Issue #73

Last Update May 20, 2013

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Business and Technology Rethinking Growth by Sven Grynir April 5, 2013   For most of the past two centuries, The world economy has been based on growth, Growth can mean two things: volume growth due to increased population (or an increase in the number of individuals with the resources to consume), or supply growth based on the increased availability of goods and services, or the development of new goods and services. Let's look at volume growth.

Many businesses depend on population growth for revenue growth. By and large, the housing market assumes population growth for home building, the agricultural industry assumes more mouths to feed, the automobile industry assumes more drivers. The population growth curve, even for developing nations, is flattening. Much of Europe is seeing no population growth (and in some cases, even a decline), except for the population increase caused by immigration. The United States, not quite as far along in this process, and hosting an immigration sector that is large by comparison to the European nations, is nevertheless facing a similar process. These population trends come at a good time. If we can project stable population numbers worldwide over the next century, and declines thereafter, we may yet avoid the environmental degradation and even famines that continually increasing population numbers would point to. The impact on our economy, based as it is on the concept of ever-increasing numbers of people, would be severe if it were not for the possibility of the second kind of growth.

The internet, and the tools, structures, software and devices that are its outgrowth, is an example of the second kind of growth. Whole industries have emerged to sell us goods and services that, twenty five years ago, we didn't know we needed. Wifi, iPads, smart phones, GPS-driven devices and services, and many more, are examples of economic growth not necessarily tied to population growth. Infrastructure replacement that supports energy efficiency, rationally-provided health care services, and new entertainment modalities are other examples where economic growth is decoupled from population growth.

Refocusing the economy from population growth to the economic growth based on inventiveness, quality and variety can make us all richer without straining the resources we all must share. Instead of more people leading meager lives, we will have fewer people leading enhanced lives. The few problems that a demographic contraction will create can be handled by a combination of technical ingenuity and political adroitness. We are headed this way anyway, so we should start accommodating our economic and political structures to this trend now.