Open Future NZ  

Continuous economic growth is impossible. WE have to limit "growth" and plan for development if we are to have an Open Future.

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The Economics of Limits by John S Veitch

This is perhaps the key concept that makes it possible to imagine a better world, a world with an open future, rather than a world in continuous decline. The idea of "limits" goes against much of the cultural baggage we carry in our heads. "You can do anything" we tell our children, but it's a lie. Even as a cultural group, a nation or as a world community there are LIMITS on what we can do. The idea that the economy can "grow" beyond certain small limits is simply wrong. Yet every politician in power claims that one of his/her key objectives is to make the economy "grow". The planners of every city are busy making plans for how the city will look in 30 years time when it's double it's present size. This is seen to be both desirable and inevitable.

Growth - How to ensure a Closed Future
President Ronald Reagan expressed his optimism about the American economy with these words, "It's always morning in America". That's not the case today (February 2009). It's twilight in the USA today, and after this depression it will be morning again we hope.

Along with economic liberalism and the philosophy of markets, we got the knowledge economy and a narrowing of the debate to a single storyline as Margaret Thatcher said, "There is no alternative". For some time that seemed to be true. Despite all the changes, privatization didn't solve the problems. Knowledge became contaminated by "spin" and "political truth" and the "bible" or sometimes the "Koran" and far too often by deliberate falsification of official sources by governments. Institutions that were supposed to perform various social functions in the community proved incapable of action, often acting against the intended purpose. In countries where there is supposed to be an even handed application of the law, the law was abused by those we expect to uphold it. G.W. Bush, took the USA to war in Iraq on the basis of a "political truth" that both Democrats and Republicans agreed to believe. This lie was exposed two years previously, but if you choose to be blind, you'll find it's very difficult to see. Self deception is the perfect way to close your own future.

Green Politics
I was a member of the NZ Values Party, which in the 1970's was campaigning for zero growth economics and for environmental protection. The Values Party was perhaps the first "green party" in the world. They quickly became a significant influence on a political campaign, but without winning any seats. The main effect was for the existing parties to become "me too" advocates of many Values Party ideas. (A few years later the Values Party merged with some other groups to become the NZ Greens Party.)

Population Growth
The world's population is continuing to expand. I don't believe we will ever get to nine billion people. I don't think the planet will allow it, regardless of what you and I may think. If the planet as a living system is already experiencing serious negative effects in the environment, increasing the population adds to that pressure. Stabilization of the population would be to our future advantage. The best explanation of the folly of population growth I know is given by Prof. Albert Bartlett. But the problem is much worse than stated, because the intention of governments and economists is to "grow" the world economy at a constant rate of at least 3% over the next 100 years. That involves doubling our entire use of the world's resources each 23 years. So think about oil and water. Between now and 2032 we need to produce double the annual supply. And by 2055, we have to produce four times todays annual output. Is that likely? Far more likely is the probability that we come up against resource limits that make it harder and harder to supply our needs. At some stage we need to adapt to the fact of limited resources. Because of physical pressures on the world's resources, real incomes in developed countries are going to decline, and life in less developed countries will get more difficult. We have to learn to live within limits.

The Limits to Growth
I was first introduced to the concept of limits to growth in 1972 when the book "The Limits to Growth" modeling the consequences of a rapidly growing world population and finite resource supplies, commissioned by the Club of Rome, was published. The book's central premise: that growth cannot proceed indefinitely against a finite resource base, was seriously challenged by economic theory. In the 37 years since then it's been clear that while the timing of the original predictions was off target, but the general idea was more correct than most economists care to admit. Wikipedia reports: "In 2008 Graham Turner at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in Australia published a paper called "A Comparison of `The Limits to Growth` with Thirty Years of Reality" It examined the past thirty years of reality with the predictions made in 1972 and found that changes in industrial production, food production and pollution are all in line with the book's predictions of economic collapse in the 21st century"

How to Impose Limits - A partly market method
I'm going to give one simple example. I'm thinking about the river system on the Canterbury Plains of New Zealand, consisting of several braided rivers, and a very strong underground resource fed partly by the river system and partly by the snow on the mountains far to the west. There has been a long standing policy where people who want to use river water or ground water for commercial purposes need to have a permit, a "Water Right". Rights have been allocated on a first come, first served basis, and the history of allocation goes back a long way. Water Rights are seen as property attached to the land. But we are now in a situation where all the available water has been allocated, and in a dry year the water has been over allocated. With global warming becoming a problem it's possible that every year will in future be a "dry year". So, what should we do?

I'm indebted to Dr. John Fritz Raffensperger of Canterbury University for the following suggestion. A detailed explanation of his proposal is available here (PDF):

In short Dr. Raffensperger, says that the local political process must FIRST make a decision about measuring the resource and providing scientific information about the water needs of environment. There are political choices to make that cannot be avoided. The environment should be the first priority, and sustainability constraints must be set by a political process backed by scientific information. If there is also a commitment to supply "free water" to somebody or everybody, that is also a political decision. Whatever is left, is in theory available for commercial or agricultural use. Water can be allocated for sale every week, based on the expected rainfall and the measured ground water levels. Some people may have first rights. After those are met, the balance is sold at auction to the highest bidders.

I do appreciate the objections most people will immediately raise, it sounds like discrimination against ordinary people. Understand this. The amount of water isn't strictly in anyone's control. There is a shortage. In the case of shortage someone will go without, there is no alternative. The trick is to get the best possible result from the limited supply. Hence, the political process MUST deal with the problem of making sure that the environment is maintained and that those who have special water needs are satisfied. The process of allocating the water supply should be perfectly open for everyone to see, and to argue about. People will be able to see that the process is fair, and will make their own decisions on future land use based on that information. The auction process will demand much better monitoring of the water people actually use. This will vastly improve the quality of the information in the system, and enable the allocation model to be improved. This system, once established is much less costly than the system currently used in Canterbury.

The principles above can be used in many situations where there are resource limitations, or where a government may want to impose limitations on resource use for reasons like the protection of the environment.

Please feel free to comment on this essay.