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Dear Candidate - What will you do if growth is over...?
Posted Jul 21, 2010 by Nate Hagens
(Intro: In talks with friends (not of the PO cloth), I've recently sensed more consideration of the possibility that economic growth may not return and what that might imply. As such yet I think there is a vast dissonance that such a possibility is not remotely discussed in political circles. The essay below the fold was adapted from the Institute for Integrated Economic Research website (under construction)- I've been working with the people there lately on what possible benign trajectories exist in a world after growth.)
Fig 1: Official and alternative scenarios for U.S. GDP growth
To me, one of the most surreal phenomena one encounters these days is that no country, no established economic research institute (that I'm aware of), and no international organization (such as the IMF) publicly discusses scenarios that don't plan for a return to stable economic (GDP) growth. Even Greece's government, after 2012, expects growth, which would allow the country to slowly reduce its monster debt load. Similarly, the U.S. government forecasts annual average (real) growth rates of 4.4% for the years 2012-2014, and 2.4% thereafter until 2020. This theme is globally ubiquitous. (ADDENDUM: Today Lloyds of London said global institutions are underestimating impacts of peak oil).
The above graph is one organization's view of the general magnitude of risks facing societies. Whether or not you agree with their projections is secondary to their ranking in mainstream discussions. On a long term horizon, clearly the health of our environment is of upmost importance. And, along with climate change and other potential externalities, resource depletion issues of various stripes pose large risks to the system as we know it. But before we face the long term we have to go through the short term, which will have to navigate the energy/debt/growth gauntlet. For all the effort being undertaken internationally to address climate, little if any is being made towards building bridges through and past a period of declining growth and wealth. Cognitive dissonance meet group think...
Given the stakes, it is quite worrying that in all the institutionalized economic projections of late, decline or zero growth aren't even mentioned as a possibility. One can speculate why this is the case, but I think there is significant evidence that only limited efforts- if any - are being allocated to understanding the possible consequences and required mitigation strategies of such a trajectory. I'm not so sanguine about the fact that so few people seem to be ready to think the not-so-unthinkable.
We have no insurance for no-growth scenarios
Given the constraints in natural resources, our currently unprecedented levels of debt on a global scale, and the absence of ideas for the next grand "leap forward" for mankind, it seems plausible that we might have to bid adieu to economic growth, and not just for a year or two, but for a long time. Some models at IIER (and other whisper numbers at boutique firms and the blogosphere) suggest the chances for steady economic growth after 2010 are below 10-20%. Even if you disagree with such low odds and put the probability for "more growth" to, say, 80%, doesn't it seem a bit irresponsible to not at least consider the other 20%? Not buying insurance for a risk that might hit you with some pretty negative consequences with a one in five chance strikes me as not the best strategy for a resilient and forward thinking society.
Consequences of "no growth" are quite unpleasant
Our current world is about as prepared for "no growth" as is a fish to walk on land. All our current claims systems, the credit outstanding, including government debt, our pension expectations, our savings, our hopes and dreams, are mostly focused on a "there will be more tomorrow" mentality. Should this "more" disappear as a possibility, we will likely not just see small implications, but rather a disruptive destruction of both perceived wealth and security, accompanied by the shattering of hopes and dreams, the perception alone which might cause further trouble in our highly complex societies. Choosing to go forward to a world with different aspirations than growth might have some unexpected positive surprises. But one could argue the worst will happen if we run into such a world completely unprepared. This is why we urgently need policymakers to face the risk of "no-growth," to understand possible implications and to work on transition approaches.
Why not use upcoming elections to ask a few questions?
So with elections coming up in a number of places, particularly for mid-term this fall, why not ask some questions to those people who want our vote? Why not at least instill awareness, concern and caution into the candidates who wish to represent us in the future? Why not have them ask themselves how they'd deal with a situation where they can no longer promise "more" to their constituents, but instead have to think about how to make "less" more appealing to everyone...?
Dear candidate - have you ever... ?
Below is a draft of a letter to an imaginary politician up for election later this year:
Dear ______________
You are currently running for office as _____________________ in ____________________. As you know, we are living through economically tough times, and I hear a lot about how the economy can be brought back to stability and prosperity.
However, have you ever considered that economic growth might actually not return? That we might have to build a societal infrastructure based on less?
If so, what would be your plans to mitigate such a situation, to make sure that life can go on for your constituents in a future where "more each year" is no longer possible?
Or alternatively, if you don't have any plans - are you 100 percent certain that growth and prosperity will ever return, and if so, why is it that you see no risk worth looking at?
I am personally as worried about the risk accompanying awareness of "no more growth" in the foreseeable future than I am about the reality of no growth. But my real concern is about the absence of anyone making any plans for either possibility.
With that backdrop, here are tonight's Campfire questions:
=====================================================================
1. Is there a reason why this kind of letter shouldn't be sent to real people who want our vote?
2a. Would a candidate addressing these issues/questions stand any chance of winning?
2b. If not, might such a candidate, even in a losing effort, influence the election issues and as a result positively impact transition efforts away from growth based economy?
Originally posted July 11, 2010 at The Oil Drum
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6 comments
Relocalization and steady-state economy candidate
From: Dave Ewoldt, Jul 30, 2010 12:51 AM
No growth is not a risk. No growth is the only possible path to a sustainable future. What I'm finding is that even people who seem to realize that we need an alternative to the status quo, and who even realize that relocalization/transition provides this alternative--especially when coupled with steady-state economies--don't seem to be jumping at the opportunity to support a candidate who has that as their platform foundation and is applying it to real world issues such as water, jobs, and education.
