© Flickr / Groovnick

23 July, 2017 By Mike Dowson

The Growth Trap

Column Economy

Growth. It sounds so wholesome, doesn’t it?

The word seems to arrive with a fanfare. Images of ripening crops, flourishing children and industries forging the future march past the mind like an old empire newsreel. It’s a word with a confident smile and a story to tell.

As a company president I once knew used to say: “As long as the graph is pointing up and to the right.”

But what about the blue-green algae spreading through the river system? What about the slum accreting beside the steaming garbage dump? These too are examples of growth. And in our troubled modern world, they often seem to come with the package.

Proponents of growth argue these are temporary or localised problems. Few stop to question the principle. Indeed, the panacea that’s commonly prescribed for disasters of our own making is more growth.

We're always looking for contributors. To get a sense of the work we're looking for, and what we pay, visit our contribute page.

While this prescription is aggressively promoted by the West, it isn’t universally accepted. There are other societies that function well on different value systems. They used to be disparaged as “primitive”. Now they tend to be encouraged into the fold as “developing”.

There’s an anecdote common throughout the islands of the Pacific. A plantation owner approaches an Indigenous man lying on the beach and offers him a job.
The man asks: “Why would I want a job?”
“So you can earn money.”
“Why would I want money? I have everything I need. There is fruit in the garden. There are fish in the sea.”
“Well then you can become rich.”
“Why would I want to become rich?”
“Well then you can stop work and lie on the beach.”

In the years I lived in Fiji I came to understand a different way of seeing the world and our place in it. It’s not that Fijians eschew modernity. Cars, roads, power, schools and modern medicine are all useful, and can’t exist without a workforce. But there are other things that are more important to them.

Most Fijians, especially outside the larger settlements, live communally. They have few luxuries, and much of what they have is shared. When you visit them, they share it with you. Sharing is a pleasure, not an obligation. Accumulation would be seen as the poorer choice.

Our part-time gardener, Buli, had travelled the world as a member of a UN peacekeeping force. At home, he lived very humbly, but contentedly. When we gave him a Christmas bonus, the money went to the whole village. Most of it was spent on clothes and schoolbooks for the kids.
Something you see commonly in Fiji is laughing, carefree children. It’s a sign, often disturbingly absent in the West, that suggests something fundamentally right about a culture.

Shortly before I left Fiji, I was invited to the house of a government minister for a kava ceremony. It was a pleasantly warm evening. A large group of men sat on tapa mats around a tanoa, the bigwooden bowl that contains the ceremonial drink.

I sat next to a man from the ministry. After we got to know each other a bit he asked me playfully: “So, Mikeli, how do you like our primitive Fiji compared to your modern Australia?”
I answered honestly. I told him I had grown to think of Fiji as my second home. I told him I loved the warmth and openness of its people, the simple pleasures, the unhurried pace. “I miss some things,” I said. “But in many ways I think your Fijian way of life is better.”

He laughed through a wide, toothy smile, placing his hand on my shoulder. “I know,” he said.

To people like the Fijians, whose cultures survive relatively intact, Westerners like me are strange creatures. We always seem to be hurrying to somewhere else, never satisfied, not living in the present.

For people who are happy with their way of life, growth as a transcendent value doesn’t make a lot of sense. Nor is it the necessary goal of development.

Costa Rica is another country that’s chosen a different path. A small Central American country of 5 million people, Costa Rica boasts some of the most beautiful natural environments on earth. A quarter of the country, containing 5% of the world’s biodiversity, is protected.

The Costa Rican people didn’t consume their natural assets in a quest for growth. Instead, they adopted the so-called triple bottom line. It’s a way of accounting for the environment and society, as well as the functions of the economy. By doing this, the country radically altered its pattern of development. Its rate of deforestation has gone from being among the world’s worst to virtually zero.

Perhaps unsurprisingly, Costa Rica leads its region in ecotourism, which accounts for a significant proportion of its economy. Its educated population, thanks to publicly funded schools, makes it attractive to foreign investment. New high-tech industries have arrived. Over 90% of its energy comes from renewables and it has a universal health care system.
Although still relatively poor in purely monetary terms, Costa Rica regularly ranks higher than many developed nations for happiness and well-being.

When it comes to growth, the real question is who gets the benefits. Proponents like to talk about lifting people out of poverty, and in very poor countries, the effects of growth can certainly be dramatic. Food security, access to water and sanitation, reduced infant mortality and increased life expectancy are undeniably important benefits.

But a lot depends on who you are to begin with. A downtrodden, impoverished former colony, as Costa Rica once was, has much to gain. In contrast, the Indigenous inhabitants of the Amazon like things much the way they are. The same can be said of the Amish communities of North America.

Growth adherents may scoff, but Indigenous communities often miss out on the benefits of development, while sacrificing much that is precious to them. Traditional doesn’t necessarily mean worse off. Cancer, for example, is relatively uncommon among the Amish.

A lot also depends on where on the growth trajectory you are. Typically, growth in poor countries requires a lot of workers. At least some of these have to be educated, which requires schools, to form an administrative class, which then demands new housing and improved services, like hospitals. In this context, growth and material well-being go together.

You don’t have to travel far along the curve, however, for wealth distribution to become a bigger factor than additional growth. Once the structures of a modern economy are in place, living standards for the majority of people depend on the dividend they receive, whether through wages, investment returns or public services.

