18 November 2010

my take on 'no-growth'

In my last post, I talked about the no-growth economic model which could be the model of economics the world is forced to follow due to growing environmental constraints. The US Congress can deny climate change 'til they're blue in the face but the fact remains that we're already seeing negative effects on our economy due to climate change. I choose to listen to the wiser economists and scientists, like Nicholas Stern perhaps.

The way I see it, the no-growth model is already happening. Or at least happening in part of the world. Economical growth in the Western world is beginning to taper off. More and more people are choosing to distance themselves from the rat-race, live alternatively and are seeking to discover that 'lost part of themselves'. In the 1970s they were called hippies; now they are the new radicals, the so-called pioneers of the environmental movement. Basically however, they are the category of people who have realized that economic success is not the real measure of happiness.

In the 1950's, at the peak of American industrialization everything was hunky-dory, people reported an all-time high in happiness. Since then standard of living has grown but happiness quotients have dropped. Something changed: perhaps the measure of happiness itself? Lives became busier, parents had less time for children, for friends, for hobbies - all the things that give us happiness. Instead people bought stuff to fill a void and subsequently landfills became bigger and bigger.

So now all of this is happening in the East, in the 'developing' world. People are working more, earning more, buying more and yet every single high-flying career person I meet isn't exactly happy. We now live in a post-recessional, climate-change laden, biodiversity-decreasing world full of majorly unhappy people who want to buy stuff but can't really afford to. But this view of mine changed when I met a few people recently who work but not crazy-hard, live on a farm, grow their own vegetables and have time for the things that matter. They were happy, like radiating bolts of joy just bouncing off of them.

This is the product of no-growth. It is not entirely bad. However, the bigger question remains: the people in the less-developed world, who want to aspire for the rat-race and fancy gadgets - do they realize what awaits at the end of this rainbow? Or are we just going to go around the wheel and realize that the place where we started from was the best place after-all?

Seems a waste of time to me.

11 November 2010

the 'no-growth' model

It is almost blasphemous for an economist to consider a 'no-growth' model, the very subject itself is the study of economy and no growth = no money, right? Traditional economists propounded that the earth could support endless growth. However, current economics proves that this is not possible - destruction of the ecological system, leads to eventual collapse of the economic system.

It seems to be a Catch-22 situation. Without growth, we spiral into poverty. With growth we head towards ecological collapse. To address the tantalizing question of whether we could have a healthy economy that doesn't grow, Prof. Peter Victor of York University, Toronto created a computer model of the modern Canadian economy. He then adjusted the model so that elements like consumption, productivity and population gradually stopped growing after 2010. He then shortened the workweek to 4 days to stave off unemployment. He also set up higher taxes on the rich and more public services for the poor. He imposed a carbon tax to discourage the use of fossil fuels. According to the model, it took a couple of decades but unemployment fell to 4%, much lower than what it is today, standards of living rose and GHG emissions decreased well below Kyoto levels.

The idea of a 'no-growth' economy is not new. Adam Smith, John Stuart Mill and John Maynard Keynes have all acknowledged that when maximum growth is reached, man would devote his time to "non-economic purposes". Industrial-age economists did not have to face the problem of resource crunch. The ones that did worry about resources running out where so far ahead of their times and it was not considered to be an issue of concern.

The biggest problem that the post-modern economic system faces is the use of GDP as a yardstick for the measurement of economic growth. GDP is an often baseless figure which is based solely on economic growth, completely disregarding 'unmeasurable' but often important components of actual growth. In terms of growth, the majority of the world's population has hit the point of no return vis-a-vis monetary wealth and real happiness.

In the end, resource scarcity, price hike and climate change will cause global conflict and no-growth thinking could become a realistic economic model. Do we dare hope?

07 November 2010

perspectives: post-travel

Yes I know, this post has been a long time coming. I have been on blogging sabbatical and now I'm back. Over the past month I made a massive trip through Malaysia and IndoChina mostly on work. In Malaysia I attended the AFCSR and met a lot of eminent CSR personalities. It was all very exciting.

Vietnam and Cambodia were both a revelation. Cambodia was only 3-day break during the whole trip of networking and meeting people. So I stayed in a quaint little place in Siem Reap and visited the famous Angkor temples. The people in Cambodia are incredibly friendly and live in abject poverty. Yet for some reason, are more hopeful and optimistic than most Indians I know. I also noticed that even if they were poor, they weren't starving mostly because they grew their own vegetables and fished in the three large lakes in the town. Siem Reap is a gorgeously green little town and is under conservation in Cambodia. The country is not without problems; apart from the mentioned poverty, it also has one of the highest rates of deforestation in the world.

The point of food self-sufficiency kept striking me as something obvious that every government should be striving for. The government of every developing country is moving in the opposite direction of introducing a centralized food production system that is taking away from something basic in the lives of most people.

My next stop was Vietnam. I was in Ho Chi Minh City which is very much like Mumbai. It is so much better planned, cleaner and developing at an unprecedented rate. However, unlike in India I saw a plan in their growth and development which was forward-thinking and heartening. Vietnam, like India is an SME-based economy and also many MNCs have entered the market, awareness of sustainability issues are not that high. However, I did have the chance to speak to a few people and through them I learnt that many companies are becoming more and more aware, which is encouraging.

Overall, the trip was fruitful and insightful especially in gaining new perspective about development in other countries. More to follow on here and also on Justmeans.

Photo: Akhila Vijayaraghavan © View of Saigon with the Saigon tower.