Three Glimmers of Hope for an Economic Transformation

by Brent Blackwelder

BlackwelderEcological economists, top scientists, and even a few financiers have put forth powerful arguments for moving to a steady state economy. Sometimes described as a true-cost economy, a sustainable economy, or a spaceship economy, the steady state offers a positive alternative to the delusion of endless growth.

Viewed from an environmental perspective, the need to transform the U.S. and global economic systems is becoming more urgent by the day — if you scan the headlines about global warming, biodiversity loss, and natural resource depletion, you’ll quickly get the picture. It turns out that the most important environmental policies of any nation are its economic policies. For example, there is no chance of stabilizing the ongoing climate chaos if the major economies of the world continue to reward fossil fuel usage and fail to include pollution externalities in their prices. In a true-cost economy, however, clean energy would be the cheapest, and fossil fuels would be too expensive to use.

Given the severity of the problems we face and the strong potential for steady state policies to solve them, the question is, “Why are nations failing to embrace this positive alternative?” There are many obstacles standing in the way of a sustainable economy. The skeptic would assert, “You are asking the most powerful nations in the world to change the cherished economic system they have been functioning under and embrace an economic system which no modern nation has ever used. It is a wild fantasy.”

There’s some merit to the skeptic’s argument — the suggested economic changes seem like a paradigm shift akin to those seen over the centuries in physics and astronomy. But given the unpredictability of paradigm shifts, we can encourage incremental steps toward an economic transformation.

A number of experts have laid out such steps. For instance, the economist Peter Victor has illustrated how Canada could achieve a sustainable economy. But even with a blueprint in hand, it’s questionable whether Canada or China or the U.S. or Brazil or India would ever start constructing such an economy.

Part of the problem stems from the international economic infrastructure. The continued push for economic expansion from global bodies such as the World Bank, the IMF , the G-8, the World Trade Organization, undermines intellectual support for the transformation from cowboy economies to spaceship economies.

Another obstacle comes from the extractive industries and the way they exert influence within governmental bureaucracies. These industries are propping up a business-as-usual approach to economics. If this approach continues, we can expect collapses around the world stemming from food and water riots, weather disasters, and ongoing erosion of life-support systems worldwide.

It’s tough to come up with plausible ways of overcoming these major obstacles, but three recent developments provide some much-needed hope. They may be long-shots for breaking through the resistance and spurring the transformation to a new true-cost economy, but they offer a chance.

Economic output and energy use are highly correlated. Data shown are for 175 countries in the year 2007. Sources: U.S. Energy Information Administration and the World Bank.

Economic output and energy use are highly correlated. Data shown are for 175 countries in the year 2007. Sources: U.S. Energy Information Administration and the World Bank.

The first glimmer of hope is emerging from the energy changes happening in Germany, which has become the world’s leader in electricity produced from solar and wind sources. Germans are aiming to generate half of their electricity from renewable sources within ten years. If the most powerful economies in the world were to replicate Germany’s energy policy, it would not only be a shift in the energy sector, but also a monumental shift in economics, given the way economic growth and energy consumption are connected.

The second glimmer of hope comes from growing concern about caring for creation on the part of religious congregations from many faith traditions. More and more religious organizations, liberal and conservative, are pointing to the excessive consumption in the global economy as destroying God’s creation. What if Pope Francis surprised everyone and included population stabilization on his agenda. His text could align with Genesis by envisioning a flourishing of all life on earth. That is why the blessing “be fruitful and multiply” is first given explicitly to all the animals on the planet.

A third glimmer of hope is arising from the surge of public outrage over corporate tax dodging and subsidies. Stories of financial fraud and abuse are popping up in the news coverage. The Economist’s Special Report on Offshore Finance (February 16, 2013) highlights the trillions of dollars stashed in offshore tax havens.

It’s scandalous that some of the wealthiest corporations in the world, such as General Electric, Apple, and Google, are paying little or no income tax. It’s equally scandalous that U.S. corporations continue to receive taxpayer handouts. The anger and unrest spurred by this situation offers a good opportunity to change the way businesses operate.

