the politics of simple living: why our economy is making life worse and how we can make it better

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The Politics of

Simple Living Why Our Economy Is Making Life Worse

and How We Can Make It Better

by

Charles Siegel



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Cover: A Dutch couple bicycles along the Amstel River, a short

ride south of Amsterdam. Photo by Charles Siegel.

ISBN 978-0-9788728-7-8

Copyright © 2014 by Charles Siegel



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Contents

Chapter 1: A Turning Point ...................................................... 7

Chapter 2: Work-Time Choice ................................................. 17

Chapter 3: Cities at the Limit ................................................... 31

Chapter 4: Families at the Limit ............................................... 45

Chapter 5: Health Care at the Limit ........................................ 60

Chapter 6: Growth and Sustainability .................................... 81

Chapter 7: From Progressive to Preservationist .................... 95

Chapter 8: Three Futures .......................................................... 111

Chapter 9: To Live Wisely and Agreeably and Well ............ 134

Appendix: Counterproductive Growth .................................. 145

Notes ........................................................................................... 157



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Chapter 1A Turning Point

The world’s rapid economic growth is creating more wealth but is

also straining ecological limits. We can already see the early stagesof two possible futures that loom ahead of us.

One possibility is ecological crisis. World temperatures have

already increased by about 0.8 degrees centigrade, causing more

devastating storms in the United States and hunger in some de-

veloping nations. These problems will become far worse if we do

not control global warming.

The other possibility is prosperity. Hundreds of millions ofpeople in the developing nations have joined the world’s middle

class during the last few decades. Fifty years ago, China was known

for its massive poverty, which had existed from time immemorial,

but now China is on the verge of becoming a middle-class nation.

India and other nations plagued by extreme poverty are not far

behind.

If we project recent growth rates, we find that the world as awhole could emerge from poverty very soon. A recent study by the

National Intelligence Council predicted that most people in the

world could be middle class in 2030, saying, “The growth of the

middle class constitutes a tectonic shift. For the first time, the

majority of the world’s population will not be impoverished.”1 By

the end of this century, the world generally could be economically

comfortable, if we can avoid ecological disruption—but that is a big“if.”

The current political discussion does not even mention one key

issue. What should people do after they become economically

comfortable?



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It will be much harder to avoid ecological crisis if people who

are already comfortable devote their lives to making more money,

living in bigger houses, driving bigger cars, and buying more

luxury products. We will be more likely to avoid crisis and the

massive suffering that it would bring if people decide that theywant a more balanced life after they become comfortable, spending

less time working so they have more time to devote to their families

and to their own interests.

Today, our economic planning is based on the idea that, no

matter how affluent we become, our economy should keep growing

as rapidly as possible. Few people even have the choice of

downshifting economically so they can live a more balanced life.We need a new politics of simple living that gives us this choice.

The Coming Century

If we can deal with the ecological problems caused by growth,

most of the world could lift itself out of poverty during the twenty-first century, just as America and the other developed nations lifted

themselves out of poverty during the twentieth century. Let us

project the economic trends of the last three decades into the future,

so we can see how quickly prosperity is spreading.

Because China is growing so rapidly, it shows the issues that the

world faces in stark relief. In 2010, China’s per capita GDP was just

over $7,500, over thirty times as much as in 1980 (after correcting forinflation). Growth has reduced poverty dramatically in China:

Between 1981 and 2008, the number of Chinese living in extreme

poverty decreased from 84% to 13%, as nearly 700 million people

moved out of extreme poverty.2 Almost one-third of Chinese

households now meet their definition of middle class, with incomes

of $5,000 to $15,000 per year, and that number is expected to rise to

45% by 2020.3 Its streets are clogged with cars today, though theywere full of bicycles a few decades ago.4

If the rapid growth rate of the last three decades continues,

China’s per capita GDP would equal the United States’ current per

capita GDP in the 2020s. China’s growth rate will slow as its



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economy matures and as its population ages, but if economic

growth continues at the more realistic rate predicted in a recent

World Bank study, the Chinese will be as affluent in the 2040s as

Americans are today.5

It would put immense stress on the world’s environment if thesetrends continue until the average Chinese consumed as many

resources as the average American does today:

■ If China consumed as much oil per person as America now

does, China alone would use more than the world’s total

current oil production.

■ If China consumed as much paper per person as America

now does, China alone would need more paper than theworld currently produces.

■ If China generated as much greenhouse gas emissions per

person as America now does, China alone would generate

more emissions than the entire world now generates.6

■ If Chinese owned as many cars as Americans, it would

have over a billion cars, more than the entire world has

today.7 As a general rule, for a wide range of resources, if the average

Chinese consumed as much as the average American does today,

China alone would consume more resources than the entire world

does today.8

Yet China is not the only developing nation that is moving

toward American levels of consumption. India is just a few decades

behind China, and its potential ecological impact is as great as

China’s. If the Indians consumed as many resources as Americans,

India also would consume more resources than the entire world

now consumes.

Even more striking, the world will reach America’s current level

of income in about 2090 if recent growth rates continue. In 2010, the

world had a per capita GDP of about $10,787, much more than

1980’s $6,173 (after correcting for inflation),9 and if this growth rate

continued, the entire world will have a real per capita GDP equal to

the United States current level just before 2090. The world’s growth

rate will slow as economies mature and as the population ages, but

it is plausible that the world could become middle class in this



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century and could reach the current American standard of living in

the first half of the next century.

Figure 1: Projected Per Capita GDP in China, India, and the World10

The conventional wisdom says economic growth should con-

tinue after the world reaches America’s current level of income—

just as the conventional wisdom says America’s economic growth

should continue though we have already reached this level. All of

the politicians in America today want to stimulate our economy so

it grows as rapidly as possible, and most of the world has exactly

the same attitude. It is hard to imagine the ecological stress it would

cause as the world moves beyond this level and keeps trying to

grow as rapidly as possible.

Recent rates of growth show that this century could bring

worldwide prosperity. But unless we change our current economic

policies, it is more likely that this century will bring ecological

disruption that causes massive human suffering, particularly in the

poorest nations of the world.

Environmentalists tend to focus on the nightmare scenarios. If

there is no action to control global warming, it could cause flooding

of coastlands and desertification of 30% of the world’s land,

bringing worldwide food shortages and hundreds of millions of



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deaths. As fossil fuels become scarcer, soaring energy prices could

cause wars over resources.

Yet we should also look at the unprecedented opportunity that

we have. All through history, the vast majority of people in the

world have lived in poverty, with no more than the basic shelterand food needed to survive, and with the threat of famine always

looming. Most of the world still lives at a subsistence level today.

But the world could emerge from poverty during this century, if we

can avoid ecological disruption.

Counterproductivity

There are obviously ecological risks to continuing rapid

economic growth as the rest of the world approaches and moves

beyond America’s current standard of living. But is there any

benefit to continuing growth to this point?

The evidence shows that there is little or no benefit to growth

after people reach a level of middle-class economic comfort that the

average American reached decades ago. The economist RichardEasterlin first noticed in 1974 that surveys showed Americans had

not become any happier since the 1950s, despite decades of growth

and rising income across all economic classes. This finding still

holds up today: American’s self-reported happiness peaked in 1958,

and it has jogged up and down a bit but has never reached that

peak again. Though our per capita GDP has more than doubled, we

are not as happy as we were a half-century ago.11 International comparisons prove the same point. Beginning in

1990, the World Values Survey asked people in many nations how

happy they are. Figure 2, shows the results of a recent survey,

comparing the happiness rating based on this survey with the per

capita GDP of each nation at the time. We can see in the figure that,

in lower income countries, the happiness rating generally increases

as income increases, but after countries reach about one-half of theUnited States’ per capita GDP, happiness no longer increases

significantly as GDP increases.

This result is not surprising. In poor countries, more income is

needed to provide people with decent housing, food, education,



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health care, and other essentials; it makes sense that people will

become happier as they can afford more of the necessities and basic

comforts of life. But when people reach about one-half of the

average American’s current income, they have enough to make

them comfortable, and there is relatively little benefit to consumingeven more.

Figure 2: International Comparison of Per Capita GDP and Happiness12

America’s per capita income in the 1960s was less than one-half

of what it is today (after correcting for inflation),13 and Americansfelt very prosperous at the time: In 1958, a best-selling book called

America “the affluent society,”14 and the economic boom of the

1960s made the nation feel even more prosperous. The average

American of the 1960s had the necessities and comforts needed to

live a good life. There was still poverty in the country at the time,

but as we will see in a later chapter, economic growth has not even

reduced our poverty rate since then.Once you have the basic elements of economic comfort, such as

good housing, health care, and education, and you also have some

luxuries, such as music, books, and travel, consuming even more

does not bring great benefits—but it does bring real costs.



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Growth continues to cause massive environmental costs even

after it stops bringing significant benefits. There would obviously be

less chance of ecological disruption in the coming century, if nations

that were already economically comfortable tried to achieve the best

possible quality of life rather than the fastest possible rate ofeconomic growth. We can imagine a future where the developed

nations decided to shift to slower growth now, where China decides

to slow growth in a couple of decades, and where the other de-

veloping nations decide to slow growth as they also reach the level

where they have a comfortable middle-class standard of living.

Slower growth in the developed nations would obviously make it

easier to avoid ecological disruption and to lift the world out ofpoverty.

There are many other costs of growth that are less well known

than obvious ecological problems such as global warming. Later

chapters will show that we have reached the point where the side-

effects of growth make our cities less livable, make it harder to

educate our children, and make it harder to maintain our health.

This is what we will call the counterproductivity of economicgrowth.15 When growth moves beyond a certain point, it brings

insignificant benefits, but it continues to cause significant problems.

After we pass this point, we spend more on housing and

transportation, but our cities become less livable and harder to get

around. We spend more on education without improving student

achievement. We spend more on health care without improving our

health. After we pass this point of counterproductivity, growth

threatens to decrease our well-being, because its costs can be greater

than its benefits.

Global warming is just one example of the many costs of growth

that could leave our children less well off than we are.

A Politics of Simple LivingWe often hear about the problems caused by growth, but we

rarely hear about practical policies that could slow economic

growth by giving people the option of living simpler and more

satisfying lives.



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As a practical matter, there seem to be huge obstacles in the way

of slowing growth. Whenever there is a recession, slower economic

growth causes higher unemployment. Economists and politicians

all react by saying we need faster growth to provide more jobs.

In addition, many Americans feel that they are just getting byeconomically. Higher income people might be able to cut back on

their spending, but average Americans generally feel that they

cannot.

How can it be that average Americans today feel they are just

getting by, while the nation felt affluent in the 1960s, with half as

much as we have today?

It is because we are burdened with a huge amount ofcompulsory consumption, which people cannot avoid even though

it does not bring any significant benefit. We need a politics of

simple living that gives us the choice of stepping off the treadmill,

by avoiding this compulsory consumption and downshifting

economically. It should include policies such as:

■ Work-Time Choice: Today, most people have no choice but

to take full-time jobs, because most part-time jobs have lowhourly pay and no benefits. We need policies that allow

people to choose part-time work (as workers can already do

in the Netherlands and Germany), so they have the option

of working shorter hours, consuming less, and having more

free time.

■ Walkable Neighborhoods: Since the end of World War II,

federal freeway policies and local zoning laws have forced

most American neighborhoods to be built as low-density

sprawl where people cannot leave their houses without

driving their cars. We need to build walkable, transit-

oriented neighborhoods, so people have the option of

reducing the substantial economic burden of automobile

dependency.

■ More Family Time: Today, we subsidize families who use

day care and after-school programs, but we do nothing to

help families who work shorter hours to care for their own

children. We should give families with preschool children a

tax credit that they could use either to pay for day care or to



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work shorter hours and have more time to care for their

own children.

■ Healthier Lives: Today, Americans spend almost twice as

much on health care as people in other industrial nations,

but our health is not as good as theirs. We need to providehealth care without promoting all this waste, and we need

to encourage people to improve their own health by

exercising, eating better diets, and living healthier lives.

In addition to these policies that give people the option of

downshifting economically, a politics of simple living requires

policies that distribute income more equally, so everyone has the

opportunity to live well. As we will see, since the Reagan revolutionof the 1980s, most increased income has gone to the very rich, the

United States has become the most unequal of all the developed

nations, and our poverty rates have gone up. We need policies that

give everyone who works a fair share of our prosperity—both the

income to live comfortably and the free time to live well.

A politics of simple living demands a massive change in our

political thinking.Our political ideologies, both conservative and progressive, date

to the nineteenth century, when most people lived in poverty and

rapid economic growth clearly was needed. Our conservatives

claim that unleashing the free market will promote faster growth,

and the benefits will trickle down to everyone. Our progressives

claim that government intervention is needed to promote growth

and to spread its benefits widely. The two sides argue about which

will do the better job of promoting growth.

This single-minded focus on economic growth made perfect

sense when these political ideas first became popular, but during

the coming century, it will become clearer and clearer that it no

longer makes sense, as the ecological and social costs of growth

become more and more obvious.

This single-minded focus on growth already makes no sense in

the United States and other developed nations, where we have

reached the point where there are few benefits to further growth.

The ideologies of the nineteenth and early twentieth century

promised a better future to people who lived near the poverty level,



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as growth gave them decent housing, basic education, and essential

health care. But continuing growth no longer offers an optimistic

vision of the future: Even if it were ecologically possible, a world

where we live in bigger suburban McMansions and drive bigger

SUVs on bigger freeways would not be an inspiring vision of thefuture.

After we reach the point where we have a comfortable standard

of living, more consumerism does not equal a better way of life. We

need to replace the old vision of rapid growth with a new vision of

a future where people have enough income to be economically

comfortable and also have enough time to spend with their families

and friends, time to exercise and keep physically fit, time to beactive members of their communities, and time to develop their

talents as fully as possible.

Decades ago, we passed the point where the average American

has the income to live comfortably but needs more free time to live

well.

Most books about the limits of economic growth focus on the

policies that deal with increasing pollution and demand for re-sources. This book looks at how to deal with these problems, but it

focuses on the policies that would let people live a better life after

we move beyond the age of rapid economic growth.

Environmentalists have already painted a convincing picture of

the nightmare future that rapid economic growth could cause. We

will be more successful politically if we also paint a convincing

picture of a better future.



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Chapter 2Work-Time Choice

There is a question that is central to how we live our lives and to

whether our economy is sustainable—but that no mainstreamAmerican politician has talked about since the Roosevelt adminis-

tration. That question is: Should we take advantage of increasing

productivity to consume more or to have more free time?

Ever since the beginning of the industrial revolution, improved

technology has allowed workers to produce more output in an hour

of work. During the twentieth century, the productivity of

American labor (the term that economists use for output per workerhour) grew by an average of about 2.3% a year—which means that

the average worker in 2000 produced almost ten times as much in

an hour as the average worker in 1900, as shown in Figure 3.16

During the nineteenth and early twentieth century, workers took

advantage of higher productivity both to earn more income and to

work shorter hours. But in post-war America, the trend toward

shorter hours suddenly stopped. Since 1945, in a dramatic breakwith the historical trend, we have used the entire gain in

productivity to produce and consume more without increasing

workers’ free time. In fact, we have done something even more

extreme than that: During recent decades, Americans have been

working longer hours, and we actually work more now than in the

1970s.

We could help deal with global warming and many otherenvironmental problems by taking a more balanced approach:

Instead of using higher productivity only to increase consumption,

we could also use it to reduce work hours, as we did during most of

our history. That would mean a slower rate of economic growth,



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but it would also mean a better way of life, with more free time as

well as more income.

Figure 3: American Productivity (Output per Worker Hour)

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The War over Work Time

History shows that Americans today do not work long hours out

of choice, as some conservative economists claim. Though most

people do not remember it today, there was a political battle over

work hours during the 1930s, which led to a deliberate politicaldecision to set the standard work week at 40 hours and to stimulate

economic growth rapid enough to provide workers with these 40-

hour jobs.

During the nineteenth and early twentieth century, unions

fought for shorter hours just as fiercely as they fought for higher

wages. Because of the unions’ efforts, the average workweek in

manufacturing declined dramatically, from about 70 hours in 1840to 40 hours a century later.

In the early nineteenth century, the full-time employees in

American factories typically worked six days a week, twelve hours

a day, a total of 72 hours per week. In Lowell, Massachusetts,



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humanitarian reformers established factories as part of a social

experiment meant to help young women work and save some

money before marriage, and even these reformers required the

women to work 12 hours a day, six days a week, with only four

holidays per year apart from Sundays. Those were the standardfull-time work hours.

Figure 4: Average Work Week in US Manufacturing18

Gradually, as new technology allowed workers to produce more

per hour, wages went up and the workweek declined. As Figure 4shows, the workweek in manufacturing declined steadily through

the nineteenth century and early twentieth century. Around the

time of World War I, Americans began gradually shifting from the

traditional six-day week to a five-and-a-half-day week, with half of

Saturday off as well as Sunday. During the 1930s, we adopted the

five-day, 40-hour week. Work hours in manufacturing are in-

teresting, because we have the best historical statistics for them andalso because manufacturing jobs are virtually all full-time, so Figure

4 shows very clearly that a typical full-time job has not always

meant a 40-hour week. The standard 40-hour work week was an

invention of the Depression and the post-war period.



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The Great Depression gave labor unions another reason to fight

for shorter hours during the 1930s: They believed a shorter work

week would reduce unemployment by sharing the available work.

The Black-Connery bill would have set the work week at 30 hours in

order to reduce unemployment, and labor strongly supported thisbill, with William Green, president of the American Federation of

Labor, as a leader. The bill was passed by the Senate on April 6,

1933.

At the time, many people believed that the 30-hour week would

just be the first step. The Depression was caused by inadequate

demand, and many speculated that people were beginning to reach

the point where they did not need to consume much more. Astechnology continued to improve and workers continued to

produce more each hour, it seemed inevitable that workers would

produce everything that people wanted in fewer and fewer work

hours, so the work week would have to keep getting shorter to

avoid unemployment.

Business leaders opposed the Black-Connery bill fiercely, and

they said that instead of shortening hours, we should fightunemployment by promoting “a new gospel of consumption.”

Initially, the Roosevelt administration backed Black-Connery, but

because of business opposition, it abandoned its support for this bill

and worked for a compromise that would satisfy both business and

labor. Without Roosevelt’s support, Black-Connery failed by just a

few votes in the House of Representatives.

Roosevelt’s compromise plan had two features: the 40-hour

week, and government programs to stimulate the economy and

provide jobs.

The Fair Labor Standards Act of 1938 set the standard work

week at 40 hours, which did not actually reduce work hours for

most workers, since the average work week was already less than

this because of the Depression. In addition to setting this standard

work week, the Roosevelt administration tried hard to promote

economic growth in order to give every worker one of these 40-hour

jobs. Under Roosevelt’s New Deal, the federal government built

highways, dams, and other public works projects to provide more



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jobs, and it tried to stimulate the economy so the private sector

would provide more jobs.

After World War II, Roosevelt’s compromise—the forty-hour

week plus policies to stimulate the economy and provide jobs—

became the status quo. We still live with this compromise today.In post-war America, there were fears that the country would

fall back into another depression, so the federal government spent

vast sums of money to stimulate the economy. For example, there

were federal programs to build freeways and to guarantee

mortgages for new suburban housing to stimulate the automobile

and construction industries, and there was bipartisan support for

Keynesian economics with deficit spending to encourage rapideconomic growth.

The private sector also did its share by spending more on

advertising, and our leaders told us that it was our obligation to buy

the products. In one famous example, a reporter asked President

Eisenhower what Americans could do to help end the recession of

1958, and this dialog followed:

Eisenhower: Buy.

Reporter: Buy what?

Eisenhower: Anything.19

All these efforts succeeded in stimulating growth that was rapid

enough to give Americans those standard 40-hour jobs. In a reversal

of the historical trend, the standard workweek did not decline

during the 1950s and 1960s, despite higher wages and widespreadeconomic prosperity. Since the 1970s, the average workweek for all

American employees has actually increased, because employers

have pressured them to work longer hours and because more

people feel compelled to take a second job to make ends meet; the

average American employee worked 180 more hours per year in

2006 than in 1979.20

Despite the tremendous changes in our society and thetremendous growth of our economy since the 1930s, Roosevelt’s

compromise is still with us today. Everyone takes it for granted that

people should have standard 40-hour-a-week jobs, and every



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politician promises to promote economic growth in order to provide

more of those 40-hour jobs.

We cannot be sure what balance of free time and income people

would want if they had the choice, but the inflection in the graph of

the average work week (Figure 4 above) shows clearly that we havedistorted this decision in the direction of longer hours, more income

and faster growth. From the beginning of the industrial revolution

until the Depression, average work time declined. Suddenly, after

World War II, average work time stopped declining. This sudden

shift was clearly a result of federal laws establishing a 40-hour week

and of federal policies to stimulate the economy and provide more

jobs.Our society is out of balance because we have spent many

decades focusing on increased output and ignoring increased free

time. Because women entered the workforce during this period,

many families now face a time famine, without enough free time to

take care of their own children. One-quarter of all Americans say

that they constantly feel rushed, and another one-half say they often

feel rushed, leaving only one-quarter who say they have enoughtime.21 If today’s time-starved Americans knew the history of the

battle over work hours, most would probably think that they would

be better off if Black-Connery had passed and given us a 30-hour

week.

Choice of Work Hours

Most Americans today have no choice of work hours, because

most decent jobs are full-time jobs. Part-time jobs usually have low

wages, no benefits, no seniority, and no opportunity for promotion.

You can get a part-time job if you want to work in a fast-food

restaurant, but you usually have to take a full-time job if you want

to work as a plumber, an engineer, an accountant, a lawyer—or ifyou want most jobs with security, benefits, and decent pay. To give

a glaring example of our unfairness to part-time workers, many

college teachers now work part-time as “Adjunct Professors”: They



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are paid far less per course than full-time professors, and they have

no chance of getting tenure.

Studies have shown that 85% of male workers have no choice of

hours—their only practical options are a full-time job or no job.22

Economist Juliet Schor has estimated that, if the average maleworker cuts his hours in half, he will cut his earnings by more than

80% because of the lower pay and benefits for part-time workers;23

the average woman would lose less, but that is because women are

more likely to work part-time, so they already have lower wages

because of discrimination against part-time workers.

Despite the low pay, many people choose to work part time. The

great majority of part-time workers are part-time by choice, andonly 29% work part time because full time work is not available, as

Figure 5 shows. This graph shows the numbers for 2009, during a

deep recession when it was difficult to find full-time work. The

percent who work part time because they cannot find full-time

work is much lower when the economy is healthy; for example, in

2005, only 17% worked part-time because they could not find full

time work, and the rest worked part time because they wanted to.24

Figure 5: Reasons for Working Part-Time25



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Obviously, more people would want to work part time, if part-

time employees were paid as well and treated as well as full-time

employees.

To give people the option of working part-time, so they can

consume less and have more free time, we should adopt policiesthat let people choose their work hours, as some European nations

have already done:

■ End discrimination against part-time workers: By law,

employees who do the same work should get the same

hourly pay, whether they are full-time or part-time. Part-

time workers also should have prorated benefits, the same

chance of promotion and the same seniority as full-timeworkers, with seniority based on the total number of hours

an employee has worked. The European Union has already

adopted policies like these to end discrimination against

part-time workers,26 and the International Labor

Organization has adopted a convention forbidding

discrimination against part-time workers, which applies to

the fourteen nations that have ratified it.27 ■ Allow workers to choose shorter hours: The Netherlands

and Germany have laws saying that, if a full-time employee

asks to work shorter hours, the employer must

accommodate the request unless it will be a hardship to the

business.28 These laws are the ideal, but if they are too

strong for us to adopt immediately, we can pass the

Working Families Flexibility Act, first introduced in

Congress in 2007, which gives employees the right to

request shorter hours but does not require employers to

grant the request; a similar law has been successful in the

United Kingdom, where employers grant more than two-

thirds of requests.

The Netherlands was the first country to adopt policies

encouraging part-time work. In 1982, under the agreement of

Wassenaar, labor unions moderated their wage demands in

exchange for shorter work-hours. At first, hours were reduced

largely by providing more holidays, but beginning in the 1990s, the

emphasis shifted to providing more part-time jobs: From 1990 to



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1996 the number of businesses with part-time clauses in their union

agreements increased from 23% to 70%.29 In 1996, the Netherlands

passed a law forbidding discrimination against part-time workers,

which has since been adopted by the entire European Union.

Increased part-time work is considered to be the main cause of the“Dutch employment miracle” of the 1990s, when unemployment

fell from the very high 13% of the mid-1980s to 6.7% in 1996, the

lowest level in Western Europe at the time.30

In the year 2000, the Netherlands adopted the Working Hours

Adjustment Act, which requires businesses with more than ten

employees to accommodate requests for shorter hours, if they do

not cause economic hardship to the employer. As a result of allthese policies, 48.3% of all workers in the Netherlands work part-

time as of 2011, up from 25% in 1993.31 The average Dutch worker

works only 81% as many hours per year as the average American

worker (including full-time and part-time workers).32

Rudd Lubbers, the Prime Minister when the agreement of

Wassenaar was implemented, has written:

The Dutch are not aiming to maximize gross national product per

capita. Rather, we are seeking to attain a high quality of life....

Thus, while the Dutch economy is very efficient per working hour,

the number of working hours per citizen is rather limited. ... We

like it that way. Needless to say, there is more room for all those

important aspects of our lives that are not part of our jobs, for

which we are not paid and for which there is never enough time.33

These policies would not force anyone to work shorter hours.

They would give people the option of working shorter hours, letting

them decide for themselves whether to consume more or to have

more free time.

Choice or a Shorter Workweek

In the past, American work hours became shorter as the

standard work week was reduced. It still makes sense for us to

shorten standard work hours, to catch up with Europe’s shorter

hours, but in today’s society, there are a number of reasons why it is

even more important to focus on the choice of work hours.



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Choice of work hours accommodates recent changes in the

family. Until a few decades ago, most families were supported by

one breadwinner. Today, families are much more diverse. Some

people are still the only wage earners for their families, and they

may need to work longer hours to get by. Other families are madeup of two working professionals without children, who can easily

afford to work shorter hours.

Choice of work hours has political advantages. Conservatives

would argue against a shorter standard work week by saying that

people want to work and earn more, but it would be hard for them

to argue against letting people make this choice for themselves.

Shortening the standard work week also creates conflicts betweenemployers and employees by raising the cost of labor (which is why

the 35-hour work week has become so controversial in France), but

choice of work hours does not create this conflict (which is why this

choice has not become controversial in Germany and the

Netherlands).

