Monthly Archives: January 2015

Bursting the Bubble of Excessive Economic Growth

Did you catch Boyhood? Watching Ellar Coltrane’s character, Mason, grow up is pretty cool – except when he gets his long locks trimmed at the insistence of an abusive step-dad. To simply see the physical growth and changes in Mason happen before your eyes (even at a lengthy two hours, forty-five minutes) is almost worth the price of admission. Toward the end of the movie, as Mason reaches young adulthood, we anticipate other changes in his person – not so much physical, but emotional and even spiritual.

A girl or a boy grows for 15-20 years and then reaches a state of physical maturity. In the adult years, physical growth ceases and the continued development of one’s character, spirit, and psyche prevails. Borrowing inspiration from the teacher of Ecclesiastes, there is a time for growth and a time to refrain from growth. In a finite world growth is necessarily limited. Development, defined as elaboration or maturation, deals with internal structuring and happens within the bounds of external physical limits. In my book, Just a Little Bit More, I critique the culture of excess that chooses the value of fast growth over slow and continued development much more often than not.

Economically, the long-term growth beginning at the dawn of the industrial era (early 1800s) and the short-term growth since the post-World War II era have significantly blessed millions of the world’s inhabitants, lifting them from poverty to prosperity. The ingenuity, sweat equity, and persistence of inventors, entrepreneurs, and millions of workers have made this beneficial economic growth possible. None of these, however, played the primary role as have the fossil fuels coal and oil, the cheap energy sources powering the geniuses and the grunts. As I stated in a previous post on this topic, gasoline boasts the energy equivalent of four hundred person hours of work. Yes, we’ll still have plenty of oil for some time and it will accomplish many things at the behest of human creators and doers. But, it is a non-renewable energy source and its externalities of pollution and carbon emission are unsustainable in a finite world. Beyond that, its ubiquity (and new lower price!) lures us into a false sense of security: we feel the economic growth we are so accustomed must continue on ad infinitum. For it not to continue as we’ve known it would be cultural and societal ruination, or so we think.

steady state 3

Other options do exist. A steady-state economy is one such option. It’s not socialism or Marxism or a forced recession, but economic sustainability. A steady-state economy at its core is an economy of stable resource usage and consumption. Enough is Enough by Rob Dietz and Dan O’Neill (Berrett & Koehler, 2013) is an excellent resource for understanding the issues of a steady-state economy. The 19th century is over; we can no longer operate with a mentality that assumes an endless frontier of untapped resources exists solely for our economic exploitation. Dietz and O’Neill claim that, in our current day, technological optimism – the belief in the power of technology to overcome limits to growth – gives us a false sense of separation from the environment. The economy and our way of life are not somehow unconnected from the natural world; we need to adopt an economy that suits the needs and limits of the planet. Sixteen percent of the world’s population – those living in developed nations – accounts for 78% of the world’s consumption expenditure, while 2.7 billion people, 40% of the world’s population, live on $2/day or less. If we think “economic growth” is going to lift a majority of these 40% out of grinding poverty, we’ll have to pick up a few more planets on eBay or Amazon, because this current one won’t be enough neither in terms of resources nor waste-holding capacity!

A stable population is a necessity for those who advocate a steady-state economy. World population: today, 7 billion / 2050 estimate, 9.3 billion. US population: today, 316 million / 2050 estimate, 400 million. The US population continues to increase even as the US fertility replacement rate is 1.8, below the rate of 2.1 needed for a developed nation to maintain its population. Because of immigration, US population continues to grow. Even so, conversation on the feasibility of a steady-state option is a necessity especially as world population continues to increase. Smart economic development and sustainability must increase and the acceptance of growth at all costs must decrease.

Did you catch President Obama taking credit for the recent economic growth in his 2015 State of the Union address? The very next day Senate majority leader Mitch McConnell was counteracting the president, claiming the credit for his own political party. While members of both parties childishly bicker as to the generation of economic growth, and blindly tout its merits (it helps them to get elected), the world and our place in it desperately need a leadership they are not offering. The truth is that our society is thoroughly wedded to economic growth as a way of life and being – and it’s creating an increasingly complex dilemma:

             We rely on economic growth to generate jobs, yet continuous economic growth undermines the very life-giving and life-supporting systems of the planet. What in the world are we going to do about it?

 

My book, Just a Little Bit More: The Culture of Excess and the Fate of the Common Good, is available at http://www.blueocotillo.com and wherever books and ebooks are sold, including Amazon.

 

 

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Economic Growth: The Good, the Bad, and the Ugly

In this current day when congressional Republicans and Democrats don’t agree on much of anything, there is one thing that creates a rare kum bay ya moment of unity for the two groups: economic growth. Don’t get me wrong – healthy economic growth provides jobs, creates necessary goods, and keeps the majority of us fed, clothed, and sheltered. Healthy economic growth is a many-splendored thing! However, for reasons I will explain below, we tend to become fixated with economic growth to the point where we proclaim it our societal salvation: the elixir to ameliorate all social problems from unemployment to social program funding deficits. To the contrary, I propose that the unexamined pursuit of economic growth in a finite world only makes our problems worse and hinders us from seeking and implementing actual solutions.

