WE ARE MOVING TOWARD A NEW KIND OF GROWTH

(From Tor Dahl & Associates - www.tordahl.com )


The industrial revolution started with James Watt's invention of a
commercially viable steam engine in 1776.

Over the roughly one million years of human development, the industrial
age constitutes only 233 years. Were we to force that time span into 24
hours, we would only have been industrialized for 20 seconds.

In nature, it seems that everything either grows or dies. But nature is
not simple. Farmers know that for a field to regenerate, it must be
allowed to fallow. For the farmer, fallowing forsakes current income in
order to produce higher future yields. That is actually a definition of
investment. The problem is that we confuse no-growth fallowing with lack
of progress - because continuous growth has also become synonymous with
progress in the public mind.

But much happens during fallowing. Farmers plow the ground so that weeds
can be brought to the surface and removed and the soil structure
improved so that it can better absorb water and nutrients. Earthworms
enrich the soil, microorganisms flourish, and when the fallow field is
planted again, rising yields more than compensate for the pause.

For 235 years, we have harvested more from the Earth than we did over
the entire period prior to the industrial revolution. We have learned
some important lessons from that experience:

1. Not all growth is good for us.

There used to be abundant water, abundant breathable air, abundant
fisheries, and abundant energy for our daily needs. New scarcities have
emerged relating to groundwater, fossil fuels, world fisheries and
recently, world harvests. And in many cities, breathable air is still
lacking.

2. New scarcities emerged because we have been consuming beyond our
means.

Starting in 1973 growth in wages fell below our growth in consumption.
Household debt between 1973 and today increased 13 times, government's
debt increased 20 times, but wages grew by only 1.86 times. We became
overextended, and the only way to finance the debt was by hoping for
continual increases in the prices of the assets that we had acquired at
a time when we thought we could afford them. The private savings rate
turned negative in 2005. Asset prices entered a free fall in 2007:
Prices of housing, stocks and commodities all dropped dramatically.

3. The economy was like a field that had been exploited without
pause. To meet our needs, we even consumed part of the seed corn: What
we should have invested, we consumed.

A real field is restored through fallowing. So is the real economy.
The pause that is now imposed on us forces the regeneration that is
needed.

How does a real economy fallow?

We see it all around us: People cook at home instead of eating out.
People are going to the library again. People are staying home rather
than vacationing in distant and expensive places. People are repairing
their shoes, mending their clothing, remodeling their homes, going for
walks, shopping at local farmers' markets, attending school at night,
staying healthy, postponing cosmetic surgery - maybe canceling it
altogether.

But does not all this make us poorer?

No. The Gross National Product is a poor measure of our wealth. The
early economists measured our wealth in satisfaction, and satisfaction
in the U.S. peaked in the fifties. Beyond the necessities of food,
clothing, shelter, education and health, satisfaction does not increase
with additional wealth accumulation. In fact, our current stress and
insecurities largely stem from the very possessions we accumulated at a
time when we lived beyond our means.

What is the New Growth referred to in the headline?

It will be a shift of focus from investing to meet human needs rather
than human wants.

There is no limit to human wants. Human needs, however, signal when
they are met. Meeting these needs often doesn't cost any money.

So - what are the human needs that also increase human capital? How can
we improve our yield of life satisfaction by forsaking excessive
consumption?

The first priority is to increase our ability to contribute both to the
satisfaction of others and to that of ourselves. This could happen
through serving as volunteers in organizations we support, learning new
skills, teaching others the skills we have, and helping people in need.

Then, take care of our own health so that we do not become a burden to
others: A healthy diet, long walks, attending to weight and blood
pressure, and dropping unhealthy habits would all do wonders for our
health.

Keep in mind that the eternal scarcities are time, space and human
interaction. An economist's advice to you would be to allocate your time
so that it maximizes satisfaction with life, organize your space so it
is not an obstacle to what you need to live, and be with people who make
you happy.

None of this is measured and included in the GDP. We have only the
vaguest idea of how much human capital we add to our collective wealth
each year.

But we know it when we are investing in our own human capital.

We know it, because we see how we can contribute more, how we can help
more, and how we can build a richer community life.

One day some bright scientist will find a good way of measuring our
increased capacity, our increased human capital, and make it visible to
all.

In the meantime, let the economy fallow for a while. Let us bring back
the sense of security of living within our means. For those who may be
laid off for awhile: Rethink what you most would like to do on this
Earth. Then start it. You will find a way. And for all the rest:
Find out how you can help!

During World War II, Norwegians were healthier than ever. They could
not buy tobacco, and sugar was in short supply. Refined flour was
severely rationed. But the ocean teemed with fish, vegetable gardens
flourished on city lots, and people picked fruit and berries to preserve
them for the long winters.

We certainly had become poorer measured in money. But I cannot recall a
time when the community was more united, friendships and will to
sacrifice were stronger, and ingenuity in making do with what we had was
more prevalent.

Now Norway is one of the richest countries in the world in per capita
income. Norway also has no government debt and owns the third largest
sovereign fund in the world. What could they work on now in that
beautiful and well-run country? Well, Norway ranks No.27 in freedom,
No.9 in safety, No.12 in justice, No.13 in competitiveness, and No.19 in
happiness compared to other nations.

It is a challenging agenda to make every citizen freer, safer, more
justly treated, more competitive, and happier. Economists can estimate
the wealth increase that will follow from moving forward all these
areas, except maybe happiness.

Happiness is elusive. It is summoned by reaching out rather than
turning inward. What we do for others is more strongly satisfying than
what we do for ourselves. From an evolutionary perspective, that is
what helps us survive as a species - whether it is barn raising on the
North Dakota prairie or fighting disease in Africa.

In our final hours we are not likely to focus on our possessions - we
shall probably think about what made our lives richer and more
fulfilling. We shall remember those moments when we experienced what
Thomas Hood described as 'a happiness that made the heart afraid'. We
shall visit memories of both happiness and sorrow, both victories and
defeats, and we might ponder how we could have lived an even better
life.

But if we have learned, and grown, and loved, and contributed, I know
the feeling we would all have: What a splendid ride! What a glorious
life!

But why did life put us through all these tests before we had learned
life's lessons? And could we not have learned those lessons before we
faced the tests?

I think we could have. That is precisely what would have changed our
lives, and the world, for the better.

How about acting on life's lessons now? Before it is too late?

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