In 2040, when growth is a memory... | RenewEconomy

In 2040, when growth is a memory…

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Much of the stuff that drives economic growth is really very silly. The transition to a more meaningful measure can’t come soon enough.

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George Monbiot doesn’t hold back, and says it well. With the gift season now past, we’re again throwing out the trinkets of vacuous imagination. I can’t do better than quote him. After first reminding us that 99 per cent of everything we buy is obsolescent landfill within 6 months, he gets into gear, like Tim Minchin by the fourteenth verse:

“Many of the products we buy, especially for Christmas, cannot become obsolescent. The term implies a loss of utility, but they had no utility in the first place. … a Darth Vader talking piggy bank; an ear-shaped iPhone case; an individual beer can chiller; an electronic wine breather … No one is expected to use them, or even look at them, after Christmas day. They are designed to elicit thanks, … and then be thrown away.

“The fatuity of the products is matched by the profundity of the impacts. Rare materials, complex electronics, the energy needed for manufacture and transport are extracted and refined and combined into compounds of utter pointlessness. … We are screwing the planet to make solar-powered bath thermometers and desktop crazy golfers … This is pathological consumption: a world-consuming epidemic of collective madness, rendered so normal by advertising and by the media that we scarcely notice what has happened to us.”

Part of this effort is to fulfil our insatiable desire for economic growth, the same desire that drives advertising in kids’ shows, and casinos on foreshores. I’m not in the abstemious camp that says there should be no economic growth. Rather, economic growth should not come at the expense of irreplaceable social and environmental capital.

By that measure, according to the revered Hermann Daly, our economic growth has already peaked. “Economic growth has already ended in the sense that the growth that continues is now uneconomic; it costs more than it is worth at the margin and makes us poorer rather than richer.”

Or, more aggressively: “I think that we have reached the limits of growth in the last 40 years, but also that we have wilfully denied it, much to the harm of most of us, but to the benefit of an elite minority who keep on pushing the growth ideology, because they have found ways to privatise the benefits of growth while socialising the even greater costs.”

But what if our narrowly-defined economic growth is itself nearing its limits, no matter its cost to social or environmental capital? That’s something that should concern even the most hardened Tea Party neocrat.

This is the thesis of Jorgen Randers, set out in his new book “2052: A Global Forecast of the Next Forty Years. Mr Randers is no wisher-washer: a professor at the BI Norwegian BusinessSchool, a corporate board director and a member of British Telecom and Dow Chemical sustainability council. He recently toured Australia with Paul Gilding, a fellow faculty member of the Prince of Wales’s Business and Sustainability Programme at Cambridge University, and a similarly provocative and insightful thinker.

That Mr Randers takes seriously 40 years of warnings and accurate predictions from orthodox climate scientists will discount his views in some camps. But they may find hard to fault his logic.

The Randers thesis has three quite surprising finds: greenhouse gas emissions will peak at 2030 (but the damage will be done), the working population will peak at 2040, and GDP will peak at 2050. At the risk of repeating the sins of Alan Ramsay in his later columns, I’ll quote again:

“You will see that the global population will peak much earlier than you thought, as will the workforce. The reason is the reduced desired family size in increasingly urban populations. Labor productivity (and hence production and GDP) will grow, but at an ever-slowing pace – because of problems with resource depletion, pollution, climate change, and rising inequity. As a result, global production will peak much earlier and at a lower level than many expect.”

The numbers look something like this. The global birth rate has fallen from 3.3% of population per year in 1970, to 1.8% today. It will continue its decline to about 1% of population in 2040, at which point it will have fallen beneath the death rate. Global population won’t go beyond 8.1 billion, more than today’s 6 billion but less than the 9 billion assumed by many. The numbers of those at workforce ages will hit similar limits.

The rate of productivity growth has also been declining as a long term trend since 1970, despite the best efforts of China and India to keep it powering along. It has fallen from about 2.2% growth in 1970 to about 1.6% now, and will continue to meander along to about 1.1% in 2045.

At this point, no longer saved by population growth, overall productivity won’t be big enough to cover the increasing deadweight costs of a changing climate. Global output will stop growing.

