Uneconomic growth

Growth is uneconomic when it increases environmental and social costs by more than it increases production benefits. The cost associated with economic growth arises as a result of  the social and environmental sacrifices made necessary by that growing encroachment on the eco-system. David Suzuki argued that ecologies can sustain 1.5-3% of economic growth per year and any higher growth will necessarily cannibalize the natural capital of soil or forest. But when growth becomes uneconomic we must find new answers to these problems. 

• Historically economic growth was the answer given to the major problems raised by Malthus (overpopulation), Marx (unjust distribution), and Keynes (unemployment).
• Globalization is the current ideological commitment to global economic integration via free trade and free capital mobility. Consequently many tractable national problems like overpopulation, unjust distribution, and unemployment, are converted into one intractable global problem, in the name of “free trade,” and in the interests of transnational capital.
• Growth in GNP is so favored by economists that they call it economic growth. GNP is supposed to grow forever. There are costs incurred by GNP growth. These costs are depletion, pollution, ecological disruption, sacrifice of leisure time, disutility of some kinds of labor, destruction of community in the interests of capital mobility, takeover of habitat of other species, and running down a critical part of the inheritance of future generations.
• The law of diminishing marginal utility of income tells us that we satisfy our most pressing wants first, and that each additional unit of income is dedicated to the satisfaction of a less pressing want. So the marginal benefit of growth declines. 
• The law of increasing marginal costs tells us that we first make use of the most productive and accessible factors of production and only use the less productive factors as growth makes it necessary. Consequently, marginal costs increase with growth. 
• When rising marginal costs equal falling marginal benefits then we are at the optimal level of GNP, and further growth would be uneconomic.
• The only limit to economic growth is technology, and there is no limit to technology, ergo no limit to economic growth. Therefore the very notion of “uneconomic growth” makes no sense. Growth does not increase the scarcity of anything, rather it diminishes the scarcity of everything! How can one possibly oppose growth? 
• Growth that relies entirely on exploiting increased knowledge rather than exploiting increased resource consumption may not qualify as uneconomic growth.
• Economists agree that GNP was not designed to be a measure of welfare; it measures only activity. Nevertheless they assume that welfare is positively correlated with activity, so that increasing GNP will increase welfare. This is equivalent to believing that the marginal benefit of GNP growth is greater than the marginal cost. The empirical test results turn out not to support the belief.
• Measures of welfare are difficult and subject to many arbitrary judgments. The empirical evidence that GNP growth has increased welfare is weak. Impact on welfare via policies that increase GNP growth are weak and nonexistent. 
• Economists habitually argue that we need not worry about global warming because the only climate-sensitive sector of the economy is agriculture, and agriculture accounts for only 3% of GNP. These economists evidently don’t need to eat! 
• Overpopulation would be cured by the demographic transition. When GNP per capita reaches a certain level children become too expensive in terms of other goods forgone and the birth rate automatically falls. Is it necessary for Indian per capita consumption to rise to the Swedish level for Indian fertility to fall to the Swedish level, and if so what happens to the Indian ecosystem as a result of that level of total consumption?
• Unjust distribution of wealth between classes would be rendered tolerable by growth, the rising tide that lifts all boats, to recall another slogan. Yet growth has in fact increased inequality both within and among nations. To make matters worse, even the metaphor is wrong, since a rising tide in one part of the world implies an ebbing tide somewhere else.
• The assumption that growth is economic, that it is making us richer rather than poorer. But now growth is becoming uneconomic. Uneconomic growth will not sustain the demographic transition and cure overpopulation. Neither will it help redress unjust distribution, nor cure unemployment. Nor will it provide extra wealth to be devoted to environmental repair and clean-up. Indirect growth based solutions to the big problems no longer work.
• We now need more direct and radical solutions to the problems of Malthus, Marx, and Keynes: population control to deal with overpopulation; redistribution to deal with excessive inequality; and measures such as a public employer of last resort, and ecological tax reform to raise resource prices relative to labor. These must be national policies. Many nations have made progress in controlling their population growth, in limiting domestic income inequality, and in reducing unemployment. 
• Global economic integration by free trade and free capital mobility effectively erases the policy significance of national boundaries. Nations can no longer internalize environmental and social costs in the interests of resource efficiency and social justice, because capital is free to produce elsewhere and still sell its product in the market whose social controls it just escaped. Capital escapes higher wages and taxes of any kind, in particular taxes aimed at re-distributive policies that redress excessive inequality and poverty.
• Globalization refers to global economic integration of many formerly national economies into one global economy, mainly by free trade and free capital mobility, but also by easy or uncontrolled migration.
• Whether capital moves to overpopulated low-wage countries, or poor workers move to the high-wage country, the result is the same -- a competitive bidding down of wages to the detriment of countries that have followed a high-wage policy by limiting their numbers and by more equally distributing their wealth.
• The laboring class in the low-wage country gains in terms of number employed, though not usually in terms of increased wages because of the virtually unlimited supply of cheap labor resulting from past and present demographic growth. The capitalist class in the high-wage country gains from lower wage costs at home as well as abroad. 
• The big losers are workers in the high-wage countries. With low wages now a competitive advantage in attracting capital, we might expect policies aimed at increasing the supply of labor in previously high-wage countries.
• Globalization operates by standards-lowering competition to bid down wages, to externalize environmental costs, and reduce social overhead charges for welfare, education, and other public goods. It is far worse than an unrealistic global dream -- it actively undercuts the ability of nations to continue to deal with their own problems of overpopulation, unjust distribution, unemployment, and external costs. It converts many relatively tractable national problems into a single intractable global problem.

