Jobs Without Growth: Why It's Possible and Necessary

Jobs Without Growth: Why It's Possible and Necessary

Photo by: Clayton Conn.
Photo by: Clayton Conn.

In January, the Chesapeake Bay Foundation (CBF) released a report disputing the idea that environmental regulations kill jobs. Efforts to clean up the Chesapeake Bay could in fact create more than 230,000 jobs, their research finds.[1] Revealing the foolishness of the popular ‘wisdom’ that the economy and the environment are inherently pitted against one another is an urgent task, and reports like this are vital. Shrewd policy requires accurate understanding of the likely effects of alternative stances to environmental protection—both action and inaction. Wherever win-win outcomes can be identified, they should of course be pursued.

But while investigations like the CBF’s report are essential, they fail to reach the root from which both unemployment and environmental degradation grow. Our inability to truly address these issues springs in part from the fact that we are using long-outmoded models to understand the economy and its relationship to the material world. So long as we continue to think in ways so out of sync with the actual world as it exists, we will remain unable to conceive of the real problem. An economic regime with a central goal of infinite economic growth in a finite world will never guide us to stable and meaningful employment, and it will never help us understand what sustainability even means, let alone achieve it.

Policy makers at all levels speak as though, when an economy is not growing, it’s dying. In his recent State of the Union Address, President Obama promised that “With or without this Congress, I will keep taking actions that help the economy grow.”[2] Articles about the recession point ominously to insufficient growth rates.Environmentalists too assume economic growth is compatible with protection of the natural world, speaking of ‘green growth solutions.’ In reality, economic growth is neither necessary nor sufficient for a healthy economy. It has little to do with the things that matter most to people, and inevitably pushes our economy ever further from our planet’s ecological limits. So why does growth get so much attention?

WHEN GROWTH WAS GOOD

Taking a long view of human history, the focus on economic growth makes sense. By the standard economic definition, growth is the increase in the market value of goods and services produced in a year. For most of our time as a species, people have simply not had enough to keep themselves nourished, healthy, and safe. More goods and services really did mean better quality of life. More was better.

In the last 200 years, technological development revolving around the burning of fossil fuels has changed the basic relationship between people and the physical world. We are able to interact with matter in ways previously only imagined, and the rise in productivity is staggering. The average person in the US now earns more than 40 times what her counterpart did in 1800. In the 20th century, average life expectancy in the US rose from under 50 to over 75 years. Increasingly rapid communication technology has fostered unbelievable creativity and innovation, and options for comfort and entertainment have grown exponentially. Much that economic growth has brought us is very good.

But sometime in the last 50 years, we crossed a threshold. What now improves life in the US is, on average, not more, but better. Our ability to perpetually produce more is no longer a pure blessing. Lack of food is now less of a problem in our country that is obesity due to too much unhealthy food. While important technological developments continue to be made, they no longer revolve around increasing the volume of our consumption. But the models we use to understand and guide interaction with the economy are unable to distinguish between beneficial and harmful developments.

MEASURING GROWTH

Economics emerged as a field back when more really was better, and so the field takes for granted the desirability of growth. Gross Domestic Product (GDP), the standard gauge of an economy’s size, is a hopelessly blunt measure. It indiscriminately adds together everything being cycled through the market. In the calculations of GDP, factors of well-being—nutritious food, sustainable transportation, improvements to school buildings—are added to manifestations of social dysfunction—auto accident lawsuits, unsuccessful attempts to cap an oil leak, and treatment of diseases that could have been easily prevented. All that matters is volume and activity. While an accurate measure of economic health would subtract the bad things from the good ones, GDP only adds. When a forest is cleared to provide raw materials for a paper mill, the loss of natural capital—the forest—is not deducted from GDP; instead, deforestation counts as unqualified positive economic growth.[3] It also leaves out good things that are not bought and sold. Homegrown food, care for your own children, and volunteer work do not register with GDP. Reading a library copy of The Little Prince to the kids before bed does nothing for GDP, but keeping them out till midnight to see Alvin and the Chipmunks: Chipwrecked will boost GDP by a good $50.

At some point, the negative components of growth outweigh the positive ones, and the evidence suggests we are well beyond that point. In other words, economic growth has become uneconomic. What we need is better, not more: better quality food, not larger servings of hyperprocessed food; better designed transportation, not bigger cars burning more fuel. Though on average people in the US have more than is good for them, many have too little. Inequality in this country is among the highest of the developed world. So, we also need better distribution of employment and income, not rising average income irrespective of distribution. GDP does not distinguish between growth that comes from better and growth that comes from more, or between growth that benefits the poor and that which worsens inequity. To GDP, all growth is good.

THE IMPOSSIBILITY OF INFINITE GROWTH

Not only is infinite growth not desirable, but on reflection, it is logically impossible. For most of human history economic activity used such a small portion of the planet’s resources that it couldn’t really damage natural systems on a significant scale. A village might over-fish the cod from a particular inlet, but there was no threat that the entire Atlantic cod population would collapse. Today such over-exploitation is not merely possible, but too common. The technological development and population growth of the past 200 years have fundamentally changed our relationship to the natural world. Human activity now affects most ecosystems on the planet, many quite drastically. Climate patterns, the nitrogen cycle, and the rate of biodiversity loss are only the best known of these.

