The NZ Initiative's Jenesa Jeram challenges the view that economic growth no longer has a key role in improving our society

The NZ Initiative's Jenesa Jeram challenges the view that economic growth no longer has a key role in improving our society

By Jenesa Jeram*

Have you ever heard the adage that you cannot have infinite economic growth in a finite planet?

Or that economic growth is all well and good, but it is time New Zealand focussed our attention on other things?

How about that we must face a constant trade-off between economic growth and happiness, the environment, and greater equality?

Announcing one’s disdain for economic growth has always been popular in certain circles. Back in the seventies, we would have called these people hippies. Today, we call them enlightened intellectuals.

The New Zealand Initiative has recently released The Case for Growth, authored by Dr Eric Crampton and me. The report dispels many of the persistent myths that are intended to discredit all the good that economic growth can achieve.

Moreover, the report argues that not only is the constant denunciation of growth unfounded, it can be downright dangerous.

The first thing that needs to be realised is that the very ability to challenge economic growth is due to our privileged position.

For a vast majority of human existence, living conditions stayed pretty much the same.

Looking at economist Robin Hanson’s study on very long term economic growth, there was very little technological change or growth for about two million years. That means children, grandchildren, great grandchildren and so on, pretty much lived the same lives.

Today, it is fair to say that siblings born more than 10 years apart will be raised under very different conditions.

In fact, real economic growth as we know it – a steady improvement in people's lives from generation to generation – really only took off around 1820. It’s a relatively new phenomenon, and one too easily taken for granted if we don’t look back at history.

So what has growth afforded us?

Well, contrary to popular belief, it hasn’t just provided the opportunity to acquire more stuff for the sake of having more stuff.

Sure, the improvements in the quality and variety of consumer goods and services are a positive consequence, but it doesn’t end there.

There have been vast advancements in our health, wealth, and wellbeing as some benefits. And if that’s not satisfactory, we can always point to improved environment and greater equality as other positive consequences.

One of the most comprehensive accounts of improvements in physical wellbeing came from Robert W Fogel. His study documented improvements in health and mortality over the centuries (starting from 1700), and came to the conclusion that the changes consequent to industrialisation are so great that we have effectively undergone “a form of evolution that is unique not only to humankind, but unique among the 7000 or so generations of humans who have ever inhabited the earth”.

Anyone who has opened a history book will be able to point to their own observations of how far we have come.

However, not everyone has been able to make the connection that these improvements would not have been possible if it was not for economic growth.

Growth has been necessary to afford improvements in medicine and medical technology. Moreover, economic growth spurs the widespread dispersion of medicine and technology, so better health and mortality rates are achievable not just for the privileged elite but across society as a whole.

Growth has also improved our lifestyles, where technology has made many occupations less labour-intensive, and therefore less physically straining. The same could be said about everyday tasks around the home, which are similarly less labour-intensive and time consuming.

Statistician Hans Rosling refers to the washing machine as just one historical example of how this technology transformed the lives of women, saving them both time and physical anguish. Like the development of medicine and medical technology, growth is the mechanism that allows the widespread dispersion of these discoveries from the elite to the masses.

Of course, an obvious objection to economic growth today is that while it has undoubtedly brought improvements in the past, it is time for society and policymakers to focus our efforts elsewhere. But this assumes that society has reached the epitome of our creative capacity and improvement. It assumes that things are so good now, economic growth could not possibly make our lives any better.

The truth is, we still have a long way to go before declaring growth has achieved “enough”.

As long as there are people living in poverty, diseases to treat, children to receive a world class education, natural disasters to guard against and recover from, people in need of affordable housing, and alternative resources to be discovered to guard against depletion of the non-renewable, we will need economic growth.

Nobody knew this better than Edmund Burke, widely regarded as the philosophical founder of conservatism. Conservatism’s very essence is the primacy of conserving all that society needs to flourish, including a clean environment, strong community ties, and a sense of responsibility to future generations. He said that people will not look forward to posterity, who never look backward to their ancestors.

To push economic growth to the side now ignores all that our ancestors have achieved in enhancing the living conditions we have today, and the triumphs of human creativity and entrepreneurship that are still to be achieved.

-------------------------------

*Jenesa Jeram is a research assistant at the New Zealand Initiative. This is this week's NZ Initiative weekly column for interest.co.nz.

