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Driving NASCAR Off the American Cultural Cliff

Published by Anonymous (not verified) on Fri, 01/07/2022 - 1:40am in
by Brian Czech

In the heart of New York’s spectacular Finger Lakes region last Sunday, 40 drivers lined up to race—for six hours—round and round a circuitous route of doglegs four miles southwest of Seneca Lake. I don’t know who won, and I couldn’t care less, but I do know who lost. That would be people and planet.

Brian France

Brian France: Billionaire grandson of “Big Bill” France and master of NASCAR branding. (CC BY-SA 2.0, Zach Catanzareti)

Watkins Glen International Raceway, dubbed “the spiritual home of road racing in the USA,” is among six major car-racing tracks scattered about the state parks, national forests, and wildlife refuges of the Finger Lakes region. These six tracks are among 64 in the great state of New York, where they plunder the peace from the Pennsylvania state line all the way over to Long Island, up into the Adirondack Mountains and back down to the shores of Lake Ontario.

It’s unclear why Watkins Glen gets the “spiritual home” title. Could it be for the dozen spirits (eleven drivers and one spectator) who gave theirs up at “The Glen”? Or, maybe it has to do with the historical origins of the raceway, so parallel with the origins of NASCAR. Possibly it’s because of the diversity of racing styles that have convened there, including NASCAR, the Grand Prix, and GT World Challenge America.

Yet my guess is it’s the majesty of the Finger Lakes region that spiritualizes all who enter its hallowed valleys. The sweeping vistas, clear blue lakes, and cool, crisp air are inspiring and energizing to travelers, whether afoot, aboard a bike, or driving a Prius. By the time they arrive anywhere near Watkins Glen, their spirits are lifted and their psychological engines are revved.

And NASCAR capitalizes like a vulture on a Seneca Lake updraft.

Who Is NASCAR?

NASCAR is the National Association for Stock Car Auto Racing, LLC. Don’t mistake it for a motorized version of the NFL, NBA, or NHL. It’s not a trade association designed to serve its constituent teams, complete with a commissioner holding teams and players accountable to fans and each other. Rather, NASCAR is a privately held corporation; held in particular by the France family ever since its founding by Bill France, Sr. in 1948.

While it’s not a trade association, NASCAR is somewhat of a syndicate, sponsoring races under twelve “series” across North America and another series in Europe. Most Americans can’t avoid some exposure to the “Cup Series” with its history of Richard Petty and Dale Earnhardt tearing up tires at Daytona, Talladega, and The Glen. The other two primary American series are the “Xfinity Series” for up-and comers—much like minor league baseball—and the “Camping World Truck Series” for pickup truck lovers.

Bib that says "I have a checkered future."

NASCAR fans are made, not born, but with NASCAR’s help, the making starts shortly after birth.

The latter two series remind us that NASCAR is also a brand, unto its own and as a mother brand for all kinds of offspring. The NASCAR Camping World Truck Series used to be the NASCAR Craftsman Truck Series, and for one brief year Gander got in on NASCAR glory.

Even the coveted NASCAR Cup Series has had its spin-off branding, with Winston (cigarettes), Sprint, and Monster Energy all putting their names on the cup over the recent decades of shifting consumer preferences.

Branding and sponsorship vis-à-vis NASCAR is a bewildering phenomenon. A logical start in sorting it out would be with the list of racing team sponsors. Most NASCAR teams have “partners” as well, including “primary partners” that evidently provide more money than regular old partners. NASCAR per se—the France family—has its “premier partners,” “official partners,” and “broadcast partners.”

Then there’s the straight-up NASCAR retail line, spread across a gazillion vendors including Walmart, Dick’s Sporting Goods, JCPenney, and presumably every truck stop along the Interstate Highway System. You can get the goods directly from NASCAR’s own online NASCARSHOP, too. There, for example, you can get your NASCAR T-shirts (over a thousand choices), NASCAR earrings, NASCAR nightlights, NASCAR baby bibs, NASCAR leashes (presumably for pets), and all manner of NASCAR memorabilia and collectibles. But you’ll never collect it all, try as you might, because each year and each new team brings new combinations and permutations of drivers and cars (with a current collection of 730 diecasts in sizes up to 1/24th).

None of this stuff is cheap, but don’t worry; just use code “Lap25”—no kidding—to get 25% off!

NASCAR Money

It’s not easy to assess the financials of a privately held corporation, especially in the USA, but in 2015 Forbes managed to estimate the France family at #53 in “America’s Richest Families” with a net worth of $5.7 billion. Brian France alone (the grandson of “Big Bill”) evidently clocks in today around $1 billion, and the annual gross revenue of NASCAR is about $3 billion.

How do the Frances and NASCAR make all that money? A big chunk of it comes from the $8.2 billion, ten-year television contract NASCAR signed in 2014 for the period 2015-2024. NASCAR gets ten percent of it from the get-go. The rest is split primarily between racing venues and teams.

Now imagine if a Dan Snyder or a Jerry Jones (two of the more reviled NFL team owners, for non-Americans) owned legendary Lambeau Field, AT&T Stadium, FedEx Field, and the Superdome, plus ten more of the biggest NFL venues. That would be comparable to NASCAR and the France family with their fourteen racetracks. Along with Watkins Glen, the “spiritual home,” NASCAR properties include the iconic Daytona International Speedway, Richmond Raceway, and Talladega Superspeedway.

Photo of race cars racing around Michigan International Speedway.

Cars and consumers on the fast track at Michigan International Speedway, a property of NASCAR, LLC. (CC BY-NC-ND 2.0, Stephanie Wallace)

Since 2019 when the France family bought out the ISC (International Speedway Corporation), they’ve had only one rival in the hosting and scheduling of NASCAR races: Speedway Motorsports with its twelve tracks. Given 39 tracks where NASCAR races are held in the USA (38) and Canada (1), only thirteen are owned by others, including a handful of public entities (Los Angeles County with its Memorial Coliseum, for example).

While NASCAR and the France family used to be at odds with Speedway Motorsports, that seems to have changed since NASCAR took over the ISC. That same year, Speedway went private, emulating the France family. Now they’ve “entered a period of détente,” and we can only imagine the potential for collusion. With a little cooperation, the two entities—especially the France family—can fairly monopolize prime-time stock car racing and scheduling in the USA (which of course you can monitor at NASCAR’s own ESPN-like website).

Either way, NASCAR rakes in close to a billion more annually from its “venue share” of the TV contract combined with ticket sales ($660 million and $194 million in 2018, respectively). Some of the ticket sales go back to the drivers (40 of them in the Cup Series, including 36 chartered) and their teams (17 of them in the Cup Series). But then, teams and charters (the latter analogous to NFL franchises) pay hefty fees back into NASCAR.

Don’t forget those sponsorships and partnerships, too. Sprint, for example, is thought to have paid NASCAR between $50 and $75 million annually for some years before 2016.

All we can say for sure is, if you’d like a challenging accounting job, sign on with NASCAR.

NASCAR and Economic Bloating

What could contribute to GDP at a faster pace, in a fossil-fueled economy, than some of the planet’s fastest, most gas-guzzling machines tearing around in circles? Especially when a NASCAR race typically attracts around 100,000 attendees, many of them driving their own souped-up coups to the raceway in undying tribute to their favorite “sport.”  So, when NASCAR comes to town, the chamber of commerce listens.

A NASCAR race can bring in hundreds of millions of dollars in local revenue, most of it taxable and therefore good for the public goose as well as the private gander. Richmond International Raceway, for example, “generates $557 million for the state, including $36 million in local and state tax revenues.”

Don’t get me started on “generates.” At CASSE, we know how money is generated. Money is expended, “fast and furious,” at NASCAR races, but the money is generated at the ecological base of the economy, where it invariably entails an ecological footprint in addition to the one at the raceway. That said, it doesn’t take a genius to calculate that hundreds of millions of dollars are brought to the region of a NASCAR event.

Bimp of the Daytona International Speedway

Location, Location, Location. Daytona International Speedway, NASCAR’s corporate home, is next to Daytona Beach International Airport, and now next to a hundred-acre Amazon campus. (CC BY 2.0, Chad Sparkes)

Politicians want to be in on the action, too. Here’s how Illinois state senator Rachelle Crowe (a Democrat from Glen Carbon) puts it: “By bringing the NASCAR cup series to the [St. Louis] Metro East this summer, our state is solidifying its commitment to supporting regional development and driving economic growth throughout the area.”

Conversely, when NASCAR pulls out (as it readily can, given its control of venues and schedules), the locale feels the pinch. That’s precisely what happened at Watkins Glen in 2020, when the staunchly conservative France family moved the big event down to Daytona, blaming it on the differential in COVID regulations between New York and Florida.

NASCAR knows it brings the dough, and plays it up as needed. As Lesa France Kennedy, NASCAR’s executive vice chairperson, puts it, “We are proud to be a part of positive economic development in each market in which NASCAR races.” In a country where economic growth is a hot pursuit at every political level, pitching a race is easy, but NASCAR plays good growth citizen in other ways as well.

NASCAR recently cut a land deal with Amazon, which is developing 100 acres adjacent to Daytona International Speedway. The deal prompted France Kennedy to add, “As Amazon has continued to expand its operations within Florida, we’re excited to play a role in bringing new jobs and a first-class partner to Volusia County. We look forward to this project serving as a catalyst for future growth and development in the community.”

In other words, even where a lot of the townspeople might view NASCAR as an unwelcome intruder, it’s likely to horn its way in by “virtue” of its economic growth credentials. As with so many other questionable pursuits, NASCAR would be far easier to stop if growth itself were recognized as the problem it has become.

The Gas, the Materials, and the Waste

NASCAR has its own version of green energy: Sunoco’s 98-Octane Green E15. It’s literally green; think of it as Mr. Yuk green. By the end of 2016, after only five years of running on Sunoco Green, NASCAR was celebrating “10 million competition miles” fueled by this so-called “biofuel” containing 15 percent “American-made ethanol.”

Note that celebrated phrase “competition miles,” in cars that get 2-5 miles per gallon during competition.  That means somewhere between 2 million and 5 million gallons of Sunoco Green was combusted during the five-year period, just during the races. A lot more than that would have been burned up practicing. While most NASCAR races take about two hours (the Watkins Glen marathon being a notable exception), “NASCAR drivers must practice for hours at a time to develop sound habits at a racetrack.” Thus, NASCAR has a ridiculous carbon footprint: approximately 4 million pounds per year.

Another thing NASCAR burns is rubber. About 75,000 tires were used up by NASCAR in 2015, resulting in $35 million of expenditure on tires in 2016.

If we went down the list of supplies and materials used up for all this unnecessary “car circling,” we’d find steel, aluminum, plastic, paint, solvents, glass, fiberglass, lead, copper, titanium, magnesium, wood, sand, oil, and cement.

Meanwhile, NASCAR has tried to paint itself “green” with tree planting and recycling initiatives. Has there ever been a greasier splash of lipstick on a sloppier looking pig? The salient fact remains that the “sport” consists of circling around and around, ad nauseum, in gas guzzlers, for no apparent reason whatsoever than the “entertainment” of a crowd that could probably benefit from a little healthy exercise. Certainly their ears would benefit.

The Symbolism

Approximately 23 years ago, while writing Shoveling Fuel for a Runaway Train, I recall finding (and duly reporting) that NASCAR was “the fastest growing spectator sport in North America.” I was shocked, not because it seemed untrue—it rang true indeed—but because of the absolute collapse of the American conservation ethic. I recall wondering, “What could the world possibly be thinking of us?”

On September 11, 2001 (a year after Shoveling Fuel was published), al-Qaeda terrorists attacked the symbols of American capitalism and the U.S. Government. Almost immediately, President George W. Bush hideously exhorted Americans to “go shopping” and travelling. “Get down to Disney World in Florida,” he said from O’Hare Field. “Take your families and enjoy life, the way we want it to be enjoyed.”

Empty NASCAR stadium with one car racing the track.

Goodbye NASCAR.

NASCAR fans took Bush to heart, and NASCAR, as always, was ready to capitalize. In the first major spectator event after 9/11, on September 23, 140,000 screaming fans—with 140,000 NASCAR-provided American flags—packed the Dover International Speedway in Delaware. Lee Greenwood sang “God Bless the USA.” The fans chanted as one, “Wooo! U-S-A! U-S-A! U-S-A!”

