Growth+dependent+economics


 * back to** Inconvenient truths

Economic principles

Our economy follows the paradigm of infinite growth.This has been fueled largely by coal and oil. Will our innovation and increasing knowledge compensate for the loss of cheap energy? We will eventually reach a limit where we get diminishing returns from our efforts and the growth dependent economy will collapse.

The root of the problem in economics is that humanity’s relationship to nature has been misconstrued. Mainstream economists view the economy as the whole and the environment as a part of the whole. This view is inside out. The industrial agriculture model exhibits the same inside-out flaw. People who run factory farms and concentrated animal feeding operations tend not to notice that they are embedded in a local ecology. The same goes for healthcare. A common viewpoint is that people are at the mercy of their genetics and hordes of external germs on the attack. A more enlightened view recognizes that our genetic makeup and microbes both respond in remarkable ways to the ecological systems in which they’re enclosed. It seems, then, that the root of our problems across a wide range of human endeavor is a distorted view of our place in the natural world. Thus a prerequisite to achieving a sustainable healthcare scheme, agricultural system, or economy is a widespread philosophical change of heart. We must view ourselves and our societies as strands in nature’s web rather than dominators of that web.

Economist Richard Douthwaite describes the `Features of a sustainable territory' as follows; “It provides the basic necessities of life for its population from renewable resources under its control and expects to be able to do so without over-using or degrading those resources for at least the next thousand years. [...] It has no debts to lenders outside and there are no net flows of capital across its borders, thus allowing its interest rate to fall close to zero as it moves to maturity. It does not depend on continual economic growth to stave off collapse." Richard Douthwaite - The Growth Illusion p.335

//Deep Economy: The Wealth of Communities and the Durable Future// by Bill McKibben For Bill McKibben, however, the farmer’s market is more than just a pleasant, ethical convenience, and more than just an alternative to the Kroger’s and Wal-Marts of America. It is, instead, the only sustainable model for a twenty-first century economy; a model for the local production and distribution of everything -- food, energy, communication, democracy -- that people need to survive. McKibben’s praise for farmer’s markets starts as a sustained critique of the current economy and its monomaniacal emphasis on “growth.” That growth economy, McKibben argues, is unequal, unsustainable, and, perhaps most surprisingly, depressing. It is unequal because, as he puts it, “Though our economy has been growing, most of us have relatively little to show for it. The median wage in the United States is the same as it was thirty years ago. The real income of the bottom 90 percent of American taxpayers has declined steadily: they earned $27,600 in real dollars in 1979, $25,600 in 2005.” If the wealth created in the last thirty years has not gone to the bottom 90 percent of American taxpayers, where has it gone? The math is fairly obvious: like the latest round of tax cuts, it has gone to the richest 10 percent of Americans. But inequality is not the fundamental problem of our economy. We could, assuming the political will existed, spread that growth more evenly through a variety of wage and redistribution policies. But that would not solve the problem of sustainability. Simply put, we are in danger of (1) using up all of the fossil fuels -- especially oil -- that power our current growth economy and/or (2) imperiling our lives on this planet through the build up of carbon in the atmosphere, which is produced, of course, by burning all those fossil fuels in the first place. In short, even if we liked the economy we have now, we have little chance of keeping it. Perhaps most devastating, though, and controversial, will be McKibben’s take on the economics of depression. Just as we could do a better job of redistributing the fruits of economic growth, it is conceivable, although unlikely, that we could invent our way out of the problems of peak oil and global warming. In other words, that somehow or other we could continue to fuel not just the living standards of the Western Europe and the United States -- Americans currently use about 24 barrels of oil per person per year -- but the booming economies of China and India. But why would we want to, McKibben asks, when the growth economy -- and its avalanche of stuff -- has not made us any happier? Indeed, when it has made us decidedly unhappier? Drawing on research in the field of cognitive psychology and behavioral economics, McKibben argues that “more” does not always -- and hasn’t lately -- equaled “better” or “happier.” Despite a tripling in gross domestic product per capita since 1950, despite driving more cars, despite living in bigger houses, and despite, when not working, being constantly and instantly entertained, Americans are not considerably happier -- and in many cases much unhappier -- than either their forebears or people living in other developed countries. Every year since World War II, the National Opinion Research Council has asked a sample of Americans whether they were “very happy, pretty happy, or not too happy.” To judge by the responses, the U.S. was at its very happiest in the 1950s and has grown steadily gloomier since. The number of the not too happy has increased as well. As McKibben reports, “people born in advanced countries after 1955 are three times as likely as their grandparents to have a serious bout of depression” -- and this increase does not owe just to better diagnosis or more awareness of the disease. The same pattern holds for other developed countries as well. Up to a certain point -- for those living in poverty, for example -- “more” increases aggregate and individual levels of happiness; after that point, though, happiness becomes subject to the laws of diminishing returns, until the returns become losses and “more” actually correlates with unhappiness. One cause for this unhappiness may be work: in order for the economy to continue to grow, Americans must work as much or even more than they have in the past -- and much more than workers in comparably industrialized countries. For example, on average Americans work 199 more hours per year today than they did in 1973. And while Americans make 29 percent more money than European workers, they also work about 338 more hours per year than a German worker. That schedule leaves, McKibben theorizes, much less time for what does make us happy: spending time with our families and in our communities. To put it bluntly, we work longer hours to buy more things to make ourselves more miserable. The solution to all these economic ills -- inequality, sustainability, and happiness -- lies, McKibben argues, in revitalizing local economies and local communities. The remainder of his book documents various efforts -- most of them drawn from his home state of Vermont -- to do just that. McKibben visits local farms (including urban ones), local radio stations, local wind farms, and local town hall meetings. He is careful not to wax sentimental about such efforts, but equally careful in trying to show that not only are such efforts possible but in many cases thriving. Moreover, that they are a welcome and perhaps even an unavoidable alternative to our current unsustainable, immiserating economy. He does a tolerable job, too, of responding to those who argue that abandoning economic growth means abandoning the half of the world currently living in poverty to their poverty. One, he argues, does not necessarily follow from the other. []

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