At a certain point our society’s leaders realized that in order to continue growing the economy we would have to turn consumers to debt. This is simply the next step in a series of events lead by our growth addiction. You see in order to get bigger the economy needs consumers to consume. However, you can only consume so much before you run out of money – even with raises there is an ultimate limit.
Our growth economy eventually demands more than you can afford. The solution was to simple relax the restrictions on credit and encourage consumers to buy more than they could afford now, assuming that could afford it later. (up until recently these low restrictions were mostly ignored, though not much has really changed)
But “later” comes with even more demands and less money because you’re now making payments on the stuff you bought in the past. This leads to more lending, spending, and indebtedness. I would propose that this equates to a false growth of the economy, and a false sense of wealth to the consumer.
So riddle me this batman, what has economic growth done for you lately?
Happiness is not purchased.
There might just be a secret to happiness out there in the blue yonder that can be bought with greenbacks, though history and common sense tell us otherwise. Why do we continue to pursue our consumption-driven lifestyles? Why can’t we decouple?
Simply put: We need it. Psychologically speaking we attach ourselves to material goods. And with good cause in some cases because we physically need material goods to provide shelter, security, food, et cetera. There is even truth in a certain level of material wealth providing happiness to the owner. This rule has proven to be limited in scale, however, as your marginal increase in happiness diminishes with continued material wealth. In layman’s terms: your happiness is improved less and less with more and more stuff.
To make matters worse in this constrained, global economy, consuming more and more in affluent nations means less and less for someone else who might only need a little bit to make a large positive impact. They only need some food and would be immensely happy, but you want a new TV to gain a slight, momentary improvement in your well being. Surely the material distribution of wealth should be guided to improve those who will have a larger marginal increase in well being over those who will barely notice it.
We need to find that sweet spot and somehow break the cycle of seeking happiness primarily through consumption. Retail therapy has its place, perhaps, but the entire world cannot live with excessive levels of such an expensive therapeutic. Yoga is cheaper and healthier, for instance. At a certain point we need less TVs and more yoga, less disposable cups and more memorable life experiences. We need some inner growth (development) to take over when our material growth fails.
Breaking the Cycle
The SDC’s report Prosperity Without Growth has some very insightful things to say about breaking the growth cycle. A key step is at first recognizing that material wealth has it’s limits:
“Prosperity is no synonymous with material wealth. And the requirements of prosperity go beyond material sustenance. Rather, prosperity has to do with our ability to flourish: physically, psychologically and socially. Beyond sheer subsistence or survival, prosperity hangs on our ability to participate meaningfully in the life of society.”
Where do we go from here? You know the answer. The bigger issue at hand: is how do we get there? Prosperity Without Growth offers some proof that it is possible to transition to a low-growth and eventually no-growth economy in a sustainable, secure fashion. The report also offers policy guidelines to get us there. The next report to read is The Great Transition by the new economics foundation, which just came out.