The Economics Of Enough

[interestrateripoff]

http://www.guardian.co.uk/business/economics-blog/2013/may/01/economics-of-enough

It's been over five years since the global financial crisis began, and yet we are still no closer to ending it. George Akerlof, a Nobel Prize–winning economist, has provided a good analogy for the uncertainty facing economists. "It's as if a cat has climbed this huge tree—the cat of course is the crisis. My view is 'Oh my God, the cat's going to fall and I don't know what to do'." Nor is he alone in this uncertainty. The IMF's chief economist, Olivier Blanchard, warns: "We don't have a sense of our final destination."

The economics profession has lost its moorings. The traditional cure to our economic ills has always been growth. But now, despite the best efforts of all concerned, the UK economy refuses to grow. The economic tools that have been applied – lower interest rates, quantitative easing, and strict austerity – are failing. GDP in the UK is now 2% lower than when the crisis began.

In our new book, Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources, Rob Dietz and I argue that it's time to abandon the pursuit of growth in wealthy nations and consider a new strategy – an economy of enough. Suppose that instead of chasing after more stuff, more jobs, more consumption, and more income, we aimed for enough stuff, enough jobs, enough consumption and enough income.

Abandoning the pursuit of growth may seem like a radical idea, but there's a strong case to be made for it. Economic growth is causing a number of global environmental problems, ranging from climate change to biodiversity loss. At the same time, economic growth is no longer improving people's lives in wealthy nations like the UK. To continue to pursue growth for growth's sake is simply irresponsible.

Abandoning growth...

How will we meet debt interest payments? This is a crazy idea, I want 6 TVs in my living room...

[zugzwang]

Isn't this Scepticus's Flatland?

[Guest unfunded_liability]

...The IMF's chief economist, Olivier Blanchard, warns: "We don't have a sense of our final destination."...

- I think most on here have a good sense of our final destination

[Dorkins]

They will do anything to avoid suggesting that the size of the pie is not the real problem, it's the way it is sliced.

[Si1]

great statist rationalisation - so they f*cked up with their supr growth strategy and it wenbt pear shaped - and now they're saying this was the idea all along and you proles should all be poor while they keep sipping champagne discussing the clear success of statism

[scepticus]

Isn't this Scepticus's Flatland?

It would have to be.

In defence of the perma-growth crowd, I have yet to see a realistic non-idealistic/non-utopian description of what non growth society would look like.

Most accounts I see of it are basically descriptions of everyone just being lovely to one another, with generous portions of tree hugging, whizzy solar powered trams and collectively owned ikea-style housing overflowing with greenery and flowers. Of course the monetary systems people posit for these scenarios tends to have similar attributes.

Edited May 2, 2013 by scepticus

[wonderpup]

They overlook the non trivial fact that the growth in question has already been borrowed against on a massive scale.

They make the rather touching error of believing that the current obsession with growth is driven by a desire to improve the lives of the great unwashed- in reality it's the desperate aspiration of men who sit perched atop the biggest ponzi scheme in history who need that growth just to stand still and not be consumed by the black hole of unsustainable debt they have managed to bring into being.

So growth is not optional any more (if it ever was)- it's now the minimum requirement for the maintenance of the status quo. Which does not mean it's going to happen- but does mean that any idea of a zero growth future will not be well received in the corridors of power.

The first rule of any ponzi scheme is that you never, ever, stop expanding.

[The Masked Tulip]

"We don't have a sense of our final destination."

It is not the destination but the journey that is important - especially if you travel the journey aboard the gravy train

[shindigger]

It would have to be.

In defence of the perma-growth crowd, I have yet to see a realistic non-idealistic/non-utopian description of what non growth society would look like.

Most accounts I see of it are basically descriptions of everyone just being lovely to one another, with generous portions of tree hugging, whizzy solar powered trams and collectively owned ikea-style housing overflowing with greenery and flowers. Of course the monetary systems people posit for these scenarios tends to have similar attributes.

