Economic growth has been the de facto god to which all economists and modern governments genuflect. Modern civilization has declared increasingly unswerving fealty to the idea of economic growth, sacrificing everything from workers' rights to the environment itself, to its altar.
A Reality Check About Growth's "Benefits"
Take this New York Times article by Diana Furchtgott-Roth, for instance. This sermon given in honor of the economic growth god praises economic growth as the sustainer of national defense, clean energy, and all manner of government programs. But the most hilarious part of her propaganda piece is this:
Henry Thoreau may be right that we can find God in nature. But it takes economic growth to keep nature pristine and all of us healthy enough to enjoy it.Mind you, of course, that nature was well served when the clear cutting of trees and the hunting of whales for oil, gave way to coal and crude oil. Of course, with zero economic growth, it is said that nobody is going to develop solar energy and alternative fuels to replace coal, crude oil, and the clear-cutting of trees that persists to this day. But that's an ultra, ultra simplistic approach to the relationship between growth and progress.
The reality is that the relentless pursuit of growth is killing the same environment that benefits from it. Furchtgott-Roth says growth is needed to actually fund the Environmental Protection Agency (EPA) - but then you have to ask yourself, what is the EPA being funded for? You guessed it, the destruction of the environment, which is continuing apace as a direct result of the pursuit of... wait for it... economic growth. What do I mean? Well, that same growth that supposedly funds the EPA, comes largely in the form of consumer activity. Stop and ponder that word consumer - what are they consuming? Everything from plastic bottles to paper-based goods, consumer electronics, cars, and gasoline for cars. What do all of those things have in common? They produce pollution and global warming: plastic bottles form continents in the ocean, enormous swaths of trees are being cut down to make paper and wood-based construction goods, obsolete consumer electronics are becoming toxic hazards to the environment, and to the Chinese people who recycle them, and cars are spewing tons of pollutants into the sky. Industrial factories, a critically key part of economic growth, are responsible for horrific amounts of pollution, not to mention acid rain. Ever wonder why some fish you buy at the store is almost inedible because of its mercury content? You can blame another huge engine of economic growth for that... coal-fired power plants.
So, do you still think "it keeps economic growth to keep nature pristine"? Truth be told, the EPA is largely here to clean up the environmental mess created by economic growth.
But Growth Equals A Good Standard of Living...Right?
Economic growth is not an infallible source of an increased standard of living. In fact, standards of living for most can decline while economic growth is continuing rapidly. This has in fact been happening in the United States. Why is this true? Because almost all of the gains from economic growth have been going to the top 1%. And this has been going on since long before the 2008 crash. Meanwhile, Americans lost 18% of their total wealth, and it is probably never coming back even after we recover from the crash. Another sign that the Plutocracy is capturing almost all economic growth? CEO pay in relation to worker pay, which has skyrocketed from around 50 to 1 in the middle of the 20th century to nearly 400 to 1 now - again, a pattern that has persisted since before the 2008 crash. Another way to look at it? Income inequality. The problem with blindly worshiping the economic growth god is that yes, a rising tide lifts all boats... but it drowns or displaces those living on the coastline.
For Conservatives who are reading this, let's summarize all of this in the form of pretty pictures, shall we?
(Again, another problem that has persisted since before the 2008 economic crash.)
Furthermore, Conservatives and other out-of-touch people like to say that America's standard of living has increased as growth has increased. Yet they don't want to talk about the fact that job stability disappeared long ago, and homelessness is rising, and has been since the 1980s when Section 8 funding and public housing funding declined. Mind you, these are all structural increases which were creeping forward before the 2008 recession, which accelerated greatly during the recession, and which will persist long after the 2008 collapse has worn off. Then, of course, there is the pattern of repeated jobless recoveries that have plagued the working class even as economic growth skyrockets. Here's another way to study the change in standards of living: Canadians really do have it harder now than they did before. The same is most likely true for people in the United States.
Wasn't this pursuit of economic growth supposed to fix that? Make it better? Well, guess what happened in spite of our relentless pursuit of economic growth:After earning a three-year BA (majoring in political science) at York University in Toronto back in 1984, I landed a summer job as a copy editor at The Canadian Press, the national wire service. I earned enough to spend a year in Ottawa earning a bachelor of journalism degree at Carleton University. I had to work the Christmas holidays at CP to top up my savings, but I was financially self-sufficient and incurred zero debt.
