Tag: Economic growth

The simpler life

Part Two of The Sufficiency Economy.

I do hope that you read Part One of The Sufficiency Economy published yesterday on Learning from Dogs.  There Dr. Alexander of the Simplicity Institute set out the obvious, well obvious if one reflects for even a few moments, as this small extract demonstrates:

…. precisely what consumer capitalism lacks – a purpose, a reason for existence. It is a means without an end, like a tool without a task. What makes this state of affairs all the more challenging is that the era of growth economics appears to be coming to a close, due to various financial, ecological, and energy constraints, and this is leaving growth-based economies without the very capacity for growth which defined them historically.

Before moving to part two, the global predicament, more about the Simplicity Institute, an organisation of which I had been unaware prior to a few days ago.  The Institute’s opening web page reads thus:

Given that the essential factor in our global predicament is overconsumption, the most obvious principle for a sustainable society is that those who are over-consuming must move to far more materially ‘simple’ lifestyles. This does not mean deprivation or hardship. It means focusing on what is sufficient to live well. Most of our basic needs can be met in quite simple and low-impact ways, while maintaining a high quality of life.

The Simplicity Institute seeks to facilitate the rapid transition away from growth-based, consumer societies toward sustainable and more rewarding societies based on material sufficiency. We seek to understand what a society would look like if it were based on this ‘simpler’ way of living and how we might get there.

We are also developing networks of active collaboration between existing participants in the Simplicity Movement, in the hope of providing educational tools and resources to help mainstream the idea that ‘simpler lifestyles’ provide a high quality alternative to consumer capitalist society.

I would also encourage you to read about Their Mission and their Publications, one of which is the subject of this week’s postings. Finally, do offer your own experiences by completing their Simple Living Survey.

So on to Part Two where Dr. Alexander examines the global predicament facing all of us.

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THE SUFFICIENCY ECONOMY
ENVISIONING A PROSPEROUS WAY DOWN
Samuel Alexander
Simplicity Institute Report 12s, 2012

Dr Samuel Alexander is co-director of the Simplicity Institute and a lecturer with the Office for Environmental Programs, University of Melbourne.

2. The Global Predicament

If a path to the better there be, it begins with a full look at the worst. –Thomas Hardy

Below I outline various social, ecological, economic, and energy-related problems, which together provide the background against which the sufficiency economy should be understood. Most people, including many environmentalists, seem to believe that Western-style lifestyles, and the growth economies that support them, can be sustained and even globalised, provided the world transitions to systems of renewable energy and produces commodities more cleanly and efficiently. This assumption is reflected especially clearly in international political discourse on environmental issues (e.g. UNDP, 2007/8), which consistently pushes the message that we can decouple economic growth from ecological impact, or even that we need more economic growth in order to fund environmental protection initiatives or otherwise save the planet (Beckerman, 2002). The following review casts considerable doubt on the possibility of any technological ‘fix’ to existing problems. Each of the problems, on their own, provides ground for radically rethinking the nature of existing economic structures and goals. When considered together, I believe the case for fundamental change is compelling.

2.1. Ecological Overshoot and the Limits of Technology

The ecological footprint of the global economy now exceeds the sustainable carrying capacity of the planet by 50%, and overall things continue to get worse (Global Footprint Network, 2012). Old growth forests continue to be cut down at alarming rates; fresh water is getting scarcer; fish stocks and biodiversity more generally continue to decline; top-soil continues to erode; the climate continues to change and become less stable; and overall the pollution and wastes from human economic activity continue to degrade the ecosystems upon which all life depends (see generally, Brown, 2011). While this is hardly news, the full implications of our predicament are typically grossly under-estimated. The mainstream view on how to achieve sustainability is to exploit science and technology in order to produce more cleanly and efficiently, thereby decoupling economic activity from its destructive environmental impacts. But despite decades of extraordinary technological advance, the overall impacts of economic activity continue to increase (Jackson, 2009: Ch 4). To be sure, human beings are getting better at producing commodities more cleanly and efficiently, but we are also producing more commodities, and it turns out that those production increases outweigh the efficiency gains in production, leading to an overall increase in the impacts of economic activity, not a decrease. Efficiency without sufficiency is lost. We must always remember that technology is a two-edged sword, in the sense that it provides us with tools both to protect and destroy the natural environment, and human beings are exploiting both forms enthusiastically, especially the latter. Technology might give us solar panels and electric cars, for example, but it also gives us the ability to cut down rainforests easily, empty the oceans, and drill for oil in thousands of feet of water in the Gulf of Mexico.

Granted, technology never ceases to amaze, but the very awe it evokes seduces many into faithfully investing it with limitless powers. When we actually do the math, however, the impossibility of a technological fix to environmental problems becomes perfectly clear. If the developed nations were to grow their economies at a modest 2% over coming decades and by 2050 the poorest nations had caught up – which more or less seems to be the goal of ‘development’ – then by that stage the global economy, which is already in ecological overshoot, would be almost 15 times larger than it is today (Jackson, 2009: 81). This means, for example, that if we are to meet the moderate emissions targets of the IPCC (2007) then the carbon intensity of global economic output must be 130 times lower than it is today, requiring 11% reductions every year. Even with the unprecedented technological advances of recent decades, the efficiency improvements over the period 1990-2007 were merely 0.7% per year (Jackson, 2009: 79). These hard numbers ought to shatter the faith of techno-optimists. They show that it is delusional to think that technology alone is going to be able to solve the ecological crises we face, because the extent of absolute decoupling required is simply too great (Trainer, 2012a). Humanity must exploit appropriate technologies at every opportunity, of course, but first and foremost what is needed is a new mode of economy, one that recognises and accepts that growth-based, energy-intensive consumer societies are grossly unsustainable and certainly not universalisable.

2.2. Poverty amidst Plenty

The fact that the global economy is already in ecological overshoot is even more challenging when we bear in mind that in the poorest parts of the world today great multitudes are living lives oppressed by extreme poverty (World Bank, 2009). The global challenge, therefore, in terms of humanitarian justice and ecological sustainability, can be stated as follows: The human community must find a way to raise the material standards of living of the world’s poorest people – who surely have a right to develop their economic capacities in some form – while at the same time reducing humanity’s overall ecological footprint (Meadows et al, 2004: p. xv). What is clear is that the current ‘trickle down’ approach to poverty alleviation is neither working nor ecologically sustainable, as evidenced by a report from the New Economics Foundation (Woodard and Simms, 2006). This study shows that between 1990 and 2001, for every $100 of growth in the world’s average income per capita, merely $0.60 contributed to reducing poverty below the ‘$1 per day’ line. This means that to achieve $1 of poverty reduction at that ratio, an extra $166 of global production and consumption is required. Not only do these figures expose global growth as an extremely inefficient means of reducing poverty, it also implies that the amount of growth needed to alleviate poverty would be, without question, environmentally unsupportable. Accordingly, we must find a new path to poverty alleviation beyond the conventional ‘development’ agenda, one based on equitable distribution and new structures, not limitless growth.