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I am not sure how to respond to this, without the Ed deleting this and getting a "dont do that" from DC, LOL.
To be polite, I suppose the two words are "reality check". Your argument is interesting, but it is semi-emotional and given your supporters and "right wing think tank" ethos I am not even sure its even honestly stated.  So while I would consider  "morally and socially sound"  it is however not economically, ecologically or mathematically so. Funnily enough it srikes me as one that libertarians and the right often use usually in desperation and they are not being honest frankly IMHO, trying to sound like "liberals". We are indeed on a finite planet that means resources are finite, the biggest of which is fossil fuels.    I would suggets you read a book by Robert Hirsch,
http://www.amazon.com/The-Impending-World-Energy-Mess/dp/1926837118
or,  https://www.youtube.com/watch?v=Am1DGjzxBrI
its not technical but comes up with the biggest conclusion you should take note of ie,
Change in oil supply (or its equivalent) % = change in GDP % (ie roughly unity).  We are at or about at maximum oil supply PER day and that will drop at 2~4% PER annum until it is gone by 2050 or so.  Now go back to the ='s bit above and ponder what 0% oil means for world GDP.   Then look up EROEI and ponder that for our modern industrial society we need 8 to 1 all the alternatives are 1 to 1 at best.  
I porefer to think of our "options" of more like, http://www.bbc.com/news/business-31868506
btw I know my english is awful so I should comment really but you want to use "I" and not "me" in the right spots.
and your supporters are um interesting, big names, but no small NZ ones. http://nzinitiative.org.nz/About+Us/Membership.html  Imperial tobacco?  none strike me as ecologically nice guys or care about people and often they tend to act like monopolists.

Steven, did you read this article on the oil industry ?
 
http://www.tomdispatch.com/blog/175967/

No but I have read similar.  One thing that they say in the piece is that    "True, the cost of extracting unconventional oil would be much greater than from easier-to-reach conventional reserves (not to mention more environmentally hazardous), but that would be the world’s problem, not theirs."   After 2008 and $148 a barrel you would think they have learned that there is a limit of ability to pay.   This piece shows it well, http://www.economic-undertow.com/2015/02/09/fatal-ignorance/   note that graph with the two intersecting  lines.  The top one is ppls ability to pay and the bottom one the Industries cost to extract.  So when the costs to extract goes above the ability to pay? Well that graphs points to an awful conclusion.
 
 

Steven - If you don't want fiscal austerity and you don't want growth then how the hell are we going to improve the economic outcome for all NZ'ers???
You need to change your oil (probably the chain too)as an obese public service is detrimental to the long term of all NZ'ers......NZ needs real growth in real private sector jobs not more public services (which is what you are proposing with your anti Libertarian comments) which end up pluggin a temporary hole and that is what causes the next recessionary cycle.
 
Talking of Reality Checks.........Why do you think we have open slather immigration at the moment? NZ is short of stock on the books......pure simple maths......more people are needed so the Government can have the increased taxation it needs to meet its spending on all those social services that some of you deem morally and socially sound.....good working stock are worth around 33% annually to the Government.!!!! 
 
If you want economic, ecologic and mathematical answers then I suggest you first of all get out and invent some alternatives to what you see as an issue....if its good you'll be able to sell it and that should help resolve your next two issues........practice what you preach and be the "ecological nice guy you think you are capable of being" and invent something that changes the course of humanity!!!

Does Hirsch need a "reality check"?
 
How Hirsch' energy resource predictions stack up? He called US natural gas peaking in 2005 at 70 tcf, today it's 90 tcf and the EIA have it booming out past 2040+ at roughly double the production of his 2005 geological "peak".

"U.S. natural gas production has peaked and moved into geologically controlled decline."

Geology clearly didn't peak and neither did ingenuity.

http://www.rggi.org/docs/ceed_report_4_6_05.pdf

Good growth participated in by all levels of workers across NZ geographically is good.  Artificial 'growth' propped up by immigration and foreign investment unAgreed by NZers is less explainable/useful. 
Economic growth seems to be bypassing many under 25s, regional areas and small business owners.  Who is benefitting from GDP growth?

 Who is benefitting from GDP growth? A good place to look would be on the list of supporters of the NZ initiative as linked to by Steven above. 
As far as the rest of us are concerned it is GDP per capita that matters. Auckland with 2.5% annual poulation gain needs that much in REAL growth just to stand still. And what happens to the place if that rate of population gain is maintained?
That's equal to 3.5 doublings per century. Auckland is barely 2 cenuries old (from European settlement) How big will it be in another 200 years:
1.5million now then 3m, 6m, 12m, 24m, 48m, 96m, 192 million!
Of course all this talk of the problem of infinite growth on a finite planet is complete nonsense.
 

