Posts Tagged ‘economics’

It seems to me that there are three main areas that we can change to reduce our consumption rates and halt the destruction of our planet. These are population, lifestyle and technology. The trident of climate action, if you like.

Population is fairly obvious – the more people there are, the more resources we will need to keep them fed & watered. Driving around in cars, heating homes and buying tonnes of junk a year just makes things a whole lot worse.

Every year more people aspire to the lifestyles we enjoy in the developed world, so a growing world population is only going to lead to trouble. Unfortunately, it will take a long while to halt the growth, even if everyone on the planet agreed today to have only 2 children. The best ways to achieve lower birth rates appear to be education and the empowerment of women, but neither or these is likely to happen particularly quickly over depressingly large areas of the globe.

Lifestyle is a more complex issue, but is largely about re-aligning priorities in the developed nations and helping the developing nations achieve sustainable growth. Lifestyle is more than just cycling to work or becoming vegetarian, it’s about your decisions in every aspect of your life: how you vote, where you invest spare cash, what work you do etc. It is often said that individuals have no power over government and corporations, that the small changes we can make are dwarfed by their excesses. This is true to some degree – the footprint of the Copenhagen COP15 summit was about that of a small UK city – but it misses the point. If even a few more people vote Green Party, for instance, the main parties will site up and listen. A small drop in revenue will make even the most avaricious multinationals take note. This will be news worthy, so the mainstream population will be exposed to new ideas. What is considered ‘normal’ alters, becomes a little greener and more people act responsibly. This creates more momentum in the swing to green, so normality gets greener a little faster.

Another claim is that to live a one-planet lifestyle you have to drop out. I have heard people say that they cannot live sustainable as they do not want to live in a yurt and do want their kids to go to school. This is complete nonsense. Sustainable lifestyle is about gaining things, not loosing them. It’s about thinking how you live, choosing quality of life over buying lots of stuff – focusing on living life, not climbing the property ladder. There is no reason why you could not be fabulous wealthy, send your kids to public school and still live sustainably, if that really is what’s right for you family. After all, Ghandi’s footprint was not huge & he was one of the most influential people the world has ever known.

Technology may also help us out of our worsening mess. Developing super-efficient transport, productive renewable energy systems and almost 100% recycling rates will make a huge difference. Carbon capture and storage could reverse climate change to some degree (probably) and geo-engineering may reduce its impact.

However, problems with engineering our way out of trouble include time, cost and feasibility. It will take a long time to get the fabulous technology up and running, with a lot of it only delaying the problems rather than solving them. It will cost a lot of money and require quite a shift in economic power, so there will be resistance to doing it effectively. It is also not certain that it is possible to achieve in practice, especially if people expect to carry on increasing consumption rates. Technology has often back-fired in the past, so relying on it could quite feasibly make things worse rather than better.

All three areas are vital to securing the future of our planet, but the central prong of the trident is lifestyle. It can be the most powerful and is the only one we can all influence directly as individuals. Companies are run by people, governments voted in by people and all wealth created by people spending or investing their money. We are those people and it is our choices that can change the world.

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We have just had a rather interesting budget from the LibCons, so I thought I would indulge myself with a little lucubration on economics.

Not long ago, the fiasco at Copenhagen highlighted a few cracks in the global community. All is not accord and conviviality amongst nations. The main problems appear to be distrust and vested interests, which have lead to a ‘them and us’ attitude for both individual nations and blocks of nations. No nation wants to give away too much without reaping at least as much benefit from it as everyone else, because otherwise their people might slip down the global wealth rankings and not be best pleased with their leaders.

This is sadly resonant of the Tragedy of the Commons, as are the recent attitudes of Canada et al regarding the arctic. Without a system of rewards and punishments, there is very little incentive for nations to conserve resources for the future. Indeed, the only incentives are to exploit now or hoard for later, depending on which will give the greatest economic advantage for the particular circumstances of the nation. Conservation and fair distribution are just not politically sensible in a world dominated by consumer-capitalist economic systems.

The budget today nodded towards a green economy, but no more than that. I think it is safe to say that the ensuing period of austerity and deficit reduction will banish any attempts at wholesale economic overhaul. So consumer-capitalists we will stay for the forseeable future.

Stuck with the current global economic system, we need rewards and punishments to tip the balance towards acting responsibly for the world as a whole, which means we need global environmental treaties. Such treaties appear to be focusing on emissions at the moment – caps of CO2 per country and technology transfer to allow this to happen – but this is treating the symptom rather than the cause. Emissions treaties are highly desirable in controlling climate change, with the fairest system possibly being a per capita global cap with sliding-scale reductions for wealth, but they will not be successful in addressing the tragedy of the commons. For this we need wider controls on consumption of resources.

