Sunday, September 21, 2014

Misunderstanding What Economic Growth Means

I would probably have no argument with Peter Dorman if he said that "degrowthers" have a different understanding of what economic growth means, with which he takes issue. By the way, I don't consider myself a "degrowther" -- I consider myself a critic of the growth paradigm. The growth critics I know have a very sophisticated understanding of what economic growth means. Please leave the condescension in the country club locker room where it belongs.

Roefie Hueting, for example, is the former head of the Department for Environmental Statistics of Statistics Netherlands. He developed the Sustainable national income, (SNI) indicator. Peter Victor's book, Managing without Growth, starts out with a comprehensive discussion of the idea of economic growth, including a section reviewing economists who question growth, such as John Kenneth Galbraith, H. W. Arndt, Ezra Mishan, E. F. Schumacher, Kenneth Boulding and Herman Daly. I would add, very prominently, Nicolas Georgescu-Roegen and Simon Kuznets.

Not all these economists have the same understanding of economic growth or the same objections to what it means, how it is calculated and whether it is sustainable. But on the other side there is this kind of claim that seems to typify standard economic thinking:
If the elasticity of substitution is not constant, what is crucial is what happens to the elasticity asymptotically as resource input goes to zero. In these cases the produced input is sufficiently substitutable for the natural resource that the decrease in supply of the natural resource can be compensated for by an increased supply of capital. Of the two cases, the Cobb-Douglas case is clearly the most interesting for there natural resources are essential in the sense that some input of the natural resource is required for production (the isoquants never do hit the axes). But a small input of natural resource can be compensated for by a sufficiently large input of capital, and whether that is feasible for the economy depends simply on the relative shares of the two. -- Joseph Stiglitz, "Neoclassical Analysis of Resource Economics."
Notice how much work the word "capital" does in that paragraph without a clear definition of what "capital" means?

One of the "misunderstandings" I repeatedly hear attributed to critics of the growth paradigm is that we don't take into account "dematerialization" and the value of intangible products and services. That is pure bunk. These magical solutions have been studied intensely by critics. To make a long story short, the issue is an empirical one and the proponents of dematerialization and intangibility haven't delivered the goods. Miniaturization may seem like a form of dematerialization but, in fact, the manufacturing process often involves more, not less material throughput.

The shift from products to services is also no magic bullet because the service providers come from households that use the income from service work to purchase products made from stuff (possibly in China). Many of the presumably "new" services in the economy are actually old services that used to be performed directly by households and the industrial provision of services, even though it is less material intense than the manufacture of products is usually MORE material intense than the direct household production of those services.

I hear these refrains of substituting capital for natural resources, miniaturizing products and substituting services for manufactured goods all the time. And I read empirical analyses by critics of growth that question the sweeping claims about how easy it is to dematerialize the GDP. And let's be clear, we are talking about less material throughput, period, not only less material throughput per unit of GDP. If absolute material throughput increases while relative throughput decreases the bottom line is that absolute throughput has increased. This is a relentlessly empirical question. What counts is what happens not what "could" happen (ceteris paribus).

31 comments:

Peter Dorman said...

Hi S-man. Two things. First, by "economic growth" I mean an increase in measured GDP. I think it helps to agree on terminology. But, like the story goes, if you want to call increases in GDP "bananas", I will say that there is no necessary contradiction between significantly reducing carbon emissions and "bananas". Then you can call something else "economic growth" and say you can't have "economic growth" while reducing carbon emissions. It's just words, right?

Second, as for the empirics, two things are indisputably true: there has been unprecedented economic growth (as I and other textbook writers have defined it) over the last few centuries, and there have been massive increases in environmental stress over the same period. Does this mean that the two are necessarily yoked, and that the hypothetical possibility of increased growth and decreased environmental burden is a chimera? Well, if you want to make that argument you have to make it, not just assert it. The future does not have to be like the past if we change the rules, which, as you know, is what I'm advocating as loudly as possible. If you think what we have is not just a historical conjuncture but an unalterable causal relationship that must hold forever, then you should explain why. I've haven't seen such an explanation as of yet, but I hope I'm open-minded enough that if one comes along I'll give it serious consideration.

