Friday, May 30, 2014

We haven't figured out sustainable economic growth yet

There's a big picture problem that we haven't figured out yet.

Our population keeps growing and the amount of stuff we build and create keeps growing - but there's only one planet. Eventually, we're going to run out. We're going to run out of clean water. We're going to run out of fossil fuels to burn for our energy. We're going to run out of lithium and iron. There's only so much stuff and if we keep growing at 3 or 4 percent a year, that growth will hit the limit.

To demonstrate the point more insightfully than I can do, I'll quote from an essay from the Chief Investment Officers of a $100 billion company (actually condensed in a Guardian column by George Monbiot) on the impossibility of sustained compounded growth.

Let us imagine that in 3030BC the total possessions of the people of Egypt filled one cubic metre. Let us propose that these possessions grew by 4.5% a year. How big would that stash have been by the Battle of Actium in 30BC? This is the calculation performed by the investment banker Jeremy Grantham.
Go on, take a guess. Ten times the size of the pyramids? All the sand in the Sahara? The Atlantic ocean? The volume of the planet? A little more? It's 2.5 billion billion solar systems. It does not take you long, pondering this outcome, to reach the paradoxical position that salvation lies in collapse.

That's something else.

Let that sink in.

It's like the bad side of collecting interest in a bank account for 30 years. Instead of getting rich on wealth, we're getting buried in the stuff we're consuming.

Taking the long-term view (a dozen generations or so) means our current social model of perpetually increasing consumption won't work. It will break when we hit the limit of our resources. And we're bumping up against the limits of oil, natural gas and coal in the next few decades (not to mention we've basically passed the limits of what the atmosphere can handle from our pollution).

On the other hand, creating a perpetually higher living standard (healthier, wealthier, smarter) is fundamental to ... humanity. The best reaction to recognizing the impossibility of sustained compounded growth isn't to give up on a progress. There's got to be a way to raise our standard of living without relying on ever-increasing consumption.

What a great problem to solve! Sustainable societies and economies!

I don't know what the answer is, but I'm really interested in trying to figure it out. I think renewable energy has to be at the center of the solution. Stamping out inefficiencies in our industries (like health insurance financing) has to part of it.

But it also probably involves the very nature of work, money and wealth. We probably need to find a way to value (and pay for) services more than goods. We need better measurements of economic prosperity that value services more than goods so more people can make a living from services.

It's a big problem. I can barely get my arms around it, but it's exciting to think about in order to generate the inspiration and the fuel to start changing our economy now to move in the direction of that sustainable society.

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