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How Studying in Asia Made Me See the Need for a Steady State Economy

by Jan de Graaf

Crossing the border from Singapore to Malaysia allows anyone to see the real-life benefits that can come with economic growth. Singapore is modern, prosperous, organized, clean, safe and efficient. Malaysia less so. On Malaysia’s side of the border the roads aren’t as good, the traffic signs not as clear, the sidewalks not as clean and the greenery not as well maintained. Singapore’s transformation looks impressive, especially since it was expelled from Malaysia only in 1965.

I noticed this cross-border difference during a two-year master’s program in public policy at the National University of Singapore. Soon I learned that Singapore’s rapid economic transformation came with considerable tradeoffs. A lack of political freedom is one of them. Singapore’s political system — dominated by one ruling party since independence — has yet to prove its resilience. But Singapore’s economic growth has provided obvious benefits too; many citizens in southeast Asia would forego political freedoms for Singapore’s level of prosperity. Who wouldn’t want to raise children in a safe, efficient, tropical but air-conditioned country with little corruption and top-quality education and healthcare?

Paradoxically, the answer seems to be: Singaporeans themselves. Singapore has one of the lowest fertility rates in the world. The government is vigorously encouraging couples to have babies, though so far with little effect. The former prime-minister Lee Kuan Yew — one of Singapore’s founding fathers — stated last year that Singapore can “fold up” if citizens do not reproduce. He said, “The answer is very difficult but the problems, if we don’t find the answers, are enormous.” Like many other countries, Singapore is being blinded by fears of a shrinking population and ignoring an obvious fact: one of the tiniest countries in the world can’t grow its population forever. The optimal population size is likely less than what it is now, not more.

Singapore’s population has increased almost 280% since independence: from 1.9 million in 1965 to 5.3 million people today. Its land area, on the other hand, has increased by only 23% (it was 224 square miles at independence and after some reclamation of land from the sea, it is now 276 square miles — about the size of Chicago). The country is squeezed in between Malaysia, a narrow sea strait and Indonesia. Physical expansion in such a physically bounded space cannot continue indefinitely. It has to stop growing at some point, a principle that applies not just to the number of people, but also to economic production and consumption.

Singapore and Malaysian Slum

The glitz of Singapore (photo by C. Andersson) and the slums of Malaysia (photo by D. Nunuk) are different, but equally unsustainable results of continuous economic growth.

Singapore like any country, needs to achieve demographic, political, economic and environmental sustainability. Maintaining a healthy environment is often under-appreciated, even though it is just as important as (and directly related to) the other types of sustainability in this list. I recognized this when I lived in China during a semester abroad and traveled through other parts of Asia. I breathed the toxic air in Beijing and Shanghai, walked through piles of waste in India’s urban slums, and saw the vast palm-oil plantations that have replaced tropical forests in Malaysia and Indonesia. If all these countries were to emulate Singapore, which is in a state of ecological overshoot, the environmental impact would be disastrous.

China seems to be doing its best to follow in Singapore’s ecological footsteps. It has managed to lift more than 600 million people out of poverty in roughly thirty years, an unprecedented achievement. Real GDP growth averaged 10% per year from 1978 to 2011. Its economy is more than 30 times bigger than it was in the late 1970s. It will soon be the biggest economy in the world. At the same time, China is in absolute terms now also the world’s largest energy consumer, greenhouse-gas polluter, crop importer, cement consumer and potash consumer, to name only a few things. How many more examples of explosive growth like China’s can the planet withstand?

India, another Asian giant, cannot do the same thing China has done. India has about as many people as China (1.2 billion versus 1.35 billion; each country has about one-sixth of the world population). Yet, India’s economy is less than one-fourth the size of China’s as measured by GDP. What if India’s economy had already grown to the size of China’s economy, with similar physical inputs (e.g. minerals, food, coal, etc.) and outputs (e.g. air pollution, soil depletion, biodiversity loss, etc.)?

