Abundance progressives and pro-growth conservatives are right to reject the hostility to science, industry, and entrepreneurialism of “de-growthers,” who dream of an economic stationary state in the near rather than distant future. Such a stationary state existed for most of human history, when long periods of economic and technological stagnation meant that powerful individuals and states could increase their wealth only by plundering the weak. The explosive growth and once-unthinkable technological advances of modernity have vindicated the 18th-century British writer Jonathan Swift since he wrote in Gulliver’s Travels: “Whoever could make two ears of corn, or two blades of grass, to grow upon a spot of ground where only one grew before, would deserve better of mankind, and do more essential service to his country, than the whole race of politicians put together.”

But we can reject mindless anti-growth ideology without mindlessly embracing growth for its own sake. Yes, we need growth — but good growth, not bad growth. To understand the difference, don’t look to the Silicon Valley overlords who are increasingly determining the shape of politics on both sides of the political spectrum.

Good growth leads to, and sustains, countries with strong middle classes and workers and families with decent wealth, leisure, and the power to bargain with their employers. Bad growth maximizes gross domestic product at the expense of individual autonomy, social solidarity, and other fundamental elements of a decent human society.

As an economic metric, GDP is compatible with both good growth and bad growth. Because it measures output per hour worked, it can be improved in a good way — improving the productivity of each worker, lowering the prices of goods and services for society as a whole, and allowing workers to earn the same income with less effort, assuming they can bargain effectively with employers to share in the profits.

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But GDP can also be boosted in bad ways by expanding the hours worked in a country without boosting individual worker productivity. In a modern industrial society, in which the majority of adults must toil for wages, GDP can be raised by cutting social-insurance benefits to compel the elderly to have much longer working lives, or by legalizing child labor. Abstract GDP would go up, but few people other than some employers and capitalists would be happier.

It’s also possible to expand GDP without increasing productivity by flooding a country with migrants. Excessive immigration may lower wages in various occupations, immiserating natives and immigrants alike, even as GDP improves in numerical value because of the population-driven ballooning of the workforce. Conversely, birth rates that outstrip productivity growth can impoverish a country, even as its GDP rises because more workers mean more work hours.

In a good society, work must be balanced with time for family and community and recreation.  Members of a society with a healthy work-life balance would be rational to choose somewhat less growth in personal income and the national economy — if the higher-growth alternative requires sacrificing essential social values.

Edith Cresson, the Prime Minister of France from 1991 to 92, is (barely) remembered today for asserting that a quarter of men in Anglo-Saxon countries are homosexuals who aren’t interested in women and that the Japanese were “little yellow men” who “sit up all night thinking how to screw us”. Whatever may be the case with Anglo-Saxon men, the Socialist premier was right to defend the work-life balance of the French against East Asian cultures of overwork, however chauvinistically: “I said they were working like ants. We cannot live like that, in minuscule apartments with a two-hour journey to work like animals. Work and work and work and producing children to work like animals. We want to keep our social security, our holidays, and live like human beings.”

Long work hours have been correlated with low fertility rates, and East Asia has some of the lowest birth rates in the world. In 2024, South Korea won the dubious honor of being the country with the lowest fertility in the world for six years in a row — 0.75, far below the 2.1 children per woman needed to maintain a national population without mass immigration. In response, South Korea has imposed a 52-hour work week — compare that to the 35-hour work week in France and 36 to 40 hours a week in Germany. Likewise, Japan since the Seventies has suffered from an epidemic of karoshi — stress-related death by overwork.

Which brings us to Silicon Valley. The tech tycoons who have emerged as the dominant oligarchy in 21st-century America have contradictory views of work and life in the future.  Many predict that automation will eliminate most jobs, making it necessary to create a universal basic income that allows citizens to enjoy a minimal level of subsistence without working at all.

Other tech leaders, however, want to import the East-Asian model of overwork and fanatical schooling to the United States (and the West more broadly). According to Elon Musk, who despises labor unions and laws protecting American workers, Chinese factory workers “won’t just be burning the midnight oil. They’ll be burning the 3am oil. So they won’t even leave the factory type of thing. Whereas in America, people are trying to avoid going to work at all.”

Vivek Ramaswamy, initially appointed by President Donald Trump as co-director with Musk of the ill-fated Department of Government Efficiency, has claimed that East- and South-Asian students are superior to American students. In an X post that likely doomed his political career, he wrote: “A culture that celebrates the prom queen over the math Olympiad champ, or the jock over the valedictorian, will not produce the best engineers…. More movies like Whiplash, fewer reruns of Friends. More math tutoring, fewer sleepovers. More weekend science competitions, fewer Saturday morning cartoons. More books, less TV. More creating, less ‘chillin’. More extracurriculars, less ‘hanging out at the mall’.”

Ramaswamy is confused. Individual Indian-Americans excel in many areas, but national productivity is the result of well-designed economic, legal, and political institutions, not overwork by particular individuals. That explains why India, with the longest work hours among the top-10 economies (49 hours or more per week), is much poorer than the United States (38 hours) and Canada (32.1 hours). Indeed, thanks to their productivity, countries with high per-capita GDP in general have lighter workloads.

Not content with opposing organized labor and wage-and-hours laws, many of today’s techno-libertarians dream of carving up democratic nation-states into “freedom cities” or “charter cities” — privately owned cities free to create their own regulations without interference by the countries in which they are geographically situated. This is the revival of an old and very bad idea, formerly embodied in the United States in early-industrial-era company towns and mining towns policed by private detectives — and symbolized today by the high-tech despotism of city-states like Singapore and Dubai.

If the new city-states were bottom-up democratic versions of Athens or Florence, the idea might be appealing. But the tech oligarchs have something more sinister in mind — top-down autocracies in which privileges bestowed on workers by investors and managers replace civil rights in a given territory.

Curtis Yarvin, treated as a guru by some tech executives, has popularized the acronym RAGE (Replace All Government Employees) and called for a “Butterfly Revolution” to centralize “absolute sovereignty” in a corporate state with a dictator-CEO. And foreshadowing Trump’s appointment in 2025 of Musk to head DOGE, a Google engineer named Justine Tunney in 2014 called on then-President Barack Obama to appoint Google boss Eric Schmidt as CEO of America, terminate all federal employees, turn federal power over to the tech industry — then resign.

