Some thoughts: degrowth

Some argue that shrinking the economy would help with climate change. They're wrong.

A donkey outfited with a solar panels. From Anadolu Agency

There is a trendy idea about how to solve climate change: shrinking the economy. It’s called degrowth, and its proponents argue that it’s the only way to save our planet. They’re wrong.

First, the case in favor of degrowth. One of the leading thinkers of degrowth is an economist and anthropologist called Jason Hickel, who also is wrong about global poverty reduction in a way that is tied to this.

Hickel’s argument rests on two premises: first, that the ways we predict we will avert climate change rely on technologies that don’t exist yet and might never work. Second, that given the previous statement, we need to find another way to reduce our emissions. Since total emissions are total population times emissions per capita, and emissions per capita are GDP per capita times carbon-intensivity (basically, how much greenhouse gas you have to pump out for a dollar of economic output). If you can’t change the second part enough to make a dent, which is the point Hickel makes, you have to reduce the first part - by reducing GDP (or by reducing the population, which I don’t think anyone would advocate). The idea that you can grow the economy even while reducing carbon emissions is known as decoupling, and it being impossible is a key component of the degrowther view.

There’s some nuance to clarify. Of course we’re not just bringing down everyone to the Stone Age, but rather are demanding that rich countries stop growing or shrink to some extent. Poor countries, on the other hand, get to grow as they please until they hit the same level of income the rich countries degrew to. Hickel has a variety of zany ideas about how economies work, but generally, he seems to believe globalization is bad and that nobody would see their wellbeing significantly decrease because they would radically change the economy by redistributing from the rich to the poor, so growth becomes unnecessary.

It is very obvious that, since climate change is already bad, the level of output currently sustainable (accepting that technologies won’t reduce carbon emissions meaningfully) is too high, meaning that it would have to be lower across the world. I have already written about how tackling climate change can actually create growth. But let’s assume that it would be so expensive that no growth could be gained. Is degrowth still reasonable?

No. Developed countries are simply too small to matter; they only make up 37% of all emissions, versus 63% from developing countries. Now, the per capita emissions of developed countries are much higher than those of developing ones, but climate change isn’t a per capita phenomenon. So developing countries would need to foot most of the bill of stopping climate change, and given that developing countries are much poorer than developed ones, it would be pretty cruel to ask them to degrow.

And, even if somehow it wasn’t a horrific thing to demand, it would be unfair that the developed countries who are responsible for climate change so far get off with a slap on the wellbeing wrist, and the developing countries who would suffer the most from those also have to continue being poor. Simply, the level of income that preserves current emissions is just too low (17,000 dollars per person, adjusted for purchasing power), and 86% of people in rich countries live above that level.

Also, it’s never going to happen. Nine tenths of the world’s richest people will never agree to reducing their income so much, and developing countries wouldn’t accept to stop growing at the mean world level either - and countries such as China and India are powerful enough to just blow off any demands. So asking either group to degrow is just demanding impossible solutions and making the perfect the enemy of the possible - you know, precisely what you shouldn’t do for global catastrophes.

Plus, “general welfare wouldn’t go down if GDP per capita was reduced “ is pretty much just a hunch, albeit one with fancy numbers. GDP per capita is correlated with most significant measures of welfare. And recessions, where GDP per capita goes down, are pretty bad - although they tend to affect normal people and all sectors of the economy, whereas degrowth would simply reduce the “bad” parts and keep the “good” parts intact, and mostly reduce the incomes of the rich. Besides the fact that the rich don’t have that much money, unless you mean the 86% making up the global rich, “which parts are good” and “why do specific people get to pick and choose” are incredibly difficult questions to solve. It shouldn’t be discounted that higher incomes are usually better: take it from Branko Milanovic, who isn’t exactly a rightist free marketeer (emphasis mine):

… [GDP] is imperfect at the edges while fairly accurate overall. Richer countries are countries that are generally better-off in almost all metrics, from education, life expectancy, child mortality to women’s employment etc. Not only that: richer people are also on average healthier, better educated, and happier. Income indeed buys you health and happiness. (…) The metric of income or GDP is strongly associated with positive outcomes, whether we compare countries to each other, or people (within a country) to each other.

Now, for poor countries, the claim is that their economic growth hasn’t allowed them to develop, which Hickel attributes to neoliberal free market policies. I won’t challenge that, not because I think it’s right (he’s not) but because it’s beyond the scope. And he is right that development doesn’t cause growth - it’s just that no growth can’t lead to development. For instance, they share plenty of the same causes.

The country most frequently used as an example of how development with degrowth could work is Costa Rica: it has a very low GDP per capita, but scores very well in various wellbeing and environmental indicators. But Costa Rica isn’t exactly an example of developed-level outcomes with zero growth, it’s an example of how a middle income country can overperform its peers by adopting the right policies. In other words, development comes from good social and economic policies, which aren’t not related to income. From poverty expert Martin Ravallion:

I will grant that there are cases in which economic growth has by-passed poor people; there is no reason why growth will inevitably come with lower poverty or better outcomes in terms of human development. However, the bulk of country experiences have indicated that better social outcomes (including poverty reduction) generally come side-by-side with economic growth. In marked contrast to the Degrowth Manifesto, economic growth has succeeded in reducing poverty. Also, lower poverty has helped promote economic growth. (…)

Of course, this does not mean that growth on its own, without good social policies, will improve social outcomes. There are also examples of countries that have squandered much of the social welfare gain from economic growth from this perspective—the gains have been largely captured by those who are already well-off, with modest benefit to the broader society.

Degrowth, ultimately, is the “we have enough housing” of environmentalism. Just like various bad faith NIMBY rent-seekers or oddly misinformed own-the-rich types believe that cities across the world have enough housing, so do the degrowthers think we have enough global wealth - which we don’t, in either case. If Asia wasn’t developing and growing, which is the proximate cause for the acceleration of global warming, then climate change would be a far less pressing issue - but the world would be in the worse, on net, because over three billion people would be far poorer than they currently are.

I have already made this point on a different post, but I’ll make it again: climate action is a growth-enhancing policy. Not only are the costs of climate change too high to ignore, but the benefits of adopting a less carbon intensive economy are already high enough for them to immediately pay off. I don’t really believe that a rising tide will lift all boats, but economic growth just works. There can be growth with no development, but there cannot be any development without growth.