Sunday, December 30, 2018

Economic Growth and Climate Change: Mistaking an Output Variable for an Instrument

When I first started arguing against the degrowthers, I thought they were a small, uninfluential fringe, important only because they had a sway over a portion of the left—what we might call the Naomi Klein left.  That was then.  Today degrowth is entering the mainstream, as can be seen by the latest David Roberts piece in Vox.  Roberts reviews a discussion between several economists on the Institute for New Economic Thinking (INET) website.  (INET is a Soros-affiliated outfit whose mission is to push economics in a more progressive direction.)  The key article is by Enno Schröder and Servaas Storm; using historical data, they test for the potential of decoupling economic growth and carbon emissions, finding the scale of decarbonization we need is incompatible with economic growth—hence the need to reject economic growth as a social objective.  A similar perspective is provided by Gregor Semieniuk, Lance Taylor, and Armon Rezai, while a rebuttal comes from Michael Grubb.  All three papers are authored or coauthored by important figures in the academic left or center-left, and their point of dispute reflects the expanding influence of the degrowth perspective.

If I had more time I’d write up a response in the form of a paper.  (Actually I am writing a response, but it will be a book.)  For now a blog post will have to do.  Here’s what I think these estimable economists are missing:

1. Economic growth is not, not, not a policy variable.  There is no magic button available to society that delivers a given rate of economic growth, or degrowth for that matter.  It’s an outcome of a host of factors, some of which are controllable, others not.  Indeed, as we wait for quarterly GDP numbers to be revised several quarters later, we still don’t know what economic growth or contraction we’ve experienced.  It is true that politicians often speak of the need to adopt some policy or other for sake of economic growth, but at best they are proposing to push on one of the many factors that influences it.  There is no growth dial, and even if there were, twisting it a few notches would have almost no impact on carbon emissions, which need to fall by nearly 100% within two generations.

2. It is certainly true that serious action against climate change will require giving decarbonization needs the highest priority.  In that sense, economic growth as an objective will have to recede.  This doesn’t mean growth is “bad” in any general sense, just that it now needs to rank lower among the many things we want for ourselves.  Given any level of decarbonization (and setting aside all the other competing needs, of which there are many), if we can achieve this with more growth, or less degrowth, so much the better.  The one point of agreement I have with the degrowth view is that the argument sometimes put forward that we can’t afford to take stringent measures against carbon because it will derail economic growth has to be rejected.

3. Grubb is right in his critique of Schröder/Storm insofar as there has yet been no determined action to forestall catastrophic climate change.  Extrapolating from the weak, hesitant policies of the past tells us little about what is likely to happen when policy gets serious.  We will be entering unexplored ground.

4. Standard economic models embody this extrapolation approach by applying consumption functions derived from past experience to the various goods and services that have carbon inputs.  A carbon price or some regulatory constraint is introduced, and the model is run to see how desired consumption changes.  (These models typically assume constant levels of employment and capital utilization.)  Given this structure, there is little they can tell us about the consequences of rapid, massive price changes that make the prior structure of demand unaffordable.  A carbon price of hundreds of dollars per metric ton, which is where we will need to get to within a few years of instituting a policy, is essentially a demand-forcing mechanism in the same sense that some past regulations have been technology-forcing.  It imposes a reduction in demand beyond the range of substitution people have historically faced.  It’s brutal, but that’s what it will take to live within a carbon budget compatible with 2ºC of global warming, much less 1.5º.

5. The only conceivable way to sell such a policy, and to sustain living standards in the face of such a shock, is to return most or all of the carbon revenues to the public in a progressive fashion, since ability to cope with the shock is roughly proportional to one’s income.  A per capita rebate does this efficiently, fairly and transparently.

