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Lessons from a Conference: Reaching the Tipping Point on Steady State Economics

I’d like to share some valuable lessons about the politics of economic growth that I learned at the National Council for Science and the Environment conference this week in Washington, DC. First, the relationship between economic growth and biodiversity conservation (and environmental protection in general) is looking like the “next big issue,” as some folks called it. There is a good chance it will be a featured topic at the next NCSE conference, and certainly many sub-events within the conference will be conducive to addressing the topic.

A few years ago, you couldn’t touch it with a 10-foot pole in such a venue, not without getting beat up, but at the NCSE conference it seemed to be everywhere this year. That includes the major political panel discussion, where each of the three congressmen (Moran, Holt, Inslee) and to a lesser extent the one senator (Whitehouse) either explicitly or clearly implicitly discussed the topic. All except one seemed to recognize the trade-off between economic growth and biodiversity conservation.

The one exception called the relationship a “symbiotic” one. I spoke with him afterward and it was clear he had conflated economic growth with economic continuance (such as a steady state economy). That was one problem with his analysis, plus he was thinking of a microeconomic sector, namely the auto industry (an odd choice, come to think of it), rather than the macro-economy. So I gave him a paper on the topic and he insisted he would read it because he wants to understand the topic more thoroughly. We’ll see if that makes a difference.

I also learned a tougher lesson. I consciously attempted to optimize my own input to the conference on the subject, neither inputting too much nor too little. I chose two primary venues: a plenary panel on the first day and Tom Friedman’s keynote lecture on the second.

After the plenary panel, I took a calculated risk by asking one of the panelists a brief question. The panelist was a social entrepreneur, in the stated business of helping clients bring about “positive social and environmental change.” I’ve learned you can get yourself into the conference doghouse by providing too much context in a Q/A session; i.e., you have to get straight to the question. So I eschewed the context in this case and simply asked, “Given the fundamental conflict between economic growth and biodiversity conservation, what advice can you give environmental scientists for educating the public and policy makers on this conflict and for moving the polity away from the unsustainable goal of growth and toward the goal of a steady state economy?”

I lost the gamble, and I won’t be eschewing the context any time soon! Her response was (and all these “quotes” are by memory), “I disagree with the assumption that there is such a conflict… etc. etc. etc.” Part of her response was that we could reinvent the phrase “economic growth” to mean something different than it does. That shows us how some folks can keep a straight face while propagating the old fallacy that “there is no conflict between economic growth and environmental protection.” They just reinvent the terms in their own minds - not much science there! Meanwhile, the public and policy makers go on recognizing economic growth for what it is: increasing production and consumption of goods and services (in the aggregate), as indicated by increasing GDP.

So after Friedman’s keynote, which he concluded by quoting a eulogy to Dana Meadows, I used some context: “Dana Meadows recognized limits to economic growth and the trade-off between economic growth and environmental protection. So I have a question about the ‘flow of electrons’ you mentioned as related to biodiversity conservation. [The “flow of electrons” was Friedman’s phrase for describing the cheap, clean energy he advises we seek). When we look at the causes of species endangerment in the United States, they read like a Who’s Who of the American economy, so all that additional energy in the service of economic growth would tend to eliminate more biodiversity. Yet corporations and Wall Street have been claiming for decades that ‘there is no conflict between growing the economy and conserving biodiversity.’ Now a number of professional natural resources societies have studied this issue intensively, including the ecological and economic theory, evidence, and models, and have concluded, not assumed, that there is conflict between economic growth and biodiversity conservation, and that this conflict is fundamental because it is based on laws of thermodynamics and principles of ecology, especially the principle of competitive exclusion. So, in addition to the market reforms you have recommended for ‘getting the prices right,’ don’t we also need to be thinking about macroeconomic policy reform, moving with fiscal, monetary, and trade policies away from the goal of growth and toward the goal of a steady state economy?”