Sandwichman said...

1. If I call a tail a leg, how may legs does a cow have, Peter?

2. I never said that future has to be the same as the past, so I don't have to make that case. I don't assert it.

3. I can make (and have made) a concrete proposal for a rule change that will increase economic growth and decrease carbon emissions.

4. It's just that, in political economic terms, you also have to consider the history of what kinds of rule changes are deemed admissible and what aren't. A miracle or a revolution could happen tomorrow and change all that. I don't consider a miracle or a revolution prospects with a high probability of occurring.

5. Would you please, please address the issues I raised rather than attributing views to me that have nothing to do with what I wrote?

Sandwichman said...

I repeat: there is indeed a hypothetical possibility of continued growth with decreased environmental burden. I emphasize the word hypothetical.

I can't eat a hypothetical hamburger, though. Where is the beef?

media said...

Comments:

1. I wonder why Dorman doesn't mention the notion raised by people like Daly, Victor, and even Sen that maybe things like growth (a vague term) and GDP (less so, though ways of calculating it are contested---eg intermediate versus final goods) maybe should be revised or are no more than calculation excercizes as relevant as copernican epicycles.

2. Last time I was in the economics section of a large university there appeared to be 3 floors of economics books, many of them essentially rewrites of stadanrd textbook arguments. Sure, many of those writers may not have seen or been convinced that things like standard growth theories and environmental destruction are inalterably causally linked, but examining the relation may be more interesting (if more difficult) than simply rewriting again the standard story.

(It reminds me of some recent author who explained why he was writing another biography of FDR given that there were maybe 1000's already---he said, well he had noticed that there was one period of time (maybe between 6:26 am and 7:15 am on july 14, 1937 that he felt was important, and hadn'ty been dealt with in the written works).

3. It seems one could double GDP immediately simply by doubling all the value of money now (eg 1$ go to 2$) and all prices as well. Some may say this is 'nominal' but value is all in the mind anyway. People can learn to value what was a 1$ lotto ticket at 2$, and feel much improved.

Also, some sustainable crops from the past such as tulips could be re-evaluated, and the economy could go into large and small scale production of them, and feel quite wealthy, GDP would rise, and the environment might be less degraded (eg if roads and parking lots were converted).

Katie B said...

You love to talk about how in theory, economic growth can somehow be completely divorced from growth in resource consumption, but you don't provide any specific examples. This is the problem with the field of economics in general. Lots of theories, lots of hypotheticals, but no grounding in reality. Please, at least TRY to explain exactly how you think economic growth can occur without any corresponding growth in consumption. And please note that the issue here is not temporary growth but infinite growth (because capitalism has no endgame - the growth is never supposed to stop). Name one thing that you think can grow forever without bounds.

Peter Dorman said...

My textbook gives a fairly standard account of the interpretation of GDP, and perhaps you should read it since it goes into more detail than I can here.

My personal view, which I tried to keep separate from the book (except in a few obvious spots which I couldn't resist) is that welfare economics needs to go. I don't believe in "utility" or the rest of the edifice built on top of it. Therefore I also don't believe that GDP is a measure of utility, or even that any set of tweaks to it will convert it into such a measure. It just records flows of money in return for goods or services. But that's useful, since these flows have immense consequences in the real world. I leave well-being to people who study it substantively, like psychologists, public health scholars, philosophers, etc. Economists don't have anything much to add.

On another front, I don't want to go further into the you-can't-have-infinite-growth-on-a-finite-planet thing. It has nothing to do with how we will or will not deal with climate change over the next fifty years. What specific policy to curtail fossil fuel use depends on your theories about economic growth? (I hope the answer isn't austerity...)

Sandwichman said...

"What specific policy to curtail fossil fuel use depends on your theories about economic growth?"

Peter,

Specific policy is work time reduction BECAUSE of labor productivity gains from reduction from excessive working time to closer to optimal. Basically there are two ways to increase productivity: one is to improve the proportion or quality of the capital goods inputs, the other is to increase the effectiveness of the labor power inputs. The latter effectively increases the proportion of labor to capital without adding quantity of hours.

