The economics of enough

[marmar]

from the Guardian UK:


The economics of enough
Dan O'Neill: It's time to abandon the pursuit of growth in wealthy nations and consider a new strategy – to improve quality of life without expanding consumption


It's been over five years since the global financial crisis began, and yet we are still no closer to ending it. George Akerlof, a Nobel Prize–winning economist, has provided a good analogy for the uncertainty facing economists. "It's as if a cat has climbed this huge tree—the cat of course is the crisis. My view is 'Oh my God, the cat's going to fall and I don't know what to do'." Nor is he alone in this uncertainty. The IMF's chief economist, Olivier Blanchard, warns: "We don't have a sense of our final destination."

The economics profession has lost its moorings. The traditional cure to our economic ills has always been growth. But now, despite the best efforts of all concerned, the UK economy refuses to grow. The economic tools that have been applied – lower interest rates, quantitative easing, and strict austerity – are failing. GDP in the UK is now 2% lower than when the crisis began.

In our new book, Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources, Rob Dietz and I argue that it's time to abandon the pursuit of growth in wealthy nations and consider a new strategy – an economy of enough. Suppose that instead of chasing after more stuff, more jobs, more consumption, and more income, we aimed for enough stuff, enough jobs, enough consumption and enough income.

Abandoning the pursuit of growth may seem like a radical idea, but there's a strong case to be made for it. Economic growth is causing a number of global environmental problems, ranging from climate change to biodiversity loss. At the same time, economic growth is no longer improving people's lives in wealthy nations like the UK. To continue to pursue growth for growth's sake is simply irresponsible. ...................(more)

The complete piece is at: http://www.guardian.co.uk/business/economics-blog/2013/may/01/economics-of-enough

[GreenStormCloud]

1. Fails at the individual level.

I want some more stuff than I currently have. Multiply that by almost all the population. I think you now see the problem.

[truebluegreen]

2. Ever wonder WHY you want more stuff than you currently have?

Ever wonder what drives our urge to consume more, better, faster, flashier, whatever, things? Plenty of people who think of themselves as environmentally sensitive can't wait to "consume", say, outdoors experiences that destroy what they treasure.

Why? Why are we so discontented that all we can think of is "more"?

[snappyturtle]

3. I agree with you. However, the capitalist way survives on wanting more.

More loans=more debt=keeping the merry-go-round running.

I have downsized greatly.....for many reasons. I don't believe
people realize how much of their time is taken up with caring
for all their stuff and expanding debt to house it etc. Downsizing
was a bit painful at first. However, I find it liberating now.

I buy used (good) vehicles. Wear used clothing...love resale shops.
Cook lower grades of meat (to yummy) to free up money for more produce.
Watch teevee over the internet. Have more time to read and listen to
music, keep in touch with friends, etc. Life is great!

I believe folks would be amazed at how much lttle used or worn
items are available. I also think we need to consume, really consume,
what's all ready been produced before depleting resources to make
more. This is easier for me to say than it would be for growing
families, I suppose, but everyone can do a little. I am semi-retired
so my kids are grown....I realize my station in life allows me to
live the way I do.

[strategery blunder]

4. It STILL fails on the individual level.

I want a year-round job. I'm currently stuck with seasonal contract work.

The economics of "enough" would still leave me without work even if the macroeconomy hits some magical "good enough" employment number.

Unless this utopian economy of "enough" includes a guaranteed minimum income, as was seriously proposed in the US around the 1970s, but that is a pipe dream now.

[snappyturtle]

7. I certainly didn't intend to target those who do not have 'enough'.

The definition of 'enough' is the problem here. I want you
to have year round work that yields 'enough' income to
sustain a decent lifestyle.

OTOH, there are those who have way more than they need
to live well. About all I see that they accomplish is filling
the landfills.

[GreenStormCloud]

34. Who gets to decide what I need?

You are sounding too much like, "From each according to his ability, to each according to his need.". No thanks. Humanity has been there, done that, suffered greatly from it.

[hfojvt]

11. why the heck do you want a year round job?

I would love to make my current income, or even 70% of my current income and get 3 months of the year off.

Why is a guaranteed minimum income a pipe dream NOW? We certainly make far more money collectively NOW than we did in the 1970s, so it should be more realistic now than it was in the 1970s.

[SunSeeker]

12. Excellent point(s). nt

[truebluegreen]

5. I agree.

Between advertising and planned obsolescence capitalism sucks us into consuming more "stuff" than we need.

