Thursday, 30 May 2013

A Zero-growth future?

Ambrose Evans-Pritchard's grasp of the dire state of the global economy never fails to make a dismal and depressing read to cheer me up, and his current column in the Telegraph is a corker. All that Osborne's tsunami of QE has achieved, it seems, is to have made the obscenely wealthy even richer and sent the Gini coefficient soaring. Everyone else is struggling with static incomes but increasing outgoings - a condition that suits the political-corporate class very nicely, as a population concentrating on keeping its head above water doesn't have much time for riotous behaviour. Until things reach a tipping point. 

Post-war politicians have had it easy, with continuous economic growth modulated only by the business cycle, and since the business cycle and electoral cycles are at differing frequencies each party has had a Buggin's turn of good and bad. But what if zero to low economic growth is the norm? What if, like in the century before the Black Death, wages remain at the same levels for 150 years? Where are the technological changes that drive economic growth? (no, a new model of iPad really doesn't count unless it flies alongside you and you can have an intelligent conversation with it).

Our grandchildren may have to learn to live in a very different economic world.

14 comments:

Roger said...

Exactly. So Minister, we need to do 'clever stuff' - Ipads that fly, Time Machines, Trans Galactic Gargleblasters - that sort of thing. Er, no Minister, we have absolutely no idea how to do 'clever stuff' and even if we did we would outsource it far away and offshore the profits. Got an awful lot of quadrille paper and pencils - will that do?

If government were run like a business then de-layering would be on the cards - sack Departments of State in droves. After all, is there any need to reorganise the NHS every two weeks? is there any need to update school curricula more often than once every twenty years? is there any real need for new legislation? - maybe two or three per year max.

But government is not like business, it feeds upon itself and must keep expanding or supporters and funders will drift away. Worse still, worldwide, governments help each other keep the game going - UN, NATO, EU all deliver endless jollies and jaunts and business creation initiatives (conflicts to you and me). Government - a growth industry.

So, young person, read PPE at uni and get on the bandwagon, alternatively read Taxation Law and join Snoopers and Firebrand. Every other profession will be squeezed and squeezed - except crime.

Weekend Yachtsman said...

@Roger: "...But government is not like business, it feeds upon itself and must keep expanding..."

This is exactly the problem.

The State has become so overwhelming and so ambitious, and so totally unable to recognise any limits to its own acvities, that it now crowds out the possibilities of growth and innovation, either by sucking up and wasting all the surplus capital, or ensuring that no surplus capital exists by snatching all possible revenue streams itself and wasting the resulting cash, or by simply forbidding innovation for bureaucratic or eco-fascist reasons.

Until the State is reined in, and the teeming hordes of its acolytes are sent out into the world to do something productive, normal service cannot be resumed.

Catch-22.

mR eCKS said...

Having --or not having-economic growth is not some function of nature like the weather, Raedwald.
It is a function of how much thieving and meddling political and bureaucratic scum can get away with. At the present time, most of the UK are either passive or active state arse-kissers and the meddling is at an all time high, as is the pervasive evil of socialist/statist propaganda. That is way the economy is failing. When people wake up to who their real enemies are then that can turn on a sixpence.

Blue Eyes said...

I can't be bothered to read E-P's article, but I wonder if he really thinks that there is no more productivity- or resource-driven growth left in the whole world?

No new technology undeveloped?

No new cheaper energy sources untapped?

I call BS on this. Sorry.

G. Tingey said...

Technology & new things are the naswer, as always.
If AE-P is saying there are no new technologies to develop, then he is talking 150% unadulterated bullshit.

However, there is also the political problem, as Radders has spotted ...here is a slightly-mofified snippet I'veposted elsewhere on the subject, echoing R's comment on the onscenely wealthy ...

what is being described here [the discussion I've lifted this comment from] as "capitalism eats everything" isn't capitalism.
It is semi-fascist corporatism, as lots of people on the "right" of the political spectrum are finally (!) beginning to realise, to their horror. [ As stated by R in the original piece ]
The two are as different as old-Labour party socialism & communism.
Both real capitalism & real socialism have good points, the fascism & the communism, err, dont.
NOW, your task, to save the planet, is to get that across to your local electorate....
{Addition] ... and to business leaders who are NOT part of the coprorate stitch-up and to any reasonable politician (there are a few) that "we can't go on like this" - we need a different approach".

What should it be?

Anonymous said...

