Growth Beyond Limits Is Not A Policy Choice, It Is A System Requirement.pdf

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  • 8/10/2019 Growth Beyond Limits Is Not A Policy Choice, It Is A System Requirement.pdf

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    Growth beyond limits is

    not a policy choice,it is a system requirement

    Article by

    Lewis: Verduyn-Cassels

    June 25, 2013

    Clutha River ForumPO Box 124, Lake Wanaka 9343, New Zealand

    [email protected]

    DISCLAIMER:Analysis not intended to represent the views of all forum members

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    The idea that we should pursue economic growth beyond the carrying

    capacity of our finite Earth is obviously irrational, if not insane. But that isexactly what policymakers are doing. Why?

    You may believe that pursuing ever more Gross Domestic Product (GDP) year afteryear, counting all economic activity as gain, despite the environmental and societalcosts, is pointless, immoral, and ultimately suicidal.

    And you may despair that governments around the world often ignore heartfeltprotests and petitions to save our !arth so that present and future generations mayhave a life worth living.

    "t is only logical to say Lets stop focusing on growth because perpetual growth isdestroying the ecosystems that support life on our finite Earth. #ut when it comes tothe limits to growth,$governments are not logical.

    What do policymakers mean by economic growth?!

    %here is a critical difference between quantitative growththat e&pands resource

    e&traction and material consumption, and qualitative developmentthat improvesefficiency and reduces environmental and social impacts.'

    Growth is more of the same stuff; development is the same amount of better stuff orat least different stuff!. erman Daly

    Politicians routinely cite the need to grow productivity to generate more *obs. %hisusually involves more industry, more e&ports, more highways, more houses, moreconsumption of everything that adds to GDP.

    %he fiscal need to grow GDP is never ending, so economic policies are primarily aboute&pansion and intensification. !ven when innovation is encouraged, it is often toenable more profitable e&ploitation of shrin+ing resources.

    any people suppose that quantitative growth " the production of more stuff, isnecessary because of population growth, ma+ing quantitative growth the inevitabledefault policy setting for economies.

    "s #$% growth needed to keep pace with population growth?

    %his seems plausible, because more people create more demand, but the answer is no.

    According to - data, almost all developed nations are reproducing at belowreplacement level. !urope as a whole has had a declining birth rate for over /0 years.!very country in the !uropean -nion, as well as 1anada, 2apan and 1hina, now has anannual birth rate below the '.$ children per woman replacement rate.3

    Germany is at $./'4 5rance, '.064 7pain, $./64 "taly, $./$4 Greece, $./04 Portugal,$.8$4 and 1yprus, $./94 while the -.:. is at $.;0, boosted by immigrant parents.

    %he -nited 7tates, at '.09, also has a birth rate below the replacement level. Australiais $.

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    #irth rates decline in developing nations as living standards improve, with morehealthcare, contraception, education, women?s rights, financial security, and so on.Death rates also decline, causing a net increase in population prior to falling.

    #he population will pea$ in %&'& at (.) billion people* and then start to decline andcontinue declining throughout the second half of this century. 2orgen @anders,'08' A Global 5orecast 5or %he e&t 5orty Years ('0$')9

    Why do countries with declining populations need growth?

    As a rule, governments, regardless of birth rates, are committed to policies thatpromote quantitative growthand consumption.

    !uropean -nion member nations, the -nited 7tates, and 2apan, all have stable ordeclining populations, and yet policyma+ers in these countries are desperatelyattempting to revive growth in their stagnating economies.

    aving a falling birth rate impedes economic growth. An ageing population with feweryoung people means less demand, less consumption, less ta&, and less GDP.

    "t seems perverse that despite global population overshoot, many governments nowoffer incentives for couples to have children,

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    abundant fossil energy and e&panding consumer demand, have been declining fordecades. %he preconditions have changed, but the growthE policy has not.

