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The Politics of Simple Living

Why Our Economy Is Making Life Worse
and How We Can Make It Better

by Charles Siegel


A Preservation Institute Book
© 2014
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Chapter 1: A Turning Point

The world's rapid economic growth is creating more wealth but is also straining ecological limits. We can already see the early stages of two possible futures that loom ahead of us.

One possibility is ecological crisis. World temperatures have already increased by about 0.8 degrees centigrade, causing more devastating storms in the United States and hunger in some developing nations. These problems will become far worse if we do not control global warming.

The other possibility is prosperity. Hundreds of millions of people in the developing nations have joined the world's middle class during the last few decades. Fifty years ago, China was known for its massive poverty, which had existed from time immemorial, but now China is on the verge of becoming a middle-class nation. India and other nations plagued by extreme poverty are not far behind.

If we project recent growth rates, we find that the world as a whole could emerge from poverty very soon. A recent study by the National Intelligence Council predicted that most people in the world could be middle class in 2030, saying "The growth of the middle class constitutes a tectonic shift. For the first time, the majority of the world's population will not be impoverished."1 By the end of this century, the world generally could be economically comfortable, if we can avoid ecological disruption - but that is a big "if."

The current political discussion does not even mention one key issue. What should people do after they become economically comfortable?

It will be much harder to avoid ecological crisis, if people who are already comfortable devote their lives to making more money, living in bigger houses, driving bigger cars, and buying more luxury products. We will be more likely to avoid crisis and the massive suffering that it would bring, if people decide that they want a more balanced life after they become comfortable, spending less time working so they have more time to devote to their families and to their own interests.

Today, our economic planning is based on the idea that, no matter how affluent we become, our economy should keep growing as rapidly as possible. Few people even have the choice of downshifting economically so they can live a more balanced life. We need a new politics of simple living that gives us this choice.

The Coming Century

If we can deal with the ecological problems caused by growth, most of the world could lift itself out of poverty during the twenty-first century, just as America and the other developed nations lifted themselves out of poverty during the twentieth century. Let us project the economic trends of the last three decades into the future, so we can see how quickly prosperity is spreading.

Because China is growing so rapidly, it shows the issues that the world faces in stark relief. In 2010, China's per capita GDP was just over $7,500, over thirty times as much as in 1980 (after correcting for inflation). Growth has reduced poverty dramatically in China: Between 1981 and 2008, the number of Chinese living in extreme poverty decreased from 84% to 13%, as nearly 700 million people moved out of extreme poverty.2 Almost one-third of Chinese households now meet their definition of middle class, with incomes of $5,000 to $15,000 per year, and that number is expected to rise to 45% by 2020.3 Its streets are clogged with cars today, though they were full of bicycles a few decades ago.4

If the rapid growth rate of the last three decades continues, China's per capita GDP would equal the United States' current per capita GDP in the 2020s. China's growth rate will slow as its economy matures and as its population ages, but if economic growth continues at the more realistic rate predicted in a recent World Bank study, the Chinese will be as affluent in the 2040s as Americans are today.5

It would put immense stress on the world's environment if these trends continue until the average Chinese consumed as many resources as the average American does today:

  • If China consumed as much oil per person as America now does, China alone would use more than the world's total current oil production.
  • If China consumed as much paper per person as America now does, China alone would need more paper than the world currently produces.
  • If China generated as much greenhouse gas emissions per person as America now does, China alone would generate more emissions than the entire world now generates.6
  • If Chinese owned as many cars as Americans, it would have over a billion cars, more than the entire world has today.7

As a general rule, for a wide range of resources, if the average Chinese consumed as much as the average American does today, China alone would consume more resources than the entire world does today.8

Yet China is not the only developing nation that is moving toward American levels of consumption. India is just a few decades behind China, and its potential ecological impact is as great as China's. If the Indians consumed as many resources as Americans, India also would consume more resources than the entire world now consumes.

