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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Why Economic Growth Is Impossible

Economics / Economic Theory May 27, 2015 - 12:30 PM GMT

By: BATR

Economics

The quandary of the economic dilemma continues. A globe suffering from a deflationary financial impact, while consumer prices rise well above the reported cost of living increases, does not bode well that prospects of commercial growth can rescue the world economy. What changes can overcome this predicament? Well, some academic scholar’s offers serious concern that a long term rebound towards prosperity is no longer possible.


In an essay, What if economic growth is no longer possible in the 21st century?, Sean McElwee and Lew Daly argue that fundamental changes will be the norm in this century.

“Many economists have warned that the old model is dying out. In a much-cited paper, Robert Gordon argues that the rapid growth we take for granted is not only historically anomalous but likely to slow significantly in the 21st century, pointing in particular to diminishing returns from technology as one major drag. Developed countries have already picked the "low-hanging fruit" of technological advance (in Tyler Cowen's phrase), and future innovations will produce far less growth, he argues.”

Postulating from a climate charge bias the authors claim a bleak future is in the cards.

“The conclusions that flow from these observations are stark. The old economic paradigm relied on unsustainable growth, so we must change the paradigm. For decades, our rising standard of living came at a deep cost to our environment and our children's future. There is simply not enough planetary bio-capacity to grow our way out of the messy moral discussions of distribution. The idea that inequality is merely an inefficiency to be corrected with a technocratic fix or perpetual growth is no longer tenable.”

Compare this perspective with that in The End of Economic Growth by Charles Siegel who presents three backdrops.

“First, imagine that people decide they have enough at the economic level of the United States in the 1960s—the time when American social critics began to say that our economy was so affluent that it was geared to waste. Imagine that individuals generally chose more free time rather than more income, and imagine that people also made the political decisions needed to limit sprawl, excessive automobile use, and other forms of destructive consumption, so per capita GWP stops growing when it reaches the level of 1965 America.

As a second scenario, imagine that the world imitates the current American consumerist style, so growth does not end until everyone in the world has the income that more affluent Americans have today. Imagine that everyone wants as many useless medical treatments as insured Americans receive today, everyone wants to spend as much on schooling as the most affluent American suburbs do today, everyone wants to drive to the mall and shop till they drop, everyone wants an oversized house in a sprawl suburb and at least two family cars. People are not satisfied until there are more motor vehicles than registered drivers in the world, as there already are in the United States.

Finally, as a third scenario, imagine that we do not do not allow choice of work hours. Instead, we continue to believe the economists who tell us we need growth to avoid unemployment, so the entire world decides it must stimulate demand and promote growth endlessly to create more jobs, as America did after World War II.”

An objective analysis of both research approaches needs to ask, what about the unabated increase in population and world-wide debt.

If technology is pushing the limits of providing real economy of scale or reduced innovative and useful generation of economic growth, the prospects for a rising prosperity is significantly diminished. Ever since the industrial revolution, a general economic improvement has registered improvement in individual lives.

The supposition that the planet is running out of bio-capacity is certainly debatable. However, dispute over spending beyond our mutual means and burdening future generations is not arguable.

A forecast that people will choose to consume less will not be from a perspective of voluntary design, but from decreased employment opportunities, lower pay and increases in taxes.

The notion that the entire world will achieve the Herbert Hoover adage, A chicken in every pot and a car in every garage, is about as remote as achieving universal brotherhood.

As for stimulating demand, is that really possible when currencies continue to lose their purchasing power, low interest rates savage savers and government debt is the only engine of funding public programs and make- work jobs?

Lacking in all these academic approaches is the fact that corporatists, bureaucrats, authority officials and the financial elites have no interest or desire to see ordinary citizen prosper.

Economic growth is no longer possible; because of intentional decisions that accept the strategy that most people are no longer necessary to maintain the conspicuous excesses of the super rich.

Since the consumer society is distained by the socialists in academia, it is not expected that their analysis would value a strong independent domestic economy.  

The message they would have you believe and work to impose on all of us is that we must sacrifice for the communal good.

Contrary to this attitude is to accept that the common good is actually achieved under a prosperous national economy.

The bare facts are hard to accept for most “Free Trade” proponents. The primary starting point is to write off the bankster debt and issue honest money. As long as the Federal Reserve is allowed to control the monetary creation of currency, the rules of compound interest apply and actual economic growth is impossible.

Accept that the economic woes of the planet are solvable by the liberating spirit of individual entrepreneurs and small business merchants if the stranglehold of transnational corporatocracy model was broken.

The actual resource in short supply is the will and courage to build a true free market where competition is encouraged and monopolies are broken up. Without the insurmountable burden imposed by the counterfeit financial dictatorship, the world could recover. As it stands now, business as usual will destroy the masses.

Source: http://www.batr.org/negotium/052715.html

Discuss or comment about this essay on the BATR Forum

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

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