The Myth of Perpetual Growth
“Are you better off than your parents were? Will your children be better off than you?”
The politician shouts into the microphone, his face carefully arranged in an expression of outraged inquiry. Before you have time to think of the answer to these questions – and the answer for most of us in real terms is no, despite the proliferation of toys we’ve amassed – the politician gives you the solution.
“We need to concentrate on economic growth for our economy to achieve its full potential, putting our country back on the right track and giving every American family the chance to achieve the American dream."
There it is; that elusive goal – the American dream. What is it?
Each generation is expected to surpass the previous, improving in standard of living, income, physical well-being, security, life (span), liberty (are we more free?) and the pursuit of happiness (whatever that meaningless phrase conjures up for you.)
Bigger houses and better cars; everyone with a college degree; a chicken in every pot will become filet mignon in every pan; an SUV, a boat and an RV in every driveway; the latest electronic gadget in every hand; money in every savings account: more, more, more for each generation until – what? When is enough enough? What are we striving for? What is the goal? Where does it end?
As we ponder the politician’s words, the American reality hits us in the face.
- 13.5 million people officially listed as unemployed (a debatable statistic and one considered to be far too low, not inclusive of those having exhausted unemployment benefits, the homeless, the chronic unemployable, those living off the radar.)
- 9.4 million involuntarily working only part-time.
- 44.6 million people living below the poverty threshold.
- 52 million people without medical insurance.
- 1.2 million homes foreclosed in 2010 (for a total of how many since this mess began? Statistics on that are impossible to find. And another spike in foreclosures expected.)
- A national debt of 14.2 trillion as of April 2, 2011 (see debt clock) equal to 96% of the GDP (Gross Domestic Product of 15.3 trillion.) Or, close to $50,000 per every man, woman and child in the country.
- Cumulative private debt of $159 trillion
- Deteriorating education and access to health care
- Crumbling national infra-structure
- And so on and so forth….
We have been living high on a whole herd of borrowed hogs, well beyond our means for a long, long time, and as always happens when a body abuses debt, the rate of growth of that debt is escalating, compounding and we are borrowing to pay the interest on debt already spent, transferring interest to principle. (Which anyone who has ever borrowed from one credit card to make a payment on another knows, only hastens the end, especially if the rate of income available to pay the debt declines instead of increases.)
It is clear the American dream has become the American myth, empty rhetoric in electoral propaganda. Still, you hear the promises every day.
"My plan gives Americans tax cuts that will help our economy to grow."
"These tax cuts will not undermine our economy. They will speed economic growth."
"That is the right way to cut taxes -- pro-family, pro-education, pro-economic growth."
Indeed, such words fall from the lips of our legislators and would-be legislators like rain from the heavens. One cannot fault them for spouting these vacuous pledges; they are supported by some of our leading specialists in economics.
"The key is productivity. If productivity growth in the United States were to recover to something like its rates of the 1950s and 1960s, practically everything would fall into place; it would make many, but not all, of the problems we face fade away." – Paul Krugman, The Age of Diminished Expectations
For now, let’s do away with all the reasons we can’t travel back in time to the last golden age, or how different today’s world is from the mid-twentieth century, or the fact the world’s population has more than doubled since 1960, from 3 billion to 7 billion. Let’s look at the underlying premise.
The vast majority of economists agree that higher rates of growth would solve all our economic woes: frozen wages, poverty, the trade deficit, tax income shortfall, the national debt, unemployment… They are right. Our economy is structured to thrive only when it grows. The foundation of our economy is such that it will stagnate and even deteriorate when growth is not possible.
Ah – therein lies the problem.
The world is finite. Its resources are finite. And Americans are not the only people on the face of the planet.
It is a fact that a consumption-based economy cannot continue to grow forever in a world of limited resources. It is only a matter of time before trouble strikes. In fact, it already has – something we prefer to sweep under the rug and ignore, preferring instead to cling to our old myth of perpetual growth.
Where are we headed?
That’s the subject of this article.
