ECONOMICS IN A FULL WORLD
Notes:
-Growth is widely thought to be the panacea for all the major economic ills of the modern world. Poverty? Just grow the economy (that is, increase the production of goods and services and spur consumer spending) and watch wealth trickle down.
-When the economy’s expan- sion encroaches too much on its sur- rounding ecosystem, we will begin to sac- rifi ce natural capital (such as fi sh, miner- als and fossil fuels) that is worth more than the man-made capital (such as roads, factories and appliances) added by the growth.
- Once we pass the optimal scale, growth becomes stupid in the short run and impossible to maintain in the long run.
-Humankind must make the transition to a sustainable economy—one that takes heed of the inherent biophysical limits of the global ecosystem so that it can con- tinue to operate long into the future.
-most contemporary economists do not agree that the U.S. economy and others are heading into uneconomic growth. They largely ignore the issue of sustainability and trust that because we have come so far with growth, we can keep on going ad infi nitum.
-T he economic status quo cannot be maintained long into the future. If radical changes are not made, we face loss of well-being and possible ecological catastrophe.
- T he economy must be transformed so that it can be sustained over the long run. It must follow three precepts: 1. Limit use of all resources to rates that ultimately result in levels of waste that can be absorbed by the ecosystem. 2. E xploit renewable resources at rates that do not exceed the ability of the ecosystem to regenerate the resources. 3. Deplete nonrenewable resources at rates that, as far as possible, do not exceed the rate of development of renewable substitutes.
-Even trying to defi ne sustainability in terms of constant GDP is problematic be- cause GDP confl ates qualitative improve- ment (development) with quantitative increase (growth). The sustainable econ- omy must at some point stop growing, but it need not stop developing.
- Neoclassical economic theorists have favored defi n- ing sustainability as the maintenance (or increase) of utility over generations. But that defi nition is useless in practice. Util- ity is an experience, not a thing. It has no unit of measure and cannot be bequeathed from one generation to the next.
-Sustainability can be defi ned in terms of throughput by determining the environ- ment’s capacity for supplying each raw resource and for absorbing the end waste products.
-Two broad types of capital exist—natural and man-made. Most neoclassical economists believe that man-made capital is a good substi- tute for natural capital and therefore ad- vocate maintaining the sum of the two, an approach called weak sustainability.
-Most ecological economists, myself included, believe that natural and man- made capital are more often comple-
ments than substitutes and that natural capital should be maintained on its own, because it has become the limiting fac- tor. That goal is called strong sustain- ability.
--Properly functioning markets allocate resources effi ciently, but they cannot determine the sustainable scale; that can be achieved only by government policy.
-the transition to a sustainable economy would require many adjust- ments to economic policy.
- Adjustment requires higher taxes, an older retirement age or reduced pensions. Despite assertions to the contrary, the system is hardly in crisis. But one or more of those adjustments are surely needed for the system to maintain itself.
-Product lifetimes. A sustainable economy requires a “demographic tran- sition” not only of people but of goods— production rates should equal deprecia- tion rates.
-Growth is widely thought to be the panacea for all the major economic ills of the modern world. Poverty? Just grow the economy (that is, increase the production of goods and services and spur consumer spending) and watch wealth trickle down.
-When the economy’s expan- sion encroaches too much on its sur- rounding ecosystem, we will begin to sac- rifi ce natural capital (such as fi sh, miner- als and fossil fuels) that is worth more than the man-made capital (such as roads, factories and appliances) added by the growth.
- Once we pass the optimal scale, growth becomes stupid in the short run and impossible to maintain in the long run.
-Humankind must make the transition to a sustainable economy—one that takes heed of the inherent biophysical limits of the global ecosystem so that it can con- tinue to operate long into the future.
-most contemporary economists do not agree that the U.S. economy and others are heading into uneconomic growth. They largely ignore the issue of sustainability and trust that because we have come so far with growth, we can keep on going ad infi nitum.
-T he economic status quo cannot be maintained long into the future. If radical changes are not made, we face loss of well-being and possible ecological catastrophe.
- T he economy must be transformed so that it can be sustained over the long run. It must follow three precepts: 1. Limit use of all resources to rates that ultimately result in levels of waste that can be absorbed by the ecosystem. 2. E xploit renewable resources at rates that do not exceed the ability of the ecosystem to regenerate the resources. 3. Deplete nonrenewable resources at rates that, as far as possible, do not exceed the rate of development of renewable substitutes.
-Even trying to defi ne sustainability in terms of constant GDP is problematic be- cause GDP confl ates qualitative improve- ment (development) with quantitative increase (growth). The sustainable econ- omy must at some point stop growing, but it need not stop developing.
- Neoclassical economic theorists have favored defi n- ing sustainability as the maintenance (or increase) of utility over generations. But that defi nition is useless in practice. Util- ity is an experience, not a thing. It has no unit of measure and cannot be bequeathed from one generation to the next.
-Sustainability can be defi ned in terms of throughput by determining the environ- ment’s capacity for supplying each raw resource and for absorbing the end waste products.
-Two broad types of capital exist—natural and man-made. Most neoclassical economists believe that man-made capital is a good substi- tute for natural capital and therefore ad- vocate maintaining the sum of the two, an approach called weak sustainability.
-Most ecological economists, myself included, believe that natural and man- made capital are more often comple-
ments than substitutes and that natural capital should be maintained on its own, because it has become the limiting fac- tor. That goal is called strong sustain- ability.
--Properly functioning markets allocate resources effi ciently, but they cannot determine the sustainable scale; that can be achieved only by government policy.
-the transition to a sustainable economy would require many adjust- ments to economic policy.
- Adjustment requires higher taxes, an older retirement age or reduced pensions. Despite assertions to the contrary, the system is hardly in crisis. But one or more of those adjustments are surely needed for the system to maintain itself.
-Product lifetimes. A sustainable economy requires a “demographic tran- sition” not only of people but of goods— production rates should equal deprecia- tion rates.