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Uneconomic Growth [Economics
Posted on June 7, 2016 @ 04:31:00 AM by Paul Meagher

The ecological economist Herman E. Daly popularized the concept of uneconomic growth in a Scientific American article (2005, PDF) and more recently in a Great Transition article (2015).

In his Scientific American article he introduced the concept of uneconomic growth this way:

When the economy’s expansion encroaches too much on its surrounding ecosystem, we will begin to sacrifice natural capital (such as fish, minerals and fossil fuels) that is worth more than the man-made capital (such as roads, factories and appliances) added by the growth. We will then have what I call uneconomic growth, producing “bads” faster than goods—making us poorer, not richer.

In the last few days I've been dealing with uneconomic growth in my vineyard and I think anyone who practices horticultural pruning can appreciate the concept of uneconomic growth or growth that detracts from, rather than adds to, the value of a plant.

In the case of young grape vines, I was impressed that they grew at all for me and didn't do enough pruning to properly control their growth. This year as I do the my first round of major weeding around the vine, I am also using my thumb to selectively remove buds that will throw off shoots if allowed to survive. The removal of a bud now means I won't have to cut that cane off over the summer and the plant will not have wasted energy growing the cane. The cane will also not shade out other canes. I'm hoping this form of pruning will make the job of managing the vines easier this year and produce grapes with a higher sugar content. We'll see...

The alternative of letting all the buds grow after cane pruning is the practice I used to follow and even this year I'm probably allowing too many buds to survive because I have not tested this viticultural practice, but feel that I have observed the end result in one superbly managed vineyard.

So when I think of uneconomic growth I also think about the example of grape vines that require some pruning in order to create more value and less work. Proper growth is about managing the growth energy of the vine by nipping some forms of growth in the bud stage before they have a chance to waste resources and create future work. You have to be able to forsee the consequences of growth to know what buds need to be nipped early. Nipping them too late leads to the uneconomic growth of the plant, one that can produce unripe fruit and lots of unnecessary canopy managment work.

I think it is important to dispel the notion that all growth is good. Some can suck energy from other more valuable projects and result in extra work with little payback. I don't think we automatically become experts at making these judgement calls and that sometimes we only learn when we accept that jobs that suck too much energy and teaches you the lesson to be more selective.

When Daly used the term "uneconomic growth" we was talking about bigger societal issues that arise as we approach a "full world". I think the notion of uneconomic growth should also be related to personal experience to be fully assimilated and for me I find that personal reference in the vineyard and in my early days of working at startups.

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