So, Dick Smith, the Australian Entrepreneur who, amongst other things, once flew his Bell Helicopter to the North Pole over Canada’s great white North, is in the news again. Its over a dispute with News Corp and media coverage for a prize that he has funded called the Wilberforce Award (http://dicksmithpopulation.com/wilberforce-award/), which will award $1 million to go to a young person who can communicate clearly to people around the world that we can’t always have growth. According to Dick Smith “Everyone knows that perpetual growth is not possible. You can’t have perpetual growth in a finite world.”
TH wasn’t aware of his prize until reading about his spat with Murdoch, and it got him thinking. A million bucks, that’s a lot of cash and, since the 2 year old award is still unclaimed it’s tempting to start writing here and now. If you want to have a go, feel free to put it in the comments section below and TH will be sure to send it on. But the trouble is that most economists would not agree with Dick on this one.
Great economists have shown the conditions under which perpetual growth is possible. The theory behind this finding is called endogenous growth theory (http://en.wikipedia.org/wiki/Endogenous_growth_theory). The ideas is simply that growth comes from the ability of humans to come up with ways of doing more with less over time – that is, to think up new ideas that, for example, allow us to produce more electricity with less resources (including less damage to the environment, for example). Of course, some basic conditions must be satisfied, enough sunlight, enough land, enough water. But with a given amount of these, it can be shown that a given population could enjoy perpetual growth. The technical reason behind the result is that while some resources are scare and cannot be jointly shared or reused without diminishing their utility, others, like good ideas, for example, can. For instance, if I come up with a way of doubling the amount of electricity that could be generated from a wind turbine, that idea could be used by anyone from now on and the economic benefits widely shared.
So TH reckons that DS is barking up the wrong tree. What would be more important is to ask what is preventing us from achieving sustainable perpetual growth. TH is sympathetic with the view that abuse of the environment could well be one of those factors. In fact, TH worries that it might be much worse than the failure to grow. For example, economists will often point to the collapse of civilisation on Easter Island as a good example of how destruction of the environment can have catastrophic consequences. See this paper by James Brander and Scott Taylor (www.le.ac.uk/ec/teach/ec7088/documents/brander_talyor.pdf). In that world, you can forget even stagnant growth – it is a downward spiral into starvation and death (or perhaps heat exhaustion, drought, dessert and then death, who knows).
So in TH’s most humble opinion, there are much more important public policy questions that need to be answered rather than trying to convince people of a view that is understandable but wrong. How do we resolve major environmental problems that could have devastating effects?
Some environmental problems seem pretty straightforward. For example, resolving the Murray Darling water crisis doesn’t seem too hard – the problem is fairly well understood, as are the essential elements of a solution, but so far Australian policy makers have failed to reach a good solution that maximises the overall benefits to Australians (that is, it is a public policy failure). Other natural resource issues, such as climate change and global warming are massively more difficult to solve, but much more important.
So TH is offering the Moai award (http://en.wikipedia.org/wiki/Moai ), which he hopes Dick Smith will take over and fund, but until then, the award is fame on the Specie-Flow blog (nothing more – no money, sorry). Young minds might start with the works of Elinor Ostrom, winner of the 2009 Nobel Prize in Economics for her work on such matters. http://en.wikipedia.org/wiki/Elinor_Ostrom (TH is very upset to read of her recent passing).
These are pressing issues – that need the benevolence of deep pockets to solve.