In short, the latter option increases material output relative to material inputs because it uses less capital goods per unit of output.

This is just a bare outline. The empirical evidence and theoretical framework for the argument goes back to Chapman and before him to Brassey, whose 1872 Work and Wages influenced both Francis Walker in the U.S. and Marshall, who credited Walker's work for its contribution to a reevaluation of the "theory of distribution" (which is to say marginalism).

A fuller development of the scheme is in "Time on the Ledger -- Social Accounting for a Good Society"

You may laugh but I actually sort of apologize in the article for presenting a model that projects growth. So yes, the proposal is for growth that involves less material throughput. Need I disabuse you of the expectation that economists policy makers, labor unions and environmental organizations have been beating down my door to get more details of this proposal?

So my point is not that it can't be done but that the kinds of institutional changes needed will be resisted tooth and claw by the beneficiaries of the present institutional arrangements. You actually say the same thing when you talk about Congress prohibiting the European trading scheme.

Katie B said...

I didn't ask you about your book. I asked you to give one example of something that might grow infinitely and allow for infinite economic growth, which you keep claiming is possible without a real explanation of how. Is that really too much for you? Do you seriously expect us to accept the "because I said so" explanation? How persuasive!

You are deflecting my questions by acting as if climate change is the only issue here, even though I didn't even mention it. This is about finite natural resources, which are required in some amount for all economic activity except for labor (but even labor requires people that must be fed, have clean water, shelter, etc ). Labor and "service" can't grow forever unless the population grows forever....you don't think the population can grow forever, do you? Even clean energy requires building materials, namely metals, which are nonrenewable and exist in fixed supply. That means there are limits to how many solar panels and wind turbines we can produce. We may be able to produce enough to maintain current energy consumption levels, but we absolute cannot infinitely grow our energy consumption or anything that relies on the consumption of energy.

There are limits on fresh water and arable land, limits on the regeneration rates of renewable resources, and even limits on the minerals that we mine to produce the fertilizer required by our industrial agriculture system (no minerals in the soil, no food). You fail to address these limits. It's outright lazy to claim that infinite growth is possible without even attempting to explain how that can happen while staying within the natural limits imposed on us by the planet. That's what climate change essentially is - a natural limit that we have pushed too far. So please, enlighten us by explaining how natural resource limits don't limit economic output or activity. Just one specific example would be nice.

Sandwichman said...

(and an aside [sotto voce] when THEY say growth they don't really mean g growth. THEY mean r growth. THEY will gladly sacrifice g growth for r growth. It's called "stimulative austerity.")

Peter Dorman said...

OK, on a purely theoretical level, here's what it comes down to. Assume that all natural resources (including ecosystem services) are fully utilized at the limit of sustainability at time t. Then any sustainable economic growth between times t and t+1 cannot exceed the rate at which economic value per unit resource increases. If you are beyond the sustainable limit and wish to reduce resource use at rate r, then the rate at which economic value per unit resource grows must exceed r if there is to be economic growth over this period. That is true for any t and t+1.

That's as far as pure logic can take you, yes?

Katie B said...

Does anybody here wish to provide an example of how infinite growth might actually be possible? One that isn't purely ideological in nature? I'm beginning to think that "econospeak" is actually a great name for this site, if you consider econospeak to be the unsubstantiated, ideological babble of economists whose theories have no grounding in physical science or reality.

Peter Dorman said...

Oh, sorry. Sandwichman, I think a reduction in work hours here in the US would be wonderful. Sign me up. It would make a lot of sense to start converting productivity growth into more free time. (Not that it's being converted into higher wages for most of us now, of course.) What effect this has on fossil fuel use depends on whether the reduced Y/N decreases it more than changing consumption patterns (due to free time) increases it (if it does). In any case, we are talking about something in the range of 10-20% fewer work hours per year, right? Maybe over time this could go up to as much as 50%. (Utopian but what the hell.) Alas, our per capita carbon footprint has to fall by nearly 100%. Shorter work can definitely help, but it's not going to be the main driver. In the end, the most important things are what we produce (and consume) and how we produce them.

