Is Growth Good?Gary FlomenhoftVT Law SchoolJune 11, 2004

HWI vs GDP/CAP PPP y = 17.117Ln(x) - 101.27

R2 = 0.8012

0

10

20

30

40

50

60

70

80

90

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000

GDP-CAP PPP

HWI

Human Welfare Index and GDP

HDI v GDP/CAP PPPy = 14.792Ln(x) - 55.199

R2 = 0.8663

0

20

40

60

80

100

120

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000

GDP/CAP PPP

HDI

UN Human Development Index and GDP

Life Satisfaction and Happiness vs. GDP

Put amount needed to be happy here.

I. Crime & Family Breakdown(legal fees, medical expenses, damage to property, crime and divorce.)

II. Household & Volunteer Work

III. Income Distribution

IV. Resource Depletion(Wetlands, farmland, and nonrenewable minerals (including oil) )

V. Pollution

VI. Long-Term Environmental Damage

VII. Changes in Leisure Time

VIII. Defensive Expenditures(Medical and repair bills from automobile accidents, commuting costs, and household expenditures on pollution control devices such as water filters.) IX. Lifespan of Consumer Durables & Public Infrastructure

X. Dependence on Foreign Assets

GPI Factors

Column A: Personal Consumption ExpendituresColumn B: Income DistributionColumn C: Personal Consumption Adjusted for Income InequalityColumn D: Va lue of Household LaborColumn E: Va lue of Volunteer WorkColumn F: Services of Household CapitalColumn G: Services Highways and StreetColumn H: Cost of CrimeColumn I: Cost of Family BreakdownColumn J: Loss of Leisure TimeColumn K: Cost of UnderemploymentColumn L: Cost of Consumer DurablesColumn M: Cost of CommutingColumn N: Cost of Household Pollution AbatementColumn O: Cost of Automobile AccidentsColumn P: Cost of Water PollutionColumn Q: Cost of Air PollutionColumn R: Cost of Noise PollutionColumn S: Loss of WetlandsColumn T: Loss of FarmlandColumn U: Depletion of Nonrenewable ResourcesColumn V: Long-Term Environmental DamageColumn W: Cost of Ozone DepletionColumn X: Loss of Forest CoverColumn Y: Net Capital InvestmentColumn Z: Net Foreign Lending and Borrowing

GPI by Column

“When to Stop” Rule

Total Utility and Marginal Utility of Growth

Total utility

Marginal utility

Full World or Empty World?

Source:

Ecological Economics Principles & Applications,

Farley and Daly

ESA Listings and GDP

0

200

400

600

800

1000

1200

1400

1973 1980 1990 2001

$10

$9

$8

$7

$6

$5

$4

$3

R2 = 98.4

Source: The Wildlife Society Technical Review 2003-1.

Source:

Center for

A New

American

Dream

If World consumption = US: Need 4 more planets

Grow out of poverty?Poverty rate vs. GDP per Capita (1996$)

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

1959196119631965196719691971197319751977197919811983198519871989199119931995199719992001

8%

10%

12%

14%

16%

18%

20%

per capita GDP (1996$) poverty rate

Real Wages and productivity 1948-2002

Hourly Real wages (2002$) and Labor Productivity

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

1947195019531956195919621965196819711974197719801983198619891992199519982001

0

20

40

60

80

100

120

140

160

Cumulative Increase in Labor Productivity

real wages manufacturing LP non-farm business LP

Fundamental

Human Needs

Being

(qualities)

Having

(things)

Doing

(actions)

Interacting

(settings)

Subsistence physical and

mental health

food, shelter

work

feed, clothe,

rest, work

living environment,

social setting

Protection care,

adaptability

autonomy

social security,

health systems,

work

co-operate,

plan, take care

of, help

social environment,

dwelling

Affection respect, sense

of humour,

generosity,

sensuality

friendships,

family,

relationships

with nature

share, take care of,

make love, express

emotions

privacy,

intimate spaces

of togetherness

Understanding critical

capacity,

curiosity, intuition

literature,

teachers, policies

educational

analyse, study,meditate

investigate,

schools, families

universities,

communities,

Participation receptiveness,

dedication,

sense of humour

responsibilities,

duties, work,

rights

cooperate,

dissent, express

opinions

associations,

parties, churches,

neighbourhoods

Leisure imagination,

tranquillity

spontaneity

games, parties,

peace of mind

day-dream,

remember,

relax, have fun

landscapes,

intimate spaces,

places to be alone

Creation imagination,

boldness,

inventiveness,

curiosity

abilities, skills,

work,

techniques

invent, build,

design, work,

compose,

interpret

spaces for

expression,

workshops,

audiences

Identity sense of

belonging, self-

esteem,

consistency

language,

religions, work,

customs,

values, norms

get to know

oneself, grow,

commit oneself

places one

belongs to,

everyday

settings

Freedom autonomy,

passion, self-esteem,

open-mindedness

equal rights dissent, choose,

run risks, develop

awareness

anywhere