Globalization via export-led growth is the new philosopher’s stone of the IMF-IBRD-WTO alchemists. Nations can all turn their lead into gold by free trade. With the revival of alchemy comes a return to the logic of Mercantilism: wealth is gold, and the way for countries without mines to get gold is to export more goods than they import, and receive payment for the difference in gold -- the alchemy of trade. The way to export more than you import is to reduce wages, and to externalize social and environmental costs, because that keeps prices of your exports competitive. Low wages also prevent your laboring class majority from buying imported goods and thereby dissipating the trade surplus. The way to keep wages low is to have an oversupply of labor. An oversupply of labor can be attained by easy immigration and high birth rates among the working class. Globalization requires, therefore, that for a nation to be rich, the working-class majority of its citizens must be poor, increase in number, and live in a deteriorating environment! Behind these absurdities is the further contradiction that under globalization it no longer makes sense to speak of  “nations” (only corporations); nor of “citizens” (only employees).

Globalization is accelerating the shift to an era of uneconomic growth, a time when, as John Ruskin foresaw, “That which seems to be wealth may in verity be only the gilded index of far-reaching ruin.”

Read the source article

Extreme wealth is indefensible

What is difficult to understand about those who make millions of dollars a year is why they ever need that kind of money for? Who could ever use that much? What are they even spending it on? Why do they actually want it?

• These people live like monarchs. They live in almost ludicrous luxurious excess.They make no effort to curb their consumption. 
• When they want something, like a piece of designer clothing or a fancy dinner, they simply buy it. An expensive meal does not require an occasion. If the family wants to go out to a pricey restaurant, they just do it.
• They don’t have to do household chores. Everything is taken care of by the housekeeper, gardener, housemaid, driver etc. It is difficult to fathom living like this.
• Yet most of their income still just gets tossed into their savings account. This is truly extraordinary. 
• Whether increased taxes on the wealthy will have useful consequences is arguable. What is unimaginable is that increased taxation would deprive these people in any serious way.
• These people donating to charities may not exceed 1% of their annual income. It’s almost as if they care far more about feeling like they are charitable than actually being charitable.
• They rarely encounter criticism for the moral aspects of this kind of life. In wealthy circles, everyone has a strong interest in allowing each other to feel like they are good people. So if one person mentions about their donating to charities, the friend is unlikely to criticize. Rarely do elites tell other elites that it is wrong to be an elite, for obvious reasons. 
• And the most contact this person has with the working class probably comes during chance encounters with the pool man, who is unlikely to voice any judgment he may secretly hold about their decadent bourgeois habits.
• Even $400,000 annually is far too much to live on. It is very difficult to even grasp the amount of money possessed by the 20 people who own more than half the country’s wealth. If it takes a lot of effort to fritter away $400,000 each year, imagine how the billionaires struggle to think of things to buy. That’s why their spending becomes outright ludicrous. Once you go past the first million, there’s not really much more pleasure you can buy, so you have to resort to nonsense.
• The tax policy implications are debatable. But it’s uncontroversial to conclude that the possession of enormous wealth, especially in a time of great suffering, is just indefensible in every way. Even $400,000 a year provides enough to live in extreme luxury. Anything over that is just obscene. 
• Risk-taking investors deserve higher returns, but actual returns do not necessarily reflect merit. The determining quality of  billionaires is to be lucky -- the other qualities being necessary but not sufficient. And luck is not meritocratic.