2.3. Overpopulation

What exacerbates the ecological and humanitarian crises outlined above is the fact that, according to the United Nations, global human population is expected to exceed nine billion by mid-century and reach ten billion toward the end of the century (UNDSEA, 2011). Obviously, this will intensify greatly the already intense competition over access to the world’s limited natural resources and it will put even more pressure on Earth’s fragile ecosystems. It is of the utmost importance that population stabilises as soon as possible and is significantly reduced in some equitable manner. But we have known about the ‘population bomb’ for many decades and still it continues to explode, albeit at a slowing pace. We need either new strategies here or much greater commitment to existing strategies (and probably both). But even if humanity somehow managed to stabilise population at once and thereby avoid the expected increases, the global economy would nevertheless remain in gross ecological overshoot. The primary task, therefore – given we have the population we have – must be to reduce the ecological impact of our economic activity, partly by exploiting all appropriate technologies, and partly by stabilising and reducing population over time, but mainly by reimagining ‘the good life’ beyond consumer culture and learning how to step more lightly on the planet (Alexander, 2011a; 2009). This means giving up the destructive dream of ‘consumer affluence.’ The developed nations certainly cannot lecture the developing nations about how expanding populations are putting immense strain on Earth’s ecosystems while at the same time indulging in ever-higher levels of consumption. Accordingly, if the developed nations are serious about reducing global impact on the environment, as they claim they are, then before looking overseas they must first show the world that they are prepared to step more lightly themselves. Overpopulation is too easily used as a scapegoat to deflect attention away from the more fundamental problem of overconsumption.

2.4. The Fantasy of Limitless Economic Growth

Despite the fact that the global economy is already in dangerous ecological overshoot, every nation on the planet still aims to grow its economy, without apparent limit. Economic development of some form is still obviously required in the poorest parts of the world, as noted, simply in order to provide for basic needs. But if the poorest nations are to have any ‘ecological room’ to do so – especially when population growth is taken into account – it follows by force of logic that the overdeveloped rich nations should not continue growing their own economies. Indeed, sustainability demands that the richest nations initiate a process of planned economic contraction, or ‘degrowth’ (Alexander, 2012a), with the aim of eventually arriving at some ‘steady-state’ economy within ecological limits. This confronting logic has proven easy enough for the rich nations to ignore, but it is impossible to escape. Not only must the growth paradigm inevitably collide with biophysical reality, it is in fact in the process of doing so (Meadows et al, 2004).

Needless to say, however, there are no signs that the richest nations are prepared to give up the pursuit of growth, certainly not for reasons of global equity or ecological conservation. The great obstacle that lies in the way of a macroeconomics ‘beyond growth’ is the dominant ideology of growth economics that quite explicitly treats growth in GDP as the best measure of national progress and politico-economic competency (Purdey, 2010). In fact, the growth paradigm is so deeply entrenched in mainstream political discourse in the developed nations (and increasingly elsewhere) that it is hard to imagine any of the major political parties, whether on the Left or the Right, daring to pursue or even seriously contemplate a post-growth alternative. This arguably gives rise to an acute and disturbing contradiction: We must give up the pursuit of growth, but cannot.

Empire thus marches on.

2.5. Expensive Oil and other Energy Issues

Even if the world never chooses to question the growth paradigm – which seems the most likely scenario – the peaking of crude oil suggests that the era of global growth is coming to an end nevertheless (Heinberg, 2011; Rubin, 2012). While there is still debate about the exact timing of peak oil, it is now widely accepted that crude oil production, if it has not already peaked, will peak sometime in the foreseeable future, and then, after a corrugated plateau, enter terminal decline. Since oil demand is expected to keep on rising, however, the reduction of oil supply will inevitably lead to sharply increasing oil prices (Hirsch et al, 2010). This dynamic is already well underway, with the price of oil multiplying several times during the last decade or so. There are of course vast reserves of non-conventional oil still available in the tar sands of Canada and Venezuela, and in the shale oil deposits in the United States and elsewhere, but these non-conventional reserves have a far lower energy return on investment (Murphy and Hall, 2011), making them much more expensive and slower to produce. Accordingly, the issue is not that human beings will ever run out of oil; the issue is that we have already run out of cheap oil.

This is hugely significant because oil is not just another commodity – it is the lifeblood of industrial civilisation. This is evidenced by the fact that the world currently consumes around 90 million barrels every day (IEA, 2010a). When the costs of oil increase significantly, this adds extra costs to transport, mechanised labour, plastics, and industrial food production, among many other things, and this pricing dynamic sucks discretionary expenditure and investment away from the rest of the economy, causing debt defaults, economic stagnation, recessions, or even longer-term depressions. That seems to be what we are seeing around the world today, with the risk of worse things to come (Tverberg, 2012a).

Moreover, as Ted Trainer (2012b) and others have argued, renewable energy, even if it were embraced whole-heartedly and on a global scale, would never be able to sustain the expansion of complex, energy-intensive consumer societies, especially with the global population growing. If this diagnosis is basically correct, it provides further grounds for thinking that the growth paradigm has no future. I hasten to add that this is not an argument against renewable energy. The climate science is very clear that we must abandon fossil fuels as far as possible and as soon as possible (e.g. Hansen et al, 2008). But the limitations of renewable energy do suggest that we cannot respond to climate change by embracing renewables and have a growth-based economy.

Furthermore, nuclear energy’s potential to provide the energy required to maintain growth economies is fiercely debated. What is beyond debate, however, is that nuclear energy also has a long list of limitations, time lags, dangers, and huge financial costs, and ever since Fukushima the prospects of a nuclear renaissance have looked very slim indeed. At best nuclear energy would only assist in decarbonising the economy to some extent, but it would not solve the myriad other ecological and social problems inherent to the growth paradigm, and could well exacerbate some of them. Accordingly, nuclear provides no escape from the limits to growth. What is needed is a transition to renewable energy systems, but this implies a civilisation with much lower social complexity, and with very different structures and non-affluent lifestyles. We cannot run an industrial civilisation on renewables, and an industrial civilisation powered by nuclear (if that is even feasible) remains unsustainable due its underlying growth imperative.

Whether the transition beyond growth occurs voluntarily or is imposed by force of biophysical limits remains to be seen. It scarcely needs remarking that a planned, voluntary transition would be the desired path (see Alexander, 2012b).

2.6. Economic Instability

Closely linked to the rising price of oil, but with some independent issues too, is the economic instability that has been plaguing the world economy in recent years. In the prosperous decades after World War II, developed nations especially became accustomed to consistently high levels of economic growth, and this gave them and their governments and inhabitants a false confidence that they could borrow vast amounts of money and rely on future growth to pay those debts back. In other words, the enormous national and private debts that have been taken on in recent decades were based on the assumption that future growth would be similar to growth in recent decades. But because there is such a close relationship between energy and economic growth, expensive oil is suffocating the debt-ridden global economy, just as it is trying to recover. Without systemic change or some debt ‘jubilee,’ the trillions of dollars of outstanding debt essentially ‘locks’ the world into continued growth. But as Michael Hudson (2012) states, ‘debts that can’t be repaid, won’t be,’ and the consequences of widespread debt defaults will not be good news.

Unfortunately, mainstream economists, including those in government, seem oblivious to the close relationship between energy, debt, and economy, and this means they are unable to see that expensive oil is one of the primary underlying causes of today’s economic instability. Consequently, they craft their intended solutions (e.g. stimulus packages, quantitative easing, low interest rates to encourage borrowing, etc) based on flawed, growth-based thinking, not recognising that the new economics of energy (Alexander, 2012c) means that the growth model, which assumes cheap energy inputs, is now dangerously out-dated. When growth-based economies do not grow, household, firms, and nations struggle to repay their debts, and quickly things begin to unravel in undesirable ways.