There will be a readjustment because at some point, in the EZ and likely in France some small bank will fail.
Then, the markets will panic and the real crash will begin.
Around the world, the banking system will collapse - like a pack of cards.
Worthless fiat money has no guarantee and because of the massive indebtedness of inter-banking [they all owe each other!] it will be a slaughter.
The knock-on effect will stuff the western world and will bring most countries to their knees - Britain will suffer more than most - our banks are crap and still not telling the truth about how bad it is.
Post crash, and definitely not before time - there will have to be massive government retrenchment and a new way will emerge - of virtually no government or little government, and that means local government goes back to what it used to be - police, lights and roads only.

At last, an end to the permanent tax and spend policies, it will be tough the lights will go out and the streets will be war zones until order can be restored.
Energy and cheap energy will be the way forwards - and a free for all fracking bonanza to power the new Britain - it'll be very bad for years but we will come out leaner, fairer and equal.

It is coming because this economic shell game cannot go on indefinitely, the only thing we don't know - is when will the mother of world crashes begin?

Blue Eyes said...

Well presumably it will start with the government stealing the patent for Rearden Metal.

Anonymous said...

"doesn't have much time for riotous behaviour"

If that's what they think then they know even less than I thought they know.

Most of the rentamob are benefits recipients with oodles of free time on their hands, hence the reason why I have often found myself and my colleagues locked in our offices while the benefits cheats, scroungers and public sector workers ( given a day off for democratic duties ) wreck the street outside.

Anonymous said...

Enforced zero rate of interest is just highway robbery of hard working people, who save a bit for their old age.

Zero interest rate is only good for merchants banks who grow increasingly rich on QE + 0%.

DP111

Roger said...

Perhaps the discovery of truly new things is slowing down a bit and there are problems of application - mass to energy is still clumsy. Then there are great things in biology to do and the brain to fully map - but where is the profit? But right now the new toys seem rather trivial - mere fiddling with pictures and data. Drones and robots - just grunt work. Big Data - the next disappointment IMHO.

So what needs fixing? The law and its administration seems stuck in the quill pen era - where is the Barrister App for my Iphone (with Mr Loophole and Legal Aid options). No-one designs aircraft or anything much by hand nowadays - too untrustworthy - so why make laws by hand? An automated anti-loophole checker would seem a handy thing to start with. Where is the Linus Torvalds of the legal world?

Dave said...

Quote - No new technology undeveloped?

No new cheaper energy sources untapped?

Unquote

New technology? Most technology needs a market and it can't be easy to think what people need - or even THINK they need (portable GPS being a good example of something no-one 'needs' but have been sold en-masse). But the customers need free cash resources to purchase non-essential technological inventions and who has 'spare cash' these days. We're being denied the ability to have spare cash due to ever-rising costs.

As for energy - it's there and it's currently untapped. Even if they DO drill it out (fracked gas of course) we are unlikely to get it cheaply. We will be denied cheap energy.

Clearly the possible escape routes for the economy and population as a whole are being shut down - but WHY? I can think of no other reason that a deliberate act to instigate.... what? War?

Anonymous said...

Some more financial Armageddon here....

http://info.moneyweek.com/urgent-bulletins/the-end-of-britain/?infinity=gaw~DISPL%2BSPCFC%2BThe%20End%20Of%20Britain~DISPL%2BSPCFC%2BThe%20End%20Of%20Britain%2BPL%20guardian.co.uk%2BKW%20%20Debt%2BTXT~20304508029~placement:www.seattlepi.com~c&gclid=CJucxuX0vrcCFajKtAodyxQAhQ

Anonymous said...

There's no such thing as cheap energy. The US has cheap gas at the moment, but at the price of actually paying less for the gas than it costs to extract. Leading, in the end, to less exploration. The government has already stated that cheap energy is not the way it will go, it will tax the price high and offer preferential taxes for export.
Given that the UK is sitting on arguably the deepest shale deposits yet known.
As for the rest; The root of the UK debt is not government debt, it is private debt. Private debt dwarfs government debt by many times, slightly over one trillion compared to more than twenty trillion in private debt. And that does not include minor things like exposure to derivatives, which seems to be, worldwide, something like a few hundred trillion dollars, of which London holds 40%...
I'm rather afraid that the coming crash will be comparable to a worldwide plague in scale, leading to global war.

view from the platform said...

Agree with Dave and Anon - "cheap energy", "technology " and all the cornucopian bullshit that gets spouted is infantile and wrong. Accepts it, it aint gonna happen - prepare for the worst hope for the best. I with the darker scenarios of Tim Morgan @Tullet Prebon when it comes to energy.