A Politically Motivated Growth Imperative

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As the essential challenge to GDP growth gains traction it will become ever more important to build support for the institutional changes needed to eliminate the politically constructed growth imperative of the Wall Street financial system. Here are two examples.

  1. If it appears that wages are rising, the Federal Reserve raises interest rates to slow the economy to increase unemployment and maintain a downward pressure on wages. The announced purpose is to prevent wage “inflation.” The unstated purpose is to make sure that the gains of economic growth and productivity are captured by money people rather than by working people. This means that unless the economy is growing fast enough to create sufficient new jobs, not only to accommodate natural population increase, but as well to absorb workers whose labor has been made redundant by productivity gains, unemployment will spread and the economy will ultimately collapse unless action is taken to stimulate consumption growth.
     
  2. Because our current financial system depends on private banks to create money by issuing loans at interest, the overall economy must grow fast enough to stimulate sufficient new borrowing to put enough money into the pockets of previous borrowers to allow them to pay the principle and interest due to Wall Street bankers as payments become due. Otherwise, borrowers are forced into default and the issuing banks face bankruptcy unless bailed out with public funds. There is no inherent need for perpetual economic expansion. What appears to be a systemic imperative for GDP growth is the result of politically motivated system design and management choices that enhance Wall Street profits. These can and must be identified and changed as part of the transition to an economic system that supports ecological balance, shared prosperity, and living democracy.