By Juan Pablo Carvallo
Sustained growth lies at the very heart of the current mainstream economic paradigm. Is that so that it seems almost evident that it will happen naturally because of technological innovation so it’s not questioned nor challenged. Technological advancement, in this context, is the result of the endless entrepreneurial pursuit of profit maximization to provide returns for an equally endless capital accumulation. This pursuit, in turn, is the only path to full employment, wealth, and an ever growing standard of living; in one word to prosperity. Ecological economists[1] have questioned these assumptions by simulating the macroeconomic behavior of low and no-growth scenarios and finding that, at least for Canada, a socially feasible[2] and much more sustainable economy is achievable. If we assumed these results were valid, then one question remains: which economic output level should we aim for?
Allegedly[3], a strong reason behind permanent economic growth is to allow everyone to enjoy a healthy, long, and happy life. However, on one hand, the idea that one is happier by consuming more is ridiculously simplistic and most likely wrong. On the other, it’s also true that very low levels of consumption - which translates to low income - prevents people to cover basic necessities and puts them in permanent anguish and stress to secure their livelihoods. To help find this middle point, I looked into the Happy Planet Index[4] elaborated by New Economics Foundation. The metric is compounded by life satisfaction and expectancy and the ecological footprint of a specific nation. Inhabitants who express satisfaction with life but whose nation’s ecological footprint is unsustainable have their Happy Planet Index cut as they are deemed to provide prosperity at the expense of the planet and other countries.
Economic growth is usually measured by GDP per capita, so what I did for each country was to compare their 2011 value with their happiness index in that year. It’s quite evident that to achieve a sustainable happy livelihood you don’t need a disproportionate amount of GDP per capita. Additionally, it’s also apparent that a really small income[5] will prevent nations’ inhabitants to achieving satisfying lives, even if they do so in an environmentally conscious way. The average GDP per capita for the top 20 countries in the list – out of 143 – is $6,400, whereas the top country, Costa Rica, had a GDP per capita of $10,180. Curiously, the worldwide average GDP per capita in 2011, according to my calculations based on World Bank data, was $ 10,190.
If we stopped growing and stationed at single economic output, then the current world’s one should be enough to secure sustainable happiness for all humans providing that we were able to distribute it evenly throughout the world population. It also suggests that we don’t really need incommensurate technological progress - and therefore permanent growth - and that innovation efforts should rather be put on finding macroeconomic stability mechanisms that omits the latter. Above all, considering that the Happy Planet Index is higher for nations that are environmentally sustainable, it proves that our way out of global warming does not conflict with achieving prosperity and lies mostly in the political will to distribute resources and wealth more evenly.
The views expressed here belong solely to the author of this entry and are not representative of the position of the Energy and Resources Group, UC Berkeley.
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[1] Victor, P. 2012. Growth, degrowth and climate change: A scenario analysis, Ecological Economics 84 (2012) pp.206-212.
[2] Probably the steady state population requirement would be the hardest to achieve, although Canada’s population is growing quite slowly.
[3]Herman Daly’s essay on the steady state quotes an economist having suggested that permanent growth provides hope to poorer people under an equally permanent unequal distribution of wealth and therefore income scenario.
[4]Abdallah S, Thompson S, Michaelson J, Marks N and Steuer N (2009) The (un)Happy Planet Index 2.0. Why good lives don't have to cost the Earth (nef: London)
[5] Here I’m simplifying language by assuming that economic output equals income. Even though this is not true, since there’s also government expenditure, import-exports, and capital investments, consumption makes a large portion of the economy in market societies so it’s not a bad assumption anyway for our purposes.
Sustained growth lies at the very heart of the current mainstream economic paradigm. Is that so that it seems almost evident that it will happen naturally because of technological innovation so it’s not questioned nor challenged. Technological advancement, in this context, is the result of the endless entrepreneurial pursuit of profit maximization to provide returns for an equally endless capital accumulation. This pursuit, in turn, is the only path to full employment, wealth, and an ever growing standard of living; in one word to prosperity. Ecological economists[1] have questioned these assumptions by simulating the macroeconomic behavior of low and no-growth scenarios and finding that, at least for Canada, a socially feasible[2] and much more sustainable economy is achievable. If we assumed these results were valid, then one question remains: which economic output level should we aim for?
Allegedly[3], a strong reason behind permanent economic growth is to allow everyone to enjoy a healthy, long, and happy life. However, on one hand, the idea that one is happier by consuming more is ridiculously simplistic and most likely wrong. On the other, it’s also true that very low levels of consumption - which translates to low income - prevents people to cover basic necessities and puts them in permanent anguish and stress to secure their livelihoods. To help find this middle point, I looked into the Happy Planet Index[4] elaborated by New Economics Foundation. The metric is compounded by life satisfaction and expectancy and the ecological footprint of a specific nation. Inhabitants who express satisfaction with life but whose nation’s ecological footprint is unsustainable have their Happy Planet Index cut as they are deemed to provide prosperity at the expense of the planet and other countries.
Economic growth is usually measured by GDP per capita, so what I did for each country was to compare their 2011 value with their happiness index in that year. It’s quite evident that to achieve a sustainable happy livelihood you don’t need a disproportionate amount of GDP per capita. Additionally, it’s also apparent that a really small income[5] will prevent nations’ inhabitants to achieving satisfying lives, even if they do so in an environmentally conscious way. The average GDP per capita for the top 20 countries in the list – out of 143 – is $6,400, whereas the top country, Costa Rica, had a GDP per capita of $10,180. Curiously, the worldwide average GDP per capita in 2011, according to my calculations based on World Bank data, was $ 10,190.
If we stopped growing and stationed at single economic output, then the current world’s one should be enough to secure sustainable happiness for all humans providing that we were able to distribute it evenly throughout the world population. It also suggests that we don’t really need incommensurate technological progress - and therefore permanent growth - and that innovation efforts should rather be put on finding macroeconomic stability mechanisms that omits the latter. Above all, considering that the Happy Planet Index is higher for nations that are environmentally sustainable, it proves that our way out of global warming does not conflict with achieving prosperity and lies mostly in the political will to distribute resources and wealth more evenly.
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| Image: Polyp.org.uk |
The views expressed here belong solely to the author of this entry and are not representative of the position of the Energy and Resources Group, UC Berkeley.
---
[1] Victor, P. 2012. Growth, degrowth and climate change: A scenario analysis, Ecological Economics 84 (2012) pp.206-212.
[2] Probably the steady state population requirement would be the hardest to achieve, although Canada’s population is growing quite slowly.
[3]Herman Daly’s essay on the steady state quotes an economist having suggested that permanent growth provides hope to poorer people under an equally permanent unequal distribution of wealth and therefore income scenario.
[4]Abdallah S, Thompson S, Michaelson J, Marks N and Steuer N (2009) The (un)Happy Planet Index 2.0. Why good lives don't have to cost the Earth (nef: London)
[5] Here I’m simplifying language by assuming that economic output equals income. Even though this is not true, since there’s also government expenditure, import-exports, and capital investments, consumption makes a large portion of the economy in market societies so it’s not a bad assumption anyway for our purposes.
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