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The one fundamental reason why growth is so important is that without growth, the economy becomes a zero sum game. In order for you to get more money you must t

The one fundamental reason why growth is so important is that without growth, the economy becomes a zero sum game. In order for you to get more money you must take it from someone else since there is only a fixed amount. A low growth world is one where we plunder each others' wealth, not one were the incentives are aligned with building new industry. That's why productivity increases are so important. Without them, if we want growth, we have to get it from positive sum games. I'm skeptical that will provide enough to stop people from reverting to a more Malthusian plunder mindset. Any vision of a non-growth world needs to take that into account. Without growth we'd have to fundamentally rethink how we handle distribution without reverting to bloodsport.

bilekas 7y ago
Does what you're saying imply that growth can be perpetual ?
- weeksie 7y ago
  You still need energy inputs, so I'm not sure it does.
- thegabriele 7y ago
  It should last until we get to strong AI or fusion energy, both i believe will have too much an impact to be again in the hands of the fews (perhaps a global war will be in order before). Then, the problem will be about literally physical space on earth.
  - baq 7y ago
    don't forget about waste heat, we'll get cooked alive in a few hundred years of 3% yoy growth in energy produced
    - thegabriele 7y ago
      Yep, the constraint here is not to wipe out ourself in the meantime!
    - dwaltrip 7y ago
      Yeah. To achieve 3% growth per year for several hundred years we have to expand beyond Earth. Beyond a few hundred years, it starts getting more difficult. I wonder how much waste heat Mars or other large bodies could absorb. Or what is the largest possible radiator we could build in space... Some fun facts I calculated while thinking about this: * 3% growth for 100 years is 20x * 3% growth for 300 years is 7,000x * 3% growth for 1,000 years is 7,000,000,000,000x
- tryptophan 7y ago
  It only needs to hold up for the next 100-500 years. No need to talk about perpetuity.
jdkee 7y ago
1. If you look at the productivity gains in the U.S. over the past 50 years, the vast majority of the gains have been captured by a very small subset of the population. 2. A zero sum game in terms of the distribution of money is not the same as a similar distribution of wealth.
- weeksie 7y ago
  Neither of those points are relevant to the larger one.
  - JMTQp8lwXL 7y ago
    The first point directly contradicts your main argument; that without growth, economics is zero-sum. We have growth, yet none of that growth is captured by middle income people. The growth (and wealth) is being plundered.
    - mech1234 7y ago
      It's false that none of the growth is being captured by middle income people. It is being captured to a greater extent by the very top of the income distribution and by the global poor, but income is growing across the board. Real median wages and household income in the U.S. are higher than they've ever been. This is all despite the increased international competition typified by globalization trends and detailed by the Elephant Curve. https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q https://milescorak.com/2016/05/18/the-winners-and-losers-of-globalization-branko-milanovics-new-book-on-inequality-answers-two-important-questions/ https://milescorak.com/2016/05/18/the-winners-and-losers-of-...
      - JMTQp8lwXL 7y ago
        Your second link proves that middle income people are getting virtually none of the growth; at best, scraps. The difference between "none" and "effectively none" isn't a mischaracterization on my part. I will clarify by "middle income" I meant the American middle class, and not the global median.
Mvandenbergh 7y ago
In fact, in the pre-modern world there were large spans of space and time where growth was so slow as to be invisible within a person's lifetime and people did think of wealth as being zero-sum. To a feudal lord, land = wealth and being wealthier was about having more land. Someone already had all the land, so the only way of getting more was taking someone else's.
cjfd 7y ago
This is incorrect. If GDP is constant it means that every year the same amount of goods is produced. There can be a new industry in this case. It just means that another industry needs to get smaller. The workers in the other industry can move to the new one and no one is worse for the wear. GDP is the derivative of the amount of goods and not the amount of goods.
- duxut_staglatz 7y ago
  So if 1. the same amount of goods and services is produced and 2. you get more goods and/or services this year than last year, this means than 3. someone else must have less goods or services this year. I do not follow where this was incorrect.
  - cjfd 7y ago
    Well, this response sounds a bit more measured than what you originally wrote but it is still seems a bit weird. For one thing, sometimes people consume less just because they do not need as much in a particular year. E.g., a person might buy a new car every ten years. Is he poorer in the nine years that he did not buy a car than in the one year that he did? That the amount that a person consumes may fluctuate is not very important nor should anyone start panicking about it nor as a signal that it is necessary to go into some fierce kind of competition.
    - duxut_staglatz 7y ago
      Durable goods obfuscate the issue, but let's take your example. Let's say I want to have both an all-terrain car for the weekend and my regular car on the weekdays. I now consume two new cars very ten years instead of one. The same number of car has been produced in those ten years (no growth). Where does my extra car come from?
      - cjfd 7y ago
        Let us tell a bit of a story. You bought your two cars because your all-terrain car hobby is very important to you. This was a bit of a financial squeeze and you could not go on holidays as often as you liked. But since the car hobby is more important to you, you think you made the right decision and are happy about it. There is another person who thinks going on holiday is the greatest thing ever. He went on holidays five times last year. This was a bit costly but he decided he did not need a car that badly and could use public transport instead. This was a bit less comfortable but he thought the great experience of going on holidays five times was well worth the inconvenience. So, where did your car come from? It did come from the other person who did not buy a car but went on holidays instead. But both of you were happy with your decisions. No crisis situation or fierce competition is needed in situations where not everybody gets what they want. In fact, both persons might choose to forego a promotion that was offered to them and which would have contributed to economic growth because it would leave the one person with too little time for his car hobby and the other with too little time for this travels.
pif 7y ago
As bilekas was saying, the one fundamental reason why growth must not be so important is that it cannot continue ad infinitum, thus we will have to learn and cope with that. While you state an important point, the issue of growth having to stop (sooner or later) cannot be ignored.
- anchpop 7y ago
  Why can't it be ignored? I think we're very far away from the point where growth is impossible. We haven't even left Earth yet. Imagine the amount of wealth you could create with a moon-based space elevator.
- SkyMarshal 7y ago
  Growth may eventually stop if humans remain constrained to Earth, but if we can advance to a point where we can mine the Asteroid belt between Mars and Jupiter, the wealth influx from that will be enough to sustain growth in human society far into the future.
- Kaiyou 7y ago
  The universe is for all intends and purposes infinite. Why shouldn't infinite growth be possible?
xenocyon 7y ago
Your argument establishes that a free lunch is desirable, not that a free lunch is feasible. There is a very good essay I came across relating a discussion between a physicist and an economist on the question of neverending economic growth: https://dothemath.ucsd.edu/2012/04/economist-meets-physicist/ https://dothemath.ucsd.edu/2012/04/economist-meets-physicist... It's worth reading in its entirety regardless of which side one stands on.
duxut_staglatz 7y ago
This is especially at the world stage. In a zero-sum economy, either some countries are left in an awful state of poverty for ever (no growth, same distribution of income) or people from rich countries must significantly decrease their consumption (no growth, equalization of income). For reference, the average world GDP is about US$17,300. At the OECD tax-to-GDP average rate, about $6000 would be spent through public institutions (i.e. taxes and public services). So that leaves about $11500 for both consumption and maintaining the capital stock. The consumption of fixed capital is about 15% of GDP per year, so that leaves about $9775 a year, or $815 per month to consume stuff.