It’s understandable to have mixed feelings about the Dover event. Americans needed an emotional outlet, and it happened to be a time of year when NASCAR would likeliest provide it. Yet the symbolism was horrific at a time when the rest of the world was trying to sympathize with the USA. Everyone knew American tensions in the Middle East were all about the oil, and here were filthy rich NASCAR teams launching their legendarily gas guzzling noise makers into circles yet again.

The USA blew its opportunity to secure long-lasting international goodwill. Her citizens went shopping, to Disney World, and to NASCAR races. They practiced “consumer patriotism.” The tide of goodwill turned quickly, and in a matter of months one of the prevalent topics over the airwaves and in the think tanks became “Why do they hate us?” While President Bush kept that question focused on Islamic extremists, many of us understood it wasn’t just the extremists, but rather a whole world of nations with a growing resentment of “the way we want it.”

Fast-forwarding to now, consider how frustrating it must be for the world’s other nations to watch our obnoxious NASCAR spew carbon and particulates into the global atmosphere, again and again and again, for almost 75 years, as if we were kicking sand in their faces, while they meet in handwringing futility on reducing carbon emissions. It’s not so much about the pollution and global warming directly attributable to racing—industrial and military sectors cause far more of that—but the symbolism is as stark as a Confederate flag.  What could possibly be more symbolic of Americans’ casual disregard of the world citizenry, the global environment, and posterity, than NASCAR?

Fortunately, NASCAR is no longer “the fastest growing spectator sport in North America.” It’s on the decline with all kinds of political and financial problems, thanks to a toxic mixture of Trump, Confederate stain, France family greed, COVID, and environmental concerns. Now is no time to take our foot off the gas. The Frances made their billions, drivers made their millions, and fans had their fun. Let’s welcome the fans back to sanity; we need them on the team and in the pits, if not in the driver’s seat. Together, we’ve got to drive NASCAR off the cultural cliff and let it lie in the rusty pile of American mistakes.

Nothing could be more patriotic.

Brian Czech, Executive Director of CASSEBrian Czech is CASSE’s executive director.

The post Driving NASCAR Off the American Cultural Cliff appeared first on Center for the Advancement of the Steady State Economy.

Ad Nauseum: Addressing America’s Advertising Problem

Published by Anonymous (not verified) on Fri, 24/06/2022 - 12:41am in
by Haley Mullins

One of the biggest roadblocks to achieving a steady state economy is advertising. While seemingly innovative solutions to consume conscientiously are becoming more prevalent, most people aren’t Marie Kondo-ing their way through each purchase, stopping to question whether the item in their shopping cart will “spark joy.” But how much blame can we really assign consumers when they’ve been dropped onto a hamster wheel of coupons, cash-back credit cards, and “consumer confidence” indicators?

We live in the age of the internet, where we can purchase anything with one click on Amazon. Websites track our movements and preferences as we surf the web, offering us personalized advertisements so we can discover and buy more of what interests us. To put into perspective how expansive advertising is in the USA, China is the second-largest advertising market in the world, yet its ad expenditures are estimated at less than half the amount calculated for the USA.

Advertising and Growth

Super Bowl promotions in a grocery store, featuring doritos advertising.

Super Bowl Sunday might be better named National Advertising Day. (CC BY 2.0, JeepersMedia)

In 1941, right before a baseball game between the Brooklyn Dodgers and Philadelphia Phillies, the first legal TV commercial aired in the USA. It was just ten seconds long and only cost the company nine dollars. Forty years later, the standard for prime-time TV was 9.5 minutes of ads per hour; today, it’s up to 14–17 minutes per hour. The cost of advertising has skyrocketed, too, but marketers are still willing to pay big bucks to make buyers aware of the “Next Big Thing.” In 2020, advertisers spent an average of $5.6 million for a 30-second spot in Super Bowl 54.

Firms advertise to create demand and promote consumption. (I don’t know about you, but I didn’t want socks with my cat’s face on them until I saw a Facebook ad for it.) While firms compete against each other for our business, they rally around the goal of GDP growth. Wall Street and Madison Avenue aren’t far apart—figuratively or politically—and both have skin in the growth game.

Americans have a love-hate relationship with ads though. A typical American might understand the role of advertising in economic growth, yet—apart from Super Bowl Sunday—we detest ads and go to great lengths to avoid them. By 2021, 27 percent of U.S. internet users used ad blockers on their connected devices. Younger generations are particularly put off; 48 percent of Gen Z consumers and 46 percent of Millennials prefer to pay a premium than watch advertisements on streaming video services.

First Things First

Steady staters have some significant hurdles to overcome in the degrowth of the American ad industry, the first of which is the First Amendment.

Advertising falls under the First Amendment right to free speech and free press, the most cherished of our constitutional rights. However, even the sanctity of the First Amendment doesn’t guarantee the freedom to say anything. The circumstances are important, too. Reasonable restrictions of free speech are imposed most notably when public safety is concerned. The classic example of unprotected speech is yelling “Fire!” at the movie theater when no fire exists, as the welfare of people supersedes your right to yell “Fire!”

While advertising isn’t as directly harmful as in this example, the prevalence and effects of advertising—unnecessary consumption, growth, and environmental impact—have become increasingly harmful to public welfare. Advertising restrictions already in place substantiate our cultural awareness of advertising as a danger to the public. Under the law, claims in advertisements must be truthful, and cannot be deceptive or unfair. Additionally, there are restrictions on promoting harmful products like tobacco and alcohol, as well as advertising to children, who can’t interpret ads with a critical lens.

Society understands the power of advertising and the dangers it poses when used manipulatively. Thus, it’s poor reasoning to use the First Amendment as an excuse for “anything goes” in the advertising industry. So, what policies could we enact to moderate advertising, slow consumption, and (in the process) improve wellbeing?

Ad-equate Policies

Defenders of advertising argue the importance of the practice in aiding competition, a fundamental facet of a capitalist system to keep prices low and fair. As American economist Lester Telser once described, “If sellers must identify themselves in order to remain in business, then formally unless they spend a certain minimum amount on advertising their rate of sales will be zero. Regardless of price, buyers would not know of sellers’ existence unless the sellers make themselves known by incurring these advertising outlays.”

1960 Budweiser advertisement with four Black men holding beers and chatting in a kitchen.

Advertising: framing the consumption of market goods as raising one’s quality of life. (CC BY-NC 2.0, ChowKaiDeng)

Touché, Telser. Eliminating the practice of advertising isn’t practical, as people would struggle to discover necessary goods and services. But billions of dollars are spent annually on advertising, far surpassing the optimal scale of the industry. In 2020, U.S. firms spent $240 billion on advertising; all of it tax deductible, as it’s considered a necessary business expense to generate or keep customers. Herman Daly and Joshua Farley argue for advertising taxes in Ecological Economics (Second Edition), declaring it appropriate to tax advertising as a public bad because production should meet existing demand rather than create new demands for whatever gets produced.

But if we’re truly to curb overconsumption of market goods, merely reducing the quantity of advertising will only do so much in the aggregate. To change consumer habits, an alternative to market goods must be introduced. Thus, in addition to taxation, Daly and Farley suggest making media information flows more symmetric so that the public is equally exposed to nonmarket goods as they are to market goods. Essentially, we need a sort of nonprofit advertising to balance out the advertising of firms.

Nonmarket goods, things that are neither bought nor sold directly, do not have a readily quantifiable monetary value. Some examples include visiting the beach, birdwatching, or going for a walk. Perhaps, with more attention given to nonmarket goods, consumer culture might shift to better appreciate our planet and better understand the true cost of frivolously consuming market goods that come from the Earth and return to the Earth as waste. Our resources might then be reallocated to the preservation of invaluable nonmarket goods, a shift that may aid in transitioning to a steady state.

Redefining Ethical Advertising

Cartons of cigarettes with several different warning labels making it clear that smoking is hazardous to people's health.

Full disclosure: unchecked consumption kills people and planet. (CC BY 2.0, kadavy)

The U.S. Federal Trade Commission (FTC) defines “ethical advertising” as “truthful, not deceptive, backed by evidence, and fair.” The FTC assesses the adherence of these principles through the lens of a “reasonable consumer” to determine whether an ad meets the requirements. However, some argue that the FTC has a responsibility to protect the ignorant consumer to the same extent as the reasonable one.

If the last several decades of celebrated economic growth are considered, I’d say the vast majority of consumers fall into the ignorant category—ignorant to limits to growth, at least. Is it not within the scope of ethics, then, to make the true cost of consumption for advertised market goods evident? Is it not deceptive for ads to display a price tag that fails to factor in the environmental costs of production? We have warning labels on tobacco and alcohol products that consumption may lead to adverse effects, so why aren’t we warning buyers of the consequences of consuming other goods?

If we don’t restrict the amount or reach of advertising, the least we can do is demand full-disclosure advertisements that detail the environmental cost of producing and purchasing the product. This would, at minimum, include estimated life-cycle emissions, quantity of natural resources extracted, and the energy required to produce each unit. Such disclosures would, over time, raise awareness of limits to growth and could, perhaps, be the catalyst that converts our culture of conspicuous consumption to one of careful conservation.

Haley Mullins, managing editor for CASSEHaley Mullins is the managing editor at CASSE.

The post Ad Nauseum: Addressing America’s Advertising Problem appeared first on Center for the Advancement of the Steady State Economy.

War of the Words: Rebranding the “Healthy Economy”

Published by Anonymous (not verified) on Fri, 17/06/2022 - 12:50am in
by Mark Cramer

Industries strive incessantly to increase human productivity, often by way of mechanizing or automating tasks. After all, there are limits to purely human energy, strength, and ability. Without more workers, we require technological innovation to overcome these limitations. Fortunately for the pro-growth industries, technology doesn’t earn wages.

Even outside of the workplace, technology takes the place of utilitarian exercise. Long ago, most people hunted and gathered their own food. Later they walked to markets. Nowadays, those of us who don’t drive ourselves to supermarkets can have our pre-packaged groceries delivered to the doorstep.

Our ever-growing, production-driven economy has converted us into sedentary beings. Studies have shown that as countries become wealthier, Body Mass Index (BMI) for the bottom 80 percent of the population worsens while BMI for the richest 20 percent improves. Degrowing to a steady state, then, is likely to yield significant health benefits for (at least) 80 percent of the population.

Reclaiming the “Healthy Economy”

Part of the path to improving people’s health (and arriving at a steady state economy) includes reclaiming the health-related vocabulary pro-growth economists have monopolized. Adjectives like “healthy” and “robust,” nouns like “recovery,” and verbs like “strengthen” have been reappropriated from the realm of human health for an (ironically) unhealthy economic system. A “robust recovery” in the soft drink industry means an increase in cases of type two diabetes, and the health care industry is “strengthened” when more people are sick.

A $100 bill with a medical mask covering Ben Franklin's face.

An economy designed for perpetual GDP growth is best described as “sickly.”

We might be better equipped to spread the message that taking a brisk walk outdoors is preferable to driving to a fitness club if we first stop describing the growing economy as healthy. If we can’t reclaim the health-related terminology from economic discourse entirely, the least we can do is call a spade a spade; that is, describe a growing economy as “sickly” and replace terms like “green growth” with “brown bloating.”

To introduce viable alternatives, we need to recapture the language, especially as it relates to utilitarian use of metabolic energy. Otherwise, we can win the battle of logic but still be defeated in the war of words. Reappropriating positive health-related vocabulary for degrowth and steady-state alternatives is a great place to start.

Public transportation seems like enemy number one for GDP strategists, if opinion writers for the Heritage Foundation and the libertarian Cato Institute are the gauge. Yet “active transit” would be an apt phrase for public transportation, with a clear link to public health. When one uses light rail or a bus, it’s necessary to walk to and from the bus stop or rail station on both ends of the commute. It’s fine exercise; as good as any treadmill, and far more stimulating.

In Paris I usually commute by bicycle but using the metro has helped me avoid rush-hour traffic. The brisk walks to and from the metro add 40 minutes of utilitarian exercise, roughly equivalent to the exercise benefit of 50 minutes of biking (the amount it takes for a round trip).

It’s common sense that active transit is healthier than passive. Common sense is corroborated by statistical case studies, too. One such study showed that a mere “one percent increase in county population use of public transit is associated with a 0.221 percent decrease in county population obesity prevalence.”

Degrowing Our GDP and G-U-Ts

Replacing fossil-fueled machinery with human metabolic energy is a simple step towards degrowing some of the most detrimental industries. The automobile industry, for example, is responsible for approximately 4.5 percent of all jobs in the USA according to pro-car researchers. During a policy debate on public transportation at the Paris Hotel de Ville (City Hall), I witnessed car company lobbyists warning that if the municipality curtailed car use, the economy would suffer. (When called out on fossil fuels, they flashed their trump card: the electric car.)

