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What’s Wrong With the Global Economy?


Global markets were seized by fear last week that trade wars were slowing growth in Germany, China and the United States. But the story here is bigger than President Trump and his tariffs.

The postwar miracle is over. Since the financial crisis of 2008, the world economy has been struggling against four headwinds: deglobalization of trade, depopulation as labor forces shrink, declining productivity and a debt burden as high now as it was right before the crisis.

No major economy is growing as fast as it was before 2008. Not one is growing faster than 10 percent, the rate experienced by the Asian “miracle economies” before the crisis. In almost every country, the national discussion focuses on what must be done to revive growth and ignores the fact that the slowdown is driven by forces beyond any one government’s control. Instead of dooming ourselves to serial disappointment and fruitless stimulus campaigns, we need to redefine economic success and failure.

Germany is one of at least five major economies on the verge of a recession, which is typically defined as two consecutive quarters of negative growth. But the real issue is whether that definition still makes sense in a country with a shrinking labor force like Germany’s.

Its working population has been declining for years and is expected to fall to 47 million from 54 million by 2039. And it’s not alone in this. Forty-six countries around the world — including major powers like Japan, Russia and China — now have shrinking populations.

Demographics are usually the main driver of economic growth, so it is basically inevitable that these countries will now grow at a much slower pace. And we are not talking about minor population declines. Projections for 2040 show China’s working-age population falling by 114 million, Japan’s by 14 million. With a shrinking labor force, these economies will inevitably slow and, at times, contract. To keep calling two negative quarters in a row a “recession” implies that this outcome is somehow abnormal or unhealthy. That will no longer be the case.

To avoid overreacting, the discussion about economic health needs to shift to measures that better capture satisfaction and contentment, like per capita income growth. In countries with shrinking populations, per capita incomes can continue to grow so long as the economy is shrinking less rapidly than the population. This helps explain why, for example, Japan isn’t facing more social unrest. Its economy has grown much more slowly than that of the United States in this decade, but because the population is shrinking its per capita income has grown just as fast as America’s — around 1.5 percent per year.

Shrinking populations also help explain why unemployment is at or near multi-decade lows, even in countries with serious growth worries, like Germany and Japan. Gainfully employed Germans and Japanese won’t really feel as if their countries are in a slump until per capita G.D.P. growth turns negative — which may prove to be a more useful way to think about recessions in this new era.

The definition of success also needs to change. Many emerging countries still aspire to the double-digit growth rates experienced by what were known as the “Asian miracle economies” from the mid-1960s to the early 1990s, when populations and trade were booming. But no economy had grown so fast before then, and as population and trade surges recede, it’s unlikely any country can repeat those feats.

As growth downshifts, even little miracles are disappearing. Before the 2010s, it was common for one in every five economies to be growing at 7 percent or more annually. Now, among the world’s 200 economies, just eight, or one in 25, are on track to grow 7 percentthis year. Most of those are small economies in Africa.

When the news emerged that China’s economy had slowed to just 6 percent, a new low, many investors and analysts rang the alarm bells. But the reality is that economies rarely grow as fast as 6 percent if the population is not booming too. Not only did China’s working-age population growth turn negative in 2016, but it is one of the countries hardest hit by slumping trade, declining productivity and heavy debts. If the Chinese economy really were growing at 6 percent in this environment, it would be cause for celebration, not alarm.

The benchmark for rapid growth should come down to 5 percent for emerging countries, to between and 3 and 4 percent for middle-income countries like China, and to between 1 and 2 percent for developed economies like the United States, Germany and Japan. And that should just be the start to how economists and investors redefine economic success.

This rethink is overdue. The number of countries with shrinking populations is expected to rise to 67 from 46 by 2040, and the decline in productivity growth is in many ways reinforced by heavy debt burdens and rising trade barriers. Redefining the standard of economic success could help cure many countries of irrational anxieties about “slow” growth, and make the world a calmer place.

NY Times

30 Comments on "What’s Wrong With the Global Economy?"

  1. makati1 on Sat, 17th Aug 2019 6:18 pm 

    NYT, a major US propaganda outlet…

    “Growth” is over and calling contraction “degrowth” is just an attempt to cover up reality. The only thing that requires “growth” is the capitalist system. The sooner it crashes and burns, the better.

