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We need nothing short of a miracle to accomplish significant economic growth from now onwards, particularly if we want growth that isn't just showing in the numbers of top earners, but is felt by most people. GIven the limits we face, this will be next to impossible, and so far, despite all those extraordinary efforts made, it hasn't worked: most people are not benefiting from the little growth still achieved in some places. By now, not only have we already experienced almost a decade of economic unpleasantries, but equally, no data we analyze provides hope that growth will return the way it used to be.
We are fighting against growing extraction efforts for natural resources and energy, and an economy that has exhausted its potential to incur more debt. At the same time, we also are at the beginning of on one of the biggest transitions of the past 250 years: away from fossil fuels and back to renewable energy sources, mostly sunlight in all its variations.
The biggest challenge, after such a long period where we experienced growth, is accepting that, most likely, no one in the future will ever be as rich as we were during the past decades, particularly in advanced economies . Part of accepting is to embrace that, even after scaling back, we will still be among the richest humans of all times, and that living with less, as much as the thought might hurt, does not affect our well-being unless we begin to fight against each other.
Fighting is the initial reaction most people have when they see their economic future being challenged. There is a big urge to find someone who is guilty, and as we can see in many countries, the political discussion is already showing signs of increasing tension and we begin blaming particular groups for our lack of economic progress. Unfortunately, we are all in this together: we can't largely change the people we share our country with, and even less so the people we share the planet with.
The biggest downside of fighting: by trying to find scapegoats and people guilty for what's wrong, we are losing our ability to think clearly about what can be done to change the situation, and our ability to work together on a solution. Once we have dug in and have found our enemies, our brain tends to ignore reality and no longer look for real solutions that could truly improve the situation. This is something behavioral scientists call “confirmation bias”. By ignoring facts that don't fit our position, we actually make things worse. No matter if we aim at individuals, groups, or other countries, unresolved conflict has never improved the world.
Many people share our assessment that the days of fossil energy are numbered, and some even actively want to end the use of fossil fuels sooner because of their negative impact on the environment. We don't take sides in this argument, but are not confident there is a way to phase out fossil energy and replace it with renewable sources without adjusting our economies - downwards.
Does this mean we shouldn't invest in and research renewable energy technologies? Absolutely not, we urgently need to find out how to power our societies in the best way possible without fossil fuels in the not-so-distant future - they will be gone sooner than we think. The only thing we have to accept is that that future world will not work the same way as it is today.
For all we know, so far, shrinking economies are the most likely scenario. For the lowest 20% of U.S. households, their 2014 incomes, when corrected for inflation, are back to mid-1970s levels. If inflation on core essentials of life (housing, energy, food, education and health) are considered, they probably are closer to the mid-1960s. Obviously, nobody should ask those groups to scale back much further.
But for others, who have grown accustomed to a lifestyle with a much larger footprint, with multiple cars, large houses with TVs in every room, international travel, and a new smartphone every year, there is change in store. There are three ways to respond: We can passively wait for reality to kick us back (remember that rubber band), we can fight it and get into real trouble, or accept this new reality and gradually change to a future beneficial for everyone.
There is enough evidence from around the world that people from countries with far less disposable income than in the U.S. or in Europe are considering themselves as happy or even happier than those in the richest countries. What is essential for humans isn't so much to have all these bells and whistles we have grown accustomed to, but rather the ability to feel safe, having all necessities like food, shelter, energy, healthcare, and education covered and to have a purpose. As a rule of thumb, there is no correlation between income and happiness in economies where average incomes are above $10,000.
Backtracking on our growth path isn't necessarily bad. A return to the consumption levels of 1970 wouldn't hurt the well-being of the top 80% of U.S. households in the least, if done deliberately and with care.