Friedman’s answer was just what the doctor ordered. First, it was a long and thoughtful answer. He said at least three times (maybe 4-5) that this is a “very important issue” to think about and deal with, consistent with the “next big thing” theme. He noted that, when he thinks about the steady state economy, he thinks about the impoverished countries he has visited and recognizes - as do we all - that we can’t expect them to move toward a steady state any time soon. In fact, this is an underlying message of his book, Hot, Flat, and Crowded. And he does hold out some hope for increasing efficiencies, accompanied with new energy sources, to play out for some time. Yet, and this is the big one, he acknowledged that, ultimately, and perhaps very soon, we will have reached the end of that efficiency pathway (the macroeconomic manifestation of the second law of thermodynamics, as I described it in my paper on technological progress), and that we will have to think seriously about how to accomplish a steady state.

In my estimation, a few things can be learned from these exchanges. The “win-win” entrepreneurial panelist shot me right out of the political saddle. Nevertheless, I couldn’t help but thinking that many in the audience must have been wondering, “What’s she talking about?” After all, already by that point in the conference, several speakers had spoken about how increasing populations and “economic activity” (a much more policy-relevant phrase than the old “human activity,” thankfully) were dooming species into the Sixth Great Extinction. So even that exchange wasn’t a total loss. But the exchange with Friedman eclipsed by an order of magnitude any political loss from the first day.

So I think the lesson is that, when we broach this topic in public forums, we have to provide just enough context to ask the question in a way that it cannot be mis-portrayed as “assuming” that there is a conflict between economic growth and biodiversity conservation.

Finally, Friedman’s answer was a nice validation of ecological economics, because it blended the three themes of ecological economics: scale, distribution of wealth, and allocation of resources. Friedman acknowledged that all of these are significant issues that must be handled with public policies to halt the erosion of biodiversity.

Advice to Obama

It’s unfortunate that the Center for the Advancement of the Steady State Economy (CASSE) got involved so late in the process. That’s what happens when there is one organization in the United States focused on advancing the steady state economy. We’re spread pretty thin!

We would advise President-Elect Obama to become the first president to tell it like it is about the relationship between economic growth and environmental protection. Taking office in the midst of climate change, Peak Oil, and financial meltdown, he can easily override the decades of that destructive rhetoric, “There is no conflict between growing the economy and protecting the environment!” He can resonate with the public’s dormant common sense that, in fact, there happens to be a fundamental conflict between economic growth and: 1) environmental protection, 2) economic sustainability, 3) national security, and, 4) international stability.

Furthermore, he needn’t feel out on a limb to do so. He can note, for example, the 2,000 signatures of the CASSE position on economic growth and the 50+ organizations that have endorsed the position:

http://www.steadystate.org/CASSEPositionOnEG.html

As for public policy, there is a long list of fiscal, monetary, and trade policies, currently set intentionally to stimulate economic growth, that can readily be reformed. There are new policies, too, conducive to a steady state economy. But let’s not put the cart before the horse. Obama’s first step should be to clarify the truth about economic growth. We are confident the public and policy makers can take it from there, and we will be there to help with the necessary policy formulations.

By brianczech | November 22, 2008 – 7:55 pm| Policies and Politics, Steady State Economy and Ecological Economics | Tagged Obama, steady state economy | Comments (0)

Mutual Fund Removes Growth from Portfolio

A global mutual fund management firm, Portfolio 21, has taken a courageous and visionary stance. The company has backed the idea of a non-growing economy by endorsing the position on economic growth championed by the Center for the Advancement of the Steady State Economy (CASSE). Although leading sustainability scholars have acknowledged that the economy can’t grow forever, it is a breakthrough for a successful investment firm to reach that conclusion.

The financial meltdown and its effects on the stock markets have government and business leaders scrambling to reassemble the growth machine. It’s business as usual for most leaders and organizations, as they seek to externalize or blatantly ignore the costs of growth. Portfolio 21 approaches investment from a different perspective. The company realizes that environmental devastation, climate change, and loss of nonrenewable resources are not mere externalities of an otherwise harmless economy. Portfolio 21 invests in businesses that are leading the charge to sustainability. Such businesses won’t grow forever, but they will replace competitors that aren’t able to function within the context of a steady state economy.

A steady state economy does not close the door on investments. It does, however, direct investments toward activities, institutions, and infrastructure that promote development over growth. The steady state economy is designed for improving long-term wellbeing. It is about getting better rather than getting bigger, a distinction that is well understood by Portfolio 21 and its customers.

