Posts

Building a Movement for Happiness

by John de Graaf

John de GraafEditor’s note: this essay was first published in Truthout.

You probably missed it, but April 13, 2014, marked the third annual Pursuit of Happiness Day. April 13 just happens to be the birthday of Thomas Jefferson, who wrote those famous words “life, liberty and the pursuit of happiness” into our Declaration of Independence.

Jefferson and other American revolutionary leaders including Washington, Adams and Franklin all believed that the main purpose of government was increasing the happiness of its citizens. They said so on many occasions. But the idea of government promoting happiness or its corollary, “wellbeing,” is more often derided in contemporary politics – “social engineering,” some call it.

One significant exception is the state of Vermont. In addition to electing the most progressive and independent of US senators, Bernie Sanders, Vermont has become a laboratory for promoting new ways of understanding and promoting happiness and wellbeing. Its governor, Peter Shumlin, has proclaimed Pursuit of Happiness Day in Vermont for the past three years. Its legislature, with support from Democrats, Republicans and Progressive Party members, has established a state GPI or Genuine Progress Indicator, that uses some two dozen measures of health, wealth, education, leisure and sustainability to measure progress (Maryland has the same index and other states may follow soon).

So it’s probably not surprising that Vermont has been the site of three of four national Happiness conferences in the US (Seattle hosted the other) and will be sponsoring the 5th Gross National Happiness Conference – Happiness and Wellbeing: Building a National Movement – in Burlington at the end of this month. Organizers hope the conference will help create a strategy for building public policies and personal change based on the goal of Sustainable and Equitable Wellbeing and Happiness.

Bhutan’s Challenge

The conference was inspired by a United Nations meeting, Wellbeing and Happiness: Defining a New Economic Paradigm, held in April 2012. At that meeting, then-Prime Minister of Bhutan, Jigmi Thinley, declared that

The time has come for global action to build a new world economic system that is no longer based on the illusion that limitless growth is possible on our precious and finite planet or that endless material gain promotes wellbeing. Instead, it will be a system that promotes harmony and respect for nature and each other; that respects our ancient wisdom traditions and protects our most vulnerable people as our own family, and that gives us time to live and enjoy our lives and to appreciate rather than destroy our world. It will be an economic system, in short, that is fully sustainable and that is rooted in true abiding wellbeing and happiness.

Bhutan Monk - Credit-Otabi Kitahachi

Little Monk
Photo Credit: Otabi Kitahachi

The tiny Himalayan nation of Bhutan, population 750,000 (about the same as Vermont), has been trying to measure and promote happiness as the goal of its government since its then-16-year old King, Jigme Singye Wangchuck, proclaimed that “Gross National Happiness is more important than Gross National Product” four decades ago. Its challenge to Gross National Product (now Gross Domestic Product), the standard by which other nations measure success, followed an earlier observation by US Senator Bobby Kennedy that GNP “measures, in short, everything except that which makes life worthwhile.”

As is now well-understood, GNP (or GDP) is a poor indicator of wellbeing – it measures the churn of money in a society. It creates an upside-down world in which many bad things – oil spills, traffic accidents, cancer, etc. – are measured positively because money must be spent to alleviate them, while many things essential to wellbeing – housework, volunteering, natural beauty, good health, etc. – are not counted at all (prompting Kennedy’s comments). The Genuine Progress Indicators used in Vermont and Maryland are attempts to correct these clear design flaws in GDP.

Bhutan has brought leading experts in many disciplines from around the world to guide its progress toward its goal of Gross National Happiness. The country currently conducts bi-annual surveys to measure the wellbeing and happiness of its people, measuring progress in nine areas or “domains” of life considered especially important for happiness, including: physical health; mental health; education; quality of governance; social support and community vitality; environmental quality; time balance; access to arts, culture and recreation, and material wellbeing. In this model, material wellbeing – the primary goal of GDP – matters, but as only one of several important factors.

Bhutan has also created a “happiness policy tool” that allow lawmakers to understand the longer-term implications of proposed legislation on each domain of happiness. Its 24-member Gross National Happiness Commission evaluates major policy proposals using this tool and advises Bhutan’s parliament regarding their likely impact. For example, using the tool, Bhutan turned down an offer to join the World Trade Organization. The proposal scored only 42 of 92 possible points in the GNH Commission analysis; 69 points are required for a positive recommendation.

The New Science of Happiness

In the days of Jefferson, it wasn’t really possible to measure and assess national happiness and its causes. But in the past couple of decades, a new science of happiness, driven by advances in positive psychology and extensive studies of the brain, has allowed researchers to more thoroughly understand happiness and its roots in both public policy and human behavior. Gallup polls 1,000 Americans daily regarding their life satisfaction using a popular tool called the Cantril ladder: Perhaps not surprisingly, Americans are 20 percent happier on weekends than on workdays.

Gallup also uses the ladder and other measures to assess the happiness of 150 countries in the world each year. Consistently, northern European nations rank on top, with Denmark in the number one spot (at 7.7 out of 10) year after year. The United States, which ranked 11th in 2007, has dropped to 17th place (7.0 out of 10) since the great economic meltdown. Several factors in particular characterize the world’s happiest countries – a relatively small gap between rich and poor; excellent work-life balance; urban design favoring community over cars; high degrees of interpersonal trust; a strong social safety net, and, contrary to popularly-held US ideas, the highest tax rates in the world.

Putting Happiness First

Organizers of the Vermont conference hope to launch a movement that puts happiness and wellbeing at the forefront of policy ideas and educational goals. The event features more than 50 prominent speakers, including Vermont state Senator Anthony Pollina, author of the Vermont GPI legislation, Linda Wheatley and Tom Barefoot, lead organizers of GNHUSA, the Vermont organization that has been the primary conference organizer, Laura Musikanski of the Happiness Alliance based in Seattle, John Havens of Hacking H(app)iness and a writer for the British newspaper The Guardian. (Full disclosure: This author is also a speaker.)

