Stop growing?

Published on: 3 June 2021

If something doesn't make you happy, it's better to stop doing it, especially if the collateral damage is large. No, this article isn't about bad relationships, it's about economic growth, because that's what the above reasoning is often applied to. So should we stop economic growth?

 

Of course, economic growth still has fans. Especially if it's high and politicians want to pat themselves on the back. However, economic growth has also been criticized. As Bobby Kennedy pointed out more than half a century ago, gross domestic product (GDP) doesn't measure the things that make life worth living. Examples are the health of our children, the beauty of our poetry or the integrity of our administrators. Also, issues such as environmental damage and resource depletion are not properly taken into account.

 

So it's an imperfect measure. But then again, the score on the scoreboard doesn't always reflect how well – or badly – my football club has played. Is that a problem? Well, it is if you apply the credo of what gets measured, gets managed. If the game's good, but the results aren't forthcoming, the trainer will be fired. By the same reasoning, a politician without economic growth can say goodbye to his job. He or she will therefore want to pursue a growth-promoting policy.

 

What are the consequences if we continue that line of arguing? Ugly and boring football that's focused on results. In the case of football, the damage is limited to dozing off before the final whistle. Economic scoreboard policy could do more harm. "Economic growth is a monster that is exhausting the earth and claiming human lives," someone said in a newspaper interview last week. With the recommendation to take a step back, say, 'to stop growing'.

Steering towards the type of growth rather than stopping seems more meaningful to me

I have problems with that diagnosis and with that, the remedy. Now, I'm not a political scientist, but I don't want to believe that a different composition of the GDP figure – say: we remove the gas revenues – makes a difference in the voting booth. Of course, purchasing power charts are an obsession in The Hague, but that's totally different from scoring with economic growth. The frenzied austerity measures after the financial crisis aren't an indication of a monomaniac focus on growth either.

 

The dark sides of economic growth – such as CO2 emissions, reliance on finite resources – can't be reduced by measuring growth differently. And stopping growth itself is quite rigorous. Growth has dramatically improved lives and can help further reduce poverty. Another, not insignificant fact: without economic growth, you can't save because no one's investing.

 

Steering towards the type of growth rather than stopping seems more meaningful to me - less shade, more light. Less production of goods, but more reuse and more services. Make sure energy-intensive production and CO2-intensive energy are reduced. Last month's scenario of the International Energy Agency with a climate-neutral economy in 2050 is on that track. Such an economy will grow. How do we steer growth? Well, with rules, taxes, subsidies and government investments, for instance. This influences the relative prices of raw materials, emissions and labor and helps to make growth healthier: fairer, greener, more circular, 'decluttered'.

 

Is economic growth a monster we should lock up? I see it more as a happy pet that unfortunately also regularly needs correcting for its rambunctious behavior. It's unfair to say the neighbors are crying shame over it. You should never just let him go. And you have to show him who's boss – with punishments and rewards. That's when you will enjoy the animal the most.

 

Charles Kalshoven is a senior strategist at APG