2.7 Consumer Malaise

Finally, what makes the problems outlined above all the more troubling is the fact that high consumption lifestyles, so often held up as the peak of human development, are in many cases engendering an unexpected discontent or malaise among those who live them (Lane, 2000; Pickett and Wilkinson, 2010). There is in fact a mounting body of sociological and psychological evidence (Kasser, 2002; Alexander, 2012d) indicating that lives orientated around achieving high levels of consumption often result in such things as time poverty, stress, physical and mental illness, wasteful status competition, loss of community, disconnection from nature, unhappiness, and even a sense of meaninglessness or alienation in life – to say nothing of the ecological impacts associated with consumer lifestyles.

This evidence, however, troubling though it is, arguably provides something of a silver lining to the admittedly grim situation outlined above (Jackson, 2005; Brown and Kasser, 2005). If high consumption lifestyles are not even a trustworthy path to personal well being, this raises the tantalising possibility that members of the global consumer class could live more fulfilling and meaningful lives by reducing their consumption, perhaps in exchange for more time, while at the same time reducing their ecological footprint, reducing their dependence on oil, and leaving more resources for those in greater need. Indeed, when considering the problems outlined above – especially when considering them together and their interrelatedness – it would seem that any effective response to our global predicament depends to a large extent on those overconsuming moving to far more materially ‘simple’ ways of life, with far lower energy requirements. This implies not merely huge lifestyle changes, but fundamental systemic change. Understandably, perhaps, this is not a message many people seem to want to hear, but I contend that the strength of the line of reasoning makes embracing some form of ‘sufficiency economy’ the most coherent response to the global predicament.

(The full set of references will be included in the concluding Part Five to be published on Friday.)

Part Three – Embracing Life After Growth (Before it Embraces Us) will be published on Learning from Dogs tomorrow.

Where less is so much more.

The Sufficiency Economy – Envisioning a Prosperous Way Down

For some time now I have been subscribing to the news feed from The Permaculture Research Institute of Australia.  It originally caught my eye because Jean and I want to adopt some of the techniques of permaculture here in Oregon.  However, the ‘news’ from the PRI ranges across such a broad range of topics that rarely is their regular email not worthy of detailed reading.

No less so than on the 24th, just a couple of days ago, when I saw the essay by Dr. Samuel Alexander of the Simplicity Institute under the heading of The Sufficiency Economy – Envisioning a Prosperous Way Down.  I started to read the essay and very quickly realised that I was reading something of profound importance, not just to me and Jeannie, but to millions of other people right across the planet.  I sent an email to both Dr. Alexander of the Simplicity Institute and Craig Mackintosh, Editor of the Permaculture News asking if I might have permission to republish.  Dr. Alexander quickly replied in the affirmative and also approved my suggestion of breaking the essay down into separate chapters.

So, in a radical departure from my normal pattern of different topics each day, this week is going to be devoted entirely to Dr. Alexander’s essay. Tomorrow, I will include information on the Simplicity Institute, an organisation that I hadn’t heard of before, but one that deserves the broadest promotion.

Please, please, dear reader, stay with the topic all week if you possibly can.  I guarantee that it will change your outlook and offer real hope that mankind can turn away from the suicidal path we presently seem to be on.  Indeed, I can do no better that introduce Part One using the opening words written in Permaculture News by Craig Mackintosh.

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I would exhort readers to ignore the potentially off-putting length of this piece, to instead step into, and allow yourself to be absorbed by, this important and worthy attempt at future-visualising. Readers who have been following my own work over the last several years will recognise and appreciate the themes covered. From my own perspective, what follows is a highly pragmatic view on the potential near-future of civilisation, and I truly feel that the speed and shape of progression (i.e. objectively and cooperatively planned and peacefully implemented), or, regression (i.e. unplanned, reactive, desperate, monopolistic and individualistic), and ultimate form of that future will largely depend on how many people are objectively considering these themes and adjusting their lives, and their influence, accordingly.

THE SUFFICIENCY ECONOMY
ENVISIONING A PROSPEROUS WAY DOWN
Samuel Alexander
Simplicity Institute Report 12s, 2012

Dr Samuel Alexander is co-director of the Simplicity Institute and a lecturer with the Office for Environmental Programs, University of Melbourne.

When [we have] obtained those things necessary to life, there is another alternative than to obtain superfluities; and that is, to adventure on life now, [our] vacation from humbler toil having commenced. – Henry David Thoreau

1. Introduction

If a society does not have some vision of where it wants to be or what it wants to become, it cannot know whether it is heading in the right direction – it cannot even know whether it is lost. This is the confused position of consumer capitalism today, which has a fetish for economic growth but no answer to the question of what that growth is supposed to be for. It is simply assumed that growth is good for its own sake, but of course economic activity is merely a means, not an end. It can only ever be justified by some goal beyond itself, but that is precisely what consumer capitalism lacks – a purpose, a reason for existence. It is a means without an end, like a tool without a task. What makes this state of affairs all the more challenging is that the era of growth economics appears to be coming to a close, due to various financial, ecological, and energy constraints, and this is leaving growth-based economies without the very capacity for growth which defined them historically. Before long this will render consumer capitalism an obsolete system with neither a means nor an end, a situation that is in fact materialising before our very eyes. It seems that today we are living in the twilight of growth globally, which implies that the dawn of a new age is almost upon us – is perhaps already upon us. But as we turn this momentous page in history we find that humanity is without a narrative in which to lay down new roots. We are the generation in between stories, desperately clinging to yesterday’s story but uncertain of tomorrow’s. Then again, perhaps the new words we need are already with us; perhaps we just need to live them into existence.

It is not the purpose of this essay to offer another critique of growth economics, the details of which have been laid down comprehensively many times before (Schumacher, 1973; Meadows et al, 2004; Jackson, 2009; Latouche, 2009). Instead, after briefly summarising the critique, this essay will attempt to describe in some detail an alternative economic system, which I will call ‘the sufficiency economy.’ This term is typically applied to so-called ‘developing economies,’ which either have not yet industrialised or are still in the early phases of industrialisation (see e.g. Suwankitti and Pongquan, 2011). These economies are sometimes called sufficiency economies because they do not or cannot produce material abundance, or do not seek material abundance. Instead, sufficiency economies are focused on meeting mostly local needs with mostly local resources, without the society being relentlessly driven to expand by the growth-focused ethics of profit-maximisation. My point of differentiation in this essay will be to consider the notion of a sufficiency economy within the context of the most highly developed regions of the world – where an economics of sufficiency is most desperately needed – and to explore what such an economy would look like, how it might function, and how the transition to such an economy might transpire. I address this subject having been convinced that the growth paradigm has no future and that some alternative vision is therefore needed as humanity begins its inevitable transition to a world beyond growth. I put forward the sufficiency economy as the most promising alternative model, although it is one that I believe may ultimately be imposed upon us whether we want it or not, for reasons that will be explained. We can go the easier way or the harder way, so to speak, depending on our attitudes and actions.

Defined and defended in more detail below, a sufficiency economy can be understood in direct contrast to the dominant macro-economic paradigm based on limitless growth. Whereas existing economies in our increasingly globalised world are predicated on the assumption that ‘more production and consumption is always better,’ the sufficiency economy described below is shaped by an acceptance that ‘just enough is plenty.’ As will be seen, the implications of this alternative economic perspective are nothing short of revolutionary. Rather than progress being seen as a movement toward ever-increasing material affluence, the sufficiency economy aims for a world in which everyone’s basic needs are modestly but sufficiently met, in an ecologically sustainable, highly localised, and socially equitable manner. When material sufficiency is achieved in these ways, further growth would not continue to be a priority. Instead, human beings would realise that they were free from the demands of continuous economic activity and could therefore dedicate more of their energies to non-materialistic pursuits, such as enjoying social relationships, connecting with nature, exploring the mysteries of the universe, or engaging in peaceful, creative activity of various sorts. How to spend this ‘freedom from want’ is the exhilarating and perhaps terrifying question all human beings would face in a well-established sufficiency economy, so defined.

