First, I’m not an economist.  Rather, I collaborate with smaller businesses to help make them perform as well as the corporations I meet with weekly.  Which means I need to be in tune with the economy.  We’ve witnessed an improvement in the economy, in the stock market, and in the job market for some time now.  I’ll leave to the side for now the not-so-incidental factors that the growth has been languid and that unemployment figures are probably not accurate.  The question I’m asking is will the economy continue to improve?  I feel that the answer is yes, because the items which are causing them to improve are increasing.  What are those factors? They are an increase in corporate productivity, a decrease in costs, and affordable financing.

But when we examine the underlying factors we find a few disturbing elements.  For one, the increase in corporate productivity is occurring due to fewer employees working harder and longer, and, second, automation.  The results of the first is a decrease in quality of life, and ultimately a decrease in lifespan, caused by increased stress and inadequate recovery.  So this becomes an example of growth being bad.

Second, automation is removing jobs.  And the result has been an increase in suicides, drug abuse and civil hostility caused by a disruption of the workforce.  This is the same type of disruption we’ve witnessed in other industrial revolutions.  So, this too becomes an example of growth being bad.

Finally, the increase in productivity and GDP growth is accruing to the wealthy more than profits have accrued in the past.  Why? Because fewer employees mean fewer stakeholders.  Moreover, almost unrelated, we’ve seen an increase in privately held companies, thus reducing further the number of stakeholders.  So the wealthy grow wealthier but the general population stays the same or grows poorer.  So, this too becomes an example of growth being bad.

Overall, then, the economy should continue to improve.  But the elements fueling that growth are bad for most of us.

Michael Emerald, CFA

Wall Street Security Analyst and Owner, Performance Business Design


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