Shrinking the Economy to Save the World

Shrinking the Economy to Save the World

Shrinking the Economy to Save the World

The degrowth movement argues that the only way toward an ecologically sustainable world is to redirect economies away from market imperatives.

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America, I’m afraid to report, teeters on the precipice of inexorable decline. Our once limitless horizon is suddenly contracting, our outlook increasingly grim. Ross Douthat, The New York Times’ preeminent moral handwringer, lives in fear of the “stagnation, loneliness, alienation” our future has in store.

The cause for all this doomsaying? Not heat waves, wildfires, floods, or any of the other manifestations of the climate crisis. No, far more concerning for those in the halls of power is the 2020 census, which found that the US population is growing at a slower rate than at any time since the Great Depression. Fifty years ago, fears ran rampant that the “population bomb” announced by biologists Paul and Anne Ehrlich would produce a world without enough space to feed its untold billions of inhabitants. Now it’s a population “bust” we must prevent, what political scientist Darrell Bricker and journalist John Ibbitson describe as “a relentless, generation-after-generation culling of the human herd” in their 2019 manifesto Empty Planet. While the demographic slowdown that might produce this frightful culling is currently limited to the United States, Europe, and East Asia, Bricker and Ibbitson argue that even South Asia and sub-Saharan Africa—the regions whose growth most terrified the Ehrlichs in the ’70s—will see their populations peak by mid-century.

For many economists, the coming demographic apocalypse is a problem only insofar as it will damage the gross domestic product. Though the GDP does not speak in any meaningful way to people’s actual quality of life, it remains an obsession of policy-makers around the world, who accept the premise that a growing GDP is a sign of a healthy economy and that a rising population is a key component of that equation. In a March working paper, Charles Jones, a professor of economics at Stanford University, wrote, “When population growth is negative…living standards stagnate for a population that gradually vanishes.” Conversely, “an ever-increasing population benefits from ever-rising living standards.” As is typical in mainline economics, “living standards” here are defined by GDP per capita, the number you get when you divide a country’s gross domestic product by its population.

By this metric, life in America has never been better. GDP per capita is over $59,000, more than twice what the country enjoyed in 1980. But by most other measures—not the least of which is common sense—it has only gotten harder for Americans to prosper over the past half-century. The federal minimum wage has lost more than a third of its value since the late ’60s, while the rising cost of housing regularly outpaces both inflation and wage growth, as does the price of health care and college tuition.

Making matters worse, the United States has emitted 300 billion tons of greenhouse gases over the same period, and average temperatures here last summer were up 2.6 degrees Fahrenheit. With each passing year, the climate crisis ravages a different population—fires burning down homes in the Sierra Nevada, rainstorms flooding basement apartments in Queens, heat waves broiling the Pacific Northwest. When so many Americans find it difficult to get by and are gripped by encroaching fears of climate disaster, is it any surprise that they aren’t rushing to become parents?

Pronatalists like Douthat are hardly interested in addressing rising living costs or climate change, given their devotion to liberal orthodoxy. In an essay last spring titled “How Does a Baby Bust End?,” Douthat suggested that pairing European-style parental benefits with a rising GDP might do the trick. “Call this the Joe Biden-baby-boom hypothesis,” he wrote. “If you spend on family benefits and run the economy hot enough, maybe fertility rates will finally begin to float back up.” To put it more simply: The solution to the thing preventing growth is more growth.

There is, however, an alternative economic model to look to, one that sidesteps the growth paradigm and focuses on creating an ecologically sustainable country that might actually give its residents a shot at a decent life.

The contemporary degrowth movement owes much of its intellectual foundation to the Club of Rome’s pathbreaking work. Composed of 16 academics from the United States, Europe, India, and the Middle East, the Club of Rome released The Limits to Growth in 1972, a report arguing that ever-increasing population and capital would create “negative feedback loops” that would eventually compromise both. Of the several loops the authors detailed, pollution and the depletion of nonrenewable resources posed the greatest risk to humanity. “The delays inherent in the action of these negative loops tend to allow population and capital to overshoot their ultimately sustainable levels,” they wrote. “The period of overshoot is wasteful of resources. It generally decreases the carrying capacity of the environment as well, intensifying the eventual decline in population and capital.”

This school of thought came back into vogue in the years after the Great Recession, when GDP was bouncing back while real wages remained stagnant. Proponents of degrowth hold that conventional economics needs to be abandoned in favor of a system that prioritizes the eradication of disparities in wealth and a rollback of carbon capitalism. While the authors of Empty Planet contend that the earth is approaching a population tipping point, after which global deaths will outpace global births to disastrous economic effect, degrowthers argue that this dynamic is unfolding already, as the climate crisis indicates the global economy has overshot its ecological limits and needs to contract to a sustainable level. In their view, old arguments about population control are irrelevant: Since the population is already shrinking, degrowthers want to push legislators to embrace the decline and redirect their economies away from the market imperatives that are ravaging the environment.