Symbolizing the convergence of libertarianism with the libertine drug culture in Silicon Valley and the Burning Man festival, Peter Thiel has funded a project to promote private “seasteads” unregulated by nation-states, which might allow medical experiments on human beings that are banned elsewhere: “Could you have something where you use psilocybin” — the psychedelic compound in magic mushrooms — “or MDMA” — better known as the rave culture drug ecstasy — “as an antidepressant drug? Or could you get new medical treatments where you break the FDA monopoly on medicine worldwide?”

A comment on X by a Thiel protégé, Joe Lonsdale, co-founder of Palantir Technologies, suggests the danger of replacing liberal, constitutional democracy with the tyranny of an all-powerful tech-industry Wizard in a private charter city of Oz: “If I’m in charge later, we won’t just have a three strikes law. We will try and quickly hang men after three violent crimes. And yes, we will do it in public to deter others. Our society needs balance. It’s time to bring back masculine leadership to protect our most vulnerable.”

Public executions and deregulated experimentation on human beings, combined with technological innovation as a goal in itself — it is hard to imagine a better example of bad growth.

Then there is the Freedom Cities Coalition, which calls for states to cede land to new private corporate governments exempt from selected federal and state laws and regulations, no doubt including labor laws. President Trump, who in his second term has largely abandoned his working-class voters in favor of tech plutocrats like Musk and Ramaswamy and David Sacks, has called for 10 such post-national, privatized corporate zones on the soil of the United States.

In this dystopian fantasy, America’s federal lands — divided in the 19th century by Lincoln and his allies into homesteads for free family farmers who were considered to be the bulwarks of bottom-up democracy — would now be given over to capitalists and managers to create special economic zones like those in China that host Foxconn, the world’s largest electronics manufacturer, which has had to install “suicide nets” to prevent overworked and underpaid workers from jumping to their deaths from their dormitory towers.

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Silicon Valley strongmen want to lead the West

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In Honduras, experimental corporate-controlled charter cities like Prospera, which drew more than $100 million in investments from tech libertarians including Thiel, Marc Andreessen, and Adam Draper, were seen as so menacing by locals that the Honduran government has repealed the laws that enabled their establishment.

Undeterred by the popular rebellion against Prospera, libertarians bankrolled by tech plutocrats are promoting new, semi-sovereign company towns in places like the Presidio in San Francisco and Guantanamo Bay.

In the “Immigration and Workforce Strategy” section of its Orwellian proposal for a Guantanamo Bay Charter City, the Charter Cities Institute proposes using it as a probationary detention center for potential immigrants to the United States: “this model also introduces a phased approach to immigration: Individuals demonstrate their skills and reliability in Guantanamo Bay before transitioning to the US mainland.”

The new Guantanamo Bay charter city would combine Dubai’s indentured-servant workforce with the pleasing façade of a Potemkin village: “by controlling the narrative — weekly media updates, tours for foreign dignitaries, and televised speeches from the new city — administration officials can shape the story of ‘America’s frontier spirit, revived.’”

A humane and enduring society doesn’t resemble a mining boom town or a slave plantation or a nightmarish “freedom city” of the kind promoted by ketamine-dosing, harem-collecting, neurodivergent tech oligarchs. Technological innovation and economic growth are means to an end, not ends in themselves. Good growth is economic growth that balances desirable technological progress and economic innovation with equality of condition and worker bargaining power. Bad growth increases GDP at the cost of the powerlessness of most citizens in the workplace, as well as the voting booth.

Edith Cresson inadvertently spoke for all human beings, French and Japanese and Hondurans and Americans alike. We are not ants.

Globally, economic growth rates are declining, despite the unprecedented interventions from central banks and record federal debt from fiscal spending. Investors and governments nervously foresee a future of demographic shifts, unmet pension liabilities, increasing inequality, and the potential for another credit crunch. Again, this was all prior to Covid-19, which could be the worst economic crisis since the Great Depression.

Rightfully, much of our current economic attention is focused on the immediate and remedial regarding Covid — applying a tourniquet to the virus via social distancing and wound-packing the economy with stimulus packages. These efforts are vital, but they will ultimately only bring a diseased and dying economy back from the brink. There will be no sustained recovery without fundamental change.

There’s no shortage of suggested remedies. Jamie Dimon, the Business Roundtable, Marc Benioff, Ray Dalio and others have all recognised that something is seriously wrong with capitalism. At Davos earlier this year, Dimon, who is the CEO of JPMorgan Chase, released a piece entitled ‘Unless We Change Capitalism, We Might Lose It Forever’ arguing that capitalism needs to make “meaningful changes, like rebuilding our education system and providing skills training, affordable health care policies, substantial infrastructure investment, and sensible immigration reform and climate policies”.

But for all the talk of reform, these Davos-friendly pronouncements tend to undergird existing power structures and serve a tired narrative: perpetual growth, primacy of free-market mechanisms, and ‘win-winism’ (i.e. having impact without sacrificing profit).

They skirt any real regulatory challenge to corporate dominance. They ignore industry’s often deliberate role in charting the wrong path. So, nebulous initiatives and one-off CSR exercises are not enough. We need more than a short dose of ‘thought leadership’ or PR-driven gestures to a supposedly wider set of stakeholders.

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Coronavirus will change nothing

By Ben Gummer

With 40 years of neoliberal economic experimentation, and the shock of Covid-19, we know that simply betting on an improved version of our status quo will not work. Structural change is required to rebuild an economy that works for all, not simply benevolent CEOs acting on generous impulses.

Before the novel coronavirus began to threaten our lives and livelihoods, we were living in an economy that had overshot many traditional metrics of health. Corporate profits and the stock market were at all-time highs and companies spent the majority of the 2017 Trump tax cuts — a record-breaking, eye-popping total of over $806 billion in 2018 — on stock buybacks to inflate their stock prices even higher. An outsized portion of those corporate profits went to management — the US leads the world in CEO to worker compensation ratios (in 2008, the average CEO raked in 278 times what the average worker got).

Furthermore, despite being flush with profits, US corporations have simultaneously amassed more debt than ever. In March last year, The Economist argued that America’s corporate debt mountain could worsen a recession. As of mid 2019, large nonfinancial companies had accumulated $10 trillion dollars in corporate debt, a staggering 48% of GDP (for the 2008 recession, the equivalent figure was $6.6 trillion).

