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Page added on March 14, 2015
Can the world get richer forever?
Since the dawn of the industrial age, the world has steadily been getting wealthier, despite setbacks such as the Great Depression and the more recent global financial crisis.
We make more, sell more and consume more than ever before.
Yet, according to the United Nations, nearly three billion people still live on less than $2.50 (£1.70) per day.
So, how can we raise living standards for those who still live in poverty? The answer, according to most governments, is rapid economic growth.
Growth is seen as a panacea for a great many ills. It creates jobs, erodes debts and raises living standards. For politicians, it also generates votes. It is almost universally seen as a Good Thing.
Journalists are complicit in this. We frequently describe rapid growth as “robust”. Slower growth is “anaemic” and an economy in recession is often portrayed as “sick” or “ailing”.
‘Boiling the oceans’
Yet there’s a problem here. We live on a finite planet, but growth is exponential. So an annual increase in gross domestic product (GDP) of 3% might not sound like much – but it means an economy will double in size every 23 years.
Continued growth could cause long-term damage to the planetSo does this matter? According to Tom Murphy, professor of physics at the University of California San Diego, it definitely does, as economic growth goes hand in hand with increasing energy consumption.
“From a physical point of view, if we grew at 3% a year, in about 400 years’ time we would actually be boiling the oceans – not because of global warming and CO2, but just because of the heat that is a natural by-product of the energy that we use,” he says.
These physical constraints, Prof Murphy says, will start to have an impact – for example, by creating cycles of boom and bust – and will make long-term growth impossible.
Accessible energy
This view is not entirely new. In fact, the English cleric and scholar Thomas Malthus made a similar point back in the 18th Century. His concern was not energy use but population growth.
He believed that the population would grow as living standards rose, and that eventually food supplies would run out. That hasn’t happened so far. In fact, we have simply become much better at producing food.
So could we do something similar with energy?
Could renewable energy help negate the impact on the environment of economic growth?“There’s potential to get renewable sources of power that don’t produce carbon emissions, that are cheap and easily accessible,” says economist and environmental campaigner Yoram Bauman. “The goal is to get the cost of renewable power below the cost of, say, coal.”
Certainly there’s little sign of anxiety within the financial industry.
“Historically, people have demonstrated a remarkable ability to deliver economic development and growth, often in the face of appalling manmade and environmental catastrophes,” says Joe Siefert, a former investment banker and now the chief investment officer for Indian fund Essar Capital.
“Resource scarcity in areas such as energy and water is a possible constraint, but there are vast natural resources that are untapped and human ingenuity has in the past overcome many such constraints.”
The right growth
On the face of it, that should be good news for many developing countries, who rely on growth to create jobs and boost living standards.
But growth alone is not good enough, says Ashish Thakkar, founder and chief executive of the Africa-based Mara Group. It needs to be the right kind of growth.
“Growth should not be about speculation and making a quick buck,” he says. “It’s seen as helping to lift people out of poverty, but we mustn’t lose that mindset. It should not be about simply creaming away natural resources.”
A “rich” life?He thinks growth can still have huge benefits for developing countries.
But the well-known – and frequently controversial – Indian environmental activist Vandana Shiva has a very different view.
She believes that current measures of growth place too much emphasis on potentially harmful activities, such as logging or mining, and do not value natural wealth.
“Every story of growth is a story of environmental footprint that was encountered, of social dislocation,” she says. “Growth is only measured in terms of commodification. It doesn’t measure the life you’re living, the nutrition you’re eating, the quality of your life.”
‘Work for hands and heart’
She thinks we need to redefine what we mean by wealth and accept that economic growth often comes with a hefty price tag.
“Being rich means living a full life, living a life of meaning,” she says. “Having work for your hands and your mind and your heart. Having a wide circle of compassion to give. On that there is no limit.”
One person who might have some sympathy for that view is Gillian Tett, the US managing editor of the Financial Times. But she is also a graduate in social anthropology, the study of peoples and how they relate to one another.
