Friday, 26 November 2010

Growing Pains

A new series of 'In Business' returned to Radio 4 last night. The first programme explored the idea of 'economic growth' and asked whether this was what the world needed. Surprisingly, for a programme that tries to present a range of perspectives, the message was clear : 'growth' (defined as growth in GDP or GNP) is a crude, fairly recent but already outdated and misleading measure of economic performance. Even the speaker drafted in to argue for growth (the author of 'Ferraris for All') said it can't be seen as an end in itself. Will this mean that we no longer get excited BBC News headlines such as "economic output fell by 0.3% today . . fear of recession . . blah blah"? (Meaningless headlines that make me want to throw the radio out of the window.)

The half-hour programme is served up as a podcast at but I reproduce my rough notes below :

Government loooking for alternative indicators : 'happiness'

Andrew Simms (Policy Director, New Economics Foundation and author of "Economics as if People Mattered) : extraordinary . . . how recent an artefact of economic thinking it is. Only appeared in run-up to WW2, and in that context - re-gearing towards a war economy. Kuznetz, the architect of it, himself said "don't see this as the only . ."

PD : Who's responsible for elevating 'growth'?
AS : we need better indicators. A huge natural disaster, crime wave, war - 'growth' indicator would tell you it's all 'good'.

Professor Tim Jackson (Centre for Environmental Strategy, University of Surrey and Author: Prosperity Without Growth) Confirms 'growth' is a recent development as an indicator.
We had to persuade people to go out shopping because they were getting tired of it. Post 9/11 : "Mrs Bush and I would like to encourage everybody to get out shopping."

PD : isn't growth good?
TJ : we did need to improve living conditions, yes. Growth - for the 'haves' - has delivered good stuff. But as long ago as the 1970s it was pointed out that resources are finite. And we still haven't lifted the poorest out of poverty.

Sustainable Development Commission loses its government funding next year.

Daniel Ben-Ami (Author, 'Ferraris for All'.) 'they all say 'we need growth' but then add loads of caveats'
PD : the monetisation of everything.
DB : for the benefit of humanity we need more prosperity, an end of scarcity. I don't support it as an end in itself.
PD (leading him on) : what about the 'hair shirts'?
DB : there's a real elitism behind the hair shirts. They don't like chavs with big flat screen TVs. It's a rich elite that's promoting this anti-growth thinking. They want the poor in the developing world as pets - they're filled with horror at the prospect of Chinese and Indians having their own cars.

John Kay (Economist and Author of 'Obliquity') : It's dumb how people obsess about GDP. If you ask people what it is they don't know what it is. It's not an objective fact, it's a construct.
Alan Greenspan said 'GDP doesn't weigh any more'.
Most important thing we can do is divert human ingenuity into things we actually want, not (e.g.) sub-prime mortgages. GDP doesn't measure human ingenuity.

To Totnes (transition town).
Hal Gilmore and Ben Brangwyn (Transition Towns Network).
Lots of listed buildings makes it difficult to install double glazing. Only river crossing for miles - lots of traffic.
Looking for a longer-lasting change - not obvious what's happening on the surface.
Small business closure doesn't register in traditional measures.
Working in schools : asking kids 'what do you think is important?'.

PD : era of cheap energy coming to a close.
Ben Brangwyn : we get 'transition pilgrims'. Some are disappointed we don't have goats on the roofs.
If we wait for the government it will be 'too little, too late'. If we leave it to individuals it's 'too little'. If we do it at community level we may just manage it.
Wouldn't it be good for health to grow?
Economic wealth and happiness are not linked once you reach a certain level.
Economic no-growth is an inevitability in the long term : we need to learn how to work with it.

John Kay : people have been telling us for three or four centuries that things would stop as resources ran out.
PD : what about poverty - don't poor countries need to grow?
JK : of course. China has grown and it's pulled millions out of poverty. They are not poor because we are rich, but because their economies have not been as productive as ours.
Human ingenuity is what is creating growth. Growth doesn't have to mean that we use more stuff. In Britain we are consuming better and more interesting stuff .

Andrew Simms : Ruskin, Smith, Mill. All assumed that economies would grow to a certain point and then level off. Even though advanced economies have continued to grow, the happiness the deliver is tailing off . . dimishing returns.

PD : yet we sigh in relief when GDP expands. GDP is ridiculous.

PD : is the human race not ingenious enough?

Tim Jackson (Univ Surrey): we're making assumptions so heroic about our own ingenuity . . . We're not that clever - we need to concentrate on our economic measures.

Thomas Carlyle : economics, the 'dismal science'.

Monday, 8 November 2010

Lobby for Financial Reform, Nov 19th!

On Nov 19th the Financial Services (Regulation of Deposits and Lending) Bill has its second reading in the House of Commons. Although it's being brought by two back-bench Conservative MPs the issue should be able to secure cross-party support. We have a financial system in which the greatest proportion of money in circulation is effectively counterfeit, and as it circulates (your average deposit being lent onwards 15 or more times over) it requires interest payments. The private economy has to grow simply for us to stand still, with all the knock-on implications for global warming that that entails.

Quite why this bill isn't getting more media attention I don't understand. A brief account of it is found lower down the page at The summary includes the following :

"The Bill proposes ending the privilege currently held by the retail banks whereby they may create credit based solely on their borrowers' debts. In the future, bank lending will be limited to the amount deposited with them by their savers (as many people wrongly suppose to be the case at the moment).

"This will prevent the further expansion of the money supply over and above the amount created by the Bank of England. It will therefore permit the Bank of England to move towards increasing the amount of positive, debt-free money within the economy without fear of inflation.

"As the Bank of England is a government agency, this money will be available for the Government to pay off its debts without the need for public spending cuts, tax increases, reducing the nation's money supply or for more households or businesses to go ever more deeply into debt."

Lobby your MP!

Thursday, 4 November 2010

C4 : "What the green movement got wrong"

For those that watched tonight's Channel 4 documentary (see this is my quick response :

The debate revealed that the film alone - without the debate - would have been a disaster. The documentary was ideologically driven, contained serious factual errors, and omitted key information.

The debate revealed that the 'green movement' left its hippy origins behind 20 years ago and has grown up, whereas documentary makers are still stuck in the past.

The debate revealed that the green movement is broad, more united than the documentary suggested, and much more interested in solutions than personal point-scoring and partisanship.

In fact the documentary itself was largely unnecessary.