Economic growth is a fantasy and an obsession that we all seem to believe in, and it happens at almost any cost, and definitely hurts the sustainability and ecological balance of the world.
To quantify this, global GDP had grown to USD85 trillion, which is good and big, but our addiction to economic growth has led to global debt / borrowing of over USD250 trillion as well.
Let that sink in.
Simply put, even counting for 8 billion people, USD85 trillion GDP, equally split, would imply over USD10,000 per person per year. This amount is more than what most people make around the world, given that half the world population is living on less than USD5.5 a day, implying USD2,000 a year. Adjusting this amount to average costs of living across the world, this ought to be more than what most people “need.”
We have borrowed from whom, somebody on Mars? By borrowing more, we are not making the world more equitable, but only more distorted from equality perspective.
How much more stuff do we all need after all? In the name of progress, economic growth and evolution, we are just creating more stuff that we don’t need, we are consuming more and hurting ourselves, and destroying our only planet that supports life as far as we know it.
“We cannot and should not keep deferring the consequences of our crises to the future, by borrowing and printing money.” Kunal Nandwani, CEO uTrade Solutions
The problem we face is more of allocation of this global GDP, not that we need to borrow more to keep indefinitely growing, as the natural resources are also limited and not endless.
What if we did not borrow any more, but tried to live within our means, and allocated more fairly (maybe by introducing things like Universal Basic Income), and as a result, developed more sustainably.
Most countries, governments, capitalists believe that economic growth is paramount and that’s the only reality in which our world does and can function. What if we they are all wrong?
Sticking to the recent events only, what if the U.S. had not tried to reduce interest rates to zero after the dot-com crash in 2001, in an attempt to generate demand and grow the economy? Maybe the housing bubble would not have been as big and would not have led to the 2008 credit crisis.
What if the governments had not again reduced interest rates in 2009 and introduced liquidity schemes like quantitative easing? We would not have accumulated the debt crisis at the scale we are living through right now.
We cannot and should not keep deferring the consequences of our crises to the future, by borrowing and printing money. The bubble and the pain only keep getting bigger and for someone else to face at some point in the future, possibly for our next generations.
All the governments and politicians will have this choice in a few months to address their economic problems, post COVID-19 crisis. It’s time we learned that we should control our obsession with endless capitalist economic growth, and in turn, make the world more sustainable, equitable and a fair place for all.
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