Brian Albrecht on the Economics of Degrowth
ICLE Chief Economist Brian Albrecht was interviewed by James Pethokoukis about the economics of the “degrowth” movement as part of a Q&A segment for Pethokoukis’ Substack newsletter Faster, Please! You can read the full piece here.
This is the most sensible contribution from degrowthers. On the surface, rich countries intentionally slowing resource usage to leave space for still-developing economies sounds sensible. Near term, this would marginally lower commodity prices from reduced US/European demand, helping poorer countries import more fossil fuels, minerals or timber at better prices. But this view remains excessively static.
We must ask what happens to long run incentives and innovation from demand constraints in wealthier countries. Imagine we implemented stringent resource consumption limits in the US a decade or more ago. Would breakthrough technologies like hydraulic fracturing still have emerged? What substitutes and efficiencies fail to materialize going forward if policy suppresses market signals communicating scarcity?
Lasting global equitable prosperity requires dramatically cheaper, cleaner energy and materials accessible to every part of the world. Rather than rationing machinery or plastic as extravagant indulgences, climate justice demands radical technology cost deflation through innovation. That only happens by rewarding entrepreneurs and innovators when they find ways to do more with less.