Tim Jackson is something of a pied piper for the movement. An ecological economist at the University of Surrey in England, Jackson wrote the degrowth handbook Prosperity Without Growth in 2009, as well as last year’s Post Growth: Life After Capitalism. Jackson told me that the alarm over the United States’ baby bust was symptomatic of the nation’s untenable fetishization of economic expansion. “The growth imperative and the population imperative go together,” he said. “Ultimately, I think we need to be working our way to a state of stable population.”

While government-subsidized child care and generous parental leave are worthwhile progressive goals, the adoption of these policies in Japan and across Western Europe has done little to reverse declining birth rates. Instead, Jackson and other degrowthers offer a forward-looking solution: Accept that people don’t want to have as many children as they once did and think about the baby bust as a step toward a more sustainable economy. If the graphs of birth rates in most countries already show a clear inflection point, why not seize the moment and create a similar inflection point when it comes to economic production? As Jackson put it in his first book: “Our technologies, our economy, and our social aspirations are all badly misaligned with any meaningful expression of prosperity.” It’s time to try something new.

While some have accused the Club of Rome of playing into the racist fearmongering about overpopulation that the Ehrlichs stoked in The Population Bomb (such as when they described a slum in Delhi as having a “hellish aspect”), today’s degrowthers don’t see the demographic rise of the Global South as a trend to be stopped. They argue that as the poorest nations begin to attain the standards of living currently enjoyed in the Global North, their populations will also stabilize, at which point the global economy can shrink to an ecologically sustainable level.

When I e-mailed Samuel Alexander, a lecturer and researcher at the University of Melbourne, to ask about the economic pain a degrowth policy might entail for industrialized nations in the near future, he responded: “Given that billions around the world still live in conditions of material destitution, they have every right to increase their material living standards in sustainable ways. This makes it an ecological imperative that the high-impact economies (like the US and Australia, and those in Western Europe) reduce their impacts.”

Of course, convincing the hundreds of millions of people in wealthy countries that they should accept a stagnant standard of living, however elevated, presents a herculean political challenge. Complicating matters are the doubts among many leftists that a degrowth world would be the idyll its proponents suggest. British journalist Leigh Phillips derided the program in a 2019 essay, “The Degrowth Delusion,” which argued that the most practical socialist alternative to free-market capitalism is for the government to assume control of the existing economic levers. “Let’s take over the machine, not turn it off!” he writes. In Phillips’s view, “degrowth unwittingly endorses what would be an imposition of austerity on the Western working class far beyond anything a Thatcher, Cameron, or May could imagine, this time in the name of the planet.” Yet while Phillips casts the degrowthers as the modern heirs to overpopulation alarmism, his critique fails to contend with the trends articulated in Empty Planet and instead takes an ever-increasing population for granted.

The mere mention of the word “austerity” is enough to cool the blood of any committed leftist. But as Jackson demonstrates in Prosperity Without Growth, there’s little reason to be satisfied with the diminishing returns that the Global North sees from its focus on growth when compared with developing nations. Using political scientist Ronald Inglehart’s measure of “subjective well-being,” or SWB, as a proxy for life satisfaction, Jackson shows that as GDP per capita rises, SWB increases steeply for countries whose income is below about $15,000 per capita. The gains taper off as you move up the income spectrum, though, before flatlining at around $25,000—less than half of the United States’ current GDP per capita.

The explanation for how GDP per capita could become so inflated without any significant gains in well-being? Consumerism. While replacing your laptop or trading in your sedan for an SUV does a wonderful job of stoking GDP growth, neither has much of an effect on your overall quality of life, and both are made possible only because of the labor of lithium miners and assembly-plant workers overseas. In conventional terms, this is a sign of a healthy globalized economy, as it means that countries like Vietnam and Panama are growing at the same time Denmark and Canada are. In ecological terms, though, the system requires ever more resource extraction and a nightmarishly complex maritime shipping network, which emits more greenhouse gases than commercial aviation.

