[Pops]

The growth economy is pointed to by many as the basis of all economic evil, boom inevitably followed by bust amid the never-ending quest for "more".

A better match with the physical constraints of a limited planet is the Steady-state economy say it's proponents. From the link:

A steady state economy, therefore, aims for stable or mildly fluctuating levels in population and consumption of energy and materials. Birth rates equal death rates, and saving/investment equals depreciation.

The rate of rise in the population is slowing, forecasters think it may take up to 15 years now to add a billion people, not a steady state by any means but the time of doubling had been halving - not good.

But more important is what seem to be increasing creaks from the old model. Primary evidence of course is peak <everything> and the current state of economies around the world. The US had a bad decade, Japan has been having a bad generation. Chindia may be ascendant but could it be they are late to the party and the keg is already floating?

Here's Krugman today and last month about the future:

But the truth is that policy makers aren’t doing too much; they’re doing too little. Recent data don’t suggest that America is heading for a Greece-style collapse of investor confidence. Instead, they suggest that we may be heading for a Japan-style lost decade, trapped in a prolonged era of high unemployment and slow growth.

And here is Ezra Klein of the Washington Post on the recent past:

The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation's growth.

And finally, from the Reason Foundation (whoever they are ):

The current economic uncertainty in the United States, and the government’s response to it, is eerily similar to that of Japan’s “Lost Decade” according to a new Reason Foundation report.
The study finds that Japan’s housing prices rose by 51 percent and commercial real estate values rose 80 percent between 1985 and 1991. In the U.S., commercial real estate and housing prices both skyrocketed 90 percent from 2000 to 2006.
The Nikkei, Japan's stock index, fell from 38,975 in 1989 to just 18,934 by the end of 1999. During the continuing economic malaise, it dropped even further to 7,603 in 2003. The Dow Jones Industrial Average hit 14,115 in October 2007. On February 19, 2009, the Dow closed at 7,465, its lowest finish since 2002.
President Barack Obama recently signed a $787 stimulus package that includes over $60 billion for infrastructure and transportation projects. Japan passed 10 stimulus packages in the 1990s that would equal $1.4 trillion in today’s dollars. From 1992 to 1999, Japan spent over $500 billion (in today’s dollars) on public works projects. Despite this infrastructure spending, Japan’s unemployment rate more than doubled and the economy remained stagnant.

So the question is this, Is there a possibility we are slipping - or have slipped, toward a new normal of zero growth and are all waiting in vain for the good times to roll once again?

[Sixstrings]

Pops, nobody ever wants to agree with me when I bring this up, but I really think that AUTOMATION is why we're now past peak employment. I used to rant about all the jobs going to Asia, and I still do, but as I looked into the issue I had to admit that an even bigger destroyer of jobs has been automation. Sure, we've always had job destruction through automation -- the problem now though is that we've past the point where enough new jobs are no longer created to replace those lost through tech advance.

Oh, to answer the question posed.. it's worse than a "lost decade," this peak employment is going to get only worse until something breaks and we have to figure out some kind of new paradigm. Part time work for full time pay (in other words job sharing), getting folks to not only retire again but retire younger than ever before, etc. We're also going to have to accept some kind of permanent dole -- the jobs just aren't there anymore. All of these options are impossible at the moment, so we'll have to have a major crash before we come to grips with the fact that the economy can no longer achieve full employment. And, the situation will only get worse unless peak oil hammers us back to a simpler and more human labor-intensive way of living.

[Keith_McClary]

CHART OF THE DAY: The Scariest Job Chart Ever Just Got Even Scarier

[Maddog78]

There was another article in a major Canadian newspaper recently about the upcoming (2-5yrs) labour shortage.
I guess different countries will have different problems.

[Thralen]

I don't think we are either lost decade or new normal. There is still quite a ways to go before we find a level we can stay at. I think things, despite promises of "green shoots" "recovery in progress" etc..., have a ways to go yet. Sideways, down, and possibly even a bit up in between the other movements but an overall ending point of down a ways more.

Thralen

[heroineworshipper]

Private vs. government control has crossed a point where we're now permanently living in the Soviet Union. This is basically how they lived in the 1950's.

[Sixstrings]

There was another article in a major Canadian newspaper recently about the upcoming (2-5yrs) labour shortage.
I guess different countries will have different problems.

Labor shortage?? In what sector, all of them? That may be true, but it's contingent on raw materials not crashing in price. If we do end up with a second leg down into global deflationary depression, then these commodity prices will collapse and Australia and Canada will be in trouble.

But for now, you're doing well. I think this is mostly because Canada is small -- 33 million in population. When you get to the size of the US, or Europe, or China or India that's when it gets complicated.

[dsula]

that an even bigger destroyer of jobs has been automation.

