Two weeks ago, the Bloomberg View economist Noah Smith examined and criticized the arguments made by “de-growth” activists calling for an economic contraction to save the world from environmental collapse due to resource overconsumption.
While I may not have Noah Smith’s Ph.D, my undergraduate degree is environmental economics, and I would like to expand upon Noah Smith’s arguments with a critique of my own, because of my specialty.
The most simple and common argument for “de-growth” made by activists is that Earth, a planet with finite resources, is not capable of withstanding infinite economic growth, and that we are already consuming more resources than the planet is capable of providing on a sustainable basis, arguing that human consumption of resources is similar to how animals are constrained by the carrying capacity of the local environment, and that human civilization will collapse due to resource shortages if we aren’t careful.
Although there is disagreement among proponents over the specifics, it is generally agreed that economic activity will be rolled back to a level where our consumption reaches a level Earth can sustain, and to alleviate global poverty while doing so, there would be a massive global redistribution of wealth from more to less developed nations. Once consumption is at ecologically sustainable levels, the total amount of economic activity is kept the same for perpetuity, in a “steady state,” to allow humans to sustainably live within the means of the environment.
Opposing growth in principle is not new to left-wing environmentalism. Ernest Callenbach’s 1975 novel Ecotopia explicitly mentioned the decline of GDP by a third when an eco-socialist paradise is formed out of Oregon, Washington, and Northern California.
However, that mindset is not only reckless, but also an extremely privileged worldview that, if implemented, would actively harm billions of underprivileged people around the globe and highlights a fundamental misunderstanding of what economic growth is among the activists.
While Europe’s population is expected to fall by nearly 90 million by 2100, Africa’s population is expected to skyrocket by over 3 billion, and Asia’s expected to grow by 300 million. The global south/less developed countries (LDC’s) will make up a disproportionate amount of human population growth in the future.
For people to maintain the same standard of living, economic growth must match population growth. Otherwise, the same amount of economic activity is being produced by an increasing number of people, reducing the well-being of the populace. Unless de-growthers are calling for mass sterilization or the deaths of tens to hundreds of millions in LDC’s, stopping economic growth in Africa alone is impossible without massive increases in poverty on the continent. Population momentum has already locked in much of Africa’s growth. Even if a comprehensive safe sex and contraception campaign was implemented in Africa tomorrow, reducing the fertility rate to rates seen in America and Western Europe, the population would continue to grow rapidly for decades.
Standards of Living
Most of the economic growth of the upcoming century will take place in LDCs, and not just because of population growth. Industrializing nations have higher rates of economic growth than nations that have completed their economic transition. The burden of de-growthing would be felt in developing, not developed nations, and would neuter their ability to reach living standards comparable with what the West experiences today.
How is it ethical to demand that those in LDCs not achieve a better standard of living? The solution offered by de-growthers—mass expropriation of assets of wealthy countries redistributed to poorer nations to eliminate differences between nations—is not only infeasible, as mines, oil wells, and factories cannot simply be moved between nations, but is politically impossible without a global government with the ability to expropriate trillions.
Furthering the ethical dilemma, economic growth is necessary to improve the standards of living of the global poor.
An unsung success of the past half century has been the dramatic reduction in global poverty. In 1981, 42% of the world lived on less than an inflation adjusted $1.90 a day, and 26% lived on less than $1.25 a day, the standard for what is considered extreme poverty. Today, under 11% live under $1.90 a day and under 4% live under $1.25 a day. Social welfare programs and international trade and investment have been critical drivers of the decline in poverty. Any effort to cut economic growth would gut both drivers of poverty reduction.
Suppose a redistribution of global wealth is accomplished, eliminating the difference in living standards between more and less developed countries, virtually eliminating global poverty. Ignoring the reduction in overall GDP included as part of the de-growth plan, the average GDP per capita globally in purchasing power parity (PPP) is 17,000, on par with middle-income nations like Mexico and Turkmenistan. Ignoring the insanity and political impossibility of what such a global expropriation and redistribution would look like, that level of income is not desirable for environmental and health reasons, even if it may be seen as optimal for resource consumption.
