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More People, Less Unemployment?

by Max Kumerow

Bill Clinton took a welcome step toward reality. In his Democratic Convention speech, he pointed out that cutting taxes on rich people and fighting endless wars increased federal debt, and more of the same would make things even worse. Tax cuts and deregulation during the Bush administration failed to bring prosperity and helped cause the global financial collapse and widespread joblessness.

The Chicago School of economics has been preaching for decades, with lots of money from rich people adding to the volume of their message, that low taxes, small government, and deregulation are the road to nirvana. But the last time we had low taxes on the rich and little regulation was called the Great Depression. Clinton, at least, has come to understand that America made a mistake in believing the fairy tale that “government is the problem, so let’s cut rich people’s taxes.”

Clinton still remains bamboozled, however, by the neoclassical nonsense that sees economic growth as the solution to unemployment. On the Daily Show Clinton offered a demographic path to prosperity. He opined that because most of America’s competitors — Russia, Japan, China, and Europe — have low birth rates and aging populations, we will have a younger workforce with a lower old-age dependency ratio, so growth will solve our unemployment and debt problems.

But the notion that population growth cures unemployment is false, just like the idea that cutting taxes on the rich raises revenue and cuts the deficit. The immigration and higher birth rates that keep the population younger also guarantee a higher young-age dependency ratio and a growing population. In a world constrained by high commodity prices and other symptoms of reaching the limits to growth, a growing population leads to high unemployment, rising cost of living, and falling wages. If a young population leads to prosperity, why aren’t places like Nigeria, Rwanda, and Uganda thriving? Why has China gotten so much richer since starting its “one-child” policy?

The fertility rates in all the Asian tiger economies dropped below the replacement level during the decades when their economic output increased dramatically. Hong Kong and Singapore, places with no natural resources and aging populations, have a higher per capita income than the United States. Hong Kong’s 0.97 children per woman and Singapore’s 1.26 are two of the lowest fertility rates in the world.

Birth rates that low mean each generation inherits twice as much as the one before, and a future economy can have full employment with half as many jobs. Scarcer labor means higher wages. New technology and rising productivity can be used to raise incomes instead of what happens with a growing population (i.e., society treads water as the benefits of increasing productivity are canceled out by more people consuming more resources). Low fertility is the path to high incomes and abundance. High fertility is the path to poverty and scarcity.

America’s ongoing population growth has played a role in causing higher unemployment rates, more difficulty funding education, falling real wages for workers, and the incarceration of two and a half million people. You would think that in a country where oil production has fallen by 40% since 1972, a country responsible for so much of the global climate change problem, where forests have been burning, cities have been wrecked by hurricanes, and crops have been withered by drought, we would have learned that more growth is not the answer to unemployment and budget deficits.

Bill Clinton should read ecological economists like Herman Daly. He should pay attention to systems thinkers such as Donella Meadows and Bill McKibben, and consult Al Gore about our ethical responsibilities to future generations. Growth cannot be the solution to unemployment. If all countries decide to grow their populations and their economies, ice will melt, putting cities under sea level, oil will run out, food prices will rise, wages will fall, and human welfare will be reduced, not increased. We will be poorer and fewer people will be able to find jobs.

Common sense says that continuously increasing population makes it harder to keep everyone employed, not easier. The problem is not too few jobs; it’s too many people. There are already too many people consuming too much and diminishing the earth’s long-run carrying capacity.  Economic growth is running into the wall of limited resources on a finite planet. The trends created by economic growth and population growth include higher carbon emissions and climate change, loss of forests, depleted fisheries, soil erosion, species extinctions, toxic contamination, and the possible negative effects of technologies like fracking and genetically modified foods. The path the world is on — economic and population growth — is just as unsustainable as the subprime mortgage market and trillion-dollar federal deficits and will lead to collapse.

Long-run prosperity on a planet with limited land and water and air requires a transition to a steady state economy — a transition which in turn requires a transition to a smaller global population. The higher fertility rates, immigration, and economic growth that Clinton described as the path to prosperity turn out to be the path to collapse.

Do the arithmetic, starting with this year’s federal deficit, the short crop in the Corn Belt, the number of Americans in jail, and cuts to education budgets. Growth has not been the path to full employment or deficit reduction. If Romney was right about tax cuts, we wouldn’t have a federal debt crisis. If Clinton was right about population growth, we wouldn’t have unemployment. It’s time to try something beyond politics as usual.

