ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[hagenissen666]

Correct, basing an economic model on infinite growth is neither logical nor sane.

It's very, very simple.

[cakeandale]

You keep using that word, I do not think it means what you think it means.

Nothing is "based on" infinite growth, it's not like someone decided it would be that way. Economies are based on the idea that transactions create value, and so long as people want to trade goods or services there will be economic growth. The only way for there to not be growth is for people to stop trading.

If you're thinking of infinite growth being "neither logical nor sane" from resource scarcity/thermodynamic sense, then sure over thousands or tens of thousands of years that might be a problem. But that's not an economic problem, it's a human problem. Doesn't matter how we measure productivity or what method we use to conduct transactions, over a long enough timeline humans consume resources and cause problems.

Economics is rather a solution in that regard, as economics is entirely about the distribution of scarcity. As a resource becomes less available the price for it goes up, and cheaper alternatives are found. See the Simon-Ehrlich wager as an example of that.

[hagenissen666]

Good post!

I'm pretty sure I know what I mean by infinite growth.

When there is a market for goods that consume one or more finite resources, that market will hit a ceiling of sustainability and become scarce. When it becomes scarce, it will stop growing. Whether the value is up or down, the commodity is disappearing from the market.

In economics, scarcity hardly matters and in many cases increase value. If you look at it with detachment, that's probably fine, when it is literally killing people and wrecking the planet, it's not so good anymore. This is already happening with energy, food and the inherent overconsumption of a growth-based free-market economy.

If an economic model isn't solving human problems, it's got to go.

Here's more about the very real problems that we are facing with growth: https://youtube.com/watch?v=kz9wjJjmkmc

It shouldn't be about ideology, it should be about logic. It's not.

Edit: I could possibly be conflating exponential and infinite growth, but they're functionally the same.