Growth has turned into our modern-day holy grail—a beacon that politicians, companies, and individuals relentlessly chase, often with promises and aspirations that border on the fantastical. Every election cycle, candidates tout it as their deliverable. Businesses chase perpetually climbing profits, and personal discontent brews if our earnings stagnate or our living spaces don’t expand. Yet, ironically, the signs increasingly suggest that, deep down, we might not truly crave this endless expansion.
The foundation of Gross Domestic Product (GDP) growth rests on two pillars: the growth of the labor force and productivity enhancements. However, the term “growth” might be a bit misleading, given the current landscape.
The International Monetary Fund (IMF) forecasts paint a telling picture, indicating that labor force growth is expected to decelerate or even decline in key economies over the next few years. Germany, for instance, faces a shrinking labor force, a phenomenon not exclusive to it but rather a common thread among developed nations. Even in countries like Italy, where a slight uptick is expected, the reality is that the working-age population has been on a steady decline since 2012, making any small gains negligible.
The desire—or lack thereof—for work further complicates the picture. The trend in major economies shows a steady decrease in the annual hours worked per employee, highlighting a societal shift towards valuing leisure or part-time work over full-time engagement. This shift isn’t just about workforce participation rates but also reflects on broader cultural and economic dynamics that value work-life balance over traditional work-centric lifestyles.
AI might not be a silver bullet
Then there’s the role of technology, particularly Artificial Intelligence (AI), which holds tremendous potential for growth. Yet, historical patterns caution us against assuming that technological advancements automatically translate into sustained productivity gains. The initial surge in productivity seen during the internet’s ascendancy didn’t maintain its trajectory, suggesting that technological innovation alone might not be the silver bullet for perpetual growth.
Considering these factors, the relentless pursuit of growth seems increasingly quixotic. The potential for growth, tightly interwoven with demographic trends and productivity, is inching closer to a standstill across many nations. The default strategy to overcome these growth hurdles often involves accruing debt, a tactic that’s nearing its limits, or resorting to creating inflationary illusions of growth—neither of which genuinely enhances societal well-being.
This backdrop invites a critical reassessment of our growth-centric aspirations. Perhaps it’s time to recalibrate our expectations, acknowledging that in a world where the natural and human resources are finite, continuous expansion might not only be unrealistic but potentially undesirable. Instead, seeking sustainable, qualitative improvements that enhance well-being without depleting resources could pave the way for a more balanced approach to progress.
Jeroen Blokland, with his deep expertise in multi-asset investment strategies and keen insights into economic trends, challenges us to ponder the true nature of growth and its implications. His weekly analyses, drawing from his extensive experience at Robeco and through his innovative platforms, urge us to consider whether our collective growth ambition aligns with the realities of our time and the planet.