By RobDietz | November 17, 2008 – 12:29 pm| Business, Investment, Policies and Politics, Steady State Economy and Ecological Economics, sustainability | Tagged economic growth, Investment, steady state economy, sustainability | Comments (1)

Debunking the Objections to a Steady State Economy

Economic growth is simply an increase in the consumption and production of goods and services, and thus, is an increase in the flow of natural resources through the economy and back to the environment as waste. It is driven by increasing population and increasing per capita consumption, and typically indicated by increasing gross domestic product (GDP). Theory and evidence suggest that continued growth is actually uneconomic or costly to society. If the growth paradigm is unsustainable and harmful to biodiversity, the environment, and future generations, why is society still pursuing it? First, economic growth has been a blessing for much of history, and it is difficult to change from something that worked in the past. Second, powerful interests from corporations to government agencies to universities have a stake in the growth economy and promote it doggedly. Third, the idea of more goods and services for everybody is a powerful political promise that allows governments and businesses to postpone work on just distribution of resources. Finally, and perhaps most importantly, society lacks knowledge of the alternative to economic growth.

The alternative to economic growth is the steady state economy. The idea of the steady state economy is not new. It has been considered since the days of classical economist John Stuart Mill in the 19th century, yet society is almost completely unaware of the concept. The steady state economy represents a positive alternative to unsustainable growth. It is an economy with relatively stable population and per capita consumption, and it is fully capable of meeting needs and providing a high standard of living for all citizens.

Conservation biologists have front row seats to the assault of economic growth on biodiversity. Habitat loss, extinctions, damage from invasive species, and loss of functioning freshwater systems are a few of the symptoms of economic growth as it pushes beyond ecological limits. But conservation biologists (not to mention other scientists, politicians, and the general public), sometimes raise common objections to the idea of curtailing economic growth and transitioning to a steady state economy. Here are some common objections:

Technology
Objection: “Humans are clever. Our technology will allow us to manage any problems with resource use, energy, and ecological health.”
Reality: Some economists think that, because a particular production process can become more efficient (more output per unit of natural capital), there is no limit to economic growth. These economists and “technological optimists” are disregarding the second law of thermodynamics, the entropy law, which tells us that we cannot achieve 100% efficiency in the economic production process. When the entropy law is applied across all economic sectors, or in other words when the limits to efficiency have been reached, the only remaining way to grow the economy is by using more natural capital (including energy).
Case Study: Besides the limits to efficiency, there is another issue with technology. Societies have wielded it in many ways, some useful for long-term sustainability, and some harmful. When gasoline prices rose in the 1970s, automobile companies developed new technology to increase the efficiency of engines. Marked improvements in vehicle mileage occurred with a resultant drop in pollution from transportation. When gas prices dropped in the 1980s and 1990s, fuel efficiency in the United States stagnated. The technological improvements were used to provide increased horsepower to smaller cars and sufficient horsepower to big cars, trucks, and SUVs. Technology that could have continued to improve the fuel efficiency of the U.S. auto fleet was used instead to power bigger and faster vehicles, resulting in a less sustainable transportation systems and more pollution (e.g., smog and greenhouse gases). In addition, technology has widely been used to increase the liquidation of natural capital. Readily recognizable examples include technologies for logging and fishing.

Substitution
Objection: “As we use up resources, we will find substitutes or alternatives.”
Reality: This argument is akin to the technology argument – it rests on the notion of humans using their cleverness to solve the problems of over-consumption of resources. Although people have demonstrated some successes in finding alternatives to meet needs when resources become scarce (e.g., fiber optic instead of copper wire or particle board instead of timber), some materials and services are not so readily substitutable. What are the substitutes for clean supplies of fresh water, pollination, intact species habitat, or climate stability? Several characteristics of resource scarcity events are negative for long-term sustainability. Oftentimes substitutes are simply extracted from other areas of the planet to avoid local scarcity (e.g., oil from the Mideast nations to feed U.S. demand). Scarcity and price increases often provide an increasing incentive to liquidate natural capital (e.g., oil corporation profits when demand outstrips supply) even as alternatives are being developed. Substitutes are often not developed or manufactured sustainably. For example, in the search for a substitute for fossil fuels, renewable energy from biomass is spurring transformation of tropical forests into palm oil or sugarcane fields.
Case Study: What resources will be used as substitutes for Haiti’s forests and the ecological services they once provided? Economic growth on Haiti generated widespread deforestation, first through sugarcane planting, then through timber sales, and finally through subsistence farming and provision of fuel wood. Already impoverished, with only 1.4% of their land in forest, the citizens of Haiti face ongoing soil erosion, serious floods, and loss of biodiversity.