What a content free piece! I hope the report has more nuance than the above. It's a pity because there's a lot of interesting stuff to be said on economic growth - pros and cons of different metrics, trends over time, key drivers and how they've changed,...  Just this morning the 90 secs at 9 reported a decoupling between economic growth and CO2 - that would be fascinating to examine. By memory the other piece I read by this commentator was also all unicorns and rainbows too. Hopefully she can adjust her writing style to a more critical stance if she is to become a regular contributor. 

More fatuous unsupported incoherent burblings from the propaganda mill, then? 
Starts with strawmen, continues with cherry-picked irrelevancies and non-sequiturs, and finishes with more unsupported assertions and rhetorical sleight-of-hand.
If we're going to have this low-quality drivel dumped on us, could it at least be something that makes sense, or has an entertainingly daft conspiracy theory in it?
Just out of curiosity, interest.co.nz people, how much are you paying this outfit for their outpourings of idealogically-driven propaganda?  And if you're not paying them, then who is?

You've got it all wrong. They are paying interest.co.nz

Just for clarity, interest.co.nz does not pay the NZ Initiative for their articles, and nor does the NZ Initiative pay us to run their articles.

But how many of their members place advertisements on this website? I can spot quite a few. There may or may not be an incentive to publish their opinion pieces.

Now you are adding 1+1 and getting 3. If you wish to discuss and debate the issues raised in, or topic of, the article please feel free. If you wish to submit an article yourself, we'll consider it for publication. But if you wish to peddle conspiracy theories, please take them elsewhere.
Cheers.

......although kakapo I like to see this stuff on here, in much the same way as i like to see the climate denyers.  Reason being it then becomes a geat place to find decent quality material that gets posted in response.  Great way for us less knowledeable to get more than just main stream chaff.

It'll probably be a decent comment thread at least. 

If there is economic growth there will be jobs created and the wealth will trickle down!
Why even allow this PR machine to publish here. The NZ Institute represent members like BP, Dow Chemical and Fletcher Building.
Just look at the last puff piece by Jenesa: http://www.interest.co.nz/opinion/73714/nz-initiatives-jenesa-jeram-says...
 

I thought for a moment I had stumbled on a kindergarten version of the National Business Review.........

That sums it up beautifully.  Comment of the day.

I'm quite struck by the amazing one-sided superficiality of the appeal to history.  Rhapsodise about the economic growth of the 17th, 18th and 19th centuries, whilst completely ignoring the fact that much of that growth was predicated on slavery.  What is the official libertarian position on slavery, I wonder?  Slavery was one of the most profitable industries of the time, and underpinned the other profitable industries of the time.  Sugar, cotton, spices.  Of course, none of that went away.  We wouldn't be able to buy all these cheap clothes and electronics that Bernard gets so excited about if it wasn't for cheap overseas labour who are slaves in all but name. 
I'd also like to see some real analysis on the population growth=economic growth mantra, now that there is a global trend towards automation of the jobs where it used to be necessary to have mass warm bodies on the ground.  The intuitive conclusion is that with automation, population becomes largely uncoupled from economic growth and/or activity, but some actual rigorous analysis would be nice.

Yes thank goodness for the Republican Party abolishing slavery. Where would we be today with the GOP?

"Where would we be today with the GOP?"

In Iraq 'liberating' o̶i̶l̶ ̶f̶i̶e̶l̶d̶s̶ people?

Well, that was stunningly irrelevant.

Oh sorry, I thought you wanted to know the right wing official position on slavery.

DC should delete the wisecracks from Jenessa

Trouble with Jennessa's opinion is that she misreads what people are disturbed about. I can't see any problem with increasing access to sustainable resources.
But most are increasingly disturbed by an increasing GDP - when that means we have less time, struggle with affording housing, and have diminished security.
If increased GDP delivered good things for New Zealanders she might have a point, but GDP increase does not deliver those things and Jennessa has no point to make.

My only comment about this article is UNBELIEVABLE
Take that in either the literal or the alternative sense.
 
 

Excellent article. Only Fiat money has been able to fuel the growth that out specifies desperately needs. It's easy for all the doom pornstars above to bemoan growth and the betterment of their fellow humans, but ultimately they are just noise in the great conversation and advancement of civilisation. So long as just a few leaders realise that growth comes first before everything then the MAJORITY have a bright future ahead. Not just a select few.

"Only Fiat money” means only a claim on resources not yet got out of the ground.  So translating your first sentence it reads - Only by stealing from future generations are we able to sustain the "growth"  that lets me live comfortably now.  
 
"Not just a select few."    Have you not been paying attention?  During this massive growth the world has been experiencing a disproportionate amount of wealth is falling into the hands of the few.  

