Chris Croft's Personal Blog

June 2, 2012

Planning for zero growth

Filed under: Managing People, News and Politics — Tags: , , , , — chriscroft @ 4:22 pm
Thanks to Mike for starting me along this path of thinking and reading….

Mathematics tells us that if something (e.g. the UK economy, or the world economy, and therefore the world’s use of oil) grows at 7% per year then it will double every 10 years.

The world’s use of oil has actually been doing this for many decades now, so it’s no wonder we are using up more oil than we are discovering. Reserves are maybe 50 years but if we keep doubling then they are only 20 or less. And we’re not going to discover double, or even the same amount each decade as we have done. Nothing major has been found since the north sea back in the 1970s. (and oil s important for more than just cars – it makes fertilisers which feed most of the world….)

If something grows by only 3 or 4 % then it doubles every 20 years – still an unsustainable rate!

If only the developed world has growth then it’s great for us because as a percentage of the world it’s small, and we can flog more and more to the underdeveloped world – but now that China India Brazil and Russia are booming as well we can’t all grow. We will run out of space, houses, greenery, fuel, roads, metals, water, things to pollute, etc. You may have noticed that a lot of this has already started…..

So we HAVE to discover a way to live with zero growth, and soon. Especially we in the developed world, since we are ahead of the curve and the others are going to carry on growing whether we like it or not.

What would zero growth be like? We currently think of it as teetering on a recession, but why is it so bad? Companies won’t grow but can still make a profit. In fact they will grow if they are better than their competitors or in a growing segment. Other segments will be contracting – but that’s life, and happens even when there is growth.

The stock market will have to get used to companies staying the same size. People will have to get used to their houses not increasing in value. We won’t have to keep spending money on new roads, hospitals etc.

All this would be fine if it wasn’t for one thing – people are living longer and the population is on average getting older. Who will look after them? At the moment we make more children, and we let immigration happen, (deliberate incompetence by the government?) so that we get enough younger people to do the work. But with zero growth we would have to find a way to keep things going with the people we’ve got. Maybe working until an older age, combined with great efficiency, and living off a smaller pension, will be how it has to be?

Pensions will have to be smaller because pensions are usually not a pot of money you have saved, but are taken from those still working and paying tax – a dwindling part of the population.

Could the economy cope with not growing? It’s going to have to, and I can’t see why not.

Thoughts anyone?

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2 Comments »

  1. Aaaaah now we see the spaces!

    Comment by Martin Herrington — June 2, 2012 @ 8:56 pm


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