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If there is a dominant paradigm for how politicians and economists today think about solving climate change, it is called green growth. According to green growth orthodoxy — whose adherents populate European governments, the Organization for Economic Co-operation and Development, the World Bank and the White House — the global economy can both continue growing and defuse the threat of a warming planet through rapid, market-led environmental action and technological innovation.
But in recent years, a rival paradigm has been gaining ground: degrowth. In the view of degrowthers, humanity simply does not have the capacity to phase out fossil fuels and meet the ever-growing demand of rich economies. At this late hour, consumption itself has to be curtailed.
Degrowth is still a relatively marginal tendency in climate politics, but it’s been attracting converts. In 2019, more than 11,000 scientists signed an open letter calling for a “shift from G.D.P. growth” toward “sustaining ecosystems and improving human well-being.” And in May, a paper published in the journal Nature argued that degrowth “should be as widely and thoroughly considered and debated as are comparably risky technology-driven pathways.”
Here’s a closer look at the debate.
The case for degrowth
Perhaps the most prominent proponent of the degrowth movement is Jason Hickel, an economic anthropologist and the author of “Less Is More: How Degrowth Will Save the World.” Degrowth, as he defines it, “is a planned reduction of energy and resource use designed to bring the economy back into balance with the living world in a way that reduces inequality and improves human well-being.”
His argument against the green growth framework rests on two key premises:
There is no historical evidence that G.D.P. can be completely decoupled from material resource use. In other words, human economies cannot grow infinitely on a planet with finite resources.
G.D.P. can be decoupled from greenhouse gas emissions by replacing fossil fuels with renewable energy, but that decoupling isn’t happening fast enough.
The requisite solution, in Hickel’s view, is to reduce resource and energy consumption, which will make it easier to rapidly transition to renewable energy in the short time humanity has left to avert 1.5 degrees of global warming. But this imperative would not apply equally across the globe:
Climate change is being driven primarily by the cumulative historical consumption of the Global North, so he argues it is incumbent on rich countries to shrink their economies. (The disproportionate responsibility advanced economies bear for climate change is also why Hickel rejects calls for population control in poorer countries as “completely backward”: “We do have a population problem, it’s true,” he said in 2018. “But it has nothing to do with poor countries. The real problem is that there are too many rich people.”)
That retrenchment, in turn, would create space in the global carbon budget for poorer countries to continue growing, which they still need to do to lift their populations out of poverty.
Critics of degrowth have analogized the project to economic austerity or forced recessions, which tend to cause broad-based suffering and worsen inequality. But those negative effects, Hickel says, are merely the predictable disaster that ensues “when growth-dependent economies stop growing.”
Degrowth, by contrast, calls for a different kind of economy altogether, one that could improve people’s livelihoods despite a reduction in aggregate activity: It seeks to scale down “ecologically destructive and socially less necessary production” (such as S.U.V.s, weapons, beef, private transportation, advertising and consumer technologies that are designed to obsolesce) while expanding “socially important sectors” like health care and education.
Among the policies Hickel proposes to create such an economy are shortening the workweek, introducing a job guarantee with a living wage, shifting workers out of declining industries and the decommodification of goods like housing that people need to live dignified lives.
‘A fantasy that distracts us from real efforts to save the planet’
In a recent newsletter, the economist Noah Smith took degrowth’s main arguments to task in a defense of green growth:
First, he says economic growth can, in fact, be decoupled from resource use: “We can keep raising everyone’s standard of living without exhausting the planet’s resources. Because growth doesn’t just mean using more and more stuff; instead, it can mean finding more efficient ways to use the stuff we have.” (Hickel dismisses the claim as a hypothetical.)
Second, and more directly pertinent to climate change, Smith says that decoupling G.D.P. from greenhouse gas emissions is not just possible, as many degrowthers acknowledge, but already happening: Since 2005, 32 countries, including the United States, have managed to do it, according to the Breakthrough Institute.
Smith agrees with Hickel, though, that emissions decoupling isn’t happening fast enough. The question, then, is whether degrowthers offer the correct prescription for reaching carbon neutrality on a shorter timetable.