Garbage. Nothing is being stolen from future generations. Talk like that shows a gross ignorance about modern money.
But anyway, what about the millions of Chinese and Indians who havers from rural settings to urban settings? Their lives have improved tremendously or have you not paid attention. Not Anglos so not important?

Ignorance about modern money.  Ok so help me shed my ignorance, in a world where money is created by debt how can interest be repaid with out constant growth? Assuming constant economic growth is required, which of course it must be, how can that mean any thing other than a constant increase in extraction of resources from the earth.   So new money created with debt must be in essence a claim on future economic growth which can only really be achieved by increased resource extraction.  If you can show me where my thinking falls down that would be much appreciated. 
 
Or do you think selling houses to each other and creating apps and increasing the service sector is the path to future Nirvana for all?  All of these things ultimately rely on the real productive sector which relies on real resources.  
 
As far as the Indian and Chinese go that argument is a red herring.  It's like saying well if this pyramid scheme is so bad what about the people who made their money?  

Exactly.

Unless you 'uncouple' growth from the physical economy then infinite 'growth' is impossible. Of course you could cook GDP numbers and grow fiat currency until the cows come home to try to create the 'happy bedtime story' of ever-continuing  'economic growth' but that would be meaningless to people.

Physical resources have physical limits.

Now it's time for me to travel home using a vehicle (made from physical resources) using energy (physical resource) to eat some food (physical resource) while I sit in my house (physical resources) on my couch (physical resource) typing on a computer (physical resource) using electricity (produced from physical resources).
 
I'd like Jenesa to give me advice on how she thinks I can get around using physical resources for any of these tasks.

 

But not all growth is good.
Prices were mixed at the Global Dairy Trade (GDT) auction on March 3rd. The GDT index rose 1.1%. Butter, Cheddar and skim milk powder (SMP) prices all continued to gain, but whole milk powder (WMP) prices slipped 1%. Since the auction milk powder prices have eroded at the NZX futures exchange. The Daily Dairy Report noted last week that the contraction “could signal that New Zealand’s milk output might not be falling to the extent previously indicated, or perhaps demand is not as robust.” New Zealand’s WMP exports to China in January were down 69% from December and 10% from the prior year. Since then, New Zealand’s export woes have only increased.

 http://www.milkproducerscouncil.org/updates/031315.pdf

You say
The Case for Growth, authored by Dr Eric Crampton and me
You should have said
Dr Eric Crampton and i
Maybe your economics is as bad as your grammar,

Incorrect.
Her economics might be bad but you'd be best to avoid comparing with grammar if you want to hang your own case on it.

badmonkey and Jenesa are correct. It is indeed "Dr Eric Crampton and me" - quick rule of thumb is remove the other person and see if it sounds correct or not - you wouldn't say "authored by I"

Now i was never good at English, in fact it was my worst subject. However i still think i am correct.
You say take away the other person and you have "authored by i" - well of course this is incorrect because the message being conveyed has changed.
In the singular i would say
"It was i who authorised xyz"
and, in the plural i would say
"xyz and i"
 

>>>> In the singular i would say "It was i who authorised xyz"
 
Then you would again be incorrect. "It was me who authorized xyz" is correct.

Correct. It depends on whether I/me is the subject or the object in the sentence - it has nothing to do with singular vs. plural. 

I know lots of people do it that way. But as far as I know, if you leave the other bit out (the "Dr Eric Crampton and" bit in this case), the sentence should still make sense. "Authored by I" doesn't sound right...

Announcing one’s disdain for economic growth has always been popular in certain circles. Back in the seventies, we would have called these people hippies. Today, we call them enlightened intellectuals.
 
No one listened to them and now we have climate change.
 

Fixed it for her:
 
"Announcing the impossibility of constant economic growth has been attempted before in certain circles. Back in the seventies, we called these people scientists."

For a vast majority of human existence, living conditions stayed pretty much the same.
 
So, our living conditions are "infinite" and we will never achieve satisfaction, that is why we need infinite growth.
 

The thing is living and population stay pretty much the same because humans had to live inside the Sun's annual energy output falling on the earth.   It is only for a brief few Hundred years that we have ballooned and that is due to us extracted 'stored solar energy" in coal and oil.   Once those batteries are flat we are back to living inside the Sun's annual energy output falling on the earth.
The pluses are we have made great intelectual advancements that I am hoping will surive and that we wont go into another dark age, I am not to hopeful on that however.
PS One day I may be able to spell and type, LOL.

we can always point to improved environment and greater equality as other positive consequences.
 