Clearly, we need to take steps to achieve sustainable and equitable prosperity around the world. But trying to achieve prosperity through ever more growth — a method that irreversibly damages the planet, depletes natural resources and destabilizes societies over the long term — is not the way. The elephant in the room, the global problem that needs to be solved is “us” — the rich, industrialized part of the world that generates an unsustainable ecological footprint. “We” have only been able to live beyond our means because enough other people don’t. Communities in rural India, Namibia or Costa Rica could continue living their lives, with modest ecological footprints, for centuries without being a threat to global civilization and the planet. “We” in Europe, North America, Singapore, Shanghai and other rich parts of the world, on the other hand, cannot.

Still, many people in the world aspire to the lifestyles of Singapore, coastal China and the West. What if more and more people demand their fair share? Aside from the energy received from the sun, the Earth is a closed system with finite resources, so “we” the over-consumers have to get used to living with a much more modest ecological footprint. The predicament of the over-consuming countries raises some fundamental questions: how can we call our current economic growth “progress” if it can never be attained by all? And how can we call our current economic growth “progress” if it is based on depleting precious nonrenewable resources?

Real progress would take the form of new political and economic models that achieve a sustainable and resilient equilibrium. Unfortunately, as my home country (the Netherlands) and the nations I visited in Asia are demonstrating, we are far from it. That’s why I volunteer with CASSE to promote the concept of a steady-state economy. The over-consuming nations of the world are teaching an important lesson: the current spoils of continued economic growth come with a spoiled foundation for achieving continued prosperity in the future. Are we smart enough to heed the lesson?

Since graduation in Singapore, Jan de Graaf has been an intern at the United Nations headquarters and a trainee at the European Commission. He now works in the clean energy sector in Africa for an American start-up company.

China’s Infinite-Growth Haze

by Eric Zencey

Eric_ZenceyA few weeks ago, air quality at the U.S. embassy in Beijing registered 755 on a scale to 500. A thick, choking haze enveloped the entire city. You couldn’t see from one high-rise office tower to the next; flights were cancelled, some highways were closed, schoolchildren were kept indoors, hospital admissions soared. China’s air quality problems aren’t limited to Beijing — a 2010 study found that air pollution led to 1.2 million premature deaths nationwide — and killer air is just one of the country’s ecological sorrows. One-half of its surface water is so polluted it can’t be treated to make it drinkable, and half of that is so bad it can’t even be used for industrial purposes. Seventy percent of the country’s rivers and lakes receive raw sewage or untreated industrial toxins. Cancer rates are up, and the country has been losing an area the size of Connecticut every year to desertification, brought on by unsustainable farming practices in grassland ecosystems.

In protest, Chinese people have begun taking to the streets in demonstrations that have increasingly become clashes, sometimes bloody, with riot police.

Between 1978 and 2008 the Chinese economy grew tenfold, outpacing the rest of the world. (For comparison: U.S. real GDP tripled in that period.) The growth has come at considerable and notorious cost in contaminated air and water and other “disamenities” — pulmonary disease, cancer, riots.

Are these the necessary costs of development? Of course not. So why is China paying them? As with most real-world questions there is no single answer, but one of the clearest, strongest, and saddest parts of a complete answer is this: China listened to the wrong economists.

EKC

Theorized relationship between pollution and income

Those economists are neither crazy nor blind. They can see the human cost of pollution and environmental degradation. But they’ve got a theory that reassures them the problem is only temporary and will fix itself: the Environmental Kuznets Curve (EKC), which plots a supposed relationship between pollution and income as an upside-down U. Before development, this theory says, pollution levels are low; pollution then increases as economic activity and income both rise; and then, at some tipping point, pollution hits a peak and begins to decline with additional income, as a wealthier population demands and can afford better environmental quality.

This, the standard economics textbooks say, is “intuitively appealing.” And it is — if your intuition has been shaped by traditional economic theory. If ecological damage can always be reversed, and if environmental quality isn’t a God-given gift or a basic human right but a commodity like any other, then it makes sense to think that you can buy a better environment when you get more income. Implication: “Growth is the Key to Protecting the Environment, Not its Enemy,” as one article on the EKC puts it.