My colleague Ezra Klein doesn’t think so. The unacceptably slow pace of the transition to renewable energy, he argued on a recent podcast, is a political problem, not a technological one. And on the politics, degrowth is a much tougher sell than green growth.
The degrowth movement is “attacking the flaws of the current strategy as not moving fast enough when the impediments are political, but then not accepting the impediments to its own political path forward,” he said. “I think that if the political demand of the movement becomes you don’t get to eat beef, you will set climate politics back so far, so fast, it would be disastrous. Same thing with S.U.V.s. I don’t like S.U.V.s. I don’t drive one. But if you are telling people in rich countries that the climate movement is for them not having the cars they want to have, you are just going to lose.”
This is an argument Hickel takes seriously:
New York magazine’s Eric Levitz agrees that “Americans might well find themselves happier and more secure in an ultra-low-carbon communal economy in which individual car ownership is heavily restricted, and housing, health care, and myriad low-carbon leisure activities are social rights.” But, he adds, “nothing short of an absolute dictatorship could affect such a transformation at the necessary speed. And the specter of eco-Bolshevism does not haunt the Global North. Humanity is going to find a way to get rich sustainably, or die trying.”
Forgetting about growth
At the moment, degrowth has no mass constituency. But some of its animating ideas are nonetheless exerting an influence on political economic thought — particularly the critique of G.D.P. growth as the lodestar of human progress.
“Even within mainstream economics, the growth orthodoxy is being challenged, and not merely because of a heightened awareness of environmental perils,” John Cassidy wrote in The New Yorker last year. “After a century in which G.D.P. per person has gone up more than sixfold in the United States, a vigorous debate has arisen about the feasibility and wisdom of creating and consuming ever more stuff, year after year.”
What’s the alternative? Kate Raworth, an English economist, has identified one option: “doughnut economics.” In Raworth’s view, 21st-century economies should abandon growth for growth’s sake and make it their goal to reach the sweet spot — or the doughnut — between the “social foundation,” where everyone has what they need to live a good life, and the “environmental ceiling.”
“The doughnut model doesn’t proscribe all economic growth or development,” Ciara Nugent explains in Time. “But that economic growth needs to be viewed as a means to reach social goals within ecological limits, she says, and not as an indicator of success in itself, or a goal for rich countries.”
Raworth’s ideas have had real-world impact: Last year, during the first wave of the pandemic, Amsterdam’s city government announced it would aim to recover from the crisis by adopting the precepts of “doughnut economics.” A year before that, Prime Minister Jacinda Ardern of New Zealand announced her country would prioritize its residents’ welfare and happiness over G.D.P. growth.
Even in the United States, which has embraced no such policy, G.D.P. growth has slowed in the past two decades, largely because of falling birthrates and a switch in spending patterns from goods to services.
That hasn’t solved the problem of America’s addiction to fossil fuels, of course. “Yet the sorts of policies on offer from degrowth advocates — like universal basic services and shorter working hours — could help address some of the long-standing ills now afflicting a wide range of economies,” Kate Aronoff writes in The New Republic. “Rather than chasing an increasingly far-off goal by trying to coax forth elusive corporate investment with giveaways, governments could start planning for what a fairer lower growth, lower carbon future might look like.”
Do you have a point of view we missed? Email us at email@example.com. Please note your name, age and location in your response, which may be included in the next newsletter.
“Can we live within environmental limits and still reduce poverty?” [Development Policy Review]
“Green growth vs degrowth: are we missing the point?” [OpenDemocracy]
America Inc and the shortage economy – The Economist
IF YOU LOOK only at the scale of the profits cranked out by American businesses, they seem to be indestructible (see chart). Despite a pandemic and a savage slump in 2020, large listed American firms’ net income for the third quarter of this year is expected to reach over $400bn, at least a third higher than in the same quarter in 2019. Yet as earnings season gets into full swing this week, bosses and investors are watching for signs that three related worries are biting: supply-chain tangles, inflation, and hints that a long era of profitable oligopolies is giving way to something more dynamic and risky. Already big firms such as Snap, Honeywell and Intel have given the jitters to investors. Could there be more to come?