It is very difficult to control consumption without changing the consumer-capitalist system we operate, or becoming unacceptably draconian. However, what can be done is to make rampant consumption unattractive. The easiest way to do this is to make it desirable to use renewable energy, to recycle waste and conserve natural habitats. There are many mechanisms for achieving this, but they ultimately boil down to economic necessity: keep your forests to make money, use fossil fuel to lose money.  

This will work very well if all the nations sign up to the necessary treaties, which is unlikely to happen without a lot more trust and cooperation. This leaves the option of unilateral action, such as border taxation. Is the EU strong enough to impose its vision of necessary action on the rest of the world? Can we tax carbon-intensive goods as they enter the EU? Probably not, but it is probably immaterial as the resulting conflict could be more damaging to the world than inaction. The climate is becoming less stable and resources dwindling, so any action that heightens international tension is probably a bad idea.

Is it possible to overcome the political impasse by private means? Can corporations lead where politicians fear to tread? Well, there is already the technical capability to convert the world to use 100% renewable energy, which is a start. This capability is also improving all the time due to scientific advances, but is it practicably possible or economically viable?

Some recent rough calculations suggest that wind energy is cheaper than nuclear power for the UK and that 2500km2 of solar panels could supply the UK with all its energy needs. The latter would be rather ridiculous as there are much more efficient ways to generate transport fuels and electricity in the UK, which brings us to the idea of a supergrid. This could distribute renewable energy across Europe and beyond, making the most of local power sources and evening out local gaps in production.  This makes renewable energy very attractive with incentives such as FIT or ROC, but without subsidies renewables cannot currently compete with fossil energy. Partially this is due to various subsidies (largely indirect) that fossil energy enjoys and partially due to the infrastructure, but as with all finite resources this will change.

The supply of oil and many important minerals is rapidly diminishing. The simple economics of supply and demand mean that these commodities will become more expensive. There will therefore become a time when it is cheaper to use renewable energy and recyclate than virgin minerals. The only problem with this is that resource consumption will probably increase as a proportion of reserves, so that volumes of sales remain high and revenue streams are maintained. This will keep sustainable practices on the fringes or requiring subsidies until the mineral resources become extremely scarce, at which point there will be insufficient time to build the necessary infrastructure to avoid production loss. This is turn will probably lead to civil dissatisfaction and international tension.

The nations or trading blocks that have promoted renewable energy, recycling and conservation will at that time be better able to continue production as they will have the infrastructure and social practice already in place. They will have far greater energy security and civil stability than those nations that build economic growth on mineral exploitation and do not invest in a sustainable society.

The greatest aim currently should be for international treaties to reduce resource exploitation, minimise climate changes and ready the world community for a sustainable future. However, this is currently unlikely to happen sufficiently robustly or soon enough to avoid damaging resource depletion. The private sector within the EU will not be able to change the block into a sustainable community without economic advantage or subsidies implemented by government. It may not be possible for the EU to impose tax burdens or other trade tariffs on resource-intensive imports, but this should not deter us from pursuing a sustainable European community within 50 years or so. This may reduce our competitive advantage in the short term, but it will lead to safe, equitable and comparatively comfortable future for all within our community. It can be done, but only with political will from our national and EU parliaments.

Unfortunately, that puts the burden back onto you and I. Only if we push our politicians to act, show them that we are brave enough to take some pain now so we can build a viable future, will they be able to lead us through such difficult changes.

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I have noticed a surprising number of climate sceptics on things like facebook and Yahoo Answers. Now, the surprise is not that some exist, but that so many are vehemently opposed to any suggestion that there is even the slightest possibility that we are altering the climate. Most don’t even admit that there is any climate alteration in the first place – a flurry of snow anywhere on the globe is, to them, enough to show that Global Warming is a fantasy.

Now, from the general tone, language and references of these violent sceptics it is apparent that most come from the US of A and nearly all of those talk about misinformation and manipulation by liberals and left-wingers in an attempt to take over government & business. They seem to think there is a massive, organised conspiracy to falsify scientific data and rob them of all that is rightly theirs; and since most scientists are long-haired commy weirdos, they are in on it too.

I don’t know if it is fair, but the mental image I get from their posts is of big, burly men in plaid shirts, carrying large knobbly guns and spitting torrents of tobacco. I often hear banjo music too. ooof – shivers down the spine!

Perhaps is has something to do with the capitalist, consumer philosophy that current economic wisdom is based on. This has been pioneered by the US over the last 100 years or so and exported to much of the world with an almost religious zeal. It seems to represent, for some people, the essence of being American and the American Dream.

