For all their calculating nature, economists are surprisingly optimistic about humanity’s ability to have as much prosperity as it wants. Express concern about the negative impact of excessive growth on our planet’s ecosystems, and many will simply chuckle and say you don’t understand what growth means.
Nobel laureate Paul Krugman, for example, chides natural scientists for thinking of growth as a “crude, physical thing, a matter simply of producing more stuff.” They fail to appreciate, he suggests, that growth is about innovation and deciding which technologies and resources to use.
Allow me to explain why I am one of those scientists who are preoccupied with the physical. Economists are correct in saying that growth doesn’t necessarily require more pollution, more carbon pumped into the atmosphere or more deforestation, even though we’re getting all of the above today. Humans can learn, and we might figure out how to grow differently in the future, separating the benefits from the environmental costs.
There’s just one crucial exception: energy.
Growth inevitably entails doing more stuff of one kind or another, whether it’s manufacturing things or transporting people or feeding electricity to Facebook server farms or providing legal services. All this activity requires energy. We are getting more efficient in using it: The available data suggest that the U.S. uses about half as much per dollar of economic output as it did 30 years ago. Still, the total amount of energy we consume increases every year.
Data from more than 200 nations from 1980 to 2003 fit a consistent pattern: On average, energy use increases about 70 percent every time economic output doubles. This is consistent with other things we know from biology. Bigger organisms as a rule use energy more efficiently than small ones do, yet they use more energy overall. The same goes for cities. Efficiencies of scale are never powerful enough to make bigger things use less energy.
I have yet to see an economist present a coherent argument as to how humans will somehow break free from such physical constraints. Standard economics doesn’t even discuss how energy is tied into growth, which it sees as the outcome of interactions between capital and labor.
Why does using ever more energy matter? For one, it feeds directly into all the bad things we’re trying to stop doing — polluting, destroying forests, wiping out habitats, covering the planet with an ever-denser network of roads. Our energy use — either by design or by accident — always ends up changing the environment in one way or another.
Then there’s the issue of climate change. Even if by some miracle we act to fix carbon-dioxide levels soon, that won’t actually be a lasting solution. If energy consumption follows the historical trend, by 2150 or so the waste heat alone will warm the Earth as much as carbon dioxide is doing now. We’ll have yet another global warming problem.
I’m not sure how economics broke free from the laws of physics and biology. Maybe we’ll eventually leave the planet and live among the stars, escaping the limits of our Earth. Those dreams aside, the physical limits to growth apply as much to us as they would to a colony of bacteria expanding into a jar of sugar water.
The irony is that economists love to talk about trade-offs and constraints. There are no free lunches, they like to say. Yet when it looks as if the unbridled optimism of economic growth itself is running into a wall, they prefer to look the other way.
How Can We Foster Creativity in China?
By Keith Sawyer | Mar 27, 2013
Chinese college graduates are less entrepreneurial than their U.S. counterparts.
A recent study* found that U.S. graduates are much more likely than Chinese graduates to found a startup or join one. This survey of engineering students at three top Chinese universities and Stanford University found that 22 percent of Stanford grads planned to start or join a startup; 52 percent of top Chinese graduates plan to join the government. One 25-year-old graduate in international business explained it this way: “If you work for private-sector Chinese firms, your family will lose face. Those aren’t famous firms.” She went on to say that entrepreneurial jobs are too risky. In Wenzhou, a city whose recent success has been driven by entrepreneurship, “entrepreneurs were viewed suspiciously by many residents.” Li Hongbin, a Tsinghua University economist who worked on the study, says
The current education system does not produce people who are innovative. That makes it harder for the country to reach its long-term goal of building an innovative society.
The government in Beijing knows that entrepreneurship has driven the Chinese economy, and they now have policies in place–for example, to bring back Chinese professionals who attended university in other countries and stayed there. One policy offers a bonus of as much as $160,000 for those who return; and yet, since 2008, only 3,300 professionals have taken up the offer.
Some of China’s top universities are beginning to offer entrepreneurship education programs, of the sort that are now common in the U.S. thanks in part to the funding of the Kauffman Foundation, which has famously sponsored many “Kauffman campuses” where students can major in entrepreneurship and participant in business plan competitions, under the guidance of experienced local mentors. (My employer, Washington University, is a Kauffman campus.) Three of China’s most elite universities, Tsinghua and Peking Universities in Beijing, and Fudan University in Shanghai, have created incubator programs to help entrepreneurs develop commercial applications.
So what’s the solution for entrepreneurship in China? Schools and universities are an important part of the solution; many Chinese perceive their own schools and colleges to be focused on rote learning and not receptive to creativity and critical thinking. One international business student chose to attend an English language university, run by Britain’s Nottingham University, specifically to acquire the “critical thinking” that her uncle says is lacking in Chinese graduates.
But colleges can’t solve the problem alone. Cultural attitudes need to change to value entrepreneurs. Venture capital is an essential component, and a business climate of open and fair market competition. Many would-be entrepreneurs give up after they realize the bribes they’re expected to pay, and the unfair advantages given to large state-owned enterprises (SOEs). The path to greater Chinese innovation is complex, but education is one of the core components of greater creativity and entrepreneurship.
*Bob Davis, 2013. “Chinese college graduates play it safe and lose out.” WSJ, Page A1, A10.