The obstacles to a establishing a true-cost, steady state economy are daunting, but now’s the time to get on board with efforts to overcome them. People are responding to the challenge and taking positive actions all over the world. I’ve summarized three of my favorites here, and I’m hopeful that you know of plenty of other efforts to create an economy that will work for people and the planet.

The Great Energy Rethink: Lessons from Japan and the Neighborhood

by Rob Dietz

As if we really required more prompting, the unfolding nuclear accidents in Japan are confirming what we must do.  When a disaster strikes, the most urgent response is to help those who are suffering, prevent further calamities, and clean up the messes—it’s a time to get busy.  But the next critical step is to figure out what we might do differently—it’s a time to take a step back and contemplate how we got where we are and where we might go from here.  With each passing day, it is becoming increasingly clear that we need to rethink where and how we get our energy supplies.  We can call this Phase 1 of the Great Energy Rethink (GER).  But just as important, and much less considered, is the need to rethink what we do with the energy we generate.  Although it probably ought to come first, let’s call this Phase 2 of the GER.

Hopefully we'll pay attention to Fukushima's lesson.

I find that I am profoundly shaken by what is happening in Japan.  For several years, I have been on a self-prescribed media blackout.  My family doesn’t have television reception, so I never watch the news.  I do glance at the New York Times occasionally, but I’ve been focusing more and more of my gaze on local issues. Given the large amount of time I spend on the job considering what’s wrong with the way we manage our economic affairs, I don’t want to flood my mind with negative images of national and global dysfunction.  But I have found it impossible to black out the triple disaster (earthquake, tsunami, and nuclear accidents) in Japan.  The devastation and suffering are beyond description.

The earthquake and tsunami were unpreventable.  After all, we live on a planet where such things occur.  We’ve seen similar devastation recently in Haiti, Sichuan Province in China, Pakistan, and Indonesia and other Indian Ocean nations.  But the venting of radioactive steam and the threat of nuclear meltdown were utterly preventable.  A New York Times article provides an astonishing description of what happened at the Fukushima nuclear power plant where the backup generators failed to cool the overheating reactor:

The central problem arises from a series of failures that began after the tsunami. It easily overcame the sea walls surrounding the Fukushima plant. It swamped the diesel generators, which were placed in a low-lying area, apparently because of misplaced confidence that the sea walls would protect them.

The key phrase in that description is “misplaced confidence.”  Misplaced confidence sums up how we got to this point in history when it comes to selecting sources of energy to power our ever-expanding economy.  Regardless of what smooth-talking P.R. professionals say, a nuclear power facility has been the site of a serious accident about every 10 years: witness Three Mile Island in the U.S. in 1979, Chernobyl in Ukraine in 1986, Tokaimura in Japan in 1999, and now Fukushima in 2011.  “Safe nuclear power” is an offensive oxymoron.

Misplaced confidence also describes our failure to take big strides on phasing out fossil fuels.  We have misplaced confidence that we’ll find a technological solution to climate destabilization, that the market will take care of the problem, and that Mother Nature will continue to warehouse the emissions from our economy with no consequences.

If we can stop misplacing our confidence for a moment or two, we can get on with the task of selecting sane sources of energy.  We can start the comprehensive conversion to renewable resources, a massive makeover that will surely include a process of powering down.  This process of powering down, in turn, will require a re-prioritization of what we actually do with the energy we generate—this is the very moment to take a step back and contemplate how we got where we are and where we might go.

In my own neighborhood, folks are realizing the need to change the sources of energy.  We have a decent start on Phase 1 of the GER, but we are still struggling with Phase 2.  I witnessed the evidence on a recent bike ride.  My friend Bruce and I were cycling on a street that is flanked by an unusual mix of farmland and industrial buildings.  As we were coming up on a factory, we saw workers setting up a huge array of photovoltaic solar panels.  We both wanted to stop and take a closer look for two reasons: (1) the array was by far the biggest we had seen in town, and (2) we had recently embarked on our own process of installing solar panels at our own households.

