The flawed economic model.

[joe-90]

All we ever here about is 'growth' in the economy, or the flip-side of 'recession'.

The point is, that the notion of eternal growth is just plain silly.

Everyone knows that if you build a building too big it will crumble at the base and collapse.

Everyone who has ever made a snowball as a kid knows that it gets to a certain size and then collapses.

The economy is no different.

To achieve endless growth you need endless raw materials and endless additions to the workforce - but that means an endlessly burgeoning infrastructure too, such as housing, roads, healthcare etc.

We've reached the point in the Western world where we are in danger of collapse.

So, scrap the silly notion of 'growth' and move to a steady state economy which gets no bigger and no smaller. Growth and recession are effects of a flawed economic model - and both of them are undesirable.

At least in the UK, as the UK is full up.

 

[TheDec]

Joe,

I could not agree more.

Dec

 

[Brigadier]

We're not there yet, Joe.
Look at all of the idleness around us - the scratters, the people at work tossing it off on their smartphones. All of that (if actually used) would be "growth".
Ultimately though, endless growth is not achievable. But it is so far off that it might as well be.

 

[ladylola]

Totally agree Joe , this growth is nothing more than an increase in greed.
There is no reason for example why costs actually have to increase at all, for example a table's real value as a place to work or eat is the same now as it was a hundred years ago but the price is vastly different. It's all a butterfly effect someone thinks he can charge more for the wood to make that table which makes the joiner charge more for the table which makes the shop charge more which makes the customer charge more for whatever services he provides until down the line the timber supplier is being charged more for his loaf of bread and so cheages more for his wood and on and on , and we have growth

 

[^woody^]

I've had the same thoughts about perpetual growth, but thinking about it, on a national level then annual growth may be achievable as it can rely on certain sectors performing better than others - ie a few years of manufacturing growth, and then less manufacturing growth but more service industry growth etc.

So effectively growth can transfer to various sectors, with industries waxing and waning

But I agree that our economic model is pants. And this could even extend to the capitalist model too

 

[Nige F]

But I agree that our economic model is pants. And this could even extend to the capitalist model too

Never And what is the option - all voluntarily devalue our houses Long live the Free Market Economy and trickle down of £

 

[joe-90]

If that idiot Scot hadn't removed the cap on mortgages linked to income we wouldn't need to. House prices would still be at 2.5 times salary. If house prices come down now half the population would be in negative equity.

 

[alumni]

With many people/companies still saddled with debt an upturn in the economy is going to be some way off yet.

With people now trying to pay off their debts rather than spend on luxuries - or what they perceive to be - this impacts further on the economy and output thus weakening the position of companies further. People then become more worried about their positions so become more cautious with regard to spendiing. Net result, a static to shrinking economy. Not such a bad thing if it does actually reduce the collective debt of the nation but we can't have growth and sensible spending.

 

[joe-90]

We still borrow tens of billions every month. When are we going to pay it back if we can't even slow the borrowing down? Britain is bust. Fact.

 

[Whitespirit66]

We're not there yet, Joe.
Look at all of the idleness around us - the scratters, the people at work tossing it off on their smartphones. All of that (if actually used) would be "growth".

I disagree. Maybe millions of underemployed people is a direct result of us being 'there'. We can't grow more, but our population is still multiplying.

In the 50s when we were the workshop of the world, and exported everywhere, there were real jobs for everyone. Very few idlers. Same with the States.

Now, we are a spent force, and other economies are growing and leaving us behind, we have lots of spare labour. Just utilising labour doesn't necessarily mean economic growth. That's what went on in the Soviet Union, lots of people employed, but a hopeless economy.

 

[joe-90]

Spot on.

 

[TheDec]

I'm with joe,

Spot on!!!

Dec

 

[ladylola]

I suppose I;ll be the first to say it then, if our own economic system is deeply flawed and Russia's experiment was a failure (actually I don't fully hold to that -sanctions and a non negotiable currency would serverly hamper any ecomony)then there should be a better option?
And of course there is if we admit it-
Something like the Chinese model a sort of state capitalism which has given them a strong economy.

 

[cantaloup63]

So what then is the solution?

Ladylola seems to be suggesting some form of protectionist capitalism or monetarism (I really don't fully know what these words full mean so forgive my naivety ), but isn't it capitalism itself that is the flaw since IMO it requires "expansion" in order for it to function. Which requires the pyramid which joe points out is flawed.

 

[ladylola]

Not quite protectionist capitalism .
The Chinese model can only work when it has purely capitalist economys it can exploit, hence Chinese inroads into europe and the states.
I still think that communism is a better system at least in theory but unfortunately it's almost impossible for it to work up against the capitailist west.
So what is the solution?
Good one that , maybe genetic engineering to breed out greed from the human race would be a starting point.