Such an economy recognises that there are fundamental limits to growth (Meadows et al, 2004), and in this it obviously shares some conceptual ground with the notion of a steady-state economy developed by ecological economists in recent decades (e.g. Daly, 1996). But to date the steady-state economy has remained largely at the level of theoretical abstraction, and this has made it difficult to envision the alternative society it vaguely implies. Unfortunately, this has hurt the movement for change, because if people cannot picture the alternative society, it is very difficult to desire it; and if we do not desire it, no social or political movement will arise to bring it into existence. Many have been persuaded, as I have been, by the insight that economies are a subset of the natural environment, not the other way round, as neoclassical economists assume. Very little attention, however, has been given to describing in detail what economic life would be like if an ecologically sustainable economy actually emerged. How would we feed ourselves? What clothes would we wear? What forms of transport and technology would we use? How much and what types of energy would we require? And what material standard of living would we have if we were to successfully decarbonise the economy? Most importantly, perhaps, what would the quality of daily life be like? These are some of the concrete questions to which this essay will offer some tentative answers, acknowledging all the while that the nature of the sufficiency economy described, like any economy, must ultimately be shaped and understood in context-specific ways. (1)

The analysis begins in the next section by briefly outlining the multi-faceted problems the world finds itself facing, not for the purpose of providing a thorough review of the global situation but simply to contextualise the discussion that follows. Unless one understands the magnitude of the overlapping problems we face, the relevance, importance, or even the necessity of the sufficiency economy may not be immediately apparent. Once the global predicament is outlined, the analysis proceeds to define in more detail the principles that underpin the sufficiency economy, although again this will be more a matter of exposition than comprehensive defence. The main part of the analysis then explores in some detail what economic life might be like if developed nations gave up the pursuit of growth and transitioned to some form of highly localised ‘sufficiency economy’ based on far lower resource and energy consumption. It is hoped that this analysis might provide some guidance on what it will actually take to transition to a just and sustainable society, as well as provide some deeper insight into what life might be like if we were ever to succeed.

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Notes:

  1. In forming the following views I have been influenced and inspired by many people, the most significant of whom I would like to acknowledge. With respect to material simplicity and ‘the good life,’ Henry Thoreau (1982) has by far been the greatest influence on my world view, followed by William Morris (2004) and the Greek and Roman Stoics (e.g. Seneca, 2004). I am also greatly indebted to my colleagues and fellow authors at the Simplicity Institute – Ted Trainer, Mark Burch, David Holmgren, and Simon Ussher – all of whom, in their own way, have deeply influenced the following discussion (see Simplicity Institute, 2012). The work of Ernst Schumacher (1973) and the Club of Rome (Meadows et al, 2004) first introduced me to the ‘limits to growth’ analysis, and Serge Latouche (2003; 2009) introduced me to the insight that degrowth, not merely zero-growth, is what is needed to achieve sustainability in overdeveloped nations. With respect to energy, Howard and Elisabeth Odum (2001) and Joseph Tainter (1988) have been my biggest influences, showing me how central energy is to the world we live in. I must also mention and thank Rob Hopkins (2008) and the Transition Movement, for providing what I consider to be the most promising framework for bringing about a just and sustainable, post-carbon world.

(The full set of references will be included in the concluding Part Five to be published on Friday.)

Part Two – The Global Predicament will be published on Learning from Dogs tomorrow.

A Presidential speech.

A President with more speech writers than one could imagine.

Got a vested interest or a strong view?  Then draft a speech for the President of the United States of America.  Many do.  Some are clearly very tongue-in-cheek, some are pertinent.  The following from CASSE fits into the latter category. Enjoy.

President Obama’s (Hoped for) “Amaze Speech”

Speechwriter: Brian Czech

President Obama’s hoped-for speech first appeared in the Daly News on August 7. We reprint it this week in anticipation of the President’s September 8th speech.

Pres. Obama

Fellow Americans, this evening I have a special message for you. It’s an unprecedented and surprising message, but ultimately it will resonate with your common sense, good will, and patriotic spirit. It turns out that the recessionary cloud we’re under does have an extremely valuable silver lining. I know; it sounds like something only a politician would say, but wait. I think you’ll be surprised to hear my explanation.

Now before I elaborate on the silver lining, I want to make it clear that the cloud has some rain, too. As a nation, we are struggling with debt, credit ratings, and worst of all, the painful experience of unemployment. The last thing I want is to mislead you into thinking these are problems I take lightly, or problems that will be automatically solved by the markets or policy makers. These problems were many years in the making — decades in fact — and it’s going to take years of diligence and readjustment to solve them.

Yet none of these problems can deny us the silver lining, which is this: the economic turmoil we experience today will change the course of history in such a way as to secure the future for American posterity, starting with our children and grandchildren. Let me reiterate, our own kids and grandkids — the most precious American treasure — will have a secure future as a result of the problems we face today. Here’s why…

Far from the trading floors of Wall Street and the policy meetings of the Federal Reserve, crucial discoveries have been made by scientists, economists, anthropologists, historians, and others collaborating under a broad umbrella called “sustainability science.” No, they haven’t discovered an unlimited energy source, a pollution-free car, or a method to stabilize our climate at optimum conditions. They’ve discovered something far more important and exciting: the key to permanent economic security.

For the past few years, as time has allowed, I and my economic advisors, with the assistance of numerous scholars, have studied this key to economic security. The theory and evidence for it is absolutely irrefutable. The only reason this key to security hasn’t broken into public dialog is because it serves no short-term vested interests; no wealthy corporations, think tanks, or political parties that would stand to profit before the next shareholders meeting or election cycle. But that’s also the beauty of it: the key to security is a non-partisan, scientifically sound approach to the long-run interests of all, especially our kids and grandkids. Fortunately for us, it’s surprisingly simple as well.

What is this key to a secure future? We could coin a new phrase to get credit for the idea or to improve its political flavor, but I believe the clearest term is what the scientists already call it: the “steady state economy.” Political advisors think it’s a bit on the dry side, but after what we’ve been through – stock market crashes, insurance crises, banker bailouts, panic over the debt ceiling, having our credit downgraded — doesn’t a “steady state economy” sound like just what the doctor ordered?

In the coming weeks and months, I and my Cabinet will be helping to introduce fellow Americans to the basics of steady state economics, especially what it means for producers, consumers, and public policy. We’ll do this through a series of public announcements, publications, and townhall meetings. Meanwhile, this evening, I’ll provide a brief summary, first by noting what a steady state economy is not.

A steady state economy is not communism, Marxism, or anything at odds with the Constitution of the United States. A steady state economy is not a stagnant, flat-lined economy but is rather continuously dynamic and creative. A steady state economy is not established overnight with draconian policies; instead it evolves as a matter of consumer preference and prudent policy. Most importantly, a steady state economy is in no way opposed to jobs and full employment. To the contrary, a steady state economy is the only economy that can ensure full employment, for your kids and theirs.

The most fundamental feature of the steady state economy is stability. The idea is to stabilize good conditions; stable agriculture, stable manufacturing, stable services, stable production and consumption, stable currency, stable markets, stable international trade, stable impact on the environment, stable air and water, stable climate… You get the picture, and remember, all this stability is at a good level — a level that ensures life, liberty and happiness for us and future generations. At this point in history, the steady state economy is the right goal, and the first step in getting there is recognizing it.

