The Really, Really Big Picture
"Steadily rising energy costs and decreasing net energy yields will simply not be able to fund the future economic growth and consumptive lifestyles that developed nations are depending on (and that developing nations are aspiring to). In fact, the persistent global economic weakness we’ve been experiencing over the past years is an expected symptom of the throttling constraint decreasing net energy places on growth." (Source: Peak Prosperity)
Chris Martenson’s excellent analysis of why there is not going to be enough net energy for the economic growth we want.
Japan as the new normal: Living in a constrained economy
“If the end of economic growth is approaching, Japan can offer insight into the new forms of economic and societal behaviour required.” (Source: Our World 2.0)
Very good article by Brendan Barrett of the United Nations University. Could Japan become the model for the difficult transition to a post-growth society?
Zero-growth is the ‘new normal’
US economic growth will be less than 1% in the next fourty years according to a new analysis by famous American investor Jeremy Grantham. The contrarian investor sees resource scarcity and higher resource prices as well as demographic factors as the main reason why our global economies will continue to struggle for new economic growth. (Source: Business Insider)
As always the gloomy predictions of Mr Grantham’s piece make a lot of sense but will be neglected by the "don’t worry, be happy" myopic political and economic elites.
Read the full report and another interesting piece by Jeremy Grantham on climate chaos and scientists’ response in the journal Nature.
You can’t say that!
"So the real trade-off, the real choice we face, is not between climate protection on one hand and economic growth on the other. It’s between planned economic contraction (with government managing the post-carbon transition through infrastructure investment and useful make-work programs) as a possible but unlikely strategy, and unplanned, unmanaged economic and environmental collapse as our default scenario." (Source: Energy Bulletin)
Richard Heinberg on why neither President Obama nor influential NGOs to tell citizens the inconvenient truth. Without that courage, the transition will be chaotic and will cost the world.
Prosperity with growth: economic growth, climate change and environmental limits
This interesting working paper written by the Grantham Research Institute on Climate Change and the Environment concludes that "continued economic growth is feasible and desirable, although not without significant changes in its characteristics.
These changes need to involve ultimately the reduction of the rate of material output, with continued growth in value being generated by expansion in the ‘intellectual economy’." (Source: LSE)
The Achilles heel of this thought-provoking paper lies in the fact that it starts from the fallacy that the "intellectuel economy" (the knowledge economy) has little or no material and resource implications.
On this and other fallacies about growth, read this brilliant article by Herman Daly.
The sufficiency economy: envisioning a prosperous way down
"I address this subject having been convinced that the growth paradigm has no future and that some alternative vision is therefore needed as humanity begins its inevitable transition to a world beyond growth. I put forward the sufficiency economy as the most promising alternative model, although it is one that I believe may ultimately be imposed upon us whether we want it or not, for reasons that will be explained. We can go the easier way or the harder way, so to speak, depending on our attitudes and actions. " (Source: resilience.org)
Absolute must-read analysis by Samuel Alexander of the real economic alternative to the crisis.
“My point is that the sufficiency economy described above is not about turning off the lights and taking shorter showers. It is about embracing a fundamentally different way of life and a fundamentally different economy. If we do not voluntarily embrace these differences, however, and instead persist with the goal of universal affluence, then soon enough ecological and / or economic systems will collapse and we will be faced with fundamental change all the same, only with much more suffering. As I noted earlier, we can go the easier way (which will not be easy), or the harder way (which will be unspeakably tragic), depending on our attitudes and actions. We are free to choose our fate, and presently we are in the process of doing so.”
New OECD report shows world en route to zero-growth
The new OECD report "Looking to 2060: long-term growth prospects for the world" predicts that in fifty years the combined GDP of China and India will surpass the entire OECD area. Growth will continue to be anemic in most Western countries and global inequality will remain high. (Source: OECD)
This pessimistic report completely neglects the issue of resource constraints to growth which was the subject of a recent IMF report. If you would add the predictions of the IMF study to the outcome of this one, it is clear that we are on track for a zero-growth world. Time to start rethinking our way of life if we want to remain relatively prosperous and have a good life.
Read also New York Times: “Slower growth seen in a graying world”
PwC: Supply Chains Threatened by Six-Degree Global Warming
“Some 85 percent of companies have more complex supply chains as a result of globalization, and adjusted climate forecasts mean businesses should expect climate change to have an even more destructive effect than previously assumed on supply chains, assets and infrastructure, according to two reports from PricewaterhouseCoopers” (Source: Environmental Leader)
Two new remarkable reports by PricewaterhouseCoopers paint a scary 6-degrees climate future and economic turmoil for global business. High time one of the big consultancies goes beyond the usual "let’s keep it positive" approach and starts talking reality.
See also The Guardian: Business warned to prepare for catastrophic impacts .
The two PwC reports are: “Risk Ready: New approaches to environmental and social change” (Nov 2012) and “Low Carbon Economy Index 2012: too late for two degrees?” (Nov 2012).
“Rapid and deep emissions reductions may not be easy, but 4°C to 6°C will be much worse”
“So we have no historical precedents for anything greater than 1% per annum reduction in emissions. We’re saying we need nearer 10% per annum, and this is something we need to be doing today. And therefore, we can draw a very clear conclusion from this, that in the short to medium term, the way for the Annex 1, the wealthy parts of the world to meet their obligations to 2°C, is to cut back very significantly on consumption. And that would therefore mean in the short to medium term a reduction in our economic activity i.e. we could not have economic growth.” (Source: Transition Culture)
Good interview of Kevin Anderson of the UK’s Tyndall Centre. Main message: effectively tackling climate change and economic growth are NOT compatible.
Is the “economic growth” hegemony crumbling?
“Our problem is not lack of growth but too much of it,” Sedláček said. An economy that uses debt to grow must continue to do so by taking on more and more debt or, alternatively, face a slowdown that will lead to bankruptcy. It is like owning a car that explodes when it stops, argued Sedláček." (Source: CFA Institute)
Brilliant presentation at the Fifth Annual European Investment Conference in Prague by Czech economist Tomáš Sedláček, who was an advisor to Vaclav Havel in the past.
The full presentation which question our political obsession with economic growth is available in livestream via the Conference website.
Sedláček’s speech at the European Investment Conference is not the only sign that some of the more daring economists are waking up to the reality of a post-growth society.
Last week, the Financial Times (the Church of Economic Growth?) published an interesting article by Satyajit Das addressing the same issue. Referring to the movie “A Few Good Men”, Das says that our “politicians and policy makers seem unable to handle the truth – the prospect of little or no economic growth for a prolonged period.”
Analysing how the financialisation of the economy used debt to create demand and growth, Das claims that “expansionary fiscal and monetary policies may only provide termporary palliative relief, but cannot restore the health of the real economy”.
His conclusion is so on the money: “A return to strong growth remains an article of political and economic belief. But as philosopher Michel de Montaigne asked: “How many things we regarded yesterday as articles of faith that seem to us only fables today?”
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