Was Thomas Malthus right after all? In 1798, he predicted that civilization would soon be constrained by disease and resource shortages. Scientific discoveries and agricultural innovation put off any such reckoning, at least until the present. Are the good times coming to an end?
Satyajit Das was born in India, educated in Australia, and has been a banker, corporate treasurer, and business consultant. The Age of Stagnation: Why Perpetual Growth is Unattainable and the Global Economy is in Peril is his third book.
The central theme of the book is encapsulated in the quote from playwright Arthur Miller: “an era can be said to end when its basic illusions are exhausted.” The author maintains that the central illusion of capitalism – endless economic growth – is ending.
According to the author, the origins of our present difficulties start with the ascendance of finance as it replaced the “real” economy of manufacturing and businesses began seeking profits and investor return by shipping capital, and jobs, to lower cost areas of the world. This resulted in increased labor competition and the consequent stagnant wage levels for those that were still employed.
In order to maintain their accustomed standard of living, people were encouraged to borrow against their credit cards and increasingly against their home equity. As we know, this added immeasurably to the pain when the housing bubble collapsed in 2008.
The world governments and all their economists have not been able to return the world to prosperity. Why not? Debt remains king and the attempts to bolster economies have been unsuccessful and, in some ways, counterproductive. It seems that while economics might point the way, it is not powerful enough to overcome human nature.
The author uses many quotes from influential personages from the last hundred years to sum up pages of description and data in short, satisfying summations. The practice is worthy of note. Here are two quotes dealing with both ends of the problem. Oscar Wilde said “living within one’s means merely shows a lack of imagination,” and Claude Junker, the head of Eurogroup said, “we all know what to do, we just don’t know how to be reelected after we’ve done it.” Two tough, innate, and universal problems that prohibit strong and effective solutions, even if they were obvious.
Finally, the author presents familiar, but largely discounted, looming problems: the depletion of low cost reserves of metals, water, energy, and food. He explains each of these and it seems hard to dismiss them any longer. Perhaps the most worrisome is the lack of trust in our institutions, leaders, and each other.
The Age of Stagnation: Why Perpetual Growth is Unattainable and the Global Economy is in Peril is a fine, well-organized book that explores every facet of our economic life and what we might expect from the future. This reviewer wholeheartedly recommends it to you.
[signoff predefined=”Social Media Reminder” icon=”facebook”][/signoff]