THE DEAD-END RUT

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Last Thursday, a day before the world’s financial policymakers’ convened their annual meeting, Lawrence Summers offered his assessment of the economic state of the world, along with some advice, in a lengthy op-ed for The Washington Post. The piece was entitled “The Global Economy Is in Serious Danger.”

Lawrence Summers, as you might recall, was the Secretary of the Treasury under President Clinton from 1999 through 2001, Director of the National Economic Council under President Obama from 2009 through 2010, and a past president of Harvard University. Currently, he is an economics professor at Harvard.

Summers began the essay with a bold declaration: “[T]he dangers facing the global economy are more severe than at any time since the Lehman Brothers bankruptcy in 2008.” Why? Because “[p]olicymakers badly underestimate the risks of both a return to recession in the West and of a period where global growth is unacceptably slow, a global growth recession.” Furthermore, Summers explained, “[i]f a recession were to occur, monetary policymakers would lack the tools to respond.” So what should financial policymakers do? They should use fiscal policy to stimulate economic growth. As Summers put it: “Today’s challenges call for a clear global commitment to the acceleration of growth as the main goal of macroeconomic policy.” Given that “the world’s principal tool for dealing with contraction — monetary policy — is largely played out,” what we need is a “more expansionary fiscal policy. . . . It follows that policies aimed at lifting global demand are imperative.”[1]

Missing from Summers’ essay is any mention of the environmental consequences of the “acceleration of growth” or the “lifting [of] global demand.” Nary a word does he speak concerning species extinctions, habitat destruction, groundwater depletion, fracking-induced earthquakes, ocean acidification, global warming, climate change, or any of the countless environmental horrors that have followed in the train of economic growth.

Like most mainstream economists, Lawrence Summers fails to acknowledge any limits to growth. For him, growth is good, and that’s that. There’s no reason to worry about problems caused by growth because, as he and others like him (I think it’s fair to say) see it, more growth will provide the tools that will fix any problems that arise.

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As I read Lawrence Summers’ essay, I recalled a passage from Herman Daly’s book Beyond Growth, which I’ve copied below. To set it up, I should mention that the year was 1992. Summers was the chief economist at the World Bank, and Daly was the senior economist in the environment department. At the time, the Bank was preparing its annual World Development Report. According to its webpage, the purpose of the 1992 report, entitled Development and the Environment, was to explore “the links between economic development and the environment.”[2]

In Beyond Growth, Daly explained that had initially thought that “the World Bank would be the proper institution to recognize the ecological contradictions in the world’s economic development plans, and to call attention to the need for the [wealthy, developed countries] to stop growth in resource throughput in order to both reserve for the people of the [impoverished, less developed countries] the remaining ecological space needed for growth to satisfy their vital needs and set [an] example of sustainable development.” The World Development Report offered the Bank its “best opportunity to date for doing this. . . .” As it turned out, however, the Bank didn’t take that opportunity.

Here’s more of what Daly had to say:

The evolution of the manuscript of Development and the Environment is revealing. An early draft contained a diagram entitled “The Relationship Between the Economy and the Environment.” It consisted of a square labeled “economy,” with an arrow coming in labeled “inputs” and an arrow going out labeled “outputs”nothing more. I suggested that the picture failed to show the environment, and that it would be good to have a large box containing the one depicted, to represent the environment. Then the relation between the environment and the economy would be clear — specifically, that the economy is a subsystem of the environment and depends upon the environment both as a source of raw material inputs and as a “sink” for waste outputs.

The next draft included the same diagram and text, but with an unlabeled box drawn around the economy like a picture frame. I commented that the larger box had to be labeled “environment” or else it was merely decorative, and that the text had to explain that the economy is related to the environment as a subsystem within the larger ecosystem and is dependent on it in the ways previously stated. The next draft omitted the diagram altogether.

By coincidence, a few months later the chief economist of the World Bank, Lawrence H. Summers, under whom the report was being written, happened to be on a conference panel at the Smithsonian Institution, discussing the book Beyond the Limits (Donella H. Meadows et al.), which Summers considered worthless. In that book there was a diagram showing the relation of the economy to the ecosystem, a diagram exactly like the one I had suggested. . . . During the question-and-answer time I asked the chief economist if, looking at that diagram, he felt that the question of the size of the economic subsystem relative to the total ecosystem was an important one, and whether he thought economists should be asking the question, What is the optimal scale of the macro economy relative to the environment? His reply was immediate and definite: “That’s not the right way to look at it.”

