Monday, April 25, 2016

"A World Full of Fact-Resistant Humans"

That's what Satyajit Das sees when he looks at Earth today, a world full of fact-resistant humans. The Indian-born, Australian banker, academic, and author is featured in the latest Tyee discussing the post-growth world economy that will soon be on us and, with our resistance to facts generally, how this will hit us sooner than you imagine.

I think the last 50 to 60 years were quite odd in terms of the longer run economic history of the world. Now, we face a series of challenges. Some are financial and some are non-financial. But, they are all linked. The first challenges I would list are financial and economic, built around excessive debt. The sum of global debt is about three times GDP. If we had interest rates of three per cent on average, the global economy would need to grow annually, over the long run, by roughly nine per cent just to service it.

Policymakers and most people have decided it's just too difficult to deal with. For now, they ignore it. But these things can't be ignored forever. Not only did we borrow, but we also promised ourselves government services, like elder care and health care, which haven't been fully paid for. These will have to be paid over the next 20 to 30 years.

...The planet is now full of fact-resistant humans and we don't want to even acknowledge climate change. We're experiencing extreme weather conditions which impact on the costs of world operations, in terms of insurance, food production, and many other things.

And there are a whole series of other problems for economic growth, like the demographics of aging. Also, improvements in economic productivity and rates of innovation have generally flattened off.

We also face geopolitical uncertainties, some of which are going to become more heightened with fights over food rights, water security, and energy security.

But, the thing that dooms us to an age of stagnation is that we do not want to confront any of this. We currently have a model of dealing with these issues, which is counterproductive. We can loosely call it the extend-and-pretend model. We tend to defer the problems, pushing them into the future, often in financial terms.

The whole model of quantitative easing, low interest rates and government spending, does not actually solve these underlying problems. For example, climate change summits tend to defer the problem rather than confronting it. All we're doing is piling these problems up. And as we do this, the problems get bigger.

Das mocks what he calls the Davos Man narrative that preaches perpetual economic growth while ignoring the key factors that have driven growth since the outset of the Industrial Revolution, especially population growth. Think of it as a bit like driving a car down the highway only with the windows blacked out.


Lorne said...

Das has certainly identified an important part of the problem, Mound, one that not only governments but the average person must share. Our unwillingness to confront unpleasantness and disruption of a lifestyle we have become habituated to means that we are far too willing to kick the can farther down the road; the only problem, of course, is that we are almost out of pavement.

The Mound of Sound said...

You're right, Lorne. We're out of road. We are at the end of the alley and it's just full of cans.

I cannot understand how we imagine ignoring such obvious and pressing facts can continue? It's manifest that we must know yet try to avoid thinking about how this ends. It's the final scene out of 'Thelma & Louise' only played out on a societal, even civilizational scale.

Toby said...

There are so many problems, so many perfect storms on the horizon that it is impossible to cope with them all. We elect representatives to cope on our behalf but they invariably shirk. Those of us who try to sound the alarm are accused of all manor of pathologies. In the face of armies of "Fact-Resistant Humans" it is tempting to shut down.

lungta said...

Anonymous said...

No politician is going to be elected telling us( the truth) that we have to make do with less.
Less fossil fuels, less travelling,smaller homes ( not houses) paying now or at the end of the month for daily needs.
Fact is ; I don't recollect a politician saying he or she would make do with less!


The Mound of Sound said...

Absolutely, Trailblazer. Our governments are still locked in the embrace of perpetual, exponential growth in GDP. We're running into wall after wall from the collapse of global fisheries to the depletion of our groundwater reserves to the exhaustion of our farmland - on and on and on.

My dad was a metallurgist and I visited a lab with him where they were testing alloys to destruction. It's unforgettable to watch a bar of solid metal pulled until, in a nano-second, it breaks in two. I think we're stressing Earth in similar ways that will yield similar results.

Anonymous said...

"Davos Man narrative that preaches perpetual economic growth while ignoring the key factors that have driven growth since the outset of the Industrial Revolution, especially population growth."

My take is that the "Davos establishment" purposedly suppressed efforts to control the rise in global population. Somehow, in the early 70s, the overpopulation agenda fell into oblivion...