The End of Growth

The End of Growth by Jeff Rubin. Random House Canada 2012.

Jeff Rubin has good news and bad news. The bad news is that the cheap oil that once came gushing out of the ground like a geyser is mostly gone. The oil we are burning now comes increasingly from remote and difficult to access sources and it’s not cheap. With the end of cheap oil, the economic growth that has fuelled prosperity since WWII has stalled. Government efforts to kick-start the economy with huge injections of cash will only lead to ever-increasing deficits. Cheap oil is gone, and economic growth is gone, and they won’t be back.

But there is good news too. As the price tag for a barrel of oil settles into the triple digits, consumption levels will drop, thus reducing greenhouse gas emissions. There’s no need for government interventions. No need for Kyoto agreements! No need for cap-and-trade systems! We can just stand back and the whole emissions problem will take care of itself.

Rubin’s view that economic growth has hit its limit isn’t new. Economist Kenneth Boulding (1910–1993) famously remarked that “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” Herman Daly, former Senior Economist in the Environment Department of the World Bank, has long espoused the need for a steady-state economy and has written many books on the topic. Even Rubin’s title is borrowed from a book of the same name written by Richard Heinberg and reviewed here.

However, as the former Chief Economist at CIBC World Markets, where he worked for over twenty years, Rubin is uniquely positioned to offer a Canadian perspective. Unlike Heinberg’s dense and rather weighty tome, Rubin’s book is an easy read and an accessible introduction to the topic. He strikes up a conversational tone and invites the reader to share his insider’s view. Rubin covers many of the same areas as Heinberg, albeit in a more superficial manner. I especially liked the inclusion of the helpful maps that supplement the text. Still, some of his notions may give the reader pause.

In a chapter entitled The Keystone Conundrum, Rubin, rather oddly, compares the construction of the Keystone Pipeline and the Northern Gateway Pipeline to his fishing experiences. Rubin notes that when catch-and-release policies lead to the subsequent deaths of fish from barotrauma, catch-and-kill limits seem like a better option. Similarly, he concludes that the Keystone Pipeline represents the less damaging pipeline option and in blocking it, environmentalists have ill-advisedly forced a more destructive option, the Northern Gateway pipeline, into play.

Of course, these are both false dichotomies. A third fishing option would be for well-heeled middle-aged fishermen to take up lawn bowling or antique collecting, and leave all the fish in remote ecosystems alone. They might even consider petitioning the government for better protection of aquatic resources.

There are better options than pipeline construction as well. One obvious choice would be to slow tar sands development to a level that can be handled by existing facilities. This would have the advantage of lessening pressure on Fort McMurray’s strained resources, reduce extraction impacts on the environment and preserve tar sands oil for future anticipated higher prices.

In looking at how we might adjust to slower growth, Rubin makes other questionable suggestions. He concludes, for example, that libraries are an unnecessary frill. Good thing we haven’t closed them down yet; I was reading a library copy of his book and would beg to differ with his view! He takes a swing at over-paid garbage collectors and government clerks, and suggests that we should look to rich philanthropists to fund our public institutions. There is so much wrong with this latter idea that a book could be written about it. In fact, a book has been written about it, Linda McQuaig’s The Trouble with Billionaires, reviewed here.

Interestingly, Rubin doesn’t make any mention of tax reform or consider the impact of growing income inequality on the economy. Even stranger, he fails to examine government subsidies to Big Oil and the perverse subsidies that reward industrial agriculture that relies on petrochemicals. Nor does he discuss how the redirection of government subsidies to green alternatives might hasten our adaptation to slower economic growth. Indeed, while Rubin points out that Germany is shutting down nuclear facilities, he concludes that this will increase their dependence on fossil fuels, while in fact, Germany’s investment in green technology has both supported its industrial sector and led to phenomenal success with solar technology. A new solar power generation world record was recently set and is outlined in a Guardian article here. The billions of dollars that the Canadian government gifts to Big Oil could likewise be redirected.

As for Kyoto, Rubin is wrong in suggesting the Accord has been a failure. It has just been a failure in Canada, where federal governments with feet of clay have failed to uphold Canada’s duty to the planet and their own obligation to protect future citizens. This is not universally the case. Most of the countries in the industrialized world have met or exceeded their Kyoto targets. The EU as a unit has exceeded its target. Japan has reduced emissions below 1990 levels but falls short of its target. Canada is the only country within the Kyoto Protocol to have repudiated legally binding obligations.

Note: As Fiddlegirl points out in the Comments section, Ontario has reduced GHGs by 6.5 per cent since 1990, making it the only province to reach Kyoto emission-reduction targets. Other provinces have also acted independently of the federal government to address environmental issues. See her link to a provincial ‘report card’.

It is no doubt true that high oil prices will reduce greenhouse gas emissions. But the triple-digit prices that Rubin refers to repeatedly are not yet permanently in place. Rubin seems to lack a sense of urgency. But climate change is already underway, and even if all emissions ended today, forces already set in play will continue to mount. Doing nothing is certainly an easy out, but does not address the immediacy of the emissions problem.

The National Round Table on the Environment and the Economy, one of the recent victims of the Harper Regime’s ‘Silence the Messenger’ campaign (Conservatives can’t handle the truth?), has just issued a Reality Check. Their last study finds that Canada is on track to achieve only half of its watered –down 2020 target to reduce greenhouse gases by 17 per cent below 2005 levels. The Conservatives must love Rubin’s “Everything will take care of itself” approach.

The End of Growth is worth reading, but you might want to have a box of salt on hand. A grain of salt might not be enough.