Larry Elliott gets suckered by the wrong kind of environmentalists

Larry Elliott tells us that there’s something to this degrowth idea as a method of dealing with climate change. That’s because he’s been suckered by the wrong kind of environmentalist - those who know nothing of the economics of climate change:

Given the existential threat posed by global heating, the concept that growth is good is being seriously challenged by those who say policymakers should be aiming for zero growth or even degrowth economies, ones that are shrinking. Make no mistake, it is a good thing that the accepted wisdom is being questioned. The idea that faster growth is the solution to every problem is no longer tenable.

It’s possible to be very basic indeed here. The solution to the problem - as described - is a change in the technologies used. Moving to higher value add technologies is - by definition - economic growth. Therefore growth is the solution, as both are that change in technologies used to those which add more value.

There is nothing new about the current debate. Thomas Malthus predicted eventual famine once population growth exceeded food supplies. John Stuart Mill’s comment, that the “increase in wealth is not boundless”, paved the way for what became known as steady-state economics. Herman Daly, who died last month, long championed the idea that the constraints of the natural world imposed limits to growth.

Well, in one sense of course there’s nothing new about this. Economics is the study of the allocation of scarce resources. So, we’re all agreeing that scarcity is a limit to, a brake upon, growth. Where Daly, specifically, went wrong - and we had this out with him directly - is in his insistence that we can only have qualitative growth, rather than quantitative. Sure, he might even be right about that - but he adamantly refused to accept that GDP is both of those. It’s value added and if we add more value by qualitative growth then that’s still GDP growth.

Being more specific about climate change this has been looked at. Back when, before the patina of repeated layers of economic misunderstanding were spread over the subject. The Special Report on Emissions Scenarios. The economy has growth, does not have growth, the population rises, comes to a peak then falls, what energy producing technologies are used and so on?

The results were that the growth limiting models produced a worse climate outcome. Or, more accurately, the highest growth model plus increased coal use (A1FI) produced the worst, the highest growth model with technological advance (A1T) produced the second best climate outcome plus a vastly better human outcome in terms of the richness with which folk could live their lives. The lowest growth model (B2) produced the second worst climate outcome and by far the worst human outcome.

It really is all there, in those original models that the entire construct of climate change is built upon. The Stern Review - as one example - uses these models, as does Nordhaus’ Nobel winning work. RCP 8.5 in today’s set of models is really just A1FI gussied up a tad.

We started the whole climate change game with the setting of some rules. Which is that our models even showing that it could happen were based upon the idea that economic growth - without coal - is the solution. Given those rules of the game we cannot then turn around and say that growth is not the solution to climate change.

Well, of course, we can, for many are saying so. But they are wrong.