The problem with economic policy is that it constantly pursues growth and doesn’t take into account the negative impact this has on the environment. Governments always set GDP targets to grow, meaning that the use of resources and hence emission output is constantly increasing. The UK for example sets a long run economic growth target of 2.5%. The growth model is based on producing more, consuming more and disposing more every year.
Naomi Klein’s book ‘This Changes Everything’ has a great quote that perfectly describes the problem: ‘What the climate needs to avoid collapse is a contraction in humanity’s use of resources: what our economic model demands to avoid collapse is unfettered expansion. Only one of these sets of rules can be changed, and it’s not the laws of nature’.
The conclusion from Naomi Klein’s statement is that the economic model of ‘more’ must change. Listening to Greta Thunberg, the 16 year old Swedish activist school girl, makes you realise how urgent the need for change is. Greta is saying that within 11 years, the impact on the environment will be irreversible. Change has to happen quickly.
Currently it is taboo for politicians to suggest a shrinking economy as this would involve knowingly putting the economy into a recession and they would be voted out of office immediately. Bill Clinton’s famous quote ‘Its the economy stupid’, underlines this divine mantra of focusing on economic growth. However, as voters we have to change and support a green economy even if this means recession. If the change can’t come from top down government policy then it will have to come from the public forcing through environmental responsibility.
The need for a change to Green Economics is urgent. The holy grail would be economic growth that would also result in lower use of resources and falling emissions. Economic policy has to evolve away from the constant pursuit of growth at any cost.
There are examples of green business models that should be applauded and copied. Patagonia, the American outdoor clothing and equipment producer has a strategy that is ‘anti-growth’. They are looking to produce products with minimum impact on the environment and products that have a long life. Patagonia is committed to environmental activism and has focused on reducing waste and extending the life of its products.
Ellen McArthur, UK Yachtswoman, has a foundation that looks at a regenerative economy and has decided to make her legacy an environmental one. Instead of having a ‘take – make – waste’ industrial model, a circular economy aims to redefine growth. It entails decoupling economic activity from the consumption of finite resources and designing waste out of the system.
In the Rebel Economics blog post ‘New Zealand – Small and Rebellious’, we looked at a different economic model where the country is focusing on increasing ‘Living Standards’ rather than constant GDP targets. These living standards include environmental factors.
In the current environmental climate it is no longer responsible for governments to follow the old model of constantly pursuing economic growth. Change has to come and economic policy has to evolve to meet the changing needs of the 21st century. Green economics is possible if you look to New Zealand and business models such as Patagonia and the work of the Ellen McArthur foundation.
Rebel Economics 
Jenny, the need to stop targeting global increases in living standards for environmental reasons may be sensible, but personally I doubt this is the best policy to pursue. Implicitly it assumes that global Total Factor Productivity (TFP) growth is unsustainable. If TFP growth can be sustained, then that implies that global growth of GDP per capita is also perfectly sustainable, without any need to increase consumption of the world’s resources. I came across an interesting chart recently that showed California’s fuel consumption levels over past decades. Despite an enormous expansion of the economy, fuel consumption levels had actually declined slightly from their peak, due to the effects of innovation in engine technology. Moreover, if such a policy was pursued vigorously, it would inevitably result in higher levels of poverty for countless millions across the world, especially in developing economies which already have very low levels of GDP per capita.
I think the majority of well-informed people at the moment are more concerned that TFP growth might spike much higher in the coming decades, causing higher living standards with lower levels of factor inputs, but also mass unemployment, due to rapid advances in AI technologies etc. For example, autonomous vehicles would likely lead to the end of private car ownership, and an enormous contraction in motor vehicle production (and hence lower levels of global consumption of metals, fuel, etc), while also resulting in higher living standards – for everyone other than car workers.
The other point I’d make is that one should be naturally suspicious of people and organisations that preach a green agenda while at the same time they (a) behave exactly the opposite in terms of their own personal consumption habits (fabulously wealthy people like Al Gore tend to be the most avid proponents of green policies, which will have no effect on them personally – it is unusual to find people on the minimum wage arguing for lower GDP growth!); and (b) benefit enormously financially from promoting that agenda. I’m convinced there is a very strong element of virtue signalling with activists like Naomi Klein, who are neither trained scientists nor economists. Despite all the claims to the contrary, my understanding is that the science of man-made global warming is far from settled. For example, the doom-monger predictions of climactic models have proven to be totally false. And it was not so long ago that the scientific community was predicting the coming of the next ice age. Increasingly the scientific community is becoming extremely authoritarian, destroying the careers of anyone who raises objections to perceived wisdom – which of course is totally at odds with the scientific method of progress through testing competing hypotheses.
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Here is a good article on climate change that is consistent with my viewpoint. It is based on the views of a specialist in the field.
https://www.city-journal.org/global-warming#disqus_thread
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An interesting fact. Just three volcanic eruptions, Indonesia 1883, Alaska 1912 & Iceland 1947, released more carbon & sulphur dioxide than all human activity in history. But no-one knows of these events because their impact on the earth’s environment was so limited.
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Thank you for the article and your response. I am going to try and respond as best I can. Firstly I acknowledge that global warming is occurring and hence with it climate change. It is a catch 22, in that we don’t know what the impact on the environment will be. Currently we have environmental theories that we can’t prove or disprove until they occur and at that point it could be too late.
My main point is that focusing on GDP growth as an economic target is a blunt measure in that it does not take into account the cost of that growth in terms of the environmental factors. You are right to mention productivity gains and particularly technology that can give higher economic growth without an increased used in fossil fuels. This is the dream scenario in giving higher growth and emitting less.
However, why not have an economic target that has a reference to the emissions used, taking into account productivity improvements. I don’t think that growth at any cost is acceptable in the current uncertain climate. Looking at countries such as New Zealand that are trying a different model for economic growth that reflects living standards and environmental factors is maybe something that the UK could consider.
I think we are all hoping that productivity growth and technological development will be rapid and that we can continue with our current lifestyles whilst also respecting the environment. This should be something that is targeted.
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That all sounds very sensible, Jenny. The UK is already achieving a great deal wrt reducing its carbon emissions, let’s hope communist China follows suit!
https://www.carbonbrief.org/analysis-uk-carbon-emissions-in-2017-fell-to-levels-last-seen-in-1890
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Yes – the uk is making good progress and moving to renewable energy away from coal has been a big driver. Globalisation has pushed manufacturing to other countries such as China who are unfortunately emitting on our behalf !
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A very good point. Globalisation involves outsourcing production to countries which undercut domestic manufacturers by utilising high carbon-emitting energy sources, lowering health & safety standards, reducing workers’ rights, breaching international patent rights, lowering product quality, etc etc. The West running massive trade deficits with communist China is a very short-sighted policy. China is starting to increase coal consumption again, as the economy slows.
https://www.chinadialogue.net/article/show/single/en/11107-China-s-coal-consumption-on-the-rise
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