Economic policy

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The Meat of the Matter: Diet, Climate, and the Steady State Economy

Published by Anonymous (not verified) on Sat, 31/10/2020 - 2:03am in

By Haley Demircan

The saying “you are what you eat” is clearly true to a great extent, but there’s more to the story. The food we consume not only affects our being directly, but also the environment and the economy—and therefore us indirectly as well. Eating more vegetables and less meat and dairy is better for the health of most individuals here and now, and certainly for the health of the planet, now and for the long run. Without a healthy planet, there’s no healthy economy.

Cow and plant-based diet

A dairy cow raised for milk production. (Image: CC0, Credit: USDA)

The science is pretty clear, starting with the fact that Earth is warming at an alarming rate and economic growth is a major cause. According to the latest estimates, many regions have already surpassed 1.5 degrees Celsius above pre-industrial levels. Meanwhile the Intergovernmental Panel on Climate Change clearly links greenhouse gas emissions to GDP growth. Among the factors contributing to that GDP growth is food consumption, and not all food consumption contributes equally (Figure 1).

When most people think about what they can do to help reduce greenhouse gas emissions, they don’t even think about GDP. They don’t think about their diet, either. That’s a problem. As Jalava et. al found: “Shifting away from animal-based foods [could not only] add up to 49% to the global food supply without expanding croplands; but would also significantly reduce carbon emissions and waste byproducts that end up in our oceans and as seafood byproducts.”

Greenhouse Gas Emissions

When shopping at a grocery store or eating at a restaurant, how many of us think about the process of meat production and how it affects the climate? It’s a question with significant repercussions. In 2018 farming was responsible for 574 million metric tons of carbon dioxide emissions in the USA, or 8.3 percent of the nation’s total greenhouse gas emissions. Meat production accounts for the lion’s share of these emissions.

Due to population growth and the lack of a plan for replacing or slowing meat production, those numbers will continue to grow. Emissions from agriculture are projected to increase to 80 percent by 2050.

 


Figure 1. Greenhouse gas emissions per food product. (Image: CC0, Credit: Vision Capitalist)

 

Earth or One Big Farm?

Ten percent of Earth’s surface is covered by glaciers (Figure 2). Nineteen percent of Earth’s surface is desert, salt flats, beaches, and sand dunes. The remaining 71 percent is considered “habitable land”—land that includes forests, grasslands, surface freshwater, and urban areas. As of this year, about half of the habitable land is farmland (which, as with urban areas, is much less “habitable” for wildlife).

Agriculture not only emits copious greenhouse gasses, it commits a colossal water footprint. Agriculture including livestock production accounts for 70 percent of freshwater use and is the largest water-consuming sector worldwide. This percentage accounts for all the sectors of agriculture; however, meat and dairy products are responsible for using the most. It takes about 1,840 gallons of water to produce one pound of ground beef, mostly because of the water needed to grow grain and other forage crops, and to provide drinking water for the cattle.

If we compare those 1,840 gallons to the daily per capita water use of an American (101.5 gallons), then the meat produced for a quarter-pound hamburger costs 4.5 days of water use. Meanwhile, the water footprint of a chicken egg is 50 gallons. If the USA cut animal product consumption by half, our food production would require 37 percent less water.

 


Earth’s surface and land use. (Image: CC0, Credit: Our World in Data)

 

Diet and Savings (In More Ways than One)

Consuming less meat (or no meat) is not only beneficial to the environment and human health but seemingly also the economy. If we continue increasing meat consumption at current rates instead of shifting to a vegetable-heavy or plant-based diet, it will cost the USA $197 billion–$289 billion each year, and the global economy up to about $1.6 trillion annually, just in direct and indirect healthcare costs. If we’d eat less meat or adopt a plant-based diet, we’d save a lot or all of that money. 

Wouldn’t saving that money, and/or preventing those costs, be a smart thing? Of course, this perspective entails the recognition that more expenditure—higher GDP—is no longer the goal. The economic benefits of saving as opposed to spending is highly congruent with the trophic theory of money, and hopefully with the common sense of many citizens, but not with conventional economics and growth politics.

Advertising Kills

Given all the evidence for how a plant-based diet is more sustainable for society and healthier for people, why do we continue to consume so much meat and so many other animal products? It’s not entirely a matter of rationality on our part. For one thing, advertising gets in the way!

The U.S. meat and poultry industry represents $1.02 trillion in “total economic output.” With that kind of money at stake, the meat and poultry industries have an abundance of motivation (and resources) for advertising. The same motives apply to the dairy industry. Advertising plays an enormous role in what consumers believe and buy.

Direct advertising by producers isn’t the only form of public relations conducive to meat, dairy, and poultry consumption. The American Cancer Association’s “champion sponsors” include the likes of Tyson Foods and Perdue Farms. The American Diabetes Association gets money from Dannon and Kraft. It is no surprise then that the recipes promoted by these “health” associations include ingredients from these heavy hitters in the meat, dairy, and poultry industries.

Behavioral and Policy Implications

People can readily change their diets to reduce their carbon footprints. Customers can opt for lentils or beans in their home-cooked meals, or even plant-based “meats” that have gotten increasingly similar to the real thing and quite tasty in their own right. Yet, individual dietary choices will not be enough to solve climate change, prevent the transmission of animal diseases, or conserve wildlife habitats. Among other things, we need systemic reform in our agricultural system.

For starters, a tax should be imposed on meat products. This could prevent 222,000 deaths and save $41 million in global health costs every year. Health warnings could also be issued on meat packages to inform consumers of harmful side effects. Certain farm subsidies could be cut, too, saving taxpayers money, reducing overproduction, and reversing the trend toward factory farming.

Farmers markets are an encouraging and more sustainable option for purchasing agricultural products due to the organic and low-impact practices of participating farmers. These markets have grown in popularity, and with help from local governments, their accessibility could be improved in more regions. The Farmer’s Market Coalition has already proposed recommendations for cities and counties to follow in building healthy foundations for farmer’s markets.

Of course, these types of reforms—especially the fiscal and regulatory policies—will be far more feasible if tied to the goal of a steady state economy. Otherwise the argument will be made at every step that such reforms are “getting in the way of business” and impacting GDP. Only when steady staters are populous enough will we overcome such arguments with, “Yes of course lowering meat consumption will lower GDP, and that’s just what the doctor ordered for you, the climate, and our planet.”

Haley Demircan is CASSE’s fall journalism intern.

The post The Meat of the Matter: Diet, Climate, and the Steady State Economy appeared first on Center for the Advancement of the Steady State Economy.


It’s not about the watches …

Published by Anonymous (not verified) on Thu, 29/10/2020 - 6:10pm in

… is Australia Post a commercial operation or a public service?

That’s the headline for a piece I wrote for The Guardian (my first there in quite a while). A key point is that the deal that allegedly justified the expensive gifts was, in essence, the continuation of an arrangement established a hundred years ago between what was then the Post Office and the publicly owned Commonwealth Bank. Whoever put that arrangement together deserves commendation, but I doubt that they were rewarded by anything more than a promotion adding a few shillings a week to their salary.

The conclusion:

The Australian public has long since seen through the claims made for privatisation, even if the financial and corporate sectors (the real “inner city elites”) continue to push the ideas of competition and choice. Australians want basic services to be delivered cheaply and reliably, by organisations set up to serve the public, rather than to maximise profits.