Katie B said...

Peter Dorman,

Your answer makes no sense. I'm not asking for a theoretical economic formula. I'm asking for a real world example. Something specific that might illustrate that your theory isn't complete bullshit. If resource consumption is fixed (not growing), and if population is fixed, what can possibly continue to grow forever and ever? If consumption and population aren't growing, what does that leave?

Peter Dorman said...

Katie, that's what math is for, to formalize logic so you can discuss it logically. You can, for instance, suggest constraints you think should be imposed on the model, and we can talk about it. Seriously, math is essential for some purposes. What I gave you were the formal conditions for economic growth subject to resource constraints in the simplest possible model. So this answers your question on a logical level, unless you want to raise issues with the underlying model, which of course you're free to do.

It's reasonable to ask for an example, so here we go. What can grow forever? My teaching can grow. By that I mean it can get better and better, if not forever (I won’t live that long), at least for as long as I’m around. And people can pay me more and more to do it because they think it’s continually becoming more wonderful. Higher quality teaching that commands higher incomes is economic growth. As long as this doesn’t lead me to eat more, commute more or feel the need to live in a McMansion, it has no direct resource cost. So I can spend my increased earnings on ever more wonderful concerts, ever fancier restaurant meals, etc. More economic value, no additional resource use. (Fancy restaurants often give you less food.) After I retire or croak some other economist can take my place who’s even better than I am and gets an even fatter paycheck.

I’m not saying that this is specifically how things should go, much less that more luxuries for me is morally acceptable in a world of poverty and oppression. (I should give away a large chunk of my ever-expanding salary to people in need, à la Peter Singer, but that’s another matter.) Just showing that there are obvious ways to have perpetually increasing economic value without increasing material or energy throughput.

ps: The stuff about being a better teacher and getting paid more is pure fantasy. I know the second is empirically false, and, well, you can ask my students about the first.

ps2: My style is facetious, but the example is not totally bonkers. For instance, in my personal utopia an increasing part of economic growth will take the form of music: music teaching, higher quality musical instruments, live concerts, fabulous digital music everywhere. And we can do this. Look, for instance, at Finland’s economy and the large role played by music instruction and performance.

Katie B said...

So you are talking about infinitely increasing the value of things? In other words, the "quality" will increase (which is subjective and not really quantifiable) and the price will increase? Do you seriously think that we can just keep increasing the price or value of things forever and ever with no upper bound? That just seems silly. Why would that even be desirable?

It seems like you are grasping at straws trying to find some abstract thing to quantify just for the sake of having SOMETHING that can grow forever. But growing anything forever is a ridiculous goal. It's one thing to say you want to maximize quality of life (however you might try to measure that) but quite another to think that metric can grow infinitely without ever reaching a maximum.

Why is there this desperate desire to find something that we can grow forever? Nothing in nature does that. Nothing. Every other living thing on this planet grows until it reaches maturity then enters a steady-state maintenance phase. Why do economists not even consider that? Why this insistence that we keep growing? It just makes no sense. It may have made sense 200 years ago when the world's resources seemed endless, but we know now that they're not. Perhaps we need an economy that can function without growing? Have you ever even considered that?

Sandwichman said...

"Seriously, math is essential for some purposes."

"as far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality." Albert Einstein.

T. W. Hutchison quoted this lovely aphorism in the original German. Both Hutchison and Georgescu-Roegen present trenchant critiques of the misuse of mathematics in economics.

Your purely theoretical equation relates two terms that remain undefined: value and resources. That is where the reality rubber hits the road.

If we define value as scarcity and resources as those things which are scarce, we can indeed have "infinite growth" as we deplete natural resources and environmental services BECAUSE we are depleting them.

I don't think that is what you want, Peter.

Peter Dorman said...

Katie, you're throwing words at me: silly, ridiculous. Those aren't arguments. When I teach writing, I sometimes ask student to write paragraphs without using any adjectives or adverbs at all, as an exercise.

