Is Economic Growth the Answer?

Financial bailouts are not the key to a healthy economy. It's time to shift from pursuing a bigger economy to pursuing a better, non-growing, steady state economy.
Is Economic Growth the Answer?

In an attempt to reverse the financial meltdown and get the economy growing again, heads of state, Wall Street financiers, Federal Reserve economists and CEOs are all scrambling to arrange bailouts for banks and businesses. I believe that if these leaders continue down the bailout trail, they will only make matters worse. Financial shell games aimed at coaxing more growth out of an already overgrown economy just add fuel to the fire.

If economic growth is the answer, how did we arrive at this mess in the first place?

Three frightening features of the economic landscape come to mind:

  • A debt-riddled financial system coupled with growing unemployment and inequities between the haves and have-nots;
  • Profound environmental problems such as climate change, loss of biodiversity and deforestation that are the unintended consequences of market activity;
  • Increasing demand for energy despite dwindling supplies and intense international competition for the Earth’s remaining resources.

After 60 years of growth, these problems have only worsened. Despite decades of political rhetoric to the contrary, economic growth conflicts with environmental health. At this juncture in history it is time to re-envision our economic goals and shift from pursuing a bigger economy to pursuing a better, non-growing, steady state economy. Such a shift toward “right-sizing” is the path to sustainability and true prosperity. It’s time for economists and our business leaders to poke their heads outside the neoclassical economics box.

_Rob Dietz is the executive director of the Center for the Advancement of the Steady State Economy (CASSE), www.steadystate.org. Voice support for the steady state economy by visiting CASSE’s website and signing the common sense position on economic growth.

68 comments on the article “Is Economic Growth the Answer?”

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Anonymous

I have a tendency to agree with this position. perhaps it is time for a paradigm shift in economic policy. Our national economy has been steadily rising since WWII; unfortunately, during the same period of growth, we've gone from manufacturing to a service-sector based economy. I might also add that economists and the administration have become too dependent on consumer spending to help lift economic growth. That's somewhat of an oxymoron considering the loss of jobs overseas and tight credit policies here at home. Consumers can't spend what they don't have. And the financial meltdown in progress makes all the failed economic policies and bailouts appear to be crisis management at it's best.

Anonymous

I have a tendency to agree with this position. perhaps it is time for a paradigm shift in economic policy. Our national economy has been steadily rising since WWII; unfortunately, during the same period of growth, we've gone from manufacturing to a service-sector based economy. I might also add that economists and the administration have become too dependent on consumer spending to help lift economic growth. That's somewhat of an oxymoron considering the loss of jobs overseas and tight credit policies here at home. Consumers can't spend what they don't have. And the financial meltdown in progress makes all the failed economic policies and bailouts appear to be crisis management at it's best.

josh bootz

I love the "frightening features" analysis, and am glad to see hints that not only adbusters, but investors are thinking through these issues. Investors who have pulled their money out and cut their losses are seeking more connected, concrete and safe places to rebuild their portfolios. I'm not sure steady-state captures what we should be striving towards. Agile, innovative, and emerging seems more appropriate. The global and environmental issues we face require a turn from a pure growth-based economy. Pure growth cannot be sustained anymore (it never really could), but overcoming these challenges will require significant innovation and growth in new areas such as alternative engergy, transport, product design, manufacturing, materials agriculture, and more. It's probably no surprise that the only real bailout will be consumer driven. In this "new bailout" I see investors and consumers seeking, and money moving to, the most innovative at producing a beneficial and sustainable product, a company that can do so for a profit and satisfy its investors with dividends not necessarily growing stock price, where creativity and community investment are rewarded. We vote with our dollars. Vote for the smaller, more innovative and agile company that has honest investment in your community, the global market and greater environment. Though this we can change the corporate landscape, and emerge from this recession on a better heading than before.

josh bootz

I love the "frightening features" analysis, and am glad to see hints that not only adbusters, but investors are thinking through these issues. Investors who have pulled their money out and cut their losses are seeking more connected, concrete and safe places to rebuild their portfolios. I'm not sure steady-state captures what we should be striving towards. Agile, innovative, and emerging seems more appropriate. The global and environmental issues we face require a turn from a pure growth-based economy. Pure growth cannot be sustained anymore (it never really could), but overcoming these challenges will require significant innovation and growth in new areas such as alternative engergy, transport, product design, manufacturing, materials agriculture, and more. It's probably no surprise that the only real bailout will be consumer driven. In this "new bailout" I see investors and consumers seeking, and money moving to, the most innovative at producing a beneficial and sustainable product, a company that can do so for a profit and satisfy its investors with dividends not necessarily growing stock price, where creativity and community investment are rewarded. We vote with our dollars. Vote for the smaller, more innovative and agile company that has honest investment in your community, the global market and greater environment. Though this we can change the corporate landscape, and emerge from this recession on a better heading than before.

Anonymous

Cradle to cradle theory. What we want is more productivity, and more waste. Just, waste that is engineered to be productive (waste=food). Humanity is not just going to stop proliferating. Nor should it. Instead we should look forward to a future innumerable creative endeavors.

Anonymous

Cradle to cradle theory. What we want is more productivity, and more waste. Just, waste that is engineered to be productive (waste=food). Humanity is not just going to stop proliferating. Nor should it. Instead we should look forward to a future innumerable creative endeavors.

nate

great article, and great points. We're being told that it may take awhile to get the economy back to normal, and it is healthy to question... is "back to normal" really what we want? Do we want things to be like they were a couple years ago? Uh... won't that just cause more problems? thanks for the insight.

nate

great article, and great points. We're being told that it may take awhile to get the economy back to normal, and it is healthy to question... is "back to normal" really what we want? Do we want things to be like they were a couple years ago? Uh... won't that just cause more problems? thanks for the insight.

M to the S

I see how you can discover a correlation between economic growth, disparity, and environmental damage but that doesnt denote direct causation. A shift towards industries that produce clean energy would cause a rise in economic growth and an increase in markets but this would have negative affects on the environment. And would actually lower prices of a basic necessity that would help close equity gaps. The problem isnt the growth in economy specifically but rather in what areas it is in. You must also be aware that setting this paradigm to the world as a whole, would leave many countries far from being dependent on foreign aid. The lack of growth would continue maintain high rates of crime, health risks and etc...

M to the S

I see how you can discover a correlation between economic growth, disparity, and environmental damage but that doesnt denote direct causation. A shift towards industries that produce clean energy would cause a rise in economic growth and an increase in markets but this would have negative affects on the environment. And would actually lower prices of a basic necessity that would help close equity gaps. The problem isnt the growth in economy specifically but rather in what areas it is in. You must also be aware that setting this paradigm to the world as a whole, would leave many countries far from being dependent on foreign aid. The lack of growth would continue maintain high rates of crime, health risks and etc...

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