The statutory authority model, under which most of the infrastructure on which we now rely was built, is the best way to achieve this.

A Life on Our Planet – A Tentative Step Toward Mainstream Steady Statesmanship

Published by Anonymous (not verified) on Sat, 24/10/2020 - 1:22am in

By James MacGregor Palmer

Sir David Attenborough is nothing short of a national treasure in the UK. The 93-year-old nature broadcaster’s lyrical but soft-spoken narration is instantly recognizable, providing the backdrop for many Britons’ most vivid on-screen encounters with the natural world.

Attenborough’s career has spanned well over half a century, bringing the world’s wildlife to our screens. While initially his focus was merely on bringing viewers a taste of the planet’s brilliant biodiversity, over the years a new concern has emerged: Biodiversity is shrinking. And Attenborough feels an obligation to use his platform to do something about it.

That’s why, even at his advanced age, he’s joined Instagram, hoping to influence a younger generation that will bear the majority of the burden of the climate crisis. It’s also why, though tentatively and incrementally, he has begun to point the finger of blame at something so deeply embedded in our hegemonic psyche that it has seemed for so long beyond criticism—capitalism. In doing so, he is (perhaps unwittingly) becoming a great asset to those of us who believe in steady-state economics.

Globe (a life on our planet)

From outer space it’s crystal clear that we live on a planet of a finite capacity. (Image: CC0, Credit: PIRO4D)

Attenborough’s latest film, A Life on Our Planet, is his “witness statement.” It documents the loss of biodiversity that has occurred during his lifetime. Biodiversity is a term that has somewhat shifted off the mainstream media’s radar in recent years; yet here it is brought front and center. But throughout, there is a consistent theme that this loss is not merely caused by human carelessness but by a systemic need for ever more consumption. This need must be overturned if we are to stand any chance against the climate crisis.

The Importance of Visual Metaphors and Frames

Some of Attenborough’s key points can be viewed as a coherent and digestible argument for steady-state economics. They also highlight the idea that the message lands better when it is presented as part of a broader philosophical worldview, rather than as a set of cold, hard economic principles.

First, Attenborough sketches out a rather vivid picture of monitoring the 1968 Apollo mission, the first time humanity had seen our planet from the outside:

I remember very well that first shot. You saw a blue marble, a blue sphere in the blackness and you realised that that was the earth, and in that one shot there was the whole of humanity with nothing else except the person that was in the spacecraft taking that picture.  And that completely changed the mindset of the population, the human population of the world. Our home was not limitless. There was an edge to our existence. It was a rediscovery of a fundamental truth. We are ultimately bound by and reliant upon the finite natural world about us. This truth defined the life we led in our prehistory—the time before farming and civilization.

This is a powerful visual metaphor. While we walk on this planet, it is easy to become lost in its vastness, to fall into the trap of believing on a subconscious level (though on a rational level we know this to be untrue) that it is infinite. Once we view our planet from another angle, one from outside its atmosphere, it is easier for us to grasp its finitude. Widespread realization of this “fundamental truth,” as Attenborough calls it, is vital if steady-state ideas are to be accepted by the general public. Reducing steady-state economics to the fundamental truth at its core—the reality that Earth is finite and should be treated as such—could be a key element of simplifying the message. When we acknowledge this truth, and that, as Attenborough states, “anything we can’t do forever is, by definition, unsustainable,” it becomes a case of simple logic that endless economic growth is incompatible with the limits of our planet.

The power of the visual image of a finite Earth is not the only frame that A Life on Our Planet lends for potential application to steady-state economics. Another is in the following:

We had broken loose. We were apart from the rest of life on Earth. Living a different kind of life. Our predators had been eliminated. Most of our diseases were under control. We had worked out how to produce food to order. There was nothing left to restrict us. Nothing to stop us. Unless we stopped ourselves. We would keep consuming the earth until we had used it up.

Forest

The natural world is the greatest visual and experiential asset to the communication of steady-state ideas. (Image: CC0, KANENORI)

The idea here is that humans have become separate to the rest of life on Earth, subduing it and refusing to be confined by it, changing the environment instead of ourselves (an idea Attenborough first posited way back in his 1979 documentary Life on Earth). This is another mode of thinking that, if we were able to successfully challenge, would make steady-state economics far more palatable to the general public. When we view ourselves as separate from the living world we inhabit, it is easier for us to see it as there for our consumption rather than our cooperation. While many accept the fact that current hegemony encourages us to think in individualistic terms, few extend that premise beyond other people to other forms of life. Hegemonic individualism and consumerism encourage us not only to see other people as merely assets to be exploited but also to apply the same logic to the natural world. We continue to exploit all the assets available to us until there are none left. Steady-state economics is a direct challenge to this logically flawed position, but in order to become widely accepted as a legitimately workable economic theory, we must first challenge the underlying ideology that predisposes many to subconscious opposition of degrowth ideas.

A Step Forward

The natural world is the greatest visual and experiential asset to the communication of steady-state ideas. While anthropogenic climate change is now broadly acknowledged as a “root cause” of our current environmental crisis, the challenge for us is to illustrate the “deeper root”: endless economic growth. We all see the loss of biodiversity around us and we all lament it. We lap up nature documentaries because we have an innate sense of awe for the natural world. If we can bring into plain view the link between the loss of the natural world and the idea that growth is always good, we may stand some chance of winning people over.

David Attenborough

David Attenborough: Serious about protecting the planet and on the cusp of steady statesmanship. (Image: CC BY-SA 3.0, Credit: Mikedixson)

A Life on Our Planet takes a big step in making that connection. Yes, it may be tentative. And yes, Attenborough is careful to avoid any explicit reference to economics, but what the film does do is advocate a fundamental shift in human thinking. That has to be the first step toward general acceptance of the steady state economy.

In fact, Attenborough went further into detail on a BBC podcast following the release of the film, stating his belief that “we must curb excess capitalism” in order to combat the climate crisis. A national figure talking about capitalism as the “deeper root” of the climate crisis on a state broadcaster no less. This is big stuff.

Now, as journalist George Monbiot pointed out on Twitter the following day, Attenborough still felt the need to qualify “capitalism” with “excess,” pointing the finger at the adjective and not the noun. But Monbiot himself has written about the incompatibility of perpetual growth with continued human life on Earth on multiple occasions over the last two years in the prominent British newspaper The Guardian. We are beginning to see mainstream voices questioning the moral and theoretical underpinning of the hegemonic ideology that compels us toward perpetually increasing consumption, and that is a crucial first step toward overthrowing that ideology.

Returning to Our Roots

Steady statesmanship is not just an economic principle, it is a counter-hegemonic ideology. We are fundamentally opposed to the neoliberal capitalist worldview, which makes the task of communicating our ideas immeasurably harder. But the lesson from A Life on Our Planet is that we can use universal visual and experiential metaphors to our advantage. We all experience and love the natural world. We all get some sense of existential awe when we realize the enormity yet finitude of the planet we live on. The task for those of us who believe in change is to convince others that the world’s dominant economic model is responsible for the rapid erosion of our relationship with the natural world around us. In the words of Sir David Attenborough:

“When you think about it, we are completing a journey. Ten thousand years ago, as hunter-gatherers, we lived a sustainable life because that was the only option. All these years later, it’s once again the only option. We need to rediscover how to be sustainable, to move from being apart from nature to becoming a part of nature once again.”