This logic leads to an absurd conclusion (always a bad sign for a theory): the reason we have climate change is that the richest countries the planet has ever seen are still not rich enough to afford the environmental good known as “climate stability.” Nor can the EKC be defended on empirical grounds, as good science. The New Palgrave Dictionary of Economics acknowledges that most EKC studies “are designed to yield inverse-U-shaped pollution-income paths, and succeed [in doing so by] using a variety of assumptions and mechanisms” — an approach more consistent with preservation of a faith than with scientific inquiry.

The faith that’s at stake are the dogmas of infinite growth. If pollution doesn’t at some point decrease permanently as income increases, we have to admit that there are ecological limits to economic activity.

While the inverted U of the EKC does describe the relationship between some key pollutants and GDP growth in most developed countries, that finding has fatal conceptual flaws. “Key” pollutants are not all pollutants, and particular pollutants aren’t the sole and permanent marker of ecological degradation. Policies that control one kind of pollutant (and which thereby send its EKC down) may simply encourage a shift to manufacturing processes that produce other kinds of pollutants — ones that aren’t (yet) regulated and haven’t ever been measured, so there’s no possible way to chart their history on an EKC.

SmoggyBeijing_byAnimaSuri

Beijing’s gamble with the EKC has become a health hazard (photo credit: AnimaSuri)

Another kind of shift establishes an EKC for a pollutant in one country because the manufacturing process itself moves somewhere else. No EKC study has ever definitively excluded the possibility of this “pollution haven” effect. If exporting a dirty industrial process to a country with little or no regulation is cheaper than meeting regulatory standards at home, why would a profit-maximizing company do anything else?

In the effort to shift an economy’s pollution footprint to another country, the EKC is a big help. It reassures the recipient nation that poisoned air and water are a necessary phase of economic development; that someday it too will be rich enough to restore the environmental quality it once had. What the EKC doesn’t say: ecosystems can be degraded past any hope of repair or reclamation, as many a previous civilization learned the hard way. It doesn’t say: loss of biodiversity is a definitive element of ecosystem degradation, and an EKC for it is a logical impossibility. It doesn’t say: we live on finite planet, and there’s no guarantee that when you want to restore your country’s environmental quality, you’ll be able to find fresh pollution havens willing to accept your economy’s footprint.

Thus, China. In 2005, Pan Yue, then the vice minister of environmental protection, lamented his country’s acceptance of the EKC: “The assumption [was] that the economic growth [we pursued] will give us the financial resources to cope with the crises surrounding the environment, raw materials, and population growth.” Whether China can now reverse the damage and outsource the pollution-dump services that its environment has been asked to provide remains to be seen. One thing is clear: other parts of that country’s ecological footprint are being exported. China is now shopping for farmland in Africa and long-term agricultural leases in South America because its degraded landscape can’t support the human population it holds.

Still, the EKC has its defenders and continues to be treated as a sturdy economic finding — probably because if the EKC isn’t true, then a discipline dedicated to infinite growth will have to face up to the fact that there are limits to what nature can give to us and to what it can absorb from us. Evidence and logic — and the air quality in Beijing — say that yes, there are limits. It’s time for economists to stop seeing the world through the distorting, poisonous haze of an unsupportable theory and to start seeing the world as it is. The fate of our civilization depends on it.

Eric Zencey is a Fellow of the Gund Institute for Ecological Economics at the University of Vermont. He is the author, most recently, of The Other Road to Serfdom and the Path to Sustainable Democracy, from which this essay is drawn.

Environmental Heroes Can Inspire Economic Reformers

by Brent Blackwelder

Each year in April, the Goldman Environmental Prizes are awarded to six activists, one from each of the six inhabited continental regions. This year’s winners have overcome tremendous odds and threats to their lives to lead effective protests and carry out brilliant strategies. The inspiring winners give me hope that, on the economic front, we can energize an enormous protest movement in the United States. The Occupy movement has provided a solid start on opposing the outdated, unfair, growth-dependent economic model — a model that drives unemployment, encourages casino-style financing, enlarges the gap between the super-rich and the rest of society, and sucks the blood from the life-support systems of the planet.

