Getting Past the Dilemma of Growth

Indefinite economic growth is not physically possible, and there’s mounting evidence and opinion that it’s not even desirable.

Cartoon by Polyp.org.uk

Cartoon by Polyp.org.uk

I’m convinced that our best hope of sustainable progress is to transition to a steady-state economy, where consumption and population are kept at steady, ecologically safe levels, and equitable human well-being is the overarching focus. In Enough is Enough, Rob Dietz and Dan O’Neill outline a practical blueprint for such an economy. Their engaging and accessible book suggests seven key policy goals, each with examples of specific policies:

  • Limit throughput of natural resources
  • Stabilize population
  • Distribute income and wealth
  • Reform financial institutions
  • Change our progress indicators
  • Secure meaningful jobs
  • Rethink commerce

Although these are all brilliant suggestions, I think the book misses a crucial point. After reading Prosperity Without Growth by Tim Jackson, I’ve realised that I was being quite naïve in my assumption that the only things blocking my vision of a steady-state were political will and corporate influence. Of course those are huge obstacles, but the real underlying obstacle is what Jackson calls ‘’the dilemma of growth’’.

This dilemma, or paradox, is that although continued economic growth risks ecological collapse, we’re locked in to chasing it simply because our economy doesn’t work if it stops growing. When growth stops, or even slows down too much, it causes recession. People lose their jobs, and sometimes their homes. Businesses go bankrupt. The government interferes by borrowing money from banks and hands out stimulus packages, desperate to get the economy growing again. But this creates public debt.

This is why economic growth is always the top priority, why the media’s always cheerleading it and why the political will for a steady-state is non-existent. But it’s vital that we get past this catch-22, and fast. While we’re forced to peruse economic growth, action on climate change, poverty, social justice and biodiversity loss will be marginal. We desperately need to find a way past this systemic problem, because limiting throughput (and Dietz and O’Neill’s other ideas) won’t be possible in a growth-based economy.

If you thought this post was going to just be me moaning about the problem, then think again. I’ve been racking my brains and I’ve come up with an idea, which I think is feasible.

This is a top-down, policy based approach. Later I’ll be writing about what role individuals, businesses, the media and NGOs will play in the transition.

Stage 1:
Introduce substantial taxes on all forms of pollution (atmospheric, water, soil etc). This would have four beneficial effects. Firstly, it would obviously discourage pollution. Secondly, it would help to internalize externalities, forcing companies to pay the full price of their production processes – which would force them to put their prices up, meaning retailers would also have to, meaning people wouldn’t be able to afford as many consumer goods. Thirdly, it would massively reduce economic growth (which is only possible by externalizing costs and not counting things like pollution). Fourthly, it would raise funds for stage two.

Stage 2:
Before the harmful effects of recession kick in, implement an ecological investment package. This would be similar to a stimulus package in that it would aim to prevent unemployment, but of course it wouldn’t be trying to stimulate growth. Instead, the investments would be laying the foundation for our steady-state economy, while creating millions of jobs and opportunities for enterprise and innovation. The package would provide investments and grants for:

  • Public transport
  • A new smart electric grid
  • Renewable energy
  • Retrofitting buildings
  • Recycling plants
  • Parks, urban farms and green spaces
  • Pedestrianized city centres and plazas
  • Organic agriculture
  • Reforestation
  • Habitat conservation
  • Scholarships for environmental degrees
  • Green skills evening classes
  • Research into clean technologies, e.g. hydrogen power

Many of these investment areas would improve health and well-being, all of them would reduce our ecological impact and all of them would create jobs. Note that employees with a huge range of skill levels and types will be required: from scientists to construction labourers and from teachers to engineers. This should address the risk of unemployment. It would also harbour the growth of many new green businesses. But crucially, many of the investments will not be productive in conventional terms, or will only be productive in the long term. This should mean that although employment will be high, growth should be slow.

Stage 3:
However, there’s no telling how people will spend their wages. If people still spend all their disposable income on consumer goods then our sustainability gains will be negligible. There’s two ways of reducing consumption, and I recommend we use both simultaneously:

Limit throughput:
The pollution taxes will already be reducing consumption to an extent, as super-cheap disposable products will be increasingly unavailable. A few more policies could help speed up this trend:

  • A tax on the use of virgin raw materials which can be recycled, such as paper, plastic and aluminium. This would boost recycling, reduce resource-intensity of products and gather funds for future investment.
  • Stricter controls on advertising could help to reduce demand for consumer goods. As a start, advertising to children should be banned.
  • Some kind of limit could be placed on the import of consumer goods, to prevent the risk of being green at home but outsourcing all our dirty industry, pollution and resource use. Maybe a ceiling could be set and then companies could buy import rights in a kind of auction.
  • Tighter product standards, where goods are expected to be durable and repairable. Better quality products without built-in obsolescence would reduce demand, as they would last longer and could be repaired.
  • Encourage labour intensive but low-carbon services to fill needs rather than products. E.g. massages over cosmetics, gigs over video games… Could be done by offering tax breaks to service companies, or start-up grants, possibly.

