Thursday, August 27, 2015

Growth for Growth's Sake

“Growth purely for its own sake is the philosophy of cancer.”
Jasper Fforde

If there’s ever any doubt that economists desire growth for its own sake, rather than for any tangible benefits delivered to the general population in a “growing” economy, check out this post.
From the 4th quarter of 2013 to the 2nd quarter of 2015 the Japanese economy grew by a grand total of 0.1%.  And the unemployment rate continued to fall, from 3.7% to 3.4%.  That’s right, over the past 6 quarters the Japanese economy has been growing at above trend.  But that blistering pace can’t go on forever.  The unemployment rate is down to 3.4%, and unless I’m mistaken there is a theoretical “zero lower bound” on unemployment that is even more certain than interest rates. The Japanese economy is like a Galapagos tortoise that has just sprinted 20 meters, and needs a long rest.
http://marginalrevolution.com/marginalrevolution/2015/08/the-greatest-stagnation-the-economy-that-is-japan.html

So, the population is shrinking, the unemployment rate is falling, the living standards are high. And yet it’s not growing! And that’s a problem because…? Well, we need growth. We just do! Because growth means low unemployment and high living standards, which they already have. And it must grow at a certain rate, even if the working age population is shrinking.

In a world that is being utterly gutted by human numbers, this is utterly insane. Unlike climate change, ocean acifdification, or the sixth extinction, shrinking population growth rates are a crisis:
MENTION “demographic crisis”, and most people think of countries where women each have six children and struggle to feed them. Much of Asia has the opposite problem: low fertility and an upside-down family structure (four grandparents, two parents, one child). Three-quarters of all the people in countries with exceptionally low fertility live in East and South-East Asia. Prosperous Japan, South Korea and Taiwan have fertility rates of 1.4 or below. The fertility rate is the number of children a woman can expect to have during her lifetime. A rate of 2.1 implies stability: the population is replacing itself. Demographers refer to rates of 1.4 or less as “ultra low”.

The difference between 2.1 and 1.4 may not sound like much. But consider what it has meant for Japan. In the early 1970s the country had a fertility rate of 2.1, with 2m children born every year. Four decades later the number of births has halved, with the fertility rate down to 1.4. Or take an even more dramatic example, China. In 1995 some 245m Chinese were in their 20s. By 2025, on current trends, there will be only 159m, a decline within a single generation of 86m. This will reduce by more than a third the segment of the population that is best educated, most technologically astute and most open to new ideas.
Asia's new family values (The Economist)

Clearly East Asia needs to start reproducing so that they can have more growth. More people means a growing economy, and that’s just better, right? Look how well Africa’s doing. After all, East Asia is dangerously underpopulated:


http://io9.com/more-than-half-of-the-worlds-population-lives-inside-t-493103044

So what’s the benefit of growth again?

There’s also an odd paradox. Environmentalists always tout industrialization as the solution the world’s environmental crisis because it slows down fertility rates. But when it works as intended, for example In the East Asia example above, the forces of economics cry that we must start producing more people or else! In other words, both the Ecomodernists and the Neoliberals want to go full steam ahead on economic growth and technoutopianism, but the Ecomodernists are dependent on the same thing happening (population stabilization) that the neoliberals believe is a total disaster. One’s head explodes.

The real reason for wanting population growth is the same reason as open borders is encouraged--it keeps the labor supply high and hence wages low. History has shown conclusively that increasing labor supply leads to lower wages, while decreasing supply of labor leads to higher wages. When industrialism happened, real wages fell, as there were more workers than there were jobs, a good position for the owners of the factories. They started to rise after 1850, exactly when massive outmigration (U.S., Australia, Canada, Mexico, Australia, New Zealand, Argentina, etc.) began to occur. Wage growth in the U.S. from 1940-1977 were driven by high unionization and low immigration. No more.

