I often see statements in the news from economists saying things like “only 0.2% growth reported, which might have bad effects on the economy”. In my eyes infinite growth is simply impossible when we have finite resources, or is that a misconception from my part?
Edit: thank you for all the detailed an in-depth answers! Learned a lot of new things 🙂
In: 96
The short answer is “because they’ve designed the system that way.” The population of humanity has grown continuously with a couple of blips for all of human history. A larger population by definition means more housing, food, water, and other basic needs for those people to survive Additionally, we’ve grown our standard of living, in general, throughout human history as well. Both of these things are related to consumption of goods, and the system that the Western world, and basically everyone else too, is to pay money for essential goods. So for the producers of those goods, they’ve seen charts of population growth, and they build that into their forecasts for customers. They’ve shown these charts to their bankers, who give them loans based on the future earning potential based on their past performance. And they invest in R&D to outpace the competition to also grab a greater portion of the market share.
As long as the prices of goods are going up, this is an incentive for people to purchase now. If the prices of goods were going down, then people would put off purchases to wait for lower prices in the future. This then creates a cycle of economic losses, and essentially everything that I described above comes crashing to a halt. There would be other ways to structure things, but we have baked the growth into every part of what we call a “normal” economy.
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