Leave it to the Economists
Objection: “Let the economists decide what’s best for the economy. They’re the ones who spent all those years in universities learning about economics.”
Reality: Economists cannot work in isolation – the nature of their work is interdisciplinary, notwithstanding an unsuccessful attempt to remake economics into a pure science through mathematical expression. Economists have been prescribing policies using a theoretical construct that is largely devoid of physical and ecological realities. Without an understanding of the true value of ecological systems, a solid grounding in basic physical principles, and a rich understanding of human welfare and happiness, economists have made underlying assumptions that do not stand up to scrutiny. Examples of such assumptions include:
-infinite growth is possible on a finite planet;
-evermore consumption of goods and services (as well as ever expanding choices of goods and services) leads to individual and societal well being; and
-economic output is a function of only labor and capital (capital taken to mean factors of production built by humans, such as factories and computers), and natural capital (e.g., land and ecosystems) is ignored.
Case Study: The Post-Autistic Economics movement illustrates how narrowly focused economists have become. The movement critiques neoclassical economics (also called mainstream economics after sidelining other approaches) for suppressing competing and complementary theories. The movement began modestly in June of 2000, when students in Paris circulated a petition calling for the reform of their economics curriculum. The first part of the petition was titled “We wish to escape from imaginary worlds.” The students’ desire to connect their curriculum to complex economic realities struck a chord with the media and the public. Following the lead of the French students, 27 Ph. D. candidates at Cambridge University launched their own petition a year later, titled “Opening Up Economics”. That same year, students at an international conference wrote an open letter to all economics departments calling for a broader, more inclusive approach to economics education and research. Students at Harvard University soon followed suit, launching a petition in 2003 calling for a broader spectrum of views in the economic classroom. These student initiatives, coupled with the initiatives of numerous other economists committed to empiricism and reality-based models, spurred the development of the Post-Autistic Economics movement (journal Real World Economics – website www.paecon.net).

Information Economy
Objection: “As we transition to an information economy, we use fewer and fewer resources.”
Reality: The “economy of nature” operates in trophic levels, and so does the human economy. In nature, the producers are plants. Herbivores consume plants, and carnivores consume herbivores. Some species function as “service providers,” such as scavengers and decomposers. The human economy follows the same natural laws. The producers are the agricultural and extractive sectors, such as logging, mining, and fishing. As Adam Smith wrote in The Wealth of Nations, it is the agricultural surplus that allows for the division of labor, the origin of money, and economic growth. Analogous to herbivores, economies have sectors that consume the raw materials of the producers. These are manufacturers, and the higher level manufacturers are analogous to the carnivores. The economy also features service providers, such as chefs, janitors, bankers, and purveyors of information. The key point is that the economy tends to grow as an integrated whole. More manufacturing and more services requires more agricultural and extractive surplus. In other words, economic growth, requires the use of more natural capital and results in more pollution. In addition, a society can only afford to spend time and resources on information if its material needs are met first.
Case Study: Clearly the U.S. economy has transitioned from an industrial base to a service-provider base, but this transition has not resulted in a net decrease in a material and energy throughput. Why is this the case? First agricultural surplus, which is a baseline condition necessary for an information economy, is being achieved by increasing capital inputs (e.g., tractors, oil, and fertilizer). Fewer people and more machines (less labor, more capital) are able to produce our agricultural surplus. The agricultural sector has actually become more throughput-intensive. Second, the people who work in information sectors of the economy may not be using many material and energy resources in their productive capacity, but their consumptive capacity has not changed in the transition. Information employees spend their wages back into the economy to purchase material goods – the difference is that they are simply made in another economic sector or elsewhere in another economy.