Max Kummerow has a Ph.D. in urban and real-estate economics. This semester he is a visiting lecturer at Lincoln University in Canterbury, New Zealand.

The Titanic Code

by Dave Gardner

One hundred years ago April 15, the Titanic disappeared beneath the icy waters of the North Atlantic. Several have marked this anniversary by noting the similarities between the Titanic and human civilization. In Titanic: The Final Word with James Cameron, on the National Geographic channel, James Cameron, director of the blockbuster film, Titanic, aptly turned the event into metaphor:

Part of the Titanic parable is of arrogance, of hubris, of the sense that we’re too big to fail. There was this big machine, this human system, that was pushing forward with so much momentum that it couldn’t turn, it couldn’t stop in time to avert a disaster. And that’s what we have right now.  We can’t turn because of the momentum of the system, the political momentum, the business momentum.*

The metaphor is remarkably apt, as the size of the Titanic meant it was not nimble. It could not stop or turn on a dime. The captain needed to look far ahead on the horizon and plan ahead. Doesn’t that sound like the predicament in which civilization finds itself? We have built up an increasingly complex system, and it is a ginormous one (7 billion served), touching all corners of the planet. It’s impossible to change overnight. And looking ahead with only a short time-horizon serves it very poorly.

There’s something else keeping us from changing course, however. It is lack of desire. Our culture is not interested in a course correction because we’re distracted. We don’t see the iceberg ahead because we’re fixated on a cultural story that defines progress as growth, and growth as progress. This worldview has led us to develop a system that depends on everlasting growth.

Fortunately, when Mother Nature says, “enough,” key parts of the system begin to fail. I say fortunately because it’s hard to argue with success. As long as this system appears to be serving most of us well, we are not likely to throw it out. The failure of the system, which we’ve begun to experience, is our best hope for motivation to get moving toward a more enlightened arrangement.

“We’ve written a narrative that was fine in the nineteenth century.  It served us well through much of the twentieth century… but it’s outdated.  And we now need a new cultural narrative.”

— William Rees, ecological economist, in GrowthBusters

In the documentary, GrowthBusters, I refer to perpetual growth as our “operating system,” comparing it to Windows or Mac OS. The belief, the dependence on, and the pursuit of growth are what we’re all about. It’s the computer code that manages everything we do. Many call it our cultural narrative. If we were on the bridge of the Titanic, it would be in our charts, affecting our compass, on our radar. It informs (or misinforms) everything we do.

Without a doubt there are economists, sociologists and activists developing patches for this growth-based operating system. There are also scientists and activists developing apps that help us lighten our load on the planet. Renewable energy, water and land conservation, permaculture, and transit-oriented development are all examples of what I would call improved software applications, but they are still written to run on our old, growth-based operating system. With a system committed to everlasting growth, they will not keep our civilization from running off a cliff.

This is not to disparage them; it is to keep us from relaxing, thinking they will enable our civilization to become sustainable. They can be meaningful parts of a completely new system. But we do have to throw out the old system and start with fresh computer code. Upgrading from Windows 7 to Windows 2013 won’t do — Windows has to go.

“Only the prospect of worldwide mind-change gives me hope for the future.”

— Daniel Quinn, author of Ishmael

Changing our cultural narrative is a tall order. In my film, Paul Ehrlich says, “We’re faced with a gigantic challenge that we haven’t been prepared for, either in our genetic evolution, or more importantly, in our cultural evolution.” I believe it’s the biggest challenge our civilization has ever faced. Who can we call? I’d love to say, just call GrowthBusters. After all, the film is my biggest contribution to the change we need to make.

But this challenge is too big. The film takes only the first step, which is to raise awareness that we have a culture that worships growth everlasting, and to help audiences realize it’s not delivering on its promise. I see the role of storytellers like Daniel Quinn, Dave Foreman, Richard Heinberg and myself as one of preparing our fellow human beings to be receptive to the completely new computer code that steady staters, transitioners, de-growthers and others are developing.

The time is now. The pieces are falling into place. The old system is crashing. We’re not able to reboot and get back to the business of robust growth. It will be key that we don’t rush in with patches or rely only on new apps. We must be relentless in our insistence on adopting a new operating system.