Ph

Bhutan’s Four Pillars of GNH
Photo Credit: Ritwick Dutta

“Bhutan may have first suggested that happiness and wellbeing be the primary focus of policymaking,” says Linda Wheatley, conference organizer and co-founder of Vermont-based GNHUSA, “but now, as we face indicators of economic, social and environmental distress, the whole world is seeing the value of that shift in orientation. It’s time for an informed and inspired grassroots movement. We’re thrilled to be part of that effort and invite everyone else to join us.”

Participants will gather to share the tools, skills and resources for building happiness initiatives in other towns and cities across the country. The formal conference, on Thursday and Friday, will explore four content areas: Policy and Community Engagement; the Power of Data; Developing Happiness Skills, and Movement Building. Each segment will include a keynote and plenary presentations by well-known academics and activists in a variety of related fields, followed by workshops for further skill development. The very practical efforts currently underway in Vermont will be an important focus of the conversation.

The formal conference, on Thursday, May 29 and Friday, May 30, will be followed on the weekend by a series of add-on trainings including a focus on spiritual traditions and on conducting happiness surveys and using happiness policy tools in local communities.

Until now, what has been happening in Bhutan, and more recently, in the state of Vermont, has been under the radar of most Americans. Conference organizers hope this gathering will help change that.

“We’ll be looking at best practices to improve wellbeing and happiness from throughout the world,” says Tom Barefoot of GNHUSA.

At a time when so much of our news is a litany of inequality and environmental destruction, making happiness our goal instead of more money, stuff and consumerism is common sense. The scientific evidence shows that social connection, participation, good health and access to nature matter far more for wellbeing than an ever-growing GDP. It’s time for that evidence to get out there more widely.

Eight Fallacies about Growth

by Herman Daly

Herman DalyOne thing the Democrats and Republicans will agree on in the current U.S. presidential campaign is that economic growth is our number one goal and is the basic solution to all problems. The idea that growth could conceivably cost more than it is worth at the margin, and therefore become uneconomic in the literal sense, will not be considered. But, aside from political denial, why do people (frequently economists) not understand that continuous growth of the economy (measured by either real GDP or resource throughput) could in theory, and probably has in fact, become uneconomic? What is it that confuses them?

Here are eight likely reasons for confusion.

1. One can nearly always find something whose growth would be both desirable and possible. For example, we need more bicycles and can produce more bicycles. More bicycles means growth. Therefore growth is both good and possible. QED.

However, this confuses aggregate growth with reallocation. Aggregate growth refers to growth in everything: bicycles, cars, houses, ships, cell phones, and so on. Aggregate growth is growth in scale of the economy, the size of real GDP, which is a value-based index of aggregate production and consequently of the total resource throughput required by that production. In the simplest case of aggregate growth everything produced goes up by the same percentage. Reallocation, by contrast, means that some things go up while others go down, the freed-up resources from the latter are transferred to the former. The fact that reallocation remains possible and desirable does not mean that aggregate growth is possible and desirable. The fact that you can reallocate the weight in a boat more efficiently does not mean that there is no Plimsoll Line. Too much weight will sink a boat even if it is optimally allocated. Efficient reallocation is good; the problem is aggregate growth.

Reallocation of production away from more resource-intensive goods to less resource-intensive goods (“decoupling”) is possible to some degree and often advocated, but is limited by two basic facts. First, the economy grows as an integrated whole, not as a loose aggregate of independently changeable sectors. A glance at the input-output table of an economy makes it clear that to increase output of any sector requires an increase in all the inputs to that sector from other sectors, and then increases of the inputs to those inputs, etc. Second, in addition to the input-output or supply interdependence of sectors there are demand constraints — people are just not interested in information services unless they first have enough food and shelter. So trying to cut the resource-intensive food and shelter part of GDP to reallocate to less resource-intensive information services in the name of decoupling GDP from resources, will simply result in a shortage of food and shelter, and a glut of information services.

Aggregate growth was no problem back when the world was relatively empty. But now the world is full, and aggregate growth likely costs more than it is worth, even though more bicycles (and less of something else) might still be possible and desirable. That should not be too hard to understand.

2. Another confusion is to argue that since GDP is measured in value terms, it is therefore not subject to physical limits. This is another argument given for easy “decoupling” of GDP from resource throughput. But growth refers to real GDP, which eliminates price level changes. Real GDP is a value-based index of aggregate quantitative change in real physical production. It is the best index we have of total resource throughput. The unit of measure of real GDP is not dollars, but rather “dollar’s worth.” A dollar’s worth of gasoline is a physical quantity, currently about one-fourth of a gallon. The annual aggregate of all such dollar’s worth amounts of all final commodities is real GDP, and even though not expressible in a simple physical unit, it remains a physical aggregate and subject to physical limits. The price level and nominal GDP might grow forever (inflation), but not real GDP, and the latter is the accepted measure of aggregate growth. Most people can grasp this, and do not conceive of real GDP as trillions of dollar bills, or as ethereal, abstract, psychic, aggregated utility.

3. A more subtle confusion results from looking at past totals rather than present margins. Just look at the huge net benefits of past growth! How can anyone oppose growth when it has led to such enormous benefits? Well, there is a good reason: the net benefits of past growth reach a maximum precisely at the point where the rising marginal costs of growth equal the declining marginal benefits — that is to say, at precisely the point at which further growth ceases to be economic and becomes uneconomic! Before that point wealth grew faster than illth; beyond that point illth grows faster than wealth, making us poorer, not richer. No one is against being richer. No one denies that growth used to make us richer. The question is, does growth any longer make us richer, or is it now making us poorer?