This borrowing binge has been encouraged by central bankers who kept interest rates artificially low and by certain economists who touted debt as a way to spur growth. But even some central bankers are worried. Janet Yellen, the previous Federal Reserve chair, recently expressed her concern that high corporate debt levels would burden an economic recovery.

Record high corporate profits, buybacks, and debt are symptomatic of a system that prioritises ever greater returns for shareholders and executives over the need for resilience.

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The things we do for growth

By Peter Franklin

Albert Bartlett, the late emeritus professor of physics at the University of Colorado at Boulder put it this way: “The greatest shortcoming of the human race is our inability to understand the exponential function.” Bartlett viewed the term “sustainable growth” as an oxymoron, recognising that compounding factors like interest and population growth inevitably led to uncontrollable risk.

Loading up on debt is not the only problem with this growth-at-all-costs mentality. There’s also the high levels of market concentration that have left bloated companies in dominant positions across a wide range of industries. Monopolies and oligopolies have used their market power to extract wealth from everyone else. Competition is crushed, workers underpaid, and consumers gouged (see: The Myth of Capitalism: Monopolies and the Death of Competition) — thus generating even more profit and control.

The traditional checks on corporate power include unionisation, strong local supply chains, the opportunity for startups to compete and produce disruptive innovation, and effective enforcement of competition laws. But all of these countervailing forces have been weakened over the last 40 years. Neoliberal economic dogma has put shareholder returns and short-term market efficiency above all other considerations.

Covid-19 has exposed the fragility of this economic model, but it also gives as a chance to  ‘flatten the curve’ of market concentration.

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How coronavirus exposes our fragility

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Rather than governments opting for the bailouts and regulatory decisions that give large corporations yet more power, now is the time to envision new models for how markets can work in a de-concentrated, cooperative way. I am not arguing for socialism, nor am I arguing for capitalism, as these binaries make little sense when nearly every world economy is a mixture of the two systems.

What we really need to do is to turn away from extractive, winner-take-all growth to a fair and resilient economy based on distributed power, shared prosperity and democratic decision-making. In particular, we need to see reforms to corporate ownership and governance.

We take the shareholder model ownership for granted, whether it’s in the form of publicly traded shares or private equity. Indeed, right now, private equity firm are circling over the crisis-hit economy, looking to buy up distressed companies. The answer, though, is not concentrating ownership even further, but distributing it more widely to workers (and also users, in the case of technology companies).

Employee stock ownership programs (ESOPs) are one model, as are employee ownership trusts (EOT), which give employees equity stakes in their company and include them in profit-sharing schemes. This list highlights the top 100 companies in the US that are majority employee owned through an ESOP. More companies would do well to adopt these models.

Purpose Evergreen Capital champions what’s known as ‘steward ownership’. They define it this way: “The concept of steward-ownership harnesses the power of entrepreneurial for-profit enterprise while preserving a company’s essential purpose to create products and services that deliver societal value and protecting it from extractive capital.” They also have an investment buyout fund for mid-sized companies wanting to transition to steward-ownership, and they have converted over 50 companies to this ownership structure in Germany.

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We have already seen a number of industry bailouts for large corporations, and taxpayers should stand to gain from these socialised losses. One way is for government to take an equity stake in companies, giving taxpayers preferred shares and paying dividends to social security recipients. Alternatively, corporates could issue convertible bonds to the government.

Citizens and workers should stand to gain from the returns of these companies in the good times, not simply pay their bills in the bad.

As for corporate governance, Germany has practiced what’s known as codetermination (giving workers representation on company boards) since the early 1900s. In the 1970s the country instituted these rights into law, requiring worker representation on advisory boards (elected by worker vote) for any company with more than 2000 employees. Today, a majority of EU countries have followed suit with similar legislation. Worker representation in company decision-making should be standard in the US as well, as some studies have shown, it actually increases worker productivity.

The mechanism of a Perpetual Purpose Trust is also being explored as a way to uphold a company’s mission and shield it from investor demand. This structure allows businesses to define their purpose — for example to reinvest all profits back into the business or to primarily serve the interests of its employees. Being solely owned by the trust, the company is protected from profit extraction by predatory investors.

The perpetual purpose trust company structure was setup for the first time in the US two years go by RSF Social Finance and Purpose in the case of the Organically Grown Company. Companies built up or bailed out in the national interest (healthcare companies, drug manufacturing companies, essential parts manufacturing, etc.) could be protected in the same way.

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Covid-19 is the first of many future shocks that epidemiologists, climate scientists, and social cohesion theorists are predicting. If we do not use this moment as a time to rebuild and reform our economic system we will be left even more vulnerable to the next catastrophe.

While some will advocate for a return to pre-Covid-19 economic status-quo, others will see this as an opportunity for change. But beware those who advocate change while leaving existing power structure essentially untouched. The language of win-win— ‘doing well by doing good’ — may sound plausible, but we must listen carefully to who defines what it means to win, and who shares in the gains of those wins. Mutual benefit can only occur through exchange, not extraction.

Markets are important mechanisms of exchange that we love and rely on, but we need to reclaim our ability to control them on our terms. We must seize this opportunity to democratise ownership and and create a mission-led system of governance.

There’s no better time than now to reshape the system — and how we respond is up to us.

There was something special about the sunshine. Not a mere winter’s end, but a quality of light that struck me as out of the ordinary.

It could be just my imagination. These are strange, silent, times and the mind plays tricks. But there is a plausible external cause. Fewer flights mean fewer vapour trails (a.k.a. ‘contrails’) in the sky. These artificial clouds reflect sunlight back into space — thus reducing the amount that teaches the ground. Contrails are thus a big contributor to the phenomenon of ‘global dimming’.

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The effect is big enough to be noticed when it stops — i.e. on the rare occasions when aviation is interrupted. 9/11 was one such instance, another was April 2010, when planes were grounded by an ash cloud from the Eyjafjallajökull volcano. That too made for an exceptionally bright and splendid spring.

Affordable air travel has opened up the world to millions, indeed billions, of people. But it has also made the world a literally duller place. We associate flying with freedom, and yet some of the light has gone from our lives.

*

There’s a lot that we put up with for the sake of speed. According to the World Health Organisation 1.35 million people are killed on the roads every year. A further 20 to 50 million are injured. How’s that for a global pandemic?

