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Let It Grow, Let It Grow, Let It Grow

Thursday, March 3, 2011

Social pessimism stands in the way of tackling the real challenges facing humanity. Growth skepticism has become a barrier to rediscovering the potential of human progress.

Most people would invariably say yes if you ask whether they want a more prosperous life for themselves and their families. But ask them about the consequences of rising prosperity for society as a whole, and doubts will quickly start to creep in.

Almost everyone can see that more money offers not only more material things but greater opportunities: the ability to pursue another educational course for themselves or someone in their family, the chance to travel abroad, or the possibility of taking an extended break from work. Even committed greens are amazingly adept at demanding resources for personal travel or their organizations.

In relation to the wider world, however, most people’s support for economic growth and its resulting prosperity is likely to be heavily qualified. Indeed, it is remarkable how many lines of attack against prosperity exist.

Typically the argument says growth may have been welcome in the past, but the time has come when the costs outweigh the benefits. America is reaching the stage, so the argument goes, where it is bumping against the limits to growth.

America is reaching the stage, so the argument goes, where it is bumping against the limits to growth.

This is an outlook I call “growth skepticism.” Typically, it professes support for growth in principle but often undermines it in practice. It represents an indirect attack on prosperity rather than a full-frontal assault. It essentially says, “I support growth, but…” with emphasis on the “but.” To most people, this position is far more convincing than the outright rejection favored by deep greens, supporters of voluntary simplicity, and advocates of steady state economics.

Growth skepticism presents a flawed but powerful assault on prosperity. It is enormously influential across the developed world, including among America’s political leaders. It must be examined and understood if it is to be effectively challenged—especially as we are threatened with a new age of austerity.

The Planet, Happiness, and Equality

Perhaps the most common assaults on growth relate to the environment. From a green perspective, the drive to accumulate more stuff strips the planet of scarce resources and poisons it with waste. Overconsumption is said to fill our homes with needless goods and even swell our bodies with cheap but unhealthy food. The American dream of plenty has become the American nightmare. Even worse, the planet’s survival is said to be threatened as a result of runaway climate change.

Another common set of arguments relate to inequality. Economic growth is said to benefit the few rather than the many.

Then there are the arguments about happiness. Growth skeptics point to opinion polls showing that rising prosperity is not making Americans happier. Some go even further and liken the drive towards prosperity to a mental illness. Many names disparage such acquisitiveness, including “affluenza,” “luxury fever,” and “stuffitis.” Our growth fetish evidently threatens a shopacalypse.

Another common set of arguments relate to inequality. Economic growth is said to benefit the few rather than the many. While a small elite has enriched itself in recent decades, the mass of the American population has been impoverished. From this perspective, it is typically argued that we must restrain growth to level outcomes.

Finally, the recent financial crisis and economic bust are typically blamed on our lust for material betterment. Greedy bankers lent money recklessly, and lax regulators let them get away with it. But behind them all, it is alleged, stood the gluttonous American consumer with rapacious demands for ever more goods and services.

Less Is More?

Clearly, there is a pattern here. Once we recognize these indirect criticisms, it should be apparent, even for those sympathetic to growth skepticism, that prosperity is hotly contested nowadays. From television programs to magazine articles to the Internet, we are constantly warned of the supposed downsides of growth. Less really is more—or so we are told.

Although the likes of Al Gore prefer to avoid the word, their approach to climate change centers on rationing.

Fortunately, several excellent studies challenge the popular green litany that everything is getting worse. These include recent works such as Matt Ridley’s The Rational Optimist and Charles Kenny’s Getting Better. Older books on the same theme include Indur Goklany’s The Improving State of the World, Ron Bailey’s The True State of the Planet, and Bjørn Lomborg’s The Skeptical Environmentalist. All of these works argue that in broad terms human welfare is improving substantially over time: we are living longer and healthier lives, we are taller, more intelligent (at least as measured by IQ), and better educated. This improving trend applies to the developing world as much as to America.

Of course, saying that things are getting better overall does not mean that we live in a perfect world. Far from it. There is still an immense amount of poverty, as well as other challenges to overcome. But finding solutions to these problems demands generating more growth rather than exercising restraint.

The Climate Challenge

Climate change, contrary to what greens argue, exemplifies why more growth is needed. Let us assume for a moment that the mainstream scientific view is right, and man-made climate change presents a severe threat. Although the likes of Al Gore prefer to avoid the word, their approach to climate change centers on rationing. They want us to modify our behavior and change our lifestyles to help tackle the problem of global warming. In other words, although they are coy about saying it explicitly, they want us to consume less.

Such an approach is unwelcome from an economic and political perspective. Making people poorer and imposing austerity is undesirable. It also does not generally work since ordinary people, quite naturally, resist cuts in their living standards. Such an approach will only likely be successful if imposed through authoritarian means.

As importantly, this approach is also undesirable for tackling climate change. An alternative approach would involve developing technology to address what should be seen as a practical problem rather than a moral issue: investing in the large-scale use of less carbon-intensive forms of energy such as renewables and nuclear; adapting through such measures as building higher sea walls; and high technology solutions, perhaps including developing machines that suck carbon dioxide out of the atmosphere.

Such measures will clearly involve a considerable expense. To afford them means generating more growth to create the resources to pay for them.

Why So Pervasive?

If growth skepticism is so misguided, it begs the question of why it has become so pervasive. Until the 1970s, there was a broad consensus that greater prosperity should be welcomed. Although growth critics have existed as far back as the 18th century’s Industrial Revolution, they have typically been a minority.

