a (slight) increase in the standard of living. Definitely "trickle down", maybe not "economy" but at least "technology" (which is what ultimately counts on the long run - we don't care who was rich in Ancient Greece, but we do care about their technology).
This is an incredibly blinkered viewpoint. Sure if you're insulated from the effects of economic downturns (you have a secure job or no dependents, and you have a lot of savings and a diverse investment portfolio, and you're healthy and/or have no need to worry about losing health insurance benefits) then sure, you can relax and tell yourself that everything will work out alright in the end.
However the reality is that recessions mean a lot of suffering and uncertainty for a sizeable chunk of the population. Pretending this isn't the case is extremely bizarre.
I think it can be a fairly reasonable viewpoint; there are many systems where "downturn" type events are good for the system as a whole and also disproportionally good to some members. A natural forest fire is good for the forest from time to time, good for certain well established individual trees, and good for future generations but of course terrible for those trees that get culled out.
I sometimes feel conflicted about bad economic news-- a lot of my reading materials suggest this is 'good', because it's an opportunity to buy distressed assets and make more money. Then I think about the cost to others, and I realize I'd rather not make the money and let others have an easier time of it.
I get where you come from. You have to see though that for a lot of people recession means losing their jobs, being unable to provide for their families, etc. The fear of recession is entirely rational for anyone without a savings account covering the next 2 years.
>Everyone should be spreading their savings around different banks.
Depending on the country this will not save you. You can have it in N banks, and still get back up to a fixed X amount, because the amount is per person, not per account.
And this assumes people have "savings".
Most people outside of the 10% echo chamber live paycheck to paycheck.
> Everyone should be spreading their savings around different banks.
Which savings? 60% of the US population has less than 1.000 $ in liquid savings per [1]. In Germany it's 33% per [2].
When the recession hits (not if but when) people are going to get fucked. The 2008 crisis wiped out what many people had and its aftermath left them unable to rebuild their savings, and social security institutions have been wrecked since neoliberalism took over - I certainly expect (food) riots once recession hits. The Yellow Vests in France are an example what a still relatively rich but angry population can do, and extrapolating from that reveals a not very nice future.
I think this is correct, and answers the common question of "how do we expect growth to go on indefinitely?" It follows from this that as we get to the stage where the global population starts to shrink we will not require constant growth. Of course then we will have the serious issue of how to fund people past retirement age as population shrinks.
Funding retirement in an inverted age pyramid is not a theoretical problem. Germany is facing this problem already and it is going to get much, much worse in the next 10 years.
As a side note, this inverted age pyramid aligns partially with a unbalanced power distribution as old people outvote younger generations and their interests by a wide margin.
Speaking reasonably and from an ecologic point of view you're 100% right. But for the current economic system simple sustenance, i.e. not growing, is similar to death. It's much like a shark, if it stops moving it cannot breathe. I think a lot of it is down to being powered by loans which in essence can be paid back only if the total output grows. Imagine a bank that lends you 100K to set up a business. You'll pay back eventually more than you initially got -say 130K- over a period of the next 10 yrs. The extra 30K will only appear in the economy somewhere if the economy grows. At least that's how this game is supposed to be played.
It should, but there is some predatory spending going on that is actually shrinking the economy because of inequality. How fun is a poker game at the end of the night when one guy has all the chips? Everyone usually goes home or takes on debt to double down in a drunk stupor.
If there shall be no growth, there may be no innovation. Essentially every product and service has to be created the same way, using the same amount if manual labor, as yesteryear.
Economical growth is not necessarily growth in consumption of resources. It is also a measure of getting more out of less.
>If there shall be no growth, there may be no innovation.
That's not a problem. We already have too much shit for the good of the planet and for the good of our sanity. We should focus on quality, not innovation of more gadgetry.
Considering diseases for example, we could save hundreds of millions with spreading existing drugs and techniques, and give many years or longevity to billions with access to water and food and vaccines, etc, than what we'll "might" do with some (diminishing returns) cutting edge drug research.
We know how to cure lots of diseases people all over the world suffer from, and we don't do it. It takes a lot of hypocrisy to say we need more "growth" and "innovation" to help them.
Your focus on consumer gadgets is incredibly narrow and overlooks so many other things where innovation happens and brings true progress to the world.
Also, you can't stop human curiosity and the drive to improve and compete. There has always been progress in arts, science and technology throughout history, no matter what political or theological system reigned at that time.
>Your focus on consumer gadgets is incredibly narrow and overlooks so many other things where innovation happens and brings true progress to the world.
I find the world worse than 30 years ago, so I'm doubtful about this "true progress". Our progress is just moving along without a clear goal.
>Also, you can't stop human curiosity and the drive to improve and compete.
You can cut off the economic motives for those things, which turn them from a human thing into an inhuman cut-throat compulsion.
In what ways is the world worse?
"So why does it feel like the world is in decline? I think it is partly the nature of news coverage. Bad news arrives as drama, while good news is incremental—and not usually deemed newsworthy."
http://time.com/5086870/bill-gates-guest-editor-time/
I see, so there has been no new Japanese product or innovation during the 20 or 30 years of Japanese deflation? Every car is from 1990, every CD walkman still available, created with techniques of the 1990s? Are you sure about that?