Two people riding bikes down a road with cars parked along the side.

Trading fossil power for human power is a step towards a truly healthy economy. (CC BY 2.0, Kristoffer Trolle)

In other words, these lobbyists believe (or would have us believe) we should rejoice at the opportunity to sit immobilized behind the wheel during a traffic jam because we are “lifting” GDP. Yes, in GDP parlance, we can now lift while remaining inactive.

The CDC has attempted to counteract such lobbyists by explaining what would happen if we kept our cars parked for trips under a mile. The answer is startling. Car trips under a mile equate to 10 billion miles per year in the USA. If Americans traveled half of these trips on foot, the result would be the equivalent of taking 400,000 cars off the road each year. The “health” of the automotive and oil industries would diminish as the health of the American people improves, all while saving drivers $900 billion.

A study cited by the CDC found that eliminating car trips under five miles (round-trip) in urban Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin would result in nearly $5 billion in health benefits from improved air quality. The same study estimated that if half of these car trips were bike trips, $4 billion in healthcare costs could be saved—along with well over a thousand lives.

Another segment of the economy that contributes heavily to GDP with malignant results for our personal health is the food industry, from farming to food services. “Agriculture, food, and related industries contributed $1.055 trillion to the U.S. gross domestic product (GDP) in 2020, a 5.0-percent share.” The industries also “contributed” to a “healthy” dose of obesity.

Adults helping a child with gardening at a community garden plot.

What could be better than walking to the grocery store? Participating in a community garden! (CC BY 2.0, d-olwen-dee)

With a healthy dose of human energy, we can grow our own food while staying trim. Local gardening can reduce the role of fossil fuels in food distribution, too. The average tomato travels more than 1,300 miles from farm to supermarket. We can do better than that. Plus, the result for public health would be significant beyond obesity concerns: fresher, nutritious food; revitalized bodies; and fewer trips to the doctor. The more families that do their own gardening and composting, the bigger the hit taken by the food industry and GDP—and the better our health.

Like walking and cycling, gardening isn’t just healthy, it’s satisfying and enfranchising. Many cities have nonprofit organizations that help homeowners convert their lawns into gardens. Even apartment dwellers can participate in community gardens sprouting up in smart American cities and common around the world. These vibrant spaces combine active living with social connectivity.

Who would have thought that the very language of health would be siphoned away from human beings and applied to GDP? Who would have thought that we’d reach a point in history where walking, bicycling, and gardening would become acts of rebellion? I am not an economist, but I suspect that when we use our own metabolic energy in utilitarian tasks, the vast majority of us will be healthier and happier while GDP declines.

Mark Cramer Book CoverMark Cramer is the author of Old Man on a Green Bike: Chronicles of a Self-Serving Environmentalist.

The post War of the Words: Rebranding the “Healthy Economy” appeared first on Center for the Advancement of the Steady State Economy.

Heart Troubles: The Link between Cardiovascular Disease and GDP Growth

Published by Anonymous (not verified) on Fri, 03/06/2022 - 4:02am in
by Taylor Lange

Heart disease is the leading cause of death and disability across the world. The Global Burden of Disease Study covers ten specific cardiovascular diseases and designates rarer ailments in an “other” category. The most prevalent and deadly diseases are ischemic heart disease, stroke, and hypertensive heart disease. In 2019, cardiovascular disease lead to the deaths of 18.6 million people globally.[i]

 


A cardiovascular Kuznet’s curve?

 

Is there a relationship between the prevalence of heart disease and economic growth? Economists from the University of Malta found that increases in per capita consumption—as opposed to GDP at large—in the EU initially caused increases in per capita mortality from cardiovascular disease before reaching a maximum. Thereafter, evidently, growing per capita consumption led to decreased cardiovascular disease mortality. The economists implied, in other words, that a “Kuznets curve” describes the relationship between GDP per capita and cardiovascular mortality.

More to the Story

While mortality is an important dimension of public health, so are incidence and prevalence of disease. In the Global Burden of Disease Study, incidence is defined as the number of new cases of a disease emerging each year, while prevalence refers to new cases plus cases continuing from previous years. Analyzing incidence and prevalence helps us develop a more holistic view of GDP’s relationship to public health and suggests that economic growth may be driving the pervasiveness of cardiovascular disease because of risks that accompany growth.

Risk factors for cardiovascular disease can be environmental or behavioral. One of the most prominent environmental risk factors for cardiovascular disease is ambient air pollution, which can cause a number of inflammatory responses and oxidative stress. Though many developed countries (such as the USA and EU) have decreased air pollution through regulation, political pressure for loosening such regulations is ever-present when GDP growth is a primary goal. Meanwhile, in countries with the most aggressive GDP growth policies, air pollution is hardly in check. In China, for example, air pollution increases the prevalence of multiple health conditions, including cardiovascular disease.

GDP growth can also bring cultural shifts in lifestyle that result in some increased behavioral risk factors for cardiovascular disease. The “big three” risk factors are dietary change, decreased physical activity, and smoking. With GDP growth often comes a reduction in physical activity and lower-fiber diets, increasing the probability of heart disease. On the other hand, smoking appears to be falling across the globe, though this is attributable to concerted global efforts to curb smoking, rather than increasing GDP.

Conflicting evidence, then, seems to muddle the relationship between GDP and cardiovascular disease. Mortality from cardiovascular disease appears to decrease after a certain level of GDP/capita, presumably due to investment in health services. On the other hand, environmental and behavioral risk factors increase. What do we make of this?

Incidence Rising

Cardiovascular disease data are available from the Global Burden of Disease Collaborative Network. The network compiles data from numerous national and subnational sources to estimate the impact of 369 diseases. My focus herein is on the global incidence of cardiovascular disease for all ages from 1990 to 2019 (the full extent of their data).

Global incidence of cardiovascular disease rose steadily throughout the study period, from 585 cases per 100,000 people in 1990 to 717 in 2019 (Figure 1). Global GDP rose substantially, too. The concurrent increase results in a tight correlation with a coefficient of 0.96. Such a high correlation coefficient (perfect positive correlation = 1) suggests a strong association between GDP and the incidence of cardiovascular disease.

The relationship is best visualized with a scatterplot. Using regression analysis, we determined the slope of the trend line. The slope indicates how many new cardiovascular disease cases arise per additional trillion dollars of GDP. The slope of this line, estimated at 1.65, means that an average of 1.65 new cases of cardiovascular disease arise per 100,000 people with every additional trillion dollars of global GDP. In other words, per capita heart health decreases with a growing GDP.

This trend is reflected at the national level, too, especially in China. Chinese rates of cardiovascular disease increased throughout the period and have a strong, positive correlation with GDP (coefficient of 0.95). This translates to 27 new cases of cardiovascular disease per additional trillion dollars of GDP. If this trend continues, the Chinese population will have over 16.6 million new cases of cardiovascular disease in 2025.[ii] That’s more patients with heart disease than the population of Maryland, Virginia, and the District of Columbia combined.

Case rates in the EU and USA are different. Cardiovascular disease fluctuates around a decreasing trend until 2006 in the USA and 2009 in the EU, when the trend inverts and rates increase. This pattern is also present in the relationship between heart disease and GDP, and is a characteristic of a positive quadratic relationship, which is the opposite of a Kuznets curve. In other words, continued economic growth is likely to facilitate further increases in cardiovascular disease.

 

Footnotes

[i] All statistics referenced in this article come from the Global Burden of Disease Study unless otherwise noted:
Vos, Theo, Stephen S. Lim, Cristiana Abbafati, Kaja M. Abbas, Mohammad Abbasi, Mitra Abbasifard, Mohsen
Abbasi-Kangevari, et al. 2020. “Global Burden of 369 Diseases and Injuries in 204 Countries and Territories,
1990–2019: A Systematic Analysis for the Global Burden of Disease Study 2019.” The Lancet 396 (10258):
1204–22. https://doi.org/10.1016/S0140-6736(20)30925-9.

[ii] GDP and population projections for China in 2025 came from statistica.

Taylor Lange, CASSE's ecological economistTaylor Lange is CASSE’s ecological economist.

The post Heart Troubles: The Link between Cardiovascular Disease and GDP Growth appeared first on Center for the Advancement of the Steady State Economy.

Sell Your Stocks and Enjoy the Slide

Published by Anonymous (not verified) on Fri, 27/05/2022 - 2:37am in
by Brian Czech

I’m sorry if you’re one of the 145 million Americans invested in the stock market, but I actually find it gratifying to see the market sliding. Why shouldn’t I? As a steady stater, I’m firmly against GDP growth in the 21st century. A perpetually growing stock market presupposes a perpetually growing economy. If the market has to decline along with GDP, I’m all for it.

Conversely, it’s safe to say that anyone hoping for an ever-growing stock market is no steady stater. They’re not on the side of people and planet; not really. They’re on the side of their short-term selves, and maybe their immediate families, but not the rest of us, and not the grandkids.

A serious steady stater would probably possess no stocks whatsoever. Yes, arguments get made for “green stocks” such as wind or hydrogen, but ultimately the steady state economy means a stabilized size of economy, whether it’s run on wind, hydrogen, or cow power. If you have disposable income, you can surely think of some steady-state expenditures that don’t reek of pro-growth hypocrisy. Better yet, you can save!

What’s in a Stock Market?

Robert Reich holding a finger up at a podium.

Robert Reich: “Repeat after me, the stock market is not the economy.”
Except it kind of is. (CC BY 2.0, ATIS547)

As Robert Reich would have us repeat, “The stock market is not the economy.” He avers that jobs, wages, and general standards of living have little connection to the market. In terms of its ownership, too, the stock market is hardly representative of the citizenry. While 145 million Americans—56 percent of adults—seems like a lot of investors, most of the “investment” is in the form of retirement accounts containing mutual funds. Only about 14 percent of American families actually invest directly in individual stocks. And, the wealthiest 10 percent own more than 80 percent of the shares.

Shareholding is skewed even more than the general distribution of wealth (including real estate), and far more than the distribution of income. So, Reich’s point is well taken. If the economy is supposed to reflect society at large—rich, poor, and middle-class—then the stock market is not the economy.

On the other hand, let’s not get carried away with nostalgia for Reich or our own wishful thinking. If we’re concerned about people and planet, we have to think twice about the relationship between the stock market and the economy. We’d be way wrong to rationalize, for example, “OK, if the stock market is not the economy, I can invest in it without worrying about my ecological footprint. Limits to growth might apply to the economy, but not to the stock market, which is after all just a measure of expectations, not economic activity per se.”

While the stock market may not be the economy, it certainly represents a lot of our economic activity. Consider the 30 stocks comprising the Dow Jones Industrial Average, the long-serving index of the New York Stock Exchange:

Dow-Jones Component
Sector (vernacular)
NAICS Best-Fitting Sector*

3M
Chemicals
Manufacturing

American Express
Financial services
Finance and Insurance

Amgen
Pharmaceutical
Manufacturing

Apple
Information
Information

Boeing
Aircraft
Manufacturing

Caterpillar
Heavy Equipment
Manufacturing

Chevron
Energy
Mining, Quarrying, and Oil and Gas Extraction

Cisco Systems
Technology
Manufacturing

Coca-Cola
Beverage
Manufacturing

Disney
Entertainment
Information

Dow
Chemicals
Manufacturing

Goldman Sachs
Banking
Finance and Insurance

Home Depot
Retail
Retail Trade

Honeywell
Equipment
Manufacturing

IBM
Technology
Information

Intelligent
Technology
Manufacturing

Johnson & Johnson
Pharmaceutical
Manufacturing

JP Morgan Chase
Banking
Finance and Insurance

McDonalds
Food services
Accommodation and Food Services

Merck
Pharmaceutical
Manufacturing

Microsoft
Information
Information

Nike
Footwear
Manufacturing

Proctor & Gamble
Personal care (products)
Wholesale Trade

Salesforce
Software
Information

Travelers
Insurance
Finance and Insurance

UnitedHealth
Health Insurance
Finance and Insurance

Verizon
Telecommunications
Information

Visa
Financial services
Finance and Insurance

Walgreens
Retail
Retail Trade

Walmart
Retail
Retail Trade

*NAICS is the North America Industry Classification System, maintained by the U.S. Census Bureau.

