Wouldn't surprise me if that's a big part of the problem.
Despite tax cuts, low interest rates, and other corporate handouts, nothing's getting passed onto the people who do most of the spending. Inequality is higher than ever and the people making the most money need it the least.
My family is relatively well off and our home was purchased back in 2004. Still, the steady march of expenses has certainly increased faster than income.
For me the biggest things are that as the family grows, so has many expenses. We need two big cars now, which are like 150% more than they were in the early 2000s. For health reasons we need to really focus on fresh vegetables and meats and avoid most cheaper foods — which are very volitile price wise.
In 2016, for the first time in a while, the middle class grew (in the USA, anyway): https://money.cnn.com/2018/04/12/news/economy/middle-class/i... .
Also, we're seeing real median incomes that we haven't seen for over 20 years: https://seekingalpha.com/article/4231615-november-2018-media...
But inequality continues to grow at an alarming rate with almost all economic growth going to asset value not wages. Likewise, the cost for necessary goods such as housing, medicine etc far out pace wages.
I'm not sure I'd call that totally accurate. Real wages have been increasing since the Great Recession turned around. That's true. However, it is continuing to increase past the point of previous highs. The middle class inflex happened in 2016, although there doesn't seem to be data since then.
And of course retirement saving are stunningly in adequate for the vast majority. Likely because anyone who wants to save has to compete with people who don't and will work for a lower salary.
It should also be noted that in the past, employees frequently received pensions which rival their take home in total value. And even though pensions have disappeared, wages remain flat.
And make no mistake, a combination of low inflation and low growth is already something very near to a recession. The Fed and other central banks are worryingly close to dropping the ball now, as they did in late 2008. Luckily though the circumstances are not nearly as bad now as they were back then - there's a fair chance that we'll muddle through.
That's generally true, but it's not an absolute, and it doesn't rule out paying higher wages while also maintaining the current level of employment. It's pretty clear from the data  that corporations are earning more than ever and not passing it on to employees.
> This is also why high real wages are so damaging when they lead to higher involuntary unemployment: they actively rob those who are most in need of their rightful incomes! It's why recessions make people angry and anxious for "something to be done", whatever that might be.
That's true, but doesn't apply. Real wages aren't even keeping up with inflation, and are decreasing relative to productivity , so it's silly to claim they're so high they're causing unemployment.
Also, is R&D in fracking transferable? Or is it just tech that will be irrelevant in 20-30 years? (I don't have a good picture on this one; I could see a reasonable argument that we will be using natural gas for a long time, even when we're a mostly-renewable economy, since it's a convenient-to-transport form of energy as LNG).
EDIT: It might be useful for enabling greater storage density of CO2 in rock formations if we attempt to sequester CO2 out of the atmosphere at scale: https://phys.org/news/2018-11-co2-underground-curb-carbon-em...
Destructive uses of aquifers may mean we need skills in underground water table remediation. I don't think fracking directly helps (I think it hinders) but we're going to need to understand how to use it to fix things as well as extract things.
End of the day, the dollar will inflate away in the long run. We will have created more value with oil than the shieks and Russian mob bosses yielded in dollar terms.
We seem to be experiencing that. But people have been great in avoiding the EROEI collapse that some expected, so it does not seem to be a large factor on the world's economy. It is very unlikely that the current stagnation can be attributed to peak oil.
There is some evidence that we are either hitting peak oil, or rising competition from previously-developing countries is choking the West out of energy markets. Energy prices are not cheap at the moment (I'm not accounting for inflation, but according a back of the envelope check these numbers are all growing much faster than inflation).
Crude oil prices went from $35 -> $70 around 2005 and have generally been floating around there since, with short periods of time (a year or two) where they drop down , coal did something similar from $50 -> $80 . In the US, coal use for electricity immediately started dropping off, and Natural Gas has been replacing capacity but not overwhelmingly . There was a 5 year period where gas (ie, car fuel) prices were just out of control, and a long period of time where they were just high.
Most of the US's energy is sourced from petroleum and coal [3, 4]. I'd suggest that although cheap natural gas has absorbed some of the shock, there is evidence of cost pressure. This all seems like a pretty substantial problem (read: threat to political stability at a grand scale), I'm constantly surprised it doesn't get more press.
IF you assume that GDP is no longer a good measure of energy but that the people care about energy more, it provides an interesting interpretation of Trump's 2016 victory, the fracturing of politics and the widespread condemnation of politicians. People's lifestyles are no longer being buoyed by a rising quantity of cheap energy, and they are angry without quite understanding why their lives don't seem to be improving.
It is easier to put tensions aside and work together when you are seeing an increase in your living standards each year - even if you don't agree, it obviously works. Harder to do when they are falling - even if you agree, something seems to be going wrong.