By RobDietz | November 10, 2008 – 5:55 pm| Policies and Politics, Steady State Economy and Ecological Economics, ecology | Tagged conservation biology, ecological economics, economic growth, steady state economy, sustainability | Comments (2)

Obamanomics and Environmental Protection

Obamanomics and Environmental Protection It looks like Barack Obama has the knowledge to put an end to the erosion of common sense that plagued the landscape of our political economy – not to mention our landscape per se! - for the past couple of decades. The bipartisan rhetoric from the highest positions that “there is no conflict between growing the economy and protecting the environment” led citizens to believe it, corporations to hide behind it, and shenanigans all over academia and the civil service. Obama might be the one to tell it like it is, based upon the excerpt (pasted below) from the article “Obamanomics.” Of course, no presidential candidate can be a viable contender without putting forth a pro-growth agenda during the campaign. Obama did that and will attempt to follow through. The best we can realistically hope for is some explicit education, at least, on the trade-off between economic growth and environmental protection (etc.), even while the growth is being facilitated via macroeconomic policy. It is still going to take a ground-up movement, founded securely upon something like CASSE’s scientifically sound position statement, to empower politicians of any party to provide real leadership on this topic; i.e., leadership that will temper consumer behavior and reform macroeconomic policies. Excerpt from http://www.nytimes.com/2008/08/24/magazine/24Obamanomics-t.html?pagewanted=print: “Shortly after I boarded Obama’s campaign plane this month, one of his press aides warned me that the conversation might not last long. She explained that he was exhausted from two days of campaigning in Florida and might decide to nap as soon as he got on the plane. But a few minutes later he summoned me to the plane’s first-class section, evidently choosing an economics discussion over a DVD of “Mad Men,” which was sitting on his side table. His eyes were tired, and he looked a good deal older than he had only four years ago, on the night that he became famous at the 2004 Democratic convention. But we ended up talking for an hour. After I returned to my seat, the press aide walked back to tell me that Obama had more to say. “Two things,” he said, as we were standing outside the first-class bathroom. “One, just because I think it really captures where I was going with the whole issue of balancing market sensibilities with moral sentiment. One of my favorite quotes is — you know that famous Robert F. Kennedy quote about the measure of our G.D.P.?” I didn’t, I said. “Well, I’ll send it to you, because it’s one of the most beautiful of his speeches,” Obama said. In it, Kennedy argues that a country’s health can’t be measured simply by its economic output. That output, he said, “counts special locks for our doors and the jails for those who break them” but not “the health of our children, the quality of their education or the joy of their play.” The second point Obama wanted to make was about sustainability. The current concerns about the state of the planet, he said, required something of a paradigm shift for economics. If we don’t make serious changes soon, probably in the next 10 or 15 years, we may find that it’s too late. Both of these points, I realized later, were close cousins of two of the weaker arguments that liberals have made in recent decades. Liberals have at times dismissed the enormous benefits that come with prosperity. And for decades some liberals have been wrongly predicting that economic growth was sure to leave the world without enough food or enough oil or enough something. Obama acknowledged as much, saying that technology had thus far always overcome any concerns about sustainability and that Kennedy’s notion had to be tempered with an appreciation of prosperity. What’s new about the current moment, however, is that both of these arguments are actually starting to look relevant. Based on the collective wisdom of scientists, global warming really does seem to be different from any previous environmental crisis. For the first time on record, meanwhile, economic growth has not translated into better living standards for most Americans. These are two enormous challenges that are part of the legacy of the Reagan Age. They will be waiting for the next president, whether he is Obama or McCain, and they’ll probably be around for another couple of presidents too.”

By brianczech | November 10, 2008 – 5:44 pm| Environment, Steady State Economy and Ecological Economics | Tagged Barack Obama, Conservation, economic growth, economics, environmental protection, politics, steady state economy, sustainability | Comments (0)

The Conservation Band Aid

I am amazed at the dedication and efforts of wildlife refuge managers, and I think the majority of Americans agree with this sentiment. What is less impressive in my mind, though, is the productivity of our conservation lands and the lack of awareness about this topic.

I spent several years working in the National Wildlife Refuge System. The U.S. Fish and Wildlife Service manages National Wildlife Refuges to provide habitat for migratory birds, endangered species, fish, and other wildlife. To a casual observer, the job appears to be done. When you visit a National Wildlife Refuge, you tend to find a place teeming with wildlife. Take, for instance, Bosque del Apache National Wildlife Refuge in central New Mexico. In the right season, a day at Bosque del Apache provides face time with vast flocks of snow geese and sandhill cranes.

