Regeneration The Art of Sustainable Living

Meetings with fascinating ecological Regenerators. Grounded sustainable thinking and commentary from a Permaculture perspective.

Friday, September 29, 2006

Green Economics: A Dose of Reality

Green Economics: A Dose of Reality

Our skewed system of accounting hides the truth

By: Claude William Genest

Businesspeople demand to know “the bottom line”. In order to know where we’re going, they rightly reason, we need an accurate accounting of where we are.

Currently, the state of the economy is measured by the Gross Domestic Product. Unfortunately, this outmoded accounting paints a grossly distorted picture of reality.

Consider the following examples:

  • An oil tanker spills its load into the ocean decimating hundreds of miles of coastline. Is that a plus or a minus on the GDP ?
  • Rates of disease, crime and divorce skyrocket... plus or minus ?
  • Forests are clear-cut and precious top soil erodes into waterways choking aquatic life for decades to come. Add or subtract from the GDP ?
Believe it or not, since they all result in economic activity, they are all counted as PLUSES. The GDP it turns out, is counted on a calculator that has no minus
button - there literally is no occasion to subtract from the GDP no matter how much it subtracts from our quality of life or how much it is in fact costing us ...

In response to this alarming omission, classical economists reply that since there is no agreed upon way to “objectively” value ecosystem services, it makes sense to simply ignore them. This is called “externalizing” costs.

Well, while we may not agree on what natural, social and human capital is worth, surely we can all agree that it’s worth more than what it’s currently being valued at ....which is zero.

Show me the Money ... ?

Traditional political parties laughably promise increased spending on services and infrastructure while simultaneously cutting taxes - without offering the slightest inkling of how to accomplish this magic feat.

Maybe they should learn to subtract in order to start counting what really counts and not just what’s countable.

Leaders lamely crow over an economy that saw unparalleled growth for most of the last two decades even though virtually every quality of life indicator we have reveals a different story:

Health, safety, education, homelessness, drug addiction, suicide, depression, burnouts, air, water, forests, food quality, traffic, infrastructure, community cohesion etc. etc. almost everywhere you look, things are getting worse, not better.

The list above reminds us that “quality of life” has precious little to do with the “quantity of things” that the GDP insists is the only measure of “prosperity”.

Indeed, even by the lopsided standards of conventional accounting, the extractive, destructive economy is failing us - the much trumpeted economic gains turn out to be illusory - The “rising tide of economic prosperity “ has in fact lifted only a few elite boats. (Eighty-six percent of stock market gains between 1989 and 1997 flowed to the top ten percent of households while 42 percent went to the most well-to-do one percent. The after-tax income flowing to the middle 60 percent of households is the lowest on record since 1977 - The Wall Street Journal, March 15, 1999, p. A6.)

For the rest of us, real wages have barely risen, and in some cases even gone down ! (on an inflation-adjusted basis, the median hourly wage in 1998 was 7 percent lower than in 1973 (Commerce Department's Bureau of Economic Analysis data reported in State of Working America 1998-99).
Meanwhile, working hours have increased enough for us to surpass the Japanese as the most overowrked people on earth . (According to the Bureau of Labor statistics, the typical North-American now works 350 hours more per year than a typical European -- almost nine full weeks.)

We’re working more, making less and killing off our future prosperity in the process. The obvious question then is how can more of the production and consumption system causing the problem ever be the solution ?

If enough is never enough, how can more possibly be better?

.... And yet that's just what our government is proposing, financing and subsidizing.

Clearly, we need a dose of reality. We need Green Economics.


At 3:29 PM, Blogger Wendy, founder, Gen Plus said...

Congratulations! Best of success with your series. I'll be keeping an eye out.


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