Totally Growth’d Out?

“Every politician is in favor of growth, and no one speaks against growth or in favor of steady state or leveling off. But I think it’s an elementary question to ask: Does growth ever become uneconomic?” 

 Herman Daly, emeritus professor at the University of Maryland School of Public Policy, a former senior economist for the World Bank and, along with the likes of Greta Thunberg and Edward Snowden, a recipient of the prestigious Right Livelihood Award

For all of those people trying to buy an unaffordable house versus homeowners who look at their house/condo as an appreciating asset, a de facto savings account, well, is buying a home finding a place to live or simply as asset play? Is it both? Is that good? If GDP (gross domestic product) is the proper metric of success, then government policies seem to reinforce growth as a social determinative goal. Growth in the aggregate… even if the number is overwhelmed by those at the top of the food chain, getting much fatter: GDP blends the mega-success of the billionaires at the top with the rest of us making much, much, much less. So, a solid GDP growth number does not reflect the rising income inequality gap; any downward “standard of living pressures” on those in the bottom 75% or simply, reality, is barely reflected. When growth is the driver of policy, the metric of political success, or is that a distortion of values or a valid measure?

We should all be aware that throughout most of history “growth” wasn’t remotely relevant. Until the Industrial Revolution, I doubt it was a national concern even here in business-driven America. The Gross Domestic Product metric was first developed by Simon Kuznets for a 1934 US Congressional report, but GDP as a modern concept behind macroeconomics only began to dominate in the 1940s. Today, it is fairly uniformly the competitive success measure among and within nations, the dividing line among first and second world nations and those “developing” nations at the bottom of the global economic ladder. But should it be? Is it time to reexamine how we measure national “success”? I’m certainly not against entrepreneurial wealth; getting rich is not a sin. But when our policies distort benefits and metrics that favor the rich, not factoring in essential costs, all to make our GDP look better, you have to question the relevancy of “growth” statistics.

The New York Times (July 18th) examined the issue noting: “Growth is the be-all and end-all of mainstream economic and political thinking. Without a continually rising G.D.P., we’re told, we risk social instability, declining standards of living and pretty much any hope of progress. But what about the counterintuitive possibility that our current pursuit of growth, rabid as it is and causing such great ecological harm, might be incurring more costs than gains? That possibility — that prioritizing growth is ultimately a losing game — is one that the lauded economist Herman Daly has been exploring for more than 50 years. In so doing, he has developed arguments in favor of a steady-state economy, one that forgoes the insatiable and environmentally destructive hunger for growth, recognizes the physical limitations of our planet and instead seeks a sustainable economic and ecological equilibrium. ‘Growth is an idol of our present system,’ says Daly.”

Extreme capitalists, themselves wildly rich within the spectrum of American economics, decry the very notion of steady state economics as a threat to social stability, even as that steady state defined humanity for millennia. In that Times piece, Daly reminds us that infinite anything, even growth, is a physical impossibility: The global “economy, like everything else on the planet, is subject to physical limitations and the laws of thermodynamics and as such can’t be expected to grow forever. What’s less obvious is how our society would function in a world where the economic pie stops growing. I’ve seen people like Peter Thiel, for example, say that without growth we would ultimately descend into violence...

“The question is, Does growth, as currently practiced and measured, really increase wealth? Is it making us richer in any aggregate sense, or might it be increasing costs faster than benefits and making us poorer? Mainstream economists don’t have any answer to that. The reason they don’t have any answer to that is that they don’t measure costs. They only measure benefits. That’s what G.D.P. is...

“What I call the empty world was full of natural resources that had not been exploited. What I call the full world is now full of people that exploit those resources, and it is empty of the resources that have been depleted and the spaces that have been polluted. So it’s a question of empty of what and full of what. Is it empty of benefits and full of cost? Or full of benefits and empty of cost? That gets to that point of paying attention to the costs of growth… But limits to growth are there.” Daly tells us that his own influencers asked more relevant questions:

“I recall that [University of Colorado Professor of Economics and President of the American Economic Association, the late Kenneth Boulding] said there are two kinds of ethics. There’s a heroic ethic and then there’s an economic ethic. The economic ethic says: Wait a minute, there’s benefits and costs. Let’s weigh the two. We don’t want to charge right over the cliff. Let’s look at the margin. Are we getting better off or worse? The heroic ethic says: Hang the cost! Full speed ahead! Death or victory right now! Forward into growth! I guess that shows a faith that if we create too many problems in the present, the future will learn how to deal with it.” I call it “kick the can down the road and let future generations deal with the consequences.”

Where are the heroes? How are environmental and ecological cost factors included into the GDP statistic? Simply, they are not. If the societal value is “more is necessary,” we have to ask, “more to whom?” What’s ecological cost of “more,” and who pays for that? When does “enough” kick in?

As long as we worship “growth” and the GDP metric, we cannot accurately reflect the true economic picture of our world. For example, the permanent loss of non-renewable resources, deplete of habitats, and the “stuff of climate change” are not taken into account… neither is the economic suffering at the bottom of the economic ladder when compared to the top. These essential realities are simply not encapsulated in GDP. That fiction of success, created before WWII, is no longer a metric that 21st century nations need to reflect a functional and sustainable planet.

I’m Peter Dekom, and I learned whatever metric you pick for success will determine how people subject to that metric will behave; it’s time to abandon “GDP” almost entirely.