Why does the economy need to continue to grow, especially in countries such as Japan where population is declining?
In: 56
Well, Johnny, since industrialization the world’s economies work under a concept called capitalism. Capitalism essentially turns the government into a business. Business 101 in a capitalistic society implies that if the company is not growing, it’s dying. This is because no matter what happens, the cost of existing as a business always rises with inflation. As the world around you slowly becomes more expensive, it also requires that the business grows with it.
As far as Japan goes, less people being born means less workers and tax payers. Old people getting older means less workers and tax payers. Without population increases you get much less core government funding.
TL;DR you asked for an explanation that cannot be said like you’re five. The concepts are too complex.
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