This year’s prize winners hail from Russia, Argentina, China, and Kenya. Their stirring stories offer ideas for those of us who want an economic paradigm shift — we can employ the same kinds of energetic activism and protests that have worked on tough environmental problems worldwide.

In Russia Evgenia Chirikova initiated what started as a typical conservation battle to save the federally protected Khimki ancient forest near Moscow from a proposed superhighway. Notwithstanding efforts by authorities to suppress the movement, the first rally drew 5,000 people. Subsequent beatings of journalists and activists did not deter the campaign, and a year ago, the effort mushroomed into record-size protests against Vladimir Putin. Chirikova’s small, but courageous conservation battle turned into a general referendum on the Russian government and its leader.

In Argentina, Sofia Gatica, a mother whose baby died as a result of pesticide poisoning, organized a successful “Stop Spraying” campaign against the indiscriminate aerial spraying of dangerous chemicals on soybean fields. Gatica mobilized local women to tabulate the illnesses that were plaguing their communities, and they found cancer rates 41 times the national average. Their campaigns and protests against powerful companies like Monsanto and DuPont led to a big victory in the Supreme Court, which outlawed aerial spraying near homes.

The odds of one person in China successfully challenging thousands of water polluters may seem miniscule, especially given governmental suppression of protests. Yet Ma Jun exposed over 90,000 pollution violations by Chinese and multinational companies. The exposure empowered citizens to demand justice. Ma Jun then went after leading transnational corporations for refusing to clean up their supply chains. When the Apple computer company failed to respond, Ma organized a “Poison Apple” campaign that, after a year and a half of organized protest, forced the company to clean up the polluting components of its supply chains.

 The world’s largest desert lake in Kenya is under threat from a massive dam upstream in Ethiopia. Ikal Angelei, a brave woman using the slogan “We won’t be silenced,” has led the effort to save Lake Turkana, a World Heritage Site. This effort also seeks to provide protection and justice for the more than 100,000 people who depend on the lake. The fate of this boondoggle has not been determined, but the protests have convinced major banks to refrain from funding this mega-dam.

The economic transformation agenda of the Center for the Advancement of the Steady State Economy is connected to the battles just described because the global economy facilitates and finances these environmental debacles. Current economic institutions largely disregard the destruction of natural resources and the depletion of fisheries, neglect the rights of the poor and tribal peoples, undervalue the natural world, fail to exercise precaution when dealing with toxic materials, and undermine the well-being of future generations. The grow-at-all-costs mentality that dominates in both the halls of government and the boardrooms of businesses is distorting the way we value human life, our own communities, and natural ecosystems around the world.

To hasten the switch to a steady state economy, we need to emulate the Goldman Prize winners and generate effective protests and mobilizations. For those times when it seems overwhelming to overhaul the economy, we can look to people like Evgenia Chirikova, Sofia Gatica, Ma Jun, and Ikal Angelei. They have shown us that the biggest changes in society can originate from humble beginnings.

An Open Letter to Peter Kent, Canada’s Minister of the Environment

by James Johnston

Regarding Your Modest Proposal for Preventing Canada from Remaining Cold

Dear Minister Kent,

On December 12, from the foyer of the Canadian House of Commons, you irrationally rationalized why it is a good idea for Canada to pull out of the Kyoto Protocol. I would like to congratulate you on your cheeky display of hyperbolic satire — there was so much cognitive dissonance and misleading rhetoric in your statement that it couldn’t possibly have been serious! I can’t wait for the day when you reveal that your government’s position is one big elaborate hoax designed to taunt the world into acting on climate change. I want to point out where your satire was effective but also give you a little bit of advice on how you could have made your statement even better.

First of all, you could have come right out and given the “real” reason why the “Harper Government” (TM) is getting out of Kyoto: because global warming is in Canada’s national interest! Developing the tar sands and pumping out greenhouse gasses to the max has the obvious benefit of improving Canada’s national temperature.