Choice of work hours would reduce inequality of income,

because people with higher hourly earnings are more likely to workshorter hours. Ultimately, it could change our definition of success:

We would consider people successful if they not only had a higher

income than average but also had more free time than average.

Most important, choice of work hours would let people make a

deliberate choice of their standard of living. Each person would

have to decide whether it is more important to consume more or to

have more free time, and this choice would make people think

much harder about their purchases. Instead of buying a McMansion

and an SUV, you could buy a smaller house and car and work (say)

one day less each week. If you have fixed work hours and a fixed

salary, you might as well buy the biggest house and the biggest car

you can afford; but if you have a choice of work hours, you will

consider that consuming less would allow you to work less.

Choice of standard of living has become important now that we

have moved from a scarcity economy to a surplus economy.

In theory, choice of work hours has always made sense. Eco-

nomic theory has always said that people should have a free choice

among different products, so they can choose the combination of



27

products that gives them the most satisfaction. This theory implies

that people should be able to choose between consuming more and

having more free time for exactly the same reason: They should be

able to choose the combination of consumption and free time that

gives them the most satisfaction.In practice, this choice was not very important in the past. Until

the mid twentieth century, most people consumed not much more

than the essentials, so they could not go very far in choosing more

free time rather than more income. As a result, most economists

overlooked the issue historically.

In today’s American economy, though, most people consume

more than the essentials and could get by with less income andmore free time. The choice between more free time and more

income is now critical to determining what sort of lives people lead.

This choice is needed to let people live in the way they prefer.

This choice of more free time rather than more income is also

important to dealing with our most pressing environmental

problems. For example, a recent study by the Center for Economic

and Policy Research found that, if Americans worked as few hoursas western Europeans, it would lower our energy consumption and

greenhouse gas emissions by 20%.34

A popular movement toward simpler living could help to reduce

all our environmental problems, but that movement cannot become

widespread as long as most people do not even have the choice

between consuming more and having more free time.

What Is the Economy For?

With choice of work hours, we would still need planning to fine-

tune the economy in order to avoid inflation, unemployment, and

other economic disruption. Keynesian planning became popular in

response to the unemployment of the Great Depression. Monetary

planning became popular in response to the inflation of the 1970s. Ifthere were a mass movement to shorter hours, new methods of

planning would be needed to respond to slower growth.

In one example of the sort of planning we would need, the

Canadian economist, Peter Victor, has created a computer model



28

that lets him study how the Canadian economy would react to

slower growth or to no growth. The results of running the model

differ dramatically as he changes the values for macroeconomic

variables such as the savings rate, the rates of public and private

investment, and the length of the work week. In one run, the end ofgrowth brings economic instability, high unemployment, and rising

poverty. In another run with different values for these variables, the

end of growth brings economic stability, reduces both poverty and

unemployment by half, and reduces the ratio of debt to GDP by

75%. The second scenario has a higher savings rate, a lower rate of

private investment, and a higher rate of public investment, and it

avoids unemployment by reducing work hours.35 There are very few macroeconomic studies of this sort, and more

would be needed to help us develop policies to accommodate wide-

spread work-time choice and the slower growth it could bring.

But the key difference in macroeconomic planning would be

this: Today, we try to create economic growth rapid enough to give

people standard 40-hour jobs. With work-time choice, we would try

to create growth rapid enough to give people the number of workhours that they actually want.

Today, the economy must grow rapidly, whether or not people

want more products, purely to create more 40-hour jobs. With

work-time choice, people would work enough to buy the products

they want, and then they could stop.

Our economic debate usually focuses solely on inflation and

unemployment, technical questions that only economists can deal

with. We also need to ask the underlying human question: What is

the economy for?36

Obviously, the purpose of the economy is to produce things that

people actually want.

Everyone realizes this when they talk about work that we do for

ourselves. For example, we do the job of patching the roof because

we want to keep the rain from coming in, and when we have

accomplished this goal, we stop. We do not keep tearing up the roof

and patching it again in order to “create jobs” for ourselves.

But when it comes to the formal economy, we become totally

mystified, and we believe that there is a benefit to “creating jobs.”



29

We do not work to produce the things that we want to consume.

Instead, we believe we must produce and consume more things to

create more work.

If we thought about the human purpose of the economy, we

would realize that in the formal economy, as in production for ourown use, we should produce what we want to consume and then

stop.

Economists have expert knowledge that helps them deal with

inflation, unemployment and other economic problems, but

ordinary people are the ones who should decide how much they

want to consume. The technical questions about inflation and

unemployment, which only economists can answer, should besubordinate to the human question about what balance of work and

free time gives you the most satisfying life. People should be able to

answer this human question for themselves, by making decisions

about their own work hours based on their own desire for more

income and more free time.

Compulsory Consumption

For most Americans, though, choice of work hours alone is not

enough.

Wealthier Americans could cut their work hours significantly by

giving up luxuries, but when we look at average Americans, we

find that most people feel hard pressed economically. They might

be able to cut their work hours a bit by downshifting economically,but if they cut their work hours by much, they would not be able to

get by.

When the Black-Connery bill was introduced during the 1930s,

in the days before most women worked, everyone thought it was

plausible that that one worker could support a family by working

thirty-hours a week. Americans today earn much more per hour

than Americans did during the Great Depression, but most wouldbe shocked by the idea that they could support their family with the

income of one person working a 30-hour week.

In the 1960s, Americans had half as much income as today (after

correcting for inflation), and they felt affluent. But today, most



30

Americans could not even get by on half of their income. Why do

we need so much more income than we did in the 1930s or the

1960s?

The problem is that we are burdened with a huge amount of

compulsory consumption. In addition to allowing the personalchoice of work hours, we need larger social and economic changes

to free people from this compulsory consumption and give them the

choice of living more simply.

In the next few chapters we will look at practical policies that

could let us step off the consumption treadmill. We will see that, in

the cases of urban planning, education, and health care, we in the

United States are moving beyond the point where growth brings usany benefits, but our current policies do not give people the choice

of consuming less.

We need new policies that give people the choice of living

simpler, more satisfying lives.



31

Chapter 3Cities at the Limit

The way we build our cities and neighborhoods imposes a

tremendous economic burden on the average American.Spending on transportation has soared as our cities have been

rebuilt around the automobile. One hundred years ago, most

Americans who lived in cities and suburbs walked as their main

form of transportation. Today, most Americans cannot leave their

homes without driving; they have no choice but to pay for their

cars, for gasoline, for insurance, and so on.

Spending on housing has also soared. The low-density,automobile-oriented suburbs that most Americans live in today are

much more expensive than the apartments, row houses, and street-

car suburbs that Americans lived in a century ago.

Most Americans do not have the choice of avoiding these costs.

Since the mid-twentieth century, most federal transportation

funding has gone to freeways, and most local zoning laws have

required developers to build low-density, auto-dependent suburbs.These costs increased dramatically, precisely because it was

government policy during the post-war period to encourage more

spending on automobiles and suburban housing in order to

stimulate the economy—part of the post-war consensus that grew

out of Roosevelt’s response to the Depression. We needed economic

growth rapid enough to provide everyone with 40-hour-a-week

jobs. During the post-war decades, auto-dependent suburbs were acentral to the “rising standard of living” that government promoted

to absorb consumers’ excess purchasing power and to avoid another

Depression. The Highway Trust Fund and other federal programs

funded freeway construction in cities and suburbs. Until the 1960s,



32

the Federal Housing Authority (FHA) offered low-cost loans only

for new housing built in suburbs.

In retrospect, most city planners today agree that these policies

caused the biggest problems of contemporary American cities:

traffic congestion, less livable neighborhoods, destruction of openspace, high levels of energy consumption, and over five tons of

carbon dioxide per year emitted by the average vehicle.

Consuming More Housing and Transportation

If we look back at the history of the American city, we can seethat consuming more housing and transportation made cities more

livable initially but now makes cities less livable. Counterpro-

ductivity has set in

Before the nineteenth century, all cities were built as “walking

cities.”37 Because most people got around by foot, cities had to be

very dense. People lived in three to six-story buildings, in

apartments or in narrow row houses, often with shopping on theground level. Streets were narrow, and buildings were not set back

from the sidewalk. The older parts of European cities and towns are

still built this way, and some early American cities were just as

intense: The streets of eighteenth century Philadelphia looked like

the streets of London, though there were vast areas of open land

nearby.

Early in the nineteenth century, steam powered ferries andhorse-drawn omnibuses let Americans live at lower densities. New

middle-class neighborhoods typically were made up of row houses:

Streets were wider, houses were set back a few feet from the

sidewalk and had larger backyards, and trees were planted along

the sidewalks. Houses were commonly built on one-twentieth-acre

lots.

From the 1870s until World War I, horse cars on steel tracks,cable cars, and electric trolley cars let the middle class move to

“streetcar suburbs,”38 which we think of today as classic American

neighborhoods. They were made up of free-standing houses, with

adequate backyards, small front yards, and front porches looking



33

out on tree-lined streets. Houses were commonly built on one-tenth-

acre lots.

Streetcar suburbs felt spacious and quiet, but their most

important form of transportation was still walking—even though

they were about one-tenth the density of the traditional walkingcity. Streetcars were used for commuting to work and for occasional

trips to other parts of town, but everyone lived within walking

distance of a local shopping street. You could catch a streetcar on

the main street, but you usually just walked to the stores, doctors’

offices, and other services that were right there. People nodded to

neighbors sitting on their porches as they walked to the local

shopping street, and they met their neighbors at the local stores.A carriage was a sign of wealth one hundred years ago, and (as

astounding as it seems today) middle-class Americans who lived in

cities or suburbs generally did not own vehicles.

Figure 6: Typical Lot Size in Middle-Class American Neighborhoods

Many people like cities, but for those who prefer a suburban

way of life, new transportation technology and economic growth

brought real benefits during the nineteenth and early twentieth

century. From the walking city, to the row-house neighborhood, to



34

the streetcar suburb, middle-class neighborhoods became greener,

quieter, more spacious, healthier, and safer for children.

During the twentieth century, Americans moved to even lower

density suburbs.

After World War I, the typical middle-class neighborhood was abungalow suburb with one-sixth acre lots. Often, the neighborhood

stores were not close enough to walk to easily, but cars were

becoming more common, and people could drive a few blocks to

buy their groceries.

After World War II, when the federal government actively

promoted suburban sprawl, the typical middle-class neighborhood

was a freeway-oriented suburb with homes on quarter-acre lots. Tobuy groceries, you had to drive on high-speed arterial streets, where

the traffic could be nerve-racking. Each adult—and even each teen-

ager who reached driving age—needed a car.

During the rest of the twentieth century, we continued to travel

longer and longer distances, as sprawl became worse and shopping

moved to remote big-box stores.

Reversing the trend of the twentieth century, per capita vehiclemiles traveled (VMT) declined slightly between 2000 and 2010.

There are a number of explanations for this decline. Most obvious is

the “great recession” that began in 2007: Foreclosures were most

common in the newest, most auto-dependent suburbs; and people

who are unemployed drive less because they do not commute to

work. The aging of the population also reduces driving, because

people who are retired do not commute to work. In some metro-

politan areas, sprawl cannot go further because it has reached the

maximum distance that people are willing to drive. In other areas,

sprawl has been limited by environmentalists’ efforts to stop

freeways and preserve open space.

There are also social changes that have led some observers to

predict that driving will continue to decline. Driving has been

reduced by the renewed popularity of walkable neighborhoods. The

baby boom generation is about to begin retiring, and a recent survey

by the National Association of Realtors shows that many plan to

move from the auto-dependent suburbs where they raised their

children to urban downtowns, suburban town centers, or small



35

towns. The so-called millennial generation, born between 1979 and

1996, is beginning to form families, and surveys show that they

prefer urban downtowns and suburban town centers, because they

are more interesting and more convenient than auto-dependent

suburbs.39

Figure 7: During the Twentieth Century, American Driving Distances Soared40

Even more striking, surveys show that teenagers no longer focusas much on cars as they did fifty years ago. They are more likely to

use electronics as the way to keep in touch with their friends and to

show their independence.41

To some extent, VMT has been reduced because of economic and

demographic trends, but to some extent, it has been reduced

because of a change in values that may go further. We still have a

long way to go to reduce automobile dependency: The averageAmerican still drives more than twice as much as in 1960,42 though

in 1960 there was already widespread recognition among people

knowledgeable about city planning that Americans drove too

much.43



36

Counterproductivity and the City

By now, most urbanists recognize that post-war urban design

was a failure. It is a perfect example of counterproductivity: All the

increased consumption of transportation and land made oursuburbs less livable than the streetcar suburbs were. Excessive

automobile use made neighborhoods noisier, more congested, and

less safe for children. Endless freeways, strip malls and tract

housing paved over the open countryside that had attracted people

to the early suburbs. The sense of community of the early suburbs

disappeared, as local shopping streets were replaced by anonymous

regional shopping centers.The most important trend in urban design in American today is

the New Urbanism, a reaction against conventional suburbia.44

Urban designers such as Andres Duany and Peter Calthorpe are

building neighborhoods modeled on the streetcar suburbs that were

built before World War I. Some cities and counties have adopted

form-based codes that require traditional neighborhood design, to

replace conventional suburban zoning, so developers are no longerrequired by law to build sprawl, as they still are in most of the

country.

New Urbanism has been so successful because many people

agree that post-war suburbia, with housing on one-quarter acre lots,

is less livable than streetcar suburbs, with housing on one-tenth acre

lots. All the extra land that we consume does not give us more

livable neighborhoods.

Growth has made transportation less convenient and more

stressful, just as it has made neighborhoods less livable.

All the extra money that we spend on transportation—on our

freeways and our two or more family cars—does not make it

quicker for us to get around. Research has shown that the amount of

time that Americans spend commuting to work remained constant

from the 1840s (when suburbanization began during the early years

of the industrial revolution) through 1990, despite the vast changes

in technology during that time.45 The total amount of time that

Americans budget to transportation also tends to remain constant,

about 1.1 hours per day.46 As speeds have increased, suburbs have



37

sprawled and malls have gotten bigger, so people drive further to

get to their jobs or go shopping, rather than getting where they are

going more quickly.

After remaining constant for 150 years, the average American’s

commute time began to increase in the 1990s. By 2006, the averagecommute had increased to 18% more than its historic norm. Over

3.4 million Americans drove more than an hour and a half to work,

twice as many as in 1990. 47

These people generally commuted such long distances because

they moved to very remote suburbs to find affordable housing. On

the east and west coast, low-density suburban zoning has created a

scarcity of housing, but the cost of a house is tens of thousands ofdollars lower for each additional freeway exit that you drive. Low-

density zoning forced people into long, stressful commutes, left

them without enough time for their families, and made them take

on debts they could not afford. These are the patterns that were

common when cities were sprawling rapidly in the years following

1990; of course, they have been partly reversed since the collapse of

the housing market during the “great recession.”When we look at how American neighborhoods have changed

historically, the typical pattern of counterproductivity is clear.

Neighborhoods became more livable as the middle class moved

from the walking city, to row houses, to streetcar suburbs. At that

point, middle-class Americans were already living in neigh-

borhoods that were adequate. The streetcar suburbs gave families

enough space, enough privacy, enough quiet, a big enough back

yard. Post-war suburbia did not bring much added benefit, but it

did cause real social and environmental problems, such as traffic

congestion, the ugliness of strip malls, loss of farmland and open

space, and a scarcity of land that drove up housing costs. We have

reached the point where the costs of urban growth outweigh its

benefits.

Yet most Americans today have no choice but to live in low-

density suburbs, where each family needs two or more cars. During

the post-war period, the federal government promoted this sort of

development so forcefully that it now accounts for most of our

housing stock. In the single decade following 1950, for example, the



38

number of dwelling units in the United States increased by 63%.48 In

a few decades after the war, suburban sprawl became the dominant

form of American neighborhood.

Most zoning laws today still require developers to build low-

density housing separated from other uses, forcing people to live inauto-dependent neighborhoods.

Transforming Our Cities

There is now a reaction against sprawl and a move toward whatis called “smart growth.” If this movement succeeds, American

cities could be transformed as dramatically in the next few decades

as they were during the post-war decades.

We need to transform our cities because freeway-oriented

sprawl puts an economic burden on Americans and is less livable

than traditional walkable neighborhoods. And we urgently need to

transform our cities to help deal with global warming.

Transit-Oriented Development

We should shift transportation spending away from the current

emphasis on building new freeway capacity. Instead, government

should support public transportation and development around

transit stops as vigorously as it supported freeways and sprawl

during the post-war decades.

From the 1950s through the 1980s, almost all federal

transportation funding was used to build freeways. Beginning in

the 1990s, the federal government made some transportation

funding flexible, so it could be spent on either freeways or public

transportation. About 58% of the funding for Federal Highway

Administration programs between 1992 and 2002 was flexible

funding, but the states spent only 5.6% of this funding on public

transportation and the rest on highways.49

The federal government should make all of its surface trans-

portation funding flexible, and urbanized states should realize that

the way to solve their traffic problems is by building public



39

transportation and transit-oriented development, rather than

building new freeways.

We will still have to spend most of our transportation funds on

maintaining existing highways, but spending on new transportation

capacity should focus on public transit and on improvements forpedestrians and bicyclists.

As we build more public transportation, we should also create

incentives for developers to build walkable neighborhoods near

transit stations. We need a federal program to stimulate the same

sort of building boom around transit stations that the FHA

generated around suburban freeways in the 1950s and 1960s.

This development should be near transit and have walkablestreet systems, but it does not have to be very high density: Around

transit stations in the center city, we would build apartments, but

around transit stations at the edge of the city, we could build the

sort of streetcar suburbs that the New Urbanists are now designing,

with apartments above the shopping on Main Street, and with free-

standing houses as the main housing type.

This new development is needed to give Americans the choice ofliving in walkable, transit-oriented neighborhoods. After many

decades of government support for sprawl, most Americans no

longer have this choice, because so much of our housing is in auto-

dependent neighborhoods. There is no chance that these neigh-

borhoods will disappear in the foreseeable future, and we need to

provide more balance and more choice by developing neighbor-

hoods that are built around the pedestrian.

Demand for housing in walkable neighborhoods has increased

dramatically, and their prices are high because zoning laws have

prevented us from keeping up with this demand. During the

decades after World War II, when there was a mass movement to

the suburbs, urban housing was cheaper than suburban housing;

but now urban housing in many metropolitan areas sells for 40% to

200% more per square foot than equivalent housing in sprawl

suburbs. Likewise, homes in New Urbanist streetcar suburbs sell for

a premium over homes in sprawl suburbs.50

Promoting new pedestrian-oriented development would reduce

the upward pressure on housing prices in general. We can make



40

housing more affordable by increasing the supply, but for

environmental reasons, we must do this with public transit and

transit-oriented development.

There is No Free Parking

To transform American cities, we should also apply a key

principle of the politics of simple living: People who live more

simply should not be forced to subsidize people who are heavier

consumers.

Today, everyone is forced to subsidize the automobile, whether

or not they drive. For example, the costs of paving streets and oftraffic signals are paid for out of cities’ general funds, so everyone

pays for them through sales taxes and property taxes—including

people who use only one-tenth as much street space because they

bicycle or use public transit rather than driving.

One way to reduce these unfair subsidies is to make drivers pay

their own way by funding roads and traffic signals primarily with

user fees on the automobile, rather than with sales and property

taxes that everyone pays. The federal gasoline tax used to build

freeways is this sort of user fee,51 and we need similar user fees to

pay for local roads, traffic signals, and the like.

The most blatant subsidy to the automobile is “free” parking.

Businesses generally provide free parking for their employees: 95%

of all employees drive to work, and 86% park for free, 9% pay a

subsidized price, and only 5% pay the full price of parking.52 Most

businesses provide free parking for customers: the parking for 99%

of all non-commute trips is free.53 Virtually all new housing

provides parking for residents at no extra cost.

The subsidies are large. It costs an average of $5,000 for each

space in a surface parking lot, and an average of $19,650 for each

space in a parking garage.54 Zoning laws typically require that each

person has one parking space at home, one at work, and occasional

use of other free parking spaces at shopping centers, parks, and

other services. For each vehicle in a typical urban area, there are an

estimated total of three off-street parking spaces and two on-street

parking spaces.55



41

One comprehensive study found that subsidies to parking are

equal to over half of what the owner spends directly on each car.56

For every dollar that people spend directly on their cars, they get

subsidy of more than 50 cents for parking (not to mention all the

other subsidies to the automobile).Of course, all the “free parking” is not actually free. Employers

account for employee parking as part of the cost of labor, and they

pay lower wages and salaries to make up for this extra cost.

Developers have to charge higher prices for housing to pay for the

parking they include, and businesses have to charge higher prices to

customers to pay for the parking they provide. Everyone pays these

higher prices, whether or not they drive.There are more equitable ways of dealing with the cost of

parking.

Many environmentalists have called for laws requiring a

“parking cash out” for commuters. Instead of providing free

parking, employers would charge a fee that covers the full cost of

parking, and they would also give their employees a transportation

allowance that is large enough to pay this parking fee. If employeesdrive to work alone, they can use the transportation allowance to

pay the parking fee. If employees use two-person carpools, they can

use half of their parking allowance to pay for parking and can keep

the other half for themselves. If employees bicycle or walk to work,

they can keep the entire parking allowance for themselves. This

plan would cut commuter traffic by an estimated 15 to 20%,57 and it

would give a substantial cash bonus to people who do not drive

alone to work. For the first time, it would give people the option of

downshifting economically by changing commute mode and of

keeping the money they save because they do not need parking.

Likewise, we could require landlords, condo developers, and in

some cases even single-family-housing developers to charge

separately for the housing unit and for the parking, charging

enough for the parking to cover the full cost of building it. In denser

cities, where parking is structured, this could reduce the cost of

housing dramatically for people who do not own cars.

Some environmentalists have also called for zoning that allows

car-free housing, where residents could rent cars for occasional use



42

but would agree by contract not to have their own cars and would

not get permits needed to park their own cars on the streets. This

would lower the price of housing, and the price would tend to stay

low because there is less chance of gentrification when residents

cannot own cars.In Great Britain, section 106 of the planning code makes it legal

to build car-free housing, and the idea has been catching on in that

country. The London Borough of Camden alone has approved

construction of 3,500 car-free housing units, whose residents cannot

get on-street parking permits.58

We could go further and create car-free neighborhoods by

zoning some areas with good transit service to require that all newhousing must be car-free. Because this housing would attract people

who want to downshift economically and work part time, these

neighborhoods would be filled with people during the days.

Residents would get to know their neighbors, because they would

walk to local stores to do their shopping. And the neighbors would

be interesting to know, because they would be people who want

free time for their own pursuits.During the 1950s, some old neighborhoods, such as Greenwich

Village in New York and North Beach in San Francisco, became

popular for just these reasons: You could live there cheaply because

they had low-cost housing within walking distance of shopping,

and they attracted interesting people because you could live there

cheaply. But these neighborhoods were victims of their own success

and became so popular that rents soared. Their success shows that

there is demand for this sort of neighborhood: If cities began to zone

for car-free neighborhoods in locations with good transit service,

many people would be interested in living in these neighborhoods

at least during parts of their lives.

The new neighborhood of Vauban, which is a ten-minute bicycle

ride from the center of Freiburg, Germany, is an example of a car-

free neighborhood designed to attract families with children.

Parking is available only at a garage at the edge of the neigh-

borhood, and spaces sell for 17,500 Euros each. There are four

kindergartens, a Waldorf school and many playgrounds in this

neighborhood, where one-third of the 4,700 residents are children.



43

When kindergarten lets out, there are not lines of cars waiting to

pick up the children; instead, there are long lines of parents on

bicycles with trailers that carry children—a very convenient and

low-stress way to get around a car-free neighborhood, where you

do not have to worry about being run down by a reckless driver.59 Currently, people who do not have cars still have to put up with

the environmental costs of their neighbors’ cars: Their neighbor-

hoods are noisy, congested, and less safe, because the streets are

filled with cars. Car-free neighborhoods give people a real trade-off.

If you opt to live in one of these neighborhoods, you lose the

convenience of having a car, but you get the benefit of having a

quieter neighborhood, pleasant public spaces, streets that are saferfor your children, and stores that you can bicycle to without being

threatened by cars. People do not have this option today, and many

might consider it a good trade-off.

Employee parking cash-out, car-free housing, and car-free

neighborhoods are meant to give people more choices. People still

could still live in auto-dependent suburbia, but they would also

have these new options that they do not have today. In fairness, thepeople who choose to live without cars should not be forced to

subsidize the people who choose to drive.

Cities and Simple Living

With traditional neighborhood design and less auto-dependency,we could spend much less money on housing and transportation

and, at the same time, have cities that are more livable than our

cities are today.

With a shift from sprawl suburbia to transit- and pedestrian-

oriented neighborhoods, the cost of transportation could be cut

roughly in half, because trip lengths would be cut dramatically and

many trips would shift to walking and bicycling. Of course, car-freeneighborhoods would save even more.

With a shift from sprawl suburbia to traditional walkable neigh-

borhoods, like the old streetcar suburbs, the cost of housing could

be cut by about 30%, according to one extensive study of the



44

subject.60 In addition, smart growth saves cities 38% of the cost of

developing infrastructure, such as roads and water lines.61

Overall, Americans could save as much as one-third of what

they spend on housing and transportation (the two largest

expenditures for the average household), if they chose to live inneighborhoods where cars are a convenience rather than an

everyday necessity. And spending less money would give them

neighborhoods that are more livable and more convenient than our

usual sprawl suburbs.



45

Chapter 4Families at the Limit

Many Americans do not have enough time for their children. In the

decades following 1970, the amount of time that the averageAmerican child spent with parents declined by ten hours per

week,62 as work hours increased.

The issue of family time is one of the best opportunities to make

Americans think critically about our narrow focus on economic

growth. People care enough about their children that, if we raised

this issue, they would see that they would be better off if they could

choose to work less and have more time for their families.Unfortunately, mainstream liberals keep focusing on the same

tired policies that progressives supported at the beginning of the

twentieth century. The government should spend more money on

child care, more money on universal preschool, more money on

schooling, and more money on after-school and summer programs.

They assume that families do not have enough time for their

children, so government should take over their job.Demands to spend more on schooling made sense in 1900. At

that time, only 6% of Americans were high school graduates, and

urban elementary schools often had 50 children or more in a class.

