Why does the economy need to continue to grow, especially in countries such as Japan where population is declining?
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It’s because the social safety net in almost all countries is run like a ponzi scheme. Instead of taking social security (i.e. pension) payments and putting them in the bank for when you retire, most governments immediately take it and spend it and write an IOU for the amount. The idea was that populations would continue to grow and future pension payments would be made from future tax revenue, which would of course be larger than today’s tax revenue because the population and the economy had grown. Unfortunately this is no longer the case and the very fabric of the social security safety nets is now unravelling. It’s why Spain is doing a massive 250% hike on social security payments, and countries are pushing retirement age to 67-70. In the USA these items are called ‘unfunded liabilities’, and they amount to 45 trillion dollars in money that was paid but never actually saved (i.e. and IOU was written for them). It’s why most of us won’t have a pension to draw from when we retire, because there simply isn’t enough money for it, and people aren’t having as many babies to help pay for it in the future.
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