Fear of recession is irrational. There is no need for continuous growth.
"(...) Beginning in the 1970s, economic growth slowed and the income gap widened. Income growth for households in the middle and lower parts of the distribution slowed sharply, while incomes at the top continued to grow strongly. The concentration of income at the very top of the distribution rose to levels last seen 90 years ago".[1]
[1]: https://www.cbpp.org/research/poverty-and-inequality/a-guide...
If we want to get enough food, shelter, and medicine for the population of the world to just not be in the brink of starvation, homelessness and death from simple diseases, we need more economic growth.
The economic output of a society is independent of the wealth distribution mechanisms. We wouldn’t magically gain all of the output we needed by just switching to socialism.
A simple example is a workforce building houses without tools and a workforce building houses with tools. The latter will have more economic output than the former and will be better for society overall, regardless of what share of the profits the workers get.
Yeah, but this is very different from saying growth is only necessary because of uneven wealth.
Not necessarily, not only is growth not bound to income disparity; once people's basic needs are meet (health care, minimum living benefits while out of job), the disparity is no longer a humanitarian issue.
More yet, what today goes to middle class in most developed and developing countries used to be the best upper class could get. There is a lot that can be done, of course, but the general state of humanity is on an upwards trend with economy.
- Neal Stephenson, Snow Crash
While it does to some degree, it's rather debunked as I understand it.
At the current rate 9$/hr on average for Africa would mean a massive increase in standard of living, so you could achieve the same goal you imply by better distribution of wealth without growth (though that has it's own problems).
What I'm trying to say is that continuous growth isn't necessary to improve standard of living.
Besides history has shown us that growth isn't continuous, rather it's cyclic with a general upward trend.
However the reality is that recessions mean a lot of suffering and uncertainty for a sizeable chunk of the population. Pretending this isn't the case is extremely bizarre.
I sometimes feel conflicted about bad economic news-- a lot of my reading materials suggest this is 'good', because it's an opportunity to buy distressed assets and make more money. Then I think about the cost to others, and I realize I'd rather not make the money and let others have an easier time of it.
People don't have to die for their lives to be miserable.
(And people on HN don't have to be so literal or pedantic, especially when analogies are used...)
Banks will only pay back a certain amount if they go bust - and it depends on the country how much that is.
Which savings? 60% of the US population has less than 1.000 $ in liquid savings per [1]. In Germany it's 33% per [2].
When the recession hits (not if but when) people are going to get fucked. The 2008 crisis wiped out what many people had and its aftermath left them unable to rebuild their savings, and social security institutions have been wrecked since neoliberalism took over - I certainly expect (food) riots once recession hits. The Yellow Vests in France are an example what a still relatively rich but angry population can do, and extrapolating from that reveals a not very nice future.
[1]: https://www.cbsnews.com/news/most-americans-couldnt-cover-a-...
[2]: https://www.focus.de/finanzen/news/finanzen_news_armut_in_de...
Secondly, the link you provided states “in the event of a catastrophe that stops the supply of food”.
Is a recession a food supply halting catastrophe?
Above posters said that 60% of Americans don't have meaningful savings. That would mean in the event that they can't afford food, more than half of America might start a revolt. (Of course depending on the size of the recession).
In a food supply halting catastrophe we’ve got problems, catastrophic problems.
A recession that hits any significant portion of the population will have political-will to find alternative outcomes, and probably won’t happen with the rapidity catastrophes are usually associated with. Eg. food aid, wealth redistribution, easy / no-interest credit, government jobs.
I’m not saying any and every political outcome won’t result in a catastrophe, but every food halting catastrophe is, by definition, a massive catastrophe.
You may have a wider point though: just in time manufacturing / delivery in the food industry means probably most of the world is a few meals away from panic.
It can very easily turn into one, look at what is happening in Venezuela or in Russia. Or what may happen with Britain and the Brexit, with the additional difficulty there that warehouses have been replaced by trucks which means that food supply is endangered in case of unplanned border controls.
I'd argue Venezuela has experienced a cascade of poor choices well beyond your average general decline in economic activity.
Do you really believe Britain is on the brink of a Brexit induced food supply halting catastrophe? I'd seriously like to believe trade relations are strong and that selling in to a 60+ million population market is a strong incentive to keep trade relations well lubricated.
Nigel Farage and his Brexit Party won the EU elections in the UK. People are talking openly about "hard Brexit", and some day the EU is going to have enough and give the UK the boot in the arse. No way the UK is going to be remotely prepared - it simply won't be possible to prepare for a hard Brexit with weeks, maybe months of border chaos. There simply is not enough warehouse capacity.
Depending on the country this will not save you. You can have it in N banks, and still get back up to a fixed X amount, because the amount is per person, not per account.
And this assumes people have "savings".
