Growth Core - DDI 2023

Growth Good
Core
WRONG
Degrowth Fails – laundry list
Wim Naudé 22 {Wim Naudé is Visiting Professor in Technology and Development at RWTH Aachen University, Germany; Research Fellow at the IZA Institute for Labor Economics, Germany; and Distinguished Visiting Professor in Economics at the University of Johannesburg. According to Stanford University’s rankings, he is amongst the top 2% of scientists in the world.} - ("Seven reasons why degrowth is no solution to the ecological crisis," No Publication, published 7-28-2022, accessed 7-13-2023, https://illuminem.com/illuminemvoices/seven-reasons-why-degrowth-is-no-solution-to-the-ecological-crisis)//marlborough-HL
Earth Overshoot Day, "when humanity has used all the biological resources that the Earth regenerates during the entire year", fell on 28 July 2022. In 1971, it fell on 25 December. This acceleration in using biological resources means that humanity is overshooting planetary boundaries. Our ecological crisis is an overshoot crisis, of which anthropogenic climate change and biodiversity losses are symptoms. The full scale "of the threats to the biosphere and all its lifeforms - including humanity - is so great that it is difficult to grasp for even well-informed experts." We face a “ghastly future.” To avoid this, the degrowth movement is calling for an end to economic growth (as measured by GDP) and shrinkage of the economies of developed countries. Developing countries should use this space in world GDP created by the contraction of developed economies to develop - freed from the unequal and exploitative restrictions imposed by global capitalism. Degrowth advocates do not believe in green growth, the compatibility of continued GDP growth within planetary boundaries, or that technological solutions exist - they reject techno-optimism or any possibility of decoupling between growth and the material footprint of nations. Limitations of Degrowth Degrowthers diagnose a real problem. Unfortunately, the downsizing of western economies is not a solution. At least seven reasons can be highlighted why degrowth is insufficient. Degrowth will not decrease decarbonization Most (63%) of current carbon emissions come from developing countries - where it will only continue to increase in the foreseeable future. The 2022 Emissions Gap Report notes (p. 67) that “virtually the entire future increase in global primary energy demand is expected to occur in these [developing] economies.” Even if western economies are shrunk, they would still be extensive and emit significant carbon. Degrowth will make matters worse Degrowth may be dirty. Global redistribution, as degrowthers envisage, will increase aggregate consumption through a well-known "growth through redistribution" effect. Inequality reduces economic growth, hence the opposite will raise growth. Businesses may substitute more expensive cleaner production techniques for cheaper but more polluting technologies. Governments would also not be able to borrow further to spend on social and basic needs or environmental protection. Degrowth is politically infeasible Because of the endowment effect, people would be unlikely to vote for politicians who propose lowering their levels of GDP per capita, especially in certain countries, at least if it is to fight climate change. A 2022 poll found that only 1% of USA voters listed climate change as the most crucial challenge. And politicians, being generally subject to a status quo bias, would be reluctant to propose such a radical policy. As proponents acknowledge “political parties that have put forward degrowth ideas have received limited support in elections.” Degrowth is expensive Degrowth is not only politically infeasible because voters would not give up their incomes but also because it is a costly way to tackle the ecological crisis. It has been calculated that if the world shrinks GDP per capita by 10% (around US$7,000 billion), it will reduce carbon emissions by about 3.3 gigatons, meaning a cost of US$2,100 per ton of emissions. A recent study published in Nature put the social cost of carbon dioxide (SC-CO2) at US$185 per ton of emissions. Degrowthers want us to pay more than ten times the price. Degrowth policies are disappointing A recent inventory of degrowth policies identified 530 proposals associated with the movement. This proliferation is because the degrowth movement is “multi-faceted". It has become a rally-cry for anyone with a societal and environmental grievance, whether against capitalism, colonialism, patriarchy, or utilitarianism. Because of the confusion this proliferation creates, a recent paper prioritized these into an “Iceberg model of degrowth policy proposals." At the top of the iceberg, prominent policies are universal basic income, work-time reductions, job guarantees, maximum income caps, non-for-profit cooperation, eco-villages, and housing cooperatives. None of these are novel and most are, or have already been, implemented - most extensively in market economies. Furthermore, there is no attempt to link these policy proposals to decoupling - how many carbon emissions would they eliminate? How fast? No evidence is provided. Degrowth is irresponsible The lack of evidence on the carbon reduction that the iceberg model of policies will achieve - and achieve soon, as the matter is pressing - is a concern. We would not imagine subjecting human populations to potentially dangerous experimental drugs without rigorously testing their efficacy. Why embrace the "medicine" prescribed by the degrowth movement? Olivier Simar-Casanova described this ethical and moral problem with degrowth clearly: “Global warming is a serious issue, and claiming to respond to it with solutions of uncertain carbon efficiency, which we do not know how to implement in practice, is irresponsible.” The dangers of shackling economies without any evidence as to the likely outcome are that it would leave the world much more exposed and vulnerable to shocks, make the adjustment to a zero-carbon-emitting economy more costly, and raise the risk of conflict by turning the economy into a zero-sum game. Degrowth is hypocritical Degrowth is no solution to the ecological crisis because it is, at its roots, hypocritical. As one commentator put it: “It is one thing to advocate the end of economic growth if you have no actual fear of poverty. If you are struggling to keep yourself warm and fed, on the other hand, the idea of self-denial – still less of shrinking the economy – will have rather less appeal. Degrowth is a middle–class luxury, an indulgence to be conducted from the comfort of your sofa with its electronic foot-raiser […] People who express disgust with consumerism have a tendency to disapprove of other people’s while overlooking their own.” Conclusion Neither degrowth nor the more mainstream green growth approach offer viable solutions for the ecological crisis. Worse, a recent editorial in Nature magazine pointed out that the disagreement between degrowth and green growth “is impeding action. It’s time for researchers to end their debate. The world needs them to focus on the greater goals of stopping catastrophic environmental destruction and improving well-being.” This is a distraction that cannot be afforded because GDP growth and population growth are, in any case, in decline. We do not need a degrowth experiment to slow it down. We live in the Great Stagnation. Society is gradually ossifying, and with it, its supply of innovative science and ideas, which remain, however remotely, our only chance of avoiding the premature curtailment of humanity’s potential.
Degrowth won’t solve – targets the wrong problem, worsens the environment, shifts the problem to the Global South
Naude 23 [Wim Naude is a Visiting Professor in Technology, Innovation, Marketing and Entrepreneurship at RWTH Aachen University, Germany and Distinguished Visiting Professor at the University of Johannesburg, South Africa. He is also Fellow of the African Studies Centre at the University of Leiden, The Netherlands; Research Affiliate at the International Security and Development Center, Berlin, Germany, and Research Fellow at the IZA Institute of Labor Economics, Germany., 5-2023, Institute of Labor Economics, https://deliverypdf.ssrn.com/delivery.php?ID=499084127102076118065064106104027028004054068006069016124058017030028054071082065087096017123091029004105018101002097066107028030125081009075099096090024024120002001113077112085107&EXT=pdf&INDEX=TRUE] VL
Ultimately, the proposal for degrowth as proposed by the Degrowth movement turns out, much like that of green growth, not to be a solution. Most importantly, degrowth has been criticised that its proposal to reduce the GDP of advanced economies will have no significant impact on reducing the world’s Material Footprint (MF), or carbon emissions, significantly enough to avoid an ecological overshoot. This is because most (63%) of current carbon emissions come from developing countries - where it will only continue to increase in the foreseeable future. The 2022 Emissions Gap Report notes UNEP (2022, p. 67) that “virtually the entire future increase in global primary energy demand is expected to occur in these [developing] economies.” And after the GDP of rich economies are downsized - say by a significant 40%, there would still remain a footprint of 60% and 60% of their economies to de-carbonise (Hickel and Hallegatte, 2022). van den Bergh (2011, p.885) concluded that “Even if we would manage to ‘scale the economy down’ to 50% [....] we still only would have reduced the size of the environmental problems by half. But this is by far insufficient for most environmental problems.” It is clearly insufficient to halt the growth in material footprints and carbon emissions and not reduce these “tout court.” Phillips (2019) uses the example of the successful reduction in the hole in the ozone layer to illustrate the shortcoming of the Degrowth proposal, explaining that: “we embraced degrowth with respect to ozone depletion by attempting to arrest growth in, say, the number of fridges in the world—or even reduce the total number—instead of regulation to enforce technology-switching, disaster would have befallen us. Saying ”this many fridges and no more” would only have arrested the growth in emissions, not emissions tout court” (Phillips, 2019). Moreover, even if the GDP growth of all countries, not only that of the developed countries, could be curtailed, it may still not be effective to reduce carbon emissions and MF sufficiently to achieve climate goals. This can easily be seen using the so-called