To give an extreme example, one Victorian school system, the

Lancaster schools that were started by Joseph Lancaster in early

nineteenth century and were widely imitated, taught the urban

masses with a ratio of one teacher for every 300 to 1000 students,using a system where some children supervised others.63 When

progressives started demanding more money for schooling, the

schools desperately needed that money.



46

These demands make no sense today. Spending on education

increased dramatically during the twentieth century, and the

evidence shows that America now spends more than enough on

schooling. Though we do need more government funding for public

universities, which are raising tuition to levels that put them out ofreach of many families, we do not need to spend more on public

schools through high school. As we will see, international and

historical comparisons show that spending more on schooling stops

improving education when it reaches about one-half of what we

now spend in the United States.

Consuming More Schooling

Early in the twentieth century, educational achievement im-

proved as spending on public schools increased; but since the 1960s,

there has been no correlation between increased spending and

achievement.

In 1920, American schools spent only $720 per pupil (in 2008-9dollars), and in 1960, they still spent only $3,441 per pupil (in 2008-9

dollars), very little compared with the $12,922 per pupil that they

spent in 2008.64 Through the 1950s, increased spending was still

needed and helped to improve achievement.

Yet during the 1960s and early 1970s, achievement declined as

spending on education soared. For example, scores on the SAT

peaked in 1963 and then declined sharply. In part, this was becausethe pool of test-takers increased, but in 1977, a panel organized by

the College Board found that the decline was also caused by

lowered expectations and reduced homework.65 Even more con-

vincing, there was a 37% decline in the absolute number of students

who scored above 700 from 1972 to 1994, which obviously cannot be

explained by the larger pool of students taking the test.66

As it happened, achievement began to improve during the early1980s—right after spending on education stopped increasing for a

few years because of a severe recession and Reagan’s spending cuts.

We can see in Figure 8 that achievement has been trending upward

since about 1980 but is still far below its 1963-64 peak.



47

Since the 1960s, there has been no correlation between

achievement and increased spending. We spend more than three

times as much per student as in 1964 (after correcting for inflation),

but the students learn less.

Figure 8: Educational Spending and SAT Scores67

Counterproductivity and Education

Why did educational achievement decline while spendingincreased? It is a perfect example of counterproductivity. Most

American children already got adequate schooling in 1963, so that

spending more money since then has not improved education

significantly. At the same time, the growth economy has harmed

education significantly: It has overworked parents and left them

without enough time for their children, and it has created a

consumer culture that undermines the effort needed for learning.Many studies within the United States have shown that

spending more on schooling no longer improves achievement,

beginning with the extensive statistical studies by James Coleman in

the 1960s and Christopher Jencks in the 1970s showing that quality



48

of schooling has a very small influence on educational achievement

compared with quality of community and family life.68 In a series of

papers over two decades, Eric Hanushek has looked at 300 studies

of the effect of spending on educational achievement in the United

States; he found that most studies show there is no correlationbetween spending and achievement, about 15% show that higher

spending correlates with higher achievement, and about 15% show

that higher spending correlates with lower achievement.69

International comparisons of spending point to the same con-

clusion. The United States spends about one-third more per student

than the average of the other industrial nations, but our

achievement is lower than average (Figure 9).

Spending per

Student

PISA Science Score

of 15 Year Olds

United States $16,441 488.9

Other Industrial

Nations

$13,410 504.1

Figure 9: Educational Spending and Achievement in the Industrial Nations70

A broader international comparison is even more revealing.

Based on the data available (Figure 10), it seems that increased

spending improves achievement until spending reaches Australia’s

level, which is about half as much as the United States. Above that,

achievement does not seem to increase because of higher spending. Judging from this international comparison, spending more money

on schooling seems to have no benefit once you reach Australia’s

level, but in reality, spending more may bring small benefits—so

small that they are outweighed by other cultural factors.

Though spending more no longer improves education sig-

nificantly, our hypergrowth economy does work against education

in some ways.Our economy requires many parents to work two full-time jobs,

leaving them with little time for their children. More children than

ever are cared for by state agencies or are latchkey children who

return to empty homes after school. According to the Census



49

Bureau, one-third of all school-age children are home alone during

at least part of the week.71 For children under 10, loneliness,

boredom, and fear are the most common results of being home

alone. For children in their early teens who are home alone, peer

pressure can lead to experimentation with alcohol, smoking, andsex.

Figure 10: Educational Spending and Achievement Internationally72

Even worse, Lawrence Steinberg’s study of over 20,000 High

School students in nine communities—the most extensive everdone—found that about 25% of all High School students have

“disengaged parents [who have] ‘checked out’ of child-rearing”

completely.73 The children of these disengaged parents are more

likely to be emotionally immature, to use drugs, to become de-

linquent, to suffer from anxiety, depression or psychosomatic

complaints, and to be unsuccessful in school.74

In addition to taking too much of parents’ time, our consumeristculture undermines character traits that are essential to learning.

For example, when the high school in San Ramon, California,

adopted a rule forbidding students to bring iPods to school, the

students organized a letter writing campaign to protest the ban. A



50

flood of letters to the editor complained that it was unthinkable to

ban iPods from campus and to expect the students to go through

the entire day without any entertainment.75

Teachers often say that the children expect them to make the

classes entertaining enough to hold their attention; for example, onehigh school teacher of accelerated students says, “I’m an entertainer.

I have to do a song and dance to capture their attention.”76 Many

students expect to sit back passively and be educated by their

schools, just as they expect to sit back and be entertained by their

televisions and iPods. They are less likely to make the effort that is

needed to learn anything difficult.

According to a recent study by the Kaiser Family Foundation,the amount of time that eight-to-eighteen-year old children spend

with media increased from 6 hours 21 minutes per day in 2004 to 7

hours and 38 minutes in 2009. In 45% of all homes, the television is

on most of the time, even when no one is watching it, and 71% of

children have their own televisions in their bedrooms. In homes

where the television is left on, children watch an hour and a half

more per day, and children who have televisions in their bedroomswatch an hour more per day. This overuse of media is a direct

distraction from learning: Almost half of all children watch

television while doing their homework.

Media addiction works against academic achievement. This

study found that 47% of the children who are heavy media users

(spending more than 16 hours per day with media) get fair or poor

grades, compared with only 23% of children who are light media

users (spending 3 hours a day or less with media). Minority

students are affected most: black and Hispanic students spend

about four and a half hours more per day with media than white

students.

It is astounding that heavy users are defined as those who spend

more than 16 hours a day with media. There are only 24 hours in

the day, so if you spent 8 hours sleeping, 16 hours with media

would take up all your waking hours. Yet heavy users manage to

spend more time than this.

Parents are the key to reducing children’s media addiction. The

study found that, in homes where parents set rules, children



51

typically spend three hours per day less with media. Yet 72% of

children said their parents did not limit their television watching.77

The usual pattern of counterproductivity explains why other

industrial nations have higher academic achievement than the

United States. Once you spend as much as the average industrialnation, spending more in education is not as important to

achievement as other cultural factors. Though they spend less than

we do, parents in the other industrial nations have more time for

their children, and their children are not as hooked on the culture of

media and entertainment.

Instead of Day Care

We do not need to cut our spending on education. Even though

we spend more than other industrial nations without better results,

the amount we spend is a relatively small percentage of the GDP.

Education spending does not threaten to break the federal budget,

like our spending on health care, and it does not blight theenvironment, like our spending on sprawl. We can easily afford the

luxury of having smaller classes.

But we do need to develop policies that encourage parents to

devote more time and more effort to raising their children—which

means that we need to move beyond the old progressive idea that

the key to solving all our educational problems is to spend more

money on preschools, more money on schools, and more money onafter-school programs.

We need to realize that improving the quality of schools is

important but is not primarily a matter of spending more money.

Some promising ideas for improving schooling are teacher

evaluation systems that take student achievement into account,

which are supported by the Obama administration, and charter

schools, which allow schools that use a variety of different teachingmethods, so more successful models can be imitated. Good teachers

have a lasting effect on earnings and other measures of success:

According to a recent study that tracked 2.5 million students for

over twenty years, replacing just one poor teacher with an average



52

teacher would raise the lifetime incomes of all children in one year’s

class by a total of $266,000.78 In New Haven, the city and teachers’

union are cooperating in an experiment to improve the quality of

teachers by making it easier to fire teachers who are clearly

incompetent,79 and this is one possible initiative that could improveachievement.

Just as important as improving schools, though, is finding

policies that would let parents spend more time with their children.

As one step, we should stop discriminating against parents who

care for their own toddlers by giving child-care funding equally to

all families with preschool children.

Currently, federal tax laws allow a tax credit to pay for 35% ofchild-care expenses, up to a maximum of $3,000 for one child or

$6,000 for more than one child. This is one of the most widely used

tax credits,80 and it goes only to families with children in day-care.

Affluent dual-income families get a child-care tax credit, but

families get nothing if they work shorter hours and sacrifice income

so they can care for their own children.

Instead, we should offer this tax credit to all low and middle-income families with preschool children, whether or not the

children are in day care. The credit should be phased out for

families with higher incomes: A dual-income family that earns

$200,000 per year can afford to pay its own child-care expenses.

The current tax credit gives people an incentive to work longer

hours and spend less time with their children, because it pays for

day care and gives nothing to families who care for their own

children. If we just leveled the playing field, it would give many

people the opportunity to live more simply and have more family

time.

Child Care and the Family Budget

Ideally, we should give low and middle-income families withpreschool children a non-discriminatory tax credit large enough to

pay the entire cost of quality day care. Families who need day care

could use this credit to pay for the day care. Most families could



53

choose whether to use this credit to pay for day care or to work

shorter hours and have more time for their children.

Child-care advocates sometimes claim that we must subsidize

daycare and preschool, because the average family now needs two

incomes to get by. This claim shows that they are totally blind to thefailure of the growth economy: They apparently do not know that

the median family earns about twice as much today (after correcting

for inflation) as in 1950,81 when almost all families cared for their

own preschool children, with much of the increased income going

to compulsory consumption.

Even without reducing compulsory consumption (for example

by building walkable neighborhoods) the average family couldhave the option of caring for its own children if we just gave the

price of day care to the family directly. We can see this by looking at

some sample numbers. One estimate, made in 1999, calculated that:

■ The average woman’s income after taxes is $18,998.

■ The additional costs of the woman’s working are $14,500,

including $7,000 for day care.■ Therefore, the net added income is $4,498.

This estimate of the additional costs of working is an example,

not a statistical average, but these costs were a reasonable estimate

or what many families paid in 1999 in order to earn a second

income.82 Of course, costs have increased since then.

If we had non-discriminatory child-care tax credit, the $7,000

credit for one preschool child would be more than the $4,498 thatwas the net benefit of the second income. This credit alone would be

enough to make it economically possible for the family to work

shorter hours and care for its own child.

In combination with work-time choice, this policy would let both

men and women live more balanced lives, with time for both work

and family.

Fifty years ago, the typical family was supported by a man

working forty hours a week. If this were a reasonable world, the

entry of women into the workforce would have given us families

supported by two people who divide the forty-hour work week



54

between them. Instead, today’s typical family is supported by two

people working an eighty-hour week between them.

We have moved so far away from a sensible work-life balance,

because we have inflexible work hours, and because we have child-

care policies that discriminate against people who care for their ownchildren.

The Failure of Preschool

Child-care advocates often claim that preschools improve child-

ren’s academic performance, but they are distorting the evidence. In

reality, the overwhelming majority of studies show that preschools

can bring small improvements in the academic achievement of poor,

at-risk children, but they have no effect at all on the achievement of

middle-class children.

In a typical example of how mainstream liberals have distorted

this issue, Hillary Clinton wrote:

significant headway has been made in the field of biology, where

researchers have begun to grasp how the brain develops. ... Dr.Frank Goodwin, former director of the National Institute of

Mental Health, cites studies in which children who could be

described as being ‘at risk’ for developmental problems were

exposed at an early age to a stimulating environment. ... At the age

of four months, half of the children were placed in a preschool

with a very high ratio of adult staff to children. ... those in the

experimental group averaged 17 points higher in IQ tests.83

Clinton exaggerates the program’s benefits for at risk-children:

IQ initially increases by 17 points, but the improvement diminishes

over time and, by the time the children reach high school, it is less

than 5 points, not enough to make much difference in school

achievement.84

Just as important, Clinton does not mention that the at-risk

children in preschool did much worse than the national average,

though they did better than at-risk children who did not go to

preschool. For example, 30% of the children in one of the most

successful of these of these programs had to repeat a year in school,

compared with 56% of the at-risk children who stayed home; at-risk



55

children did better if they used this program, but they still did far

worse than middle-class children.

It is not surprising that the benefits of these programs were

small, since studies have shown that differences in quality of

preschool account for only 1% to 4% in the differences in children’scognitive development, and the rest can be attributed to differences

among their families.85

Constant repetition has convinced middle-class parents that

their children brains will be hard-wired to make them smarter if

they are in preschools during the first three years of their lives, but

in reality, the studies overwhelmingly show that preschool has no

lasting benefit for middle-class children.In fact, preschools providing “enriched environments” for poor

children usually just do the same things that most middle-class

parents already do. Studies have shown that children are more

successful in school, if adults talk to them long before they have

learned to speak, read to them, sing to them, give them interesting

toys to play with, and have repeated affectionate interactions with

them. Most middle-class parents already do this, but many low-income parents do not.

After working in preschools to improve the vocabularies of poor

children, Betty Hart and Todd Risley did research to learn about the

effect of the children’s homes on vocabulary. They spent two and

one half years observing forty-two families with children from 7

months to 3 years old. They found that the average child in a poor

family on welfare heard only 616 words per hour, the average child

in a working class family heard 1,251 words per hour, and the

average child in a professional family heard 2,153 words per hour.

By age four, the child in the poor family heard 13 million fewer

words than the child in the working class family. They also found

that parents in middle-class families tend to be more affirmative

and encouraging. The children in professional families averaged 32

affirmations and 5 prohibitions per hour, the children in working-

class families averaged 12 affirmations and 7 prohibitions per hour,

and the children in poor families averaged 5 affirmations and 11

prohibitions per hour.86



56

You do not need a degree in brain science to talk to and

encourage your preschool children, but many parents need to be

told how important it is to do these things.

We could improve child raising dramatically by funding a large-

scale public education campaign with advertisements showingparents talking to infants, reading to toddlers, and having affirm-

ative interactions with children, and telling parents how important

these activities are to their children’s long-term success. This public

education campaign should also tell parents that children do not do

as well in school if they spend more than three hours a day with

media, emphasizing how important it is for parents to set

reasonable limits on use of television and other media by children ofall ages, up through the teens.

Public health improved dramatically because of the anti-

smoking campaigns of the 1970s and 1980s, which spread the word

that people should do more to protect their own health. Education

will improve dramatically when we spread the word that people

should do more to raise their own children.

Money or Time for Children

We need to ask the same question about older children that we

are asking about preschool children: Should we spend more money

schooling them or more time raising them?

Mainstream progressives want to help these children by

spending more on schools, on after-school programs, and on

summer programs; but we have seen that we have reached a point

where the demands for more money for schooling are useless. The

demands for more money for after-school and summer programs

are worse, because they would lead us toward a society where

children’s activities are so programmed that they have little time to

do anything serious on their own.To grow up into autonomous adults, children and teenagers

need time for their own thoughts and their own projects. For

example, people who grow up to be serious readers virtually all

begin by reading for pleasure on their own time—even though they



57

may dislike the books they are required to read as their school

assignments.

Not very long ago, playing baseball with the other kids on the

block was an essential part of American childhood: As the children

chose teams, settled disputes, and even invented new games withtheir own rules, they learned to organize themselves and to make

decisions on their own.87 Not very long ago, American children and

teenagers had plenty of free time for play, reading, and solitude,

during the hours after school and during their long summer

vacations.

But today, most parents want to put their children in after-school

and summer programs, because there is no one to take care of themat home. Middle-class parents also want their children in teams

where the adults organize their baseball or soccer games, rather

than letting the children learn to organize games themselves;

usually, they live in low-density suburbs where there are few

children nearby, so there is no choice but organized play.

These middle-class parents believe that over-scheduling

organized activities will help their children succeed economically,and there is probably some truth to this belief. Just as choosing

teams and running their own baseball games used to prepare

children for an entrepreneurial economy, where many people ran

their own businesses, spending long hours on organized sports

prepares today’s children for a economy where they will work long

hours in a corporate organization. Over-scheduling them with

organized activities leaves middle-class children unable to make

good use of their own free time; unlike most working-class children,

who are accustomed to self-directed play, most middle-class

children get bored if they have unstructured time.88

If parents had free time and lived in walkable neighborhoods,

they could be home to watch casually over children who are

playing with the other kids on the block or are playing alone in their

rooms—as parents typically did fifty years ago. Today’s parents

should at least have this option: They should not feel that they must

put their children in after-school programs and full-time summer

programs, because they work such long hours that the only



58

alternative is having latchkey children who come home to an empty

house.

Commodities or Activities

When we step back and look at them in perspective, the

conventional progressive idea that we should provide universal free

preschool does not seem much different from the conventional idea

that we should provide universal free parking.

Both violate the key principle of a politics of simple living: If

people choose to consume less and do more for themselves, theyshould be able to keep the savings rather than being forced to

subsidize those who consume more.

Both violate this principle because they subsidize the heavy

consumers and ignore everyone else. People who walk or bicycle do

not get any benefit from free parking, and people who care for their

own toddlers do not get any benefit from free preschools. Yet

everyone pays higher prices or taxes to support the free parking andpreschools, whether or not they use them.

We subsidize parking and child-care because we consider them

necessities: Most families cannot go shopping or go to work without

finding a parking space, and most families cannot get by

economically without putting their children in day-care and earning

two incomes.

Yet there was a time when most Americans got along perfectlywell without either of these “necessities.” One hundred years ago,

Americans did not need all this transportation, because they usually

got around on their own power by walking. Fifty years ago,

Americans did not need all this child-care, because they usually

took care of their own preschool children.

As Ivan Illich has said, the modern economy tends to convert

activities into commodities. Activities that most people used to dothemselves—moving around and caring for children—have become

commodities that the economy produces for people to consume—

transportation and child-care.89



59

Those who demand universal free child-care (like those who

cannot imagine a world without free parking at every destination)

are so completely mystified by the modern economy that they do

not believe people can do more for themselves. They ignore the real

needs of most Americans, who would be better off if they consumedless transportation and spent more time walking, and if they

consumed less child-care and spent more time with their children.



60

Chapter 5Health Care at the Limit

Health provides good examples of all the elements of counterpro-

ductivity:■ The failure of growth: America spends almost twice as

much as on health care as the other developed nations, but

we have lower life expectancy and much higher levels of

infant mortality, because our lifestyles have become less

healthy.

■ Compulsory consumption: With our current insurance

system, individuals have no choice of downshifting. Youpay the same amount for insurance, even if you do not want

the wasteful treatments.

■ The need to do more for ourselves: The most important

things Americans can do to improve our health is to

exercise, to eat better diets, and to give up cigarette

smoking.

We should reform health insurance to reduce costs andunnecessary treatments, bringing our spending closer to the level of

the other industrial nations. And we should promote healthier ways

of life to bring our life expectancy up to the level of the other

industrial nations.

Consuming More Medical CareAmerica’s health-care spending has increased from 5.1% of the

GDP in 1960 to 17% of the GDP today. This is a huge increase,

considering that per capita GDP itself has more than doubled since

1960.90



61

Yet improvements in health have slowed, despite the huge

increase in spending. American life expectancy went from 47.8

years in 1900 to 68.2 years in 1950, increasing more than 21 years

during the first half of the twentieth century. But life expectancy in

2000 was 77, increasing only 9 years in the second half of thecentury.91

Figure 11: Medical Spending and Life Expectancy in the United States92

Health care is different on one important way from city planning

and education, which we looked at in earlier chapters: there have

been many advances in medical technology that have increased life

expectancy, so counterproductivity has not set in, as we can see in

Figure 11. For example, statins were approved by the FDA in 1987

and are widely used to reduce the risk of heart attacks. There are

also many specialized treatments that save some lives and that have

given the United States a reputation for medical breakthroughs, but

many are extremely expensive: for example, each year of life saved

by implanted heart defibrillators costs between $1.2 million and $1.5

million.93

Much of our increased spending has gone to new technologies

that are useful, but our method of funding health care also

encourages spending on treatments that are unnecessary or even



62

harmful. There are several ways of estimating how much of our

health care spending is wasteful.

Studies at Dartmouth University that compare medical costs and

outcomes in different parts of the United States have estimated that

one-third of American health-care spending is wasted.94 Likewise, arecent consensus report prepared for the Institute of Medicine by a

panel of experts found that about 30% of all American health-care

spending is wasted, a total of about $750 billion.95

Comparisons with other industrial nations seem to show that

almost one-half of our spending is wasted. America spends almost

twice as much per capita on health care as the average for other

industrialized nations, but has lower life expectancy and muchhigher infant mortality than the other industrial nations (Figure 12).

Spending PerCapita

(2005 US Dollars)

Average LifeExpectancy At

Birth

Infant Mortalityper 1000 Live

Births

United States $6,350 78 7

Other IndustrialNations

$3,488 80 3.35

Figure 12: Medical Spending and Life Expectancy in Industrial Nations96

Broader international comparisons seem to indicate that three-

quarters of our health care spending is wasted. Figure 13 and Figure

14, which include developing as well as industrial nations, showthat higher health care spending no longer correlates with increased

life expectancy or reduced infant mortality when spending is more

than about $1,500 per capita, about one-quarter of the $6,350 that

the United States spends.

Not all of these differences are the result of spending on

treatments that are totally useless. We Americans use many

treatments that have a small benefit, so small that it is outweighedby our unhealthy behavior. In addition to leading the world in

health care spending, the United States leads the world in obesity,

as we can see in Figure 15. We have worse health than nations that

spend one-quarter as much as we do on health care, because the



63

health problems caused by obesity and other lifestyle factors

outweigh the small benefits of our extra spending on medical care.

Figure 13: Medical Spending and Life Expectancy Internationally97

Figure 14: Medical Spending and Infant Mortality Internationally98



64

Regardless of exactly how much of our medical spending is

wasted, these international comparisons show very clearly that we

have reached a point where spending more money on medical care

is not as important as other factors that promote good health, such

as diet and exercise. This explains why other nations have betterhealth than the United States, though they spend much less on

medical care.

Figure 15: The US Has Most Obesity of Any Industrial Nation99

Counterproductivity and Health

Health care is a perfect example of counterproductivity.

Spending at one-half of our current level is enough to provide

adequate medical care in the other industrial nations, and spending

more brings relatively small benefits.

The same is true of the rising standard of living. Healthimproved over the past centuries largely because economic growth

gave us better sanitation, housing, and nutrition, but most Amer-

icans have reached the point where further improvements in the

standard of living also become useless or even harmful. For



65

example, spending more on suburban-sprawl housing makes us

exercise less than we did in the days when we walked.

Let’s look in more detail at these two elements of counter-

productivity: much of our increased health care spending is useless,

while economic growth can sometimes harm our health.

Useless Treatments

By the 1970s, when we spent only one-third as much per capita

on health care as we do today, social critics were already saying that

many of our common medical treatments were useless.100

Americans considered it substandard to be born at home—bythe 1960s, virtually all of our births occurred in hospitals—but

studies have shown that home births, attended by lay midwives

whose training was a year of apprenticeship, can have fewer

complications than hospital births, attended by teams of highly

trained doctors and nurses. Because hospital births are organized

around doctors’ schedules, there is pressure to shorten labor.

Because midwives cost less, they can have more patience with thenatural process of birth, so they are more successful than hospitals

in cases where prenatal examination shows that birth will proceed

without complications.101

Americans also considered it substandard to die at home. They

die in hospitals, surrounded by tubes, doctors, and technicians,

rather than at home, surrounded by friends and family. Often there

is no treatment that will lengthen useful life: The hospitals are filledwith machines whose main function is to maintain life in a

vegetable state after all hope of recovery is gone.

And there are useless—or even harmful—medical treatments

from cradle to grave.

Dr. John Wennberg, a professor at Dartmouth Medical School,

found tremendous variations in the use of medical procedures in

nearby areas, without any benefit to the locations that spend more.For example, he found that about 70% of the children in Stowe,

Vermont, but only 10% of the children in Waterbury, Vermont, had

tonsillectomies by the time they were 15 years old. About 50% of

men in Portland, Maine, but only about 10% of the men in Bangor,



66

Maine, had prostate surgery by age 85. Twice as many people had

heart surgery in Des Moines, Iowa, as in Iowa City. Because of

different medical cultures, doctors in some towns recommended

these procedures much more often than doctors in others. Yet in

every case, except for extremely poor areas where people lack basichealth care, Wennberg found that high-use areas did not have better

results than low-use areas.

A team from Dartmouth, led by professor Elliot Fisher, has

continued to use Wennberg’s methods and has found that Medicare

spending varies dramatically through the nation without improved

outcomes. For example, hospitals in Sacramento, Ca. spend $34,659

per Medicare patient, while hospitals in Los Angeles, Ca, spend$58,480 per Medicare patient with no better result.102 In fact, he

found that, mortality is 2% to 5% higher in regions that spend more,

presumably because medical procedures can cause some risk of

death even when they provide no benefit.

Based on this study Fisher concluded that about one-third of

America’s current medical spending goes to services that do not

improve health and may damage health.103 One good example of a treatment that has become harmful

because it is so overused is Computed Tomography scans (CT

scans, formerly called CAT scans for Computerized Axial Tomo-

graphy), which use computer processing to generate a three-

dimensional image from a number of x-ray images. The United

States performs 62 million CT scans per year, one for every five

people; at this rate, the average person would get about sixteen CT

scans in a lifetime. Many are unnecessary, and all are potentially

harmful, because a CT scan exposes the patient to almost 1000 times

as much radiation as an x-ray, adding to the lifetime risk of cancer.

CT scans are very valuable in treating patients who come to the

emergency room with chest pains but without other symptoms of a

heart attack, because they can determine whether the patient is

actually having a heart attack. Yet most CT scans are performed on

patients who have no symptoms, and these scans have never been

shown to provide any benefit. Because of this and other procedures,

the amount of medical radiation that the average American is

exposed to has grown six-fold during the past few decades.