Reflecting on these two experiences has reinforced my belief that the main issue in the sustainable development controversy truly does revolve around what economist Joseph Schumpeter called “preanalytic vision.” My preanalytic vision of the economy as subsystem leads immediately to the questions, How big is the subsystem relative to the total system? How big can it be without disrupting the functioning of the total system? How big should it be? What is its optimal scale beyond which further growth would be antieconomic, would cost more than it’s worth? The World Bank’s chief economist had no intention of being sucked into addressing these subversive questions, so he dismissed the viewpoint that gave rise to them.

Summers’s dismissal was rather peremptory, but so, in a way, was my response to the diagram showing the economy receiving inputs from nowhere and exporting wastes to nowhere. That is not the right way to look at it, I felt, and any questions arising from that incomplete picture say, how to make the economy grow as fast as possible by speeding up the flow of energy and materials through it were not the right questions. Unless one has the preanalytic vision of the economy as subsystem, the whole idea of sustainable development of a subsystem being sustained by a larger system whose limits and capacities it must respect makes no sense whatsoever. On the other hand, a preanalytic vision of the economy as a box floating in infinite space allows people to speak of “sustainable growtha clear oxymoron to those who see the economy as a subsystem. The difference between these two visions could not be more fundamental, more elementary, or more irreconcilable.

It is interesting that such a huge issue should be at stake in a simple picture. Once you draw the boundary of the environment around the economy, you have said that the economy cannot expand forever. You have said that John Stuart Mill was right, that populations of human bodies and accumulations of capital goods cannot grow forever, that at some point, quantitative growth must give way to qualitative development as the path of progress.

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And now, here it is, some 23 years after the writing of Development and the Environment, and the rapid unraveling of the ecosphere—driven largely by growth—is accelerating. But rather than contemplating a different vision for the wellbeing of humanity (not to mention other species), Lawrence Summers is still obsessed with economic growth. And the tragedy is that most mainstream economists, financial policymakers and world leaders are stuck in the same, unimaginative, dead-end rut. Last night, at the Democratic debate, for example, Hillary Clinton said she had “specific plans” to take “the opportunity posed by climate change to grow our economy.”

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In the end, environmental conditions will force economists, financial policymakers, political leaders, and the rest of us to shift our goal from quantitative growth to qualitative development, but it will be better for us and our descendants if we make that change sooner rather than later.

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[1] Summers, Lawrence. “The Global Economy Is in Serious Danger.” Washington Post. October 7, 2015. https://www.washingtonpost.com/opinions/the-global-economy-is-in-serious-danger/2015/10/07/85e81666-6c5d-11e5-b31c-d80d62b53e28_story.html

[2] World Bank. 1993. World Development Report 1992 : Development and the Environment. World Development Report; World Development Indicators. Washington, DC : World Bank Group. http://documents.worldbank.org/curated/en/1993/05/17387636/world-development-report-1992-development-environment

Environmental Policy: Not Just for Wonks

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GREETINGS, Dear Reader! For several months, I stopped blogging while I prepared my book, It’s Up to Us, for publication on Kindle. And now, I’m happy to announce, the book is on the Amazon website. If you’d care to take a look, you can find it by clicking this link:

http://www.amazon.com/ITS-Unconventional-Examination-Environmental-Predicament-ebook/dp/B0128CEBMA

It’s Up to Us is a book about environmental policy. As a rule, books on that subject don’t attract a broad range of readers. Most people know little—if anything—about environmental policy, and they’d just as soon keep it that way.

At this point in history, however, it’s vital that we all understand some unfortunate facts: (1) the ecosphere is unraveling rapidly; (2) the methods we’ve been employing to correct environmental problems aren’t getting the job done; and (3) in order to prevent a slew of dire consequences from occurring, we must get involved, as individuals, in cleaning up the environmental mess we’ve created. It’s Up to Us discusses those facts. At the same time, it demonstrates that our environmental predicament, while serious, offers us the opportunity to reset our values, break free from the chains of consumerism, and enjoy a life full of simple joys.

