Economic growth can be about better – not more


Why do we use no more materials today than a century ago? Modern economic growth is about better rather than more

Gloomy commentators have always argued that scarce resources will halt economic growth and their prognostications have always been wrong. Human ingenuity has found new resources and substitutes for old ones – oil and gas replaced coal, the artificial fixation of nitrogen solved the scarcity of bird droppings for use as fertiliser, and plastics substituted for pretty much everything.

But economic growth in affluent societies does not mean an increased claim on resources because growth is now mostly about better stuff, not more stuff. Alan Greenspan, the former Federal Reserve chairman, has been reported as saying that America’s gross domestic product weighs no more than it did a century ago. It is hard to see how even the great sage could know this, but easy to see what he means. At the beginning of the 20th century big companies such as US Steel, Pullman and International Harvester made goods you could stand on or sit in. Their counterparts today are Microsoft, Pfizer and Coca-Cola, whose products fit in your pocket.

At Wuppertal in Germany, a research group documents our use of the three main kinds of materials with Teutonic thoroughness. Biomass – the product of living and growing things – feeds us, clothes us and furnishes our homes. We eat it and we wear it out. Fuels warm us and power our cars and become atmospheric gases. Metals and minerals make our manufactured goods and our buildings and are then dumped. The quantities grown or mined in Europe can easily be established. But we import not only oil and steel but also items made using oil or steel. They leave a trail of debris that leads back to the mine and the forest. While it makes sense to count this waste, the consequences are strange. A gold ring may weigh only five grams but, since ore contains very little gold, that ring may represent several tonnes of stuff. Precious metals and minerals account for a large proportion of our consumption of stuff.

We use a lot of stuff, especially in construction. The average European gets through 50 tonnes a year. But the amount is not increasing: Mr Greenspan seems to have been right. And consumption of stuff has little relationship to income. There are wide variations across Europe, and the continent as a whole does not use much more stuff per head than China. And – of course – per capita consumption of stuff in the US is higher than elsewhere. Richer Europeans may like better, but richer Americans like more.

The National Food Survey asks British households to record what they eat and nutritionists analyse the content. We are mostly doing the right things. Although food expenditure has increased over the past 30 years, our average calorie intake has fallen by almost 20 per cent. We eat less dairy fat and red meat, more fresh fruit; more greens and fewer starchy vegetables. The main blackspots are the rise in soft drinks and in “other”, which probably includes a lot of junk food. Obesity has increased but in a rich country obesity is characteristic of poverty not affluence. When everyone has enough to eat, rich people do not eat more, but better.

So with many other commodities. When most people have a car, you display wealth with a better car. Young people may fill their wardrobes, but you can wear only one set of clothes at a time. Richer adults look for style and durability.

The German researcher who looks at a gold ring and sees a tonne of ore is making an important point about hidden costs, but frames the argument badly. There is something odd about adding together the weight of a flock of sheep, the gallonage of an oil tanker and the mass of building cement and expressing the result in tonnes; a similar calculation of the resource content of a grilled lamb chop is odder still. Economists emphasise prices not because they equate the material with the valuable, but because they do not. There is no better common unit than money for achieving commensurability because, in a rich world, the quality of our experiences is usually more important to our welfare than their quantity. That is true whether the perspective is economic or environmental.

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