The factor of people’s expectations, left out of this discussion so far, would change the outcome somewhat.
The effect of rising expectations would be to stop the “boom” and return to “stagflationary” conditions sooner than if resource depletion alone were the depressing factor.
The mechanism whereby this would take place is described in other posts. In one way it is better for expectations to rise and have this effect because it puts a brake on the process of resource depletion with all its unhappy results. But it is said elsewhere in these posts, and will not be denied here, that rising expectations in the more perfluent countries are a major obstacle to the achievement of a steady-state or sustainable world economy, that is by deliberate policy measures rather than by default.
Rising expectations impede the steady increase in perfluence to which more perfluent people look forward, but this is also blocked by the fact of the earth’s limits. The rising expectations completely ignore these limits as if they did not exist.
If people could somehow be persuaded to recognise, understand, and take account of the fact that the earth’s wealth is limited and that there must be a limit to the increase of throughput, then they would reduce their expectations.
But this reduction of expectations would enable the economic systems to work more efficiently, putting upward pressure on the throughput rate, with a consequent acceleration of the rate of depletion of wealth. So while rising expectations impede the attainment of rising perfluence, falling expectations of perfluence temporarily make it more attainable.
Governments can’t go on fuelling expectations until economic systems seize up, nor can they allow wealth throughput to surge ahead of renewal rates until economic systems break down under intolerable stress.
In practice it is easier to let expectations rise than to educate populations about the limited nature of the earth’s resources – apparently a most difficult concept for most people to understand. So rising expectations can save resources and buy time while this arduous education process goes on and policies are developed that take account of the earth’s limits. Eventually a strong attack on expectations can begin without boosting resource depletion.
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Posts in this Series
- Review of 1988 edition of Economics for a Round Earth
- Ends and Means
- Evolution Not Revolution
- Notes on Evolution Not Revolution
- Concepts and Terms – What is ‘wealth’?
- The Throughput Chain
- The Derivatives of Wealth
- Global Inequalities in Wealth
- Economic Growth Redefined
- Misconceptions in Practice
- Borrowing to Invest to Get Rich
- Environment versus Economic Progress
- Digression: Pollution Red Herrings
- Digression: Depletion and Inflation
- Value Inflation – the Trigger, not the Bullet
- Living Standard and Quality of Life
- Digression: Resource Consumption, Jobs, and Hands Off
- When the Boom comes
- The Effect of People’s Expectations
- Hard Work – Virtue or Vice?
- Who needs the Snail Darter?
- More Dollars for Conservation?
- Non-renewable Resources – Leave Them in the Ground?
- Digression: Fast Breeder Nuclear Fission Reactors
- Minerals in National Parks – Leave Them in the Ground?
- Population and Wealth
- Left, Right and The Environment
- Digression: “So Long As We Profit, Costs Elsewhere Aren’t Our Problem”?
- Limits to Growth?
- Solar Energy – a Special Case
- The Solar-Powered Car
- Money Supply, Throughput and Inflation
- Real and Money Wages: Living Standards
- Digression: Caution about “Increases” and “Decreases”
- The Idea of Proportionate Flows Applied to Wages: the Great Depression
- Deficit Financing
- The Optimum Proportionate Flow Condition
- Digression: Thrift versus Spendthrift
- Digression: the Private Motor Car – a Basic Necessity?
- The Idea of Proportionate Flows Applied to Wages – the Stagflation of the 1970’s and 80’s
- Excessive Wages Can Cost Jobs
- Fight Unemployment or Inflation First?
- Digression: Work and Jobs
- Other “Job Creation” Schemes
- Visual and Noise Pollution
- Digression: Renewal and Recycling of Resources; Wages and Jobs
- Ratio Distortion and Consumption
- Aggregate Demand – Components and Internal Ratio
- The Slave Economy
- Employment and the Steady State
- Consumer-Led Recovery
- Interest Rates and Ratio Distortion
- Demographic Trends and Living Standards
- Digression: Bad Economics Good for Conservation?
- Coping with Aging Populations
- Stabilising the Human Population
- Costs – What Really Costs Us and What Doesn’t?
- Digression: Other Comments on Statements in UN Report
- Discussion of Costs Resumed
- Budget Balancing Methods – Cost or Gain?
- Digression: Government Expenditure – Government Employees
- Expenditure on Weapons