Where we are
We are in a time of great change, and as always, change creates anxiety. For such an adaptive species, we fight change with an astonishing might. Witness the clamor of those demanding we go back, back to a better time, a more affluent time, a time of more purity of purpose (or so they believe,) back to a time that truly never existed. We wax nostalgic over the past, forgetting the past has been glorified, Disneyfied and become little more than legend. Even if this were not so, we simply cannot go back; the past is gone, non-existent and what may have once served us as we were then, will not do so now.
This attachment to the past and fear of the
future freezes us in our tracks at a time when action and direction is critical. Like ostriches, we bury our heads in the sands of time so as not to see the abyss opening at our feet. We waste our energy arguing over empty political rhetoric, our resources in meaningless distraction. We stand divided as though we have any number of choices. We deny the undeniable. We worry and fret over a meaningless list of figures as though the world's accounting system is our biggest worry.
Our inability to accept what may come to be our future -- or to deal with the present effectively -- is predicated on a number of myths, basic lies we’ve come to accept as truths.
- Myth #1 – Wealth can be generated
Just as something cannot be made from nothing, wealth is not generated. It is amassed. It merely changes hands. To arrive in one man’s bank account means it left another’s – figuratively speaking.
If we start at the bottom of the production chain, we need two things: raw materials and energy. Both of these resources are taken from the earth, one way or another, requiring human labor along the way. Those laborers acquire a modicum of wealth for their sweat and efforts. The producer changes the raw materials into products through the use of energy (and again human labor to a much smaller degree than in the past) which he then sells for more than the cost to make it. The consumers buy the product, exchanging a portion of their wealth to the producer in the process. That’s it in a nutshell.
A simplistic explanation, to be sure, but the point remains that wealth can never be generated, only transferred and acquired.
The image of the ‘self-made’ wealthy man forgets that his wealth came to him from others. Certainly, the wealth a man acquires allows him to acquire more. But never forget; every penny came into his hands from other hands. It is not created, but exchanged.
All wealth has as its base the resources of the earth.
Wealth is finite because the resources of the world are finite.
Our attempts to enlarge the pie to ensure that even the smallest slice is enough to 'get by' are laughable. There is only so much pie.
- Myth #2 -- Technology will find a way
The idea that technology, the offspring of our inventive, innovative abilities will save us from the reality of nature’s limitations is one of the most dangerous of global myths. Read the following quotation.
“There are no limits to the carrying capacity of earth that are likely to bind any time in the foreseeable future . . . . The idea that we should put limits on growth because of some natural limit is a profound error [with] staggering social costs.“ – Lawrence Summers, 1991.
Summers was president of the World Bank when he made this statement. Today he is President Obama’s chief economic advisor, the chair of the US president’s Council of Economic Advisors. The idea that such a highly placed intellect could hold to such an impossible theory is beyond frightening. But he is not alone.
“Technology exists now to produce in virtually inexhaustible quantities just about all the products made by nature. . . . We have in our hands now the technology to feed, clothe, and supply energy to an ever-growing population for the next 7 billion years. “ -- Julian Simon (1995) Professor, University of Maryland School of Business
If ever there was a case of wishful thinking, this is surely the great-great grandmother of them all. If such technology exists, why is it not in use? We have the ability to produce fresh water, fresh air, more fossil fuels, renew our forests, our land, grow more food… We do?
Of course we do not. If we did we would have done so.
In fact, our use of technology is reducing our ability to feed the planet. Following the so-called "green revolution" of the 1970's, the world's production of staple food products, cereal crops, increased dramatically. Forty years later we see the long-term effects of industrialized intense agriculture. The very soil on which our food stuff is dependent, once a living medium is fast depleting, becoming sterile and void of those nutrients we require.
Check the map of the world shown below. Look at the vast stretches of very degraded and degraded land. What is most shocking is that many of these sections of now exhausted and sterile soils were not that long ago the richest farmlands in the world.
To combat the effects of our abuse of the land, we use huge amounts of chemicals which only exacerbate the problem. Our heirloom cultivars no longer thrive and we grow dependent on genetically engineered, patented replacements – expensive.
There is an escalating use of fossil fuels in agriculture: fertilizers, energy for production, harvest and distribution. Each calorie of food requires 35 calories of energy to produce -- and rising.
