Stress test your assumptions!

If you’re wondering what the fuss is about, or why a few tweaks here and there won’t solve our problems – then this page is for you.

Test your assumptions about what’s possible, and what changes are coming. We “stress test” our banks to try and see if they can survive the next financial meltdown, why not try the same thing for yourself?
If you still feel that there isn’t anything wrong, that there isn’t anything coming along that a few adjustments in current policy can’t handle, then you should vote for one of the old parties.

Growth will come
What we need is growth?Growth, in the sense of higher GDP of the current economy, is advertised as the fix to our social and financial problems: once growth returns we will all get jobs, tax revenues will rise, we will pay off our debts, and all live comfortably and affordably into our old age.

Is that true? Doesn’t “growth” mean all of the following too?

  • Every small signal of growth is matched by a rise in the oil price, because every industrial economy is dependent on fossil fuels. So economic growth just funnels more money to petro-states.
  • Industrial economies are not only dependent on oil, they are also very inefficient and resource intensive. Economic growth means more resource consumption and more waste.
  • The waste generated by increased industrial production is dangerously destabilising our environment, polluting our water, our land and our air.
  • Growth now means more trade, and trade relies on transport that runs on fossil fuels.

Growth without retooling our economy will only drive us into the ditch faster.

Many argue that growth will not come, and that it is time for the economics of enough. http://www.guardian.co.uk/business/economics-blog/2013/may/01/economics-of-enough

An ageing population
[[{“type”:”media”,”view_mode”:”300wide”,”fid”:”122″,”attributes”:{“alt”:””,”class”:”media-image”,”height”:”193″,”style”:”float: right;”,”typeof”:”foaf:Image”,”width”:”300″}}]]If we can’t afford to take care of ageing population today, how will we cope when it doubles in size over the coming decade?

Wasted youth
Where’s the work? There is increasing understanding that the modern economy will destroy more jobs than it creates. If we are expecting gainful employment without significant change, we’re betting on a fantasy.

There is work, lots of work! But it’s doing things that improve our lives, not making things destined for the rubbish tip. We have a massive backlog of house building and infrastructure, we can and should have many more trades and crafts people to build and repair things, and there’s lots of work looking after children, the aged and the less-abled. A society that enables all of those jobs will be one in which the cost of labour is lower, not higher.

Unprecedented financials
Ever since the collapse of 2008, the world’s banks have pumped extra cash into the financial system, partly to support failing banks and partly to try and stimulate the real economy by making everyone feel richer (because the price of their assets, like houses and shares, have been reinflated).

What has not changed significantly since 2008 is the level of debt carried by both countries and individuals. This is OK right now because interest rates are at historic lows.

As soon as things start to wobble, interest rates will go up. As soon interest rates rise millions of individuals will not be able to afford their debts, and dozens of countries will go bankrupt.

Today the UK is paying £5,000,000 an hour in interest, and borrowing £10,000,000 and hour. If interest rates rise by only 2% it would wipe out our whole defence budget, or half of our education budget![[{“type”:”media”,”view_mode”:”300wide”,”fid”:”160″,”attributes”:{“alt”:””,”class”:”media-image”,”height”:”343″,”style”:”float: right;”,”typeof”:”foaf:Image”,”width”:”300″}}]]

There are a number of scenarios in which the wobbling starts, here are a couple:

  • real economic growth does not come (so far this is true), and so asset prices (houses and shares) start to look inflated, and start to fall because people want to sell them before others also see them as too high
  • the patience of some country or another, with either their austerity or another countries’ bailouts, runs out, and a domino of national bankruptcies starts

And that’s all without even addressing the changes needed to support climate stablity

So if you look at these potential scenarios, and you ask yourself if our existing system is ready to handle any one of these, let alone multiple at the same time, do you still feel like we can make through with just a few tweaks here or there? 

 

2 thoughts on “Stress test your assumptions!

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  1. Klaus Schwab, founder and chairman of the WEF, has told the business executives, academics and government officials attending Davos this year that much remains to be done. “Economic growth patterns, the geopolitical landscape, the social contract that binds people together, and our planet’s ecosystem are all undergoing radical, simultaneous transformations, generating anxiety and, in many places, turmoil,” he said.http://www.theguardian.com/business/2014/jan/19/world-economic-forum-davos-issues-2014

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