To understand the question requires that we recognize that real GDP has a cost, that illth is a negative joint product with wealth. Examples of illth are everywhere and include: nuclear wastes, climate change from excess carbon in the atmosphere, biodiversity loss, depleted mines, eroded topsoil, dry wells and rivers, the dead zone in the Gulf of Mexico, gyres of plastic trash in the oceans, the ozone hole, exhausting and dangerous labor, and the exploding un-repayable debt from trying to push growth in the symbolic financial sector beyond what is possible in the real sector. Since no one buys these annually produced bads (that accumulate into illth), they have no market prices, and since their implicit negative shadow values are hard to estimate in a way comparable to positive market prices, they are usually ignored, or mentioned and quickly forgotten.

The logic of maximization embodied in equating marginal cost with marginal benefit requires a moment’s thought for the average citizen to understand clearly, but surely it is familiar to anyone who has taken Econ 101.

4. Even if it is theoretically possible that the marginal cost of growth has become greater than the marginal benefit, there is no empirical evidence that this is so.  On the contrary, there is plenty of empirical evidence for anyone who has not been anesthetized by the official party line of Madison Avenue and Wall Street. As for empirical evidence of the statistical type, there are two independent sources that give the same basic answer. First are the objective measures that separate GDP sub-accounts into costs and benefits and then subtract the costs from GDP to approximate net benefits of growth. The Index of Sustainable Economic Welfare (ISEW) and its later modifications into the General Progress Indicator (GPI) both indicate that, for the US and some other wealthy countries, GDP and GPI were positively correlated up until around 1980, after which GPI leveled off and GDP continued to rise. In other words, increasing throughput as measured by real GDP no longer increased welfare as measured by GPI. A similar disconnect is confirmed using the different measure of self-evaluated happiness. Self-reported happiness increases with per capita GDP up to a level of around $20,000 per year, and then stops rising. The interpretation given is that while absolute real income is important for happiness up to some sufficient point, beyond that point happiness is overwhelmingly a function of the quality of relationships by which our very identity is constituted. Friendships, marriage and family, social stability, trust, fairness, etc. — not per capita GDP — are the overwhelming determinants of happiness at the present margin, especially in high-income countries. If we sacrifice friendships, social stability, family time, environmental services, and trust for the sake of labor mobility, a second job, and quarterly financial returns, we often reduce happiness while increasing GDP. Relative income gains may still increase individual happiness even when increases in absolute income no longer do, but aggregate growth is powerless to increase everyone’s relative income because we cannot all be above average. Beyond some sufficiency, growth in GDP no longer increases either self-evaluated happiness or measured economic welfare, but it continues to increase costs of depletion, pollution, congestion, stress, etc. Why do most economists resist the very idea that we might have reached this point? Why do they resist measuring the costs of growth, and then claim that “there is no empirical evidence” for what is common experience? Read on.

5. Many believe that the way we measure GDP automatically makes its growth a trustworthy guide to economic policy.  To be counted in GDP, there must be a market transaction, and that implies a willing buyer and seller, neither of whom would have made the transaction if it did not make them better off in their own judgment. Ergo, growth in GDP must be good or it would not have happened. The problem here is that there are many third parties who are affected by many transactions, but did not agree to them. These external costs (or sometimes benefits) are not counted in GDP. Who are these third parties? The public in general, but more specifically the poor who lack the money to express their preferences in the market, future generations who cannot bid in present markets, and other species who have no influence on markets at all.

In addition, GDP, the largest component of which is National Income, counts consumption of natural capital as income. Counting capital consumption as income is the cardinal sin of accounting. Cut down the entire forest this year and sell it, and the entire amount is treated as this year’s income. Pump all the petroleum and sell it, and add that to this year’s income. But income in economics is by definition the maximum amount that a community can produce and consume this year, and still be able to produce and consume the same amount next year. In other words income is the maximum consumption that still leaves intact the capacity to produce the same amount next year. Only the sustainable yield of forests, fisheries, croplands, and livestock herds is this year’s income — the rest is capital needed to reproduce the same yield next year. Consuming capital means reduced production and consumption in the future. Income is by definition sustainable; capital consumption is not. The whole historical reason for income accounting is to avoid impoverishment by inadvertent consumption of capital. By contrast our national accounting tends to encourage capital consumption (at least consumption of natural capital), first by counting it in GDP, and then claiming that whatever increases GDP is good!

As already noted we fail to subtract negative by-products (external costs) from GDP on the grounds that they have no market price since obviously no one wants to buy bads. But people do buy anti-bads, and we count those expenditures. For example, the costs of pollution (a bad) are not subtracted, but the expenditures on pollution clean-up (an anti-bad) are added. This is asymmetric accounting — adding anti-bads without having subtracted the bads that made the anti-bads necessary in the first place. The more bads, the more anti-bads, and the greater is GDP — wheel spinning registered as forward motion.

There are other problems with GDP but these should be enough to refute the mistaken idea that if something is not a net benefit it would not have been counted in GDP, so therefore GDP growth must always be good. Lots of people have for a long time been making these criticisms of GDP. They have not been refuted — just ignored!

6. Knowledge is the ultimate resource and since knowledge growth is infinite it can fuel economic growth without limit.  I am eager for knowledge to substitute physical resources to the extent possible, and consequently advocate both taxes to make resources expensive and patent reform to make knowledge cheap. But if I am hungry I want real food on the plate, not the knowledge of a thousand recipes on the Internet. Furthermore, the basic renewability of ignorance makes me doubt that knowledge can save the growth economy. Ignorance is renewable mainly because ignorant babies replace learned elders every generation. In addition, vast amounts of recorded knowledge are destroyed by fires, floods, and bookworms. Modern digital storage does not seem to be immune to these teeth of time, or to that new bookworm, the computer virus. To be effective in the world, knowledge must exist in someone’s mind (not just in the library or on the Internet) — otherwise it is inert. And even when knowledge increases, it does not grow exponentially like money in the bank. Some old knowledge is disproved or cancelled out by new knowledge, and some new knowledge is discovery of new biophysical or social limits to growth.