Even more striking, the world will reach America's current level of income in about 2090 if recent growth rates continue. In 2010, the world had a per capita GDP of about $10,787, much more than 1980's $6,173 (after correcting for inflation),9 and if this growth rate continued, the entire world will have a real per capita GDP equal to the United States current level just before 2090. The world's growth rate will slow as economies mature and as the population ages, but it is plausible that the world could become middle class in this century and could reach the current American standard of living in the first half of the next century.

Growth in China, India, and the World

Figure 1: Projected Per Capita GDP in China, India, and the World10

The conventional wisdom says economic growth should continue after the world reaches America's current level of income - just as the conventional wisdom says America's economic growth should continue though we have already reached this level. All of the politicians in America today want to stimulate our economy so it grows as rapidly as possible, and most of the world has exactly the same attitude. It is hard to imagine the ecological stress it would cause as the world moves beyond this level and keeps trying to grow as rapidly as possible.

Recent rates of growth show that this century could bring worldwide prosperity. But unless we change our current economic policies, it is more likely that this century will bring ecological disruption that causes massive human suffering, particularly in the poorest nations of the world.

Environmentalists tend to focus on the nightmare scenarios. If there is no action to control global warming, it could cause flooding of coastlands and desertification of 30% of the world's land, bringing worldwide food shortages and hundreds of millions of deaths. As fossil fuels become scarcer, soaring energy prices could cause wars over resources.

Yet we should also look at the unprecedented opportunity that we have. All through history, the vast majority of people in the world have lived in poverty, with no more than the basic shelter and food needed to survive, and with the threat of famine always looming. Most of the world still lives at a subsistence level today. But the world could emerge from poverty during this century, if we can avoid ecological disruption.

Counterproductivity

There are obviously ecological risks to continuing rapid economic growth as the rest of the world approaches and moves beyond America's current standard of living. But is there any benefit to continuing growth to this point?

The evidence shows that there is little or no benefit to growth after people reach a level of middle-class economic comfort that the average American reached decades ago. The economist Richard Easterlin first noticed in 1974 that surveys showed Americans had not become any happier since the 1950s, despite decades of growth and rising income across all economic classes. This finding still holds up today: American's self-reported happiness peaked in 1958, and it has jogged up and down a bit but has never reached that peak again. Though our per capita GDP has more than doubled, we are not as happy as we were a half-century ago.11

International comparisons prove the same point. Beginning in 1990, the World Values Survey asked people in many nations how happy they are. Figure 2, shows the results of a recent survey, comparing the happiness rating based on this survey with the per capita GDP of each nation at the time. We can see that, in lower income countries, the happiness rating generally increases as income increases, but after countries reach about one-half of the United States' per capita GDP, happiness no longer increases significantly as income increases.12

Income and Happiness

Figure 2: International Comparison of Per Capita GDP and Happiness13

This result is not surprising. In poor countries, more income is needed to provide people with decent housing, food, education, health care, and other essentials; it makes sense that people will become happier as they can afford more of the necessities and basic comforts of life. But when people reach about one-half of the average American's current income, they have enough to make them comfortable, and there is relatively little benefit to consuming even more.

America's per capita income in the 1960s was less than one-half of what it is today (after correcting for inflation),14 and Americans felt very prosperous at the time: In 1958, a best-selling book called America "the affluent society,"15 and the economic boom of the 1960s made the nation feel even more prosperous. The average American of the 1960s had the necessities and comforts needed to live a good life. There was still poverty in the country at the time, but as we will see in a later chapter, economic growth has not even reduced our poverty rate since then.

Once you have the basic elements of economic comfort, such as good housing, health care, and education, and you also have enjoyable luxuries, such as music, books, and travel, consuming even more does not bring significant benefits - but it does bring significant costs.

Growth continues to cause massive environmental costs even after it stops bringing significant benefits. There would obviously be less chance of ecological disruption in the coming century, if nations that were already economically comfortable tried to achieve the best possible quality of life rather than the fastest possible rate of economic growth. We can imagine a future where the developed nations decided to shift to slower growth now, where China decides to slow growth in a couple of decades, and where the other developing nations decide to slow growth as they also reach the level where they have a comfortable middle-class standard of living. Slower growth in the developed nations would obviously make it easier to avoid ecological disruption and to lift the world out of poverty.

