[Fultonius]

All you hear in the news, from the politicians, company CEOs and man on the street is that we "must return to GDP growth".

Now, I think most rational people would agree that continuous, infinite GDP growth is not sustainable and, depending on your economic outlook quite likely undesirable!

I'm currently reading this report on the steady state economic model:  http://steadystate.org/wp-content/uploads/EnoughIsEnough_FullReport.pdf  but I would like to hear from some of you enlightened peeps any insight into the validity of this report?

I wonder how long it will be until a politician grows some balls, nails his colours to the mast and declares "we've grown enough, let's just improve!"

More than likely not before some almighty depression or war...

[SA Chris]

I'd personally like to see a politician nail his balls to the mast.

[slackline]

The large revenues of the internet or smaller revenues of the climbing wall industry are good examples of GDP components that no one could have envisage n years ago.

Smartphone "applications" being another, whole lot of money potentially available there essentially from a "few" hours developing and programming.

[Fultonius]

I'd personally like to see a politician nail his balls to the mast.

Thanks Chris, now I have to clean the spit of my screen due to that unexpected outburst of amusement!

[lukeh]

Hmm, interesting. I only had a quick skim of the summary of that report, but it seems less about the economics of growth and more about the politics of (extreme) sustainability?

My jist of the report was that, as there is not enough to go around, we should drastically limit consumption (therefore growth), as we'll be just as happy as we were before hd TVs, imported foods etc as survey says we were happy then too...

Regarding the question of the need for growth, I think its wrong to chase growth in itself, but a lot of improvements will be reflected by an increase in GDP.

Certainly some things to mull over covered by the report, although was put off the report itself when it mentioned the need for population control...

[Jaspersharpe]

I'm normally happy to defend the statement "GDP per capita growth has risen since the dawn of humanity and will likely continue for a very long time", but reluctant on a climbing website as people seem to get very emotional about it.

Now now. Don't tar your own website with the Cocktalk brush!

I agree by the way.

[Fultonius]

Maybe I'm just having a doom filled day, but I don't see how the economy could survive on smartphone apps (which are consumed by the worlds richest 1% only fact checking is in progress... and provide little in the way of actual improvement to people lives...), the internet (which pretty much only makes money by encouraging consumerism) and other service based industries.

I'm pretty sure about 10 years ago the UKs services and financial sectors were touted as the future of the UKs economy!

I just think that in the UK (i.e. a very wealthy country in world terms) peoples lives would be enriched by having more leisure time, less consumerism and less drive for growth for the sake of growth.

In other words, do you really think GDP growth brings much other than just "GDP growth"?

(P.S. if I come across at all naive in this thread, the reason I started it is to learn more, not argue...)

P.P.S. re: the population control thing - I think any drastic, enforced population control is not the way to go - but I don't think the world can cope with many more people and certainly don't think the world will benefit from having more people. Access to family planning and educating women in developing countries are much better propositions!

[lukeh]

peoples lives would be enriched by having more leisure time, less consumerism

For some people sure, but I think it'd be pretty hard to convince the masses that they could be just as happy only working half the amount of hours and having to give up a bunch of the nice things globablisation and other unsustainable activites have brought us... What would people do with all of that spare time if they couldn't play video games/shop/drive across the country to their favourite crag...

(P.S. if I come across at all naive in this thread, the reason I started it is to learn more, not argue...)

Personally I dont think that there are any concreate answers to the points you raise, so discussion is the best way forward!

[Jaspersharpe]

I think everyone should punter Fultonius for starting a thread for the purpose of learning rather than argument. That's NOT what the internet is for!
 

[slackline]

Access to family planning and educating women in developing countries are much better propositions!

Not forgetting the UK itself which has a rather high teenage pregnancy rate!


Perhaps start with the classics...

An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith

(Not that I've read it myself!)

[Bonjoy]

I've heard the idea that GDP can continue growing via the expansion of goods and services which don't use any/many resources, I don't buy that this gets us out of the hole. In a world where the price of basics like food and fuel continue to rise due to per capita resources shrinkage, who is going to buy all this vapourware? The grotesque ballooning of the financial sector in the last few decades is an example of this kind of growth and look where that has got us.