James MacGregor Palmer graduated from Newcastle University with a BA in Music with Politics in 2019 and is pursuing a master’s degree in International Journalism at the University of Stirling.

The post A Life on Our Planet – A Tentative Step Toward Mainstream Steady Statesmanship appeared first on Center for the Advancement of the Steady State Economy.


Who Does Economic Growth Serve?

Published by Anonymous (not verified) on Fri, 16/10/2020 - 5:09am in

By Brian Snyder

For many people, one of the causes of our obsession with economic growth is our belief that it will make our lives better. We think that with a little more money and a little more financial security, we will be able to better provide for our families, pay for our children’s college, and eventually retire, perhaps not wealthy but safe in the knowledge that we will never be poor.

For others, economic growth is needed as a means to help the poor. We drive around our communities and see a great deal of poverty—people without healthcare, food, or decent housing—and think that if we had a bit of economic growth with the new businesses and jobs it brings, we could alleviate this suffering.

These are noble and understandable goals, but they are based on a faulty assumption: A rising tide lifts all boats, and national economic growth increases financial stability for the middle class and raises the poor out of poverty. There was a time in American history when this was the case. But for the past three decades, economic growth has almost exclusively benefitted the top 10 percent, and done little to nothing for the bottom 50 percent.

Economic Growth and the Unequal Distribution of Wealth

Recently, the Federal Reserve released an analysis which showed that the 50 richest Americans controlled as much wealth as the 164 million poorest. While that shocking number led to headlines, the more interesting aspect of this data is the way in which equity shares have changed over time. In 2002, the top 1 percent owned about 40 percent of equity in corporations, while those in the 50th to 90th percentile owned about 20 percent, and the bottom 50 percent owned about 1.5 percent. Today, the 1 percent own over 50 percent of equity, while the bottom 90 percent own about 11 percent of equity. Of that, the bottom 50 percent own about 0.5 percent of equity in corporations.

Moving more broadly to the estimate of wealth, the trends remain the same. The top 1 percent of the nation own 30.5 percent of its wealth, up from 24 percent in 1989. Meanwhile, the bottom 50 percent’s share of wealth has declined from 3.6 percent in the late 1980s to 1.9 percent today.

Of course, these statistics do not necessarily imply that the poor and middle class are growing poorer, but they do imply that the benefits of economic growth are not spread evenly or equitably. The bottom 50 percent, or perhaps even the bottom 90 percent, support an economic system that is built for the benefit of the top 10 percent. We support this system because we believe that it is the means to move from poverty to prosperity, but it turns out that this prosperity is not our own.

Jeff Bezos and economic growth

Jeff Bezos and then-Secretary of Defense Ash Carter, 2016. (Image: CC0, Credit: Senior Master Sgt. Adrian Cadiz)

What is especially galling in this situation is that this growth is an affront, not just to steady-state heterodox economics but to neoclassical economics as well. Jeff Bezos, CEO of Amazon, made $5 billion dollars last Wednesday, enlarging his fortune to $188 billion. Inexplicably, that was not his personal best. Neoclassical economists assume that utility plateaus as consumption increases. That is, there is some amount of money beyond which further income does not add to happiness. Certainly, this limit to human utility must be decidedly south of $188 billion dollars. If so, then why do we have a system that encourages billionaires to build wealth ad infinitum?

Critics will argue that the rising tide of economic growth has indeed lifted all boats. They will argue that poor and middle-class Americans are richer than we were 20 or 30 years ago. Certainly, we all have more stuff than we did a few decades ago, and our stuff is fancier and more expensive. So, in a sense, such critics would be correct. But they neglect the fact, described by Herman Daly and John Cobb long ago, that wealth is at least partially relative. Humans are social animals, and one of the ways in which we situate ourselves on the social hierarchy is through wealth. Thus, what matters is not just how much stuff I have, but how much stuff I have relative to that other guy. Therefore, in a very real sense, when the rich get richer faster than the poor get richer, the poor really do feel poorer.

Unbeknownst to most, this economic growth that benefits the rich extracts a cost on natural resources and the environment. Our aquifers are being depleted, fisheries are in decline, forests are disappearing, air is toxic, oceans are acidifying, soils are eroding, and the planet is warming. At some point, perhaps next year or perhaps 100 years from now, these environmental crises will become a global humanitarian crisis. Indeed, climate change may already have contributed to the war in Syria, the most terrible humanitarian disaster of the 21st century. Yet when this socio-ecological crisis comes, who do we imagine will suffer the consequences? Will it be the children of the 1 percent, or the children of the bottom 50 percent?

Who Will Pay the Price?

The COVID-19 crisis illustrates the linkage between environmental crisis and wealth. While many may not think of COVID-19 as an environmental crisis, it was caused by a parasitic organism that a wild animal transmitted into humans and spread through densely populated cities in China and the USA. Thus, the pandemic is an anthropogenic environmental crisis.

Graph and economic growth

Impacts of climatic variation on corn yields in the USA. Source: EPA.

A year ago, we might have thought that we were all equally vulnerable to an infectious disease. Certainly, we would expect differences in population density to impact transmission, but not differences in wealth. While it is certainly true that the rich and poor get COVID-19, it is not true that we have all contracted it at the same rate. African Americans and other minority groups have been disproportionately impacted as well as people living in areas with historic particulate matter pollution.

The same pattern is likely to hold for the next environmental crisis, whether it is another pandemic, a climate-induced famine, or some new terror that we have not yet imagined. The poor—the people that live in polluted locations with less healthcare, more violence, and more food insecurity—will pay the costs of environmental degradation, either through a reduction in the ecosystem services they rely on, or via an increase in ecosystem disservices like parasitism, fires, and extreme weather.

No More Economic Growth! No More Malarkey!

Map and economic growth

Anthropogenic soil degradation. Source: UN FAO.

In sum, the richer have gotten richer through economic growth while the poor and middle class have grown relatively poorer. Furthermore, the children of the poor and middle class will pay for this growth. In a best-case scenario, they will pay higher taxes to pay off the government debt the rich have required to fuel growth and build the infrastructure needed to resist the various environmental crises that befall them. In a medium case, perhaps they will also be displaced from their homes. But in a worst-case scenario, they will pay with their lives.

Of course, they already do. Globally, over 3 million people die each year from air pollution, with about 200,000 of those deaths in the U.S. Lethal air pollution, mostly in the form of particulate matter, is a direct result of our economic activity, and it has increased in China and India in recent years because of the globalized world we created to fuel our economic growth.

Given this ludicrous yet abhorrent situation, I wonder what the first step should be. Not a long list of radical policy ideas, but the first, moderate step. A step someone like Joe Biden could take to slow growth and change the beneficiaries of the growth that remains. Reversing the Trump tax cuts would certainly be helpful, and it is in Biden’s plans, but that seems almost trivial compared to the scale of the problem. Instead, I think we must change the mandate of the Fed to favor employment rather than growth. That seems like real progress that is both symbolic and meaningful. It is radical without being overly so, and it is the sort of change that may gain popular support. Perhaps, if Biden is elected, advocates of the steady state economy might focus on one or two such policies with the broadest appeal. Policies that, while not turning the train of economic growth around, at least start tapping the brakes.  

