DW sent me this article and asked: "What do you think of the idea of moving to a steady state economy?"
So here's an excerpt from the article:
A growing band of experts are looking at figures like these and arguing that personal carbon virtue and collective environmentalism are futile as long as our economic system is built on the assumption of growth. The science tells us that if we are serious about saving Earth, we must reshape our economy.I've written on the "growth fetish" before, and my opinion is that growth for the sake of growth is not useful either to humans or the environment.
This, of course, is economic heresy. Growth to most economists is as essential as the air we breathe: it is, they claim, the only force capable of lifting the poor out of poverty, feeding the world's growing population, meeting the costs of rising public spending and stimulating technological development - not to mention funding increasingly expensive lifestyles. They see no limits to that growth, ever.
In recent weeks it has become clear just how terrified governments are of anything that threatens growth, as they pour billions of public money into a failing financial system.
The first problem is that we measure GDP as the sum of goods and services (by value), which ignores the quality of those services and -- especially -- the sustainability and/or externalities of those services.
For example, a logger could chop down a tree, make a club, sell the club to a hunter who would then kill endangered pumas to make fur coats to sell -- at a suitable mark-up -- at Neiman Marcus. All of these actions produce "positive" value in GDP figures. If we do more and more over the years, then we have "growth." Pretty stupid.
So the first problem is that we measure the wrong things.
The second question -- assuming we measured right -- is whether we can improve our lives at "no growth". Putting inflation and population issues aside, can real GDP per capita stay flat for a long time while we are improving our lives?
Only -- I think -- if we consider the quality of our lives, i.e., if going to someone's house, eating dinner and watching a movie produces more benefits to us than going out to dinner and seeing a show at the cinema.
Now, we may be better off, but what about those people who no longer serve meals and run the cinema? Well, they would have to find other, "sustainable" jobs -- and this means that the composition of the workforce would change.
I happen to think that we could have more sawyers and fewer lawyers, more chefs and fewer waiters, more
[In the developing world, economic growth is synonymous with consuming items (e.g, mobile phones, light, calories) never before consumed. I think that they could/should have positive sustainable GDP growth.]
Bottom Line: The road to sustainability starts with you. There's no need for government intervention, but proper pricing would help. Consider your consumption and production patterns, and be thankful that you have choices.
8 comments:
You state the obvious fact that growth is stupid and unsustainable. Talk to real estate developers about growth. They could care less if the water is gone, the open spaces, the clean air, the natural world with trees, wetlands, and wildlife. All they care about is flipping land and making a ton of money. Do we blame making profits as the root of the problem, or the developer's lack of vision for a future other than his own immediate wealth? My generation got labeled as "hippies" for trying to live sustainably, and after making our case in the 70's, what did we get? Reaganomics, sprawl Mart, and then "W" with his "Capital, gonna spend it". The whole system is wildly out of control and headed for disaster. The value system of economics has to change, and as long as people think they can get rich, it never will. Bottom line: we are doomed to self destruct by our own greed and stupidity.
Holy moly, that Neiman Marcus link startled me. I didn't know they could actually still sell clothes that are (a) that ugly, and (b) killed that many cute, non-domestic animals. It never occurred to be there might be fox fur factories :-(
Ok. I will admit it. I didn't read this blog and its replies carefully. But in Norway, right now, we are governed by the coalition of the "red-greens". We have a socialist party finance minister. Unemployment is 1.8% (but rising). GDP is still growing (by last measure). The national budget is in surplus. We’re saving rents from non-renewable resource (read: oil) extraction in investment funds. Yet, the so-called finance crisis has landed in the economy, and people are worried about the effects in the real economy. Consequently, the socialist finance minister (who in my mind, incidentally, is very competent) has asked the Norwegian folks to go out and shop: To boost the economy, to avoid GDP slow-down/down-turn, to signal confidence in the market economy. How bizarre/surreal is that!!!!?? (so much for the sustainable economy - steady-state – carrying capacity) Even socialists understand reality of market economies. If GDP (however much you hate that measurement of (economic) welfare)) starts declining, the world is in for some bad shit!
Growth is not always sprawl is not always more resources consumed.
What if the steady state had been imposed in 1992 (post Rio)?
Would we have had the Internet and blogs etc and cell phones or would these have been seen as an eco-burden.
Creative destruction is key.
You can't really put population growth aside as that is a crucial reason for the need for growth. The other cause of growth is productivity, which usually comes from capital deepening (more technology) and ever finer division of labor. Most people I know think these last two increase their enjoyment of work and life. There's a recurring theme that tech and life are moving too fast, too much stress, etc. But we are also fighting back and taking control, and deciding for ourselves. I think the workplace has grown more flexible, and there will be a balance with the stressful.
Why can't we just incorporate the sustainability and externalities into the current calculations, instead of putting our economic lives in a holding pattern?
Your utopia really sounds like a halt to the trajectory of Western Civilization as we know it. I believe we can incorporate our new values of sustainability and environmentalism without stopping our ever increasing need to improve and change our surroundings.
Your descriptions conjure up the sustainable cultures of indigenous people from (mostly) hundreds of year ago. "They've lived like this for centuries, these noble savages." and I'm sure they enjoyed life immensely. But it also sounds really boring, and anathema to a scientific age of enlightenment and discovery.
Can't we keep living the good and mitigate the bad?
[meanwhile, your suggestion that the developing countries be allowed to catch up is pretty funny. Then what? "ok, we've allowed you to catch up to our awesome standard of living. You can stop now." I'm pretty sure the Chinese would laugh all the way back to their space stations and lunar bases.]
My main point is that economic growth due to population growth and productivity can occur in a sustainable way, and is orthogonal to growth from land use and extractive industries, which will have to slowly die by natural attrition. Meanwhile, we know the population will reach a peak sometime this century.
At that point, a sustainable economy is the only one that will survive long term. And surely our world is (slowly) headed in that direction.
Perhaps we are saying the same thing. But your description sounds a lot more Utopian and socialist than one might expect from an economist.
"more chefs, fewer waiters" What does that mean? Cook at home and everyone has to eat in the kitchen standing up?
huh. I should read the links first.
Love the blog.
@Tom -- If I take your last comment as a refutation of your earlier comments, then we agree :)
But, if you still like your earlier comments, let me add a few notes:
1) The only meaningful growth is growth per capita. Once you get about a critical mass of people (6 billion is enough :), growth through population gain is not helpful.
2) "More chefs" means standing in the kitchen if that's how you like to eat. I sit down with my friends :)
3) My "Utopia" is a place where growth is sustainable -- perhaps because of productivity growth and -- more important -- because of WHAT we do that leads to economic activity.
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