Perhaps you find this amazing. I think you should be amazed. After all, I haven’t said a word about economic growth; in fact I’ve called growth into question. The closest thing to this in presidential history is when President Carter encouraged Americans to consume a little less after the OPEC oil embargo. But President Carter was before his time, and his speech was maligned as the “malaise speech.”

Well, at this point in history, we can no longer afford — literally or figuratively — to pull out all the stops for economic growth. Therefore, tonight you’re hearing the “amaze speech,” the speech that introduces our nation to steady state economics, the alternative to growth.

I understand the adjustment in thinking that this will entail. I’ve gone through it myself. With the exception of President Carter in 1979, my predecessors for over 50 years have prioritized economic growth in their speeches, campaigns, and policies. None even mentioned steady state economics in a speech. Yet with every new president, the pursuit of economic growth has become less realistic, less sustainable, and even less desirable.

Earlier I mentioned the profound developments in sustainability science. Among the sustainability scholars are behavioral scientists and psychologists who have found compelling evidence that economic growth stopped contributing to a happier United States somewhere from the 1950′s to the 1970′s. After that, our gross domestic product continued to rise, but our happiness did not. If you’re like me — meaning old enough to remember — this probably resonates with you. Somewhere along the line the brighter lights, bigger houses and fancier cars stopped making us better off. In fact, all the new “stuff” started working against us. Now we struggle to find enough oil, water, “green space,” solitude, free time, and the peace of mind that comes with a stable climate. It’s all the sign of an economy grown too big.

They say the definition of insanity is doing the same thing over and over again and expecting a different result. I think we’ve all done some crazy things in life, but I don’t want to go down in history as the insane president who kept trying every trick in the book to “stimulate the economy,” when stimulating the economy was neither bound to work nor even desirable by that point in history. I don’t want to oversee more banker bailouts, more stimulus spending, more loosening of environmental protections in a vain attempt to increase GDP growth. That would be insane. Instead, I’m going to tell it like it is: the pursuit of economic growth has become a dangerous obsession that we must overcome. I say this with the backing of sound science, the lessons I’ve learned, and the concern I have for the future of America.

I’m going to test your common sense now. Do you think there is a limit to economic growth? Remember, economic growth is increasing production and consumption of goods and services. It means more and more people, more and more stuff. It takes more energy, water, space to operate in, and places to put out the trash.

Now as a politician, I can assure you that, in the coming days, well-paid pundits will conjure up magical concepts of perpetual growth based on “dematerializing” the economy. Well when they’re ready to dematerialize it, maybe they can beam us up. Meanwhile, the rest of us in the real economy know what perpetual GDP growth would take: evermore people, evermore stuff. And we know we’re running out of evermore room, resources, and patience for unreal notions of evermore growth.

I know that for some, and perhaps for many, this is hard to swallow. For decades we Americans have been encouraged to believe in the notion of continual economic growth. But look at it this way: to think there is no limit to economic growth on Earth is like thinking we could fit a stabilized economy into a perpetually shrinking area. For example, with computers, robots, nanotechnology and the like, we could squish the $70 trillion global economy into North America, then the United States, then Iowa, then into the foyer of the Des Moines Chamber of Commerce, leaving the rest of the world as a designated wilderness area! It’s a ludicrous notion, and it’s precisely as ludicrous as thinking there’s no limit to economic growth in Des Moines, the United States, or Earth.

Now, let’s consider some of the problems we will face if we continue pulling out all the stops for economic growth. The first is inflation. Typically we use monetary policy — such as increasing the money supply — to stimulate growth. But when the real economy isn’t meant to grow as easily as increasing the money supply, the result is inflation. Nothing could be more harmful to our economy at this point than inflation, which is like a devastating tax on the nation.

Another problem is debt. As you know, my Administration injected a major fiscal stimulus into the economy. It helped somewhat and spun off some jobs, but it did not produce the wave of jobs we’d get in an economy with plenty of room to grow. Meanwhile, it added to our deficit and ultimately our debt. Now our credit is coming into question, as with so many nations in a global economy bumping up against the limits to growth.

Of course, there is no shortage of special interests to pounce on the news of faltering fiscal policy. The answer, they say, is to turn over as much as possible to Wall Street. “Take care of national security,” they say, “and let the markets take care of the economy.” The problem with that approach is that national security is about more than having the biggest military. National security starts with a sustainable economy, which requires a stable environment to support the agricultural, fishing, logging, mining, and ranching activities that have always been and always will be the foundation of the American and global economy. Our manufacturing and service sectors — the best in the world — are the best because we have the biggest and best agricultural and extractive sectors. And we have those because we have protected the environment from overuse, pollution, and displacement.

Consider what will happen if we take an unbalanced approach and prioritize economic growth even more over environmental protection. Does anyone really question whether we will have more environmental problems, including devastating problems? More oil spills in the Gulf of Mexico and Gulf of Alaska, more mountaintop mining in the Appalachians, more scraping for shale oil in the Rockies, more nuclear waste, more endangered species, more greenhouse gas emissions, and all the while less water, less fish and wildlife, less wilderness, less nature, less beauty. Does anyone question whether such trends diminish the quality of life for future generations? No, the problems caused by economic growth are unquestionable. It’s just that, for much of American history, the benefits of increasing GDP outweighed the costs. That’s no longer the case, and I’m confident that most of us can sense it.

In fact, the more I thought about this speech, the more amazed I became. Why did it take us so long, in America, to have an open discussion of limits to growth and alternatives to growth? The principles are irrefutable. Neither growth nor recession is sustainable in the long run; a steady state economy is the obvious policy for long-run security. Yet based on the politics of the past 50 years, you’d think economic growth had supplanted apple pie as the companion to motherhood.

Well, now we’re entering a new era of dealing squarely with sustainability. It turns out that economic growth was not a good companion to motherhood, not in the long run. We want apple pie back. We want loving homes for our children, quality time with family and friends, the occasional escape to the great outdoors, and peace. That’s the American dream in a nutshell, and it’s too valuable to sacrifice for economic growth.

So let’s roll up our sleeves and wash our hands of the dirty business of growth at all costs. We know what the right goal is, and malaise won’t get us there. We have work to do to stabilize the economy for our children and grandchildren. Our decisions — what we eat, what we drive, what we build, and frankly how many kids we have — all these will determine the quality of life for the kids that we do have. Meanwhile, those of us privileged to hold public office are responsible for developing the policies to help you thrive in a steady state economy, and for avoiding the policies that force us onto an unsustainable pathway of evermore growth. You could say we are tasked now with “steady statesmanship.”

To conclude, my fellow Americans, do stay tuned. In the coming days and weeks we’ll be discussing the details of transitioning from growth to a steady state. We’ll be talking with you about employment, population growth, stock markets, the banking system, and more. Don’t fear any shocks to the system; you’ve seen most of the shocks already as the policies of economic growth have failed. One by one, we’re going to turn these “failures” into steady state successes.

Meanwhile, good night, and God bless America.

 

The fantasy of infinite growth

A fascinating and powerful message from CASSE.

(Apologies to all you readers – bit under the cosh at the moment in terms of free thinking time – so have lent on this timely update from CASSE for today.)

