My question is how indefinite GDP growth is any less magical?
At some point governments and firms are going to have to deal with ecological limitations.
I enjoy my consumption of a new gaming console or TV, gas consumption etc but I’m certainly open to public policy curbing that consumption if it’s shown to be unsustainable especially in my lifetime. I’m 28.
Economic growth models do NOT assume infinite GDP growth. In fact, the big theme of international growth is of "convergence" - the idea that richer countries eventually slow down while poorer countries grow at faster rates until growth rates converge.
I do not know how and when this idea that economics promotes infinite growth came into play. My best guess is that it's a hangover from the 90s, when expansionary monetary policy by the US Fed postponed recessions in America, creating a temporary illusion that growth can be perpetual. This was properly debunked in 2008 (and indeed, some economists like Raghuram Rajan had noted the instabilities of the global financial system even before 2008).
So no, economic theory doesn't promote infinite growth. In fact, one of the big fears here among Indian economists (I live in India) is that we have a narrow window for high GDP growth, before our young population grows too old and climate change imposes heavier costs on creating new goods and services. Hence the urgency to generate as much wealth as possible for our people before we lose the chance. It's true that this can lead us down dark paths (and this must be called out), but the overall fear is not unjustified.
Thank you for the reply. Out of curiosity, do you know what specific domestic sectors India is trying to grow before climate change imposes too high a cost? Also, are there good models from India that project what that growth timetable might be?
Thanks for the question. This requires a bit of a nuanced answer, which may not read very well here. Still, let me try.
There are two or three layers to go through on this. At the first layer, there are some clear goals - the Indian government has committed to cutting emissions by 33-35% compared to 2005 by 2030 under the Paris Agreement. It has also committed to fulfilling multiple goals under the UN Sustainable Development Goals. On the other hand, it has recognised that in order to bring Indians to a reasonable standard of living, it needs to grow its GDP by at least 7% every year for the next decade. It also needs to be creating 20 million new jobs every year to reduce unemployment. Finally, the government acknowledges that climate change has already begun affecting the country's Himalayan glaciers, monsoon rain patterns, cyclonic occurrence and coastal erosion. So there's an urgent need to *adapt* to climate change as it occurs.
At the second layer, this becomes a little more confusing. While all these goals are acknowledged, there aren't a lot of places where they are seen and integrated together. India used to have an integrated 5-year planning system, but this was abandoned in 2015. So right now, it's not very easy to see how India's climate goals fit with its economic goals in formal policy. Policymakers know, but opacity in government processes make it difficult to extract this information on a regular basis.
We can see the broad direction in their sector-based policies though. In the last few years, there has been huge investments in building out infrastructure, mass transport, and energy systems, with a focus on climate-related aspects such as renewable energy and water conservation. These are also sectors which are high-growth at present, with potential for employment, so they're clearly pushing for sectors that balance climate and economic goals together.
However, this is countered by some other problematic trends. India's energy needs to build out its economy and employment are too big to be met by renewables alone, so there's also a push to mine more coal and gas, which threatens to lock us into unsustainable paths. It's become easier to obtain mining permits and the usual environmental restrictions have been considerably watered down. There is a sense of urgency to the way this has been carried out, which (to me) suggests that they're trying to get this done before the window for growth is closed by climate change considerations. So overall, the picture is a complex one, where India is being pushed into extremely high growth rates (no matter what the cost) in the immediate future, but is also being pushed to adapt to climate change and environmental concerns over the next few decades.
This was really informative. Thanks for taking the time to go into detail. It’s definitely a complex mix of priorities, international commitments and environmental constraints.
Innovation allows using resources many times more efficiently, for example if you replace your gas boiler with heat pump running on renewable, you just did increase energy efficiency for 3 times, but material efficiency for several order of magnitude times.
GDP is unlimited, since the value is based on social agreement, and values are not intrinsic. When women start preferring guys with many likes on social networks to guys with gas guzzlers, you have solved the resource problem, at least for another hundred years.