67

According to Food and Drug Administration regulations,

manufacturers of CT scanners only have to show that they are safe

and provide accurate images, not that they provide any medical

benefit, and manufacturers spend heavily on marketing scanners to

doctors. Medicare usually pays for any device approved by the FDAwithout asking for evidence of effectiveness, but there was so much

talk about wasteful use of CT scans that Medicare almost changed

this policy. In June, 2007, Medicare officials said that they were

considering doing a large-scale study of the effectiveness of CT

scans and paying for them only in cases where they had value for

patients. There was a strong response from the Society of

Cardiovascular Computed Tomography, which lined up a dozensenators and 79 representatives to support its position and

pressured Medicare to drop this study and keep funding CT scans

without knowing whether they are useful.104

There are many other clear cases of Medicare waste. For

example:

■ Avastin: In 2010, the FDA found that the drug Avastin is

not effective in treating breast cancer, though it does havesevere side effects. Yet Medicare decided it would continue

to pay for Avastin, which costs about $88,000 for one

patient for one year.

■ Colonoscopies: The United States Preventive Services Task

Force says doctors should not perform colonoscopies on

most people over 75. There is no evidence that they save

lives among these people, and there is a risk of perforating

the intestine, which increases with age. Yet Medicare pays

for colonoscopies for patients of any age.105

Many other procedures often provide no health benefit. A recent

report from nine medical specialty groups recommended that

doctors perform 45 common procedures less frequently. The

American College of Cardiology said that cardiologists should stop

performing stress cardiac imaging on patients with no symptoms.

The American College of Radiology said that radiologists should

stop performing imaging scans on patients with simple headaches.

Specialty groups made similar recommendations for many other

common procedures, which are expensive but have no benefit.106



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These useless treatments can cause unnecessary suffering. For

example, doctors initially thought that treating advanced metastatic

breast cancer with chemotherapy and bone marrow transplants had

a 10% chance of lengthening the patient’s life, but a recent article

concluded that “the actual chance of meaningful benefit from thistreatment is zero, and that the only effect of the treatment was to

make patients’ remaining months of life miserable”107

There are also strong commercial pressures to overuse drugs.

The United States is one of only two industrial nations that allow

direct advertising of drugs to consumers. As drug advertising was

deregulated, spending increased 58-fold between 1991 and 2003, to

$3.2 billion per year.108 The ads all tell you to ask your doctorwhether this drug is right for you, but doctors have very little sales

resistance; they prescribe 75% to 80% of the drugs that their patients

ask for.109

The drug companies control most of the research about their

own products. Before 1970, most drug research was funded by the

National Institute for Health and performed in universities, but

government funding has declined and drug company funding hasincreased dramatically, to the point where 80% of clinical trials were

performed by for-profit companies in 2002.110 Drug companies often

do not publish results of trials that show their drugs are ineffective

or dangerous. For example, of 44 studies of five new antidepressant

drugs, 22 showed they were effective and 22 showed they were no

better than a placebo, but 15 of the 22 unfavorable studies were

never published and became public only when the drugs’

manufacturer applied to have them approved in Sweden, which

requires applications to include all the studies that have been done,

not just the published studies.111

The drug companies also control most information that doctors

get about drugs. Most states require doctors to receive continuing

education, and in 2003, drug companies funded 70% of continued

education, at a cost of $1,500 per year for each physician in the

United States.112

Not surprisingly, huge numbers of Americans take drugs that

are unnecessary or harmful. Twenty-two million Americans (one of

ten adults) have taken drugs that were later withdrawn as unsafe.113



69

The most famous example is Premarin, which replaces estrogen

after women have reached menopause. This was the most widely

prescribed brand-name drug in the United States in 1966, and again

in 1995, and many doctors recommended it for all post-menopausal

women. Then a 1998 study showed that it increased the risk of heartdisease, and a 2000 study showed that it increased the risk of breast

cancer, so it is now used in a more limited way. It is estimated that

overuse of Premarin caused more than 100,000 added cases of

breast cancer.114

If our health care system pushed so many people to take a drug

that is harmful, imagine how many people are taking drugs and

using other treatments that are ineffective.

Health Costs of Growth

Though much of what we spend on health care no longer brings

significant benefits, economic growth causes very real threats to

health. Today’s most common diseases—such as heart disease,

cancer, obesity, hypertension, and diabetes—are the by-products ofeconomic “progress.”

The number-one cause of death in the United States is heart

disease, which is caused primarily by cigarette smoking, lack of

exercise and junk-food diets.

The second greatest cause of death is cancer. For decades,

everyone thought that we could find a cure for this disease if we

spent enough on research and development. In 1971, Richard Nixondeclared that “the time has come when the same kind of con-

centrated effort which split the atom and took men to the moon

should be turned toward conquering this dread disease,” and

Congress allocated $2.7 billion to the National Cancer Program. Yet

most scientists agree that this program’s main achievement was to

show that cancer is primarily an environmental problem, caused by

carcinogens in tobacco, air, water, food, and workplaces. Cigarettesmoking and modern technology itself are the prime causes of this

disease.

These two leading causes of death, accounting for more than half

of all deaths, are obviously aggravated by the modern economy.



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Another major threat to our health is the current epidemic of

obesity. Between 1980 and 2008, the obesity rate doubled for adults

and tripled for children. Today, more than one-third of adults and

17% of children are obese.115 If current trends continue, there will be

65 million more obese adults in the United States in 2030 than in2010, which would cause 8 million added cases of diabetes, 6.8

million added cases of heart disease and stroke, and over 500,000

added cases of cancer. Obesity causes many other diseases that

lower quality of life, such as osteoarthritis, infertility, asthma, sleep

apnea, and birth defects.116

Some American children are now developing type-2 diabetes

and high blood pressure, which were virtually unheard of amongchildren a few decades ago. The increase in obesity has outweighed

all improvements in children’s health, leaving American children

today significantly less healthy than in 1975.117

This increase in obesity is a by-product of “progress,” caused by:

■ Less Exercise: For example, in 1969, 66% of American

children walked to school. By 2000, only 13% walked to

school and most were driven to school.118 ■ Less Healthy Diets: American children eat about five times

as much fast food today as in 1970. Almost one-third of

American children eat fast food every day, and those who

eat fast food consume 187 calories a day more than those

who do not, enough to gain an extra 6 pounds per year.119

Older Americans are becoming less healthy for similar reasons.

A government study of Americans aged 55 to 64 found that 42%

had high blood pressure and 31% were obese in the 1990s, while

50% have high blood pressure and 39% are obese today.120 Their life

expectancy is higher, even though their general health is worse,

because they are more likely to use treatments such as statins to

reduce the risk of heart attack.

Another recent study found that Americans 55 and over are less

healthy than Britons of the same age.121 They have much higher

rates of diabetes, high blood pressure, heart disease, strokes, lung

disease, and cancer.122

One study, projecting the effects of obesity into the future, found

that the current generation of children will live three to five years



71

less than they would have if they were not obese. The trend toward

rising life expectancy will be reversed, and these children will have

shorter and less healthy lives than their parents. During childhood,

obesity causes relatively little disease, but as these children become

middle aged, it will cause widespread heart attacks, strokes, kidneyfailure, diabetes, and earlier death.123

Others say that new technologies could increase life expectancy

to 100 years,124 but even if they do, many people may not be healthy

enough to enjoy the extra years of life. Americans between 55 and

64 are less healthy than Americans of the same age were ten years

ago, though new technologies such as statins are still increasing

their life expectancy. Obesity could make the current generation ofchildren much less healthy when they reach their fifties and sixties,

though new technologies may keep them alive despite their poor

health.

Though life expectancy is still rising, counterproductivity has

already affected America’s general health. People in other industrial

nations spend much less on health care, but they are more likely to

walk rather than driving everywhere, and they are more likely tocook using fresh ingredients rather than eating fast food and junk

food. They are healthier than Americans, because we have reached

a point where spending more on health care is less important than

exercise, diet, and other actions that improve your own health.

Health Insurance Reform

We need to reform our health insurance system to provide

universal coverage and to reduce costs.

The simplest way to get universal coverage would be a single-

payer insurance system, like Canada’s. A single government health

insurance plan would cover everyone, and people would still beable to choose their own health care providers. This is sometimes

called “Medicare for All,” because Medicare already provides this

sort of insurance plan to Americans over 65. It is estimated that

single-payer insurance would reduce health-care costs by about 14%



72

by reducing administrative expenses—a significant savings, though

it is just a fraction of our overspending.125

It is also possible to get universal coverage by giving tax credits

to lower-income people so they can afford coverage, by forbidding

insurance companies from denying coverage to people withpreexisting conditions, and by requiring all Americans to have

coverage. If we require insurance companies to insure people with

preexisting conditions, we also must require everyone to buy

insurance; otherwise people would game the system by not paying

for insurance as long as they are healthy and getting insurance only

when they need expensive medical treatment.

The Obama administration’s health-care reform law takes thisgeneral approach. Though it extends coverage to more people, this

law does relatively little to reduce costs.

There are many things we can do to cut medical costs. We could

limit direct-to-consumer advertising of drugs. Many suggest that

we could save large amounts of money by shifting from a fee-for-

service model to a result-based model of health insurance.

Here we will look just two ways to cut medical costs, healthsavings accounts and health-care choice. Both follow the key

principle of a politics of simple living, allowing people to choose

less expensive forms of treatment and to keep the money that they

save.

Health Savings Accounts

We could cut health-care spending by replacing our usual

comprehensive health insurance with a combination of health

insurance to cover large expenses and health savings accounts to

pay smaller expenses. The best known proposal for health savings

accounts was written by John Goodman and Gerald Musgrave.126

Though rates vary depending on age and location, full health

insurance coverage for a family of four typically cost about $4,500per year during the 1990s, when Goodman and Musgrave wrote,

compared with $1,800 for a policy with a $2,000 deductible at that

time.127 Employers would have saved money by paying for this

high-deductible coverage and giving the employees $2,000 per year



73

to put in health savings accounts that they could use to pay the

deductible, which would have cost $3,800 rather than $4,500 for full

insurance.

In this proposal, the health savings accounts would be the

property of the employees, who could leave any unspent balance totheir heirs after they die.

Health savings accounts save money, because people spend

more carefully when they have to pay the bills themselves. For

example, a RAND Corporation study found that people who pay

95% of their medical bills up to $1,000 spend 50% less than people

who have full medical coverage.128 Of course, it makes sense for

insurance to pay for basic preventive medicine, such as regularmedical and dental checkups, so people do not try to save money in

the short run in ways that hurt their health in the long run.

Conservatives were the first to propose the idea of health

savings accounts. The earliest proposals had employers put enough

into the account to pay the deductable, but some later conservative

proposals would have made individuals put money into the savings

accounts, hurting lower income people. We should insist that healthsavings accounts be fully funded, so there is more money in the

bank for the people being insured as well as lower costs for the

employer.

Despite the obvious financial advantage, it was impossible to

create medical savings accounts for many years, because money put

into the medical savings account was taxed as income, while

employees’ health insurance coverage was not. With the sample

costs we looked at above, employers would no longer save money if

they had to give employees, say, $3,000 so the employees had $2,000

after taxes to put in the health savings accounts.

Federal tax laws changed in 2004, allowing Americans to have

tax-free health savings accounts if they have health insurance with a

large deductible, but only 8 million Americans have insurance plans

that qualify.129 If we were serious about lowering costs, we would

go further by requiring all employers who provide health insurance

to offer at least one option with fully funded health savings

accounts.



74

Health-Care Choice

To cut overall costs significantly, we also need to control major

medical expenses. About 10% of our population accounts for 60% of

our health-care spending,130 and because they spend far more than

the deductible, health savings accounts would not give them any

incentive to hold down costs.

The first step needed to control major medical expenses should

be relatively easy politically. We need a federal government agency

that reviews the literature and publishes studies of the cost-

effectiveness of medical treatments. To make this possible, we must

make all clinical trials public, for example, by requiring drug

companies to submit the results of all the trials of drugs that they

want to have approved. If the federal cost-benefit studies are well

publicized, they could help us eliminate much of the useless and

potentially harmless 30% of our current spending. There would

probably be a movement to ban insurers from covering treatments

that have no benefits but do have risks. It is astounding that the

Republicans in Congress have blocked this sort of fact-basedapproach to health care.

The second step is more difficult politically. We should define a

basic package of cost-effective treatments, which would probably

cost about as much as health care in the other industrial nations,

and we should reform health insurance to give people the option of

choosing this basic package and keeping the savings. Employers

who provide more expensive health insurance would be required togive employees the option of choosing the cost-effective package

and receiving the savings in the form of extra pay. A basic Medicare

tax deducted from everyone’s earnings would cover the cost-

effective package, and people would have the option of paying a

larger tax during their working life to qualify for less cost-effective

treatments after they are sixty-five.131

People should have a number of tiers to choose from, the basiccost-effective basic package and a series of packages with higher

costs and more treatments available.

To give one obvious example, the basic package would cover

hospice care rather than hospital care for people with terminal



75

illnesses. Hospitals often use any means available to keep patients

with terminal illnesses alive, even when there is no possibility of

recovery. For example, if patients stop breathing, most hospitals use

breathing tubes to keep them alive artificially. If their hearts stop,

they are resuscitated. These procedures just lengthen the time that ittakes to die. By contrast, hospices keep people with terminal

diseases comfortable, control their pain with drugs, and allow them

to die naturally. Most people would probably prefer hospice care if

they thought about this choice, but most do not think about it and

end up with hospital care.

During the debate on health insurance reform, conservatives

said that Obama’s plan would bring government-run “deathpanels” to decide which people would not be treated. They did not

mention that insurance companies are already private-sector death

panels that refuse to cover some treatments and some people. Yet

they did make the important point that an impersonal bureaucracy

should not make this very personal decision.

People should make this sort of decision for themselves,

considering both the benefits and the costs of a treatment.Currently, patients take into account the benefit, while insurance or

Medicare pays the cost, so there is conflict between patients who

want more treatment and insurers who want to save money. The

sort of insurance reform we have sketched here allows individuals

to make this personal decision for themselves.

A thought experiment can help us come to grips with this issue.

Imagine that, when you are sixty-five years old, you are able to

predict your future, and you see that you will die suddenly at age

eighty unless you spend $1,500,000 on a treatment that would let

you live to be eighty-one. You have the choice of retiring at sixty-

five and living for fifteen more years in good health, or of working

at two jobs until you are eighty and saving every cent you earn in

order to pay for a treatment that lets you live one extra year in

failing health. Most people would choose fifteen good years, rather

than fifteen overworked years plus one year of bad health.

This thought experiment uses an extreme example to show what

sort of question we are dealing with when we ask which medical

treatments are cost-effective. Americans are already near the point



76

where choosing a basic plan that costs as much as health care in

other industrialized nations (which have better health than we do)

would let people retire four years earlier or work four and a half

days instead of five days a week during their entire working life.

People should decide for themselves whether they want to savemoney and have more free time during their healthy years, or

whether they want to spend extra money on insurance covering

treatments that cost hundreds of thousands of dollars for each year

of added life.

In the last few decades, we have handed this decision to a new

breed of experts known as medical ethicists. Articles about

expensive new medical treatments often quote ethicists whopontificate about whether we should pay the large extra cost to add

a small amount to life expectancy—but they never ask why

professional ethicists should be the ones to decide how many

dollars an extra year of life is worth.

This is obviously a decision that people should make for

themselves, not a technical question that we should leave to the

experts. We have turned over these decisions to expert medicalethicists, only because impersonal bureaucracies decide which

treatments we use—rather than the people whose lives are at stake.

Living Healthier Lives

These changes in health insurance would reduce health carecosts, but if we want to improve our health, the most important

thing we can do is to promote healthier habits.

It interesting to compare the importance of healthier habits and

medical care. Of the 30 years that life expectancy increased during

the twentieth century, it is estimated that 25 years resulted from

public health improvements, such as better sanitation, housing,

nutrition, and vaccinations, while about 5 years resulted fromimproved medical care. 132 It is also estimated that obesity reduces

life expectancy by 6 to 7 years,133 smoking reduces life expectancy

by 4 years, lack of exercise reduces life expectancy by 1.5 years

(compared with moderate exercise), and (surprisingly) watching



77

more than two hours of television per day reduces life expectancy

by 1.5 years.134 Your own unhealthy behavior can shorten your life

by more than the 5 years that is added by all of our medical

spending.

Some of the proposals made in earlier chapters of this book willimprove our health. If people have more time, they can do more

cooking for themselves rather than eating fast food. If people live in

walkable neighborhoods, they get exercise during their everyday

activities. Studies have shown that obesity is more common in auto-

dependent neighborhoods than in more walkable and transit-

oriented neighborhoods.135

Yet these proposals from earlier chapters are not enough bythemselves. We need to do more to promote healthier habits.

One obvious possibility is a campaign against obesity in the

schools. Schools have begun to improve the food they provide in

school lunches: The United States Department of Agriculture has

adopted new standards, which set maximum calorie limits for

meals and require that schools serve more fruits and vegetables,

more whole grains, and only low-fat or non-fat milk.136 We should also tilt our agricultural policies toward healthier

food. Currently, there are very heavy subsidies to a few crops,

including wheat, soybeans, and corn, lowering the price of

packaged snacks, fast food, and soft drinks, which all contribute to

obesity.137 To improve health, we should subsidize fruits and

vegetables instead of unhealthy foods.

We should go a step further by taxing unhealthy food, such as

sugary soft drinks and high-fat snack foods, and using the revenues

to pay part of the cost of health insurance. During the debate over

health-insurance reform, a group of doctors and health officials

advocated a tax on sugary beverages to help pay the cost of

extending health insurance coverage. They estimated that a tax of

one cent an ounce would raise $14.9 billion in its first year, and

would reduce consumption significantly.138 Though sugary drinks

have been shown to be a major contributor to obesity, industry

lobbyists managed to kill this measure, but we should keep

proposing similar taxes, for sugary drinks and high-fat snack foods,

combined with reductions in other taxes for low-income people.



78

We should also ban advertising of junk food to children. Because

of demands from child advocacy groups, threats of lawsuits, and

impending government regulation, eleven food corporations, which

account for two-thirds of the $900 million annually spent on

television food advertising aimed at children under 12, voluntarilyagreed to advertise products on television programs aimed at

children only if they meet federal dietary guidelines. However,

these guidelines are fairly loose: for example, of two sugary

breakfast cereals, Trix will no longer have television ads aimed at

children, but Cocoa-Puffs will.139 These corporations made a

concession to health because of the threat of regulation, but stronger

action is needed.We should remember how we caused the greatest single im-

provement in health in recent decades. Following the Surgeon

General’s report of 1964 about the dangers of smoking, we required

all cigarette packages to contain a warning that smoking is

dangerous to your health, we banned cigarette advertising on

television, we raised taxes on cigarettes dramatically, we ran

advertisements about the health hazards of smoking, and webanned smoking in most public places.

Obesity is now as great a health hazard as smoking was decades

ago, and we can control it if we act as vigorously as we did against

smoking.

Though obesity is our number-one health problem, we should

look briefly at a couple of other policies that would improve health

by giving people more free time.

The United States is the only industrialized nation that does not

require paid sick leave. Forty percent of American workers get no

paid sick days, so many people who are living on the edge

economically have to go to work when they are sick and send sick

children to school, a sure way of spreading contagious disease.

Most unsettling, 86% of restaurant workers get no paid sick days, so

if you eat in restaurants, it is likely that you get regular exposure to

contagion from sick employees. We obviously need a law requiring

paid sick days for workers—so obviously that a survey found that

80% of Americans support this law.140



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Likewise, the United States needs a law providing paid parental

leave. We give parents unpaid time off if they work for companies

with over 50 employees, but mothers who are stressed economically

often go back to work only a few weeks after their babies are born.

Research shows that infants whose mothers have less than twelveweeks off after their birth have more behavior problems and

reduced cognitive capability at age four, and that the mothers have

worse overall health. Virtually all the nations of the world

guarantee mothers paid maternity leave; the only countries that do

not are Liberia, Swaziland, Papua New Guinea, and the United

States.141 We are in the same league as three of the poorest nations

on earth.

Consuming and Doing

Proposals that encourage people to do more to protect their own

health are important in themselves, but they would be even more

important as part of a larger cultural change. Today, as we said

earlier, we tend to convert activities to commodities: We expect to

consume transportation rather than walking around on our own

two feet, and we expect to consume child care rather than caring for

our own children. Likewise, we expect to consume health care

rather than changing our behavior to improve our own health.

We need to realize that what we do for ourselves is as important

as what we consume.

This idea was obscured during the early period of indus-

trialization. The average person did not even have basic minimum

housing, education, and health care, and progressives focused on

providing these basics to everyone.

But today, in the developed nations, most people already have

these basics, and we have reached the point where consuming more

brings only small benefits. We have looked at graphs showing how

growth affects self-reported happiness, education, and health. The

pattern is always the same: more money improves the result in

poorer countries but not in developed countries. In every case, the



80

United States is far beyond the point where spending more

improves our lives.

We need to shift from the old focus on providing people with

more services toward a more balanced view that takes account of

the importance of doing for ourselves.This book has sketched a number of proposals for city planning,

child care, and health care that would shift our focus by letting

people downshift economically, so they can have more time to do

for themselves. The key principle of these proposals is that we

should give people the option of consuming less and keeping the

savings for themselves. Those who choose to consume less should

not be forced to subsidize those who choose to consume more.Today, everyone pays indirectly for “free parking” with higher

taxes, lower wages, and higher prices, whether they use the parking

or not. Proposals such as commute allowances for employees would

let people keep the savings if they choose not to drive.

Today, everyone pays indirectly for subsidized child care and

for the child-care tax deduction, whether or not they use them.

Proposals such as a non-discriminatory child-care tax credit wouldlet people keep the savings when they choose to care for their own

children.

Today, everyone pays indirectly for the high cost of health care,

through lower salaries and higher Medicare taxes. Our proposals

for medical savings accounts and health-care choice let people keep

the savings when they choose to avoid wasteful health care.

During the debate on the recent health care reforms,

conservatives played on public fears that people might not get all

the treatment they want. This sort of complaint is inevitable when

we pay for health care in a way that lets individuals consume more

without paying more. The debate would be very different if people

could consume less and keep the money that they save.



81

Chapter 6Growth and Sustainability

Earlier chapters have looked at policies that give people the option

of downshifting and consuming less. These policies would increasepeople’s well-being, because they are based on choice. People

would choose to downshift only if they thought that it would make

their lives better.

These policies would make it easier to control ecological

problems such as global warming, because they would slow

economic growth, but they are not enough in themselves. To deal

with these ecological problems, we must move from the socialissues discussed in earlier chapters to more conventional

environmental issues: We are reaching the limit of the earth’s

capacity to provide the natural resources we consume and to absorb

the pollution we create.

Ecological Economics

Ecological economics is based on the idea that the economy is

embedded in nature. The economy takes resources from the natural

environment, it processes these resources to produce goods and

services, and it discharges the leftover wastes into the natural

environment. Nature provides the resources that are the economy’s

inputs, and nature absorbs the wastes that are the economy’soutputs.

There is danger of ecological disruption and dieback when

resources are exhausted or wastes are excessive. This sort of dieback

is common in nature. For example, yeast grows in overripe fruit,



82

using the sugar in the fruit as food (resources) and excreting alcohol

(wastes). As its population grows, the yeast consumes more sugar

and excretes more alcohol, until there is ultimately a massive

dieback after the yeast consumes all the available sugar or excretes

enough alcohol to poison itself with its own wastes.When conventional economic theories were being developed in

the nineteenth century, the world’s economy was so small that it

did not have a significant impact on the global environment. There

were serious local environmental impacts—for example, factories

discharged toxic wastes into the air and water—but there were not

significant global impacts, so conventional economics ignored this

issue.In recent decades, the world’s economy has become large

enough to affect the environment of entire regions and of the entire

earth: the ecological problems of yeast in an overripe fruit are now

occurring on a global scale. Resource depletion and waste emissions

could make the earth less livable, causing a dieback of the human

population.

Two early examples of large-scale ecological effects were theregional problem of acid rain and the global problem of the

thinning ozone layer, both cases where nature was unable to absorb

the economy’s wastes.

Acid rain occurred when factories made their smokestacks tall

enough to protect local residents from pollution, so emissions of

sulfur dioxide and nitrogen oxide spread through the region,

reacted with water in the air to form acids, and fell back to earth

when it rained. The acid rain killed trees and made lakes so acidic

that fish could not survive. By the 1980s, acid rain was causing

entire forests to die in Germany. When the United States found that

5% of New England lakes were acidic, we used a cap-and-trade

system to reduce these emissions, so that acid rain is no longer a

major problem.

Ozone depletion was caused by chlorofluorocarbons (CFCs)

from aerosol containers, refrigerators and air conditioners. In 1985,

scientists found that the ozone over Antarctica was reduced by up

to 70% during the southern-hemisphere spring. Because ozone

depletion could ultimately cause widespread cancer in humans and



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the death of microorganisms that are at the base of the food chain,

the world agreed in the Montreal Protocol of 1987 to phase out the

use of CFCs, so the ozone layer is now healing.

Resources and Wastes

We face many other regional and global ecological problems.

The world’s immense consumption of fossil fuels has caused two

related problems, which are both well known.

One is a resource problem: We are depleting the supply of

energy that our economy uses as an input. Ultimately, we could

consume so much of the world’s fossil fuels that production cannotincrease quickly enough to meet demand, driving up prices and

jolting the world’s economy. There are debates about when

production will peak, with pessimists predicting impending crisis

and optimists saying that we will be able to delay the peak by

exploiting tar sands and other unconventional fuels.

The second is a waste problem: Fossil fuels are emitting enough

carbon dioxide to cause global warming, which could bring wide-spread desertification, rising sea levels, and extreme weather, if it is

not controlled. Glaciers on the Tibetan plateau that feed the Indus,

Ganges, Yellow, and Yangtze rivers during the dry season are

already retreating because of global warming, and the reduced flow

of these rivers could create the most massive food crisis the world

has ever seen, spreading hunger through the world’s most

populous nations.142 Global warming could have similar effects on

agriculture throughout the world: Each temperature increase of 1

degree Celsius could cause a decline of about 10% in world grain

production.143

Carbon dioxide concentrations in the atmosphere have already

moved far beyond historic levels, showing how much effect human

activity now has on nature. During the last 700,000 years, there was

an alternation of ice ages, when CO2 reached a low of 180 parts per

million (ppm), and warmer interglacial periods, when CO2 reached

a high of 300 ppm. We now are around 400 ppm and rising rapidly,

well outside of the range that existed when humans and the crops

we depend on evolved.



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Though they are less well known, our immense consumption of

water has also caused two related problems.

