In studying the blue economy I occasionally come across degrowth-driven groups and ideas. Like you mentioned, my spidey sense always goes off. While I am concerned about the environment and the health of our oceans, I just don’t see degrowth as a viable solution at any significant scale (or really helpful in any way).
I would agree with the goal of deemphasizing GDP, not because I want less growth, but because GDP is a pretty bad measure of the economy. More government spending will make GDP go up, even when it is just consumption and waste and, being borrowed, lowers our collective net worth and future living standards to service the debt.
You are correct that the ostensible goal of de-growth is just a cover for a planned society with useless make-work "green" jobs paid for by taxing the wealthy until they leave or have nothing left. Meanwhile, the only thing that can raise living standards in the long run and do it with fewer resources consumed, savings and investment, would shrink as savings are confiscated to fund more consumption and waste. You end up with a poor society that can't afford to care about the environment the way a wealthy society can.
I don't know what degrowth actually means but it feels like the chart decoupling emissions from economic growth is exactly what people who would support degrowth want to continue
It feels very new and unfamiliar to most that transitioning to a green economy actually increases growth and can make economy stronger and resilient. I think there is much confusion around this as to replace fossil fuels we need to triple electricity production.
I think people also want to see growth decoupled from making air and water more toxic too.
Reminds me of a story about the loggers and town in a meeting together after hostility where the organizer helped defuse tensions by reminding everyone that they all want clean air and forests for their children
once we have stable population and 10T people I do believe we will start agreeing more about value of material things as our economy becomes more circular and waste becomes input
I think this analysis might be overegging the pudding by quite a bit. In particular I suspect it (1) draws a sharp distinction between "elite imposition of preferences" (bad) and "pricing for externalities" (good) while putting the degrowth proposals into the former category, and (2) treats the relationship between degrowth proposals and redistribution as more spurious and opportunistic than it really is.
Re: (1), there's certainly a real danger in allowing technocrats to ban something they merely consider gauche (like "fast fashion") without consideration of the tradeoffs. But really necessary regulations are also meaningfully characterized by "a bunch of experts got together and decided it was harmful," for instance of chemical pollutants we wish to reduce, whether that's CFCs or carbon or the like. (Such expert judgments will have principal-agent problems even when they are democratically accountable, though it's disingenous to categorize them as "elite impositions" while not extending the same to production and consumption decisions by market elites!)
Re: (2), IF you believe that economic growth is running up against biophysical limits (I'm not convinced it is, but most economies have existed around that threshhold so it's not implausible a priori) then your options are to reduce the consumption of the rich or that of the poor. The latter is the ecofascist or neo-Malthusian "solution;" if you preclude that on moral grounds, solve for equilibrium.
Agreed entirely that proposals for the harms of any one thing should be specific.
Another great piece Brien. I used to be a semi-advocate for this. I embrace minimalism, keep the night temperature at 55 in winter (and only 65 in daytime) to save energy….etc. I believed that we needed to degrow somewhat to protect the environment.
But I have also read enough economic texts in the last few years to realize that degrowth doesn’t solve anything. GDP, far from a measure of insatiable greed, is a reasonably good measure of human capability and growth.
As those economies grow, they dematerialize their growth, decoupling it from environmental destruction.
Crucial to this process, however, as you point out, is respect for pricing data as economic signals…information that informs the problem-solving capacity of society.
An excellent analysis of a dangerous movement. I believe promoting long-term widely-shared economic growth should be the #1 goal of government. Not the only one, but the most important.
I wish one of those degrowthers would respond to my challenge:
The Left tends to be very good at identifying the problems of society. Unfortunately, the go to solution is usually some type of government control or central planning. As a Liberal, and a liberal, I’d much rather tweak the market and let the market sort out the details.
We have an income inequality problem in the US: let the Trump tax cuts expire. (And some other things, but the tax code is a whole other topic.)
Wealth inequality: Maybe a wealth tax. If not, reform inheritance taxes and family limit trusts to two generations, as used to be the case.
Car and trucks a too big, which is dangerous to pedestrians: make registration fees dependent on vehicle weight. (Some states do, but it could be carried further.)
Too many cars: congestion pricing, give mass transit some subsidies.