You're right that nothing in nature grows forever. Nothing shrinks forever. Nothing is forever. All is flux. The universe will probably collapse at some point billions of years from now. What that tells me about what should be done about climate policy when the movement represented by the marchers in NY gains power in 2016, or pick your year, is unclear.

S-man, I'm using economic value in the NIPA sense, nothing more or less. If you have an alternative to NIPA, fine. You can make assertions that apply to your alternative, but that doesn't mean they apply to NIPA. If you think they do, you have to show it.

Also, I'd recommend that you not claim that there is a system of logic and measurement that does a better job of representing the known universe than mathematics. Math isn't perfect but it has a pretty good track record.

Katie B said...

Peter,

I made plenty of arguments and asked some very specific questions that you continue to ignore. I asked for examples of how your theory would pan out in the real world and the only example you can provide is one that you admit is fantasy. All you seem to know how to do is deflect questions and dance around the points made by others. The longer you ramble on without answering my questions or giving plausible examples to illustrate your abstract theories, the more ridiculous you look. Are you going to address my points or not?

Peter Dorman said...

Katie, I've decided it's easier to be ridiculous. I never had much intellectual honesty anyway....

Sandwichman said...

"Also, I'd recommend that you not claim that there is a system of logic and measurement that does a better job of representing the known universe than mathematics. Math isn't perfect but it has a pretty good track record."

Well, at least I was supporting my claim with the view of someone who may be widely recognized as an authority. Not an authority in economics, though. Here is what Keynes wrote:

"Unlike physics, for example, such parts of the bare bones of economic theory as are expressible in mathematical forms are extremely easy compared with the economic interpretation of the complex and incompletely known facts of experience, and lead one but a very little way towards establishing useful results."

Now I'm not saying it is true because Keynes said it or because Einstein said it. I'm just pointing out that my arguments are not simply idiosyncratic assertions I make up on the spot as you seem to repeatedly suggest.

Frankly, I'm disappointed with the arrogance of your responses both to me and to Katie B. whose reasonable questions you evaded.

Peter Dorman said...

Sorry you're disappointed. Obviously, I thought I didn't evade them. In fact, to me it looked like the evasive shoe was on the other foot.

Regarding math, KB claimed that something was a logical impossibility. So I offered a very simple model to show the possibility conditions. I agree with our friend Keynes that this sort of thing won't get you very far in economics, but I wasn't trying to get very far at all. Just about what is possible and impossible. What actually determines the rate of economic growth, the rate of resource depletion etc. is extremely complex and requires vastly more than a dollop of elementary algebra.

Sandwichman said...

"KB claimed that something was a logical impossibility."

No, Peter, get out of your own head for a change and read what your conversants are writing instead. If KB claimed something was a "logical impossibility" that claim has magically disappeared from the comment thread. YOU transmuted her objection from a real world one to a logical one that could be answered with a tautology.

Is this the way you treat your students? I give mine credit for thinking about things even when I think they are wrong. But first of all, I listen, listen and listen.

You address me as if I am some bumpkin with no grounding in economic theory or methodology. That's not a good place to start for a respectful conversation.

With regard to the "evasive shoe being on the other foot." Up thread you asked me for an example of a proposal. I gave you an example. I mentioned that it was a bare outline. You responded with a critique of that bare outline that was fair enough --within the confines of that bare outline -- but that was (perhaps unintentionally) dismissive of the idea that shorter work time could be "the main driver of change."

I think I could agree with that conclusion but it doesn't really address what my proposal was about. My point was about the need for institutional change and resistance to institutional change. As I emphasized in my final paragraph, the proposal was an illustration of the resistance to change -- not a panacea that would solve the problem.

