The COVID-19 pandemic has revealed the faults in our globalized and inequitable economic system based on the continuous growth of Gross Domestic Product. This global crisis has allotted time for individuals to consider what has true value in their lives: financial security, food and housing security, mental and physical health, interactions with family and friends, and time with nature, to name a few. Our economists and politicians are working to get the economy growing again, but there are serious negative implications with returning to business as usual.
It is worth considering the impact COVID-19 would have on our livelihoods if we had a steady state economy, in which the population size mildly fluctuates and the economy steadily functions at a capacity that allows for ecological regeneration. In this type of economy, everyone can meet their basic needs without exploiting nature, and future generations are guaranteed fundamental resources.
What if our government could guarantee job security and a living wage? Our nation would have stability and strength to withstand such a crisis. This could be implemented through providing work opportunities in renewable energy sectors, following the guidelines of the Green New Deal, for example.
Our current capitalistic economic system weighs preferences based on purchasing power (one dollar equals one vote). It is a fundamental human right that everyone should be able to meet their basic needs, and the U.S. economy fails to allocate resources to those who need them the most. Certainly, we must get our economy stable before transitioning to a steady state system, but it is a myth that everyone will be better off when we increase our GDP.
For instance, America has the highest GDP the world has ever seen, but the $20 trillion veils the fact the U.S. is experiencing the largest income inequality it has had in 50 years — and never has it been so evident.
There is common opposition to steady state economies due, in part, to hesitation for the unknown; however, due to our significant income inequality, a large portion of Americans have actually lived in a relatively steady state system for a long time.
The Congressional Budget Office calculated the “Projected Changes in Distribution of Household Income [from] 2016 to 2021,” and concluded that over this period of five years, the lowest quintile (20%) will have an income increase, before taxes and transfers, of just $1,300 ($20,600 in 2016 to $21,900 in 2021). Comparatively, the income for households in the top 1% will increase by $200,000 before taxes and transfers. This boost will bring them to an annual income of $2 million in 2021. Those who fear the steady state the most are those in the top percentiles, whose lifestyle is provided by the nation’s allowance of inequality.
In 2011, Vermont was the second state after Maryland to adopt a different model of measuring well-being. It is called the Genuine Progress Indicator (GPI) and has been an effort to shift the conversation about economic well-being from quantitative to qualitative. GPI includes both environmental and social costs that GDP fails to recognize, such as resource depletion and poverty rate. Although GPI is not an all-encompassing measurement, it is, nevertheless, progress.
It is crucial that citizens and municipalities work together to envision their future and design an economy they want for themselves and for future generations. Vermont has the potential to be the model state that contains resilient towns with just economic systems that do not sacrifice future well-being.
In the coming weeks and months, dominating politicians and their economic committees will continue to preach to the media that the economy must continue to grow. Though we must regain stability to then change, the pursuit of GDP growth cannot last. We will run out of resources, we will collapse our ecosystems, and we will be even worse off the next time an event like this happens.
A steady state economic system will happen at a much lower quality of life if there is ecological collapse. Do we want to be forced into one? Or can we work with our communities and local governments to plan a resilient and sufficient economy that adheres to biophysical limitations? The choice needs to be made now.
For more information about steady state economics, check out the Center for the Advancement of the Steady State Economy at steadystate.org
Margit Burgess is an undergraduate student at the University of Vermont in the department of Community Development Applied Economics and a director for the nonprofit Better Vermont.