Climate change: the obvious answer is a carbon tax, but since that is a political non-starter, tax credits, which are working pretty we.
As you say, price the externalities and let price signals drive the solution.
Funny thing is, the vehicle size issues are an unintended effect from fuel efficiency regulation. Of *course* bigger cars are going to be less fuel efficient, and some people need bigger cars, so we’ll get them a break!
Funny enough, part of the car size issue is the price system working exactly as intended, we just screwed the pooch at the federal level.
I read something about the size of cars, and how they are also tied to safety measures in California. Bigger = safer, more crumple zones, etc. The bigger they get, the "safer" but also more powerful, so then faster, and it keeps getting crazier each time. (I did a bizarrely engrossing paper on highway safety a while back)
Yes! How are vehicle safety standards measured? Driver safety. Over a 6th of people who die are outside of vehicles, and many of the things that improve driver safety make it more likely for car crashes to be fatal (weight, extra height)
That doesn’t mean to just ditch all driver safety (that’s the other 5/6!), but there’s definitely a tradeoff
Thanks Brian. Great stuff! As always, this implies some sort of omniscient ability of those few brains at the top to make all the right decisions and consider all the trade offs for billions of citizens. Just one look at the one dimensional obsession of EVs here amongst policymakers blows this team’s theory to bits. Imagine what it would take just to get the mining in these third world countries to come into compliance with? And that’s just one aspect of. Happy new year!
You know what is waste? A liberal arts education. If we're going to be degrowthers we should start with useless degrees and overinflated university budgets.
Great article! This is definitely one of those things that sounds all beautiful but is not at all beautiful. I'm not even sure what "earmarking funds to keep down cost of living inflation" even means??
Not quite sure about your assumption that the low price of fast fashion implies it uses fewer resources. It may use less labor, and rely on resources with more unpriced negative externalities. Its higher profit margin is due to its rapid adaptation to trends, something traditional long-lasting clothing cannot do. The argument here is that extremely low prices of materials and lack of pricing of environmental externalities let fast fashion churn through resources to provide a type of good—cheap facsimiles of the latest trend—which the planet can’t actually afford. Of course one could fix this by adequately pricing externalities but that’s not politically popular either.
Wow, it is telling that you now write for The Economist.
Who are you to decide “what the planet can actually afford”?
But even if I played your game, be specific on how fast fashion uses more of “environmental externalities” than does haute couture.
Especially on a per capita basis.
There is in fact no way you can do this. In fact, using your own logic about what “the planet can afford”, it is haute couture that should be criticized and banned, no? If not, why not?
It‘s all about economic instruments. Tell me your favorite instruments and I know what you are talking about. Degroth debate is hiding this clarity and often vague.
- The original degrowth paper reeks of ideological motives, specifically by tying in unrelated social issues like equality. Just as an example, global temperatures will rise by the same amount regardless of the Gini coefficient, dependent only CO2 in the atmosphere.
Also, the fact that they go for "degrowth" and abandoning GDP, seemingly assuming these to be inherently unvirtuous, as opposed to sacrificing some near-term growth for future prosperity.
- Regardless, there is a strong economic case for "degrowth", which is more along the lines of consumption vs. investment, though inverted to future damage. The question should be framed in this way. How much future damage does a ton of CO2 today create? How much do we need to sacrifice today to prevent that CO2 from being released? And what is the exchange rate (interest rate) when we compare that future damage to today's sacrifice, under certain constraints of uncertainty and risk.
Some models from finance my do well here.
- The market mechanics described above explain why markets and economies today might be mispricing the future damage from CO2, and good market solutions for these have been proposed many times in the past. Some of those solutions will be harder to implement than others.
But the biggest obstacle is the OG Tragedy of the Commons. It requires a concerted effort from all the globe, yet the temptation to benefit from the frugality of others while not paying the price will be too great. In fact, the worst actors in this sense are probably those that the writers of the paper will be least willing to call out; developing economies.
In studying the blue economy I occasionally come across degrowth-driven groups and ideas. Like you mentioned, my spidey sense always goes off. While I am concerned about the environment and the health of our oceans, I just don’t see degrowth as a viable solution at any significant scale (or really helpful in any way).
Adding this to my lesson on economic growth. Thanks; my macro students will be glad you read the paper for them!
