Posts

Uneconomic Growth Deepens Depression

by Herman Daly

Herman DalyThe US and Western Europe are in a recession threatening to become a depression as bad as that of the 1930s. Therefore we look to Keynesian policies as the cure, namely stimulate consumption and investment—that is, stimulate growth of the economy. It seemed to work in the past, so why not now? Should not ecological economics and steady-state ideas give way to Keynesian growth economics in view of the present crisis?

Certainly not! Why? Because we no longer live in the empty world of the 1930s — we live in a full world. Furthermore, in the 1930s the goal was full employment and growth was the means to it. Nowadays growth itself has become the goal and the means to it are off-shoring of jobs, automation, mergers, union busting, importing cheap labor, and other employment-cutting policies. The former goal of full employment has been sacrificed to the modern ideology of “growth in share holder value.”

Growth has filled the world with us and our products. I was born in 1938, and in my lifetime world population has tripled. That is unprecedented. But even more unprecedented is the growth in populations of artifacts — “our stuff” — cars, houses, livestock, refrigerators, TVs, cell phones, ships, airplanes, etc. These populations of things have vastly more than tripled. The matter-energy embodied in these living and nonliving populations was extracted from the ecosystem. The matter-energy required to maintain and replace these stocks also comes from the ecosystem. The populations or stocks of all these things have in common that they are what physicists call “dissipative structures” — i.e., their natural tendency, thanks to the entropy law, is to fall apart, to die, to dissipate. The dissipated matter-energy returns to the ecosystem as waste, to be reabsorbed by natural cycles or accumulated as pollution. All these dissipative structures exist in the midst of an entropic throughput of matter-energy that both depletes and pollutes the finite ecosphere of which the economy is a wholly contained subsystem. When the subsystem outgrows the regenerative capacity of the parent system then further growth becomes biophysically impossible.

But long before growth becomes impossible it becomes uneconomic — it begins to cost more than it is worth at the margin. We refer to growth in the economy as “economic growth,” — even after such growth has become uneconomic in the more basic sense of increasing illth faster than wealth. That is where we are now, but we are unable to recognize it.

Why this inability? Partly because our national accounting system, GDP, only measures “economic activity,” not true income, much less welfare. Rather than separate costs from benefits and compare them at the margin we just add up all final goods and services, including anti-bads (without subtracting the bads that made the anti-bad necessary). Also depletion of natural capital and natural services are counted as income, as are financial transactions that are nothing but bets on debts, and then further bets on those bets.

Also since no one wants to buy illth, it has no market price and is often ignored. But illth is a joint product with wealth and is everywhere: nuclear wastes, the dead zone in the Gulf of Mexico, gyres of plastic trash in the oceans, the ozone hole, biodiversity loss, climate change from excess carbon in the atmosphere, depleted mines, eroded topsoil, dry wells, exhausting and dangerous labor, exploding debt, etc. Standard economists claim that the solution to poverty is more growth — without ever asking if growth still makes us richer, as it did back when the world was empty and the goal was full employment, rather than growth itself. Or has growth begun to make us poorer in a world that is now too full of us, and all our products, counted or not in GDP?

Does growth now increase illth faster than wealth? This is a threatening question, because if growth has become uneconomic then the solution to poverty becomes sharing now, not growth in the future. Sharing is frequently referred to as “class warfare.” But it is really the alternative to the class warfare that will result from the current uneconomic growth in which the dwindling benefits are privatized to the elite, while the exploding costs are socialized to the poor, the future, and to other species.