She believes the vision of growth put forward by orthodox economists is too narrow.
“People don’t think about their lives in terms of numbers in a bank or in terms of numbers and spreadsheets. They look at their total sense of wellbeing and prosperity. Maybe that’s the kind of thing we should be focusing on much more these days,” she says.
So perhaps, if we want to get richer forever, we should go back to the drawing board, and start to rethink what being rich actually means.
10 Comments on "Can the world get richer forever?"
penury on Sat, 14th Mar 2015 10:15 am
I don;t know maybe we need to repeat this everyday or have it included in every commercial:”You cannot have infinite growth on a finite planet. There are too many humans. This planet is running out of easily obtained resources. “NO MORE GROWTH:”
Plantagenet on Sat, 14th Mar 2015 11:47 am
There is nothing wrong with different cultures around the world having different lifestyles. You can’t measure everything and everyone by how much money they create.
Perk Earl on Sat, 14th Mar 2015 12:38 pm
Yeah, but we’ve always been richer even after the depression and the long recession, so why can’t we increase the wealth of every poor person on Earth? Why can’t they have big SUV’s, big screen TV’s, computers, wall to wall carpeting, water & sewage systems, asphalt roads, concrete curbs, street lights, sports stadiums, airports, mini-malls, giant grocery stores, Walmarts, Home depots, car dealerships, bullet trains and vacation packages? I mean we’re only talking about another 2.5 billion people. I mean for goodness sakes, QE it if necessary, regardless of hitting energy limits as oil price drops. After all why should just part of the world population charge full on towards the cliff when all 7+billion of us can?/sarc off
Apneaman on Sat, 14th Mar 2015 4:15 pm
Even if resources were unlimited there would never be anything resembling equality. Capitalism is just another religion someone(s) made up to maintain power and control the plebs.
Bureaucracy, Capitalism and Freedom
“Graeber also noted the large amount of “guard labor” required in highly unequal capitalist societies – large amounts of people are employed in doing nothing else but keeping other people in line (police, military, prison guards, security guards, parole officers, bail bondsmen, etc.). This is not exactly productive activity that enlarges the pie and makes us all better off like capitalist theory predicts.”
” There is no such thing as deregulation because the Market is by definition is a set of regulations.”
“Then there’s the machinery designed to keep global capitalism running “freely” – the World Trade Organization, International Monetary Fund and the rest – which are in fact a “planetary-scale administrative bureaucratic system”, protected by state violence when challenged.”
http://hipcrime.blogspot.ca/2015/03/bureaucracy-capitalism-and-freedom.html
Makati1 on Sat, 14th Mar 2015 8:24 pm
Capitalism is the cause of most of today’s problems. If you took the world’s GDP and divided it up into equal shares, every person on earth could live a Brazilian lifestyle. A family of four would have a 40,000+ USD income. But then there would not be 85 billionaires with more wealth than 3 billion others.
Apneaman on Sat, 14th Mar 2015 8:42 pm
I tend to think overall were simply following our evolutionary programming of maximizing energy use to pass on as many copies of our genes as possible;same as all the other life. Capitalism is a force multiplier. The idea that we have a choice – that we are in control is an illusion.
Capitalism + Industrial civilization = The end.
http://www.dieoff.org/
Makati1 on Sat, 14th Mar 2015 9:54 pm
Actually, we were in control, but gave it up for greed and sloth. Both are encouraged by capitalism. Blaming it on our genes is typical capitalist thinking. We are an intelligent species, but few every use it except to live off of other’s labors. I will be glad to see the system taken down in the near future. It cannot be worse than what we have today. Ask any African, South/Central American or Asian not in the top 10%.