Hopefully it's a helpful discussion about growth and the environment overall
I concur!
I would agree with the goal of deemphasizing GDP, not because I want less growth, but because GDP is a pretty bad measure of the economy. More government spending will make GDP go up, even when it is just consumption and waste and, being borrowed, lowers our collective net worth and future living standards to service the debt.
You are correct that the ostensible goal of de-growth is just a cover for a planned society with useless make-work "green" jobs paid for by taxing the wealthy until they leave or have nothing left. Meanwhile, the only thing that can raise living standards in the long run and do it with fewer resources consumed, savings and investment, would shrink as savings are confiscated to fund more consumption and waste. You end up with a poor society that can't afford to care about the environment the way a wealthy society can.
I don't know what degrowth actually means but it feels like the chart decoupling emissions from economic growth is exactly what people who would support degrowth want to continue
It feels very new and unfamiliar to most that transitioning to a green economy actually increases growth and can make economy stronger and resilient. I think there is much confusion around this as to replace fossil fuels we need to triple electricity production.
I think people also want to see growth decoupled from making air and water more toxic too.
Reminds me of a story about the loggers and town in a meeting together after hostility where the organizer helped defuse tensions by reminding everyone that they all want clean air and forests for their children
once we have stable population and 10T people I do believe we will start agreeing more about value of material things as our economy becomes more circular and waste becomes input
I think this analysis might be overegging the pudding by quite a bit. In particular I suspect it (1) draws a sharp distinction between "elite imposition of preferences" (bad) and "pricing for externalities" (good) while putting the degrowth proposals into the former category, and (2) treats the relationship between degrowth proposals and redistribution as more spurious and opportunistic than it really is.
Re: (1), there's certainly a real danger in allowing technocrats to ban something they merely consider gauche (like "fast fashion") without consideration of the tradeoffs. But really necessary regulations are also meaningfully characterized by "a bunch of experts got together and decided it was harmful," for instance of chemical pollutants we wish to reduce, whether that's CFCs or carbon or the like. (Such expert judgments will have principal-agent problems even when they are democratically accountable, though it's disingenous to categorize them as "elite impositions" while not extending the same to production and consumption decisions by market elites!)
Re: (2), IF you believe that economic growth is running up against biophysical limits (I'm not convinced it is, but most economies have existed around that threshhold so it's not implausible a priori) then your options are to reduce the consumption of the rich or that of the poor. The latter is the ecofascist or neo-Malthusian "solution;" if you preclude that on moral grounds, solve for equilibrium.
Agreed entirely that proposals for the harms of any one thing should be specific.
This excellent comment has earned you a subscription.
Another great piece Brien. I used to be a semi-advocate for this. I embrace minimalism, keep the night temperature at 55 in winter (and only 65 in daytime) to save energy….etc. I believed that we needed to degrow somewhat to protect the environment.
But I have also read enough economic texts in the last few years to realize that degrowth doesn’t solve anything. GDP, far from a measure of insatiable greed, is a reasonably good measure of human capability and growth.
As those economies grow, they dematerialize their growth, decoupling it from environmental destruction.
Crucial to this process, however, as you point out, is respect for pricing data as economic signals…information that informs the problem-solving capacity of society.
An excellent analysis of a dangerous movement. I believe promoting long-term widely-shared economic growth should be the #1 goal of government. Not the only one, but the most important.
I wish one of those degrowthers would respond to my challenge:
https://frompovertytoprogress.substack.com/p/debate-challenge-economic-growth
Well put with a lovely level of levity. Thanks Brian!
The Left tends to be very good at identifying the problems of society. Unfortunately, the go to solution is usually some type of government control or central planning. As a Liberal, and a liberal, I’d much rather tweak the market and let the market sort out the details.
We have an income inequality problem in the US: let the Trump tax cuts expire. (And some other things, but the tax code is a whole other topic.)
Wealth inequality: Maybe a wealth tax. If not, reform inheritance taxes and family limit trusts to two generations, as used to be the case.
Car and trucks a too big, which is dangerous to pedestrians: make registration fees dependent on vehicle weight. (Some states do, but it could be carried further.)
Too many cars: congestion pricing, give mass transit some subsidies.