Note that this death toll does not include the lethal impact of exhaust fumes. The WHO estimates that 4.2 million people die every year from their exposure to all forms of outdoor air pollution. Obviously not all of that is vehicular in origin — though in the West, with our strict controls on other sources, tail pipe emissions are the main problem.

Unlike Covid-19, this is not a plague that spares our children. Furthermore, it is a force entirely under our control. We could, if we wished, make it go away. Obviously, there’d be a price to pay — and, clearly, we’re unwilling to pay it. Indeed, we won’t accept even a fraction of the pain we’re enduring in our fight against the virus .

One has to ask why one set of lives (those that would be lost to the pandemic) are worth tanking the economy for, while the other set (the victims of traffic accidents and air pollution) have to be sacrificed year in, year out.

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Of course, I’m ignoring the issue of tail risk. The road vehicle death toll, while horrific, is broadly predictable — in any one year or decade, the worst case scenario isn’t that different from median expectations. With a pandemic though, outcomes are driven by potentially exponential trends — with potentially ruinous consequences. In a ‘ normal’ year, cars may well kill more people than the virus ends up killing this year. What cars definitely won’t do, however, is push healthcare systems, indeed entire societies, to the point of collapse. We are prepared for the carnage on our roads. We have systems in place to deal with the consequences.

Another key difference is that the bulk of what we’re doing to fight the pandemic is temporary. It’s enormously expensive, of course — but at some point it will stop. In contrast, a commitment to saving the victims of the car would require a permanent change to our way of life. And that we’re not prepared to countenance.

And yet there’s a huge amount we could do to reduce road deaths without giving up cars altogether. For instance, we take it for granted that there will be cars on every residential street, but it never had to be that way. We could have used neighbourhood parking to keep the side streets traffic-free and child-friendly. These days, we could use road pricing everywhere to place hard limits on congestion and fund public transport. We could uphold a right to clean air for every child — but instead we allow idiots to run their engines outside the school gate.

Or take air travel. As an island nation we could have built our airports on the coast so that aircraft descend and ascend over water, not people. We could have balanced the right to see the world against the right to tranquility at home. We could make the aviation industry pay for what it’s doing to the planet — instead we subsidise it.

And it’s not just transport. In every aspect of modern life, we meekly accept the hammer blows of progress. Consider construction, for instance. We’ve never been in a better position to build beautiful, brilliantly designed buildings that stand the test of time. We have machinery and materials that would amaze our ancestors. We also have the necessary knowledge. The sum total of humanity’s architectural achievement is available at the click of a button. We have armies of architects, designers and planners — and ways of drawing upon the experience and insights of local residents. Always and everywhere, development could make places better.

But instead we just make them bigger, blighting our lives with ugliness and dysfunction as a careless byproduct. We can’t even make our modern dystopias interesting anymore, the insults of brutalism replaced by spreadsheet architecture.

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I could go on. In just about any field of economic activity — from agriculture to information technology — it seems that we can’t create without also destroying. Things that aren’t priced by market mechanisms, but which have value nonetheless — from local wildlife to the decentralised flow of information — are lost to us forever.

Is this just the price of progress? We can either have birds tweeting in the trees or shops full of food, but not both. Nature or abundance. Tranquility or mobility. Community or convenience. Localism or variety. That, supposedly, is the choice.

But, of course, it isn’t. As I’ve tried to show above, we can deploy our technologies with care. We can think through the consequences, correct our mistakes, direct our efforts away from danger, choose one path over another. For example, the UK has put decades of effort into making our roads safer. Our fatality rate is significantly lower than in Germany or France, it’s half the Canadian rate and a quarter of America’s. We should be proud.

*

We can design a better world if we want it. So why don’t we do it more often and to a greater extent?

Fundamentally, it’s because it means constraining the most dynamic forces in our economy: speed, energy, extraction, transportation, production, consumption, demolition, construction, automation, immigration, globalisation, finance.

These are destructive forces, but they’re also creative. Try to tame them, and the risk is that we will slow down or even kill the essence of life, which is growth.

The case for growth is a powerful one. Nobody makes it better than the economist Tyler Cowen in his book Stubborn Attachments. While a lot of attention is paid to the GDP growth rate at any particular time, Cowen argues that we overlook the importance of growth as it multiplies over decades and centuries. Seemingly small differences in average growth rates can compound into radically different outcomes several generations down the line.

Accepting a less dynamic, slower economy now would mean that our great, great, great grandchildren will live in a much poorer world than they otherwise would have done. And if you’re wondering why we should care about descendants we’ll never meet, consider how you’d feel about our ancestors if they’d taken the same attitude. If, say, they’d suppressed the industrial revolution as being too disruptive of their way of life, we’d now be living in abject poverty. Never mind the temporary shutdown we’re living through now, the modern economy as we understand it wouldn’t exist at all — nor would it for generations to come.

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Therefore, within his consequentialist moral framework Cowen believes that we have a duty to keep growth going at the maximum sustainable rate. Not being a fool, he realises that economic activities can compromise that sustainability, for instance by messing up the climate. Yet within these basic constraints (and also respect for human rights), the argument is that growth is the greatest of greater goods.

What does such a worldview imply? Certainly that we should accept a little global dimming so that aviation can connect a global economy. As for pollution, then yes, within limits, it’s worth putting up with. Our paleolithic ancestors enjoyed unpolluted air, untainted water, got plenty of exercise, ate organic low carb food … and were all dead by the age of 40. I mean, would you swap with a caveman? As for too little wildlife, would you rather have too much (again, ask the cavemen)?

Further implications are that traffic accidents are a price worth paying for mobility. Lousy architecture is the price we pay for urbanisation — and a rate of development that allows countries like China to lift their people out of rural poverty. Of course, we in the West wouldn’t tolerate Chinese environmental standards, but then that stage in our development is safely in the past.

*

So, then, an overwhelming case for letting the economy rip — decarbonising as we must, but otherwise allowing the forces of growth to find the path of least resistance?

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Here are three reasons why not:

The first is that some components of growth are worth a lot more than others. The most important is technological progress. Over time, it is all that matters to an economy (beyond people, of course, and the availability of natural resources). It can be amplified by other forces — like prudent finance and capable government — but ultimately, growth relies on innovation. Take that away and growth eventually stops — though it can run for a while on fumes (e.g. the debt-fuelled property speculation that is recorded as ‘growth’ in our flawed GDP statistics).