Most people outside of the 10% echo chamber live paycheck to paycheck.
https://www.cnbc.com/2019/01/09/shutdown-highlights-that-4-i...
https://money.cnn.com/2018/05/22/pf/emergency-expenses-house...
https://www.bankrate.com/banking/savings/financial-security-...
The global population is growing, correct?
So there should be at least some minimal growth to keep up with population growth, no?
Otherwise, if there is zero economic growth but a growing population, doesn't that imply increasing poverty?
As a side note, this inverted age pyramid aligns partially with a unbalanced power distribution as old people outvote younger generations and their interests by a wide margin.
Not if you rely on selling labor for the income necessary to acquire the needs of daily survival, it isn't.
Economical growth is not necessarily growth in consumption of resources. It is also a measure of getting more out of less.
I'm sorry, but nothing of what you say follows.
Yes, I would say the innovation in Japan has died out since the bubble.
Might as well say the same things for a country that still heavily relies on fossil fuels, still doesn't have high speed rail, still has shitty internet speeds, has crumbling roads and infrastructure, and still uses these horrible air-conditioning units, and wooden (!!!) houses, not to mention their mobile internet situation...
The beurocracy is insane. My guess is that the government crept in lots of it because it helps to keep the public servants employed. If you look in to the post office or local government ward office, there is always a whole army of office workers sending away faxes and stamping them, then stapling some papers. (They still use these weird stamps to sign their documents btw)
And yes, Japanese still use faxes, drive old taxis and generally you'll see a lot of antiqued technology that still works, but I think that's kind of charming. I especially enjoy seeing some of the old narrow guagae trains still chugging along the country side from time to time (in stark contrast to the shinkansen). Also exiting to see laser disks / VCRs / minidisks when visiting Japanese houses. Just the other day I seen an automated piano controlled by a device which seemed to be reading the data from a 3.5 inch floppy! Sometimes I can spot the odd CRT display still happily flickering, including the old vintage arcade games... The bowling alley down the block still uses what seems to be a DOS based system to manage their displays & business. Visiting a hospital is sometimes like visiting a museum... Oh, btw, got to fly in a Boeing 767 on a domestic route a few months ago, that was a pleasant surprise as I haven't been on one in years!
I've been to Mississippi, Alabama, South Dakota, Michigan, and lots of other states, and it's probably much worse there.
There was plenty of innovation, new methods, product launches and new companies during the great Depression, even in the peak year of decline, and in all countries affected.
GDP and GDP growth is a decidedly modern invention anyway.
The Great Depression would have been a better example to use because even real GDP declined drastically.
That's not a problem. We already have too much shit for the good of the planet and for the good of our sanity. We should focus on quality, not innovation of more gadgetry.
Considering diseases for example, we could save hundreds of millions with spreading existing drugs and techniques, and give many years or longevity to billions with access to water and food and vaccines, etc, than what we'll "might" do with some (diminishing returns) cutting edge drug research.
We know how to cure lots of diseases people all over the world suffer from, and we don't do it. It takes a lot of hypocrisy to say we need more "growth" and "innovation" to help them.
Also, you can't stop human curiosity and the drive to improve and compete. There has always been progress in arts, science and technology throughout history, no matter what political or theological system reigned at that time.
I find the world worse than 30 years ago, so I'm doubtful about this "true progress". Our progress is just moving along without a clear goal.
>Also, you can't stop human curiosity and the drive to improve and compete.
You can cut off the economic motives for those things, which turn them from a human thing into an inhuman cut-throat compulsion.
But in a system that presupposes "continuous growth" for sustaining itself, and all its structures have been built with that assumption, fear of recession is totally rational.
For most of time, up to the 20th century, growth was not an expected part of economic activity. Neither expected or required. GDP didn't even get dreamed up until the 1930s, and its inventor warned against it being used as a measure of the success of a nation.
Of course it was soon used as a measure of success, comparison and an easy concept for headlines and politicians. So the irrational belief that infinite growth on a finite planet was not only possible but desirable and necessary became the modern religion. :)
The societal benefit of "infinite growth" is fully utilising the workforce. If an innovation reduces the number of people needed in a job we can try to grow a different part of the economy to use those people. Unless we can think of a different way to utilise people (eg universal basic income, negative income tax, free stuff for everyone, or something) growth is a useful mechanism to regulate society to an extent.
For zero growth or negative growth world a lot would have to change significantly. From presonal choices to government policies.
Have you considered that people might not want to lose their jobs in a contraction?
https://www.businessinsider.com/study-recessions-unemploymen...
ROTFL. Good luck with that mate. Show me how this is going to work. The Nobel prize in economics is yours for sure!
https://ourfiniteworld.com/2011/02/21/there-is-no-steady-sta...
So far this is true for the US, but Japan shows this might not always be the case.
In the current model of capitalism, yes there is a systemic need for continuous growth - one might say, for VC-style turbo capitalism, there is in fact an even worse need for exponential growth.
Edit: why the downvotes? I am sincerely interested to read more about the necessity of growth or the lack of it.