Center for the Advancement of the Steady State Economy
Regular Contributors:  Herman Daly, Brian Czech, Brent Blackwelder, James Magnus-Johnston, and Eric Zencey. Guest authors by invitation.

More People, Less Unemployment?

by Max Kumerow

Bill Clinton took a welcome step toward reality. In his Democratic Convention speech, he pointed out that cutting taxes on rich people and fighting endless wars increased federal debt, and more of the same would make things even worse. Tax cuts and deregulation during the Bush administration failed to bring prosperity and helped cause the global financial collapse and widespread joblessness.

The Chicago School of economics has been preaching for decades, with lots of money from rich people adding to the volume of their message, that low taxes, small government, and deregulation are the road to nirvana. But the last time we had low taxes on the rich and little regulation was called the Great Depression. Clinton, at least, has come to understand that America made a mistake in believing the fairy tale that “government is the problem, so let’s cut rich people’s taxes.”

Clinton still remains bamboozled, however, by the neoclassical nonsense that sees economic growth as the solution to unemployment. On the Daily Show Clinton offered a demographic path to prosperity. He opined that because most of America’s competitors — Russia, Japan, China, and Europe — have low birth rates and aging populations, we will have a younger workforce with a lower old-age dependency ratio, so growth will solve our unemployment and debt problems.

But the notion that population growth cures unemployment is false, just like the idea that cutting taxes on the rich raises revenue and cuts the deficit. The immigration and higher birth rates that keep the population younger also guarantee a higher young-age dependency ratio and a growing population. In a world constrained by high commodity prices and other symptoms of reaching the limits to growth, a growing population leads to high unemployment, rising cost of living, and falling wages. If a young population leads to prosperity, why aren’t places like Nigeria, Rwanda, and Uganda thriving? Why has China gotten so much richer since starting its “one-child” policy?

The fertility rates in all the Asian tiger economies dropped below the replacement level during the decades when their economic output increased dramatically. Hong Kong and Singapore, places with no natural resources and aging populations, have a higher per capita income than the United States. Hong Kong’s 0.97 children per woman and Singapore’s 1.26 are two of the lowest fertility rates in the world.

Birth rates that low mean each generation inherits twice as much as the one before, and a future economy can have full employment with half as many jobs. Scarcer labor means higher wages. New technology and rising productivity can be used to raise incomes instead of what happens with a growing population (i.e., society treads water as the benefits of increasing productivity are canceled out by more people consuming more resources). Low fertility is the path to high incomes and abundance. High fertility is the path to poverty and scarcity.

America’s ongoing population growth has played a role in causing higher unemployment rates, more difficulty funding education, falling real wages for workers, and the incarceration of two and a half million people. You would think that in a country where oil production has fallen by 40% since 1972, a country responsible for so much of the global climate change problem, where forests have been burning, cities have been wrecked by hurricanes, and crops have been withered by drought, we would have learned that more growth is not the answer to unemployment and budget deficits.

Bill Clinton should read ecological economists like Herman Daly. He should pay attention to systems thinkers such as Donella Meadows and Bill McKibben, and consult Al Gore about our ethical responsibilities to future generations. Growth cannot be the solution to unemployment. If all countries decide to grow their populations and their economies, ice will melt, putting cities under sea level, oil will run out, food prices will rise, wages will fall, and human welfare will be reduced, not increased. We will be poorer and fewer people will be able to find jobs.

Common sense says that continuously increasing population makes it harder to keep everyone employed, not easier. The problem is not too few jobs; it’s too many people. There are already too many people consuming too much and diminishing the earth’s long-run carrying capacity.  Economic growth is running into the wall of limited resources on a finite planet. The trends created by economic growth and population growth include higher carbon emissions and climate change, loss of forests, depleted fisheries, soil erosion, species extinctions, toxic contamination, and the possible negative effects of technologies like fracking and genetically modified foods. The path the world is on — economic and population growth — is just as unsustainable as the subprime mortgage market and trillion-dollar federal deficits and will lead to collapse.

Long-run prosperity on a planet with limited land and water and air requires a transition to a steady state economy — a transition which in turn requires a transition to a smaller global population. The higher fertility rates, immigration, and economic growth that Clinton described as the path to prosperity turn out to be the path to collapse.

Do the arithmetic, starting with this year’s federal deficit, the short crop in the Corn Belt, the number of Americans in jail, and cuts to education budgets. Growth has not been the path to full employment or deficit reduction. If Romney was right about tax cuts, we wouldn’t have a federal debt crisis. If Clinton was right about population growth, we wouldn’t have unemployment. It’s time to try something beyond politics as usual.

Max Kummerow has a Ph.D. in urban and real-estate economics. This semester he is a visiting lecturer at Lincoln University in Canterbury, New Zealand.

Selecting “Surrogate Species” for Conservation: How About an 800-Pounder?

by Brian Czech

These days the American conservation community is abuzz with the “surrogate species” approach to conservation. That’s where certain species are selected to represent all the others. Older conservation biologists see it as another iteration of the “umbrella species” concept, where managing for a critter like the grizzly bear would automatically protect a long list of species, simply because the grizzly bear occupies a vast sweep of terrain and habitats.

The rationale for taking this approach is clear enough. State and federal wildlife conservation agencies are tasked with conserving thousands of species of concern, including threatened and endangered species, migratory birds, marine mammals, all sorts of fishes and other “aquatic resources,” and biodiversity in general. These species are under pressure from left and right, above and below. Mountaintop removal, shale oil excavation, fracking, helicopter logging, stern trawling, factory farming, manufacturing, road construction, dams, invasive species, air pollution, water pollution, BP oil spills, climate change, genetically modified crops… all greased by the information sectors. “It’s the economy, buddy.”

To protect the thousands of accosted species, one by one, entails dealing with threat after threat after threat, in place after place after place. For a while during the first decade of the 21st century, notions were entertained of doing precisely that! Theoretically we could have worked up some computerized flowchart of species’ population goals, converted all the goals into habitat objectives, melded them all together, and spit out maps identifying precisely which parcels on the landscape were necessary to conserve.

And then of course we would have had to actually go out on the land and protect those parcels. Details!

This whole pipe dream was impossibly complicated, and wouldn’t be possible in the best of fiscal environments. It’s not even close to feasible today as we encounter limits to growth and declining budgets. That’s why we’re back to the umbrella species approach, bottling old wine with a new label, “surrogate species.”

There is another, mostly unspoken rationale for the surrogate species approach. The alternative approach to simplifying conservation — the “coarse filter” approach of conserving various ecosystem types — doesn’t connect so well with publics and politicians. It’s a lot easier to generate political support for a real live critter with fur or feathers than for a “submontane broad-leaved drought-deciduous woodland” or a “succulent extremely xeromorphic evergreen shrubland,” examples of ecosystem types.

Yet either way amounts to basically the same thing. You identify some conservation target — critter or ecosystem — then go out and protect it from the onslaught. Sure, you might have a marginally easier time of it politically by saying you want to protect the bear, wolf, eagle, salmon, black duck, or even some cold-blooded fella such as a desert tortoise. But whether it’s a species or an ecosystem, you either have to stop the economic sectors in their tracks, or buy some land out ahead of the bulldozer and then hope to stop the sectors (and their pollutants) when they reach the gates. That turns out to be not so simple after all. You still have to deal with the mountaintop removal, shale oil excavation, fracking, helicopter logging, stern trawling, factory farming… you get the picture. It’s still the economy, buddy, and it’s getting more unwieldy every day.

