Economic policy
The Future of Work: Keith Hancock Lecture at ANU
I’ll be giving a public lecture on The Future of Work at ANU on 6 March. It’s the Keith Hancock* lecture, sponsored by the Academy of the Social Sciences in Australia, in honour of one our great labour economists. Details are here . An outline
The outcomes of technological change are affected by the interaction of changes in the regulation of labour markets and the stance of public policy. For the last 40 years, changes in labour market regulation have been almost uniformly anti-union and anti-worker, while public policy has been premised on the desirability of reducing wages. Until and unless the stance of public policy changes, technological change will be experienced by workers as harmful disruption. Used in a socially desirable way, however, technological change offers the potential for a radical improvement in work-life balance.
I’ll be giving the same talk at UQ in April (details TBA).
- Just to confuse things, the Australian Academy of the Humanities sponsors the Sir Keith Hancock Lecture in honour of one of our most famous historians.
Meet the CASSE Interns – Spring 2019 Cohort
Left to right: Yujing Mo, France Konin, Faisal Orainan, Yan Wang, and Mengshi Ge.
Before long, the cherry blossoms in Washington D.C. will be in full bloom as spring unfolds in the nation’s capital. While it’s not quite springtime yet, we are happy to welcome our spring semester interns to the CASSE team!
Our five student interns come from the rich community of colleges and universities in the Washington DC metro area. Each of them spends from one to two days per week at our offices in Arlington. They’ve signed on with CASSE to learn, grow, and make a positive impact.
The interns are working on projects involving economic data analysis, statistical modeling, policy analysis, non-profit administration, and financial research. They exercise a great deal of independence, with coordination and guidance provided by CASSE staff. While the interns gain valuable work experience and university credits, CASSE gains the input and skills offered by these talented students.
We are thrilled to introduce our Spring 2019 interns. Let’s wish them the best with CASSE and beyond.
Meet the Interns!
Accounting Intern:
Yan Wang, graduate student in accounting at American University
Yan aspires to be a certified public accountant, and she is excited to be at CASSE because “it gives me a great chance to develop my skills and further my knowledge. I’m interested in CASSE because it provides instructive solutions to advance the steady state economy, and it factors other goals of society into development decisions.”
Economic Modeling and Mathematics Interns:
Mengshi Ge and Yujing Mo, graduate students in statistics at George Washington University
Mengshi says she is excited to be at CASSE because we “help people better understand the relationship between the economy and our planet, which relates to everyone’s lives. I see that what I learn in class has some connection with and even makes a contribution to the real world..”
Yujing says she is “happy to work for CASSE because the work atmosphere is very nice. Everyone is close to one another and willing to help me learn. I am encouraged to try different methods and tools to present statistical results, which enables me to gain hands-on experience.” Yujing hopes to work as a consultant after graduating with a Master of Arts in Statistics this May.
Economic Policy Intern:
Faisal Orainan, senior undergraduate student in economics at Marymount University
Faisal is excited to be at CASSE because “it allows me to develop my knowledge and skillset on policy initiatives and fundamental economic sustainability. The foundation I learn here will help prepare me for long-term goals of working with microfinance and trade issues toward economic wellbeing on an international level.”
Financial Research Intern:
France Konin, senior undergraduate student in finance at Marymount University
France is excited to be at CASSE because “I get the opportunity to learn how U.S. economic policy is affecting the environment and climate change, and how people are working on finding solutions. In addition, it is a great opportunity to discover the fight for implementing environmental policy into the world. As a finance major, it is important for me to learn this side of business and economics and how it affects our everyday lives.”
Do you know any students who are passionate about sustainability?
Soon, we’ll be searching for summer interns.
Contact us if you are interested!
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The Green New Deal: What’s Really Green and What’s Really New
Caption: Alexandria Ocasio-Cortez (D-NY) speaks at a Green New Deal press event Feb. 7, 2019. (Image credit: Senate Democrats via CC BY 2.0.)
By Brian Czech
Ask Americans what the Green New Deal is all about, and you’ll get two basic answers. Most often you’ll hear, “It’s about moving to renewable energy in order to fight climate change.” You’ll also hear, from a camp further right, “It’s all about socialism!”
Either way, the really green, really new feature is overlooked. What the Green New Deal is really about is the transition to a steady state economy. At least, that’s what it must be about, to be truly green and new.
