Low- and middle-income countries demand UN-led solutions to growing debt and wealth inequality problems.Credit: Cristina Quicler/AFP via Getty Let’s imagine a world in which almost 90% of the population earns twice as much and works half as many hours as today. One in which the share of global wealth held by the poorest half increases,
Low- and middle-income countries demand UN-led solutions to growing debt and wealth inequality problems.Credit: Cristina Quicler/AFP via Getty
Let’s imagine a world in which almost 90% of the population earns twice as much and works half as many hours as today. One in which the share of global wealth held by the poorest half increases, while the share held by billionaires decreases. All while limiting global warming to 1.8°C above pre-industrial levels by 2100. That is the vision laid out by researchers at the Paris-based World Inequality Lab in their report. Global Justice Reporta modeling study published last month1.
The report proposes funding the plan through global taxes on the very rich, with the revenue going into a fund to support health, education and the shift towards sustainable development, including the transition from fossil fuels to renewable energy. He also proposes the creation of a new international currency to end some of the financial advantages that rich countries enjoy at the expense of poor ones.
Another report, presented to the United Nations last month, goes further. The roadmap for Eradicate poverty beyond growth2 calls for escaping the “growth trap,” the idea that progress depends on an ever-increasing gross domestic product (GDP). It has been endorsed by more than 1,000 signatories, including Nobel laureate and economist Joseph Stiglitz of Columbia University in New York City.
“People are realizing that simply chasing growth and expecting it to reduce poverty and inequalities does not work,” says the report’s lead author, Olivier De Schutter, the outgoing UN special rapporteur on extreme poverty and human rights.
But many economists criticize the reports and some dismiss them entirely. Nature He spoke with researchers who have different views on the role of economic growth in fighting poverty and climate change.
This is what they had to say.
Should economies grow to end poverty?
Many economists consider economic growth to be a necessary condition for ending poverty.3. They reason that a growing economy creates jobs and increases incomes, which together generate taxes that governments can invest in health, education and other public services. The number of people living in extreme poverty has decreased substantially over the last three decades. The World Bank attributes this achievement to economic growth in East and South Asia. “The biggest thing that has reduced global poverty this century has been the growth of China,” says Eoin McLaughlin, an economic historian at Heriot-Watt University in Edinburgh, UK.
However, both reports argue that it is possible to end poverty and reduce inequality without relying on growing GDP. To achieve this, the roadmap proposes a list of 80 policy measures, including a job guarantee scheme in which governments would employ people who could not find work, focusing on activities involving care and recycling, for example. To finance these measures, he proposes several tax reforms, including a wealth tax on the world’s richest people and an increase in taxes on activities that damage the environment.
Andrew Fanning, an ecological economist at the Donut Economics Action Lab, based in Cadiz, Spain, agrees with the roadmap’s premise that growth is not necessary to end poverty, at least not beyond the infrastructure people need to live a good life, such as roads, schools, hospitals and comfortable homes, he says. The economies of low-income countries may still need to grow to meet these needs. “After that point, we don’t need to grow anymore,” he says.
Can economies continue to grow without harming the planet?
Some economists advocate “green growth,” the idea that countries can continue to grow their GDP while reducing their environmental impacts by developing cleaner technologies. China’s economy, for example, is growing at a relatively high rate even though its carbon dioxide emissions have recently stabilized and begun to decline.
De Schutter acknowledges this example, but points out that there are many more environmental impacts beyond greenhouse gas emissions that could worsen with growth. These include most planetary boundaries, the concept that there are limits to Earth system processes, such as biodiversity loss and changes in the water cycle, that cannot be crossed if Earth’s environment is to remain stable.4. “There is no example of a country that has managed to grow without impacting the nine planetary boundaries,” he says. “When you grow the economy, when you increase the metabolism of the economy, you use energy, resources, produce waste and pollution.”
But Diane Coyle, an economist at the University of Cambridge, UK, says that in rich economies, growth has become less energy and materials intensive over time. “The ‘growth’ measured by GDP is not a measure of the use of materials and energy, since it includes intangibles and services, which constitute an increasing proportion of the total,” he says. “A new vaccine or a more efficient solar inverter will increase GDP, and innovations like these will surely be welcomed.”
Is degrowth or post-growth the answer?
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