Worse, no longer satisfied to vary our diet and eat seasonally, as were our ancestors, we import delicate foodstuffs from around the globe, often from nations more in need of the sustenance than are we are. Why does this happen? Because we have colonized the globe with corporate entities and placed their governments in deep hock until the pressure to repay debt means a full treasury of foreign currency is a greater priority than food for their own people. Food follows the money.
Inefficient, expensive and inhumane.
World-wide production has leveled off, and is expected to decline. In fact, some sources state it already has.
Period of Growth
Period of Decline
Beef, mutton, pork
Can technology solve these issues?
To quote a far greater mind than mine:
“The laws of thermodynamics rule the economic production process, and they tell us that, regardless of technology, all production requires high-quality inputs and generates lower-quality outputs. Thermodynamic laws also tell us that we cannot achieve 100% efficiency. When the limits to efficiency have been reached, the only remaining way to grow the economy is by using more natural capital (including energy), which is limited in quantity. The application (or misapplication) of technology also plays a role – if technology isn’t aimed specifically at reducing the overall use of materials and energy, it won’t make any headway on that front.” – John Kenneth Galbraith
The bare truth is we cannot continue to gobble our
renewable resources at the current rate, let alone increase our rape of the
earth to care for a geometrically increasing population. Over the long term, spending cannot exceed income, water use cannot exceed the hydrolic cycle, soil erosion cannot exceed
soil formation; forest destruction cannot exceed forest regeneration; carbon
emissions cannot exceed carbon fixation; fish catches cannot exceed the
regenerative capacity of fisheries; and certainly, the exponential growth of humanity cannot continue into infinity.
In other words, perpetual growth is impossible.
The link below takes you to a wonderful analogy: the myth of the expanding island.
Imagine the population of the world is on an airplane that crashes into the ocean, near an island. What would happen?
- Myth #3 -- Population growth is beneficial
An interesting quote caught my eye not too long ago, though I can't attribute the source, nor recall it word for word.
"Those who speak of over-population haven't driven across the Dakotas, or Montana, or Texas. We have plenty of room."
If we're speaking of simply space, certainly there is room to stand with your arms stretched out, build a house -- and then what?
There is one resource without which life is impossible: water. Great stretches of the North American continent are arid, or semi-arid. There are certain states already facing difficulty in providing enough water for their residents: California, Texas, Oklahoma, South Dakota and -- surprise, surprise -- Florida to name but a few.
Water for agricultural irrigation empties our aquifers
faster than the hydrolic cycle can replenish them. Industry and oil exploration use unimaginable amounts, rendering them unusable, toxic, leaving them sitting in slurry ponds waiting for nature's cycle to re-purify the soup, and leaking into our ground waters in the process. Levels of noxious chemicals and heavy minerals in almost all water sources are constantly rising.
Water purification processes require energy.
In our world, we take water for granted, use potable water to flush our toilets, launder our clothes, irrigate our lawns, turn a tap in an automatic reflex and it gushes forth in quantity. We use it and waste it without once thinking of this precious life-sustaining resource. Not so in other places where people walk for miles to the nearest safe supply.
And probably not so here in the future. Not if we are so set on growth.
Population growth in the United States, one of
the few places where such growth is due to immigration rather than birth
rate means one million new Americans each year. At the current rate of immigration, the population of the United
States will be 600 million within a few decades. Will California be able to provide water for double the current population of that state? Will many others?
And no offense intended to the Dakotas or Montana, but immigrants, like everyone else are free to live where they choose, and that is rarely the empty plains. No, immigrants tend to flock to the cities, as several studies have shown.
Water is forecast to be the next shrinking resource. Without water there is no life. We can't make it.
"But," said someone the other day, "rainfalls are expected to increase." Yes, rainfalls in some areas are forecast to become greater, but that means less will fall somewhere else. There is only X amount of water.
"Immigration is good for the economy. That's the wonderful thing about America. Whenever we begin to stagnate, a new wave of immigrants comes into revitalize us. The bring economic growth."-- Bill O'Reilly, Fox News
This kind of thinking may work in a country like Canada which is, we're told, underpopulated at 33 million people, but not so in the United States with ten times that number. How exactly will waves of new immigrants grow our economy other than to compete for finite resources such as jobs, education, food, water? (Setting aside the idea that those who've lived in America for a generation or more have become so innervated, sluggish and lazy, only an injection of a new populace can get the ball rolling.)