We use the word ‘breakthrough’ to describe instances of scientific or technological progress because discovery is difficult. A growth strategy based on always allowing economic activity to find the path of least resistance is therefore counter-productive. Innovation depends on resources being directed at the right challenges (the paths of fruitful resistance, if you will) and overcoming them. Necessity, not deregulation, is the mother of invention.

Secondly, growth is not the only thing that makes an enormous difference on a generational timescale. We also have to be aware of extremely unlikely but highly consequential risks — Black Swan risks. Any long-run economic calculus of the sort that Tyler Cowen advocates has to take account of the fact that the highly improbable becomes increasingly certain given enough time.

Now, those risks may be external to a high-growth economic model — like nuclear war. Or they may be intrinsic, but adjustable — like averting the dangers of climate change by switching to clean energy sources. But what if the black swan risks arise out of, or are greatly multiplied by, something that is an integral feature of our favoured economic model?

The obvious example, right now, is infectious disease in the context of globalisation. A hyper-connected world may well be the best way to maximise overall economic growth — until, that is, we’re ruined by our exposure to the food safety practices of other nations. It’s all very well bequeathing future generations the legacy of decades or centuries of high growth, but it won’t help them if they’re all dead.

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By Peter Franklin

Finally, we need to ask whether the pro-growth policies that delivered growth in the past are still capable of delivering growth now and in the future. Quite frankly, the record of the neoliberal era isn’t great. Or rather it’s been great for the developing countries — thanks to all that previously invented, off-the-shelf technology waiting to made use of — but not so great for the already developed world.

Western economies have failed to maintain the rapid economic growth and social progress of the three or four decades after the Second World War. We are, to quote the title of another Tyler Cowen book, stuck in a Great Stagnation.

How do we get unstuck? Is it by flogging the dead horse of neoliberalism even harder? More deregulation, more globalisation, more inequality? New roads, airports, skyscrapers: More! More! More! Or, at some point, do we need to stand back and question the fundamentals of what we’re doing?

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Eric Weinstein likens our efforts to recreate the conditions for rapid growth to a cargo cult. Having experienced a great bounty at one point in our history, we ritualistically go through the motions of this or that pro-growth policy not understanding that it’s not in our power to conjure it up again.

Indeed, the rituals — involving, as they do, great sacrifice — are doing us more harm than good.

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More than that, economic growth is not an end in itself. Presumably we want to grow our economies so that we can improve citizens’ lives. In that case, why not measure the happiness and wellbeing of citizens directly, and work towards that, rather than the proxy of GDP?

That’s exactly what New Zealand is trying to do. The UK and other countries measure wellbeing through various metrics, but New Zealand is the first country to use it as a basis for its national budget. There are five parts to it: improving mental health, improving “child wellbeing” (reducing poverty and abuse), improving national productivity, supporting indigenous peoples, and moving to a zero-carbon economy.

Those are, of course, all good things to pursue. But I’m still a little concerned about it. Obviously GDP is a crude tool: it doesn’t distinguish between a local coffee shop making nice Americanos for passersby, and a factory that builds cluster bombs and pumps poisonous waste into rivers. But it does have the advantage of being relatively easy to measure. Wellbeing, on the other hand, is not.

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New Zealand appears to be basing its budget on the Organisation for Economic Co-operation and Development (OECD)’s Better Life Index (BLI). This takes into account housing, income, jobs, community, education, environment, civic engagement, health, life satisfaction, safety, and work-life balance.

But it’s only one available measure. The UK’s Office for National Statistics uses a different set of metrics. A 2016 study in the BMJ did a literature review, searching for ways of assessing the adult population, and found 99 different measures of wellbeing looking at 196 different dimensions (the BLI looks at 11). Some took as their basis Maslow’s hierarchy of needs; some a model of psychological well-being; others self-determination; others the WHO’s definition of health as “a complete state of physical, mental and social well-being”. It found that 27 new measures were invented in the decade 1990 to 1999 alone.

They may all find the same results, of course, but I am instinctively wary. I asked a couple of psychologists about it and they were too.

One said that self-reported data like this has lots of problems with “construct validity and operationalisation” – that is, whether what you’re measuring really relates to the underlying thing you want to improve, happiness or whatever, and what weights you give all the factors. “How you rigidly define ‘wellbeing’ in a robust and benchmarkable way is non-trivial,” he said.

The other was starker: “Given how much dodgy research there is in the world of ‘happiness psychology’,” he said, “I’d be pretty worried about them choosing a measure that’s actually worthwhile.”

More from this author

Is the 'epidemic of loneliness' fake news?

By Tom Chivers

And economists know that GDP isn’t a perfect measure. But it does seem to correlate with most of these measures of national wellbeing – on balance, the richer a country gets, the happier it becomes. That’s hardly surprising. If there’s more money in the economy, people have more money to spend on their families; if there’s more money in the exchequer, public services – schools, transport, policing – can improve.

Of course it’s not as simple as that, and if all the money concentrates in a few rich people then the GDP–happiness link can break. (As tends to happen in states that get suddenly rich from discovering natural resources, such as oil.) But in general, reported subjective wellbeing goes up fairly linearly with GDP.

That’s not to say that national budgets should blindly chase GDP. It is absolutely true that, in general, increased GDP leads to increased environmental impact. The relationship has become more complex in the modern information economy – for instance, an author could sell hundreds of thousands of books for only a negligibly greater impact of selling the first one, if they’re all sold as ebooks.

Once a video game has been made, you can sell an essentially infinite number of copies via Steam, without having to expend significant physical resources. In the UK, the link between growth and environmental degradation has apparently been largely severed, but in many other developed countries – and even more so in developing ones – it has not. As economies decarbonise and technology becomes more energy-efficient, perhaps it will, but whether it happens fast enough to avoid some really devastating consequences is an open question.

And it’s also true that GDP is only a proxy for what we actually care about, which is presumably some ineffable and complex but nonetheless real combination of human flourishing and happiness and a sustainable future. And if we could measure that thing, whatever it is – if we could even define it – then we should absolutely direct all our efforts to increasing it.

Suggested reading

How moral is the Chelsea Flower Show?