It’s a great experience for visitors, but in a way, they’re deceived. The land appears to be providing resources for these flocks of birds, but it’s only through careful management and dedication of the refuge staff that the land can provide enough resources. The natural functioning of the river system is long gone, taken by dams and diversions for irrigation. Floods, the major driver of the ecological systems that provide for the birds, no longer occur at the historical scale and frequency. Refuge managers, biologists, and staff work the land to provide enough resources. In some cases, they try to mimic conditions that would have historically occurred. For example, they use pumps and diversion channels to flood fields and create temporary wetlands. In other (perhaps less enlightened) cases, they grow crops to provide bird food. Without these interventions, the flocks would be much smaller, and might not even spend the winter at Bosque del Apache.

Refuge lands represent a band aid approach to conservation. Due to a lack of interconnected, highly functional conservation areas around the nation, we have chosen to apply band aids on the landscape (intensively managed refuges) to stem the loss of blood (habitat conversion, species extinctions, and declining ecosystem services). As any good doctor knows, prevention is much more effective than treatment of symptoms.

Conservation lands, by their very definition, mean that they are kept out of economic production. They are not to be cleared, mined, farmed, grazed, covered with suburban homes, or otherwise exploited for profit. America pioneered the idea of conservation lands back in the days of Teddy Roosevelt with the establishment of magical places like Yellowstone National Park and Pelican Island National Wildlife Refuge. The problem is that conservation lands have been unable to keep pace with economic growth. The endless pursuit of economic growth has left a poor network of conservation lands, one which focuses on rocky, icy, and arid places. These places contain beauty, habitats, and species worth protecting, but they are not representative of the habitats of the nation, and most of them require intensive management to be as productive as they were when ecosystem productivity was higher.

Given the current state of band-aid conservation, what can we do? The main step is to start the gradual process of transition from unsustainable growth to a steady state economy. The “redevelopment” of wilderness and interconnected conservation lands is a critical piece of this transition. We can put large chunks of land off limits to economic growth and focus national efforts on ecosystem health. People can be redirected from jobs that tend to harm ecosystems to ones that restore them. We can have a naturally functioning set of ecosystems that will continue to provide services and wonder for generations to come.

By RobDietz | February 22, 2008 – 11:09 am| Environment, Steady State Economy and Ecological Economics, ecology | Tagged Conservation, Refuges, steady state economy, sustainability, Wildlife | Comments (0)

Relocalization — the Cohousing Experience

Relocalization is a key way to move an economy toward sustainability. According to the Relocalization Network, relocalization is a strategy to build societies based on the local production of food, energy and goods, and the local development of currency, governance and culture. The main goals of relocalization are to increase community energy security, to strengthen local economies, and to improve environmental conditions and social equity.

In essence, relocalization means going about social and economic life at a human or community scale. Rather than purchasing and eating food which has been grown on distant farms, cooked in centralized factories, and shipped thousands of miles, relocalization calls for eating fresh foods from local farms sold in a community market. One way to jumpstart relocalization is to develop housing structures that foster community.

Cohousing is one such structure. Cohousing is a kind of intentional neighborhood, one in which the residents live in private homes, but manage the neighborhood and common amenities together. Although I am not a cohousing expert, I am certainly informed. I live with my family in a cohousing neighborhood. We own a modest sized townhouse, one of 34 residences in the neighborhood. The units are arrayed along a walking path where community members often see one another. We share some meals. We share work projects. We share tools. More tellingly, we share good times and values, and have a rich community structure that fosters support and connectivity. Cohousing amounts to a modern take on village life. There’s quite a bit more privacy (e.g., private home ownership and private employment) than what existed in villages of old, but many of the collective amenities are maintained.

On first blush, living in a tight-knit community (which includes resolving conflicts, making decisions, and managing shared resources) wouldn’t seem to have much to do with building a sustainable economy, but it sets the stage for relocalization. A citizenry that thinks and lives at the community scale is the main ingredient necessary to cook up a more local economy. Certainly other ingredients like local currency and energy systems would be helpful, but there is little chance of building the necessary local systems if people are not engaged at the local level.

