Saturday, October 4, 2008

THE FACTS ARE IN FOLKS: We Don't Need Growth To Get Rich

The 2008 Fact Book makes for an interesting read. Simply align the rankings by country with their GDP real growth rate % with the population growth rate of that country. Surprise, surprise. Another Canadian myth bites the dust. The myth best articulated by NDP leader Jack Layton’s pea-brain partner MP Olivia Chow when she stated “We need more immigrants because of our aging population. We need families and young people for productivity and growth.”

We won’t deal with the C.D. Howe Report of 2006 that calculated that to maintain our present age structure of 20% seniors through immigration our immigration quota would have to be 28 times its present rate by 2050 boosting our numbers to 167.5 million Canadians. More to the point is while the extravagant immigration that we have suffered in the past two decades, has cost the federal treasury on average $18.3 billion more annually in taxes than incoming revenues according to the 12 year Grubel study, it has also diverted monies away from investment in needed technology. Canada’s labour productivity gains have been substantially below those of France, Japan and the United States. It will be the labour productivity of our workers, not the number of our workers, who will support our retirees.

If one focuses just on the G8 countries, the most salient de-coupling of population growth and economic growth is seen in Russia, which so far has had a growth rate of 7.40% in tandem with a drop of .48% in its population! The Germans had a growth rate of 2.60% while enjoying a drop of .03% in their population. I wished I could emigrate to that country---but as Groucho Marx said of the club that would accept him as a member…
Compare this to dear old Canada. We have this growth rate of 2.50% and look what we are sacrificing to get it. This year a population growth rate of .87% on our best farmland and 5.4% between 2001-2006, the fastest in the G8 group. And the four party leaders who want to increase immigration by 32%, with refugees the wild card!

Other countries, like Italy with 1.90% economic growth and virtual population stability at .01, or Japan at 2.00% economic growth and .09% drop, also poke large holes in the population pyramid growth scam. This frontier mentality of ours that only a demographic booster shot can kick start an economy is one that has been challenged in Australia.

Former NSW Premier Bob Carr once said that it was a lazy Australia that depended on driving up population numbers to stimulate the building of houses and shopping malls, but a smart Australia would create a smart, sustainable economy with value-added products.

Clearly, economic growth is not necessarily predicated on population growth. In fact that is why GDP growth is a delusional yardstick of economic progress, as a growing population will not tell the story of per capita wealth. Middle aged Canadians today will tell you that more waterfront property, more fish, more quality wood, more of the things that are not electronic toys, were much cheaper thirty years ago than they are today. And no matter how great the economies of scale get, our dollars won’t buy back the paved farmland, or the old growth forests that have been cut down. Cell phones and Blackberries won’t recover the time that growth has claimed from our lives in trying to pay for its trappings.

The question then is, while population growth, and the immigration that fuels it, is not needed to propel the economy, do we want economic growth?
The Environmental Commission for the City of Bloomington, Indiana, adopted a position statement on May 22/08 advocating

“A steady state economy in which resource consumption and waste production are maintained within the environment’s capacity to regenerate resources and assimilate waste, emphasizing development as a qualitative, rather than quantitative, process… Ever-increasing economic growth ultimately leads to resource consumption and waste production at rates greater than can be sustained by nature.… A sustainable economy (that is, an economy with a relatively stable, mildly fluctuating product of population and per capita consumption) is a viable alternative to a growing economy and has become a more appropriate goal for the U.S. and other large, wealthy economies.”

Perhaps a declining population that fosters a declining GDP is the optimum scenario, and our worst is the inverse of that. For population growth, as the foregoing numbers have shown, is not the most efficient path toward economic prosperity, not the “biggest bang for the buck”. Nevertheless, intuitively it would seem that GDP would inevitably grow when consumers, however destitute, begin to add up. And that every economic upturn rebounds as an environmental “downturn” however well it is dressed up and blunted with controls and regulations.

But the advocates of steady-state economics would contest this polarized depiction of GDP and dispute the suggestion that the economy would need to be collapsed to shut down growth. Herman Daly insists that a steady state economy cannot be viewed as some kind of failed growth economy, anymore than a hovering helicopter can be viewed as a stalled airplane. They are two entirely different models. Our objective should not be to engineer a catastrophe. Daly describes the difference this way:

“Throughput growth means pushing more of the same food through an ever larger digestive tract; development means eating better food and digesting it more thoroughly. Clearly the economy must conform to the rules of a steady state –seek qualitative development, but stop aggregative quantitative growth. GDP conflates these two very different things.”

Key features of the steady-state model are population stability, limits to inequality and an end to the “arms race of unhappiness”. Beyond a certain threshold of sufficiency, research indicates that both between and within societies growth does not increase everyone’s relative income and that self-evaluated happiness is based on the income status relative to others. Consumerism is a dog chasing his own tail, the Holy Grail of happiness in Growthdom will never be found.

Maybe it’s time to re-define “rich”. When we stop filling up our plate with busy work and consumer goods and unplug Madison Avenue, we might discover that wealth consists of more time with family, friends, animals, nature, art, music and good books. And more than that, with ourselves.

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