The Costs of Chasing Unlimited Economic Growth
the cost is riyal
Ever feel like life is moving faster and faster these days? I know I do.
We're constantly being told that faster economic growth is the key to progress.
But what if this unlimited growth is actually costing us more than it's gaining us?
According to recent studies, Americans today work more hours, experience higher levels of stress and anxiety, spend less time socializing and suffer from more chronic health issues than in decades past.
Meanwhile, happiness levels have flatlined. I read many articles on this topic and found multiple things.
It turns out that chasing continuous economic growth may be hurting our health, happiness, and society in ways we haven't fully grasped.
Is Unlimited Economic Growth Possible?
When I think about unlimited economic growth, a few questions come to mind.
Is it really possible for an economy to grow indefinitely? What are the constraints and costs? I've researched a bit about it, and here's my perspective.
Economic growth depends on a few key factors:
investments in physical capital (machines, infrastructure),
human capital (education, skills),
technological progress, and resource availability.
Historically, new technologies and discoveries have enabled sustained periods of growth. But there are limits.
First, we only have so many natural resources. Many raw materials are finite and non-renewable. According to the UN, we're consuming resources at an unsustainable rate. Eventually, we'll run out or costs will skyrocket.
Second, as economies mature, growth tends to slow down. Diminishing returns set in, meaning each new investment or discovery moves the needle less over time. Developed nations have experienced declining GDP growth rates for decades.
Also, there are environmental costs to consider too. Pollution, biodiversity loss, and climate change all pose existential threats if left unnoticed.
While I'm optimistic about human ingenuity, I don't believe unlimited economic growth is feasible or sensible as a long-term goal.
We need to pursue growth that's sustainable and equitable, focusing on well-being over aggregate output. If that means GDP growth rates level off or even decline in wealthy nations, so be it. The endless chase of "more" needs to end.
The Environmental Costs of Constant Growth
As an economy grows over time, so too does its environmental impact. Constant growth means constant consumption, and that takes a major toll on the planet.
For starters, producing more goods requires extracting and using up more natural resources. We're talking timber, minerals, fossil fuels - you name it.
The more we consume, the more we deplete these resources. Some are renewable but many are not.
According to the Earth, humans currently use the equivalent of 1.7 Earths to provide the resources we use and absorb our waste. That's not sustainable.
Growing economies also mean growing waste and pollution. Manufacturing, transportation, energy usage - all the activities that power economic growth also generate waste products like CO2, plastic pollution, and toxic chemicals.
The waste has to go somewhere and often ends up in the air, water, or landfills where it harms ecosystems.
Additionally, as economies expand into new areas of land and sea, it leads to deforestation, loss of biodiversity, and habitat destruction.
For example, demand for palm oil has fueled massive tropical deforestation. Coastal pollution and overfishing threaten marine habitats. Species are going extinct at up to 1,000 times the natural rate according to the WWF.
While economic growth has lifted millions out of poverty, we have to face the reality that unlimited growth is impossible on a planet with finite resources.
Constant growth may benefit us in the short term but it's destroying the very natural systems that all economies and societies depend on.
Alternatives to Focusing Solely on GDP
For decades, economists have focused on increasing GDP as a measure of a nation's success and well-being.
But as I've learned more about sustainability and well-being, I've come to realize GDP alone is an incomplete and sometimes misleading indicator. There are alternative ways to measure progress that capture more of what really matters to people.
1. Health and happiness
GDP doesn't account for the health and well-being of citizens. But measures like life expectancy, health care quality, and happiness/life satisfaction indexes can provide insight into people's overall wellness and prosperity.
2. Income and wealth distribution
GDP also masks inequality in a society. A rising tide doesn't lift all boats. Measures like the Gini index examine how evenly income and wealth are distributed across a population.
3. Environmental sustainability
A high GDP fueled by pollution, waste, and depletion of natural resources is not sustainable. Ecological footprint, carbon footprint, and other environmental impact measures provide a more balanced view of economic progress that accounts for these externalized costs. As climate change intensifies, these metrics are increasingly important to consider.
4. Access to basic human needs
For many, GDP growth means little if basic needs like food, shelter, healthcare, and education are not met.
The UN Human Development Index adds health, education, and living standards into its ranking of countries.
While a strong, growing economy is important, GDP alone should not be the only measure of a nation's well-being or progress. A variety of alternative indicators provide a more holistic assessment of sustainable development, equity, health, education, environment, and happiness.
As I wrap up here, I hope this newsletter has given you some food for thought on the implications of perpetual economic growth. At some point, we have to find a balance between growing our economy and protecting our planet.
Our obsession with more, bigger, better, and faster is coming at a huge cost.