I’ll start out with a question, can constant economic growth be sustainable? By the end of this post I may have an answer, more than likely though, I’ll just have more questions.
The majority of modern economies around the world rely on one thing, growth. If the economy isn’t growing it’s either failing or in a recession. Central to that growth is consumption, in particular, household consumption. In Australia, household consumption makes up roughly 60% of Gross Domestic Product (GDP), in the US it’s around 70%.
To be fair a lot gets bundled up into household consumption. In fact most things that households typically spend money on, like food, utilities, education, healthcare, cars, entertainment, housing, retail spending and other services. But does household consumption need to be such a big driver of economic growth? What if everyone stopped spending as much or stopped spending on certain things? Well we’re already starting to see the impact of this in Australia.
For the last 10 years, house prices have been increasing by huge amounts, largely fueled by low interest rates, somewhat shoddy lending practices and foreign investors. Those houses prices have been deflating for the last 18 months or so and it’s impacting other areas of the economy. People are spending less, people are buying and selling houses less and housing construction is unwinding, which could have an impact on employment figures. It’s now looking likely there’s an economic downturn on the horizon for Australia. I could be wrong though, the government of the day may work out a way to kick that can down the road a little further.
Aside from household consumption, Australia has only really relied on a few other things over the past 20 years for economic growth, exporting coal and iron ore, housing construction and buying and selling existing housing from each other. None of these things are particularly sustainable, although there will always be a need for housing, I just don’t see the value in including house price increases in headline GDP figures. A house should primarily be a place for people to live, not an investment vehicle to grow wealth.
To be clear, I don’t think minimalism is the answer to having sustainable economic growth, a lot of other things need to change, but it’s not a bad place to start. Minimalists tend to spend money more deliberately, instead of buying five cheap shirts made in Bangladesh, they may buy one more expensive shirt made locally. This more deliberate spending ideal has the potential to change economies.
So back to the main question. Can constant economic growth be sustainable? Personally I think it depends. The way we’re currently tracking, no. There’s a lot of unsustainable industries making money all in the name of economic growth. But what’s the alternative? How about investing in more renewables and dialing back the burning of fossil fuels, or not relying on mass animal agriculture so much or not growing large water intensive crops in places where there is very little water, like growing cotton in Central Australia!
I do want to add that this post is largely my opinion with a little bit of fact sprinkled in, however I personally think waiting for governments or large corporations to do the right thing in terms of sustainability is a waste of time. But as individuals we can have a big impact. I’m not saying everyone needs to become a minimalist or a vegan, but just be a little more conscious and deliberate with how you spend your money. Support governments that make sustainability a key focus and support local producers.