The real problem is "secular stagnation". We just don't need that many people to make all the stuff. The US now has a huge population that's irrelevant, and acts as a dead weight dragging down wages. I've been saying this for over a decade, and it's now conventional wisdom, although it took way too long.
Capitalism is now market limited. There has to be buying power. People who are only marginal players in the economic system don't generate much discretionary buying power. As the CEO of WalMart has said, "Our customers are out of money".
Growth just means the human race getting smarter at being productive, so we can grow more food with less effort, get around in transportation with less cars and drivers, buy the things we need at lower prices and with less friction.
You could argue that once literally everything is roboticized and automated with strong AI then there's no more growth... except humans will be looking for even better real-life experiences, better art, better teaching, better personal connections... and robots and technology will still evolve to be better designed, use less energy, use less resources...
I'm not sure I can imagine a world in which people didn't want anything else to be improved that could possibly be improved, which is what a world with no growth would have to be.
Look at the chrts in http://www.econ.ucdavis.edu/faculty/gclark/papers/long_march...
Of course you can. We've been doing for most of the last 2000 years, we'll keep doing it. Mostly.
We can definitely grow by 3% per year forever, it's easy if you first consider we don't need any real material change for that to happen - it could just mean the 'numbers on our money change' i.e. just inflation.
But more likely, there will be material progress and 'growth' for the next 2000 years, just as there was for the last 2000 years. (Mind you, most of it has been since the dawn of the industrial revolution).
If you open your mind just a shade and consider how vastly the world has changed over the last 100 years alone, it's not hard to imagine how things could change in the next 100. I was alive when the internet went from nothing to 'world changing' and nobody - I mean nobody really guessed at the profound changes it would mean. There were a few thinkers who got a few things right, but nobody had the faintest idea. The same can be said for the dawn of the automobile/airplane one century ago.
There are a few technologies on the horizon which could shatter our world view, namely quantum computing and fusion. Just to name two that we know of.
We don't know if they will fly, but if they do, it will change everything.
Quantum computing may imply de-facto near unlimited computing for everyone. Consider that Deep Learning was only on the chalkboard until we had cloud computing, imagine what we will be able to do when it takes 0.1 seconds for insanely complicated neural networks to 'learn'?
If fission flies, it could mean unlimited energy for everyone. Imagine if the cost of electricity went to 0.0001 cents/kwh? What does that mean? It sounds crazy, but remember that 200 years ago, before the dawn of the industrial revolution, you did it 'by hand, or by horse' hence 'horsepower' as a unit of measure. When coal and machines came around it would be comparable to fission happening now - the world literally came out of the dark.
Vast changes are afoot, and will be for a very long time as long as we wipe ourselves out by some series of stupid acts.
Stop attacking with ad hominem and address the argument -> there is absolutely nothing preventing perpetual growth. Nothing at all.
History has shown there to be consistent exponential rates of growth through long periods, and it's utterly reasonable to assume this will continue.
Same is true of some other central banks. I always am frustrated when I hear about japan not being able to raise inflation rates much. If their activities have no impact on inflation at all, why not buy up all the securities and foreign exchange in the world by printing yen? The Japanese could live entirely off the dividends because of this magical property of their central bank.
Our society, and I think capitalism in general, seems to be pinned on the foundation of perpetual growth.
The question for me is: how can we have infinite growth on a planet with limited resources?
I find it sad but unsurprising that a reasonable question like this attracts a bunch of downvotes here.
I heartily recommend Higgs' book "Collision Course" -- it doesn't provide solutions about how to get ourselves out of the mess that we're in, but it does provide a lot of historical evidence explaining how much public thought and speech around economic growth has been warped by propaganda:
Kerryn Higgs -- Collision Course: Endless Growth on a Finite Planet
A few quotes from reviews:
> If modern society ever had a core taboo it is against speaking favorably of limits, especially with respect to growth.
> Higgs explains brilliantly how our ideas about economics and the environment have been carefully warped and manipulated over decades, just so a small minority could get rich.
Edit. Every example other people are posting have been around for longer than most of us have been alive. I’m not trying to take a dump on the notion of progress, but I feel the distinction between “new” and “maturing” is being lost.
Long-distance message transmission
Electric lighting (LED uses less than 10% of the power of incascendent bulbs)
Travel, in general (remember luggage did not have wheels until the 70s because it was expected that a traveler would have servants to carry their luggage)
The same can happen with materials: there is definitely enough iron and brick and glass and cobalt on this planet to enable everyone to live in comfort and safety. One iPad likely requires far less natural resources than a C64 and screen, while delivering far more value. And once people are clothed, and fed, and housed, consumption increasingly turns to “intellectual” value, i. e. theatre, or Netflix, or a good book.
