How far can California’s economy grow?

In 1992, as the World Bank prepared to release a report entitled Development and the Environment, there was a battle between groups of economists over a single chart that was resolved by not using the chart at all.   The original depicted the economy as a black box with one arrow pointing at it labeled “inputs” and another arrow pointing away from it labeled “outputs”.

A dissident group of World Bank economists wanted to surround that with another box labeled “Environment.”  Had they done that, the implications are obvious.  The economhy has limits.  If you hypothesize a continuously growing economy, eventually, it will fill then entire box and there will be nothing left.  So, perpetual growth is a myth.  


This raises many questions for us now.  Since this is economics, you can view the environment like an account of our natural economy.  You can continue to make withdrawals to support the human economy (the inputs) as long as something replenishes the natural economy.  How long we can exceed that is determined by the relative sizes of the boxes.  

This month we passed the day on which we used more planetary resources than can be replenished in a year.  We are now borrowing from our children and their children.  But no one celebrated this milestone and it was definitely NOT on the Nightly Business Report.

For California politics, we need to be asking how much growth can be expended here.  We continue to run the state on borrowed funds in the human economy and borrowed resources in the natural economy. We can not continue taking more than we can return.

It is possible to throttle our economic throughput to such a level as is sustainable, but that has major implication for employment.  If we reduce throughput how might we provide jobs and keep our standard of living?  Hard answers to come up with and no one is even asking the questions.