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 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
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.
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 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.
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.
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??
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:
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 think you (and Sowell) are quite right to highlight the importance of who gets to decide what kind of growth is good and bad, and how this process takes place. The flaw with the current system is industry capture of decision-making processes. These should be more transparent, democratic, and localized in order to allow affected people to assert what they find valuable.
For example, in Japan—where I live—there has been a national trend of more and more private finance initiative (PFI) projects taking place. Recently, many have focused on the transformation of public parks. Park-PFIs are marketed to the public as win-win because they purport to enable the continued provision of services (such as park maintenance) while reducing the financial burden on municipal governments. In fact, a study of British Park-PFI initiatives showed that such projects ended up costing on average 40% more with little evidence of added value. However, in many cases decisions have been made for these projects in deals between industry and government with little or no public input.
Excluding the public from the planning process serves the interests of businesses seeking to create value for shareholders by securing market-share (e.g. a monopoly on customers at a single coffee shop in a public park). But the initiatives often fail to consider the broader public good and local community values (which are not “priced” into the calculations). The businesses are incentivized to capture government decision-making processes, and we know that they are very effective at doing this (think of the MIC in the US). Sometimes, there is a public backlash (like the one happening now around the redevelopment of a public space in Tokyo: https://www.change.org/p/protect-jingu-gaien-s-trees-rethink-the-development-plan), but as long as the system incentivizes and allows for industry capture of government it’s hard to see an end to this destructive side of neoliberal-style growthism.
What's the solution? Probably just more public participation in local government. When the public is apathetic, industry interests tend to fill the vacuum, but when they pay attention assert their will at the ballot box and through other initiatives, they can sometimes affect the kind of positive growth that serves the public good.
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.
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!
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
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.
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 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.
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.
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??
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
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 think you (and Sowell) are quite right to highlight the importance of who gets to decide what kind of growth is good and bad, and how this process takes place. The flaw with the current system is industry capture of decision-making processes. These should be more transparent, democratic, and localized in order to allow affected people to assert what they find valuable.
For example, in Japan—where I live—there has been a national trend of more and more private finance initiative (PFI) projects taking place. Recently, many have focused on the transformation of public parks. Park-PFIs are marketed to the public as win-win because they purport to enable the continued provision of services (such as park maintenance) while reducing the financial burden on municipal governments. In fact, a study of British Park-PFI initiatives showed that such projects ended up costing on average 40% more with little evidence of added value. However, in many cases decisions have been made for these projects in deals between industry and government with little or no public input.
Excluding the public from the planning process serves the interests of businesses seeking to create value for shareholders by securing market-share (e.g. a monopoly on customers at a single coffee shop in a public park). But the initiatives often fail to consider the broader public good and local community values (which are not “priced” into the calculations). The businesses are incentivized to capture government decision-making processes, and we know that they are very effective at doing this (think of the MIC in the US). Sometimes, there is a public backlash (like the one happening now around the redevelopment of a public space in Tokyo: https://www.change.org/p/protect-jingu-gaien-s-trees-rethink-the-development-plan), but as long as the system incentivizes and allows for industry capture of government it’s hard to see an end to this destructive side of neoliberal-style growthism.
What's the solution? Probably just more public participation in local government. When the public is apathetic, industry interests tend to fill the vacuum, but when they pay attention assert their will at the ballot box and through other initiatives, they can sometimes affect the kind of positive growth that serves the public good.
To summarise, the price of everything and the value of nothing.
Just the kind of thinking, and leaving it to the market, that has got us to where we are today.
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.