New knowledge must always be something of a surprise — if we could predict its content then we would have to know it already, and it would not really be new. Contrary to common expectation, new knowledge is not always a pleasant surprise for the growth economy — frequently it is bad news. For example, climate change from greenhouse gases was recently new knowledge, as was discovery of the ozone hole. How can one appeal to new knowledge as the panacea when the content of new knowledge must of necessity be a surprise? Of course we may get lucky with new knowledge, but should we borrow against that uncertainty? Why not count the chickens after they hatch?

7. Without growth we are condemned to unemployment. The Full Employment Act of 1946 declared full employment to be a major goal of U.S. policy. Economic growth was then seen as the means to attain full employment. Today that relation has been inverted — economic growth has become the end.  If the means to attain that end — automation, off-shoring, excessive immigration — result in unemployment, well that is the price “we” just have to pay for the supreme goal of growth. If we really want full employment we must reverse this inversion of ends and means. We can serve the goal of full employment by restricting automation, off-shoring, and immigration work permits to periods of true domestic labor shortage as indicated by high and rising wages. Real wages have been falling for decades, yet our corporations, hungry for cheaper labor, keep bleating about a labor shortage. They mean a shortage of cheap labor in the service of growing profits. Actually a labor shortage in a capitalist economy with 80% of the population earning wages is not a bad thing. How else will wages and standard of living for that 80% ever increase unless there is a shortage of labor? What the corporations really want is a surplus of labor, and falling wages. With surplus labor wages cannot rise and therefore all the gains from productivity increases will go to profit, not wages. Hence the elitist support for uncontrolled automation, off-shoring, and immigration.

8. We live in a globalized economy and have no choice but to compete in the global growth race. Not so! Globalization was a policy choice of our elites, not an imposed necessity. Free trade agreements had to be negotiated. Who negotiated and signed the treaties? Who has pushed for free capital mobility and signed on to the World Trade Organization? Who wants to enforce trade-related intellectual property rights with trade sanctions? The Bretton Woods system was a major achievement aimed at facilitating international trade after WWII. It fostered trade for mutual advantage among separate countries. Free capital mobility and global integration were not part of the deal. That came with the WTO and the effective abandonment by the World Bank and IMF of their Bretton Woods charter. Globalization is the engineered integration of many formerly relatively independent national economies into a single tightly bound global economy organized around absolute, not comparative, advantage. Once a country has been sold on free trade and free capital mobility it has effectively been integrated into the global economy and is no longer free not to specialize and trade. Yet all of the theorems in economics about the gains from trade assume that trade is voluntary. How can trade be voluntary if you are so specialized as to be no longer free not to trade? Countries can no longer account for social and environmental costs and internalize them in their prices unless all other countries do so, and to the same degree. To integrate the global omelet you must disintegrate the national eggs. While nations have many sins to atone for, they remain the main locus of community and policy-making authority. It will not do to disintegrate them in the name of abstract “globalism,” even though we certainly require some global federation of national communities. But when nations disintegrate there will be nothing left to federate in the interest of legitimately global purposes. “Globalization” (national disintegration) was an actively pursued policy, not an inertial force of nature. It was done to increase the power and growth of transnational corporations by moving them out from under the authority of nation states and into a non-existent “global community.” It can be undone, as is currently being contemplated by some in the European Union, often heralded as the forerunner of more inclusive globalization.

If the growth boosters will make a sincere effort to overcome these eight fallacies, then maybe we can have a productive dialogue about whether or not what used to be economic growth has now become uneconomic growth, and what to do about it. Until these eight fallacies have been addressed, it is probably not worth extending the list. It is too much to hope that the issue of uneconomic growth will make it into the 2012 election, but maybe 2016, or 2020, …or sometime? One can hope. But hope must embrace not just a better understanding regarding these confusions, but also more love and care for our fellow humans, and for all of Creation. Our decision-making elites may tacitly understand that growth has become uneconomic. But they have also figured out how to keep the dwindling extra benefits for themselves, while “sharing” the exploding extra costs with the poor, the future, and other species. The elite-owned media, the corporate-funded think tanks, the kept economists of high academia, and the World Bank — not to mention GoldSacks and Wall Street — all sing hymns to growth in harmony with class interest and greed. The public is bamboozled by technical obfuscation, and by the false promise that, thanks to growth, they too will one day be rich. Intellectual confusion is real, but moral corruption fogs the discussion even more.

A Mindful Path to a Steady State Economy

by Rick Heller

The Occupy Wall Street movement has struck a chord with its protests against growing inequality in the United States. Suddenly, it is conceivable that policies may be enacted in the next Congress that would raise taxes on the rich and make the American dream more affordable. But if all the Occupy movement does is to restore middle-class demand for large homes and late-model automobiles, it will have been a failure.

The United States faces two economic crises: one is a crisis of severely unequal wealth and political power; the other is a climate crisis driven by an economic model based on insatiable consumption. A Robin Hood approach that redistributes wealth from the rich to the less affluent but does not address the dynamic of excess consumption will not fix and could even exacerbate the climate crisis.

These two economic crises have a common driver — greed. Is it possible that the Occupy movement could take on greed itself, or is that pie-in-the-sky dreaming?

