Limits to Growth – of What?

By James K. Boyce. Originally posted on Triple Crisis.

Average national income is a notoriously imperfect measure of the average person’s well-being. The 2010 BP oil spill in the Gulf of Mexico – with clean-up and damage costs of $90 billion – added about $300 to the average American’s “income.” But it added nothing to our well-being. The world’s most expensive prison system, costing almost $40 billion per year, adds another $125 per person. This doesn’t make us better-off than people living in countries that don’t incarcerate one in every 100 adults.

Of course, national income includes many good things, too. Growing food and building homes add to national income. So does public spending on education and health care. Unlike oil spills and jails, these really do add to our well-being.

 

National Income:The Good, the Bad, and the Useless

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Desert Year: The Third Industrial Revolution

John ‘Skip” Laitner is an economist, enjoying a desert year while on research sabbatical  from the American Council for an Energy-Efficient Economy. Skip is discovering some surprising insights from his time in the desert that can inform the way one looks at the economy and social systems. In a series of posts entitled Desert Year, Skip lends us his new insights, as well as his 40 years of experience as an energy and natural resource economist, to probe the economic, climate, and energy challenges that confront us.

This latest post appeared first on the Huffington Post. It is reposted here with permission.

We are used to thinking — or even believing it is our heritage — that our economy will grow at maybe 2 percent above the annual growth in our population. So if our population increases by 1 percent, then we assume the economy will grow maybe 3 percent in any given year. And if we maintain that level of growth, then yes, we can support the new jobs necessary to provide for our nation’s economic well-being.

But we are in different times. Social visionary Jeremy Rifkin provides perhaps the critical insight in this regard. In his new book, the Third Industrial Revolution, Rifkin offers a compelling narrative that highlights the need to transition away from an older, less productive way of doing things — relying on “the second industrial revolution technologies and systems” of the 20th century — and moving instead into a newer and more intelligent way of providing the needed goods and services. Why is this important?

George Mason University economist Tyler Cowen suggests in his own book from last year that we are in the midst of what he calls, The Great Stagnation. This is the result, he suggests, from “living off low-hanging fruit for at least 300 hundred years. We have built social and economic institutions on the expectation of a lot of low-hanging fruit, but that fruit is mostly gone.” Rifkin makes the compelling case that without a substantial investment that enables our transition into the Third Industrial Revolution, we may be left without the new fruits that can ensure a more sustainable economy. Continue reading…