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AT THE ROOT - SUPPLY AND DEMAND
Let’s start with a few well known facts. Producing less than the market actually requires causes scarcity and that, in turn triggers price rises in a Free Market Economy. Producing more than is basically required may lead to more competitive pricing but it often leads to price increases to cover the costs of the advertising and promotion to sell the surplus. Higher production also provides work – employment – for a number of people in both the manufacturing and the advertising departments.
Then there are the economic knock-ons in that the jobs created in over production does provide increased employment and that in turn increases the purchasing power of those involved. So we “consume” and consume more. This all adds to the overall growth of the economy.
Growth in production does however have a down side. Every item produced uses raw materials and consumes energy to work the materials and drive the machines. This in turn adds to the depletion of resources – some of which are now beginning to run out - and equally contributes to the generation of green-house gases and therefore to climate change.
Let’s consider the main features of the fact that the world currently produces 95 million cars a year, yet statisticians calculate that we only actually “need” some 55 million. How this is calculated remains a mystery, but let us here just consider some of the consequences, not in economic terms but in resource consumption, and in the wider implications of environmental damage.
Car manufacture is a big employer. It uses large quantities of minerals - metals and plastics; There is a significant energy requirement – again consuming resources but also generating atmospheric pollution. We then run around in the cars guzzling fuels and polluting even more.
The developed world is currently experiencing the many, interlocking, effects of the global consumption pattern - not just in terms of cars but across almost everything that is involved in contemporary life.. We are consuming almost all basic resources at a totally unsustainable rate. Oil is likely to be the first victim, gas may follow, water supplies are going to give trouble – possibly as soon as next spring in the UK, fertile land on which to grow foodstuffs is stretched, as is land on which to build homes. Put simply, the planet is going broke.
What we already produce and use and what we currently consume is triggering climate change which unless we halt soon will make life catastrophically different. And that is with our current population levels, yet it is now forecast that world population will double again by the middle of this century.
Working against all these warning signs there is the combined pressures of generations of market promotion and of consumption.
Growth has become both a cause and effect. Economies have grown and we now all expect continuous growth. “Growth” has become a measure of the effectiveness of the ruling governments, and it has become the life expectancy pattern of all of us. If our salaries do not increase year on year, if our house is not improved, our car is not the latest model fitted with new and wonderous Gizzmos, if there is not an iphone in our pocket, and our computer memory is not expanded etc. etc. – then we are “failures”. This conclusion is almost bellowed in our ears by the adverts we see on the hoardings, which take up pages of our newspaper and magazines, and by the breaks that interrupt the TV thriller every few minutes. Advertisements are there purely to stimulate consumption and thereby to take our money and give it to somebody else.
Then the manufactures add their twopen’erth. They constantly jazz up design and add features. We think the goods are improving (occasionally this is true) but some of the improvement is un-necessary and much of it is designed merely to attract and to make us happy with our purchases – and also to make us ready to buy the latest model just before our existing (two year old model) finally expires. White goods given as wedding presents years ago often lasted 20, 30, even 40 or more years, today you are lucky to get 5.
So growth is always achieved through encouraging us to spend more money. Today, often, it requires the spending of money that we do not have readily available – so we need credit.
There are now many people, possibly even most alive today, who will die in debt.
But OOoo! Look! We have now developed the scope for another “industry”. Debt has become our new Jerusalem. Not only has debt selling and trading blossomed into a full scale industry but worse, it now sustains whole nations. Credit has become the accepted name for what used to be called Usury. Today 30% of the UK’s gross GDP is produced by money dealing in the banking “industry”. Stripped of all the niceties we now live on and by buying and selling debt. In this and several other countries we sustain the whole process by Quantitive Easing – to you and me that actually means printing money.
There is now an increasing number of people, thinkers, philosophers, world leaders, and a growing army of every-day citizens who are saying that we can not go on as we have. They know that excessive consumption can not continue; that there are resources that we must husband; that paper money is meaningless; that the wealth gap between rich and poor is criminal, and the fact that in an “abundant” world some 25% of the total population is starving; and that a growing population can not be fed; must all come to an end.
We need, desperately, a new structure for society – not just the UK’s society but for the whole world. We must forget what has worked in the past – we have a very different set of parameters and we must redesign everything to fit what is possible – not what we dream about.