There are many other costs of growth that are less well known than obvious ecological problems such as global warming. Later chapters will show that we have reached the point where the side-effects of growth make our cities less livable, make it harder to educate our children, and make it harder to maintain our health.

This is what we will call the counterproductivity of economic growth.16 When growth moves beyond a certain point, it brings insignificant benefits, but it continues to cause significant problems. After we pass this point, we spend more on housing and transportation, but our cities become less livable and harder to get around. We spend more on education without improving student achievement. We spend more on health care without improving our health. After we pass this point of counterproductivity, growth threatens to decrease our well-being, because its costs can be greater than its benefits.

Global warming is just one example of the many costs of growth that could leave our children less well off than we are.

A Politics of Simple Living

We often hear about the problems caused by growth, but we rarely hear about practical policies that could slow economic growth by giving people the option of living simpler and more satisfying lives.

As a practical matter, there seem to be huge obstacles in the way of slowing growth. Whenever there is a recession, slower economic growth causes higher unemployment. Economists and politicians all react by saying we need faster growth to provide more jobs.

In addition, most Americans feel that they are just getting by economically. Higher income people might be able to cut back on their spending, but average Americans generally feel that they cannot.
How can it be that average Americans today feel they are just getting by, while the nation felt affluent in the 1960s, with half as much as we have today?

It is because we are burdened with a huge amount of compulsory consumption, which people cannot avoid even though it does not bring any significant benefit. We need a politics of simple living that gives us the choice of stepping off the treadmill, by avoiding this compulsory consumption and downshifting economically. It should include policies such as:

  • Work-Time Choice: Today, most people have no choice but to take full-time jobs, because most part-time jobs have low hourly pay and no benefits. We need policies that allow people to choose part-time work (as workers can already do in the Netherlands and Germany), so they have the option of working shorter hours, consuming less, and having more free time.
  • Walkable Neighborhoods: Since the end of World War II, federal freeway policies and local zoning laws have forced most American neighborhoods to be built as low-density sprawl where people cannot leave their houses without driving their cars. We need to build walkable, transit-oriented neighborhoods, so people have the option of reducing the huge costs of automobile dependency.
  • More Family Time: Today, we subsidize families who use day care and after-school programs, but we do nothing to help families who work shorter hours to care for their own children. We should give families with preschool children a tax credit that they could use either to pay for day care or to work shorter hours and have more time to care for their own children.
  • Healthier Lives: Today, Americans spend almost twice as much on health care as people in other industrial nations, but our health is not as good as theirs. We need to provide health care without promoting all this waste, and we need to encourage people to improve their own health by exercising, eating better diets, and living healthier lives.

In addition to these policies that give people the option of downshifting economically, a politics of simple living requires policies that distribute income more equally, so everyone has the opportunity to live well. As we will see, since the Reagan revolution of the 1980s, most increased income has gone to the very rich, the United States has become the most unequal of all the developed nations, and our poverty rates have gone up. We need policies that give everyone who works a fair share of our prosperity - both the income to live comfortably and the free time to live well.

A politics of simple living demands a massive change in our political thinking.

Our political ideologies, both conservative and progressive, date to the nineteenth century, when most people lived in poverty and rapid economic growth clearly was needed. Our conservatives claim that unleashing the free market will promote faster growth, and the benefits will trickle down to everyone. Our progressives claim that government intervention is needed to promote growth and to spread its benefits widely. The two sides argue about which will do the better job of promoting growth.

This single-minded focus on economic growth made perfect sense when these political ideas first became popular, but during the coming century, it will become clearer and clearer that it no longer makes sense, as the ecological and social costs of growth become more and more obvious.