[Bonjoy]

Famously the people of Easter Island when faced with existentially threatening resource constraint tried to swap one sort of GDP growth with another. Their not being here to sell us their latest range of giant rock heads is an elegant demonstration of why the idea is flawed. Units of growth are not fungible, you can eat an apple but you wont wow the party with a pie full of apps.

Edit: Wrote before Thesiger's latest post. Will reply to that when I get chance.

[Bonjoy]

I don't buy that this gets us out of the hole.

Long-run trends (10 years - millenia) certainly can't be relied on on the medium term (1-5 years). But, still, what hole? Things aren't that bad. Global GDP will probably grow 3% next year, probably mostly in developing countries ... but should we begrudge them that growth? Despite all the "slave labour" rhetoric that actually just means millions of people owning a fridge for the first time.

I'm not begrudging anyone anything. I'm not really passing comment on the rights or wrongs of globalisation. My point is that there's less and less to exploit and the economics of it are changing. Everyone on the planet having a car is nice for us all today but not so nice for our children who will be expected to drive to work on smartphone apps.

[slackline]

Everyone on the planet having a car is nice for us all today but not so nice for our children who will be expected to drive to work on smartphone apps.

Perhaps, for certain sectors of employment, they'll have an app that allows them to work from home and not have to jump in the car. 


I should hasten to point out that I did not imply that writing smartphone apps was a panacea to allowing continued growth in GDP, simply that its an area where wealth has been generated that a decade ago hadn't been envisaged.

Personally, being a biologist before I got caught up in all this statistics crap I don't think continued growth is possible, there's always a ceiling.  What I don't know is where on the growth v's limited resources curve humans currently sit.

[Bonjoy]

Famously the people of Easter Island when faced with existentially threatening resource constraint tried to swap one sort of GDP growth with another. Their not being here to sell us their latest range of giant rock heads is an elegant demonstration of why the idea is flawed. Units of growth are not fungible, you can eat an apple but you wont wow the party with a pie full of apps.

... would have been the conclusion of a martian economist landing on Easter Island in the early 19th century. But as an observation about Earth it would have been very uninformative. Two centuries on we muddle on into the future with considerably higher living standards than then.

I don't get your point. I'm saying that Easter Island shows on a tiny scale what happens when you run out of one sort of thing and try to replace it with another. Obviously the world is much bigger and more complex and in many respects it's this complexity which makes it harder for us to spot the constraints when they arise than it would have been for those unfortunate islanders.
The fact we have higher living standards than said islanders is irrelevant to what I said. Muddling through works until it doesn't. I'm sure we'll keep muddling through in one way or another for a long while to come I'm just not sure it will look like the growth and progress we've come to expect.
We will have to learn to live with shrinking horizons.

[Oldmanmatt]

I'll try and keep the prosaic prose to a minimum, for once (failed already).

I deal with figures, graphs and Macro economics; far more than I do (more interesting) engineery things these days.

This is why I'm sick of them (sorry Slackers/Toby)...

Over the years, I've developed some opinions on the world economy; without bothering to learn the jargon.

Bonjoy, limited resources?

That depends on what you mean by resources. For example:-

There is very little that we use, that we truly destroy. I've been involved with a lot of material recovery technology development over the last decade. Necessity is the mother of invention and this is one area where I'm sure a new industry and economy will emerge.

The same is true of energy. The practicality of recovering unused/reusable hydrocarbons from the atmosphere may always prove too difficult, the development of alternative energy sources (I hate the term renewable), is gathering pace.
I've been consulting to a company developing electrical systems to replace many hydro/mechanical machineries (not as easy as it sounds), as well as developing battery technology and linked up with people developing fuel cells (commercial and academic). We've spent the last 7 years reducing absorbed power on those systems to the point we now use 50% less than comparable hydraulic systems (and as of last Thursday, I became their "Northern Europe and rest of the world"manager. YYFY).
This means the amount of energy required in the world will reduce over time.

What? I hear you say!

I have spent most of my life traveling and whilst we have a long way to go, I have no doubt that standards of living have risen across the globe; the pockets (big I admit) of genuine poverty grow smaller. It seems likely that the trend in the developed nations towards reduced birth rates, will gradually spread. It seems to me the global population will plateau, then fall at point X in the future.