It’s time for the conservation community to wake up and smell the notoriety it’s courting for fiddling while Rome burns. If there is a surrogate species in need of attention, it’s the 800-pound gorilla called the economy. It sits there in the corner, growing bigger and more menacing by the day, while conservationists either pretend it doesn’t exist, claim it can grow forever without impacting the environment, or say it’s too big to mess with. None of these three approaches is worth a taxpayer’s dime.

How can we keep ignoring the 800-pound gorilla of economic growth?

If we really want to conserve wildlife and protect the environment, we’d better do exactly the opposite of what we’ve done so far with regard to the 800-pound gorilla. We had better acknowledge the critter, explain to the public why it can’t be reconciled with biodiversity conservation, and not shrink at the thought of it. It is, after all, nothing more than increasing production and consumption of goods and services in the aggregate. It’s measured by the supremely secular GDP. It’s not God, Godzilla, or even (despite the metaphor) King Kong! There’s plenty of precedent in American history for questioning the merits of economic growth, with real effects on public opinion (the demand side of the economy). Real, bold conservationists such as Aldo Leopold and Rachel Carson played a part in this history, as did real politicians such as Robert F. Kennedy and Jimmy Carter.

Conservationists need to learn this history and add a new chapter. Somebody has to lead the way to a new paradigm, away from economic growth and toward the balance of nature. This leadership is just not going to come from Wall Street, the Federal Reserve, or the World Bank. Big-picture leadership is required from conservationists — especially conservation professionals who get paid the big bucks — for developing clear and nuanced public understanding of the trade-off between growing the gorilla and conserving the rest of our fish and wildlife heritage.

Everyone knows that conservation professionals don’t make economic policy. They’re better off not even talking economic policy. But neither did Rachel Carson regulate DDT. Her leadership came in the form of telling the inconvenient truth about organochlorines. The policy implications were obvious. Likewise, leadership to address the 800-pound gorilla starts with rigorous public education. With enough such leadership, citizens will temper consumption from the demand side and economic policy engineers won’t be pulling out all the stops from the supply side. Together — conservationists, citizens, policy makers — we can get that surrogate critter on a sustainable diet!

Population and a Dose of Common Sense

by Blake Alcott

It isn’t true that population size (relative to the size of the earth and its resources) is the “main cause” of unsustainable environmental impact, or the “main problem” when it comes to depletion, pollution, and other concerns over health and happiness for people today and in the future. It also isn’t true that “the real problem” is too much consumption per person by rich people. It is both. It is P x A in the formula:

Impact = f(Population, Affluence, Technology), or simply IPAT.

Many researchers have measured the relative contributions of population and affluence to various kinds of impact. However, since decreases in population can be offset by increases in affluence, and vice versa, changes in either factor do not necessarily lower impact.

Can we be complacent about population size? Can we count on declining birth rates to stabilize or even lower population, now over 7 billion and increasing by 80 million per year (the size of Ethiopia’s population)? We are also, after all, experiencing declining death rates, and rising life expectancy counterbalances declining fertility to some extent. The deeper question is whether a population of 7 billion — or 8 billion or even 11 billion (low and high projections) — exceeds the earth’s carrying capacity.

The number of people that can live on earth obviously depends on how much food we can produce now and over the long term. The evidence suggests that we cannot count on food production to keep pace with population growth:

  • Very little land remains to be converted into agricultural hectares;
  • Such land conversion incurs high costs;
  • Yields per hectare can rise significantly only in Africa and South America;
  • Soil degradation and groundwater depletion curtail production;
  • Petroleum scarcity will increasingly constrain food production because agriculture requires fuel for machinery, water-pumping, and transport as well as oil-derived fertilizers and plastics.

A population’s sustainability depends on its affluence. Therefore, before any society can compute its carrying capacity, it must first decide what material lifestyle it wants — how much it wants to consume. Does it want to eat meat (and not just grain), or use land for sports and entertainment (and not just agriculture), and does it want wilderness for other species? If so, its maximum population is proportionally lower. Once a society has politically decided its desired level of affluence, it can assess appropriate technologies for producing its goods and services most efficiently. Only then can a number be calculated for a desirable and sustainable population size.

Population and affluence are both components of overall environmental impact.  Credit: www.TheEnvironmentalBlog.org

Many countries, if they were to estimate these parameters, would conclude that they are overpopulated, especially if they remember that sustainable size takes into account the rights of future generations and the desirability (on either utilitarian or ethical grounds) of leaving room and resources for non-humans.

Once overpopulation has been recognized, the search for appropriate population policies begins. In the rich countries (the ecological footprint of a rich child, ceteris paribus, will be greater than that of one born in poverty) one could end subsidies for child-bearing, including tax breaks, salary bonuses, parental leave from work and even one-off payments for having a child. Any policy change must consider the rights of already-born children and the goal of gender equality. In poorer societies there is unmet demand for the means of preventing pregnancy. Birth control “technology,” if available to all who want it, would cut today’s 80 million excess of births over deaths by perhaps two-thirds.

Whether rich or poor, a country could also choose to adopt direct policies. Some possibilities, as promoted by many ecological economists, are:

  • Ending subsidies after a couple’s second child;
  • Offering payments for sterilization;
  • Imposing tax penalties for large families; and
  • Setting quotas for child-bearing.

These measures however raise the question of whether a society has the right to legislate how many children its members can have. On this issue, two questions are often confused: (1) the legitimacy of restrictions on individual procreative freedom itself, and (2) the legitimacy of the political process deciding them. If it is an inalienable right to have as many children as one wants, then quotas and other constraining policies would be out of bounds. Treating procreation in this way fits well with the laissez-faire, individualist philosophy of our time. The opposing view holds that reproductive freedom has limits, that at some population level, the interests of society are harmed, and restrictions that support the common good are acceptable and even desirable. Population size, moreover, is one of many issues affecting living beings without a vote, namely other animals and future humans. Concrete proposals have included the right to one child, with permits being transferable (for free or for a price) to someone else.

Such direct policies can be decided democratically or autocratically, and it is the latter that leads many to think immediately of “compulsion” or “coercion” when imagining them. However, every law, by definition, coerces us, so let us just agree to use a democratic process and reject the option of an authoritarian eco-regime. The question then becomes: is it legitimate for a majority — say, 51 or 60 or 66% of the voters — to restrict everybody’s procreative activity? A majority cannot, after all, legitimately legislate the incarceration or death of all red-heads.  But red-heads don’t pose the same problems that overpopulation does.

There is truth in the statement, attributed to David Attenborough, that one cannot conceive of an ecological problem that wouldn’t be easier to solve with fewer people. For example, in poorer countries, hunger and environmental degradation could immediately be mitigated if there were less demand for resources. The issue is to figure out first how many fewer people we’re aiming for, and second how to make a transition that is democratic, compassionate, and fair.

For more details on this topic, see the full paper, which raises more questions and offers many references for further reading.

Alcott, Blake, 2012, “Population matters in ecological economics,” Ecological Economics 80: 109-120. (accessible at www.blakealcott.org > Publications)

Three More Growth Fallacies

by Herman Daly

Herman DalyIn a previous essay I identified eight fallacies about growth. Well, at the risk of starting a growth industry, here are three more.

1. As natural resources become scarce we can substitute capital for resources and continue to grow. Growth economists assume a high degree of substitutability between factors of production. But if one considers a realistic analytic description of production, as given in Georgescu-Roegen’s fund-flow model, one sees that factors are of two qualitatively different kinds: (1) resource flows that are physically transformed into flows of product and waste and (2) capital and labor funds, the agents or instruments of transformation that are not themselves physically embodied in the product. There are varying degrees of substitution between different resource flows, and between the funds of labor and capital. But the basic relation between resource flow on the one hand, and a capital (or labor) fund on the other, is complementarity. You cannot bake a hundred-pound cake with only one pound of ingredients, no matter how many cooks and ovens you have. Efficient cause (capital) does not substitute for material cause (resources). Material cause and efficient cause are related as complements, and the one in short supply is limiting. Complementarity makes possible the existence of a limiting factor, which cannot exist under substitutability. In yesterday’s empty world the limiting factor was capital; in today’s full world remaining natural resources have become limiting.

This fundamental change in the pattern of scarcity has not been incorporated into the thinking of growth economists. Nor have they paid sufficient attention to the fact that capital is itself made from and maintained by natural resource flows. It is hard for a factor to substitute for that from which it is made! And consider yet another oversight. Substitution is reversible — if capital is a good substitute for resources, then resources are a good substitute for capital. But then why, historically, would we ever have accumulated capital in the first place if nature had already given us a good substitute? In sum, the claim that capital is a good substitute for natural resources is absurd.

In reply to these criticisms, growth economists point to modern agriculture, which they consider the prime example of substitution of capital for resources. But modern, mechanized agriculture has simply substituted one set of resource flows for another, and one set of funds for another. It has partially replaced soil, sunlight, rainfall, and manure, with other resources, namely fossil fuels, chemical fertilizers, pesticides, and water pumped from rivers and aquifers. The old resource flows (soil, sunlight, rain, manure) were to a significant degree replaced by new resource flows (fossil fuels, chemicals, irrigation water), not by capital! The old fund factors of labor, draft animals, and hand tools were replaced by new fund factors of tractors, harvesters, etc. In other words new fund factors substituted for old fund factors, and new resource flows substituted for old resource flows. Modern agriculture involves the substitution of capital for labor (both funds), and the substitution of nonrenewable resources for renewable resources (both flows). In energy terms it was largely the substitution of fossil fuels for solar energy, a move with short-term benefits and long-term costs. But there was no substitution of capital funds for resource flows. The case of mechanization of agriculture does not contradict the complementarity of fund and flow factors in production.

2. Space, the high frontier, frees us from the finitude of the earth, and opens unlimited resources for growth. In a secular age where many have lost faith in the spiritual dimension of existence, and where the concept of “man as creature” is eclipsed by that of “man as creator,” it is to be expected that science fiction might be called on to fill the dead void of space with a happy population of “survivors.” The spiritual insights of millennia are replaced by technocratic projections of the “Singularity” in which mankind attains the final goal of (random?) evolution and becomes a new and immortal species, thanks to the salvific power of exponential growth in information processing technology. Moore’s Law promises eternal silicon-based life for the new elect who can stay alive until the Singularity; oblivion for those who die too soon! And this comes from materialists who think that they have outgrown religion!

Space tourism: a silly reason to believe in infinite economic growth.

Of course many technical space accomplishments are real and impressive. But how do they free us from the finitude of the earth and open up unlimited resources for growth? Space accomplishments have been extremely expensive in terms of terrestrial resources, and have yielded few extra-terrestrial resources — useless moon rocks that some fledgling astronaut managed to steal from NASA in a bungled attempt to sell them for their collector’s value, plus some space tourism for a few billionaires to take orbital joyrides. On the positive side of the ledger we can list communications satellites, but they are oriented to earth, and while they can help us use earth’s resources more efficiently, they do not bring in new resources. And apparently some orbits are getting crowded with satellite carcasses.

Robotic space exploration is a lot cheaper than manned space missions, and may (or may not) yield knowledge worth the investment to a society that cannot afford basic necessities and elementary education for many. The opportunity cost of indulging the expensive curiosity of a few is to leave undeveloped the capacities of many. Were it not for the heavy military connection (muted in the official NASA propaganda) we would probably be spending much less on space. Cuts in NASA’s budget have led to the over-hyped reaction by the “space community” in proclaiming a pseudo-religious technical quest to discover “whether or not we are alone in the universe,” as opposed to how to zap other earthlings with laser beams from space. Another major goal is to find a planet suitable for colonization by earthlings. The latter is sometimes justified by the observation that since we are clearly destroying the earth we need a new home — to also destroy?

The numbers — astronomical distances and time scales — effectively rule out dreams of space colonization. But another consideration is equally daunting. If we are unable to control population and production growth on earth, which is our forgiving and natural home, out of which we were created and with which we have evolved and adapted, then what makes us think we can live as aliens within the much tighter and unforgiving discipline of a space colony on a dead rock in a cold vacuum? There we would encounter limits to growth raised to the hundredth power. Sorry for being such a “pessimist!”

3. Without economic growth all progress is at an end. On the contrary, without growth (now actually uneconomic growth if correctly measured), true progress finally will have a chance. As ecological economists have long argued, growth is quantitative physical increase in the matter-energy throughput, the metabolic maintenance flow of the economy beginning with depletion and ending with pollution. Development, in contrast, is qualitative improvement in the capacity of a given throughput to provide for the maintenance and enjoyment of life in community. The main ways to develop are through technical improvement in resource efficiency, and ethical improvement in our wants and priotities.

Development without growth beyond the earth’s carrying capacity is true progress. Growth means larger jaws and a bigger digestive tract for more rapidly converting more resources into more waste, in the service of unexamined and frequently destructive individual wants. Development means better digestion of a non-growing throughput, and more worthy and satisfying goals to which our life energies could be devoted.

The Next President’s Inaugural Speech (If Only…)

by Brent Blackwelder, Head Speechwriter

Once upon a time the United States was a global pioneer of democracy and justice. The founders of this great nation articulated a noble vision of inalienable rights — life, liberty, and the pursuit of happiness. Times have changed. We have emerged from this presidential campaign with an ignoble vision of alienating wrongs — venom, vitriol, and the pursuit of pettiness. The campaign, including my campaign, dodged the most important issue of our era: coming to grips with the ecological reality confronting life on this planet. Today I pledge to make our nation once again the leader in solving economic, environmental, and social crises.

We have built a global economy that refuses to recognize ecological limits to growth. Repeated financial collapses, mushrooming corruption, and rampant speculation have characterized the last twenty years. We will blaze a new trail over the next twenty years; we will take bold steps to confront the failed global economy. Better late than never, we will face the issues of climate change and population growth that we have been avoiding for political expedience.

Modern industrial societies, with the United States leading the way, are emitting so much pollution that we have endangered the stability of earth’s climate and jeopardized the survival of over one quarter of the planet’s species. Our global population of over seven billion needs access to goods and services, but almost a billion are already struggling to obtain the bare necessities. Our civilization is using natural resources much faster than the earth can regenerate them. Scientists explain that we would need one and a half earths to keep consuming at our current rate. We can do better.

Our goal is to create a true-cost economy, a sustainable economy that gives everyone a fair chance. No more cheater economics and no more casino economics. We will put the cheaters in jail and close down the Wall Street casinos.

We will challenge the zealous pursuit of economic growth as the solution to the all problems. Much of our so-called economic growth has cost us far more than it has been worth. We have ruthless growth that benefits a few at the top but does nothing for most Americans. We have futureless growth that destroys resources, such as water and farmland, that will be needed by our children and grandchildren. Our economy should line up with our family values. We tell our children to save for the future. We don’t tell them to outspend their peers and judge the quality of their lives based on quarterly financial reports.

We will fund family planning so that the 250 million women worldwide who want such services can get them. All U.S. foreign aid will be screened to ensure that women will be better off as a result of the assistance.

While America has been sleeping, other nations have stepped into leadership roles:

  • Iceland has become the leader in empowerment of women; women hold the majority of jobs in university education and have nearly half the seats in parliament.
  • Bhutan has become the leader in measuring progress; this small Himalayan nation has committed itself to maximizing gross national happiness rather than gross national product.
  • Costa Rica and Sweden are leading the way in climate stabilization by instituting carbon taxes.
  • Germany, a nation with unexceptional wind and solar potential, has became the world’s largest generator of electricity in both categories.
  • Several European nations are taking the lead on jobs, shifting to shorter work weeks to relieve unemployment and enable citizens to spend time as they choose.

It’s encouraging to see other nations stepping up, but the United States need to get in the game. We can no longer stand still and watch other nations pass by on the way to a sustainable twenty-first-century economy.

Your odds of being struck by a meteorite are better than your odds of hearing a speech like this from one of these candidates.

Instead of rehashing the vicious debate over the deficit, I will move to implement a Robin Hood tax of just half of one percent on financial transactions. This simple and fair tax would yield billions in revenue and prevent Wall Street gamblers from playing with our money. We can have prosperity without growth.

We will adopt a four-day work week. There is no winner in a rat race. We will share the work, so that everyone can have a job, and we will trade the high productivity of our workers for a time dividend — meaning more time spent with our families and less time spent at the office.

Instead of fighting wars over oil, our military will prevent wars by helping to engineer the transition to clean energy. The military is already far ahead of the public and politicians in recognizing the threat of climate disruption. For example, the U.S. Army is working to get its bases off the electric grid and onto renewable energy. We will accelerate efforts like these and apply them across the nation.

We have only to look at the history of our nation to find inspirational leadership. The United States led in stewardship of the land with the establishment of Yellowstone National Park, the world’s first, in 1872. Faced with mounting pollution in the 1960s, we responded to the challenge. Congress launched the first Earth Day on April 22, 1970, and assumed global leadership in reducing pollution by passing clean air and water laws. Other countries replicated our laws.

Now, even though most citizens are aware of profound economic and environmental problems at home and abroad, the United States has been a drag, not a leader. Instead of excuses and gridlock, we will take responsibility for our actions. My administration will put aside pessimistic notions of what we can’t do and focus on what we can do.

I am not proposing an unachievable agenda for the American people, but rather a solid plan to build on our past triumphs and cooperate with today’s leading countries, regions, cities, and towns that have begun the quest for an economy with a future. We will systematically transform the United States from the biggest consumer to the biggest conserver. We will take up the challenge of leadership so that we can once again pursue the noble vision of life, liberty, and the pursuit of happiness.

George Will, Doomsday, and the
  Straw-Man Sighting

by Brian Czech

A funny thing happened on the way to this column. Right when I was ready to accuse Washington Post columnist George Will of building another straw man to tear apart, one of Will’s straw men appeared! It’s as if Will himself cued it up, as I’ll describe in a bit.

Meanwhile don’t get me wrong. Will isn’t right about a lot. He has long been loose with the facts on environmental issues, denying the causes and effects of resource scarcity, pollution, and climate change. His vision of perpetual economic growth is neoclassical naiveté. He displayed it again with “Calls for doomsday remain unheeded.”

Will stubbornly remains a fawning fan of the late perpetual growther Julian Simon. No one likes to criticize the deceased, and Will counts on this and other social conventions to protect himself from critique. (Recently he hid behind society’s respect for Native American tribes to shoot at federal government clean-air efforts.) But it’s not a fair tactic, I’m not falling for it, and Simon was no saint anyway. Simon’s culminating book (The Ultimate Resource 2) was the shoddiest semblance of “scholarship” I’ve ever seen, as I described at length in Shoveling Fuel for a Runaway Train. For Will to stick with Simon after all this time is a red flag over the teeny terrain of his scientific credentials.

Will has even been sucked into the junk-science vortex of Bjorn Lomborg, Simon’s disciple and darling of pro-growth propagandists like the Competitive Enterprise Institute. Will thinks “potential U.S. gas resources have doubled in the last six years,” as if even potential (not just economic) gas resources change with technology! No stranger to bad facts, Will says, “One of [Paul] Ehrlich’s advisers, John Holdren, is President Barack Obama’s science adviser.” In reality it was the other way around: Ehrlich was Holdren’s adviser. In other words Will uses a mistaken claim to unleash a twice-removed, guilt-by-association attack, all in one sentence!

Despite the fact that Will has the combined credibility of Barry Bonds and BP Oil on environmental and sustainability affairs, there are reasons for empathizing with him at times. In fact, one reason plopped in my inbox this morning! The sender, a sustainability activist, first quoted from a website of the Center for the Advancement of the Steady State Economy, “The CASSE position calls for a desirable solution — a steady state economy with stabilized population and consumption — beginning in the wealthiest nations and not with extremist tactics.” Then he went on to complain:

“Unfortunately, there is no ‘desirable solution’ — I wish there were… Industrialism is by its very nature a temporary phenomenon; in the process of perpetuating it we consume the natural resources — primarily finite, non-replenishing, and increasingly scarce NNRs — that enable it. Unfortunately the chickens are coming home to roost now — instead of 1,000 years from now — and there’s nothing that we as a species can or will do about it, except suffer the inevitable consequences.”

So when George Will talks pejoratively about “calls for doomsday,” he’s got that one legitimate point, at least. For someone (a sustainability activist no less) to claim there is no desirable solution to the problem of uneconomic growth is defeatist at best, and patently false besides. Just because a solution — such as a steady state economy running at optimal size — is difficult to achieve does not mean it is out of the question or undesirable. What we should all agree on is that perpetual growth is out of the question, and then strive for the best alternative, handling the growing pains (or in this case, the de-growing pains) along the way.

Next, to paint “industrialism” with such a broad brush that it cannot be sustained, period, is another target on the straw man’s back. We should expect Mr. Will to hit that bulls-eye every time. First of all, de-industrializing is no panacea; it’s easy to envision an unsustainable, non-industrial economy hell-bent on growth. More to the point, who is to say we cannot sustain some industrial capital and production, especially with the use of renewable resources (picture a sawmill running on hydropower), for such a very long time that no one would consider it unsustainable. The problem is perpetual growth — always expanding the capital base and trying to produce more — regardless of the mechanical means by which that growth occurs.

And then, to top it off with, “there’s nothing that we as a species can or will do about it, except suffer the inevitable consequences,” almost makes me wonder who is farther from the truth: Will or the sustainability activist. After all, the activist is either not doing anything “about it” after all, or considers himself too exceptional to be part of the human species. But I don’t, and CASSE doesn’t. We are trying to do something about it. That is, we’re advancing the steady state economy — a desirable solution — instead of sitting on our doomed derrières while lamenting the forces of “industrialism.”

I never thought I’d agree with George Will on a matter of sustainability, but I’ll admit one thing: The caricatures he constructs are not always comprised of straw. Doomsday straw does exist but, unfortunately, some sustainability activists wear it too well.

The Resilience Imperative and Civil Disobedience

by Michael Lewis

As I was making a speech in Alberta, Canada, to a business audience, mainly from the finance and energy industries, a fully engaged participant in the front row caught my eye. He was the first to approach me after the question period and the first to get my autograph on The Resilience Imperative: Cooperative Transitions to a Steady-State Economy, the book that I co-authored with Pat Conaty.

During my talk, I had argued that economic growth and a casino-like financial system were taking us to the edge of a deadly precipice. I made the case that societies urgently need to navigate the turn to a steady-state economy, based on local and regional trade. I also offered suggestions on how we might accomplish this. The thesis has a bit of an edge to it, especially in a business crowd accustomed to globalization and growth, so I was anxious to learn more about the front-row enthusiast.

He turned out to be a warm, charming, and open senior manager at Cenovus Energy, a large player in the Athabasca Tar Sands. The corporation seems to be respected in Alberta and Saskatchewan because of its health and safety, community, and environmental initiatives. He rapidly brought the discussion to the issue of “social license,” a condition he acknowledged was a big problem for the tar sands operators. But his view, after many years around boardroom tables, is that the industry is becoming more transparent and responsible, and its performance is improving.

I believe this to be true; certainly Cenovus has been doing a lot of things right. However, I argued that he was missing the point; social license in this industry could only be understood in a global context, and it is not going to be forthcoming for two simple reasons: (1) economic growth produces carbon and (2) carbon is going to kill a lot of us and thousands of other creatures.

If the oil and gas sector wants to explore the potential for broadening its social license, it would have to stand shoulder to shoulder with scientists, governments, businesses, and civil society and argue for a stiff tax on carbon. Only by taking such responsibility can Cenovus and its fellow corporations expand their social license. At the same time they would be helping to set the stage for the transition to a steady-state economy.

“Nothing less would do,” I proclaimed.

“Well you know, Mike,” he replied, “I have not seen much evidence of such a move afoot.”

Why am I not surprised? “I know,” I said. “Shareholder interests are framed by the ideology of growth and profit maximization, and even when these interests are complemented by an ethic of corporate social responsibility, the ideology does not exactly encourage this vital and necessary conversation.”

A few days later I attended the launch conference of the New Economics Institute at Bard College in Upstate New York. It was a remarkable convergence of practitioners, researchers, and activists engaged in debates about economics, analysis of mindboggling challenges (both local and planetary in scale), and exploration of hopeful transformational pathways.

Bill McKibben delivered a Friday evening keynote speech to a packed audience. His laser focus on greenhouse gas emissions was at once absorbing, terrifying, and hopeful, precisely the kind of dynamic that is motivating more and more people to step up to the front lines of civil disobedience, including many scientists and even a few economists. Mark Jaccard, a well-known energy economist in Vancouver, is hardly considered to be a radical, but he joined the front-line battle as part of a 350.org action. He was arrested in May of this year for blocking a coal train headed north to Vancouver’s coal port.

McKibben and Jaccard are picking up on the analysis of James Hansen et al. that oil and gas are a problem, but we do not have enough of it left to take us over 450 parts per million of carbon dioxide in the atmosphere. Coal is the real threat. Unless we phase out coal completely by 2050, we will blast beyond this concentration, and that’s an event that many climate scientists believe will trigger catastrophic consequences. What are we to do?

McKibben and Jaccard are showing us part of the answer. But to make real progress, we need to pay much more attention to Herman Daly, the outstanding chronicler of our economic and ecological lunacy. He concluded one recent essay with this strident statement befitting of our circumstances:

Even though the benefits of further growth are now less than the costs, our decision-making elites have figured out how to keep the dwindling extra benefits for themselves, while “sharing” the exploding extra costs with the poor, the future, and other species. The elite-owned media, the corporate-funded think tanks, the kept economists of high academia, and the World Bank — not to mention Gold Sacks and Wall Street — all sing hymns to growth in perfect unison, and bamboozle average citizens.

Dr. Daly has clarified and expanded the arguments for a steady-state economy that go back to John Stuart Mill, John Ruskin, Frederick Soddy, Kenneth Boulding, and Ghandi. In the same essay referenced above, Daly also noted that in spite of all the evidence of the growing crisis, “our economists, bankers, and politicians still have unrealistic expectations about growth. Like the losing gambler they try to get even by betting double or nothing on more growth.”

Well then, perhaps we need to follow the leads of McKibben, Jaccard, and Hansen, and go get arrested. Perhaps we need to breathe deeply and act courageously to make hope more concrete and despair less convincing. Perhaps those of us in the 50 to 90-year-old set need to commit to civil disobedience to honor our children, grandchildren and our hopes for their survival. The time has arrived for all of us, but especially the post-war “growth generation” to break out of our too comfortable zones. Stopping carbon emissions is a pre-condition, but nothing will change unless we are prepared to put ourselves on the line.

Of course, this is not enough. We have many questions to answer. How are we going to meet basic needs for energy, food, and shelter? How are we going to finance the economic transition? How do we restructure property rights to overcome the pervasive me-first culture? How do we achieve more local and democratic ownership of the means of production? How do we share jobs and income in a transition that will require less stuff and thus less making of stuff?

These are the questions we concentrate on in The Resilience Imperative. Pat Conaty and I put 42 months of serious forehead pressing into the book, and the early results are gratifying. People as divergent as John Fullerton, former managing director of JP Morgan whose focus is now on resilience and transition (good-bye Wall Street), and Robin Murray from the London School of Economics have endorsed it — they believe we have presented hopeful ideas for getting the transition going.

After presenting numerous positive examples of how people are changing the economy today, we end the book on this note:

The tasks of transition are many. The challenges are daunting. The outcomes are uncertain. Our courage remains untested. But we are a resilient species. We are not alone; there is “blessed unrest” all about. If we but open our eyes, we will SEE change is possible. If we act in ways that recognize we are interdependent, we will continue to innovate cooperative transitions to a steady-state economy.

There is one key question we need to ask ourselves. What stories will we be able to tell our loved ones about what we did to advance the Great Transition?

The Triumph of Fantasy over Science, Part 2

Restoring Science as the Basis for Economic Policy

by Rob Dietz

Right now “economics” means “neoclassical economics,” especially in the halls of government and business boardrooms.  At the same time, ecological economics remains an under-appreciated and under-utilized sub-discipline of economics. To reverse this situation, such that when people talk about economics, they’re talking about ecological economics, we need to address the three factors described in Part 1 of The Triumph of Fantasy over Science:

  1. The psychology of inclusion drives people to follow the dominant economic philosophy (neoclassical), even if it comes straight out of Fantasy Camp.
  2. Neoclassical economics has become entrenched in the culture.
  3. The fanciful stories that support neoclassical theories are more emotionally compelling than the logic (straight out of Science Camp) that underlies ecological economics.

Overcoming these three factors requires three countermeasures.

Countermeasure 1. Frame the limits to growth and ecological economics in a way that prevents people from feeling threatened.

For decades, the denizens of Science Camp have been broadcasting messages about the shortcomings of neoclassical economics and the problems posed by its obsession with growth. To a lesser degree, they have also been promoting ecological economics (and its focus on well-being) as a positive alternative. But to bypass protective cognition — the defense mechanism that allows people to accept faulty premises — Science Campers need to frame their ideas differently.

Many people, when confronted with the possibility that the economic paradigm they’ve embraced may be harming society and causing significant environmental damage, react defensively. I know that I’ve been called all sorts of names (even the “C” word — communist) for presenting an alternative economic view. The key to disarming the defensiveness that comes along with protective cognition is to focus the conversation on needs that all people share (e.g., subsistence, security, and participation) and how an ecological economy can meet these needs without growth. Such framing can dampen denial and open minds.

For example, one time I was part of an “economic vitality” team tasked with providing ideas to a city council about how to achieve a prosperous local economy. The team included a sustainability guru, a business owner, a representative of the Chamber of Commerce, and a banker, among others. In one of our first meetings, I gave my standard spiel about the difference between a prosperous economy and a growing one. Since it was a small group seated around a table, I could see right away the misgivings some of my teammates had about my ideas. The banker must have set the world record for quantity of disapproving head shakes. We ended up butting heads for the next several meetings until I tried a different approach. I drafted a short document about our “areas of agreement,” which focused on the city’s needs. By steering the conversation toward things we all hoped to achieve in the city’s economy, such as available jobs, meaningful work, sufficient infrastructure, healthy ecosystems, and local production and consumption, we were able to have a constructive discussion and develop useful strategies for the city.  Once the walls of protective cognition have been toppled, people can access their considerable capacity for logic when assessing policy options.

Countermeasure 2. Use student demand to supplant neoclassical economics in universities.

Since this countermeasure focuses on university economics, let’s use a couple of standard economic graphs. First let’s consider the production possibility frontier for teaching in economics departments (see graph). An economics department can offer only a certain amount of economics courses, defined by the production possibility frontier. If it is spending that “certain amount” on neoclassical economics, then it can teach very little ecological economics. The goal is to move along the curve from point A (where we currently reside) to point B where we want to be.

Now let’s use supply and demand to see how to move from A to B. The quantity (and price) of neoclassical economics offered by universities is determined by student demand and departmental supply (see graph). To lessen the quantity of neoclassical economics supplied, students need to lower their demand for it. This is a natural place to start, since neoclassical economics offers students very little in the way of long-term prospects for healthy and happy lives. Student uproar over the downsides of neoclassical economics is already percolating, and activists have begun organizing efforts to increase demand for ecological economics.

If students decrease their demand for neoclassical economics, then the quantity supplied will decrease.

For example, Adbusters started a campaign called Kick It Over that invites students around the world to join the fight to revamp Econ 101 curricula and challenge the myopic views of neoclassical professors. Another outstanding effort is Kate Raworth’s work with Oxfam on the “doughnut economy.” Raworth is trying to unseat neoclassical orthodoxy and replace it with an economic framework based on meeting society’s needs within nature’s limits. Besides offering a sound premise for structuring the economy, she suggests that students engage in a guerilla campaign to rewrite economics textbooks.

As students decrease their demand for neoclassical economics, casting it into the dustbin of obsolescence, economics departments will move along their production possibility frontier to point B where their core will become ecological economics. At that point professors will focus their research on how to achieve sustainable and equitable well-being, and new generations of students will be grounded in the principles of Science Camp.

Countermeasure 3. Tell a better story.

Rob Hopkins, the founder of the Transition Towns movement has poked fun at the standard Science Camp story. He says, “Environmentalists have often been guilty of presenting people with a mental image of the world’s least desirable holiday destination — some seedy bed and breakfast… with nylon sheets, cold tea and soggy toast — and expecting them to get excited about the prospect of NOT going there. The logic and the psychology are all wrong.” We need to tell a more inspiring story about the transition to a steady-state economy.

That’s exactly what CASSE authors have been up to, and two new books will be available in early 2013.  Enough Is Enough (by Dan O’Neill and me) and Supply Shock (by Brian Czech) will serve as a one-two punch to knock out the neoclassical obsession with growth. These two books can accompany the ecological economics textbook by Herman Daly and Joshua Farley to provide options for new economics courses along the path from point A to point B on the production possibility frontier.  As more such books and resources come out of Science Camp, professors, politicians, and pundits will have fewer excuses for remaining in Fantasy Camp.

From reframing to organizing, from protesting to storytelling, there’s a lot of work to do to get past the collective mental block and start walking a sustainable economic path. For decades, we’ve shown ourselves to be incapable of accepting facts, unable to modify failing social institutions, and unwilling to adjust our lifestyles. But now is the time to overthrow the academic programs and economic institutions that got us into this mess in which we undervalue our most important assets. Now is the time to tell the story of ecological economics — the hopeful story of long-term prosperity on a healthy planet. Now is the time to demand the economy that we want and that the planet needs.

Eight Fallacies about Growth

by Herman Daly

Herman DalyOne thing the Democrats and Republicans will agree on in the current U.S. presidential campaign is that economic growth is our number one goal and is the basic solution to all problems. The idea that growth could conceivably cost more than it is worth at the margin, and therefore become uneconomic in the literal sense, will not be considered. But, aside from political denial, why do people (frequently economists) not understand that continuous growth of the economy (measured by either real GDP or resource throughput) could in theory, and probably has in fact, become uneconomic? What is it that confuses them?

Here are eight likely reasons for confusion.

1. One can nearly always find something whose growth would be both desirable and possible. For example, we need more bicycles and can produce more bicycles. More bicycles means growth. Therefore growth is both good and possible. QED.

However, this confuses aggregate growth with reallocation. Aggregate growth refers to growth in everything: bicycles, cars, houses, ships, cell phones, and so on. Aggregate growth is growth in scale of the economy, the size of real GDP, which is a value-based index of aggregate production and consequently of the total resource throughput required by that production. In the simplest case of aggregate growth everything produced goes up by the same percentage. Reallocation, by contrast, means that some things go up while others go down, the freed-up resources from the latter are transferred to the former. The fact that reallocation remains possible and desirable does not mean that aggregate growth is possible and desirable. The fact that you can reallocate the weight in a boat more efficiently does not mean that there is no Plimsoll Line. Too much weight will sink a boat even if it is optimally allocated. Efficient reallocation is good; the problem is aggregate growth.

Reallocation of production away from more resource-intensive goods to less resource-intensive goods (“decoupling”) is possible to some degree and often advocated, but is limited by two basic facts. First, the economy grows as an integrated whole, not as a loose aggregate of independently changeable sectors. A glance at the input-output table of an economy makes it clear that to increase output of any sector requires an increase in all the inputs to that sector from other sectors, and then increases of the inputs to those inputs, etc. Second, in addition to the input-output or supply interdependence of sectors there are demand constraints — people are just not interested in information services unless they first have enough food and shelter. So trying to cut the resource-intensive food and shelter part of GDP to reallocate to less resource-intensive information services in the name of decoupling GDP from resources, will simply result in a shortage of food and shelter, and a glut of information services.

Aggregate growth was no problem back when the world was relatively empty. But now the world is full, and aggregate growth likely costs more than it is worth, even though more bicycles (and less of something else) might still be possible and desirable. That should not be too hard to understand.

2. Another confusion is to argue that since GDP is measured in value terms, it is therefore not subject to physical limits. This is another argument given for easy “decoupling” of GDP from resource throughput. But growth refers to real GDP, which eliminates price level changes. Real GDP is a value-based index of aggregate quantitative change in real physical production. It is the best index we have of total resource throughput. The unit of measure of real GDP is not dollars, but rather “dollar’s worth.” A dollar’s worth of gasoline is a physical quantity, currently about one-fourth of a gallon. The annual aggregate of all such dollar’s worth amounts of all final commodities is real GDP, and even though not expressible in a simple physical unit, it remains a physical aggregate and subject to physical limits. The price level and nominal GDP might grow forever (inflation), but not real GDP, and the latter is the accepted measure of aggregate growth. Most people can grasp this, and do not conceive of real GDP as trillions of dollar bills, or as ethereal, abstract, psychic, aggregated utility.

3. A more subtle confusion results from looking at past totals rather than present margins. Just look at the huge net benefits of past growth! How can anyone oppose growth when it has led to such enormous benefits? Well, there is a good reason: the net benefits of past growth reach a maximum precisely at the point where the rising marginal costs of growth equal the declining marginal benefits — that is to say, at precisely the point at which further growth ceases to be economic and becomes uneconomic! Before that point wealth grew faster than illth; beyond that point illth grows faster than wealth, making us poorer, not richer. No one is against being richer. No one denies that growth used to make us richer. The question is, does growth any longer make us richer, or is it now making us poorer?

To understand the question requires that we recognize that real GDP has a cost, that illth is a negative joint product with wealth. Examples of illth are everywhere and include: nuclear wastes, climate change from excess carbon in the atmosphere, biodiversity loss, depleted mines, eroded topsoil, dry wells and rivers, the dead zone in the Gulf of Mexico, gyres of plastic trash in the oceans, the ozone hole, exhausting and dangerous labor, and the exploding un-repayable debt from trying to push growth in the symbolic financial sector beyond what is possible in the real sector. Since no one buys these annually produced bads (that accumulate into illth), they have no market prices, and since their implicit negative shadow values are hard to estimate in a way comparable to positive market prices, they are usually ignored, or mentioned and quickly forgotten.

The logic of maximization embodied in equating marginal cost with marginal benefit requires a moment’s thought for the average citizen to understand clearly, but surely it is familiar to anyone who has taken Econ 101.

4. Even if it is theoretically possible that the marginal cost of growth has become greater than the marginal benefit, there is no empirical evidence that this is so.  On the contrary, there is plenty of empirical evidence for anyone who has not been anesthetized by the official party line of Madison Avenue and Wall Street. As for empirical evidence of the statistical type, there are two independent sources that give the same basic answer. First are the objective measures that separate GDP sub-accounts into costs and benefits and then subtract the costs from GDP to approximate net benefits of growth. The Index of Sustainable Economic Welfare (ISEW) and its later modifications into the General Progress Indicator (GPI) both indicate that, for the US and some other wealthy countries, GDP and GPI were positively correlated up until around 1980, after which GPI leveled off and GDP continued to rise. In other words, increasing throughput as measured by real GDP no longer increased welfare as measured by GPI. A similar disconnect is confirmed using the different measure of self-evaluated happiness. Self-reported happiness increases with per capita GDP up to a level of around $20,000 per year, and then stops rising. The interpretation given is that while absolute real income is important for happiness up to some sufficient point, beyond that point happiness is overwhelmingly a function of the quality of relationships by which our very identity is constituted. Friendships, marriage and family, social stability, trust, fairness, etc. — not per capita GDP — are the overwhelming determinants of happiness at the present margin, especially in high-income countries. If we sacrifice friendships, social stability, family time, environmental services, and trust for the sake of labor mobility, a second job, and quarterly financial returns, we often reduce happiness while increasing GDP. Relative income gains may still increase individual happiness even when increases in absolute income no longer do, but aggregate growth is powerless to increase everyone’s relative income because we cannot all be above average. Beyond some sufficiency, growth in GDP no longer increases either self-evaluated happiness or measured economic welfare, but it continues to increase costs of depletion, pollution, congestion, stress, etc. Why do most economists resist the very idea that we might have reached this point? Why do they resist measuring the costs of growth, and then claim that “there is no empirical evidence” for what is common experience? Read on.

5. Many believe that the way we measure GDP automatically makes its growth a trustworthy guide to economic policy.  To be counted in GDP, there must be a market transaction, and that implies a willing buyer and seller, neither of whom would have made the transaction if it did not make them better off in their own judgment. Ergo, growth in GDP must be good or it would not have happened. The problem here is that there are many third parties who are affected by many transactions, but did not agree to them. These external costs (or sometimes benefits) are not counted in GDP. Who are these third parties? The public in general, but more specifically the poor who lack the money to express their preferences in the market, future generations who cannot bid in present markets, and other species who have no influence on markets at all.

In addition, GDP, the largest component of which is National Income, counts consumption of natural capital as income. Counting capital consumption as income is the cardinal sin of accounting. Cut down the entire forest this year and sell it, and the entire amount is treated as this year’s income. Pump all the petroleum and sell it, and add that to this year’s income. But income in economics is by definition the maximum amount that a community can produce and consume this year, and still be able to produce and consume the same amount next year. In other words income is the maximum consumption that still leaves intact the capacity to produce the same amount next year. Only the sustainable yield of forests, fisheries, croplands, and livestock herds is this year’s income — the rest is capital needed to reproduce the same yield next year. Consuming capital means reduced production and consumption in the future. Income is by definition sustainable; capital consumption is not. The whole historical reason for income accounting is to avoid impoverishment by inadvertent consumption of capital. By contrast our national accounting tends to encourage capital consumption (at least consumption of natural capital), first by counting it in GDP, and then claiming that whatever increases GDP is good!

As already noted we fail to subtract negative by-products (external costs) from GDP on the grounds that they have no market price since obviously no one wants to buy bads. But people do buy anti-bads, and we count those expenditures. For example, the costs of pollution (a bad) are not subtracted, but the expenditures on pollution clean-up (an anti-bad) are added. This is asymmetric accounting — adding anti-bads without having subtracted the bads that made the anti-bads necessary in the first place. The more bads, the more anti-bads, and the greater is GDP — wheel spinning registered as forward motion.

There are other problems with GDP but these should be enough to refute the mistaken idea that if something is not a net benefit it would not have been counted in GDP, so therefore GDP growth must always be good. Lots of people have for a long time been making these criticisms of GDP. They have not been refuted — just ignored!

6. Knowledge is the ultimate resource and since knowledge growth is infinite it can fuel economic growth without limit.  I am eager for knowledge to substitute physical resources to the extent possible, and consequently advocate both taxes to make resources expensive and patent reform to make knowledge cheap. But if I am hungry I want real food on the plate, not the knowledge of a thousand recipes on the Internet. Furthermore, the basic renewability of ignorance makes me doubt that knowledge can save the growth economy. Ignorance is renewable mainly because ignorant babies replace learned elders every generation. In addition, vast amounts of recorded knowledge are destroyed by fires, floods, and bookworms. Modern digital storage does not seem to be immune to these teeth of time, or to that new bookworm, the computer virus. To be effective in the world, knowledge must exist in someone’s mind (not just in the library or on the Internet) — otherwise it is inert. And even when knowledge increases, it does not grow exponentially like money in the bank. Some old knowledge is disproved or cancelled out by new knowledge, and some new knowledge is discovery of new biophysical or social limits to growth.

New knowledge must always be something of a surprise — if we could predict its content then we would have to know it already, and it would not really be new. Contrary to common expectation, new knowledge is not always a pleasant surprise for the growth economy — frequently it is bad news. For example, climate change from greenhouse gases was recently new knowledge, as was discovery of the ozone hole. How can one appeal to new knowledge as the panacea when the content of new knowledge must of necessity be a surprise? Of course we may get lucky with new knowledge, but should we borrow against that uncertainty? Why not count the chickens after they hatch?

7. Without growth we are condemned to unemployment. The Full Employment Act of 1946 declared full employment to be a major goal of U.S. policy. Economic growth was then seen as the means to attain full employment. Today that relation has been inverted — economic growth has become the end.  If the means to attain that end — automation, off-shoring, excessive immigration — result in unemployment, well that is the price “we” just have to pay for the supreme goal of growth. If we really want full employment we must reverse this inversion of ends and means. We can serve the goal of full employment by restricting automation, off-shoring, and immigration work permits to periods of true domestic labor shortage as indicated by high and rising wages. Real wages have been falling for decades, yet our corporations, hungry for cheaper labor, keep bleating about a labor shortage. They mean a shortage of cheap labor in the service of growing profits. Actually a labor shortage in a capitalist economy with 80% of the population earning wages is not a bad thing. How else will wages and standard of living for that 80% ever increase unless there is a shortage of labor? What the corporations really want is a surplus of labor, and falling wages. With surplus labor wages cannot rise and therefore all the gains from productivity increases will go to profit, not wages. Hence the elitist support for uncontrolled automation, off-shoring, and immigration.

8. We live in a globalized economy and have no choice but to compete in the global growth race. Not so! Globalization was a policy choice of our elites, not an imposed necessity. Free trade agreements had to be negotiated. Who negotiated and signed the treaties? Who has pushed for free capital mobility and signed on to the World Trade Organization? Who wants to enforce trade-related intellectual property rights with trade sanctions? The Bretton Woods system was a major achievement aimed at facilitating international trade after WWII. It fostered trade for mutual advantage among separate countries. Free capital mobility and global integration were not part of the deal. That came with the WTO and the effective abandonment by the World Bank and IMF of their Bretton Woods charter. Globalization is the engineered integration of many formerly relatively independent national economies into a single tightly bound global economy organized around absolute, not comparative, advantage. Once a country has been sold on free trade and free capital mobility it has effectively been integrated into the global economy and is no longer free not to specialize and trade. Yet all of the theorems in economics about the gains from trade assume that trade is voluntary. How can trade be voluntary if you are so specialized as to be no longer free not to trade? Countries can no longer account for social and environmental costs and internalize them in their prices unless all other countries do so, and to the same degree. To integrate the global omelet you must disintegrate the national eggs. While nations have many sins to atone for, they remain the main locus of community and policy-making authority. It will not do to disintegrate them in the name of abstract “globalism,” even though we certainly require some global federation of national communities. But when nations disintegrate there will be nothing left to federate in the interest of legitimately global purposes. “Globalization” (national disintegration) was an actively pursued policy, not an inertial force of nature. It was done to increase the power and growth of transnational corporations by moving them out from under the authority of nation states and into a non-existent “global community.” It can be undone, as is currently being contemplated by some in the European Union, often heralded as the forerunner of more inclusive globalization.

If the growth boosters will make a sincere effort to overcome these eight fallacies, then maybe we can have a productive dialogue about whether or not what used to be economic growth has now become uneconomic growth, and what to do about it. Until these eight fallacies have been addressed, it is probably not worth extending the list. It is too much to hope that the issue of uneconomic growth will make it into the 2012 election, but maybe 2016, or 2020, …or sometime? One can hope. But hope must embrace not just a better understanding regarding these confusions, but also more love and care for our fellow humans, and for all of Creation. Our decision-making elites may tacitly understand that growth has become uneconomic. But they have also figured out how to keep the dwindling extra benefits for themselves, while “sharing” the exploding extra costs with the poor, the future, and other species. The elite-owned media, the corporate-funded think tanks, the kept economists of high academia, and the World Bank — not to mention GoldSacks and Wall Street — all sing hymns to growth in harmony with class interest and greed. The public is bamboozled by technical obfuscation, and by the false promise that, thanks to growth, they too will one day be rich. Intellectual confusion is real, but moral corruption fogs the discussion even more.

Failure and Hope from Rio+20

By Jules Peck

Editor’s note: Jules Peck originally posted this as a two-part essay on the blog of the New Economics Foundation. Peck’s views on what happened at the Rio+20 Earth Summit and his conclusions about what needs to happen dovetail with Brian Czech’s observations from the Summit.

A failure of epic proportions?

Commentators are fairly unanimous that the Rio+20 talks have been a failure. Expectations had of course been low. And because of this most developed country leaders stayed away. In opening the summit Ban Ki-Moon admitted the draft outcome was “disappointing” due to the conflicting interests of member states. China’s Sha Zukang, the UN’s lead on the conference agreed, calling the statement “an outcome that makes nobody happy.”

NGOs were unanimous in their disgust with the conference outcome statement, The Future We Want and Greenpeace’s Kumi Naidoo spoke of “…the longest suicide note in history…the last will and testament of a destructive twentieth century development model…a failure of epic proportions.”

So what was missing from the talks? What hope might there be coming from outside official negotiating rooms?

The end of an era of global diplomacy?

There seemed to be some consensus that the era of global treaties might be over, at least for the time being. George Monbiot concluded his roll call of Rio failures by calling for us to give up on global agreements. Barbara Stocking, head of Oxfam, urged civil society to “pick up and move on… take action.” Lasse Gustavasson, the World Wildlife Fund’s Executive Director of Conservation agreed that there had been a fundamental failure of “sophisticated UN diplomacy.”

UN Environment Programme Director Achim Steiner said the conference was evidence of “a world at a loss what to do” and that “we can’t legislate sustainable development in the current state of international relations.” Of course it is not just on sustainable development that global agreement is failing — the same is true of solutions to the financial system and issues such as Syria.

US Delegation Lead Todd Stern seemed to agree that global multi-state solutions no longer hold out much hope. Todd joined others in suggesting that the failures of Copenhagen and now Rio+20 signal the end of the post-Cold War global treaty era.

Both Stern and WWF’s Gustavasson noted that far more commitment and leadership had been shown at Rio+20 by civil society, city mayors, and the private sector. Indeed, Stern spoke of the early stages of a new era of new forms of global cooperation linking nations with business and civil society that is now flourishing in the shadow of the hollowing-out of formal processes. Some commentated that there was far more of a meeting of minds between some business and civil society folk in the 3,000 fringe events at Rio+20 than in the negotiating rooms.

It is perhaps hard to see how such one-off, informal cooperation between the private sector and civil society will replace binding global treaties, but perhaps there is some small reason to be hopeful still? For the time being, we may have to give up hope for action from governments. After all, the best our political “leaders” were able to come up with at Rio+20 was “green growth” and its love-child “sustained growth.” How many more moronic oxymorons can they think up?

Thankfully, there are signs that civil society and the private sector might take up some of the slack.

To read more, please see Jules Peck’s original Part 1 and his follow-up in Part 2, which call for sustainable development rather than sustained growth. Also see Brian Czech’s previous Daly News article about the role of CASSE and steady state economics.