Peak Growth?

David Roberts has an excellent conversation with…well he’s got voices in his head (Smith and Daly) having an internal dialogue over a very important question: Can we keep growing the economy in light of finite resources such as peak oil, peak soil, etc. or should we take measures to halt growth to save the planet?

Read the whole thing, because it’s not only hilarious it’s also really smart, and both voices make some good points.

Now, as an anti-Malthusian, anti-central planner I am much more on Mr. Smith’s side. Smith grabs this chart from some storage box in Robert’s digital brain:

Smith argues that capitalism and democracy have led to the greatest exodus from human suffering we’ve ever seen. Turning our back on that legacy would be bad news:

Liberals need growth even more than conservatives do. They have to overcome status quo bias. Social psychology and history both show that people are more inclined to be generous, more likely to care about the disadvantaged, during times of shared prosperity. If we want to spend on clean energy, health care, infrastructure, and innovation, we need money — tax revenue. For that, we need growth.

Demographic trends reveal the same need. There are more and more old people, fewer and fewer young people to pay for their health care and pensions. This is exactly what Biden was warning the Chinese about when he made his inartful comments on their one-child policy the other day. Unless countries want to sink into a pernicious spiral of higher taxes and lower productivity, they need … growth.

Daly counters:

Here’s your problem. You think capitalism is limited only by human ingenuity, which is unlimited. You believe that Man Will Overcome.

And so, if soil’s being depleted, tweak the market to reflect that — raise soil prices. Price carbon. Price air and water pollution. Make sure the price of commodities reflects their externalities and watch the machine whir into action. The price signal goes to thousands, maybe millions of potential innovators at once, spurring them, through some mix of greed, ambition, and devotion to purpose, to devise solutions. Voila!

You think capitalism is a conceptual engine, that it transcends any physical substrate. As long as it incorporates correct information about relative value, it can continue growing in perpetuity.

But consider: What if the rocketing growth of the last 200 years has had much more to do with the physical substrate than you imagine? What if we’re just uncommonly clever primates who figured out how to unlock the power of fossil fuels? If that’s true, if our economies are mere subsets of the global ecosystem, utterly dependent on it for steady supply of resources, and we’re about to overshoot its carrying capacity, then … we might just go back to shivering in the dark.

As I said, the whole thing is great – lots more charts and videos at the original.

But Roberts does leave out some important points. For instance, higher-density building and increased walkability could reduce not only carbon emissions, but need for fossil fuels and cars and all sorts of things, while not really curtailing overall growth. Indeed, all that money saved on transportation costs could go right into eating out and entertainment and so forth. So you get growth in different sectors, rather than no growth at all.

Keeping population down is a good idea if you live in a country that’s starving. In a developed country it’s practically suicide. Growth, including population growth from having kids or incoming immigrants is an almost-undisputed economic good.

Not to sound like too much of an optimist – because resource depletion does keep me up nights, too – but I do think innovation and green technology and new ways of crafting our cities, our transportation infrastructure, and so forth, will do a better job overcoming this obstacle than any sort of central planning.

The pernicious Malthusian argument has been taken to its furthest logical conclusion in China. But stifling population growth through central planning is wrong-headed. Education and prosperity will naturally keep population growth at stable levels.

Right now, subsidies of fossil fuels and fossil fuel industries are hurting efforts for mass transit and green tech innovation to take off. We don’t need more central planning or lower growth, we need smart problem solvers working together across the entire globe to solve these very big problems. Governments can help or hinder this effort. I think it would be a shame to preemptively curtail growth, stymie innovation, and turn the lights off long before the show is over.

There’s no one right answer to this conundrum, but I think we can work toward a more efficient infrastructure and use a mixture of markets and incentives (such as carbon taxes, end to subsidies, investment in mass transit) to tackle the problem over the long-haul.