Ottawa's Festival of Ideas Since 1997

Slow Motion: Jeff Rubin and the End of Growth

Former Chief Economist and Managing Director of CIBC World Markets, Jeff Rubin spoke to a mid-sized crowd on a Friday evening at Southminster United Church to promote his new book, The End of Growth , but the discussion was about much more, often referring back to his first book, Why Your World Is About To Get A Whole Lot Smaller . Rubin was an engaging speaker, a story-teller able to describe economics in laymen’s terms; sparking very thoughtful audience questions and handling them with poise and confidence: speaking of the future as if it is a sure thing. He makes thoughtful, well-reasoned arguments in favour of his predictions, but ultimately, he is predicting the future, and thus could stand to be proven wrong (or right) in the years to come.


The general premise of his argument is that higher oil prices, a necessity given that the world’s current oil supplies cost more to take out of the ground than they yield in profit, will lead to the end of growth. Rubin outlined how globalization has been made possible by affordable oil. Oil is the source of transportation and without transportation, globalization would not exist. He further pointed out the rise in oil prices will make shipping goods from around the world no longer the most cost effective way of producing and distributing the things that we use on a day to day basis. He predicts this leading to more manufacturing locally and a return to the economy pre-globalization.


Rubin predicts that the means to dealing with this will involve things like job-sharing and adjusting our expectations of a reasonable standard of living. To quote Rubin on this, “Perhaps it is better to learn to do with less than always wanting more.” He notes that we can’t keep pace with the physical demands that we are making of the world. While I agree that we want too much and that these would be superb ways of equalizing out resources, it seems highly unlikely that in the competitive and materialistic culture that we currently live in that people will willingly accept living on less in the interests of the whole.


Until this happens, Rubin predicts regular bubble and bust cycles, all related to oil poking the bubbles, which will be made worse by the lack of financial regulation; which he (correctly I believe) identifies as a major problem. When banks can gamble with people’s investments without fear, knowing they can pass losses off on their millions of customers - we all lose. Rubin is a promoter of more regulation and a return to the days when those managing investments must back them up with their own money. On this point, I whole-heartedly agree, but unfortunately, getting these rules changed will be an uphill battle given the power of the people who maintain them.


While Rubin predicts that prices will force this cycle to end because the people will rise up and demand change, I have my doubts. The government has already hit some legal blocks in their attempt to bring about some more regulation, and I would imagine that they will likely hit more in the future. He puts a lot of faith in prices, and while his arguments do have some merits, they may be an overly simplistic view of the economic picture. It would be interesting to hear him debate this point (and his others) with fellow economists.


An audience member raised the point that the majority of money in the economy is out of the hands of the majority of people, floating around in financial transactions and not being put to any real use. The audience member called for taxation of this money in order to spread the world’s resources around so that we all can survive and thrive in the world and perhaps if this was the case, then growth might still be possible. Her point was very well received by the crowd. Rubin appeared to be in agreement about getting that money out of the financial realm and into the hands of the people, but he failed to answer as to whether this would permit some growth.


A difference of philosophy between Rubin’s world-view and that of the mainstream, and especially certain other economists, emerges. Economics is founded on the premise of growth. The discipline strives to find ways to maximize this growth. But Rubin raises the ultimate question: how will we re-think economics when we remove the growth factor? Ultimately, only time will tell.