What COVID19’s Economic Slowdown means for the Future — Part 1 of 3
I hope that one day I’ll be able to book a ticket to Mars on the spaceship of some eccentric tech giant, but that opportunity is likely still pretty far in the future. At the moment, humanity doesn’t have a colony on another world. All of us are still living here on planet Earth.
Our single planet has about 51 billion hectares of surface area for us to live upon. About a quarter of that surface area is actually viable for human needs, while the rest is oceans and deserts. There are seven billion of us that currently call Earth home, and if you divide that habitable surface area among us you wind up with about 1.7 hectares per person. If each person on Earth used only the replenishing resources provided by 1.7 hectares each year, then we’d be living sustainable lives that could continue indefinitely into the future.
If you divide the Earth’s habitable surface area among us you wind up with about 1.7 hectares per person.
Unfortunately, the reality is that it currently takes about 2.8 hectares to support a single human’s consumption for one year. This number also varies wildly between countries such as India (where the average person uses 1.2 hectares) and Canada (where the average person uses 7.7 hectares). In essence, we are consuming our planet faster than it can replenish itself. It should be obvious that this is a situation that can’t last forever.
This brings us to the current economic slowdown that’s been triggered by the COVID19 pandemic. Prior to the pandemic, the International Monetary Foundation was projecting that the world economy would grow by about three-percent in 2020. At the time of this article’s writing they are instead predicting that it will shrink by about three-percent this year, but then will rebound next year by nearly six-percent. Even this temporary interruption has triggered mass panic in the financial sector.
Our current economic system is entirely dependent upon economic growth in order to function. Most people are unaware of how intertwined our self-constructed economic rules are with a perpetually growing economy. This is why economists and politicians are frequently so concerned with keeping their country’s growth numbers high. Many of the systems that we’ve designed — such as banking, pensions, and public revenue — operate based on the assumption that the economy will grow perpetually, forever. In fact, economists generally quote the rate of “two-percent” as the amount our economies need to grow each year in order to maintain our institutions, as they are currently designed.
This is not a linear growth, by the way. This is a compound growth compared to the previous year. And that leads to some shocking statistics.
If the world economy continues to grow by two-percent every year, we can project the overall size of the economy in the future. In ten years, the world economy would be 1.22 times the size that it is now. That doesn’t seem like much, but it begins to ramp up quickly after that. In one hundred years the economy would be more than seven times its current size. In one thousand years it would be four-hundred-million times its current size. And after another two-thousand years at two-percent yearly growth, the economy would be 160 quadrillion times its current size, an unimaginable number.
At 2% yearly growth, our economy will be four-hundred-million times its current size in 1000 years. And one-hundred-sixty quadrillion times its size in 2000 years.
When our economy grows it consumes more resources. India’s per-capita GDP (Gross Domestic Product) is about $2000 (USD), whereas Canada’s GDP is about $45,000 (USD). As mentioned at the beginning of the article, an average Canadian’s per-capita ecological footprint is about seven times as much as an average Indian’s. The country with the highest per-capita income in the world, Luxembourg ($113,000), predictably has the highest ecological footprint in the world (15.8 hectares). The bottom of both lists is likewise filled out by a matching group of countries, mostly in sub-Saharan Africa.
Those numbers should give us pause. We’re currently consuming our single planet at a faster rate than it can replenish itself. Earth is the only planet we currently know of that can support human life, and even if we discovered another one somewhere out there in the galaxy, we have no way to get ourselves there. I should also point out that there are only around 200 billion stars in our galaxy, so it’s a stretch of the imagination to picture what an economy 160 quadrillion times our current size would even look like.
None of us are likely to live for another two-thousand years. However, written human history has already existed for thousands of years, and I’d like us to continue as a species for at least a few thousand more. If Canada’s average life expectancy remains the same, I’ll likely die at some point in the 2070s when the global economy is only around three times its current size, but my children and grandchildren will live on, and the math doesn’t look good for them. If things stay the way they are, they will not be living in a sustainable future.
Why is our economy insisting on infinite growth, and what does it mean for our happiness and wellbeing in the future? I’ll be covering this in Part 2.