We rode up  to the array where two men were setting up racks to hold the panels.  One of them approached us, and we began a cheerful conversation.  He was happy to answer our questions, and he was genuinely proud of his work, and rightfully so.  The owners of this factory were taking an important step to switch to a safe and emissions-free power source.

I asked the worker what the factory made.  He said it made advanced rubber compounds.  I was thinking how great it would be to purchase locally made bike tires from this place when he went on to explain that the factory was producing sheets of rubber armor for Humvees in Iraq.  That new knowledge abruptly terminated my thoughts of local sustainability.  I was baffled by the oddity of:

  • using solar panels to generate energy…
  • to outfit military vehicles that were deployed in an effort to secure oil interests in the Middle East…
  • with the ultimate goal of keeping a cheap and reliable flow of oil available to the U.S. economy.

We have misplaced confidence in our ability to make good decisions about our precious energy supply.  Even if we’re successful in making the transition to a renewable energy economy (Phase 1 of the GER), we have to come to grips with Phase 2.  What do we really want to do with our energy supplies?  We’ll regret it if we waste them on a doomed effort to keep the economy growing.

The tragedy in Japan will require action on the ground for some time to come.  For those of us who are not there on the ground, we can do our part to help by getting on with the Great Energy Rethink.

What Is a “Green Economy?”

Herman DalyA green economy is an economy that imitates green plants as far as possible. Plants use scarce terrestrial materials to capture abundant solar energy, and are careful to recycle the materials for reuse. Although humans are not able to photosynthesize, we can imitate the strategy of maximizing use of the sun while economizing on terrestrial minerals, fossil fuels, and ecological services. Ever since the industrial revolution our strategy has been the opposite. Fortunately, as economist Nicholas Georgescu-Roegen noted, we have not yet learned how to mine the sun and use up tomorrow’s solar energy for today’s growth. But we can mine the earth and use up tomorrow’s fossil fuels, minerals, and waste absorption capacities today. We have eagerly done this to grow the economy, but have neglected the fact that the costs of doing so have surpassed the benefits – that is to say, growth has actually become uneconomic.

In spite of the fact that green plants have no brains, they have managed to avoid the error of becoming dependent on the less abundant source of available energy. A green economy must do likewise – seek to maximize use of the abundant flow of solar low entropy and economize on the scarce stock of terrestrial low entropy. Specifically, a green economy would invest scarce terrestrial minerals in things like windmills, photovoltaic cells, and plows (or seed drills) – not squander them on armaments, Cadillacs, and manned space stunts. A green economy can be sufficient, sustainable, and even wealthy, but it cannot be a growth-based economy. A green economy must seek to develop qualitatively without growing quantitatively – to get better without getting bigger.

There is another kind of green economy that seeks to be green after the manner of greenback dollars, rather than green plants. Green dollars, unlike green plants, cannot photosynthesize. But dollars can miraculously be created out of nothing and grow exponentially at compound interest in banks. However, Aristotle noted that this kind of growth is very suspect, because money has no reproductive organs. Unlike green plants, green money seeks to grow forever in the realm of abstract exchange value, even as we encounter limits to growth in the realm of the concrete use values for which money is supposed to be an honest token and symbol.

Recently we have grown, or rather “swollen”, by expanding the symbolic realm of finance. Debt is a mere number (like negative pigs) and can easily grow faster than the real wealth (positive pigs), by which it is expected to be redeemed. Wall Street has bought and sold an astronomical number of negative pigs-in-a-poke – they have “sold bets on debts and called them assets”, as Wendell Berry succinctly put it. We have recently experienced the failure of this fraudulent attempt to force expansion. Yet we have so far been unable to imagine any policy other than restarting the old growth economy for another round. After the next crisis we should try to avoid the Ponzi scheme of growth and build a steady state economy – a green economy that is sustainable, just, and sufficient for a good life.