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Debate based on Ponzi-scheme economics

In rejecting a referendum on public transit, Waterloo Region councillors have set the stage for a fateful vote June 15. Some of them will undoubtedly support the light rail scheme floated by planners. In doing so, they are simply contributing to the degradation of the environment and quality of life.

That’s because all the arguments made in favour of the LRT are predicated on the most harmful of human constructs: growth.

Nowhere in the plans of regional government – or any other government, for that matter – is there an argument for curtailing growth. Instead, we have policies that favour an ever-increasing number of people flowing into the region (and the province and the country). The transit scheme itself requires a huge influx just to meet the optimistic – but still low – ridership numbers and to justify the spending of massive amounts of money.

In building an LRT system, there’s no going back – well, not without a quick acknowledgement of failure, an uncommon event even without the kind of monetary and civil penalties that should accompany failures by politicians and bureaucrats.

While proponents of the LRT – and a host of other planning decisions – pat themselves on the back for being forward thinkers, what we really have is the local offshoot of the giant Ponzi scheme that is our economy and the fallacy of perpetual growth. Much of the thinking stems from population growth in general and immigration policies in the West specifically, which fuel the growth mantra. But what we’re doing is unsustainable, as experts as diverse as Dr. Joseph Chamie, who worked for the UN in the field of population for 25 years; economists Herman Daly and Joseph Stiglitz and physicist Joe Romm have argued for years.

Chamie, director of research at the New York-based Center for Migration Studies, calls our population-based growth fixation “Ponzi demography.”

“While more visible in industrialized economies, particularly in Australia, Canada and the United States, Ponzi demography also operates in developing countries. The underlying strategy of Ponzi demography is to privatize the profits and socialize the costs incurred from increased population growth,” he writes in a recent article.

“According to Ponzi demography, population growth – through natural increase and immigration – means more people leading to increased demands for goods and services, more material consumption, more borrowing, more on credit and of course more profits. Everything seems fantastic for a while – but like all Ponzi schemes, Ponzi demography is unsustainable.”

He recommends population stabilization, an end to the growth mentality. It’s akin to Daly’s call for a steady-state economy.

A former World Bank economist, Daly knows firsthand the failings of traditional economic thinking. At its root, the currently-accepted viewpoint sees growth as something infinite on a finite planet. That’s just not possible, especially when we’re using up the planet’s stored capital of resources at a breakneck pace, polluting our environment every step of the way.

In a report for the UK’s Sustainable Development Commission, he outlines a new way of economic thinking, one that moves away from a growth pattern that can’t go on indefinitely. And one that separates good economic activity from undesirable activity, something not done in traditional use of gross domestic product (GDP) figures, which give equal weight to the financial impact of a new lifesaving technology and the costs associated with a natural disaster. Both generate economic activity, but we would prefer much more of the former and less of the latter (though we’re likely to see more disasters, however, as climate change cashes in on the IOU we’ve been writing to the planet for the last two centuries).

“We have lived for 200 years in a growth economy. That makes it hard to imagine what a steady-state economy (SSE) would be like, even though for most of our history mankind has lived in an economy in which annual growth was negligible. Some think a SSE would mean freezing in the dark under communist tyranny. Some say that huge improvements in technology (energy efficiency, recycling) are so easy that it will make the adjustment both profitable and fun,” Daly writes.
“Regardless of whether it will be hard or easy we have to attempt a SSE because we cannot continue growing, and in fact so-called ‘economic’ growth already has become uneconomic. The growth economy is failing. In other words, the quantitative expansion of the economic subsystem increases environmental and social costs faster than production benefits, making us poorer not richer, at least in high consumption countries.”
This last bit is in keeping with what municipalities here have been experiencing for a number of years: growth costs more than it contributes to the local economy. The expansion of hard services such as roads, water and sewers and schools and the resultant maintenance costs, coupled with social services, policing and fire protection outstrip the benefits of new development.

And that’s just in direct dollars, never mind the environmental and quality of life impacts, neither of which is beneficial.

You can bet, however, that such considerations won’t be on the table June 15.

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  1. While I completely agree that growth is an unsustainable option, it is inevitable that growth in Waterloo Region will continue for the next 20 years or more.

    Waterloo Transit planners are not necessarily advocating growth; the LRT is a means of dealing with the growth that is predicted.

    Given a choice for dealing with growth by building an LRT or by adding more buses to the streets, the LRT option will be my choice every time.

    On the other hand, the politicians that are encouraging growth as a justification for building the LRT are sadly short-sighted, and would do well to read your column.

    –Bob.

  2. And there’s a very good reason such considerations won’t be on the table. The Regional Municipality of Waterloo has no legal ability to restrict growth. In fact, it is mandated to plan for growth by the Province of Ontario, which in turn is guided by Federal immigration targets. Not every community is slated to receive growth, but the ones that are should be making sure that they are not debilitated by it.

    It seems you would suggest that the Regional government should discourage growth, which it cannot do. The Regional government could avoid proactive planning for growth, but that would result in a far higher impact in terms of infrastructure and services, with poorly planned sprawl instead of more efficient urban growth.

    To quote one of the delegations at this week’s public meetings: it’s not “If you build it and they will come”, but rather “They are coming, so you had better build it”.

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