 

 

 

 

 

 

Taken one by one or in the aggregate, does anything look sustainable about this who’s who of Wall Street? If anything, it’s a conglomerate with a glaring and growing ecological footprint, with Caterpillar bulldozing the way for the rest of these bellwether corporations. Yet when we study the list, we also find something glaring in its absence.

The absence should be glaring for steady staters, at least, if not for Robert Reich (a progressive but nevertheless neoclassical economist). Can you spot it?

Here’s a hint: How are any of the 30 CEOs, their boards, and their strategists going to eat, and thus continue their plundering growthmanship? Yes, McDonalds is in their midst, but once that last McDouble comes off the McGriddle, they’re in McTrouble, and more than McLittle. They’ve got no farmers, fishers, or growers to keep food on the table!

In this non-Reichian sense, then, the stock market is profoundly not the economy. The real economy starts with agriculture—agriculture and extraction, but most notably agriculture—before anyone goes to work at Apple, Amgen, or American Express. The real economy starts, succeeds, and persists only with enough agricultural surplus to free the people for a division of labor, allowing for the existence of IBM, 3M, and McDonald’s itself. Without that agricultural surplus, the entire economy collapses; real and monetary sectors alike.

So, if we think of “the stock market” as the Dow, it most certainly is not the economy. It’s not the economy for the “Reich reason” (not representing the American public) and it’s not the economy for the structural reason (lacking an agricultural and extractive base). But hang on; there’s more to the story. The verdict isn’t quite in yet on how closely the stock market resembles, reflects, or represents the real economy.

The Dow is Not the Stock Market

The Dow is not “the” stock market, but rather a stock market index. It’s the leading index, but not the only index. Unless you’re comatose, you can’t get through a week in the USA without hearing about the Nasdaq and S&P 500, too. The Nasdaq represents the technology sector especially, while the S&P 500 is supposed to represent the stock market at large.

The New York Stock Exchange Trading Floor

All that time and attention spent on mind-numbing, money-grubbing minutiae.

Thank goodness we don’t have to hear about the rest of the approximately 5,000 indices. We have almost as many indices in the USA as there are publicly traded stocks, perhaps even more if we leave out the OTC equities (that is, stocks traded purely over the counter and not via stock exchange).

Globally there are well over 3 million stock indexes, or 70 times the number of publicly traded companies! I’ll opine about the proliferation of such indexes below, but only after we settle this matter of the stock market representing (or not) the real economy.

If we took all the publicly traded corporations in the world—roughly 43,000—and assembled them like pieces of an ecological puzzle, they’d start looking more like the real global economy; that is, the triangular economy building upon the agricultural and extractive sectors at the base. Similarly at the national level, we could use the Wilshire 5000 for a fuller picture of the U.S. economy than we get from the Dow, Nasdaq, or S&P 500. We have agricultural and extractive sectors at the base, heavy manufacturing sectors in the middle, and light manufacturing at the top, with service sectors intertwined throughout, serving the agricultural, extractive, and manufacturing industries in addition to household consumers.

Reich’s particular point about the representation of citizens would still stand, because while Del Monte, Perdue, and Cargill might be there, pumping out the produce and poultry like insults at a political rally, not a single family farm would be in sight, or in mind. Nevertheless, the full suite of NAICS sectors would be represented. In that sense, we might hearken back to another Clintonian confidant, James Carville, and say of the stock market, “It’s the economy, stupid.”

Which brings us back to the incompatibility of stock market investment and serious steady statesmanship.

What Happens When You Purchase Stock

When you purchase stock through an initial public offering, you’re either helping yet another corporation take root, or an existing one expand its operations. It’s that simple. That might have been fine in the early 20th century, but by now, any addition to the bloated economy is like feeding Fat Albert French fries. It’s not healthy—literally—for people or planet.

While the effect isn’t as direct, you encourage the corporation to expand its operations when you purchase “seasoned” (non-initial) shares at the stock exchange, too. Corporations view their share price as a barometer for when to initiate more capital outlay. On the ground, that means more factory floor, offices, utilities, energy consumption, and pollution. Less green space, quietude, biodiversity, resources, clean air, climate stability…all the things we need most at this point in history.

Please don’t cop a plea with the lukewarm alibi, “I’ll do good with my money by investing in sustainable industries.” Steady staters know that sustainability is first and foremost about the size of the economy. The hydrogen French fries may not be as fattening, but Fat Albert needs less fries, period.

Furthermore, the economy grows as an integrated whole, and so does the stock market. If you’re helping one sector, you’re essentially helping them all. You may not be assisting every business competitor when you purchase a particular stock, but you are helping to expand a sector, and therefore the economy at large.

Every stock purchase is an opportunity cost, too. Think of all the bona fide good that could have been done with the trillion dollars poured into stock markets in 2021. Things like infrastructure repair, debt relief, healthcare coverage, and education. It almost makes you want higher taxes—especially capital gains taxes. That’s assuming our elected politicians have meritorious priorities. And there you go: meritorious political campaigns could have been supported instead of more pipelines, power plants, and parking lots.

Stock Market Indices Are Social Indicators, Too

In 1975, global market capitalization (the market value of publicly traded shares) comprised roughly 27 percent of global GDP. It first exceeded GDP in 1999, and by 2020 was 135 percent of GDP, or almost $94 trillion. In the USA alone it was nearly $41 trillion; well over double the American GDP. What does that tell us about American priorities?

Two adults happily sliding down a double playground slide.

Sell your stocks and enjoy the slide! (CC BY-NC-SA 2.0, blanchardjeremy)

Revisiting the proliferation of stock indices and funds, one gets the impression that just about any combination or permutation of stocks could constitute this or that “index,” with more of them arising by the business day. Many if not most of these indices double as investment vehicles in their own right, scarcely distinguishable from mutual funds and exchange-traded funds (ETFs). These “index funds” can only be purchased outside of trading hours though, so in today’s hyperactive markets, ETFs have become all the rage, as they can be traded throughout the day. In the first quarter of 2022, 73 more were added to the New York Stock Exchange alone (one of 60 stock exchanges in the world).

This proliferation of funds, indices, and market cap speaks to the salesmanship and ambition of financial operators, brokerage firms, and (most likely) second comings of Bernie Madoff. It’s also an embarrassment for Homo sapiens, with so many of its members occupying their precious time on such mind-numbing money-grubbing.

Don’t we have better things to do with our time and money than analyzing the markets to death and trying to suck even more money out of an inflated market and money supply?

If you own stock, why not sell it now? Use it to help an ailing loved one, or even an ailing stranger. Boost the campaign of a steady stater. Put it in a trust fund for your kids’ tuition. Protect some land, help Ukraine, and put some smiles on poor kids’ faces. Who knows the benefits you might impart?

One thing is certain: When you sell your stocks, you’ll be helping us all—people and planet—with desperately needed degrowth toward a steady state economy. Then you can stop worrying about the Dow, the Nasdaq, and the rest of the 5,000 boring indices.

Brian Czech, Executive Director of CASSEBrian Czech is the executive director of CASSE.

The post Sell Your Stocks and Enjoy the Slide appeared first on Center for the Advancement of the Steady State Economy.

Steering Away from a Car-Centric Society

by Mai Nguyen

Two lanes of car traffic in a city street.

Our car-centric society is in a jam. (CC BY 2.0, Oran Viriyincy)

Learning to drive scared me as a teenager. There was something terrifying about controlling a two-ton hunk of metal, and my drivers’ education teacher didn’t help by showing a graphic slideshow of injuries we could expect from a brutal car accident. This didn’t bother me much once I moved to the city; with buses, the metro, and bike or scooter shares, there are plenty of other ways to get around. However, you’ll be hard-pressed to find these same options outside the city.

Cars are ubiquitous in the USA, with 286.9 million registered vehicles on the streets in 2020. That’s almost 300 million gas tanks to fill. The EPA reported that the transportation sector accounted for 29 percent of U.S. greenhouse gas emissions in 2019. Now, coming out (we hope) of the COVID pandemic, we’re seeing more traffic again with attendant emissions.

Some people are eagerly replacing their gas-powered cars with new, “green” electric vehicles. The intentions are a good sign, but we can’t “get sustainable” simply by exchanging some of the energy we consume.

How Bad Are Cars?

Cars are massive machines that require heaps of resources, from building the vehicles to fueling them for the road. The average vehicle requires 900kg of steel and 39 different plastics and polymers. A single tire requires about seven gallons of oil for its production. The aluminum content per vehicle is also steadily increasing, projected to reach 505 lbs in 2025.

Manufacturing is also immensely energy-intensive and complex. Stages of car manufacturing include extracting ores, transporting raw materials and components from around the world, and assembling the vehicle. Though each of these steps emit plenty of CO2, it can be difficult to put an exact figure on car-production emissions. Carbon footprint researcher Mike Berners-Lee breaks it down in How Bad Are Bananas? The Carbon Footprint of Everything, finding that the carbon footprint of manufacturing a car ranges from 6–35 metric tons.

And the environmental cost doesn’t stop there. It’s no secret that fuel consumption contributes to air pollution, but a 2018 study found that, globally, passenger road travel accounted for 45.1 percent of global CO2 emissions, or nearly six times as much as passenger air travel (8.1 percent). Americans used a grand total of 123 billion gallons of motor gasoline in 2020, corresponding with 56 percent of transportation sector emissions.

It’s Electric!

The ubiquity of gas-guzzling personal vehicles can’t be a part of a sustainable future. For some, the solution seems obvious: electrify vehicles to remove the problems that come from gas-power. Tesla kicked off its precedent-setting electric vehicle (EV) line in 2008, and today car companies like General Motors and Honda are edging into the competition. (Ironically, GM could’ve led the EV revolution as early as the 90s with their wildly popular EV1 if they hadn’t killed the model for profiting less than their gas-guzzling counterparts.)

Image of a fancy electric vehicle parked in a spot that reads "Electric Vehicles Only."

Are EVs driving us to a sustainable future, or are they another guise for green growth? (CC BY 2.0, marcoverch)

EV innovations do, in fact, look promising. Though not exactly carbon-neutral, EVs emit significantly less emissions than gas-powered cars, and they can handle just as much daily travel. EVs don’t run on empty, though. Depending on how your local power is generated, charging EVs can produce carbon emissions, and a worldwide shift to EVs would only exacerbate the global power demand. While it is generally accepted that emissions over the lifetime of an EV may be lower than a gas-powered car, the construction of EVs emits substantially more than the construction of traditional internal combustion vehicles. Specifically, a 2017 study found that the manufacturing of parts and assembly of EVs resulted in approximately 37 percent more emissions per vehicle than that of combustion vehicles.

Even though EV sales are picking up fast, we can’t bank on them and other “green” alternatives to solve limits to growth without a plan to fully transition away from fossil fuels and reduce consumption. Take the trendy plant-based alternatives filling shelves at grocery stores, for instance. Despite its massive carbon footprint, the U.S. meat market still dominates its plant-based competitors by almost $160 billion, and we’re simply “gifted” with more choices when we shop. The development of eBooks was similarly predicted to overhaul the publishing industry, but print books still outsell eBooks four-to-one.

Even if we all switched to EVs, we’d be exploiting yet another fuel source: lithium, the rechargeable battery’s key material. In 2021, global extraction of lithium was about 100,000 metric tons, about a 20 percent jump from 2020 levels. A worldwide switch to EVs would entail a 500-fold expansion of EV-battery manufacturing capacity. With the new mining boom, lithium and precious metal mining will simply replace (some) oil extraction.

The environment around South American deposits would be hit especially hard, bringing perils like wind drift of toxic chemical residue from the mines. This not only endangers the ecosystems along the Andes mountains—where the continent’s largest deposit is located—but threatens the livelihoods of farmers.

Chasing Us off the Streets

The problem with cars extends beyond their immediate environmental impact. We must examine why we find it so difficult to rid ourselves of them. Today’s suburban sprawl and congested highways didn’t come as a result of innovation for the masses; it’s more like the aftermath of an auto-industry takeover. Roads were once public spaces made for the people. Pedestrians freely crossed roadways without designated walkways and children played in the open space, while streetcars and railways catered to commuters and travelers.

Robert S. Kretshmar, Executive Secretary of AAA's Massachusetts Division; Commissioner Thomas F. Carty, Boston Traffic Department; and Mayor John F. Collins celebrate jaywalking legislation by Boston City Archives

Robert S. Kretshmar (Executive Secretary of AAA’s Massachusetts Division), Commissioner Thomas F. Carty (Boston Traffic Department), and Mayor John F. Collins celebrate jaywalking legislation. (CC BY 2.0, Boston City Archives)

It all changed with the mass production of cars in the 1910s. Over the next two decades the public was outraged at the rise of car-related fatalities, most of which involved children. A battle for the roads ensued between the masses and the auto industry. Unfortunately for the masses, car companies held sway.

