Is Economic Growth Dead?
Economic growth is often taken for granted yet relied upon to improve our standard of living. But in recent years growth has stalled and has sent shock waves through the economy. What has happened and why?
Economic growth
Economic growth is a relatively recent phenomenon as it has only been a feature of the economy in the last few hundred years.
Before that most people had no experience of the economy and no expectation that such an entity would grow each year to improve their lives.
People lived simple lives based on day-to-day survival that often culminated in early death by their middle forties.
Most economic growth has happened in the last hundred years or so as technologies from railroads to electricity to the internet created year-on-year improvements.
Economic growth over the decades meant people worked fewer hours, lived in better houses, had better access to health care, and enjoyed more labour saving devices in the home: not to mention radio, television and film.
But economic growth has slowed or stalled around the world and without a flurry of major new inventions the economic growth we take for granted may not return.
Without growth the inequality of recent years where the gap between rich and poor increases on an annual basis will get wider and create societal conflict.
Low or no growth
The spread of electricity and the more recent spread of computers has spurred tremendous economic growth but the question is what, if anything, will spark the next period of expansion.
The internet is often cited as the next big thing but it may take years before its full effects are felt and even then it’s difficult to predict whether it will create or destroy jobs.
Digital technology is heralded as the next great industrial revolution but there is a view that it is too narrowly focussed given its concentration on too few sectors.
But it is reasonable to predict that in a low growth economy inequality will increase because earnings from capital grow at a greater rate than wages thus further enriching the rich.
Barriers to growth such as falling educational standards, a population that is growing older, and increased levels of debt are also cited as challenges to growth.
The optimists, of course, argue that the digital revolution will boost the economy but there is increasing scepticism that it may restrict rather than accelerate growth.
The digital economy causes concern because it may reward people with the right skills while punish others through exclusion, which means many people who lose their jobs may never work again.
It is, of course, difficult to predict the outcome but there are rising concerns that the economy is shifting to a new and more divisive low growth norm.
SO, a traditional economy that grows in size each year for everyone’s benefit is vanishing and a more difficult period of low or no growth beckons.
