It was announced today that UK inflation is now 0.1%. We economists fear deflation, its inevitable effect is to delay consumption in the hope that prices will fall further. Companies lose sales, workers lose jobs, the economy falls further.
But wait - isn't this a good thing from a Green perspective? Surely we WANT the economy to slow down, for consumption to fall.
And this cuts to the heart of the irony in a Green worldview. 'We' want to stop austerity which means we want the economy to expand. But we don't want an expanding economy, we want a contracting economy that eventually evolves into a steady-state economy. So we should be supporting austerity, which should result in falling GDP. Falling inflation or even deflation. Falling interest rates. Falling savings. Above all falling consumption and investment.
My answer? You expect too much - which is both a cop out and an answer.
Becoming Green, becoming a citizen of a steady state economy state isn't going to be easy. The only way we can ease it is by bringing it in gradually. Step by step. A genuine free market would of course make this process so much more straightforward, but no nation on Earth has a free market. Every nation has the dreaded scourge of politicians, desperately fishing for votes and baiting the hook with bigger and bigger promises of more, more, more. And the little voter fishies fall for it every time.
We've had permanent 'teaser' interest rates now since 2008, and they're not going up any time soon. Now deflation makes the issue even more complex. As energy and resources continue to stutter on the cliff edge of rapidly falling EROEI and raw materials perhaps we finally have the real first harbinger of the contracting economy, just as we gain a fresh new government that doesn't even know about these issues, and even if they did would ignore them as they bait their rods ready for 2020 ...
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