As people pointed out in the comments, the per capita growth factoring in the lower population has actually been higher for the Japanese than for Americans. In other words, our growth has been eaten up by population growth such that we are actually worse off than the average Japanese person (even before factoring in the extreme inequality of the U.S. where the benefits of growth accrue only to the top 0.1). And even the horrible government debt caused by this is hardly a problem – Japanese debt is mostly domestic held by retirees (meaning their children will be the beneficiaries) and interest rates are low. Meaning that in extremis the Japanese can always write off the debt they owe themselves to pay off the Gaijin. From the comments:
“According to the world bank over the last 5 years Japanese per capita real GDP growth has averaged 1.66%. When you population is actually falling, standard economic data analysis can be very misleading.”
“We sure get a lot of Japan-pessimism in the US media, but they have significantly better quality of life than Americans or Europeans by any metrics that matter: job security, health, life-expectancy, crime rates, unemployment, obesity, etc. Japan was more orderly and stable post-Tohoku than the USA is on any given day. “
“Japan hasn’t made much money for Wall Street over the last quarter century so we constantly hear about how horrible Japan is.”
“...The U.S. relies on population growth for GDP growth to a startling extent. I believe Japan’s per capita GDP growth outstripped or at least matched the U.S.’s during the 1990’s as well, but I can’t find anything on that after a quick google.”
And here's a fitting quote from Albert Bartlett:
"We in the United States are in a culture that worships growth. Steady growth of populations of our towns and cities is the goal toward which the powerful promotional groups in our communities continuously aspire. If a town's population is growing, the town is said to be "healthy," or "vibrant," and if the population is not growing the town is said to be "stagnant." Something that is not growing should properly be called "stable." Yet, the promoters of growth universally use the word "stagnant" to describe the condition of stability, because "stagnant" suggests something unpleasant. Since continued growth is the goal of the promoters in our communities, we should understand the arithmetic of steady growth."

12 comments:

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    1. "Even if we use one of the more modest and prudent formulas that have been suggested as the law of growth for the population of the world, the conclusion to which it brings us is this: if continuously valid for the next two thousand years, it would give a world population of 150,000 billion people, i.e., one person to every square meter of the earth's surface (seas excluded). In the next eight thousand years it would give a population of 10
      23 (1 followed by 23 zeros) with a density of 666 million people to every square meter, or 62 million people to every square foot. Which is absurd.
      Incidentally, the weight of the whole terrestrial population would then be equal to that of the globe itself (including its heavy central nucleus, made of nickel and iron). It is obvious that the limiting factors will be in action long before either (absurd) hypothetical target is reached.

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    2. It's from Albert Bartlett, isn't it? I vaguely recall reading something like it somewhere.

      And then there is this craziness from “a professor of practical philosophy”:

      “The idea that people are morally obliged to have as many children as possible has some radical implications. The biggest is that a world in which many people—20, 50, even 100 billion—are alive, but each has a life that’s only barely worth living, is preferable to a world where only, say, 10 billion people are extremely happy. Let’s call these Big Bad World and Small Happy World, respectively.

      This conclusion may seem ludicrous. Of course you’d rather live in a world where everyone’s happy than one where people are just scraping by! But this intuition is wrong.

      Imagine that the end of Small Happy World is the end of humankind. Everyone’s as happy as can be, and then they all die. Meanwhile, in Big Bad World, the human race continues on for billions of years, at a level where life is worth living, but not spectacular. Would we not then feel that the Small Happy World people are doing selfish? Rather than going on with the human race, and accept the sacrifice that this means, they’re living high and not letting anyone succeed them. This is clearly wrong.”

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  2. OK that idiot can spell his name with two F's if he wants, but don't fuck up Albert Bartlett's name please.

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  5. The reported Japanese growth figures are probably skewed towards minimum. They learned that the West doesn't like it when they report they are doing better than them so they obliged us by showing smaller figures.

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  6. The original, which I read years ago, is "Growth for growth's sake is the ethics of a cancer cell" and its one of those sayings that is attributed to many people.

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  7. Fforde may have said/written similar, but the best known iteration is Edward Abbey's: "Growth for the sake of growth is the ideology of the cancer cell." (The Second Rape of the West, 1975)

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    1. The Abbey quote is usually what I've seen, but this came up in a search. My guess is the sentiment goes back a long time (because it is common sense) and we may never know who said it first.

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