I normally have quite a lot of time for Jeremy Warner, the economic journalist who writes for the Daily Telegraph but when his headline is “It’s finally safe to say that the great crisis is over” it depends on what he means by “great crisis”. If he means the great crisis is over for this country — and America — then I’d agree with him that we might have economic growth — albeit modest levels — for some years yet.
If he’s implying that the world’s low pace of economic growth is now finally over and that we’ll now see a steady resumption to full scale growth as it was in the 1990s — say about 4% per annum — and way beyond permanently, I think he’d then be wrong.
There’ll be room for this for a decade or two but little longer as China finally draws in its final tranche of 500 million rural Chinese into its ‘ghost’ cities and adds their exports to those remaining importing pockets of opportunity — the rich and upper-fifth of Second and Third world countries.
In the case of America and England, we’ll be sharing in this modest prosperity by importing replacement or improved items of consumer goods from China in exchange for highly sophisticated services — education, health, law as well as design in fashion, architectural, infrastructure and engineering.
What applies the kybosh to any sort of growth economics as is still not talked about today. It is that you don’t get massive additions to economic output without massive additions to energy inputs — such as we certainly had during the industrial revolution itself 1780 to 1980. None of the world energy companies will ever get into discovery mode again unless the prices of oil, gas and coal is very much higher then now and guaranteed to stay there.
And, besides, energy conservation in building construction and in equipment use has never been better than now in First World countries. The Law of Least Effort — as abstract and impossible to understand as any other law in physics — is now coming about unwittingly in men’s minds.