*Thanks to Joe Romm of ThinkProgress for alerting me to Cameron’s words.

Dave Gardner is the director of the non-profit documentary, GrowthBusters: Hooked on Growth, currently screening around the world. CASSE executive board members Brian Czech, Herman Daly and Peter Victor appear in the film. This commentary was published simultaneously here, as part of a series honoring the 40th anniversary of The Limits to Growth. Dave asks that you take his Pledge to Think Small to help speed adoption of a new operating system.

Fictitious “Facts” Spur Students to Liquidate the Planet

by Rob Dietz

One reason that we have a culture dedicated to the myth of perpetual economic growth (a dedication that produces a pile of consequences such as climate chaos, financial fiascos, ecosystem eradication, and dismal disparity between the haves and have-nots) is that students are learning fictitious “facts.”  College students in the most common majors are repeatedly told that unlimited economic growth is a good thing, with no thoughtful analysis of the costs of growth.

According to the National Center for Education Statistics, the most popular major for U.S. college students is business.(1)  A whopping 21% of American undergraduates declared business as their major in the 2007-2008 school year.  All of these students take introductory business courses that describe rudimentary principles of economics.  After all, the economy is the environment in which businesses operate, so business students need to understand the economy.  They learn about supply and demand, business cycles, inflation and unemployment.  So when the topic of economic growth comes up in such a course, what sort of message do they receive?

It just so happens that my wife teaches an introductory college business course.  She was kind enough to let me borrow the textbook for her course – Exploring Business by Karen Collins – for a quick review.(2)  I took a look at it with great interest.  Chapter one is called The Foundations of Business, and right at the beginning, I came across a section on economic goals.  In this section, Collins states:

All the world’s economies share three main goals:

  1. Growth;
  2. High employment; and
  3. Price stability.

She goes on to explain the concept of prosperity:

During prosperity, the economy expands, unemployment is low, incomes rise, and consumers buy more products.  Businesses respond by increasing production and offering new and better products.

For anyone who has studied both the upsides and downsides of economic growth, a statement like, “All the world’s economies have a goal of growth,” raises some red flags.  Follow-up statements that equate prosperity with increased consumption raise even bigger and redder flags.  These assertions can be rewritten as 2 simple (and unsubstantiated) equations:

  1. Growth = Number 1 goal; and
  2. Prosperity = More stuff.

These equations raise the following questions in my mind:

  • Should all economies have growth as a goal?
  • Isn’t there a deeper meaning of prosperity – don’t we tend to value things in our lives beyond accumulation of more and better products?
  • With economic growth straining ecological health around the globe and compromising human health in the high-consuming nations,(3) shouldn’t we at least consider an optimal size for the economy rather than limitless expansion?

Exploration of such questions is not a part of the standard curriculum – Exploring Business doesn’t explore any of them.  With so much at stake (after all, a complete understanding of economic growth may help us build economic institutions that fit within ecological capacity), what can we do to help ensure that students obtain a more complete picture of economic growth?  Let’s turn to economics for help.  If we want professors and textbook writers to supply balanced coverage of economic growth, we need to demand it.  We can do so with civility and persistence.  These professors and writers aren’t villains – they are simply passing along knowledge, some of which is dangerously misguided, that was handed down to them.

Adbusters Magazine has launched a campaign called Toxic Textbooks to encourage schools and universities to use economics textbooks that engage honestly with the real world.  You can get involved with that campaign.  You can ask the writers of college textbooks (perhaps starting with Karen Collins) to make some changes.  If you’re taking a course in business or economics, you can certainly ask your professor to explain how we can have infinite growth on a finite planet.  And if these sorts of attempts fail, perhaps students will begin to select majors that are more in touch with what’s happening in the real world.


What exactly are we learning here?


(1)   U.S. Department of Education, National Center for Education Statistics, Higher Education General Information Survey (HEGIS), Integrated Postsecondary Education Data System.  Note that the second most popular major (with 10.7% of the student population) is social science and history, which includes an awful lot of economics majors who receive similar messages to business students.

(2)   Collins, Karen (2010). Exploring Business, Flat World Knowledge.

(3)   See, for example, Egger, Garry and Boyd Swinburne, 2010.  Planet Obesity: How We’re Eating Ourselves and the Planet to Death, Allen & Unwin.