The paradox is that increased incomes and wealth have environmental benefits. It’s called the environmental Kuznets curve. Richer nations, such as Japan, the United States, and France have comprehensive environmental legislation to control smog, water pollution, and protect natural areas. As mentioned earlier, middle-income nations have considerably worse environmental records, as do lesser developed nations. Mongolia, a middle-income country, has higher carbon emissions per capita than Canada. Beyond greenhouse gas emissions (which typically do not follow a Kuznets curve), poorer nations produce greater levels of carbon monoxide emissions per capita, PM 2.5 per capita, and ground level ozone. The most polluted cities in the world are in middle-income countries such as Iran, Russia, India, and Pakistan. Placing the entire world at a middle-income level of development would likely maximize, not minimize pollution.
Misunderstanding Economic Growth
Much of the opposition to further economic growth is predicated on the idea that all economic growth is fueled by increased extraction of resources, be it land or labor. While a portion of economic growth is fueled by consumption, growth is also fueled by technological improvement, which is defined in economics as improvements in the ability to obtain value from inputs in the economy. For example, with an improvement in tillage that results in higher yields in a crop, means more economic value (crops) is produced from the same amount of land and labor (inputs).
That economic growth from the tillage improvement can be beneficial for the environment. Higher yields cut food prices, reducing the incentive for farmers to convert more land to production, protecting forests and grasslands.
In short, economic growth is not a zero-sum game. Improved efficiency can result in improved environmental protection. From an ecological standpoint, it’s a way for humans to increase the carrying capacity of the planet.
While it is naive to believe that all environmental issues can be solved through improved technology, opposition to growth completely ignores the technological solutions to some environmental issues, and treats all economic growth as a zero-sum game between progress and the environment, which is simply not the reality.
The Political Harm of “Anti-Growth” Rhetoric
While not all of economic leftism opposes economic growth, openness to forms of economic organization other than the dominant capitalist market economy oriented around growth that currently defines the global economy — defines economic leftism.
The affiliation of environmentalism with economic leftism is dangerous for environmental protection policy, and has resulted in political losses in the United States, where the effect is particularly strong. In 2016, the state of Washington voted on ballot initiative I-732, which would have instituted a carbon tax in the state of Washington that would be offset by cuts in the state sales tax while increasing the state’s Earned Income Tax Credit. Had it passed, Washington would be the first state in the US to implement a carbon tax. It was a wonkish center-right proposal pushed by environmental economists that was intended to appeal to “pro-business” moderate Republicans in the state.
However, the moderate GOP support failed to materialize, and major environmental organizations in the state such as 350.org Seattle actively refused to support the measure, arguing that it did not go far enough, and that the money raised through a carbon tax should not have been revenue neutral, and should have funded clean energy jobs.
The measure failed 40.7% to 59.3%. In short, market-oriented environmentalists are not a significant voter base in the United States, and many significant environmental groups will oppose groundbreaking climate policy for being too conservative. Beyond that case study, it has been well documented that the merging of leftist social and economic policy with environmentalism has damaged support for environmental protection among the right-wing in the United States. Instead of left- and right-wing governments agreeing over whether pollution is an issue, and arguing over whether pigouvian taxes or the assignment of property rights are the solution to pollution issues, right wing governments in the US often ignore environmental issues entirely, reversing progress made to clean up America’s industry.
I sympathize with the concerns of de-growthers. We are consuming the Earth’s resources at an unsustainable rate, and many elements of traditional economics, where externalities are not factored into business decisions, contribute to market failures such as climate change. Furthermore, I understand that there are alternatives to GDP per capita as an indicator of human progress, as GDP does not account for income inequality, life expectancy, or cost of basic necessities. I actively support changes to traditional economics to ensure that as many as possible benefit and the environment is preserved. That’s why I majored in environmental economics and policy.
However, there are market solutions to resource concerns and climate change that prevent ecological collapse but do not sacrifice the well-being of billions of humans while doing so.
Right now, under the current market economy, greenhouse emissions per capita are falling in developed countries. Renewable energy is rapidly transforming energy sectors, and developing nations are increasingly leapfrogging industrialization altogether. Agricultural yields and productivity are rising, reducing the need to cultivate new land. Endangered species such as the Siberian Tiger are making a comeback. Air and water quality in developed nations is far better than it was 50 years ago. While these changes may not be rapid enough to many activists, it’s clear that environmental degradation is not accelerating due to affluence.
While activists are well intended, their lack of understanding of what growth is dooms them to supporting policy that hurts billions of predominantly brown and black people in less developed nations. While de-growth activists themselves may be far from racist, the outcomes of the policies they support are. Economics is a constant game of trade-offs, and unintended consequences. To put it quite simply, policy outcomes don’t care about your intentions.