Oh so we have greater equality, wow, we are all part of the 1% and the 99% dont exist.
 

Did she explain how we can have exponential growth on a finite planet?  Or did she just say 'growth is good'?

(Pointless smeer comment deleted. Ed. Please stick to the issues everybody, don't personalise your comments).

I think it was 'growth is good'.  A fitting slogan for an Oncology ward.

As Steven points out above the growth in the economy is related to the exploitation of fossil fuels.
The article names the date 1820 as the begining of econonic growth, which is when the industrial revolution, powered by coal, began. As fossil fuels get harder to find and/or more expensive growth slows. Volumes have been writtewn on the difficulties of maintaining growth based on renewable energy but a less resource intensive, steady state, society may be possible without forgoing many of the qualitative gains that the last 200 years has produced.
Infinite growth on a finite planet is indeed impossible. As fossil fuels and other resources decline in avialbility the economy will slow. That is, if we don't bankrupt the system with excessive debt first (debt itself is predicated on growth to pay the interest).

A nonsense article.
Jenesa tells us about all the good things growth has contributed.
No one is arguing about this.
BUT the point is, it can't go on forever.
And this point she doesn't adress at all.

If you really want to know about growth and the economy then you should watch this
https://www.youtube.com/watch?v=0NdDupITDv8
 

The Huffington Post weighs in,
http://www.huffingtonpost.com/climate-nexus/ridleys-wall-street-journ_b_...
Says it pretty well.
 

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Amazing what economic growth can do for the general population. The vast volumes of growth in developing nations and developed nations appears to do very little for those most in need. Interesting to see which country (2013) tops the rankings. Certainly not a top-ten holiday destination either and I'm fairly certain the local population would prefer to be somewhere else!
http://en.wikipedia.org/wiki/List_of_countries_by_real_GDP_growth_rate
I'm embarrassed by the very fact that we have to rely on charity to support the most vulnerable in New Zealand.
Can sometime please tell me with our "booming economy" why charitable organisations such as the Salvation Army and Kids Can  have become the ambulance at the bottom of the cliff for many New Zealanders when the coffers of our government should be providing for those most in need?
Seems the best correlation I can find is HIGHER Gdp = Slight shift to becoming more 3rd world. 

How can you write something (the first sentence) when you clearly have no idea what it means?
 
 

Gee, tough audience. Are the naysayers suggesting communism?
What are our alternatives to growth, a return to conservative values or being limited and centrally controlled? Since we can't stomach Darwin and are too lazy and selfish to be conservative, Im thinking State planning for us...

I think you are not understanding the issue if you think communism would change anything.  Communism is simply a different way to split up the pie.  
                                                                                                                                             
Using the pie analogy most of us here realise a pie can only get so big, it's limited by pastry, meat, the size of the oven.  The above article says we need to keep making a bigger pie so the hungry
 can eat.  The problem is we only have so much pastry, meat and a certain sized oven.  At some point we can't make a bigger pie the oven can only fit so much.   (not a perfect analogy but you probably get the point)  Now the author of the article ,even faced with these natural limits (size of oven, amount of meat and pastry) , would say but human ingenuity will find a way to cook a bigger pie.  Now sure you could maximise every single square meter of the oven but at some point you have reached a hard limit the size of the stove.  
 
At the moment lets say the oven is 3/4 full when cooking the pie.  Us negative types are saying hmm that pie can't keep growing by 2-3% every year for much longer perhaps we should start trying to find a way to feed everyone with the pie the size it currently is.    The author is saying nonsense we can grow the pie forever or at least until everyone is able to be fully fed.  The problem is the pie can only feed 2- 3 billion people but there are projected to be 10 billion people when the pie really can't get any bigger.   So sure growing the pie seems like a good idea except to grow the pie you need more people which means less for everyone.
 
While all this is going on all the 7 billion of us are in a kitchen that is starting to fill up with smoke.  It turns out building a pie this big is putting a lot of strain on the oven which is causing some serious discomfort.  Luckily the rich 1 billion are sheltered from the worst of the smoke but the poor people who miss out on the pie are also living right next to the exhaust of the oven. 
 
The author realises that the poor are choking on the smoke and says oh look at the poor people who are both hungry and choking we must keep making the pie bigger to feed them but once they are fed we can work on the smoke problem.  (In case you missed it trying to feed the poor people is actually causing the smoke)  
 
Now those of us who realise there is a limit to the size of the pie want to look at solutions but while people think the answer is a bigger pie we will always be met with resistance.  Thankfully more people are starting to wake up to the ever bigger pie will solve our problems cult.