By Giles Fraser

But all our wellbeing measures are just proxies for that thing too. They’re intended to be more direct proxies, but whether they actually are is very hard to tell.

I will watch the New Zealand experiment with great interest. But one thing I have learnt from writing a lot about psychological experiments in recent years, is that it is possible to find almost anything you want in the data if you’re not profoundly careful in how you go about collecting it.

There’s something else, as well. An old GK Chesterton parable, about a fence across a road or a field. Someone walks up to it and says “I can’t work out why this is here, so let’s get rid of it.” He does so and is then promptly gored by a bull that was being kept in the next field by that fence.

A more intelligent reformer, says Chesterton, would have told the first: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.”

For close to a century, since the development of the modern GDP concept in a 1934 report for the US Congress – and especially since the Bretton Woods conference of 1944 – GDP has been used to measure national economies. In that time, almost all metrics of human progress – life expectancy, childhood survival, levels of violence and war, disease burdens, gender equality, education, nutrition, life satisfaction – have consistently moved in the right direction, around the world.

I’m not saying that if we stop measuring GDP and start measuring the Better Life Index instead, all that will collapse or go into reverse. I’m just saying: using GDP is, broadly, working. Of course we need to work hard to make sure that GPD isn’t seen as the be-all and end-all: if we strip away all our natural resources and ruin our climate, it’ll slow human progress.

But it turns out GDP is a pretty good proxy for human wellbeing. Tearing it down because you think you can do better might not be such a smart thing to do.

I’ve counted down the top 50 UnPacked highlights from 2018 – the facts, figures, ideas and events that may not have made the headlines, but which provide a more reliable insight into the forces shaping the future.

Today, numbers 30 to 21:

#30

Scandalous link to Russia exposed

With America under Trump, Britain mired in Brexit and France having a riot, Germany looks like the responsible adult of international politics.

But is it? Consider the Nord Stream 2 gas pipeline, a link between Germany and Russia that undermines the security of the countries in between. A Bloomberg editorial explains:

“Due to be completed in 2019, the pipeline will double the amount of gas Russia transports directly to Germany across the Baltic Sea. Nord Stream 1, completed in 2011, supplies 55 billion cubic meters a year to Germany; the second pipeline would allow Gazprom, Russia’s state-owned gas company, to funnel an additional 55 billion cubic meters over the same route.”

This is bad news for Russia’s immediate neighbours:

“Gas that gets to Western Europe [via land-based pipelines] from Russia also passes through countries such as Poland, Slovakia and Hungary, all NATO members. They… are at risk of being denied supplies and transit revenues once Nord Stream 2 comes online. Poland’s government has called the pipeline a ‘hybrid weapon’ created by Moscow to divide the EU and NATO.”

Read more...

The Year UnPacked: 30 to 21

Global Affairs

#29

Where are the clones? There are no clones

2018 began with a very special delivery at the Chinese Academy of Sciences in Shanghai: the birth of two crab-eating macaques called Zhong Zhong and Hua Hua. What made these little monkeys special is that they are the first cloned primates to make it beyond the Petri dish and the womb.

People are also primates, but no human clone has ever been born (we think). In a fascinating, if somewhat horrifying, report for MIT Technology Review, Antonio Regalado explains why. Basically, it’s hugely impractical – most attempts fail and each attempt is costly:

“…[Yi Zhang, a leading stem cell biologist] notes that Chinese teams used 63 surrogate mothers and 417 eggs to make two monkey clones. Just imagine arranging for dozens of human surrogates and egg donors.

“‘No society could accept this,’ says Zhang.”

Well, one would hope so.

Read more...

The Year UnPacked: 30 to 21

Technology

#28

China is electrifying

“If you want to know the future, look at the past”, said Albert Einstein. Alternatively, look at China.

For instance, the scale of the country’s environmental problems may shock you, but so might the effort going into solving them.

In April, Jeremy Hodges took a look at China’s electric bus revolution for Bloomberg:

“The numbers are staggering. China had about 99 percent of the 385,000 electric buses on the roads worldwide in 2017, accounting for 17 percent of the country’s entire fleet. Every five weeks, Chinese cities add 9,500 of the zero-emissions transporters—the equivalent of London’s entire working fleet, according Bloomberg New Energy Finance.”

If we want to stop catastrophic climate change then we will have to electrify our transport system within a generation. China shows it can be done.

Read more...

The Year UnPacked: 30 to 21

Global Affairs

#27

America: Not divided, just disappointed

America appears to be a deeply polarised nation. And it is – but not for the reasons you might think, argues George Hawley in the American Conservative:

“The Bible-thumping, pro-war, free-market purist is a rare creature. So is the gun-grabbing, abortion-loving, socialist atheist. Perfect conservative and liberal stereotypes are hard to find in the real world.

“Especially on economic issues, Americans exhibit a remarkable consensus…”

As shared institutions decline, we become more loyal to unshared institutions like political ideologies and cultural identities. This allows emotionally manipulative, but otherwise incompetent, politicians to rise to the top. In power, they let their supporters down – creating psychological stress that needs a release:

“…we can resolve the tension between our party identifications and our frustration with our parties by increasing our antipathy toward our parties’ opponents. In other words, we can justify our vote choice if we believe the opposing party is worse…”

Utter madness, but it explains a lot.

Read more...

The Year UnPacked: 30 to 21

Groupthink

#26

Whatever happened to Web 3.0?

Ethan Zuckerman is a key figure in the development of the internet. Interviewed by Noah Kulwin for New York magazine, he believes that ‘Web 2.0’ – the internet as dominated by the giants of search and social media – is stagnating:

“I really feel like we’ve lost about ten years of innovation. I feel like this last decade has been pretty boring for the web.”

He’s right. Think about the development of internet in decade-long chunks. In 1988, most of us hadn’t even heard of the internet, but by 1998, email was widespread and websites commonplace. Fast forward another ten years to 2008 and broadband had become the norm. Google and Facebook were also achieving default status – indeed pretty much everything that dominates digital in 2018 was in place ten years ago.

Thanks to the smartphone, the internet has gone fully mobile over the last decade – but it’s still basically the same internet, only on a smaller screen.

Read more...