Finally, I eagerly submit that even if we limit quantitative physical throughput (growth) it should still be possible to experience qualitative improvement (development) thanks to technological advance and to ethical improvement of our priorities. I think therefore we should urge policies to limit the quantitative growth of throughput, thereby raising resource prices, in order to increase resource efficiency, to force the path of progress from growth to development, from bigger to better, and to stop the present folly of continuing uneconomic growth. A policy of quantitative limits on throughput (cap-auction-trade) will also block the erosion of initial resource savings resulting from efficiency improvements (the rebound effect or Jevons paradox). In addition the auction will raise much revenue and make it possible to tax value added (labor and capital) less because in effect we will have shifted the tax base to resource throughput. Value added is a good, so stop taxing it. Depletion and pollution, the two ends of the throughput, are bads, so tax them. If you are a technological optimist please have the courage of your convictions and join us in advocating policies that give incentive to the resource-saving technologies that you believe are within easy reach. You may be right — I hope you are. Let’s find out. If you turn out to be wrong, there is really no downside, because it was still necessary to limit throughput to avoid uneconomic growth.

¡Buenas noticias! ¡La recuperación económica se frena!

Publicado por Dave Gardner, director del documental de próximo estreno GrowthBusters

Artículo original traducido del Inglés al Español por Bosco Gámiz.

Las noticias económicas del pasado viernes fueron bastante positivas. El crecimiento anual del PIB de EE.UU. fue inferior al uno por ciento en el primer semestre de 2011.

Sin embargo, me atrevería a decir que …ehmm, un 99,9 por ciento de todo el mundo considera esto una mala noticia. El New York Times [1] lo calificó como “paso de tortuga”. Periodistas y comentaristas de todo el mundo con toda probabilidad están escribiendo palabras como debilidad, anemia, malestar general, sombrío, triste, abatimiento, y el estancamiento.

Entonces ¿qué tiene de bueno? ¿Acaso me produce un placer perverso y morboso ver a mis compañeros humanos desempleados, ahogados en sus hipotecas, o comiendo en comedores de beneficencia? No, no me lo produce. Las consecuencias de la recesión son reales; es doloroso, y es triste. Sin embargo, que el PIB sea constante o que baje un poco, no es una mala noticia. Tampoco es la caída en el gasto de los consumidores [2] que se dio a conocer el martes.

Aunque muchos de los impactos de la recesión son trágicos, son la cara negativa de adaptación a una nueva realidad: el fin del crecimiento. Son una parte necesaria de una fase temporal. Podríamos llamarlo la fase de crisálida, hasta que nos transformamos en algo más bello.

Considere estos titulares de los últimos dos años. ¿Son buenas o malas noticias?

  • La recesión pone a los bebés en espera
  • Movimiento por casas pequeñas prospera en medio de crisis inmobiliaria
  • Se construyen menos casas durante el frenazo de la economía
  • El uso mundial de carbón se estanca a pesar del creciente mercado chino e indio
  • Total Municipal Waste Generation Dropped
  • Caída de la generación residuos en el municipio
  • La contaminación por carbono de la UE cae
  • GM cierra la fábrica donde se producen los Hummer
  • Gasoline Spike Fuels Surge in U.S. Bicycle Sales
  • La subida de gasolina en EE.UU. aumenta las ventas de bicicletas
  • El tamaño medio las casas en EEUU se estanca tras 30 años de continuo crecimiento
  • El gasto en publicidad disminuye
  • Las aerolíneas dejan en tierra más del 11% de sus aviones
  • Los implantes mamarios se desinflan junto con la economía
  • Más de 400 de congresos cancelados en Las Vegas
  • El mercado de segunda vivienda cae un 30%

Si leemos estos titulares a través de una lente arcaica – la visión del mundo propia del siglo pasado en el que el crecimiento es el Santo Grial – estas historias parecen malas noticias. Pero a través de una lente más moderna, del siglo 21, que valora la verdadera sostenibilidad, son el anuncio de un mundo que se ralentiza hacia un nivel responsable de actividad humana.

Piensen en ello. Casas más pequeñas significa menos deforestación, menos hábitat partido en subdivisiones, menos hormigón (cuya producción emite mucho CO2, y menos espacios vitales que calentar o enfriar (una vez más, reducción de emisiones de CO2). Un menor uso del carbón es una buena noticia en el aprtado de gases de efecto invernadero – como lo son los aviones en tierra, no más Hummers y el cambio a favor de las bicicletas. Curiosamente no vemos señales de que los políticos, los expertos y los periodistas estén pensando tan en serio acerca de los temas.

