The Bear Necessities
Most financial markets are on the brink of Bear Country – that is, they are 20% or more below the highs reached in 2015. This should not come as a surprise to those who read ‘fasten your seat belts’ in our Daily Paradox at the end of last year. The rocky ride will continue for a while yet. Some see it as a long overdue major correction to grossly inflated markets; others think of it as a warning that the world economy is inexorably slowing and will do so for the foreseeable future because the era of rapid growth in China has come to an end. Politicians and economists at Davos ran the gamut of opinions, many contradictory.
While pondering the world’s economic future, they considered the long-term loss of jobs to automatons and robots. They studied the ageing demographics of the developed economies and ogled the juicy pickings to be made from India and Africa. They touched on global warming, El Nino, Middle East turmoil, the end of oil and pretty well everything that could go wrong. They talked of inequality. Davos is not for the faint-hearted.
Odd, then, that they appear barely to have touched on the one subject – the elephant in the room, if you like – that dominates all this. That is a World of No Growth. It is what we are heading for and we need to prepare for it. But, as with the elephant, if you don’t admit it’s there, you don’t discuss it. So they didn’t – well, not much. As Lawrence Haddad recently put it so pithily in the Guardian “the quality of growth matters as much as, if not more than, the quantity”. He goes on “There are many vested interests being served by focusing on growth at all costs”.
Much of what Mr Haddad says emanates from and is inspired by the book ‘Growth Is Dead, Long Live Growth: The Quality of Economic Growth and Why It Matters’. This is one of the few studies of growth that has touched the issue we all want to avoid – what happens if there is no growth. The answer is very simple. Individuals and collectives (organisations, companies) won’t stop growing. The progress of life is itself of exploiting growth.
What needs to stop growing is the world’s Gross Domestic Product (GDP), the measure by which a country’s growth is judged. Much GDP grows directly at the expense of the planet by extraction, consumption, emission. This is bad GDP growth. It is bound to continue as long as the world’s population is growing. That is expected to reach about 9Bn in the next twenty or thirty years. Since developed societies do not have the population growth that less developed societies have and since all societies will move towards being developed quite quickly it is reasonable to expect that world population growth will slow, possibly stop, at about the 9Bn mark. Events like the spread of the Zika virus may cause it to slow earlier.
However, the major change that is happening and will happen faster in the next few decades is the availability of cheap, clean energy. What will determine our planet’s future – and the future of our species – is the use to which that energy is put. The test of human creativity will, therefore, be how to make the New Energy deal with the problem of the Lost Jobs.
The history of the human race is one of adaptability through creativity. Our biggest challenge is already presenting itself. To handle it we will have to concentrate on what really matters and leave the non-essentials for later.
Happiness lies not in the mere possession of money;
it lies in the joy of achievement, in the thrill of creative effort.
Franklin D Roosevelt at his inauguration, 1933