Yet Japan's current GDP is lower than that in 1995, and has only been over 1995 level in two years.
There was plenty of innovation, new methods, product launches and new companies during the great Depression, even in the peak year of decline, and in all countries affected.
GDP and GDP growth is a decidedly modern invention anyway.
It's fundamentally meaningless to compare nominal GDP between different years because of changes in the value of money. The current GDP of Japan is only nominally less than in 1995 because the values are measured on different scales.
The Great Depression would have been a better example to use because even real GDP declined drastically.
A country that still heavily relies on paper document, still using fax machine, and its most popular internet forum has not changed its design since inception.
Yes, I would say the innovation in Japan has died out since the bubble.
Spoken like a person who has never set foot in Japan. LOL.
Might as well say the same things for a country that still heavily relies on fossil fuels, still doesn't have high speed rail, still has shitty internet speeds, has crumbling roads and infrastructure, and still uses these horrible air-conditioning units, and wooden (!!!) houses, not to mention their mobile internet situation...
Sure, the US also had a recession and it shows. But I can vouch for OP what he said about Japan. Once you step outside Tokyo/Osaka in to the smaller cities, you'll see abandoned buildings, crumbling public infrastructure and many people living off government benefits, struggling to make ends meet. Decades of recession have really taken their toll. I wouldn't call that poverty yet, but definitely there's a lot of austerity.
The beurocracy is insane. My guess is that the government crept in lots of it because it helps to keep the public servants employed. If you look in to the post office or local government ward office, there is always a whole army of office workers sending away faxes and stamping them, then stapling some papers. (They still use these weird stamps to sign their documents btw)
And yes, Japanese still use faxes, drive old taxis and generally you'll see a lot of antiqued technology that still works, but I think that's kind of charming. I especially enjoy seeing some of the old narrow guagae trains still chugging along the country side from time to time (in stark contrast to the shinkansen). Also exiting to see laser disks / VCRs / minidisks when visiting Japanese houses. Just the other day I seen an automated piano controlled by a device which seemed to be reading the data from a 3.5 inch floppy! Sometimes I can spot the odd CRT display still happily flickering, including the old vintage arcade games... The bowling alley down the block still uses what seems to be a DOS based system to manage their displays & business. Visiting a hospital is sometimes like visiting a museum... Oh, btw, got to fly in a Boeing 767 on a domestic route a few months ago, that was a pleasant surprise as I haven't been on one in years!
>Sure, the US also had a recession and it shows. But I can vouch for OP what he said about Japan. Once you step outside Tokyo/Osaka in to the smaller cities, you'll see abandoned buildings, crumbling public infrastructure and many people living off government benefits, struggling to make ends meet.
I've been to Mississippi, Alabama, South Dakota, Michigan, and lots of other states, and it's probably much worse there.
But in a system that presupposes "continuous growth" for sustaining itself, and all its structures have been built with that assumption, fear of recession is totally rational.
For most of time, up to the 20th century, growth was not an expected part of economic activity. Neither expected or required. GDP didn't even get dreamed up until the 1930s, and its inventor warned against it being used as a measure of the success of a nation.
Of course it was soon used as a measure of success, comparison and an easy concept for headlines and politicians. So the irrational belief that infinite growth on a finite planet was not only possible but desirable and necessary became the modern religion. :)
This... We need to optimize efficiency against known negative externalities better. We need to stop optimizing finance and start optimizing how our business affects all life cycles on the planet.
If output were stable then innovation would only be used to improve the efficiency of production. That would mean fewer jobs producing the same amount of stuff, which would lead to increased inequality (fewer people working and earning compared to people who aren't working). That doesn't sounds like a good thing to me.
The societal benefit of "infinite growth" is fully utilising the workforce. If an innovation reduces the number of people needed in a job we can try to grow a different part of the economy to use those people. Unless we can think of a different way to utilise people (eg universal basic income, negative income tax, free stuff for everyone, or something) growth is a useful mechanism to regulate society to an extent.
Output should never be stable in theory as people will not always need the same amounts of the same things. Optimally, output of consumer goods would dwindle if they were made to last as long as possible and convincing people to buy shit they don't need or really even want wasn't a key component of the economy. Also, the notion of "ways to use people" seaks directly to the alienation of labor central to capitalist systems.
It seems like a contradiction. Fear of recession is rational due to the world that we have all made - it is built around and addicted to growth, inovation, overconsumption.
For zero growth or negative growth world a lot would have to change significantly. From presonal choices to government policies.
People die due to the lower economic output of a recession. Lower GDP is a sign that we are not solving the world's problems as quickly as we had been previously. There are real negatives to be feared.
Yeah, very true. We would expect a rise in suicidality in white males in USA, for instance, as has already been happening due to hollowed out midwestern economics and ongoing opioid crisis.
I think people lose sight that a recession is normal and part of the cycle of boom and bust. Net net it’s always higher but you need a cool-off period.
The fact the people believe the cycle of boom/bust is somehow an inevitability of life rather than a flaw in our economic ideology is yet another cynical neo-liberal deception of the working and middle classes.
In the current model of capitalism, yes there is a systemic need for continuous growth - one might say, for VC-style turbo capitalism, there is in fact an even worse need for exponential growth.