Will Ending Poverty Require Endless Economic Growth?

By Mal Warwick, Co-Author, Business Solutions to Poverty

Will Ending Poverty Require Endless Economic Growth?

What is Progress?

If you ask this question of most Americans, they’ll probably say something that implies continuing growth in material wealth — more stuff for more people, in other words. The overwhelming majority of professional economists would agree: progress means ever-higher economic output, which in turn means increasing use of natural resources and ever-bigger mounds of waste. But this almost universally-held point of view flies in the face of the reality that’s been confronting us for nearly half a century: the limited “carrying capacity” of Planet Earth.

A fascinating article by Carolyn Lochhead ran Jan. 5, 2014, in the San Francisco Chronicle under the headline “Efforts to curb unbridled growth that’s killing the planet.” (The Chronicle is not known for in-depth articles on weighty subjects, so this piece took me by surprise.) Lochhead points to the work of several economists who buck the prevailing wisdom in their profession, casting their lot with the environmental community that regards unbridled consumerism and mindless exploitation of natural resources as anathema.

Knowing what we now know about the increasing disruption in planetary climate patterns, with its roots in unplanned use of energy and careless waste of arable land, water, and other resources, it’s difficult for any thinking person today not to side with those who question the wisdom of unending growth. After all, as environmentalists continually remind us, enabling everyone among China’s 1.3 billion people to live at a lifestyle comparable to those of today’s North Americans would require the resources of five Planet Earths — and, sadly (or not), we have only one.

But what does that imply about humanity’s potential to eradicate poverty? Are the billions of poor in the world doomed to remain at or below subsistence simply because the planet is incapable of supporting them in the health and comfort of a middle-class lifestyle?

What happens to the poor?

At the outset, let’s be certain we agree on one fundamental truth: if economic growth continues unchecked, exacerbating global climate change, the poor will bear the brunt of the consequences. Half the world’s poor live in India and China, most of the rest in sub-Saharan Africa and South and Southeast Asia and its adjoining island nations. Every one of these areas is already experiencing damage from the disruption of climate change in the form of more intense storms and punishing droughts. The billions who live in these regions can only expect more of the same from the status quo.

But what if policymakers in government and industry belatedly wake up and put in place intelligent measures to stall the continuing slide into climate chaos? What if such policies as high carbon taxes and incentives for massive investments in solar and other forms of renewable energy become the norm? Will the poor be shortchanged?

I suspect not.

True, the working poor in the United States and other rich nations will at first be adversely affected. High carbon taxes will fall heavily on them if they continue to depend on the automobile to drive to work, and in cold climates those who rely on fuel oil will be disadvantaged as well. However, on a global scale, the number of these people is exceedingly small, and few of them come even close to the accepted definitions of poverty, which are variously pegged at between $1 and $2.50 per day per person.

For the more than 2.7 billion people (nearly two out of five) who live on $2 a day or less, policies designed to arrest global climate change will likely be a boon. In fact, they’re likely to become net beneficiaries to a significant degree: slowing down the planet’s descent into climate catastrophe will mean they may not need to fear even more extreme storms and droughts; reducing the rate of species loss and shifting animal habitat will result in more stable conditions for agriculture, the primary source of subsistence income for the more than 70% of the world’s poor who live in rural areas; and an acceleration of the growth in solar energy, the price of which is already falling at a steep and steady pace, will unquestionably mean the extension of electricity into even small villages around the world.

But what about the broader question in the title: does ending poverty require endless economic growth? Perhaps better put, is it possible to end poverty without worsening the prospects for humanity’s future on Planet Earth?

Can we end poverty without further warming the planet?

There’s no getting around it: producing just about anything requires raw materials and energy, which in turn frequently occasion environmental costs in extraction and generation. Even supplying services may require travel, with its own carbon footprint. However, there are ways to minimize these costs: using solar energy exclusively, for example, and delivering both products and services on foot or by bicycle. These methods won’t entirely eliminate the environmental impact, since somebody has to produce both the solar generator and the bicycle, neither of which is free of raw materials and both of which contribute in tiny ways to increasing the GDP of the producing country.

