Pro-Growth Isn't Anti-Environment

Rising human prosperity can be be ecologically sustainable. De-growth is anti-human.

Human activity is threatening the sustainability of human life on earth. The recent spate of devastating wildfires and floods will be just the beginning if current trends aren’t sharply reversed.

The most recent report from the Intergovernmental Panel on Climate Change, published earlier this month, warns that global surface temperatures will likely reach their highest sustained levels in more than 3 million years by the end of the century thanks to the emission of carbon dioxide, methane, and other greenhouse gases.

“There will be an increasing occurrence of some extreme events unprecedented in the observational record” even under the most benign scenario. Expect more droughts, heat waves, wildfires, “extreme precipitation events,” and cyclones. Many changes will be “irreversible” within any of our lifetimes.

Something radical must be done, because the status quo is literally unsustainable. The question is: what?

One possibility, which is becoming increasingly popular among a certain faction of environmentalists, is that we must accept decreasing living standards to ensure the long-term habitability of the planet. As the academics Jason Hickel and Giorgos Kallis put it recently, “we will need to scale down aggregate economic activity…staying within planetary boundaries may require a de-growth of production and consumption.”

That’s not an obviously unreasonable view. A subscriber recently wrote to me with his concern that my pro-growth stance is “increasingly untenable in a world of finite resources and accelerating global heating.”

But the de-growthers are wrong, both morally and intellectually.

As I wrote when I launched this site, the economy is “simply how people try to get more of what they want.” De-growth therefore depends on making sure that we, in the aggregate, don’t get what we want. It is a policy of deliberate deprivation.

That might mean that most people live worse (and potentially much worse) than they do now. It might also imply radically shrinking the human population, since a large portion of modern agriculture depends on the use of polluting industrial inputs. That may be why some of the most entertaining fictional supervillains have been de-growthers.1

Leftwing de-growthers often get themselves into knots when attempting to reconcile what they believe is necessary for the environment with their other preoccupations.

That’s because there is no way to lift living standards for the vast majority of people—including the large number of poor and working-class people in rich countries who would happily enjoy better food, larger homes, a wider array of gadgets, and more opportunities for travel, if provided with the necessary spending power—if humanity as a whole must consume far less. Vastly increasing global production and consumption of goods and services is the only solution to global poverty, and it’s the only acceptable way to reduce inequality.2

The reason: most spending on goods and services isn’t done by the rich, but by the poor and middle class.

Yes, the average high-earner consumes (and pollutes) much more than other people, but that doesn’t mean as much as you might think.

Just before the pandemic, 82% of U.S. consumer spending came from people who earn less than $200,000 a year. Similarly, the bottom 90% of households by disposable income accounted for 80-85% of total consumer spending in Western Europe. Unsurprisingly, the top 1% of the global income distribution only accounts for 15% of world carbon emissions—essentially unchanged for decades.3

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Part of this is a question of population size: there just aren’t that many rich people compared to everyone else even if they have a lot more money to spend. But it’s also a function of the fact that the highest earners spend a smaller share of their income on consumption than everyone else.

Most people would happily spend even more on goods and services if they had the money or credit to do so, but are constrained because their purchasing power is finite. Those at the top of the income distribution, however, have so much money that they literally can’t spend it all on consumer goods and services. Instead, they buy stocks, bonds, trophy housing, and art.

Across most societies, people outside of the top of the income distribution tend to save around -5% to +10% of their income. For those at the very top, however, the saving rate is over 50%, with the saving rate rising far higher the higher up the income ladder one goes. That means that changes in the distribution of income, both within households and between households and businesses, can have significant effects on economy-wide saving, spending, and borrowing.4 Giving poor people more money means more consumption, full stop.

But many of the de-growthers don’t seem to have wrapped their heads around the implications. Consider how Hickel and Kallis conclude their paper (citations omitted, emphasis added):

Combatting climate change might require not only new clean and efficient energy technologies, but also a reduction and re-composition of consumption, with a shift from carbon-intensive to low or zero carbon sectors. Legislative limits, green taxes, shifts in public investment and working hour-reductions or new social security institutions such as a basic income all have a role to play in such a transition. The objective could be to find ways to decouple prosperity and development from growth rather than to continue to chase the phantom of green growth.

