Wednesday, July 4, 2012

Growth Forever?

By Tom Kando

Things haven’t been going well economically since 2007, particularly in the Western World, i.e. in Europe and in the US.

Meanwhile, “the rest” has been rising (See Alice Amsden’s The Rise of “The Rest”). For example, the huge so-called “BRIC” countries (Brazil, Russia, India and China) enjoy  explosive  growth.

These two trends are obviously related. We are going through a vast global re-distribution  of wealth. Multi-national Capitalism doesn’t believe in zero-sum scenarios (it profits no matter what), but to real people  it IS  a zero-sum game.  Like communicating vessels.  The West  has  exported  modernity, industrialism and capitalism to the rest of the world, and the rest of the world  is now catching up, to some extent at the West’s expense.

Japan did it first, then the Asian Tigers (South Korea, Hong Kong, Singapore, Taiwan), and so on.

One should note that the “rest’s” current success relies on State Capitalism, whereas America’s past success depended on Liberal Capitalism (see Adrian Wooldridge’s   “The visible Hand,”  The Economist, Jan. 21, 2012). Some say that China will soon eclipse the US because of its  superior (more efficient, less obsolete) economic system. But this is not my issue today.  If anything, State Capitalism promotes growth and environmental plunder even more than the old-fashioned Anglo-Saxon free enterprise system does.

Meanwhile, the world’s population continues to grow, and the “rest’s” per capita consumption is skyrocketing.

Take for example car ownership: There are now perhaps 1.2 billion cars in the world (US: 330 million; Europe: 350 million; Japan and the other parts  of the  highly developed world: 100 million; the “rest”: 400 million).

China and the “rest”  feel entitled to, and are moving in the direction of, the same frequency of car ownership as  the West.

If the “rest” gets there (say, a  1:2 per capita ratio of car ownership), there will be another 2.5 billion cars in the world, i.e. a total of 3.7 billion, or 3 times the current number.

The level of greenhouse gases will then  choke the planet to an extent which will makes current global warming look like a picnic.

It is the same with all other aspects of economic development - deforestation, urbanization, industrialization, etc.

Nothing can or should  grow forever - at least not in a linear, quantitative way. Living things grow in size after they are born, and then the curve flattens out. Nations, groups, institutions, businesses often grow after they are created, but then the curve must stabilize. It must be the same with economies. When a people has reached a comfortable lifestyle, it makes no sense for it to continue to increase  its material  consumption.

Such a no-growth philosophy may seem to be short-sighted and in conflict with the (correct)  view of human progress as potentially endless. But it is not. There should be no limits to the growth of  knowledge and of the  qualitative improvement of human life - longer, healthier, happier, more intelligent lives. But there should be a limit on  human  population growth, at least until we colonize space.  (A valid effort to safeguard our survival, as Stephen Hawking said,  for example in case  we are hit by a huge asteroid).

And there must be limits on the linear growth of dirty energy use, the growth of unhealthy consumption, the continued and destructive production  of “things.”  Yet it is in this sense that GDPs and GNPs grow, and it is in this sense that we are told that a 5% annual growth rate is good and a 1% growth rate is insufficient.

A few small and very rich countries such as Switzerland and Norway understand this error,  and they live accordingly. They focus on qualitative progress,  not quantitative growth.  The entire  Western World should emulate this.  All we hear right now is that Europe will only solve its problems through economic growth (as will the US, whose economy is not quite as stagnant).

But the goal of the Western World should be to improve its quality of life (the US in particular needs a heavy dose of redistribution, as it has become  a very inequitable society, and  repair  its public sector, which suffers from grave neglect), but not to continue to “grow” its overall economies.

And the rest? Well, it’s unfair  to tell China that it shouldn’t pursue the same standard of living as that enjoyed by the West, or to tell Brazil that it shouldn’t cut down its trees, as the US did in the 19th century.  But two wrongs don’t make a right. Brazil’s deforestation affects us all.

All I can say is that it’s time to slow down old-fashioned quantitative growth, and to start to focus on improving the quality of life  - especially  in the West, but soon elsewhere as well. Otherwise, the earth is gonna get real ugly, as it’s already beginning to do. Malthus may have been premature, but he was not wrong. leave comment here