No soy el primero en reconocer la recesión como una oportunidad. Grandes mentes como Gus Speth y David Korten están haciendo todo lo posible para convertir esta recesión en una corrección del rumbo. “¿Por qué esta crisis puede ser nuestra mejor oportunidad para construir una nueva economía” de Korten [3], y “Hacia una nueva economía y una nueva política” de Speth [4] son buenos ejemplos de esto. Incluso Jay Leno se ha apuntado, felicitando al Presidente George W. Bush por frenar la economía en 2008 y por tanto hacer más a favor de la lucha contra el cambio climático que Al Gore. Por supuesto que los impactos del crecimiento económico afectan a mucho más que el clima. Nuestra actividad económica en aumento está causando la destrucción del hábitat, la extinción de especies y contaminación [5], y está liquidando recursos críticos como el suelo fértil.

No conozco a ningún periodista que buscase a Speth, a Korten, a Daly, a Czech, a Victor o a Heinberg para contrastar una visión alternativa de las noticias del viernes. Una historia sobre la fusión de los hielos incluiría comentarios de parte de auténticos científicos del clima y de parte de negacionistas del cambio climático. Pero en la historia que conocemos sobre el PIB no hay discusiones en las redacciones para garantizar todos los puntos de vista – nadie que dijera lo buena noticia que es que el producto interior bruto se pueda estar acercando a un estado estacionario. Se supone que crecimiento del PIB es una buena noticia y la contracción económica es una mala noticia – para todo el mundo. Ni siquiera se les ocurre cuestionar esa suposición. La fe ciega en la antigua visión del mundo todavía tiene un férreo agarre sobre los periodistas y editores. Esto tiene que cambiar.

¡Quiero ver la mariposa!

Dave Gardner es el realizador del documental, GrowthBusters, que se estrena a finales de octubre. La campaña de esta película sin ánimo de lucro en Kickstarter [6] para recaudar fondos se encuentra en su última semana. Para más información sobre la película o para organizar una proyección, visite www.growthbusters.org [7]. David puede ser contactado en dave@growthbusters.org.

Enlaces:

[1] http://www.nytimes.com/2011/07/30/business/economy/us-economy-worse-than-expected-in-second-quarter.html?nl=todaysheadlines&emc=tha2

[2] https://steadystate.orgdrop in consumer spending

[3] http://www.yesmagazine.org/issues/the-new-economy/why-this-crisis-may-be-our-best-chance-to-build-a-new-economy

[4] http://www.thesolutionsjournal.com/node/619

[5] http://www.worldwildlife.org/sites/living-planet-report/

[6] http://tinyurl.com/kickstartGbusters

[7] www.growthbusters.org: http://www.growthbusters.org/

 

Good News: Economic Recovery Stalls!

by Dave Gardner, director of the upcoming documentary GrowthBusters

Economic news last Friday was quite positive. Annualized U.S. GDP growth was less than one percent in the first half of 2011.

However, I would hazard a guess that, oh, some 99.9 percent of the world considered this bad news. It was characterized in the New York Times as a “snail’s pace.” Journalists and commentators around the world are predictably typing out words like weak, anemic, malaise, gloomy, bleak, doldrums and stagnation.

So why would I celebrate? Do I get perverse, morbid pleasure at seeing my fellow humans unemployed, upside down in their mortgages, or dining at soup kitchens? I do not. The fallout of the recession is real, it’s painful, and it’s sad. But steady or declining GDP is not bad news. Nor is the drop in consumer spending reported Tuesday.

While many impacts of the recession are tragic, these are the pains of adjusting to a new reality: the end of growth. They are a necessary part of a temporary phase. We might call it the cocoon phase, as we metamorphose into something more beautiful.

Consider these headlines from the past two years. Are they good news or bad?

