Economic Growth is (Still) Underrated
An introduction to "Debunking Degrowth"
Welcome!
Welcome to my Substack! I’ve wanted to do this for a while and finally came around to do doing it. (To be honest, next week’s post was the motivation for doing it now… more on that later!).
A little bit about me. I am an economics professor at the University of Louisiana at Lafayette and Research Fellow at Archbridge Institute (a research think-tank focused on mobility and the economics of human flourishing). My research is mostly on social and income mobility, the determinants of economic growth, and broader political economy studies.
The main point of this Substack is to discuss why the “de-growth” movement is a dangerous and misguided approach to solving various real problems around the world (like global emissions, inequality, and poverty). Throughout this weekly-posted channel, I will summarize, in laymen’s terms, different academic articles on economic growth, freedom, and prosperity; give some personal thoughts regarding growth and freedom; and have discussions with experts in the field. These posts will discuss various topics surrounding the broader “debunking degrowth” paradigm: why is de-growth wrong, why is economic growth important, and how do we achieve economic growth and prosperity.
Economic Growth is Underrated
As economist Tyler Cowen says, we should have a “stubborn attachment” to economic growth. Now, do we care about economic growth because it means we get to buy more shoes, PS5s, and Taylor Swift tickets? To be honest, sure, that might be part of it. But more crucially to this point is that economic growth makes our lives healthier, happier, and overall better!
Before we take on arguments against economic growth more head on, I’ll take this first piece to talk about the benefits of economic growth. First, let’s look at world GDP over time—many look at this as the “hockey stick” of prosperity; de-growthers might look at this figure and shiver in fear; others (including myself) look at this and are happy. (All of the figures in this post are thanks to the wonderful work from Our World in Data).
This figure (which is inflation adjusted, before anyone yells at me) shows that the world has gotten much richer in the past 2000 years; in fact, we really didn’t see this level of world prosperity occur until the last 100-150 years. World GDP reached $1 trillion only in the early 1800s. For reference, 18 countries as of 2022 have over $1 trillion in total wealth. We reached $100 trillion in world wealth in 2011 and now sit at close to $140 trillion in global wealth. If we look at per person GDP (an overall better measure of a country’s standard of living), global per capita income sits at almost $18,000 per person. Of course, this is widely different across countries, with some countries sitting at close to 7 times that amount (Singapore and Luxembourg, for example) while a handful of countries are stuck at less than $2000 per person.
Speaking of happiness, I don’t think it’s a stretch to think that most of us (de-growthers included) value happiness or life satisfaction. Well, unfortunate for the de-growthers among us is that GDP per capita is a great predictor of self-reported happiness. A very poor country like the Democratic Republic of Congo has a happiness of just 3.2 (out of 10), middle-income countries like India and Indonesia sit at happiness scores of high-4 to low 5s, and richer country like the United States and Norway have happiness scores from high-6s to low 7s. Perhaps more interesting is that very few poor countries have even a middle-happiness score, while just two countries stands out as a richer, but not-so happy country: Turkey and Hong Kong.
Ok, ok, maybe happiness is over-rated? Well, can we all agree that women and children dying is a bad thing? Ok, great! In that case, economic development is a great predictor for lower maternal and child mortality rates. Much like the above figure, with few exceptions, richer countries have fewer maternal and childhood deaths, and poorer countries have more. Sounds like another feather in the cap for economic growth!
Finally, while this doesn’t perfectly capture aspects of the economy like income distribution and inequality, poverty rates do tell us what percentage of society is living in purely distressed conditions. Once again, income per capita is related to a lower share of the population that lives on less than $2.15 a day. In rich countries, this number is close to 0 percent; in the poorest countries, this number can reach well over 50%! This suggests that the “richer are getting richer and the poor are getting poorer” line is not true at least in the extreme sense. (We will cover this with more detail in a future post.) Broader economic prosperity does lift those out of the most severe levels of poverty.
In brief, richer countries tend to have a much better standard of living (even without considering things like PS5s and Taylor Swift tickets). They are happier, healthier, and have less truly desperate levels of poverty. Despite the budding de-growth narrative, economic growth is still important. There are still many countries that have very low (and in some cases, stagnant or even falling) economic growth and its citizens are paying the price. We should want them to grow! These countries desperately need economic growth; and as we will discuss later, economic growth is still good for already-rich countries.
Why is it that people can say that resources are limited? A resource is something that we know how to use. Before 1840 or so, petroleum was not a resource, it was just something that polluted when it leaked out of the ground. Whale oil was used - obviously that was limited, but then petroleum became useful. Before 1900 or so, gasoline was a waste product of petroleum refining - kerosene was used.
Before nuclear power was developed, we didn't use uranium for anything - now we can generate power from it. If nuclear power were not demonized by environmentalists, and we built nuclear power plants, then electricity would be too cheap to meter. And we can generate nuclear power from thorium, which isn't useful for building bombs.
Also, the idea that we are destroying the environment (less clean air and water), is typical environmentalist nonsense. Any decent measure of the state of the environment shows tremendous progress. For example, there are about 1% of the deaths from climate disasters (hurricanes, etc) as there were 100 - 120 years ago.
The de-growth people are believers in sumptuary laws. Just as in ancient times, when only royalty was allowed to wear purple, today degrowthers don't believe that the average deplorable should be able to have all the conveniences that plentiful energy allows. Read John Tierney's piece in City JournalL https://www.city-journal.org/needless-panic-over-disposable-plastic
The Perverse Panic over Plastic: The campaign against disposable bags and other products is harming the planet and the public. John Tierney Winter 2020
Remember Paul Ehrlich's quote: In fact, giving society cheap, abundant energy at this point would be the moral equivalent of giving an idiot child a machine gun.
One final point: The GREEN Revolution (pioneered by Norman Borlaug) enabled more food to be grown on less land. This was great for wildlife. But this was OPPOSED by environmentalists and degrowjhers. But disallowing these modern seeds and farming methods would lead to more land being put under cultivation to grow needed food, and less habitat for wild species, which is what environmentalists would supposedly be against (not really, since they have no problem taking up land for wind farms and solar generation, which have a huge need for land, unlike nuclear power),
The degrowth movement, last time I checked, was a couple of guys financed by Richard Heinberg. I hung out on their blog, asking them how they propose to implement their longings. No clue.
Nevertheless, infinite econ growth is nonsense. There are limits to what the planet can provide. Why does mainstream econ lie about it? :-)