Charles Hugh Smith: Demographic Cliff + Let It Rot = Collapse of Global Growth

As workforces shrink and opting out becomes increasingly attractive, Global Growth implodes on both the production and consumption sides.

A funny thing happened on the way to permanent global growth. Actually, three funny things happened. One is the cheap, easy-to-access materials that enabled a vast expansion of consumption have been pulled out of the ground and what’s left will cost more going forward, meaning there will be less to squander on consumption.

True Believers are confident that some Savior Technology will emerge and scale up globally to save us from any nasty reduction in consumption, but they overlook the inconvenient fact that all the proposed Savior Technologies need vast quantities of the same materials that we’ve already consumed.

Two other funny things will also impact global growth: the sharp decline in birth rates in most developed and many developing nations–the Demographic Cliff–and the collapse of young workers’ willingness to sacrifice themselves on the altar of Global Growth (i.e. systemic inequality) via working in miserable conditions for low pay–wages that will never enable the purchase of a home or support a family.

Since it’s hopeless to secure “the good life,” why bother sacrificing one’s life? Why not enjoy life on a much more modest level?

This rejection of self-exploitation in service of further enriching the already-rich is global: The most descriptive terms are from China–laying flat and let it rot–but they apply to youth around the world.

Unfortunately for the already-rich benefiting from Global Growth, this puts upward pressure on global wages as employers have to offer higher wages to entice reluctant young workers: Younger Chinese are spurning factory jobs that power the economy (Reuters.com)

Higher wages might have some effect on the margins, but the real problem is vast wealth-income inequality created by hyper-financialization and hyper-globalization. Increasing wages by 10% isn’t going to fix what’s broken. Doubling wages and eliminating all taxes on labor would be a start. (Taxes on capital and financialization’s churn would have to rise significantly to offset the elimination of taxes on labor.)

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