6. The main threat to the level of economic activity is the massive capital writeoff that such a carbon policy shock would entail.  Current speculation centers on the stranded assets of fossil fuel suppliers, and this is substantial, but I estimate it constitutes no more, and probably much less, than half the capital loss faced by investors.  There are entire industries whose existing stock of investment will be rendered uneconomic by a serious carbon price; think of the airlines, for instance, and the businesses like tourism that depend on affordable air travel.  Think of the trucking fleet, the current location of residential and commercial real estate, or industrial agriculture with its large fossil fuel inputs.  Existing models consider changes in operating costs; what none of them take into account is how much of the capital stock will simply have to be scrapped, and what the economic consequences will be.  Here it is precisely labor and capital utilization that is in question.  Based on historical analogies (discussed in the book), I believe it is likely that stringent carbon policy will be accompanied by a large negative economic shock, greater than any recent demand-driven recession, including 2008.  Keynesian policy can help us get through such an episode but can’t avoid it.

7. And this means degrowth, at least for a while.  But it’s not planned or desired degrowth—on the contrary.  It is the result of having the wrong capital stock for the decarbonized economy of the future; we will have to submit to a contraction, but we should anticipate and counteract it to the extent we can.  Above all, we should adopt policies to protect and improve living standards in the lower income countries.  I predict this will be a tough sell when belts are tightening throughout the capitalist world, but if you care about social justice this will be your fight.

51 comments:

rosserjb@jmu.edu said...

An important offset adding to growth would/will be massive investment in non-carbon based enrgy sources and related industries, even as there is a massive decline in the carbon-related sectors. This can wash out a lot of different ways.

Peter Dorman said...

Yes, Barkley, and I know you've studied this. But isn't there a stock vs flow problem? The capital writeoff will be a near-instantaneous shuttering of a significant portion of our capital stock. It will take years of new investment to replace this.

Peter T said...

I agree with your general argument, but is not writing off the stock also writing off the substantial associated flows? Coal/oil down, but also grain trades down, thirsty crop shipments down and so on.

More - climate is the major threat, but trade-associated ecological threats are also important (invasive species, transfer of ecological responsibility), as is topsoil loss. In short, given "growth" is measured GDP, a serious try at a long-term sustainable economy is surely going to have much less measurable GDP - less capital, lower flows. It may - depending on political choices - be kinder to humans, but it surely can't be the same kind of economy in the ways it is measured or the ways it functions.

Peter Dorman said...

Peter T: Yes, stock writeoffs have implications for flows -- that's my point. Or more precisely, the flow reductions you get assuming the capital stock remains in operation and adjustments are made only on the basis of operating costs are less than what you get if you have a shutdown. This is really just micro 101, but shutdown analysis is usually covered pro forma with little awareness of its relevance to the real world.

Also agreed that, while it's the biggest issue we face, climate change is hardly the only environmental concern. We face a long list, but in each case I think the same analysis of economic growth applies: be willing to sacrifice it for more important objectives, but not more than necessary. And restoring the environment is far more about *how* and *what* we produce than a monetary total of how much (GDP).

Barkley Rosser said...

So who cares about capital stock writeoffs in and of themselves? We already see this in the employment debates in the US over fossil fuels versus renewableS. Is it not the case that we already have more people working in the renewables sector than in the fossil fuels sector?

Yes, of course, there are timing issues, and if the growth in employment and growth lags too far behind the decline in growth and employment from the cutbacks due to cutting back carbon-based energy sources, well, that will be troublesome, and even with good timing the low geographic mobility we see will be a problem, even if there is a net gain in employment (and maybe measured GDP, although this looks less important to me, a sideshow really). We already see this with the long declining coal-steel-auto complex in the US Midwest feeding into the Trump victory. We could easily see more of this. The prospects for West Virginia simply do not look all that great.

Barkley Rosser said...

BTW, on FB I was recently in a debate with some locals here about Trump's wall and immigration, and I noted that very white WVA with very few immigrants was very pro-Trump and anti-immigrant, as well as having the worst opioid crisis in the country. A big local muckety-muck, actually the son of the guy for whom the building my office is in who thinks that all JMU profs should kowtow to him as a result, accused me of being a "racist" for that.

