Sustainable Growth is No Longer Feasible

This the latest in my columns from the Morgan Hill Times.

Last week's Times showed us two reasons that we need to be concerned about growth. One was the Times editorial focusing on the fact that there are so many housing allotments that have been awarded, but not built. The other was the fact that the Morgan Hill Unified School District is losing rather than gaining students. The combination illustrates two of the pitfalls in planning for growth.

Like any community, Morgan Hill would love to be able to digest population growth like a leisurely dinner with friends, filling allotted slots each year. We are told that builders are not using their allocations for economic reasons, that they can not afford to build homes when credit is not available or the foreclosures have made the current stock of housing more affordable.

Even if the rate of housing growth were constant, it still does not guarantee schools will be able to plan accordingly. There are, again, more options for families. Some will send their children to private schools. Other families will choose not to have as many children, a seemingly wise choice when the economy is no longer predictable.

Our president hardly opens his mouth without mentioning the need to grow jobs. In that, his detractors, both Republican and Democratic, seem to agree. But the supply of jobs is not growing in the US. Even in California where one would expect innovation to create new jobs faster than we can fill the old ones, unemployment remains higher than 10 percent and in neighboring San Benito County, it is higher than 20 percent.

Maybe it is time to stop and ask ourselves whether the historical rates of growth are really possible. Increasingly, we are seeing events that fall outside the expected range if one's only reference is the historical record. Considering climate, the current drought and heat dome that has engulfed Texas is unprecedented and nearly unbearable. The analysis provided by the Texas State Climatologist shows that the 2011 drought is clearly outside the range of normal event. It may be enough to change the way that people think about living in Texas, about the quality of life there, and that will surely affect growth and the finances of local government.

For growth to continue, we need to be able to provide physical material to support it. But since the Earth is a finite source of everything, it may not always be possible. The list of things currently, or soon to be, in short supply seems to get longer every day. Lithium for new batteries is limited currently to just two major mining sources. The rare earth materials used in our increasingly innovative electronics are currently 80 percent sourced from China and the only other known major source requires deep seabed mining technology to be developed.

Californians know that fresh water is in limited supply. And for energy, we have to consider that the supplies of both oil and coal have peaked while a recent analysis of well head data shows that the supplies of natural gas that have been so abundantly advertised have also been overestimated by 100 percent. Some have even made the case that we have already passed the peak of uranium production with a corresponding increase in the costs of nuclear power.

Any one of these limits could have a major negative effect on our economy. In particular, the costs of energy production are increasing. We have gotten to all of the easy oil, coal and natural gas while we seem unable to fully endorse the replacement from renewable sources. Taken together, these physical world realities also place limits on economic growth, if not now, then in the not to distant future. There is a special term for investments that can only return value by securing new investments. It is called a Ponzi Scheme. The same term could be applied to the idea that we can sustain perpetual economic growth.

It no longer makes sense for any political entity to base fiscal policies on the assumption that current spending can be paid for by future growth. We can see what this has done for the national economy and we are paying for the cost by shedding jobs and a Congressional Circus to distract us from reality. We can see what this has done for the State of California where we take the money from education. The problem we have to solve locally is how to provide for a slowly growing population with declining resources. It will require resetting our priorities and developing a new vision of what Morgan Hill needs to be.