IPAT identity, used to gauge the drivers of the environmental impact of the economy (Bretschger, 2021; Stijn, 2021). The IPAT identity decomposes the environmental impact (I) of an economy into the consequences of population (P), affluence (A) and technology (T) (Holdren, 1993). It can be written as follows (where a ‘hat’ over a variable indicates a rate of change): I = Pˆ + Aˆ P + Tˆ A (1) If affluence (A) - say measured in GDP - is reduced as per degrowthers’ proposal, it will lead to a reduction in impact (I ). This is the basis of degrowth. However, if Pˆ continues to grow, and if technological innovation (Tˆ) declines or remain slow, then the reduction in impact caused by GDP degrowth would be offset. The important point to note is that both of these offset mechanism are more likely to apply at lower levels of GDP. Furthermore, if reduced GDP lead to a reduction in technological innovation in the richer countries, the environmental impact may be even worse. Holdren (1993, p.5) shows in this regard that “a change for the worse in the technology of production is more serious environmentally if it occurs in a populous, affluent society than if it occurs in a small, poor one” - which are the type of the societies that the Degrowth movement want to downsize. Worse even, not only is downsizing the economies of rich countries not likely to be effective, but it may worsen ecological overshoot in several ways. “degrowth might turn out to be dirty” (van den Bergh, 2011, p.882). One is that countries will have less resources to invest in climate change mitigation and adaptation technologies, and hence they will be more vulnerable to the impacts of ecological deterioration (Phillips, 2019). A second is that firms may substitute more expensive cleaner production techniques for cheaper, but more polluting, technologies. Third, government revenues will drop - an inevitable consequence of economic shrinkage. Governments would not be able to borrow further to spend on social and basic needs or environmental protection. They would need to repay their existing debt - in the EU, the rule that government debt cannot exceed 60% of GDP implies that, if GDP declined, debt would also need to fall (Stijn, 2021). Fourth, poorer households in (degrowthed) rich countries are likely to revert to deforestation30 and environmental destruction - as they did during the 2021/2022 winters in Europe when faced with rising energy prices following the Ukraine war (Moloney, 2022; Rankin, 2021; Kauppi et al., 2006). A further shortcoming of degrowth is that if one considers degrowth as a method to decreasing carbon emissions, it is a much more expensive method than any currently comparable technological investments as green growth is pushing for. According to calculations by Jakob and Edenhofer (2014) if the world shrinks GDP per capita by 10% (around US$7,000 billion), it will reduce carbon emissions by about 3.3 gigatons, meaning a cost of US$ 2,100 per ton of emissions. In comparison, the social cost of carbon dioxide (SC-CO2) has been estimated at US$ 185 per ton of emissions (Rennert et al., 2022). In additionn to being likely ineffective, to worsen the environmental challenge, and a very expensive way to reduce carbon emissions, degrowth may disproportionately hurt the poorest of the poor - and make global inequality worse. One mechanism through which this could occur is that degrowth in the Global North will severely curtail development in the Global South because of the intertwined nature of the global economy (and there is no time for the Global South to successfully “decouple” if at all that is possible). The COVID-19 crisis emphasized this inter-dependency - poverty rose more sharply in the Global South than the Global North - and indicated how difficult it would be for the Global South to decouple from the Global North. Hence it may be indeed the case that, ”the degrowth people are living a fantasy where they assume that if you bake a smaller cake, then for some reason, the poorest will get a bigger share of it [. . . .] that has never happened in history” (Horowitz, 2022).Ultimately, degrowth will make global inequality worse because it will be the poor will pay the price, and not the rich, who has the means and connections to find shelter31 - and who has arguably the most wasteful consumption. Hence, “Degrowth is, in essence, a form of ecological austerity for working-class people” (Chambers, 2021). Finally, in the words of Stijn (2021) degrowth is not only ineffective, likely to worsen the environment, very expensive and a form of austerity for the working class, but redundant: “Economic degrowth is not necessary, because it targets the wrong enemy. GDP is not the enemy; environmental impact is the enemy. Environmental scientists are able to determine upper bounds on environmental impacts such as pollution. For example, climatologists have determined the carbon budget: how much greenhouse gases can still be emitted that keep the atmospheric temperature increase below 1,5°C. But GDP is measured in dollars, a totally different quantity than kg CO2. Hence, none of the economic degrowthers are able to say what is the upper bound or true limit on affluence. There are no scientific studies that estimate the maximum level of GDP that is still permissible.”