Do all immigrants enter the country with money to build a new house, invest in business or start one? And even so, once that initial spurt of input is exhausted, we are back where we started but with yet more bodies and mouths to provide for.
The pie is to be sliced even thinner.
People Year Time Span
1 billion 1804 200,000 years
2 billion 1927 123
3 billion 1960 33
4 billion 1974 14
5 billion 1987 13
6 billion 1998 11
7 billion 2009 11
8 billion 2021 12
9 billion 2035 14
10 billion 2054 19
11 billion 2070 16
- At the current rate, we are adding the population of China to this planet every decade.
- Essentially, we add a city of 1 million people to the earth every three and half days.
Now take this same scenario global. 7 billion humans on the planet, soon to be 8 billion, all needing water, food, shelter -- but there is nowhere to go, no supposed golden land where life will be better.
In fact, those 'golden lands' are now at or beyond their maximum supportable levels.
Ask the European nations if they were better off once populations reached maximum self-supportable levels... or surpassed them, like the British Isles, who must import over half of all foodstuff. Ask China how they are dealing with their population -- a mandatory negative birth rate.
Even if the world were to adopt a zero population growth program today, the number of people would not begin to decrease for another 60 years, at which point we will be approaching 12 billion.
We are already seeing the strain on our resources. How can we continue to believe growth is good? It's a mindset left over from the age of expansion of a century or two ago, an insidious fantasy-thinking that would have us believe there are no limits.
- Myth #4 – Fossil fuel (oil) is constantly being made by the planet, therefore the supply is endless
This theory is currently in vogue, though the attributed sources appear to be nebulous. As such information is well beyond my scope of knowledge, I contacted a geology expert, one working for an oil company in Canada and asked. Here is his response, verbatim:
“Oil forms due to burial and heating of organic sediment, eg coal. The organic sediment breaks down, initially to oil. The 'oil window' refers to the temperature and pressure conditions at which oil forms. While geothermal gradients vary, the typical depth of the oil window is 4-6 kms. If heated to temperatures above the oil window the chemical reaction continues, forming natural gas and so on until there is nothing useful left.
Oil and natural gas, once formed, are more bouyant than the encompassing host rock and will rise due to buoyancy. Therefore, to 'trap' oil there must be a suitable structure above the buried sediment such as an anticline with a suitable reservoir rock such as a sandstone, and suitable capping rock such as a shale. Sandstone is generally porous and therefore oil can accumulate within this rock, while shale is considered an aquiclude; a rock type which prevents fluid from passing through it.
Therefore, from the discussion above, it can be seen that the process of oil formation requires the accumulation of large amounts of organic sediment, there burial to depths greater than 4 km BUT not greater than 6, and further requires suitable structures to trap the oil. If these structures are not in place the oil will simply escape to the surface and evaporate over geologically short timescales.
To allow significant accumulations of organic material subsidence is generally required, this continuously lowers base level allowing sediment to continue to accumulate. Furthermore a low energy environment is needed as foreign sediments, eg silicates, will contaminate the organic sediment. Subsequent burial to the depths occurs over the timescale of 10's of millions of years, and deformation of overlying rocks to form suitable trapping structures generally requires orogenic (mountain building) events, which also occur over a similar time scale.
In conclusion, both the timescale, and the specific events required, make oil formation, and equally important; oil accumulation, very rare events. Currently there are locations in the world which are accumulating significant organic sediments, eg Bangladesh, however it will only be a matter of luck if they are exposed to the conditions suitable for oil formation in the future. And of course this won't be for millions of years.” -- D. Clark, geologist, Encana
By the way, the same is true for coal formation. So, the optimistic idea that the earth is continually creating new sources of fossil fuels and our supply is endless, is hereby debunked.
- Myth #5 -- Everything will be fine if only we get the government to do the right thing.
This is perhaps the most insidious, misleading and dangerous myth of all. If only we vote for the right leader, the right party, spend more, spend less, tax less, tax more, veer right, veer left, if only… Everything will be fixed.