We all know that international forums are talk-fests that amount to non-binding statements of procrastination, but I laughed out loud when you pretended not to understand the symbolic value of forums like Kyoto and Durban. This rings especially true for a government that has proven its media savvy by virtue of authoritarian-style message control. Indeed, Kyoto has become a misplaced symbol of climate justice. But standing before a global audience and shamelessly teasing the world with such irresponsible nonsense! Priceless!

You were pretty convincing each time you conjectured that it is possible to create “jobs and growth” while also reducing emissions. Surely someone of your intellect and stature knows that at no time in history have we had economic “growth” without a corresponding increase in greenhouse gas emissions. Certainly not when the figures are adjusted to track the export of pollution at the planetary level. Development, maybe, but not growth! Man, I have to tell you, the joke became more cruel each time you repeated it (which happened a lot). Use it sparingly next time.

Your goal to reduce emissions via a “legally binding agreement to address global emissions that allows us to continue creating jobs and economic growth in Canada” hints at how elaborate the government’s hoax must be. At present, the Canadian government is shaping an economic agenda where more and more “growth” is coming from unsustainable oil production, natural resource extraction, and real estate inflation. No sane person thinks this is a good trajectory for the planet. Talk about wanting it both ways! Must be Christmas (well not quite, but almost — a few more sleeps!!). The world will be so shocked when you reveal the truth — about the Canadian position, I mean (not about Christmas).

Speaking of Christmas, I had an idea when I saw you pretend to stand up to big emitters like China and India. Way to goad them into action, by the way. But you know what would have been even better? Declaring that you are “standing up to preserve the Canadian holiday tradition of consuming an excess of cheaply manufactured Asian goods.” Then, when emissions go up in Asia as a result, you can stomp and huff that it’s “all their fault.” You missed a few opportunities like this to set yourself up for future satirical tantrums.

There were a couple of moments when your sense of humour went a little too far. Like when you repeated the government’s nonsensical target for emissions. The promise that you will focus on “reducing greenhouse gas emissions by 17 per cent over 2005 levels by 2020” — effectively doing less than the previous government and pretending that it will save us from climate disaster — that’s so funny it hurts (my children). You can’t keep that joke up forever. But I double over with laughter each time you say your target is somehow the previous liberal government’s fault. Those genetically incompetent liberals!

It was cute how you pretended that “Canada’s position” is shaping a global consensus among the “EU… the United States, Australia, New Zealand, [the] least developed countries and the group of 43 small island states.” Cute, because Australia’s Minister for Climate Change implied they were leading the way by instituting a carbon tax, and don’t tell me that you’ve changed your “position” on that one! That would ruin the hoax! Beyond that, judging from how irked tiny Tuvalu was about your statement, you must have known that you were pushing a few buttons. Ian Fry, Tuvalu’s lead negotiator at Durban, said that “it’s an act of sabotage on our future.” Seriously, though. Tuvalu? Who knew that was even a country, right? ;)

Just when I thought you were going too far, you made a point so absurd that it reassured me of your comedy genius. The pièce de résistance was when you quipped that Kyoto would require Canadians to remove “every car, truck, ATV, tractor, ambulance, police car and vehicle of every kind from Canadian roads; or, closing down the entire farming and agricultural sector and cutting heat to every home, office, hospital, factory and building in Canada.” Well light my hyperbolic pants on fire and sound the alarm. Sure it would… if we choose exclusively to develop the tar sands instead! You’re such a drama queen. I’m glad you know Canadians aren’t stupid enough to believe such misleading statistical play. Who could ever dream of taking their ATV off the off-road anyway!?

And finally, regarding your plea at the end for “an agreement that works” for jobs …and growth …in Canada …and China …and Tuvalu …and for emissions reduction. Frankly, it was getting a little convoluted. Next time you should just let out a loud fart in front of the press, apologize for the emissions and then, in a fit of despair declare “what’s the point!? By the time global warming starts wreaking havoc, I’ll either be out of government or dead. What a waste of time. Stupid liberals.” Boy would that ever ignite a global response!

Anyway, you’re cutting it pretty close. It’s just about too late to stop runaway climate change and it’s making us all very nervous.You’re going to have to reveal your true position pretty soon and stop taunting us with these clever hijinks.

