2014/03/24: economic growth has already ended in the sense that the growth that continues is now uneconomic; it costs more than it is worth at the margin and makes us poorer rather than richer.
We still call it economic growth, or simply “growth” in the confused belief that growth must always be economic. I contend that we have reached the economic limit to growth but we don’t know it, and desperately hide the fact by faulty national accounting, because growth is our idol and to stop worshiping it is anathema.
some say that if our empirical measure of growth is GDP, based on voluntary buying and selling of final goods and services in free markets, then that guarantees that growth always consists of goods, not “bads.” The free market does not price bads—but nevertheless bads are inevitably produced as joint products along with goods.
Since bads are unpriced, GDP accounting cannot subtract them—instead it registers the additional production of anti-bads (which do have a price) and counts them as goods. For example, we do not subtract the cost of pollution as a bad, yet we add the value of pollution cleanup as a good. This is asymmetric accounting. In addition we count the consumption of natural capital (depletion of mines, wells, aquifers, forests, fisheries, or topsoil, for instance) as if it were income rather than capital drawdown—a colossal accounting error.
Paradoxically, therefore, GDP, whatever else it may measure, is also the best statistical index we have of the aggregate of pollution, depletion, congestion, and loss of biodiversity. Economist Kenneth Boulding suggested, with tongue only a little bit in cheek, that we relabel it Gross Domestic Cost.