To an increasing extent, today's discussions of economics and public policy resemble the cargo cults on Pacific islands of the 19th and 20th centuries. After their encounters with travelers from Europe and the U.S., some islanders decided that the material wealth displayed by the visitors was destined to come to them, a blessing guaranteed by their ancient ancestors. Hence, they built rough wooden models of ships and, later, airplanes, engaging in elaborate rituals as ways to attract the shower of prosperity that they hoped would come their way.
Among today's economic policy experts, our equivalents of voodoo doctors, there are basically two cults with differing sets of ritual incantations and practices.
On one side we have those who believe that the problem is excessive government "spending" and the spiraling levels of debt the nation has piled up over the years. Members of this cult demand austerity achieved by slashing federal and state budgets and, of course, by lowering taxes, especially on the "job creators," their equivalent of the beloved but now woefully absent ancestors revered by the cargo cults.
On the other side are those who believe that the basic problem is insufficient "demand" caused by both long and short term developments -- outsourcing of jobs, the housing bubble, foreclosure, job loss, etc. Priests of this cult insist the renewed prosperity will arrive when government takes steps to pump more money in the economy, creating new jobs and boosting demand for goods and services.
What the two cults share is the view that mana from heaven -- economic GROWTH -- is just around the corner. With just the right collection of chants, ceremonies and talismans and just enough financial inducement thrown to the most worthy (or needy) members of the tribe, the good times will surely return. All hail to BIG MAGIC!
Faced with these arguments and programs, my normal preference is usually to side with those who seek to boost the economy by enlarging government programs that might help the poor, unemployed, students, small business. At the same time, I am more and more haunted by the thought that the diagnoses and remedies of both sides are fundamentally flawed. What if "growth" has finally become a chimera for modern technological society?
The publication of Richard Heinberg's book, The End of Growth, comes at an appropriate moment. In the U.S., European Union and around the world, the anemic "recovery" following the economic crash of 2007-08 has begun to sputter. A "double dip recession" or worse may be at hand as the nostrums and hand-waving of both major schools of economic seem impotent to turn things around. Heinberg's book raises many crucial questions and offers a strong set of arguments backed by impressive evidence. "Economists insist that recovery is at hand, yet unemployment remains high, real estate values continue to sink, and governments stagger under record deficits. The End of Growth proposes a startling diagnosis: humanity has reached a fundamental turning point in its economic history."
(from the Heinberg's Post Carbon Institute web page)
The book identifies indelible limits to growth in resource depletion (especially petroleum), environmental impacts (especially climate change) and "crushing levels of debt." Heinberg ponders the consequences of this nightmare and speculates about new economies and ways of living that could emerge from the wreckage.
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Update: This page contains a cartoon video with Richard Heinberg's commentary summarizing some of the book's basic themes. Watch until the very end to see container cargo ships sailing off the edge of a Friedman-esque "flat" world.