The person running that thread deleted it, but I have to note regarding WVA and racism, with me sympathetic with the West Virginians for their long running poverty problem (and employment in the coal industry has been declining since 1929), that back in 2008 they gave Hillary Clinton her second strongest showing in the Dem primary against African American Obama, while giving her the least support of any statw when she ran against white racist Trump in 2016. (Arkansas in 08 gave her more support against Obama, Sanders narrowly beat her in the 16 Dem primary in WVA.)

Anonymous said...

The creepy remark about Naomi Klein is just the way in which male economists intimidate female economists. How shameful.

Peter Dorman said...

Barkley: If I understand correctly (and maybe I don't), your stock/flow comment is about the energy sector only, and I would agree with it. The fossil fuel sector is obviously resource- rather than labor-intensive, and the writeoff of trillions of dollars worth of stuff in the ground is of no concern to anyone except those with a financial stake in that valuation.

Not so with the enormous "wrong" capital stock in the rest of the economy whose profitable operation depends on low energy prices. Again, I think the air travel example is illuminating, Boeing for instance. If the US passed the kind of carbon program I and other climate hawks advocate, a large portion of Boeing's facilities would be immediately mothballed. And this would be replicated to varying degrees throughout the economy. Yes, it's still a timing problem, but measured in years and (probably) tens of millions of workers.

Peter Dorman said...

Anonymous: Please explain how my Klein reference is "creepy" and "intimidating". I'm actually curious, because I try to be conscious about sexism, and I don't see what you're seeing.

For the record, I used Klein as an exemplar of this portion of the left because she's a journalist whose work is unparalleled in its coverage and distillation of the thinking and action of the extraparliamentary left, and because her book This Changes Everything had the widest readership and influence of any work analyzing climate change from a left perspective. By criticizing the ideas in the book, my real criticism is of the people she is reporting on, and not just her. I tried to make that clear in my review. If I've expressed any of this in a sexist way, I'd appreciate having that pointed out.

rosserjb@jmu.edu said...

Anonymous,

The problem with your comment is that Klein is not an economist, although she pretends to be one. She is as PD noted a journalist. I am among those who find her wildly overrated.

To Peter,

"Mothbslled"? I doubt even a sharp increase in carbon prices would shut down the airline industry as much as you forecast. I would expect a substantial increase in fares and some drop in people flyng, along with a shift to more enrgy efficient planes. You are right, of course, that many industries would be hit hard, but the same argument applies to them as to energy itself, there will be investment in alternarive technologies with ultimate output and employment impacts not necessarily so obvious and contingent on timing issues, although certainlhy a sudden increase in carbon prices will probably impart a substantial temporary shock to quite a few sectors.

Peter Dorman said...

This is a useful discussion, Barkley. It's true that the airlines themselves would shrink slowly on a timescale that permits a rise in employment elsewhere. Boeing? How many orders for new planes would we see? (Energy efficiency improvements in new models are not sufficient to justify replacement.) And below a certain level of demand it is rational to shut down a plant rather than running it at reduced capacity -- the shutdown argument.

My argument is that a sizeable portion of our economy looks like Boeing, if less drastically.

rosserjb@jmu.edu said...

Well, in some you mentioned adjustment could presumably happen more smoothly with less just plain out shutting down. Agriculture is the obvious one to me, even if certain input industries might be shocked badly. A lot of this is tied to levels of capital intensity and how inflexible the enrgy usage is in all that capital stock.

Peter Dorman said...

Yes, but I would add to that the role of demand. The existing literature on asset exposure (net of fossil fuel reserves) centers on the share of energy in costs, but demand is crucial, and along with that the relative flexibility of the capital stock in accommodating demand-switching. (We are back to putty-clay again.) I think this could be operationalized and made someone's research project (a good dissertation, except it's too low-tech).

Thornton Hall said...

This issue is too important to be handled by environmentalists who think smart people shaming less smart people is a good method to accomplish big goals and economists who have no idea how dumb they sound when they claim the ability to predict the future.

Climate change is a massive opportunity where the country that figures out solutions first is going to make a lot of money. It’s good news for the most innovative country on earth. We’re going to do it. Not because it’s easy, but because it’s hard.

reason said...