    When EVERYONE has to sweat for their living, the world population will level out. No “investors” sitting in their Martha’s Vineyard mansion checking the DOW, then going out for a round of golf. NO Bill Gates, Soros, etc. meddling in other country’s business. A world similar to the 1800s, before FFs.

    It is only a matter of time before the SHTF an BAU vanishes into the past…permanently. Are YOU prepared?

  2. Theedrich on Sat, 17th Aug 2019 6:40 pm 

    The masses are steered by their subconscious.  A subconscious that the masses do not even know they have.  That is why dictators from time immemorial have been intent on controlling the dominant religion of their “subjects.”  The Western mass media now serve as a quasi-religious pulpit forming the subconscious of the multitudes, including of the “intelletuals.”  Thus, when the media perpetrates a blatant lie and repeats it countless times, the recipients absorb it subliminally and come to accept it as common truth, whether it be that the earth is flat or that some slut named Angela Merkel will give you a post-mortem paradise if you obey her.

    This is the true path to power:  control of the means of persuasion, using messages which are as simplistic as possible.  History proves that humanity which, like the other primates, loves murder and killing, will believe absolutely anything, no matter how absurd, so long as it does not require immediate proof.

    Today the combination of maniacal materialism and anti-evolutionism is turning mankind into a criminal species.  The elite-controlled media celebrates this death spiral as (anti-racist) “progress.”  And progress it is.  Of the earth down the cosmic commode.

  3. Cloggie on Sun, 18th Aug 2019 2:49 am 

    “What’s Wrong With the Global Economy?”

    Declining IQ.

    – Around 1900, the planet had 30% whites.
    – Today 17%.
    – By 2100 8% (if some right-wing revolution doesn’t happen and that G*ddamn US empire and western corporatism doesn’t get thoroughly destroyed)


    Nothing is more desirable than a complete reset, initiated by a global financial meltdown and economic depression and end of international trade and development aid, with all the women out of work and tax-rates that benefit people who are married and have children (“wanker-tax”).

    New chieftain EU-commission, Ursula von der Leyen giving the good example:

    I had hoped that “peak oil” would deliver such a crash, but helas, Heinberg hadn’t done his homework.

    Now we need to hope for a second “2008”, again originating from the US.

    It’s coming:

    Trump-US and Brexit-UK dangling at the bottom of the country surplus/deficit-ranking, pointing at the collapse of the illustrious “Five Eyes”.

    James Howard Kunstler in the past has speculated that Japan could be the first post-industrial society. I think he overlooked the US and UK. But then again, is there anything Kunstler wasn’t wrong about?

    LOL. Kunstler has deleted his column! Ouch!

  4. Cloggie on Sun, 18th Aug 2019 3:15 am 

    “Yabut, doesn’t Brexit automatically imply the rebirth of the British empire?”


    “Project Fear 2.0? ANOTHER leaked No Deal Brexit dossier predicts fuel, food and medicine shortages, port chaos and Irish border disruption on Oct 31 as Boris Johnson vows to crash out the EU if necessary”

    There is a reason I planned an extra vacation to the British Isles (the 5th and last this year) shortly before the Brexit date of October 31, so I can later say I was there before the disaster happened. Travel-route:

    Hoek van Holland, ferry to Harwich, accross the UK to Mull of Kintyre, take some ferry to Ireland, inspect the advance of the Dutch army in 169x, battle of the Boyne and the British-Irish border and return via Dublin-Holyhead to Dover-Calais.

    Soon it will be “1939” all over Europe again, albeit with the geopolitical cards significantly redistributed. Hint: not to the advantage of the UK. The transatlantic trade route is in significance going to be replaced by the all-Eurasian New Silk Road.

    Meet the new giants of the 21st century, in the eyes of the Chinese (and they are right):

    F* the US oligarchs and Mob’s tribe, race is everything.

    P.S. somebody copied Kunstler’s column about Japan:

  5. Cloggie on Sun, 18th Aug 2019 3:53 am 

    “What’s Wrong With the Global Economy?”

    Note, this is not just Britain, it is all over the West, albeit in varying degrees, but at least this piece is in English:

    “PETER HITCHENS: Remember those useless A-Levels? The people who took them now run the country…”

    And it all happened after 1945, or perhaps 1965, when the full consequences of that cancerous egalitarian US empire began to make itself felt.