Let’s start with green. “Green” connotes environmental protection. Some may view it naively as a tree hugger’s agenda, but ultimately, it’s about economic sustainability. That’s because economic activity starts from deep in the environment; namely with the agricultural and extractive sectors such as logging, fishing, and ranching. Only with agricultural and extractive surplus can we free the hands for the division of labor into manufacturing and service sectors. (Anyone thinking otherwise may kindly skip their meals until acquiring the necessary common sense.)
Now let’s take a closer look at the point that agricultural surplus—and therefore the rest of the economy—requires the green deal of environmental protection. Agricultural surplus takes soil, water, a stable climate, and plenty of space. If, for the sake of GDP growth, we use too much of that space and water for other activities, remove or erode the soil in the process, or destabilize the climate, the agricultural sector will decline. The rest of the economy will decline right along with it. “Down will come baby, cradle and all.”
In other words, the reckless pursuit—or even the systematic pursuit—of GDP growth will backfire like a canon plugged with cement. And that is exactly what is happening, albeit in slow motion (so far). Exceptions notwithstanding, soils are eroding, water supplies are dwindling, climate is destabilizing, and too much space is being robbed from the agricultural sector. This is the opposite of environmental protection, agricultural productivity, and economic sustainability. It’s the opposite of green.
So, we need environmental protection badly, and we need to pursue it quickly, if not for the sake of nature, then for the sake of the economy. We need the green in the Green New Deal. But no one should think that simply transitioning to renewable fuels will accomplish greenness. Not by a long shot. We are already committed to a “brown” 21st century and beyond. Loading up the atmosphere with greenhouse gases (and many other pollutants) has set us up for long-term ecological unravelling. Wholesale habitat disintegration, species extinction, unhealthy forests, shifting agricultural zones, and evolutionary chaos will take centuries and possibly millennia to sort out.
Not that anything resembling today’s “normal” will return. Polar bears will be gone, along with many other canaries in the coal mines. Half of Florida will be under saltwater, while the fresh waters of the Ogallala Aquifer will be depleted. Climate suitable for a wheat belt will be far north of the current American and Eurasian breadbaskets. There’s no guarantee the earth will retain a wheat belt or any type of grain belt.
The best hope for future centuries is that a new balance of nature—and a new economic equilibrium—is reached, and reached in a process that doesn’t starve, infect, or otherwise decimate billions of souls.
Left: A 1942 fertilizer experiment to build up soil fertility. Right: A green field in Bangladesh in 2011. (Image ©Rafi Bin Tofa, CC BY SA 4.0)
Now, let’s consider the more immediate prospects for us, our kids, and our grandkids in the 21st century. Even if we are able to rapidly replace fossil fuels with renewables pursuant to the Green New Deal, the type of fuel we use is only one side of the coin. We also have to think about what we are fueling. Here’s a short list:
- Agriculture
- Mining
- Logging
- Livestock production
- Commercial fishing
- Purification and reduction (of metals)
- Milling
- Machining
- Chemicals manufacturing
- Packaging
- Transportation
- Retailing
- Medical services
- Financial services
- Information services
- Entertainment
- Disposal services
If we want to fuel the current, $19 trillion American economy or the $87 trillion global economy with renewables, we’ll be filling up vast landscapes with solar panels, windmills, wave power devices, and the ridiculous amount of infrastructure required to transport power from such widespread, low-intensity energy harvesters to the farms, factories, retail outlets, office facilities, entertainment complexes, and landfills where economic activities transpire.
But then, where will the farms, factories, retail outlets, office facilities, entertainment complexes, and landfills go? And what happens to our national parks, forests, and wildlife refuges? Don’t forget about housing, military bases, and the halls and monuments of government and civics. It is not as if there is some overlooked abundance of land just waiting for a manifest destiny of economic activity.
Now imagine growing the amount of economic activity, let’s say at the typical American goal of 3% per year. All else equal, in 23 years we’ll need double the space. How green is that?
So we’ve figured out what is really “green” in the Green New Deal (recognizing that “very green” is no longer an option). Green is all about protecting the environment, and therefore the economy, by moving away from fossil fuels and by limiting the scope of economic activity. In the process we’ve also identified what is truly “new,” and it’s certainly not renewable energy.
For millennia before the industrial revolution, farmers, millers, and manufacturers used nothing but solar, wind, and hydro power. The use of renewable energy is ancient; quite the opposite of new. The really new thing about the Green New Deal, then, is the same thing that makes it relatively green; that is, stable size.
