The New Economy

[important title=Part 2 of 3] In a three-part series, columnist Loys Maingon gives us an oveview of the New Economy and a Sunshine Coast reality check.[/important]

The difficulty many people have in understanding what “The New Economy” is, or will be, is compounded by the way that The New Economy is intimately linked to the concept of “sustainability.”

The term, “sustainability” has in the last two decades acquired a really bad name in many sectors. It is often seen as a red flag for double-talk, simply because of the general failure to deliver tangible results over the past 23 years of talk.¹ Somehow, no matter how well-intentioned, the oxymoron “sustainable development” never quite catches up to the negative impacts it has.

I don’t think anybody is actually against “sustainability.” In some ways we all have a gut-feeling about what it should be. However, as with the words “eco” and “green,” there are fundamental misconceptions that need to be cleared up, if we want to transform it into a viable tool. Just as Friedman points out that there is a veritable “con-job” industry trying the persuade people that it is easy to be green and save the planet,² there are many “would-be experts” in sustainability who would persuade us that, “we are all on the same side,” provided we subsidize them with our taxes.

Not surprisingly, that “sustainability” just feels like snake-oil.

In the real world, given the magnitude of the problems, saving the planet is going to be tough – but not impossible. We are not on the same page if we don’t understand the need for economic reform, bottom-up. We are looking at two very different worlds. We don’t really speak the same language, just similar words. It is a completely different habit of thought.

Executive Summary

Sustainability, as understood by governments is an addition problem. It is “additive” thinking linked to adding direct and indirect taxes. It is a by-product and subset of “pollution,” to be solved technically within a neo-liberal economic framework. In this sense, “sustainability” is just another marketing product.

In environmental science, systems analyses tell us that sustainability is an exponential, or multiplication, problem, because it is part of the way earth-systems function. Sustainability is part of the operative conditions of the real world, which are not represented in “the market.”

Sustainability re-assessed

The New Economy is not a simple addition of toys to assist the current framework – as most politicians would have us believe. It integrates two factors absent from neo-classical economics: energy and pollution costs, both of which have exponential, or multiplicative, consequences far beyond the narrow focus of the market. In The New Economy, “sustainability” is therefore synonymous with “exponential thinking.”

“Sustainability” became a dubious concept from the moment it was ingrained in The Brundtland Report , Our Common Future (1987). Brundtland moved away from the systems approach of Limits to Growth, and laid the foundation for the government mantra of “sustainable development,” within neo-liberal economic assumptions. Brundtland defines “sustainability” within economic terms which present “the market” as a self-perpetuating machineindependent of the environment. This illusion has been largely maintained by the artificially low cost of oil-energy.³

The Brundtland report appends the environment to a classical economic framework in what is often referred to as, “the triple bottom line.” As the past 23 years have shown, this impressive mesmerizing term is completely vacuous, and demonstrably ineffective, because it does not really modify the economic assumptions that drive development. Social, economic and environmental considerations are subordinated to needs generated by a neo-liberal economy. By definition, it does not really recognize the environment either as a finite source of resources, or as a limited recipient of market outputs.

It should also be noted that the “triple bottom line” was viewed by First Nations as culturally discriminatory and culturally unsustainable. It is a Western cultural point-of-view that fails to incorporate “cultural diversity”, as noted in the Universal Declaration on Cultural Diversity (2001). So-called “sustainability filters” that fail to consult with First Nations, and incorporate cultural diversity are therefore potentially in violation of the UN Declaration, as well as, of section 35 of the Constitution Act (1982).

The Brundtland definition of sustainability, while well-intentioned, can only remind an attentive reader of Adam Smith, that the needs of the individual are indistinguishable from the needs of the market: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” These are not necessarily the needs of average people and the planet, as distinct from “the market.” And the market needs of classical and neoliberal economics are not sustainable – as demonstrated by the economic crises of 1971, 1983, 2001, and 2008, all of which were driven by a failure to integrate energy in economic assumptions and consequences.⁴

Exponential Thinking

As children, most North-American boomers were exposed to Pete Seeger’s children songs, several of which like: “I Have a Rabbit,” or “We’ll be A-Doubling,” are excellent primers to the concepts of ratios and exponential function. Unfortunately, the lesson seems lost on adults who regress into linear or additive thinking after they reach voting age. This is regrettable, because it keeps a lot of middle-aged politicians from coming to grips with the magnitude of the problems we face. On the other hand, it reinforces the case for the leadership of youth, such as we saw at Copenhagen.

Reliance on addition is a really regrettable habit. Most, if not all, systems that we depend on, whether they be our own physiological perceptual systems, computational systems, our economic systems or our environmental and whole-earth systems function on exponential principles. So, when we have to solve problems emanating from within a system , we have to do so by thinking in its terms of reference: exponentially. Mis-identifying a problem as additive, can have disastrous and costly consequences.

A systemic problem must be approached, not as a series of entities that we add one by one, but as a problem of rate of increase that presents different aspects at different scales.

A simple example, one we are all familiar with, would be the recent H1N1 pandemic. The problem with a pandemic is that while it appears to spread additively, person to person, it in fact spreads exponentially, not one person at a time, but in multiple groupings. (A pandemic is in fact a rapid exponential system that grows from a local to a global scale.) As with any such system, to maintain sustainable long-term conditions, one has to control its growth in both space and time. At a regional scale, the transmission problem has to be localized, by, isolating potential cases, limiting transportation, and by getting ahead of the developing rate of increase by vaccination, at source.

As we all know, the problem was not solved by having people vaccinated one-by-one, door-to-door. This would have involved taking the top-down approach of having medical staff tend down to the public. As with most additive approaches, this would have required repeated triage, or repeated sorting until all households were covered. Even if this logistic nightmare had been possible, it would have been very expensive both in terms of labour , transportation and energy costs – and too inefficiently slow to get ahead of the virus.

