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The Puzzling Flattening of Carbon Emissions and the Problem of Global Growth

by Kurt Cobb

Editor’s Note: the below was originally published by Resource Insights.

Kurt CobbLast week we learned that maybe, just maybe, global carbon emissions were flat in 2014 even though the global economy supposedly grew by 3 percent. As Brad Plumer of Vox (whose work I greatly respect) points out, carbon emissions have moved up almost in lockstep with economic growth for the entire industrial age except during recessions and one year of growth 40 years ago.

This is why I use “supposedly” when referring to the global economic growth number. It’s because there is another obvious and plausible explanation for the flat carbon emissions, namely, that the global economy did not grow by the stated percentage, that it may have grown only a fraction of that amount or not at all.

Economic measures are constantly being revised, and I think it is very likely that the global economic growth number for 2014 will be revised downward. Probably not to zero, but downward nonetheless. It’s also possible that estimates of carbon emissions are too low. Plumer cites “notoriously unreliable” Chinese emission numbers as one reason to be skeptical.

But, even if 2014 turns out to be a year of growth without rising emissions, we shouldn’t get particularly exercised. Nor should we be particularly excited if it continues for a time. This is because the only trend that will actually address climate change is a RAPID DECLINE in worldwide emissions (as Plumer rightly points out).

Plumer makes one very telling statement in this regard:

If we ever hope to stop global warming, we’ll have to sever that relationship [of economic growth to emissions] — and figure out how to have economic growth while reducing emissions. (Alternatively, we could halt economic growth, but no one wants that.)

“Alternatively, we could halt economic growth, but no one wants that.” Two questions arise from this observation: Is it true that “no one wants that”? Who specifically wants economic growth to continue and why?

The answer to the first question is no; there is, in fact, a small minority of people advocating an end to growth. Herman Daly, former World Bank senior economist, is the acknowledged dean of the steady state economy movement. In a September 2005 Scientific American piece, “Economics in A Full World,” he outlined his case for why there is little room for economic growth and why growth in recent decades has been uneconomic, that is, the cost of such growth has outweighed the benefits.

There are also the deep ecologists who value other species on the planet as much as our own, a view which implies not only an end to economic growth but a serious rollback of industrial civilization. Perhaps Derrick Jensen is the best known of the deep ecologists whose views about how to achieve the proper role for humans on planet Earth varies greatly.

Given that there are people who want to halt or even reverse economic growth, we must now ask the second question: Who wants growth and why?

If we follow Herman Daly’s logic, we have long since passed the point of economic growth and now have “uneconomic growth,” growth that imposes costs greater than the growth is worth: social costs in terms of inequality and environmental costs that undermine the long-term sustainability of human society.

So, who benefits from such growth? We now have a name for this group, the one percent. Those with the highest incomes and greatest financial wealth continue to benefit from such growth since they can both reap disproportionate rewards from it and insulate themselves from the costs associated with it–leaving others to bear them.

When Plumer says that no one wants economic growth to end, what he is unwittingly saying is that the power elite in the world does not want to face the grand implication of a steady state economy–namely, that lower-income groups cannot be assured of a better material existence through economic growth and so such betterment would, of necessity, have to come from the redistribution of wealth.

As long as the chimera of perpetual growth can be sold to the masses, no one will have to deal with the thorny issue of redistribution as the primary method for the economic betterment of the middle and lower classes.

And yet, growth ended for many people around the globe in 2008. According to the International Labour Organization (ILO), if you earn the median wage in Kenya, your real income has declined 26 percent from 2008 through 2013. For Greece, the decline has been 24 percent. For prosperous Singapore and Japan the number is minus 1 percent. Egyptian real median income declined 10 percent; the United Kingdom declined 7 percent; Iceland and Italy, 6 percent; Taiwan, 5 percent; Spain and the Netherlands, 3 percent; Ireland, 2 percent; Austria, Luxembourg and the Philippines, all hovered around zero percent growth.

Of course, some prospered. Median wages in Romania, Panama, Paraguay, Norway, Jordan, Poland, Vietnam and Morocco all rose more than 10 percent from 2008 onward. There were standouts: The Brazilian median wage grew by 21 percent; Thailand by 26 percent; China by 74 percent; Mongolia by 75 percent. Ukrainian workers enjoyed a media wage increase of 43 percent through 2013 though it is likely that much of that has since been wiped out by the war and currency crisis there. In the United States, the median wage registered a one percent increase according to the ILO, though homegrown analysis suggests a decline.

The metaphorical tide of economic growth that is supposed to lift all boats is lifting far fewer people much more selectively than before.

On the other hand, if you possess substantial financial assets, you have prospered quite nicely as financial markets post daily records in the face of ever more precarious economic growth numbers around the world. But, only a small portion of the world’s people have any financial assets at all. The fate of a large number of the others has been stagnant or falling incomes or unemployment in an increasingly uncertain world.

Whether economic growth for all the world’s people will return is an open question. The system by which we’ve governed the world economy, a system dependent on central banking, central government spending, the build-up of huge and unsustainable debt, and the ever more rapid depletion of fossil fuels and other resources is showing its decrepitude.

