Slower Growth by Design, not by Disaster

A commentary article appeared in the top scientific journal/magazine Nature this week, by economist Peter Victor of Canada, exploring the revolutionary concept of economic “degrowth” instead of growth.

…Even economist Robert Solow, who won the 1987 Nobel Prize in Economics for his work on economic growth, said in 2008 that the United States and Europe might soon find that “either continued growth will be too destructive to the environment and they are too dependent on scarce natural resources, or that they would rather use increasing productivity in the form of leisure”. The idea of steady-state economies, or even economic ‘degrowth’, in developed countries is gaining traction.

The reasons for disenchantment with economic growth as a paramount policy objective are not hard to find. Humanity has gone beyond the ‘safe operating space’ of the planet with respect to climate change, nitrogen loadings and biodiversity loss, and threatens to do so with six other major global environmental issues…

I’m been thinking about this issue for a few years now. Beyond a certain wealth level, higher income doesn’t really make an individual happier anymore. Beyond a certain level of development, higher growth doesn’t really make a country become a better place for its citizens anymore either. If we think this way, it has more incentive for us to pursue ecologically-friendly paths that are seldom economically appealing.

The view that we should curb planetary impacts by reducing growth in richer countries is reinforced by several considerations. First, there is mounting evidence that this growth is largely unrelated to measures of happiness. Second, in recent decades, increasing inequality has accompanied much of this growth, leading to problems ranging from poor public health to social unrest. Third, the prospects for real improvement in the developing world are likely to be diminished if developed countries continue to encroach on more ecological space.

Obviously, when I brought this up at the Prime Minister’s Dialogue some years back, Lee Hsien Loong didn’t quite agree with me. (It also always makes me tickle whenever I recall Straits Times describing him as giving me a “gentle warning“…)

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