Consider this. Back in 1966, only 42 percent of college freshman considered “being very well off financially” to be an important personal goal. That figure rose to about 75 percent by the time President Ronald Reagan left office. If it is possible to promote greed, it must also be possible to promote generosity.

A traditional way to discourage greed is by shaming those who engage in elaborate displays of wealth. But if criticizing excess consumption made a powerful difference, we would have seen results already. Allow me to introduce a practice that can address greed called mindfulness. Although derived from Eastern thought, it has been appropriately secularized for Western audiences.

I’ve led mindfulness meditations at the Occupy Boston spirituality tent. Mindfulness is the practice of paying attention to the present moment with a nonjudgmental accepting attitude. Many Americans have been exposed to it as part of Mindfulness-based Stress Reduction, a hospital-based program that helps people deal with physical and emotional pain. Indeed, the program I am trying to create could be called Mindfulness-based Greed Reduction.

When one pays close attention to the present moment with a welcoming attitude, the here and now becomes more vivid and joyful. Mindfulness can make negative experiences feel neutral. It also makes neutral experiences feel positive, by restoring a sense of freshness to the wonderful things in life you take for granted. When you realize how much you already have, you feel less need to accumulate more and more. It thus promotes modest appetites in place of greed.

The best way to verify this is to start practicing mindfulness yourself and see if it works. But for those interested in a technical explanation, let me go into the neuroscience.

Our appetites go through a cycle of wanting and liking — which reinforces further wanting. When we desire something, the brain transmits a chemical called dopamine. When we get what we want and like it, the brain releases internal opioids. The latter are chemically similar to morphine and heroin, which helps explain how desires can become addictive.

Addicts need increasingly higher doses of a drug in order to continue to get the same high. People who get their satisfaction from having and spending money likewise need more and more of it to feel rewarded. This is because of habituation. Dopamine neurons in the brain react most strongly to unexpected rewards. When rewards come in steadily and predictably, handling them shifts to the habits system, which operates with little conscious involvement and little sense of pleasure.

This presents a challenge to advocates of a steady state economy. How can you keep people excited when the stream of rewards fails to grow?

Spirituality Tent at Occupy Boston

Mindfulness addresses this challenge by showing how to find novelty in the smallest details of daily life. As you tend your own garden, you become absorbed by each blade of grass. This absorption produces a steady flow of dopamine and a continuous feeling of satisfaction. Mindfulness generates novelty and excites the dopamine neurons not by covering a lot of ground fast, but by delving deeper into familiar turf. As the poet Allen Ginsberg once wrote, “You own twice as much rug if you’re twice as aware of the rug.”

Mindfulness practices, including yoga, are spreading rapidly in the United States. They will spread even more quickly if movements like Occupy embrace them. But will this be quick enough to make a difference for the climate crisis? Although I can’t predict the future, it may be easier to change young people’s minds about consumption that it is to alter the energy infrastructure of the United States.

Ultimately, we need to pass legislation that restrains carbon emissions. But it will be easier to do if Americans realize we can continue to grow in happiness even as we shrink our dependence on the planet’s resources.

Rick Heller is the author of Occupy the Moment: A Mindful Path to a New Economy.

Wealth, Illth, and Net Welfare

by Herman Daly

Adapted from an article published in Resurgence.

Herman DalyWellbeing should be counted in net terms — that is to say we should consider not only the accumulated stock of wealth but also that of “illth;” and not only the annual flow of goods but also that of “bads.” The fact that we have to stretch English usage to find words like illth and bads with which to name the negative consequences of production that should be subtracted from the positive consequences, is indicative of our having ignored the realities for which these words are the necessary names. Bads and illth consist of things like nuclear wastes, the dead zone in the Gulf of Mexico, biodiversity loss, climate change from excess carbon in the atmosphere, depleted mines, eroded topsoil, dry wells, exhausting and dangerous labor, congestion, etc. We are indebted to John Ruskin for the word “illth,” and to an anonymous economist, perhaps Kenneth Boulding, for the word “bads.” In the empty world of the past these concepts and the names for them were not needed because the economy was so small relative to the containing natural world that our production did not incur any significant opportunity cost of displaced nature. We now live in a full world, full of us and our stuff, and such costs must be counted and netted out against the benefits of growth. Otherwise we might end up with extra bads outweighing extra goods, and increases in illth greater than the increases in wealth. What used to be economic growth could become uneconomic growth — that is, growth in production for which marginal costs are greater than marginal benefits, growth that in reality makes us poorer, not richer. No one is against being richer. The question is, does growth any longer really make us richer, or has it started to make us poorer?

I suspect it is now making us poorer, at least in some high-GDP countries, and we have not recognized it. Indeed, how could we when our national accounting measures only “economic activity.” Activity is not separated into costs and benefits. Everything is added in GDP, nothing subtracted. The reason that bads and illth, inevitable joint products with goods and wealth, are not counted, even when no longer negligible in the full world, is that obviously no one wants to buy them, so there is no market for them, and hence no price by which to value them. But it is worse — these bads are real and people are very willing to buy the anti-bads that protect them from the bads. For example, pollution is an unpriced, uncounted bad, but pollution clean-up is an anti-bad which is accounted as a good. Pollution cleanup has a price and we willingly pay it up to a point and add it to GDP — but without having subtracted the negative value of the pollution itself that made the clean up necessary. Such asymmetric accounting hides more than it reveals.

In addition to asymmetric accounting of anti-bads, we count natural capital depletion as if it were income, further misleading ourselves. If we cut down all the trees this year, catch all the fish, burn all the oil and coal, etc., then GDP counts all that as this year’s income. But true income is defined as the maximum that a community can consume this year, and still produce and consume the same amount next year — maximum production while maintaining intact future capacity to produce (capital in the broadest sense). Nor is it only depletion of natural capital that is falsely counted as income — failure to maintain and replace depreciation of man-made capital, such as roads and bridges, has the same effect. Much of what we count in GDP is capital consumption and anti-bads.