Rather than entertain a pullback from consumerism, liberals in North America and Western Europe have embraced so-called green growth, believing reforms like the Green New Deal will allow the world to avoid the worst excesses of climate change without fundamentally altering capitalism. The biggest issue with these initiatives is their time scale: Gentle market interventions may put the economy on a more sustainable course, but they’re unlikely to act quickly enough to decouple emissions from GDP growth at the rate necessary to seriously impede climate change. Giorgos Kallis, an ecological economist at the Universitat Autònoma de Barcelona, warns that even the most ambitious reforms being floated today will not prove sufficient in the long term. “The Green New Deal is the best proposal out there for moving us in the right direction,” he said. “But when people put numbers to it—a Green New Deal with the economy growing at 3 percent—it’s like running up a down escalator. You cannot [sufficiently reduce emissions] with the economy growing so fast.”

The efforts of the city of Phoenix to draw down its water use while also growing at a rapid pace provide a clear illustration of Kallis’s point. In 2019, Kathryn Sorensen, then the director of Phoenix Water Services, bragged about her agency’s success in reducing residential water use when she told a journal published by the Yale School of the Environment, “We’ve decoupled growth from water…. We use the same amount of water that we did 20 years ago, but have added 400,000 more people.” This is a remarkable achievement, but one undercut by the fact that maintaining the same level of water use is itself unsustainable, given that the two decades Sorensen is referring to coincided with a megadrought that has left the city’s reservoirs with less water than at any time since they were first filled.

The idea of running up the down escalator only grows more foolish when you consider the long horizon over which many decarbonization efforts are taking place. Many large companies, including major polluters like American Airlines and Ford, have committed to becoming “net zero” by 2050, a date that allows them to continue fouling the atmosphere under the assumption that new technology will come along in the next 30 years that will make it possible for them to simply remove as much carbon as they’re emitting. Even fast-tracked plans, like the Australian mining concern Fortescue’s bid to become fully green by 2030, still mean another decade of emissions from a company that currently burns 185 million gallons of diesel a year.

Embracing degrowth might mean that a company like Fortescue will have to suspend operations until it can resume work in a sustainable manner, or that a city like Phoenix will have to limit the number of new homes to those it can realistically supply with water over the next century. Both are tough sells in a status quo that demands year-over-year growth no matter what, but such measures are becoming increasingly necessary as the window for avoiding catastrophic climate change closes.

Putting any of this into effect would of course require a much stronger regulatory state. But look no further than Texas’s disastrous experiment in letting the utility market run wild to see how untenable the conservative preoccupation with deregulation has already become. When then-Governor George W. Bush signed the legislation creating the state’s free market for power in 1999, he promised, “Competition in the electric industry will benefit Texans by reducing monthly rates and offering consumers more choices.” By 2012, analysts were estimating that the new market had instead passed $22 billion in new costs along to consumers. The situation became disastrous last winter, when a cold snap sent rates soaring as much as 7,400 percent and left customers with electric bills as high as $17,000. As Kallis observed, “The government can stay out, deregulate things, and then what will happen? In 20 or 30 years, you’re just going to have heat waves, fires destroying economies everywhere. What would be efficient about that?”

A more muscular government that would prevent such free-market failures could also implement what Alexander calls policies that “directly redistribute wealth, policies that ensure a dignified material baseline for all people, and policies that structure the economy in ways that ensure corrosive and undemocratic inequalities of wealth do not arise in the first place.”

A population that isn’t constantly increasing may translate into a lack of economic growth, but what a focus on those metrics misses is the fact that the United States is already fabulously wealthy. Rather than continue waiting around for the über-rich to voluntarily share their spoils, it’s past time to radically redistribute the gains that have accumulated at the top to allow everyone at the bottom a baseline level of prosperity.

Jackson calls policy-makers’ inability to think beyond the growth paradigm an “ideological straitjacket,” but he’s been encouraged by how their responses to the pandemic, as well as to the 2008 financial crisis, point toward a possible future in which the focus shifts from maintaining growth to taking care of people. “It turned out the government had the ability to protect livelihoods, build hospitals, intervene in supply chains, stimulate local community-based initiatives, and, indeed, find the financial wherewithal to do that out of nowhere, overnight,” he said. “It was an example of the sovereign power of government that capitalism had tended to deny, of the responsibility of government to intervene to protect the welfare of its citizens.”

The early months of 2020, then, may be something of a blueprint for how a government can reform in response to an emergency. Lawmakers intentionally torpedoed the US economy in the name of public health, but the 30 percent plunge in the GDP was paired with experiments in providing a universal basic income and the transition of white-collar work into virtual space. It took a crisis to make such reforms possible. For lasting changes to be implemented, though, we need to recognize that the greatest challenge the country faces is not future demographic decline but rather the carbon capitalism that has prevailed for the past two centuries. “There was a sense during the pandemic that the ideology of capitalism could be put to one side,” Jackson said. “The fact we did it under extreme circumstances suggests we could do it under any circumstances.”

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