To accept the ‘green’ message is to accept that classical consumer capitalism is wrong: you cannot live a truly sustainable lifestyle in a system that demands constant expansion and therefore an ever-increasing drain on resources. It is like pyramid selling, which is well documented as making a few people very wealthy before collapsing. So for those people that feel the current economic situation is a core part of their American identity, telling them to plant a few veg in their yard is tantamount to treason or heresy

the Guardianhttp://www.guardian.co.uk/environment/cif-green/2009/mar/09/denial-climate-change-psychologyhas a good article about the psychology of climate denial and why it is still so prevalent, although it doesn’t go into the whole sister-marrying banjo thing.

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The world is changing. It has, of course, changed continuously throughout history, what with wars and plagues and so forth, and endless social schisms of which the recent New Age movement is but one link in a long chain, but this time something different is happening. It’s not just the use of convoluted sentences, either.

The history of Man has been marked by a slow, continuous push in the same direction: gaining a better standard of living and increasing consumption. Although there have been regional reversals, the overall direction for mankind has been forward. Now we have almost reached our zenith and for the first time in history we are about to go into a decline.

That statement may sound a little bold and perhaps over-confident, but let’s think things through a little.

In the developed nations we consume far more than the Earth can replace. This is balanced out a bit by the poor nations consuming far less, but as a whole planet we get though about 30% more than can be replaced. This figure is increasing as the poor slowly become richer.

We are working our way through all the known deposits of metals, oil, trace elements etc, so that within 30 years many will be gone, even without the increased consumption of the poor. There are undoubtedly more deposits out there that haven’t been found yet, but they are likely to be found deeper in the earth, be located in more remote corners of the globe or be less pure. Getting them and refining them will therefore take more effort, consume more resources and cost more.

The easy wins will therefore peter out in a couple of decades, possibly leaving a lack of raw materials as they go. Some things will become scarce, such as rare metals essential for electronics, whilst dwindling fuel stocks will make energy frequently unaffordable. Life in general will become more expensive, our ability to travel for work or pleasure will diminish and our standard of living will drop. We will effectively become poor. This will affect the rich nations most violently at first, since it is they that currently benefit from all these riches, but it will not take long for the developing nations to join the downward plunge as well. It is likely that some people will get angry about life getting tougher, which may lead to an increase in nationalism, xenophobia and protectionist policies. This in turn could lead to friction and even war.

Climate change may or may not be real, but if it is the attendant flooding and droughts will only increase the pressure for conflict. Disasters cost money and create huge tensions throughout the afflicted region and beyond. Darfur is one example of just this: a local denigration of natural resources leading to regional conflict and global tensions. In the global community in which we now live, the consequences of such future conflicts will not be confined to the afflicted areas but will affect the entire world economy. Blame, protectionism and desperation can be volatile ingredients; they are set to become far more common.

If you are not convinced by all the conceptual blather above, we can follow another train of thought to the same destination. The capitalist model, which most of the developed nations follow, relies on continued economic growth to work successfully. Hence the horror of recession, which is usually nothing worse than a time when growth stops or declines very, very slightly.

But this need for constant growth is a bit like pyramid selling – it can not go on for ever and will have to collapse one day. Why? Well, wealth has to come from something tangible – something grown, mined or made. The recent Credit Crunch has shown that bankers passing IOUs between themselves does not actually create anything, other than fat bankers and a global overdraft. The pyramid has to keep expanding by the constant input of stuff: stuff mined, manufactured or grown. It is, I hope, self evident that this cannot carry on for ever – we will at some point run out of new stuff to feed into the pyramid. So at some point we will run out of things to drive growth and like a car running out of fuel as it powers up a hill, the world economy will not only stop growing but will go into swift reversal. Consumer capitalism will collapse and we will be left with tougher lives, poverty, protectionism, xenophobia and war.

So how can we avoid all this unpleasantness? Well, the only way I can see (and I admit I am not particularly bright) is for us to change the way we live – not only that, but we must change the way we want to live. It is up to everyday people to drive this change, because our current economic system is a bit like being drunk. Let me explain: the first effect of getting drunk is wanting to get more drunk and never stop being drunk. Capitalism is designed to create massive wealth within a few organisations, with those organisations having the continued expansion of wealth as their core purpose.  The get capitalist and want to never stop being capitalist. The only problem is that to do this they have to make sure that as may people of the world are also capitalists, or else they won’t buy into it (pun intended – sorry). So it is for us comparatively poor people who are not drunk with capitalism to effect the change – put the world economy in rehab – which we can do by changing the way we live, spend & vote. It is tricky to get the hang of, as we have been conditioned for decades to support the current system – feed the pyramid – but with a change of mindset we can be free (sorry, can’t seem to quit the dire puns today!).

It is time we evolved away from our gorilla past and into a more enlightened era. If we can do this, the benefits on both an individual and global scale will be immense.

My next blog will chat about what this means – the end of the Alpha Male and the rise of Zeta!

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