Improve Equality:

The Spirit Level by Wilkinson and Pickett show that more equal societies perform better across a range of health and social factors: they have better literacy and life expectancy, and they have less crime, less teenage pregnancy and less obesity. In addition, more equal societies are less consumerist. This is because in unequal societies, envy and competition lead to the increased consumption of status goods (such as flashy cars and designer clothes). Poverty and wealth are always relative; people compare themselves to others in their society. If some are excessively rich, everyone aspires to that materialistic bench mark. For these twin reasons, a steady state aims to be more equal. Note: I am not suggesting a totally equal society. All jobs having the same salaries just wouldn’t make sense. What I am suggesting, is that the gap between rich and poor should be narrowed. This could be done by several policies:

  • Phase out fractional reserve banking and the interest function of money. Is it really fair that people be paid just for being rich? The interest function deepens inequality by distributing wealth to those who already have it. Fractional reserve banking allows banks to create money out of thin air and locks us into cycles of debt that can’t be repaid even with economic growth, let alone without it. Dietz and O’Neill suggest we phase out fractional reserve banking until eventually banks can’t loan money unless they literally have the funds to do so.
  • Progressive income taxes, used to fund extensive public services such as healthcare, education, libraries and museums, incapacity benefits, child and elder care. These would help to ‘’level the playing field’’. I think eventually we should have free university education for those who have the right A Levels and pass an interview.
  • As outlined in Enough is Enough, pay ratios could be used to reduce inequality. If a company had a pay ratio of 1:80 this would mean the CEO couldn’t be paid more than 80 times the salary of the lowest-paid employee, probably a cleaner. More transparency in business would pressure companies to publish their pay ratios, as well as their bonuses.

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With these three stages, I think it would be possible to get past the dilemma of growth.

There’s undoubtedly going to be a large element of creative destruction with this transition. Some companies won’t adjust quickly enough and will go bankrupt. But that’s okay, as long as there are other innovative companies rising from the ashes. The steady-state economy is people centred. It’s not the companies that are important, but the people behind them – what we’re trying to avoid is unemployment. If people lose their jobs because their employer has gone under, that’s okay as long as there are other new job opportunities open to them. It’s only a problem is there aren’t enough jobs to go round or if companies can’t afford to employ the workers they need.

Persuading politicians to undertake this strategy is the subject of future posts, because that’s where the role of individuals, the media, NGOS and businesses come in.

Until next time!

Recommended reading:

Dietz, R and O’Neill, D. (2013) Enough is Enough. London and New York: Routledge.

Jackson, T. (2009). Prosperity Without Growth. London: Earthscan.

Wilkinson, R. and Pickett, K. (2010). The Spirit Level. London: Penguin Books.

also published on Earth Baby , Tegan’s Personal Blog

Fracking Britain – The Facts

The UK Prime Minister, David Cameron, is convinced that ‘fracking’ – or hydraulic fracturing – of shale gas and oil is the answer to the country’s energy supply worries and economic troubles. However politicians such as Caroline Lucas, environmental groups and thousands of local protesters are more than aware of the downsides to this ‘dash for gas’ and are desperate to shout about them loud and clear. So what is fracking, what are the benefits and what are the risks?

Horizontal hydraulic fracturing is an intensive method of fossil fuel extraction. Where gas or oil lies within the earth in layers or shales, there is the possibility of extracting it by pumping sand, chemicals and a huge amount of water into the shale and letting the fuel come up into a well. The horizontal method is new while conventional oil or gas drilling is vertical. The US has recently undergone a huge ‘fracking revolution’ and the UK has granted over 100 licenses for exploratory drilling while other countries such as China and Poland are also in the process of undergoing this process.

The benefits of fracking are largely the benefits to any kind of fossil fuel extraction. Our whole economy is powered by fossil fuel, so nations are always desperate to pull more and more out of the ground – especially as oil extraction around the world starts to decline. For the UK specifically, fracking would create a lot of profit, helping our economy to grow. It will also create jobs, and possibly improve our energy security, although this isn’t definite because the companies that frack will actually just sell the fuel to the highest bidder in Europe – as the whole EU has an integrated energy supply system.  Cameron claims it will lower domestic gas bills – but there is evidence to the contrary. Caudrilla itself – one of the biggest companies involved – has admitted that the effect on gas bills will be marginal, if anything.

So there are some economic benefits. But there are many downsides. First off, this ‘dash for gas’ completely contradicts the 2008 Climate Change Act, as the continual investment in fossil fuels not only pollutes the atmosphere and deepens the climate change problem, it also diverts investment potential and public spending away from renewable energy technology.
There is also a risk of earth tremors – tiny earthquakes – caused by fracking sites. This happened at an exploratory site near Blackpool, causing significant public concern.
Fracking also has significant health risks, as the gas and chemicals can (and often do) leak into the groundwater of the area. This will not only put aquatic wildlife in jeopardy, but can also contaminate local drinking water. If this happens, the health and safety risks to local people are severe.
The industrialisation of the countryside is also an issue to many people who live in rural communities. Huge noisy trucks chugging through small villages create traffic congestion and localised atmospheric pollution.
The aesthetic value of the English landscape is also damaged by industrial fracking plants. Not only is this a shame in itself, but it will also lower local house prices, which in turn will have a negative economic effect on local areas. Households very near to a site may even have trouble getting house insurance.

At the moment both government and the public are massively divided on the fracking debate. It’s proving to be a very controversial issue, with campaign groups such as Frack Free Somerset and Frack Free Sussex cropping up to organise the opposition.  The testing site in Balcomb, Sussex, has seen thousands of protesters from both the local area and all over the country camping out for days on end, desperate for their views to be taken seriously.

Anti-fracking protest at Balcomb. Image from the Guardian.

Anti-fracking protest at Balcomb. Image from the Guardian.

If he’s serious about democracy, David Cameron will listen to the people rather than the pound signs. Is that really too much to ask for?

Resources:

http://ecowatch.com/2013/fracking-protests-intensify-officials-push-drilling/

http://www.greenpeace.org.uk/newsdesk/energy/fact-check/will-fracking-lower-bills

http://www.independent.co.uk/news/uk/politics/fracking-the-great-debate-8782853.html