Let’s cut to the chase. As the Depression eventually gave way to post-World War II, vibrant economic growth in America lifted many out of poverty and pretax incomes between the richest and poorest Americans narrowed. Economic growth (annual GDP) hummed along at 4% and 5% yearly rates.  The US government published the first national poverty rate – 22.4% – in 1959, a significant improvement over the poverty rate estimates of 40-60% during the Depression. One of the main factors contributing to this strong growth was cheap and plentiful oil. As US production of oil was not able to keep up with demand, reliance upon cheap and plentiful foreign oil increased in the 1960s. The OPEC oil embargo of 1973 changed all that. Economic growth decreased to 3% during the 1970s and ’80s, and for the fifteen years of the new century it has hovered around 2%. One of the main factors for the decrease of the growth rate is the increasing price of energy due to the difficult and costly process of extracting energy sources.

Have you ever heard of the term EROEI? It’s an acronym for energy returns on energy invested. Back in the days of Rockefeller and the early American oil boom, EROEI was 100:1, meaning the energy equivalent of one barrel of oil input produced one-hundred barrels output. The area surrounding Titusville, Pennsylvania attracted oil drillers in the 1860s because of the ubiquity of oil springs – little creeks of oil! Those were, as they say, the good old days. Today EROEI for oil is about 15:1. Extracting petroleum from the bottom of the North Atlantic, for example, can be classified as an engineering miracle – albeit an expensive and extremely complex one. As the Keystone XL pipeline continues to be a point of contention in US Congress and American society, check if the sites from which you source information actually report on the EROEI of the Canadian tar sands. I’ve yet to hear a mainstream news organization mention EROEI. Some of the tar sands have a ratio as low as 3:2. Joseph Tainter and Tad Patzek, in their excellent treatise on our current energy dilemma, Drilling Down (Springer, 2012), tell us that to power a complex modern society a net energy ratio of at least 5:1 is required. Yes, the completion and implementation of the pipeline will create jobs – but at what cost? I’ve not even mentioned the accompanying pollution and strains on water supplies that the production of these energy sources entails, and the additional release of carbon into the atmosphere upon their eventual consumption and use . . .

To complicate matters, the Saudis are flooding the market with – just like the good old days – cheap oil. As I write this post in January 2015, gasoline prices in America are hitting long-time lows as the price of oil crashes the $50/barrel barrier for the first time since 2005. And, on cue, economic growth is up. Some are hoping (reports come out at the end of January) for a 5% growth rate – just like the good old days – for the fourth quarter of 2014. Will it last? Has the American economy made its long-awaited comeback to 1950s’ era growth? We’d be foolish to expect a return to what used to be. Cheap, high quality energy – coal powering the industrial era before oil became dominant at the turn of the 20th century – provides strong economic growth and is the essential foundation of the highly advanced society of which we are accustomed. A gallon of gasoline has the energy equivalent of four hundred person hours of work. Giddy up and then some!

So, YES, economic growth is a good thing. BUT, the good and strong growth we’ve experienced has been based principally on a cheap energy source. The fossil fuels coal and petroleum, essentially millions of years of chemically stored sunlight, have made possible a 200-year run of high-phase energy gain. Social commentator Richard Hienberg says we’ve gotten accustomed to a “perpetual growth machine.” For those who think the next high-yield energy source – methane hydrate is currently being touted – will pick up the slack when fossil fuels run their inevitable course of completion, I ask: Is it not narcissistic and irresponsible to think we have to continue on the same trajectory of consumption we’ve been on for the past 200 years? Financial advisor and writer Paul Kedrosky wisely opines: “I want to believe in innovation and its possibilities, but I am more thoroughly convinced of entropy.” In other words, the unlimited growth machine can’t and won’t last forever.

Australian economist Clive Hamilton calls our commitment to unlimited growth above all other things a fetish, “an object worshipped for its magical powers.” Unlimited growth is known by another name: cancer. The defining characteristic of a cancer cell is its inability to self-regulate. Healthy cells follow an established cycle of division, multiplication, and then, inevitably, death. Cancer cells are interested in only one thing: unlimited growth. Similarly, over-commitment to economic growth makes us susceptible to bubbles – the 1990s’ dot.com and the 2000s’ housing bubbles being the most recent examples. Economic bubbles are like cancer cells – they don’t know when to stop and they damage the common good.

What I’d really like to hear from a politician – a president, no less – is talk about a steady state economy. In this day and age, an elected leader – Republican, Democrat, or independent – tempts political death if he or she were to speak common sense and encourage steady state economics. That’s why it’s left up to authors and bloggers like me to do it.

My next blog post will cover steady state economy. Until then –

T. Carlos Anderson

And, in case you’re wondering, the EROEI of wind and solar energies are 20:1 and 13:2, respectively.

 

My book, Just a Little Bit More: The Culture of Excess and the Fate of the Common Good, is available at http://www.blueocotillo.com and wherever books and ebooks are sold, including Amazon.

 

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