Of course, as with greenness, all is relative in the case of newness. Homo sapiens has roamed the Earth for approximately 300 millennia, and the global economy was largely stable for approximately 299.7 of them. Then—with the dawn of the nation state, mercantilism, capitalism, and the industrial revolution—the human economy grew far faster than before. Growth solved more problems than it caused during the early stages, too, as described by classical economists such as Adam Smith and David Ricardo. Yet the vast majority of human experience is with non-growing (or imperceptibly slow-growing) economies.
Although steady state economics is not new to the human experience, the policy goal of a steady state economy is. Prior to the nation state, there were no macroeconomic policies. Then the study of economics commenced, with a focus on the wealth of nations in the 19th century, and by the mid-20th century, practically every nation on Earth had adopted the goal of GDP growth, as did far-reaching international institutions such as the World Bank and the United Nations. Therefore, in terms of modern economic policy, the steady state economy is brand spanking new.
It is a game-changing goal for Democrats and Republicans, and quite the opportunity for leadership. When Republicans stand in the way of steady state economics, progressive Democrats can say (ironically), “We are the real conserv-atives. We start by conserving resources, and we conserve our ways of life with the steady state economy. True conservatives will vote for us.”
Conversely, if Democrats are hellbent on GDP growth, Republicans looking for a political facelift can say, “Those liberals think we can have our cake and eat it too. Conservative policy means steady-state spending, not perpetual growth of debt, deficits, or even GDP. We’re returning to our Rooseveltian roots and taking back the mantle of conserv-ation.”
Then there is the Green Party, which jumps to mind by virtue of the capitalized “Green” in their title. They are the only party, thus far, with a steady-state plank, too. The problem is, the Green Party has become something of a Pink with Blue Polka Dots Party, running far left on every issue that arises. Boxing itself into a smaller and more irrelevant corner is no way to prioritize green.
All things considered, Democrats have a big jump on steady statesmanship by advancing the Green New Deal. To the extent they emphasize the steady state economy, they’ll gain converts quickly from the ranks of the Green Party and sustainability-minded Independents. I can testify to that, as a registered Independent and the ex-Green Party activist who drafted the steady-state plank in 2004. I’ll be joining the Democratic Party to help with the macroeconomics of the Green New Deal.
A steady-state Green New Deal will also attract the true-conservative Republicans who haven’t seen enough attention paid to… conserving! I can testify somewhat to that as well; long ago I belonged to Republicans for Environmental Protection (known today as ConservAmerica).
An excerpt from House Resolution 109, submitted to the 116th Congress of the United States on Feb 7, 2019 by Representative Alexandria Ocasio-Cortez (D-NY), which calls for the creation of a Green New Deal.
Regardless of current political party, bona fide steady staters (such as the 14,000+ signatories at www.steadystate.org), as well as members of the many organizations that have developed similar positions (for example, the U.S. Society for Ecological Economics) are constantly searching for a political home; a steady-state political home. Much the same may be said for those with latent steady-state leanings (essentially all those concerned with the build-up of environmental impact and the erosion of ecological integrity). A Green New Deal replete with steady state economics is long overdue and a breath of fresh air.
Numerous details must be worked out for infusing the Green New Deal with steady state economics, such as a workable timeframe for establishing a steady state economy, amending the Full Employment and Balanced Growth Act (with a Full and Sustainable Employment Act), and “steady statesmanship” in international diplomacy. Yet dozens of books, hundreds of university courses, and thousands of journal articles have already paved the way for such policy reforms. In fact, more policy work has already been done for the steady state economy than for the wholesale replacement of fossil fuels.
The agenda of the Green New Deal—its emphases, themes, and particulars—is still being ironed out. Politicians, policy wonks, and academicians are wrestling over turf. Some want credit for coining phrases, some want your vote, some want research funding, and some simply want to protect the environment and therefore the economy.
In the midst of it all, you can help with the ironing out. If anyone asks you about the Green New Deal, just say, “The Green New Deal? Why it’s all about the steady state economy. That’s assuming you want it to be really green, and really new.”
Brian Czech is the founder and executive director of the Center for the Advancement of the Steady State Economy. He is the author of three books, Supply Shock, Shoveling Fuel for a Runaway Train, and The Endangered Species Act, as well as more than 50 academic journal articles. He served as a conservation biologist in the headquarters of the U.S. Fish and Wildlife Service from 1999-2017 and as a visiting professor of natural resource economics in Virginia Tech’s National Capitol Region.
