Saturday, October 16, 2010

Zero Growth

Yesterday I read a article from Utne magazine that said there are more economist coming out to state that the world must stop thinking in growth the only way the economy can be sustained. It argued that instead there are economist out there who believe in Zero Growth as the future of the worlds economy.

What is Zero Growth?

It is simply the ideal that there are only so many of anything you can utilize or use and overproduce of any one item results in wasted resources which leads to environmental suicide for us by using up our resources and polluting the world we live in.

It went on to say that zero growth while scary and new sounding really is not. that even Adam Smith the father of Capitalism said that eventually you would hit this wall where growth would stop. So where did this ideal of the only way for the economy to be sustained is by increased production? They said the concept came from big business in the 19th century and was propagated by government economic pundits.

Wait a minute if this is so then why do I recalled in my high school social studies class and then later in my college economic and history class the statement both read and lectured on that there is only so many of any one thing can be produced before you reach market saturation and the resulting saturation of that market leads to market failure or stagnation.

The ideal is then if you build refrigerators without concern as to what the market can bear then sooner or later the refrigerators you are building becomes so much clutter in the warehouse. That leads to factory producing said refrigerators slowing down or shutting down (layoffs) which leads to less ability across the economic scale to buy said refrigerators which leads to a recession or worse depression. This over production was what lead to the depression of 1929

Does this ideal sound familiar. Think the recent building boom in Mac Mansion driven by uncontrolled mortgage brokers and suddenly you see why there are so many foreclosure of Mac Mansions and subsequently the failure of our finical institutions. The key word here is speculation, another way of saying gambling.

The economic theory of Zero Growth has to do with the ideal of producing only what you need and nothing more. This they say will lead to at first to layoffs and shortfalls but with adjustment and doing what FDR in 1933 had proposed but was shot down by wall street and that is instituting a 4 day work week we will see actual drop of unemployment to the 4% acknowledge to be expected.

Of course this is extremely simplified view of Zero Growth but if you add to that a more progressive income tax, and yes I am talking about increasing the tax burden across the board but more so on the ultra-rich. Then what you eventually see is a more balanced economy of employment, resources and environment. One proponent of this concept went on to say if we initiated this theory that the economic models indicate that the 4% unemployment could be reached by 2020 and the Kyoto agreement on the environment met as well while increasing social services.

From Wikipida I found this definition and leads to the model used and other sources.

Interesting thought isn't. Might just be worth our urging our leaders to study and act responsibly if not elect someone who will.

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