It's silly, dangerous and coming to a head
Sydney Morning herald June 30 2003
By Ross Gittins
If you think the old ideological divide between Left and Right has lost its punch, never fear. A new and far more disturbing ideological fault-line is emerging: the battle between the proponents and the opponents of economic growth.
Just how disturbing many people find the gathering anti-growth push can be seen from NSW Treasurer Michael Egan's outburst last week. He was reacting against my sympathetic columns about Clive Hamilton's book Growth Fetish (published by Allen & Unwin and into its third printing).
"Clive Hamilton's garbage," Mr Egan said, "is just silly, dangerous, left-wing crap."
Well, it may be crap, but what it's not is left wing. The attack on economic growth - on the primacy of ever-increasing production and consumption of goods and services - is an attack on materialism.
And when you question materialism you soon discover you've united the Right and the Left against you. The traditional Left is just as obsessed by the pursuit of material gain as any fat capitalist. The only distinction is that while the Right's into greed, the Left's specialty is envy. Its beef is with the way the cake's being divided, not with its scrumminess - that's self-evident.
The commitment to growth - "rising living standards" - is so nearly universal among our businesspeople, economists and politicians that it's tempting to dismiss the anti-growth push as a one-week wonder.
But I think that would be a mistake. The push has got more momentum behind it than most people yet realise. I think it could become the major ideological battleground of the coming years.
Why? Because of satiation (for some people, at least). Because, in our ever-more-hectic lives, "downsizing" is so tempting. Because the rise of economic rationalism has made capitalism turbo-charged and overdone.
Everyone used to be fairly laid-back in their pursuit of the good life but now we're surrounded by people with whips. Our bosses whip us because they live in fear of the sharemarket's whip.
In the micro-reformed economy, the unceasing cry is More! More! Faster! Faster! Is it so hard to believe that one day a lot of people may start asking . . . why?
But there's more to it. The intellectual case against growth is building up on two fronts: the environmentalists on one side and the psychologists and renegade economists on the other.
I guess most people know that the Deep Green environmentalists have been muttering against economic growth for some time. They think we simply can't go on chewing up natural resources, generating waste and destroying eco-systems at the rate we are.
Their arguments become more powerful when the economists so proudly remind us of how rapidly the world's two most populous economies are growing. Do we really believe the environment could withstand 2.3 billion Chinese and Indians attaining a material standard of living even remotely approaching that of the West?
Dr Hamilton, director of the Canberra-based think tank the Australia Institute, is probably the country's leading environmental economist. But Growth Fetish gets to its second last chapter before it mentions the environment.
Rather, his book is about the challenge to economic growth arising from the psychologists' burgeoning study of happiness. Once a country's material living standard passes a certain minimal level, the psychologists simply can't find a correlation between economic growth and "subjective wellbeing". Nor do they find that the rich are notably happier than the poor.
And they're making progress in explaining this unexpected finding. Part of it is that humans' expectations adapt so quickly to their improved circumstances. Another part is that our comparisons of our income aren't absolute (as economists assume), but relative.
What we care about is how our income compares with other people's, what it says about our social status. And the more micro reform succeeds in raising our income, the higher proportion of it we devote to "positional goods", to things that demonstrate our status - homes in good suburbs, imported cars, fashionable clothes, private schools and private hospitals.
The trouble with this is that, contrary to the economists' assumptions, it's a zero-sum game - I can advance my position in the pecking order only by pushing someone else back.
To this Dr Hamilton adds the contention that, far from the market system existing to serve the consumer, the producers bombard us with advertising and other marketing intended to con us into keeping up our consumption.
Perversely, advertising (as well as the TV programs and movies that come between the ads) does this by making us unhappy and dissatisfied. It shows us how poorly our lives compare with those of the beautiful people and holds out the delusion that a tub of margarine or a Rolex watch is the thing that will finally make us happy.
It plays on our easily manipulated emotions, knowing full well how incapable we are of rational decision-making. If this is true, it turns the assumptions of economics on their head. It means we're being conditioned into consuming more merely so production can keep growing.
But while these ideas strike some people as illuminating, liberating and worthy of more thorough exploration, it's not hard to see why others - like Mr Egan - find them so threatening and dangerous. For most of us, the pursuit of growth and material advance is the organising principle for our world view. It's the object of the exercise, determining the role of government and the way economies should be managed.
More to the point, for many of us the pursuit of income and material gain is the organising principle for our lives. We can't imagine how we'd hold the show together without it.
As for economists, the pursuit of growth is so deeply ingrained in their thinking that they find the contrary idea utterly disorienting. (Which is why they try so hard not to think about it.)
What's the alternative to growth? How would you manage the economy, and to what end? Would the population also have to stop growing? What if it didn't? Where would the extra jobs come from?
Is an economy that doesn't grow one that doesn't change? Wouldn't we find such stagnation suffocating?
And who's to say that, if we stopped aiming for continuous growth, we wouldn't end up with continuous contraction? Our limited experience tells us economies that keep getting smaller are not happy places to be.
These are questions to which most economists have given zero thought - though the leading environmental economist Herman Daly, of the University of Maryland, has given them considerable thought.
For his part, Dr Hamilton has no grand design. His starting point is not that we should try to stamp out growth, just that we should stop aiming for it.
It's an appealing notion. If only we could get our big businesspeople to calm down a bit. If we stopped whipping ourselves quite so hard, maybe that would make our lives better rather than worse.
Here's more evidence that the challenge to traditional economics is building: the psychologist who shared last year's Nobel Prize in economics, Professor Daniel Kahneman of Princeton, will deliver a free public lecture on Monday, July 14, at the University of NSW in the Clancy Auditorium, from 6.30pm. His topic: Toward a Science of Well-Being.
Ross Gittins is the Herald's Economics Editor.