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A Country of Immigrants
U.S. Customs and Border Protection sign, Pigeon River boat launch, Minnesota. (Image (c) 2018 Tony Webster)
By Herman Daly
Historically, the U.S. is undeniably a country of immigrants. But why is this uncontested fact so repeatedly emphasized? Might the unremitting celebration of immigration as a policy (as opposed to the celebration of particular immigrants as people) obscure a dark side of our immigration history?
In popular American culture the near genocide of Native Americans is considered an unfortunate collateral effect of the glorious European immigration of our ancestors. Whatever past policy led to us—for example manifest destiny—must be good. We are the proof!
The additional involuntary immigration (slavery) of Africans merits equal shame, but it too helped to make us a “country of immigrants.”
Subsequent waves of immigration from Europe, as well as Asia and Latin America, were part of a cheap-labor policy favored by the U.S. elite, often resented by the U.S. working class. Currently, automation and off-shore operations are reinforcing the historical cheap-labor policy of lax enforcement of our immigration laws. Illegal immigrants have lately been pawns in U.S. class conflict, used by the elite to bust unions and drive down wages, safety standards, and other working conditions.
As individuals we are all proud of our immigrant great-grandparents and diverse cultural heritages. Immigrants have made enormous contributions, and they still do. Nevertheless, our national immigration history gives us as many reasons for repentance as for pride. Yet we now hear strident calls for more immigration, and even for a de facto policy of open borders. Why? Well, because “we are a country of immigrants!”
At the same time, resistance to mass immigration is surging. Class conflict remains basic, mixed with diverse countercurrents of identity politics, political correctness, and racism—both real racism and false allegations. This growing maelstrom contributed strongly to the angry, confused, and tragic results of the 2016 U.S. presidential election. And the storm is growing, not only in the U.S. but also in Europe and elsewhere.
Much of the conflict in the U.S. could have been avoided if Congress had taken seriously the recommendations of its own 1995 Commission on Immigration Reform, chaired by the late civil rights champion Barbara Jordan. But, “a nation of immigrants” could not face up to reforming its immigration system. Allowing easy immigration is a cheap way for politicians to buy ethnic votes, as well as the votes of employers of cheap labor.
With an empty continent, free immigration may have been reasonable in light of the push factors in Europe. But we now live in a full world, much of which is being destroyed by war, or so ecologically ravaged by uneconomic growth that it cannot support its existing population, much less another billion or two. Should the U.S. continue, in mixed service to both individualistic humanitarianism and class-based exploitation of cheap labor, to welcome not only the poor and displaced of the world, but increasingly the technical and financial elite of the world who now compete for places with the teeming masses?
Should we welcome all of the poor (and elite) of the world, or only some? How many? Which ones? Do the poor and unemployed citizens in our own country have a say in those decisions, or only the employing class that benefits from cheap labor (and cheap human capital)?
Is free immigration to the U.S. the best way to help the world’s poor and oppressed? Where then will destitute U.S. citizens emigrate to? Would a new Marshall Plan plus care packages, along with refugee resettlement, as after WWII, be a better way to share than would the mass migration implicit in open-borders globalization? Can we at least discuss this alternative?
Apparently not—not as long as we pursue unlimited economic growth for the U.S. economy, which not only permits but requires us to continue as a cheap-labor “country of immigrants”. And not as long as any policy contrary to open borders, no matter how justly structured, elicits howling accusations of racism.
Global population growth is of course entirely due to natural increase, and migration would hardly be the problem that it is today if the quadrupling of human numbers within one recent lifetime had not brought the world from two to nearly eight billion people. However, in the U.S., Western Europe, and Canada, recent population growth is mainly due to net immigration and higher average fertility of immigrants. So, it is hard to evade the increasingly difficult and divisive issue of immigration in discussing the already nearly taboo subject of population policy, especially in “a country of immigrants”.
Without effective borders, responsibility for what happens within them would soon disappear. Human rights and welfare safety nets are provided by national governments—not by failed states—and not by global corporations, nor by the United Nations, however necessary the latter may be. Indeed, why would any nation undertake to limit its natural increase if the benefits of such limitation could be cancelled by unlimited immigration? Or if the costs of its own high population growth could be exported by unlimited emigration? Or if the investment in education of its own citizens could be lost to brain-drain emigration? Open borders would invite the tragedy of the open-access commons writ large. Low-wage corporate feudalism would force a competitive race to the ecological bottom in an inclusive global commons.
