How to Avoid the Looming Dystopia: When the Money Runs Out
Is the current economic stagnation in the West a temporary setback or a new and lasting reality? Prominent economist Stephen D. King looks back at history to get a fresh picture of the current global economic situation and it isn’t pretty. In his accessible, engaging, and hard-hitting book When the Money Runs Out: The End of Western Affluence, King argues that expectations of continued economic growth and increase in living standards in the U.S., Western Europe, and Australia are out of sync with what the future holds.
As King explains in an interview on the Squawk Box on CNBC (above) over the past six decades, the West has enjoyed remarkable growth rates. Current economic performance, however, indicates that there is a significant lasting reorganization of economic growth patterns in the West. King identifies four factors that contributed to the period of increased growth rates: the inclusion of women in the workforce, the opening of trade from the 1950s through the 1990s, the increases in educational attainment, and increases in financial markets such as consumer credit. The nature of these economic influences is such that they cannot be expected to continue contributing to future growth rates.
Promises were made to the public in Western countries based on past economic growth rates. As growth rates slow, those promises will be broken, leading to distrust and resentment. Using historical lessons, King provides recommendations to avoid dystopia, which he outlines in depth at the book launch of When the Money Runs Out at AS/COA (below), but warns that it will require some painful reforms.