Thursday 22 January 2015

Zero-growth economy - Not so batshit crazy

Today the media is rightly panning the Green manifesto as completely crazy. But it has two qualities that are missing from all the other parties. Ambition and radicalism. I shudder to imagine what a green utopia would look like, but we'd all die of starvation before we ever reached it. But with such blue-sky thinking, one should always pause to examine if there isn't some freakish genius in their ideas. What caught my eye is the notion of a zero-growth economy.

At first it seems like an absurd notion that we should seek to stop progressing. But pause for a moment to consider what the word growth actually means. It's just a notional figure of GDP. We are in a perpetual rat race to make one years growth bigger than the last. By making busy work and non-jobbery both public and corporate we add to the numbers on the screens, but does it actually make us more productive for it?

Sitting in a traffic jam for two hours getting into London, buying petrol and stopping for a pasty goes onto that growth figure. And so does the number of journeys made on the tube. Also on that figure goes megawatts of energy produced, new power stations, generators, new cars and new houses built. But does that actually suggest our economy has grown in any meaningful sense that improves our lives?

Arguably not at all. It's innovation that drives life enhancing technology - and not all innovation necessarily means making more things. It could be that there are creative ways of making fewer things. Which indeed there are.

One of the most unnecessarily controversial regulatory mechanisms in the energy industry is the practice of peak-shaving. This is the means by which large users of energy can be paid to shut down. This only happens maybe two weeks out of the year, but in tandem with other regulatory measures which demand more energy efficient kettles etc, this removes the need to build a new power station.  It means cheaper bills for industry and for a select few big energy users, a chance to be paid for doing nothing.

Left to their own devices, kettle companies would continue to sell us the same product they always have, which has not changed in any significant way for decades. But if forced to conform to standards which increased their lifespan and efficiency, the price of the kettle may go up, but the longer term reduction in energy consumption, with all the externalities associated with producing more energy (ie land use, transmission lines, pylons, pollution, health) can only be beneficial - along with whatever genius innovation the kettle company comes up with more more efficient heating filaments.

The same can be said of insulation. In a year more heat energy escapes from the chimneys of power stations than is used to heat all of our homes. This makes no sense. So then a regulatory intervention that requires new housing developments to use Combined Heat and Power (CHP) not only reduces the need for transmission lines, it also reduces the need for high capacity power stations.

Then look at our working practices. How many of the millions of journeys made each day are really necessary? With broadband internet now capable of quite amazing speeds, we could conceivably bribe business with tax cuts to encourage every member of staff to work one day a week at home (where feasible). The result is up to a 20% reduction in journeys, which could mean a similar reduction in office sizes, which brings down overheads for businesses, and infrastructure upkeep costs.

Congestion is also one of the most damaging and destructive problems London faces. I also can't imagine a less productive or enjoyable way to spend time. Even with the best will in the world, London can't keep pace with the traffic demands placed on it. So why not whack up the congestion charge?

It is taxi prices which have ultimately seen the growth of Uber. A congestion charge hike might be just the ticket to spur on two important developments - car hire systems in the shade of Boris Bikes (reducing the need to buy cars thus leading to more "negative growth"), and more importantly, an exodus from London to the other cities which are more car friendly - an instant boost to regional economies without even lifting a finger - and people might then learn that life is possible outside London, that doing business is cheaper (with less competition) - and you don't have to de-clog soot in your nasal passages.

Of course, there are those with the libertarian streak who consider this all to be anathema. But what liberty is a daily commute stuck in traffic or in a tube train packed in tight like a slaveship, with only marginally better sanitation? What liberty is there in sitting in a tube lit office doing a corporate non-job you could do in your pyjamas? The fact is that markets are not the only way to drive progress, nor are they necessarily drivers of innovation - and nor does a laissez faire approach necessarily improve life quality.

In fact, rather than being batshit crazy, I think it's mega-batshit to cram all of the nation into one large overburdened city, doing a twice daily commute in the pursuit of some fictional measure of wealth. GDP is not wealth, nor is growth. Wealth comprises of tangible things - and while we may notionally be earning more, what use is earning more (driving GDP growth) if the lions share goes on rail fares, rents, and home energy bills. We could already move toward free heating and home working. We could lead greener, leaner, happier lives with greater liberty without forever chasing GDP. It turns out you don't have to be an eco-loon to love innovation - and while you might scoff at Green Party fantasists, it's us hard nosed capitalists who are even bigger Luddites than they are. Sometimes less really is more.

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