So what was that again about the prosperity of the working class depending on economic growth? It seems that growth has left the working class behind. Far behind. In a world where the tide is rising, the working class is the ones standing at the shoreline. The 1% are the boats. The working class is the economic Maldives. What is the most startling example of where global growth has failed to serve the working class? The World Bank reports that by 2022, the world will need to create 600 million more NEW jobs to keep up with the population of working class people. That's 400 million jobs in addition to the already 200 million who are unemployed now. Worse yet? The World Bank sees no way that these jobs can or will be created. The experts call for reduced inequality and better education, but neither can be achieved when there's no jobs. It's circular; a catch-22. Moreover, the Plutocrats won't pay the taxes needed to support such reforms.Today, financial self-sufficiency is impossible without taking breaks from school to work. The Bank of Canada’s handy inflation calculator tells us that my $1,000 tuition back in 1984 would cost $2,028 today if it increased just by the inflation rate annually. But according to Statistics Canada, the latest read on average tuition fees is $5,366.
So What Is The Connection Between Economic Growth And Jobs?
In reality? There is little, if any connection. In fact, the tenuous nature of economic growth's relationship to jobs is becoming increasingly obvious to people who study economics.
How can this be? The article explains further: globalization and foreign outsourcing... plus this:But consider this: Between the fourth quarter of 2007 and the second quarter of last year, the U.S. economy lost almost 8 million jobs, an enormous figure by historic standards. Yet during that same period, economic activity declined by only 1.3 percent, according to the National Bureau of Economic Research—a far less dramatic dropoff than the huge number of jobs lost would predict using conventional models. By the same token, the latter half of last year saw solid economic growth, including record corporate profits, but weak job creation, with unemployment stuck around 9 percent. That was the "jobless recovery" we heard so much about.In other words, the established link between economic growth and job creation hasn't held up lately, during either up or down periods. And in both cases, it's the jobs side that has lagged.A recent study released by the Political Economy Research Institute at the University of Massachusetts Amherst suggests the experience of the last few years hasn't been a fluke. Economists Deepankar Basu of Amherst and Duncan K. Foley of The New School for Social Research write that "the close relationship between [growth and jobs] that characterized the U.S. economy over the two decades after World War II has been weakening since the mid-1980s." The result has been "jobless recoveries," and "output-less crashes"—employment lagging behind growth during both good times and bad.
In short, the link between economic growth and jobs never existed in the first place, and this fact is merely becoming obvious now.The other has received less attention: the increasing share of the economy made up of the "FIRE" industries, finance, insurance and real estate. Between 1995 and 2009, those sectors accounted for more than one quarter of U.S. GDP growth. But compared to sectors like manufacturing, which has declined steadily over the same period, the FIRE industries don't generate many jobs in relation to their contribution to growth.
Most economists in their ivory towers are too dedicated to finding ways to create more economic growth. But what main street America needs, is more jobs. The two are not related, and they never have been. They just appeared to be.
But... Can Prosperity Survive Without Growth?
Now the next argument that pro-growth religious fanatics will come up with, should be predictable at this point: without growth, everyone will become poorer. As bad as it is with workers getting a rapidly diminishing share of the expanding pie, if the pie stopped growing, it would be the end of all happiness as we know it. The working class share of everything would practically implode if growth stopped. See: 2008.
The Better Question Is, Can Civilization Survive With Endless Economic Growth?
The reality is, there is at least one reason why the relentless pursuit of growth is going to come very close to driving humanity extinct. It may not actually get to that point, however it will drive humanity into a level of suffering and global poverty that has probably not been seen in 500 years, at least for America. In some cases the poverty and suffering will have no equal in the entire history of human beings. What am I talking about? The role of economic growth in the destruction of the environment, of course. But the problem goes way beyond that. The real problem is that economic growth will hit a wall, and must hit a wall: a wall known as PEAK EVERYTHING.
