19 June 2020

Professor Pangloss is Usually Wrong

Andrew McAfee, a "technologist" at MIT, wrote a book, More From Less showing that the US use of natural resources has declined even as its GDP has increased, implying that growth can continue unencumbered without any economic cost.

The problem with this is that his book studiously ignores the raw materials that go into imported goods, which refutes the hypothesis:
Scientists are increasingly concerned about the impact that excess industrial activity is having on our planet’s ecosystems. Our pursuit of perpetual economic growth is driving ever-increasing levels of material extraction, which is causing a wide range of ecological problems: deforestation, soil depletion, habitat loss, and species extinction. The crisis has become so severe that last year more than 11,000 scientists from over 150 countries published an article calling on governments to shift toward “post-growth” economic models, focusing on human well-being and ecological stability rather than constant expansion.

But some figures have rejected this idea and are rallying around a different narrative altogether. In a book published last October titled More From Less, the Massachusetts Institute of Technology-based technologist Andrew McAfee argues that we can continue to grow global GDP indefinitely while reducing our ecological impact at the same time—and all without any structural, much less revolutionary, changes to the economy or society.

At the core of McAfee’s argument is his analysis of the U.S. economy. He claims that U.S. consumption of resources has remained steady or even declined since the 1980s, while GDP has continued to rise. In other words, the United States is “dematerializing,” thanks to increasingly efficient technology and a shift toward services. The same thing has been happening in other high-income nations, he says. This proves “green growth” can be achieved; rich countries are showing the way, and the rest of the world should follow suit.


There’s only one problem: McAfee’s argument is based on a fundamental accounting error. McAfee uses data on domestic material consumption, which tallies up the resources that a nation extracts and consumes each year. But this metric ignores a crucial piece of the puzzle. While it includes the imported goods a country consumes, it does not include the resources involved in extracting, producing, and transporting those goods. Because the United States and other rich countries have offshored so much of their production to poorer countries over the past 40 years, that side of resource use has been conveniently shifted off their books.


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