  • Recession Puts Babies on Hold
  • Tiny House Movement Thrives Amid Real Estate Bust
  • Home Production Falls as Economy Languishes
  • Global Coal Use Stagnates Despite Growing Chinese and Indian Markets
  • Total Municipal Waste Generation Dropped
  • Home Depot Calls a Halt to Rapid Expansion
  • European Union Carbon Pollution Drops
  • GM to Close Hummer
  • Gasoline Spike Fuels Surge in U.S. Bicycle Sales
  • Bottled Water Consumption Growth Slows
  • 30-Year Growth Spurt Ends for Average American House Size
  • Ad Spending Down
  • Airlines Ground More Than 11% of Their Jets
  • Breast Implants are Deflating Along With the Economy
  • More Than 400 Meetings in Las Vegas Recently Cancelled
  • 2nd Home Market Declined 30%

Looking at these headlines through an archaic lens, last century’s worldview that growth is the Holy Grail, these stories seemed like bad news. But through a more modern, 21st century lens that values true sustainability, they herald a world slowing down toward a responsible level of human activity.

Think about it. Smaller houses mean less deforestation, less habitat converted to subdivisions, less concrete (production of which emits significant CO2), and less living space to heat or cool (again reducing CO2 emissions). Less coal use is also good news in the greenhouse gas department — as are grounded jets, no more Hummers and a switch to bicycles. Strangely we see no signs that politicians, pundits or journalists are thinking this deeply about the subjects.

I’m not the first to recognize this recession as an opportunity. Great minds like Gus Speth and David Korten are doing their best to turn this recession into a course correction. Korten’s Why This Crisis May Be Our Best Chance to Build a New Economy, and Speth’s Towards a New Economy and a New Politics are good examples of this. Even Jay Leno got into the act, congratulating President George W. Bush in 2008 for doing more to fight climate change than Al Gore — by slowing the economy. Of course the impacts of economic growth reach far beyond the climate. Our increasing economic activity is causing habitat destruction, species extinction and pollution; and it is liquidating critical resources like fertile soil.

I’m aware of no journalist who sought out Speth, Korten, Daly, Czech, Victor or Heinberg for an alternative view on Friday’s news. A story about ice melting would include comments from both real climate scientists and climate change deniers. But for this GDP story there was no discussion in the newsrooms about getting the other side — a quote about how terrific it is that gross domestic product may be settling toward a steady state. They assume GDP growth is good news and economic contraction is bad news — for everyone. It doesn’t even occur to them to question that assumption. Blind faith in the old worldview still has a tight grip on the reporters and editors. This needs to change.

I look forward to seeing the butterfly!

Dave Gardner is the filmmaker behind the documentary, GrowthBusters, which premieres in late October. The nonprofit film’s final fundraising campaign on Kickstarter is in its last week. For more information about the film or to organize a screening, visit www.growthbusters.org. Dave can be reached at dave@growthbusters.org.

Recession — An Opportunity We Should Not Pass Up

by Peter Seidel

We are currently facing a worldwide recession. Many people cannot find employment, and many things are poorly done or not done at all, because businesses and governments say they don’t have the money to fund them. Political and business leaders keep calling for more growth to get us out of this recession. I am not an economist nor do I have a complete understanding of the economy, nevertheless, like the boy who pointed out that the emperor was naked, I see things that strike me as odd.

Perpetually pursuing growth into the future, in a finite space with limited resources, is impossible. We have already exceeded the level of consumption our planet can sustain. According to the Global Footprint Network it would take 1.5 planets like our own to regenerate all the resources humanity now uses and assimilate our carbon dioxide emissions. If everyone lived like the average American, we would require the resources of almost 5 planets. Instead of growing, we need to scale back. Continued growth is suicide for our species. Now this may sound naïve, but why not employ people who have lost their livelihood to do things that urgently need to be done, and do this in a way that puts us back on the road to sustainability?

