Thursday, December 03, 2015

Eduardo Porter's Hysterical View of Growth

Eduardo Porter wrote a hysterical article for yesterday's New York Times business section, a striking contrast to his usual careful and detailed economic analysis. What provoked his irrational response? Challenges to the great orthodoxy of our time, the ideology of economic growth.

Porter begins by saying that some environmentalists claim endless economic growth is not sustainable because the earth cannot supply infinite resources. He cites the Canadian economist, Peter Victor, who found that Canadians could slash greenhouse dramatically by cutting their work hours by 75% and going back to their living standards of 1976.

To think about Victor's proposal rationally, we should start by realizing that economic growth since 1976 has not made Canadians happier. As we can see in this graph, per capita GDP has no correlation with happiness after an economy reaches is about half of the United States' current level - equivalent to the per capita GDP of the United States or Canada in the 1960s.

But Porter reacts to these challenges to economic growth with s nightmare scenario rather than economic analysis: 

"Economic development was indispensable to end slavery. … the option for everybody to become better off — where one person’s gain needn’t require another’s loss — was critical for the development and spread of the consensual politics that underpin democratic rule. Zero growth gave us Genghis Khan and the Middle Ages, conquest and subjugation."
This age of conquest and subjugation was a time of extreme poverty. Genghis Khan's horde used to drink their horses' blood to avoid starvation, and this sort of hardship does make people fierce. But I don't think they had quite this primitive a standard of living in Canada in 1976, and Victor wants growth to continue until all the world's nations reach this level of economic comfort. In the future, wars are less likely to be waged by starving hordes than by nations fighting for the natural resources that they need for endless economic growth.

Slavery ended when technology reduced the need for labor, making made it possible to reduce workers' as well as to free slaves. Porter's talk about slavery is completely off the mark, since Peter Victor's proposal would reduce workers' hours much further, and it would not stop continued development of technology and reduction of work hours.  Even more important, shorter work time gives workers greater freedom - another step in the historical process that included the end of slavery.

The idea of ending growth does raise many economic issues that should be analyzed in detail. Most obviously, it would make it harder to pay off debts.  For this reason, it would be impossible to cut work hours in the immediate future as much as Victor proposes.

More fundamentally, concerns about sustainability only apply to growth in resource consumption.  As the economy became more resource-efficient, GDP and consumption could continue to grow - though it would ultimately grow more slowly than it did in the days when there were no resource constraints.

Yet Porter does not look at any of these economic questions. Instead, he shrieks that ending growth would bring the apocalypse. It would end democracy, bring back slavery, and cause wars of subjugation and conquest. This is what happened when there was no growth in an age of extreme poverty, and so Porter imagines that it would also happen if there were no growth in an age where every nation in the world was economically comfortable, as Victor envisions. This hysterical reaction is particularly striking coming from Porter, whose columns usually contain detailed economic analysis.

This is the sort of reaction that we would expect when someone's religious faith is challenged - and, in fact, conventional economists like Porter believe that consumerism and growth give meaning to life and protects us from evil, essentially a religious faith.

To move beyond this irrational faith, we need to think hard about the graph shown early in this post and to realize that we in the developed nations have reached a point where consuming more will not make us happier. To live more satisfying lives, we need more free time and we need to be able to make good use of our own free time.

Porter's article is at http://www.nytimes.com/2015/12/02/business/economy/imagining-a-world-without-growth.html?_r=0

1 Comments:

Blogger Michael A. Lewis said...

Fascinating! I wrote an article on my blog this morning, before I discovered this entry.

https://malanlewis.wordpress.com/2015/12/03/remembering-a-world-without-growth/

6:24 PM  

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