capitalism

The End of Growth

It’s been awhile since I’ve reviewed a book on here. Probably because I don’t have a helluva lot of time for reading these days.

I’m about half way through “The End of Growth” by Jeff Rubin, former chief economist at CIBC and author of “Why your world is about to get a whole lot smaller”, and interested enough to blog about it prior to finishing it. He’s painting a pretty dire picture of the state of the world’s economy, with very compelling arguments. The combinations of triple digit prices on oil, the quadrupling of coal prices in recent years, combined with a general anti-nuclear stance around the world (particularly after the Fukushima incident), are flatlining growth in Europe and North America. Add to this mix a voracious appetite from China and India for fossil fuels, and it’s pretty apparent that the era of cheap energy is over.

And without cheap energy, our current system of globalization falls apart. It no longer makes sense to build cheap widgets in China, if the fuel for the boat costs more than the cargo is worth.

Why are we drilling in the arctic? Levelling the boreal forest in northern Alberta and boiling sand to extract bitumen? Because “conventional oil” (the kind that erupts out of a hole in the ground in Texas) is basically tapped out. As oil companies run out of cheap oil, we have to turn to oil that’s harder and harder to find, extract, refine and ship. Which means it’s never going to be cheaper. The price will fluctuate of course, but the days of using cheap energy to shock our economies out of recession are over.

So if growth is dependant on cheap energy (which Jeff makes a pretty clear argument for), and we no longer have access to cheap energy (also pretty evident)….it’s pretty safe to assume that no-growth or very slow growth is our new reality.

There are some pretty big consequences for society, if that’s indeed the new reality. From sovereign debt loads to youth unemployment, to the performance of my RRSP…a world with no growth looks very different than the one we currently inhabit, the one that’s been propped up by cheap energy for the last 200 years. Of course, we know that GDP (Gross Domestic Product) doesn’t influence the happiness and satisfaction of society…so maybe a “no-growth” economy might actually do us some good? I’m pretty sure that’s where the book’s headed.

Either way, it’s looking like it might be time to lock down some more grease suppliers for the ol’ veggie truck

Values vs. The Economy

And so is crime. And car accidents. And divorces. Do you know what’s bad for the economy? Carpooling. Buying seeds and growing your own food. Living in a smaller house, with less stuff.

How then, are we to reconcile this obviously irrational dynamic? How can we possibly change a status quo so perverse?

We’ve got a couple of options, chief among them is the notion of finding ways to describe value in more ways than one (the almighty $$). And maybe not getting so hung up on what’s good for “the economy”, when it’s obvious that what’s good for the economy is often very bad for people.

I’m sure folks are familiar with Bobby Kennedy’s speech from 1968, but it bears repeating here.

“Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things.  Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product – if we judge the United States of America by that – that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. 

It counts special locks for our doors and the jails for the people who break them.  It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. 

It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities.  It counts Whitman’s rifle and Speck’s knife, and the television programs which glorify violence in order to sell toys to our children. 

Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play.  It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. 

It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.

Think about it for a second from the perspective of a business or home owner. You pay bills. You pay to fix the leaky roof. You pay to dispose of garbage (pollution). At the end of the month, you take your expenses and subtract them from your income, to see what your net income was (and hope it was positive).

On the contrary, our governments add the expenses to the income. The economy grows when an oil spill needs to be cleaned up. The more trees that are cut down, the better the economy does. Car accidents? Great for the economy. Think of the ambulance driver, firefighter, doctor, lawyer, car repair guy, insurance company… awesome. We should be getting in more car accidents.

Or perhaps we should be talking about other forms of value. Natural capital, Social or Human capital, Built capital, and yes, Financial capital. I believe the clear direction forward for our communities is learning how to measure all forms of capital, and if we can’t measure it, at least appreciating that it exists and is important in decision making.

And maybe, just maybe, we could stop talking about the “economy” as if it’s a living, breathing thing. It’s not. It’s a system that we’ve devised to account for value in society… and right now it’s not doing a very good job.