If you own a small shop making nails. And it takes you 1 hour to make one nail. Now you buy a little machine and you now make 2 nails per hour. Your productivity just doubled. Essentially without competition you can now maintain the same standard of living with only half the amount of work. Or you can work the same as before and your income doubles. Of course you will also need to LEARN how to use the machine. And that's the key. You need to educate yourself for a changing job market, because with automation the jobs don't disapear, but they change. Instead of welders and machinist you now need operators, computer programmers, network specialists and so on. Uneducated and unskilled labours are plentyful and that's why they are cheap.

The biggest destroyer of jobs is slacking and letting the competition get ahead of you.

[Revi]

There are three places that are experiencing 20% growth around here. The seed companies Johnny's Selected Seeds, FEDCo and a large greenhouse tomato growing operation. They are all hiring all the time. The rest of the economy is tanking. I think we will move into another economy whether we like it or not. I have a friend who is building solar cars and making farm tools for Johnny's. He hires as many as 7 people and can't keep up with the orders. What is going on? The green economy is going to be the only thing that pulls us out of this depression, but it isn't going to save everyone. Here's my friend's kit car company:



www.sunnev.com

[hillsidedigger]

Economic decline punctuated by frequent military conflicts is the new normal that will continue as long as anyone currently alive is alive, in my guess.

[Ibon]

Isn't all of this exactly what we want? Aren't we heading in that sought after direction of a no growth economy?

I think this new normal is actually the old normal returning. The new paradigm is the old paradigm but with the added burden of weaning ourselves off of the excesses that we have become accustomed to. Also the burden of the excess population. Resilient enough to avoid collapse but forced to capitulate to a regime with less energy and more constrained resources. This is the makings of a very slow cultural transition.

Before fossil fuels and the industrial revolution there were centuries of generations that changed little through time. The 21st century will be the first since the 16th century where we will retract toward a decelerated rate of growth and change. Innovation and technology channeled toward mitigating resource constraints while governments try to manage an overshot population with dampened expectations. The emerging generations born this century will not know anything about the self entitlement culture except in watching old documentaries.

Remember a while back when we believed cultural transition would happen from a society suddenly waking up after watching films like "The End of Suburbia" ? That's not the way it happens.

[Maddog78]

There was another article in a major Canadian newspaper recently about the upcoming (2-5yrs) labour shortage.
I guess different countries will have different problems.

Labor shortage?? In what sector, all of them? That may be true, but it's contingent on raw materials not crashing in price. If we do end up with a second leg down into global deflationary depression, then these commodity prices will collapse and Australia and Canada will be in trouble.

But for now, you're doing well. I think this is mostly because Canada is small -- 33 million in population. When you get to the size of the US, or Europe, or China or India that's when it gets complicated.

I can't recall the exact details but I was surprised because I thought any talk of a labour shortage went out the window in the 2008 recession.
I agree with you, it is very much contingent on the demand for Canada's raw materials.
The article talked a lot about baby boomers leaving the labour force as well.

Heaven forbid we ever get to the size of those places!

[patience]

Sixstrings said:
"...AUTOMATION is why we're now past peak employment."

Right. With Asia more automated thatn the US ever was, why are they kicking our butts in manufacturing? Uh, no, that ain't the problem. Low wages, high productivity, decent quality, and a really cheap currency all have a part of it, but automation does not. The only way the US was able to be close to competitive for a long time was the level of automation here, and when Asia caught up with us in automation, the US took a licking for the above reasons. Other factors that also cost the US in manufacturing were top-down management, Japanese adoption of Deming's quality control philosophy, the concurrent US phenomenon of hostile takeovers and corporate looting, over-strong labor union clout, high interest rates in the 80's that begat asset-mining in corporations, along with the takeover of manufacturing management by financial people determined to make a fast buck, and damn the long term. There were other issues, also, like EPA, OSHA, and other restrictions on companies that cost a lot, but they were minor in comparison, in most cases.

Been there, lived through it as an engineer trying to keep companies competitive in that time period, got the T shirt, and no pension, either. Your idea won't wash with me.

For a look at what happened on the inside, read "On a Clear Day you can see General Motors", by the former head of Chevy motor division, John Z. DeLorean.

http://www.amazon.com/Clear-Day-You-Gen ... 0960356207

The same things have happened to various degrees in most fields of manufacturing in the US, resulting in offshoring. So, the answer is no, those jobs aren't coming back. I get a couple auction flyers a week where factories, machine shops, and machinery dealers have bankrupted and half the equipment is sold to scrap dealers, because there is no demand for it in the US now. Nobody can make any money with it. The financial parasites have killed their host, and the rotting corpse is being shipped to China to be made into poisonous toys to ship back here.

Yes, this is the new normal for the US. Any attempts at bootstrapping the economy back up will be sat upon by PO and sucked dry by the money parasites. Welcome to this brave new world.

