Have the Limits to Growth Really Been Reached?
As true recovery from the Great Recession continues to elude us, more and more financial gurus have begun to question the fairy tale of endless economic growth. Of course this makes the true believers and high priests of the church of growth everlasting very nervous. I’ve been expecting them to rally the rhetoric to convince investors and the general public to “move along; nothing to see here.”
The Wall Street Journal just ran The World’s Resources Aren’t Running Out, by Matt Ridley. Since that’s behind a paywall I don’t want to frustrate you by writing about it. So today we’ll honor a piece put out by the American Enterprise Institute. AEI is a conservative mouthpiece funded by many infamous growth-pushers, including the Koch brothers. The Institute’s Desmond Lachman apparently drew the short straw and got the assignment recently. In the AEI magazine, The American, Lachman makes the best case he can for keeping the faith. He takes on a recent paper by Northwestern University economics professor Robert Gordon, which theorizes that the past 250 years of robust economic growth were a unique blip, not a pattern we should expect to repeat into the future.
“Each time these economies stumble, there is no shortage of economists who come out of the woodwork to advance plausible reasons as to why the limits of economic growth might have been reached. Yet each time, events seem to have proved these pessimists wrong — it has turned out that they consistently have tended to underestimate the ability of the human mind to come up with new ideas that might underpin renewed long-term economic growth.”
So far this has been the case, for about 200 years. Out of the entire history of human civilization, a couple hundred years of successful binging doesn’t necessarily mean we can party indefinitely. The fact that we managed through innovation to push the day of reckoning with limits to growth farther into the future does not necessarily mean we can do this indefinitely. In fact, each time we manage to do this, we are winding ever tighter the spring of complexity in our civilization, increasing its chances of breaking, and compounding the likely consequences.
Lachman credits “the power of technical advances like hydraulic fracturing, horizontal and deep-water drilling,” with disproving predictions that peak oil would cause high energy prices that would cripple our economy. Yet high oil prices have been partly to blame for recent economic shocks. We are scraping the bottom of the energy barrel, going to the expense and risk of drilling in deep oceans, and risking the health of our air, water and children by drilling in our back yards. This hardly feels like a triumph of technology and human innovation.
But Lachman seems certain that we can drive our civilization with our eyes glued to the rear view mirror, expecting repeats of the same miracles that fossil fuels and a few continents worth of untapped resources provided during recent history. He proceeds to prove this using the word “could” in a few places. Yes, miracles “could” happen. Fairy tales “could” come true. But Robert Gordon, Jeremy Grantham, Herman Daly, and a host of very bright men, coincidentally not employed by growth profiteers, are very doubtful. Things are different this time. This is the first time we’ve had a planet full of over 7 billion people. It’s the first time in human history we’ve had 400 ppm of CO2 in our atmosphere. It’s the first time we’ve been pumping major aquifers and rivers dry. There's a first time for everything.
Please vote just how guilty of pro-growth bias you find this piece. Comment below.