THE AGE OF STAGNATION
Why Perpetual Growth is Unattainable and the Global Economy is in Peril
Satyajit Das
Tranquebar
353 pages; Rs 699
Do we need more growth? Except for politicians in power and a shrinking cabal of economists, among others the support for a faster rise in GDP is withering away.
But how about support for the premise that my children's life should be better? Now, that's a different thing to grudge.
No one has grudged it either, from time immemorial, whether as folklore or as stories in classical literature. It is also the impulse that has propelled human beings through millennia to set off from their overcrowded and sometimes persecuted homes to offer the next generation a better life. Hope in Pandora's Box, even if it came slowly and took centuries to work through, has made civilisations expand. And it took the route of more economic opportunities.
The challenges of climate change have made this route difficult. Successive surveys by Pew and Gallup are throwing up one consistently uniform statistic. Most people in OECD (Organisation for Economic Co-operation and Development), or developed, countries are convinced Earth will be a hotter place and distinctly unpleasant for those coming after them. And this is big time trouble.
It would mean even bigger trouble if the mega-share of world population, huddled mostly in Asia, were also forced to finally acknowledge that problem. As of now, sample surveys from India, China, Pakistan and Indonesia show that people here are optimistic that the world will continue to offer their children a better deal.
It is certain that if the same surveys were to ask Indians whether growth should be pursued even at the cost of climate disaster, everyone down to the poorest would say no. Try, however, reframing the question to the poorest mother to ask if her children should trade a better deal in life with concerns over climate and the answer will be different. For her the ranking order is clear.
It is a challenge that has no answer as of now. The entire socio-political compact under which Asia and Africa fought for political independence was that there would be more economic opportunities for all. If they were to ask their citizens to close down the growth valve now, would democracy survive in even the most hospitable terrain? Everyone will have to make sacrifices but obviously it will be much harder for those at the lower end of the economic ladder. So for most of Asia and Africa, the political leadership may have to break another compact-that of the right to property. The current unequal distribution of wealth sealed with the right to property is unlikely to sit well with the no-growth syndrome. With expectations of moving up the ladder snuffed out, the democratic compact of letting the right to property exist will be impossible to reconcile.
This is the mistake Satyajit Das makes in his third book The Age of Stagnation. There is no way the world can stomach a march to austerity based on current asymmetrical life chances unless we make some mega-assumptions, such as there will be a world government that will milk all the rich and feed all the poor and expect it to produce nothing more than a ho hum.
Mr Das was nominated in a 2014 Bloomberg survey as one of the world's 50 most influential financial thinkers and his excellent survey of the current world economy, taking off from his earlier works, shows why. But he stumbles thereafter since he doesn't take off his financial hat to examine these political choices closely. His laundry list of what the people of the world should adopt as "required adjustments in living standards" is, thus, limited in its scope. He compresses these in his Epilogue as a "thought experiment". There is a paragraph on each of them. Suggestions like a mandatory one child policy for everyone in the world, rationing electricity, and "people to work till they die...unless they have enough savings to finance their retirement" read like a Roman patricians' take on the world order.
There is no indication from the earlier chapters how he has developed this set of conclusions or if they are sufficient or the only ones available. Most of them could be countenanced only in a perfectly equitable world and would still be judged a colossal change (I wouldn't call them an achievement).
Can a nation where more people haven't had a square meal on at least some days every month than those who have, afford to tell its citizens all this? Would the socio-political compact of democratic governance structures hold after such a change in policies? For instance, would the surviving women of Rana Plaza disaster in Bangladesh, whom Das mentions, agree that a one child norm and work till death is their option in the new world order even if they find the rich have engaged in some cutback in their life style?
It is this divergence that is making an agreement on climate difficult to arrive at. From every annual conference since the first one in Berlin in 1995 the tale has been similar.
The just-concluded Paris Conference of Parties has, consequently, thrown up more challenges than answers and we desperately need to come up with some, very fast. Climate change will demand attention from every one of the world's citizens for solutions. But not the way the banker has imagined.
