This article examines the causes and implications of what has been referred to as the “new normal” or “new neutral” of “secular stagnation” . The topics explored include macroeconomics, financial markets, economic history and cycles, techno-economic developments and trends, energy, ecological conditions, population, demographics/sociology, and complex-adaptive economic, social, and political systems dynamics.
Among the growing list of factors that are converging as persistent structural constraints on the growth of real GDP per capita are:
Peak Oil (increasing energy cost of energy extraction and utilization and the resulting declining net energy per capita), which is now a decade behind us in terms of global oil production per capita (where the US was in the late 1970s);
global population overshoot (and the implications for an impending bottleneck), despite the halving of the rate of growth of world population since the 1970s;
resource depletion per capita (loss of arable land, freshwater, forests, fisheries, watersheds, rare earth materials, etc.);
climate change (whether or not humans are contributing incrementally to an increase in atmospheric and ocean warming, the effects of human overpopulation are exacerbating the stresses on resources necessary for sustainable human habitation of many ecosystems);
peak Baby Boomer demographic drag effects (a once-in-history shift in the composition of household spending from high-multiplier new housing, autos, and child rearing to low- or no-multiplier spending on rent, house maintenance, property taxes, utilities, insurance, and out-of-pocket costs for medical services and medications);
deindustrialization (owing to US peak oil production per capita in 1970-85), financialization (increasing debt to wages and GDP replaced increasing earned income for the bottom 80-90%), and feminization of the US economy(women entering the labor force en masse in the fastest-growing sectors, including health care, education, government, financial services, and retail, sectors in which employment is 65-85% female);
a record low for earned income as a share of GDP (resulting from the aforementioned deindustrialization/offshoring, financialization, and feminization of the economy, labor force, and society);
a record high for financial profits as a share of GDP, increasing from ~1% in the 1950s-80s to 4-5% since the mid- to late 2000s, with financial profits at near 50% of total profits;
regressive payroll taxes on low- and middle-income wage and salary income, including prohibitively costly self-employment taxes;
favorable tax treatment and other incentives for non-productive rent seeking via rentier speculation at the cost of productive activity;
extreme wealth and income inequality and hoarding of overvalued financial assets by the top 0.001-1% to 10% at effectively zero acceleration of velocity to GDP;
unprecedented debt to wages and GDP, resulting in total annual net flows to the financial and financialized sectors claiming virtually all annual growth of value-added output of the US economy in perpetuity;
accelerating automation and elimination of paid employment without net replacement of “living-wage” or “breadwinner” employment and purchasing power of earned income;
military overstretch requiring a disproportionately large share of resources to be perpetually committed to the Anglo-American-NATO imperial military superstructure around the world;
prohibitive costs of so-called “health” care (emphasizing costly for-profit treatment over promoting “good health” and prevention of consumption of “health” care), which is now 18-19% of GDP and 50-65% to 80% of spending on the sickest 5-10% to 20% (those aging into midlife and late life with chronic conditions resulting from unhealthy diets, smoking, alcohol abuse, lack of exercise, and psycho-emotional stress related to socioeconomic factors); and
fractional reserve bankingthat encourages excessive leverage, asset bubbles, and the aforementioned rent seeking, which in turn exacerbates the effects of a record low for labor share, reduces productivity, and worsens the more pernicious effects of wealth and income inequality.
In the economics section of this website, we will dispassionately examine the causes, effects, assumptions, beliefs, expectations, and current and future implications related to financialization, “secular stagnation”, and “Limits to Growth”.