Inequality does not cause poverty. Capitalism has resulted in much more economic inequality in China, but much less poverty. Studies have shown that lower taxes for the wealthy don't necessarily result in increased economic growth. Extreme wealth contributing to inequality were seen as irrelevant and a prerequisite for the growth that would also help the poorest, as the wealth created trickled down to the benefit of everyone. But rather than creating jobs and lifting others out of poverty super-rich minorities cause social unrest and depress demand for goods and services, limiting growth and innovation as a result. Extreme wealth causes extreme inequality that impedes poverty alleviation, slows economic growth, compounds gender inequality, drives inequality in health and education outcomes, undermines economic mobility over generations, fuels crime, undermines social cohesion, and harms democracy.

Read the source article

That man is rich, whose pleasures are the cheapest ... Henry David Thoreau
Honesty is incompatible with amassing a large fortune ... Mahatma Gandhi 

At least 50% of the world’s billionaire wealth is non-meritocratic owing to either inheritance or a high presumption of cronyism. Another 15% is not meritocratic owing to presumption of monopoly. All of it is non-meritocratic owing to globalization. By contrast, crime and technology are found to be negligible sources of extreme wealth. The argument that "These eight billionaires, through the salaries and stock paid to their employees and the stock owned by millions of shareholders, have made millions of people rich and improved the lives of billions of people through the use of their products. They have not made anybody poor." is fine but governments must tax them at higher tax rates and spend the proceeds for accelerating eradication of poverty. These billionaires have a greater obligation for contributing for this cause. 

How much is enough?

• "How much is enough?" is a good question. Anyone involved in capitalism and markets will find this question uncomfortable. It is a qualitative question and is about how money makes us feel about spending, saving and giving and values we stand for.
• Enough is the quality of having everything you need and want but nothing in excess and nothing that burdens you. 
• Income to meet the expenses of frugal living, a home, a car, insurance for health & life, provision for children education and their well being, provision for health shocks, leisure, passions and retirement - is what is enough. 
• The best thing one can do to children is to give roots & wings. And the worst thing is to give them a mountain of wealth under which they will get buried never knowing what they are and what they wanted to be in life.
• Our culture is geared towards endless consumption and upgrades. Reasonable wealth is comfort. Meaningful testament to a life is well spent.
• While personal debt is bad, public debt is necessary not only for prosperity but to avoid economic disasters. A good economy must serve the needs of many instead of the few.
• A great economist told students that the capitalist system was capable of delivering such a sustained and steady increase in output that workers would eventually have all the material goods they could possibly want. They would need to toil for only 15 hours a week and could then spend the rest of the time enjoying themselves. Capitalism was a means, a rather distasteful means, to this end.
• Capitalist economies are efficient, but workers were unsatiated by any material possessions, and devote any of their time to their pleasures. The new servant class which emerged and served the needs of neo rich were paid little more than subsistence wages.
• Modern world is characterised by insatiability, an inability to say enough is enough, and the desire for more and more money. Economics, a narrowly focused discipline in which there is no distinction between wants and needs, has driven to the end of a cul-de-sac. 
• The short-term need to get the economy moving again should not deflect policy-makers from reforms that will lay the foundations of a saner, more stable world.
• Progress should be measured not by the traditional yardsticks of growth or per capita incomes but by the seven elements of the good life: health; security; respect; personality; harmony with nature; friendship; and leisure. 
• Job security is much weaker and the pressure on the environment has increased.
• There is more to life than gross domestic product. Growth at all costs has become enshrined as the goal of economic policy. We live in a country divided into workaholics who have more money than they know what to do with and millions of unemployed and under-employed citizens struggling to make ends meet on the proceeds of work in the informal economy.
• In the middle, there are the debt slaves worried about the mortgage and often one pay packet away from penury. We ought to be able to do better than this. They favour a society with liberalism, social democracy and the good society is within reach.

A little house well filled, little wife well willed and 
little land well tilled are the greatest riches ... Shakespeare 

Money has no utility to me beyond a certain point ... Bill Gates

The fortunate man is he who, born poor, or nobody, works gradually up to 
wealth and consideration, and, having got them, dies before he finds 
they were not worth so much trouble ... Charles Reade

Earnings beyond certain point usually result in gaudy life style - excessive spending, amassing wealth, paying excess amounts for services without much substance. These activities contributes to increase in consumption and wastage, emissions and abuse of nature. Every luxury looses its vigor after 20 uses. You begin to own many things and eventually things will own you. Display of wealth or possessions is not only vulgar but also reflects low self esteem, make others feel jealous, lose real friends and win false acquaintances. They become more and more insensitive and end up knowing the price of everything and the value of nothing. 