I’m not sure what your comment has to do with my post. My point has nothing to do with technology not enabling growth. My point is about the ecological limitations of our current conception of growth not decoupling from increased material consumption.
Technology has a two-pronged impact in those aspects. On one hand it enables for more efficient extraction of resources that were previously unreachable/unprofitable. On the other it enables to use those resources much more efficiently, reducing the amount used per production unit and/or allowing for easier recycling or directly replacing some, more scarce materials with more abundant and cheaper ones. Case in point the switch from lithium-based batteries to sodium-based ones.
Throughout history technology has been the main driver behind increases in productivity and efficiency, the woods that fed one large family turned into fields that fed entire towns thanks to the invention of farming. And so on, and so forth.
Growth is definitely finite in absolute terms, but we can hardly speculate on where its limit is, as technologies that have not yet been discovered can not be evaluated. If technological development continues as is, it may very well be in our reach to avoid these limitations.
So far our conception of GDP has not decoupled from large amounts of material extraction. Therefore there will always be absolute limits. The debate is what types of extraction are sustainable for some kind of social standard we can agree on and how long we believe we can maintain that standard.
Your first and second sentences are non sequitur, while the first one is true, the second does not follow from it in no way. What we know now is that fast transition away from fossil fuels is technoeconomically feasible, although sociopolitically difficult. Such energy transition would reduce the amount of resources needed by several orders of magnitude, also allowing for something we did not easily have up to now, substitutivity of materials. For example, in batteries, cobalt can be substituted by nickel.
The "growers" are doing magical thinking. They ignore planetary boundaries, they ignore the fact that a triple down effect is not working, they ignore the extractive economy. "Degrowers", by the way, are not only focussing on the GDP indicator. They try to develop alternatives for the current economic system that is destructing our planet and making poor people poorer and rich people richer and that causes pandemics (with zoonotic diseases as they exploit the animals too much). Indeed not an easy task, and often politically not accepted by the establisment. But still a struggle worth to continue. The only realistic way to achieve more equity, fair societies and a healthy ecosystem. Call me magical, but that sounds/is better than being part of the collective suicide..
Innovation allows using resources many times more efficiently, for example if you replace your gas boiler with heat pump running on renewable, you just did increase energy efficiency for 3 times, but material efficiency for several order of magnitude times.
GDP is unlimited, since the value is based on social agreement, and values are not intrinsic. When women start preferring guys with many likes on social networks to guys with gas guzzlers, you have solved the resource problem, at least for another hundred years.
Malthus was proven wrong many times. It is innovation!
Several comments here identify the problem with dismissing degrowers-- dismissal doesn't address the problem at the root of their concern.
Technology fas seem to think they are more clear-eyed than degrowers, but have done no more than degrowers in dealing with implementing solutions.
Our form of growth puts us on a unsustainable path. Leida made that point and was dismissed. A rapid decline in greenhouse gas release is needed without technological solutions in hand. They are not in hand. Technology fans are no more ready to face the hard steps required to avoid continued warming than degrowers are. Just as magical.
Degrowers at least have the virtue of admitting that painful change is coming. Those who drag out tired old technology promises don't. Their complacency simply raises the odds that painful change will be forced on us without adequate planning and preparation.
I kept reading, nodding my head in agreement, waiting for Brando’s solution.
Is it in another article?
I don’t think the degrowth scenario is politically possible, which is presumably the point here, but as best I can tell everyone engages on magical thinking of one form or another.
Thanks Branko. How can we reduce carbon emissions enough to deal with climate change and still grow at the same time? Is it possible to do carbon negative growth? Particularly in the developing world? Cheers
Massive investments in nuclear energy and PV. But the thing is that won’t “help.” Hydrocarbons are so useful they’ll continue to be used. They are so useful that when they run out we will likely use brute force and energy to CREATE them. Just sell your oceanfront property is all I can recommend.
My question is how indefinite GDP growth is any less magical?
At some point governments and firms are going to have to deal with ecological limitations.
I enjoy my consumption of a new gaming console or TV, gas consumption etc but I’m certainly open to public policy curbing that consumption if it’s shown to be unsustainable especially in my lifetime. I’m 28.
