Irmi Seidl
Hooked on conomic
growth: how to get rid of?
2
Content
1. Terminology
2. Short History of economic growth
3. Growth – no (more) increase in well-being
4. Reasons for being hooked on growth
5. Starting points for a post growth society
22/24 maggio 2014 - Quale Economia, per quale Benessere
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Terminology
Growth
= GDP-growth
= market value of all final goods and services produced in
a country in a given period and traded on markets
Presentation will concern highly developed countries
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0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
18
00
18
10
18
20
18
30
18
40
18
50
18
60
18
70
18
80
18
90
19
00
19
10
19
20
19
30
19
40
19
50
19
60
19
70
19
80
19
90
20
00
20
10
GD
P-l
evel
/ c
ap.
USA
Switzerland
Netherlands
England/GB/UK
France
Germany
(Northern)Italy
*In 1990 International Geary-Khamis dollars, Quelle: www.ggdc.net/maddison
2. Short history of economic growth
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Declining growth rates since 1960s; decades / per head
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CHEU 15*
DE*FR
ITAT
SWUK
USAJP
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
*until 1989 only West Germany; Data: AMECO (http://ec.europa.eu/economy_finance/ameco/user)
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Short history of economic growth
„It is not by any means necessary that
economics should be growth-minded. I
can indeed myself remember a time it
was not growth-minded at all.”
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Growth and Anti-Growth, 1966
J.R. Hicks
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Short history of economic growth
„One day we will surely question
whether it is still reasonable and
appropriate to create more goods and
material welfare or whether it is not
more reasonable to waive this progress
and gain more leisure time,
contemplation and recreation.“
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Wohlstand für Alle, 1957
L. Erhard
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3. Growth – no (more) increase in well-being
Welfare: does not increase any more
Environmental problems increase
Public debt increases
Unemployment increases
Social inequality increases
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Happiness/well-being and GDP
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3. Growth – no (more) increase in well-being
Welfare: does not increase any more
Environmental problems increase
Public debt increases
Unemployment increases
Social inequality increases
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High environmental costs of growth (Germany: 20%,
China: >100%)
No decoupling of growth and resource use (Rebound
effects > 50%)
Growth argument used against market-based
environmental policies
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Wiedmann et al. 2013
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3. Growth – no (more) increase in well-being
Welfare: does not increase any more
Environmental problems increase
Public debt increases
Unemployment increases
Social inequality increases
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Expansive public policies to stimulate economy
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Stimulus packets
2009-2010
in mrd. €
Stimulus packet I 70
Stimulus packet II 50
SUM 120
Sources: German Government, own calculations
GDP
2009-2011
in mrd. € Difference
in mrd. €
GDP 2008 2.489
GDP 2009 2.397
GDP 2010 2.497 (+4.2%) +100
GDP 2011 2.542 (+1,8%) + 45
SUM +145
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3. Growth – no (more) increase in well-being
Welfare: does not increase any more
Environmental problems increase
Public debt increases
Unemployment increases
Social inequality increases
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Employment threshold: 1.8% CH, 1.2 - 2.4% GER
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17
Unemployment of young adults
7.2
8.7
8.8
9.3
9.7
13.8
14.2
16.7
18.6
19.1
20.3
22.3
22.4
22.5
23.7
25.2
27.9
32.9
41.6
0 5 10 15 20 25 30 35 40 45
Switzerland
Netherlands
Austria
Norway
Germany
Denmark
Luxembourg
OECD-Total
Chile
United Kingdom
Finland
Portugal
Belgium
France
Poland
Sweden
Italy
Greece
Spain
Unemployment (15-24 yrs.) 2010, in %
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3. Growth – no (more) increase in well-being
Welfare: does not increase any more
Environmental problems increase
Public debt increases
Unemployment increases
Social inequality increases
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Gini coefficient – (un)equality of distribution
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0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
middle 1970s middle 1980s middle 1990s middle 2000s 2010/12
Canada
Denmark
France
Germany
Greece
Italy
Netherlands
Sweden
Switzerland
United States
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20
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3. Growth – no (more) increase in well-being
Welfare: does not increase any more
Environmental problems increase
Public debt increases
Unemployment increases
Social inequality increases
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Why do society, politics and the economy pursue
growth so ardently -
although hardly any current problem can be
solved, and new problems are created?
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4. Reasons for being hooked on growth
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Major sectors of society, politics and economy are
existentially dependent on economic growth
No growth means structural crises of these sectors,
and hence political and societal turnmoil
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Old age assurance
Health assurance
Employment market
Consumption sector
Income equality/social justice
Enterprises
Finance markets, banks
Public finances, taxation
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4. Reasons for being hooked on growth
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Main sectors of society, politics and economy are
existentially dependent on economic growth
No growth involves structural crises of these sectors,
and hence political and societal turnmoil
Only when these sectors are growth independent,
politics and society will give up their fixation to growth
Politicians und society will do everything to avoid such
crises
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J.W. Kingdon (2003)
1) Problem has political attention
2) Topic is on agenda of upcoming decisions
3) Existence of political decision possibilities, ideas,
concepts, supported by politically acting persons
5. Starting points for a post growth society
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Identify major growth dependent sectors
Identify, collect, develop approaches, proposition, examples, good-practice-cases on how totransform sectors to become growth-independent
Transforme these sectors
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Growth of health expenditures ≥ Growth GDP
Economically important sector
17% of health expenditures by public households (GER)
Dependence on GDP-growth:
To pay increasing premiums
New employments in health sector
Growth in health industry
Health sector
5. Starting points for a post growth society
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Introduce new systems of premium payments (part may be reimbursed if little use of health care)
Increase individual responsibilities – also with financial incentives
Introduce new health care systems (managed care systems)
Support non-invasive treatments & palliative medicine
Limit influence of lobbying
Improve fraud control
….
5. Starting points in health sector
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5. Overall starting points for a post growth society
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- Getting growth-dependent sectors growth-
independent
- Ecological tax and finance reform
- Public participation (direct democracy) -> good
governance & healthy public finances
- Limitation of public debt
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5. Overall Starting points for a post growth society -2-
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- Restrictions to stock corporations (liability,
repurchase of stocks, limitations of acquisitions)
strengthen cooperatives and foundations
- Regulation of banks and financial markets; money
creation by central bank
- Provision of public goods to replace part of private
goods
- Setting strict ecological objectives
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A world without growth, … without change, is ashard … to imagine as a world of everlastinggrowth and change. Somewhere in the dim future, … there may lie a world in which physical changewill be minimal. It will be a world of much greaterequality …, hopefully a much more humane andless materialistic world. We shall not live to see it. Meanwhile, let us give a boost to the old tax baseto get government revenues going again.
H.C. Wallich, Newsweek, 24 Jan. 1972