In so far as humans seem perfectly incapable of making the connection between "growth" (in populations or consumption) and long-term, looming destruction of large parts of the biosphere, I have hypothesized that the urge to grow is an instinctual behavior of the human animal and thus unalterable. It follows that humans should behave in precisely the self-destructive ways we readily observe every day. This hypothesis also predicts that humans will be blind to other considerations which might be deemed important if they did not conflict with the instinctual urge to grow.
Both of these tragic consequences are on display in the discussion of a paper “Redistribution, Inequality, and Growth” which has been posted on the I.M.F.’s web site and authorized for distribution by Olivier Blanchard, the I.M.F.’s chief economist. The New Yorker's John Cassidy introduces the issue in Does Tackling Inequality Reduce Growth? No.
In the ongoing debate about rising income inequality, two questions are often raised: one from the left—Is rising inequality impeding economic growth?
And the other from the right: Does tackling inequality, which usually involves some form of redistribution, reduce growth?
The questions reflect differing concerns and differing world views. In his 2012 book, “The Price of Inequality,” Joseph Stiglitz, the liberal Columbia economist, argued that recent trends in income distribution threatened not just economic growth but the very fabric of democracy. On the other side of the ideological divide, conservative economists claim that tackling inequality—by, for instance, raising taxes on the rich and using it to finance government programs for the poor—has adverse effects on incentives and restricts growth, which is counterproductive for everybody.
The first thing to notice is that neither side in the "ongoing debate" questions the value of economic growth. So from this larger perspective, the thinking of those on the political left and those on the right do no reflect "differing world views." It is that larger perspective which is always missing in discussions of this issue. I take that as further confirming (albeit indirect) evidence that my hypothesis is correct, i.e., nothing in these typical human discussions falsifies that hypothesis.
In so far as those on the political left and right understand to some extent that human expansion is destroying the biosphere—they know about global warming—it would appear that compartmentalization is among the most important pyschological defense mechanisms.
Compartmentalization is a lesser form of dissociation, wherein parts of oneself are separated from awareness of other parts and behaving as if one had separate sets of values. An example might be an honest person who cheats on their income tax return and keeps their two value systems distinct and un-integrated while remaining unconscious of the cognitive dissonance.
Even those with an active interest in preserving the biosphere dissociate in this way—growth and its consequences always remain separate in the psyche. See my recent post A Note On Climate Change Risk.
The primacy of growth leads to beliefs which look absurd to those with the wherewithal to question growth's inherent goodness. For example, consider this recent statement about the I.M.F. paper from The Economist's Free Exchange column.
Some inequality is needed to propel growth, economists reckon. Without the carrot of large financial rewards, risky entrepreneurship and innovation would grind to a halt. In 1975 Arthur Okun, an American economist, argued that societies cannot have both perfect equality and perfect efficiency and must choose how much of one to sacrifice for the other.
While most economists continue to hold that view, the recent rise in inequality has prompted a new look at [growth's] economic costs.
Here is the absurdity.
Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result.
If one wanted to sum up the Human Condition as tragedy, this one statement might do the job. If those with low incomes get sick, their productivity (output per hour worked) declines, which impairs growth. But one might also say that the entire point of economic growth, considered from an outsider's rational, compassionate point of view, is to lift up those with low incomes so they do not suffer poor health.
But for The Economist, that fact that the poor are getting sick means only that their productivity is impaired, which in turn hinders economic growth. Growth itself is primary, and the poor getting sick is merely an impediment to achieving it.
The text continues in this vein.
It could threaten public confidence in growth-boosting policies like free trade, reckons Dani Rodrik, of the Institute for Advanced Study, in Princeton. Or it could sow the seeds of crisis. In a 2010 book Raghuram Rajan, now governor of the Reserve Bank of India, argued that governments often respond to inequality by easing the flow of credit to poorer households. When the borrowing binge ends everyone suffers...
If redistribution is benign, that could be because it substitutes for shaky borrowing. In their 2011 paper Messrs Berg and Ostry note that more unequal societies do poorly on social indicators such as educational attainment, even after controlling for income levels.
This suggests that households with lower incomes struggle to finance investments in education.
Tragic absurdity reaches new heights with that last statement and this next one.
In a recent paper Barry Cynamon of the Federal Reserve Bank of St Louis and Steven Fazzari of Washington University in St Louis reckon most Americans borrowed heavily before 2008 to prop up their consumption.
That kept the economy growing—until crisis struck. Sensible redistribution could mean the difference between a healthy growth rate and one that is decidedly subprime.
These statements are not absurd because they are not true. Both statements are true. These statements are absurd because economists had to go to such great lengths to stumble upon the obvious.
This suggests that households with lower incomes struggle to finance investments in education
It might seem merely common sense to say that poor people must struggle to "finance investments in education," but economists banished common sense (and morality) long ago. Why is that the case?
Again, the answer goes back to the primacy of growth. The issue here is not economic growth versus a fairer distribution of the wealth, for we might ask what the point of growth is if only a relative few benefit from it.
Instead, the issue is whether re-distribution of the wealth impairs growth.
As with poor people getting sick affecting their productivity, poor people not being able to afford a college education might impair economic growth because an educated workforce is good for growth. But as before, one might argue—though not on Earth, apparently—that one good reason for economic growth is to permit the poor to affordably acquire a higher education if they want one. Or one might simply value an affordable higher education as an unalloyed social good—period (i.e., independent of growth).
And thus economists (and humans generally) have a "worldview" which is entirely ass-backwards. Values which should be placed first have been placed last, and the last have been placed first. Growth is a fixed point around which everything else revolves, including all questions of value, including moral values, the fundamental value of natural ecosystems, and the value of other species. My own hypothesis (an unalterable instinctual drive) places that "fixed point" inside the human unconscious, which makes sense both evolutionarily and observationally.
In my writings on DOTE, I have sought to understand the tragic consequences which follow from the primacy of growth. Although you might dispute some of the conclusions I have reached, you can not doubt the Awesome Influence on human behavior which these absurdities exert.
This will likely be my final note on growth and the Human Future because I no longer see any reason to belabor my own observations and conclusions. If you've understood the simple things I've said today, no further explanations are required. If you have not understood them, no further explanation is possible.
The primacy of growth has tragic consequences for Earth's biosphere which go far beyond the smaller, tragic consequences I've pointed out today. "The proof of the pudding is in the eating" goes the old proverb, and I expect that experiential proof to become more and more obvious over time.
And certainly for the growing number of those left behind by an American economic system dedicated solely to growth, regardless of who benefits from it, the time is now, and no further proof is required.
Decline of the Empire
March 23, 2014