Can The Economy Grow Forever
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Lesson Article
Understanding Exponential Growth: The Magic Gold Coin Analogy
Imagine stumbling upon a magical gold coin that doubles in number every 25 years. After 75 years, you’d have eight coins. Fast forward to 1,000 years, and you’d be a trillionaire. In a mere 4,600 years, the weight of your gold coins would surpass that of the observable universe. This phenomenon of periodic doubling is a perfect example of exponential growth.
While the idea of a real-life golden goose coin remains a fantasy, something almost as significant has been experiencing this kind of growth for the past two centuries: the global economy.
The Necessity of an Ever-Growing Economy
Many economists believe that a perpetually growing economy is essential for improving people’s lives. They argue that if the global economy were to stop growing, people would end up fighting over the fixed amount of value that exists, instead of working to generate new value. This leads to a critical question: is infinite growth possible on a finite planet?
Measuring Economic Growth
Economic growth is measured by tracking the total financial value of everything a country (or the world) produces and sells on the market. These products, which can range from meeting basic needs to improving our individual and collective quality of life, require resources to invent, build, or maintain.
Take a smartphone, for example. Its value stems from the aluminum, gallium, and silicon it contains, which require energy and resources to mine, purify, and turn into a phone. It’s also valuable because of the effort that went into designing the hardware and writing the software.
Growing the Economy: A Matter of Efficiency
So, how do we increase the total financial value of all things? One way is to produce more things. Another way is to invent new things. However, growing the economy requires resources and energy. And eventually, won’t we just run out?
Over the past 200 years, economies have become exponentially more efficient at producing value. If we, as a species, can continue to upgrade our economies to become even more efficient, we could theoretically generate more and more value using the same or fewer resources.
The Role of Technology in Economic Growth
The key to increasing efficiency lies in new technologies. However, new tech, while making things more efficient, can also generate new demand, which ends up using more resources.
While we’re not in immediate danger of running out of most resources, we face a much larger and more immediate problem: the global economy, especially those of rich countries, is driving climate change and destroying valuable natural environments on which we all depend.
The Debate: Infinite Growth vs. Post-Growth Economy
Economists are divided on the solution. Some believe that new ideas will fix most of these problems, arguing that human ingenuity has also increased exponentially and will rise to meet these challenges in ways we can’t predict.
Others argue for a complete reengineering of our economies. They advocate for a shift to a post-growth economy, where the focus is on improving what we really need, like renewable energy, healthcare, and public transportation.
Envisioning a Post-Growth Economy
In a post-growth economy, the assumption that the economy should grow is discarded. Instead, the focus is on improving essential services. This would require rich countries to guarantee living wages, reduce wealth and income inequality, and ensure universal access to public services, like healthcare.
However, this raises other questions: Who defines what’s necessary? How would we resolve the inevitable disagreements? Could we really do away with entire industries?
Conclusion: Balancing Economic Growth and Sustainability
The approach of “we’ll come up with new ideas to solve these problems” can seem as realistic as a magical gold coin. On the other hand, the “we have to change our economies fundamentally” approach can seem politically daunting, especially in rich countries.
Regardless of the approach, we must find a way to benefit everyone while also taking care of our planet. The challenge lies in striking a balance between economic growth and sustainability.
Discussion Questions
- What are your thoughts on the concept of infinite economic growth? Do you believe it is possible on a finite planet?
- How do you personally define economic growth and its importance in improving lives?
- What role do you think technology plays in both increasing efficiency and using more resources?
- Do you believe that human ingenuity and new ideas can solve the challenges posed by a growing global economy? Why or why not?
- What are your thoughts on the idea of shifting towards a post-growth economy focused on essential services? How do you think this would impact society?
- Who do you think should have the authority to define what is necessary in a post-growth economy? How do you envision resolving disagreements?
- What are some potential consequences of completely doing away with certain industries in a post-growth economy? How might this affect employment and society as a whole?
- How do you think we can strike a balance between economic growth and sustainability? What steps can individuals and governments take to achieve this?
Lesson Vocabulary
- Exponential growth – A rapid increase in the size or quantity of something, where the growth rate itself is constantly increasing. – The population of the city has been experiencing exponential growth, doubling every five years.
- Global economy – The interconnected economies of different countries, where goods, services, and capital flow across national borders. – The global economy was severely impacted by the financial crisis in 2008.
- Economic growth – An increase in the production of goods and services in an economy over a specific period of time. – The government’s policies have led to sustained economic growth for the past decade.
- Measuring economic growth – The process of quantifying the increase in the value of goods and services produced within an economy. – GDP (Gross Domestic Product) is commonly used as an indicator for measuring economic growth.
- Efficiency – The ability to accomplish a task with the least amount of time, effort, or resources. – The new manufacturing process has significantly improved efficiency, reducing production time by 50%.
- Technology – Application of scientific knowledge and tools to create, modify, and utilize products, systems, and processes. – The advancements in technology have revolutionized the way we communicate and access information.
- Climate change – Long-term alteration in temperature and typical weather patterns in a place, usually caused by human activities. – The effects of climate change are evident in the increasing frequency and intensity of natural disasters.
- Post-growth economy – An economic system that prioritizes well-being and sustainability over constant economic growth. – Some environmentalists argue that we need to transition to a post-growth economy to address the challenges of climate change and resource depletion.
- Essential services – Basic services necessary for the functioning and well-being of a society, such as healthcare, education, and public utilities. – During the pandemic, essential services like healthcare workers and grocery store employees played a crucial role in supporting the community.
- Sustainability – The ability to maintain or improve standards of living without depleting or harming natural resources or the environment. – The company’s commitment to sustainability is reflected in its use of renewable energy sources and eco-friendly practices.
