The term ‘steady-state’ is anathema to most economists. Until the last year or so anyway when some are re-reading Herman Daly, the first to use the term. Jeremy Warner, writing in the Daily Telegraph yesterday mentioned . . . another euphemism — ‘secular stagnation’ — which he ascribes to those of a “Left-wing persuasion”. M’mmm? The first person who used that term was Larry Summers, former advisor of Obama and as ‘central’ as an economist could be. In this country the Labour has never remotely proposed that we can remain stagnated. In passing though, Warner has invented two new terms, — “growth hiatus” and “peak globalisation”.
Here’s a glossary of these terms:
Peak globalisation — suggests that the total amount of manufacturing in the world will never exceed what going on now — or, rather, about 18 months ago when China first noticed a quite sudden dip in its exports.
Growth hiatus — we’re pausing now in respectable economic growth but will resume sometime soonish.
Secular stagnation — no economic growth until we (professional economists) have solved the ‘dark matter’ problem of what actually is holding us up. Once solved, then away we go again.
Steady-state — a future of no perceptible economic growth but with a programme of reducing pollution and increasing recycling until we have a renewable system of production.
But what is actually happening? The advanced countries are now largely satiated with consumer goods with only a replacement market from now onwards. Until about 18 months ago China and South Korea were selling to the better-off people in the Third World but that market has now become stabilized. Whether Brazil and India will be truly ’emergent’ countries over the next few years remains to be seen. I’m very doubtful about Brazil — much too little necessary scientific expertise to serve as growth points for innovation.
When China’s recent proposal of the Asian Infrastructure Investment Fund (AIIF) has sufficient investments and the first of several high-speed road and rail routes is operating between northern China and northern Europe then there’ll be a resumption of economic growth in central Asian and eastern European countries. But this market will soon be satiated because the populations are not large.
My crystal ball clouds over greatly when considering the Islamic Middle East, South America and Africa. Considering the first item something extraordinary might well happen there.