".. is going to make a lot of MONEY." Can we PLEASE stop this sort of talk, it is part of the problem. Firstly, it is a zero sum approach to a global problem. Secondly, money is not the issue, you can print as much of it as you like. If a country makes money with sustainable technology and uses it to import goods made using old technology, there might be no net gains for the world as a whole. My view is that part of the solution has to be a greater emphasis in policy on economic security because if the solution entails a massive readjustment then many people will have specialities that will suffer a loss in demand. If we are going to have the political will to carry through the changes that are needed then we need to protect these people.

Thomas L. Hutcheson said...

A fall in consumption at current prices relative to no net CO2 emissions tax may indeed be needed, but I do not see how failing to shift resources from consumption to investment, which is what is implied by lower "growth," can be on the optimal adjustment path.

reason said...

TLH .. I don't follow why does higher rates of investment necessarily imply higher GDP? You could invest to reduce your dependence on the market and accept lower rates of return. I've said before that I am agnostic about whether we need lower GDP or not - but we definitely need less wasteful consumption. And it sure would help if we had less private debt so the system as a whole was more resilient.

Sandwichman said...

Happy New Year, EconoSpeakers!

Thornton Hall makes a remark in passing that I would like (or hate?) to elaborate on at length. In fact I did -- 3000 words.

Thorton: "...economists who have no idea how dumb they sound when they claim the ability to predict the future."

It is my contention that "economic growth" is simply a pretext for economists to perform their fantasy of prediction. Period. End of story. The problem with degrowth is not that it opposes this fantasy but that it participates fully in it, albeit with different entrails. Dialing down the CO2 emissions PREDICTS something or other about GDP. In place of "man's triumph over nature," we get man's triumph over nature's revenge for man's triumph over nature. And so it goes (as Kurt Vonnegutt would say)...

It is a fine kettle of fish we have painted ourselves into the corner of! Academic fads of "new materialism" and "posthumanism" (brought to you by the Andrew W. Mellon foundation [brought to them by Andrew W. Mellon's fortune {brought to him by the Mellon Bank, Gulf Oil, Koppers Coke, Alcoa and the Carborundum Company}]) offer an alternative ontology: "shit forms an assemblage".

Psychoanalytically speaking, I would take Melanie (not-Mellon-y) Klein over Naomi. Actually, I would take Donald Winnicott over Melanie Klein but couldn't resist the play on names. The bottom line is that human subjects must undertake a constructive project of mending whose "success" is not guaranteed, cannot be predicted, and, in fact, may well be improbable. The alternatives are denial OR masturbatory exercises of prediction and or theory building. There is no such thing as an economist.

Shit or get off the pot. Happy New Year.

Anonymous said...

"The problem with your comment is that Klein is not an economist, although she pretends to be one...."

-- Barkley Rosser

Really, really creepy. Do keep trying to demean and intimidate a superb scholar, who happens to be a woman. I am so impressed by such creepy sexism.

Anonymous said...


"The problem with your comment is that Klein is not an economist, although she pretends to be one...."

-- Barkley Rosser

Barkley Rosser shows just how awful the demeaning stereotyping of Naomi Klein by Peter Dorman is. Shameful sexism, that Rosser actually takes as a joke.

Anonymous said...

I used Klein as an exemplar of this portion of the left...

[ Don't, how about that? Naomi Klein is a fine complex scholar, simple as that. ]

Sandwichman said...

"Anonymous" is making an important point that I am all too afraid Peter Dorman and Barkley Rosser will brush off as "irrelevant." It's actually quite central to their discipline, whether they admit it or not. My comment above about the "fantasy of prediction" alludes to an analysis by Vinca Bigo ("Explaining modern economics") that posits the dual fantasies of supremacy (and disparagement of 'others') and prediction as central to economists' persistence in using formalisms that have failed time and again.

Bigo notes that "the practices in question are pursued far more by men than by women." She explains this gender difference with reference to the greater separation anxiety experienced by boys in early childhood because of their gender difference from their primary caregiver, which is usually the mother, citing Nancy Chodorow and MELANIE Klein.