Apneaman on Sat, 14th Mar 2015 10:37 pm
If it’s ideology and not evolution then how come NO culture can stop reproducing in the face of disaster? Why do we keep repeating the same collapses in different cultures in different centuries and millennia? Evolution selects for population overshoot. Yeast or Yeaster island;)St. Mathew island is probably a better example. If high intelligence is so great, why have we only seen it once? Me thinks it is because it is a lethal mutation. An evolutionary dead end. Many are aware that we are heading towards a cliff. We are, after all, the most intelligent. Ignorance is overrated. That’s the paradox and irony. We are intelligent enough to know that we are just another biological creature unable to operate outside our programming. Our inbuilt optimism bias tricks us into thinking we won’t/can’t go extinct when every thing does and we know it.
http://www.stuartmcmillen.com/comics_en/st-matthew-island/#page-5
Your brain won’t allow you to believe the apocalypse could actually happen
http://io9.com/5848857/your-brain-wont-allow-you-to-believe-the-apocalypse-could-actually-happen
Davy on Sun, 15th Mar 2015 7:11 am
More BAUtopian hopium. Let’s wish upon a star that all peoples will be rich and happy. We can clean BAU up. You know the sales pitch smart growth and clean growth. Cat Piss is what that smells like. Reality says that we are in overshoot of consumption and population. We have systematically hit limits and diminishing returns. This is profoundly evident in our foundational commodity oil and our debt choked financial system.
The only thing left for BAU to do is help BAU transition out of BAU. BAU has no future and these BAUtopian singing the siren song are bastards leading a huge amount of people into the cliffs. Pain, suffering, and death await us. How much of that horror and how quick is the true question. There can be less pain, suffering, and death if approached properly.
We can do a paradigm change of attitude that will lessen the dangers and suffering. If we keep the educated and people of means seduced by the siren song of BAU it will be bad. BAU’s siren song of seduction through technology, knowledge and markets will save us is truly setting up everyone up to an awful transition. This will be a rich and poor event. The rich might do OK initially in the worst of descent but they will fall the hardest at some point. Can you see a Wall Street asshole lifting a spade hoeing a garden? What a joke.
Let’s be honest and that across the spectrum. We know the parasitic 1%ers need honesty but the AltE, greenies, AGW wonks and transitionalist need honesty too. There is no silver bullet and there is no alternative to pain, suffering, and death. All of the above preach a solution just like the Democrats and the Republicans that think they can run the government. The government is unreformable and so is BAU.
Once the denial is reduced we can get down to the brass tax of hard effort and living to muster some kind of transition that doesn’t leave large areas a waste land. This is needed not only for us humans but also for Natures critters. A quick return to the land will be a locust event with the land scoured of anything edible and with energy. We will have a wasteland of desertification and denuded of wildlife.
People will eventually die in mass from hunger and exposure here and there. This is what awaits us if we don’t get our shit together. We can lessen this hell but hell none the less even with good attitudes and decisions. I hate the BAUtopians for this because their denial and their hubris will kill many. I may be one of those quick deaths I have no illusions about that.
Makati1 on Sun, 15th Mar 2015 8:35 am
Apneaman, maybe it would work if we actually educated our people and didn’t waste so much time and energy in trying to control them as slaves or serfs? The US was built by slaves. Washington had over 100 slaves. Even Ben Franklin had several. The fact that education seems to cut down on the population growth, in 1st world countries, proves my point.
But, yes, we are now doomed. Unfortunately, I don’t see my grand kids living to my ripe old age of 70+. The world is going to quickly revert to almost a dark ages level over the next few decades.
Cannot happen? Well, if you are English and know your history, you will see that it can happen and quickly. The invading Romans had running water, under-floor heating, and bath houses in the first century AD. They had mass produced, glazed pottery and building materials. These disappeared for almost 1,000 years, after Rome fell.
Going back to the Egyptians, they had all kinds of medical practices lost for thousands of years. And they had writing in stone and on papyrus to preserve their learning. Yet, they lost the ability to use that knowledge.
We have computers that cannot function if they have a drop of water in the wrong place or the battery/power goes. Nothing readable in 1,000 years or even 100, just e-junk and books printed on cheap self-destructing paper.