Warren Buffet believes that setting up his heirs with a lifetime supply of food stamps just because they came out of the right womb can be harmful for them and is an antisocial act. The perfect amount to leave children is "enough money so that they would feel they could do anything, but not so much that they could do nothing." Bill and Melinda Gates are giving a $10 million only for each of their three children with a remark "It will mean they have to find their own way in life". 

Development is not a buzzword but a toxic word

Despite its widespread usage, the meaning of the term ‘development’ remains vague, tending to refer to a set of beliefs and assumptions about the nature of social progress rather than to anything more precise. Development fail to address poverty or to narrow the gap between rich and poor, but in fact it both widens and deepens this division and ultimately creates poverty, as natural resources and human beings alike are increasingly harnessed to the pursuit of consumption and profit. The survival of the planet will depend upon abandoning the deep-rooted belief that economic growth can deliver social justice, rational use of environment, and human well-being.

• The word ‘development’ as a buzzword is in vogue for almost 60 years and its actual meaning is still elusive, since it depends on where and by whom it is used.
• Everyone uses it as she or he likes, to convey the idea that tomorrow things will be better. 'Development' has been widely used as a hard drug, addiction to which may stimulate the blissful feelings that typify artificial paradises.
• President Truman merely wanted to include in his 1949 Inaugural Address as a fourth point that would sound ‘a bit original’. So from the very beginning, no one not even the US President really knew what ‘development’ was all about. This did not, however, prevent the word from gaining wide acceptance.
• There was an unquestioned assumption that “development”, whatever it was, could lead to improvement in the situation of 'poor people’. And no one cared to define it properly.
• Any measure (foreign investment, lowering or raising of trade barriers, well-digging, literacy campaigns, etc) was justified ‘in the name of development’, making even the most contradictory policies look as if they were geared to ‘improving the lives of poor people’. This trick has been highly instrumental in preventing any possible critique of ‘development’, since it was equated almost with life itself.
• During the cold war period (1947-1991), the great powers disagreed on almost all issues except one: ‘development’, the magic word that reconciled opposite sides. Its necessity and desirability were not debatable, and the two ideological adversaries vied with each other in promoting it across what was then known as the Third World. ‘Development’ was mainly used as an excuse for enticing ‘developing countries’ to side with one camp or the other.
• This political game turned to the advantage of the ruling ‘elites’ who were influential in international arenas, rather than grassroots populations.
• To reconcile the requirements to be met in order to protect the environment from pollution, deforestation, the greenhouse effect, and climatic change and to ensure the pursuit of economic growth that was still considered a condition for general happiness has resulted in the coining of the catchy phrase ‘sustainable development’, which immediately achieved star status.
• It is impossible to bring together a real concern for environment and the promotion of ‘development’. ‘Sustainable development’ is nothing but an oxymoron, a rhetorical figure that joins together two opposites such as ‘capitalism with a human face’ or ‘humanitarian intervention’. Hence the battle to define what ‘sustainable development’ is really about.
• The ‘new era of economic growth’ was certainly not in favour of those who considered environmental sustainability a top priority. Despite increasing concerns for the environment protection, but the popularity enjoyed by the idea of ‘sustainable development’ is overwhelming. Increasing number of people feel that something has to be done to lessen the impact of human activity on the biosphere due to the mounting environmental crises. And yet, ‘development’ whether sustainable or not remains high on the agenda, and no one seems about to forsake it.
• Irrespective of ideologies, no politician would dare to run on an election platform that ignores economic growth or ‘development’, which is supposed to reduce unemployment and create new jobs and well-being for all. Small investors and ordinary people expect an increase in profits or wages. ‘Development’ has become a modern shibboleth, for anyone who wishes to improve his or her standard of living.

The undeniable success of ‘development’, linked to its undeniable failures in improving the condition of the poor, therefore needs to be called into question. Those who are ready to recognise that ‘development’ has not really kept its promises are also loath to discard the notion altogether. Failures, they would say are from erroneous interpretation or ill-considered implementation. After all, God himself may not answer all our prayers or grant all our requests, but his righteousness remains beyond doubt. In a nutshell, ‘development’ could be defined as: the essence of is the general transformation and destruction of the natural environment and of social relations in order to increase the production of commodities (goods and services) geared, by means of market exchange, to effective demand. 