GDP growth can continue, certainly for a long time. It's just that the base resources will change. When we say "Oil based" economy, we mean energy based. The source of energy will change (that may hurt in the short term).
When we talk about "Raw materials", at the moment we are talking about things dug out of the ground; in the future we might just mean things recovered from previous "Things".
Our ability to produce food increases, year on year. It might change, we may end up eating a lot of ants in the future.
Our awareness of our impact on the environment/climate increases, every year more people take it seriously (fast enough? Who knows).

I think we (all of us) have to give up on the idea of making money by selling money. It's far too dependant on the whims/fears of the traders.
I know that any economy is an artifice, a product of our imaginations; but that one is just silly.

[Fultonius]

I have no doubt that the developing economies will continue to grow and the gap between the wealthier, more developed countries and the developing ones will narrow.

I guess I was being a little more focussed on the "developed" countries when I was pondering if we have already reached, or are soon likely to reach the point where further GDP growth (in already wealthy/developed countries) is actually detrimental to the general well-being of people?

It just seems that the US and UK politicians and the City of London appear to promote GDP maximisation for the sake of it rather than actually for any specific and defined reason.

Slackers - I wasn't trying to imply we'll run the world on apps but, they do embody a sector of the market that is really, completely unnecessary and purely consumerist. While I use them, and find them fun/handy - would my life be significantly worse without them??  Debatable...

OmMatt - Oceans, air pollution, soil degradation, rare materials, hydrocarbons, waste (chemical, plastics, nuclear) - all finite resources or in the case of waste - finite places to keep chucking them! We're struggling now - what's it going to be like with 9.5bn people? 

[Oldmanmatt]

OmMatt - Oceans, air pollution, soil degradation, rare materials, hydrocarbons, waste (chemical, plastics, nuclear) - all finite resources or in the case of waste - finite places to keep chucking them! We're struggling now - what's it going to be like with 9.5bn people? 

Ah, you see waste; I see man made mineral veins.

Toxic to harvest?

Have you ever been into a mine?

(there are plenty of places on this planet, which are toxic to life (at least life larger than a Bacterium) for purely natural reasons. Generally, what we do is move things around; after all we have not created any of the matter or elements in these things).

I am absolutely not condoning the status quo. We are being short sighted arseholes and doing a damn good job of shooting ourselves in the foot. I believe this will change, society does/has change(d). My 6yr old is far more aware of these things than I was at 6!

It might not seem like it, but I am agreeing with you.

Up to a point...

We have been struggling for many centuries. Famine, lack of resources etc have been a feature of human existence since before we knew we were human. Yes, when there are more people, more people will be affected. On the other hand, we have never been in a better position to tackle it!

I'm a little shocked to be playing the optimist here...

The worlds financial institutions will change over the coming decades (an overnight shift would be the true disaster), because people remember; people have more power than they are given credit for (and I mean that in several different ways). History is replete with examples of people power, those who believe themselves superior often come down with a bump; individuals and social groups alike.

I suspect we continue to underestimate the impact of technology on our future.

And I don't mean PS3's.

[Bonjoy]

Bonjoy, limited resources?

Oil, water, Phosphorus (for fertilizer) spring to mind but there are others. In the long run most resources are limited.
I'm not suggesting they will run out entirely. We get more and more inventive about extracting marginal reserves and as you say re-using things. The problem is that the new way always requires more energy than the old way, often by a lot. So while for instance oil (and other liquid fuel replacements)  supplied year on year may look flat, more and more of the energy extracted is ploughed back into extracting the next barrel. Eventually you get to a point where there is plenty left in the ground but there is not enough net gain to bother extracting it.
 Just sticking to oil for the moment as it is pretty critical to our position. I've looked into the subject a fair bit and have seen nothing looking remotely like a replacement for it. Have I missed something? What have you seen that will replace it or is it just faith in science generally?

This means the amount of energy required in the world will reduce over time.

What about Jevon's paradox and growing world population?

[ksjs]

It just seems that the US and UK politicians and the City of London appear to promote GDP maximisation for the sake of it rather than actually for any specific and defined reason.

Agree totally! Interesting thread and a subject I've thought a lot about; the mantra for the world's leaders is growth and growth at all costs. There appears to be no reference to why this is so basic and essential. Just repeat ad nauseum and you too can be part of the club.

