Economic growth for its own sake is misdirected

Colin AlexanderTwo centuries ago, clergyman Thomas Malthus expounded the proposition that population always outruns food supply. He said population increases geometrically while food supply increases, at best, only arithmetically.

Half a century ago the Green Revolution, enabling massive increases in agricultural production, allayed such fears. Arguably, however, it will be impossible to repeat that revolution.

Even if the world’s population levelled off, there are reasons to question the reliability of the food supply.

The first is that rising living standards connote more consumption of fish and meat. The limit to productive capacity of the oceans is at hand and, by a conservative estimate, some five pounds of feed produce one pound of meat.

Another problem is that current farming practices are degrading arable land. Therefore, production requires unsustainably more chemical fertilizers. For example, Jared Diamond, a professor of geography at UCLA, says the sustainable population of Australia is just five million compared with the current 26 million.

In 1972, the Club of Rome’s The Limits to Growth argued that exponential depletion of resources must end eventually.

Critics thought that was exaggerated alarmism because we’ve always figured out how to meet new demands.

But beyond the impact of carbon dioxide on climate change, other limits loom. There’s only so much Amazonian rainforest to clear for growing soybeans, and the oceans can’t absorb an infinite amount of garbage and man-made pollutants. There are limits to the arable land to build on and to the sand for making concrete.

This leads me to the worldwide failure to address the foundational challenge. Who’s making all that carbon dioxide and consuming all those resources?

People! With fewer people, there would, axiomatically, be less pressure on the environment. It follows that birth control everywhere must accompany improving health care and increasing longevity.

A classic example of overpopulation is what caused the genocide in Rwanda. There had long been friction between Hutus and Tutsis. But tensions escalated because the increasing population of Hutus, mostly farmers, was running out of arable land.

So what does growth mean?

There are two partly overlapping kinds of growth: wealth generation and consumption. Wealth generation comes primarily from natural resources like agriculture, mining, forestry and energy production, as well as most manufacturing. The problem is that we reckon gross domestic product (GDP) by including everything from fixing broken windows to retailing goods made in China. But consumption needs wealth generation.

As a corollary, governments of all persuasions everywhere have failed to grasp why the gap between rich and poor is widening. The foundational causation is that the law of supply and demand impacts labour markets as it does every other marketable commodity. When labour is plentiful, wages are low and investors benefit disproportionately.

In China, as an extreme example, a seemingly inexhaustible supply of cheap labour has enabled the enrichment of billionaires.

Historically, surges in wage rates occurred after plagues decimated populations. The biggest surge occurred after the Black Death in Europe, between 1348 and 1352, halved the population. Scarcity of labour ended feudalism and raised wages. It induced immense improvements in productivity, through technological innovation, as well as by abandoning less profitable farmland and mines.

As an exception, the Industrial Revolution increased overall prosperity in parallel with huge population increases. However, there are limits to net societal benefits from economic growth or from technological innovation.

Real wages for Canadian and American middle classes have stagnated for decades. Worse, poverty statistics don’t show the distress arising from homelessness and insufficient housing. They don’t put a human face on the burgeoning underclass of unemployed and all-but-unemployable multigenerational welfare recipients.

Largely but by no means exclusively in Canada, they include Indigenous in remote settlements and urban slums. Distress shows up in suicide, substance abuse, violent crime, teenage pregnancy, health care costs, and law enforcement and incarceration.

Erroneously asserting that all growth is good, business owners, real estate developers and lawyers pay politicians to promote immigration. The supply of ever more willing labour has then kept wages low and enhanced returns on capital. But tax revenues spent to sustain the underclass constrain benefits for the middle class.

Canada has always relied on immigrants for jobs requiring advanced skills. Therefore, it wasn’t necessary to deliver sufficient education and skills training to the wider population of native-born citizens. It seemed easier and more economical to drain doctors, engineers and health-care workers from Third World countries that needed them.

For farming, meat-packing plants, and much of the hospitality and home care industries, Canada’s and America’s ultimate exploitation of cheap labour, and the corresponding marginalization of native-born citizens, has been employment of temporary foreign workers.

There would soon be a net national gain if the money paying marginalized citizens not to work went instead to enabling them for employment. Effective mentoring and temporary subsidies get the able-bodied unemployed out of the poverty trap and into the job market.

In any case, job losses from technological innovation will offset the decline in the labour force as the population ages, disproving the claimed need for immigration.

An unrecognized challenge arising from immigration is that a one per cent population increase requires significantly more than a one per cent increase in GDP to maintain the same level of prosperity for citizens already here.

And even one per cent growth has been barely happening. That’s because the cost of providing housing and infrastructure, and other support systems, is front-end loaded.

The Fraser Institute has long been estimating that recent immigrants receive tens of billions of dollars more in benefits annually than they pay in taxes. Therefore, this burden also constrains national prosperity. With other misdirection of tax revenues, it prevents necessary expenditures like the $40 billion needed for Toronto’s transit system.

Another problem is that population increase has been surpassing residential construction. The result has been exponentially rising house prices and rents – to the considerable advantage of existing homeowners or those involved in real estate. The unbalanced market induces homelessness and the insufficiency of decent and affordable housing.

The remedies include constraining immigration and enabling the able-bodied marginalized with marketable skills for the high-tech economy. Educated and skilled people in rewarding jobs could then pay for their own homes.

The wealth that Canada and the United States could generate with better stewardship would enable foreign investment – not charity! – where it’s needed by more people. That could help to stem migration out of poor and troubled countries.

Growth for its own sake and misdirected spending are delusional. Canada, like most Western democracies, has been importing Third World workers for the benefit of the rich and to the detriment of everyone else.

Why does Canada bring millions of immigrants to live in a country with the world’s highest per capita consumption of energy?

Arguably, environmentalist David Suzuki has it right when he says, “Canada is full!”

Colin Alexander was formerly publisher of the Yellowknife News of the North. He is a Frontier Centre for Public Policy contributor.

Colin is a Troy Media Thought Leader. Why aren’t you?

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