One is a resource problem: We are depleting groundwater

because our agriculture uses too much water as an input. World-

wide demand for water used to irrigate farms tripled in the last fiftyyears, as electric and diesel pumps have become available that let

farmers pump water from underground aquifers more rapidly than

they are replenished by nature. The Ogallala aquifer under the

American Midwest, responsible for 27% of our irrigated agriculture,

is being pumped about 30 times as rapidly as it is replenished.

Water tables are falling in twenty countries, including the United

States, China, and India, which produce more than half the world’sgrain. In effect, the world now has a “food bubble” produced by

pumping unsustainable amounts of water, and as water runs out,

food production could decline. It has already happened very

dramatically in Saudi Arabia: In the 1970s, they used their oil

money to build equipment that pumped enough water to make

them self-sufficient in wheat, but in 2008, they announced that they

were planning to end wheat production completely because theaquifer was depleted.144

The second is a waste problem: Agricultural runoff contains

fertilizers, herbicides, and pesticides that pollute the water. Among

wells drawing water from the Ogallala aquifer, for example, 14%

contain herbicides or pesticides, and 5% contain dangerous levels of

nitrates from fertilizer. The most common pollutant is the herbicide

Atrazine, a hormone disrupter that threatens fetal health.145 The

nutrients in the runoff from our farms have also created dead zones

in the oceans, because algae feed on these nutrients and use up all

the oxygen in the water when they die and decay. There is a dead

zone as large as New Jersey each summer in the Gulf of Mexico at

the mouth of the Mississippi River, and the United Nations found

200 similar dead zones in the world’s oceans.146

Many other ecological problems have appeared as the world’s

economy has grown so large that it strains nature’s capacity to

supply the resources it uses and to absorb the wastes it emits. Here

are two examples:



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■ Fisheries: New technologies allowed the world’s catch to

increase dramatically after World War II, from 19 million

tons in 1950 to 93 million tons in 1997—but overfishing has

reduced fish populations so much that the catch is now

declining from its 1997 peak. It is estimated that thepopulation of large fish in the oceans is now only 10% of

what it was in 1950. Many fisheries have collapsed

dramatically, including cod in the Atlantic provinces of

Canada and oysters in Chesapeake Bay.147

■ Forests: The world lost 20% of its forests in the twentieth

century, as the amount of forested land shrank from about 5

billion hectares to under 4 billion hectares. The developingnations are now losing about 3% of their forests each

decade, using about three-quarters of this wood for fuel.

Clearing land for agriculture is a major threat to the world’s

largest rain forests in the Amazon and Congo basins.

Deforestation increases flooding and erosion, and it also

reduces rainfall in some places, as trees no longer pump

water out of the ground and release vapor into the air. Haitiwas once heavily forested but now has forests on only 4% of

its land, and deforestation has helped to cause a downward

cycle of poverty, as the country is no longer able to produce

enough food for itself.148

It is striking that two of today’s biggest ecological problems

involve carbon dioxide and water. When early environmental

regulations were put into place in the 1970s, it seemed that the

greatest threats were synthetic chemicals, which did not exist in

nature and caused unexpected problems, such as CFCs and DDT.

But carbon dioxide and water are very common in nature—we

exhale both of them every time we breathe—and they have become

problems only because we emit and use such huge amounts.

Of course, there are things we can do to deal with these

ecological problems. We can shift from fossil fuels to wind and solar

energy, renewable resources that do not emit carbon dioxide. We

can conserve water: At the extreme, drip irrigation with computer

controls can deposit exactly as much water and fertilizer as plants



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need, so water consumption is reduced dramatically, and there is

virtually no excess water or fertilizer to run off.

But users do not have an economic incentive to do these things:

It is cheaper to burn coal than to use solar energy, and it is cheaper

to deplete the aquifer than to use drip irrigation.If these users continue to make their decisions based on current

economic incentives, ignoring longer-term ecological issues, they

will ultimately cause ecological collapse, leaving us much less well

off than we would be if we had dealt with the ecological problems

in advance. If we keep using fossil fuels as our main source of

energy, we will face desertification and extreme weather events that

make the world far less livable. If we keep over-irrigating our crops,we will deplete the ground water until the aquifers dry up.

We need some mechanism that replaces the current economic

incentives, which make us burn coal and deplete ground water as if

there were no tomorrow, with new economic incentives that make

us act in ways that are sustainable in the long run.

Cap, Market Mechanism and Refund

Cap-and-trade systems, or variations on them, are the most

direct way to deal with these ecological problems. A cap-and-trade

system limits resource extraction or emissions to a level that is

sustainable in the long run, it issues enough permits to allow this

level of extraction or emissions, and it creates a market where usersbuy and sell these permits.149 Rather than issuing permits, we can

get the same result by taxing resource consumption or emissions to

keep them at sustainable levels.

This sort of market-based system is the lowest-cost method of

keeping within ecological limits. Businesses will control emissions

when it costs less than buying permits (or paying the tax), and they

will buy permits (or pay the tax) for the emissions that are mostexpensive to control. They will use the least costly methods to keep

within the limit.

Ideally, all the funds raised by these systems should be refunded

to taxpayers. If the government keeps the revenue, then it will be



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tempted to set the limit at a level that maximizes revenue, rather

than at the level that is needed for sustainability.

If the refund were paid equally to all taxpayers, this sort of

system would create an incentive to live more simply: It would tax

people who consume more, and it would refund the money toeveryone, so people who consume less would come out ahead. To

give one obvious example, if a cap-and-trade system on carbon

dioxide emissions drove up the price of gasoline and all the

revenues were given back as a tax credit, then people who bicycled

instead of driving could pocket part of the credit. This sort of

system would also help lower income people in general, because

they consume less.Cap-and-trade has been used successfully to limit use of one

resource, fisheries. Regional cap-and-trade mechanisms to keep the

catch at a sustainable level are called “individual transferable

fishing quotas” or “catch shares.” When populations of fish

declined dramatically, the initial response was to limit the season

when fishing was allowed, but fishers raced to catch as much as

possible during the allowed time, often working day and night,which raises costs. Since the 1970s, it has become common to

regulate fishing using catch shares, which allocate the sustainable

catch to different businesses and groups of people, typically

allowing them to sell their quotas. Over 275 of these programs are

used by 35 countries to restore and maintain the populations of

many different species of fish.

Cap-and-trade has also been used successfully to limit pollution,

controlling acid rain at a low cost. By the early 1990s, it was clear

that acid rain, caused by sulfur dioxide and nitrogen oxides from

power plants and factories, was killing trees and some species of

fish. The United States adopted a national cap-and-trade system to

control these emissions in 1995. At the time, utilities predicted that

controlling power plant emissions alone would cost $7 billion, but

the cost turned out to be about $1 billion.150 After cap-and-trade is in

place and businesses know that they will have to reduce emissions

over the years, there is an incentive to develop new technologies

that reduce emissions at low cost, so cap-and-trade systems

generally should cost less than initial projections.



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The world has taken some steps toward controlling carbon

dioxide emissions, but progress is stalled. At Copenhagen in 2009,

the world reached consensus on the goal of limiting warming to 2

degrees centigrade. Many nations pledged to control their emissions

before serious negotiations even began, pledging two-thirds of thereductions needed by 2020 to put us on the path to this goal. In the

United States, the House of Representatives passed the Waxman-

Markey bill, which would have used a cap-and-trade system to

meet this goal. But the Republicans blocked any companion bill in

the Senate, and since then, their denial of global warming has pre-

vented the world from reaching an agreement on this issue.

Yet capping emissions at this level would not involve significantcosts. The non-partisan Congressional Budget Office found that

Waxman-Markey would have reduced America’s GDP in 2050 by

1% to 3.5%, which means that it would take until 2051 to reach the

GDP that we would have in 2050 without a cap-and-trade, and GDP

would still more than double by 2050.151 The costs of capping

emissions are far, far less than the costs of uncontrolled global

warming.We can only hope that the United States and the world are able

to act on this issue before we reach some tipping point that makes it

much harder to deal with global warming.

Notice that cap-and-trade works for regional impacts or global

impacts, but not for severe local impacts.

For water, there should be regional caps that avoid depleting the

region’s aquifer. The cap would be lower in drier regions, so they

would spend more on water conservation and would grow fewer

water-guzzling crops.

For carbon dioxide and other greenhouse gases, there should be

a global cap that avoids the worst effects of climate change. No

matter where it is emitted, a ton of carbon dioxide creates the same

impact on climate.

By contrast, cap-and-trade does not apply to toxic chemicals,

because the local impact is too great. Toxic wastes can kill people

living next to a chemical factory, so we use command-and-control

regulations to reduce emissions to the level needed to protect

health. If we used cap-and-trade to limit these emissions for an



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entire region, toxic wastes could still destroy the health of people

living near the factories.

Toxics are an obvious example of a localized impact, and noise is

another interesting example. Let us say that we finally become so

annoyed by the racket in our parks that we decide to reduce noisefrom jet-skis and motorboats by 50%. It will not work to cap the

amount of noise and let boat owners trade permits to emit noise:

Every lake in America would still have some people using power

boats and disturbing all the other users. The way to limit noise is by

making some lakes off-limits to jet-skis and motorboats (except for

emergency and utility vehicles, of course). Likewise, we can limit

noise by making some places off-limits to off-road vehicles, and bymaking large areas over cities and parks off limits to small private

planes.

In some cases, this sort of direct limit is needed to control local

impacts, but in most cases, some sort of cap-and-market-mechanism

is the best way to move toward a sustainable economy because of

its cost-effectiveness.

The Nature of Growth

Ecological economists point out that continued growth must

ultimately exceed sustainable levels. Any rate of growth involves

repeated doublings, which lead to astronomical levels of production

in the long run, beyond what the global environment could con-

ceivably support. This is why ecologists say that growth cannot

continue indefinitely on a finite planet.

The effects of growth become noticeable suddenly. We can see

how suddenly by doing a thought experiment. Imagine a pond that

has only one one-thousandth of its area covered with algae, and

imagine that these algae reproduce rapidly enough to double the

area that they cover in one day. In the first three days, the algae

grow from the initial 1/1000 to 2/1000, to 4/1000, and then to

8/1000. Even after three days, the area that they cover is less than

1% of the pond, such a small area that we would probably not even

notice them. In the next four days, they grow to 16/1000, then to



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32/1000, to 64/1000, and to 128/1000. Now that they cover more

than one-tenth of the lake, we notice them, but they still seem to be

a relatively small problem that is not urgent. But in the next three

days, they grow to 256/1000, then to 512/1000, and before the end

of the tenth day, they cover the entire lake and kill all other life in it.Because the problem seems small during the early and middle

stages of growth, we are likely to ignore it until it is close to causing

disaster.

Because effects of growth become noticeable suddenly, most

readers are surprised by the projections in the first chapter of this

book showing how quickly the developing nations will reach

America’s current standard of living if their current growth ratescontinue. To round down a bit, China’s economy has been growing

at a rate of about 10% a year in recent decades, which means it

doubles every seven years. Seven years ago, its per capita

consumption was one-eighth of America’s, and the world was just

beginning to see that its demand for resources was a problem. Now,

its per capita income is more than one-fourth of America’s, and in

just two more doublings, its per capita income will be greater thanAmerica’s is now.

When it comes to the effect that economic growth has on the

earth’s ability to absorb pollution and supply resources, we are like

the people who have just begun to notice that the algae in their lake

are a problem and who do not realize that the algae will cover the

lake completely in two or three days.

The results of doubling are even more striking if we ignore

ecological constraints and keep projecting growth into the future

indefinitely. Our example of algae shows that ten doublings give us

growth of more than one thousand fold. Keep doing the math to see

that twenty doublings give us growth of more than one million fold,

thirty doublings give us growth of more than one billion fold, and

so on. If China’s per capita income keeps doubling every seven

years, then in seventy years, it will be over one thousand times

greater than now, and in one hundred-forty years, it will be over

one million times greater than now. It is impossible to imagine the

ecological impact of that growth, and it is also impossible to

imagine how anyone could manage to spend so much money.



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China is an extreme example, but a growth rate of about 3.5% is

fairly common for developing nations, and it is also an easy number

to work with because it involves a doubling time of twenty years.

At this rate, production would increase more than one-thousand-

fold in two hundred years, more than one-million fold in fourhundred years, and so on.

These projections of current growth rates make it clear that we

will ultimately have to cap many different types of resource use and

emissions, as growth strains the limits of the earth’s carrying

capacity. Cap-and-trade systems for fisheries, acid rain and global

warming are just the beginning.

Note that ecological economics does not require an end to alleconomic growth. It requires limits to the growth of resource

consumption and emissions, to keep us within the earth’s carrying

capacity, but economic growth can continue as new technologies

increase resource efficiency, providing more GDP for each unit of

resources consumed.

For renewable resources, such as water, fish, and lumber, we

will ultimately need to cap use at levels no greater than nature’sability to produce that resource sustainably. For many renewable

resources, overharvesting will cause a sudden collapse in supply.

Even when there is no danger of collapse, renewable resources will

ultimately outgrow the earth’s capacity unless we cap their growth:

For example, solar energy could generate the amount of electricity

that the United States currently consumes using a land area of about

100 miles by 100 miles (10,000 square miles), a relatively small

portion of the nation’s land, but if our electricity consumption keeps

growing at its historic rate, we would need about one-half of

America’s total land area to generate the amount of electricity that

we would consume in the year 2150, and shortly after that, we

would need more than the America’s total land area.152

For most non-renewable resources, such as metals, we will need

to cap or at least limit extraction after we have enough to support a

prosperous world economy, and then we will need to rely primarily

on recycling the resources we have already extracted. As we extract

more resources, we use poorer ores that create more waste when

they are processed, so it ultimately becomes more efficient to recycle



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than to use virgin materials. We cannot cap extraction yet, but we

can begin to move in the right direction by taxing virgin materials at

a higher rate than recycled materials and by requiring businesses to

design products so they are easily recyclable.

As new industrial processes create new types of waste, we willhave to cap many different types of emissions, as we capped the

emissions that caused acid-rain. Hopefully, we will get better at this

in the future and cap emissions before they do significant damage,

rather than waiting until after they degrade the global environment,

as we are doing with greenhouse gas emissions

These cap-and-trade systems will be needed as the use of each

resource or the emission of each waste product reaches unsus-tainable levels. Initially, they would not slow growth significantly

but instead would encourage cleaner growth; we have seen, for

example, that controls on greenhouse gas emissions will not slow

growth significantly before 2050 because we can increase pro-

duction of clean energy. In the long run, however, caps on growth

of resource use would undoubtedly slow economic growth, given

the astronomical levels that continued growth would ultimatelyreach.

But capping resource use would not stop economic growth.

Even if the economy did not increase the quantity of resources that

it processed, it could grow by squeezing more products out of the

same amount of resources. It could increase resource efficiency by

shifting production from goods to services or by developing new

technologies that use resources more efficiently. For example, some

scientists predict that in the middle of this century, carbon

nanotubes one-hundred times as strong as steel will be used as the

main structural material in bridges and in other construction,

allowing ten pounds of carbon to substitute for one thousand

pounds of steel. This sort of innovation can let us increase

production without increasing our use of resources.

To illustrate the challenge that we face, consider that, between

1980 and 2005, the weight of the materials needed to produce a

dollar of GDP fell 30% world wide—an impressive improvement in

resource efficiency. But the world’s economy grew so rapidly that

the world used 45% more materials in total in 2005 than in 1980,



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despite increased resource efficiency.153 Improvements in resource

efficiency can support economic growth, but in the long term, it

seems virtually impossible to improve resource efficiency quickly

enough to support the astronomical levels of output that we would

have if we continued the world’s recent levels of economic growth.

Beyond Ecological Economics

The basic idea of ecological economics, that the earth has a

limited capacity to provide resources and absorb wastes, has

become so widespread that it has sparked a small movementagainst consumerism.

The most prominent example is “Buy Nothing Day,” observed in

the United States on the Friday after Thanksgiving (our biggest

shopping day) and internationally on the following Saturday. There

are now activities marking this day of protest against consumerism

in 65 countries.

On Buy Nothing Day of 2011, the clothing manufacturer,Patagonia, placed a full page ad in the New York Times showing a

picture of one of their jackets, with the large headline “Don’t Buy

This Jacket.” The ad describes what the company calls its “common

threads initiative”: To reduce their environmental impact, they

make their clothing as durable as possible, they help you repair it

when it breaks, they help you resell it or give it away when you no

longer need it, and they accept it for recycling when it is finally soworn out that it cannot be reused. In addition to Reduce, Repair,

Reuse, and Recycle, their ad called on us to “Reimagine … a world

where we take only what nature can replace.”154

The anti-consumerist movement calls on Americans to cut back

on shopping. We spend three to four times as much time shopping

as Europeans.155 We buy about twice as much clothing as we did

just twenty years ago: in 1991, the average American bought 34

shirts, sweaters, dresses, pants, underwear and other units of

clothing each year, and in 2007, we bought 67 units of clothing per

year.156 Our businesses spend $300 billion annually on advertising

to persuade Americans to buy even more—more money than is



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spent on advertising in the entire rest of the world combined.157 The

average American sees more than 1000 advertising messages per

day.158

Yet rejecting consumerism is not enough. We also need a

positive vision of what the world could be like with slower growth.It is telling that we have Buy Nothing Day focusing on the harsh

news that we should consume less, but we do not have an equally

popular campaign focusing on the good news that we could work

less. Most people think that slower growth is purely a matter of

limits and sacrifices.

In fact, slower growth without shorter work hours is impossible

because of increased unemployment. Whenever there is a recession,people react by demanding policies to stimulate faster growth in

order to provide more jobs, and mainstream environmental groups

are not there promoting shorter work hours as a better way of

providing more jobs.

Environmentalists will not succeed in slowing economic growth,

until we spread a positive vision of how we can improve people’s

lives by giving them choice of work hours and other choices thatallow them to downshift economically. Shorter work hours could let

us have slower growth without higher unemployment. Policies

letting people downshift in ways that make their lives more

satisfying—for example, letting people choose more time with their

children—could make slower growth politically attractive.



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Chapter 7From Progressive to Preservationist

Policies that would let us downshift economically have made sense

for many decades, and they are urgently needed now that we haveentered the age of global warming. If the world devotes itself single-

mindedly to increased consumption, rapid growth will bring

ecological crisis. If the world takes a more balanced approach, with

more free time as well as more consumption, slower economic

growth will help make our economy more sustainable.

Yet today’s progressives are not advocating policies that would

let people downshift economically. Instead, they stick with the old-left social policies that progressives backed a century ago to deal

with the problems of a scarcity economy: Government should

spend money to provide people with services—more money to

provide education, more money to provide health care, and more

money to provide jobs.

Progressives need to change their direction, because we face

economic realities today that did not exist a century ago. Growthhas created a surplus economy, so most Americans now consume

more than they need to live comfortably. At the same time, growth

has become a threat to the global environment.

The Rise and Fall of Progressive Politics

The world has changed since Eugene V. Debs first ran as the

Socialist Party candidate for president in 1900.

In 1900, average American income was near what we now define

as the poverty level,159 and industrialism was increasing production



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dramatically. That era’s progressive politics grew out of this

combination of widespread scarcity and rapid economic growth.

In 2000, America’s per capita gross domestic product was more

than seven times what it was in 1900. A minority of Americans still

do not have adequate housing, education, or health care, and weneed to help that minority, but to create a compelling vision of a

better future, we must focus on the majority who deserve the choice

of living simpler and more satisfying lives.

During the first half of the twentieth century, progressives had a

vision of the future that appealed to the majority of Americans: If

the government promoted economic growth and gave everyone a

fair share, then working people could have a decent standard ofliving. All through history, the great majority of humanity lived

near the subsistence level. At the beginning of the twentieth

century, American workers still lived in tenements, had minimal

public education, and had little or no health care. Rapid economic

growth made it possible, for the first time in history, that everyone

could have decent housing, education, and health care—nothing

extravagant, but everyone could have the basics.Socialists believed the government should control the means of

production and plan the economy to benefit working people rather

than just the rich. As part of this economic planning, they wanted

the government to set up centralized organizations to provide the

masses with housing, health care, education, and other basic

services.

New Deal and Great Society liberals had a similar bias, but they

were more moderate. They believed that the government should

stimulate economic growth in the private sector to provide jobs and

generate wealth, and it should tax this wealth to help provide

working people with housing, health care, education, and social

services.

This was the vision that inspired liberals during the 1930s, when

poverty was still the nation’s central economic problem. The New

Deal changed the nation’s ideas about the responsibilities of

government. The federal government should promote the growth of

the private economy, by building public works such as dams,

highways, and power projects, and it should take advantage of this



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growth by using tax revenues to fund programs that provide decent

housing, education, and jobs.

But this vision began to lose its appeal during the decades

following World War II, as America shifted from a scarcity eco-

nomy to a surplus economy. Post-war affluence gave most middle-class Americans decent housing and education, so these basics were

no longer part of a vision of the future. The freeways and power

projects built by the federal government began to look less like

symbols of a better future and more like symbols of the ugliness of

the modern economy.

Rather than developing new policies to deal with the new

problems of affluence, the left marginalized itself during the 1960sand the subsequent decades by focusing on the problems of

underprivileged minorities—on groups that do not get a big enough

share of the economic pie.

Historically, the left had always focused on the working class,

who were the great majority of the population, but during the

1960s, many leftists began to say that the working class no longer

was part of their coalition, because workers had moved to suburbia,bought homes and cars, and started thinking of themselves as

middle class. At that point, the left turned away from the working-

class and instead began to appeal to the minority groups who were

excluded from the general prosperity.

But if your main goal is to bring minorities into the mainstream,

you are focusing on a mopping-up operation that extends the

benefits of the modern economy to everyone, not on the problems of

the modern economy.

It is important to help poor minorities, but it is not good enough

to say that oppressed groups should all get a bigger piece of the pie,

while you ignore the fact that the pie is becoming less and less

nourishing. Back in the days when people believed the techno-

logical economy was bringing us a better future, liberals appealed

to Americans by promising to give everyone a share of that future.

But by the 1970s, there were doubts that technology and economic

growth were bringing us a better future.

Liberals of that time did not develop a new ideal for the future

that makes sense in the new context of our surplus economy.



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Instead, American liberalism split into two factions during the

1970s. On one hand, the old left still dominated liberal thinking

about social policy, repeating the left’s traditional idea that we

should spend more money to provide services—more money to

provide child care, education, affordable housing, health care, and jobs—the sort of policies that had been central in a scarcity

economy. On the other hand, the environmental movement

changed liberal thinking about technology and economic growth,

but it focused on how much damage growth does to the natural

environment, and it did not develop new social policies that would

help people to use our prosperity to live well.

This failure of mainstream environmentalists to develop socialpolicy is obvious if we ask: “What is the environmentalist policy on

child care?” This is an issue that could make the majority of

Americans see that our economy is failing to give us a better life,

because keeping up with the standard of living has made it

impossible for most people to take care of their own preschool

children, as Americans did a few generations ago. If we campaigned

for policies that give Americans child-care allowances and flexiblework hours, we could encourage parents to work less and consume

less so they can care for their own children, shifting away from

consumerism. But environmentalists have not thought about this

social issue, because they focus on the physical environment, so

liberals just repeat the old-left mantra that we should provide more

funding for child care and universal preschool—without con-

sidering that much of the child care is needed so people can work

long hours in an economy devoted single-mindedly to growth.

The failure of mainstream environmentalists to develop social

policy is even more obvious if we ask: “What is the environ-

mentalist policy on providing jobs?” Virtually no one in the political

arena is supporting choice of work hours,160 though this social

policy could provide jobs in a way that slows economic growth,

reduces environmental problems, and lets us live more satisfying

lives. Instead, environmentalists usually say that we should create

more jobs by investing in green technologies, which shows that they

are not thinking about the deeper social change that we need:

shifting to a less consumerist, less workaholic society, where we can



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choose shorter hours, rather than promoting rapid growth to create

extra work.

Since the 1960s, American liberals have passed laws against

racism and sexism, an important social advance, but they have not

developed social policies that deal with the most destructive “ism”of the twenty-first century—consumerism.

Instead, they still support the old progressive social policies of

one hundred years ago, in aggrandized form. A century ago,

progressives wanted to provide everyone with basic education and

economic security. Today, progressives want to begin early child-

hood education for infants as young as four months old.161 Then

they want all the toddlers in universal preschools. Then they wantall the children in after-school programs and summer programs.

Finally, they want all the adults to have the full-time jobs that have

given America the longest work hours of any of the developed

nations.

They think it would help people to have all these services, but it

would actually dominate our lives completely. They do not see that,

by demanding more preschools and after-school programs, they areactually giving parents and children less time together. They do not

see that, by demanding more jobs, they are actually making us

spend longer hours at work.

They should be doing just the opposite: giving us the option of

downshifting, so we can have more free time to do for ourselves.

Taxes and Equality

Though poverty is no longer central to the American economy,

as it was a century ago, we must address this issue to develop a

vision of a better future shared by everyone.

As we will see, prosperity was widely shared among all income

groups during the post-war decades, but since 1980, most of the

increased income has gone to the rich. As a result, America now has

the worst inequality of all the developed nations. Our poverty rate

has actually increased during the last four decades of economic

growth.



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There are many things we must do to fight poverty. We need to

provide job training for the hardcore unemployed, to improve

education of low-income children, and to restore funding to public

colleges and universities, which have become less affordable to low-

and moderate-income families. But the simplest thing that we cando to reduce poverty immediately is reforming the tax system to

give everyone a share of our nation’s prosperity.

Historically, liberals supported a progressive income tax to

reduce inequality, but during the postwar decades, their emphasis

moved from equality to economic growth. Today, as we reach the

limits of growth, we need to return to the historical liberal position:

If we want everyone to be economically comfortable, we need togive everyone a fair share of what the economy can produce

sustainably.

Under a progressive income tax system, there are higher tax

rates on higher incomes: For example, everyone might pay no tax

on the first $20,000 of income, pay a low tax on the second $20,000

of income, and keep paying higher taxes on higher increments of

income. The reason for progressive taxation is that low-incomepeople need all of their income for necessities such as food and

housing. As people’s incomes get higher, they spend a larger

portion of income on luxuries. If we made everyone pay the same

tax rate, the poor would sacrifice food and housing to pay their

taxes while the rich would sacrifice luxuries, and this would be

much more of a hardship for the poor. Progressive taxes are based

on the idea that the tax system should require a similar level of

sacrifice for everyone.