    Why Eastern Europe (incl. Russia) matters and who will replace the British within the EU after Brexit:

    “And employers increasingly hired Eastern Europeans who had been to proper, disciplined, knowledge-based schools, instead of semi-literate British school products who didn’t know it was important to turn up on time.”

    They will be mostly gone from Britain, post-Brexit and replaced by Farage and BoJo’s darkies from the Commonwealth. What could possibly go wrong?


    Please Macron, pull the plug on October 31 and you, Germany and Russia are together going to replace the US and China as the most prominent entity in the world.

  6. Famlin on Sun, 18th Aug 2019 10:42 am 

    Despite aging population, japans GDP growth is still positive, it will be many more years before chinas aging population makes any impact.

    And chinese are not as much racist as japanese, so they will bring chinese from other countries if situation needs.
    Or they can even bring non-chinese.

    Still if there is trouble, they will force women to have more children.

    Summary: China will never face any problem, communist party knows how to deal.

  7. Chrome Mags on Sun, 18th Aug 2019 2:16 pm 

    “Thus, when the media perpetrates a blatant lie and repeats it countless times, the recipients absorb it subliminally and come to accept it as common truth,…”

    Yes, I’ve seen proof of this. The Republicans are masters of the art of repetitive messaging. They will repeat something so many times it inevitably like you write about, penetrates the sub-conscious.

    The proof was during the last prez campaign as hardened Dem voters I knew actually bought the idea Hillary was corrupt from constant messaging, but couldn’t cite a single bit of information to back up that assertion.

    At this point I don’t know if it is any longer possible for a Dem candidate to win a prez election, due to the success of the repeat it endlessly strategy. Literally any kind of repeated comment, no matter how pathetically idiotic it may be will be accepted if repeated enough times.

  8. DerHundistLos on Sun, 18th Aug 2019 2:58 pm 

    The following reality speaks to the cruel and destructive present state of affairs of US politics despite one million plant and animal species at risk of extinction worldwide, according to a 1,500 page report issued by the UN in May:

    Strongly endorsed by President Richard Nixon, and approved by huge margins in both chambers of Congress (the House vote was an astounding 355 to 4), the Endangered Species Act would stand zero chance of passage in today’s poisoned political climate. The moderate Republicans who thrived in Congress in Nixon’s day are themselves an endangered species, if not, for all practical purposes, extinct.

    Yet, some 40% of the American public supports Trump and his Republican enablers. Do these people have a suicide wish? Do they care about the morality of extinguishing life? Don’t Evangelicals feel a sense of obligation to conserve God’s creation?

    This sick and demented thinking tells me the end for humanity is near. How much worse can it get?

  9. print baby print on Sun, 18th Aug 2019 3:07 pm 

    “What’s Wrong With the Global Economy?”
    The capitalisam is dead , zombie, too big to fail , that’s what’s wrong with global economy

  10. Duncan Idaho on Mon, 19th Aug 2019 9:41 am 

    Greenland’s ice sheet just lost 11 billion tons of ice — in one day

  11. Cloggie on Mon, 19th Aug 2019 1:18 pm 

    German news now: Macron and Putin meet in a cordial atmosphere. Macron demands a European-Russian rapprochment.

    PBM, its coming!

    “Frankreichs Präsident Emmanuel Macron hat bei einem Besuch von Kremlchef Wladimir Putin für eine Annäherung zwischen Europa und Russland ausgesprochen”

    With 640 million Europeans we are going to eclipse ZOG and take over. American alt-righters, don’t despair. We’re going to liberate you back.

  12. Cloggie on Mon, 19th Aug 2019 1:50 pm 

    Mrs Macron and mr Putin on kissing terms:

  13. Cloggie on Mon, 19th Aug 2019 2:42 pm 

    Macron: “Russia is European”

    “Zugleich plädierte er für eine neue “Architektur der Sicherheit und des Vertrauens zwischen der EU und Russland”.”

    Macron pleaded for a new security architecture and trust between the EU and Russia.

    Both Putin and Macron are optimistic that with the new president a lasting peace can be achieved in Ukraine. when that problem has been solved, Russia can return to the G8.

    Oh the sheer beauty of Brexit, thrown unexpectedly into our continental European lap!

    UK out, Russia in.