The messiah complex: Someone has the answers to our problems. If only we could find him.
We are a contradictory mass of people. We demand smaller government, less taxes, less regulation, then turn and demand the government fix the problems, spawning a mass of bureaucracies that grow like a cancer that refuses to die – ever. We elect, grow disenchanted, elect again, grow discouraged, elect again, only to be disappointed, ad infinitum, ad nauseum.
The truth is, if only we would face it, the government can’t fix anything. No government of any stripe can. Why?
For three reasons:
- The government is not in charge. The government has no control over the powers that are.
- The government is a reactionary force, not a driving one. By the time a problem is recognized, by the time the various factions form an agreement to act, by the time legislation is approved, by the time it is enacted, the crisis has changed. The intervention comes at a point where the problem is either self-fixing, or the effects of the problem have created entirely new problems. The well-intentioned intervention causes unintended consequences, like the sub-prime mortgage debacle, the threatened collapse of the financial industry and they resultant massive spending to try and recover – which we have not. Nor is recovery likely. Government reaction, creating more policies to correct for the unintended results of the last round of policies only makes the situation worse. Intervention is directly responsible for the boom/bust cycle we suffer.
Just for a smile
- The government does not understand the economy. No one does. Trust me on this; I studied it long enough. Economics is misnamed as a science. It is not. Science is restricted to that which follows natural laws. Economics follows no natural law, nor any artificial one. Every single theory of economics is disproved by reality, whether entirely free enterprise (which does not exist,) planned economy (which does not work,) Keynesian, supply and demand, trickle down (which seems to be trickle up in practice, bless those lying black hearts,) Marxism, Galbraith’s theories, Hayek, you name it. The economy is like a wild river. Throw in a boulder and it redirects, but no one knows which course it will take, or how it will affect flow. The economy just is, like the weather.
However, no matter what the label we apply to our attempts to manage our economies, there is one theme consistent throughout them all: The economy must grow. More, more, more!
On a national level, this skewed vision may make some sense, provided we view that one nation as an isolated group of people on a land entirely divorced from the globe – which often seems to describe the American view, despite our insatiable hunger for the resources of other lands, and the gadgets and cheap trinkets produced elsewhere. As long as we’re okay, who cares?
Provided we keep growing, everything must be all right. Take heart, didn’t the news just announce the economy showed signs of growth, albeit a sliver of a percentage point? Relax, don’t worry. We’re growing again so things will be fine.
Viewed globally, this obsession with growth becomes entirely destructive. Like the rainfall, an increase here means a shortfall there. As mentioned, all production begins with material taken from our earth. From space, we must look like termites, chewing away on our own home and spitting out waste to accumulate with no thought for the future.
Remember, there is only so much pie and indications are it is shrinking. The planet is limited in resources and the slices for some are so thin one can see through them. Others get no pie at all. Some sit down to a double helping, topped with whipped cream.
A dangerous situation, there’s no doubt about it. History is replete with stories of those not content to quietly starve, who rise up and attack the tables where those who can, eat their pie with gusto and satisfaction. But we know that. Why else would a financially beleaguered nation devote so many resources to military might?
To protect the pie.
"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children...This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron." --Dwight D. Eisenhower
Is there a better way? There must be. There is an economic philosophy of sustainability, but an adaptation of a sustainable economy requires so many mind-shifts, so great a change in human nature, an end to our sense of entitlement and superiority, I suspect it will never come to pass. As long as we cling to the idea of perpetual growth, we doom ourselves to a bleak future of deadly competition for the basics of life.
“Prosperity consists in our ability to flourish as human beings – within the ecological limits of a finite planet. The challenge for our society is to create the conditions under which this is possible. It is the most urgent task of our times.” – T. Jackson
“The monetary system employed around the world could be described as four things, compound interest, fractional reserve banking, infinite growth and fiat money. The perfect description of a pyramid scheme which feeds on the myth that there is such a thing as infinite growth built with the mythical resources of infinite energy.” – unattributed
About the author --
Better known as a writer of all kinds of things here, a child protection worker and advocate, and an author and editor, lmmartin -- Lynda M Martin is a graduate of the University of Montreal, HEC -- Haute Ecole des Etudes Commercials, with a major in economics. In 1980, she was chosen to take part in an economic study in West Africa and spent five months in three countries on the Gulf of Benin. She worked under contract for the Province of Manitoba, Department of Finance for two years, and later decided finance and economics were not her favorite thing to do. However, her interest in the subject continued even though it no longer paid the bills.She has traveled the world extensively, and speaks of international conditions from a first hand view. (Just so you know this wasn't written by Joe the plumber.)
