This is an abstract from the study as of January 2018. It will be updated as the study progresses and the full study will be published on-line when it is complete. Comments are solicited.
In 2008 the economy collapsed. This was due to overleveraged financial markets, especially the housing market and its related derivatives. Although the economy recovered rather quickly there has been much political discussion during the past six years debating the “Strength of the Economy”. The debate is usually based upon GDP Growth rates.
In the U.S. the GDP Growth rate has varied between minus 10% and plus 20% since 1947. It varied relatively wildly from 1947 to about 1980. It settled down after that and averaged about 4% through 2002. It then averaged 2 ½ to 3% until 2008 and 1.33% between 2008 and 2013 and 3.6% between 2013 and 2016. So it is fair to say that our GDP Growth rate has been declining over the past four decades.
GDP is a reasonable measure of the health of our economy. However, the GDP Growth Rate is not. We should not arbitrarily pick a certain growth rate as our target but consider our available resources and determine a level of GDP that is “Sustainable”. That should be our target. Our progress toward that target should be the measure of the health of our economy. The resources available include food, water, clean air, and various forms of capital. These resources are large but finite. Because they are finite, there are “Limits To Growth”.
– Reference: http://en.wikipedia.org/wiki/The_Limits_to_Growth and http://www.unav.es/adi/UserFiles/File/80963990/The%20Limits%20to%20Growth%20Informe%20Meadows.pdf and http://www.donellameadows.org/archives/a-synopsis-limits-to-growth-the-30-year-update/ and http://www.humansandnature.org/how-can-we-create-a-successful-economy-without-continuous-economic-growth
Considering these various limitations IMHO the 4% is probably no longer sustainable for the U.S. A growth rate of 3% may be the best we can hope for. Even that will require a sound strategic plan that is well and consistently executed. For instance, we must intentionally direct our growth toward those activities which will not further pollute the environmental sinks https://en.wikipedia.org/wiki/Ecological_economics that are already at or above capacity and cut back on those current activities which do pollute those limited sinks. This is a major undertaking which will cause significant economic dislocations which in turn will require a restructuring of our economic system. It will happen. The question is, “Do we want to manage it or just suffer through the chaos?”
Pushing for continued growth rates of 4% – 6% is neither practical nor safe. As a nation we need to design and implement a sustainable economic system. Hopefully, it can be an evolutionary change to our current capitalist system with perhaps less reliance on market forces and more attention to the preservation of the commons https://en.wikipedia.org/wiki/Commons . Such a system may require more government regulation – on the other hand, it may not.
On a long range basis we need a national Economic Plan. Not something that prescribes production levels or anything that detailed but one that lays out strategic options and related probable costs. It should indicate which options are most likely to be adopted or carried forward. We need such forecasts to give direction to the education process and to insure that pollution costs associated with the extraction of our natural resources are recovered from the extractors and not borne by the taxpayers.