[rangerone314]

The S&P reached where it is now 12 years ago in 1998, and in 1997 if you take into account inflation.

Lost decade? Lost decade PLUS 3 years already.

[rangerone314]

The S&P reached where it is now 12 years ago in 1998, and in 1997 if you take into account inflation.

Lost decade? Lost decade PLUS 3 years already.

[Pops]

Isn't all of this exactly what we want? Aren't we heading in that sought after direction of a no growth economy?

Ah ha, exactly what I'm thinking!

Don't forget that along with being the worlds biggest consumer we were also the worlds biggest raw materials supplier for at least a couple hundred years. Our huge manufacturing might came about because we had inherited a whole continent's worth of resources free for the taking, not because we are inherently superior in some way. I think many times we Americans get the feeling that we've hit a triple when in fact we were born on third base!

I see the politically induced oil shortages of the 70s as a blessing in disguise because they shocked us into making the first few steps away from an extraction economy and forcing us (with a few years of detours) to take the first steps toward Z [as painful as Patience points out they are] On some level I think we understand our amazing inheritance of natural resources have begun to wane.

We in the US have been transitioning from a energy intensive natural resource exploiting / manufacturing based economy, to a FIRE economy (Finance/Insurance/Real Estate) since we hit peak oil back then. Not that we make nothing, we still make the big, expensive stuff but more and more we have been selling each other airballs and imports - derivatives based on some underlying value but increasingly less and less of real value.

BUT, a study by the Kaufman Foundation found that new business formation is remarkably constant over time, so even though the movie rental place and the equipment rental place in our little town have gone belly up in the last couple of months, some new businesses will open more in tune with the times, maybe a real bakery, maybe a new greenhouse, maybe a Weatherization Supply Outlet, who knows?


We lived high and steadily spent our inheritance, luckily we didn't blow the whole wad and we have a lot to show for the gift. Over the next couple of generations I think we'll see ourselves adopt a more austere style and maybe even a little more "communitarian", more in line with older countries.

[dsula]

But back to nails. You are right about programming. You can buy the nail-app for your Ipod and make nails by yourself in your basement laboratory. The Singularlity has arrived.

good one !

[Sixstrings]

that an even bigger destroyer of jobs has been automation.

If you own a small shop making nails. And it takes you 1 hour to make one nail. Now you buy a little machine and you now make 2 nails per hour. Your productivity just doubled. Essentially without competition you can now maintain the same standard of living with only half the amount of work. Or you can work the same as before and your income doubles. Of course you will also need to LEARN how to use the machine. And that's the key. You need to educate yourself for a changing job market, because with automation the jobs don't disapear, but they change.

Your example works out like peaches and cream assuming it's one dude making nails, and he owns the shop. What you're ignoring though is that demand is ultimately finite. There cannot be infinite demand.

Here's one example: Netflix has 1,000 employees, while Blockbuster video employees 60,000 (that was in 2009, and that's after a lot of store closings). Compare those two competitors.. Netflix hardly needs to employee anybody at all, whereas video stores employee a heck of a lot of people (my 60,000 number is just for Blockbuster, the total of all video clerks would be much higher, though all these jobs are doomed as we know). Now factor in all the ancillary jobs that brick and mortar rental stores supported -- construction, real estate, all the manufacturing required to produce every item in a retail store, etc. All Netflix supports is the post office and whoever makes their envelopes, and now that's on the way out too as they move to online streaming.

So this is what I mean by technology reaping ever more massive levels of productivity. And yet, demand is finite. As fabulously productive as Netflix is (1,000 employees producing almost two billion in annual revenue), PEOPLE CAN ONLY WATCH SO MANY MOVIES PER DAY. There's a limit there, and it applies to everything -- consumers have a finite amount of time during which they can consume goods and services.

I understand your argument by the way, and it's held true throughout history -- I just think we've begun to enter a new era in which it no longer holds true. We're beginning to reach the upper limits of sustainable productivity growth (not talking about resource scarcity here, but rather peak productivity).

And before someone says it, no I'm not a luddite. I love Netflix, and I love not having to set foot in a video store. But I also recognize this is but one of many examples where my pattern of consumption has cost workers their jobs. I think there has to be a point at which all this productivity must cave in on itself, for the simple reason that consumers can't consume if they don't have a job.

[Plantagenet]

What you're ignoring though is that demand is ultimately finite. There cannot be infinite demand.

Very interesting discussion going on here.

Let me add the idea that while there cannot be infinite demand for nails or any other item, there can simply be more items.

When the demand for record players is sated, then invent CDs. Then invent mini-discs. Then invent IPODs. Then invent newer ipods and iphones and ipads.

There doesn't seem to be limit on invention and marketing of what always described as new improved products.