I remember trying to get a cell phone repaired and being told that (of course!) they didn't fix things, but I could replace it For Free, with a new 2-yr contract....and all the Latest Features, 99% of which I didn't care a rip about and still don't.

Software companies keep the hardware cycle going by requiring more and more memory; appliances are designed to last X yrs and then expire right after the warranty does. Built-to-last is counter-productive, quality is counter-productive. And our government treats us as props for the economy, instead of the other way around.

We--as Americans and as inhabitants of the planet--need a major shift in the way we live. We need to realize that anything not sustainable is stupid, and in the history of the universe, stupidity has always been a capital crime (h/t Robert Heinlein).

[snappyturtle]

9. I again agree. However, tptb would contend, I think, that sustainable

products would inhibit them from the never ending full
production model.

Yes, we need a major shift in the way we live. If only,
if Only, people could realize how much more gratifying
life becomes when our attention for constant consumption
is re-directed. There's SO much more to an enjoyable life...
than "stuff". Sharing comes to mind.

[Blue_Tires]

18. +1

[GreenStormCloud]

35. There is a good reason why most consumer electronics aren't repaired anymore.

I well remember when any electronics were repaired. That was in the days of vacuum tubes and hand wired components. Most electronics needed repair before two years were up, due to tolerance drift (unavoidable unless you paid a very high price for precision components), and due to tubes going out. (Like incandescent light bulbs do.)

Now all of the works are in a chip that is imbedded in plastic. Chips can't be repaired, only replaced. And modern electronics are far superior to the stuff we had in the 1950s. It lasts much longer, uses less power, and is cheaper to buy. I remember looking at a color 21-inch TV in 1960 that was $400.00, (Two month's pay for Dad.) and we couldn't buy it. In today's money that would be over $3,000.00. For that kind of money you can get a really nice flat-screen HDTV. (Which wasn't even dreamed of back then.)

Cars last longer now than then, appliances are better than then. I remember the 1950s and don't want to go back to them.

[L0oniX]

21. You forgot the war machine.

[harmonicon]

14. Fundamental misunderstandings like what you're demonstrating is is why we're fucked.

Economic growth basically has zero correlation to your individual standard of living. That's the point they're making. It amazes me that people don't understand the basic fundamentals of capitalism.

[DJ13]

27. Thats what I was thinking

Even if the wealthy only made half what they currently do their actual consumption patterns wont be affected since they never spend more than a few % of their vast incomes.

The middle/lower classes would certainly spend more if they could.

True "flat spending" over a lengthy time would actually result in a severe depression.

[moondust]

6. Tell it to "investors."

That's who is served by today's exploitative growth capitalism and that's who decides how things go. Good luck getting them on board.

K/R

[Jim Lane]

8. They need to address population.

If the population keeps growing, then even the "Enough" ideology requires endless economic growth in the traditional sense.

If the population stabilizes but at the high level it is now (7 billion, let alone the 9 or 10 billion where some projections see us stabilizing), then "Enough" still requires a lot of economic growth for a long time, to bring everyone up to the standard that most of us would consider to be enough. You could get only partway there through mere redistribution (people in the industrialized countries reducing their consumption so as to free up more resources for others).

[harmonicon]

16. Economic growth has little to nothing to do with providing for people.

That is the basis of capitalism. It is about accruing capital, and the growth of that capital is what is meant by "economic growth." There is no positive relationship between it and the standard of living for most people. On the contrary, it may be negative for most people, as capitalism requires profit, and that growing profit has to come from the pockets of someone.

[Jim Lane]

25. Don't blame capitalism, at least not exclusively.

If you require a certain standard of living (either maintaining at least the current average, or making sure that everyone has "enough" per the OP), then any economic system plus population growth equals economic growth.

In a world of stable population, it might well be that the capitalist push for profit would still result in economic growth, with or without an improved standard of living for most people. If that happens, then you can blame capitalism -- but our current world is not one of stable population.

I'm not saying that the choice of economic system should be ignored. I'm saying only that population issues must also be taken into account.

[harmonicon]

26. Population growth does not necessarily guarantee economic growth.

I'll agree that there's likely to be a correlation, but there is certainly no guarantee of it.

[Jim Lane]

29. That's why my stated assumptions included maintaining some standard of living.

You can have population growth without economic growth, but then the same pie is being divided into more pieces, so the average piece is smaller. If the population growth continues, living standards continue to plummet until the point at which population growth is checked by famine or other catastrophe.

What actually happens in many Third World countries is that there's economic growth, but it lags behind population growth. The result is that average living standards decline (and this for people who were already poor). In the United States, our population growth is at a slower rate. The result is that our economic growth permits us to "enjoy" stagnant living standards. This isn't great but it's an achievement compares to what happens in some countries.