From CASSE, the Centre for the Advancement of the Steady State Economy

Why Do So Many People Believe in the Fantasy of Infinite Growth on a Finite Planet?

by Rob Dietz

How do you feel about the economy these days? How about the environment? Do you think we’re sitting in a better spot than we were ten, twenty, or thirty years ago? It’s hard to find folks who are satisfied with either economic or environmental conditions. In the first place, the way we run the economy is producing appalling results. We have a mix of financial fiascos, unacceptable unemployment, and a dismal disparity between the haves and the have-nots. And if you’re not soiling yourself (or at least somewhat concerned) about what’s happening on land, sea and air, then you’re not paying much attention to the omnipresent signs of environmental breakdown.

Each day it becomes more apparent that we are on a misguided mission. Pursuit of perpetual economic growth is not a winning proposition for a lasting prosperity. Building a bigger economy can make sense in some circumstances, but always aiming to build a bigger economy means taking an ever-bigger chunk out of the earth’s ecosystems and the life-support services they provide. Why, then, do so many people believe in the fantasy of infinite growth on a finite planet? Is it because we can’t come up with a better idea? Is it because the rich and powerful have trapped the rest of us in their web of conspiracy? Is it because people are hopelessly greedy and materialistic?

At various times and places we might answer these questions affirmatively, but we can more commonly answer, “No, no, and no.” Putting aside conspiracy theories for the moment, there are three honest (but bogus) reasons why we pursue economic growth past the point of effectiveness and reason.

Bogus Reason #1: We think we have to have economic growth to create jobs.

People, and especially politicians, want jobs. We’ve used the blunt tool of economic growth to create jobs for decades, but do we really need economic growth to have good jobs? It’s true that there are typically more job openings in a growing economy, but there are other, less costly ways to make sure jobs are available. Growth, however, gives corporate elites an easy out. They can point to economic growth as the job creator while doing what they want without considering the impacts of their decisions on jobs.

If jobs are really the priority, then we wouldn’t replace people with machinery. And we wouldn’t eliminate service jobs to shift more and more burden onto people to serve themselves. My friend Chris works as a gas station attendant and provides a valuable service pumping gas for customers. He wouldn’t have a job, however, if he lived elsewhere. He happens to live in Oregon where the law says that only professional attendants can pump gas. In most states, gas station attendants have been replaced by customer labor and credit card readers. This sort of substitution has become commonplace in the name of efficiency — policy makers find it easier (or at least they’ve found it easier in the past) to avoid considering jobs explicitly. Just grow the economy and let Chris find a job elsewhere — that’s just the way it goes if his job is eliminated and the customer is forced to pick up the slack.

The truth is that we can have good jobs without producing and consuming evermore stuff. For starters, we can institute policies to make job-sharing an attainable reality. Many people would gladly trade some salary for more time. We can also stop the process of eliminating jobs through outsourcing and machinery-for-people swaps. Of course stopping this process would require a change in corporate incentives…

Bogus Reason #2: Screwy corporate incentives require growth.

Shareholder corporations are severely flawed. In my household, let’s say my overriding goal is to maximize my earnings. What would I do? I would take the highest paying job I could get. I certainly wouldn’t be involved in public policy or a not-for-profit enterprise. I wouldn’t spend much time with my wife or daughter — that would be time away from my career, and it could eat into my earnings (cue the Cat’s in the Cradle). If the goal is so single-focused, the results aren’t surprising. Profit maximization, whether it occurs in my household or in a corporation, produces perverse outcomes.

We know this about shareholder corporations. We know there are better ways to set up productive enterprises that have more worthy goals, but we don’t make the change. The reason is that we are addicted to two things corporations do well. First, we’re addicted to consumer novelty. We’ve gotta have the latest and greatest. People chase after I-phones, I-pods, I-pads, and plenty of other I-wants. Second, we’re addicted to receiving unearned income from investments in stocks or mutual funds. People who can afford it are invested in corporations. Their personal wealth is tied to the ability of corporations to grow. We’ve become accustomed to the idea of passive investment — we put extra money into an account and do absolutely nothing but watch the size of the account get bigger. Are we really entitled to get something for nothing?

Bogus Reason #3: We refuse to pay attention to the downsides of economic growth.

Few people are studying ecology and understanding how economic growth is degrading environmental resources. In fact, a whopping 21% percent of college students are business majors. And as Dr. Seuss noted in his classic book, The Lorax, “Business is business, and business must grow!” While we continue to tempt fate by disrupting and dismantling natural systems that we only partially understand, our attention is locked on the results of reality TV shows, Tiger Woods’s sex life, Jennifer Anniston’s and Justin Bieber’s haircuts, fairytale weddings of figurehead monarchs, and other matters of critical importance.

While we’re failing to pay attention, those who benefit most from growth — the corporate elites — will keep on doing what they do, and they’ll keep on selling it to the rest of us. If we don’t start asking, “why?” real soon, our kids will one day be asking “How did we let this happen?”

The blame game

A retrospective muse about the present global challenges.

A few days back I posted an article by Tom Engelhardt called The Great American Carbon Bomb.  It attracted a number of comments including a couple from Learning from Dogs supporter, Patrice Ayme.  Here is one of those comments,

Dear Paul: There is a gentleman leading the Tour de France, right now. He was not given a chance, especially in the mountains. However, he has been going day by day, and has now worn the Yellow Jersey for more than a week, supported by his inferior, but dedicated team. His philosophy: humility, and do the job day by day, trying his best, although he strongly doubts that he is up to the task.

We, as humankind, or, rather, our hubristic leaders are doing the exact opposite. We are not doing our best, and it’s precisely because those leaders are not humble and not honest, and so very sure we are going to pull out OK, because that’s what we do best, and have always done, and thus will always do.

Verily all indicators are that of an unfolding catastrophe. All signals are loud and clear that way. So it’s really not the moment to say:”Oh, BTW, we are very resilient and totally great, so it’s just a matter of time before we put it all together OK. So now let’s all pull together, and it’s fine.”

In truth we are on the verge of an irreversible situation, as the CO2 poisoning will turn, within a decade or so, into a political, and then military issue.
PA

Patrice is an angry man (not a criticism by the way – so many of us are angry!) and anger is a great reason to find someone, something, anything, to blame!  I suspect, wearing my cloak of an amateur psychologist, that a core reason why we feel anger is that, so often, the causes of our anger are our own errors.  Anger at one’s self is much more difficult to deal with!

Anyway, back to the plot.

Like Patrice I also feel badly let down by our ‘leaders’.  Especially with regard to the nightmare of economic and ecological issues fast approaching.

Then I read this in Paul Gilding’s book, The Great Disruption, that has been featured on this Blog a couple of times.

Our addiction to growth is a complex phenomenon, one that can’t be blamed on a single economic model or philosophy.  It is not the fault of capitalism or Western democracy, and it is not a conspiracy of the global corporate sector or of the rich.  It is not a bad idea that emerged in economics, and it is not the result of free market fundamentalism that emerged in the 1980s with globalization.  While each of those factors is involved, it is too simple and convenient to blame any of them as the main driver.  Growth goes to the core of the society we have built because it is the result of who we are and what we have decided to value. [Chapter 5, Addicted to Growth, p66]

That last half of that last sentence – ‘it is the result of who we are and what we have decided to value.‘  That strikes me as the core truth.  It is the reason why Patrice, and me, and countless thousands of others across the globe, are so angry.  At heart we all know that the circumstances we find ourselves in are, in great part and before we ‘saw the light’, the result of earlier personal values which we now know were not compatible with a sustainable relationship with the planet we all live on.