A 1923 Cincinnati ordinance was proposed to limit auto speeds to 25 mph, but car companies killed the proposal—despite the 42,000 petitioners backing the plan—with a racist ad campaign mocking the city and rousing car owners. Other methods to overpower pedestrians included a slew of anti-pedestrian laws, indoctrinating children to stay out of the streets, and shaming jaywalkers.

The campaign for cars cuffed another rival, too: urban railways. Public transit has always been a key connector between low-income communities and thriving cities. It remains a major aspect of social mobility. But in the 1920s, car drivers were allowed over streetcar tracks, disrupting routes and making it nearly impossible for efficient streetcar operations. This drove transit passengers to purchase personal vehicles, further crowding the roads.

GM and other auto and fossil fuel companies bought up railways spanning 46 transit networks, only to dismantle them immediately. And while this isn’t the only reason why trolleys have fallen from grace in the USA, trolley companies were convicted of monopoly in 1949.

With the road cleared of obstacles, the auto industry set out to sell more cars. With the help of designer Norman Bel Geddes, GM debuted Futurama, a diorama portraying a car-centric future dreamed up by the company, at the New York World’s Fair in 1939 and introduced millions of visitors to something closely resembling today’s America. GM proposed a future centered around the convenience of the personal vehicle, complete with a massive interstate freeway system, suburban sprawl, and the extinction of public transportation.

The masses were sold on a car-centric America, and in 1956 President Eisenhower, with the help of Secretary of Defense Charles Wilson (who also happened to be GM’s president), leveled entire city neighborhoods to make room for highways. Minorities and low-income families comprised an overwhelming cohort of these communities, and they’ve been hit hardest by the environmental effects of “urban renewal” and the widened divide from their wealthy suburban counterparts.

Our Future Without a Map

Transportation in a car-centric society is far from sustainable or equitable. Gas-powered cars have a history of ravaging communities, and the growth of EVs won’t take us the distance. But we still need to get around, so what can we do?

Auto and fossil fuel industries fought hard in the past for political influence, but we can still take back our future. We are not fated to bumper-to-bumper traffic for the rest of our lives, and we can recenter our cities and towns around the people.

Image of several bikers riding through carless streets, with three women standing nearby a store as they pass.

In a steady state economy, communities are walkable, bikeable, and personable. (CC BY-NC-SA 2.0, UrbanGrammar)

One thing we can do is improve public transit. Access to public transportation is the key to an equitable future, but the system is in constant danger of underfunding. U.S. rail systems are far behind places like Japan, where trains are so convenient that car ownership is on the decline. Japan’s car ownership hit a low of 0.96 vehicles per household this year, while U.S. numbers have been creeping past three per household.

Fortunately, U.S. cities like Los Angeles and Indianapolis are upgrading their public transportation. Los Angeles has spent five years and $80 million on infrastructural changes to put the first electric metro bus line on the road. Meanwhile, Indianapolis is being transformed by the expansive Red Line electric bus system. These cities have shown us that commuters will jump at the chance to use public transit over personal vehicles.

Not only do our communities need access to better public transportation, but we need to foster pedestrian and cyclist lifestyles. Since 2016, Barcelona saw a 25 percent drop in pollution around the Sant Antoni market after experimenting with “superblocks,” nine-block grids of cyclist and pedestrian-first zones. Children there have room to play now, and walking and biking has increased.

In the Horta neighborhood superblock, 60 percent of survey respondents said they had become more comfortable walking on the streets and that accessibility had improved. People within the Poblenou superblock reported that the reduction in noise pollution resulted in more tranquility, improved sleep, increased social interaction, and overall improved mental wellbeing. One study estimated that widespread execution of superblocks could prevent almost 700 deaths annually.

Taking the roads back from auto and fossil fuel industries will be difficult. We‘ll have to re-envision the world around us; a world without the destructive congestion of cars. Our spaces need to be just that, our spaces, instead of streets and parking lots, dealerships, gas stations, auto parts stores, and repair shops. These profound structural and sociological changes will occur not by incentivizing the “greener” electric alternative, but by disincentivizing car culture altogether.

Widely-adopted free public transportation would be a huge step in connecting communities and promoting social mobility. We need to demand of our governments sustainable transportation for the people; that is, the expansion of our electric public transportation webs. Cars should be increasingly marginalized.

A carless society is one that is walkable, bikeable, and accessible for people with disabilities. Urban planners should prioritize the safety and mobility of the people, not cater to the automotive and oil industries. They should help us achieve a kinder, carless culture.

Mai Nguyen, editorial intern for Spring 2022 at CASSE.Mai Nguyen is the spring 2022 editorial intern at CASSE, and a junior at George Washington University.

The post Steering Away from a Car-Centric Society appeared first on Center for the Advancement of the Steady State Economy.

Consumption effects of mortgage payment holidays during the Covid-19 pandemic

Published by Anonymous (not verified) on Wed, 11/05/2022 - 6:00pm in

Alexandra Varadi and and Bruno Albuquerque

Mortgage payment holidays (PH) were introduced in March 2020 to help households who might have struggled to keep up with mortgage payments due to the pandemic. It allowed a suspension of mortgage principal and interest repayments for a maximum of six months, without affecting households’ credit risk scores. Given the novelty of the policy, we study in a new paper whether mortgage PH have supported household consumption during the pandemic, especially for those more financially vulnerable. Using transaction-level data, we find that temporary liquidity relief provided by PH allowed liquidity-constrained households to maintain higher annual consumption growth compared to those not eligible for the policy. We also find that PH led more financially stable households to increase their saving rates, not their consumption.

Transaction-level data track mortgage PH usage well

We use transaction-level data from Money Dashboard (MDB) between January 2019 and November 2020, to examine who accessed mortgage PH and how it affected mortgagors’ consumption behaviour. The MDB app links users’ financial accounts into one platform and groups financial transactions into buckets such as mortgages, gas bills or groceries.

We do not directly observe if a mortgagor received a mortgage PH in MDB, hence we have to infer this from the data. We assume a mortgage PH has been received if a household’s mortgage payment disappears from March 2020 onwards, and resumes within the following one to six months. Figure 1 shows that this estimate tracks well the proportion of mortgage PH reported by aggregate data from lenders themselves, obtained from the UK Finance. At the peak, in May 2020, around 17% of all mortgages were on PH, with the proportion declining gradually to around 2.5% in October 2020.

Figure 1: Mortgage PH usage in MDB vs aggregate data

Sources: UK Finance and Money Dashboard.

Mortgage PH were accessed by both vulnerable and stronger households, including buy-to-let investors

Using a Probit model across the sample of mortgagors, we estimate the probability of receiving a mortgage PH conditional on a set of household characteristics. Figure 2 summarises our findings. First, it shows that mortgagors with the lowest debt-service ratios (DSR), ie in the lowest quintile, were less likely to have a mortgage PH compared to the most indebted mortgagors with DSRs in the top quintile.  

Second, mortgage PH take-up was higher than average for more vulnerable households, such as those with low saving rates or those whose income decreased during the pandemic. This is in line with the US evidence showing that forbearance rates were higher among households facing tighter credit constraints.

Third, we find that mortgage PH were also accessed by borrowers with stronger balance sheets, such as those with financial income (eg with investment income) or with multiple mortgage repayments per month who are more likely to be property investors. Hence, some households may have accessed PH for reasons other than financial constraints, such as precautionary reasons.

Figure 2: Estimated probability of mortgage payment holidays (among mortgagors) conditional on household characteristics

Identification of causal effects of mortgage PH on household consumption

We next assess whether mortgage PH were able to support the consumption of mortgagors. We identify changes in consumption induced by mortgage PH using a difference-in-differences (DiD) model. Specifically, we compare the consumption behaviour of mortgagors who accessed mortgage PH – ie the treatment – against a control group formed of households not eligible for the policy – ie renters and outright owners. This approach allows us to eliminate bias from unobserved factors across mortgagors, such as financial literacy, that may determine self-selection into mortgage PH. This is important as only around 1 in 5 mortgagors have applied for mortgage PH, despite it being available to all. For the DiD approach to be appropriate, we need to ensure that consumption trends between the two groups – treated and control – are similar prior to the implementation of mortgage PH in the UK. In our paper we show that this is indeed the case prior to March 2020, which provides validity to our DiD results.

We find that mortgage PH played an important role during the pandemic by supporting the consumption of liquidity-constrained households (ie mortgagors with a very low or negative saving rate). Specifically, liquidity-constrained mortgagors had 22 percentage points higher year-on-year real consumption growth compared to similar liquidity-constrained households who were not eligible for the policy (Figure 3). Our finding is in line with US evidence on mortgage forbearance during the 2008 crisis, particularly that reductions in mortgage payments through maturity extensions as part of the 2009 US HAMP scheme had large effects on durable consumption and on the probability of defaulting.

Figure 3: Marginal percentage point change in real non-housing consumption growth for mortgagors on mortgage PH relative to non-eligible for the policy

Note: Asterisks, ***, denote statistical significance at the 1% level. The bars show the average percentage point difference in real non-housing consumption growth between mortgagors on PH and the control group over March-November 2020.

By contrast, we do not find any statistical evidence that the average unconstrained household on a mortgage PH changed consumption relative to the control group. This suggests that these households may have taken PH for reasons other than financial constraints. Instead, the average unconstrained household on mortgage PH uses the additional funds from mortgage PH to increase savings.

Our results also remain strongly consistent when we re-do the analysis using two alternative methods for identifying the impact of mortgage PH on consumption. First, we employ a synthetic control method, which computes the control group using a weighted (as opposed to unweighted) combination of non-eligible households in the control group. This technique allows us to compare only against the non-eligible households whose consumption prior to the pandemic best resembles the consumption level of mortgagors on PH. Second, we use propensity score matching, where households in the control group are chosen if their characteristics – such as income, savings, age, etc – closely resemble those for mortgagors on PH. In both cases, we choose households who are most similar to each other in terms of spending behaviour or personal and financial characteristics.   

We also examine the monthly consumption response of mortgagors on PH relative to the control group (Figure 4). We do not find any statistically significant effect of mortgage PH on consumption for unconstrained borrowers across any of the pandemic months. In contrast, the consumption response of liquidity-constrained mortgagors was mainly concentrated across two months: March and July 2020. These dates coincide with the introduction of mortgage PH and to its first extension.

Figure 4: Monthly consumption response for households on PH vs non-eligible

Note: Response of year-on-year real non-housing consumption growth relative to February 2020 (base month) for households on PH relative to those not eligible of the policy (renters and outright owners). The blue areas refer to the 68% and 90% confidence bands.

Consumption effects when mortgage payment holidays expire

Mortgage PH supported consumption of liquidity-constrained households while the policy was active. But it is also interesting to examine how consumption behaves when mortgage PH expire and mortgage repayments resume. This could help policymakers understand if the temporary liquidity relief from mortgage PH increases consumption temporarily, while the policy is active, or if it has a longer-term effect on the consumption of financially constrained households.

We find that liquidity-constrained households on PH for six months decrease consumption when mortgage repayments resume (left panel of Figure 5). But this result is not present for liquidity-constrained households on a shorter mortgage PH duration (right panel of Figure 5). This suggests that the duration of a mortgage PH matters for how households consume. While our data does not allow us to investigate this behaviour, we believe that this result could be driven by households’ financial situation. For instance, we find that negative income shocks are correlated with a longer PH duration. As such, losses in income during the pandemic may have put additional pressure on mortgagors who already had low savings. These households would then have an incentive to have a mortgage PH for longer to be able to cope with their mortgage commitments. Once the policy expires, struggling households hit hardest by income shocks would need to adjust their consumption downwards to keep their mortgage payments current.

Figure 5: Consumption dynamics around expiration date by PH duration

Note: The figures show the response of log real non-housing consumption relative to the last month of PH (base month) for mortgagors who accessed the policy relative to those not eligible for the policy (renters and outright owners). The dark blue bars refer to the 90% confidence bands. The regression includes controls, and user and time fixed effects. Standard errors clustered at the household level.

