Why Growth Is Ending (the elevator pitch)
Diminishing Returns. Of the three phases of the industrial period (coal/steam/railroads, 1800-1930; oil/electrification/automobiles, 1930-1980; and computers/cell phones/Internet, 1980-present), the second yielded the lion’s share of growth. By the 1980s, electrification and car-buying had reached a point of diminishing returns in the industrialized world. Since then, spectacular new technologies have led to minor rates of economic expansion. This suggests that rapid oil/electricity-based growth was a historic one-off. Will we see more new inventions? Of course. Will they result in a booming economy? Not necessarily.
Peak Oil. The petroleum industry needs prices in the range of $100 per barrel to justify new production from marginal sources like tar sands, deepwater, and tight “fracked” reservoirs. But recent history shows that when oil prices stray for long into $100 territory, national economies start to stagnate or contract. The era of cheap oil is over, and so is the era of oil-driven growth. We need to build more renewable energy infrastructure, but even if we deploy it at blinding speed it won’t power a rerun of the 20th century.
Peak Debt. If you borrow too much, you will eventually reach a point where you can no longer make payments and the bank refuses to loan you more money. That’s a simple description of the situation in which many households and national governments find themselves after years of borrowing. In the decades after 1980, a vast expansion of credit fueled growth (consume now, pay later). But that growth strategy has run its course.
Environmental Impacts. The costs of weird weather and industrial accidents are mounting rapidly. At the current rate of increase, in only a few years those costs will equal world GDP growth. When spending on disaster recovery becomes the leading source of GDP expansion, then growth becomes a measure of “illth” rather than “wealth.”
Elevator buttons image via shutterstock