I will add future posts on cohousing as I gain more experience. Additional information on cohousing is available at www.cohousing.org.

By RobDietz | February 5, 2008 – 12:08 pm| Energy and Throughput, Environment, Steady State Economy and Ecological Economics, ecology, sustainability | Tagged Cohousing, Relocalization, sustainability | Comments (5)

Economic Hardships or Economic Opportunities?

One of the questions I ponder when thinking about a steady state economy revolves around the idea of economic recession. In the past, recessions and depressions (prolonged recessions) have meant hard times for a lot of folks. When statisticians measure the size of an economy over time, they can see one of three possibilities: (1) growth, (2) contraction, or (3) stability. Typical neoclassical economists have long keyed on the first possibility. Their main goal along with governments and corporations has been a perpetually growing economy, which avoids the hard times associated with recessions. This idea has historically held merit – growth was beneficial up to a certain point. To put it technically, that point is where the marginal benefits of the growth equal the marginal costs. The trouble is that the costs of growth are now higher than the benefits for the U.S. and the globe, and continued growth is likely to cause even tougher times in the long run than those experienced in a recession.

To achieve an economy with a sustainable scale – one that does not exceed the Earth’s carrying capacity and one that does not use up the resources of future generations, society needs to change the goal from growth to an economy of relatively stable size. Establishing a steady state economy will require an end to the growth mindset. Given the current state of ecological overshoot (as documented by the Global Footprint Network), it will even require a fair amount of contraction before settling on an optimal scale.

So what are we to do? If we continue growing the economy, we face serious and potentially extreme consequences. If we stop growing or even contract the economy, we face the hardships experienced in previous recessions. But are such hardships inescapable? I recently spoke to a friend who worked at Hewlett-Packard (HP) for a period of many years. Over that period, the company experienced phenomenal growth and employed an increasingly large staff. At one point, however, revenues and profits took a nosedive, and HP couldn’t afford to pay everyone. The standard operating procedure for businesses in this situation is to lay off employees. HP’s innovative solution was to cut every employee’s work time to 30 hours per week, with a corresponding across-the-board pay cut. HP thought that three quarters time and three quarters pay was a more efficient and equitable solution than firing a quarter of the staff.

There were likely workers who had difficulties dealing with the pay cut, but my friend’s experience was that most people (him included) were glad to have the extra time to pursue interests outside of work. He noted something else rather astounding – even with the decreased hours, he didn’t see a drop in productivity. Pretty soon HP’s profits rebounded, and the company reinstated the 40-hour work week at former salary levels. My friend reluctantly went back to the “normal” work schedule. What if, instead, employees worked less, spent less money, and spent more time on family, friends, and hobbies?

Herman Daly often points out that economic development is different from economic growth. Economic development is qualitative and can be increased if the economy enables people to lead more enriched lives. Society can find creative ways to aim for such development and avoid the tough times associated with the end of uneconomic growth.

By RobDietz | January 23, 2008 – 10:59 pm| Policies and Politics, Steady State Economy and Ecological Economics | Tagged economic development, economic growth, economics, innovative solutions, recession, steady state economy, sustainability | Comments (0)

ECON 101 Disconnect

I studied economics as an undergraduate. I even followed the “honors” curriculum and wrote a thesis. I have to admit that I was mainly interested in environmental science (my other major), and majored in economics to be more employable upon graduation. Nonetheless, I got a solid schooling in the prevailing theories of economics from a highly regarded department at a highly regarded university.

At the time I was taking all those courses, from Econ 101 to advanced econometrics, I felt like something was out of place. I liked the analytical methods used. Economists are adept at drawing simple line graphs to represent complex ideas and analyze various behaviors exhibited by individuals and societies. I also liked the clean logic of some of the underlying principles, like the law of diminishing returns. But there was something about my economics training that left me with a sense of uncertainty.

While I was in school, I was never able to put my finger on the source of that uncertainty. Like many students, I felt like the field of economics was overly concerned with mathematics and statistics. It seemed like a fruitless attempt to demonstrate scientific rigor where it wasn’t warranted. But that wasn’t enough to explain my disenchantment with my studies. It was only years later, when I read Ecological Economics by Herman Daly and Joshua Farley that I figured it out.

