Tyler "Great Stagnation" Cowen points to a graph that shows the UK economy hasn't grown starting in the year 2000.
Why? Labour Party policies probably are at least partly to blame. Immigration could be a contributor as well if the UK's immigration has been more toward the low-skilled as in America. But natural resource limitations played a big role. Tthe UK took a big hit when North Sea oil production peaked in 1999 and then went into rapid decline just as world oil prices started rising rapidly. You can see in table 4 how world oil production growth went thru successive downshifts starting in the early 1970s. The UK was insulated from the effects of this change due to North Sea production. So the down winds from higher oil prices and lower production growth really kicked in for the UK starting in 2000.
Here are some more economic stagnation charts from The Guardian. Make your browser maximized before you maximize those charts. The resizing does not work well.
Then are the Western countries doomed to continued economic stagnation due to heightening competition for depleting natural resources and worsening demographic conditions? Well, I see a couple rays of hope. Michael Pettis argues that China's economy is so fundamentally unbalanced that its growth rate is slowing and therefore its growing demand for natural resources is slowing or even reversing in some cases. Pettis sees a big overbuilding of world mining capacity which he expects will cause a several years of lower prices for at least some commodities. This will help the Western countries somewhat. But, short of a depression, high oil prices will continue to weigh down the OECD countries.
So we've reached a point where misfortunes in some countries (e.g. southern Europe and China) cut commodities demand enough to allow the economies of other countries to grow. Welcome to the 21st century.
|Share |||By Randall Parker at 2012 November 25 03:18 PM|