The delusion of perpetual growth
It was not uncommon amongst certain sections of Chinese society, even into the early 20th century, to bind women’s feet. This barbaric practice was not an attempt to hobble women but was seen as a treatment to aid the development of ‘beautiful’ feet. Not only did it fail in its primary objective it ensured that millions of young women were maimed for life, both physically and mentally. It was a practice that did not have good intentions to begin with and garnered to itself less noble intentions even as it fell from favour.
To grow, all things need space. If space is limited so too, eventually, must be growth. And where space is finite logic demands that growth too be finite.
This week’s news reported that a leading UK supermarket chain had achieved growth of 4.6% only to see their share price drift down to end markedly lower on the day. A company that takes nearly £2 of every retailing £10 spent in the UK was only a ‘hold’ according to investors and finance professionals the world over. This despite the fact that the retailer has revenues of £25.6 billion, has shown improvements across the board; foods, non-foods and clothing plus an array of improvements in areas such as online and distribution. The company, a stalwart of the FTSE 250, is a company that is in remarkably good health and is holding its own against stiff competition and a pernicious economic recession.
So why the cautious ‘hold’ note and the softening of the share price?
Because our global financial institutions see growth as the core measure of all commercial activity. They cannot, are structurally and culturally incapable of, seeing quality as a bench mark for the success of a company. These institutions are staffed by highly intelligent, perceptive and skilled individuals who make decisions involving many millions of £s every day of their working lives. So why the myopia regarding growth above all else?
To fuel growth requires countries and companies to borrow, to enter into debt obligations that in themselves fuel income for the financial institutions. Debt is central to finance in today’s economic environment. It is enshrined by taxation policy, currency manipulation and insurance legislation. Debt is control. To own the debt of a company or a country or an individual is to have the ability to be puppet master to that entity. Forget rolling the tanks upon the lawn of Government House, seize the debt and the benefits of a coup can be had on the cheap.
The debts involved cannot be paid off, are not meant to be paid off, they are simply a mechanism through which to exert control. And it is this deception that is at the heart of the enduring pressure on companies, countries and individuals to see their ‘revenues‘ grow.
The IPCC report Climate Change 2021 published this week makes clear that change needs to happen now if the world is to avert a catastrophic environmental chain-reaction that will destroy eco-systems, countries and lives. And yet The UK government lead on the forthcoming UN Environment Conference - COP26 - claimed that if the world gets its response right to the environment challenges “…we can have economic growth…”. (Observer, August 2021)
It is that delusion that will ensure that COP26 is a political pantomime with targets set, budgets allocated, goals communicated and the long-grass called into play as always. The need to create debt will over-ride all else and our politicians will play fast and loose with the facts whilst the existential impacts of unceasing climate change will loom ever larger on our horizon.
But it need not be this way.
The world’s leading free-market economies are experiencing extended periods of low inflation. The United States has a forecast inflation rate for 2021-2022 of less than 3%. And US businesses are rebounding well following the impact of the present pandemic. Across the EU and UK the picture is similar. Global interest rates are at an all-time low; UK banks are offering mortgages at less than 1%. Our economies are saturated in cash. Apple inc. has billions of dollars it has no immediate use for!
And yet 10% of the world’s population go hungry every day. While more than one-fifth of the world's population lives on less than one dollar a day. (World Bank 2019)
The steps needed to tackle the challenges of climate change are the same as those needed to tackle the challenges of inequity in the world’s economy: debt write off, a pursuit of quality over growth, and investment by governments and corporations in local, people focused economies.
- Debt write-off will remove the deplorable spectacle of poor countries paying rich countries more in interest payments that they invest in education & health. Debt repayments that involve interest rates at 10-15% when western governments can issue 10 year bonds with less than 0% yields.
- Pursuing quality, where products are manufactured with a high degree of repairability, replaceability and reusability will reduce waste, energy use and, through recycling of materials such as aluminium and rare-earth minerals will reduce the impact of environmentally degrading mining in evolving countries.
- Investing in local economies; building capacity and capabilities in new territories will reduce levels of poverty, improve job opportunities and educational standards and improve the economic performance of developing countries.
Simple steps. But they will require politicians around the world to adapt to a new paradigm for our world’s future; we all thrive or none will survive.
It’s time to call a holt to the endless pursuit of growth across much of the western world and hold out a helping hand to those more in need. It’s time we tore down the borders that we have created, that separate the rich from the poor, and collectively work to build a more equitable world.
The benefits of doing so are far more reaching than simply delivering a sense of doing the right thing. A more equitable global population will be a more stable population; less given to territorial land-grabs that lead to powerlessness, poverty and the all too often resulting migration.
With economies focusing on quality rather than quantity new technologies will be developed that will help combat the dire impact that 20th century mankind has had on the planet. New technologies may also deliver new ideas on how we can continue to live on a finite planet with our infinite needs.
The first step is for our politicians to see endless economic growth for what it really is: a delusion devoid of logic.