Last Update April 30, 2009
Business Planning for Stability by Sten Grynir April 20, 2007 Ever since the Renaissance, and especially since the beginning of the Industrial Age, economic growth has been predicated on three factors, expanding population, improved technology and opening up new lands for exploitation. We are now seeing the end of the era in which two of these three factors play a part. World population is predicted to peak in 2070, and those land areas not yet urbanized, agriculturalized or industrialized are increasingly recognized as important ecological resources whose destruction would have enormous negative consequences. This coming era of population and geographic stability has short term negative consequences, but enormous long-term benefits. These positive benefits, however, will not be realized unless technology continues to play a significant part.
Along with the economic benefits of an expanding population, we have suffered from the drawbacks. An ever increasing burden on natural resources (petroleum, minerals, timber, etc.), increasing devastation of the environment (sewage, air pollution, reduction in natural ecologies on land and in the water), and demands on governmental and private sector social services (pensions, health care) are some of the penalties paid for a population-fueled expanding economy. To some extent, international conflict has been exacerbated by enlarging populations as well.
The short term effects of the peaking of populations around the world will be unpleasant, and will last for about fifty years. Economies will stall or begin to decline, and transfer payments such as social security, where younger workers pay part of the cost of benefits accruing to the previous generation, will become more burdensome. With proper planning, however, these short term problems can be managed, and long term benefits ushered in. The planning window, though, is only about ten years in length. If proper actions are not taken within that period, the downside will be steeper and the upside delayed.
What are the long term benefits that will accrue if the short term is handled correctly? A lighter environmental footprint, lower demand on infrastructure and higher standards of living are but three of the most likely advantages. Progress and economic growth will not come to a halt just because populations stop growing, since the effects of technological advance and social peace and security will ensure that these will continue.
What planning must be done to get us through the hard times and bring us to the good times on the other side? At a minimum, at least seven things are needed:
-Social policies to relieve the economic stress caused by an aging population. For wealthy nations such as the US, this may include encouraging, rather than discouraging immigration, to maintain a flow of young workers whose taxes support Social Security and medicare, whose labor keeps the economy flowing, and whose economic demands keeps industry, construction and other economic sectors perking.
If we don't begin thinking about these issues now, the short run difficulties will become short run disasters, and the long run benefits may never materialize..
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