The Year UnPacked: 30 to 21

Technology

#25

Stop fiddling with the gene machine

The first ‘gene edited’ babies were born in China this year. But as Veronique Greenwood reminds us in a piece for Quanta Magazine, an individual’s genome is not so much a list of instructions as a complex machine whose different parts interact in complicated ways that we’re nowhere near to fully understanding:

“Joel Bader, a systems biologist at Johns Hopkins University, says… that ‘[The] closer we are able to look, the more we are able to see that perturbing one gene or pathway has effects that propagate throughout the entire system,’…”

Thanks to techniques like CRISPR, we can knock-out and splice-in genes with ever greater precision. But though we know how to perform these manipulations, to a very large extent we don’t know what we’re doing. That’s worth bearing in mind before we genetically re-engineer our descendants.

Read more...

The Year UnPacked: 30 to 21

Technology

#24

Sheffield A and Sheffield B

The great geographical divides that define the politics of our time – for instance between ‘red state’ America and the coastal cities, or between the Eurozone’s core and periphery – don’t always involve great distances. Sometimes, the same applies to a single city. In an eye-opening piece for CityMetric, Sam Gregory provides a guided tour of what he calls “Sheffield A” and “Sheffield B”:

“Uniquely for a British city, where pockets of deprivation are usually nestled uncomfortably between well-to-do suburbs, Sheffield’s dividing line runs directly through the city like the Berlin Wall. How did this happen?”

Gregory describes a bus route across the city where, between the neighbourhoods at each end, “average life expectancy falls by 7.5 years for men and almost 10 years for women”.

There’s no physical barrier between the two Sheffields, but that doesn’t stop them from being worlds apart.

Read more...

The Year UnPacked: 30 to 21

Flyover Country

#23

The birth of two nations

In the New York Times Quoctrung Bui and Claire Cain Miller describe another great divide, this time among American women:

“First-time mothers are older in big cities and on the coasts, and younger in rural areas and in the Great Plains and the South. In New York and San Francisco, their average age is 31 and 32. In Todd County, S.D., and Zapata County, Tex., it’s half a generation earlier, at 20 and 21…”

Across the nation as a whole, the average age of first birth is now 30.3 for college educated women but 23.8 for those without a college degree.

When Benjamin Disraeli wrote about the two nations of Victorian England – “the rich and the poor” – he said that they were “as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets; who are formed by a different breeding, are fed by a different food, are ordered by different manners…”

In a different time and place, it’s still true.

Read more...

The Year UnPacked: 30 to 21

Flyover Country

#22

The great GDP con

Over the last few decades, there’s been a marked slow down in economic growth across the West. However, things could be even worse than the official GDP figures would lead us to believe.

In an article for the Global Poverty and Inequality Dynamic Research Network, Jacob Assa and Ingrid Harold Kvangraven show that some dubious tweaks to the way the figures are calculated mean that we’re not as rich as we think we are.

Not only does GDP include the rent paid by tenants to landlords, it also includes the imaginary or ‘imputed’ rent that “homeowners would have paid to a landlord had they [the landlord] owned their home…”

This means that escalating rents and runaway house prices – which contribute nothing to productivity and make a lot of people poorer – shows up as a boost to GDP.

No wonder governments are so reluctant to solve the housing crisis.

#21

Families need fathers and so do entire neighbourhoods

The inequality in life outcomes of black boys and white boys in America is well known. But a new study featured in the New York Times shows just how pervasive the effect is – it doesn’t matter how rich the household or how ‘good’ the neighbourhood, black boys are more likely to end up in a lower income band as adults than are white boys (and correspondingly less likely to end up in a higher band).

And yet the fine-grained geographical detail of the study did pick out certain neighbourhoods where the effect was much weaker. What was it that made these areas different? Crunching the data revealed various factors, but the most significant had to do with fatherhood:

“…these pockets… were the places where many lower-income black children had fathers at home. Poor black boys did well in such places, whether their own fathers were present or not.

“‘That is a pathbreaking finding,’ said William Julius Wilson, a Harvard sociologist whose books have chronicled the economic struggles of black men.”

Fathers aren’t just good for their own families, they can also provide boys in other families with “role models and mentors”.

Suggested reading

New evidence on race and inequality in America

By Peter Franklin

Now read The Year UnPacked 20-11

However, as always, economics is a slippery business. For a start, there’s the practical challenge of measuring production. For various reasons, the most reliable way of doing so is at the point of purchase. Using this expenditure method, GDP is equal to personal consumption plus business investment plus government expenditure plus net exports. That, however, leaves the question of what to include under each of these headings.

Further Reading

Don't fight dirty with statistics

By Tom Chivers

In an article for the Global Poverty and Inequality Dynamic Research Network, Jacob Assa and Ingrid Harold Kvangraven point out that the standard methodology has changed in recent decades – and that the effect of those changes has been to make the western economies look richer (in comparison to non-western economies) than they really are:

“…changes made to GDP measurement over the past two decades have a bias towards countries traditionally in ‘the West’. As this has had a substantial impact on the assessment of comparative growth among countries in those two groups, we deem it as a form of kicking away the statistical ladder “

What changes are we talking about?

“Examples include the reclassification of financial intermediation services, Research and Development  activities (R&D) and owner-occupied dwellings as productive activities. This means finance has been ‘made productive’ (as Brett Christophers puts it), R&D is no longer considered an intermediate input and home ownership is now included in GDP in the form of the imaginary rent that homeowners would have paid to a landlord had they owned their home…”

The authors propose a new measure of “core GDP” that would exclude the funny money and focus “only what can be directly measured”:

“Such directly measured industries include agriculture, utilities, manufacturing, retail trade, transportation, and communication.”

In a fascinating paper they compare the official GDP figures to their “core GDP” measure and find that the choice of method makes a big difference to the relative sizes of the western and non- western economies. For instance, according to the official figures the non-West only overtook the West in the middle of 2000, but according to the core GDP figures the cross-over took place much earlier – at some point before 1990 (when the comparison starts).

Further Reading

Lies, damned lies and energy statistics

By Peter Franklin

Choice of statistical method doesn’t change how rich or poor people actually are, but the authors observe that the bias to the West does impact on “our perception of growth in the world” and also on the weight of western influence in global institutions like the World Bank and the IMF.

As well as this apparent unfairness to the non-West, I’d argue that the official measures of GDP are doing damage in the western nations too.