Peak everything. A point where oil production will be unable to keep up with demand, where drinkable water will lag behind demand, job growth will not keep up with population growth, and various natural resources around the world will not be able to keep up with demand. You cannot sustain economic growth when this point is reached; and in many parts of the world, that point has already been reached. Even the United States or German Military are worried about peak oil. The world is currently headed for the last race it will ever run: the race for the last deposits of natural resources of many different types... or, as author Michael T Klare titled his book, "The Race For What's Left".
What is at the core of Peak Everything? Simple. It's the fact that Earth's resources are finite, and humanity's rapid consumption of such is on track to create devastating shortages in just about everything. The relentless pursuit of economic growth is at the center of this. Without new resources, there can be no growth: the dog discovers the length of its chain the hard way. This is not a problem that can be cured even by recycling: recycling is imperfect and will be well into the foreseeable future due to our lack of interest in it. Thus, inevitably, humans are going to run out of many different types of resources, especially at the rate in which natural resources are being consumed.
Economic growth must end at some point, because it will inevitably be truncated, brutally, by Peak Everything.
Peak Everything? Impossible! Or Is It?
You should, at this point, demand proof that humans have ever run into a "peak everything" moment before. It hasn't. This is mostly uncharted territory. Mostly.
Perhaps you've heard of a place called Easter Island? It's a Southeastern Pacific island near South America that is also known as Rapa Nui. It is famous for its Moai, or giant person-shaped statues hewn out of rock, which rise as high as 10 meters and weigh as much as 80 tons. What you probably haven't heard of, however, is what happened to Easter Island. The people of Easter Island were all but wiped out because of a self-inflicted problem: they consumed their natural resources until there was practically nothing left. For them, Peak Everything came and it destroyed their civilization. They cut down all their trees and this led to soil erosion, which led to a food shortage. The lack of wood meant the people couldn't build boats to emigrate, either. Long before European sailors and slave traders ravaged the society of Rapa Nui, their own over-consumption had done the job first.
Peak everything happened to Rapa Nui. Now it is threatening to happen worldwide - and it is coming rapidly because of the relentless pursuit of economic growth.
Now what does Peak Everything have to do with economic growth? When that point is reached worldwide, shortages of just about every important resource are inevitable, and in that case, economic growth is impossible. Especially if genuine water or food shortages occur, in which money will become next to worthless. Look at what inflation did in Zimbabwe after Robert Mugabe's mismanaged land reforms took a turn for worse. Closer to home, look at stagflation in the United States during the 1970s oil crisis. What was economic growth like then? Now imagine the food shortages in Zimbabwe or the American oil crisis... except worldwide. What happens to economic growth then? The same thing that happens when a hungry coyote races off a cliff.
The Hard Lesson That Will Be Learned About Economic Growth: Prosperity Must Learn To Survive Without It
The hard and unavoidable reality is that the relentless pursuit of economic growth, as it is being practiced now, must be abandoned. Consumption must be reduced, if all of humanity is to avoid a global repeat of Rapa Nui's collapse. Throw-away goods must be replaced with goods that are easily recyclable. Humanity has moved past the convenient point of arguing whether it is feasible: our resource consumption levels has made it an imperative. Reduce, reuse, recycle, do it or die. Nature is coming to the point where it no longer cares about "but we can't!" Plenty of other species have gone extinct, sentenced to oblivion because "we can't!" was their answer to that last crisis their species ever faced.
Reducing consumption is naturally going to reduce economic growth, at least until research into recycling technology is taken seriously. This is because growth and the concept of sustainability are almost natural enemies of each other. We need to pursue a sustainable economy, one in which few if any additional natural resources are required to sustain the global populace. We need to cut pollution down to as little as possible. Humans will need to recycle water and replace fossil fuel usage with renewable, clean-burning fuels.
The problem is, sustainability is synonymous with stability and stability is not synonymous with growth; in fact it is almost the antithesis of growth. But sustainability is also synonymous with survival, and at some point we need to come to grips with the fact that the survival of the species comes first. It is remotely possible, maybe, to have economic growth while having sustainability, but that is going to require a civilization that is barely (if at all) recognizable by today's economists, to say the least.
The acolytes and high priests of the economic growth god will mark this as heresy, but they will not handwave it away:
Economic growth as humans define it now will end
or humanity will end.
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