So, the world is rejoicing, global markets are up and all is well because the US Federal Reserve has made the decision to slightly reduce the monthly stimulus package. A collective sigh of relief went around the world as outgoing Chairman, Ben Bernanke reassured us all that should there be the slightest signs of a slowing in growth, stimulus will again be increased. Thank heavens for that…
Now, I’ll be the first to admit that I’m not an economist, nor a financial guru of any description. However it seems to me that a fairly fundamental element is missing from the global discourse on economic models.
How are we to maintain infinite economic growth in a world that is physically governed by finite resources? (Please don’t come at me with theories of decoupling, as the automotive industry demonstrates, the idea of decoupling as a saviour is fundamentally flawed.)
The Global Financial Crisis provided an opportune time to address these issues and evaluate whether continued economic growth is an appropriate goal for developed nations. But instead of questioning whether a system that has failed to protect environmental and social interests and then spectacularly failed to even protect itself is still the best course, we ploughed on blindly pursuing renewed economic growth at all costs.
Now, I’m not for a second suggesting that economic growth doesn’t have its place in developing nations where it provides a route out of poverty. However even to my untrained eye it is apparent that the relentless pursuit of economic growth has delivered its benefits, at best, unequally.
To quote from the UK Sustainable Development Commission’s 2009 report Prosperity Without Growth ‘In the last quarter of a century the global economy has doubled, while an estimated 60% of the world’s ecosystems have been degraded. Global carbon emissions have risen by 40% since 1990’. In addition, poverty is still widespread and political / social unrest is still rife throughout the world. Are these outcomes acceptable trade-offs?
Even more striking is both the anecdotal and scientific research demonstrating that the economic growth model fails to deliver happiness once a base level of material needs have been met. Think about your own neighbourhood. Divorce rates are skyrocketing, depression and anxiety are common and suicide is distressingly frequent. Are these problems belonging to the individual, or are they indicative of a flawed economic, social and political system?
I don’t pretend to have the answers. But I do believe that we need to start the conversation…
Do you believe that economic growth is still an appropriate model for the richest nations?