(#333) "The Crash Course" Chapter 5: Growth vs Prosperity

16 Jun 2018

(#333) “The Crash Course” Chapter 5: Growth vs Prosperity

As posted on the Peak Prosperity.com and the Chris Martenson’s Peak Prosperity YouTube Channel

Background

The Crash Course has provided millions of viewers with the context for the massive changes now underway, as economic growth as we’ve known it is ending due to depleting resources. But it also offers real hope. Those individuals who take informed action today, while we still have time, can lower their exposure to these coming trends — and even discover a better way of life in the process.

In this Blog, I am presenting the 27 (inclusive of the introduction) installments of The Crash Course, one per week.

Previous installments of “The Crash Course” can be found here:

Chapter 5 of 26: Growth vs Prosperity

Transcript

Now I’m going to introduce the second Key Concept, and it is far enough outside of current thinking that I’m going to get a little backup from a 19th-century philosopher. Here’s the quote:

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” — Arthur Schopenhauer

At some point over the next 20 years, this next concept I’m about to introduce will be “self-evident.” But for now, I think it would be safe to say that a lot of people would consider it to be ridiculous. What is this wild concept? It’s that economic growth may not be good for us any longer.

But growth is good, right? Nearly everybody would agree that we want a growing economy because a growing economy means that we are becoming more prosperous. Economic growth offers opportunities, and we are all for opportunities. At least I am. And the desirability of economic growth is virtually unquestioned today. It’s just something that everybody – from politicians, to investors, to business owners — talks about wanting more of. o, many people would say that growth equals prosperity.

But is this actually true? And what if it’s not?

Growth is actually a consequence of surplus, if we think about it. For example, your body will only grow if it has a surplus of food. With an exact match between calories consumed and calories burned, a body neither gains nor loses weight. A pond only grows deeper if more water is flowing in than is flowing out.

So, it can be said that growth is actually dependent on surplus.

Similarly, prosperity is dependent on surplus. Here’s another example. Imagine that you are a family of four, your yearly income is $40,000, and at the end of the year there is no money left – on December 31, there are exactly zero extra dollars to spend on your family.

But then a 10% raise comes along, which equals $4,000, and your family can EITHER afford to have one more child OR you can enjoy additional prosperity by spending a little bit more on each person. But you can’t do both. There is only enough surplus money in this example to do one thing, so you have to choose – will it be growth or will it be additional prosperity?

And what is true for a family of four is equally true for a town, a state, a country, and, yes, our entire world.

Through this example we can tease out a very simple and utterly profound concept, that growth does NOT equal prosperity. For the past few hundred years we have been lulled into linking the two concepts, because there was always sufficient surplus energy that we could have both growth AND prosperity.

That is, we didn’t have to make any hard choices between the two.

The economist Malcolm Slesser, of the Resource Use Institute of Edinburgh, Scotland, has calculated that over half of the world’s energy is now used to simply grow. So here’s the big question: What’s going to happen when 100% of our surplus money or energy is being used to simply grow? The result is going to be stagnant prosperity. And what happens if there’s not enough surplus to even fund growth alone? Well, when that time comes, we will experience both negative growth and negative prosperity– not exactly the sort of future I am looking forward to.

More immediately, all of the developed world’s bond and stock markets are priced with the implicit and explicit assumption baked in that there will be continued future growth in the economy, corporate earnings, money supply, debt and all the rest.

But what if that growth never arrives? What then?

Without robust growth those markets will be worth a lot less than their current valuations, and that’s a huge risk for individual portfolios, pensions, endowments, and even social stability. We’ll talk in more depth about the seriousness of this risk later in the Crash Course.

But simply put: If we do not properly allocate our dwindling surplus resources towards prosperity, and instead default into the comfortable and familiar pattern of growth, then we risk a future of less prosperity. This, then, is the greatest challenge of our times – properly recognizing where we want our remaining surplus to go and getting that story out.

I, for one, want to see continued advances in energy efficiency, medical technology, and everything else that modern society can offer.

I want my children to have reasonable and fulfilling jobs, and I personally would vastly prefer to live in a world of happy and prosperous individuals versus one that is merely larger, but with less to go around for each person.

It is our future prosperity that we place at risk if we allow ourselves to do what is easy – that is, take the path of least resistance and simply grow – instead of doing what is right, which is directing our surplus towards a more prosperous future.

So there it is, Key Concept #2 of the Crash Course: Growth does NOT equal prosperity.

Now that you have these two in hand, we are ready to explore this thing called “money.”

Chapters are between 3 and 25 minutes in length. All 27 sections (inclusive of the introduction) take 4 hours and 36 minutes to watch in full.

Chris Martenson, is a former American biochemical scientist and Vice President of Science Applications International Corporation. Currently he is an author and trend forecaster interested in macro trends regarding the economy, energy composition and the environment at his site, www.peakprosperity.com.