Instead, the H1N1 pandemic was solved regionally bottom-up, by having individual members of the public converge to a handful of sites. The exponential reduction in labour , transportation and energy costs, produced fast exponentially efficient results that enabled medical staff to get ahead of the virus’ exponential rate of increase, by treating a large number of patients in a minimal amount of time.

There is a lot to learn from this simple example, because it is exactly how we solve most whole system problems: simple bottom-up exponentially efficient management strategies.

Why Worry about Recycling on the Sunshine Coast?

In neo-classical economic thought, the market is independent of sources of energy, resources and of waste. The over-arching assumption is that somehow human creativity and innovation will resolve these problems. In the last decade it has become increasingly clear that the post-1945 success of Western economies has been built on artificially low energy costs of fossil fuels.⁵ The twin economic and environmental problems we now face bear out the limits of these economic theories.

[inset side={right}]{Waste is not an additive problem, it is an exponential problem.}[/inset]Not only do we have a resource crisis, (the quality of resources is diminished, harder to extract and process), but the end-of-life product, waste or garbage, is accumulating exponentially, as current local and global controversies about garbage disposal bear out. What is interesting is that worldwide, garbage is not accumulating on a simple linear scale, that is, additively, it is accumulating exponentially. Consumption patterns are not linearly distributed, and therefore neither is waste. This is particularly evident with electronic waste which has grown exponentially since 1985, and is now a major international hazardous waste problem.⁶

Waste is not an additive problem, it is an exponential problem.

What was assumed to be an addition problem in classical economies is now a major systemic problem for The New Economy. In Europe and North America, governments are promoting the development of Resource Recovery Parks to address this systemic problem, and move their economies in line with The New Economy.⁷ That is the chosen exponential solution to a systemic exponential problem.

In the New Economy, recycling plays a very important role at multiple scales, because it is both an input, as “recovered resource” that enhances environmental conservation and provides renewal for the market, and as an output as “recovered and processed waste.” For this to work, the New Economy has to account for the efficiency of recovery, and have a clear knowledge of the processes that will take recyclables “from cradle to cradle” – not to “end-of-life” in a landfill somewhere out-of-sight either locally or on some other part of the planet. Currently, the recycling industry refers to this as “ethical concerns” in the sustainability chain.

The Difference

The only real “Sustainability Filter” is “The New Economy,” not some “green-sounding” fantasy added onto a demonstrably unsustainable economy that gives us a global crisis “every five to seven years.”⁸

If we stop to consider how our local governments, at SCRD and in Gibsons are currently handling this question, it should be self-evident that the problem is not viewed ethically, exponentially, or even sustainably.

This year, Gibsons has commissioned two professional reports on recycling. Both focussed on the ethical and long-term implications of recycling. Both are documents with foresight, which respond to the needs of the New Economy. Both of these documents are currently quashed, and one has been asked to be re-written without “ethical considerations,” largely so that it can better adapt to the vision (or lack thereof) and objectives of the SCRD.

In the eventuality that one might be fooled by the “progressive” politics of SCRD, it is important to note the logic used by Chairman Shugar and her followers. SCRD, Gibsons and Sechelt have moved to support curbside recycling, because “door-to-door service guarantees more participants.” Additively, one might get more clients to tax, but research tells us that the quality of the product and its eventual recycling capture are diminished.⁹ This is the old unsustainable additive approach that does not fully account for full energy costs, transportation costs, nor for the full cradle to cradle recovery, and is far more costly to the taxpayer than an independent Resource Recovery Park.

If SCRD and our regional governments adopt failed solutions proper to the old economy, they should not claim to be progressive, sustainable, or to be moving us into The New Economy. We should, however, thank our lucky stars that these same leaders were not in charge of the H1N1 programme!

FOOTNOTES

1. Charles A Hall (2004). “The Myth of Sustainable Development: Personal Reflections on Energy, its Relation to Neoclassical Economics and Stanley Jevons.” Journal of Energy Resources Technology 126: 85-89.

2. Thomas L. Friedman (2009). “250 Ways to Save the Planet” in Hot, Flat, and Crowded. Douglas and McIntyre p.249-262.

3. Charles A Hall and John W. Day Jr. (2009). “Revisiting the Limits to Growth After Peak Oil,” Scientific American 97: 230-237.

4. Jeff Rubin (2009). Why Your World is About to Get a Whole Lot Smaller. Vintage, 240 pages; http://www.environmentalleader.com/2010/01/15/jeff-rubin-at-the-business-of-climate-change/ ; Charles A Hall (2001). “The Need to reintegrate the Natural Sciences with Economics.” BioScience 51: 663-673.

5. Charles A Hall and John W. Day Jr. (2009).

6. Zada Lipman (2002) “A Dirty Dilemma: Hazardous Waste Trade” Havard International Review Winter 67-71; Charles W. Schmidt (2002). “E-Junk Explosion.” Environmental Health Perspectives. 110 (4): 188-194.

7. California Resource Recovery Association Conference, August 2-5, 2009.

8. Jamie Dimond, J.P. Morgan’s CEO, recently explained that it is normal to expect economic crises every 5-7 years, (and bail-outs). Contrary to Elizabeth Warren’s protests (“Wall Street’s Race to the Bottom,” Wall Street Journal February 8, 2010), Mr. Dimond is in fact statistically, if not morally,” on-the-money.”

9. C. Bartlett (2007) Scoping Study on International Processing of Ontario Blue Box Waste; C. Morawski (2009) Understanding economic and environmental impacts of single stream collection systems.)

 

• Prev
• Next