Where are the Hover Packs?

[shindigger]

looks like beijing without the bicycles and smog.

Its a Barratt homes advert from 2055.

They decided to abandon the 2 coffee coloured people pillow fighting schtick.

Edited May 2, 2013 by shindigger

[chronyx]

We could be the first country to invest in making GMO trees that grow to the sky.

[Georgia O'Keeffe]

They overlook the non trivial fact that the growth in question has already been borrowed against on a massive scale.

They make the rather touching error of believing that the current obsession with growth is driven by a desire to improve the lives of the great unwashed- in reality it's the desperate aspiration of men who sit perched atop the biggest ponzi scheme in history who need that growth just to stand still and not be consumed by the black hole of unsustainable debt they have managed to bring into being.

So growth is not optional any more (if it ever was)- it's now the minimum requirement for the maintenance of the status quo. Which does not mean it's going to happen- but does mean that any idea of a zero growth future will not be well received in the corridors of power.

The first rule of any ponzi scheme is that you never, ever, stop expanding.

i dont think the growth expectations of today are in the same league as the 1730s, its smaller scale, growth is growth, but unfortunately noone can ever or will ever out produce the expectations of the state and to be fair they dont need to because the state has violence backing it up

[shindigger]

i dont think the growth expectations of today are in the same league as the 1730s, its smaller scale, growth is growth, but unfortunately noone can ever or will ever out produce the expectations of the state and to be fair they dont need to because the state has violence backing it up

Hmmmm, i seem to have read this before on here....

Hmmmm.......

[Parkwell]

"It's as if a cat has climbed this huge tree—the cat of course is the crisis. My view is 'Oh my God, the cat's going to fall and I don't know what to do'."

My view would be. If the cat wants to climb the tree so be it.

The question is why would someone tie their existence so closely to the cats that they feel an overwhelming need to control it's every moment? I'd rather walk on by and get on with my life and the cat can do as nature dictates.

[scepticus]

looks like beijing without the bicycles and smog.

my point exactly

[scepticus]

Where are the Hover Packs?

Not environmentally friendly. People will get around in shiny white plastic dung powered bubble-cars or something.

[19 year mortgage 8itch]

Do a google image search for "where white man went wrong"

I would suggest the lower echelons of British society have it cracked.

[R K]

They overlook the non trivial fact that the growth in question has already been borrowed against on a massive scale.

They make the rather touching error of believing that the current obsession with growth is driven by a desire to improve the lives of the great unwashed- in reality it's the desperate aspiration of men who sit perched atop the biggest ponzi scheme in history who need that growth just to stand still and not be consumed by the black hole of unsustainable debt they have managed to bring into being.

So growth is not optional any more (if it ever was)- it's now the minimum requirement for the maintenance of the status quo. Which does not mean it's going to happen- but does mean that any idea of a zero growth future will not be well received in the corridors of power.

The first rule of any ponzi scheme is that you never, ever, stop expanding.

That just an accounting detail.

Since every £ $ E Y of debt is also someone's savings it doesn't matter a jot.

Russian gangsters in Cyprus took a haircut. Nobody died.

Those are simple details. The bigger picture is how are we all going to keep getting fed.

And the even bigger question is what are the 1% and the 1% of the 1% going to do when it dawns on the rest of us that we aren't going to keep getting fed.

Edited May 2, 2013 by R K

[Executive Sadman]

For most of the past couple hundred years, thanks to technology, the general rule seems to have been 'what the rich have today, the average person will have in a couple of decades time' In 1910, only the wealthiest had cars, by 1930, at least in the US, fairly average families could do the same. Same goes for heated water, electricity, television etc etc. At some point (ie when globalization reached the necessary level) the middle class started to be destroyed. If you applied the 'what the rich have today, the average person will have in a couple of decades time' observation in 1980, you would probably expect the average person in 2010 to have a swimming pool, yacht, helicopter, and a hoard of jewels. In fact, not only has that not happened, most the so called middle class are living paycheck to paycheck.

