Five myths about economic growth


We were sent this by CASSE – the Centre for the Advancement of the Steady State Economy. Love it – there are so few organisations pointing out the insanity of the quest for perpetual growth (image:

We particularly like the observation that the service economy can’t be de-materialised, and therefore can’t grow forever. Think about it – can you think of a service industry that doesn’t involve anything material? The information economy is often quoted, but where would that sector be without computers, electricity, mobile devices, phone masts, satellites, cables etc? And, of course, a growing information sector means that the amount of money paid as salaries in that sector grows as well. Then how do you ring-fence those salaries so that they’re not spent on material things? The answer is that you can’t, which means that the economy can’t grow forever, and neither can any sector of it.

Over to Brian.

Myth #1. It’s economic

To be economic, something has to be worth more than it costs. Economic activity, per se, is more beneficial than detrimental. Technically speaking, “marginal utility is greater than marginal disutility.”

If you liked a rug, but liked your grandkids more, it wouldn’t be smart to grab the rug out from under them. That’s basic microeconomics. Yet if we look around and reflect a bit, doesn’t it seem like all that economic activity is pulling the Big Rug out from the grandkids at large? Water shortages, pollution, climate change, noise, congestion, endangered species… it’s not going to be a magic carpet ride for posterity.

Growth was probably economic for much of American history. But we have to know when times have changed and earlier policy goals are outdated. In the 21st century, when we’re mining tar sands, fracking far and wide and pouring crude oil by the ton into the world’s finest fisheries, trying to grow the economy even further is looking like a fool’s errand. That’s basic macroeconomics.

Myth #2. Economic growth is often miraculous

Right now we’ve got the Chinese miracle. We’re supposed to be on the cusp of an Indian miracle. Seems like we already had a more general Asian miracle, having to do with “tigers.”

We’ve had Brazilian, Italian, Greek (yes Greek), Spanish and Nordic miracles. There’s been the Taiwan miracle, the miracle of Chile and even the Massachusetts miracle. Don’t forget the earlier Japanese miracle and more than one historic German miracle.

Read more here.