It is a wishful thought that mis-measured economic growth brought on by borderless globalization, will magically overcome finitude and entropy. With erased boundaries there would be no recognition of limits or scarcity, and hence no need to share, nor any definition of fellow citizens who have first claim to our sharing. Nor would there be any reason to distinguish better from worse ways of sharing, not in our “country of immigrants” where continuous wealth increase at the top is fueled by continuous increase in cheap labor at the bottom.
Herman Daly is an emeritus professor at the University of Maryland School of Public Affairs and a member of the CASSE executive board. He is co-founder and associate editor of the journal Ecological Economics, and he was a senior economist with the World Bank from 1988 to 1994. His interests in economic development, population, resources and environment have resulted in more than 100 articles in professional journals and anthologies, as well as numerous books.
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India: 2019 General Elections and basic income
Indian woman worker with spectacles. Picture credit to: Sarah Day New ideas seem to be running dry in the Indian political context. Within Congress, Government (BJP – Bharatiya Janata Party) and opposition parties (ex.: AAP – Aam Aadmi Party). Tweaking with the minimum support prices for food production and/or with the multiplicity of welfare programs is not going to
The end of the PFI
The long-running Brexit fiasco has overshadowed most news coming out of the United Kingdom these days. It’s not surprising, therefore, that hardly any attention was paid to news that may be of more long-term economic significance to Australia, and to the current crisis of neoliberalism, than a rearrangement of relations between the UK and the European Union.
In the Budget brought down in late October, UK Chancellor of the Exchequer, Phillip Hammond announced the end of the Public Finance Initiative (PFI). The PFI was introduced by the Conservative government of John Major in 1992, and greatly expanded under Tony Blair’s New Labour government. The PFI provides a financial framework for Public-Private Partnerships, which have their own acronym, PPPs.
PPPs are the archetypal example of the soft neoliberalism represented by Blair’s ‘Third Way’. Like the hard neoliberalism of Thatcher and Reagan, soft neoliberalism accepts the primacy of financial capital and the superiority of markets over governments. On the other hand, soft neoliberals recognise the need to match the achievements of the social democratic welfare state, which reached its peak in the third quarter of the 20th century. These achievements include universally accessible health and education services and the provision of physical infrastructure such as roads.
The central idea of PPPs, instead of governments undertaking infrastructure projects themselves, or contracting with construction firms to do so, a private consortium would build, own and operate the project. The most immediate attraction to politicians was that the infrastructure asset would be off the government’s books and therefore would not involve any addition to public debt. A more sophisticated claim was that the projects would deliver ‘value for money’, by unleashing the power of private-sector innovation and incentives.
The public debt rationale ran into trouble early on. Most of the time, the construction firm involved in building, say, a tunnel, wanted to be paid for finishing the job, not for the number of cars that used the tunnel. So, financial engineers came up with a variety of ways to guarantee the payment, while making it appear that the asset was privately owned. Unfortunately for them, government audit offices were quickly on to this, and forced governments to take such assets, and the associated debt, back on to their books.
The claims of greater efficiency held up a bit better at first. PFI projects were generally completed on time and on or under budget. The problems emerged later on. First, the value of the stream of payments associated with PFI financing greatly exceeded the cost under traditional public procurement, making a mockery of the ‘on or under budget’ claim. Even now that the PFI has ended in the UK, the National Audit Office estimates that the public is on the hook for nearly 200 billion pounds in payments stretching out to 2050.
Second, the operational phase has been a mess, particularly in the case of service facilities like schools and hospitals. Every unanticipated change can potentially require a contract variation, and, as anyone who has ever gone through a renovation project, it is contract variations that really ramp up costs. Because the British PFI has been running longer than its many imitators, the problems are more acute there.
In the years before the Global Financial Crisis, these problems were obscured. Investors were willing to take on high-risk projects, based on dubious projections, on the assumption that there would always be someone willing to bail them out if things went wrong. Sometimes that was true. But as governments tightened up, there were a string of failures.
The fundamental problem is that PPP projects almost invariably involve a higher cost, over the lifetime of the project, than direct public procurement. Either the public must pay more to meet this cost or private investors must take a loss. As both parties wise up, the flow of PPP projects turns to a trickle. The decline in the UK was so steep that the official end of the program was merely a recognition of reality.
