Monday, May 23, 2011

Economic reflections of a coach

I was tucking my son into bed recently when he “Dad, can you explain to me why you say there are big problems with the economy?” As any parent would know, this is not the best time to engage in a high level discussion, however he asked, and I did my best. That was my warm up. Now I hope I have more success explaining my thoughts to bigger people like you.

I believe the economic model we operate under in the western world is flawed, and at risk of breaking. No, I am not against capitalism – just the model of capitalism that’s being used.

In my opinion the cracks in the economy are getting wider, and we may be at serious cross-roads. No, I am not an economist. Just a coach. However as I would encourage you to do, if it affects you – and the economy does - I believe you should research it and form your own opinions, so you are prepared for whatever direction it takes.

In the following paragraphs I will tell you why I believe the economic model we rely on in western world societies is fundamentally flawed, and what I believe the future holds.

A non-sustainable model

In earlier economic models, for example in the agrarian age, I believe that if one hundred people lived in a specific area with zero population grown their lives were sustainable. In our contemporary economic model, they would not be.

We now need population growth to ‘survive’ economically. Population growth comes from immigration or births exceeding deaths. US economic commentator and forecaster Harry Dent amongst many others have done excellent work in helping us understand the correlation between population growth and economic growth.

The question I raise is this – why can’t we sustain on zero population growth? For some reason we cannot. When we experience zero or negative population growth, our economies shrink.

We rely on continuously more members in our societies to sustain the current economic model

I conclude therefore that each working adult, in our current model, is not adequately productive to sustain their and their dependant’s economic position. And therein, in my opinion lies the problem.

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