As argued above, one reason that growth may be uneconomic is that we discover that its neglected costs are greater than we thought. Another reason is that we discover that the extra benefits of growth are less than we thought. This second reason has been emphasized in the studies of self-evaluated happiness, which show that beyond a threshold annual income of some $20-25 thousand, further growth does not increase happiness. Happiness, beyond this threshold, is overwhelmingly a function of the quality of our relationships in community by which our very identity is constituted, rather than the quantity of goods consumed. A relative increase in one’s income still yields extra individual happiness, but aggregate growth is powerless to increase everyone’s relative income. Growth in pursuit of relative income is like an arms race in which one party’s advance cancels that of the other. It is like everyone standing and craning his neck in a football stadium while having no better view than if everyone had remained comfortably seated.

Check out the wellbeing issue of Resurgence Magazine.

As aggregate growth beyond sufficiency loses its power to increase welfare, it increases its power to produce illth. This is because to maintain the same rate of growth ever more matter and energy has to be mined and processed through the economy, resulting in more depletion, more waste, and requiring the use of ever more powerful and violent technologies to mine the ever leaner and less accessible deposits. Petroleum from an easily accessible well in East Texas costs less labor and capital to extract, and therefore directly adds less to GDP, than petroleum from an inaccessible well a mile under the Gulf of Mexico. The extra labor and capital spent to extract a barrel in the Gulf of Mexico is not a good or an addition to wealth — it is more like an anti-bad made necessary by the bad of depletion, the loss of a natural subsidy to the economy. In a full employment economy the extra labor and capital going to petroleum extraction would be taken from other sectors, so aggregate real GDP would likely fall. But the petroleum sector would increase its contribution to GDP as nature’s subsidy to it diminished. We would be tempted to regard it as more rather than less productive.

The next time some economist or politician tells you we must do everything we can to grow (in order to fight poverty, win wars, colonize space, cure cancer, whatever…), remind him that when something grows it gets bigger! Ask him how big he thinks the economy is now, relative to the ecosphere, and how big he thinks it should be. And what makes him think that growth is still causing wealth to increase faster than illth? How does he know that we have not already entered the era of uneconomic growth? And if we have, then is not the solution to poverty to be found in sharing now, rather than in the empty promise of growth in the future? If you get a reasoned, coherent answer, please send it to me!

Enough Childish Name Calling

by Sharon Ede

Supporters of the steady state may have been irked, if they had not been so bemused, by the content of a recent piece from the UK’s Institute of Economic Affairs (IEA), which took issue with steady state economics.

The opening paragraph of the article by IEA’s Kristian Niemietz is:

Imagine Jean-Jacques Rousseau, Thomas Malthus, Karl Marx and Saddam Hussein were meeting somewhere in the afterlife, deciding to write a joint policy paper. Difficult to imagine? Not at all. The result would probably look a lot like Enough is Enough, the report which came out of the Steady State Economy Conference.

I am sure even Saddam would have been bemused at this randomly selected “who I’d have dinner with” list.

The article continues into familiar territory encountered by steady staters: there are no limits to growth; steady staters and their ilk are doomsday environmentalists trying to spoil everybody’s consumption party; seeking to debunk Malthus and Ehrlich because their predictions have not (yet) manifested – which, based on current trends that a lot of people are very, very worried about, is arguably a bit of premature congratulation.

If Niemietz thinks that Ehrlich missed the mark about ‘prophesying decades of mass starvation in the Third World’, I suggest he familiarises himself with the Millennium Development Goals, which include a target to halve the number of people suffering from hunger between 1990 and 2015. Just because you are not starving, Mr Niemietz, does not mean many others are not. According to the UN Food & Agriculture Organization, one in six people in the world are suffering. That’s over a billion people.

Niemietz also creates a straw man of epic proportions when he states that “proponents of Steady State Economics think of people as a swarm of locusts: left to themselves, they will blindly devour their own livestock. But this interpretation is misleading. Locusts cannot generate scarcity signals. We can: they’re called market prices.”

Locusts do create scarcity signals – collapse of their number when the food source runs out. But that’s another story. In the meantime, will somebody contact the Mayans, the Romans and the Easter Islanders and tell them there is nothing to worry about.

A few tips for Mr Niemietz:

1. Limits to nature and to growth are a fact. There is only so much planet. Ask an astronaut.

2. Market prices signal a resource’s availability in the marketplace – not in the biosphere. This is why, where I live, a liter of petrol is cheaper than a liter of Coca Cola.

3. If perpetual consumption is the path to happiness, why do many western nations have such high levels of stress, personal debt, depression/mental illness? Is there a connection between the focus on maximizing consumption via the identity of the individual at the expense of community life and social connection? No chance we are out of balance in this one, then?

The author also cites a nonsensical metaphor courtesy of Bjørn Lomborg – the logic of resource depletion is akin to somebody who looks into a fridge and concludes there is only food for three days in it, and after that, the owner will starve.

An accurate metaphor would be that we are pulling apart our house to burn on the fire to keep warm; we are liquidating our capital, the natural systems that sustain us. Ask any conservation biologist and they will tell you that this is a dumb approach to asset management.

In an article peppered with inaccuracies and faulty logic, the author makes a claim that is way off target – an accusation that those advocating a steady state economy are misanthropists.  On the contrary, we want to see good lives for all, now and into the future, secured through sound management of our ecological assets, and a quality of life that includes meeting material needs – but recognizing material needs as only one aspect of the totality of being human.

