‘Graafflation’ was chosen as word of the year this week. The term for mega-profits of companies in combination with high inflation was coined this spring by the FNV trade union. Reason for some media this week to join FNV in philosophizing about economics and society. Bee Speech makers on NPO Radio 1, for example. Can we cope with economic contraction, was the question to Vice-Chairman Kitty de Jong.
“The resources are there, it is a matter of redistribution,” said De Jong. “It is about broad prosperity, which does not require growth but redistribution. Always working more is not the solution.” It went on like this for a while. Advocating for economic contraction has been trendy lately. This would make all kinds of social problems disappear automatically. But I have never been able to make sense of the substantiation – if there is any.
Like every era, it also has our problems. Some, like climate change, used to be less significant. But most problems used to be much bigger. Nowadays, women rarely die in childbirth, serious diseases have been greatly reduced, and hunger has virtually disappeared in our country. Our income differences are much smaller than before, and smaller than in most EU countries, while we work fewer hours than ever. All possible thanks to economic growth.
The ‘degrowth believers‘, the shrinkage ideologues, look at economic growth differently. Economic growth has not led to food, job, energy and housing security for everyone. So apparently the evil lies in economic growth itself, is their reasoning. Climate change is often the key argument. Less CO2 emissions are only possible if we shrink economically.
But who will pay for the energy transition costing hundreds of billions if our economy shrinks? How are we going to build those 1 million houses by 2030? Who will pay for the extra defense expenditure for Ukraine, which also protects us against Russian tyranny? How do we keep the welfare state somewhat intact in the face of a rapid aging population? And the most important question I have about this hype: who says that growth necessarily leads to inequality? I personally would not have liked to have been born on the wrong side of the line in the Middle Ages, which was the fate of at least 90 percent of humanity at the time.
The problem that the shrinkage ideologues point out is of course real. We all emit too much CO2 there are far too few homes, too many nettles grow in nature reserves instead of heather and sundew and the world will not be any safer in 2023. But the solution they propose is baseless and even dangerous. Less economic growth hinders solutions and will actually worsen some problems. The consequences of an aging population, for example – permanent labor shortages and medical costs that are rising explosively – can only be solved through accelerated productivity growth.
Of course: we need to fly less, we need to get rid of the throw-away society and eat less meat. But there are very different, better methods to achieve this. Awareness, cultural change, legislation and significant investment in (new) technology. And if that sounds too vague: CO2-pricing, sugar and meat taxes, improvements to batteries and solar panels, cheaper and safer nuclear power stations, robots in healthcare, catering and logistics, and I could go on and on. Improving the world and solving our problems does not have to lead to radical socialism or limitarianism (the idea that wealth should be limited). Let’s not make that mistake again.
Today we live on this planet with 8 billion people, compared to less than 1 billion in 1800. These people must all have food to eat and a decent life. There is no way we can do that if we switch back to the economy of two centuries ago. There is only one way to ensure social security for 9 billion people: more economic growth.
Aylin Bilic is a headhunter and publicist.
Reading list