Political economy developed under assumptions of growth should be re-examined for a future of slow or zero growth. From a forthcoming book by Jeff Rubin, The End of Growth.
While most economists believe that zero growth means big trouble, Mr. Rubin says it does not have to be a disaster – because consumers in the developed world can learn to live with less, even in energy-hungry Canada. The former CIBC World Markets chief economist cites research to show that some of the happiest people on Earth live in slow-growth economies. Lofty oil prices will do more than any regulations to curb greenhouse gas emissions and slow urban sprawl. The transition to slower growth spells tough, near-term changes in the economy – but in the long run, the environment and its citizens might be better for it. [....]
As much as Denmark is a living, breathing example of environmental success, it’s only fair to note that the battle against carbon emissions is easier there than it is elsewhere. Denmark has no significant hydrocarbon reserves of its own, which means its politicians don’t need to worry about appeasing a carbon-intensive energy industry. In the same spirit, the country also doesn’t have an auto sector to speak of. In Denmark, no one needs to worry about currying favor with autoworkers to get re-elected. [....]
Danish politicians don’t have to contend with the powerful lobbying efforts of Big Auto or Big Oil. The country is politically free to impose what are, in effect, huge carbon taxes that encourage energy conservation. While admirable from an environmental standpoint, for a country that’s forced to buy oil and coal from foreign producers, slashing energy consumption also makes a tremendous amount of economic sense.
Half a world away, the Japanese are coming to the same conclusion.
Like Denmark, Japan is largely devoid of domestic hydrocarbon reserves. That forces the country to import nearly every last drop of the 4.5 million barrels of oil its economy burns every day. In an effort to reduce its oil imports, Japan turned to nuclear energy, which before the Fukushima meltdown accounted for nearly a third of the country’s power generation. [....]
A magical new power source isn’t waiting in the wings to solve Japan’s energy problems. Instead, the country is figuring out that the alternative to building more nuclear reactors is using less electricity and closing the energy gap in other ways. Here, the cost of fuel will actually turn out to be one of Japan’s best friends. High prices enforce an economic discipline that will naturally curtail energy use.
Certainly other steps will help along the way. More electric vehicles are bound to be on roads in Japan, and around the world, before too long. Wind and solar power will continue to become more affordable and more efficient, which will add to the role they’re able to play in supplying tomorrow’s power needs. And more inventive measures are being found all the time. In Paris, an ambitious car-sharing service using electric vehicles has been launched. Other cities are bound to follow suit.
But the really big changes that will come in an energy-constrained future won’t have to do with the type of vehicles we drive or how we generate electricity. Instead, what will matter most is the energy that’s not used. The real energy savings, as Denmark knows, happen when fewer cars are on the road and less power is used at home.
The economics of energy conservation (Book excerpt) | Jeff Rubin | May 5, 2012 | The Globe and Mail at http://www.theglobeandmail.com/report-on-business/economy/growth/the-economics-of-energy-conservation/article2423500/singlepage/#articlecontent.
See also “Silver linings of a slow growth economy — Q&A: Jeff Rubin” | Tavia Grant | May 6, 2012 | The Globe and Mail at http://www.theglobeandmail.com/report-on-business/silver-linings-of-a-slow-growth-economy/article2424310/singlepage/#articlecontent