One of the stranger reviews of Trade Wars Are Class Wars was at least honest about what he thought would have to happen:

While redistributing income and wealth is vital, having this take the form of rising consumption in order to trigger additional productive capacity is a big problem, for this can only result in more growth that increases carbon emissions. As many have pointed out, it is an illusion to think that GDP growth can be “decoupled” from rising carbon emissions. Degrowth, it is increasingly clear, is an imperative…

But what is the point of giving people more spending power if you are going to turn around tell them they aren’t allowed to actually buy anything? Either you believe that the material conditions of the vast majority of humanity can and should be improved—or you don’t.

Now, I happen to think that giving people more money to buy more stuff would be a good thing. I also think it can be done in a way that doesn’t involve endangering the environment. We might need to change how we make things and maybe even change some of what we buy, but both the total population and the average person’s living standards should still rise as long as human ingenuity does what it’s done for the past couple of centuries: radically reduce our need for material inputs.

In fact, there won’t be any climate transition without enormous investments in everything from electrification to insulation, as well as substantial changes in everything from the way we produce food to the materials we use for buildings and roads. That will be a challenge, but there’s no reason to think that it will be impossible if we mobilize sufficiently to produce enough of what is needed.

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After all, we have already made tremendous progress in reducing emissions and increasing carbon efficiency without even trying. Carbon emissions in the major rich countries were 15% lower in 2019 than at the peak 2005 even as total production of goods and services rose about 30%.5 Put another way, a resident of an advanced economy produced about 50% more GDP in 2019 with the same amount of carbon emissions than she did in 2005. Moreover, that’s part of a longer-term trend going back decades.

Humanity as a whole has done even better, with the global economy producing 5.5 times as much goods and services per ton of CO2 in 2019 than in 1980. Put another way, we’ve managed to improve our carbon efficiency about 4% each year for decades.6 That’s obviously not enough, but it suggests there is a lot of potential for much faster progress if we actually agree it’s important.

China, for example, generated carbon efficiency of gains of less than 1% each year on average from 2001-2011, because that was the period when the government was focused on juicing reported GDP growth by providing cheap financing for unnecessary construction projects, steel mills, and coal mines. Since then, however, the Chinese government has attempted to shift to a more sustainable model, and while there is plenty of room for further progress, one result is that the country’s carbon efficiency has been growing around 6% a year since 2011.

The climate transition will require massive amounts of spending and production. Some areas of economic activity may have to shrink, but many will have to grow, and at least in the short term, the need for more production of desired goods and services will vastly outweigh the need to reduce undesirable forms of economic activity. Growth, not de-growth, is going to be the answer.

Suppose humanity pulls it off and we get to a world of zero (or negative) net greenhouse gas emissions in the next few decades. At that point, energy would predominantly come from resources that are both clean and, for all practical purposes, inexhaustible. Our diets and building materials might have changed a bit, but once we figure out how to make it work, the one-time adjustments should last for generations. At that point, why would there be any environmental limits to growth?

If we can get past the enormous challenge in front of us without pushing the species back to preindustrial living standards—and preindustrial population levels—then we surely have the capability to overcome any other challenges. And if not, I suspect the “solution” won’t look much like what the current crop of de-growthers have in mind.

1

Thanos didn’t restrict his plans to humans because he was an intergalactic supervillain who was also concerned about ecological constraints on other planets.

2

Immiserating everyone to the same level of subsistence would lead to lower inequality, but not in a way that anyone should find desirable.

3

Air travel is a service that’s consumed almost exclusively by high earners and contributes to their high emissions per person. But the global aviation sector, including freight, only accounts for about 3% of total emissions.

4

If you think this sounds interesting and want to know, do I have a book for you!

5

Emissions plunged in 2020, but much of that was temporary due to the pandemic.

6

The most notable laggard has been India, but things have been improving there more recently as well.