During the Depression, the Roosevelt administration created a

very progressive income tax system, and the highest tax rate

increased even further to finance World War II. From the end of the

war until 1963, the maximum marginal tax rate was 91% on income

above about $2 million a year in today’s dollars. Roosevelt raised

taxes at a time of economic hardship, when there was an obvious

need to give moderate-income people a decent share of the nation’s

wealth, and taxes were even higher during the 1950s and early

1960s, when there was widespread prosperity.162



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During the 1960s, though, liberals began to abandon their

historic support for progressive taxation. At a time of rapid

economic growth, it was tempting to avoid the political conflicts

caused by redistributing income and instead to rely on growth to

help lower income groups. The motto of the time was “a rising tidelifts all boats,” the saying that John F. Kennedy used to defend his

tax cuts against criticisms that they would primarily benefit the rich.

Kennedy and Johnson lowered the maximum tax rate to 77%

and then to 70%. Kennedy said that, because he eliminated loop-

holes, the government could raise more revenue with this lower

rate, but he also said that lower rates for the rich would stimulate

faster economic growth.These tax cuts helped to overheat the economic boom of the

1960s and cause inflation. During the 1970s, higher prices of oil plus

the inflation already built into the economy brought combination of

double-digit inflation and economic stagnation—the so-called

“stagflation” of the 1970s.

During the 1980s, Ronald Reagan promised to cure our problems

with supply-side economics, claiming that lowering taxes wouldstimulate economic growth. Reagan pushed through a series of tax

cuts that ultimately reduced the maximum marginal income tax rate

to 28%—less than one-third of what it had been in the 1950s.

Republicans continue to fight for lower taxes on the rich. Clinton

raised the top rate to 39.5%, and contrary to supply-side theory, the

higher tax rate did not prevent the economic boom of the late 1990s.

Then Bush cut the rate to 35% in 2003, and contrary to supply-side

theory, the rest of the decade was a time when median income

declined. The Republicans’ deregulation of the economy ultimately

led to the worst economic crash since the 1930s, the “great

recession” that began in 2008.

Reagan supported lower taxes on the rich by claiming that they

would stimulate economic growth and that the benefits of growth

would “trickle down” to everyone, just as Kennedy had claimed

that “a rising tide lifts all boats.” But it should be clear that the bene-

fits have not trickled down. Prosperity was widely shared before

1970, but most Americans have not gotten a fair share since then.



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Figure 16: Per Capita Median and Mean Household Incomes163

Figure 16 compares median household income, which is the

income that 50% of all households earn less than, with meanhousehold income, which is the average that we get by adding all

household incomes and dividing by the number of households. The

median indicates how well the typical middle-income household is

doing, while the mean can be pulled up by a small minority of very

rich households. We can see the difference if we imagine a group of

100 people, with 99 earning $50,000 per year and with 1 earning

$100,000,000 per year. The median income for this group is $50,000,which shows how well the typical middle-income person is doing.

The mean income is over $1,000,000, but that million-dollar mean

income does not show that the typical middle-income person is rich;

it just shows that one person in the group is super-rich and pulls up

the average.

In Figure 16, we can see that median and mean income grew at

about the same rate during the 1950s and early 1960s, whenprosperity was widely shared. During the late 1960s, mean income

began to grow a bit more quickly than the median income, and the

gap has widened considerably since then, as inequality increased

and the very rich got a bigger and bigger piece of the pie. If



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inequality had not increased, and median income had continued to

go up as quickly as mean income, the typical American’s income

would be about 15% higher than it is.164

The graph also shows that Reagan’s tax cuts did not bring faster

growth. On the contrary, income grew most quickly during the1950s and 1960s, when we had a very progressive tax structure.

(Income also grew quickly during the dot-com boom of the late

1990s, but those gains were lost during the dot-com bust of the early

2000s and the great recession of the late 2000s, so median income in

2010 was actually less than in 2000.)

Figure 17: Increase in After-Tax Income from 1978 to 2007165

A recent study by the non-partisan Congressional Budget Office

found that the highest income groups have had the greatest gains,

by far, since Reagan’s tax cuts. This study compared after-tax

income in 1979 and 2007, because these two years were in about the

same place in the business cycle. As we can see in Figure 17, itfound that the top 1% had a huge income gain of 275% in those

three decades. The rest of the wealthiest 20% of Americans had a

sizable income gain of 65%. The Americans in the middle had a gain

of under 50%, with the gain decreasing as income got lower. Finally,



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the 20% of Americans with the lowest incomes had a gain of only

18% in three decades.

The chart shows that there was some income gain across the

board, even among the lowest 20%, but the lower your income was,

the less your gain was.The poor, at the lower end of the lowest 20%, have actually lost

ground because of increased inequality. As we can see in Figure 18,

economic growth has not reduced poverty since the early 1970s.

Poverty declined dramatically in the 1950s and 1960s, when pro-

sperity was widely shared. The poverty rate reached its historic low

of 11.1% in 1973. During the 1970s, the poverty rate stagnated

because of the two severe recessions of that decade. The povertyrate went up a bit after 1980, thanks to Reagan’s policies, down a bit

during the dot-com boom of the 1990s, and up again during the

hard times of the 2000s. Overall, as Figure 18 shows, per capita GDP

has almost doubled since 1973, but the poverty rate has become

worse.

Figure 18: Despite GDP Growth, the Poverty Rate Is Higher than In 1973166

This figure should silence those who claim we need rapid

economic growth to help the poor: We have had four decades of



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growth that have not helped the poor at all. Economic growth is

obviously needed in developing nations to reduce poverty, but once

a nation is as wealthy as the United States, sharing income fairly

does much more to reduce poverty than promoting the most rapid

possible growth.In the future, we need to move beyond the rising-tide, trickle-

down theory of how to help the poor. This theory tried to use faster

economic growth as a substitute for progressive taxation, but as we

reach the environmental limits of growth, more progressive taxes

and reduced inequality should become key items of the liberal

agenda once again.

Liberals should emphasize how much inequality has increasedsince the Reagan revolution. In 1981, the United States ranked

thirteenth among 22 developed nations in income inequality. Today

we rank last, the most unequal country in the developed world.167

The top 10% of Americans now make 48.5% of all income, almost as

much as the remaining 90% of Americans.168

The United States also has less economic mobility than most

other developed nations. America has always thought of itself as aplace where anyone can live the Horatio Alger myth, rising from

poverty to wealth by working hard. But five large studies have

recently shown that people born poor are more likely to remain

poor in America than in most other developed nations. Though

Britain has long been famous for its rigid class system, only 30% of

men born in the lower fifth of incomes remain in the lower fifth as

adults, while 12% rise all the way to the upper fifth. By contrast,

42% of men born in the lower fifth remain in the lower fifth in

America, while only 8% rise to the upper fifth.169

Inequality is caused partly by larger economic trends—

globalization has eliminated most of the well-paying factory jobs

available to unskilled American workers decades ago—but changes

in our tax system have made inequality much worse than it needs to

be and much worse than it is in other industrial nations.

We can reduce inequality and poverty dramatically by returning

to a more progressive income tax system, similar to the system we

had before the 1980s. We should also tax capital gains at the same

rate as ordinary income; a recent study by the Congressional Budget



106

Office found that lower taxes on capital gains do little to benefit the

economy.170 In addition, we should expand the Earned Income Tax

Credit for low and moderate income working people, so everyone

who works earns a living wage.

Whenever anyone talks about making the rich pay their fairshare of taxes, the Republicans accuse them of class warfare, but

there is an obvious answer: There is already a class war in America,

it has been going on since the Reagan presidency, and it is a war

against the vast majority of Americans on behalf of the wealthiest

Americans.

Liberals have begun to revive their traditional emphasis on

distributing income fairly, rather than relying on growth to raiseincomes. President Obama campaigned on the promise to eliminate

Bush’s tax cuts for the very rich. Since the Republicans took control

of the House of Representatives in 2010, there have been repeated

budget stalemates, as the Republicans have refused to raise taxes at

all, while the Democrats have called for a balanced approach to

eliminating the budget deficit, with both spending cuts and tax

increases on the rich.I think the Democrats would benefit from sharpening this

contrast, when they can. For example, they have been supporting

Social Security cuts that are not as severe as the Republicans’ cuts,

but they would do better to say that we would not need any Social

Security cuts if the rich paid the Social Security tax on all their

income. Currently, this tax does not apply to income over $110,100

per year or to investment income, and there would be no need to

reduce benefits if all income were taxed. The Democrats would do

well politically by saying:

Today, the middle class pays 7.65% of income to Social Security,

but someone whose salary is $1 million per year pays less than 1%.

The Republicans want to cut your retirement income to save this

tax loophole for millionaires. We want to preserve your full

retirement income by taxing everyone equally.

The Occupy movement was an encouraging sign, because its talk

about “the 99%” moved us back toward an older version of liber-

alism that represents the common interests of the great majority.



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A New Preservationist Politics

We need to go beyond reducing inequality to create a larger

vision of a better future. The shift from a scarcity economy to a

surplus economy during the last century requires a shift fromprogressive politics to what could be called preservationist politics.

Through the mid-twentieth century, progressives believed in

building more dams, highways, and power plants to create more

prosperity for all. They were called progressives because they

believed in progress. In a scarcity economy, this focus was justified,

because growth was needed to allow everyone to become

economically comfortable.But in the late twentieth century, this sort of “progress” no

longer seemed as attractive as it had in times of scarcity. The costs

of growth sometimes seemed to outweigh its benefits. There was a

strong movement to protect the environment by stopping dams,

highways, and power plants, which was called “preservationist”

because it wanted to preserve places threatened by growth.

Preservationists focused on the physical environment. At first,they fought to preserve natural areas and old urban neighborhoods

threatened by development. Soon, they went a step further and saw

the need to preserve the earth itself from threats such as ozone

depletion and global warming.

This book has shown that preservationists should go even

further and look at ways we can limit growth to protect the social

environment. Just as it can overwhelm the physical environment,

growth can overwhelm the social environment by taking so much of

our time that we do not have enough free time left for ourselves, for

our families, and for our communities. To develop a new political

vision, we need to think about these social impacts of growth as

well as about the physical impacts of growth.

We should limit the economy so we have some room to breathe

and to do for ourselves. Instead of consuming more transportation,

we should build cities where we can walk on our own feet. Instead

of consuming more child care and education, we should take time

to raise our own children. Instead of consuming more health care,

we should take time to improve our own health through diet and



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exercise. Instead of consuming more jobs (and promoting growth to

provide jobs whether or not we want the products), we should take

control of our work hours, so we can choose to have enough income

to buy the things we want and also to have enough free time to live

satisfying lives.Preservationists try to limit the economy to preserve nature. Just

as we protect some undeveloped land from the modern economy to

leave room for nature to thrive, we should also protect some of our

own time from the modern economy to leave room for human

nature to thrive.

Progressives wanted to promote growth during an era when

most people did not consume enough. Their vision was compellingat a time of scarcity, when economic growth was needed to give

people decent housing, education, health care, and other basic

economic comforts.

Their vision is no longer compelling for most people in the

developed nations, now that we are already economically com-

fortable. Even if it were possible without ecological collapse, it is not

inspiring to contemplate a future where the trends of post-warAmerica continue, where we keep promoting the most rapid

possible growth so we can live in bigger suburban houses and drive

bigger SUVs on bigger freeways.

This does not mean that we should neglect the unfinished

business of the old progressive agenda. It is important to provide

health insurance to those who still do not have it, to reduce poverty,

and to distribute the national income fairly to those who do not

have enough. But this old agenda alone no longer offers a vision of

a better future.

Today, this vision must include enough prosperity to make us

economically comfortable, and it must also include enough free

time to spend with our families, to maintain our health, to be active

in our communities, to develop our talents, and to live fully human

lives.

The increased free time would require a new emphasis on

personal responsibility, so people use their time well. After you are

economically comfortable, the most important ways to improve

your life are things you do for yourself: exercising and eating a



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good diet, doing a good job of raising your children, walking

around your neighborhood rather than driving every time you

leave your house, making good use of your leisure time to develop

your talents.

Liberals do emphasize the importance of diet and exercise; infact, conservatives sometimes complain about the liberal “food

police.” Earlier chapters have suggested policies to encourage

people to take more responsibility for their diets and for raising

their children. We need to do the same for our lives generally.

People will benefit from having more free time, only if they take

responsibility for using that time to live well.

With this increased freedom and responsibility, there would beless of a sense of dependency on the formal economy. Modern

Americans believe that they are dependent on the economic system

to provide them with transportation, housing, health care,

education, and jobs. Old-line progressives raise this dependency to

the level of principle and claim that there is a right to housing, a

right to education, a right to health care, and (most important) a

right to a job. They take our dependency so much for granted thatthey do not realize that, when they demand more housing and

transportation, they are actually saying that the city planners should

decide what our neighborhoods look like, when they demand more

education and day care, they are actually saying that educators

should raise our children, and when they demand more jobs, they

are actually saying that the economists should make us do extra

work.

These sorts of demands made sense a century ago, when

Americans did need to consume more. They no longer make sense

now that we need to reduce destructive forms of consumption and

act more responsibly in order to live better lives. If we want more

livable cities, we need to consume less automobile transportation

and to spend more time getting around on our own power by

walking and bicycling. If we want better education, we need to

consume less entertainment media and to spend more time raising

our own children. If we want better health, we need to consume less

junk food and to spend more time exercising. If we want to live

more satisfying lives, we need to stop focusing so single-mindedly



110

on consuming more stuff and to start making better use of our free

time.



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Chapter 8Three Futures

Currently, America tries to promote more rapid economic growth

rather than shortening work time. This chapter will look at twodifferent scenarios for the future, one where the world follows this

policy and promotes rapid growth indefinitely, and another where

growth continues until people are economically comfortable and

then stops. These are not meant to be realistic possibilities for the

future. They are two extreme models that can help us understand

the issues that we face.

We will also look at a third scenario based on practical policiesthat could actually be implemented to slow growth, which would

lead us to a future that is somewhere between these two extremes.

The Coming Century

The world has a chance of moving to a prosperous andsustainable future in the coming century, because population

growth is slowing.

World population grew relatively slowly during the early stages

of the industrial revolution, less than doubling each century: from

790 million in 1750 to 1.26 billion in 1850 to 2.25 billion in 1950. Then

world population almost tripled in just a half century, from 2.25

billion in 1950 to 6.23 billion in 2000, as the developing nationsadopted modern methods of disease control and farming.

Now fertility is decreasing sharply in most of the world because

of modernization. Fertility in almost all the developed nations is

now below 2.1 children per woman (the “replacement level” at



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which population neither grows nor declines). Fertility is also

declining in most of the developing nations. Mexico is an extreme

example: Its fertility rate was almost 7 in the 1960s, but it is now

down to about 2.1.

The United Nations’ medium projection is that world populationwill grow from the current 7 billion people to 9.6 billion in 2050 and

then will grow slowly to 10.9 billion at the end of the century.171

Population projections for Africa have increased sharply over the

last decade, and it is unlikely that these nations can produce enough

food and water to sustain projected populations.172

A more realistic projection would be 10 billion at the end of the

century. If present trends continue, we could reach that numberbecause populations of some countries are limited by famine. With

investments in family planning, we could reach that number

because fertility declines.

To see whether the world can move to a sustainable economy,

we must also ask how much each of these 10 billion people will

produce and consume.

It is striking to project world economic growth rates of thesecond half of the twentieth century (Figure 19). Between 1950 and

2010, per capita Gross World Product (GWP) grew at a rate of about

2.3% a year, and between 1980 and 2010, per capita GWP grew at a

rate of about 1.88% per year. If it continues to grow at the slower

rate of 1980 to 2010:

■ Per capita GWP will be $18,849 in 2040, making the world

more prosperous than America in 1960, when the United

States began thinking of itself as the affluent society.

■ Per capita GWP will be $47,783 in 2090, making the world

more prosperous than America in 2010.173

This does not necessarily mean an end to world poverty, because

economic growth and affluence are distributed unevenly through

the world. Among the developing nations, parts of Asia are

growing rapidly and steadily, Latin America is growing more

erratically, and Africa is growing slowly. Because fertility has not

declined in parts of Africa, it may be much harder for Africa to

emerge from poverty than the rest of the world.



113

Figure 19: Growth of Per Capita Gross World Product174

Nevertheless, if growth could continue, prosperity would spread

to most of the world by the end of this century.Many of the developing nations are now like Europe in the

nineteenth century, when workers lived in Dickensian urban slums

that were worse than rural subsistence economies. But wages went

up in America and Europe during the twentieth century, because

productivity kept growing while slower population growth

tightened the labor supply. In the twenty-first century, the same

thing could happen to the entire global economy: Because thesupply of capital will increase more quickly than the supply of

labor, the share of income that goes to labor should increase.

Incomes have already reached middle-class levels in Taiwan and

South Korea. Average incomes are still very low in China and India,

but both these countries have rising wages and a rapidly growing

middle class. China has already surpassed the United States as the

world’s largest market for most consumer goods, including cars,refrigerators, washing machines, and desktop computers, and its

retail sales are growing by 13% a year.175

In the middle of the twenty-first century, wages in China and

India could be high enough that they will lose their labor-intensive



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industries to countries with lower wages;176 but at that point,

countries with low wages would start to become scarce. After India

and China emerged from poverty, about half of the people in the

world would be economically comfortable. By the end of the

twenty-first century, as industries seeking cheap labor move to theremaining developing nations, wages could go up to decent levels

throughout most of the world—if world economic growth

continues, but that is a big “if.”

This projection assumes that ecological problems will not disrupt

economic growth. If people opt for shorter work hours and slower

growth after they reach a comfortable middle-class level, there is

clearly less chance of ecological disruption. If people work shorterhours, labor will also be scarcer, so wages will go up more quickly.

To bring the choice that we face into focus, we will look at two

different scenarios that represent two extreme possibilities for the

future of the world economy. In the first scenario, the world tries to

continue rapid growth indefinitely. In the second scenario, growth

ends when people reach the point where further growth does not

significantly increase happiness.These two scenarios are a thought experiment to clarify our

thinking about the benefits and dangers of economic growth.

Scenario: Growth Continues Indefinitely

In the first scenario, there is no move toward shorter work hoursor choice of work hours. Instead, people continue to believe that the

only way to avoid unemployment is by promoting rapid economic

growth and convincing people to consume everything that is

produced. The entire world decides that it must stimulate demand

to create standard full-time jobs for all, as the United States has

done since the end of World War II. Politicians realize that they will

not be reelected if there is high unemployment, so when there areconflicts between jobs and the environment, they favor jobs.

If the world could somehow avoid ecological collapse and

continue historical rates of economic growth indefinitely, it would

have to make heroic efforts to promote more consumption and



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create needed demand. Environmentalists often say that continuing

growth will strain ecological limits, but let’s look at the other side of

the coin: This growth rate would also strain people’s ability to

consume.

1950 2000 2050 2100 2150 2200 2250 2300 2350

Growth 2,756 8,529 22,703 57,554 145,908 369,902 937,765 2,377,395 6,027,104

Comfort 2,756 8,529 23,500 23,500 23,500 23,500 23,500 23,500 23,500

Figure 20: Per Capita GWP in the two Scenarios (2010 PPP dollars)177

The upper line of Figure 20 projects per capita Gross WorldProduct (GWP) if the world continues growing at the rate of the

second half of the twentieth century. In 2200, per capita GWP would

be over $350,000 (in constant 2010 dollars). In 2300, it would be over

$2,350,000, and in 2350, it would be over $6 million. It is hard to

believe that the world could invent enough new consumerist habits

to absorb this huge increase in purchasing power.

Post-war America absorbed excess purchasing power bypromoting automobile use, but what would the world do after

everyone had a car? As the next step, they might promote

helicopters. At first, helicopters would be a luxury for the rich, as

automobiles initially were: People who owned them could live out

in the country and work in the city, and they could go on vacation

in unspoiled wilderness areas that other people could not get to. But

once helicopters become more common, they would become anecessity, as automobiles are for most Americans today. Factories

and offices would locate on cheap land in the Nevada desert,

knowing that employees from California could commute by

helicopter. Married couples would take jobs hundreds of miles

apart, so they could not live together without commuting by

helicopter. New housing would be built where residents could not

go shopping without a helicopter. All of the wilderness areas in the

world would fill up with campers in recreational helicopters. To

avoid accidents, the helicopters would have to be guided by

centralized computer systems, so all those long helicopter rides

would be very boring—but that would provide another marketing



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opportunity: virtual-reality video games built into helicopters,

which people could play to pass the time.

It does not make sense in human terms for consumption to keep

growing indefinitely. Even if we convinced people to consume new

products that cost as much as the entire GWP, these new productswould only fuel economic growth for one doubling time—which

currently takes about thirty-three years.178 In order to absorb

purchasing power for the next doubling time, the world would have

to spend twice as much on new products as they did during the

previous doubling time.

It is not ecologically sustainable to consume so much. In reality,

long before we reached the extravagant income levels in theprojection, we would run up against the two main ecological

constraints on economic growth: limits on the earth’s ability to

provide natural resources and to absorb pollution.

We can use ecological footprint studies to estimate how far the

world’s resource use would exceed the Earth’s capacity in this

scenario. These studies calculate how much land it would require to

sustainably provide people in different countries with the resourcesthat they consume.

Americans currently have an ecological footprint of 8.0 global

hectares of land each.179 The Earth has a capacity of 12 billion global

hectares of land, so it would require six and two-thirds Earths to

give America’s current level of resource consumption to 10 billion

people.

It is possible to reduce our ecological footprint by doing things

like recycling and shifting to renewable sources of energy, as

environmentalists often say, but in this scenario, it is likely that

growth will outrun our ability to increase resource efficiency. It

would be a huge challenge to develop new technologies quickly

enough to keep up with the strain on resource supplies and on the

global environment if rapid growth continues indefinitely. We

would need a series of fundamental technological breakthroughs,

which might occur in time to prevent ecological disruption, but

might not.

There would be a constant race against the problems caused by

growth—endless crash programs to develop technologies that could



117

provide more raw materials, provide more energy, mitigate

pollution, and manage ecological breakdown. The faster the growth

rate, the more likely that we would lose this race and that there

would be ecological collapse and dieback—like the dieback that

happened after Easter Island was deforested, but on a world-widescale.

If the entire world continues to promote the most rapid possible

growth, as the United States has done since the end of World War

II, we can expect a series of economic crises caused by sudden

increases in resource prices, and we can expect mass movements of

climate refugees fleeing from famine, flooding, and desertification.

Pockets of uneasy affluence would remain in the United States,Europe, and parts of Asia, where people would live in gated

suburbs and drive their electric cars every time they leave their

homes.

Scenario: Growth Ends in Comfort

In the second scenario, we imagine that people decide they have

enough at the economic level of the United States in the 1960s—the

time when American social critics began to say that our economy

was so affluent that it was geared to waste. This scenario is also a

thought experiment that looks at the extreme case where growth

stops at this level: It assumes that, when income reaches the level of

1960s America, nations all make the political decisions needed tolimit wasteful consumption and individuals all chose more free time

rather than more income—an unrealistic assumption but useful to

clarify the issues involved.

This income level could let everyone in the world live in middle-

class comfort. It is true that in the 1960s, many Americans were

poor, and many more did not have their full share of the country’s

affluence. But at the same time, we were promoting waste in many

ways: The Federal government was building freeways, developers

were paving over the countryside with sprawl, and the automobile

manufacturers were building oversized cars with tail fins to absorb

consumers’ excess purchasing power.



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The same per capita income would be enough to let everyone

live comfortably, if there were less waste and less inequality.

Children could get a good education. People could have needed

medical care. Families could own their own homes in walkable

streetcar suburbs (though some people and some cultures preferdenser cities).

America’s per capita income in the late 1960s was about half of

what it is now. We have seen that city planners were already saying

that Americans relied too much on cars in the 1960s, though we

drove half as much as we do now, and that international

comparisons show that spending more no longer improves

education, health care, or self-reported happiness after you reachhalf of America’s current level. People in this scenario would have

enough income to be just about as well off as you can be purely

because of your income.

In this scenario, the world would avoid the excesses of

consumerism that Americans have come to take for granted during

recent decades. For example, people would not live in neigh-

borhoods where they have to drive every time they leave theirhomes. People would use canoes and sail boats for recreation rather

than jet skis and powerboats. Shopping till you drop would not

become the world’s favorite hobby. This sort of consumerism adds

little or nothing to our happiness.

After growth ended, the economy would not be stagnant. There

would still be technological change, so existing products would

continue to be replaced by new ones. For example, even in a no-

growth economy, computers would have been invented, so word

processing would have replaced typewriters, email would have

replaced ordinary mail for many uses, and so on. The difference is

that, in this scenario, people would adopt new technologies if they

were useful. We would not stimulate demand for new gadgets

purely to create more jobs.

In this scenario, growth of the world economy would slow

initially, as growth ended in the developed nations and continued

in the developing nations. Slower growth would make it easier to

control the immediate ecological threats posed by global warming



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and resource shortages. Ultimately, growth would end entirely after

the world became economically comfortable.

With limits on emissions and resource consumption, the world

could transition to a sustainable economy relatively easily. As we

have seen, ecological footprint studies show that, if a worldpopulation of 10 billion people consumed resources at America’s

current level, they would require six and two-thirds earths, but in

this scenario, where growth ends at half of America’s current per

capita income, they would require three and one-third earths. There

is evidence we can increase resource productivity four-fold using

technologies that are currently available,180 so a rough calculation

shows that we could support a 1960s level of affluence for 10 billionpeople, even if the world’s biocapacity decreased somewhat before

we controlled global warming.

This is not an austere future. When America’s per capita GDP

reached this level in the 1960s, the nation was calling itself “the

affluent society.” The world could aim at a future with the same

affluence and with much more free time, leaving people better off

than Americans were in the 1960s.What would people do with their free time? They would have

enough time for the basics of a good life, which many Americans

now lack, such as time to spend with their children. They would

also have enough time to pursue their own interests.

Of course, there are some successful CEOs, architects, writers,

musicians, and the like, who would not reduce their hours, because

they get more satisfaction from their work than they could get from

any other activity, but people like these are relatively rare. Even

among people whose jobs are satisfying, most would be happier

doing less of their routine work and spending more time on

independent activities that enrich their work. Most college

professors would be happier with a lighter workload and more time

for research and study. Most doctors would be happier with a

lighter workload and more time to keep up with developments in

their field—and we would be better off if doctors did this rather

than relying on drug-company advertising.