bilekas 7y ago

Does what you're saying imply that growth can be perpetual ?

weeksie 7y ago
You still need energy inputs, so I'm not sure it does.
thegabriele 7y ago
It should last until we get to strong AI or fusion energy, both i believe will have too much an impact to be again in the hands of the fews (perhaps a global war will be in order before). Then, the problem will be about literally physical space on earth.
- baq 7y ago
  don't forget about waste heat, we'll get cooked alive in a few hundred years of 3% yoy growth in energy produced
  - thegabriele 7y ago
    Yep, the constraint here is not to wipe out ourself in the meantime!
  - dwaltrip 7y ago
    Yeah. To achieve 3% growth per year for several hundred years we have to expand beyond Earth. Beyond a few hundred years, it starts getting more difficult. I wonder how much waste heat Mars or other large bodies could absorb. Or what is the largest possible radiator we could build in space... Some fun facts I calculated while thinking about this: * 3% growth for 100 years is 20x * 3% growth for 300 years is 7,000x * 3% growth for 1,000 years is 7,000,000,000,000x
tryptophan 7y ago
It only needs to hold up for the next 100-500 years. No need to talk about perpetuity.

jdkee 7y ago

1. If you look at the productivity gains in the U.S. over the past 50 years, the vast majority of the gains have been captured by a very small subset of the population. 2. A zero sum game in terms of the distribution of money is not the same as a similar distribution of wealth.

weeksie 7y ago
Neither of those points are relevant to the larger one.
- JMTQp8lwXL 7y ago
  The first point directly contradicts your main argument; that without growth, economics is zero-sum. We have growth, yet none of that growth is captured by middle income people. The growth (and wealth) is being plundered.
  - mech1234 7y ago
    It's false that none of the growth is being captured by middle income people. It is being captured to a greater extent by the very top of the income distribution and by the global poor, but income is growing across the board. Real median wages and household income in the U.S. are higher than they've ever been. This is all despite the increased international competition typified by globalization trends and detailed by the Elephant Curve. https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q https://milescorak.com/2016/05/18/the-winners-and-losers-of-globalization-branko-milanovics-new-book-on-inequality-answers-two-important-questions/ https://milescorak.com/2016/05/18/the-winners-and-losers-of-...
    - JMTQp8lwXL 7y ago
      Your second link proves that middle income people are getting virtually none of the growth; at best, scraps. The difference between "none" and "effectively none" isn't a mischaracterization on my part. I will clarify by "middle income" I meant the American middle class, and not the global median.