Climate change: the obvious answer is a carbon tax, but since that is a political non-starter, tax credits, which are working pretty we.
As you say, price the externalities and let price signals drive the solution.
https://www.meche.engineering.cmu.edu/_files/images/research-groups/whitefoot-group/WS-FootprintFuelEconomy-EP.pdf
Funny thing is, the vehicle size issues are an unintended effect from fuel efficiency regulation. Of *course* bigger cars are going to be less fuel efficient, and some people need bigger cars, so we’ll get them a break!
Funny enough, part of the car size issue is the price system working exactly as intended, we just screwed the pooch at the federal level.
I read something about the size of cars, and how they are also tied to safety measures in California. Bigger = safer, more crumple zones, etc. The bigger they get, the "safer" but also more powerful, so then faster, and it keeps getting crazier each time. (I did a bizarrely engrossing paper on highway safety a while back)
Yes! How are vehicle safety standards measured? Driver safety. Over a 6th of people who die are outside of vehicles, and many of the things that improve driver safety make it more likely for car crashes to be fatal (weight, extra height)
That doesn’t mean to just ditch all driver safety (that’s the other 5/6!), but there’s definitely a tradeoff
Thanks Brian. Great stuff! As always, this implies some sort of omniscient ability of those few brains at the top to make all the right decisions and consider all the trade offs for billions of citizens. Just one look at the one dimensional obsession of EVs here amongst policymakers blows this team’s theory to bits. Imagine what it would take just to get the mining in these third world countries to come into compliance with? And that’s just one aspect of. Happy new year!
You know what is waste? A liberal arts education. If we're going to be degrowthers we should start with useless degrees and overinflated university budgets.
Great article! This is definitely one of those things that sounds all beautiful but is not at all beautiful. I'm not even sure what "earmarking funds to keep down cost of living inflation" even means??
Not quite sure about your assumption that the low price of fast fashion implies it uses fewer resources. It may use less labor, and rely on resources with more unpriced negative externalities. Its higher profit margin is due to its rapid adaptation to trends, something traditional long-lasting clothing cannot do. The argument here is that extremely low prices of materials and lack of pricing of environmental externalities let fast fashion churn through resources to provide a type of good—cheap facsimiles of the latest trend—which the planet can’t actually afford. Of course one could fix this by adequately pricing externalities but that’s not politically popular either.
“… which the planet can’t actually afford.”
Wow, it is telling that you now write for The Economist.
Who are you to decide “what the planet can actually afford”?
But even if I played your game, be specific on how fast fashion uses more of “environmental externalities” than does haute couture.
Especially on a per capita basis.
There is in fact no way you can do this. In fact, using your own logic about what “the planet can afford”, it is haute couture that should be criticized and banned, no? If not, why not?
It‘s all about economic instruments. Tell me your favorite instruments and I know what you are talking about. Degroth debate is hiding this clarity and often vague.
I opened this page and Bitdefender warned me this is a suspicious website.
Just got here and I have a few thoughts:
- The original degrowth paper reeks of ideological motives, specifically by tying in unrelated social issues like equality. Just as an example, global temperatures will rise by the same amount regardless of the Gini coefficient, dependent only CO2 in the atmosphere.
Also, the fact that they go for "degrowth" and abandoning GDP, seemingly assuming these to be inherently unvirtuous, as opposed to sacrificing some near-term growth for future prosperity.
- Regardless, there is a strong economic case for "degrowth", which is more along the lines of consumption vs. investment, though inverted to future damage. The question should be framed in this way. How much future damage does a ton of CO2 today create? How much do we need to sacrifice today to prevent that CO2 from being released? And what is the exchange rate (interest rate) when we compare that future damage to today's sacrifice, under certain constraints of uncertainty and risk.
Some models from finance my do well here.
- The market mechanics described above explain why markets and economies today might be mispricing the future damage from CO2, and good market solutions for these have been proposed many times in the past. Some of those solutions will be harder to implement than others.
But the biggest obstacle is the OG Tragedy of the Commons. It requires a concerted effort from all the globe, yet the temptation to benefit from the frugality of others while not paying the price will be too great. In fact, the worst actors in this sense are probably those that the writers of the paper will be least willing to call out; developing economies.