Debunking the Growth Myth, Part 9

Myth Number 9
We have to "grow or die." Growth makes the economy strong and creates better paying jobs.

Reality Check: The short-term benefits of additional growth may not outweigh the longer-term costs.

According to ecological economist Herman Daly, "There is evidence that in the United States growth now makes us poorer by increasing costs faster than it increases benefits. In other words, we appear to have grown beyond the optimal scale."

Daly and others have shown that the growing U.S. gross domestic product (GDP) does not reflect the true economic welfare of the public. While GDP has grown steadily, better measures of economic welfare that consider social and ecological costs, such as the Genuine Progress Indicator (GPI) show a declining level of prosperity over the past 20 years.

While acknowledging the political difficulty in limiting growth, Daly has argued convincingly that we must move towards a stable or "steady-state" economy. While a stable economy can continue to develop in a qualitative sense, quantitative growth in material consumption and waste production cannot continue indefinitely.

The idea that economies must grow seems to be rooted in a classical economics originating more than 200 years ago. These early economists believed that population growth was inevitable (there was no safe and effective birth control devices at the time). Thus, they believed economies must grow to meet the needs of expanding populations. However, in recent times, many European countries have shown that they can have strong, prosperous economies with little or no population growth.

The bias toward continued growth in grow economic output is apparent in the professional terminology. A non-growing economy is referred to as "stagnant" or even "recessionary", rather than the more accurate and neutral term, stable. The former terms imply rot, decay, and decline, while the later implies balance and equilibrium.

North American society has very little experience with economics that are intentionally stable or non-growing in terms of consumption and pollution emission. The business of crafting a sustainable economy that does not place increasing burdens on the natural environment will be a challenge for the future

Fear of Dying in Eugene, Oregon

In 1995, various members of Eugene's business community were trying to promote a proposal for a new convention center that would cost at least $25 million and require ongoing public subsidies. The vice-president of marketing for the Hilton Hotel (the largest local hotel) was quoted in the newspapers as saying "We have to grow or die." The statement went unchallenged by the reporter in spite of the fact that the hotel had been profitable for the past 20 years without any growth.

for a printable version of the argument against Myth 9, citing references, click here