Economic growth: It is important to stress, especially where there is a large immigrant population, that growth refers to an increase in GDP (output/income) per head of the population expressed as a percentage change per annum. It implies a general rise in living standards. For 200 years the civilised world has grown at an unprecedented rate of 2 per cent a year. The growth rate in the Cayman islands of the last 40 years has been faster even than this. It is assumed by ‘conventional wisdom’ that growth has become a law of nature and a more or less unconditional good in the Cayman islands as elsewhere.
Debate: However, the relationship between growth and the growing environmental crisis and ‘the social recession’ world wide has come under scrutiny by an army of writers. This is also becoming the case in the Cayman islands. In the last quarter of the century, while the global economy has doubled, the increase in resource consumption has degraded an estimated 60 per cent of the world’s ecosystems. The Cayman Islands has a particular and fragile ecosystem. Should there be any debate in a recession? It is argued that financial and ecological sustainability are linked and the recession can be regarded as a spin off from growth.
Inequality: The benefits of growth have been distributed very unevenly and unequally worldwide. Even in developed countries huge gaps remain in wealth and well being between the rich and poor.
Growth is good
Quality: It relieves poverty, extends life, alleviates suffering and generally improves the quality of human life. Only through growth can we hope to cure problems of growth; global warming being an obvious example. Resource depletion has repeatedly been offset by increased ingenuity and efficiency. We have no choice but to jog frantically on the growth treadmill. This Island has seen all these benefits in recent years. However,it too is on this treadmill, as was pointed out by Roy Bodden recently.
Productivity: More specifically, growth is necessary to prevent economic collapse owing to the link between employment levels on the one hand and population growth/productivity/technical advance. Technological advances leading to labour productivity would lead to an employment if the economy does not grow and the downward spiral of recession looms. Growth is necessary with this system just to prevent a collapse! Cayman’s current unemployment is not necessarily causally of this nature but nevertheless the administration deems it necessary to kick start the economy with injections of projects. Growth is bad: It must be zero per cent.
Inequality: The benefits of growth have been delivered unequally. This is a problem for the poorer and society at large when there is a rift in the social cohesion. At the moment, Cayman is struggling with the concept of a minimum wage.
The nature of prosperity: Prosperity is being questioned. There are now concerns with regard to climate change, fuel security and collapsing biodiversity. Increasing development and rising incomes are not appropriate in a world constrained by ecological limits.
Well being: Growth depends for its continuation on consumption but the idea that more is better is being questioned. We are coming to a state, so the argument goes, where we value the buying of certain goods to express ourselves as to who we are and for what we stand for in society. But such a notion is flawed. Prosperity has other vital social and psychological dimensions and a big component of it is the ability to participate meaningfully in the life of society. Crime, pollution on land and sea and more over crowding are seen as modern irritants.
Economic instability: The growth model is unstable economically as well as ecologically.
Economies are rendered unstable because they depend upon consumption growth for their survival and systems remain viable only as long as consumption rises and liquidity is preserved. The growth imperative motivated the freedoms granted to the financial sector and is partly responsible for the loosening of regulations and the proliferation of unstable financial derivatives. The market was undone by growth itself! Continued expansion of credit was deliberately courted as an essential mechanism to stimulate consumption growth.
Whose side are we on?
Even the most ardent sandal-wearing anti-growthers realise that their solutions are largely Utopian. It is unlikely that controls by governments to abandon the presumption of growth in material consumption as a new basis for economic sustainability and stability will be tolerated. There are no workable models out there using the concept of zero growth to replace what we have. We would need to move so far toward a command economy as to be unacceptable.
However, their arguments do highlight the problem and they have useful suggestions that must be considered:
Don’t shop so often – devote time to less material pursuits such as family and care for others
The concept of work sharing and improving the work/life balance
Tackling systemic inequality
Education – to strengthen the social capital
Investment in green technology. This is possibly the consideration most worthy of further examination.
Whither the Cayman islands?
Recent history here has illustrated the case both for and against growth. It has the special problem of the economy being largely at the mercy of outside factors along with a narrow and fickle demand base. The administration is proposing to widen this base with diversification projects to get back on to the growth track. If these are eventually successful, then once again environmental issues and the instability of such a system will come to the fore on an island not protected by proper planning and conservation laws. An additional problem bolted on to this as it were is the problem of immigration. The proposed projects will initially need specialised labour not readily available here. Cayman, to protect its birthright, must control immigration and this seems to be another issue.
During boom conditions lapses in productivity can be masked. It simply means that growth could have been even greater. In a recession this can be came a problem because conditions have become more competitive. Cayman is suffering from a world recession, particularly in the USA, but within that there is the possibility of relative decline in the Cayman Islands owing to rising costs because of a failure to innovate. There are some pundits who blame this on the implementation of the immigration laws and the failure to attract the most efficient foreign labour.
Cayman, with its tradition of bare knuckle capitalism is unlikely to take seriously the case against growth. I personally think that it should examine green technology projects. It has plenty of sun, plenty of wind and plenty of wave action. There should be planning control to reduce energy loss in buildings and carbon emissions. Electric cars should be encouraged. Their limited range is not a big problem here.
Think about it.