Economic growth models do NOT assume infinite GDP growth. In fact, the big theme of international growth is of "convergence" - the idea that richer countries eventually slow down while poorer countries grow at faster rates until growth rates converge.
I do not know how and when this idea that economics promotes infinite growth came into play. My best guess is that it's a hangover from the 90s, when expansionary monetary policy by the US Fed postponed recessions in America, creating a temporary illusion that growth can be perpetual. This was properly debunked in 2008 (and indeed, some economists like Raghuram Rajan had noted the instabilities of the global financial system even before 2008).
So no, economic theory doesn't promote infinite growth. In fact, one of the big fears here among Indian economists (I live in India) is that we have a narrow window for high GDP growth, before our young population grows too old and climate change imposes heavier costs on creating new goods and services. Hence the urgency to generate as much wealth as possible for our people before we lose the chance. It's true that this can lead us down dark paths (and this must be called out), but the overall fear is not unjustified.
Indefinite. Not infinite.
Thank you for the reply. Out of curiosity, do you know what specific domestic sectors India is trying to grow before climate change imposes too high a cost? Also, are there good models from India that project what that growth timetable might be?
Thanks for the question. This requires a bit of a nuanced answer, which may not read very well here. Still, let me try.
There are two or three layers to go through on this. At the first layer, there are some clear goals - the Indian government has committed to cutting emissions by 33-35% compared to 2005 by 2030 under the Paris Agreement. It has also committed to fulfilling multiple goals under the UN Sustainable Development Goals. On the other hand, it has recognised that in order to bring Indians to a reasonable standard of living, it needs to grow its GDP by at least 7% every year for the next decade. It also needs to be creating 20 million new jobs every year to reduce unemployment. Finally, the government acknowledges that climate change has already begun affecting the country's Himalayan glaciers, monsoon rain patterns, cyclonic occurrence and coastal erosion. So there's an urgent need to *adapt* to climate change as it occurs.
At the second layer, this becomes a little more confusing. While all these goals are acknowledged, there aren't a lot of places where they are seen and integrated together. India used to have an integrated 5-year planning system, but this was abandoned in 2015. So right now, it's not very easy to see how India's climate goals fit with its economic goals in formal policy. Policymakers know, but opacity in government processes make it difficult to extract this information on a regular basis.
We can see the broad direction in their sector-based policies though. In the last few years, there has been huge investments in building out infrastructure, mass transport, and energy systems, with a focus on climate-related aspects such as renewable energy and water conservation. These are also sectors which are high-growth at present, with potential for employment, so they're clearly pushing for sectors that balance climate and economic goals together.
However, this is countered by some other problematic trends. India's energy needs to build out its economy and employment are too big to be met by renewables alone, so there's also a push to mine more coal and gas, which threatens to lock us into unsustainable paths. It's become easier to obtain mining permits and the usual environmental restrictions have been considerably watered down. There is a sense of urgency to the way this has been carried out, which (to me) suggests that they're trying to get this done before the window for growth is closed by climate change considerations. So overall, the picture is a complex one, where India is being pushed into extremely high growth rates (no matter what the cost) in the immediate future, but is also being pushed to adapt to climate change and environmental concerns over the next few decades.
This was really informative. Thanks for taking the time to go into detail. It’s definitely a complex mix of priorities, international commitments and environmental constraints.
Innovation allows using resources many times more efficiently, for example if you replace your gas boiler with heat pump running on renewable, you just did increase energy efficiency for 3 times, but material efficiency for several order of magnitude times.
GDP is unlimited, since the value is based on social agreement, and values are not intrinsic. When women start preferring guys with many likes on social networks to guys with gas guzzlers, you have solved the resource problem, at least for another hundred years.
It's technology that allows for growth. It's not that hard to understand, we have a track record of centuries proving it.
I’m not sure what your comment has to do with my post. My point has nothing to do with technology not enabling growth. My point is about the ecological limitations of our current conception of growth not decoupling from increased material consumption.