It is very good news.  That anger is fuelling change.  As Malcolm Gladwell writes in his book The Tipping Point societies change when something of the order of 18% of individuals emotionally commit to change.

What is it you don’t understand?

Stating the obvious.

I am about a third into Paul Gilding’s book The Great Disruption.  It’s proving to be a very-thought provoking read that I will review in more detail over the coming weeks.

However, I just wanted to quote from the start of Chapter 5, Addicted to Growth,

Indeed, as argued by economist Kenneth Boulding: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”

Very little that can be argued about that statement.  It rather puts into context a couple of items read recently. Both from the blogsite New Economic Perspectives.  The first on June 10th by Stephanie Kelton,

Earlier this week, President Obama talked about the weakening state of the economy, telling us that he’s not worried about a double-dip recession and that the nation should “not panic.” It’s hard to imagine a more alarming assessment at this juncture.

The recovery is faltering. Our economy is growing at annual rate of just 1.8 percent. Manufacturing just grew at its slowest pace in 20 months. More than 44 million Americans – one in seven – rely on food stamps. Employers hired only 54,000 new workers in May, the lowest number in eight months. Jobless claims increased to 427,000 in the week ended June 4. The unemployment rate rose to 9.1 percent. Nearly half of all unemployed Americans have been without work for more than 6 months. About 25% of all teenagers who are looking for work are unemployed. Eight-and-a-half million Americans are underemployed – i.e. working part-time because their hours have been cut or because they can’t find full-time work. There are, on average, 4.6 unemployed people for every 1 job opening. And even if all the open positions were filled, there would still be 10.7 million people looking for work.

The second on July 8th by Marshall Auerback,

Today’s unemployment data suggests that we are experiencing something far worse than a mere “bump in the road”, as our President described it last month.  In fact, if last month was the time to panic, as Stephanie Kelton argued here, then today’s data should create real palpitations in the White House.  This isn’t just a “bump,” but a fully-fledged New York City style pot hole.

First the headline number everyone looks at: non-farm payrolls. Up 18,000 in June, the increase was 100,000 less than expectations.  In addition the prior two month payroll increases were revised down by -44,000 overall.  That’s weak – but not terrible.

Dig a bit deeper into the data and it looks absolutely awful:  The household measure of employment fell by -445,000.  Okay, it’s a noisy number. But, as Frank Veneroso has pointed out to me in an email correspondence, this measure of employment which is never revised now shows no employment growth over the last five months and very negative employment growth over the last three.

But it gets worse:  The work week was down one tenth.  Overtime was down one tenth.  The labor participation rate at 64.1% was the lowest since 1984.  The broad U6 unemployment rate rose from 15.8% to 16.2%.  In other words, as Frank suggested to me this morning, “many other employment indicators in this report confirm the deep disappointment in the payroll series and the much more negative message of the household series.”

Now here’s the latest item published by Paul Gilding in his Blog, The Cockatoo Chronicles. (I have republished it in full, hopefully without upsetting Mr. Gilding – couldn’t see advice on reproduction – but copyright remains, of course, fully with Paul Gilding.)

Like a Grenade in a Glasshouse

June 29, 2011

It’s going to hit hard and it’s going to hurt – made worse because most aren’t expecting it. They think the world is slowly returning to our modern “normal” – steadily increasing growth, with occasional annoying but manageable interruptions. After all, the global recession wasn’t so bad was it? Sure there was pain and things got shaky but Governments responded, bailed out companies, stimulated economies, got things back on track.  While it’s still a bit bumpy, Greek wobbles, US debt, extreme weather, high oil and food prices etc, it’ll work out. It always does….

If only it were so. In fact we are blindly walking towards the next in a series of inevitable system shaking and confidence sapping crises, deluded in the belief that the worst is behind us.

Each crisis will be a little worse than the last. Each one will shake our denial a little more. This is what happens when systems hit their limits. They don’t do so smoothly, but bump up against the wall, hitting hard, then bouncing off equally hard. It is the behaviour of a system trying to break through. But if the limits are solid, as is the case with our economic system hitting the limits of the planet – defined by unchangeable physical capacity and the laws of physics, chemistry and biology – then it can’t find its way through. So eventually, when the pain of hitting the wall gets too much, it stops.

Then it will hit. Like a grenade in a glasshouse, shattering denial and delusion and leaving it like a pile of broken glass on the floor of the old economic model. Then we’ll be ready for change.

I’ve been arguing the inevitability of this moment since 2005, mostly inside the business community. Before the 2008 financial crisis hit, the idea was almost universally rejected, with a belief in the indomitable power of globalised markets to overcome all challenges and keep growth on track. Most audiences believed that while markets always wobbled, they also always recovered. My suggestion, that this level of arrogance was the hallmark of empires before they fell, landed on deaf ears. They were the masters of the universe and markets and growth would always reign supreme.

Now the response is different. The financial crisis saw many break off from the pack and start to ask the difficult questions. I now find as I tour the world speaking about The Great Disruption to community gatherings, corporate executives and policy makers that minds are increasingly open. While not the dominant view, the previous confidence in the inevitably of growth has become shaky and the group asking the challenging questions is rapidly expanding.

As I argue in the book, the fundamental cause of what’s coming is resource constraint and environmental breakdown, which when combined with an overstretched financial system and high levels of debt puts unbearable tension into the global economy. While no one can know what event will pull the pin out of the grenade, the underlying pressures make that moment inevitable. Yes, the dominant commentary still blames each individual problem on unique circumstances, but the underlying systemic causes are clear for those who wish to look.

The continued level of denial still surprises me, especially given the pressures driving this are not esoteric and can be measured in clear economic indicators. A good example was recently published by one of the more interesting voices to join the growing chorus that we have a system-wide problem. The legendary contrarian and fund manager Jeremy Grantham is co-founder of the Boston based firm GMO, with over $100 billion of assets under management. So this guy is a solid capitalist and market advocate, pursuing wealth for the wealthy. But he sees the data and is raising the alarm, calling this moment “one of the giant inflection points in economic history” – referring to the end of a 100-year steady decline in commodity prices. His views were echoed by Stephen King, group chief economist at HSBC, who wrote in the FT: “After the biggest meltdown since the Great Depression, economic theory tells us that world commodity prices should not be this high. But they are and the West quickly needs to wake up to this new economic reality. Commodity prices are now permanently higher.”

Grantham provides the detail, pointing out that the 100 year trend of falling prices in the 33 most important commodities, except for oil, were wiped out with a price surge from 2002 to 2010 – a surge even greater than experienced in WW2. We have now reached what Grantham calls the Great Paradigm shift; not a price spike but a new reality. Within this new reality, Grantham says: “if we maintain our desperate focus on growth, we will run out of everything and crash.”

This is why hitting the wall is inevitable – because limits are not philosophies, they are limits. We can understand what to expect – and why the grenade will shatter the glasshouse of economic growth – by going back to how systems behave when they hit their limits. Our economic system first hit the wall in 2008 – that was when The Great Disruption began with food and oil prices hitting record highs and a credit crisis driven by reckless monetary policy pursuing growth at all costs. The resulting recession meant we backed away from those limits (bouncing off the wall), and then borrowed massive amounts of money from our children (think Greece) to try to get the economy moving again.

Now that the global economy is slowly entering a so-called “recovery”, the prices of commodities (representing our use of earth’s resources for food and materials) are on the way up, accelerated, in the case of food, by climate change. Of course if significant growth kicks in, the prices of oil, food and other commodities will surge, this timestarting from near record highs.  Then we will bounce back into recession and prices will back off again. Hit the wall, bounce off. Hit the wall, bounce off. Ouch.