The PFI has failed miserably in its country of origin. Yet it carries on a zombie existence in Australia, where it was the model for the National PPP Policy Framework and its various state-level counterparts. Our national planning body, Infrastructure Australia seems oblivious of the failure of PFI.
Worse still, Australia is actively exporting this failed idea throughout the Asia-Pacific region. According to the Department of Foreign Affairs
Our recognised domestic expertise in Public Private Partnerships (PPPs) and “asset recycling” are of significant interest to our partners [in the Indo-Pacific region]
Even as the UK looks for ways to unwind failed PFI contracts, new PPP contracts, with payments stretching far into the future, are still being signed.
Considered as a coherent policy program with a tenable theoretical basis, neoliberalism has been dead ever since the global financial crisis. But the habits of mind instilled linger on a decade later. The bills for neoliberal policies like the PFI will still be coming due in the middle of this century and perhaps even beyond.
Neocornucopianism and the Steady State: Part I
The cornucopia is an age-old symbol of celebrating plenty. Today, the world has plenty and a new goal is needed. (Image credit: Yzrael. Image used under Creative Commons Attribution-Share Alike 3.0 Unported license.)
By Josh Farley
Perhaps the main reason people reject the need for a steady state economy is some form of cornucopianism, the belief that technological progress will overcome all ecological and physical limits, allowing endless economic growth into the indefinite future. Cornucopianism has several flavors, and I will describe three: mainstream economics, eco-modernism, and singularity theory.
Mainstream Economics Fuels Cornucopian Ideas
First, let’s examine how mainstream economics feeds a belief in cornucopianism. Most mainstream economists argue that as resources become scarce, their prices increase and that this incentivizes suppliers to produce more, innovators to develop substitutes, and consumers to demand less. They claim centuries of empirical support for their beliefs. Take for example the need for energy sources to fuel societies. The English economist William Stanley Jevons once said there was no conceivable substitute for increasingly scarce supplies of coal, but then we discovered oil. Oil production in the U.S. peaked in the 1970s, declining rapidly thereafter, and global production would inevitably peak sometime around 2012. Then the oil industry found deep sea deposits and refined hydraulic fracturing, while innovators developed alternative energy technologies. Oil production in the U.S. has surged back to its previous levels, global production has continued to rise, and solar energy prices are plunging.
To mainstream economists, climate change is a bit pesky, but it just requires internalizing ecological costs into market prices. They argue that technological advance, together with economic growth, will save us from any scarcity. But the folly in this idea is that demand does not stabilize or reduce just because new innovative sources (of fuel, for one example) become available. Demand continues to rise in parallel as new sources are found, new technologies are created, and economic growth is pushed to accelerate—to find more and use more. Demand becomes a runaway train, one that drives not an overflowing cornucopia of supplies (fuels, products, or anything else humans need), but rather drives a perpetual cycle of endless need that is never satisfied, an overflowing cornucopia with food going rotten.
Eco-Modernism as Cornucopianism
The second flavor of cornucopianism I want to explore is eco-modernism. Eco-modernists recognize that human impacts on our global ecosystems are currently unacceptable, but they believe that humanity can refocus technological progress to reduce these impacts. Eco-modernism believes that technology can end our reliance on nature. That we can use nuclear power to extract atmospheric gases and terrestrial minerals to build food in a laboratory, eliminating the ecological damage from agriculture. That we can extract carbon from the atmosphere and convert it directly into hydrocarbons. That if the climate grows too hot too fast, we can geo-engineer some cooling by throwing aerosols into the atmosphere. In their own words, eco-modernists say: “we affirm one long-standing environmental ideal, that humanity must shrink its impacts on the environment to make more room for nature, while we reject another, that human societies must harmonize with nature to avoid economic and ecological collapse,” (see the ecomodernism manifesto). They are saying that we need to accelerate, not move toward a steady state.
Singularity as Cornucopianism
Perhaps the most extreme flavor of cornucopianism is singularity theory. Singularity theorists are not concerned by the exponentially growing impacts of human activities on global ecosystems, because they say knowledge is growing super-exponentially, which means the power of human knowledge will become infinite by 2045. With infinite knowledge, they say, we can undo all the previous harm done to earth’s ecosystems, or simply abandon the earth and even our human bodies all together. We can download our consciousness into solar powered computers floating in space and virtually experience any reality we choose. This may sound far-fetched, but the idea has gained traction among Silicon Valley hotshots.
