Intro To Degrowth

Bidenomics was slowly, but surely discarded as a positive narrative when it was clear it did not resonate with enough people. Messaging aside, traditional economic indicators meant Joe Biden (or anyone with incumbency) should have won re-election in last year’s recovery. Sentiment (sorry Justin Trudeau) did not match up with the data. Data, though, was what led to Bidenomics being assumed to be a winning message in the first place.

Unemployment was low, inflation was at its lowest point in a long time and trending better, interest rates were coming down.

However, traditional economic indicators have long relied on assumptions including perfectly efficient markets and the “rational consumer,” neither of which exist.

Recognizing these facts presents the best opportunity in the modern era to shift away from an unfettered growth approach to policy and economic analysis.

Doing so relies on an oversimplification of election results and the worldwide anti-incumbency we have witnessed, but it is still a lens through which we can begin talking about non-growth measures of the economy and success.

Growth is a very generic term and generally applied to GDP with little consideration for its true impact on or relationship with other indicators. It is assumed that a growing GDP means more jobs or that a shrinking one means unemployment, but those links, among others, have not played out in a perfect way in recent years.

Inflation is based on fundamentals of supply and demand, but various actors in the economy make choices on some of that supply and induce demand, while the length of inflation is increasingly recognized as simply self-reinforcing fear.

Additionally, growing income inequality means that GDP growth has a disproportionate benefit to a small group and a small, if not entirely negligible effect for everyone else.

That is one reason why the minimum wage does not rise. The incremental increase of even a few dollars would substantially impact many people’s lives. They would spend more, but the minor expense to companies is believed – accurately or not (more likely not) – to hinder growth more than the increased consumer spending of those making more money, even though their lives might drastically improve.

Further, it is widely accepted that our economic activities have massive negative externalities – that is, carbon emissions, exploitation of labor, packaging and other waste, and other side effects we do not like and, importantly, ones we do not price into the market.

If these effects were properly factored in, a real approach to “growth” may be possible, but a carbon fee and dividend, while still an exciting and potential prospect in the US, does not seem wholly likely in the short term.

As such, we need to think differently and not simply accept growth as an ultimate goal with only positive and outsized consequences.

More flights, for example, are not inherently good. Airlines may benefit. GDP may increase. But that means more emissions, exacerbated natural disasters, and an increase is not likely to affect employment with flights not the absolute driver behind many airlines’ decisions.

If we are to begin a real conversation though on an approach away from growth, we need to ensure and expand on the principles of a “just transition.”

Today’s economic approaches, while imperfect, offer a level of predictability and generally aim to maintain jobs, temper inflation, and keep interest rates relatively stable at least at the national level. However, that approach clearly leaves people behind as all 3 of those factors, with growth in mind, have improved, yet people do not seem to agree or feel the effects as tangibly as economists and politicians perhaps think they should.

While growth is relevant at the macro national and international levels, it is also very important to the local context, particularly in housing and the concept of rebuilding after disasters.

The U.S. has a housing shortage. There are places in the U.S. that should not have residents or see building activity due to their massive and repeated risk of facing natural disasters.

Unfortunately, these two facts lead to contention at the local level when evaluating everything from zoning to aid.

While I am able to write generically and separated from the emotion of having to leave a home with physical and other memories, we need to acknowledge physical safety and resiliency.

Subsidizing insurance or mandating insurers stay in “risky” areas and even encouraging rapid rebuilding with no second thought may all induce short-term growth and seem like politically wise decisions. However, 100-year floods and storms are becoming every other year floods and storms.

Again, I am detached from any given situation and I absolutely recognize that not everyone has control over the rebuilding process, funding, or where they live due to jobs, families, and other commitments, but there are solutions from FEMA to municipalities.

Broadly, though, rebuilding in such areas is a great example of how an unfettered approach to growth for its own sake encourages us to put ourselves in the same situations repeatedly, maintaining or increasing risk and re-traumatizing ourselves in the process.

Negative externalities have thus far been addressed by government, voluntary commitments, or, most often, been entirely ignored. Our economic system may be the best we have so far, but continuing to aim for incremental or voluntary progress, while laudable, ignores that the current system will never on its own solve the very problems it aims to – namely employment, prices, and interest rates. What a new system looks like is impossible to describe without first acknowledging the current one’s flaws.

Today we measure economic activity at least monthly. Corporates report quarterly, while annual reporting may allow for longer-term views on a number of factors, a reorienting of resources, and less action that seeks only short-term profit.

Yes, less info for investors may not be great and could lead to corruption. Each of these examples warrants its own approach and simply highlight the inefficient and imperfect current system and proposed solutions out there. These ideas are not suggestions, but simply suggest that alternatives to dominant approaches relying on growth do exist.

“We see from where we stand” and the politician or economist’s view of macro “wellbeing” may not match that of the individual because it relies more on linear, directly related inputs and outputs rather than maximizing outputs with minimal inputs. When they expect individuals to see from their view – as was the case over the last ~2 years – there was not agreement. When flipped, policy makers will be faced with creating an entirely new set of metrics and indicators, though it is questionable if true wellbeing can be quantified.

Even today’s subjective surveys are often centered around “consumer sentiment,” which assumes consumption is a primary goal. While there are necessities we consume, this framing inherently leads to waste and ties back to growth without accounting for what individuals had to “put in” or give up to make it happen.

One general solution/concept, a circular economy, can have growth with little or no traditional input. But it requires innovation to do so.

These are not simple ideas or even expectations I can reasonably hope for, but if this conversation is ever to occur in my lifetime, I maintain hope that now is the right time for it.

There are dozens of critics against degrowth, but the global population will hit an apex in many of our lifetimes. Many US communities already face population stagnation, but can still thrive.

Internal migration will increase with climate havens anticipating growth, but there will be the cities from which they flee that see depopulation and still many others that see no change. The concept of the just transition can be applied to frame this movement of people and static or reduced consumption (and, therefore, GDP) as still positive.

Traditionally, the just transition addressed workforce development and changes like growing industries (solar and wind) versus disappearing ones (fossil fuels), but that can expand to retail, mobility, and maybe even healthcare, each of which can innovate, but ideally will not see explicit growth going forward either.

Will tobacco use be around forever? Even after many people quit and children became less likely to smoke, a fairly sizable percentage of the population still does so. I would love to live in a world where that is not the case, but to do so means changing mass amounts of land used for agriculture, likely shutting down unviable convenience stores, and shifting healthcare offerings over time, not to mention public health resources.

If certain changes are treated as inevitable, I hope we find a way to start viewing them positively otherwise our systems of the economy, government, and more will continue to be incapable of providing insight, preparation, or protection going forward.

P.S. Some people ask me the best environmental actions they can take, especially around waste. The best waste is avoided waste. Before you get to the point of asking, “can I recycle this,” ask how to avoid a situation where something needs to be disposed of at all.

Uneaten food consumes up to 16% of freshwater per the Environmental Law Institute.

What if you wait a few days and pick something up at the store instead of ordering online, ultimately reducing packing? What if you don’t get that thing at all?

I do not advocate that we all become minimalist, ascetic people, unless that is your schtick. But we all do have plenty of opportunity to consume less.