But in terms of "evasion", you asked for a proposal and I presented one. It seems to have been substantive enough -- that is to say un-evasive enough -- for you to critique, whether or not I agreed with your critique or felt you understood the point of my proposal.

media said...

peter dorman thinks 'welfare economics' and utility theory and 'well being' need to go, or be put in the psychology departments etc where they can can buy a degree , get an NSF grant, and study it objectively. That actually sounds like what would be a prediction of behavioral economics in the form of marist thought---your theory or view of reality is essentially constructed by your bank account and social position ('mind on my money, money on my mind' (snoop dawg eat dowg). We'll assume the observor, the pollster, etc. can be ignored and just look at reality (like the controversy over chimpanzee violence). You have to to, in my opinion, include your own social welfare function in the equation---but then you end up with something like general relativity---you end up with a source term on both sides of the equation (highly nonlinear). I guess you your view is you just sweep the problems under the rug, and then write books about them, and create some more problems to sweep under the rug so you get more books. That is the way the world works, actually, it appears. (Tyron and Sackharov wrote about this like 40 years ago; more recently examples include people who are employed to keep metro in good shape---but after work, they slash the seats, so they have nore is better).

rosserjb@jmu.edu said...

OK, folks, let me as a fellow environmental economist like Peter who has long taken ecology very seriously step in here. Let us think about the relation between GDP as conventionally measured and pollution emissions, keeping in mind that for some pollutants emissions might be reduced sharply but ambient levels may continue to rise because they do not rapidly leave the environment, with this unfortunately true for the most important of pollutants driving global warming, namely CO2, which just hangs around in the atomsphere once it gets there for a very long time.

So, an old friend of mine coined a concept that he did not get public credit for because somebody else stole his idea and published it before him, namely the idea of the Enbvironmnetal Kuznets Curve (EKC). This relation says that as economic growth proceedw with both total and per capita GDP rising as national proceed from a predominantly agricultural pre-industrial socity to a high technology post-industrial society, pollution emissions first tend to rise, but then after some level of per capita GDP, they start to decline. This relation in fact seems to empirically hold throughout most nations for the deadliest of all pollutants, SO2, which is largely generated by coal burning, and which, btw, also tends to lead to global cooling rather than warming.

This relation is not general and does not hold for all pollutants. Thus, there are some pollutants for which almost any increase in real per capita income/GDP from the lowest levels decline almost immediately, or not too long thereafter. Many of these are related to water pollution, with reductions in infant mortality from people not having their latrines over their well water almost as soon as they can afford to fix that leading to reducing infant mortality rates from about 50% to far lower. This is a big deal, although we in the US are long past that and take our much improved water quality for granted, although we seem to be backsliding on water quality in many ways and areas.

OTOH, two pollutants that seem to see rising emkissions levels to much higher per capita GDP levels are the crucial CO2 and also NOX, which mostly comes from vehicles using fossil fuels. Comparing higher income countries to middle income countries, one tends to see much higher NOX emissions levels and lower SOX ones in the higher income ones compared to the middle (or lower) income ones, more cars, but cleaned up or even outright less coal burning.

CO2 is clearly the big problem for global warming, and indeed ironically the conquest of SO2 in the high income countries, which leads to cooling, while CO2 has not been controlled (much), may have been why global temperature stopped declining in the mid-70s when a wave of pollution control laws in the high income nations started limiting SO2 from coal but not CO2.

Even so, we may be reaching a point in some of the highest income nations where we may be seeing the EKC kick in even for CO2 emissions. They have stopped rising nearly as rapidly in the US as in the past, especially compared to GDP growth, and may even be declining from the US, even as they are surging in China and India and some other nations. But, as noted above, ambient levels will continue to rise even as emissions may top out and decline because CO2 just sticks around, whereas SOX in the atmosphere tends to fall out with the particulates it tends to be associated with fall out with the acid rain it generates.

Hope this clarifies this discussion a bit.

rosserjb@jmu.edu said...

Two additions. One is that indeed average global temperature gradually declined from the 1940s to the mid-1970s, which is when it turned around and has risen sharply since.

The other point is that the name of my friend who coined the EKC is Thomas Selden. He did publish on it, but got his paper out after the more famous person who stole it from him (whom I shall not name), with that more well-known person also getting it out in a more prestigious and widely read journal, leading to that person generally getting the public credit for it.

Barkley Rosser

Katie B said...