Although it’s pleasing to see that these ideas are starting to pop up as debates in this kind of forum, because it means that the growth monster is being perturbed, critics should try adding some basic physics, biology and a bit of history into their all-economics diet. Think of it as a bit of fiber!

Sharon Ede is a collaborating author of Post Growth and the curator of the Cruxcatalyst blog.

Might As Well Face It, We’re Addicted to Growth

by Dave Gardner

Recently I ventured to Toronto to interview Peter Victor, author of Managing without Growth: Slower by Design, Not Disaster, for my GrowthBusters documentary. Victor has done some impressive modeling to show wealthy nations can reduce their pace of economic growth toward a steady state without a lot of pain. Of course those unfamiliar with limits to growth might asky why we should do that. Victor writes (and many agree) that rich nations need to give up economic growth so poor nations have room to grow on this finite planet. I’ll be the first to say that is only fair.

But I have to wonder, do we really want to recommend economic growth as a policy goal for any nation? The success of modern nations in our quest for unending economic growth is largely responsible for the ecological crises we face. We’ve taken a detour off the path to true happiness and fulfillment; why encourage others to follow? If we work to enable populations to have “their fair share” of economic growth, aren’t we just like a drug-pusher? “Come on. Give it a try. It’ll blow your mind. Everyone’s doing it!” It seems Peter Victor (and many others) would have us use less of the drug so we can distribute it more widely and get others hooked.

Maybe “economic growth” isn’t the right goal for the nations who aren’t already addicted. Certainly their people are entitled to have a good life – to have needs met and live happy, fulfilled lives. And conventional wisdom is that economic growth lifts people out of poverty. In my view, there are just two problems with hanging your hat on that concept. First, there is a growing body of evidence that economic growth does not correlate strongly with better lives. Second, we’ve now proven economic growth is not a sound long-term strategy. We in the richer world are struggling mightily to get unhooked from our dependence on economic growth, which, as ecological economist Herman Daly likes to remind us, has become “uneconomic.” So, can we do the rest of the world a favor and not entice them to become fellow addicts, setting them up to go down a difficult and destructive path?

I’m not denying that increasing income, up to a point, does have an impact on happiness. And I’m not denying the current arrangement between haves and have-nots is inequitable. It is a sad truth that the rich world has already commandeered the lion’s share of Earth’s resources. The developing world is too late to the party and can’t join the dance. But it turns out the dance we’ve been tripping out to is not the answer. So I’m suggesting we recommend a dance that is not the dance of death, a dance that will bring real fulfillment and happiness, not the hedonic treadmill and empty illusion of prosperity from increasing material consumption.

Even if developing nations temporarily require some components of economic growth to reduce hunger, disease and poverty, let’s not brand it “economic growth.” Let’s at least change the vocabulary. Let’s more narrowly define what we recommend to them. Rather than the open-ended term, “growth,” let’s opt for “sufficiency.” Otherwise we’ll greatly increase the population of growth addicts struggling to get into a recovery program.

Dave Gardner is currently finishing up the documentary, GrowthBusters: Hooked on Growth, and is a founding member of Growthbusters, a global network inspiring and equipping people everywhere to make the wellbeing of people and the planet our most urgent priority, without relying on growth to make it happen. For more information on the movement or the film, visit www.growthbusters.org.

A Shift in the Burden of Proof

by Herman Daly

Preface for Sustainable Welfare In The Asia-Pacific: Studies Using the Genuine Progress Indicator, by Philip Lawn and Matthew Clarke, 2008

It is no small thing to shift the burden of proof. Yet that is what Lawn and Clarke, and their colleagues, have done in this remarkable study. The presumption in the “empty world” has been that growth in GDP is “economic” in the sense that it increases benefits faster than costs, as well as in the sense that this thing we call the economy is getting physically bigger. It was not previously considered necessary to distinguish the two meanings of “economic” growth. Lawn and Clarke have shown that in a large part of today’s “full world” growth in GDP often costs more than it is worth at the margin, and thus should be called “uneconomic” growth. (In this book’s language uneconomic growth occurs after a threshold at which the Genuine Progress Indicator (GPI) levels off or declines while GDP keeps on increasing). Advocates of GDP growth, who generally point to Asia as their best success story, heretofore were never asked to prove that such growth was in truth economic. Now, after the theoretical demonstration that uneconomic growth in the macroeconomy is quite possible, followed by the empirical demonstration that it is in fact often the case, the burden of proof in policy arguments must shift from the shoulders of growth critics to the shoulders of growth advocates. This is quite an accomplishment and needs to be strongly claimed and emphasized.

For many years I have worked with ideas that are used in this book — steady state economy, Index of Sustainable Economic Welfare, contradictions between comparative advantage and international capital mobility, and others. It is a pleasure to see these ideas not only applied, but sharpened and polished as well. Although I have very little knowledge of Asia, I cannot resist recounting one relevant episode out of my limited experience. Around 1992 I was part of a World Bank mission to Thailand. This was at the end of a decade in which Thailand’s GDP had doubled. Now doubling is a big change, and ten years was within the easy memory of most adult Thais. In conversations I began to ask people how much their lives had been improved over that decade. Many said that life had been better ten years ago. I suggested that maybe life always feels better when you are ten years younger. They assured me that they had corrected for that! Some thought things were a little better, but the suggestion that life might be twice as good was considered laughable by all. This experience led me to suggest to my bosses at the World Bank that we finance a study — a scientific survey asking people how much life had improved over the decade in which GDP doubled, and to give the main reasons for their answer. History had given us a unique experiment, and we should take advantage of it and learn something. My proposal was turned down, I think because the World Bank, the prime pusher of growth, was worried that it might learn an “inconvenient truth.” In 1992 the burden of proof was on me. Now, with Lawn and Clarke to appeal to I think the burden of proof will be on the World Bank.