    Although neoliberals have found new ways to boost corporategrowth, by promotingtrade deals that allow better access to foreign wealth, and by easing internationalcapital flows, this has only fasttrac+ed environmental decline and sovereign debt.

    5inancial deregulation vastly increased debt by allowing runaway gambling in realestate mar+ets and a plethora of derivative instruments, prior to the '006 crash.

    (7ee graphic for correlation between -7 debt to GDP and related policies.)

    The pursuit of #$% to settle debt is futile and destructive

    7o we *ust need to grow more GDP, rightJ Irong, because total global debt hasalready e&ceeded global GDP (about H63 trillion in '0$'), many times over.$

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    Designed in the late $;/0s to gauge the military capability of economies, GDP ma+esno distinction between good and bad outcomes.''"n terms of growing GDP, evenweapons sales and wars can be effective strategies.

    "n many ways, GDP is an indicator of Greed, ,estruction, and -ollution.

    Why does the debt&money system re'uire endless growth?

    Fnly about 3B of a nation?s money is created by the government, as notes and coins.%he rest is created digitally by private ban+s, out of nothing, when they issue loans.E#an+s do notlend reserves or customer deposits.

    /hen ban$s e0tend loans to their customers* they create money by crediting theircustomers1 accounts. ervyn :ing, Governor of #an+ of !ngland ('0$')

    %he private debtmoney system has three fatal defects

    5irstly, the interest mechanism systemically transfers wealth upward, increasinglyenriching the minority at the e&pense of the impoverished ma*ority.

    7econdly, the ban+s create about ;

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    Ci+e deadly Pied Pipers, the growth *un+ies are leading us to destruction.

    %he conundrum of neoclassical economics is that the debtmoney system only has twomodes of operation, growth and collapse, usually referred to as boom and bust.

    %he first mode, growth, depends on ever more people producing and consuming evermore stuff. %he second mode is the failure of the first.

    "n the present debtmoney system, policyma+ers have no option but to pursue growth.#asically, their toolbo& allows them to either shrin$ ore0pandthe debtmoney supply.

    Ihich suicide policy do you prefer public austerity or private stimulusJ

    (usterity shrinks the spending power of the peopleGovernment austerity policies involve cutbac+s on spending and borrowing. %hisreduces the money supply circulating in the economy, which reduces the demand forgoods and services, which reduces employment. Poverty increases along with thedemand for social services. 1ommodity prices wea+en as consumption declines, and

    even large businesses become vulnerable.

    A shrin+ing money supply deflates the economy, leading to defaults, foreclosures,ban+ruptcies, unemployment, depression, and, historically, social unrest and war.

    obel priKewinning economist 2oseph 7tiglitK recently described !uropean -nionausterity plans as a suicide pactE.30

    Cess obvious, is that neoliberals are using austerity to force down wages, strengthencorporate power, and launch a second wave of privatisation through public asset firesales. Privatisation is a core reuirement of austerity plans.3$3'

    eoliberal governments, committed to e&panding the private sector, are selling offpublic assets at bargain rates, and further opening up their economies to e&ploitationby transnationals in e&change for a debtor?s handout, sacrificing environmentalprotections and sovereign freedoms.33

    )timulus expands the gambling power of the brokers

    Nuantitative easing(N!) is meant to stimulate growth in the economy by adding to themoney supply. 1entral ban+s create new money to buy up to&ic financial assets, suchas longterm government bonds and *un+ mortgages, from toobigtofailban+s andother private institutions.3/

    N! e&pands the liuidity of the ban+s, providing the elite managers, bondholders andbro+ers with more funds with which to speculate in shares and commodities, raisingtheir stoc+ portfolios. %he N! is base moneyE added to ban+ reserves, which areloaned between ban+s, but never actually loaned to the public. %he result is a net lossof credit to the economy.38%his e&plains why H3 trillion of N! in the -nited 7tates hasnot caused hyperinflation, and why it does not benefit the government, mostbusinesses, or the people on the streets.393