Why further conventional economic growth has become a very bad idea

There are quite a few "knowledgeable" pundits who are speculating that we might be heading for a double dip recession - which is where you have a recession then see "green shoots" for a bit but then the recession carries on down. A bit like a "dead cat bounce" in an individual share on the stock market.
We keep hearing about the "green shoots" from our economic advisers, both here and on the UK mainland, and those who trust in them, as they continue to believe, like Annie, that "the sun'll come out tomorra - bet your bottom dollar". Rose tinted spectacles.
The likes of Treasury Minister Ozouf and Economic Development Minister Maclean are wedded to the hope that a resumption in economic growth will solve all ills and they think that it's just a matter of the Island/World bunkering down until the recession ends. However, more significant figures are whispering the "D" word - Depression.

We've got to this point because of centuries of Ponzi scheme-like money systems and vast economic growth, fuelled by relatively easily available and cheap fossil fuels combined with a global population level, and average international "standard of living", that meant that the available resources of Planet Earth appeared ample (ish) and inexhaustible.
We are now at the point where we can say that Peak Everything will dampen the growth party - maybe not today, maybe not tomorrow, but soon and for the rest of our lives (yes, it’s from Casablanca).

The United Nation's Environment Programme (GEO4) identified a few years ago that we we are living at least 25% beyond what the Earth can sustainably supply. The current recession/incipient depression will slow the assault on our planetary life support systems down a bit but the end result will be the same.

Indefinite unending conventional growth in a finite world is not possible. That is not an opinion or an assertion – it’s a statement of a law of the Universe. Ye cannae change the laws of physics, Jim! He’s featured on this blog before but step forward one more time the 9 billion tonne hamster.


Global population is only forecast to stabilise at 9-10 billion using the assumption that a developed world standard-of-living spreads to the "undeveloped" world, as a higher standard of living (=impact on resources) is seen as part of the reason why population growth falls in developed nations. Clearly the "necessary" growth in the undeveloped world that is "needed" to stabilise global population will send us careering wildly even further into ecological overshoot mode.

If we don’t stabilise population, everything must go to hell in a handbasket. What is presented as the way to stabilise population means that, if we do it, we will end up also going to hell in a handbasket.

Tricky, huh?

Further conventional economic growth would be "uneconomic growth" where the bad consequences outweigh any benefits. In short, we cannot afford conventional economic growth any more. We have come to the end of that particular road. Unfortunately, conventional economics says that we need growth to resume to get us out of this current colossal financial mess, let alone the staggering levels of international debt that depend on a huge expansion of the global economy to ever be paid back. If the reader didn’t know what unsustainable meant before, they ought to by now!
Back to the current recession/depression. Here's a couple of sites to make Geoff Cook's (Jersey Finance’s Chief Executive) toes curl. The first - The Energy Report - is relatively optimistic (although you'd never know it until you read the second, much longer, one...). Brace yourselves for The Automatic Earth (which references the first article). It takes a while to get going, but stick with it.

By the way, sustainable or ecological economics shows us a way out of the dilemmas but, until the powers that be acknowledge the grave problems the world faces honestly and in public, nothing is likely to be done. While the general population still have some faith in unbearably stupid irresponsible people, like our glorious leaders and their advisers, the pressure for real sustainable change will never build up. Our leaders will continue to prescribe more of what they think worked in the past. It won’t help. People need to get the rocks out of their heads. Bob Dylan said "Don't follow leaders". Until our leaders start speaking reality, I think we should agree with him.

The 9 billion tonne Hamster – be scared!

Today we are hearing lots of rejoicing in Britain that the recession is over and that the economy is growing once again because we got a tiny bit of "growth" in the last quarter. Leaving aside the Christmas splurge and the car scrappage effect, which are an alternative possible source of the growth which might dampen the celebrations a bit, we have to ask ourselves if the resumption of conventional growth is entirely beneficial.

Yesterday, I sent a version of the text quoted below to our Treasury Minister, the Minister for Economic Development and a couple of greenish States members. I also sent it to the local paper. Unfortunately, I could not include this video from the New Economics Foundation (as I only saw it today) but, as they say, a picture is worth a thousand words and I suppose a video might be worth a million? or maybe a billion... but I'm spoiling the plot...

It demonstrates why economic growth is only a good thing for a certain period. After that time it becomes dangerous - like a larger than natural hamster

Here’s my letter:

“It's time to face up to the situation we are in because it would be irresponsible to do otherwise. As the world struggles with the latest and largest "bust" in the boom and bust economic cycle, many are starting to realise that the very basis of that economy, cheap fossil fuelled growth, is no longer sensible. More economic growth, of the type that conventional economists think will solve all ills, is no longer an option. All the experts that Finance Ministers and captains of industry and such-like rely on must be now regarded as false prophets. Their discipline is, of course internally self-consistent, which gives their pronouncements a spurious gravitas but the dangerous flaw is that it is based upon an oxymoron - an impossibility - unending exponential growth.

Successful as a theory for many decades, we are now coming up against the hard-wired physical limits of the planet and the serious nature of the large holes in the foundations of that theory are starting to show. Rather like Einstein had to come up with Relativity when Newtonian mechanics were no longer adequate to describe what we knew of the physical world, so too does conventional economics have to step aside for something more all encompassing.

The elephant-in-the-room flaw is that conventional economics just doesn't take enough into account when measuring the success or otherwise of businesses or economies. A car designed solely for high miles per gallon may appear, to the naive, to be the most efficient and cheapest to run but without consideration being given to the concomitant expensive maintenance costs, or the longevity of the engine and bearings, it is not a good deal. Similarly, the theories, expectations and prescriptions of conventional economists for the economy are a threat to the much larger natural environmental economy that supports it, supplies it and absorbs its waste.

While further economic growth is no longer desirable, economic development is still possible within the environmental and ecological limits that really should not be ignored or discounted any more. Are our Ministers fully aware of this imperative or are they hiding their heads in the sand?

sincerely,

Nick Palmer”