Conclusion

We show that mortgage PH were effective in supporting consumption of more vulnerable households during a period of financial difficulty. Our work thus provides encouraging signs about the role that mortgage PH may have had in avoiding the repetition of a 2007–09 type-recession, when unemployment and arrears increased dramatically as a result of a collapse in overall spending. In contrast, during the pandemic, arrears remained at historically low levels in the UK. This suggests that mortgage PH, potentially together with other policy interventions during the pandemic, such as the furlough scheme, may have helped in keeping households current on their mortgages.

But we have also shown that households with stronger balance sheets have used the policy to boost savings instead of consumption. An open question remains whether these extra savings will be used to bolster consumption in the aftermath of the pandemic.

Alexandra Varadi works in the Bank’s Research Hub and Bruno Albuquerque works at the International Monetary Fund.

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Comments will only appear once approved by a moderator, and are only published where a full name is supplied. Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.

The Colorado River: Devoured by Growth

Published by Anonymous (not verified) on Fri, 06/05/2022 - 12:49am in
by Gary Wockner

“The nature of consumption is the consumption of Nature” – Jordan Perry

Map of the Colorado River Basin

The Colorado River Basin, a life source for the Southwest, is being drained for growth. (CC BY-SA 4.0, Shannon)

The natural environment of the American Southwest is sending out a loud call of distress, but few people in positions of power are listening. Economic and population growth are straining nature, especially across the Colorado River Basin, which encompasses parts of Colorado, New Mexico, Utah, Wyoming, Arizona, Nevada, and California.

From 2010 to 2020, Colorado gained about 725,000 people, Arizona gained 760,000, and California gained a whopping 2.3 million. At the same time, Nevada, Utah, and New Mexico grew considerably, and the population even inched upwards in slow-growing Wyoming, the least populous U.S. state.

Similarly, the GDP of each Colorado River Basin state increased by two to four percent annually in 2017, 2018, and 2019. Despite the pressures of the pandemic in 2020 and 2021, the collective GDP raced upward even faster.

Growth in the Southwest is largely due to state and local policies that incentivize, subsidize, or otherwise lure people into the area. A researcher could craft an entire career out of cataloguing pro-growth policies in just one state.

In Colorado (where I live), a succession of governors—including incumbent Governor Jared Polis—have promoted and celebrated every uptick in statewide GDP, consumption, and population. Thanks to these pro-growth attitudes and initiatives, the Colorado River Basin’s water, landscape, and biodiversity are continuously under assault.

GDP Goes Up, Water Goes Down

The Colorado River, which sustains over 40 million people across the Southwest, has been hit hard by climate change, drought, and resource exploitation. Nearly every month, news reports paint a worsening picture for river flow and the water levels of reservoirs. The two largest reservoirs in the USA—Lake Mead and Lake Powell, both on the Colorado River—are at their lowest levels in history with further decreases predicted.

Lake Mead levels are at historic lows.

Lake Mead water levels have dropped to historic lows. (CC BY-SA 2.0, Bureau of Reclamation)

The Bureau of Reclamation has announced “emergency” measures to increase Lake Powell’s water level so electricity turbines may continue spinning at Glen Canyon Dam’s hydropower plant. Meanwhile, California, Arizona, and Nevada have decreased their water diversions out of Lake Mead. Yet, as drought and climate change intensify, upper basin states—Colorado, Utah, and Wyoming—continue building more dams to support the growing population.

There’s not enough water to support the population and economy that already exists in the Southwest, but continued growth means stretching water supplies further by transferring water from farmers—who control about 75 percent of water in the basin—to cities. The city of St. George, Utah, for example, is struggling to find alternative water sources to accommodate growth. Officials recently warned that the “stalled water supply could put the brakes on the growth economy.”

The ecological health of river systems across the basin has been deteriorating for as long as I remember. Now, flows are at historically low levels, fish and aquatic life are suffering from low flows and warmer water, and pollution levels continue increasing. Furthermore, the parched landscape is burning more frequently and intensively, increasing the runoff of river-clogging soot and debris into the rivers and reservoirs.

Landscapes, Open Space, and Farms Disappear

Growth in the Southwest is devouring open space, farms, and wildlife habitats. A March 2022 comprehensive report, published by Numbers USA (which advocates for U.S. population stabilization) is titled, “From Sea to Shining Sprawling Sea.” The report offers state-by-state insights into the way growth is devouring the landscape in basin states. According to the report, from 1982 to 2017:

  • Colorado lost 1,126 square miles of open space, farms, and wildlife habitats due to growth and sprawl
  • California lost 3,420 square miles
  • Nevada lost 498 square miles
  • Utah lost 713 square miles
  • Arizona lost 1,744 square miles
  • New Mexico lost 1,018 square miles
  • Wyoming lost 251 square miles

Some policymakers and activists concerned about this loss of open land for growth argue that the solution is to pack people in more densely to reduce sprawl. However, as I have described in other columns and posts, dense housing increases the ecological footprint of growing economies and human populations as surely as sprawl does. The Global Footprint Network describes how Americans’ environmental impacts extend far beyond our housing choices and spatial arrangements.

Our ecological footprint includes the roads we drive on, the malls we shop at, and the pipelines that bring natural gas to our homes. It also grows with plane trips to Europe, electronic devices imported from China, produce shipped from South America, granite countertops sourced from Brazil, and even the various materials extracted to construct our houses. Any additional activity producing the goods and services we consume entails a larger ecological footprint.

Biodiversity and Habitat Fragmented and Diminished

In March, the New York Times published a series of maps illustrating the threat to biodiversity across the USA. The report included a disturbing image of nature being destroyed in the Southwest. Healy Hamilton, chief scientist at NatureServe, said, “There are hundreds of species known to be globally critically imperiled or imperiled in this country that have no protection under federal law and often no protection under state law.”

Panoramic view of a Southwest desert city overtaken by urban sprawl.

Natural landscapes across the Southwest are being overtaken by urban sprawl. (CC BY-NC-SA 2.0, scaredpoet)

The map shows the basin states as having some of the most imperiled biodiversity in the USA, most notably the Colorado River’s aquatic diversity. California—including Southern California, which receives Colorado River water—appears particularly stressed. The New York Times report quotes Wade Crowfoot, California’s natural resources secretary as saying, “We have this tremendous biodiversity, but we also have these major stressors, including that we built ourselves into the fifth-largest economy in the world with 40 million people.”

Several NGOs work throughout the Southwest to protect biodiversity. One NGO, Defenders of Wildlife, catalogues the biodiversity threats as “urbanization, agriculture, water diversion, fossil fuel extraction/conveyance/processing, and open-pit mining.” And, the so-called “green economy” is creating new threats.

Proposed lithium mines in Nevada and Arizona are some of the latest flashpoints of enviro-political controversy. These mines further destroy the landscape, pollute streams and rivers, and imperil biodiversity that relies on intact and healthy ecosystems.

America the Beautiful?

Given the extreme threats to water, land, and biodiversity throughout the Southwest, the U.S. government appears to be making an effort to manage the degradation caused by growth.

In May 2021, President Biden launched the “America the Beautiful” initiative with the goal of “conserving 30 percent of U.S. lands and waters by 2030.” Sometimes called the “30 by 30” (or “30×30”) campaign, this initiative has been broadly embraced by conservation leaders, nonprofit groups, tribal governments, and eleven U.S. states. Further, in April 2022, Biden doubled down on the campaign, pledging a $1 billion investment to bring the 30×30 campaign to fruition.

Beyond the 30×30 campaign, however, other U.S. policies are absurdly designed to pursue more growth. It will be increasingly difficult, if not completely impossible, to accomplish the goals of the 30×30 campaign if the U.S. population and economy continue to grow.

At local and state levels in the Southwest, we routinely see tax incentives for new businesses, subsidies to cut development fees, and aggressive marketing campaigns aimed at luring new residents. Eliminating these growth subsidies and pro-growth campaigns is critical for any semblance of sustainability, but that elimination is almost unheard of in any local or state-level discussion throughout the region.

Steady-state policies, including an ethical approach to stabilize population, are the only options that can protect water, land, and biodiversity across the Southwest. We’ve been warned, “The nature of consumption is the consumption of Nature.”

Gary Wockner, CASSE's Colorado River Chapter DirectorGary Wockner is CASSE’s Colorado River Chapter director, and an environmental activist and writer.

The post The Colorado River: Devoured by Growth appeared first on Center for the Advancement of the Steady State Economy.

The Trophic Theory of Money, with Apologies to Peter Victor

Published by Anonymous (not verified) on Fri, 08/04/2022 - 4:22am in
by Brian Czech

In my critical review of Peter Victor’s biography, Herman Daly’s Economics for a Full World, I focused on two major and several lesser weaknesses of the book. The two major weaknesses, in my opinion, are the confusion over GDP as an indicator of environmental impact, and the absence of CASSE in a book that, in many ways, CASSE helped make possible or at least more marketable. These two weaknesses turn out to be interrelated, as I’ll explain.

Portrait of Peter Victor

Peter Victor. (CCA)

But first, I must extend a sincere apology to Peter Victor. While I was left incredulous over the omission of CASSE, I overstepped the bounds of civility by speculating on a “fishy smell emanating from this biographic smorgasbord…[that] might emanate from a funding source, a competitive urge, a legacy-building strategy, or just a mere personal problem.” While I found myself fishing for reasons for the shocking omission of CASSE, it was irresponsible to invoke fish of such foul lineage. I ended up catching nothing for the effort but a bad case of flak. More importantly, the fishing expedition impugned Peter Victor’s character, and I regret doing that.

While “funding sources, competitive urges,” etc. do cause issues in the halls of academia, I have little reason to believe that such factors tainted the biography, especially after discussing the matter at some length with Victor. Rather, I have to acknowledge his explanation that he simply overlooked CASSE’s role in advancing and defending the work of Herman Daly. He knows the omission of CASSE was a mistake, lessening the quality of the biography and effectively damaging the reputation of CASSE. It happens to be an ironic mistake, to the extent that the biography was intended to advance the ideas of Herman Daly, particularly the steady state economy.

Steady State Economics: Bigger than Any Author

The phrase and concept of “steady state economy” is associated first and foremost with Herman Daly. I believe it always will be, and should be. What Adam Smith was to classical economics, or Alfred Marshall to neoclassical economics, Daly will be to steady-state economics. I, for one, will continue singing the praises of Daly, as I did in my chapter (“May There Be Dalyists”) of the Herman Daly festschrift.

It would be a grave mistake, however, to think everything written by Daly comprises the whole of steady-state economics, or that steady-state economics redounds exclusively to the writings of Daly. If such were the case, we could hardly expect the field to grow, much less flourish into a body of ever-evolving literature replete with timely political and policy relevance. What we need is not only Beyond Growth in the libraries, but “Beyond Daly” in the curriculum, politics, and policy. We need a supra-Dalyist steady-state economics that makes sense to all with an open mind and a sufficient conceptual toolkit.

In some ways, the world has passed us by in this endeavor (“us” referring to steady staters, starting with Daly). The linguistically efficient and rhetorically powerful “degrowth” has seemingly eclipsed “steady state economy” in the hearts and minds of sustainability-minded reformers. The eclipse has its technical merits; we need degrowth in the wealthy countries before a steady state economy can be sustainably settled into.

An image of binary planets coming into focus.

Degrowth and steady-state economics: binary planets coming into focus. (CC BY 4.0, International Gemini Observatory)

It needn’t be a total eclipse of the steady-state sun, however. A more virtuous metaphor would be that of binary planets, with degrowth and steady-state economics revolving around the existential gravity of limits to growth. The unifying slogan, then, would be “degrowth toward a steady state economy.”

Unfortunately, many European degrowthers seem to have developed something approaching disdain for the Dalyist vision of steady-state economics. They’ve thrown shade, exacerbating the eclipsing effect of the political Degrowth movement instead of brightening it with complementary steady statesmanship.

No doubt the aversive attitude is unwarranted—misplaced and unjust—and the perpetrators have been misleading with their portrayals of Daly. They’ve attempted to frame Daly as some apologist for capitalism, simply because he has recognized the market as a reasonable mechanism for the allocation of (rival and excludable) goods.

I learned a lesson with my ill-advised speculation over the possible motives of Peter Victor, so I’ll stop short of impugning the integrity or motives of the Daly critics in Europe. Perhaps in their idealistic zeal for social justice and economic reform, they spoke and wrote (in some of their cases) a bit too soon. It’s easy to empathize with that. That said, the Dalyist tradition of steady-state economics can’t be digested from a handful of tweets or a handful of papers. I’m not even sure it can be digested from a handful of years, unless those years are spent in focused steady-state economics, as in a graduate degree program uncensored by neoclassical faculty.

