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Step on the Gas and Wipe that Tear Away
Professor Roger Steare is writing at top speed for Business and Politics readers: Toyota recall is a warning for our civilization
“Quite simply, our economy has a sticking throttle problem. We’re driving faster and faster. Economic growth is not only seen to be desirable, but essential for well-being … The maths are actually very simple. If you increase something like say GDP, by 3.5% per annum, you double it every 20 years. Now 3.5% doesn’t sound very much, but imagine we’re travelling along in our shiny green Toyota Prius at just 25mph.”
“We then increase our speed by 3.5% per minute. In 20 minutes we’re still only travelling at a very responsible 50 mph. But if we keep increasing our speed by just 3.5%, after another 20 minutes we’re either going at a crazy 100mph, or we’re dead.”
“There’s still time to recall our entire stupid, suicidal way of life, before it’s too late.
Eeek. It’s over. We’re doomed, he tells us, doomed.”
The problem with this sort of ‘let’s press Rewind on world history’ is that it’s not easy to work out when we should stop rewinding.
What is economic growth, in fact?
It’s nothing other than decisions by people to do things together, usually expressed in legal contracts which give expression to new ideas by putting resources behind them. Profoundly democratic and cooperative behaviour. Which also is why the most dangerous, unstable and poor places in the world tend to be those places where there is no respectable legal order.
So less growth = fewer contracts = fewer ideas brought to fruition = less freedom = less humanity.
Which means less chance of discovering new medicines, or cleaner energy, or more efficient ways to use natural resources, or better ways to hold powerful people in check, or ways to educate people faster and better. All of which reduces our chances of zapping an asteroid hurtling towards Earth, or (further down the road) moving on to better solar systems when ours starts to expire naturally.
Roger rightly points to the drama of compound interest. But it works both ways. See eg the numbers on how the people of Serbia and Zimbabwe have been plunged into ruin through lack of modest but steady growth.
Who decides which ideas should or should not be supported in Roger Steare’s unstupid brave new system?
Hmm. Governments? Not sure I’d trust Peter Mandelson or Herman Van Rompuy on that one. NGOs? Nope, most of them live off government so aren’t NG. Big corporations? Nope, they are Too Big to Fail and so need taxpayers to be the spittoon for their moral hazard expectorations.
Got it! The right people to fine-tune the future of civilisation must be wise, just, highly intelligent thinkers. Who else but … academics?
Just don’t choose scientists. As Professor Krebs put it in the Times the other day, scientists, just like every other trade — bus drivers, lawyers and bricklayers — are a mix. Most are pretty average, a few are geniuses, some are a bit thick, and some dishonest. Well, he must be assumed to know what he is talking about. But would it not be better if Universities and the BBC listed scientists in these helpfully clear categories so we know whom to trust?
I was at a conference in New York on the Internet and Politics a while back. One speaker put it in stark terms: the change brought by the Internet is that over a billion people now own the means of production of ideas.
An astounding insight. And every time one of them does a deal with someone else to give effect to an idea, global GDP clocks up a notch. Just as it does when Roger Steare or I write a blog piece about it.
Is that really so bad? Would it not be suicidal to try to stop that happening? To put it another way, economic growth should not “be seen as essential to well-being”. It is well-being.
In such gloomy circumstances one looks to the classics for inspiration, in this case Abbey Road:
Soon, we’ll be away from here,
Step on the gas and wipe that tear away.
One sweet dream came true today…
But maybe better to use a Mini Cooper S than a Prius.
Charles Crawford, a former British Ambassador turned blogger and policy pundit, looks at how UK policies shape global events – and how global events shape UK policies. For more information or to contact Charles Crawford, click here.[twitter]
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Thank you Charles for engaging in this debate! Much of what you say makes a lot of sense, but you make the mistake of assuming that economic growth is the same as economic activity; and that economic activity must either increase or decrease. It does not. To return to our Toyota analogy, the car is safest either when its at rest or travelling at a constant speed in a straight line. You’re still getting from A to B, which is the purpose of economic activity. To use another analogy, the only other organism that believes in growth for its own sake is the cancer cell. It’s logic is flawless until the host dies. If you’re right, then every economist who believes in the scarcity of resources and the theory of supply and demand is wrong. Ask any economist if scarcity implies finite or infinite resources? Then when they concur that scarcity means finite, ask whether this means that economic growth is finite or infinite? Its called systems thinking. Like it or not, until we can inhabit or exploit another world, or discover some form of philosophical rehab, Toyota’s stuck throttle remains a metaphor for our greedy, addictive, all-consuming, cancerous so-called civilization.
Economic activity and economic growth. I guess the difference between motion and progress?
Roger,
We could get bogged down in nomenclature here, including over how far ‘growth’ does or does not measure ‘activity’.
Plus you appear to be demonstrating your idea about the finite nature of the Earth’s resources by using up at a furious pace all available negative adjectives to describe modern civilisation!
OK. There’s only so much iron or oxygen, and sooner or later we’ll have used it all.
But what I think you’re missing is the fact that we are seeing exponential increases in knowledge, which allow us to use the resources we have in ever-smarter ways. And to find different ways of doing things as resources previously used get harder to come by.
Just as once upon a time all telephone calls were made down what was in effect a ‘finite’ single wire, now thanks to packet-switching the world’s networks are able to use more and more of their inherent capacity more and more efficiently. The finiteness of any given cable or resource starts to look a lot less important than the surging knowledge about how to use it.
Hence eg this website.
So I do believe in growth for its own sake, by which I mean that I think it’s good that millions of people have more freedom and more choice and so can do productive things together.
Nor do I understand your argument that ‘getting from A to B is the purpose of economic activity’. Why ascribe one overall ‘purpose’ to economic activity? A touch of unprofessorial mysticism?
I probably would agree that slavishly chasing after ‘growth’ as currently measured may not be a good idea, as there are many reasons to question whether the way growth is measured makes much sense – it necessarily tends to look at what is measureable and ignore what is not.
Thus today I ordered via Amazon some new rechargeable batteries and a charger. Previously I have used disposable batteries. I (for now) am spending rather more money on a few batteries + charger, with a view to making savings on new batteries down the line.
I have no idea how that ‘activity’ features in ‘growth’ statistics. What is just terrific is that the market mechanism is giving me the ability to research it all and order new inventions from home.
Plus the market is rolling out ever better, ever cheaper mobile telephones to Africa so that the world’s poorest people can finally start to use their own potential to escape poverty without waiting for cargo-cult Western developmentalists to give them yet more orders.
Like it or not, the exponential growth of computer power (Moore’s Law etc) means that we are going to see several centuries more ‘growth’ (however defined) as more and more poor people stop being so poor. And that growth, all being well (and it might not be, for all sorts of familiar reasons), should lead us to the inventions needed to help us manage your problem of finiteness so far into the future that we can stop worrying about it.
Optimist v Pessimist?
I didn’t understand the concluding part of your article, could you please explain it more?