Brian F. Snyder is an assistant professor of environmental science at Louisiana State University and CASSE’s LSU Chapter director.

The post Who Does Economic Growth Serve? appeared first on Center for the Advancement of the Steady State Economy.


Colorado River: “Lifeline of the Southwest” Suffering Effects of Economic Growth and Climate Change

Published by Anonymous (not verified) on Fri, 02/10/2020 - 5:37am in

By Haley Demircan

The Colorado River, also known as the “Lifeline of the Southwest,” spreads along 1,450 miles (2,330 kilometers), from northern Colorado to the Gulf of California in northwestern Mexico. This legendary river provides water for 40 million people in cities such as Denver, Phoenix, Los Angeles, Las Vegas and San Diego, as well as millions of acres of vital farmland. Seven states rely on the Colorado River as a primary source of water. But as economic growth and climate change ensue, there is major cause for concern regarding depletion and the impacts of climate change in the Colorado River basin.

Colorado River Basin

The Colorado River system covers a huge expanse of the American Southwest. Image: CC0, Credit: USGS)

Whether residents of the Southwest are using water from the river or groundwater, they are withdrawing the region’s most vital resource much faster than it can be replenished. In other words, the Southwest’s water-use challenges constitute a textbook case of a not-so-steady state economy.

The Effects of Climate Change

Over the past century, regional temperatures have risen 1.4 degrees Celsius and water usage has increased, both of which are a function of a growing, environmentally-destructive GDP. Researchers Chris Milly and Krista A. Dunne at the United States Geological Survey (USGS) published a study in March 2020 using a hydrologic model and historical observations to demonstrate that the decrease in water flowing through the river is due largely to the evapotranspiration associated with climate change.

Global warming drastically affects the snowpack that feeds the river. As temperatures in the region rise, more winter precipitation falls as rain rather than snow. Snow cover declines, causing the land to become exposed and dry. Without this snow cover, less energy from the sun is able to be reflected back through the atmosphere into space. Instead, it becomes trapped and warms the surface of the earth. Furthermore, plants need more water when temperatures rise. Just in the last century, waterflow from the Colorado River dropped 20 percent, and half of that percentage is from climate change. This reduction of water has left the two largest reservoirs in the nation, Lake Mead and Lake Powell, which were completely full in 2000, almost half empty. From 2000 to 2004, both had lost enough water to supply California with five times its Colorado River water.

With further global warming, Milly and Dunne estimate that the river will be depleted another 14-26 percent by 2050. They stated that more than half of this depletion is attributable to higher temperatures. As this trend in increased temperatures continues, the risk of severe water shortages for the millions of people who rely on the water from the Colorado River will grow.

The higher end of the percentage of depletion would mean a loss of about 1.5 million acre-feet of water—or 326,000 gallons of water—which is enough water to cover an acre of land about one foot deep. With temperatures on the rise and rainfall and snowpack declining, it is impossible to keep up with the water demand. In an interview with CNN, Brad Udall, a climate scientist at Colorado State University, warned, “Without this river, American cities in the Southwest would dry up and blow away.”

River basin study

Water supply and demand for the Colorado Rover. Credit: March 2016 Report by U.S. Bureau of Reclamation.

The Drought Contingency Plan

With the 19-year-drought affecting the Colorado River basin, all seven basin states had to come up with a plan. In an effort to keep the levels of the two major reservoirs from becoming critically low, they created the drought contingency plan (DCP). All seven states signed the DCP for the Upper and the Lower Colorado River basins. The plan is actually a set of specialized plans unique to each state and designed to help stabilize the river system and reduce the risk of reservoirs falling to critically low levels.

The Arizona drought contingency plan goes into effect when levels in Lake Mead reach 1,090 MSL (mean sea level). Currently, Lake Mead is 1,085 MSL. Arizona is only allotted 37.3 percent of the Colorado River’s lower basin water, and the state will receive a drastic decrease in water resource as the DCP and cutbacks are managed, from 2.80 million acre-feet per year to just over a million acre-feet per year.

Ground Water Depletion, Farmland Abandonment, and Economic Impacts

In an effort to source water elsewhere, Arizona is now relying on ground water aquifers, which is not a viable solution for the future. These aquifers provide corporate farms the ability to grow as much food as possible in a short time frame. Using ground water in this way depletes the underground, fresh water much too quickly. Water depletion in Arizona has caused several issues in the past, such as land abandonment, earth cracking/collapse, and major dust storms.

Lake Mead

Recent photo of Lake Mead showing an alarming drop in water level. (Image: CC0, Credit: USGS)

In Pinal county, Arizona, farmers are experiencing a lack of water resources. With the new DCP, farmers have lost two-thirds of the irrigation water they had been receiving from the Colorado River. They are now relying on groundwater; however, drilling and pumping groundwater is costly, and many farmers cannot afford the large increase in the cost of water for their farmlands. Ashley Hullinger, a research analyst from the University of Arizona, conducted a water loss study specifically for Pinal Country, and she found that there could be enormous economic repercussions if ground water depletion continues at this rate.

With the loss of 300,000-acre feet of water, the study found that there would be:

  • $63.5 million to $66.7 million lost in gross farm-gate sales (this accounts for 7 percent)
  • $94 million to $104 million lost in total county sales (farm and non-farm sales)
  • $31.7 million to $35 million lost in county value added (this includes net farm income, profits in other industries, employee compensation and tax revenues)
  • 240 to 480 full-time and part-time jobs lost

Depleting water from underground aquifers at high rates provides a small solution to the large cut in the Colorado River water allocation; however, there are severe consequences to the land as well as the economy.

Where do we go from here?

With temperatures on the rise due to climate change, there is no doubt that water depletion will occur. The next steps in the DCP are critical in reducing the risk of further shortages. One long-term goal is for reservoirs like Lake Mead and Lake Powell to replenish and hopefully allow for the water flow to increase in the Colorado River. Scientist like Udall, believe that the only way to save the Colorado River is by addressing what he considers the root cause of the problem—climate change. We might add an even deeper root: the GDP growth that drives greenhouse gas emissions and climate change.

“The science is crystal clear—we must reduce greenhouse gas emissions immediately,” he says. “We now have the technologies, the policies and favorable economics to accomplish greenhouse gas reductions. What we lack is the will.”

We’re not so sure about the “policies and favorable economics” part. While the microeconomics of installing renewable energy facilities may be more favorable, we still have pro-growth policies that ensure not only more renewable energy technology, but dipping further into the wells and deposits of fossil fuels.

 

Haley Demircan is CASSE’s fall journalism intern.

The post Colorado River: “Lifeline of the Southwest” Suffering Effects of Economic Growth and Climate Change appeared first on Center for the Advancement of the Steady State Economy.


Outsourcing: what we pay for is what we get

Published by Anonymous (not verified) on Wed, 30/09/2020 - 5:42pm in

Ross Gittins makes some obvious, but important, points about what is lsot when vital public services are contracted out. As he says, economists have known this since the work of Oliver Hart, last century, but it’s only now penetrating the policy establishment. In the UK, which led the charge for outsourcing under Thatcher, insourcing is the New Big Thing.