Cover of ecological economics second edition by herman daly and joshua farley.

Top choice for the Dalyist vision of steady-state economics. (Island Press)

The single best way to get started on a Dalyist education in steady-state economics is to carefully read Ecological Economics: Principles and Applications. It’s readily digestible by reasonably intelligent readers, including those without an economics background. It is a textbook, though, and if you can’t find the time, Beyond Growth is still a good bet. If you can’t squeeze that in, at least get the flavor of Daly’s writing and his thoughts on some of the biggest issues with Best of The Daly News: Selected Essays from the Leading Blog in Steady State Economics, 2010-2018. (The latter was the first book off the Steady State Press, CASSE’s imprint and a source for Dalyist and supra-Dalyist literature, hopefully for decades to come.) If you prefer listening to reading, you can hear what Daly thinks in his own words, on The Steady Stater podcast, about markets, capitalism, degrowth and the like. Getting it from the horse’s mouth is always preferable to secondhand accounts.

While it is important to clarify and defend the real Herman Daly—as CASSE has time and time again—the point remains that steady-state economics is not just Daly. Furthermore, while many of us (myself included) view Daly as an intellectual hero, hero worship is not a strategy for policy reform. Conceptually and politically, we need a supra-Dalyist program in steady-state economics, a program embracing the slogan “degrowth toward a steady state economy” as well as other contributions.

A Tragedy of the Uncommon

Just because steady-state economics should encompass more than Daly’s writings doesn’t mean much ground has yet been covered. Some of the usual suspects (for example, Phillip Lawn and Dan O’Neill) have provided perspectives and analyses clearly classifiable as steady-state economics. The contributions of European Degrowth Movement principals such as Giorgos Kallis and Timothée Parrique also ought to be considered so, even if they’ve largely eschewed the linguistics of “steady state economy.” As with any taxonomy, there are more ways than one of categorizing the literature and policy efforts of those addressing limits to growth. Parrique demonstrates this profusely in his Ph.D. dissertation, The Political Economy of Degrowth.

Peter Victor notes in Daly’s Economics some examples of scholarship that complement the steady-state writings of Daly. Unfortunately, given his overlooking of CASSE, he seems to also overlook certain CASSE activities and findings; quite a few of them, in my opinion. One of the most unfortunate results is that Victor leaves readers hanging about the relationship between GDP and environmental impact. This undermines the entire program of steady-state economics.

If we—steady staters, degrowthers, post-growthers at large—don’t recognize GDP as a reliable indicator of environmental impact, what separates us from the neoclassical economists we criticize? Sure, we might identify more negative externalities than they do. We might not buy into the “rising tide lifts all boats” metaphor. We might talk about the economy as a subset of the ecosystem. Yet, on the one crucial subject of how to manage GDP, the mother of all economic indicators, we find ourselves in the same conceptual and political place as the neoclassical growth economist! Our message becomes, without much twisting, “Don’t worry about GDP. We can figure out how to grow GDP while we protect the environment.”

Daly, Victor, and others have hedged their bets—our bets to the degree they would represent the field of steady-state economics—with the clever repartee, “OK, neoclassical policy maker, you think you can grow GDP without impacting the environment? Then let’s protect the environment, and you can grow the GDP all you want.” It’s a bit like the American Cancer Society attempting to rebuke the Seven Dwarves by telling the 103rd Congress, “OK, you think smoking isn’t cancerous? Then let’s protect against cancer, and you can allow all the smoking you want.”

As found in the context of Daly’s body of work, the “go for it” approach to GDP always seemed tongue in cheek, saving it from condemnation as a non sequitur per se, but it’s also been as useful as a rhino horn on a baby buggy. Furthermore, based on Victor’s assessment, there is little indeed in the writings of Daly to definitively establish the fact that GDP cannot be reconciled with environmental protection.

But there is in the supra-Dalyist steady-state literature, because that’s where we find the trophic theory of money (TTOM).

The Trophic Theory of Money and CASSE

I was shocked to hear, in the wake of my review of Daly’s Economics, the opinion of a colleague who thought the trophic theory of money “has not been a part of CASSE.” Aside from the irrelevance of such an opinion to the validity of the TTOM, any rumors of the apartness of the TTOM from CASSE would be greatly exaggerated. As the author of the TTOM and the founder of CASSE, presumably I should know!

One approach to the rumor would be to ignore it, but the rumoring colleague happens to be a significant presence in steady-state economics, so I take the rumor to be of some import. If it mattered to this colleague, I’m guessing it’s more relevant (albeit not to the validity of the TTOM) than I’d have guessed. So let’s take a trip down memory lane.

Screenshot of Google searchfor Seneca Sawmills

Seneca Sawmill scenes: generating money from the trophic base, perhaps unsustainably. (Notice the prominence of manufactured capital and lack of forest.)

The story of CASSE is largely a story of the trophic theory of money, the roots of which were set on the San Carlos Apache Reservation (east-central Arizona) in 1992. I tell the story in Supply Shock, how we (San Carlos Recreation and Wildlife Department) negotiated the sale of three elk tags for $43,000 apiece; a sale made possible because the reservation was known for the biggest elk antlers in the world. Two of the tags were purchased by the late Aaron Jones, who developed and owned Seneca Sawmill, one of the largest old-growth sawmills in the Pacific Northwest at the time. Two tags, in other words, fetched the tribe $86,000, unheard of even in the world of extreme trophy hunting.

For the current purposes, though, the take-home message isn’t that elk were “generating” money for the San Carlos Apache Tribe. Rather, it was the liquidation of old-growth stands of Douglas fir, western redcedar, and Sitka spruce that generated the money for Aaron Jones, who flew down to the reservation in a Learjet piloted by “the other John Glenn,” Seneca Sawmill’s chief pilot. I guided Jones for part of his hunt, and the whole spectacle made an impression I’d never forget. None of it was more instructional, though, than the origin of all that money.

It struck me as an ecologist that the money originated at the trophic base of an ecosystem; namely the coastal forest of the Pacific Northwest. Ecologically, we were robbing Peter (not to be confused with Peter Victor) to pay Paul, a conundrum I discussed at length with John Stevens, a San Carlos Recreation and Wildlife commissioner who, as one of the most successful peridot miners in the USA and a member of the San Carlos Cattle Association, was continually active at the trophic base of the San Carlos economy. With the revenue from the elk tags, we bought out a cattle association grazing lease on the reservation, fencing out the cattle and devoting 6,200 acres to elk production, but only at the expense of Oregonian old-growth forest, spotted owls, marbled murrelets, etc. This observation—centered on trophic principles from ecology—helped lead me to the study of ecological economics (and my “discovery” of Herman Daly) during the latter stages of my Ph.D. research later that decade.

The trophic theory of money starts taking shape in Shoveling Fuel for a Runaway Train, a postdoctoral project of mine that was published by the University of California Press in 2000, shortly after I signed on as conservation biologist at the U.S. Fish and Wildlife Service headquarters in Arlington, Virginia. In 2001 I received my first gag order, prohibiting me from speaking about the conflict between economic growth and biodiversity conservation, including the trophic origins of money (which so clearly illuminate the conflict).

Pyramid illustrating the trophic structure of the economy.

Trophic structure of the human economy.

In 2003, frustrated by the gag order, I established CASSE, which allowed me to take leave from the government and wear a different professional hat at conferences, colleges, and universities. I was intent on touting the steady state economy and the name of Herman Daly, along with the nascent trophic theory of money. I drafted the CASSE position on economic growth (which was vetted by Daly and others) and began an aggressive campaign of signature gathering along with soliciting parallel positions by professional, scientific conservation societies such as The Wildlife Society, American Fisheries Society, Society for Conservation Biology, etc. The strategy was published in Bioscience.

Although the linguistic and conceptual progression from the “trophic structure of the human economy” (with the focus on the real sector) to the “trophic origins of money” (moving into the monetary sector) to the “trophic theory of money” (with the focus on GDP and money supplies as indicators of environmental impact) isn’t neatly demarcated, by 2009 CASSE featured an online briefing statement called “The Trophic Theory of the Economy,” and by early 2010 I published the first Daly News article on the “trophic theory of money” per se.

Since then, the TTOM has been a fixture at CASSE, in CASSE research projects, and in CASSE communications including presentations, books, the Daly News, Steady State Herald, The Steady Stater podcast, and social media, including YouTube. It’s as much a part of CASSE as the laws of thermodynamics or the concept of throughput. In fact, it builds upon said laws and concept, adding value such that a clear linkage between GDP growth and the growing ecological footprint can be clearly envisioned and diagrammed.

One critic has suggested that the TTOM, while correct, applies only to the evolutionary roots of money, but is irrelevant for thinking about modern monetary policy. My response is to invoke recapitulation theory from evolutionary ecology, summarized succinctly with the phrase “ontogeny recapitulates phylogeny.” Just as the development of a fetus in a placental mammal roughly mirrors an evolutionary pathway from a single-celled organism to the full-blown species, so does the trophic origin of money (that is, agricultural and extractive surplus) “authorize” the existence of real (meaning adjusted for inflation) money today. It’s not a perfect analogy, but metaphorically we might say, “Monetary ontogeny recapitulates monetary phylogeny.” The biggest difference is that recapitulation theory is shaky; not so with the TTOM.

You can judge for yourself, but I’ll conclude with a story—a lesson in epistemology no less—and challenge you to put yourself therein. You’re seated in a packed symposium on economic growth and fish conservation at the 2005 conference of the American Fisheries Society (AFS) in Anchorage, Alaska. A position on economic growth (modeled after the CASSE position) is being proposed for adoption by AFS. The speaker presents the position in a very deliberate manner, with one slide devoted to each of the 16 clauses. After each slide, he asks the audience if there is any disagreement. No disagreement adheres to the seven “whereas” clauses, so the presenter continues with the nine “therefore” clauses, including the “fundamental conflict between economic growth and fish conservation” clause. Again, no disagreement.

Next, in the discussion about AFS adopting the position—not a single clause of which has been disagreed with—three neoclassical economists complain vociferously that there must be something wrong, because there is no conflict between economic growth and fish conservation! You put on your psychotherapist hat and ponder the particular form of cognitive dissonance so bluntly displayed. End of story.

Now it’s true that a collection of phenomena can sometimes produce emergent properties; that is, subsequent, more sweeping phenomena that aren’t necessarily indicated by the “sum” of the lesser phenomena. Usually, though, any mystery is solved by the addition of lesser phenomena left out of the original collection. Wisdom might just boil down to parsimonious collecting of the relevant facts, as opposed to sophistic parceling of epicycles and equants designed to support a predetermined conclusion.

I’ll conclude with a challenge: Study the trophic theory of money as laid out most recently and see if you can find an invalid assumption or an unsound conclusion. If so, is it a fatal flaw, or something to be corrected conceptually? What is in most need of empirical corroboration? Does the TTOM supersede or counter any existing theories or concepts?

If the theory is sound, as I’ve diligently concluded, then we’re onto something. We have a contribution to a supra-Dalyist steady-state economics, one that gets us past the “Seven Dwarves Hump” of public policy futility. We can go straight to the policy table and call not only for “stabilizing throughput” (which might get us a wink and a prayer), but for stabilizing GDP itself, which will get us closer to stabilizing throughput than we’ve been in centuries.

That’s the mother lode of steady statesmanship.

Brian Czech, Executive Director of CASSEBrian Czech is the executive director of CASSE.

The post The Trophic Theory of Money, with Apologies to Peter Victor appeared first on Center for the Advancement of the Steady State Economy.

Game On or Game Over for the Environment?

Published by Anonymous (not verified) on Fri, 01/04/2022 - 1:14am in
by Mai Nguyen

In January 2022, Microsoft announced that the company planned to buy the videogame company Activision Blizzard for almost $70 billion, giving it control of franchises like Call of Duty, Candy Crush, and World of Warcraft. This signaled to the world the potential of gaming for the tech industry’s pursuit of speedier growth despite technology being an already high-demand industry.

Activision Blizzard sign at gaming convention.

Microsoft bought Activision Blizzard, usurping many profitable franchises, most notably Call of Duty. (CC BY-SA 3.0, Dinosaur918)

I understand the appeal of video games; I own a couple of consoles, and I keep up with the latest gaming news. While many dismiss them as a waste of time, video games are a medium that enable us to tell incredible stories in a way that movies or books can’t quite replicate. They provide a level of interactivity and customizability that allows the player to immerse themselves in a grand story. I’ve fought to protect my family from Japanese crime society in Yakuza and lived my fantasy life as the homeowner of a castle in The Sims. And just like any other hobby, fans can find communities centered around their favorite games.