Of course, in the United States and in the Third World, there are also substantial issues of distribution. You can find that the mean size of the slices of the pie is increasing (economic growth is outpacing population growth) but the median slice size is decreasing (the benefits of growth are going disproportionately to the wealthy).

[harmonicon]

30. Economic growth has nothing to do with the size of the pie necessarily.

It's more like how often the pie is measured.

You could have both an increased average standard of living, population growth, and no economic growth. People can live great lives with not so much money changing hands, and therefore a lower GDP. Say more people join non-profit credit unions over for-profit banks. Well, then there's less economic growth (the for-profit bank wouldn't be throwing so much money around to be measured by GDP), but the person who's made the switch and the community are probably both better for it.

[Jim Lane]

37. There are limits to that kind of substitution.

People need food, clothing, shelter, and drinkable water. Switching from a bank to a credit union won't address such basic issues. If you have population growth and keep providing everyone with the basics, then you're locked in to growth in, at least, those sectors of the economy.

[harmonicon]

38. That's just one example.

The point I was trying to make is that measurements of capital and GDP don't necessarily correlate to how well off people are. Right now, payments on loans are going towards GDP, or economic growth, payments on credit cards with too high interest rates, outrageous student loans, etc.

Yes, of course with a plan for economic stability, there's going to be economic growth at the same rate as population growth after some time. I don't think the authors of the book and Guardian piece were ever arguing otherwise. Their point was that pursuing economic growth for its own sake has stopped generally benefiting the population.

[Cary]

10. I don't buy it.

Population growth is another story. However I think the future is clearly in growth not in physical commodities, but rather in information and knowledge. I don't see why a growing economy cannot be based on a growing information and knowledge base.

In fact at this point I don't see how a viable economy cannot be built upon a growing information and knowledge base.

Yes that knowledge may very well be our path to extinction. If that is our fate, so be it. As for the earth and the environment I am certain these will survive with or without us. And if not, there are other earths and other environments and perhaps even more successful species.

[hfojvt]

13. one of the problems is mentioned right here

"The economic tools that have been applied – lower interest rates, quantitative easing, and strict austerity – are failing."


Because only an idiot would think that "strict austerity" is going to increase economic growth.

lower interest rates will stimulate an economy
and so will quantitative easing

however strict austerity will depress an economy more than either of those first two.

[DJ13]

28. lower interest rates will stimulate an economy

Only if those lower rates are available to the consumer, which, in an era of 20+% CC interest rates isnt happening.

And with corporations hording record amounts of cash they have little incentive (outside of taxes) to borrow either.

[Dreamer Tatum]

15. Stupid-assed idea

Growth is a positive phenomenon. "Enough" is a normative one. What if we decided enough was enough in 2000? No smartphones, or any of the wealth created by that industry. Nothing like the Prius, or any of the incremental wealth that came from it. Who determines when I've had "enough?" Do I get to say when YOU'VE had "enough?" Because if you have ONE ATOM MORE THAN ME, you have TOO MUCH and I have NOT ENOUGH.

Stupid.

[harmonicon]

17. It's not the idea presented here that is stupid.

You have failed to understand the point at a very basic level. Why that is, I'll leave up to you.

[Dreamer Tatum]

19. I get the point perfectly, thanks.

Do you get that if you harness growth, you harness wealth and wellbeing for everyone, forever?

[L0oniX]

20. "forever" ...oh yea with those infinite resources. Keep dreaming.

[harmonicon]

22. I get that that's a fallacy, and evidence of that being a fallacy was presented in the article.

Do you understand the very basics of capitalism? I mean, do you even understand what the word means? Do you know that the way it functions explicitly rules out the outcome which you suggest it guarantees "forever"?

[marmar]

33. WTF? ..... Incoherent babble.

[pansypoo53219]

23. i am in the business of sideways. recycling stuff for ebay.

amazing stuff can be found at estate sales. NEW is overblown + expensive. all the stuff you have is marked down when you die.

[on point]

24. Tried everything EXCEPT Demand stimulus !!! When will supply siders admit their theory is a failure?

[HiPointDem]

31. "despite the best efforts of all concerned" = bullshit. uk has pursued austerity, that's why no

growth.

[galileoreloaded]

32. grow or die for this virus like species.

we exceeded carrying capacity many years ago.

only way out is through.

[GreenStormCloud]

36. You are correct.

Humanity is heading for a major crash with a massive die-off, maybe 1% surviving, and they will be back to early agricultural days.