The most basic difference between today’s standard university economics (neoclassical economics) and ecological economics is the world view. The neoclassical economists believe that the ecosystems of the planet are a subsystem of the economy – the economy is the containing whole. Ecological economists believe the opposite. Namely, the economy is a subsystem of the Earth’s ecosystems – the Earth is the containing whole. I don’t recall any explicit utterance of the neoclassical world view in my studies, but the assumptions used by my professors, text books, and readings align with that world view. This was the source of my discontent.

I believe that the economy is something we have built on our finite planet. The logic seems pretty straightforward to me. The ideas about economic growth and efficiency that derive from this starting point are quite different from those pushed in economics lecture halls today. If I were a student of economics today, I would be sure to ask my professor about this underlying world view. What is the system and what is the subsystem? What is the logic behind the neoclassical view? It’s time for the models in economics to bear a resemblance to the reality they purport to describe.

By RobDietz | January 15, 2008 – 10:11 am| Policies and Politics, Steady State Economy and Ecological Economics | Tagged ecological economics, economics, neoclassical economics | Comments (6)

Be a Citizen. Don’t Be a Consumer.

In the movie “Say Anything” (apologies to those who haven’t seen this film, one of the funniest from the lost decade of the 1980s), there is a telling exchange between Lloyd Dobler and his closest friends, D.C. and Corey. Lloyd is talking to his friends about trying to win back his former girlfriend and how he’s called her for the last time. It goes like this:

D.C.: Lloyd, why do you have to be like this?
Lloyd: ‘Cause I’m a guy. I have pride.
Corey: You’re not a guy.
Lloyd: I am.
Corey: No. The world is full of guys. Be a man. Don’t be a guy.

I feel like a similar dialog applies to the population of the United States at this point in history. If Corey were offering advice to us, she might say, “No. The world is full of consumers. Be a citizen. Don’t be a consumer.”

Somewhere along the line, what and how much we purchase became more important than how we behave in civic life. It can be attributed to any number of causes. For example, marketers have been working for years to make us equate our self identity with our purchases. They have effectively influenced us to believe that we are what we buy. We have come to accept that we are defined by our clothing, car, handbag, square footage, etc.

The very word itself, “consumer,” has a pejorative connotation. It is reminiscent of a bacterium that does nothing but eat away at its host. There’s a reason that tuberculosis used to be called consumption.

As our lives as consumers have ramped up, our lives as citizens have fallen away. Citizenship has devolved into consuming, paying taxes, obeying laws, and voting (at least occasionally). It’s time to throw off the label of “consumers” and get back to being a society of citizens.

Here are 5 positive ways to take Corey’s advice and be a citizen – spending time on any or all of them might also reduce the urge to consume. Also note that these are just ideas. They are not meant to be preachy and they certainly don’t apply to everyone.
1. Stay informed. It can be difficult with today’s media to stay informed about critical issues (and no, the quirks of Lindsay Lohan and Britney Spears don’t count), but what could be more important than a stable economy that functions within the limits given by the Earth? Sustainability in society requires knowledge of practices that are and are not sustainable.
2. Get involved in community life. Each of us has our own communities and our own possibilities for participating in them. As be build and maintain communities (whether they are neighborhoods, church groups, musical ensembles, volunteer organizations, book clubs, etc.), we tend to care about the quality and sustainability of those communities.
3. Take responsibility for your actions. It’s not hard to find any number of quotes about how responsibility needs to accompany freedom of choice. We can all find ways to lighten our ecological footprints and support sustainability in our communities.
4. Spend time on things that matter. It’s so easy to get caught up in the rat race, along with the material trappings that our wages can buy. Whether playing with family members, volunteering in your community, or simply taking a break, society and individuals alike will benefit from a slowdown.
5. Get involved in political discussions. These discussions can range from simple conversations with friends to negotiations with members of Congress. If we don’t talk about sensible economic policies, who will?

By RobDietz | January 4, 2008 – 10:56 pm| Environment, Policies and Politics, Steady State Economy and Ecological Economics | Tagged citizen, citizenship, consumer, consumption, sustainability | Comments (4)