Truly novel technologies are inherently unpredictable: Since we can’t know what will emerge, we can’t possibly know the odds that it will emerge on time or truly address the problems we think it might. Betting the future of civilization and biodiversity on gambles with unknown odds is unwise to say the least. Rather than arguing over an unpredictable future, I propose neo-cornucopianism as a new argument for a steady state economy.
Neocornucopianism: We Already Have Plenty
I coin the term “neocornucopianism” to describe the recognition that, in wealthy nations, the horn of plenty is already overflowing, so the desire to establish an endless plenty is an empty, misplaced, and problematic desire.
The average American home has nearly doubled in size since the 1950s, and consumption has grown even faster: Americans rent an average of 21 square feet of storage space per person and generate more than 250 million tons of garbage per year, including 40% of the food we purchase. It’s to the point where we are actually paying to get rid of useful things. Additional production now makes us worse off.
A growing awareness of these trends leads to neocornucopianism: an idea, a mindset, and a lifestyle. Neocornucopians recognize that many of the new things they want will be thrown away within a week. So wanting and demanding less (instead of the endless pursuit of more) makes sense for personal choices, individual finances, local, state and national policies and for the larger global economic system.
Want to learn more? Stay tuned for future essays on this topic at the Steady State Herald, including articles in which Farley will provide examples of cornucopian wealth, with insights into the extreme inefficiency, injustice and unsustainability of our current system, as well as exploring a just and sustainable steady state alternative.
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The slow death of neoliberalism: PF2 edition
In the UK Budget last week, the Chancellor, Phillip Hammond announced the end of the PF2 scheme, the Conservative government’s replacement for the discredited Public Finance Initiative originally introduced by the Conservatives under John Major, but greatly expanded by Tony Blair’s New Labour. This announcement is less than meets the eye in a couple of respects. Financing under PF2 had already slowed to a trickle.
The decline of the PFI
More importantly, the UK government still hasn’t given up on the mirage of Public Private Partnerships, and may simply be trying to forestall more drastic action by a future Labour government.
Nevertheless, it’s a significant move. PPPs, in their various forms are an archetypal neoliberal policy, designed to show that capitalism can deliver all the infrastructure services traditionally associated with the social democratic state, while shrinking the public sector and keeping financial markets firmly in control. The failure of the PPP system in its country of origin ought to alert its imitators here that the model is irreparably broken.
Having abandoned the PFI, it now seems likely that the government will try something called the Non-Profit Distributing (‘NPD’) Model. As this article makes clear, it’s essentially an expensive form of debt finance with various cosmetic adjustments designed to keep the debt off the balance sheet. So far, these attempts have proved unsuccessful – auditors understand that if the public sector takes the risk, it owns the asset and owes the associated debt. In fact, the author of the piece, written in 2014, concludes that the authorities in question should go with the PF2.
Most favoured customer status
One of the things that annoys about the neoliberal era is the constant advice to “shop around” for the best deal for services we could once assume were fairly priced, like electricity or banking services. A crucial feature of this is that you can’t do this once and for all. Loyal customers are routinely punished by being left on unfavourable deals while new customers are offered better terms.
It struck me that we could get substantially better outcomes from markets if all firms were required to extend to existing customers any offer made to new ones.* That would greatly reduce churn and wasteful sales efforts, hopefully leading to a reversal of the increase in retail margins we’ve seen in areas like electricity.
This would be the equivalent of Most Favoured Nation status in trade policy, which ensures that all members of the World Trade Organization receive the same treatment. Interestingly, the Wikipedia article on Most Favoured Nation status refers only to an anti-competitive version of Most Favoured Customer status, where MFC status is extended only to selected customers.
I’m a bit ambivalent about suggesting ways to make neoliberalism work better, especially as it is now in retreat, but I think it will be around for a while yet, so reforming obvious failures seems like a worthwhile idea.
* I can imagine a case for some limited exemptions, for example, for “try before you buy” deals.
Why electricity reform failed
My latest piece in the Guardian is headlined The national energy market is an abject failure – it’s time for a publicly owned grid I’ve said this before and I don’t mind repeating myself. But the new insight that provoked me to write this piece is a bit further down
Why has Australia done so badly? The reform process in Australia has treated markets and competition as goals in themselves, rather than as policy instruments designed to produce useful price signals and thereby guide investment and consumption decisions.
The article is also a plug for a recently published book, Wrong Way, How Privatisation and Economic Reform Backfire, in which I have two chapters, one on electricity and one on productivity.