In the meantime, I’m looking forward to seeing more of this precious, mind-bending stuff. And soon. It’s truly a joy to watch.

New Evidence for Changing the Nature of the Global Economy

by Brent Blackwelder

Billion-dollar weather catastrophes this year, along with the latest figures on Chinese consumption, emphasize the urgency of a shift in economic thinking.

The National Oceanic and Atmospheric Administration cites 10 massive weather disasters in the U.S. this year, each exceeding a billion dollars. The nine months of unprecedented weather extremes include these estimates of death and damage:

  • Hurricane Irene: 50 deaths and $7 billion;
  • Upper Midwest flooding along the Missouri River: $2 billion;
  • Mississippi River flooding in spring and summer: $4 billion;
  • Drought and heat waves in Texas and Oklahoma: $5 billion;
  • Tornadoes in the Midwest and Southeast in May: 177 deaths and $7 billion;
  • Tornadoes in the Ohio Valley and Southeast in April: 32 deaths and $9 billion;
  • Tornadoes in Oklahoma and Pennsylvania in April: $2 billion;
  • Tornadoes in the Northeast and Midwest April 8-11: $2.2 billion;
  • Tornadoes in central and southern states April 4-5: $2.3 billion;
  • Blizzard in January from Chicago to the Northeast: 36 deaths and $2 billion.

Although we cannot conclude that any particular event was caused by global warming, climate models predict growing frequency and intensity of storms. The tragic weather events of 2011 could well be due to the accumulation of dangerous levels of greenhouse gases in our atmosphere.

This year’s disasters are sending a powerful signal that the time has arrived for a new economic framework. The current structure of markets puts the wrong prices on goods and services, because it neglects the ecological costs of producing them. This market failure is especially critical in the energy sector, where overconsumption of fossil fuels is driving climate destabilization.

How long can governments keep spending huge amounts to deal with catastrophe after catastrophe? Weather disasters undermine governance in two ways: first, they require large amounts of money and human resources for emergency relief, cleanup and rehabilitation. Second, they impair the ability of governments to provide ongoing public services by diverting revenue and personnel.

At the beginning of summer, New York Times columnist Thomas Friedman pointed to alarming evidence that the human race is consuming at a rate that requires one and a half planet earths to maintain. Friedman describes the consumer-driven growth model as broken and suggests a transition to a “happiness-driven growth model, based on people working less and owning less.” Many of us have been making these very points for some time, but it is noteworthy that a major growth advocate has had a change of thinking. And now there is new data on consumption in China that reinforces our concerns.

In a recent article entitled “Learning from China: Why the Existing Economic Model Will Fail,” Lester Brown provides some sobering statistics. When compared to the U.S., China consumes twice as much meat, three times as much coal, and four times as much steel. The per capita consumption of the 1.2 billion people in China is far below that in the U.S., but it is moving upward and is on track to equal ours in 25 years, Brown notes.

What does such growth in consumption mean if the Chinese embrace the same spending habits as U.S. consumers? Take a look at two factors: paper and automobiles. If the projected 1.4 billion people in China in 2035 consume paper at the American rate, then China itself would consume a quantity equal to four fifths of today’s paper usage. The world’s forests, already under intense pressure, would suffer under this additional onslaught.

Lester Brown considers what would happen if Chinese car ownership in 2035 matched that of the U.S., which currently has three cars for every four people. China would have 1.1 billion cars. Today the world has roughly one billion automobiles. Brown estimates that such a fleet of vehicles would necessitate so many new roads and parking areas, that an area two thirds the size of the acreage now growing rice in China would have to be paved. All these new vehicles would consume about the same volume of gasoline that the entire world auto fleet currently uses each day.

Why are the Obama Administration and Congress so focused on the debt panel when there are such pressing problems with the economy at home and around the world? They are missing the big picture and failing to enact changes that are called for in these perilous times. Now is the time to write letters to the editor about real economic solutions. We don’t need to be slashing government programs; we need to be making progress toward the transition to a steady state economy.