Most people, from accountants to computer programmers to

electricians to middle managers, work for income and not for the



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intrinsic satisfaction that they get from doing their jobs. If they did

not need the money, they would gladly work shorter hours.

Though we can project productivity growth indefinitely, there is

probably a limit to how much productivity can actually increase

and work hours can decline. There is generally slower productivitygrowth for services than for goods, and there seems to be a limit to

how far productivity in services can increase. As the economist

William Baumol pointed out in the 1960s, the quality of cars does

not depend on how many workers produce them, but the quality of

education does depend on the student-teacher ratio. It is possible to

increase the productivity of many services: for example, Automated

Teller Machines eliminate the need for bank tellers completely formost transactions, and one supermarket chain now uses only self-

service checkout, eliminating the need for checkers. But it seems

that some services will never be fully automated: We will always

want people (not robots with artificial intelligence) teaching our

children, producing our art and literature, and making our laws.

Yet productivity could increase enough to reduce work hours

substantially. All through history, most people have been tightlyconstrained by economic necessity, devoting their lives to work.

Because of increased productivity, there could be a fundamental

shift from necessity to freedom. People would work short hours and

would have to make a deliberate decision about what to do with the

bulk of their time.

Most obviously, people could use their free time do the things

that improve their own well-being. People could spend more time

exercising to improve their own health, more time raising their own

children, more time working in community groups to improve their

own neighborhoods.

In addition, people could use their free time to do the work they

love, even if it pays little or nothing. Some would have small

businesses after hours: They could earn their living by working in

the mainstream economy part-time, and they could spend most of

their time on computer art, handicrafts, or some other work that

they do because they enjoy it, even if it earns them only a few cents

an hour. Others would spend most of their time on unpaid work,

for example, on study, local politics, art, sports, or music.



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There are already people who try to do this but who are limited

by their work schedules. For example, Vince works as a policeman,

but he devotes weekends to his hobby of carving wooden doors. He

began by carving a door for his own house, and it looked so good

that a few neighbors asked him to do the same for them. Soon hehad so many people asking for his doors than he could not keep up

with demand, but he earns less than a dollar an hour carving doors,

so this work could never support him. He looks forward to

retirement, so he can spend more time on this hobby.

Susan worked as an administrator at a university. After her

children were grown, she began volunteering with neighborhood

groups, and after a decade of volunteer work, she was elected to thecity council. At that point, she essentially had two full-time jobs: an

administrator during workdays, and a councilmember virtually

every evening and weekend—a pace that most people could not

maintain. When she finally retired from the job where she earned

her income, her work as councilmember still took up more time

than most jobs.

Imagine how different our culture would be if Americans spentless time making money and buying stuff, and instead spent their

time doing work that they were dedicated to. People could do the

work they loved without quitting their day jobs, because their jobs

would not take much time.

This sort of voluntary work can provide the feelings of

accomplishment and the social contacts that most people get from

their jobs today. Yet this is work that people do freely, because they

feel it is interesting and important, rather than work that they do

just because they need the paycheck.

Education would have to change. Today, schools focus on

teaching skills that are needed to get jobs. Of course, schools would

keep teaching job skills, but they would also teach people how to

make good use of their free time.

There would be many classes teaching activities that are

satisfying in themselves: Children would learn skills that they

might want to pursue when they grew up, such as playing musical

instruments, and adult education classes would become much more

popular. There would be a proliferation of community orchestras,



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community theaters, independent filmmakers, crafts studios, neigh-

borhood improvement groups, arts, local political groups, and the

like. People would also have more time to spend with their

children, families, and friends. With the proper education, there

could be an unprecedented flourishing of human talent.To teach children how important it is to do for yourself, schools

might have history lessons that show children how much better off

they are than Americans were at the beginning of the twenty-first

century. Back then, the children would learn, Americans spent so

much on medical care that the costs threatened to bankrupt the

federal budget, but there was also an epidemic of obesity; now we

spend less on health care but we are healthier because we have freetime to exercise. Back then, Americans moved to sprawl suburbs for

the sake of their children, but they had to work so much to support

their suburban way of life that they did not have enough time to

spend with their children.

College economics texts would note that Aristotle said growth

should not increase indefinitely, because it makes sense for wealth

to increase only to the extent that is needed to promote humanflourishing. They will wonder how economists forgot this obvious

point during the second half of the twentieth century. How could

economists have considered the production of wealth to be an end

in itself, rather than a means to the end of living a good life? This

attitude may have been useful when the majority were poor, the

texts would say, but now we can see that Aristotle was right to say:

“One form of property-getting, namely getting a livelihood, is in

accordance with nature ... For the amount of property of this kind

which would give financial independence adequate for a good life

is not limitless .... Wealth is a tool, and there are limits to its uses as

to the tools of any craft; both in size and in number there are limits

of usefulness ... but there is another kind of property-getting, to

which the term money-making is generally and quite rightly

applied; and it is due to this that there is thought to be no limit to

wealth or acquisition .... Indeed, wealth is often regarded as

consisting in a pile of money, since the aim of money-making and

of trade is to make such a pile ....”181



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Accumulating the limited amount of wealth that is adequate for

a good life is “in accordance with nature”—by which Aristotle

means that it promotes the full development of human nature—but

trying to accumulate an unlimited pile of money wastes time that

could be better spent.Until the nineteenth century, it seemed that only a small number

of aristocrats would have the free time needed to live a fully human

life, and that most people would always have to toil for long hours

just to produce necessities (unless, Aristotle says in one passage, the

old myth came true and machines began to move themselves, so

masters had no need for slaves182). Now, it has become possible for

most people to move from the realm of necessity to the realm offreedom, spending some of their time on necessary work but having

enough free time to develop their talents fully and to live fully

human lives.

Thought Experiments and Practical Policies

We have done a thought experiment comparing two extreme

possibilities for the future. In one scenario, people do not reduce

work hours at all, and instead use all productivity growth to

increase consumption. In the other scenario, people do not increase

consumption at all after they are economically comfortable, and

instead use all productivity growth to shorten work hours. These

two extremes are meant to clarify the actual choice that we facetoday:

■ If we continue growth as usual, if we refuse to cap

emissions or resource consumption because caps might

slow growth enough to cause unemployment, then we will

move toward a future of empty consumerism that goes far

beyond what is needed to live well, that gives us resource

shortages and a less livable earth.

■ If we slow growth and live more simply, and if we move

decisively to cap emissions and resource consumption at

sustainable levels, we could move toward a future where

the world emerges from poverty during this century, a



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future where people are economically comfortable and have

free time for their communities, their families, and their

own interests.

These two extreme alternatives should also make us consider

that we in the United States are at one of the extremes. The United

States has not reduced work time since the end of World War II, a

striking contrast to the United States between 1840 and 1930, when

work hours went down steadily, and to west European countries,

which have continued to reduce work hours during recent decades.

These two alternatives are a thought experiment, because there

are no practical policies that could end growth when people are

economically comfortable. Even if we give people the option of

downshifting, most people would want to take advantage of

increased productivity to have both more money and more time,

rather taking all increased productivity in the form of more free

time after they are comfortable.

Figure 21: Work Hours in the United States, Germany and France since 1950183

We can look to Europe for a realistic alternative with both

shorter work time and increased consumption. In Figure 21, we can

see that work hours have declined steadily in France and Germany



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since 1950 (as in other west European nations) but have hardly

declined at all in the United States. Both France and Germany had

much longer work hours than the United States in 1950, when they

had to work hard to rebuild after the devastation of World War II,

but their work hours declined by about one-third between 1950 and2010. France is known for its short work hours because of its

political battles over the 35 hour week, but Germany actually has

shorter work hours than France. The average American work week

was much shorter than theirs in 1950, but the chart shows that we

now work much longer hours than they do.

It is interesting to contrast the United States and Germany,

because their work hours account for almost all of their difference inper capita output. The average German worker works 83% as many

hours as the average American worker, and Germany’s per capita

GDP is 81% of America’s.

If economic growth measured well-being, then Germans would

be better off working as much and making as much money as

Americans, but Germans seem to believe that they are better off

having extra time rather than extra money. They seem to enjoy thepaid four-week vacations that their laws guarantee; by contrast,

29% of American workers have no paid vacations, and those who

do get paid vacations average just over one week per year.184

According to most measures of economic success (apart from per

capita GDP), Germans are better off than Americans, as we can see

in Figure 22. Germany has lower unemployment than we do during

the current hard economic times, in part because they have a policy

called kurzarbeit (short work), which provides subsidies to

employers who cut workers to part time rather than laying workers

off. Germany has a lower national debt and a much higher house-

hold savings rate than we do: It seems that our work-and-spend

economy leaves us less able to save than they are, even though we

make more money. Germany also has perennial trade surpluses

(over $184 billion in 2010), while we have perennial trade deficits

(over $470 billion in 2010), showing that shorter work hours and

choice of work hours do not make a country less competitive.

According to common measures of social welfare, Germany is

also better off than the United States. Though they spend only 57%



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as much on health care as we do, they have higher life expectancy

and much lower infant mortality. Though they spend only 60% as

much per pupil, they have higher educational achievement.

Germany USA

Per Capita GDP (2010 PPP Dollars) $37,366.57 $46,697.35

Annual Hours per Worker 1,408 1,695

National Debt (% of GDP, 2010) 83.96% 94.36%

Household Savings Rate (2007-

2010)

11.3% 4.8%

Unemployment (2010) 7.2% 9.6%Trade Balance (Millions of 2010

Dollars)

184,693 surplus 470,898 deficit

Per Capita Health Care Spending

(2005 Dollars)

$3,628 $6,350

Life Expectancy at Birth 80 78

Infant Mortality (Deaths per 1000

live births)

4 7

Per Pupil Public Spending onEducation (2007 Dollars)

$9,879 $16,441

Educational Achievement (PISA

Science Score, 2000)

515.6 488.9

Ecological Footprint (Global

Hectares per Person)

5.08 8.00

Figure 22: Germany and the United States185

Germans can live better with lower incomes, because they do nothave our level of compulsory consumption. Though it is famous for

its autobahns, Germany has compact, walkable cities. It also has

controlled its medical expenses: We spend $2,722 more than they do

on health care, which accounts for about 30% of our higher per

capita GDP, but that extra spending does not seem to do us much

good, since our health is worse than theirs.

Despite our higher per capita GDP, it seems that Americans are

not as well off as the Germans, according to every available

measure of well-being.

America’s more consumerist way of life is also much more

environmentally destructive than the German way of life. The



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ecological footprint of the average American is 8 global hectares,

while the ecological footprint of the average German is 5.08 global

hectares. Their footprint will become smaller, because they plan to

generate all of their electricity using renewable sources of energy by

2050. Though Germany is famous for its laws promoting cleanenergy and recycling, their shorter work hours and lower per capita

GDP currently contribute about as much as their cleaner economy

to their smaller ecological footprint.

Yet the developing nations seem to want to imitate the American

model: They are growing as quickly as possible, they are building

freeways in their cities, and they are beginning to move to

American-style suburbs. There is even a gated suburb of Beijingnamed Orange County, after the suburban county outside of Los

Angeles, which markets itself as an imitation of a California suburb.

It is a 45-minute drive on the freeway from downtown Beijing, with

no connection by transit.

The world will obviously have a much better chance of avoiding

ecological disruption if the developing nations imitate the European

model instead of imitating the American model. They should buildnew neighborhoods that work for transit, bicycles and pedestrians

as well as for cars. After they have grown enough to have a com-

fortable standard of living, they should shorten the work week and

allow choice of work hours, so they can take some of the benefit of

their rising productivity in the form of more free time.

Scenario: A Possible Future

Now, let’s look at a third scenario that speculates about a future

that is realistically possible. This scenario assumes that work-time

choice and other policies give us slower growth and more free time,

more like the European model of work time than the post-war

American model. It assumes that effective cap-and-trade systemskeep pollution and resource consumption at sustainable levels. And

it assumes that the tax system is used to reduce inequality. The

result would be a future that is somewhere between the two

extreme scenarios in our thought experiment.



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If we lived in a world of philosophers and sages, people might

choose to stop consuming more when they had enough to live

comfortably; they would take all productivity gains in the form of

more free time, which they would use to develop their capabilities

fully. But in the real world, people with choice would useproductivity gains both to increase their income and to increase

their free time, as west Europeans have. If people in the developed

nations chose to cut their work hours as rapidly as Germany did in

the last two decades, average work hours would decline by more

than one-third in a century186—and hours could decline even more

rapidly if there is a movement toward simpler living. We could

move from necessity toward freedom, toward the point where whatpeople do with their own time is more important than what they do

at their jobs.

Though the economy would keep growing, cap-and-trade

systems would prevent it from exceeding ecological limits.

Emissions and renewable resources would be capped as each

approached critical levels. Until the middle of this century, these

caps would not have much of an effect on the rate of economicgrowth. They would just change the direction of growth so it is

cleaner and more resource efficient. We have seen, for example, that

the Congressional Budget Office found that a cap-and-trade system

controlling greenhouse gases would not slow growth significantly

and that our GDP would still more than double by 2050;187 in this

case, cap-and-trade would encourage energy conservation and shift

the economy from dirty energy to clean energy. Likewise, other

caps on resource use would not slow growth significantly at first.

Based on ecological footprint studies and a four-fold increase in

resource efficiency, we can estimate that cap-and-trade systems

would not slow growth significantly until somewhere around the

middle of this century, but the estimate is very rough for several

reasons. First, global footprint looks at the earth’s total capacity, but

there could be shortages of individual resources before there was a

general shortage, and we cannot predict how easy it would be to

develop substitutes for the scarcest resources. Second, our pro-

jections are based on recent rates of growth, but one economic crisis

or another might cause growth rates to change, as the recent



129

financial crisis has. Third, we assume a factor-four increase in

efficiency, but this is just a rough estimate of how much we can

increase resource efficiency with current technologies.

Though it is approximate for all these reasons, this estimate

makes a key point about what a sustainable future would be like:Currently, we can reduce emissions and increase resource efficiency

at low cost, but as we picked the low-hanging fruit and the law of

diminishing returns took effect, it would become more difficult to

increase efficiency.

At some time, probably around the middle of the century, cap-

and-trade systems would begin to slow growth, as it became harder

to increase resource efficiency further. There will undoubtedly benew technologies that will let us move beyond a four-fold increase

in resource efficiency, because cap-and-trade would encourage

investment in developing them, but technological breakthroughs

that might not come as quickly as the world wants them.

Resource scarcity might make it harder for the remaining

developing nations to emerge from poverty. We saw that there

would be enough resources for everyone to have America’s 1960sstandard of living with a four-fold increase in resource productivity,

but in this more realistic scenario, the developed nations would

grow far beyond this point, pushing up resource prices and making

it harder for the remaining developing nations to grow. No doubt,

international cap-and-trade agreements would cap the developing

nations less strictly than the developed nations, following the

approach to controlling global warming sketched at Copenhagen in

2009. There might be political or religious movements calling on

people in the developed nations to live more simply so everyone in

the world has a fair share of resources; these movements would

probably have limited influence, but it is conceivable that people in

the developed nations would realize that consuming more is not

improving their lives and would shift to much slower growth.

Most likely, the remaining developing nations would grow

slowly because of resource scarcity. Their progress to a comfortable

standard of living would probably be delayed for many decades,

but ultimately they would emerge from poverty, as new

technologies to increase resource productivity were finally



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developed. Individual nations might remain poor because they

cannot control population growth or their governments are corrupt,

but ecological disruption is the only thing that can prevent the

world generally from emerging from poverty. If cap-and-trade

systems keep resource consumption and emissions at sustainablelevels, then by definition, they would prevent ecological disruption.

In the developed nations, caps on resource use would ultimately

make people increase their consumption of some luxuries more

slowly. It is plausible that people’s desires are unlimited, as many

economists say, so that caps on resource use would prevent people

from satisfying some of their most extravagant desires.

For example, Virgin Galactic, a company related to VirginAirlines, is planning to offer suborbital space flights at a cost of

$200,000 each, and it already has people lined up waiting to buy

tickets. Another company, SpaceX, claims it will send tourists to

Mars within 20 years.188

Currently, only a few very rich people can afford this sort of

tourism, but if incomes kept growing at their historical pace,

weekend vacations on the moon could become popular by the endof this century. It would be fascinating to see the full earth in the

sky, much larger than a full moon, and to feel what it is like to walk

around in the moon’s low gravity. It is easy to imagine a domed

amusement park on the moon, which would take advantage of the

low gravity to give people experiences that they could not have on

earth.

But it is not easy to imagine that there will be enough clean

energy by the end of this century to support large-scale space

tourism. A cap-and-trade system for energy would put this sort of

energy-intensive amusement beyond the reach of all except the very

rich. In fact, it would be best to have a luxury tax to discourage the

wealthy few from consuming so much energy on amusements that

they drive up prices for everyone else.

Because of cap-and-trade, people in the developed nations

would have to give up on their vacations on the moon (at least, until

fusion energy becomes feasible). These vacations are an extreme

example that makes a general point: As the economies of the

developed nations continued to grow during the second half of this



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century, caps on resource consumption and emissions would

prevent people from consuming all of the luxuries that they might

want to buy with their increased incomes. Instead of buying some

of the most resource-intensive luxuries, they would either buy

different luxuries or cut their work hours.This does not seem like much of a sacrifice to make to preserve a

livable planet. It is certainly much less of a burden than what we

can expect if we do not cap resource use and pollution at

sustainable levels: periodic resource shortages that cause recessions

and widespread unemployment, and global warming that turns the

American heartland into a dustbowl and causes famine in the

developing nations.

An American Tradition

Because the United States is a model for developing nations, we

can help to change the direction of the world if we begin to livemore simply. There are proven policies that can give Americans the

option of downshifting economically, such as the choice of work

hours pioneered in the Netherlands and the city planning policies

that have made Portland, Oregon, less automobile dependent.

America adopted its current economic policies after World War

II, but before then, we had a long history of support for simpler

living.During the earliest decades of our republic, the Hamiltonians

supported rapid economic growth, but the Jeffersonians believed

that democracy required a nation of small farmers and small

businessmen, so they deliberately tried to slow growth and

discourage manufacturing. Through the age of Jackson, Democrats

opposed a national bank, hoping that tight money would slow

growth.Many of our early writers had a similar bias. Emerson was

critical of the industrial revolution, and he wrote:

Machinery is aggressive. The weaver becomes a web, the

machinist a machine. If you do not use the tools, they use you....



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What have these arts done for the character, for the worth of

mankind? Are men better? ‘Tis sometimes questioned whether

morals have not declined as the arts have ascended. Here are great

arts and little men.....189

Emerson’s follower, Thoreau, became famous for dropping out ofthe economy to pursue an extreme form of simple living at Walden

Pond.

Even during the age of rapid economic growth that followed the

Civil War, the labor movement continued to insist that workers get

both higher wages and shorter work hours, and the workweek

declined steadily. William Green, president of the American

Federation of Labor, showed that labor still had some of that oldEmersonian spirit in 1926, when he wrote, “The human values of

leisure are even greater than its economic significance,” because

leisure is needed “for the higher development of spiritual and

intellectual powers.”190

In the mid-twentieth century, this vision of a more leisured and

more high-minded future was so widespread that President

Eisenhower mentioned it when he accepted the presidential

nomination at the 1956 Republican convention:

Science and technology, labor-saving methods, management, labor

organization, education, medicine—and not least, politics and

government. All these have brought within our grasp a world in

which backbreaking toil and longer hours will not be necessary. …

Leisure, together with educational and recreational facilities, will

be abundant, so that all can develop the life of the spirit, of

reflection, of religion, of the arts, of the full realization of the good

things of the world.191

It is hard to imagine a president saying anything like that today.

Americans have no more leisure now than during the Eisenhower

era. Our inflexible work hours have pushed us toward the extreme

scenario where all of our productivity gains go to more income, and

where we need rapid economic growth purely in order to avoid

unemployment.

It is time to moderate the post-war focus on economic growth,

by reviving the Jeffersonian and Emersonian tradition of simple

living and idealistic thinking.



133

In the coming century, as people see how much damage

consumerism is causing, there could be a movement toward simpler

living that is as powerful as the civil rights movement and feminist

movement were in the twentieth century. If this movement becomes

widespread, it would make it much easier to control globalwarming and other ecological problems. But this movement cannot

become widespread as long as people do not have even have the

option of consuming less and working less.



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Chapter 9To Live Wisely and Agreeably and Well

The economy has reached the point where we can choose our

standard of living. Throughout history, most people lived at asubsistence level: Rapid economic growth was obviously a good

thing when most people worried about having enough food and

decent housing. But now, our most important needs are satisfied, so

we can make a deliberate decision about what standard of living we

want, rather than focusing exclusively on promoting growth, as we

have since the end of World War II.

Some radical environmentalists overreact to the failings ofgrowth and look to primitive or preindustrial societies as models.

This sort of thinking obviously is not a basis for practical economic

policy. Going back to a homestead and living on the land may

sound romantic to some people in New York or Los Angeles—but

not in the developing nations, where most people still have this

hard life.

Rather than criticizing modernization, environmentalists shouldsee that slower growth is a natural result of modernization. When a

nation reaches the point where economic needs are satisfied, growth

can slow, so people have both a higher standard of living and more

free time than they had in the past.

Possibilities for Our Grandchildren

During most of the twentieth century, it seemed that we would

choose to have more free time as we moved beyond scarcity.

In his 1930 essay “Economic Possibilities for our Grandchildren,”

the great economist John Maynard Keynes looked at how



135

technology would affect his generation’s grandchildren, one

hundred years after he wrote, and he foresaw a society where more

leisure would give humanity freedom to live well.

All through recorded history, Keynes said, there had not been

any great economic improvement. There were ups and downs, butthere was not any general trend toward greater prosperity. “From

the earliest times of which we have record—back, say, to two

thousand years before Christ—down to the beginning of the

eighteenth century, there was no very great change in the standard

of life of the average man living in the civilized centers of the

earth.”

But during recent centuries, there has been continuing economicprogress, because new technologies have made production more

efficient, and because capital invested in those technologies has

accumulated compound interest. As a result, Keynes said,

“mankind is solving its economic problem.”

In the past, “the economic problem, the struggle for subsistence,

always has been ... the primary, most pressing problem of the

human race—not only of the human race but of the whole biologicalkingdom from the beginnings of life.” But in the future, “a point

may soon be reached, much sooner perhaps than we are all aware

of, when these needs are satisfied in the sense that we prefer to

devote our further energies to non-economic purposes.”

When that time comes, “man will be faced with his real, his

permanent problem—how to use his freedom from pressing

economic cares, how to occupy the leisure which science and

compound interest will have won for him, to live wisely and

agreeably and well.”

But, in Keynes’ mind, this future was so remote that it did not

influence current economic policies. In the same essay, when he

looked at increased free time as a current issue, Keynes had a very

different attitude toward it: He called it “technological unem-

ployment ... unemployment due to our discovery of means of

economising the use of labour outrunning the pace at which we can

find new uses for labour.” 192

Instead of giving us leisure and freedom, increased productivity

gives us the problem of unemployment, which we must solve by



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creating more jobs. Yet we obviously will never have more leisure

as long as we believe (as Keynes said) that we must fight

technological unemployment by finding new uses for labor just as

quickly as we economize the use of labor.

After World War II, we used just the methods that Keynesrecommended to “find new uses for labour”: Government built

roads, promoted suburban housing, and used deficit spending to

stimulate the economy. At the same time, advertising persuaded

people to buy more. We were so successful at finding new uses for

labor that the workweek has not gotten any shorter since then.

A couple of decades from now, we will reach the hundred year

mark when Keynes predicted we would have lives of leisure. Yet noone today is saying that our work hours will be shorter in the

foreseeable future.

If we are ever going to have more free time, we need current

economic policies that offer us shorter work hours or choice of work

hours. We cannot continue to believe, like Keynes, that leisure and

freedom are economic possibilities for our grandchildren, but that

we must create jobs so quickly that our generation does not havemore leisure.

Keynes’s essay is reminiscent of the school in Alice in Wonderland

where the rule was to give the students jam tomorrow but never to

give them jam today. No matter how much time passes, it is always

today, so the children never get any jam. Likewise, if we always

create jobs quickly enough that we do not have more free time now,

we will never get the leisure promised in the future.

Keynes’ prediction of more leisure made sense in 1930: Writing

at a time when work hours had been getting shorter since the

beginning of the industrial revolution, Keynes naturally expected

more of the same. But today things look different: The American

work week stopped decreasing after Keynes wrote, because the

postwar economy deliberately promoted consumerism to provide

everyone with 40-hour-a-week jobs.

Today, we can see that increased leisure is not inevitable, as

Keynes assumed. We can promote economic growth rapid enough

to provide 40-hour-a-week jobs, or we can move toward shorter

work hours. We must make a deliberate choice between those two



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options, and the sort of world that we create during the twenty-first

century depends on the choice we make.

In retrospect, we would have been better off if we had given

Americans choice of work hours during the post-war period,

instead of fighting “technological unemployment” by “finding newuses for labor.” We could have reduced work hours gradually

during the post-war decades, with both higher earnings and more

free time, instead of building freeways, encouraging sprawl, and

promoting consumerism, so that we could keep the 40-hour work

week of the 1930s into the twenty-first century.

Keynes name was associated with the policies used to stimulate

growth during the post-war period, but we should also rememberthat he believed shorter work hours were the ultimate answer to

unemployment. In 1945, Keynes wrote:

...the full employment policy by means of investment is only one

particular application of an intellectual theorem. You can produce

the result just as well by consuming more or working less.

Personally I regard the investment policy as first aid. … Less work

is the ultimate solution ….193

Population, Technology, Affluence

Mainstream environmentalists focus on two of the three pillars

of ecological sustainability.

Sustainability depends on what is sometimes called the “IPATequation,” because it says that our Impact on the environment is a

function of Population, Affluence, and the Technology used (which

determines the impact of each unit of output).194 We can state it

more precisely as follows:

Impact = population x impact per unit of output x units of output per person

To make our economy sustainable, we must deal with all threeof these factors.

Population is an issue that most people understand and that the

modern environmental movement has focused on since its

inception. Population growth has declined dramatically during the



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last few decades, as we have seen, but it now has begun to increase

a bit in some places.

We should continue to work on limiting population growth. It is

estimated that $15 billion per year is needed for family planning

programs in the developing nations,195 which would be aworthwhile investment purely because of its environmental

benefits, even apart from the benefits to the people who would be

helped.