I personally doubt the 'finite' resources bit. Of course they are finite, but we are nowhere near that point. We have endless energy via thorium, which can be utilized to recycle most materials. We simply have decided to stop technology from assisting us to continue the 'what the rich have today, the average person will have in a couple of decades time'. How? Because productivity (via technology) increases at 2-3% a year, meaning all things being equal, wealth should increase. However, via deficit spending and unfunded pension liabilities, the government steals all this and more, meaning there has been zero progress in wealth since at least 1980.

We will never know how wealthy we would be without the catastrophe of government imposed on us, but I suspect id be typing this from a 70ft superyacht, rather than a semi that essentially has progressed in no way to how it was in 1970.

[scepticus]

That just an accounting detail.

Since every £ $ E Y of debt is also someone's savings it doesn't matter a jot.

Russian gangsters in Cyprus took a haircut. Nobody died.

True but the common man didn't take a hair cut. We need to see that happen to people like browneconomy in the save our savers thread before we determine what the likely outcomes are.

Those are simple details. The bigger picture is how are we all going to keep getting fed.

That is IMO more a matter of distribution and inequality than resources, at least for the time being. But yes eventually it will need to be addressed.

The most interesting (to pick a word) is when the choice comes between feeding people or machines.

And the even bigger question is what are the 1% and the 1% of the 1% going to do when it dawns on the rest of us that we aren't going to keep getting fed.

Yes, internal restructuring.

[Sour Mash]

They overlook the non trivial fact that the growth in question has already been borrowed against on a massive scale.

No need to worry about that - it will never be paid back. Should be obvious by now that there's simply no way that the debt can be repaid, let alone will be repaid.

What needs to be worried about is the effects of the default - deflationary depression if hard default or (hyper)inflationary depression in the IMO more likely event of soft default through all-out money printing.

[Executive Sadman]

No need to worry about that - it will never be paid back. Should be obvious by now that there's simply no way that the debt can be repaid, let alone will be repaid.

What needs to be worried about is the effects of the default - deflationary depression if hard default or (hyper)inflationary depression in the IMO more likely event of soft default through all-out money printing.

You would hope so, but our political class are globalist traitors. Im sure the real reason they want to sell the roads, the hospitals, the schools is to pay back the debts, and they'll be rented back to us for all eternity. Motorists can be gouged for £40billion a year. I guess that gives the roads a value of about £800billion for example.

And dont for a minute think labour will be any different.

[wonderpup]

No need to worry about that - it will never be paid back. Should be obvious by now that there's simply no way that the debt can be repaid, let alone will be repaid.

What needs to be worried about is the effects of the default - deflationary depression if hard default or (hyper)inflationary depression in the IMO more likely event of soft default through all-out money printing.

I will always remember Jim Cramer on CNBC screaming 'This cannot be allowed to happen!' as the 2008 crash started- the key word in that sentence being 'allowed'.

The huge irony of people like Cramer is that for all their anti government rhetoric they maintain a child like faith in the power of Government to 'fix' the economy.

So the reality that the debt will not be paid back is not one the 1% seem able to accept- it's too painful. As a result we get an increasingly desperate array of policies designed to obscure this reality- like QE, ZIRP and the plethora of other gimmicks and tricks currently being deployed by Central Bankers everywhere.

Things they are not doing-for example- are dealing with the derivative issue, which massively amplifies the fallout of any defaults by spreading the pain throughout the system.

So at present I would argue that we are not past the 'denial' stage of the crisis- the powers that be still seem to think that if they just pump enough funny money into the system it will spring back into life and things can go on as before.

[sossij]

We could be the first country to invest in making GMO trees that grow to the sky.

Yes! And live in them

[chronyx]

Yes! And live in them

Save some for the pwoper-tree developers?