Why does the economy need to continue to grow, especially in countries such as Japan where population is declining?
In: 56
There are many, many reasons. The fundamental principle is that if your economy is not growing, it is shrinking because it is not keeping up with inflation and the fact that people are using more resources from living longer.
Now think of everything the government (federal & local) puts money into maintaining. A weaker economy means you has less of that.
– Healthcare: Less coverage
– Pension: Less money and/or retirement ages get pushed up
– Welfare: Less funding
– Military: Less funding
etc.
On a more abstract level, it also means you will be a weaker nation when it comes to exerting geopolitical and economic influence because you have less money to spend and a weaker military. Imagine you a poor “3rd world nation” trying to negotiate a deal with the US or China… the more powerful nation will always have favorable terms for themselves. As your nation declines economically, you will have less negotiating power.
There are also more abstract concepts when it comes to the economy and capitalism, but essentially there is an element of self-perpetuation, where wealth/investment/skilled immigrant labor is attracted to larger economies. This leads to more job opportunities, generally an improvement in the citizenry’s quality of life, etc.
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