So, 1) the letter should be sent, 2a) yes, with enough support from respected institutions and leaders on the benefits of becoming better instead of bigger because people are becoming aware that we have to do things differently but are currently only being told there is no alternative but they are searching for one, and 2b) probably not, as we've tried that three times now, and while the debate has shifted and some minor environmental mitigations have occurred, growth is still firmly ensconced. An alternative to growth that improves quality of life, for all life, that is articulated as something other than sacrifice and austerity the way the doomsters keep insisting is necessary can be presented but it's going to take more than one independent candidate doing so entirely on their own with no outside support.
Check out www.daveforarizona.org if you'd like to lend a hand to accomplish exactly what you're asking for.
From: Edpeak, Jul 29, 2010 04:18 PM
also to have a better shot of success the letter needs to educate the person receiving it by giving alternatives...they are not going to write back "Gee! you opened my eyes! I need to hold a press conference tomorrow saying we need to create contingency plans" at least most of them won't. But, if we suggests projects for creating an economy that is not growth based, or even less ambitiously, projects local and regional which would merely *reduce* the level of dependency of the economy on perpetual growth, then ask if they would support such projects, I think that might have more traction if added to the letter. more in terms of educating the official or candidate, more in terms of a more likely positive reply, and more in terms of educating the public (by disseminating to the public the text of the letter to the official (why not send to them too?) or candidate)
Don't minimize climate destabilization
From: Edpeak, Jul 29, 2010 04:14 PM
I loved the insurance graphic.
But you are not making friends (and are not being honest) when you pull numbers out of nowhere to try to say peak oil activists are better than climate action activists (some of us are both) because the numbers you pull out of thin air make the latter 'less critical'
We have NO CLUE to give an upper bound (short of "100% loss") on what the longer term damage might be from positive feedback loops...so say ou think it would be 30% loss at the very worst is not supported by facts, known risks, known unknowns, and what we know about potential positive feedback loops (or even known developments like the assault on the bottom of the food chain plankton in the ocean by warming and also by acidification)
Different timelines? Here you're on more solid ground (with a large disclaimer that we can't rule out huge climate disasters in the near term, but that larger risks are more concentrated in terms of probabilities, a little further off this century, yes) But please don't try to put minimizing number on the "smaller" possible impacts of climate. It just ain't so.
Another ugly truth: you don't have to convince us of the limits to growth, but the world is NOT homogeneous...the shorter term risk might be that mass murder and other devastation of the developing world by military and financial and other means might be what happens. Oil can peak globally without US consumption peaking, if the ugly system starves, marginalizes, outright kills, and prices-out-of-reach for India and elsewhere..The US population (middle class, working class and poor) will not get a free ride, but a difficult ride...but the world is not homogeneous and the ugly three-quarters of a trillion dollar to one trillion dollars in militarism plus economic levels of power mean that if we only worry about how the US or west can muddle through, we're not looking at the whole picture...we might be able (through ugly means I don't support) improve from negative growth to (tiny) positive growth here by moving more of the devastation elsewhere. Oil consumption, mineral consumption, energy use, purchasing power per capita, and other things are not spread evenly. The world has global limits to growth...but unless we incorporate justice into our project, things could be even uglier in injustice betwee (and within) nations than the picture we resource depletion activists pain
Question responses
From: Lee Shelton, Jul 24, 2010 08:10 AM
1. None at all. We lose nothing by trying and everything by not trying.
2a. Unlikely, certainly where I am in the UK. Growth is institutionalized in our way of life. Even those of us who accept the possibility of no growth and try to plan for it will miss some of the outcomes. Generally, the awareness in the population is very low - the size and power of the motoring/driving lobby is a great example, along with the continued adverts I see for 0% interest on finance - and it is even possible that a large proportion of people may not even comprehend what zero growth even means.
Saying that, we now have our first Green Party MP and 2 Green Party MSPs.
2b. Tough one, as this is dependant on the awareness of politicians themselves. In the UK parliament, for example, there is the All Party Parliamentary Group on Peak Oil and Gas which also looks a little at economics, so in a similar manner to the USA (as stated in other great articles on this site) there is some awareness of these issues in political circles, but not necessarily in the "glued together" fashion that action to address them would require.
The pessimist in me says that we will need another economic crash, and likely another Deepwater Horizon, to get us to full awareness. This is the human nature factor that leads people to ignore a bad thing until it is not just past their doorstep but is wiping its feet in the hallway. And we also have a large number of rich people with influence in the corridors of power (dare I stab at BP?) so I believe it will take more than just a good-hearted, losing candidate to influence the political bandwagon.
Steady State Economics
From: Stephanie Mills, Jul 23, 2010 04:06 PM
Dear Nate,
Good and thoughtful post. Are you aware of Herman Daly's work, and his organization the center for the advancement of steady state economics? (http://steadystate.org/learn/blog/) Not quite the same thing as bearding politicians in their lairs, but I daresay that Daly, in his brief stint at the World Bank, did think through some contingencies. Seems like a prime opportunity for PCI to cross fertilize with another outfit. Also Robert Costanza, whom you may know, a student of Daly's and an ecological economist in his own right, seems like a pretty pragmatic and constructive thinker on these matters.
Best wishes,
Stephanie Mills
good article
From: Barbara Janeway, Jul 21, 2010 10:32 AM
I like this idea and approach.