Green Mass Group - Economics

Occupy Sandy

gmoke — Sat, 03 Nov 2012 20:53:29 GMT

A group of people from the Occupy Wall Street movement is collaborating with the climate change advocacy group 350.org and a new online toolkit for disaster recovery, recovers.org, to organize a grassroots relief effort in New York City.

Occupy Sandy: http://occupywallst.org/articl...

Boston TEDX talk by Recovers.org http://www.ted.com/talks/caitr...

The combination of the jobs and economic focus of Occupy with the climate change and energy transition ideas of 350.org along with the disaster recovery systems of Recovers.org is a model that can build resilience and preparedness quickly if continued. Add Solar IS Civil Defense, set the Maker Culture loose, and it just might shade over into Solar Swadeshi, Gandhian economics, a non-violent and restorative open source peer-to-peer economic system where we plan for 100% success for all humanity, to paraphrase R Buckminster Fuller.
First encountered Recovers.org in April, 2012 when Caitria O'Neill, one of the founders, spoke at Harvard. Morgan O'Neil, Caitria's sister and another of the founders, was working on a PhD in atmospheric science before her hometown of Monson, MA was hit by a tornado and she began disaster recovery work.

Here are my rough notes from that presentation:
4/17/12
Harvard
Recovers.org
Common misconceptions - Red Cross and FEMA organize volunteers, assess needs and donations, or canvass neighborhoods. They do not do any of these things.
Common problems - Spontaneous volunteers and unsolicited donations (almost never a need for clothes)
[accommodating surges of volunteers, donations, and interest is a problem not confined to natural disasters]
Town/ngo/community responses do not interface optimally now
No centralized info hub
Short window of interest - 50% of web searches on a disaster are in the first 7 days but needs are beginning to be reported only after that first week
Recover.org databases the initial interest information for use later
Use community organizations for long-term recovery
[build resilience, especially for most common emergencies and disasters - flood, fire, blizzard, drought]
Internet communication more organized and prioritized than facebook
Centralized info clearinghouse
Tools: needs reporting, canvassing, volunteer management, donation databases
Fema pays for 75%, state pays for 15%, town pays for 10% - and volunteer hours can be counted if accounted for.
Recovers.org has a database service that can be deployed online immediately along with a package of tools to take advantage of that initial interest
Post-disaster assistance free
License subscriptions to preparing towns - first sale to five towns in Illinois in response to periodic flooding

Previously:
Planning for After the Storm Emergency and Before the Next One
http://www.dailykos.com/story/...
Building Resilient Communities: John Robb at NYC Maker Faire
http://www.dailykos.com/story/...
Eating the City and Town: Todmorden and Beyond
http://www.dailykos.com/story/...
My Solutions to Climate Change
http://www.dailykos.com/story/...
Occupy Green
http://www.dailykos.com/story/...

Trash Technology and Recycled Solar: Plastic Bottles

gmoke — Wed, 14 Sep 2011 03:27:59 GMT

Solar water disinfection
http://www.sodis.ch/index_EN
A two liter plastic bottle can be made into a water treatment system simply by filling it with contaminated water and exposing it to the sun. Sodis is an organization that promotes this technology around the world.

The disinfection process can be speeded by turning aluminized mylar snack food bags inside out and making them into reflectors as two young students in Belo Horizonte, Brazil discovered: http://calais.phase2technology...

Solar bottle bulbs for daylighting
http://www.elliottlemenager.co...

In 2002, during a long electrical shortage, at Uberaba, São Paulo, Brasil, Mr Alfredo Moser discovered a way to gather sun light in the house through plastic bottles hanging from the roof. First shown at the Globo Reporter in the 25th May 2007.
Alfredo Moser was pressed by a scarce electricity substitution and found out that he could light his house with a bottle of water filled with water and a protection cap made of camera film.
The bottle is just refracting sunlight very effectively and produces an equivalent light power compared to a 50/60W lamp. In a rainy day, even without much light and direct sun, one still have some light. Scientist have now visited Moser and are looking into ways to take this concept to maximize its potential.

That was 2002. Now over 10,000 households, small businesses, and schools in the Philippines have installed solar bottle bulbs. Iliac Diaz of Liter of Light is attempting to spread it worldwide.
http://isanglitrongliwanag.org/

http://www.csmonitor.com/World...

The invention is something that is so simple, cheap, and sustainable that anyone can create and maintain it themselves.
As Diaz says, the three rules of appropriate technology are that people can find it, they can replicate it, and most importantly, they can make a business of it.

Here's another Brazilian design, for a PET bottle hot water heater
http://www.temasactuales.com/t...

There are also plastic bottle houses
from Argentina
http://www.odditycentral.com/p...

and Nigeria
http://nationaldailyngr.com/in...

In Nigeria, they fill the bottles with sand or dirt to make bottle bricks.

Here's a backpacker solar water heater
http://www.instructables.com/i...

A recycled solar cloche or cold frame for the garden
http://solarray.blogspot.com/2...

All these devices make use of the Simple Solar Principles
Dark gets hot
Light reflects
Clear keeps the wind out

Most any and everybody can understand how to build and use them.

Even when a plastic bottle is chopped up, it may still help in purifying water
http://portal.acs.org/portal/a...