Only a quarter or so of firms in the S&P index have reported results so far. Those that have done so have pleased investors with better than expected figures. Superficially the picture is of “back to business as usual”. Bad-debt provisions taken by banks in the depths of the panic over the economy, which proved unnecessary, have been unwound. JPMorgan Chase got a $2bn benefit to its bottom line from this reversal in the third quarter. Goldman Sachs has shelled out $14bn in pay and bonuses so far this year, up by 34% year on year. American Express reported a leap in revenues as small firms and consumers spent on their cards more freely. United Airlines confirmed it was on track to hit its performance targets for 2022.
Yet look again and the three worries loom. Start with supply chains. The number of ships waiting off California’s big ports remains unusually high at about 80, according to Bloomberg. On 22nd October, Jerome Powell, the chair of the Federal Reserve, said that supply-chain problems may last “well into next year”. The knock-on effects are feeding through industry. Union Pacific, a railway firm, lowered its forecast for traffic volumes because semiconductor shortages (often in Asia) have hit car production, in turn reducing the number of vehicles and components transported by rail. Honeywell, an industrial firm, cut its full year sales target by 1-2% complaining of a shortage of parts. VF Corp, which makes shoes (including white ones that fans of Squid Game, a hit TV show, hanker after) complained of supply-chain problems in Asia. So far the problem is not disastrous but it is inflating costs and forcing firms to adapt.
This supply chain headache is one element of a second, broader worry, about inflation and its impact on profits. Commodity prices are a source of pressure, with crude oil reaching $86 a barrel this week. Wages are too: although there are still 5m fewer people employed across the economy than before the pandemic hit, average hourly pay rose by 4.6% year on year in September. The immediate effect tends to be felt by low-margin firms that employ a lot of people: Domino’s Pizza has complained of a “very challenging staffing environment” and falling sales.
Elsewhere a mild inflationary mindset is slowly infiltrating boardrooms. Procter & Gamble predicted that commodity and freight inflation would raise its operating costs this financial year by about 4% and that sales would rise by up to 4%, owing to a mixture of price rises, and volume and mix effects. Honeywell warned there would be a “continued inflationary environment” in 2022. All firms are weighing how much they can raise prices to compensate for higher costs. So are fund managers who are busy running screens for companies that they judge to exhibit the all-important quality of “pricing power”. The shifting psychology of bosses and investors towards expecting more inflation should concern Mr Powell at the Fed.
The final big issue is whether an economy with shortages that is running hot ultimately forces an end to the managerial consensus of the past decade, which has favoured keeping margins high and being stingy with investment in order to maximise short-run cashflow. Already there are signs that attitudes are shifting in response to shortages and pent-up demand: economy-wide investment, excluding residential investment, rose by 13% in the second quarter of 2021 compared with the preceding year. United Airlines has said it will increase its capacity on international routes by 10%. FreePort McMoRan, a huge miner of copper (used in electric vehicles among a wide array of industrial applications), has said that it is “prepared to make value enhancing investments in our business” in response to red-hot prices. Hertz has announced an order of 100,000 cars from Tesla. And on Wall Street a fund-raising bonanza for speculative start-ups continues, including last week the merger of a special-purpose acquisition company with the social-media ambitions of a certain Donald Trump.
Rising investment is exactly what economists want because it increases capacity today and boosts the economy’s long-run potential. Yet whether investors are prepared to take the plunge remains to be seen. Habituated by years of high margins, they tend to run shy of rising investment and competition. Snap’s share price dropped by over 20% on October 21st as signs that the war over privacy settings on the iPhone between Apple and social-media firms, and the intensifying competition in advertising between a wide array of tech firms, is hurting its results. And Intel, which earlier this year boldly announced plans for a huge rise in investment in order to return to the frontier of the semiconductor industry, alongside TSMC and Samsung, presented Wall Street with the bill in the form of much lower than expected short-term earnings: its shares dropped by 12%. If you run a company or invest in one this is the new calculation: demand is recovering and costs are rising. Can you raise prices? And should you expand capacity? By the end of this earnings season the answer may be clearer.