Technology that reduces the impact of each unit of output has

been the focus of plenty of talk but of relatively little action until

recently. Now, we have begun to take some steps toward promoting

a shift to solar, wind, and other forms of clean energy to controlglobal warming. There are other things we should do, such as

requiring products to be designed so they are more easily recycled,

moving toward more resource-efficient farming, and so on.

This is an issue that environmentalists understand and that

governments are beginning to act on. The world desperately needs

to do more: To avoid the worst effects of global warming, we need

an international agreement to limit carbon emissions, which wouldlead to a massive world-wide effort to develop and deploy clean

energy technology.

Output per person (affluence), the third key factor in sus-

tainability, has been the focus of relatively little talk and virtually no

government action, a sharp contrast to all the attention paid to

population and clean technology. Some people are thinking about

these issues, but they have not even been introduced into the

mainstream discussion of economic policy.

Not a single elected official is advocating choice of work hours

as a way of slowing economic growth and improving our lives. Yet

we have seen that it will become impossible to sustain the current

rapid rate of economic growth, just as it would have been

impossible to sustain the 1960s’ rapid rate of world population

growth.

These three factors are all important, and we cannot afford to

overlook one of them.

We can create a sustainable world economy with enough for

everyone to live a comfortable middle-class life if we choose a less



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consumerist future. The more we do to promote simpler living, the

better chance we have of creating a future where growth slows

because all the nations of the world have risen out of poverty—

rather than slowing because of ecological crisis. Yet the debate on

global development has ignored the key question: How muchincome does a person need to live well?

If we had begun a transition to simpler living and cleaner

technology in the 1970s, when ecological limits to growth were first

widely recognized, we could have moved to a sustainable economy

without doing damage to the global environment. This smooth

transition is no longer possible: Global warming has already begun,

and it will do some damage, but we can avoid its worst effects if theworld acts soon. This looming ecological crisis is all the more reason

to act decisively.

A Convenient Truth

Unlike most mainstream environmentalists, some radical en-vironmentalists do talk about simpler living, but their prescriptions

tend to be so harsh that they could never be politically successful.

For example, one article agonizes over environmentalists who

use paper napkins, who use plastic bags for the fruit they buy at the

farmer’s market, and so on, and then it finally gives this ideal

example of an environmentalist who really lives the changes that

we need:

she … began to live on the land in a tent. She farms six acres

without tillage or chemicals of any kind. … She built a rough

house by raiding dumpsters for building supplies and trading

labor with friends. … What attracted me to her talk was its title:

“Creating a Farm and Homestead on Marginal Land (While

Penniless).” [She] was the most inspiring person I’d seen in a long

time.196

Needless to say, most people in the world are not going to be

inspired by this idea of doing hard manual labor to scrape out a

subsistence living—particular not people in the developing nations,

who are trying to escape from this sort of impoverished life.



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Of all the radical environmentalist factions, the most politically

futile is the peak-oil movement, which claims that imminent energy

shortages will destroy the mainstream economy and force a shift to

local subsistence production. Predictions of a peak-oil apocalypse

are wrong, as the battle over the Keystone XL pipeline shows. BillMcKibben points out that the world needs to emit no more than 565

more gigatons of carbon dioxide to hold warming down to 2

degrees centigrade, but proven reserves of fossil fuels would emit

2,795 gigatons of carbon dioxide.197 Tar sands can already substitute

for petroleum, and liquid coal will also be able to substitute for

petroleum when gasoline prices go up a bit further. We need to act

politically to limit greenhouse gas emissions, and the peak-oil visioncould never succeed politically. If the public hears the peak-oil

crowd saying that we are heading toward economic collapse and

hears conservatives saying that we can maintain our current

standard of living if we just slash environmental regulations and

“drill, baby, drill,” the public will obviously go with the

conservatives.

The idea that simpler living means more sacrifice and moredrudgery is the biggest obstacle to our political success. Environ-

mentalists’ fascination with hanging out your wash on clotheslines

is a prime example of simple living as drudgery. The New York

Times featured the story of a woman who said she was following

“energy-saving tips from Al Gore, who says that when you have

time, you should use a clothesline to dry your clothes instead of the

dryer.” When she tried it, “I briefly gave up—the dryer was so

much easier—but then tried again.” She finally got in the habit of

doing all this extra work, but she found that her electric bill was

“still too high, so we’re about to try fluorescent bulbs.”198

Doing your laundry with a tub and washboard and then

hanging it out to dry was one of the most hated of women’s

traditional tasks: Monday was usually wash day, and the work was

so hard that women called the day “blue Monday.” Do

environmentalists really believe that they can attract wide public

support by saying we should go back to this sort of drudgery?

If we imply that simpler living involves a harder way of life, we

are just pushing the public toward the “drill, baby, drill” crowd.



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Instead, we should call for simpler living that reduces work and

make our lives more satisfying.

For example, we have seen that the average American drives

twice as much now as in the 1960s, because we have built so much

urban sprawl. There is no real benefit to spending all this time onthe freeways, but there is the real stress of doing the extra driving,

the real economic burden of paying for it, the real environmental

damage done by the emissions. New Urbanists are designing

walkable neighborhoods, and most people can see that these

neighborhoods are better places to live than sprawl suburbs, even

apart from environmental issues.

New Urbanist neighborhoods are a model for a politics of simpleliving that could attract widespread public support. They have

become popular because they are more attractive and more

convenient than conventional sprawl suburbs—and their residents

also happen to consume less land and less gasoline.

A politics of simple living should take a similar approach to the

entire economy. Many people would find their lives easier and

more pleasant if they had the option of downshifting economicallyby working shorter hours, if they had the option of living in

walkable neighborhoods rather than in sprawl suburbs, and if they

had the option of taking care of their own children rather than using

child-care.

This, as economist Dan Aronson says, is the “convenient truth”

that could help us deal with the inconvenient truth of global

warming. We can save the earth by working less and having easier

lives with more free time.

The threat of global warming has become so severe that even

some mainstream environmentalists are beginning to say that we

need to shift from our current economy, with its single-minded

focus on growth, to a new economy that focuses on promoting

human flourishing while avoiding ecological crisis. Yet at this point,

they seem to be providing a vision of how the economy should be

transformed rather than in providing practical polices that could

actually change the economy. They talk about a utopian

transformation of the economy, including changes such as a shift

from a global production dominated by corporations to a local



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production that relies primarily on small businesses and worker

cooperatives.

Instead of a general vision of economic transformation, this book

focuses on policies that are politically feasible and that will

transform our economy from its current focus on growth above allelse, to a focus on ecological sustainability and widespread human

flourishing. Let’s look once again at the three key policies needed

for this transformation.

The first policy is to use cap-and-trade (or similar systems) to

limit pollution and resource consumption to sustainable levels. This

policy seems to be feasible, since we have already done this with

acid rain, and the world came very close to agreeing to do this withgreenhouse gas emissions in Copenhagen in 2009. Regardless of

anything else that happens to the economy, this sort of policy is

essential to avoiding ecological disruption and the widespread

suffering it would cause.

The second policy is to allow choice of work time. The policy

seems to be feasible, because it has already been adopted in the

Netherlands and Germany and has caused little controversy there.It would shift us to slower growth, as people take some of their

higher productivity in the form of more free time, rather than taking

it all in the form of more income. It would allow greater human

flourishing, now that we have reached a point where consuming

more does not improve our well-being as much as having time to

do more for ourselves.

The third policy is to overhaul the tax system to reduce

inequality, with higher taxes on the rich, lower taxes on middle-

income families, and a higher earned income tax credit for low-

income families. This policy will be difficult to implement, but it

seems we can move in the right direction, as Democrats are now

pushing for higher taxes on the rich. This policy would allow

prosperity to be widespread, so everyone who works has an income

high enough to allow them to flourish.

These three policies would cause major social and economic

changes. Business undoubtedly will fight against slower economic

growth, just as business fought during the 1930s against a shorter

work week and for a “new gospel of consumption.” The difference



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is that no one saw the dangers of economic growth during the

1930s, but now global warming and resource shortages have led to

widespread skepticism about growth.

As it becomes more and more clear that economic growth no

longer improves our well-being and instead threatens our survival,there could be a powerful political movement to shift us to an

economy that aims at human flourishing, rather than an economy

that maximizes growth and fails to provide a good life. This

movement must be based on policies that are realistically possible.

This book is a first attempt to develop practical policies needed

by a politics of simple living. It undoubtedly is not perfect, but it

does show the direction we should be taking. It is the oppositedirection from the conventional idea that we need more growth

purely to create jobs, but it is also the opposite direction from the

idea that we need more drudgery, such as hanging out your

laundry on the line.

It is the opposite of both of these because it involves less work,

not more. We should do less work producing stuff we do not really

want to have, so we can have more time for the things we reallywant to do.

Cynics object to the politics of simple living by saying that

people will never change and will always want to consume more.

Yet from the beginning of the industrial revolution until the

Depression, Americans used increased productivity in a balanced

way, which gave them more free time as well as more income.

Western Europeans still have this balanced approach, so they now

work less and consume less than Americans.

The vicious circle of endless work and endless consumption is

the result of policies that the American government adopted during

the Great Depression and the postwar period. There will probably

have to be a crisis before we adopt different policies. This crisis may

come sooner than we think. The question is how much damage we

do before we are willing to change.

Environmentalists are absolutely right that we must avoid

ecological disaster, but predictions of doom, without an optimistic

alternative, are unlikely to attract broad public support. We will do

much better politically if we not only prophesy disaster but also



144

offer a vision of a better future—a future where we are not only

economically comfortable but also have abundant free time for our

families, our communities, and our own interests.

Now is the time for us to advance practical policies that would

create this better future. As we move into the age of global warmingand resource scarcity, we must develop a new politics of simple

living.



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AppendixCounterproductive Growth

This appendix is an economic analysis of counterproductivity. We

have seen in earlier chapters of this book that, after people haveenough to live comfortably, economic growth can be counter-

productive, as increased output provides benefits that are less than

its environmental and social costs. To analyze it more precisely, we

will use two basic economic principles: “the law of diminishing

marginal utility” and the idea of “external costs” or “externalities.”

Diminishing Marginal Utility

The law of diminishing marginal utility says that, as consumers

buy more of any product, they get less satisfaction from each

additional unit of the product that they buy. Economists use the

word “marginal” to mean additional.

Imagine that people have a mental checklist of all their possibleuses of a product, arranged in order of importance. As they get

more of that product, they move down the list to less important

uses. For example, if you can only afford a small amount of coffee,

you might just drink a cup at breakfast, when you need it most. If

you have more coffee, you might drink a cup at lunch as well—not

as important but still very satisfying. If you have even more coffee,

you can drink it any time, even when you do not want it very much.If you keep getting more coffee, you might finally start using bags

of coffee beans as paperweights and doorstops. At this point, the

coffee you drink at breakfast is still very satisfying, but you do not



146

want any additional coffee: The marginal utility of coffee is

essentially zero.

The law of diminishing marginal utility is central to modern

economic theory,199 which applies it to individual products.

It obviously also applies to products in general: As peoplebecome wealthier, they buy products they need less urgently. The

poorest people might have bread or rice to eat and a crude one-

room shelter to live in, things that are necessary to survive. When

people become a bit more prosperous, they can afford more

nourishing food and sturdier homes—still extremely important but

not as urgent as survival. When they become even more

prosperous, they can buy bicycles, radios, and so on—still veryuseful. Finally, when they become prosperous enough to buy

sports-utility vehicles rather than ordinary cars and to fly to Hawaii

for their vacations rather than going to the local beaches, the

products that they buy with the last addition to their income have

relatively little utility.

Historically, most economists have said that the marginal utility

of products in general will never reach zero. They say thatconsumers have unlimited appetites and will continue to demand

more products indefinitely to satisfy their “psychological needs,”

even after all of their physical needs have been satisfied. Economists

have always emphasized the unlimited psychological need for

status, and today’s consumers seem to have an unlimited appetite

for high-tech amusements.

But even if demand is insatiable, products in general still have

diminishing marginal utility. The psychological need for status or

for high-tech amusement is not as urgent as the need for food and

shelter. In addition to being less important than necessities and

conveniences, products you buy as status symbols or amusements

have diminishing marginal utility themselves: The first diamond

ring that you buy as a status symbol gives you more satisfaction

than one you buy after you already own a hundred diamonds, and

the first off-road vehicle you buy gives you more of a thrill than you

get from buying jet skis after you already own a powerboat, a

snowmobile and an off-road motorcycle.



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Counterproductivity can still occur, even if consumers have

insatiable “psychological needs.” Consumers may want to drive

gas-guzzling SUVs as status symbols, and if SUVs became common,

they might want even bigger vehicles as the battle of status symbols

escalates, but displaying your status gives you a minorpsychological satisfaction that is outweighed by your gas-guzzler’s

contribution to the major problems of global warming and resource

depletion.

Undiminished Externalities

Economists use the terms “externalized diseconomies” or

“externalities” to describe harmful side-effects of economic activity.

Externalities are costs borne by third parties, who are not part of the

market exchange between the businesses that make products and

the consumers who buy them, so the market does not take these

external costs into account.

For example, a factory can make products more cheaply if it

dumps wastes in the river rather than treating them. Consumers

will buy these cheap products rather than more expensive ones

made by a factory that handles its wastes safely. Dumping wastes in

the river may create medical costs that are much greater than cost of

disposing of the wastes safely, but these medical costs are ignored

by the factory’s owners and the consumers of its products. They are

“external” to their transaction, borne by third parties who live

downstream.

In a pure market economy, any manufacturer who pays extra to

treat his wastes safely will be driven out of business by competitors

who can sell cheaper products because they dump wastes in the

river. A totally unregulated market economy will poison everyone’s

water and air in order to lower the cost of factory products by a few

percent. Everyone suffers because a pure market economy does notweigh all the costs of a product against its benefits; it ignores the

external costs.

Environmental problems, such as water pollution, are the most

familiar examples of externalities, but this term lets us think more



148

generally about the costs of growth. For example, the effects of

media on education, discussed in an earlier chapter, are not what

we would usually consider an environmental issue, but they are an

external cost of our entertainment industry.

Counterproductivity: A Graphic Analysis

Using these concepts, we can analyze counterproductivity

graphically.

In Figure 23, the UU' curve represents the total utility of aneconomy’s output as per capita consumption increases. Because of

the law of diminishing marginal utility, consumers get less

additional satisfaction from each addition to production, so this

curve climbs less steeply as output increases. If we accept the idea

that consumers’ appetites are insatiable, then marginal utility will

never reach zero, but it will approach zero, as consumption

increases indefinitely.

Figure 23: Total Utility and Total Externalities as Consumption Increases

The EE' curve in this figure represents the total external costs of

an economy’s output as consumption increases. It is a straight line



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because the graph assumes that each unit of output creates similar

external costs, regardless of the level of total output. (Technically,

an economist could say that this curve does not just include exter-

nalities, because it might also include pollution whose costs are

internalized through a tax, but we are calling it total externalities tomake it easier for a general audience to understand.)

The EE' curve is a simplification. External costs might actually

vary, depending on what products people consume and what

technologies they use. As consumption increases, this curve might

jog upward if we needed to use less benign technologies to meet

demand—for example, if we used more coal because we did not

have enough natural gas to meet demand. It might jog either up ordown as people bought different things with their extra income:

They might want more personal services, which create relatively

low external costs, or they might want to buy more recreational

vehicles, which create high external costs. (We will look at the effect

of technological change in a moment.) Despite these jogs along the

way, however, externalities do tend to increase indefinitely: There is

no law of diminishing externalities. In fact, economists generallyassume that marginal externalities increase as output increases, so if

anything, the straight-line EE' curve understates the problem.

The vertical distance of the UU' curve above the EE' curve

represents the net utility that the economy provides. Increasing

consumption continues to make people better off as long as this

distance is expanding. Counterproductivity sets in at the point

where the slope of the UU' curve is equal to the slope of the EE'

curve, the Maximum Utility line on the graph. To the left of this

line, increasing output widens the distance between the two curves,

but to its right, the UU' curve climbs less quickly than the EE' curve,

so increased output narrows the distance between the two. To its

left, increasing output increases well-being, but to its right, in-

creasing output decreases well-being by bringing more problems

than benefits. This is the point where utility is greatest, assuming

that there are no policies that shift the curves, such as policies to

control externalities.

Further to the right, it seems that the EE' curve, which extends

upward indefinitely, will ultimately cross the UU' curve, which



150

approaches some upper limit. This is the point where the total

external costs of the economy are greater than the total benefits of

the economy, which probably happen when there is large-scale

ecological collapse.

The Effect of Technological Change

The graph makes it seem that counterproductivity must occur if

economic growth continues: It seems that the distance between the

UU' curve and the EE' curve must decrease after per capitaconsumption reaches a certain point, because marginal utility

diminishes, while marginal externalities do not.

Yet this graph leaves out technological change. It assumes that

the consumers always have the same products to choose from: As

their incomes increase, they just move down the “checklist” and

buy less useful products.

In reality, technological innovation can have two different effectson the products people buy, which could shift the utility curve up

or down. Some new technologies cheapen existing products:

Today’s radios are cheaper than old vacuum-tube radios, for

example, and we can download music over the Internet for less than

it costs to buy a CD at the music store. On the other hand, some new

technologies introduce new products that consumers want, such as

polio vaccinations and camcorders.Innovations that cheapen existing products would shift the UU'

curve downward, because consumers with any given income could

get further down the “checklist” to less useful products. Innovation

that introduce useful new products would shift the UU' curve

upward, because consumers with any income would not get as far

down in the “checklist” after these new products were inserted in

the list.In the long run, the effect of these two types of innovation on the

UU' curve might balance each other, as they more-or-less have in

the computer industry. Today, our personal computers have (for

example) thousands of times as much disk space as computers did



151

decades ago, but the costs of disk space and of other components

have gone down so much that computers are no more expensive

now than they were decades ago. Technological change gives us

new features we want and also lowers the costs of producing them,

so we buy much better computers for about the same cost.Technological changes can also affect the EE' curve by shifting it

upward or downward. For example, the change from coal to natural

gas for home heating meant less pollution per unit of output, but a

shift from petroleum to tar sands or liquid coal would mean more

pollution per unit of output. It is possible to adopt policies that

make the economy develop technologies with lower external

costs—for example, by using a cap-and-trade system to shift toclean energy—and these policies would shift the EE' curve

downward.

Where We Stand Today

Since the 1970s, America seems to have been in the range wherenet utility stops growing and begins decreasing slowly, and today

we seem to be entering the range where net utility begins

decreasing more rapidly

Americans seem to sense that economic growth is no longer

giving us a better life. In the 1910s, Americans generally realized

that they were hard pressed by economic scarcity and would benefit

from economic growth. In the 1960s, Americans generally realizedthat they were more affluent than Americans fifty years earlier; they

had reaped many of the benefits of growth, and they expected to

reap greater benefits in the future. But in the 2010s, Americans

generally do not think they are better off than Americans were fifty

years earlier, and many expect things to become worse in the future.

For example, Americans in the 1960s felt affluent because they

owned cars with flashy tail fins, something that their parents andgrandparents did not have, but Americans today do not feel better

off because they drive twice as much as fifty years ago.

Studies have confirmed that we are not as well off as we were

decades ago. The best known is the Genuine Progress Indicator,



152

created by an organization named Redefining Progress, which

corrects the Gross Domestic Product by subtracting the estimated

money value of resource depletion and environmental damage and

also subtracting the extra spending on health care, education,

commuting, and urbanization that is necessary only to deal with thecosts of growth (which economists call “defensive expenditures”). It

also corrects for the value of housework and other productive

activities outside of the market, for income inequality, and for other

variables. This index shows that, though America’s per capita GDP

has risen fairly steadily, our actual economic well-being rose until

the early 1970s and then began to decline.

The main defect of the Genuine Progress Indicator is that itbegins with the GDP and then corrects it. In a scarcity economy, it

was important to produce more output, and so the GDP could be

used as a rough measure of economic well-being. But it no longer

makes sense to use the GDP (or a corrected index based on the

GDP) to measure economic well-being, now that we have reached

the point of diminishing marginal utility where we can spend more

on health care without increasing average life expectancy, spendmore on education without children learning more, and spend more

on housing and transportation without making our cities more

livable.

The Genuine Progress Indicator does not correct for the

diminishing marginal utility of output generally. It does correct for

inequality, and this correction is actually based on the law of

diminishing marginal utility. Greater inequality reduces total well-

being because gaining an extra $1,000 helps a rich person less than

losing $1,000 hurts a poor person: the rich person spends the money

on luxuries, while the poor person sacrifices necessities. But if this is

true of rich and poor individuals, then it is also true that the United

States as a whole benefited more from economic growth in 1910

than in 2010, because the United States was richer in 2010, and the

study does not correct for this fact. It is easy to divide the GDP by

an inequality index to correct for increasing inequality, but there is

no obvious way to correct the GDP to account for the diminishing

marginal utility of products generally.



153

The GDP measures total economic output. Now that more

output no longer means more well-being, we should measure

progress by using indexes that measure well-being directly, such as

figures on life expectancy, infant mortality, educational achieve-

ment, and the like. In earlier chapters, we have looked at these sortsof indicators, and we have seen some signs that well-being has

declined in recent decades. Education achievement is lower than it

was in 1960, though we spend much more on education. Children’s

health is worse than it was in 1960, because of a massive increase in

obesity, though our immense spending on health care is still

increasing our life expectancy.

So far, the decline in well-being has been so gradual that wehave hardly noticed it. There is not a general feeling that life has

gotten much better or much worse since the late 1960s, though our

per capita GDP has doubled. Americans have been running as fast

as they can just to stay in the same place.

Now, however, we seem to be entering a period where life has

begun to become significantly worse. High world demand for

energy drove up gasoline prices dramatically at the end of the lasteconomic expansion, an economic burden on Americans. Most

climatologists believe that global warming contributed to the

severity of Hurricane Katrina and Hurricane Sandy, which

devastated two major American cities, and to the current drought in

the mid-west. Cattle drives from Texas are a legendary part of

American history, but now ranchers in Texas are slaughtering their

cattle because drought has driven up the price of hay so much that

they cannot afford to feed the animals. Forty years from now,

conditions in states stretching from Kansas to California could be as

bad as the Oklahoma dustbowl of the 1930s, if we continue business

as usual.200

During the last few decades, Americans have been running as

fast as they could in order to stay in the same place. If we continue

business as usual during the next few decades, we will run as fast as

we can but will fall behind. Unless we change course very soon,

global warming and resource shortages will make it all too clear

that we are not as well off we used to be, that counterproductivity

has set in.



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In 1977, economist Herman Daly already suspected that we had

reached the point where growth was diminishing our well-being,

and he wrote:

Once we have gone beyond the optimum, and marginal costs

exceed marginal benefits, growth will make us worse off. Will we

then cease growing? On the contrary, our experience of dim-

inished well-being will be blamed on the traditional heavy hand of

product scarcity, and the only way the orthodox paradigm knows

to deal with increased scarcity is to advocate increased growth—

this will make us even less well off and will lead to the advocacy

of still more growth! Sometimes I suspect that we are already on

this ‘other side of the looking glass,’ where images are invertedand the faster we run, the ‘behinder’ we get.201

If global warming turns large areas of the United States into a

dustbowl, if we begin to evacuate neighborhoods permanently

because of hurricanes and flooding, it will become clear to everyone

that we have reached the point where we are falling behind—but

let’s hope it becomes clear before things get so bad.

Implications for Policy

This graphic analysis of counterproductivity shows that we need

three policies to make our lives better rather than worse in the

coming decades.

The first policy is to reduce the external costs our economycauses, shifting the EE' curve downward. To do this, we should

limit forms of production and consumption that cause more costs

than benefits, reducing our overall well-being. It is most important

to control major environmental problems, such as global warming,

before they reach tipping points that shift the EE' curve upward

dramatically. But the analysis shows that we should also limit other

forms of consumption that bring a net loss because their external

costs are greater than their benefits, ranging from major problems

such as urban sprawl to minor nuisances such as noise.

Conventional economists are leery of these limits and say we

should trade off some environmental quality for the sake of faster



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growth. This sort of thinking makes sense in scarcity economies

(such as the United States a century ago and the developing nations

today), where growth brings significant benefits. It no longer makes

sense in the United States today, where the law of diminishing

marginal utility has set in and growth does not bring significantbenefits.

Our goal should be the best possible quality of life rather than

the fastest possible economic growth.

The second policy is to increase the benefits our economy

provides, shifting the UU' curve upward. The most readily available

way to do this is to reduce inequality of income by making our tax

system more progressive. When we reduce inequality, we areshifting income from rich people who spend their incomes on

products with low utility to low- and middle-income people who

spend their incomes on products with higher utility.

Conservatives say that we should lower taxes on the rich in

order to promote faster growth by increasing incentives to work

and invest. It is probably not true that these incentives are needed to

promote growth, since the economy grew more rapidly in the 1950sand 1960s than it has since tax rates were lowered. But even if it

were true, the goal of promoting faster growth would be a mistake,

now that the United States has reached the point where growth

brings significant costs and minor benefits.

Our goal should be widely shared prosperity rather than the

fastest possible economic growth.

As these two policies shifted the EE' curve downward and the

UU' curve upward, the Maximum Utility line would shift to the

right, allowing more growth before counterproductivity sets in.

However, it might be difficult to move Maximum Utility rightward

quickly enough to keep up with the actual rate of economic growth.

The faster growth is, the more likely it is that we will fail and

growth will become counterproductive—and the more likely it is

that we will reach ecological tipping points that reduce our well-

being drastically.

Thus, the third policy we need is to slow growth by giving

people the option of choosing their work hours and other options

that let them downshift economically. We need to abandon the



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policy that America has had since the end of World War II, the

policy of stimulating demand artificially, convincing people to buy

products with very little utility, in order to promote growth and

provide jobs. Instead, we need a politics of simple living that helps

to avoid counterproductivity by letting people cut down onpurchases of products that have little or no utility. This change

would also give people time for high-utility activities that they now

are too busy for, such as caring for their own preschool children.

Initially, choice of work hours should be enough to slow growth; in

the long run, it will also be necessary to cut the standard work

week.

We could reverse the current decline in well-being and build abetter future with these three policies: limiting externalities to

improve the quality of life, reducing inequality to share prosperity

widely, and giving people the choice of downshifting economically

so they have more time to do for themselves.



Notes

Notes are not available in this internet preview of the book.

The complete book is available on amazon.com

the politics of simple living: why our economy is making life worse and how we can make it better

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