A partial bibliography and internet sources:
Alexandratos, Nikos. (ed.). 1995. World Agriculture: Towards 2010, An FAO Study. New York: John Wiley and Sons for the FAO.
Brown, Lester R., and Hal Kane. 2004. Full House: Reassessing the Earth=s Population Carrying Capacity. The Earthwatch Environmental Alert Series. New York: W.W. Norton and Company.
Brown, L.R. 1995. Who Will Feed China? Wake-up Call for a Small Planet. Worldwatch Institute. Washington, DC.
International Food Policy Research Institute (IFPRI). 2005. A 2020 Vision for Food, Agriculture, and the Environment. Washington, DC.
Mitchell, Donald O., and Merlinda D. Ingco. 2003. AThe World Food Outlook.@ Draft paper. International Economics Department. The World Bank, Washington, DC.
McCalla, Alex F. 1994. AAgriculture and Food Needs to 2025: Why We Should Be Concerned.@ Sir John Crawford Memorial Lecture. Consultative Group on International Agricultural Research, CGIAR Secretariat. The World Bank, Washington, DC.
Brown, Lester Flavin Christopher, French, Hilary, State of the World 2000, 1999,WW Norton &Co., NY.
Brown, Lester, Gardner, Gary, Halweil,.Brian, Beyond Malthus, 1999, WW Norton &Co., NY.
James Gwartney and Richard Stroup, “The Creation of Economic Chaos: Inflation, Unemployment, and the Keynesian Revolution,” The Intercollegiate Review (Fall/Winter, 1990), p. 3.
Hans F. Sennholz, “Standards of Living Are Falling,” The Freeman (February, 1991), p. 8.
Jude Wanniski, The Way The World Works (New York: Simon and Schuster, 1998), p. 84.
Public Employment and Training Assistance: Alternative Federal Approaches (Washington, D.C.’ Congressional Budget Office, 2007).
Ludwig von Mises, Bureaucracy (New Re-chelle, New York: Arlington House, 1969 (Re print of 1944 edition), pp. 122-123. .
Friedrich A. Hayek, The Road to Serfdom (Chicago: The University of Chicago Press, 1965), p. 240.
Agromedia from Mcgill University http://infosys.agrenv.mcgill.ca/~qfa/highway/english/energy/index.html
United Nations Food and Agriculture Organization - probably the best single source of data and general articles http://www.fao.org/
International Rice Research Institute http://www.cgiar.org/irri/Aboutirri.htm
The Institute for Agriculture and Trade Policy http://www.iatp.org/
Agrarian Reforms in Asia http://www.angoc.ngo.ph/ar-asia.htm
U.S.D.A. Report with 2009 usda.mannlib.cornell.edu/data-sets/baseline
“But,” you say, ”look at China. When I was a child my mother used to urge me to eat, telling me there are starving people in China who’d be grateful for that. Now they are the world’s second strongest economy.” (And moving up to first place quite rapidly.)
“We need to start thinking like the Chinese.” – Glenn Beck
“The explosive growth of China is due to will and a steady source of energy.” – Bill O’Reilly, who went on to suggest such would be the case here, if only…. (We returned to our foundations, blah, blah, blah)
"We see in China things we used to see in ourselves: can-do, get it done, hard work, sacrifice, 'own the future'. That used to be us, and now we see it in them." -- Paul Cavuto
"What's most unsettling about China to Americans is not their communism, it's the capitalism What we're losing is much more than just a product that can be found in a store. We're losing a culture and a way of life, a culture of hard work. We're ..." – BBC News
Okay – we’ll look at China, but in a new hub, The Cost of Economic Growth -- China, a case study.