Why a steady state economy might be a good thing

Economic growth – doesn’t it sound lovely? But is sustained, continual economic growth really possible?

Really, the whole to’ing and fro’ing over budgets needed for economic growth and austerity measures and just who is paying for it all has been about this fundamental question. It underpins all sorts of debates about not only Australia’s contentious 2014 budget but all those post global financial crisis budgets round the world. It’s a question that has spawned Wall Street protests and Hong Kong sit ins, devolution of power grids into small communal solar (or other renewable energy sources) generation of electricity in places such as  Wildpoldsried (pop. 2,600) in Germany and a Greek election of a left wing government. According to Fred Magdoff and John Bellamy Foster,  2011, in What Every Environmentalist Needs to Know About Capitalism, the idea of continual economic growth teaches ‘that greed, exploitation of laborers, and competition (among people, businesses, countries) are not only acceptable but are actually good for society because they help to make our economy function “efficiently”’. What would happen if our economy stopped growing over a very long term – if our finances hit a particular level and then remained there; if there were no more line graphs shooting skywards? Would it be an end to efficient economic management? This is what is called a steady state economy, one where economic growth is no longer continual. Would this be the disaster many of the world’s treasurers predict? Would there be no more food, an end to development, terrible losses of jobs, stagnation and ruin, wars and famine? HavesHaveNots1 HavesHaveNots3 Probably not.  A steady state economy would (according to Investopedia, 2015) equal ‘an economy structured to balance growth with environmental integrity…’ [finding] ‘an equilibrium between production growth and population growth. The economy aims for the efficient use of natural resources, but also seeks fair distribution of the wealth generated from the development of those resources.’ Is economic growth in fact a myth? The reality is that most of us, over the past thirty or so years, have not actually experienced real economic growth – our finances haven’t actually improved. It’s a con. What’s actually happening is that a few peoples’ finances are improving (quite nicely, thank you very much) but many of the rest of us are actually getting relatively poorer. In fact, most of us are actually experiencing not only economic decline but we’re watching the world go to the crapper environmentally. The disparity between rich and poor has not merely grown internationally; it has also increased within nations.  Chrystia Freeland notes in her book, Plutocrats, The rise of the new global super rich (2012) that the average 1980 CEO in the US had a wage 42 times the average income in the country; by 2012, the multiple was 380. According to the UK’s Guardian newspaper there has been a 117% increase in wages for the wealthiest 1% of Brits (in real terms) since 1986, compared with an average wage increase of 47% for the rest of the population. The Poverty program estimated that, in 2011, 1 in 7 people in the European Union lived in poverty, while the ratio was 1 in 6 in the US. The problem with the steady state economy idea is that most people see that getting ‘the equilibrium between production growth and population growth’ would involve increased government interventions in the economy, and we have been trained not to like governments intervening. We have been tutored in accepting the hands-off, business-knows-best neo-liberalism most of us experience these days. I’ll leave a final observation on the big question to Greens Senator Adam Bandt (ABC, AM program, 2014). He says: ‘[Billionaires tell us] …the only way we can make ends meet in the country is if ordinary people pay more and people like Gina Rinehart herself pay less… The government’s revenue is decreasing and it’s threatening our ability to fund the services Australians expect. We’ve got two choices: we can either say people like Gina Rinehart ought to pay a fairer share, or we can start cutting back on health and on schools.’But it could work and at least one of the key ways of getting this equilibrium is likely to be popular with the hoi polloi: fairer tax rates… Do we want to cut back on health and education? Do we want to live on a permanently soiled planet? So, do we really need to keep growing financially – pursuing the false utopia of eternal economic growth? The answer is no.

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CHARITY: good, bad or just ugly

India_Literacy1900-2010
This is a graph for literacy rates in India, so what is the connection? Isn’t charity mostly about a ‘haves and have nots’ world

I have to confess to reaching for the wallet (at least metaphorically) when I heard how bad the devastation caused by cyclone Pam has been in Vanuatu. And then I paused (mid click on the donate now button), as I’ve done any number of times with other disasters and the cries for help from charity organisations, and asked myself — Is this the way to go?