The change in how humanity is affecting the natural world is obvious to researchers in most fields, and common sense to non-experts who stop to think about it. But economists have been slow to recognize this change. The foundations of modern economics were laid when the relationship between the economy and the Earth’s ecosystem could reasonably be ignored, and so the ecological consequences of economic activities were ignored.

Energy and natural resources are assumed to come from nowhere, and waste and pollution return to that nowhere. If the environment is considered at all, it is as a separate realm, from which the economy takes resources and to which it exports pollution.

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In reality, though, the economy is part of the ecosystem. All the stuff cycled through the economy comes from and goes to somewhere, and that ‘somewhere’ is the Earth’s ecosystem. This relationship between the economy and the natural world is better represented as such.

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While this may seem like a small distinction, its implications can hardly be overstated. As a part of the ecosystem, the economy is subject to the laws and constraints of physics. The ecosystem is finite, and so the economy cannot grow infinitely. And as it continues to grow, it is necessarily making use of a larger part of the global ecosystem. Though technological improvements allow us to use resources more efficiently, improved efficiency almost never outweighs the increased burden on the ecosystem. If we want to accurately project the effects of policies intended to improve the economy or the ecosystem, we have to start with an accurate understanding of the relationship between the two.

GROWTH AND EMPLOYMENT

How does this basic misconception relate to jobs? Politicians, journalists, and economists alike often treat economic growth and employment as though the two were inextricably tied, at times using the terms interchangeably. “[T]he Nation faces an economy that is not growing and creating jobs as it should,” warns the President’s recent Plan for Economic Growth and Deficit Reduction. “Growth would need to double—consistently—to make a significant dent in the unemployment rate,” projects Martin Crustinger of the Associated Press.[4] That economic growth is necessary for adequate employment seems so obvious as to be unquestionable. But on closer inspection, this relationship does not appear so absolute.

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Considering how they’re always spoken of together, you might expect a direct relationship: that rising unemployment would be accompanied by a shrinking economy, and that unemployment would go down as the economy grows larger. But, while the economy has continued growing, apart from the Great Depression, unemployment has consistently hovered around five percent. A smaller proportion was unemployed in the US in 1915 than in 2000, though per capita, the economy was less than one quarter its 2000 size. This is not to say growth and jobs are never related, but that growth only seems to alleviate unemployment in the short run. Beyond an initial spurt of new jobs, growing the economy is maintenance at best, a chasing of the dragon.

The idea that if the economy does not grow many will be forced into idleness is a relic of late capitalism. It does not correspond to an inherent quality of human economic activity.

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Prior to the turn of the century, unemployment was negligible, despite a growth rate of close to 0%. Of course the dynamics of the economy are very different today than in 1750, and much is built around the idea that the future will perpetually be wealthier than the present. Government financing is currently based on the assumption that tomorrow will be rich enough to float today’s swelling deficit. Moving away from an economy centered on growth will involve a lot of restructuring, and require us to (re)discover economic channels quite different from those we now travel.

Transitioning away from a growth-centered economy will be politically difficult, though it is ultimately a physical necessity. It is important for us to see that the things that matter to us most—employment, for example—do not necessarily depend on growth as we are so often told. Our tie to perpetual growth is a contingent aspect of how we have organized ourselves economically, not an eternal law to which we must submit to avoid misery.

THE NEED FOR NEW IDEAS

Growth-centered economic policy had its day in the sun, and arguably worked well. But it is not working well anymore. Despite increasing popular awareness of environmental problems, we don’t seem to be getting any closer to environmental sustainability. It has been nearly 50 years since we declared war on poverty, yet economic injustice continues to grow worse. We need new ideas, more accurate ways of thinking about these urgent problems.

Understanding the inaccuracy of the ideas guiding economic policy is valuable in itself. We now hold our elected officials responsible for how quickly the economy has grown on their watch, when this is not what we really care about. A citizenry that accurately understands economic growth will instead hold representatives accountable for things that do matter, such as employment, just distribution of income and wealth, and environmental health. Focus on GDP is at best a misdirected effort, and misdirected effort is wasted effort.

Using GDP as the primary gauge for economic policy is like using a speedometer to determine whether we are going the right direction, and whether we have fuel in the tank. We need GPS and a fuel gauge. An alternative that holds promise is the Genuine Progress Indicator (GPI). Unlike GDP, GPI is reduced by pollution, resource depletion, crime, and other clearly bad aspects of economic activity. GPI also takes into account the distribution of income, the amount of leisure time people have, and the value of household labor, such as growing and cooking one’s own food. The State of Maryland is one of the first states to calculate GPI. We should consider this above GDP in steering the future of our state.

Many of the changes that will bring genuine progress come from a familiar list. Local orientation, cooperative management, and innovation away from non-renewable resources are steps in the right direction. Also, work schedules and employment arrangements need to be made more flexible. Though growth does not bring lasting employment, it can inject activity during economic downturns. Job sharing will become essential if we stop relying on growth to pick up such slack. Studies show that more leisure time would be a welcome relief of stress for most US workers, and would allow work to be spread more equitably.

Win-win findings like those of the CBF report are certainly important to an equitable and sustainable future—not because they grow the economy, but because they encourage work needed both by people and by the natural world.