"Hope this clarifies this discussion a bit. "

Nope. Not for me, at least. None of my points or questions have been addressed, specifically how infinite growth is compatible with resource constraints. If population is held constant (I think just about everybody realized by now that infinite population growth is not possible) and if resource consumption is held at fixed rates (even renewable resources are limited by replenishment rates), what does that possibly leave (a specific example) that could grow forever? And keep in mind that we are already consuming at unsustainable rates. If infinite economic growth is possible, why is nobody able to provide examples that illustrate how? So far, all I've seen here is smoke and mirrors without any direct answers (which is pretty much what I expected).

Sandwichman said...

Katie B.,

"Infinite" economic growth is NOT possible no matter what economists may say. Those who say infinite growth is possible don't understand the meaning of the word infinite. People can't even COUNT to infinity.

Economists seem to use the word infinite as a hyperbole. David Autor talked about the "infinite amount of work to be done." What they really mean is more like "lots more."

My view is that "economic growth" is a euphemism for enabling the accumulation of capital and that accumulation of capital is based on shifting costs so that they are "external" to the balance sheet.

Economic growth was part of the post world war II social compromise between labor and capital. Capital has since abrogated their part of the compromise but liberals still yearn for the cargo cult of economic growth, as if that will bring back the Happy Days of the New Deal welfare state and social democracy.

People aren't going to abandon their faith just because a few miracles don't happen.

Sandwichman said...

Barkley,

I teach a unit on ecological modernization theory, which examines the EKC hypothesis. I keep up with the literature. The evidence for the EKC is not robust. Hard to isolate the variables. The classic critique is David Stern, "The Rise and Fall of the Environmental Kuznets Curve".

The EKC has, though, spawned a small industry of searching for an EKC. Seems to me like Waiting for Godot. It would be nice if there was an EKC but it would not be prudent to rely on it. By the way, for news on the fate of the original Kuznets Curve, see Piketty. Presumably, you've heard about the status of Phillips Curve.

I hope this clarifies the discussion a little more.

rosserjb@jmu.edu said...

Katie,

Did I say anything about infinite growth? No. The problem is not running out of resources. It is polluting ourselves severely while using up resources before we run out of them. If we ran out of them, well, that would end the problem.

Sandwichman,

Yes, I agree that the EKC is "not robust." Thought noting how the pattern varies for different pollutants agreed with that, and I realize that even for SO2 the story is messy and complicated. And I am most certainly not "relying on it," although it has held for some pollutants.

Fully aware of Piketty on the original K curve, but that is irrelevant to this discussion.

As for Phillips Curve, well, that is not at all a settled matter. Do not know what you think its status is. That is a matter of wild and ongoing debate, near as I can tell, one that I do not have a strong opinion on, for the record. A big mess.

Sandwichman said...

Barkley,

That's what I meant about the Phillips Curve: "not a settled matter... a big mess." That's my prediction for the EKC. It will never be settled one way or the other.

Sandwichman said...

"We need to put resources where the problems are in a very specific way. A discourse which is based upon what's the rate of economic growth -- how much stimulus monetary or fiscal do you need to get there is not drilling down to the questions that need to be asked and answered." -- James K. Galbraith on the Charlie Rose show September 12, talking about his new book, "The End of Normal: The Great Crisis and the Future of Growth."

There is a long excerpt from the book on the Amazon site of a section titled "Growth Now and Forever," noting the curious over simplification of the models of growth that became popular in the 1950s and 60s.

"The notion of production, therefore, was one of immaculate conception: an interaction of machinery with human hands but operating on nothing. Economists (Milton Friedman, notably) sometimes expressed this model as one in which the only goods produced were, actually, services—an economy of barbershops and massage parlors, so to speak. How this fiction passed from hand to hand without embarrassment seems, in deep retrospect, a mystery. The fact that in the physical world, one cannot actually produce anything without resources passed substantially unremarked, or covered by the assumption that resources are drawn freely from the environment and then disposed of equally freely when no longer needed. Resources were quite cheap and readily available—and as the theory emerged, the problem of pollution only came slowly into focus. Climate change, though already known to scientists, did not reach economics at all. It would have been one thing to build a theory that acknowledged abundance and then allowed for the possibility that it might not always hold. It was quite another to build up a theory in which resources did not figure."