Engrained mental models of perpetual growth make the degrowth transition impossible
Steve Genco 23 { Steve is author of Intuitive Marketing (2019) & Neuromarketing for Dummies (2013). He holds a PhD in Political Science from Stanford University.} - ("It’s Getting to Look a Lot like Degrowth: Part 1," resilience, published 4-19-2023, accessed 7-15-2023, https://www.resilience.org/stories/2023-04-19/its-getting-to-look-a-lot-like-degrowth-part-1/)//marlborough-HL
At the heart of the flawed mental model that I believe is responsible for our collective failure to address climate change and resource depletion is an apparently unshakeable conviction that any future for human civilization must include the continuation of economic growth. According to this belief, growth is the engine of the current world order and, without it, the system will collapse and human progress will end. This model has several core principles embedded in it. Here are just a few of them: Economic growth has allowed us to expand our human population to eight billion, a clear sign of success. Capitalism is the best and most equitable way to drive economic growth. It balances market forces of supply and demand and allocates resources in the most efficient, and therefore just, manner possible. Economic growth within a capitalist framework is best measured by increases in Gross Domestic Product or GDP. Economic growth is necessary to meet constantly increasing consumer demand for goods and services. Growth fuels demand, demand requires growth. Economic growth produces human happiness, more growth produces more happiness. Supply scarcity does occur, but it triggers self-correcting responses: investments to find additional supplies and inventions to create substitutes for depleted resources. (source) This system is a perpetual motion machine that can and will continue to produce positive outcomes indefinitely. I am not going to debate the empirical accuracy of these principles here. All are demonstrably false, as others have cogently shown (source, source), including here on Medium (source, source, source). The question I am interested in is not why they’re false, but why the world’s elites appear to be doubling down on them when they are known to be false. I believe this is because of the inherent nature of deeply-embedded mental models. In this case, the mental model underlying the faith in economic growth is not only embedded in decades (centuries?) of economic thought, it is also enshrined in the practices, legal frameworks, and institutions that power the global economic system today. This is why an often-repeated quote rings as true today as it ever has: “It’s easier to imagine the end of the world than the end of capitalism.” (source, p. 1) Adherence to the gospel of economic growth permeates many of the most popular climate change mitigation and adaptation scenarios in circulation today. Indeed, although the IPCC started issuing climate change reports in 2000, it was not until 2022 — and then only after numerous calls by climate scientists (source, source, source) — that a self-described Low Energy Demand (LED) scenario was added to the portfolio of models (source, Table 1.1, p. 174). Why do we cling so desperately to the idea that civilization cannot survive without economic growth? There are most likely two reasons why the world’s political and economic elites cannot acknowledge that we have entered an era in which economic growth must inevitably come to an end with the depletion of fossil fuels. First, our political leaders can’t give up on the idea of growth because, without growth, the only way they can respond to climate change and resource depletion is by radically decreasing human resource consumption, primarily in the global North. This is seen as politically unfeasible and career suicide for any politician who might suggest it.¹ So no political leader, with the possible exception of the Secretary-General of the UN (who is not the leader of a sovereign nation), is willing to ta

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