My opinion - so take that for what it’s worth:
Growth is limited - note I say limited not eliminated - due to the majority of top tier economies having replacement or negative population growth. US, EU, Britain, Japan, even China.
With an aging population there comes a time when people “have enough” and they are no longer looking to ‘expand’ but instead are looking to ‘downsize’ or ‘simplify’. Part of the driver for importing “refugees” into some of these countries is, in my mind, to offset the demographic shifts in these countries.
There will still be some growth due to technological advances. But the numbers in the majority of 1st/2nd world economies are not going to expand greatly like they did the last century. They will plateau if not slightly dip and then plateau.
More rapid growth could come IF ...I repeat IF... the shackles were to come off the third world nations with greater population growth. These are held in check by corruption, dictatorships, and a lack of freedom, education, and true economic opportunity. Freeing these would likely provide another 100 years of rapid growth until they too started to limit their reproduction.
Likelihood of 3rd world changing for the better in economic freedom or the things that drive it- 10%. Higher for specific countries, but very limited for most. Likelihood that some higher tier economies will instead head down the ladder of economic freedoms - I’d say 70%. Just look at what is happening with France and Germany - don’t think they will have any negative impacts due to their internal problems? Look at the last 10 years of movement on the US in economic freedom ratings, I think we dropped to the mid teens in a recent rating poll if I remember correctly.
So between the high tier demographic drivers and the likelihood of improvements in economic freedom factors, it would appear that rapid (not all) growth is going to be challenged for the near term.
I’m very concerned about what happens to the stock market in the next 10-15 years when all of the baby-boomers start to cash in their 401ks and retirement plans at the same time. Who is going to buy their stock? At what price? Supply vs demand. If they all start selling to pay for their retirement there has to be a buyer - it’ll either be the government (god forbid); other businesses (with limited growth is it the right move for a board to agree?); or a drop in the price until a buyer accepts based on limited demand.
Sorry for the book
Good insights.
I hadn’t thought of the baby boomers all cashing in in a relatively short time frame. Now that I think of it, this seems like a big problem on the horizon.
Good insights.
I hadn’t thought of the baby boomers all cashing in in a relatively short time frame. Now that I think of it, this seems like a big problem on the horizon.
But immigration plus outsourcing has lead to flat or declining wages and stagnant demand.
That's the bigger picture you are missing: an aging population in the developed world produces stagnant demand, but so does "free trade."
Globalization in its current incarnation provokes a demand-side economic crisis in the developed world leading capital to withdraw from productive investment (because it's not profitable) and move towards asset inflation (either here or in developing countries), which simply increases instability further.
The US was the primary driver of globalization because our trade deficits drove development in East Asia. With the increasing pauperization of Americans, that debt-driven model cannot continue.