Unlike Hart, I’m not in the running for the Economics Nobel, but I’ve spent much of the last thirty years supplying empirical support for his theoretical analysis.

Fair Incomes for a Healthy Future: The Sustainable Salaries Act

Published by Anonymous (not verified) on Fri, 25/09/2020 - 4:43am in

By Ashfia Khan

To achieve sustainability in the USA and generally, it is crucial that we narrow the income gap between the highest and lowest earners. An equitable distribution of income is a prerequisite of social and environmental sustainability. It’s not just about sustainability, either—it’s about fairness, too.

yacht

Unsustainable salaries lead to unsustainable consumption. (Image: CC0, Credit: Roman Boed)

People tend to be happier and healthier in societies where there is a more equitable distribution of wealth, as well as more likely to receive higher education and have a longer life expectancy.[i] Among the G7 countries, the USA ranks highest in income inequality, and the wealth gap more than doubled between 1989 and 2016 and continues to widen.[ii] The more the income gap widens, the worse it gets for economic mobility.

Sometimes called the “Great Gatsby Curve” by economists, the relationship between income equality and mobility is such that children from lower-income families will be far less likely to improve their economic status compared to their parents.[iii] It simply seems unfair that so little of the USA’s population controls so much of its wealth while 20 percent of Americans are unable to even pay their monthly bills and give their children the opportunity for a better future.

Income Inequality and Its Negative Effects

Domestic and international researchers have explored the effects of income inequality through the “Gini coefficient.”[iv] The Gini coefficient ranges from 0 to 1, where 0 represents perfect equality and 1 represents perfect inequality. In other words, when the coefficient is 0, everyone receives an equal share; when the coefficient is at 1, only one group or individual gets everything.

The Gini coefficient is not a perfect indicator, as it depends on every country having reliable income data and doesn’t measure informal economic activity. However, it does provide useful insights for how income inequality effects people’s wellbeing. For example, one researcher compared infant mortality rates in the USA by mapping CDC data against the Gini Index and found that as income inequality increased, so did infant mortality.[v] Researchers also found that U.S. teenagers living in states with higher levels of inequality are more likely to become pregnant than those living in states with a low level of inequality.[vi]

Gini coefficients have also been analyzed with data from the U.N. Human Development Indicators, revealing that Japan has the lowest Gini coefficient (lowest inequality) and the U.S. has the highest, and that there is a significant relationship between inequality and obesity.[vii]

The pervasive reach of income inequality extends beyond societal impacts. Researchers have also discovered strong threats to the environment and sustainability. While many of the causes of biodiversity loss, such as habitat loss and climate change, are more directly causal, some studies have explored the relationship between income inequality and biodiversity loss. Even after controlling for factors like biophysical conditions, human population size, and per capita GDP and income, researchers found that as the Gini coefficient increased, so did the indicators of biodiversity loss.[viii] This pattern remained the same whether compared across countries or U.S. states. The researchers noted that correlation does not equate to causality, but they postulated a strong likelihood of causality in this case.

It doesn’t end at biodiversity loss either. One researcher found that there was a consistent trend, at least among wealthy countries, whereby those with higher inequality consumed more resources and generated more waste.[ix] U.S. water consumption per capita is more than twice that of Japan. In Japan, the top 10 percent of the population has an income 4.5 times that of the bottom 10 percent. In the U.S., the top 10 percent earns 16 times that of the lowest. Similarly, in New Zealand, where the top 10 percent earn 12.5 times as much, the per capita annual consumption of fish and meat is close to three times as much as that of Japan.

graph and salary caps

Inequality and consumption of fish and meat across countries, 2002-2007. Note: Circle size corresponds to the size of a country’s population.[xi]

This same pattern is reflected in how much per capita annual waste countries generate. Sweden, which has a relatively low ratio of income inequality, generates 513kg of waste annually. Switzerland, with an income inequality ratio of 9, generates 728kg, and Singapore, where the top 10% earns 18 times as much as the bottom 10%, generates a whopping 1072kg.[x]

Salary Caps

One proposed solution to narrow the income gap is to implement a salary cap, which could also be considered a 100 percent tax rate beyond a certain salary. The tax revenue may be repurposed to serve the public good.

Salary caps have been kicked around the policy arena as early as 1933, when members of the House of Representatives were introducing amendments to limit annual incomes to $1 million. In 1942, Franklin Roosevelt proposed that annual incomes should be capped at $25,000 (which would translate to $375,000 today).[xii] These proposals were never legislated, but academics and policymakers have explored the concept with increasing interest and support.

The NFL and NBA, among other athletic organizations, have famously adopted salary caps. Since 1994, the NFL has enforced both a salary floor and cap for its athletes and teams. These minima and maxima are readjusted after annual reviews. Sports teams have found that leveling the playing field not only makes for a more egalitarian league, but it also makes the performance more engaging for their audience as well.[xiii]

It would hardly make sense, though, to set one overarching salary limit across all industries and occupations. Some industries require higher levels of education and more skilled qualifications. Industries that require specialized education and experience will have less competition than other industries and may garner greater profits. Holding industries with a huge disparity in profit margins to the same salary cap doesn’t seem feasible. If set too low, the political prospects for establishing the cap would be nil. If set too high, it would lose effectiveness.

In Supply Shock: Economic Growth at the Crossroads and the Steady State Solution, Brian Czech proffers “sectoral salary caps” of fifteen times the lowest in-sector salary or wage, calling this a common-sense starting point for feasible policy negotiations. Using the example of a barber in Pulaski, Tennessee versus a barber in New York City, it makes sense that the New York barber could, would, and should charge more for a haircut. For producing what would be a $15 haircut in Pulaski, the New York barber may receive up to $450. A $450 haircut is hardly a glowing example of sustainability, yet it’s not a $1,000 haircut, which would be wantonly wasteful by almost anyone’s standards. The cap, then, would move us in the direction of sustainable consumption.

Green Bay Packers and salary caps

The NFL is no paragon of sustainability, but has implemented salary caps since 1994. (In the case of the Green Bay Packers, shown above, the team is community-owned as well). (Image: CC BY-SA 2.0, Credit: Mike Morbeck)

The Sustainable Salaries Act

Consistent with Czech’s sectoral salary-capping proposal, I propose a “Sustainable Salaries Act.” The legislation may be included in CASSE’s broader Full and Sustainable Employment Act. Alternatively, it may be introduced as an independent bill.

The Sustainable Salaries Act would prohibit top employees in most industries from making more than fifteen times as much as the lowest-paid employees. Somewhat lower proportional caps would apply to sectors known for inequitable business practices or the production of non-essential goods and services.

The bureaucracy entailed may not be as onerous as some would suspect. Companies already report their employees’ salaries and wages to the IRS. Pursuant to the Sustainable Salaries Act, the IRS will compile this information and submit it to the U.S. Department of Labor. If a company violates the act, it will face criminal penalties and fines in proportion to excess salaries, and CEOs may even face jail time in egregious cases.

The following is a conceivable Section 3 (Declarations) of the Sustainable Salaries Act. This should give readers a better sense of how the law would function and provide a starting point for conversation on sectoral salary capping. As the act is further developed, some of the subsections may be broken out into full sections.

