We've Outgrown Growth: We Can Have It All-Full Employment, No Poverty, Lower Greenhouse Gas Emissions and Fiscal Balance without Relying on Growth

By Victor, Peter A. | Alternatives Journal, Summer 2017 | Go to article overview

We've Outgrown Growth: We Can Have It All-Full Employment, No Poverty, Lower Greenhouse Gas Emissions and Fiscal Balance without Relying on Growth


Victor, Peter A., Alternatives Journal


IN MY RESEARCH, I've asked the question: can we in Canada have full employment, no poverty, greatly reduced greenhouse gas emissions, and fiscal balance without relying on economic growth? Sounds nice, doesn't it?

I first addressed the implications of managing without growth 10 years ago in a book called Managing Without Growth: Slower by Design, not Disaster. I deliberately focused on rich countries where it has been shown in many studies that further increases in average GDP (gross domestic product) per person contribute less and less to people's sense of well-being.

I used a simulation model of the Canadian economy to generate scenarios indicating that it is possible to move the economy towards prosperity and well-being without increasing GDP. I also considered some of the changes that would be necessary to make it so. These included a modest reduction in average annual working hours to reduce unemployment, an escalating carbon tax to discourage greenhouse gas emissions, and a number of antipoverty measures to reduce poverty. Ultimately, I found that it would be possible for Canada to manage just fine without growth.

That was 10 years ago. Back then, it looked possible to make a reasonably smooth transition to an economy that would provide high and improving levels of well-being to all Canadians. Now it's not so clear.

In the decade since I began my Investigations into alternative economic futures, Canada's GDP has grown 19.7 percent, GHG emissions have declined a measly 0.8 percent excluding LULUCF (land use, land-use change and forestry) but increased 6.0 percent including LULUCF. Although the inequality of income distribution declined slightly as measured by the Gini coefficient, the number of Canadians living below the Low Income Measure (LIM), used by the Organisation for Economic Cooperation and Development (OECD) to compare poverty among member countries, increased 8.0 percent. This was a smaller percentage increase than the total Canadian population, but nevertheless it meant that from 2004 to 2014 the number of Canadians with low incomes grew by 335,000 to 4.5 million.

It's widely believed that economic growth--the continual expansion of production and consumption of finished goods and services--is absolutely essential for improving the well-being of Canadians. But GDP is a seriously inadequate measure of well-being. It says nothing about distribution, excludes many factors that influence well-being such as environmental damage and other social costs, gives no value to unpaid work, and includes some expenditures on items such as increased commuting and home alarms whose contribution to well-being is questionable.

While GDP has been growing, other measures designed to evaluate how Canadians are really doing tell a very different story about our well-being. For example, between 1994 and 2014 the Canadian Index of Well-being, which is based on changes in education, health, community vitality, democratic engagement, living standards, time use, environment, and leisure and culture, increased just 9.9 percent. Meanwhile GDP increased 38 percent.

The Slowdown of growth

Since the 1950s, the promotion of economic growth, measured as an increase in inflation-adjusted GDP, has been the overarching policy objective of virtually all governments and political parties. Now economic growth is proving increasingly elusive as growth rates continue to slow. The average annual growth rate of OECD economies combined fluctuated between four to six percent per year in the 1960s. Since 2001, it's been in the 2 to 2.5 percent range with negative growth in 2009 during the financial crisis. The Canadian record is much the same. This decline in the rate of economic growth has revived concern about "secular stagnation," a condition of ongoing low or no economic growth due to insufficient spending or slow increases in productivity or both.

Slowing growth is a matter of grave concern to those who regard economic growth as vital. …

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