The failing recovery: natural diminishing returns

Marketplace Radio said it best today, discussing why everyone is having such a hard time explaining why the economy is unresponsive to stimulus. My comment:

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It was gratifying to hear you discuss our so very stubborn economic dilemma with your question for your guest, “You mean we still don’t know what we don’t know?” And getting the simple answer “Yes.”

I’ve known generally how and why the present dilemma would arise for over 30 years.   I’ve had a hard time telling you, though.  As many times as I try, you (and others) don’t respond with questions.   I hope the following helps.

What I know is that the basic logic of a growth economy reverses polarity as it crosses the whole system point of diminishing returns. That’s visible in the earned income growth curve, at the inflection point in the middle, indicating a reversal in the pattern of environmental response (marking the end of accelerating increase). It happens for ANY physical growth system, and for us was around 1970.

That’s when LOTS of things started working backwards, for natural cause, like when growth at the top stopped lifting the bottom. It’s also when growth started multiplying more complications than opportunities, for another. You can readily study it, if you just start looking for what to study.

That phrase “natural cause” might throw you off. Sorry, it’s kind of unavoidable. Physical environments are THE source of economic opportunity, and conflict. Since that turning point growth efforts have also been creating unexpected conflicts for each other rather than unexpected freedoms as before. It’s a crystal clear sign of limits and the natural end of our several hundred year fabulous run of expanding luck. A time to change our thinking.

The only thing preventing the discovery of real answers to this natural problem is needing to reorganize our thinking about growth. We are responding with a distinct widespread aversion to studying it. We’d have to look outside our familiar concepts and issues. That is indeed asking a lot, yes. So, ask questions. Nature is asking a lot of us at the present.

Maybe that’s the best way to say what it is you don’t know, and really need to; Nature is asking a lot of us at present. I also may be the one person who has studied it most deeply.

phil www.synapse9.com

 

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