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What is Zero Growth?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 12 November 2016
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Sometimes known as steady state economy, zero growth is a type of economic theory that has to do with the creation of a specific state or status within the economy. Specifically, the idea is to make use of all activities and economic policies so that a state of equilibrium is achieved and maintained over a period of time. The idea is that by reaching this balance, the opportunity for economic collapse is minimized, making the potential for a recession or some other type of undesirable pattern to emerge. While zero growth is considered a desirable goal by a number of economists, others disagree that this state is the best option over time, and consider shifts in the economy to be crucial to progress in technological and other areas.

With zero growth, there is a balance achieved between supply and demand that ensures that desirable goods and services are readily available and affordable. At the same time, this state also has the characteristic of a low amount of unemployment at any given point in time. As a result, the economy in general remains strong, with very little shifting in terms of growth or loss over the course of each calendar year. Events with the potential to trigger inflation or recession are kept to a minimum, and the natural checks and balances within the healthy economy offset whatever impact those events may generate in the short-term.

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Proponents of zero growth believe that the consistency provided by this type of economic condition is superior to the continuous growth model, in that rapid and ongoing growth typically leads to periods in which the boom of the economy will suddenly go bust. When this occurs, businesses begin to lay off employees; prices go up; and unemployment increases, sometimes to alarming figures. While the impact of these events can be corrected over time, the process may take years. In the interim, people living within a nation that is going through an economic recession may be unable to afford to buy food, pay rent or meet mortgage payments, or maintain an equitable standard of living in general.

Critics of zero growth note that while the concept does tend to sidestep the occurrence of a number of economic woes, progress is often made in the face of adversity. Technology in particular is likely to develop during economic downturns, ultimately leading to new industries and products that help to move the economy forward. From this perspective, the up and down movement of a nation’s economy over time can be viewed as necessary to promoting advances in most aspects of society from time to time.

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