• A country is the more ‘developed’ the more limited the number of free things that are available: to spend an afternoon on the beach, to go fishing, or enjoy cross-country skiing is nowadays impossible unless one is prepared to pay for it.
• In a ‘developed’ country, human beings are also turned into ‘resources’ and are expected to know how to sell themselves to potential employers. Prostitution may be officially condemned, but it has become the common lot: everyone is for sale.
• Poverty is proof of the ‘good health’ of the capitalist system. It is the spur that stimulates new efforts and new forms of accumulation. Economic growth – widely hailed as a prerequisite to prosperity – takes place only at the expense of either the environment or human beings. 
• World segregation is such that those who enjoy a so-called ‘high standard of living’ hardly come into contact with the poor and may thus cherish the illusion that their privileged circumstances may sooner or later spread to humankind as a whole. But climatic change, the greenhouse effect, and nuclear clouds cannot be contained and affect everyone, rich and poor alike, perhaps in the not-too-distant future. This is the real meaning and the real danger of globalisation. 

It is clear that ‘development’ is not a buzzword but a toxic word. It has been used time and again to promote a system that is neither viable, nor sustainable, nor fit to live in. The benefits that it still confers on a tiny minority are not enough to justify its continuing acceptance, in view of the lethal dangers that it entails. This is being progressively admitted. Given the amount of information that have been gathered on the manifold man-made hazards that impinge on our daily lives, why is it that we do not believe in what we know to be certain? The answer, probably, lies in the fact that our belief in ‘development’ is still too strong to be undermined by the scientific certainty. A change could be conceivable if we recall the Amerindian wisdom that teaches us that ‘we hold the earth in trust for our children’. It is high time to debunk the ‘development’ buzzword. To do so means that we must define it relying on actual social practices, rather than wishful thinking. We must be aware of its inclusion in a corpus of beliefs that are difficult to shatter, expose its mischievous uses, and denounce its consequences. The most important thing is that there is life after ‘development’ – certainly a different one, but there is no evidence to suggest that we would lose on such a deal.

All progress is precarious, and the solution of one problem brings us 

face to face with another problem - Martin Luther King Jr

Development as a buzzword - Gilbert Rist

In India there would be no speech by politicians or officials or anybody without reference to the buzzword 'development' which in fact justifies, promotes and expand their activities and vested interests in multiplying their profits albeit unjustly, undemocratically and often unlawfully. Every rich and 'street smart person' tries to jump into the bandwagon of  'development' gang and corners some share of the booty. Those who can't in the name of ethics & morals, will get lost in this siren world to lead ignominious life. Excepting escaping from extreme poverty by masses, there is no justification for destruction of ecological assets and deterioration of social life in the name of 'development' and 'capitalism'. China's development if loaded with the factors of ecological destruction and erosion of human values, it would be negative. Finite world doesn't have enough resources to support ever increasing population without erosion and degradation. 

American way of living needs 4 Earths

Americans consume a disproportional amount of the world's stuff. It's obvious that Americans consume more, on average, than the people of less developed countries. But the claim that four Earths would be needed if everyone lived like Americans is still a striking one.

• America make up 5% of the global population.
• America uses 24% of the world's energy. 
• America eats 15% of the world's meat. 
• America produces 40% of the world's garbage.
• America eats 10 billion animals every year. 
• America throws out 16 billion disposable diapers every year. 

It would take 4 Earths, to be precise 3.9 Earths, to sustain world population of seven billion at American levels of consumption. At Indian consumption level, world requires just half the planet.

One curious thing to note is that the world's population is currently using not one, but one-and-a-half Earths. The forests and oceans of the world absorb a lot of carbon dioxide, but we are currently emitting more than the planet can handle and extra land and sea we would need to absorb it is estimated that we need an extra half a planet.

5% of the world's population that lives in the U.S. has more environmental impact than the 51% that live in the other five largest countries. The wealthiest 20% of the world's population consumes 80% of the goods and services produced from the earth's resources.

The global economy cannot grow indefinitely on a finite planet. As populations increase and economies expand, natural resources must be depleted; prices will rise, and humanity -- especially the poor and future generations at all income levels -- will suffer as a result.

Americans ought to realize that although we must satisfy basic needs, a good life is not the one devoted to amassing material possessions which eventually comes to own us, keeping us from fulfilling commitments that give meaning to life, such as those to family, friends, and faith.