Jason Hickel has a great piece I’d recommend.
https://www.jasonhickel.org/blog/2020/10/9/response-to-mcafee
Technology has a two-pronged impact in those aspects. On one hand it enables for more efficient extraction of resources that were previously unreachable/unprofitable. On the other it enables to use those resources much more efficiently, reducing the amount used per production unit and/or allowing for easier recycling or directly replacing some, more scarce materials with more abundant and cheaper ones. Case in point the switch from lithium-based batteries to sodium-based ones.
Throughout history technology has been the main driver behind increases in productivity and efficiency, the woods that fed one large family turned into fields that fed entire towns thanks to the invention of farming. And so on, and so forth.
Growth is definitely finite in absolute terms, but we can hardly speculate on where its limit is, as technologies that have not yet been discovered can not be evaluated. If technological development continues as is, it may very well be in our reach to avoid these limitations.
There are no absolute limits, just on certain technological level.
So far our conception of GDP has not decoupled from large amounts of material extraction. Therefore there will always be absolute limits. The debate is what types of extraction are sustainable for some kind of social standard we can agree on and how long we believe we can maintain that standard.
Your first and second sentences are non sequitur, while the first one is true, the second does not follow from it in no way. What we know now is that fast transition away from fossil fuels is technoeconomically feasible, although sociopolitically difficult. Such energy transition would reduce the amount of resources needed by several orders of magnitude, also allowing for something we did not easily have up to now, substitutivity of materials. For example, in batteries, cobalt can be substituted by nickel.
The "growers" are doing magical thinking. They ignore planetary boundaries, they ignore the fact that a triple down effect is not working, they ignore the extractive economy. "Degrowers", by the way, are not only focussing on the GDP indicator. They try to develop alternatives for the current economic system that is destructing our planet and making poor people poorer and rich people richer and that causes pandemics (with zoonotic diseases as they exploit the animals too much). Indeed not an easy task, and often politically not accepted by the establisment. But still a struggle worth to continue. The only realistic way to achieve more equity, fair societies and a healthy ecosystem. Call me magical, but that sounds/is better than being part of the collective suicide..
Innovation allows using resources many times more efficiently, for example if you replace your gas boiler with heat pump running on renewable, you just did increase energy efficiency for 3 times, but material efficiency for several order of magnitude times.
GDP is unlimited, since the value is based on social agreement, and values are not intrinsic. When women start preferring guys with many likes on social networks to guys with gas guzzlers, you have solved the resource problem, at least for another hundred years.
Malthus was proven wrong many times. It is innovation!
Several comments here identify the problem with dismissing degrowers-- dismissal doesn't address the problem at the root of their concern.
Technology fas seem to think they are more clear-eyed than degrowers, but have done no more than degrowers in dealing with implementing solutions.
Our form of growth puts us on a unsustainable path. Leida made that point and was dismissed. A rapid decline in greenhouse gas release is needed without technological solutions in hand. They are not in hand. Technology fans are no more ready to face the hard steps required to avoid continued warming than degrowers are. Just as magical.
Degrowers at least have the virtue of admitting that painful change is coming. Those who drag out tired old technology promises don't. Their complacency simply raises the odds that painful change will be forced on us without adequate planning and preparation.
I kept reading, nodding my head in agreement, waiting for Brando’s solution.
Is it in another article?
I don’t think the degrowth scenario is politically possible, which is presumably the point here, but as best I can tell everyone engages on magical thinking of one form or another.
Branko’s solution. Spellcheck intervened above.
Thanks Branko. How can we reduce carbon emissions enough to deal with climate change and still grow at the same time? Is it possible to do carbon negative growth? Particularly in the developing world? Cheers
100% renewable energy systems do that easily.
Massive investments in nuclear energy and PV. But the thing is that won’t “help.” Hydrocarbons are so useful they’ll continue to be used. They are so useful that when they run out we will likely use brute force and energy to CREATE them. Just sell your oceanfront property is all I can recommend.
Price the carbon out of the market then.