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The New Yorker February 10, 2020 pp24-27 Dept of Finance “Steady State” “Can we have prosperity without economic growth?” by John Cassidy
It was speculated by John Maynard Keynes back in 1930 “that by the year 2030 capital investment and technological progress would have raised living standards as much as eightfold, creating a society so rich that people would work as little as fifteen hours a week, devoting the rest of the time to leisure and other non-economic purposes”. As we know this hasn’t happen and we are still dedicated to “maximizing the rate of economic growth”.
In the last century, American GDP/person has increased six-fold and some are beginning to wonder can we continue “creating and consuming ever more stuff…”. On the political left concerns about climate change has given rise to the “degrowth movement”-a calling for “zero or even negative GDP growth”. Some proponents call for “dismantling the entirety of global capitalism, not just the fossil fuel industry”. Others see simply moving from a production to a service market and indeed services once just 40% (1950) of the American GDP are now nearly 70%.
Some economists too are suggesting “that a larger GDP doesn’t necessarily mean a rise in human well-being-especially if it isn’t distributed equitably…”. Since Reagan/Thatcher, in the economically developed countries of the west, economic inequality, mortality and polarization has been increasing as benefits have largely accrued to the elite while GDP growth in under-develop countries has increased with those in extreme poverty decreasing dramatically “from 2 billion to 700 million” since 1990. In the west GDP has hovered around three percent between 1950 and 2000 and is now around two percent. While some economist’s worry other suggest that this leveling off of GDP is a byproduct of a wealthy society. After women entered the workplace in large numbers a decline was inevitable unless birth rate or immigration could add more workers to the labor force. With smaller families yet wealthier families and an aging population, one would predict that spending on durable and consumer goods would fall and the service sector GDP would rise. As an example, this has played out in Japan starting since the 1990s and is forecasted for other major economies.
Economist’s note that even a two percent GDP will result in a doubling of the economy by 2055. “Green growth” advocates wonder if such growth is environmentally sustainable. Others note that with the “right policy, measures and continued technological progress” growth with lower carbon emissions is possible-until recently this was trending. Measures to get trending again, for growth with a lower carbon footprint, are “research into green technology, and hefty taxes on fossil fuels”. For many economic, political and social reasons, there seems to be an understanding and consensus amongst experts that no-growth is absolutely a non-starter especially for populations in developing countries. A thorny issue for developed economies, that must be addressed or planned for, is compensating those affected by permanent job los