The Crash Course - Chris Martenson [22]
To give you a good example of this assumption, look at how embedded the concept of growth is in this short passage in a 2010 New York Times editorial by Treasury Secretary Timothy Geithner:
The process of repair means economic growth will come slower than we would like. But despite these challenges, there is good news to report:
Exports are booming because American companies are very competitive and lead the world in many high-tech industries.
Private job growth has returned—not as fast as we would like, but at an earlier stage of this recovery than in the last two recoveries. Manufacturing has generated 136,000 new jobs in the past six months.
Businesses have repaired their balance sheets and are now in a strong financial position to reinvest and grow.
Major banks, forced by the stress tests to raise capital and open their books, are stronger and more competitive. Now, as businesses expand again, our banks are better positioned to finance growth.
By taking aggressive action to fix the financial system, reduce growth in health care costs and improve education, we have put the American economy on a firmer foundation for future growth.2
The word growth appears six times in eight sentences, while the words expand and booming have cameo roles. The message is clear: Growth is what we are after.
Businesses constantly seek to grow, local municipalities have growth targets, states and provinces covet high growth, and the federal government seeks to promote economic growth. Meanwhile, the Federal Reserve (“the Fed”) has full employment as one of its core mandates: Since the population is constantly growing and new jobs come from an expanding economy, economic growth is a logical mandate of the central bank. The Fed also has a minimum inflation target of roughly 2 percent, which means that growth of the money supply is a central bank target. But wait a minute . . . since the inflation target is expressed as a percentage, it means that exponential monetary growth is an express goal of the Federal Reserve. How did economic growth come to be so deeply embedded in our language, ideas, and philosophies?
For a long time, longer than anyone reading this has been alive, economic growth has been synonymous with increasing prosperity. By prosperity, I mean a higher standard of living defined by more of everything, easier access to all of the conveniences, luxuries, products, and services that define modern life, and plentiful and varied jobs and opportunities.
The Industrial Revolution brought an explosion of both growth and prosperity. When you read today about how many people live below the poverty line, it’s helpful to realize that nearly every citizen of any developed country today lives at a level of prosperity and comfort that is equivalent to a level enjoyed only by the wealthy in the not-too-distant past. If growth delivered this prosperity, then it is easy to understand why growth would be revered and sought. If growth brings prosperity, then let’s have growth! From there, it’s just a hop, skip, and a jump to the measurement and pursuit of economic growth as an end all its own, and that is where we find ourselves today.
But is it actually true that growth equals prosperity? What if it doesn’t?
Thought about one way, we might conclude that growth is actually a consequence of and dependent on the presence of surplus. For example, our bodies will only grow if they have a surplus of food. With an exact match between calories consumed and calories burned, a body will neither gain nor lose weight. A pond will only grow deeper if more water is flowing in than flowing out. With a deficit of food or water, growth of bodies and ponds will cease and then reverse. Growth in these examples is dependent on surplus.
But exactly what sort of a “surplus” is economic growth dependent upon? It’s not a surplus of money, or labor, or ideas, although each of those can be an important contributing factor. All economic growth is dependent on what economist Julian Simon called “the master resource”—energy.3