The Quick Rise & Inevitable Decline of the Modern Economy
I am very interested in our economy and how we got from a hunter-gatherer lifestyle (not that many years ago) to where we are today.
If you look at the timeline of human history, there are certain inventions that have allowed the human population to explode and expand, which has also driven economic activity to increasingly new heights.
The most powerful of these inventions and their impact on human society, in approximate chronological order (please spare the historian corrections) would be:
- hunting devices: instead of being hunted, we became the hunter. Small game became big game. We could now feed more bodies
- fire: heat supplied from saved untold lives from hypothermia and cold weather conditions, allowing human population to expand geographically
- shelter: propagated health and population growth
- clothing: allowed humans to live in all climates on the planet
- agriculture: storing food allowed humans to avoid famine and population to explode by expanding food supply and diversification
- use of domesticated animals for transportation, agricultural work, and food consumption: food and transport improvements
- bartering: trade was the first economic activity and it still exists to this day
- monetary exchange: increased commerce activity previously limited by physical goods
- boats: permitted inter-continental trade and population expansion
- the furnace/stove: permitted geo-location expansion to the poles
- banks: personal economic safety and debt to grease the economic engine
- modern water purification: allowed population to explode further
- modern four-walled shelter: drove significant exchange of wealth in building and filling the homes
- printing press: education and advertising to drive commerce
- steam, electric, and fuel-engines: transportation
- the use cheap fossil fuels to power engines: powered engines and transport of people and commerce
- electricity: powered machines, appliances, and light
- light bulb: now humans could work beyond day light hours
- telegraph: increased the speed of delivery of communication
- trains: moved huge/heavy materials quickly
- refrigerators: permitted the storage of perishable food
- phones: rapid communication by everyone
- the 40-hour workweek standard: humans jumped from 2 to 8 hours of work per day over time, drastically increasing economic output
- automobiles: revolutionized travel and geo-location
- the postal service: a service to transport goods
- highway system: permitted fast, simple nation-wide transport of people/goods
- planes: fast inter-continental travel
- radio: more advertising to drive commerce
- credit cards: improved ease of transactions
- television: even more advertising to drive commerce
- air conditioning: geo-location expansion to the equator (its impact is very underrated – how different would population patterns in the U.S. be without it?)
- cheap global labor: why make stuff at home when you can pay someone across the sea 10% of the wages?
- computers: storage of data without physical constraint
- cell phones: rapid mobile communication
- the internet: cheap transfer of data and information to everyone. Enhanced commerce activity
Did I miss anything?
Each of these inventions were the result of humans becoming more clever about how they could manipulate the physical world to the benefit of themselves and/or their fellow human beings. Each solved what their inventors deemed to be a human “problem”. The more recent the invention, the more refined the problem solved.
Over the millions of years of human history, most of these inventions came within the last 200 years. Each has created a sizable jump in economic activity. The inventions that have come within the last 100 years have driven the overall value of an increasingly complex global economy, jobs, and personal wealth.
Like a giant machine that needs the addition of new parts to mask a problem or continue running, the addition of each new cog has resulted in an increasingly delicate inter-dependent system.
A few examples of these dependencies include:
- the economy is dependent on the aforementioned inventions working
- the economy and wealth not deteriorating from inflation is dependent on these inventions being powered by cheap fossil fuels
- jobs are dependent on the continued growth of the economy
- humans are dependent on jobs to buy stuff
- the economy is dependent on government and people using debt to pay for stuff they don’t need
- debtors are dependent on creditors offering credit
- the economy is dependent on people buying stuff
- the economy is dependent on people paying off their debts
- the economy is dependent on cheap manufactured junk from overseas driving profit
- investment returns are dependent on the continued growth of the economy
- population growth and economic growth is dependent on the use and manipulation of resources (inventions)
- population is dependent on food production
- affordable food production is dependent on cheap fossil fuels
- growth of the economy is dependent on either: a.) new inventions to drive GDP or b.) population growth to drive GDP
But what happens when:
- the cheap fossil fuels used to power the inventions and food production become increasingly rare or run out?
- the resources used to grow the population become increasingly rare or run out?
- the population doesn’t grow or starts to decline?
- governments no longer can pay their debt?
- individuals can no longer pay their debt?
- the cheap labor overseas catches up in wage equality?
- people run out of money to buy stuff and pay off their debt obligations?
- GDP stalls or starts an unstoppable decline?
- there are no more significant inventions to drive the economy?
- there are just too many of us to take responsibility, address, and fix the problems we’ve created?
- humans get tired of feeling like they are nothing but commoditized labor?
- gross income inequality
- high turnover/dissatisfaction with work
- personal debt
- government debt
- political corruption
- currency manipulation/quantitative easing
- shrinking or flat monetary wealth
- environmental degradation
- and a slow reversion back to basic needs
Economic growth has had a great run. But what more evidence do you need that we are dangerously close to peaking?
A new invention or two may come along to briefly lube up the economic machine, but it will only delay the inevitable decline.
You can see the trend against bigger, better, nicer, and more expensive everywhere around you. Deep down you know this. It’s partly why you are reading this very commentary right now.
Welcome to the new economy.
It’s already been here for a while. And it’s not going away.
The more extreme it gets, the more basic skills and meeting basic needs will be valued.
Three things to ask yourself:
- Am I financially/physically/mentally/psychologically/spiritually in position to succeed against the challenges the new economy will throw at me?
- Do I have the right skills to fall back on today, 5 years from now, 10 years from now, or even 20 years from now?
- If I don’t have #1 or #2, what is it going to take to get me there?
We all have some work to do.
Believe it or not, I’m kind of looking forward to it.