Sunday, December 2, 2012

End of Uneconomic Growth

I'm reading among other things, Jorgen Randers' new 2052: A Global Forecast for the Next Forty Years. Dr. Randers was one of the authors of the 1972 classic Limits to Growth. In 2052 he looks forward 40 years based in part what has been measured and observed from 40 years ago when Limits to growth was published. He also relies on insights collected from a large team of thinkers in conjuring up his forecast. One of those he asked for thoughts about the future was noted economist and former World Bank official, Herman Daly. In a brief piece entitled "The End of Uneconomic Growth" Daly has the following to say.

..I think economic growth has already ended in the sense that the growth that continues is uneconomic; it costs more than it is worth at the margin and makes us poorer rather than richer. We still call it economic growth, or simply "growth" in the confused belief that growth must always be economic. I contend that we have reached the economic limit to growth but we don't know it, and desperately hide the fact by faulty national accounting, because growth is our idol and to stop worshiping it is anathema.... We do not really want to know when growth becomes uneconomic because then we should stop growing at that point -- and we don't know how to run a steady-state economy, and we are religiously committed to an ideology of "no limits." To maintain this state of delusion we confuse two distinct meanings of the term "economic growth." Sometimes it refers to the growth of that thing we call the economy (the physical subsystem of our world made up of the stocks of population and wealth and the flows of production and consumption). When the economy gets physically bigger we call the "economic growth." But the term also has a second,very different meaning. If an activity causes benefits to increase faster than costs, we call that "economic" activity. In this sense, "economic growth" is growth that yields a net benefit or profit. Now, does "economic growth" in the first sense imply "economic growth" in the second sense? No, absolutely not. The idea that a bigger economy must always make us richer is pure confusion....In sum, I think that we have reached the limits to growth in the last forty years, but also that we have willfully denied it, much to the harm of most of us, but to the benefit of an elite minority who keep pushing the growth ideology, because they have found ways to privatize the benefits of growth while socializing the even greater costs. (pp. 73-76)

I refer the readers to two minute video where Prof. Emeritus of Physics Al Bartlett explains very clearly the problems associated with growth run amok and the human ability to deal with it. The growth emperor wears no clothes and it's past time for  us to say so publicly. It is a driver of both climate destabilization and income inequality, the twin challenges of our age. There are solutions that Daly, Randers and many others are offering, but they tend to be drowned out by the choir of politicians and media pundits. I'm glad we still have libraries!