What deadweight costs? Well, the good news is that while energy use follows global output, the energy intensity of that output is falling – we are producing more with less energy. While we used the energy equivalent of about 300 tonnes of oil to generate $1 million in 1970, we now need only 180 tonnes, and will need only 140 tonnes by 2040 when output peaks and energy use also starts to decline.

The better news is that the emissions intensity of that energy use (the CO2e emissions per unit of energy) is also declining. It drifted down from 3 tonnes of CO2e per tonne of oil in 1970 to about 2.7 tonnes in 2005. But now that we’re trying, it will fall to 2 tonnes by 2040.

Put the slowing production and falling emission intensity together, and we find that global emissions will peak quite soon – in 2030. Pity then that the damage will already have been done. As we’ve seen from the most recently published research, there is a material risk that current IPCC forecasts will be as accurate as the past ones have been. We’re pretty much locked into a 2.5-3°C global temperature rise, and if emissions peak only in 2030, a greater rise is a very solid chance.

By then, the costs of climate change damage and adaptation will be added to the list of global investments needed to keep the wheels of industry turning in a resource-constrained world:

• Finding substitutes for oil, gas and phosphorous

• Replacing‘free’ ecological services such as water from glaciers and aquifers, and fish protein

• Decommissioning of spent nuclear power plants

• Protecting against rising sea levels

• Replacing and strengthening infrastructure to meet more extreme weather events, and

• Maintaining armed forces to defend borders against immigration, defend resource supplies, and provide manpower for more frequent emergencies.

This does not make a pretty yuletide picture, and I’m sure things won’t be so bad. Besides, in the Keynesian long term we’re all dead, so does it really matter?

I’d humbly suggest it does. Political and corporate promises of future growth, as currently measured, will soon begin to sound lamer and lamer. As will the related promises of managed fund returns.

Perhaps it’s not so early to start thinking about a more enriching type of growth. One to which we can all toast, without the need for an electronic wine breather.

Josh Dowse, Dowse CSP, partners on corporate sustainability, ESG investing and related actions and communication. This article first appeared in the Sustainability Report. Reproduced with permission.

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  1. John D 8 years ago

    For most of us it is not too hard to identify expenditure that adds ZILCH (if that) to our quality of life. Problem is that, the way the economy works, the pain of any economic slowdown is not evenly spread. Some people will lose their jobs while others will suffer from nothing more than the insecurity people feel when the people around them lose their jobs.
    If we really want to stop wasteful production the country needs to come up with mechanisms for better sharing of the remaining jobs and wealth. Most of us would welcome an extra weeks holiday in return for a 10% cut in pay. But losing your job in the middle of an economic downturn?

  2. Peter 8 years ago

    It it what it says, economic growth is history, however that does not mean there would not be alternatives. Actually much better alternatives, which can provide for the needs of all (and not the excess of the few) plus much more (purpose and meaning, culture, spirituality, real democracy and participation and much more), and now one should then fear of not having a meaningful job or contribution to make. But to be clear life will look very different from what it looks like now, simpler, less cluttered with nonsense, more localised, family and community based and so forth. But it will be a hard road to get there, because the powerfull elites will fight hard to hang onto what they have. Useful other publications worth reading along those include (but not limited to) The End of Growth, The Great Turning, The Bridge at the End of the World, The Ecotechnic Future, Agenda for a New Economy, and also Fanfare for the Future (etc etc). Hence solutions for the shit we are in exist plentyfully so we need to pick them up and live them.

    • Josh Dowse 8 years ago

      Thanks for the extra reading Peter. Agree on all counts. Though you and I may be interested in the alternative, how many of the voting populace would be? Is it a case of not interested, don’t know there’s an alternative, or not at all engaged in the question? The Economist this week highlights some strengths of the Scandinavian model. The biggest blocker, for mine, is not economics, not logic, not the (non-)appeal of the alternative – but the partisanship of our political culture, which wipes away the possibility of all such discussion.

  3. Holly Berkowitz 8 years ago

    If we divest from dirty fuels asap yesterday. . . .and invest in clean, renewable energy asap now immediately. . .and in clean, renewable infrastructure, including a global grid so that even small producers could profit financially and qualitatively. .. . and our financial sectors helped to develop a financial systems that counted cash plus values impossible to count in cash. .. . . .they our future will become much brighter and positive of, by, for All 100%

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