Tuesday, 13 November 2012

The Limitless Growth Myth

Here is a thought that is occurring in my head on a regular basis lately.

Our economy is measured by its growth. If the growth is negative for more than 2 consecutive quarters then we call it a recession. Bad word that...recession. Nobody wants to hear it. People want to hear that their economy is growing by 2, 3 or even 5% a year. Yes that is progress. This is how we will achieve everlasting and ever increasing prosperity.

Now my question is this: If our economy is based on a monetary scale, which it is at the moment and the growth is measured on, well, how much money was made, then how will this work ad infinitum? Can we always make more money? Everyone? All the time? Sounds like a pyramid scheme to me. And it is really. Our whole system is built on a lie. the lie that everyone can get richer all the time, every time. We know that the reality is far from what the system is promising. And then there is such people like the ones I met in 2010 when I was visiting a conference in Florida. It just so happened that Walmart had their annual meeting at the same time and my Hotel was booked with Walmart....Walmart....I think they are called associates. Anyhow, I tried to stay away from them not to get entangled in a discussion about local economy and the demon of big box stores. I managed until my LAST night. During a civilised but nevertheless heated discussion about salaries and exploitation of their....well, associates one of my "debate opponents" (a higher Walmart associate) answered the following after I mentioned that most empl...eh associates at Walmart are underpaid:

"Everyone can make as much money as I do (200K+ according to the man himself). They just don't want to work hard enough"

I think this is a slap in the face of Walmart associates that do overtime and work for as little as 13K a year. But that is beside my point. The striking thing was that in the same argument the man said that they can't afford to pay people a minimum wage because otherwise the company couldn't get the low prices they offer the consumer. So basically: people can't get paid adequately because the consumer wants low price. There is a good movie made about this practice. If I remember right it was called: "Walmart - The high cost of low price".

I don't want to single out one specific company. This is a phenomenon that our entire economy is based upon. In chemistry people use equations to describe the reactions between molecules and the products derived. These equations are ALWAYS balanced. What goes in, must come out and what comes out must go in. It is simple and easy to understand. In fact the laws of the universe dictate how to balance these equations. We are bound by those laws.

Somehow, this does not work for our economy, because the money that is supposed to come out isn't there to go in. So an easy trick is to make more money. We can print money...not a problem. Unfortunately doing this facilitates inflation. Another one of these bad words that nobody wants to hear. So we want more money, but don't want to make more. Then there is only one solution, we will have to take the money from somewhere else.

Mostly I found that these so called money trees do not in fact grow money (I am not giving up on that yet though...maybe they just take a decade to fruit or so...). So where else to take it from. Well, someone else of course. That person can take money from someone else again and then we create a circle and everybody will get more money....no, that doesn't work either. A closed system with no input can not generate more output.  

So how can anyone in their right mind believe that a truly sustainable economy has to grow all the time?

And then there is another thing that we seem to have forgotten about. Our economy does not solely operate on money. It is the resources that we use to produce our products that in return make the money. Or at least this is the way it is supposed to be.

Alas, we live on a finite planet. And the resource will not be there forever. Anyone who believes that is simply naive. Sorry but this was the nicest way to say this. I can even show that our resources are not limitless by simply naming some that we already used up (more or less):

1) Cod
2) Coal
3) Oil
4) Helium
....well you get my drift

It always makes me think of Sitting Bulls proverb. And he is right, you can't eat money. Nor can you drive money or heat your house with it (not efficiently anyway).

So what is the solution? In my mind, our economy has to be taking into account what resources we got and (and this is maybe the more important point) it should be a NO-GROWTH economy. Why always make more than the last time? Why not be satisfied with the size we got? Only a no-growth economy can be sustainable in the long run.

Forget what economists and bankers tell us. They don't understand natural laws, at least it seems so. David Attenborough said it quite well recently:

"Anybody who thinks there can be limitless growth in a limited environment, is either mad or an economist."

Food for thought.

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