The idea that economic growth cannot, and should not, continue, is gaining widespread support. It is based on grave misconceptions, and entirely deluded about economic reality.
‘We are in the beginning of a mass extinction and all you can talk about is money and fairy tales of economic growth. How dare you!’
When a then-16-year-old Greta Thunberg prissily lectured the assembled worthies at a United Nations climate summit in New York on 23 September 2019, one might have expected the adults to recognise that a high school girl might be passionately rebellious and anti-establishment, as we all were at her age, but probably has little to teach us about money and economic growth. Instead, she won prizes and accolades.
The irony that the girl who accused world leaders of having stolen her dreams and her childhood grew up in a country with one of the highest GDPs per capita in the world was entirely lost on them.
Unlike the children who mine the cobalt to make her iPhone, Thunberg was sufficiently well-connected to borrow a fancy racing yacht built for the Monaco-based sailing team of Benjamin de Rothschild. This was a blatant act of virtue-signalling, so she did not have to fly to New York. While the eyes of the world were on her, her skipper and crew flew back home from New York, to be replaced by a new crew which flew to New York to bring the yacht back.
Once in New York, she was able to borrow a Tesla from Arnold Schwarzenegger, because who doesn’t have the Governator on speed dial?
She emotionally blackmailed her mother into giving up her dream of singing opera because it involved flying, and, according to her father, drew energy from this, like a little angry climate vampire.
She is the very picture of wealth and entitlement, and yet millions of gullible adults swooned over her insolent rants about things she did not understand, like money and economic growth.
Prosperity without growth
Thunberg is but one manifestation of a ‘degrowth’ movement that has deep roots but has become widely popular in recent years.
The New Yorker wondered, in February 2020, whether we can have prosperity without growth. Scientific American, two months ago, published an article entitled The Delusion of Infinite Economic Growth. Nature Communications published a ‘perspective’ entitled Scientists’ warning on affluence in June last year.
In Daily Maverick last Sunday, one Natale Labia pondered the ‘degrowth’ movement and the complex role of economic expansion on a changing planet.
The idea of ‘degrowth’ is based on a number of misconceptions. One is that economists are deluded by the idea of infinite economic growth in the face of finite physical resources.
I addressed this concern recently in my article about the Limits to Growth, a book which was highly influential in the degrowth movement. Back in 2010, I wrote about the same idea in a pair of columns, Go ahead, have a baby, and A glass half-full.
The proponents of degrowth not only misunderstand the tension between economic production and the scarce resources it employs, but they also fail to grasp human nature. At least, one hopes they fail to grasp human nature, because if not, one can only conclude that they are evil.
Dystopia
In a world in which aggregate GDP must decline, which is the meaning of degrowth, no company can produce more this year than it did last year. To prevent it doing so, one could, for example, tax 100% of the excess revenue. Of course, for a new company, this means it cannot grow at all, so there will be no motive to start new companies. So only existing companies will continue to exist, until they, too, shrink out of existence.
That means there will be no more innovation, except by scientists employed by the government’s Department for Innovation, inventing things that the government thinks would be useful, like autonomous drones firing depleted uranium shells at wedding parties or new headdresses for politicians.
There must also be a limit on what the wealthy are allowed to earn, save, invest, and spend. Limiting the spending of rich people might take them into a state of zen peacefulness in which neither desire nor need cloud their day, but it also means the people who make things rich people buy will no longer have jobs. So, they will need to go on state support. Also, you need to force rich people into that zen state of indolence in which they may not produce nor consume too much, because by nature, people won’t choose to do that.
To determine what is too much, we’ll need people like the WWF to make up numbers and create alarming infographics ‘proving’ that we consume five or seven or nine times what the planet can really support.
So, we end up with a totalitarian state in which everyone’s production and consumption is strictly regulated by the state. Those who won’t work will have to be forced to work at gunpoint. Those who are productive working at gunpoint will have to be forced to surrender what they produce, again at gunpoint.
(Never forget that all government regulation and taxation is ultimately dependent on the threat of lethal force. Try resisting arrest for tax evasion, if you don’t believe me.)
Rationing
In the midst of it all sits someone like Ebrahim Patel or Rob Davies, planning in fine detail exactly what everyone wants or needs, and then rationing it out to make sure they don’t exceed their ‘fair share’.
People will be dependent on government for all their material needs and need government permission for all they want to do.
Every human impulse to create a better life for themselves, or their children, or their community, will have to be stifled, since all of them might lead to unauthorised economic growth that makes poor little rich girls like Greta Thunberg cry.
In defence of Labia, he recognises that degrowth seems like a very ‘first world’ idea.
‘It is all very well for the overwhelmingly well off in Europe, the US and Japan to advocate the benefits of being post-growth,’ he writes. ‘They are, after all, the beneficiaries of the longest and most environmentally destructive economic boom in history, the latter half of the 20th century.’
Unlike the Western elites who guiltily wring their hands about their own prosperity, Labia acknowledges that economic growth has been shown to be necessary for lifting millions out of poverty. That is, indeed, a fact.
However, he still wants to put politicians in charge of what kind of growth would be permissible, and what kind must be suppressed.
‘Either way,’ he writes, ‘policymakers – particularly in developing countries such as South Africa which face particularly extreme looming environmental and humanitarian catastrophes – need to be far more explicit about what kind of growth should be pursued and what growth should be specifically avoided. If green growth is the future, then surely there must be a rapid prioritisation of “green” over “growth”.’
So, the spectre of Patel and Davies planning our economy remains very real in Labia’s vision of selective, ‘sustainable’ future growth.
Eastern Bloc
The world certainly does face environmental problems, although they are often exaggerated either for nakedly political aims, or for the sake of raising millions from guilt-ridden rich people.
Those environmental problems would get a lot worse if the state were put in charge of the economy, in order to enforce negative aggregate growth, ‘sustainability’ and ‘fairness’. To see why, we need look no further than the industrial wastelands of the former Eastern Bloc, or even present-day China.
Doing away with capitalism, as degrowth proponents want to do, actually is much worse for the environment than capitalism is.
The solution to the world’s environmental problems is not to turn the economy over to central planners who get to decide exactly how much of what people may produce or consume.
On the contrary: as the correlation between the Environmental Performance Index and GDP per capita shows, the solution is to encourage as many people as possible to get rich, so they will have the means to solve these environmental problems for themselves.
We need to encourage more growth, not less. Without the rich, the poor will never have jobs. Without more growth, the poor will never get rich. And without prosperity, we will forever be mired in a destructive, exploitative relationship with our environment, as billions of people scrabble just to put food on the table.
The proponents of economic growth are not deluded. On the contrary. It is those who think degrowth is both desirable and possible who are deluding themselves.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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