Friday, May 3, 2013

Growth is gone - welcome steady-state

Perhaps we should stop discussing whether growth is good or bad and just conclude that it is ending...
Clearly, growth has stalled the last decade. Of course, some still put their faith into that growth will restart again, and they have all kinds of ideas what societies should do to re-start growth. Many, including myself, question the growth paradigm itself. Well, perhaps we don't have to discuss it anymore - growth is declining.

This is particularly apparent if we look at GDP per capita which adjust for population growth. In most rich countries the number of people working in the economy is declining and with them economic growth - Macrofugue Analytics talks about Peak Capitalism. In most parts of the world, we have reached Peak Child. For a while those countries, such as China will go through a period of growth stronger than ever before and ever after, but gradually growth will subside. While we will not run out of fossil fuels, there is no doubt that new sources are much more expensive to extract and has lower EROEI than earlier finds and therefore contributes less to growth. 

It seems to me that young people in Europe or North America today can not assume - as my generation did - that things will be better and better. And this is even without the drama of climate change taken into account. Youth unemployment in Spain has reached 56 percent these days.

So, instead of arguing if growth is good or not, perhaps we should instead discuss how we will manage a society without growth. Also those that are in principle in favour of continued growth might find it wise as a safeguard - a contingency planning.

It seems to me that we need to re-think a lot in our societies if growth is not there. One apparent thing is of course pensions. We can already see a pension squeeze in many countries. Intra-generational conflicts might increase when the cake is not constantly growing. Many business models are built on assumptions of growth and many peoples' housing "careers" are built on ideas of ever increasing house prices - assumptions that already have proven wrong and dangerous. 

As a matter of fact it might be the case that our entire system requires growth. But then we would have to revisit the system rather than desperately trying to incite new growth, with higher and higher social costs.

The religious belief in constant progress needs to be revisited.

read also:
Lagom is good enough
We get richer also without growth
Aging populations will end growth
Japan: post growth and post-peak-oil works?



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