No growth in the economy - why does it matter?

[dave50]

If the economy does not grow but remains stagnent, why is this such bad news? Surley this means that economic activity is remaining constant so why does this mean higher unemployment? Why does it have to constantly grow to be beneficial?

[boxtops]

Stagnant means that nothing new is happening, employers are having to cut costs to stay where they are - if you don't see profits increasing year on year, a company will eventually fail. There are no new employment prospects in a company which isn't expanding, more likely job losses as employers seek to maintain their current position. Very low interest rates mean your money in the bank doesn't grow, either.

[factor-fiction]

Also, people have ever increasing aspirations. At one time you were rich if you had a colour TV and had a bottle of wine on Sunday. Nowadays even people who consider themselves poor feel they are entitled to have a widecreen TV and the latest Iphone.

[boxtops]

Damn, I haven't got either of those, factor!

[LazyGun]

Every country following a capitalist model has factored in continuing economic growth when calculating their public spending - the extra revenue brought into the treasure from increased corporation tax, increased revenue from better paid employees as tax, the extra tax from more people being employed by successful and expaning companies, have all underpinned forecasts for public spending.

If countries can no longer rely on continuing economic growth to pay for their growing public spending commitments, some radical rethinking of both public spending targets and the means to generate the revenue need to be found.

A stagnant economy has other more indirect effects too. Such a forecast discourages investment by companies into their capital needs, or their training or employment needs either, for that matter. A stagnant economy also acts as an anchor on spending by the public, who tend to prefer to pay down debt and save, thus depressing the retail sector and all those companies that service the retail sector.

All in all, if the prospect for the next few years or even decade is for a stagnant economy, thats a gloomy prospect for everyone.....

[Zeuhl]

The capitalist system relies on money growing money through the financial markets, speculation, lending and investments in stocks and shares.

Without that momentum it collapses:

non progredi est regredi

[factor-fiction]

I agree with LazyGun.
No boxtops- I haven't got those things either.