I can't escape the (cliched and not new) idea that it is all designed to ensure that those in power keep themselves and their friends precisely there. Look at the lies and hypocrisy surrounding what happened with the bailout of UK banks. How did the EU manage to sneak two of their kind into power in Greece and Italy without any fuss or serious question over whether any of it was democratic? It doesn't matter though, the IMF will get your house in order and then you'll be compliant like the rest of us.

The whole system is corrupt and insidious. The whole debate (hold on a minute there is no debate!) about growth and resource lacks any real honesty. Landfill is full (or virtually), water is running out but let's just ignore that lot and carry on regardless, 'growth' will fix everything 

[Oldmanmatt]

Yep Toby, that's a sure sign that the base line is rising.

Bonjoy,
Sorry, would have replied yesterday, but the death of a hard drive meant I had to spend the day doing battle with the floods in Thailand...
(Cue ironic intonation)... Bloody global economy! Cost me an extra tenner for the new drive, because it rained on the other side of the planet! I ask you! And all so some bugger can work in a factory, when she'd (probably) be so much happier subsistence farming and raising twelve kids.

That is not a dig at you Bonjoy, it was just something that occurred to me yesterday, when I was getting a bit wound up about the time it was going to take to get my laptop up and running...

Yes, by the way, I am excited by some of the developments I have seen in power generation and energy storage. There are some exciting things which are yet to be published (some already in peer review). As I said before, our own humble efforts have resulted in systems that use 50% less absorbed power compared to the existing technology and we are sure we can do better!
It would land me in some serious Khaki if I detailed specific things here.

There is a growing network of Engineers and Scientists, who are working on these issues. More importantly, there is a growing economy in Knowledge Transfer. Now there's an industry that didn't exist 10 years ago...
You can get an idea from here:

https://www.facebook.com/ESKTN

All is not rosy!
I just believe that this kind of work, will achieve more, in the same direction; than pitching a tent outside Saint Paul's.

I do despair of our media obsession.

This weeks, world ending, crisis; is next weeks Kitty litter tray lining...

 

[Bonjoy]

It just seems that the US and UK politicians and the City of London appear to promote GDP maximisation for the sake of it rather than actually for any specific and defined reason.

Agree totally! Interesting thread and a subject I've thought a lot about; the mantra for the world's leaders is growth and growth at all costs. There appears to be no reference to why this is so basic and essential. Just repeat ad nauseum and you too can be part of the club.

Growth is fundamental to the standard economic model because it is the only way that debt plus interest can be repaid. Without growth or with negative growth debts rapidly become unaffordable.

[Bonjoy]

I just believe that this kind of work, will achieve more, in the same direction; than pitching a tent outside Saint Paul's.

I agree completely. There's plenty that can and will be done, but I'm sure you probably agree that the world has got a big change coming, it won't be comfortable and most people are ignorant of the extent to which we are going to have to adapt.

[slackline]

Yes, by the way, I am excited by some of the developments I have seen in power generation and energy storage. There are some exciting things which are yet to be published (some already in peer review). As I said before, our own humble efforts have resulted in systems that use 50% less absorbed power compared to the existing technology and we are sure we can do better!
It would land me in some serious Khaki if I detailed specific things here.

I'm waiting to see this "knowledge transferred" (bit of a bullshit bingo term IMO, people have been applying the results of research for years, e.g. Stephenson's Rocket, commercialisation is perhaps more appropriate, although some may see that as "dirty" as it implies connotations of consumerism)

Artificial leaf that could be more efficient than the real thing

(A more technical description from the PNAS)

[ksjs]

Growth is fundamental to the standard economic model because it is the only way that debt plus interest can be repaid. Without growth or with negative growth debts rapidly become unaffordable.

I understand this but to grow indefinitely is impossible; we are no different to bacteria in a petri dish. Perhaps with some technological tweaks and advances we can get a bit more out of what we've got but essentially we seem to be nudging up against various limiting factors. We will hit them, sooner or later. Why stick with this 'religion' when it only takes us more quickly to where we don't want to be?

This totally ignores the social and personal side of everything: we have an infinite number of ways to 'entertain' ourselves and our choice of goods and services seemingly proliferates. Yet, the view that, in the UK at least, we are physically unhealthier than we have been for a long time and more mentally inundated and confused than ever is hard to avoid. More is not more. Growth is not the panacea that it's painted as.