Here’s what Herman Daly, the “Father of Ecological Economics,” had to say about It’s Up to Us:

Sally Wengrover, PhD, knows her business, and is careful and thorough in her research. This book is a scholarly tour de force of environmental policy analysis and economics, and I highly recommend it. Sally has an irrepressible sense of humor that enlivens the reading of some of the dry technical material. Some of the widely accepted ideas and policies that good scholarship forces her to cover, however, are so ludicrously and perniciously wrong that their focused consideration cannot be endured for extended periods without damage to one’s brain. So after diving deeply into the high-pressure nonsense of growthism (environmental Kuznetz Curve, geo-engineering, entropy reversal, denial of climate change, etc.), Sally has to be careful in re-surfacing to the normal atmosphere, lest she and her readers get the bends. Her means of controlling decompression is to pause now and then for some moments of purposeful silliness—some nutty rest interludes, but less nutty than the deeply serious junk science (or sometimes good ideas) she has just explained. Some readers will find her playful penchant for antiquated verb forms and pirate talk distracting, while others will enjoy it. But both kinds of readers will be grateful for a very insightful, positive, and honest book.

—HERMAN DALY, Emeritus Professor, School of Public Policy, University of Maryland; author of dozens of journal articles and numerous books, including Beyond Growth and For the Common Good; former World Bank Senior Economist; recipient of the Lifetime Achievement Award from the National Council for Science and the Environment (United States), the Honorary Right Livelihood Award (Sweden), and the Heineken Prize for Environmental Science (Netherlands).

P. S. If you’d like to watch a one-minute animated trailer for the book, please click below:

https://www.youtube.com/watch?v=HX3d3KpeRhw

As always, thank you, Dear Reader, for giving some of your valuable time and attention to my words.

Okay, this is totally embarrassing to say, but . . .

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To be frank, I started blogging before I got all the mechanics down, and I’m still not quite sure what I’m doing at times. One thing I’m wondering is whether it’s hard for visitors to get to my “About” page. I just updated it and I’d like people to be able to find it easily because it provides the foundation for my posts.

If you’ve already seen it, no need to read on.  If you haven’t and you have the time and the interest, you will find what I’ve put on my “About” page on the other side of the line of asterisks below.

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Here it is:

ABOUT

In case you’re wondering why I’m using a picture of a toddler for my gravatar, I guess I should explain. I wish I could say it’s because I, Sally Wengrover, was the first 18-month-old in history to earn a Ph.D., but, alas, that isn’t true. I chose that snapshot for my gravatar because, well, for one thing, it’s so darn cute, and, for another, because a picture of a child keeps me focused on the point of this blog, which is to do whatever I can to enable today’s children to have as fair of a chance at having a satisfying life as someone born in my (baby-boom) generation has had.

I guess I should tell you a bit about my life as an adult. To be brief, in my twenties I was an electronics tech at Atari, in California’s Silicon Valley. In my thirties I worked in Portland, Oregon, as a broadcast engineer, and in Marin County, California, as a 3D animator and instructor. When I was halfway through my forties, I went back to school to study environmental policy.

My mental transition from techno-geek to environmentalist dates back to my daily commute, via moped, from my apartment in San Jose to my job at Atari in Sunnyvale. Day after day, as I rode across miles of side streets, I witnessed acre after acre of habitat for wildlife being razed to make way for industrial parks. The sight of displaced egrets, stilts, and herons—their long, graceful legs splayed clumsily across dirt clods and parking-lot asphalt—led me to contemplate the ecological costs of technological progress.

For years thereafter, my mind played tug-of-war, pulling me back and forth between my fascination with high tech and my concern about the degrading condition of the environment. But as time went on and the rate at which the ecosphere was unraveling accelerated, I realized that I couldn’t sit on the sidelines and watch the ongoing deterioration. I had to invest my time and energy into searching for environmental solutions. So I went back to school and, blessed with the great Herman Daly as my advisor, I earned a Ph.D. in Policy Studies (with a specialization in Environmental Policy) from the University of Maryland’s School of Public Policy. While I was waiting to defend my dissertation and for a while thereafter, I assisted Jeremy Rifkin on his 2009 book The Empathic Civilization, as an editor/fact-checker/researcher/foot-noter/handwriting decipherer.

And now I’m trying to share the results of my decades of study. And my big message is this: We need to act immediately to reduce our environmental impact. Government regulations, market mechanisms, and greener technologies are necessary, but the environment is unraveling too fast for us to sit by and wait for those things to solve our problems for us. Each one of us needs to cut our consumption of stuff starting today.