The study I had proposed to the World Bank was to look at what is now called “self-evaluated happiness,” whereas Lawn and Clarke look at a more objective index of welfare, the GPI. Studies of self-evaluated happiness have now come into fashion, and generally support the same conclusions that Lawn and Clarke reach on the basis of more objective data. The finding is that self-evaluated happiness rises with absolute income up to a threshold beyond which increases in absolute income do not increase happiness. The emphasis in these studies is on psychological phenomena of satiation and relative position with its self-canceling effects, rather than biophysical phenomena of rising external costs imposed by a full world. The two approaches are not in conflict but in fact are quite complementary. The fact that they yield broadly similar conclusions regarding the futility of growth to increase welfare beyond a threshold is a devastatingly important point worthy of intense study and reflection. But beware; we may have to conclude that growth is becoming uneconomic and that we need a new principle and new policies by which to organize our separate national commonwealths and their international federation. That is a very big problem. Thanks to Lawn and Clarke for suggesting many specific policies rooted in a clear analysis of that very big problem.

From Black Friday to a Better Way

Rethinking Consumer Spending and Enjoying the Holidays

by Brent Blackwelder

The day following Thanksgiving Day in the United States is called Black Friday. For retailers the day marks the beginning of the Christmas shopping season. While the origin of the term is debated, it is today associated with special sales and extraordinary promotions that retailers use to induce shoppers into spending the holiday weekend on a shopping spree.

Our modern economy is structured such that its stability depends upon ever increasing consumer spending. In my first economics course in college in 1961, the professor told the class to go out and shop because it is good for the gross national product (GNP). Then and now, mainstream economics continues to treat the Earth as if it were a business in a liquidation sale.

At a time of high unemployment in the United States, it may seem like an act of madness to question the growth economy, but relentless pursuit of growth has failed to deliver again and again on the promise of economic stability and security. Its recipes are not making people any happier, and it is undermining the ecological life support systems of our planet. It has failed about one third of the world’s population who live on less than $2 per day, while simultaneously producing an exclusive club of gratuitously wealthy individuals. Those of us advocating a steady state economy seek a new way to maintain full employment that does not incentivize employers to seek dirt-cheap labor or to replace people with machines.

Professor Tim Jackson’s 2009 report to the UK Sustainable Development Commission entitled Prosperity without Growth provides an outstanding foundation for any discussion of consumerism and the growth economy. For those interested in a steady state economy, it is worthwhile to think in this holiday season about the nature of shopping in such an economy.

Throughout history religious leaders have expressed concerns about the accumulation of stuff. Two thousand years ago Jesus cautioned about excessive attention to material possessions, saying: “Lay not up for yourself treasures on earth where moth and rust doth corrupt and where thieves break through and steal.”

Over 100 years ago the economist and philosopher John Stuart Mill recognized that eventually humanity would have to move toward a stationary state of capital and wealth, but that condition need not entail a stagnation of human improvement.

Two centuries ago the poet William Wordsworth expressed alarm at the consumerism he witnessed in England: “The world is too much with us, late and soon. Getting and spending we lay waste our powers. Little we see in nature that is ours. We have given our hearts away…”

Today’s economy is five times bigger than in the 1950s, and at current growth rates stimulated by commercial promotions, it is headed to a global economy 80 times as large.

The consumer rampage is in part fueled by slick advertising for novel consumer products, and much of this advertising is targeted at youth. Ralph Nader questions who is watching what young people worldwide are being enticed to buy? He writes: “Undermining parental authority with penetrating marketing schemes and temptations, companies deceptively excite youngsters to buy massive amounts of products that are bad for their safety, health and minds.”

Excessive packaging accompanying today’s products attracts ecological criticism, but it is only the tip of the iceberg in terms of waste. The volume of raw resource extraction required in the manufacture of products dwarfs the packaging waste. For example, many mining operations for valuable metals leave behind as waste over 90% of the material excavated, and such rocky rubble often releases a mass of toxicity onto the land and into the water.

Has happiness been improved by having all these products? Studies over the past two decades have suggested that a certain amount of material comfort and ease provided by various products increases one’s happiness, but beyond a certain point – one study suggested $75,000 income – more stuff doesn’t produce more happiness. In fact, it can yield the perverse result of adding stress, worry and depression.

It is amazing that times of holiday celebration in the United States are frequently the very times of peak stress. What should be a fun and cheerful experience becomes a week or even a month of worry.

The holiday season is a good time to reexamine the kinds of purchases we make to see whether they are reducing the use of natural resources and encouraging more sustainable ways of growing food and conducting commercial business.

Many religious congregations are looking toward a different approach to reclaim the holidays from preoccupation with material gifts. Some offer ways to reduce the volume of purchasing and to make different kinds of purchases that reduce throughput and pollution.

For example, Interfaith Power and Light seeks to get religious congregations to purchase renewable energy and to reduce energy use in their homes and their places of worship. Through Greater Washington Interfaith Power and Light, our family now purchases all our electricity, sourced from wind farms, at a surcharge of about $130 a year.

By voting with their food dollars many Americans have already sent powerful signals in favor of local farm markets and organic food. With some due diligence, people can determine whether their purchases lend further support to child labor and slave conditions, whether the purchases harm women or empower women, and whether the product came from an animal-slum factory farm operation. The Fair Trade label allows consumers to identify imported products that avoid harmful labor and environmental degradation in their manufacture.

We have options.  We can do better than liquidating our natural bounty for consumer novelty, we can refrain from pitching unnecessary products to our children, and we can stop pursuing growth for growth’s sake.  The steady state economy is a better choice than continuous pursuit of economic growth, but the transition starts with better choices about what and how we consume.