In fairness to Peter, I don't think he intended to disparage Naomi Klein because she is a woman. He was simply deploying the time-honored economists' defense mechanism of disparaging those who question the orthodoxy of growth and Naomi Klein just happened to be a woman. I am, of course, being sarcastic. Klein fulfilled the trifecta of being a heretic on growth, a non-economist AND a woman.

Barkley Rosser said...

S-man,

Sorry, but I am not going to bite. I think trying to turn this discussion into being about sexism is a waste of time. Peter and I questioning the validity of some of Naomi Klein's arguments makes us sexist? Sorry, I do not accept that and consider this line of discussion to be just worthless bs. As it is, all I said is that I think she uis overrated, and nothing said here by anybody has remotely moved me to reconsider or withdraw that remark.

Questioning the use or importance of predictions is quite another matter, something that I also see has having nothing to do with gender. Of course I just put up a thresd about predictions, but a major sub-theme was how I personally avoid making predictions and I made none about what is coming up, rather commwented on how some made for last year by Jeffrey Frankel turned out. I did comment on some things that I privately thought might happen or not, although most important of these was about the Iran nuclear deal, which is not specifically about economics. On trade I basically admitted that I did not know what to predict.

So you are kind of barking up a wrong tree if you want to tie me into some big fetish about making economic predictions. I guess you can drag in my posts on this thread, but most of these have been to throw up doubts about predictions being made by Peter and others. If you want a prediction out of me on all that it is that there will simply not be political support in any nation for environmental policy changes that would lead to any severe reductions of economic growth, which may lie behind some of my remarks, but that is more a political prediction, or statement of a hard political reality, than an actual economic prediction. It also does not mean that I support that, just that I am all-too-unpleasantly aware of hard political realities.

Sandwichman said...

Barkley:"Sorry but I am not going to bite."
Also Barkley: [bites foot]

You read me wrong. I was not "trying to turn this discussion into being about sexism." As for Naomi Klein being "overrated," where can I find these alleged "ratings"? This is an odd kind of ad hominem disparagement-by-demotion.

Barkley Rosser said...

)OK, I bit.

On Klein, just my humble opinion. After all, she has had several bestselling books with a lot of people claiming she is the new Noam Chomsky or Howard Zinn, indeed, the "Leading figure on the intellectual left in the US," actual quote, so she is very highly rated by quite a few people.

But then indeed we do have the issue that a lot of her stuff is on economics and most of the people making these high praises are not economists either, like her. So, she can be very good while still overrated, given that in some peoples' books she is Number One.

Sandwichman said...

If one judges by book-jacket blurbs, EVERYONE who writes a book is overrated.

Sandwichman said...

(It's called puffery)

rosserjb@jmu.edu said...

Of course the particular book that got brought into this discussion is the one on climate and capitalism. I am probably getting even snottier, but I must note that Klein is also not a climatologist. Heck, at least with economics she has written quite a bit about and so I think has picked up quite a bit of knowledge, even if not having had formal training.

But with regard to climate, well, maybe we should accept that she is the leading intellectual so can just pick up anything about anything including climate, and, heck, we certainly see all kinds of people spouting off about global climate with no training or background whatsoever on all sides, so, wow, Klein might as well get into it and be taken very very seriously as the leading left intellectual in the US. Yeah, wow.

Sandwichman said...

Would you also say that Michael Mann is overrated on climate?

rosserjb@jmu.edu said...

Michael Mann is an actual climatologist. Naomi Klein is not.

rosserjb@jmu.edu said...

The climatologist who is probably overrated on climate is James Hansen, who has also decided to comment on the economics of climate change, a matter on which he is not qualified and has said some stupid things.

Sandwichman said...

"Michael Mann is an actual climatologist. Naomi Klein is not."

Which is why I thought you might be interested to know what his view is on Klein's book.

