If it is true, who specifically wants economic growth to continue and why?
No 1294 Posted by fw, March 30, 2015
“Six years of pedal-to-the-metal monetary policy and government deficit spending have barely nudged world growth forward while levitating financial markets to unsustainable levels. Such policies in the past would have had the world economy quickly overheating with central bankers responding by hoisting interest rates sky high to rein in inflation and financial excesses. Instead, the economy remains so weak that the U.S. Federal Reserve had to reassure the world that despite language…that would indicate an imminent increase in interest rates for the first time in 10 years…the central bank really wouldn’t be raising them anytime soon after all….So, maybe flat carbon emissions are actually telling us something ‘no one’ wants to hear: that economic growth has faltered or even halted for a large portion of the world’s people…”—Kurt Cobb
Cobb points to signs that economic growth, primarily favouring political and corporate elites, is failing the majority and driving climate change. The powerful insist that it’s possible to have BOTH economic growth AND RAPID DECLINE in global emissions. Cobb counters with an alternative – “We design a new system that can either grow for the benefit of everyone, or that can sustainably, equitably and successfully manage a steady-state economy” — both of which are difficult to attain.
To read Cobb’s original article, click on the following linked title. Alternatively, below is a cross-posting with added subheadings in bold italics, inserted as hanging indents, and text highlighting.
The puzzling flattening of carbon emissions and the problem of global growth by Kurt Cobb, Resource Insights, March 29, 2015
New study surprises — 2014 global carbon emissions flat, though global economy grew 3 percent
Last week we learned that maybe, just maybe, global carbon emissions were flat in 2014 even though the global economy supposedly grew by 3 percent. As Brad Plumer of Vox (whose work I greatly respect) points out, carbon emissions have moved up almost in lockstep with economic growth for the entire industrial age except during recessions and one year of growth 40 years ago.
Whoa! There is another explanation – Maybe estimate of global economy growth is too high
This is why I use “supposedly” when referring to the global economic growth number. It’s because there is another obvious and plausible explanation for the flat carbon emissions, namely, that the global economy did not grow by the stated percentage, that it may have grown only a fraction of that amount or not at all.
Or maybe the estimate of carbon emissions is too low
Economic measures are constantly being revised, and I think it is very likely that the global economic growth number for 2014 will be revised downward. Probably not to zero, but downward nonetheless. It’s also possible that estimates of carbon emissions are too low. Plumer cites “notoriously unreliable” Chinese emission numbers as one reason to be skeptical.
Is there a way to have BOTH economic growth AND RAPID DECLINE in global emissions?
But, even if 2014 turns out to be a year of growth without rising emissions, we shouldn’t get particularly exercised. Nor should we be particularly excited if it continues for a time. This is because the only trend that will actually address climate change is a RAPID DECLINE in worldwide emissions (as Plumer rightly points out).
Is it true that no one wants to halt economic growth?
Plumer makes one very telling statement in this regard:
If we ever hope to stop global warming, we’ll have to sever that relationship [of economic growth to emissions] — and figure out how to have economic growth while reducing emissions. (Alternatively, we could halt economic growth, but no one wants that.)
“Alternatively, we could halt economic growth, but no one wants that.”
Two questions arise from this observation: Is it true that “no one wants that”? Who specifically wants economic growth to continue and why?
There is a small minority advocating an end to growth because cost of economic growth outweighs benefits
The answer to the first question is no; there is, in fact, a small minority of people advocating an end to growth. Herman Daly, former World Bank senior economist, is the acknowledged dean of the steady-state economy movement. In a September 2005 Scientific American piece, Economics in A Full World, he outlined his case for why there is little room for economic growth and why growth in recent decades has been uneconomic, that is, the cost of such growth has outweighed the benefits.
There are also the deep ecologists who value other species on the planet as much as our own, a view which implies not only an end to economic growth but a serious rollback of industrial civilization. Perhaps Derrick Jensen is the best known of the deep ecologists whose views about how to achieve the proper role for humans on planet Earth varies greatly.
So, who wants growth and why?
Given that there are people who want to halt or even reverse economic growth, we must now ask the second question: Who wants growth and why?
