| HN Mirror

>Problem is we know what no economic growth looks like. It's some form of feudalism, where powerful entities hoard all the wealth and we all rent the rest.

Powerful entities keep growing and getting a bigger share of the economy so we have to grow it just to not become poorer? Isn't it strange that no growth is considered the same thing as a shrinking standard of living? In any sane theoretical economics model, a lack of growth shouldn't mean a reduction of living standards, it should mean a continuation of our existing very high living standards which also precludes any form of automatic runaway wealth accumulation.

I have read a short anarchist book and I have seen the argument that it is the state that causes the problem but I am not fully convinced that just having a government is the problem but rather something the government does that is invisible to the naked eye. Subsidies are a classic example. Everyone drives because the road is free, nobody wants to pay the fully internalized costs of buses because the subsidy exposure of a car for every potential bus passenger is greater. The bus has to be subsidized to the same degree as the bus to compete! Those subsidies are paid for by taxes which decouples the amount of subsidies received from the amount of effort put in and the amount of labor paid into the system through taxes. This disconnect is most likely the problem when it comes to government activity. You can build a business and receive subsidies proportional to the size of the company while someone else has to pay for the subsidies.

Now, transportation is important but it only serves as an obvious in your face example where the subsidy structure is visible and how competition demands subsidies.

The real question is whether there are state subsidized factors of production. If they exist, then every other industry will have to ask for an equal level of subsidies to continue doing business.

The food industry is a classic industry where doing without a subsidy is unthinkable. The question is, why does food production need a subsidy in the first place? Can't farmers just be obligated to overproduce food on their own and pass this on as higher food prices, why does the government have to pay?

It has most likely to do with land as running a farm is impossible without it. If the land is leased, the farm is under intensive pressure to produce profitable crops rather than a surplus or the farmer won't be able to pay the lease. How is land subsidized? The military complex and police forces are in charge of protecting the country and enforcing property laws. How much can the owner of the land charge to the farmer? At least as high as the subsidy paid on land by providing free protective services plus the quality of the land itself. The latter subsidy might be paid by nature rather than the government but the government could tax this difference and remove the positive externality.

But even if production has succeeded, distribution must still happen and it can only happen through trading via the national money system which is practically speaking a monopoly. If you start out with no money, how do you get more money? By borrowing it for interest. That interest rate forces another profitability pressure on the farmer, he simply cannot produce food for everyone without a subsidy if that interest rate itself originated from a subsidy. Competing borrowers might be borrowing to buy land which receives subsidies thereby outcompeting farmers. There is also the fact that the money system is free but it generates massive amounts of costs for the economy. Printing physical bank notes costs money, providing bank accounts and branches costs money, providing loans costs money and accepting electronic payments require specialized terminals which cost money, opening a shop and providing goods every day aka widespread acceptance also costs money beyond the goods themselves. What this means is that the holders of money get to sleep while everyone else without money must toil and keep moving and stay active. The subsidy isn't paid out in money but in real terms but the lender can now step in and market these subsidies as if he provided them, he can turn them into cold hard cash by charging interest. Thus the lower bound on interest on money that borrowed from another is somewhere between 3%-5% and the only way it is lower in practice is because banks create new money through loans rather than lending on existing deposits via CDs. If interest originates from subsidies then wealth accumulation must be automatic.