A key issue here is that of ‘imputed rent’ – which takes a bit of explaining. Official GDP figures include the rents that tenants pay to their landlords. They also include an estimate of what owner occupiers would pay if they too rented their homes instead of owning them – these are the imputed rents. It is as if owner occupiers were paying rent to themselves. This might seem fanciful, but the justification is that though owner occupation doesn’t generate an actual transaction, it still has a measurable financial value.

Assa and Kvangraven argue that including imputed rents in the measurement of GDP has “the peculiar effect of making countries with housing bubbles appear to grow more rapidly”. Well, fair comment, but on that basis one shouldn’t include any kind of rent in the GDP figures – imputed or actual.

Further Reading

Home Truths – Part III: The nine drivers of a broken market

By Liam Halligan

In fact, taking rent out of GDP would remove some deeply perverse incentives for policy-makers. Ever wondered why government does such a bad job of solving the housing crisis? Well, if it did a better job, and rental values came down, GDP would take a corresponding hit.

In the longer term, I think the real productive economy would benefit hugely from lower, more stable rents and land values – but that’s not the sort of thing factored into the models of bean-counting finance ministries.

If that seems exaggerated, consider the facts. Extreme economic hardship almost always produces dramatic political changes. The economic collapse following the Great Depression ushered in fascism throughout Central and Southern Europe and social democracy in most other states.

The stagflation of the 1970s gave rise to Margaret Thatcher and Ronald Reagan, whose apparent political and economic successes nudged the rest of the West toward some form of neoliberal economics. Even in the late 1990s, nations that experienced extreme deprivation because of the collapse in the price of oil, such as Venezuela and Russia, overthrew their established political orders in favour of undemocratic authoritarian regimes.

This pattern even held true following the Great Financial Crisis of 2008. The economies of Greece, Ireland, Iceland, and Spain essentially collapsed under the strain. Each has since either elected a populist-led government (Greece), or seen the share of the vote of the pre-crisis established parties drop by between one-quarter and one-third. The slow-growth countries of France and Italy have both ended the domination of their politics by traditional Right-Left parties; elsewhere the old duopoly is hanging on by a thread, often in coalition with one of the new, populist parties.

Further reading

Ten years on from the crash, the most important banking reform has still not been enacted

By Liam Halligan

The events of 2008 also upended politics in the Anglosphere. The United States and Great Britain were hardest hit, each experiencing large increases in unemployment and expensive bank bailouts. Each has seen the Right challenged by anti-immigration and anti-globalist forces, and each seen the Left rise to obtain or battle for control of the leading centre-Left party. Even placid Australia, whose economy declined after 2008 but never dropped into recession, is seeing record numbers of voters embracing anti-immigrant or other protest parties.

All of this is well known, but the role of economics in these developments is still under-appreciated. According to the OECD, 28 of the 32 member countries on which it has data increased their debt-to-GDP ratio between 2007 and 2018. Countries that experienced deep downturns dramatically increased their debt, even to the point of doubling it (Great Britain, Iceland) or nearly tripling it (Ireland, Spain).

Virtually every major economy now has debt-to-GDP ratios at the level that, pre-2008, would have sent alarm bells ringing in financial markets. Among wealthy economies, only Germany, Switzerland, and a couple of Nordic countries are close to pre-Crisis debt levels. As rich as they are, they cannot bail out the world should another crash occur.

Further reading

Four reasons another crash is on the cards

By Daniel Gayne

In essence, wealthy countries throughout the world bought off political convulsion the old-fashioned way, by borrowing massive amounts of money to fund high levels of government consumption. Individual nations might have the financial capacity to address mild or local downturns, but the free world does not have the cash to bail itself out again. Given what we know from history and recent experience, the political reaction to a combination of crash and austerity will be swift and severe.

There is an alternative to a financial crash followed by political upheaval, but it carries its own political risks. China’s economy is now the largest in the world, and while its household and business debt is high, its formal government debt is not. China’s central bank holds over $3 trillion in hard currency reserves. Assuming that a financial crash in the West does not completely crush the Chinese economy, one can easily imagine Beijing absorbing some of its own domestic debt defaults while bailing out strategic countries that are now part of the Western alliance.

Does anyone think that newly-elected populist governments – or even pre-crash established ones who see the writing on the wall – would turn down offers of low-interest loans from China to avert total collapse? Does anyone think that the longer-term ramifications of that would stop those nations from signing on the dotted line if an equivalent offer were not forthcoming?

These considerations should cause Western governments to sit up. They need to start serious economic reforms now if they want to avoid the risk of everything blowing up.

Further reading

Ten years after the crash, we should still be terrified

By Peter Franklin

There are only three ways to get a debt problem under control. The first is devaluation – if the currency is worth less, then the value of the debt held by creditors would be reduced. Devaluation also can spur growth, as the costs in the devaluing country are suddenly cheaper in terms of the purchasing country’s currency.

The second is inflation – again, with high rates of inflation, the dollar amount of the debt held drops in real terms, making it in theory more affordable if all else remains equal. The problem with both of those remedies is that all else rarely remains equal. Inflation in particular erodes confidence in the future, which erodes investment. That in turn reduces growth, which reduces nominal GDP in future years and thus undermines a country’s ability to service its debt.

Devaluation only works if one is a first-mover country, gaining a relative advantage over other countries that do not devalue and thus spurring growth. If all major countries devalue, or if a small country’s devaluation is then followed by a very large country’s move, the advantage is cancelled and the expected future growth does not occur.

Further reading

As China pitches for reserve currency status, the era of US hegemony is ending

By Liam Halligan

The third option, increasing economic growth without currency debasement, is hard to implement. Orthodox prescriptions from the Right – labour deregulation, lower marginal tax rates, and so forth – always either worsen the debt problem initially, prove politically difficult to pass in the face of opposition from vested interests, or both.

Orthodox prescriptions from the Left – higher levels of public spending and, often, increasing taxes on capital – also produce initially worse financial results and resistance from special interest groups. The solution the Italian populist government has just hit upon – to do both simultaneously – is even riskier financially, as the doubling of Italian government bond yields since the government was formed in May demonstrates.

And so the West slouches on, hoping the centre will hold. It might: one can never predict the future with any certainty. But the warning sounds are present, and growing more urgent, for all who have ears to hear.

Further reading

Chinese capital flows – the ‘dragon energy’ of globalisation

By Peter Franklin