 

Sec. 3. DECLARATIONS

 

1. In General.—The salary of the most highly compensated employees of any
organization or corporation may not be any greater than fifteen times the salary of
the lowest paid employee of the same organization or corporation.
(A) The salary of the most highly compensated employees of any organization or
corporation engaged in activities—
   (1) in the pharmaceutical and drugs sector, real estate sector, and commercial lending sector may not be any greater than ten times the salary of the lowest paid employee of the same organization or corporation.
   (2) in the amusement and recreation sector, cosmetics sector, and jewelry sector may not be greater than twelve times the salary of the lowest paid employee of the same organization or corporation.

 

2. REPORT.—The Internal Revenue Service shall submit the salary and
wage information of all employees within the top ten percent of highly compensated
employees and the salary and wage information of all employees within the lowest ten percent of the least compensated employees within an organization or corporation to the U.S. Department of Labor for review.

 

3. CRIMINAL PENALTIES.—Whoever—
     (1) knowingly and willfully exceeds the salary limit set forth under the Sustainable
Salaries Act shall be fined under this title or imprisoned for not more than two years
or both.
     (2) willfully reports a record of compensation as set forth in the Sustainable
Salaries Act with the intent to deceive, mislead, or otherwise falsely misrepresent
information, knowing that the record contains false information or does not meet all
the requirements set forth in the Act, or both, shall be fined not more than
$5,000,000 or imprisoned not more than ten years, or both.

 

Enforcing salary caps pursuant to a Sustainable Salaries Act is just one step toward a steady state economy, but a crucial one. By reducing income inequality, we move closer to not only a more equitable society, but a more sustainable one as well.

 

[i] According to a study in Italy, where the Gini coefficient was mapped against life expectancy at birth, income inequality was shown to have a significant negative correlation with life expectancy. G.A. Cornia, R. Gnesotto, R. Mistry, R. De Vogli. 2005. Has the relation between income inequality and life expectancy disappeared? Evidence from Italy and top industrialised countries. Journal of Epidemiology and Community Health 59(2):158–162.

[ii] Schaeffer, K.,”6 facts about economic inequality in the U.S,” Fact Tank: News in the Numbers, Pew Research Center, February 7, 2020, https://www.pewresearch.org/fact-tank/2020/02/07/6-facts-about-economic-inequality-in-the-u-s/.

[iii] Vandivier, D. “What is the Great Gatsby Curve?” The White House: President Barack Obama, June 11, 2013, https://obamawhitehouse.archives.gov/blog/2013/06/11/what-great-gatsby-curve.

[iv] Chappelow, J, “Gini Index,” Investopedia, February 3, 2020, https://www.investopedia.com/terms/g/gini-index.asp.

[v] Erwin, P., M. K. Jones, and A. Siddiqi. 2015. Does higher income inequality adversely influence infant mortality rates? Reconciling descriptive patterns and recent research findings. Social Science & Medicine 131:82–88.

[vi] Levine, P.B. and Kearney, M. S. 2012. Why is the teen birth rate in the United States so high and why does it matter? Journal of Economic Perspectives 26(2):141-63.

[vii] Brunner, E., Kelly, S., T. Lobstein, K.E. Pickett, K. E. and R. G. Wilkinson. 2005. Wider income gaps, wider waistbands? An ecological study of obesity and income inequality. Journal of Epidemiology and Community Health 59(8):670-674.

[viii] Gonzalez, A. G.M. Mikkelson, and G.D. Peterson. 2007. Economic inequality predicts biodiversity loss. PLOS ONE 2(5):e444.

[ix] Islam, S. “Inequality and Environmental Sustainability.” New York: DESA Working Paper No. 45., 2015.

[x] Ibid.

[xi] Ibid.

[xii]Pizzigati, S., “For Minimum Decency, a Maximum Wage,” Institute for Policy Studies, June 6, 2018, https://ips-dc.org/for-minimum-decency-a-maximum-wage/.

[xiii]Vassallo, J. The Advantages of Salary Caps. Houston Chronicle, July 31, 2020.

Ashfia Khan is a Policy Specialist with the Center for the Advancement of the Steady State Economy (CASSE) and a prior CASSE Legal Intern. She is also pursuing a J.D. at George Washington University. 

The post Fair Incomes for a Healthy Future: The Sustainable Salaries Act appeared first on Center for the Advancement of the Steady State Economy.


Wealth Transfers, Carbon Dioxide Removal, and the Steady State Economy

Published by Anonymous (not verified) on Fri, 18/09/2020 - 5:24am in

By Brian Snyder

In 2019, the U.S. per capita GDP was $65,000. It seems obvious that this level of economic activity is more than sufficient to meet the needs of the U.S. population; after all, if we can’t live fulfilled, productive lives in an economy producing $65,000 per person per year, more money and production will never be enough. Further, additional per capita economic growth in the USA is uneconomic. For example, economic growth to $75,000 per person per year will not increase our economic wellbeing nearly as much as it will decrease ecological wellbeing; hence, the justification for a steady state economy.


Just one example of wealth in the USA. Mansion in Newport, RI. (Image: CC BY 3.0, Credit: silvervoyager)

But much of the world is not like the USA. Afghanistan’s per capita GDP was $502 in 2019. Burundi’s was $261, and the average per capita GDP in sub-Saharan Africa was less than $1600. In these nations, most citizens cannot meet their basic needs—food, water, sanitation, electricity, education, and healthcare—at current levels of economic activity. In these places, a steady state economy is unsustainable because poverty is unsustainable.

There are two reasons we may consider poverty unsustainable. The first is simply definitional. One of my favorite definitions of sustainability is “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” While this definition was originally used by the Brundtland Commission for “sustainable development” rather than “sustainability,” it works just as well for either. Given this definition, poverty is unsustainable because it does not allow for present generations to meet their basic needs.

But there is also a more fundamental reason why poverty is unsustainable, and it has less to do with poverty per se than the unequal distribution of wealth. If we consider sustainability to be “able to be sustained” or “able to be repeated for long periods,” then poverty itself is actually quite sustainable. Almost every human in history has lived in what we would consider abject poverty and could continue to do so for millennia.

Syrian Army

Poverty and an uneven distribution of wealth are major factors of the Syrian Civil War. (Image: CC BY 2.0, Credit: Freedom)

Yet while poverty may be sustained over long periods, a vastly uneven distribution of wealth cannot; just ask Marie Antoinette or Tsar Nicholas II. While the French and Soviet Revolutions were, in part, a reaction to the inequal distribution of wealth and extreme poverty within a country, unequal power and wealth between nations can also fuel international rivalries, terrorism, and wars, all of which are unsustainable regardless of the definition you choose. A large part of the reason that Afghanistan and Somalia have been fertile soil for terrorism over the last three decades is that they are some of the poorest nations on Earth. Likewise, intranational economic inequality and poverty is an important cause of the Syrian Civil War, the deadliest conflict of the 21st century.

In sum, poverty and the unequal distribution of wealth between nations is unsustainable, and per capita GDP growth is required in the developing world to rectify it. Without such growth, asymmetries in wealth will continue to incite violence.

