Paul P. Mealing

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Monday, 29 July 2013

Why the economic growth paradigm is past its use-by date

Last week’s New Scientist (20 July 2013, pp.42-5) had an intriguing article on the relationship between demographics and economic health in various countries. It’s not the first time that they’ve featured this little known aspect of political and economic interaction, but this article was better than the previous one, because the interactions they describe are more obviously perceived. Basically, the median age of a country is a determining factor in that country’s economic future.

Economic growth is related to burgeoning population growth, which led to the so-called 'Asian Tigers' in the 1980s and the huge spurt in post-war economic growth in Western countries, as well as Japan. Many of these countries, like Japan and much of Europe, are now economically stagnant due to ageing populations, so you can see the relationship between median age and economic growth. The author, Fred Pearce, claims that even China’s against-the-trend growth will be stymied by their ‘one child’ policy in coming generations.

But stability is also an issue and ageing populations are more politically stable, whereas youthful countries trying to embrace democracy (like Egypt and Afghanistan) are struggling and unlikely to succeed in the near future.

Countries like the US, Canada and Australia depend on immigration to maintain economic growth. In Australia, it is ridiculous that our economic health is always gauged by new home construction, which is obviously dependent on sustained population growth (only yesterday, the flag went up that housing had slumped therefore we were in trouble). It’s ridiculous because ‘sustained population growth’ has limits, and those limits are beginning to be experienced in many Western countries, especially Europe.

The problem, which is readily understood in this context, is that economic growth is married to a youthful burgeoning population without limits, which obviously can’t be sustained indefinitely. Yet all our so-called ‘future’ policies ignore this fact of nature. It’s ironic that conservative politics are determined to keep everything the same, yet it’s these very policies that will create the greatest change the planet has ever seen, and not necessarily for the better.

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