Mvandenbergh 7y ago

In fact, in the pre-modern world there were large spans of space and time where growth was so slow as to be invisible within a person's lifetime and people did think of wealth as being zero-sum. To a feudal lord, land = wealth and being wealthier was about having more land. Someone already had all the land, so the only way of getting more was taking someone else's.

cjfd 7y ago

This is incorrect. If GDP is constant it means that every year the same amount of goods is produced. There can be a new industry in this case. It just means that another industry needs to get smaller. The workers in the other industry can move to the new one and no one is worse for the wear. GDP is the derivative of the amount of goods and not the amount of goods.

duxut_staglatz 7y ago
So if 1. the same amount of goods and services is produced and 2. you get more goods and/or services this year than last year, this means than 3. someone else must have less goods or services this year. I do not follow where this was incorrect.
- cjfd 7y ago
  Well, this response sounds a bit more measured than what you originally wrote but it is still seems a bit weird. For one thing, sometimes people consume less just because they do not need as much in a particular year. E.g., a person might buy a new car every ten years. Is he poorer in the nine years that he did not buy a car than in the one year that he did? That the amount that a person consumes may fluctuate is not very important nor should anyone start panicking about it nor as a signal that it is necessary to go into some fierce kind of competition.
  - duxut_staglatz 7y ago
    Durable goods obfuscate the issue, but let's take your example. Let's say I want to have both an all-terrain car for the weekend and my regular car on the weekdays. I now consume two new cars very ten years instead of one. The same number of car has been produced in those ten years (no growth). Where does my extra car come from?
    - cjfd 7y ago
      Let us tell a bit of a story. You bought your two cars because your all-terrain car hobby is very important to you. This was a bit of a financial squeeze and you could not go on holidays as often as you liked. But since the car hobby is more important to you, you think you made the right decision and are happy about it. There is another person who thinks going on holiday is the greatest thing ever. He went on holidays five times last year. This was a bit costly but he decided he did not need a car that badly and could use public transport instead. This was a bit less comfortable but he thought the great experience of going on holidays five times was well worth the inconvenience. So, where did your car come from? It did come from the other person who did not buy a car but went on holidays instead. But both of you were happy with your decisions. No crisis situation or fierce competition is needed in situations where not everybody gets what they want. In fact, both persons might choose to forego a promotion that was offered to them and which would have contributed to economic growth because it would leave the one person with too little time for his car hobby and the other with too little time for this travels.

pif 7y ago

As bilekas was saying, the one fundamental reason why growth must not be so important is that it cannot continue ad infinitum, thus we will have to learn and cope with that. While you state an important point, the issue of growth having to stop (sooner or later) cannot be ignored.

anchpop 7y ago
Why can't it be ignored? I think we're very far away from the point where growth is impossible. We haven't even left Earth yet. Imagine the amount of wealth you could create with a moon-based space elevator.
SkyMarshal 7y ago
Growth may eventually stop if humans remain constrained to Earth, but if we can advance to a point where we can mine the Asteroid belt between Mars and Jupiter, the wealth influx from that will be enough to sustain growth in human society far into the future.
Kaiyou 7y ago
The universe is for all intends and purposes infinite. Why shouldn't infinite growth be possible?

xenocyon 7y ago

Your argument establishes that a free lunch is desirable, not that a free lunch is feasible. There is a very good essay I came across relating a discussion between a physicist and an economist on the question of neverending economic growth: https://dothemath.ucsd.edu/2012/04/economist-meets-physicist/ https://dothemath.ucsd.edu/2012/04/economist-meets-physicist... It's worth reading in its entirety regardless of which side one stands on.

duxut_staglatz 7y ago

This is especially at the world stage. In a zero-sum economy, either some countries are left in an awful state of poverty for ever (no growth, same distribution of income) or people from rich countries must significantly decrease their consumption (no growth, equalization of income). For reference, the average world GDP is about US$17,300. At the OECD tax-to-GDP average rate, about $6000 would be spent through public institutions (i.e. taxes and public services). So that leaves about $11500 for both consumption and maintaining the capital stock. The consumption of fixed capital is about 15% of GDP per year, so that leaves about $9775 a year, or $815 per month to consume stuff.