If we follow Herman Daly’s logic, we have long since passed the point of economic growth and now have “uneconomic growth,” growth that imposes costs greater than the growth is worth: social costs in terms of inequality and environmental costs that undermine the long-term sustainability of human society.
There is no longer any doubt that the one percent benefit from economic growth
So, who benefits from such growth? We now have a name for this group, the one percent. Those with the highest incomes and greatest financial wealth continue to benefit from such growth since they can both reap disproportionate rewards from it and insulate themselves from the costs associated with it–leaving others to bear them.
For elites to admit failure of “trickle down” economic growth would be to concede necessity of wealth redistribution
When Plumer says that no one wants economic growth to end, what he is unwittingly saying is that the power elite in the world does not want to face the grand implication of a steady-state economy–namely, that lower-income groups cannot be assured of a better material existence through economic growth and so such betterment would, of necessity, have to come from the redistribution of wealth.
As long as the chimera of perpetual growth can be sold to the masses, no one will have to deal with the thorny issue of redistribution as the primary method for the economic betterment of the middle and lower classes.
The claim that the tide of economic growth is supposed to lift all boats has gaping holes in it
And yet, growth ended for many people around the globe in 2008. According to the International Labour Organization (ILO), if you earn the median wage in Kenya, your real income has declined 26 percent from 2008 through 2013. For Greece, the decline has been 24 percent. For prosperous Singapore and Japan the number is minus 1 percent. Egyptian real median income declined 10 percent; the United Kingdom declined 7 percent; Iceland and Italy, 6 percent; Taiwan, 5 percent; Spain and the Netherlands, 3 percent; Ireland, 2 percent; Austria, Luxembourg and the Philippines, all hovered around zero percent growth.
Of course, some prospered. Median wages in Romania, Panama, Paraguay, Norway, Jordan, Poland, Vietnam and Morocco all rose more than 10 percent from 2008 onward. There were standouts: The Brazilian median wage grew by 21 percent; Thailand by 26 percent; China by 74 percent; Mongolia by 75 percent. Ukrainian workers enjoyed a media wage increase of 43 percent through 2013 though it is likely that much of that has since been wiped out by the war and currency crisis there. In the United States, the median wage registered a one percent increase according to the ILO, though homegrown analysis suggests a decline.
The metaphorical tide of economic growth that is supposed to lift all boats is lifting far fewer people much more selectively than before.
On the other hand, if you possess substantial financial assets, you have prospered quite nicely as financial markets post daily records in the face of ever more precarious economic growth numbers around the world. But, only a small portion of the world’s people have any financial assets at all. The fate of a large number of the others has been stagnant or falling incomes or unemployment in an increasingly uncertain world.
Whether economic growth for all the world’s people will return is an open question. The system by which we’ve governed the world economy, a system dependent on central banking, central government spending, the build-up of huge and unsustainable debt, and the ever more rapid depletion of fossil fuels and other resources is showing its decrepitude.
Six years of pedal-to-the-metal monetary policy and government deficit spending have barely nudged world growth forward while levitating financial markets to unsustainable levels (and thereby exacerbating inequality). Such policies in the past would have had the world economy quickly overheating with central bankers responding by hoisting interest rates sky high to rein in inflation and financial excesses.
Instead, the economy remains so weak that the U.S. Federal Reserve had to reassure the world that despite language in its recent public statement that would indicate an imminent increase in interest rates for the first time in 10 years (that’s not a typo), the central bank really wouldn’t be raising them anytime soon after all.
Could it be that economic growth is failing most of us? Is it past time to design a more equitable system?
So, maybe flat carbon emissions are actually telling us something “no one” wants to hear: that economic growth has faltered or even halted for a large portion of the world’s people and that we are going to have to deal with the consequences of that until we design a new system that can either grow for the benefit of everyone–a difficult proposition–or that can sustainably, equitably and successfully manage a steady-state economy–an even more difficult proposition.
Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights
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- Critics rip flawed plan promising win-win low-carbon growth economy with reduced climate risk — Pt 3: Rebuttal posted October 10, 2014
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