Sunday, November 1, 2015

Economic Growth Is No Longer a Topic

Notice how economic growth no longer interests anyone.  Wonder why?  Maybe because growth is such a distant memory, we no longer really expect economic growth anymore. As we load on more and more regulations, we are way past the point point where regulations slow the economy. At this point, the economy barely has a pulse.  That pulse can get weaker, but most of the real damage is already done.

We are becoming a totally stratified society, where division of a stagnant pie is becoming the political debate, but growing the pie is no longer even a topic of discussion. If economic growth were a topic of discussion, it would become apparent that the US economy has undergone a fundamental change.

Good times used to be 4.6 percent economic growth (the average of the 1950s) or 4 percent economic growth (the average of the 1960s).  Today, economists and media pundits cheer 2 percent economic growth (when we are lucky enough to experience that number, which we didn't in the most recent quarter). 

Given the pace of technological change, there is no reason why 8 to 10 percent growth is not feasible for the US economy, but the burden of regulation suggests that anything above zero is becoming increasingly less likely.  Moreover, no one seems to care.  There is no longer much discussion about increasing our economic growth rate.

Even with a slowdown, China is moving along at a 7 percent pace and will return to higher numbers in time, as the center of world economic power shifts to Asia and the US and Europe continue their decline into long run economic stagnation.

Once you lose interest in growing your economy, you enter a period of economic and political decline.  That's the trajectory of the US and Europe, but that is not the trajectory of many other parts of the world.  Asians want to grow their economies and they will do just that, while we watch and grumble.

No comments: