Open Future NZ  

In a steady state economy, the future is always OPEN, but we have to live within limits.

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Steady State Economics by John S Veitch

Many of these ideas have been developed by Prof. Herman E. Daly.

Without major changes in the way humans choose to live, we face a collapse of the ecosystem and the loss of the regenerative processes on which all life depends. If we insist on developing a predatory economy focused on growth we will continue to draw down the natural reserves of clean water, fertile soils, and species diversity. We are engaged in collective suicide. The build up of toxic wastes in the air and the ocean is changing the nature of the planet.

While the United Nations is predicting a world population of 10 billion people by the year 2100, some people suggest that the population is likely to fall to less than 1 billion long before then. In response to human activity on Earth, the planet is evolving in it's own natural way. Every day we read of stress induced feedback on some part of the ecosystem. Sustainablity has become a buzz word, but there is no political committment to make that a reality. We need to imagine an economy that has an optimal size.

The proposal that the economy can grow indefinitely isn't supported by anyone who can do simple mathematics, and who also knows some simple facts. Here are those facts. You need to do some simple maths.

Choose your own desirable "growth Rate"

To find examples of your new future that exist today.

Gross National Product, does not indicate the prosperity of a country. Increases in GNP are captured by the business and political elite. Economists say the governments are responsible for ensuring income redistribution in a society to eliminate poverty, but governments are controlled by the elites, and are prevented from doing that.

Economics is closely related to biology as a concept. Governments, businesses, organizations, and households are all "living things" inside the economy. Each living thing has it's own DNA, has it's own structure, needs to be fed, needs to produce waste products, has a "skin" which divides the world outside from the world inside. Each living thing has it's own behaviour, which includes a process of growth and reproduction. The growth of all living things is limited by biology and by the nature of the environment. All living things die. Some individuals develop a malfunction that enables continuous growth, but very soon that causes severe problems for the individual and early death. (In humans we call this cancer.)

Economists and Ecologists share similar territory, they both look at the environment in different ways. They both understand the essential laws of physics. Matter can be converted into energy, and energy can be converted into matter, but the process always creates a product with less and less energy potential. We take useful energy sources like oil or coal and convert them into many kinds of waste. Waste never goes away, it accumulates unless it's used by living things as a food source. One of the keys to keeping the environment sustainable is to have more than enough living things to enable this cleansing process.

Ultimately the whole system depends on the energy that comes from the sun. The sun fuels the natural renewable resource base, fisheries, forests, grasslands, and the cycles of nature like the wind and rain. But these systems have their own limits, they are only regenerative to some extent given the current conditions. If the current conditions become less and less favourable the ability to renew, to regenerate is threatened. There is a lot of evidence that the regenerative ability of the planet is declining because of human economic activity.

The planet is a commons. Garrett Hardin in his essay "The Tragedy of the Commons" (1968) explained what happens to any common where the social rules that protect it are ignored. Population pressure might cause the social rules to break down, but an unreasonable desire by some people to be rich could have the same effect. If social rules are no longer effective formal laws might be needed, but that will only work if the laws are enforced, even against the most powerful members of the community.

Things we could do

Our situation would improve if there are fewer people. Policies to stop population growth are desirable.

Our situation would improve if the output of certain wastes (CO2, methane and Nitrous Oxide for instance) are reduced.

Our situation would improve if incomes were more uniform.

Our situation would improve if in any time period we used less of some scarce resources.

Our situation would improve if we used more wind, and wave energy for electricity production.

Our situation would improve if most people understood these needs and would help in voluntary ways to achieve them.

So why can't we do those things?
Much of what we need to do simply requires hard political choices that our present politicians are unwilling to acknowledge. For instance in our community what is the "proper level of poverty" below which people should never fall? Is the difference between this level of income and the income of the richest people in our community acceptable? Plato considered this problem and he considered that the rich should be only four times as wealth as the poor. In the USA today some rich are about 500 times more wealthy than the poor.

In the developed world capital gains, the favoured means of wealth accumulation of the rich are lightly taxed, or not taxed at all. Property taxes are also likely to be falling as a proportion of total taxation. On the other hand sales taxes are increasing and taxes on wages are always collected. People who earn their incomes from profits, pay their taxes later and can often avoid paying them altogether. In a steady state economy taxes will shift towards taxing resource use, and the production of pollution. We should try to tax what we want less of.

GDP is an unsatisfactory measure of economic activity. Many alternatives have been suggested, none of them easy to do in practice. Economist J. R. Hicks has developed a concept of INCOME, which includes adjustments for the loss of manmade and natural capital, and for the externalities of economic activity, Hick's system tries to count both the good's and the bad's of human activity.

In a steady state economy we are going to see more tools like cap-and-trade, extraction rights, pollution permits, fishing quotas, and auction systems for scarce resources. The present depression is a good opportunity to set many of these tools in place. We should have a vision of the sort of economy we need to build, that will be sustainable. It would be much better to do that now, than to build again the old unsustainable economy, that we'll then have to deconstruct again at some stage. I look to informed citizens to make this demand of our unwilling politicians.

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