Six years of pedal-to-the-metal monetary policy and government deficit spending have barely nudged world growth forward while levitating financial markets to unsustainable levels (and thereby exacerbating inequality). Such policies in the past would have had the world economy quickly overheating with central bankers responding by hoisting interest rates sky high to rein in inflation and financial excesses.

Instead, the economy remains so weak that the U.S. Federal Reserve had to reassure the world that despite language in its recent public statement that would indicate an imminent increase in interest rates for the first time in 10 years (that’s not a typo), the central bank really wouldn’t be raising them anytime soon after all.

So, maybe flat carbon emissions are actually telling us something “no one” wants to hear: that economic growth has faltered or even halted for a large portion of the world’s people and that we are going to have to deal with the consequences of that until we design a new system that can either grow for the benefit of everyone–a difficult proposition–or that can sustainably, equitably and successfully manage a steady state economy–an even more difficult proposition.

Kurt Cobb is an authorspeaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

There’s Hope for a New Economy in the New Year

by Brent Blackwelder

Early in 2011 UN Secretary General Ban Ki-Moon issued a profound condemnation of the global economy’s ill-conceived pattern of growth: “For most of the past century, economic growth was fueled by what seemed to be a certain truth: the abundance of natural resources. We mined our way to growth. We burned our way to prosperity. We believed in consumption without consequences. These days are gone… Over time, that model is a recipe for national disaster. It is a global suicide pact.” (Spoken at the World Economic Forum in Davos, Switzerland, January 2011).

That’s a somber statement, but there’s hope that the U.S. will break free from this “global suicide pact” and develop a fundamentally different economy.  My prediction for 2012:  decentralized forces, formed in response to the unsustainable and unfair economic situation, will begin to fundamentally change how our national economy works. People in the Occupy Wall Street movement and groups working on human rights, public health, clean energy, and social and tax justice are laying the groundwork for a shift to a steady state — a dynamic and sustainable economy that pursues prosperity and full employment without GDP growth.

The grassroots mobilization to support clean energy and a healthy environment is a sign of the shift to come. The work of diverse groups protesting the dirty tar sands pipeline from Canada to Texas motivated a huge turnout at the White House, with over 1,000 people being arrested. These protests were strong enough to get President Obama’s attention.  He delayed a decision on the pipeline and elevated the issue to center stage on the Republican agenda.

Statistics give us another hint that we’re headed in the right direction toward a steady state economy in 2012. Despite efforts by the Republican Congressional Leadership to undermine environmental protections (e.g., ongoing denial of climate change and attempts to gut EPA regulations), U.S. emissions have dropped by 7% in the last four years and are in line to drop further. Vehicle miles driven have declined, and ridership of public transportation is up 2%.

A cynic might say that the reason is simply the recession, but that’s only a small part of the story. Important actions such as renewable energy standards at the city and state levels are helping. Religious congregations participating in the Interfaith Power and Light initiative are reducing their carbon footprints. The campaign to shut down coal power plants and the substitution of natural gas for coal are also significant. Coal used to be the source of over half of U.S. electricity, but its share dropped to 43% in the first half of 2011 and is scheduled to drop even further.

As we enter 2012, we should redouble our support of those groups pushing for an economic paradigm shift based on sound governance and the principles of a just democracy. And it’s time to build a broad coalition of such groups to include those working on clean energy, public health, climate stabilization, financial reform, and other pieces of a sustainable economic system. Growing support for these groups and mutual reinforcement among them will provide the necessary spark to ignite the economic shift.

As we push for a just, environmentally sustainable world, we must continue to highlight the unabashed attempts by the richest one percent to continue fleecing the rest of us. December has featured a full array of proposed new financial gimmicks and tax breaks to benefit the very rich. For example, corporations with billions stashed in offshore tax havens are now seeking to bring these funds back to the U.S. with minimal tax under a so-called “Repatriation Act.”  They’re angling for a repeat of their lucrative repatriation flim-flam in 2004, a plan that saw 15 corporations bring back $150 billion at a 5 and ¼% tax rate instead of 35%. The Senate Permanent Subcommittee on Investigations found that these 15 companies did not add jobs or increase research expenditures, but rather increased spending on executive pay and stock buybacks. Now more companies are petitioning Congress to allow them once again to bring the loot back home with the same tax break.

Although the U.S. Chamber of Commerce strongly supports such repatriation, the Women’s Chamber of Commerce, with 500,000 dues-paying members, opposes it. The members of the Women’s Chamber of Commerce aren’t benefiting from the offshore tax havens or the repatriation scams.

As 2011 gives way to 2012, outrage is in the air.  But that can be useful for uniting and motivating people of conscience across the political spectrum to work for change — to break free of the suicide pact described by Ban Ki-Moon. Mr. Ban has called on governments to supply “visionary recommendations” for the upcoming Rio+20 UN Conference on Sustainable Development in June of 2012. Here are two recommendations that, at this point in history, seem obvious, but would certainly be radical in the business-as-usual economy:

  1. Stop pursuing the ruinous pipe dream of continuous economic growth and work toward a steady state economy.
  2. Take power back from the oligarchy of the 1% to reclaim our democracy.

Best wishes for the new year.