This Changes Everything gets the science right, but it’s about much more than facts and figures. This is a deeply insightful exploration of the ideology and interests that have systematically blocked climate action and have undercut even good faith efforts. Klein gives no one a free pass. A rousing must-read!”

rosserjb@jmu.edu said...

He also happens not to be an economist or a social sccientist. I take him seriously on climate, but not other things. Obviously lots of people think the book is an "insightful exploration of the ideology..." but so do lots of other people. She sells lots of books. This is how she got to be overrateed.

BTW, I did not say she does not have insights or that she is always wrong. I said she is overrated and not an economist, and I stick to that.

Sandwichman said...

"Obviously lots of people think the book is an 'insightful exploration of the ideology...' but so do lots of other people."

That makes it unanimous!

Peter Dorman said...

Weird. I just got back to this site, and I find a raging debate about how sexist I am or am not. Well, I respect Naomi Klein highly as a journalist: she senses what her sector of the left is thinking before they sense it themselves. This is being a "thought leader" in a positive way. So when I say she's an exemplar, I only mean that this particular set of ideas is best found in her exposition of it.

My beef is really with what the sector thinks. It's not based on pulling rank (as in "I'm an economist, and I think...."), but in what I view as the actual merit. I'm entirely open to rebuttals that say, you have missed the merit because of X. I try not to be sexist, to respond to NK and other women on the same terms I respond to men, but I'm open to being informed otherwise, based on specific examples. I've had sexist behavior pointed out to me in the past, and I've appreciated it.

Incidentally, the climate science in This Changes Everything is pretty good; it's the rest of the thinking that drives me crazy.

Peter T said...

re the "ability to cope..is roughly proportional to income" - I'm not sure this is true. A coal-plant electrician can switch to wiring renewables, while the Koch Bros face a much tougher ride. Wealth is almost all claims on future income - no income, no wealth. Also, destroy the value of capital stock and you destroy the flows that pump money around the world (eg the oil money that ends as real estate in London. Previous such shocks have left a lot of the upper classes waiting tables, living off the charity of class-mates or just plain dead. It's this that accounts for the obstinacy of the resistance.

rosserjb@jmu.edu said...

Yes, NK avoided making any egregious errors in discussing climate science, kept close to the widely availavle IPCC reports. So no hasssles from Michael Mann who could bloviate on how brilliant her ideological analysis is.

As it is, S-man had it earlier: a lot of the overrating amounts blurbs that ar "puffery," although clearly there are a lot of people taking those blurbs a bit too seriously.

Peter T.,

Yes entrenched wealthy and powerful special interests fight hard to maintain their positions when threatened, and all those tied to fossil fuels are seriously challenged.

Sandwichman said...

Peter Dorman,

It may be unclear to a reader of the OP to appreciate what exactly your beef with "what we might call the Naomi Klein left" is. One has to follow the link and wade through the "obvious counter arguments" that the vision, in your account, pushes aside. Here is the beef:

"Actually, I think hostility to economic growth is a moral position that expresses values, not a proposition that is intended to lead to laws or policies. This came to me in a flash when, after many pages of anti-growth rhetoric, Klein rhapsodized over how many new jobs would be created in the transition to a green economy. GDP would go down because growth is bad (and you can’t have it in a finite world), but jobs would go up because we care for our communities and want everyone to have a decent livelihood. On rational grounds it’s gibberish, but the moral logic is clear enough."

Fair enough. Hostility to economic growth is a moral position. So is promotion of economic growth. And I agree, rhapsodies about how many new jobs will be created is gibberish -- as are rhapsodies about how many new jobs will be created by any other policy or set of policies. So your critique of Klein is not really about how much she differs from the prevailing paradigm but how little she differs.

That's how I read what you are saying -- and I would agree -- but I suspect that is not how you read your disagreement with Klein. I suspect you retain quite a bit of investment in your three "obvious counter arguments": the qualitative nature of GDP, the dubious arithmetic of solving the carbon problem by degrowing, and the procedural conundrum of enacting degrowth. These counter arguments are gibberish, which is why it was probably prudent for you to segue to the objection that Klein's position was a moral one and not a practical one. I could go into detail on why your counter arguments are gibberish but it hardly seems necessary since you have framed them as ancillary to your main objection.

