As the Tory government puts the last touches on another budget, it faces a landscape of sluggish economic growth for the visible future. Our rate of expansion trails that of the US, which itself continues to struggle with a relatively jobless recovery and the interference of political static. Europe appears to have averted the worst case scenarios of a eurozone collapse — for now, at least — but the continent’s stagnating economies show little sign of being able to contribute to global growth. Even the emerging markets in Asia and next-wave countries like Brazil are cooling, generating unease about just who can lead the global economy out of the doldrums.
Many observers argue that we see these troughs with regularity and have always found productivity gains and new opportunities that allow growth to resume its upward trend over time. Just because we can’t see exactly where those gains are lurking, they say, there is no need for faddish new theories that assume we are breaking with history.
And yet having lived in Japan through the mid-2000s and watched policy-makers flail and fail to stimulate growth, I have seen how a postindustrial, export-driven economy can settle into chronic low growth that risks becoming permanent. Two decades of near-flat expansion have changed and strained Japanese society, though, for a variety of reasons, the country has avoided the sort of street eruptions that Europeans are tasting as their postwar social welfare model comes under threat. The democratic institutions and values — and the pension cheques — that we live by have been built in large part upon the premise of economic growth over time.
What happens to Canadians if slower growth becomes baked in? Will our standard of living suffer, or is GDP per capita an abstract measurement of our true well-being? What are the implications for governments, which have made spending commitments that citizens see as a sacred trust? Is our social welfare model safe? Will low growth worsen income inequality?
For this month’s issue we asked a collection of smart thinkers to examine what happens when a society accustomed to decades of growth finds itself facing the prospect of learning to live without that oxygen. Some writers recommend ways out of the slow-growth trap. Critics of untrammelled market forces see slower growth as a blessing, a way to begin reversing the worship of economic expansion, which can carry severe environmental costs and warp our values. But either way, we face making new calculations for our future.