In trying to answer this question, more questions rise to the surface. How can we create enough jobs? Where do we get the money to pay for them? By focusing on efficiency, as we now do, and raising worker productivity, workers are continually producing more for each hour worked. Under this current economic system, people must consume more and more (at the same time placing more and more burden on the environment) just to maintain jobs. Outsourcing exacerbates employment problems, requiring even more consumption to make up for disappearing jobs. How will we ever return to earlier levels of employment with the increased efficiencies that businesses have introduced during the recession, and without the reckless spending habits people had before the recession? There are some simple ways to turn this around. We can hire more teachers to reduce class sizes in schools and restore subjects that enrich young people’s lives such as, art, music, and physical education. We can maintain our parks and protect the environment better. Employing more police, inspectors of the products we use, and people to review income tax returns would also help.

Shortening the work week and granting longer vacations would also create openings for unemployed workers, and provide more free time for all. As much of our life is spent at work, work should be less stressful, more enjoyable, something one can take pride in, and be adequately compensated for. In short, we should switch from an economy where we are slaves of the system and are obliged to consume more than we need in order keep it going, to one based on meeting human needs within the capacity of our planet.

Where can we obtain the funds to provide full employment in the kinds of jobs I have just described? Today, large numbers of people who are doing financially well simply don’t want to sacrifice for others or the common good, and there are politicians who tell them they don’t need to. When I was growing up, I was taught that it was the American way to pitch in and help one another when things were tough. Farmers helped their neighbors when their barn burned down, and we sacrificed during World War II by raising taxes and forgoing many things. Now we pass the burdens of war on to the socially disadvantaged (from whose ranks we populate our armed forces) and our children (who will end up paying the costs of war). And today our situation is far worse as we head for environmental troubles that will hurt everyone. A moderate tax increase on those who are fortunate enough to have reasonably paid jobs would solve this problem without decreasing the quality of their lives. Much research has shown that when one has enough to live comfortably, has friends, and is happy with what one does, more money does little to increase happiness. Education would help here.

New goals and mechanisms must be developed that put the long-term welfare of the planet, people, and communities above currently held beliefs and short-term profits for a few. We must replace the gross domestic product (GDP) with an indicator that includes the cost of the depletion of nonrenewable resources, pollution, medical bills, natural disasters, commuting, military expenditures, and crime. By the present means of computation, the more a nation pollutes and spends on cleaning it up, the greater the GDP! Instead we must turn to something like the Genuine Progress Indicator (GPI), which starts with the same personal consumption data that the GDP uses, but then adjusts for factors such as the fairness of income distribution, and adds factors such as the value of household and volunteer work, and subtracts factors such as the costs of crime and pollution. Instead of putting our faith in conventional economists who ignore the reality of the world beyond money and the limits of their models, we should turn to a breed of economists and thinkers now totally ignored by governments and business. Ecological economist Herman Daly, David Korten (President of the People Centered Development Forum), Peter Victor (Professor of Environmental Studies at York University), and Tim Jackson (independent advisor on sustainable development to the UK government) are good examples and have recently written books on sustainable economics.

In recent years, there has been an increasing separation of the control of business from the people and communities who are affected by those businesses. At one time business owners and their employees lived within the communities where the businesses operated, and people consumed the food that grew around them. Today, much business is owned by impersonal organizations headquartered elsewhere, and food comes from thousands of miles away. Such arrangements put people out of touch – it becomes very difficult for them to connect their choices to the consequences of those choices. Decisions tend to be based solely on monetary reasons, without regard to environmental and personal concerns. Corporations have only one obligation: making money for their stockholders without breaking the law. We need to initiate feedback systems and controls that bring environmental concerns and humanity back into business decisions.

To reach sustainability we must bring our economy back to reality. Doing so will require us to decrease human population, take money out of politics, return governments to the people, and free the media from concentrated ownership and corporate control. We need to reorient our goals and values. If the public ceased to admire conspicuous consumption and lavish living, and openly recognized the damage associated with such lifestyles, we could do away with harmful overconsumption and develop lifestyles that are healthy from both an environmental and economic perspective.

If we do not reach a level of sustainability, nothing else matters. I believe that a recession, with the suffering that goes with it, and an increased public awareness of environmental problems like those that we now have, is the easiest time to switch to a sustainable economy. Besides, it could be a seamless way to step beyond our recession into a saner, sounder future. If we do not grasp our current opportunity, when will we do what we must do?