This single-minded focus on growth already makes no sense in the United States and other developed nations, where we have reached the point where there are few benefits to further growth. The ideologies of the nineteenth and early twentieth century promised a better future to people who lived near the poverty level, as growth gave them decent housing, basic education, and essential health care. But continuing growth no longer offers an optimistic vision of the future: Even if it were ecologically possible, a world where we live in bigger suburban McMansions and drive bigger SUVs on bigger freeways would not be an inspiring vision of the future.

After we reach the point where we have a comfortable standard of living, more consumerism does not equal a better way of life. We need to replace the old vision of rapid growth with a new vision of a future where people have enough income to be economically comfortable and also have enough time to spend with their families and friends, time to exercise and keep physically fit, time to be active members of their communities, and time to develop their talents as fully as possible.

Decades ago, we passed the point where the average American has the income to live comfortably but needs more free time to live well. Most books about the limits of economic growth focus on the policies that deal with increasing pollution and demand for resources. This book looks at how to deal with these problems, but it focuses on the policies that would let people live a better life after we move beyond the age of rapid economic growth.

Environmentalists have already painted a convincing picture of the nightmare future that rapid economic growth could cause. We will be more successful politically if we also paint a convincing picture of a better future.

Chapter 2: Work-Time Choice

There is a question that is central to how we live our lives and to whether our economy is sustainable—but that no mainstream American politician has talked about since the Roosevelt administration. That question is: Should we take advantage of increasing productivity to consume more or to have more free time?

Ever since the beginning of the industrial revolution, improved technology has allowed workers to produce more output in an hour of work. During the twentieth century, the productivity of American labor (the term that economists use for output per worker hour) grew by an average of about 2.3% a year—which means that the average worker in 2000 produced almost ten times as much in an hour as the average worker in 1900, as shown in Figure 3.16

During the nineteenth and early twentieth century, workers took advantage of higher productivity both to earn more income and to work shorter hours But in post-war America, the trend toward shorter hours suddenly stopped. Since 1945, in a dramatic break with the historical trend, we have used the entire gain in productivity to produce and consume more without increasing workers’ free time. In fact, we have done something even more extreme than that: During recent decades, Americans have been working longer hours, and we actually work more now than in the 1970s.

We could help deal with global warming and many other environmental problems by taking a more balanced approach: Instead of using higher productivity only to increase consumption, we could also use it to reduce work hours, as we did during most of our history. That would mean a slower rate of economic growth, but it would also mean a better way of life, with more free time as well as more income.

US Productivity

Figure 3: American Productivity (Output per Worker Hour)17

The War over Work Time

History shows that Americans today do not work long hours out of choice, as some conservative economists claim. Though most people do not remember it today, there was a political battle over work hours during the 1930s, which led to a deliberate political decision to set the standard work week at 40 hours and to stimulate economic growth rapid enough to provide workers with these 40-hour jobs.

During the nineteenth and early twentieth century, unions fought for shorter hours just as fiercely as they fought for higher wages. Because of the unions’ efforts, the average workweek in manufacturing declined dramatically, from about 70 hours in 1840 to 40 hours a century later.

In the early nineteenth century, the full-time employees in American factories typically worked six days a week, twelve hours a day, a total of 72 hours per week. In Lowell, Massachusetts, humanitarian reformers established factories as part of a social experiment meant to help young women work and save some money before marriage, and even these reformers required the women to work 12 hours a day, six days a week, with only four holidays per year apart from Sundays. Those were the standard full-time work hours.

US Work Hours

Figure 4: Average Work Week in US Manufacturing18


Gradually, as new technology allowed workers to produce more per hour, wages went up and the workweek declined. As Figure 4 shows, the workweek in manufacturing declined steadily through the nineteenth century and early twentieth century. Around the time of World War I, Americans began gradually shifting from the traditional six-day week to a five-and-a-half-day week, with half of Saturday off as well as Sunday. During the 1930s, we adopted the five-day, 40-hour week.

Work hours in manufacturing are interesting, because we have the best historical statistics for them and also because manufacturing jobs are virtually all full-time, so Figure 4 shows very clearly that a typical full-time job has not always meant a 40-hour week. The standard 40-hour work week was an invention of the Depression and the post-war period.

 


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