High under-employment and long-term unemployment are keeping an over-heating economy on ice | Greg Jericho – The Guardian
Afghanistan's population faces extreme hunger as collapsing economy, drought and conflict hamper access to food – The Globe and Mail
More than half of Afghanistan’s population – 22.8 million people – will face extreme hunger over the winter months as the country plunges deeper into a worsening food crisis.
A collapsing economy, drought and conflict have severely affected access to food in the country, United Nations agencies warn. The Integrated Food Security Phase Classification released Monday by the Food Security and Agriculture Cluster of Afghanistan, and co-led by the Food and Agriculture Organization of the UN and the UN World Food Programme, is reporting the highest number of people with acute food insecurity ever recorded in the 10 years that the analysis has been conducted in Afghanistan.
The report shows a 37-per-cent increase in the number of Afghans facing acute hunger since the assessment in April, 2021.
The Taliban’s takeover of the country in August has had a significant impact on the economy. More than 500,000 Afghan security-force members lost their jobs and civil servants have not been paid in more than three months, the report said. Taliban control meant a freeze of US$9.5-billion in government assets, causing the economy to deteriorate further; likewise the value of the currency. Foreign aid accounted for 40 per cent of Afghanistan’s GDP and its future is also uncertain, but some countries said they will continue to provide support through UN agencies and international organizations.
Hsiao-Wei Lee, the World Food Programme’s deputy country director in Kabul, told The Globe and Mail that she’s spoken with Afghans who have told her about how much harder life has been, saying they are desperate. “If you were to go to the market here, you would find people selling their carpets and their household furniture to try to generate some money so that they can pay for food.”
She added: “We’re at a point where we either respond and respond with the depth and level of assistance that’s required or … we would face potential levels of starvation or death.”
The report said that more than 3.2 million children under 5 are expected to suffer from acute malnutrition by the end of the year. Earlier this month, World Food Programme and Unicef said one million children were at risk of dying from severe acute malnutrition without lifesaving intervention.
Chris Nyamandi, Save the Children’s country director in Afghanistan, said his organization sees young children in its clinics every day who are “wasted from severe malnutrition because they have nothing but scraps of bread to eat,” adding that when winter comes, they will see more children going hungry than ever before.
“Afghan children need the world’s help if they are going to have even a fighting chance of surviving this crisis. We will continue doing everything we can to get them life-saving services they need, but for aid efforts to continue we urgently need governments to step up with more aid to the country,” he said in a statement.
Save the Children cited Ottawa’s August announcement to spend an additional $50-million in humanitarian aid to Afghanistan as an initial response to the crisis, but said that with needs escalating, “additional life-saving support is desperately needed.”
Guillaume Dumas, a spokesperson for International Development Minister Karina Gould, said the government allocated more than $27.3-million in humanitarian assistance in 2021, and an additional $50-million for Afghanistan and the region as announced in August.
“This substantial contribution of $50M included direct funds for partners with operational capacity on the ground like the World Food Programme,” he said in an e-mail, adding that the WFP is Canada’s largest humanitarian partner.
“Our government remains committed to Afghanistan and the Afghan people and we will continue to do all that we can to support them,” he said.
David Beasley, executive director of the World Food Programme, said the country is now among the worst, if not the worst, humanitarian crisis in the world.
“We are on a countdown to catastrophe and if we don’t act now, we will have a total disaster on our hands,” he said in a statement.
“Hunger is rising and children are dying. We can’t feed people on promises – funding commitments must turn into hard cash, and the international community must come together to address this crisis, which is fast spinning out of control.”
The UN agencies made a plea to the international community for financial help. The World Food Programme said it’s planning to increase its humanitarian assistance to meet the needs of more than 23 million Afghans, which might require US$220-million a month. The Food and Agriculture Organization of the UN is looking for US$11.4-milion in urgent funding and an additional US$200-million for the agricultural season.
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