Peter Dorman said...

S-man, I would appreciate a reference to a careful, systematic argument for the degrowth position that is not vulnerable to my criticism of reversing causation.

FWIW, I do not regard GDP as an indicator of value. It measures the availability of certain types of economic resources and corresponds to the amount of paid employment in a society, and as such, it has the potential to be put to good use.

rosserjb@jmu.edu said...

I have been largely agreeing with Peter and largely continue to do so.

One area where maybe I am off on my own is that I simply find this whole morality argument vis a vis GDP to be pointless, and a major reason why is precisely all the problems that Peter raised about measuring it ans others, with my own earlier additions about how forecasting whixh way GDP would actually go with a move to having a strong environmental policy being up in the air.

On Klein's arguments, the hard nosed economist in me notes that given that indeed boring conventionally measured GDP tends to equal incomes earned in an economy, talking about increasing employment while reducing GDP does involve a decrease in incomes of all those employed, although in historical practice declines in GDP have pretty much always involved declines in employment. It is this sort of pollyannaish set of arguments that makes Klein look, well, overrated...

Sandwichman said...

Peter,

No one is more careful and systematic than yours truly, if I do say so myself!

It is an egregious error to assume negative growth is some sort of policy instrument advocated by the degrowth movement. The degrowth movement views the imperative of perpetual economic growth to be illegitimate and incoherent. It would be double-plus absurd for them to try to "fix" incoherence by "doing it backward."

The term degrowth was always supposed to be a provocation, not a proposal. I have long argued that the term is inept because it lends itself to precisely such a misinterpretation, whether innocently or mischievously. No serious scholar, however, proposes using falling GDP as a gauge of ecological progress or as a cudgel to beat back ecological crisis.

Many of the arguments that you make in the OP are compatible with things "degrowthers" actually advocate, as opposed to some chimerical, quixotic "strategy" for reducing carbon emissions by "dialing down" GDP.

As I have argued here, if one wanted to dial down anything, it would have to be hours of work, which are much more highly correlated with carbon dioxide emissions than is GDP. Ah, but correlation is not causation, one might object. Exactly. Which is why such a proposal needs to be considered instead of rejected with superficial, disparaging assumptions about what the imaginary "idea behind it" is. I have spent two decades researching the fallacy of the dismissive "idea behind."

Manifesto for a Suicide Cult
http://econospeak.blogspot.com/2017/02/manifesto-for-suicide-cult.html

"In a nutshell, the degrowth argument is that there are real limits to growth and that consequently an end to growth will happen whether it is desired or not, planned or unplanned. It would thus be prudent to mitigate the prospective end of growth by planning for it, to whatever extent possible."

Is the Ecological Salvation of the Human Species at Hand?
https://econospeak.blogspot.com/2018/09/is-ecological-salvation-of-human_20.html

Some Questions about the Ten-Hour Week
https://econospeak.blogspot.com/2018/11/some-questions-about-ten-hour-week.html

rosserjb@jmu.edu said...

S-man,

I have had quite a few conversations with "zero growth" Herman Daly over the years. Quite a long time ago (and repeatedly since) he agreed that in terms of the ecology the issue is the physical throughput of the economy, and that getting this under control, either not growing or better yet declining, which is the desideratum for ecological economics.

However, he has always agreed that there could be growth of non-material output in the form of higher quality personal services. Would you not agree that this is a not unreasonable position, with this separate from however many hours people may work?

Sandwichman said...

Barkley,

Every hard-nosed economist started out as an infant. And, as Donald Winnicott explained, "'there is no such thing as an infant' -- meaning, of course, that whenever one finds an infant one finds maternal care, and without maternal care there would be no infant."

For a hard-nosed 21st century economist, GDP functions as a transitional object. Whether or not you believe you can forecast what would happen to GDP in the event of effective environmental policy, your identity as a hard-nosed economist obviously hinges on having hard-nosed opinions on the relationship between GDP, employment and environmental policy. Otherwise you would be just another "pollyanna" (although perhaps your use of that gender-disparaging term was ill-advised in the circumstances).