CDR Systems as a Solution

If we agree that economic growth is counterproductive in wealthy nations yet productive in poor nations, we may then ask which policies will be useful for transferring economic growth from the developed to the developing world. One obvious alternative is to transfer wealth from rich countries to poor countries. However, if this wealth is used to invest in industries, especially extractive industries, such wealth transfers may become counterproductive. For example, imagine that the developed world provides $100 million in cash to country X to build a factory that exports goods to developed markets. In this case, the developed world may benefit from cheap goods, facilitating economic growth in the developed world and defeating the purpose of the transfer. In other words, creating more low-cost production centers in a Western-financed race to the bottom is not in anyone’s interest.

Instead, we need to find a cash flow that facilitates economic growth in the developing world without creating economic growth in the developed world. Given that the economies of poor and rich nations are intertwined, this is unlikely to be possible, but there may be industries that could be targeted and developed that come close. One possibility is investments in carbon dioxide removal (CDR) systems financed with developed-world cash and using developing-world labor and land.

Reforestation

Reforestation in Haiti. (Image: CC BY-SA 4.0, Credit: Cunningchrisw)

CDR, also called negative emissions technologies, are systems that use energy to remove carbon dioxide from the atmosphere. CDR systems range in technology from very low tech (like reforestation) to very high tech (like direct air carbon capture), and, at first glance, might not be the sort of thing many steady staters are inclined to support. After all, steady-state folks tend toward technological moderation and generally favor halting consumption growth, rather than developing new, often energy-intensive means for mitigating the impacts of consumption. Further, many CDR systems are likely to be unworkable or create larger problems than they solve. Hence, some skepticism is warranted.

But many CDR systems have considerable potential. Reforestation stores carbon and produces ecosystem services like soil protection, water retention, and wildlife habitat provision. Some bioenergy with carbon capture and storage systems may likewise produce ecosystem services if the biomass is harvested and managed sustainably. Enhanced weathering also is promising as a low energy means for sequestering carbon. And while direct air carbon capture systems are energy intensive, that energy could be supplied by renewable resources, especially in parts of sub-Saharan Africa with exceptional solar resources.  

Furthermore, CDR is likely the only plausible path toward meeting the Paris commitments. To limit the temperature increase to 1.5°C, we need to be at about net zero CO2 emissions in 30 years and achieve net negative emissions in the last decades of the 21st century. Because of our dependence on fossil fuels in industrial and power applications, it is highly unlikely that our gross emissions of CO2 will be zero around 2050. We would need some negative emissions to achieve a net zero emission. In other words, even if we decarbonize rapidly, it likely won’t be enough.  

The Function of Wealth Transfers and CDR

Consider a policy in which developed-world nations transfer wealth to the developing world for investments in CDR systems. This wealth transfer would act like a tax in the developed world, potentially reducing economic growth. Of course, some portion of this wealth transfer will return back to the developed world for purchasing technology for CDR implementation, subverting the purpose of increasing growth in the developing world without increasing growth in the developed world. Yet much of the wealth will be used to pay for labor in the developed world, especially in lower-tech CDR systems like reforestation and biomass-based systems. If much of the wealth from the policy stays in the developing world and isn’t used to buy developed-world goods and services, the policy may be effective at transferring wealth.

Jeff Bezos

Jeff Bezos has accumulated hundreds of billions of dollars. Image how many countries could be supported on his income alone. (Image: CC BY 2.0, Credit: Seattle City Council)

The use of wealth transfers to fund CDR has an advantage that less targeted wealth transfers do not have because CDR is, in a sense, parasitic. CDR does not produce something of value that can be sold in the same way that a factory or a coal mine does. Instead, it consumes wealth to produce a theoretical emissions credit that can only have value because governments require them. The physical “thing” itself, stored carbon, has no value—especially in its oxidized form stored in underground formations. Thus, CDR systems are akin to wealth furnaces that take land, labor, and capital and turn them into nothing that can be used to stimulate economic growth in the developed world.

We can think of investing in CDR as akin to investing in sanitation. Like sanitation, CDR produces a public good that is absolutely necessary, but funding it serves as an inefficiency for the economy. By tying CDR with wealth transfers, we may be able to increase this inefficiency, and thus slow growth, for the developed world while creating employment and infrastructure in the developing world.

A Just Transition

The nations of the developing world did nearly nothing to cause climate change, yet they are likely to bear a disproportionate share of the burden of the direct impacts of climate change and the indirect economic impacts of decarbonization. Not only are poorer countries less able to adapt to climate change, but by using up the carbon budget, wealthy nations have effectively foreclosed poorer nations’ abilities to extract and use their own fossil fuels.

village child

We need a just transition for countries who will suffer from climate change and are not economically stable. (Image: CC0, Credit: ajaykhadka)

As mentioned above, the transfer of wealth will help to rectify this injustice, but we need a means to determine how much money to transfer. One possibility is to use a climate easement system in which developing-world nations are compensated for the lost value of their hydrocarbon resources. In such a policy, nations may estimate the net value of their hydrocarbon resources and enter into easements with wealthy nations that compensate them for their lost value and ensure that the resources remain underground.

Climate and Energy are Not Just Developed World Problems

In discussions about climate policy, we tend to focus on wealthy emitters—the USA, China, Europe—and ignore the developing world. This makes sense because it is how we have dealt with nearly every international problem in history: The rich people get together and make decisions, and the poor people get ignored. But energy and climate are the glue that binds us all together. We cannot craft an energy and climate policy that ignores the developing world because, if we do, developing-world nations will either develop into major emitters or remain mired in poverty, susceptible to conflict as temperatures rise and resources decline. Thus, we need a climate and energy policy that includes an explicit path toward sustainable development (as opposed to unsustainable growth) for the developing world. Without such a path, climate policy will fail.

Brian F. Snyder is an assistant professor of environmental science at Louisiana State University and CASSE’s LSU Chapter director.

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To get the economy going, we’ll need more than hard hats

Published by Anonymous (not verified) on Thu, 17/09/2020 - 5:07pm in

That’s the headline for my latest article in Independent Australia. Opening paras

WITH THE economy in recession as a result of the COVID-19 pandemic and depressed conditions likely to continue for a year or more to come, attention has turned to strategies to promote recovery.

Unsurprisingly, most participants in the policy process have turned to the kinds of strategies they have always favoured.

High on the list for many is increased investment in physical infrastructure projects and particularly transport infrastructure. Such projects, always announced with an impressive-sounding number of associated jobs, lend themselves to images of legions of workers toiling with picks and shovels (the term “shovel-ready” is commonly used for projects ready to be implemented rapidly). And the announcement of such projects gives rise to media-friendly images, mercilessly satirised by the ABC program Utopia, of politicians in hard hats and hi-vis vests, busily engaged in building the nation.

Conclusion

the biggest investments we need to make are in people, not concrete. The pandemic has exposed huge weaknesses in our social infrastructure, from aged care and public health to university education. These are the areas that desperately need more investment if we are to make the economic transformation we need.

“Consumer Confidence” or Subtle Salesmanship?

Published by Anonymous (not verified) on Fri, 28/08/2020 - 12:14am in

By Brian Czech

Have you ever wondered about the odd pairing of “confidence” with “consumer?” Isn’t confidence supposed to reflect something more virtuous than your shopping cart? When you’re confident, you’ll be comfortable in your own skin, right? It’s all about who you are, not what your stuff is.

