Except it isn’t. A Ponzi scheme relies on more and more ‘investors’ getting a smaller and smaller portion of the revenues as money is funnelled upwards, and is geometrically unsustainable irrespective of future growth. The modern growth economy relies not just on having more workers but also better productivity as well as inflation to offset a deficit. In a well-managed growing economy deficit spending and carrying debt is actually healthy as long as it doesn’t impact either availability of revenues (dur to debt servicing) or consumer confidence (downgrading Treasury bonds and bills or the equivalent). Any money put into deficit spending on useful things such as education, infrastructure, basic and applied research, foreign development aid, et cetera should be offset by increased future gross domestic product and new markets. And managed growth is a crucial aspect of any viable industrial economy.
As an example, some very ignorant people complain about the money spent in the post-WWII Marshall Plan and equivalent in Japan and Korea, even though those expendatures have paid for themselves many times over in building robust markets for the US to sell products to, and later as trading partners to engage in tradeand shift segments of our economy to when industroes such as steel mills became too expensive or polluting. Similar cases could be made for the Eisenhower Interstate Highway System, the National Parks System, the Federal Aviation Administration and civil avaiation infrastructure, the Tennessee Valley Authority and Rural Electrification Administration, et cetera.
The problem with a declining population, as others have noted, is that there are fewer productive workers and greater expendatures on social and medical entitlements to support post-work retirees. It also puts a stress on the workforce and medical system to support people who require more per capita services, particularly since advances in medical science and public health allow people to live longer into retirement. This may be offset to a greater or lesser extent by improvements in automation which reduce workforce pressure and increase general revenues per capita worker although that will require a more progressive tax system to obtain increased revenues from worker efficiencies akin to the Value Added Tax system of the European Union.
Capitalism—the investment of private equity into production to generate a return on investment—is not an “inherently invalid system”, but unregulated laissez faire market economy with a so-called “flat” tax with massive economic inequity and a handful of people benefitting enormously from the economy while paying a proportional pittance back into the general revenue is not sustainable. Investors should make a profit because that spurs on progressive development, but the notion that private entities are the leaders in technical and social innovation ignores the enormous investment in education, infrastructure, basic research, et cetera, which enable producers to employ effective workers.
In the foreseeable future, assuming populations in the developed nations continue to decline (as they need to in order to reduce overstress on precious natural resources), automation (which is again predicated on technical advances supported by public funding and infrastructure) will allow continued progress in productivity even with a declining workforce, although how fast that will occur and the impact upon economies in the interim is unclear to everyone. However, some jobs, particularly those requiring social connection and other tasks not amenable to automation and machine cognition, will still require a predominately human workforce so it isn’t as if people are going to be thrown completely out of work; they just have to shift to different vocations similar to the shift away from labor intensive agriculture in the early to mid 20th Century into industrial and intellectual (“blue collar” and “white collar” respectively). That will result in social upheaval, which is unavoidable, but given how much better life is for people in the developed world today as compared to a century ago in nearly every metric, we can hold some optimisim about a post-industrial future where work involves more personal involvment rather than just putting in hours, days, and years until retirement.
Stranger