An alternative approach would involve developing technology to tackle what should be seen as a practical problem rather than a moral issue.

There are several reasons growth skepticism has come to the fore recently. Rather than being seen in isolation, it is important to examine how these factors interact to explain the rise of an aversion to prosperity.

First, pessimism about growth often increases in times of economic difficulty. Many conclude that anemic growth, and certainly economic contraction, shows that natural limits constrain rising prosperity. The recent financial crisis and consequent economic downturn have certainly strengthened the forces of austerity.

The slowdown in growth, however, goes back further than a couple of years. The mainstream rise of skepticism can be traced as far back as the economic crisis of 1973-1974. That was when the golden years of the postwar economic boom gave way to sluggish growth. It was also when skeptic texts such as the Club of Rome’s Limits to Growth and E.F. Schumacher’s Small is Beautiful became international bestsellers. Although America returned to growth after the 1970s recession, the pace of expansion afterward was much slower than the 1950s and 1960s.

It is important to recognize that the relationship between slow growth and growth skepticism is not straightforward. Hostility to growth never became the mainstream outlook in the 1930s, even though the Great Depression was much more severe than today’s downturn. Although some drew conservative lessons from the experience, most came to favor more ambitious attempts to tackle the problems of the time. There is certainly ample room to criticize President Franklin Delano Roosevelt’s New Deal, but at least it represented an attempt to tackle the crisis rather than a capitulation to economic collapse.

There must, then, be other factors involved in the rise of growth skepticism. The astonishing relative decline in the importance of industry in America—and indeed across the developed world—is another. Manufacturing fell from about 30 percent of gross domestic product in 1965 to 12 percent in the most recent figures.

This is a trend that British social commentator James Heartfield called “the retreat from production” in his astute study, Green Capitalism. American society, just like Britain, is increasingly estranged from the world of production. Instead, there is a one-sided emphasis on the world of consumption and a consequent downgrading of the potential to increase production.

Pessimism about growth often increases in times of economic difficulty.

Finally, and probably most important, is the demise of believing in social progress. For a long time, economic growth was closely linked to the more general idea of progress, including scientific and cultural advances. A more prosperous society was also seen as having the potential to be more humane. But as social pessimism has gripped America, the vision of the progressive potential of economic growth has also diminished.

Rather than thinking that humans have the power to create a better world, they are viewed as potential destroyers. In this misanthropic worldview, humans essentially become parasites on the planet. They are portrayed as destroyers of the environment and creators of waste, rather than as being capable of achieving great things. Rather than highlighting human ingenuity, the emphasis is on the destructiveness of mankind.

This social pessimism has emerged over several decades. Its roots can be seen in the counterculture of the 1960s when the political Left, traditionally the most ardent supporters of social change, began to embrace green ideas. Rather than consider humans capable of reshaping nature for their own benefit, the outlook switched to one obsessed with natural limits.

The downbeat attitude was further reinforced with the end of the Cold War in the late 1980s. It was widely understood that this represented the death of socialism’s traditional conceptions. Less commonly appreciated was the general acceptance that no form of improved society is possible. The “end of history” proclaimed at the time was really the end, at least for the time being, of the idea of progress.

The Harm Done

Growth skepticism’s rise to orthodoxy has tremendously damaging consequences for America and the world. Within the developed world, it means accepting as permanent a situation in which many people struggle to get by. Many people live in poverty, and many more struggle to maintain an apparent middle-class status.

What right does the West have to dictate poverty to the rest of the world?

Growth skepticism means giving up on the possibility of overcoming economic problems, including burgeoning fiscal deficits, through growth rather than austerity. In Europe the talk has already shifted to curbing consumption rather than raising output. It looks likely that America will follow shortly.

Giving up on growth also means surrendering to problems that could be solved. For instance, the “demographic problem”— populations aging in the West—may be solved with strong economic growth. A more productive society, where each employed person produces more, can afford to maintain a larger number of dependents.

The people most likely to suffer as a result of the contemporary aversion to growth are the billions of people who live in the developing world. Despite the rapid growth of China and India in recent years, about a billion people still live on less than $1 a day. About 2.6 billion people live on less than a $2 daily threshold.

Yet it has become acceptable, particularly in green circles, to argue that the third world should stay poor, to contend that the poorest of the poor may need a little growth, but the rest of the world should not aspire to American living standards.

This is a morally and politically repugnant view. What right does the West have to dictate poverty to the rest of the world? To insist that through our hard work we can live in nice houses and drive fine cars, but they should not? Yet this is the orthodoxy embodied in the notion of sustainable development.

It is hard to see poorer countries maintaining and even improving their growth records without vibrant economies in the West. The developed world, with America at its core, remains a key market for their goods and the most important center for global innovation.

It is a tragedy that an alleged American nightmare of overconsumption has replaced the earlier dream of a more prosperous world. Such social pessimism stands in the way of tackling the real challenges facing humanity. That is why growth skepticism is so important to understand and challenge. It is a barrier to rediscovering the potential of human progress.

Daniel Ben-Ami is the author of Ferraris for All. He has worked as a financial journalist and economics writer for more than 20 years.

FURTHER READING: Andrew Biggs exposes “The Protected Class,” Robert McHenry discusses “Culture and Its Discontents,” and Jay Richards explains "Greed Is Not Good, and It’s Not Capitalism.” Kevin Hassett argues “Obama’s Obsession Drives Progress in Reverse” while Arthur Brooks and Peter Wehner make "The Moral Case for Capitalism."

Image by Rob Green/Bergman Group.

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