Can Economic Growth Ever Be Green? Suggestions for a Post-Growth Malta

The stakes are too high to simply carry on with the ‘growth at all costs’ mantra. It is time to implement alternatives. Let us see what post-growth could look like.

by Abigail Muscat

Collage by Isles of the Left

 

When Simon Kuznets developed the modern concept of the Gross Domestic Product (GDP), he warned against its use as a measure of welfare. Yet since the 1940s, the use of the GDP as a measure of a country’s success has become ubiquitous.

There are multiple reasons why the measure ought to be questioned.

 

Can Growth Ever Be Green?

The first reason is that GDP acts more as a rule of thumb, rather than a measure of whether a country’s citizens have a good quality of life. The second reason is that the concept is predicated on endless economic growth: every year we need to buy and sell more goods and services than the previous one. Simultaneously, we are witnessing how anthropogenic activity has changed the planet. Daily, we are bombarded with news on environmental degradation—from climate change, to declining biodiversity, to soil depletion.

In response to these warnings, EU policymakers have turned to concepts such as ‘green growth’ or the ‘green economy’, ‘circular economy’, and the ‘bioeconomy’.

While each concept implies a different approach, all of them are based on the idea of using resources efficiently while continuing to grow and create jobs. In practice, it means that while we continue to consume more goods and services, environmental impacts should decrease. This process is called ‘decoupling’, and our policymakers envision it as the primary step that would solve all our environmental woes.

However, is this based on evidence or wishful thinking?

The research indicates that although relative decoupling can occur—by using resources more efficiently to produce goods—absolute decoupling is difficult, if not impossible. Even if resources are used more carefully, we would be still consuming more products, and they—be it a new phone or an electric car—require resources to be made. Also, gains in energy efficiency are often accompanied by an increase in demand for its use (‘rebound effect’). And if such increase is large enough, it can even offset any gains made through increased energy efficiency.

 

Why Does This Matter?

Currently, the uptake of natural resources (often called the ecological footprint) is outpacing the time it would take the Earth to regenerate those resources.

The Global Footprint Network has been annually measuring the ‘World Overshoot Day’ for decades, and has found out that our demands have been exceeding the Earth’s capacity to replenish its resources. Over time, World Overshoot Day has been arriving earlier and earlier. In 2018, it fell on August 1, meaning that we’ve used one year’s worth of natural resources in 7 months.

 

By overstepping the biophysical limits of our planet, we are eroding the life support system that keeps us humans (and all the other species on the spaceship Earth) alive. Researchers have tried to define these biophysical limits by setting ‘planetary boundaries’, over which we cannot cross if we are to continue living and thriving as a species for generations to come. However, we have already overstepped some of them.

 

Solutions?

The sensible solution to this pile of dire issues must include moving away from economic growth as a social objective. This means that the economy ought to shift towards multiple priorities, such as human flourishing and welfare within ecological limits.

There are, however, a few concerns. One of them is that post-growth will translate in loss of jobs. The key reason behind the seeming importance of the growth narrative is that politicians have been presenting it as the only way to create more employment opportunities. In fact, the provision of jobs lies at the heart of new EU policy: it is the ultimate justification for the creation of new sectors and products, irrelevant of whether these products are beneficial to society or increase the overall welfare.

There could be several ways out of the degrowth-vs-jobs conundrum. The list below is by no means exhaustive or perfect, but it could indicate the directions where serious discussions about a post-growth society should gravitate to and the issues they are meant to tackle.

One such pathway is the provision of a Universal Basic Income (UBI). This would be a small salary for all (or a large group of) citizens which acts as a safety net and allows people to invest in themselves. There are many advantages to providing a UBI: it would encourage people to invest more in their education and take on entrepreneurial ventures more than without a UBI. Of course, this approach has its disadvantages: it would allow private companies to treat employees as contract workers and disincentivise them from providing good employment conditions.

Another way to tackle the jobs issue in the post-growth era is the job guarantee, where the government provides a wage and a benefits package for employees who have not found work in the private sector. It is important to note that the private sector would not be abolished, but rather the government would be acting as a backup employer. There are a few arguments, beyond the ecological case, in favour of such a system. For one, the job guarantee could put an end to the bullshit jobs phenomenon. Freed from the constraint of profit, the job guarantee can provide jobs that are not just sustainable but more personally fulfilling.

 

Another aspect to consider is that the jobs provision needs to be compatible with social and ecological targets, such as caring for children and the elderly, as well as restoring habitats and nature reserves. This would also increase societal respect and value of ‘care work’—looking after children, elderly people and people with disabilities—which largely goes underpaid and undervalued. Some economists have argued that more attention needs to be paid to the so-called ‘care economy’, if we are to cope with ageing populations, ensure gender equality and provide real work-life balance.

Thus, the care economy is a perfect candidate for a job guarantee scenario because it does not lend itself to the market logic of increased productivity and growth: the quality of care or education is rarely improved by increasing the number of patients or students under the supervision of one professional. The same is true for the cultural sector—more paintings, more sculpture and more music does not necessarily result in more socially meaningful engagement with the arts. The pursuit of care and meaningful entertainment is vital. Even though we are becoming increasingly busier and poorer, we still seek care and comforting leisure activities.

One more reason in favour of the job guarantee option is that it could further encourage the private sector to improve its working conditions. If the government guarantees a supply of fulfilling jobs with better work-life balance and shorter workweeks, the private sector would inevitably follow suit by offering even more attractive conditions to lure in workers to the sector. At the very least, it will have to match any conditions that the government is setting.

 

Can It Work in Malta?

Can all of this work in Malta? While the decisive macroeconomic shifts have to take place at the European level, focusing more on sustainability than on growth would certainly be an advantage for an island with little natural resources.

Malta’s biophysical limits are more obvious than those of larger countries. For example, we have limited water and land supply; and we are dependent on produce from other countries. It means that, unless the economy intends to exceed these limits at some point, it would definitely have to stop growing or become totally decoupled from resource use (which, as we have argued, is difficult). Our current strategy is import, but if more countries introduce carbon tax to encourage eco-friendlier and more efficient resource use, this strategy of relying on imported produce might not work out for us in the long-term.

To make itself compatible with post-growth, Malta could consider a few more strategies besides the ones mentioned above.

Set a No Net Land Take Target

The EU has set a target of no net land take by 2050. This means that no virgin patches of land are altered in their use. Malta could think of such a target on a shorter timeline, if there is space to be left for nature, flood control and agriculture.

Use the Current Stock of Buildings and Halt Increase

Set high taxes on abandoned (or empty) and second properties. The collected revenue would then be reinvested into affordable housing. This will also partially solve the problem of exorbitant housing costs. Vancouver successfully implemented such a tax system. Furthermore, create incentives for new buildings to incorporate traditional and heritage design elements into architecture.

Tax Reform

The tax system needs to slowly be oriented more towards the use of energy and resources and less towards work and incomes. Taxation on low incomes can be reduced or replaced with carbon taxes. As Malta is a more services-reliant economy than a resource-based one, it could push for such a reformed tax system at the European level.

Re-orient Investment

Reduce public support and investment of polluting sectors and reorient this towards forms of cleaner production. Use saved funds to invest in rural and urban spaces, public transport, cycle hire schemes etc. Cap or halt the growth of private transport as transport already represents more than 50% of the country’s energy usage.

Certainly, these tasks could seem a tall order, but the stakes are too high to simply carry on with the ‘growth at all costs’ mantra.