Confidence is supposed to play out in places like football fields, gymnastic events, stages, and maybe weddings, not shopping malls and dealerships. In its highest form, confidence melds into bravery. It takes some real confidence to break up a fight or charge into battle.

What kind of “confidence” is needed for buying shoes or iPads or even cars?

Grocery store

Empty aisle, just awaiting your “confidence.” (Image: CC0, Source)

Nor is confidence the same as bluster, arrogance, or braggadocio. In fact, confidence is most convincingly exuded in modest dignity. Boasting, on the other hand, indicates the opposite of confidence: insecurity, neediness, and, in the extreme, sociopathy (as “certain individuals” have demonstrated in recent years).

Well, that’s what the word “confidence” connotes for me, at least. I’m confident it would to most others as well. But let’s check the dictionary, just to be safe.

According to Merriam-Webster, the confident person is “full of conviction: CERTAIN.” That’s meaning #1, and highly relevant. The point I’m making, though, is driven home even more profoundly with meaning #2: “having or showing assurance and self-reliance.”

While Fish May Be Innocent, Odd Pairings Are Fishy

It’s true enough that we’re all consumers. Furthermore, each of us fall somewhere along the confidence spectrum. Therefore, as an adjective, confidence can be applied to consumer. “Consumer confidence” is grammatically sound. Yet I still don’t buy it (so to speak).

When’s the last time you heard talk of “fish innocence?” What about “hiker ambivalence,” or “singer colorblindness” or “dishwasher jocularity?” Presumably all fish are relatively innocent, and yes, all hikers fall somewhere on the spectrum of ambivalence, but who the hell cares? These subjects—fish, hikers, etc.—just don’t need to be described in terms of those (respective) adjectives! In each of the pairings the linkage is irrelevant at best and spurious at worst.

So, when I hear the phrase “consumer confidence,” I smell a fish. Something seems awry, and I have a vague sense of being in the polyester presence of salesmanship and propaganda. Other slick phrases come quickly to mind, such as “jumbo shrimp” and “green growth.” It strikes me that these slippery slogans tend to be oxymoronic, or at least ironic, and “consumer confidence” is no exception.


This fish is innocent. Is that relevant? (Image: CC0, Credit: USFWS)

Certainly the “self-reliance” aspect of confidence is quite at odds with consumption, unless perhaps we’re talking about the purchasing of some fishing line and a hook, on our way to the trout stream for dinner. But then we’re talking about confidence in fishing ability, not the ability to cast a credit card all the way across the counter. “Fisherman confidence” makes sense, and so might “consumer solvency,” but… “consumer confidence?”

The Conference Board and the CCI

The U.S. Consumer Confidence Index (CCI) was developed in 1967 as a measure of “optimism on the state of the economy that consumers are expressing through their activities of savings and spending.” The CCI is measured monthly by The Conference Board, based on a five-question survey issued to 5,000 Americans. Essentially, “confidence” is indicated when (based on the survey) consumers are likely to be spending more than saving.

The CCI is supposed to be a planning tool for manufacturers, retailers, banks, and government. If it’s rising, for example, the retailer may decide to invest in more locations and higher inventory. It’s a bit of an odd duck in the world of economic indicators, though. Investopedia gushes about it as “A Killer Statistic,” yet its predictive value is questionable, and most sources (including another Investopedia site) view it as a lagging indicator. In other words, it’s more of a rear-view mirror than a telescope to the future.

I’m less interested in its merits as leading vs. lagging than in the derivation of the name! One can’t help but suspect that the phrase was coined in some Madison Avenue conference room with the blessing of the New York Stock Exchange, the Federal Reserve Chair, and the Koch Brothers. These folks are always thinking of the margin, looking for any pro-growth influence they can possibly sneak into the system. Just imagine the scheming… “I know,” said one of them, “Let’s call it ‘consumer confidence’ and get it all over the airwaves. Nobody likes to be a chicken; people will start thinking of spending money as a way to show their bravery, by God.” [Guffaws all around.]

I jest, I guess, but the phrase “consumer confidence” clearly reflects a bias toward consumption in the business world and the economics profession. If they really wanted to know about the prevalence of spending (vs. saving), the indicator could have simply and neutrally been called “spending” (as a lagging indicator), “spending likelihood” (as a leading indicator), or even the Keynesian “propensity to consume” (as an all-purpose indicator). And, of course, they could have used “consumer optimism” (straight out of the very definition), with its less normative connotations. Instead, they attached an always desirable condition—“confidence”—to the mere act of consumption!

Madison Avenue

Madison Avenue: “Consumer confidence” branded here? (Image: CC0, Credit: Leif Knutsen)

Actually, there is an economic indicator called “consumer spending.” It’s no mere psychological pulse, either; it’s the outright expenditure on goods and services by households. It’s monitored by the staid Bureau of Economic Analysis and, as a key variable in the calculation of GDP, it’s been around far longer than the CCI. Why wouldn’t that suffice? Why did we need a “Conference Board” to send out surveys on “feelings”?

So, while I’m not advancing a conspiracy theory, I still think there was an element of marketing, salesmanship, or PR in launching the “consumer confidence” paradigm. The CCI may seem like an objective indicator, but it’s designed to steer our subjectivity into a sense that spending is a good thing.

What’s Wrong with Saving, Anyway?

I’d be tempted to say, “Real men save,” but why tempt fate in the minefield of gender politics? You get the picture, though. Being a consumer has nothing to do with confidence. If anything, it’s the other way around: The more confident you are in your own skills, abilities, and general presence, the less stuff you need to show off, make you look better, or help you perform. “Non-consumer confidence,” we might call it.

Furthermore, if we associate consumption with the admirable thing to do, then where does that leave saving? Have we been led into a twisted choice between “consumer confidence” and “saver sheepishness?” When did saving become so frowned upon? What happened to Benjamin Franklin’s wise old adage, “A penny saved is a penny earned?”

Mountains

Inspiring landscape, spared via saving. (Image: CC0, Source)

Without getting into the philosophical depths of Franklin’s particular meaning(s), we have to acknowledge that “saving” means many things among many people. For the conventional, neoclassical, 20th century economist, “saving” meant little more than deferring consumption—so more could be consumed later!

For advancing the steady state economy, though, saving has entirely different connotations. After all, the steady state economy is all about stabilizing the level of consumption. The most prominent connotation of “saving,” then, is as an antonym to consumption. The saver foregoes consumption in order to…forego consumption! The income saved can be used for various other purposes: a rainy day, favorite charity, reduction in work hours, political investment, and other non-goods and non-services that don’t bloat the GDP.

Steady statesmanship, then, rejects the notion of “consumer confidence,” favoring concepts such as consumer conscientiousness, consumer frugality, and even “saver sagacity.” Sagacious savers understand they are saving far more than money. A penny saved—not spent on “consumer goods”—is a penny’s worth of planet earned. (Or at least spared.)

Brian Czech

Brian Czech is the Executive Director of the Center for the Advancement of the Steady State Economy.

The post “Consumer Confidence” or Subtle Salesmanship? appeared first on Center for the Advancement of the Steady State Economy.


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