By itself this would pose enough of a challenge to growth. But now we also have the debt we used to get the economy moving again. This debt can only be paid off with significant economic growth – but such significant growth is impossible as outlined above. So the debt itself becomes an enormous additional tension in the system, as argued by Richard Heinberg in his important forthcoming book The End of Growth. With the global economy and ecosystem now both burdened by unmanageable debt, effective global default is only a matter of time.

So we’re living in a glass house with the grenade sitting there for all to see. Who knows what will pull the pin. It could be Greece, a Chinese food crisis, peak oil or any number of other triggers. But it’s coming.

The question to ask yourself is simple. Are you ready?

Back to Kenneth Boulding: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”

Precisely!

Approaches to ‘growth’.

Some thought-provoking articles on the need, or otherwise, of continued growth.

Intellectually, most people, if they stopped and thought about it, would not challenge the absurdity of the notion that a finite rock in space, Planet Earth, can handle an infinite increase in the demands and resources of that finite planetary body, our home in space!

Yet the reality is very different.  For many complex reasons, way beyond the competencies of this writer to fully explain, we, as in the peoples of Planet Earth, continue to behave as though there are no limits to the resources of this beautiful planet that is home for all of us.

Here are some extracts from some recent items that have passed across my ‘in-box’.

A piece from the CASSE website:

What If We Stopped Fighting for Preservation and Fought Economic Growth Instead?

by Tim Murray

Seriously.

Each time environmentalists rally to defend an endangered habitat, and finally win the battle to designate it as a park “forever,” as Nature Conservancy puts it, the economic growth machine turns to surrounding lands and exploits them ever more intensively, causing more species loss than ever before, putting even more lands under threat. For each acre of land that comes under protection, two acres are developed, and 40% of all species lie outside of parks. Nature Conservancy Canada may indeed have “saved” – at least for now – two million acres, but many more millions have been ruined. And the ruin continues, until, once more, on a dozen other fronts, development comes knocking at the door of a forest, or a marsh or a valley that many hold sacred. Once again, environmentalists, fresh from an earlier conflict, drop everything to rally its defense, and once again, if they are lucky, yet another section of land is declared off-limits to logging, mining and exploration. They are like a fire brigade that never rests, running about, exhausted, trying to extinguish one brush fire after another, year after year, decade after decade, winning battles but losing the war.

Just read again the sentence, “For each acre of land that comes under protection, two acres are developed, and 40% of all species lie outside of parks.” Powerful ideas.

Anyway, do read the article in full and see if it changes your attitude.  Here’s how it ends.

Sir Peter Scott once commented that the World Wildlife Fund would have saved more wildlife it they had dispensed free condoms rather invested in nature reserves. Biodiversity is primarily threatened by human expansion, which may be defined as the potent combination of a growing human population and its growing appetite for resources. Economic growth is the root cause of environmental degradation, and fighting its symptoms is the Labor of Sisyphus.

The next article is from The Christian Science Monitor writing about how scientists are getting a new idea about the rate of loss of polar ice.

The seasonal cooling effect of light-reflecting snow and ice in the Northern Hemisphere may be weakening at twice the rate predicted by climate models, a new study shows, accelerating the impact of global warming.

By Pete Spotts, Staff writer / January 18, 2011

A long-term retreat in snow and ice cover in the Northern Hemisphere is weakening the ability of these seasonal cloaks of white to reflect sunlight back into space and cool global climate, according to a study published this week.

Indeed, over the past 30 years, the cooling effect from this so-called cryosphere – essentially areas covered by snow and ice at least part of the year – appears to have weakened at more than twice the pace projected by global climate models, the research team conducting the work estimates.

This is a well-constructed article, easy to read with obvious conclusions.  Towards the end, the author writes:

Snow appears to have its maximum cooling effect – reflecting the most sunlight back into space – in late spring, as the light strengthens but snow cover is still near its maximum extent for the year. Sea ice in the Arctic Ocean has its biggest effect in June, before its annual summer melt-back accelerates, explains Don Perovich, a researcher at the US Army Corps of Engineers Cold Regions Research and Engineering Laboratory in Hanover, N.H., and a member of the team reporting the results.

The final article that I want to include is one from the website Foreign Policy. I’m going to take the liberty of reproducing it in full because it strikes me as an extremely intelligent commentary on where mankind is in terms of our attitudes to growth.

Thomas Homer-Dixon
ECONOMIES CAN’T JUST KEEP ON GROWING

Humanity has made great strides over the past 2,000 years, and we often assume that our path, notwithstanding a few bumps along the way, goes ever upward. But we are wrong: Within this century, environmental and resource constraints will likely bring global economic growth to a halt.

Limits on available resources already restrict economic activity in many sectors, though their impact usually goes unacknowledged. Take rare-earth elements — minerals and oxides essential to the manufacture of many technologies. When China recently stopped exporting them, sudden shortages threatened to crimp a wide range of industries. Most commentators believed that the supply crunch would ease once new (or mothballed) rare-earth mines are opened. But such optimism overlooks a fundamental physical reality. As the best bodies of ore are exhausted, miners move on to less concentrated deposits in more difficult natural circumstances. These mines cause more pollution and require more energy. In other words, opening new rare-earth mines outside China will result in staggering environmental impact.

Or consider petroleum, which provides about 40 percent of the world’s commercial energy and more than 95 percent of its transportation energy. Oil companies generally have to work harder to get each new barrel of oil. The amount of energy they receive for each unit of energy they invest in drilling has dropped from 100 to 1 in Texas in the 1930s to about 15 to 1 in the continental United States today. The oil sands in Alberta, Canada, yield a return of only 4 to 1.

Coal and natural gas still have high energy yields. So, as oil becomes harder to get in coming decades, these energy sources will become increasingly vital to the global economy. But they’re fossil fuels, and burning them generates climate-changing carbon dioxide. If the World Bank’s projected rates for global economic growth hold steady, global output will have risen almost tenfold by 2100, to more than $600 trillion in today’s dollars. So even if countries make dramatic reductions in carbon emissions per dollar of GDP, global carbon dioxide emissions will triple from today’s level to more than 90 billion metric tons a year. Scientists tell us that tripling carbon emissions would cause such extreme heat waves, droughts, and storms that farmers would likely find they couldn’t produce the food needed for the world’s projected population of 9 billion people. Indeed, the economic damage caused by such climate change would probably, by itself, halt growth.

Humankind is in a box. For the 2.7 billion people now living on less than $2 a day, economic growth is essential to satisfying the most basic requirements of human dignity. And in much wealthier societies, people need growth to pay off their debts, support liberty, and maintain civil peace. To produce and sustain this growth, they must expend vast amounts of energy. Yet our best energy source — fossil fuel — is the main thing contributing to climate change, and climate change, if unchecked, will halt growth.

We can’t live with growth, and we can’t live without it. This contradiction is humankind’s biggest challenge this century, but as long as conventional wisdom holds that growth can continue forever, it’s a challenge we can’t possibly address.

Thomas Homer-Dixon is the CIGI chair of global systems at the Balsillie School of International Affairs in Waterloo, Canada.

As Rob Dietz of CASSE wrote in a recent email to me, “I’m a big Thomas Homer-Dixon fan.  His book, The Upside of Down, is outstanding.”

“Economic growth may one day turn out to be a curse rather than a good, and under no conditions can it either lead into freedom or constitute a proof for its existence” Hannah Arendt (1906-1975).

 

Well said, Hannah!