Poirot

I support measures to protect fish stocks and prevent illegal logging.

I don’t accept that the prosperity of the West is bought at the price of poverty for the rest.

Again, the evidence shows that living standards in developing countries are improving – life expectancy and infant mortality are falling, absolute poverty rates are decreasing; literacy, access to clean drinking water, calorie consumption, agricultural productivity, and a host of other indicators of human welfare and productivity are getting better.

Things are a long way from where I’d like them to be, and we certainly could do more to support development. But the fact is, our current economic model is the only proven way for poor countries to escape poverty. Until we’re in a position to offer an alternative that actually works better, we have no moral grounds to tell poor countries to stop following our example.

Rhian you state "The history of economic growth since the industrial revolution is not of doing more of the same, but of economic change through innovation, productivity improvements, capital deepening and substitution of expensive scarce resources with cheaper and more abundant ones. If we continue on this path then everyone’s living standards can be raised sustainably."

Economists are merely generalising from their experience: they can point to decades of steady growth in the recent past, and they simply project that experience into the future. Moreover, they have ways to explain why modern market economies are immune to the kinds of limits that constrain natural systems: the two main ones have to do with substitution and efficiency.

Finding substitutes for depleting resources and increasing efficiency are undeniably effective adaptive strategies of market economies. Nevertheless, the question remains as to how long these strategies can continue to work in the real world, which is governed less by economic theories than by the laws of physics. In the real world, some things don’t have substitutes, or the substitutes are too expensive, or don’t work as well, or can’t be produced fast enough. Efficiency follows a law of diminishing returns: the first gains in efficiency are usually cheap, but every further incremental gain tends to cost more, until further gains become prohibitively expensive.

In the end, we can’t outsource more than 100 percent of manufacturing, we can’t transport goods with zero energy, and we can’t enlist the efforts of workers and count on their buying our products while paying them nothing.

Unlike most economists, most physical scientists recognise that growth within any functioning, bounded system has to stop sometime.

Geoff

Economists don’t just assume growth will continue because it happened in the past. There are reasons to expect continued growth. Market forces drive producers to seek cheaper and more effective ways of meeting consumers’ wishes; increasing returns from growth in knowledge (especially as communication technology allows ideas to be exchanged more easily); capital deepening through accumulated infrastructure education, specialisation encouraged by trade; and many other factors. To repeat, growth is not about using more and more of the same stuff in the same way.

New Growth theorist Paul Romer expresses this very well:

“Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. History teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material. Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. Possibilities do not add up. They multiply.”

http://www.econlib.org/library/Enc/EconomicGrowth.html

It may be for a single process or product that efficiency follows a path of diminishing returns. But taking into account new ideas and knowledge, Romer is right – possibilities multiply.

And even you are right, and growth has to stop eventually, there is no reason to think we are at that point now - much less that we should try to make growth stop.

http://www.smh.com.au/environment/conservation/indonesian-court-backs-palm-oil-company-over-orangutans-and-carbon-storage-20120403-1wau2.html

Well this picture kind of says it all and is what kind of disgusts
me about our species. We are going to plunder the last of those
forests in the name of the ever growing human population, no matter
what. Never mind that last few thousand Orangutans, they will just
have to become extinct. All terribly sad really. If our species
eventually destroys itself, I guess we will kind of deserve it.

*The question for modern industrial man is whether he is capable of tempering his intelligence with wisdom.*

Congratulations Poirot, you are a wonderful wordsmith! I've copied
that to my "Quotable Quotes".