Why we can't grow our economy forever
The planet has a finite amount of resources, limiting how much the economy can expand
Politicians, newscasters, and pundits are united around an idea I find wacky: That we can grow the economy forever on our finite planet.
We have 7 billion people on Earth, and almost 1 billion of us go to bed hungry each night. 2.7 billion of us live on less than $2 a day, and there's 394 ppm of carbon dioxide in the atmosphere.
We would need one and a half Earths to keep producing, consuming and wasting at the rate we do now. Instead of a pursuing an economy chasing after more, why not pursue an economy asking for enough? That's what I describe in the book I co-wrote with Dan O'Neill, "Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources."
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The economy of "enough" is called a steady-state economy: A steady number of people consume a stable amount of energy and materials, all within ecological bounds. The goal of this kind of economy, rather than increasing consumption, is to improve quality of life.
Do you want more stuff or a better life? Our current economy aims for the first. A steady-state economy aims for the second.
Why the Current System Is Broken
The strategy of perpetual growth is failing on both environmental and social grounds.
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Our ecological footprint (the area of land and water we need to operate our economy) shows we're consuming resources 50 percent faster than they can be regenerated. If we continue, we'll diminish reserves of our natural capital like food and water and set ourselves up for collapse.
Socially, economic output per person has more than tripled in countries like the U.S. and U.K. since 1950, but people are no happier. And despite impressive global economic growth over the last several decades, nations continue to struggle with unemployment, poverty, and income inequality.
How to Fix It and Reach a Steady-State Economy
Here are four proposals for achieving a steady-state economy:
1. Limit the flow of materials.
Because we're using resources faster than they can be regenerated, we're living on borrowed time — or, in financial terms, going into debt. To limit consumption, we could:
- Use a simple (although heavy-handed) approach like a ban. This worked for removing lead from gasoline, which has made the air we breathe safer.
- Try less restrictive programs such as cap and trade, in which we agree to a cap on a resource, divvy up the right to use it, and allow people to trade that right.
- Choose indirect methods like tax reform, in which we tax bad things society wants less of (e.g. tailpipe emissions and resource depletion).
2. Stabilize the population through compassionate and non-coercive means.
Population is a delicate subject, but roughly 80 million people are added to the global population each year, and 80 million unplanned births happen each year. And all of those people are competing for a share of global resources.
With better education and access to contraceptives, we could go a long way toward stabilizing the population. Development economist Jeffrey Sachs says girls in school are likely to postpone marriage and childrearing; when girls learn about sex, contraception, reproductive health, and the trade-offs associated with having lots of children, they're more likely to aim for smaller families. Education also empowers young women to develop careers.
For developed nations with high income and low fertility, most population increase comes from immigration. If our population is growing because we're taking the best and brightest from other countries, we're contributing to global inequality. I hate the idea of closing the doors, but if we want more sustainable systems of trade, our immigration policy should not be about pushing economic growth in the U.S. at the expense of other countries.
3. Achieve a fair distribution of wealth.
If you have a pie that's always getting bigger, you don't have to worry so much about how you cut up the pieces. But the economic pie can't grow forever. Societies with greater equality in wealth and income do better on many social fronts: People are healthier and rates of crime, drug abuse, and teenage pregnancy are lower.
How do you shrink the wealth gap? Taxation strategies aren't a long-lasting solution, because any new government could change them. A longer-term strategy would be to equalize pay from the start. Some businesses have maximum pay differentials between the highest- and lowest-earning employees. Others are employee-owned companies in which the employee-shareholders have a say in wages.
4. Change the way we measure progress.
GDP is seen as an indicator of economic progress, but it measures the amount of money that changes hands, not progress, because it goes up when we pay for negative things like medical procedures or imprisoning criminals. Yet it doesn't account for all positive things. For example, the work of stay-at-home parents doesn't get counted in GDP — even though it helps society.
The Genuine Progress Indicator, or GPI, is used in states like Maryland, Vermont, and Utah. GPI corrects traditional GDP by subtracting out defensive expenditures (e.g. money spent on crime and illness) and adding in estimates for things like household or volunteer work. Over recent years, although GDP has risen, GPI has flatlined. It's a business school cliché to say we manage what we measure, but changing to GPI could spark other changes.
Next Steps
Some people say a steady-state economy isn't necessary because technology will allow us to keep growing despite our finite resources. Technology can give us breathing room but isn't a solution. In the 1960s, food production was struggling to keep pace with the growing population. We averted the crisis through advances in high-yield, disease-resistant wheat. But we continued growing, and now we face problems again.
Some of these technological solutions are causing their own problems — fertilizer causes water pollution and groundwater is dwindling in a lot of places. So the way I see it, technology can create breathing room, but if we continue growing, we inevitably eat that up and find ourselves in an even tougher spot.
One way to create a sustainable economy is to increase the research and teaching devoted to this concept in universities. The University of Vermont is one of a handful of universities with an ecological economics program and I'd love to see more.
Also, our culture has to change. We've got to shift consumer behavior away from materialism and toward things that help us achieve well-being, like focusing on relationships with friends and family and taking part in activities that are meaningful to us.
Changes in personal behavior aren't enough by themselves — we've got to develop new economic institutions and policies. These changes will undoubtedly be difficult to implement, but unlike infinite economic growth, at least they're possible.
If this shift is successful, we'll have an economy that meets people's needs without undermining the planet's life-support systems. One thing's for certain: The changes will only materialize when we achieve widespread recognition that enough is enough.
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