Any number of attendant questions popped into my head. Will my money (at least the majority of it) get there, how effective will the aid be, am I just being paternalistic, am I being diddled by charity and aid organisations that increasingly seem to operate like slick corporations?

Criticisms of aid and charity abound, even from among the charity/aid organisations themselves. World Vision’s Vanuatu representative Chloe Morrison says, in response to criticisms of aid and charity organisations’ lack of cohesion and effectiveness in Vanuatu, that ‘Organisations… don’t have a footprint, don’t have a relationship with communities, don’t have those government relationships and just arrive in a country… we’ve seen that in Vanuatu.’

The criticisms are also made in general terms. Charity, aid in general, targets symptoms, not causes… Charity may simply become a substitute for real justice… Charity may not provide the best solution to a problem. Charity simply appeases the well off — give money but do nothing real to change things. Charity replaces government actions to address corruption and systemic problems. Charities are inefficient. This last criticism is one we often hear; the urban mythmakers speak of vast sums soaked up by running costs, high salaries for management, and shoddy or inefficient practices. Personal friends who have worked as volunteers for X (a well-known charity) speak of monumental organisational lapses during the recent Victorian floods and the more recent cyclone disaster response in Rockhampton (hiring more cars than you have drivers for, visiting areas that have already been visited because no-one keeps records, flying in volunteers from far off ports when volunteers are available locally, for example)…

Is charity about finding real solutions? Take world poverty — is charitable giving merely a distraction from finding answers to income inequities or distribution problems? People donate a million T shirts to a country in Africa and impoverish the local tailors and home grown textile industries, or they give genetically altered plants to farmers in a small island community in Indonesia and watch local food crops perish.

There is a far more insidious damnation of charity; the idea that it, with its ostensibly humanitarian goals, has become a ‘big business’. In an article, Charity on the Rampage: The Business of Foreign Aid (1997), the writer speaks of ‘relief circuses’ in places like Rwanda: ‘The grotesque display of humanitarian agencies’ flags flapping alongside each other in eastern Zaire like so many corporate flags in some business park in Purchase, New York, or San Jose, California, realized there was more going on than the simple desire to help. The struggle to stamp out cholera, get the shelters built, and dig the pit latrines was simultaneously a struggle for market share.’ Did you know that you can now investigate the charitable qualities of any number of charities? Organisations such as Give Well (http://www.givewell.org/charities) and Charity Navigator (http://www.charitynavigator.org/) rate charities based on organisational efficiencies, transparency of financial reporting and fund raising and other characteristics. For example, here is Charity Navigator’s 2015 rating of the World Wildlife Fund [WWF]:

Financial Performance Metrics

  • Program Expenses (Percent of the charity’s total expenses spent on the programs and services it delivers) 73.2%
  • Administrative Expenses 6.7%
  • Fundraising Expenses 20.0%
  • Fundraising Efficiency $0.18 ($US)
  • Primary Revenue Growth 9.3%
  • Program Expenses Growth 5.1%
  • Working Capital Ratio (years) 1.35

Concerns such as these indicate that I am not the only one who thinks about the efficacy of my donation dollar. So, when I pause at the donate now button, do I stop? Do I decide not to give?

Here’s a story that also exercises what passes for my mind when the question of charity and giving arises. A man on a beach observed a girl, who, as the tide ebbed, began to throw starfish and small, stranded fish back into the sea. The girl scampered across the sand and valiantly strove to rescue as many as she could. But the tide was falling fast and some were missed. Some died. ‘You’ll never save them all,’ the man said to the girl. ‘It’s just part of nature, some are meant to die… why save only a few’ The girl grimaced. She’d obviously heard such words before; she simply carried on. The man, irritated, shrugged and walked away. Just before he vanished into the dunes, though, he heard a faint voice calling out, as if to the wind, ‘A few is better than none at all.’