For the infant, the transitional object may be a stuffed animal, a thumb or a piece of blanket. Winnicott wrote, "the transitional object and the transitional phenomena start each human being off with what will always be important for them, i.e., a neutral area of experience which will not be challenged."

The transitional object replaces "the illusion that there is an external reality that corresponds to the infant's own capacity to create." That illusion is crucial to the psychic development of the infant as is the disillusionment that follows. Winnicott assumed "that the task of reality-acceptance is never completed, that no human being is free from the strain of relating inner and outer reality, and that relief from this strain is provided by an intermediate area of experience."

GDP is thus doing something very important but it may not be doing what you think it is doing.

Please don't mistake this for some glib attempt to "psycho-analyze" you. I don't have the training and if I did, I wouldn't be doing it off the cuff for free. I am no less invested in this transitional object of the GDP than you or Peter are. I am simply trying to grapple with why this particular aggregate measure has attained the "overrated" status that it has.

Sandwichman said...

Barkley,

I was writing my last comment when you posted yours, so mine doesn't address your question.

"Would you not agree that this is a not unreasonable position, with this separate from however many hours people may work?"

Yes, I see nothing wrong with providing higher-quality services with no increased material throughput that add to income or wealth. It is also not what most economic activity is about and doubling or tripling or quadrupling the provision of higher-quality services with no increased material throughput is not going to reduce aggregate material throughput.

I thought you said you were hard-nosed. The people providing the high quality services have to eat, they have to have a roof over their head, they need to wear clothes. They are not going to spend all their income on high-quality services with no material throughput.

Sandwichman said...

Also, Barkley, this was an issue that Duncan Foley addressed in "Dilemmas of Economic Growth" that I write about in my loooong, long piece that I haven't posted yet to EconoSpeak. A great deal of what is currently counted as "immaterial growth" is income of financial intermediaries. I won't repeat my commentary on that here because it is already excessively condensed in my long post.

rosserjb@jmu.edu said...

Gosh, S-man, sorry I =have not addressed the Looong post you have not posted. And, um, I certainly did not suggest that material throughput goes to zero. Where did you get that from?

Oh, just to really kick a can, with all the mumbling about how brilliant NK is on ideology, I do note that 40 years ago we had possibly the most intensive S{)2 pollution ever seen on the planet due to humans in a place called "the dirty triangle." It was where three nations came toether, the former German Democratic Republic, the formeer Czechoslovakia, and Poland. None of these were capitalist in fact, unless one believes in old Trotskyist notions of "state capitalism," and all of them proudly claimed to be "socialist" and indeed were largely so by the accepted definitons of that economics system, although Poland less so than the other two. Today, the "dirty triangle" is largely cleaned up, and their economic systtems have changed, although what was more important for this to happen is that their political systems bwcame much more democratic.

rosserjb@jmu.edu said...

Of course, ironically, SO2 pollution tends to cool things down, so ending socialism in the "dirty triangle" contributed to global warming. So, gosh, maybe global warming is completely due to capitalism. :-)

Sandwichman said...

You're totally incoherent, Barkley. I only mentioned the unpublished post to explain why I didn't want to regurgitate what I wrote about what Duncan Foley wrote. Don't let your hard nose get out of joint.

rosserjb@jmu.edu said...

If your comment is directed at my last two comments, ai note that they are put out to mock certain poorly formulated arguments that we are seeing in this discussion. My points ma seem incoherent, but at a minimum they are not much more so than some of those poorly formulated arguments, some of which have been publicly states by wisely praised authors known for being "good writers," (hack, coungh), the good writing masking the inchoerence of the arguments.

Sandwichman said...

I like to think that I would at least minimally proof read my comments if I was defending myself from accusations of incoherence.

"...publicly states by wisely praised authors..."

rosserjb@jmu.edu said...

Aw, garbledegook.