As we become more sophisticated, we learn how to make better and better use of resources.
Right now, we value some resources more than others. As we evolve, that dynamic shifts.
How valuable was Uranium ore 100 years ago? Well, it was just a kind of poisonous rock. Now it can power cities.
Freshwater was 'unlimited' 100 years ago, now it's a little more scarce so we have to put economic terms around it, meaning it'll be too costly for some industries which will adapt.
1. Some resources are truly unlimited. We can ultimately meet all our food and energy needs via unlimited energy from the sun, for example. If necessary, the economy would adjust to do just that.
2. We aren't going to be limited to one planet forever. We'll be mining extraterrestrial objects long before we run out of stone or metal on Earth.
Reducing material intensity and energy intensity allows growth under material and energy constraints.
If population starts to decline, you can continue increasing GDP/capita even in material terms. Although in practice I think reduced demand from population decline is bigger issue than material resources.
The folly of capitalism is that it realizes a world in which constant growth is a natural law of the universe.
For example, if economic growth persists black body ration independent of power source raises the surface temperature of the earth to boiling in a few hundred years.
First: For a given constant T > 0 there exists C > 0 such that Temp(earth) <= T implies Energy(earth) <= C
> Right, if you plot the U.S. energy consumption in all forms from 1650 until
> now, you see a phenomenally faithful exponential at about 3% per year over
> that whole span. The situation for the whole world is similar. So how long
> do you think we might be able to continue this trend?
> Alright, the Earth has only one mechanism for releasing heat to space, and
> that’s via (infrared) radiation. We understand the phenomenon perfectly
> well, and can predict the surface temperature of the planet as a function of
> how much energy the human race produces. The upshot is that at a 2.3% growth
> rate (conveniently chosen to represent a 10× increase every century), we
> would reach boiling temperature in about 400 years. [Pained expression from
> economist.] And this statement is independent of technology. Even if we
> don’t have a name for the energy source yet, as long as it obeys
> thermodynamics, we cook ourselves with perpetual energy increase.
> At that 2.3% growth rate [of global energy consumption], we would be using
> energy at a rate corresponding to the total solar input striking Earth in a
> little over 400 years. We would consume something comparable to the entire
> sun in 1400 years from now. By 2500 years, we would use energy at the rate
> of the entire Milky Way galaxy—100 billion stars! I think you can see the
> absurdity of continued energy growth. 2500 years is not that long, from a
> historical perspective. We know what we were doing 2500 years ago. I think
> I know what we’re not going to be doing 2500 years hence.
> If we tried to generate energy at a rate commensurate with that of the Sun
> in 1400 years, and did this on Earth, physics demands that the surface of
> the Earth must be hotter than the (much larger) surface of the Sun.
> Then in order to have real GDP growth on top of flat energy, the fractional
> cost of energy goes down relative to the GDP as a whole.
> How far do you imagine this can go? Will energy get to 1% of GDP? 0.1%? Is
> there a limit?
> if energy became arbitrarily cheap, someone could buy all of it, and
> suddenly the activities that comprise the economy would grind to a halt
Or if you're talking about the phenomenon of economic deflation in general (the opposite of inflation), what does that have to do with nature? Is there a proven link that higher inflation rates lead to further negative environment impact? It's not clear to me why that would be the case.
+ 'Resources' are a whole other issue
+ By whose definition do you mean 'wasting'?
+ Deflation is a scary thing not because prices go down, that alone is just a number. When deflation hits, what happens is businesses lose incentive to invest. They stop, further driving the spiral.
The reason that the Fed shoots for 2% inflation and not 0% is to keep the treadmill moving just a little bit forward - if it stops or goes negative, it has crazy scary implications.
Businesses need to see the economy expanding in order to make investments in people, capital equipment etc. which is why 'a little bit of inflation' is good.
The overspending always must come to an end when for every additional monetary unit in debt you get very low improvement in the economy but you in debt the future. You are living from your children income.
What usually comes after that is destruction of capital, either by war(you loose all what you have) or inflation, deflation or both simultaneusly(terrible deflation in some things,terrible inflation in others).
You can make the general population pay for it(raising inflation higher than incomes), or you can make the owners of capital pay for it(haircut of 30% or so of their worth).
Of course the owners of capital, like the owners of the NewYorkTimes do not want to pay for it. So they will try to influence the population to do what is best for them basically with propaganda.
In the past it was basically States and Church the only capable institutions for using propaganda. Right now there are also private institutions who control what people feel and think through PR, ownership of media, think tanks and Universities.
Borrowing from your children's future is perfectly fine if your borrowing lets you bring things like clean running water, electricity, working transportation systems, etc.
Get ready, it’s coming.