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
Be warned. Gross generalizations ahead. Each point can be ripped apart on many, many levels. The old joke is, how do you start an argument? Ask two economists how the economy is doing.
The “economy” is all the stuff and services that a country makes.
If the economy is stable, then the amount of available stuff stays the same. If the population is growing, that means less stuff for each person.
But people also make stuff. They need to in order to buy stuff. A shrinking economy means that people cannot buy as much stuff.
An economy can grow in two ways. People can work more (more output by using more hours/stuff), or people can be more efficient (more output by using the same amount or less hours/stuff).
The best option is people being more efficient. They make the same amount of stuff for fewer hours of work, or more stuff for the same amount of work.
Ideally, the person who does the extra work gets the benefit. This is not often the case. Company profit is excess value that workers create that goes to the company, not the workers. At the same time, without the company, the workers may not be in a position to do the work that makes them what they do make.
Also, there’s no guarantee that the value is equally (or even equitably) spread around the society. You could make value in the tens of millions of dollars, but not get paid for it. Or, you could be a drain on society while still making hundreds of millions of dollars a year. Both happen.
Why is growth good/contraction bad?
More goods and services are available.
In general.
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