When financial pundits look into their gem-studded crystal balls, the future may at first look cloudy, but in the end, the glimmer of hope promises infinite economic growth. Former chief economist and strategist for CIBC World Markets and blogger for the Globe and Mail’s Economy Lab Jeff Rubin offers a blunt opposition to the notion of limitless economic expansion in his second book, The End of Growth.
The premise of the book is the idea that economic growth is contingent on energy costs, particularly the cost of oil. According to Rubin, energy resources connect and power our entire global village. Oil holds a special place in economies because it provides a third of the energy used on the planet, and is the most efficient energy source yet to be discovered. Despite its accolades, oil no longer spews from the ground, and we have been left with offshore wells, oil sands and shale reserves that are more difficult to access and more expensive to extract. As the march of modernization moves through the planet’s population, the global demand for oil increases exponentially, upping the cost of an increasingly scarce supply. Rubin contends that increased oil prices will result in a recession the world will not recover from.
Ten years ago, The End of Growth might have been used for kindling. But now, with the wounds of the euro-zone crisis, the Fukushima disaster and the 2008 financial crisis still smarting, it’s not as difficult to consider. With a masterful yet colloquial voice, Rubin uses these examples to explain the complex phenomena that connect international markets in a way even those inexperienced in economics can understand.
Even without a formal education in economics, it is easy to see that the strategies used by governments to stimulate economies — running huge deficits and spending trillions on bailouts — just don’t seem right. Rubin says governments should instead devise plans for inevitable economic stagnation.
Although the clouds of these prognostications may at first appear grim, there are more than a few silver linings to guide the road to hope. Rubin argues that unrestrained economic growth is unsustainable, and looks to places like Germany, Japan and Denmark where effective strategies have been employed in times of scarcity. During their last economic downturn, Germany instituted a job-sharing program which kept taxes coming in and skilled workers in the workforce. After the 2011 nuclear disaster, Japan closed down 50 reactors for inspection, spurring a new ideology of energy conservation that is seeing more Japanese donning casual clothes at work where air conditioning and escalators have been shut down. Denmark boasts more cyclists per capita than any other state, perhaps because the tax of owning a car is as high as the cost of the car itself. Fewer cars on the road means less carbon choking the airways, and no need for redundant carbon emission standards.
The flat lining of the economy will usher in a whole host of ecological, health and societal benefits spurred by innovation toward local sustainability rather than global gluttony. In his closing sentence, “Making do with less is better than wanting more,” Rubin encapsulates a new paradigm that may very well be around the next corner.