How about a little reader mail?
Dear Daily Reckoners:
As I wonder how long South Australia can survive with the drying of the Murray basin, a la the Coloraoo; I also wonder about all of the paper which the USA delivers to the Orientals who then pass it on to Australia for all those raw materials. I remember when you all were unhappy about being a British garden turned into a mine. Of what advantage is it to Oz to completely excavate? Then what? I used to shovel the phosphate from Nauru at Adelaide Chemical.
B.F. in Bensalem Pa
If you’re not producing finished goods for trade, you have to sell something. It’s nice to have a lot of iron ore, coal, and uranium when the world is long on people and short on steel and electricity.
I’d like to know your thoughts on why growth is generally perceived as altruistically benevolent? Obviously inflation is a very bad thing and we all want more (as I do) of everything. But beyond that, philosophically, should Australia pin its compass on gross growth being good?
I don’t see that progress and economic growth are one in the same thing, nor absolutely dependent on each other. I’d be happy for a plateau in GDP and doing our best to maintain the current standard of living for the populace. I question why we want to bring more and more people in to solve skill shortages. Let the market sort that out. We don’t have a sustainable approach to water at the moment and diminishing farming land, more people isn’t the immediate answer I don’t think. Given our strong terms of trade, aren’t we better off thinking that maybe we’ve hit peak Australia and that’s OK. Growth’s great for the stock market, which I thoroughly enjoy gambling on, but as a society, I don’t see it. What are the macro economic implications if we did plateau for a few years?
Where to begin? First, growth is not the same as inflation. Inflation is always and everywhere, as the Friedmanites point out, a monetary phenomenon. If you grow the money supply faster than the natural demand for money (lowering rates) then you stimulate a kind of growth we would call unnatural. You also get grossly misallocated resources, vacant homes, empty commercial space, and the whole boom-bust aspect of the credit cycle.
Growth? What else can we do as human beings but grow? The alternative is what? Zero growth? Death? Death is natural too. But it is not natural to wish for it, or try to bring it about (for yourself or others) through policy.
The heart of the question, though, is whether or not there are physical limits to growth. Won’t we run out of living space eventually? Or food? Or water? Or energy?
As Julian Simon once wrote, people are the ultimate resource. People have brains as well as mouths. More brains, you would reckon, would be good for the species. It would improve our chances to survive the challenges we face. And now, we don’t mean eventually we will end up eating each other’s brains.
The alternative to more brains is fewer mouths. That happens naturally anyway. War, famine, pestilence, and death. Those four always ride high. But we are deeply suspicious, though, of people who believe that the final solution to an intellectual dilemma like the limits of growth is a reduction or restriction on human life.
These people claim they are thinking about the future. But what they are really thinking about is themselves. They believe they know what the future will hold. Hubris. Because of that, they will create policies that actually determine how many people will be born in the future, or, perhaps, how long people are allowed to live before they’ve consumed their resource quota.
We wouldn’t go so far as to say all people who believe in limiting population growth are species-loathing totalitarians. But the thought had crossed our mind. Is growth progress? That’s a different story for a different day. Until then…
Markets and Money