So I was reading one of the Greens newsletters this week which left me feeling extremely confused about their economics. My criticism is not because I think Dr Norman is incompetent but rather that I think his commentary is in conflict with what I understood to be ‘sustainability’, an ethic that the Green’s advocate and that in fact the party was founded on.
Dr Norman this week criticised the government for a decline of 0.6% GDP in the tradable sector of the economy. He also stated:
“A shrinking tradable sector combined with a strongly growing non-tradable sector means only one thing – increased borrowing and a ballooning current account deficit”.
I’m curious, wouldn’t a reduction in the tradable economy sit well with Green politics. For instance, he mentions that ‘manufacturing is a key sector for driving high, value-added exports and creating well-paid jobs’ yet the reduction in this sector would surely be an environmental advantage? I mean, less carbon emissions, smaller ecological footprint, ability to restore the now unused land to forest or other environmentally friendly business that would contribute to reducing carbon emissions e.g. industrial hemp farms for various products such as paper, building products, fabric and so on?
My question is: Shouldn’t the Green’s be advocating for reductions in exports and imports and promoting wider support for local trading – which could also create well paid jobs by enabling local business owners to employ local workers as well as minimise environmental impact? I’m not saying here that there is no room for exports in a sustainability framework, only that continued steady growth of our tradable sector is unsustainable and therefore the outcome will be no different to that of the neo-liberalism the Green’s have openly advocated against.
Dr Albert A.Bartlett states that ‘the greatest shortcoming of the human race is our inability to understand the exponential function’. The exponential function is a tool used to measure steady growth patterns, such as Gross Domestic Product (GDP). The benefit of understanding exponential growth is to inform ourselves of how long it will take for steady growth to double; using a simple calculation and this gives us the ability to interpret what that level of growth will mean for our society. Dr Bartlett focuses on the use of exponential growth in relation to population as this is where he sees the function as being most important due to its understatement at both the local and global level. My purpose is to show why the Greens focus on economic growth is not in line with their principles of sustainability – the very value that gave birth to the party.
GDP is often used to indicate the standard of living in a country and so it follows that the more economic growth the better the standard of living. But the exponential function can dispel this myth.
Exponential growth is measured by a constant (fixed fraction) over a fixed period of time. In 2012, NZ’s GDP was recorded as 2.5%. Dr Bartlett indicates that if it takes a fixed length of time to grow, in NZ’s case 2.5% then it follows that it takes a longer fixed period of time to grow 100%. This longer fixed period of time is called the doubling time. The doubling time (T2) is calculated as follows: T2 = 70/(% growth per unit) = time.
What we can say is that if NZ’s economy continues to grow at 2.5% then in 28 years our GDP will double to 5% (Calculation: T2 = 70/2.5 = 28). This may not seem so bad, but consider the growth rates for the 28 years following each of the preceding periods:
- 2012 = 2.5%
- 2040 = 5%
- 2068 = 10%
- 2096 = 20%
As Dr Bartlett points out, we need to understand that “the growth in any doubling time is greater than the total of all the preceding growth and that modest growth rates give us enormous growth in modest periods of time”.
My conclusion is that if Dr Norman is concerned about sustainability then criticising the government for the decline in growth in the tradable sector is not particularly consistent with the principle of sustainability. If modest amounts of growth in that sector will give us enormous growth in a modest period of time then this will require major depletion of natural resources and massive increases in waste to sustain growth at those levels. I wonder if perhaps Dr Norman should instead be encouraging local trading (within NZ) to improve job prospects and the prospects of local business owners and support the reduction in exports rather than advocating a position that has an apparent conflict with Green Party values.