  14. Robert Inget on Mon, 19th Aug 2019 2:56 pm 

    Trump calls for zero interest rates.
    IOW’s crank up printing presses kill USD value.

    Trying to put off ‘the big drop’ Trump instead looks to hyper inflation to pay down two trillion in debt.

    In all my years as a real estate investor, I’ve never met a developer who didn’t love inflation.

  15. Cloggie on Mon, 19th Aug 2019 3:01 pm 

    Populist Orban invites Merkel and she accepts! Together they commemorate “1989” in Hungary.

    Very good!

  16. Robert Inget on Mon, 19th Aug 2019 3:03 pm 


    Start Building an Ark.

    I have no friends so, building tiny house boat.
    Beats the shit outta moving to Kansas.

  17. Cloggie on Mon, 19th Aug 2019 4:07 pm 

    BBC Ndws at at Ten: item on the rise of the right in the US:

  18. Duncan Idaho on Mon, 19th Aug 2019 7:33 pm 

    “The American fascists are most easily recognized by their deliberate perversion of truth and fact. Their newspapers and propaganda carefully cultivate every fissure of disunity, every crack in the common front against fascism.”
    ~ Henry A. Wallace, 33rd Vice President of the United States

  19. Cloggie on Tue, 20th Aug 2019 3:18 pm 

    “Volkswagen Has An Opportunity To Bankrupt Top Competitors”

    Not going to happen. Deglobalistion and protectionism will prevent that. Global trade will nosedive in the current climate.

  20. Cloggie on Tue, 20th Aug 2019 3:27 pm 

    “Onshore Wind In Europe Could Meet 100% Of Global Energy Needs”

    “Researchers at the University of Sussex in the UK and Aarhus University in Denmark say Europe has the capacity to produce more than 100 times more renewable energy from onshore wind farms than it does today. Their study was published recently in the journal Energy Policy. It analyzes all the sites in Europe that are suitable for onshore wind farms and finds Europe has the potential to supply enough energy — 52.5 terawatts of nameplate capacity — for the whole world until 2050.”

  21. Rick on Tue, 20th Aug 2019 3:52 pm 

    Here are things that are wrong with our global economy:

    1).Mismanagement from the top.
    2).Exploitation (slave labour).
    3).Robots taking our jobs.
    6).Overconsumption of non-renewable resources.
    7). Disregard for workers’ safety.
    8). Government corruption and incompetence.

  22. Rick on Tue, 20th Aug 2019 4:32 pm 

    We need fair trade, not “free trade”. People matter, not short-term profits.

  23. onlooker on Tue, 20th Aug 2019 7:41 pm 

    as you guys debate the Economy it is becoming irrelevant
    Amazon on fire

  24. makati1 on Tue, 20th Aug 2019 7:48 pm 

    onlooker, yes, the serfs are worried about their $$$ while they destroy the ecosystem they need to live. They believe that eternal growth/waste is a fact, not a delusion.

    So many are going to be devastated when the SHTF and all their dreams are shattered. But then, how many generations are left to worry about it? Few,I’m afraid.

  25. onlooker on Tue, 20th Aug 2019 7:54 pm 

    Yes Makati, the cognitive dissonance is astonishing. We are fast aporoaching an unlivable Earth. I am glad you replied as you are the one poster here I still look forward to reading. Salamat.

  26. Gaia on Wed, 21st Aug 2019 6:49 am 

    Decades from now, there won’t be any internet.

  27. makati1 on Wed, 21st Aug 2019 7:48 am 

    Gaia, I don’t think it will take decades. What could end it sooner?
    1. A major war.
    2. A solar EMP.
    #. A man-made EMP.
    4. A total collapse of the world economy and globalization.
    5. ????

    More likely, a fragmentation by country to keep their sovereignty and be out of the US ‘security” system. I vote for the last one. Under way now, I think.

  28. Gaia on Wed, 21st Aug 2019 7:50 am 

    I agree, makati1.

  29. makati1 on Wed, 21st Aug 2019 7:51 am 

    onlooker, I try to see the real world. I have nothing to gain by supporting BAU. I fear fro my grand kids as their live swill likely never be as nice and secure as mine has been. The struggle to survive will be more and more difficult as the years pass.

  30. Gaia on Wed, 21st Aug 2019 7:57 am 

    Tax the rich!!!!

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