It should be evident, then, that generalizations about environmental impact are treacherous. Determining the consequences of any particular project requires drilling down into the methods and materials used. However, it’s always possible tominimize environmental costs — and smart business leaders realize that doing so not only helps attract customers but also may contribute directly to the financial bottom line. As the impact of the changing climate becomes increasingly evident, this realization will become ever more widespread. In the poor countries that will bear the brunt of climate change, careless use of raw materials and energy could even become criminal offenses over the long term; indiscriminate waste will, in any case, be frowned upon.

Given this emerging scenario, it’s difficult to take seriously any effort to reduce poverty unless it’s designed to honor the three precepts of materials use: Reduce, Recycle, Reuse. As a practical matter, this will require:

  • Turning to solar or other forms of renewable energy to satisfy any venture’s need for power;
  • Making special efforts to minimize the use of ever scarcer water;
  • Redefining agricultural and other “waste” as by-products and actively seeking ways to make productive use of them; and
  • Minimizing the use of transportation and shipping services by hiring locally, decentralizing procurement of materials and production of goods, and delivering products and services either remotely through electronic communications channels or locally by means of the least harmful methods (on foot or bicycle).

Does this mean, then, that in improving living conditions for the bottom billions we can avoid contributing to global warming? Of course not. But we can sharply limit any tendencies to do so.

How about the question posed in this article’s title: will ending poverty require endless economic growth? An honest answer is necessarily more complex than Yes or No. Producing the goods required by poor people to enable them to lift themselves out of poverty will, by definition, contribute to economic growth. However, it seems unlikely that this bottom-up strategy alone can succeed in a vacuum over the long term — and this is the crux of the matter.

The massive inequality in income and wealth that characterizes virtually every society on Earth today presents a high hurdle — not because inequality itself is undesirable (though in its extreme form today I believe it is), but because economic inequality confers political power on the haves, who have forced the adoption of policies that make the poor, poorer, and the rich, richer. In other words, over the long term, making it possible for the 2.7 billion people now living on $2 a day or less to live secure, comfortable lives will require lessening economic inequities and involving much larger numbers of people in making the policy decisions that so directly affect their lives.

As the bottom billions gain political awareness, and policymakers wake up to the catastrophic consequences of unbridled climate change, either the overwhelmingly unequal distribution of income and wealth that’s now in place will shrink . . . or the chances will increase that homo sapiens will join the millions of other species our actions are forcing into extinction. I prefer to advocate for the more hopeful scenario. Soon, I fervently hope, it will become both unpopular and disadvantageous for the affluent minority to squander billions of dollars on palatial homes, luxury goods, and gas-guzzling limousines, yachts, and private jets, so that the net effect may well be to arrest economic growth and, at the very least, delay the day of reckoning that will surely come as the planet continues to warm. And that would be a very good thing!

Editor’s Note:

This blog was previously published on The Business Solutions to Poverty blog and is reproduced with permission.

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One Response

  1.  Two quotes that come to my mind connect to a well written article by Mal Warwick:

    “Live simply so that others may simply live.” from Mother Teresa. 

    And from the World Bank:

    “It is true that economic growth, by increasing a nation’s total wealth, also enhances its potential for reducing poverty and solving other social problems. But history offers a number of examples where economic growth was not followed by similar progress in human development. Instead growth was achieved at the cost of greater inequity, higher unemployment, weakened democracy, loss of cultural identity, or over consumption of resources needed by future generations. As the links between economic growth and social and environmental issues are better understood, experts including economists tend to agree that this kind of growth is inevitably unsustainable- that is, it cannot continue along the same line for long.http://http://www.worldbank.org/depweb/beyond/global/chapter1.html