But while video games flaunt a unique (and at times addicting) charm, with every growing industry is a dark side of depleting resources.

Growth of the Industry

Video games have come a long way since their simple beginnings, starting with a simple tic-tac-toe game in 1952 before ballooning to a billion-dollar industry. Later, the 70s and 80s brought the release of several milestone game consoles like the Atari 2600 and the Nintendo Entertainment System (NES). In 1989, Sega released the Genesis to compete against the NES, triggering the first “console war” and the release of scores of popular games for both consoles.

At the end of 2021, Newzoo reported 2.95 billion gamers worldwide and predicted 3 billion by 2023. The market for video games has only grown in the past few years, thanks partially to the pandemic. As time at home increased, so did new hobbies. From 2019 to 2020, the number of U.S. console gamers increased by 6.3 percent and console sales surged 155 percent worldwide by March 2020.

Nintendo sold more than 14.3 million units of its Nintendo Switch console during the pandemic, likely due to the release of the relaxing life-simulator game Animal Crossing: New Horizons. Similarly, PlayStation experienced an 83 percent boom in game sales in the first quarter of 2020, 74 percent of which were digital downloads.

The Internet has played a large part in video game success, and not just because of online play. The Internet made it possible to play video games as a profession, not just a hobby. YouTube videos, especially “Let’s Play” videos, made it possible for viewers to experience games they were unsure about buying, often with comedic commentary. YouTuber PewDiePie spent 2013 to 2015 as the most subscribed YouTuber thanks to his Let’s Play content and continues today with 111 million subscribers.

esports

Gaming: once merely a hobby, now a global “esport” phenomenon. (CC BY-NC-ND 2.0, Maxime FORT)

Twitch also played a significant role in shaping the gaming industry by allowing viewers to interact with their favorite gamers in real time, from voting on how the streamer will play a game to sending direct messages. YouTube, too, has a streaming feature. Polygon reports that YouTube streamers put in 54.9 million hours of content in 2020, versus 55.4 million hours in 2019. Don’t let the slight decline in total content fool you, though. Viewership nearly doubled to 6.19 billion hours in 2020 from 3.15 billion in 2019.

Esports, or competitive video games, is one of the fastest growing industries in the world, with a total audience of 335 million in 2017 rising to 645 million in 2022. The growth of esports and their viewership means more energy and resource consumption required for gaming equipment. Hardware companies encourage customers to invest in the most powerful parts in the market, from processors to entire PCs, a strategy many believe drove the industry to a $1.5 billion value in 2017. And while esports are still a relatively small source of revenue for the gaming industry, BITKRAFT predicts that figure will grow with the introduction of new competitive games.

Today, the gaming industry has at least a $175 billion value (BITKRAFT suspects it’s even bigger), but it could more than double by 2028 as the industry takes advantage of the increasingly widening platform offered by mobile gaming.

A Look inside the Game Case

While the gaming industry has internal issues like the lax attitude towards toxic workplace culture, beefing up the industry spells out something even more ominous for the environment.

Like cell phones, with the hype of each new-generation console, there lies a danger of gamers trashing old consoles for the new model. As of 2022, Nintendo sold 103.5 million Switches. PlayStation sold 116.9 million PS4s, and PS5 consoles braved shortages and hit 17.3 million sales. Of course, these shiny new models come at an ecological cost. To conduct electricity, consoles depend on mined materials including copper, nickel, gold, and zinc. The circuit board and other parts are tucked into a plastic case, which is formed from crude oil and natural gas.

There is more room for customizability with PC gaming. Gamers can buy prebuilt computers with their desired specs, or they can build one themselves. In both cases, however, gamers tend to go for the parts with the most powerful specs. These components require huge amounts of power, with some GPUs using over 300 watts in a ten-minute test run. Such excessive energy consumption is also exacerbated by incredibly tight release dates between new parts. The GPU giant Nvidia consistently releases components collections several times a year.

Nintendo has launched initiatives for recycling hardware and complying with e-waste regulations, but recycling should never be our first resort to solve the waste problem. While e-waste recycling seems like the obvious step to making the industry sustainable, the current state of e-waste recycling has a host of problems. In the formal recycling process, waste is mechanically separated and shredded for further sorting by hand. To avoid the costs of adhering to safety and pollution-control regulations in the USA, companies often export the waste to developing countries for informal recycling. At these workshops, workers recover valuable metals by burning away the plastic devices, leading to hazardous conditions and increased emissions.

Photo of a dumping site for e-waste, which includes video game consoles, PCs, and other hardware.

Old consoles and PCs get dumped for the newest tech, resulting in considerable e-waste. (CC BY 2.0, Curtis Palmer)

However, nowadays, next-gen gaming is taking on a sleeker look with digital downloads and cloud gaming. But while gaming is moving away from physical game discs, experts say that digital services won’t be the cure-all to gaming-related emissions. Gaming represents 34 terawatt-hours of energy and 24 metric tons of CO2 emissions per year, equivalent to 85 million refrigerators. Cloud-based game subscriptions like Google Stadia or PlayStation Now, which allow players to stream from an online library of games to their device, are highly demanding of servers. These subscription services allow users to stream games from huge data centers, which can cost hundreds of millions of dollars to build, are extremely energy-intensive, and take up almost as much space as ten football fields, all while producing tremendous amounts of heat.

The increased use of centralized technology will pressure game companies to consistently stay up-to-date on the latest equipment, which could contribute even more to the e-waste problem. One study found that cloud-based gaming requires significantly more energy per hour than similarly powerful local gaming equipment.

Video Games for Good

On the bright side, many of the thousands of video games in existence have environmental messages. You can fight as Cloud Strife against the evil Shinra Electric Power Company in Final Fantasy VII, or run renewable energy projects in Sims 4’s Eco Lifestyle pack. You can even explore Central Park through the eyes of a bee and defend your hive from humans in Bee Simulator. Games like these help spread environmental awareness and push the world towards sustainability in a way that no advertisement campaign can; at least, the UN believes so.

Mirai is the protagonist of E-Line Media’s educational underwater diving adventure game Beyond Blue, inspired by the BBC nature docuseries Blue Planet II. The player guides Mirai, leader of a deep-sea research team, as they investigate whales and sea turtles and uncover the secrets of the deep. Alan Gershenfeld, co-founder of E-Line Media, told DW, “The more gamers care about the ocean, the more they want to explore the ocean, avocational or as a career. I believe, that’s the key towards ocean preservation.”

In Eco, players must collaborate to use natural resources to build a civilization and develop the technology to destroy a planet-threatening asteroid. The game gives the players the option to build governments and economies, and each of the players’ decisions has the potential to benefit or harm the environment. Eco is currently still in development and is available for early access, but it already has thousands of positive reviews lauding the game’s teamwork mechanics under its belt.

Knowing minds like this exist in the game industry makes me optimistic, especially considering the growing number of gamers worldwide. And with the industry becoming more mainstream, it’s important that these gamers come to terms with the industry’s flaws and strive to become a force for good.

Where Do We Go from Here?

Even if game companies were to wholly commit to environmental protection, the fact remains that gamers never want to buy the least-powerful equipment. These game systems are incredible, and the games look and feel as fun as they do thanks to the massive amounts of resources required to make them. Perpetual growth of any industry can never be sustainable. However, we can also tell that video games aren’t going anywhere anytime soon.

To tackle this issue, we can find gaming’s steady-state potential by focusing on increasing our hardware’s lifespan instead of buying more than we need. While next-gen system release dates largely line up with the end of the predecessor’s lifespan, backwards compatibility between consoles is a rare sight; you can’t play your PS3 games on your new PS4. Providing ways to play older games and extending the life of consoles seem like good first steps.

Digital stores like My Nintendo Store and PlayStation Store offer libraries of classic games, not to mention the new games in development for older consoles. However, whether it’s buying a console or building a PC, it’s tempting to give in to upgrade trends and buy the latest, most powerful innovation in gaming technology. But you don’t necessarily need the very best specs and up-to-date tech to have a quality gaming experience. You’ll survive without a 4K-capable graphics card and butter-smooth frame rates; it’ll be easier on your wallet as well.

But scaling back on new gaming purchases is just one part of the solution. We can also take notes from games like Beyond Blue and Eco by actively using the medium to spread the word about sustainability and steady-state economics. CASSE developed Limits to Growth, a playground game that introduces kids to fairness and sustainability in the context of steady-state economics. To the play the game, players go through rounds within their individual houses, represented by a hula hoop, and one planet represented by a rope. In each round, players have the option to “upgrade” their house by adding another hula hoop. Once the planet is filled up with hula hoops, some students might “die.” This is a fun and easy way to teach children about the foundations of steady-state economics, but developing a limits to growth video game could bring it to the next level.

What if CASSE Joined the Game?

The multiplayer open-world survival genre with sandbox elements is the perfect playground for bringing the message to life. Imagine starting in a virtual world much like our Earth, except it’s completely untouched by human civilization. The virtual Limits to Growth game (perhaps Stable Planet has a catchier ring) begins with choosing the biome—aquatic, grassland, forest, desert, or tundra—where the game will take place. While exploring, players can observe and learn about the biodiversity of their chosen environment. Players may catch lion cubs play-fighting in a savanna, gawk at Galápagos penguins gliding through cool waters, or admire the crystal-blue sky occupied by a V-formation of geese. Players are simply dropped into the colorful, virtual world with nothing but a few basic tools (like a hatchet, bow and arrows, and fishing rod) in their inventories, and they must find food and build shelter to survive.

Mockup Xbox game cover for the hypothetical game "Stable Planet" inspired by CASSE's position on economic growth.

Mockup game cover for Stable Planet. Do you have what it takes to create a sustainable civilization?

Like in Eco, players live together in a civilization server and make decisions that impact the world around them, from hunting a single deer to clearing out a forest for a village. While collaboration is encouraged, individual players may choose (or not) to build and upgrade their own homes at the expense of natural resources like timber and fisheries. Certain upgrades require more advanced tools, which call for even more raw materials.

Players can eventually vote to build communal structures, such as a power plant for electricity or ports for trade with visiting non-player characters (NPCs) representing different civilizations. Of course, these major upgrades require substantial resources; the gamer sees these resources decline in quantity and quality. Open-world games like Minecraft encourage players to grind away at virtually infinite resources like wood and stone, but Stable Planet would make it clear that resources, including occupiable space, are finite or not quickly renewable.

In the game, with each collective and individual decision, consequences to GDP and the environment follow. The server’s GDP appears as a scoreboard overlaying each player’s screen. The number starts at zero and stays a cool green color until players’ economic activities proliferate. This is a major mechanic in the game, as it may—and eventually should—serve as a driving force for players’ decisions.

One group of players may decide to chase a high GDP and expand production far beyond sustainable, survivable levels. In this case, GDP continuously grows on the scoreboard, with digits increasing on a spinning meter (similar to the CASSE website). If players’ choices lead to furious growth, the scoreboard’s visuals would intensify, the number pulsing red with sparks flying off the board. Some players may interpret this as a good thing. After all, a booming economy is a healthy economy, right?

The state of the environment, however, reflects that high GDP in a different light. To expand iron trading, for example, players may build a huge plant to make mining easier, but a host of environmental consequences ensue; emissions visibly cloud the air and players’ health bars gradually deteriorate, lands lose arability, and wildlife species recede into extinction. While players may simply choose to move their settlement someplace else on the map, the “open” world is not infinite; this process can only be repeated so many times before they run out of space. With nowhere else to go, players die one by one from starvation or illness.

On the other hand, smart players may decide to manage GDP differently. They have the option of building a civilization based on what’s needed to survive. Instead of perpetual building, they can spend more time playing with friends and family, or joining other players in “town hall” meetings. GDP growth will slow, with the scoreboard once again emanating a cool green glow.

One civilization may enjoy an abundance of high-tech toys and a sky-high GDP—with all the problems that come with it—but yours can enjoy the bounty of nature and other pleasures of a good life. Like many open-world games, Stable Planet has no definite end, and instead encourages players to explore different ways to interact with their environment and other players, for better or for worse.

Mai Nguyen, editorial intern for Spring 2022 at CASSE.Mai Nguyen is the Spring 2022 editorial intern at CASSE, and a junior at George Washington University.

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