Unfortunately, in a poorly regulated economy, distribution may depend more on nepotism and corruption. Countries rarely spread wealth unless they also spread power. Where power is concentrated in a ruling elite, that’s where the growth benefits go. The elite will tend to confine distribution to patronage, which reinforces power and privilege by creating beneficiaries. In some cases, development is merely superimposed on a pre-existing system of this kind. Some African countries provide examples.

This doesn’t only affect poor countries. Some of the most advanced economies are going backwards. Each time I visit the US, I notice more ordinary people in trouble. Beggars are common now in San Francisco. The flood of money that followed the technology boom caused the cost of living to skyrocket. A few became billionaires, the owners of real estate and those with skills in high demand did well, but many more couldn’t keep up.

In Long Beach I saw large numbers of homeless people sleeping rough in the manicured gardens around the banks. Once flourishing communities in cities like Detroit and Cleveland have become decaying wastelands. Despite continuing growth, real wages have fallen. Poverty, chronic disease and mental illness are increasing. The US prison population is now the largest in history. Average life expectancy is lower than in Costa Rica.

This is shocking, but it’s no accident. Corporations have automated and offshored millions of American jobs, while they hide their profits in tax havens. Successive governments have stripped regulation, handed tax breaks to the wealthy and cut back government programs. As a result, the benefits of growth accrue to a tiny group of plutocrats and the specialised professions which serve them. Those who are no longer needed, and those struggling to hold on, become prey to new industries designed merely to extract what material value is left in their lives.

Variations on this grim picture appear in other countries where inequality has accompanied growth. Next door in Mexico, demand from the US for cheap labour and illicit drugs has empowered an oligarchy of old wealthy families and new drug barons. Patronage has corrupted politics and the law. Violence is endemic to many communities.

Elsewhere in the developed world, the picture is different. In the Scandinavian countries, taxation is high and social services are generous. With the exception of Sweden, growth is currently low. For this reason, the model is often criticised as a failure. Again, this criticism presumes that growth is the measure that counts. But these countries regularly rate at or near the top for technology, education, health care, equality, sustainability, well-being and happiness.
What these examples show is that equality and community have more to do with safety and contentment than overall wealth in both rich and poor countries.

In other words, growth doesn’t make us happy.

So what does development really mean? The answer comes down to productivity. It’s about doing more with less effort and less time. Technology is what makes it possible. This is not new. It was as true of the Kmer in the 11th Century as it was of America in the 20th.

The benefits of increased productivity can be returned to communities. But they can also be captured by an elite minority, as is the case in some African countries and now the US. Or they can be recycled to produce more growth by stimulating desires for ever-greater consumption, often on credit. To varying degrees, these latter two alternatives pretty much describe the post-war economies of the developed world, with a few notable exceptions.

I once worked with a man from Sweden. As he was leaving with his family to return home, I asked him a similar question to the one my Fijian acquaintance had asked me. My colleague told me he had become very fond of Australia. “But,” he said “you seem to be obsessed with work. You work too much.”
“It’s not like that in Sweden?”
“No. Work is necessary. But life is about friends and family and other good things.”

Time, and the freedom to choose what to do with it, is perhaps the greatest potential return on increased productivity in developed countries.

In Sweden, working hours are typically short and leave entitlements ample. Many businesses have moved to a six-hour work day. Interestingly, this has led to further increases in productivity. People can work more efficiently, leave before they’re exhausted and return refreshed.

Our aspirations are shaped by our cultures. In the materialistic, media-saturated West, many young people express the desire to become rich and famous.

Nevertheless, research across a number of countries demonstrates that the actual conditions for human well-being are both consistent and humble. Peace, safety, food and water security, adequate shelter, dignity, respect, health, learning, a satisfying job, supportive relationships and freedom from oppression or excessive interference – these are the things people need for well-being.

At the same time, evidence does not support the idea that wealth beyond sufficiency makes people happier, or healthier. In her book Plutocrats, Chrystia Freeland reports on the deep discontent of some multimillionaires in New York. They may own beautiful homes in the Upper East Side, but they can’t quite afford private jets.

No human society is perfect. Fiji, Costa Rica and Sweden all have their share of problems. Not every Westerner would be willing or able to live as humbly as the average Costa Rican, or as communally as the average Fijian. But these examples can teach us much.

The Khmer ploughed their surplus into temple building. These relics are all that remains of their civilisation. They neglected the environment and technology that enabled their astonishing agricultural productivity. In the end, as a further warning to posterity, it seems to have been climate change that undid them.

When we subscribe to growth as the ultimate signifier of progress, we are engaging in an act of faith, a kind of cargo cult. We believe rewards will be magically delivered. Yet, when we measure growth, we are not measuring human well-being. We are really just measuring the rate of conversion of the world and ourselves into money.

We need to do better than that. And, happily, we can. We already measure productivity, general prosperity, income and wealth equality, and the health of people and the environment. We just need to place those indicators centre-stage.

Kurt Vonnegut, in one his poems, tells a story about being at a party with his friend Joseph Heller. Vonnegut teased Heller that their billionaire host had made more money the previous day than Heller’s famous novel 'Catch-22' had earned in its entire history.
Apparently Heller said, "I've got something he can never have."
Vonnegut asked, "What on earth could that be, Joe?"
"The knowledge that I have enough."