A Bigger Economy Doesnt Mean a Better Economy

A Bigger Economy Doesn’t Mean a Better Economy The Steady State Path to Real Prosperity www. steadystate. org

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by treehouse 1977

The Nature of Growth Grow ˈgrō verb 1. To spring up and develop to maturity 2. To increase in size Desirability of growth depends upon. . . 1. The entity that’s growing: e. g. , a human body 2. The context: e. g. , stage of life 3. The rate: e. g. , slow, normal, fast

Context: Children Rate: Normal Growth is desirable.

Context 1: Child Rate 1: Very fast Context 2: Adult Rate 2: Slow Growth is undesirable.

Growth of Economic Activity For economic growth to occur, what exactly is getting bigger? Ø Production and consumption of goods and services (more stuff and more activity) Ø Gross domestic product (GDP), the final dollar value of goods and services produced Ø Population, consumption person, or both.

USA – 14, 260, 000 Japan – 4, 924, 000 China – 4, 402, 000 Germany – 3, 668, 000 France – 2, 866, 000 UK – 2, 674, 000 Italy – 2, 399, 000 Russia – 1, 757, 000 Spain – 1, 683, 000 Brazil – 1, 665, 000 Canada – 1, 564, 000 India – 1, 237, 000 Source: CIA Factbook

GDP Growth

Context for GDP Growth

Context: Thermodynamic Limits to Growth $$$ $ Resources Waste $ products $$$ Waste

Context: Ecological Limits to Growth th Natural capital allocated to the economy on om ic G ro w Natural capital allocated to nature Ec GDP K Carrying Capacity Time

Context: Disappointing Results of Growth Happiness (index) Source: Inglehart and Klingemann (2000) Income person

U. S. Percentage Very Happy Context: Disappointing Results of Growth Real income person Percentage very happy Source: Layard (2005)

Context: Disappointing Results of Growth 12. 0 10. 0 8. 0 6. 0 4. 0 2. 0 0. 0 GDP ## ## # ## # ## # ## ## # # Unemployment ## ## ## # # 14, 000 12, 000 10, 000 8, 000 6, 000 4, 000 2, 000 0

Context: Disappointing Results of Growth

Rate of Increase World GDP (1990 millions of dollars), source: Angus Maddison 60, 000 50, 000 40, 000 30, 000 20, 000 0 1 1600 1870 1940 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 10, 000

Desirability of Growth

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Steady State Economy: Better not Bigger Features of a Steady State Economy • Constant (or mildly fluctuating) population • Constant (or mildly fluctuating) per capita consumption • Constant (and sustainable) throughput of energy and materials Aims of a Steady State Economy • Sustainable scale • Fair distribution of wealth • Efficient allocation of resources • High quality of life

What Does a Steady State Economy Look Like? Not too big, not too small – just right! • Right-sized • Smaller population • New measures of success • Different labor/capital mix • Shorter working hours/more leisure • More nature • Fewer status goods • Healthier food systems • Better use of technology • More locally supplied goods and services • Science-based decision making • Less debt • Less production, more maintenance

What Does a Steady State Economy Look Like? . . . and more of this. Less of this. . .

What Does a Steady State Economy Look Like? Less of this. . . and more of this.

What Does a Steady State Economy Look Like? . . . and more of this. Less of this. . .

by treehouse 1977

The Transition from Growth to a Steady State 1. Start with given conditions. 2. Employ gradualism. 3. Change policies. • Exemplary network of conservation lands • Cap-auction-trade systems for basic resources • Limits on the range of inequality in income distribution • Ecological tax reform • Move to 100% reserve requirements • Elevate the commons sector • Reform national accounts 4. But don’t put the cart before the horse. • We need widespread public support. • We need all those analytical economic minds working on the new paradigm.

Policy Change – The Right Goal

Policy Change - Exemplary Conservation Copyright: The Onion "Last year's introduction of Dentyne Ice Cinnamint gum, right on the heels of the extinction of the Carolina tufted hen, put product diversity on top for the first time. ”

Policy Change: Technology Economic growth (increasing population and consumption) Limits to growth (dwindling resource base) Technological method of managing limits ? Breathing room