Economic growth is malignant
Dr. Trevor Hancock
5 November 2019
While the exchange between my fellow columnist, Lawrie McFarlane, and myself on the issue of economic growth may seem esoteric, it is fundamental to the future wellbeing of our civilization and many forms of life on our planet, including humans. In his column last week, Lawrie took issue with my view – responding to his column about the policies of the Greens and the NDP – that continuing to pursue economic growth is mad if it meant “further harm to the Earth’s natural systems, further depletion of vital natural resources and further extinction of the species that make up the web of life – as it does in the current mainstream model of development”.
He argues that economic growth has lifted many out of poverty and brought us improved health and an improved quality of life, and that with many still living in poverty and a growing population, “we’re going to need a lot more of it, not less”. To some extent he is correct, but only if we qualify what sort of economic growth we are talking about (not all growth is good), where it is needed and by whom, and how its benefits are distributed.
First, the health benefits of economic growth are not linear. If we look at the relationship between GDP per person (GDPpp) and life expectancy for the world’s nations, we find that as GDPpp goes up, so does life expectancy, and quite dramatically – to a point. That point is about $20,000 US per person, according to a 2014 report from Euromonitor International, with life expectancy increasing more than 20 years from the lowest levels of GDPpp to the $20,000 level.
But beyond that point, further increases in GDPpp have little or no relationship to life expectancy, with a mere 2 years increase in life expectancy in developed countries between $20,000 and $60,000 GDPpp. Indeed, the Euromonitor International report showed that for the wealthiest countries “where income exceeds US$40,000, the relationship becomes inverse”. So high levels of GDP may actually be harmful.
Moreover, the most common measure of a country’s economy, its GDP, is a grossly misleading indicator, because it fails to distinguish between good and bad economic activity. For example, GDP grows if we sell more tobacco and treat more tobacco-caused disease, if we spend a lot of money clearing up oil spills, or if we produce and sell more fossil fuels and worsen climate change. Is that the economic growth we want?
In fact, the Genuine Progress Indicator (GPI) and the Canadian Index of Wellbeing (CIW) – both of which are more sophisticated indicators of social progress – show that while the economy has grown a lot, human and social wellbeing has not. An estimate of global GPI per capita published in 2013 found that it had decreased since 1978, when it peaked, that “Life Satisfaction in almost all countries has also not improved significantly since 1975” and that beyond about $7000/ GDPpp the GPI does not increase.
Similarly, for the 20 years from 1994 to 2014 Canada’s GDP grew 38 percent while the CIW increased only 9.9 percent. In other words, while the economy, as measured by GDP, may be doing better, Canadians are not feeling all that much better for it. Peter Victor, a leading Canadian ecological economist, wrote with respect to the USA that “Americans have been more successful decoupling GDP from happiness than in decoupling it from material and energy”. In other words, GDP growth is related to growth in use of materials and energy – with their attendant environmental impacts – but not with growth in the social benefits of improved happiness and wellbeing.
This is because we have lost track of a very simple concept, well described in a statement from the WWF’s 2014 Living Planet Report: “Ecosystems sustain societies that create economies. It does not work any other way round”. So growing the economy in ways that harm the ecosystems that sustain, especially when there is little or no social benefit or even harm, is a ridiculous proposition. As a physician, when I find something that grows exponentially and does harm I recognize it as cancer. Our current economic system does exactly that, and is thus malignant.
More on this next week.
© Trevor Hancock, 2019