"Plastic bottle" solution for arsenic-contaminated water threatening 100 million people
Note to journalists: Please report that this research was presented at a meeting of the American Chemical Society.
DENVER, Aug. 31, 2011
"Dealing with arsenic contamination of drinking water in the developing world requires simple technology based on locally available materials," said study leader Tsanangurayi Tongesayi, Ph.D., professor of analytical and environmental chemistry at Monmouth University, West Long Branch, N.J. "Our process uses pieces of plastic water, soda pop and other beverage bottles. Coat the pieces with cysteine - that's an amino acid found in dietary supplements and foods - and stir the plastic in arsenic-contaminated water. This works like a magnet. The cysteine binds up the arsenic. Remove the plastic and you have drinkable water."

Water bottles walls, hanging bottles in south-facing windows in south-facing windows, is folk technology that goes back at least to the 19th century. Always wanted to set up a stacked thermosyphon from one gallon to five gallon container to another to see how that would affect the system. Has anyone combined solar water disinfection with solar daylighting? How about water collection and treatment with solar daylighting, water and space heating, plus PV power as one integrated system.

Previously:
Trash Technology for Education and Survival
http://www.dailykos.com/story/...
Fastfood Containers as Solar Devices
http://www.dailykos.com/story/...
Recycled solar
http://solarray.blogspot.com/2...
Solar Is Civil Defense
http://solarray.blogspot.com/2...
Small-scale LED Lighting, Off-Grid Cell Phones
http://solarray.blogspot.com/2...
Solar Insurgency
http://solarray.blogspot.com/2...
Solar Swadeshi
http://solarray.blogspot.com/2...
Gandhian Economics
http://www.globalswadeshi.net/...

All I know about simple solar is at
http://solarray.blogspot.com/2...
http://solarray.blogspot.com/2...

crossposted to http://solarray.blogspot.com/2...

Toward a post-modern (post-materialist) economic theory

eli_beckerman — Sat, 16 Jul 2011 04:09:55 GMT

The New Economics Institute, in lead-up to the 100th Anniversary of writer and philosopher E.F. Schumacher's birth on August 16th, sent out excerpts from a 2008 essay about Schumacher's relevance today:

"The Relevance of E. F. Schumacher in the 21st Century"
By John Fullerton
Our global economic system is broken not because of the credit crisis; it is broken because it is predicated on perpetual, resource driven growth with no recognition of scale limitations.
What we are not hearing, at least in the mainstream media, is a critical reframing of the questions that address root causes..... We are not hearing a debate about the sustainability of a perpetually growing global economic system nested within our finite biosphere. We are not hearing a debate about the wisdom of allowing financial power (and systemic risk) to be increasingly concentrated in the hands of a few financial institutions of increasing complexity and scale. We are not publicly questioning the wisdom of the system we have allowed to evolve in response to capital's quest for ever increasing financial returns. Nor are we debating where to look for creative responses.
However, nothing could be more important at this critical time. What we must grasp is that the financial crisis we are reacting to is but a cyclical side show to the bigger issues we face regarding the sustainability of our economic system. We should see the present financial crisis as a wake up call to this far greater challenge. We should search with an open mind for the wisdom we need to transition our economic system onto a sustainable path, grounded in ecological reality, with a respect for human justice and a deep appreciation for all life.

Continued after the jump

What is needed is nothing less than a new economic myth, which incorporates the central issue of scale in order to supplant and transcend the "invisible hand" of the free market. We need a "post-modern (post-materialist) economic theory".
At the beginning of the 20th century, scale did not matter. At start of the 21st century, scale redefines our economic challenge.
In my personal quest for this new economic myth, I was stopped dead in my tracks after discovering E.F. Schumacher several years ago. Most who know
of Schumacher know him from his seminal work, "Small is Beautiful - Economics as if People Mattered" (1973). The fortunate ones have also read his final published work, "A Guide for the Perplexed," a title that grabbed me and did not disappoint. Most disciples of Schumacher probably encountered his clear thinking during the 70s. Many went on to become leaders in the
environmental movement. I was in junior high school when "Small is Beautiful" was published, and then was busy building a career in global finance during the 80s and 90s on the belief that finance rather than politics would dominate international relations during my lifetime. I got that right, but not in the way I expected.
Seeing global finance, what I do, as a root cause in fueling our unsustainable economic system, has shaken many of my prior beliefs on economics.... it is now time that we transcend to an economics built upon wisdom. Schumacher's instruction is clear and compelling. "From an economic view point, the central concept of wisdom is permanence. We must study the economics of permanence." This intention takes us in a profoundly different direction than conventional, Cartesian thinking. "Permanence" suggests valuing durability over efficiency, stability over speed. These are different values from those typically celebrated in the marketplace.
We need to think about what adjustments are necessary to "insure" the permanence of our collective home, which must include a stable civil
society. Such thinking must address the very nature of our economic system. Without a sustainable and just economic system, there is no permanence. We need to inject these ideas into the public debate by reframing the cyclical
economic concerns that preoccupy the mainstream media. We see little true recognition of this profound challenge among our business, financial and governmental leadership, which remains absorbed with short-term tactical issues.
Following Schumacher's lead, we should look to the great wisdom traditions for direction in this truth. Where better to look than to the ideas and teachings from all cultures that have stood the test of time, rather than restrict ourselves to contemporary economic theories that we know are limited and incomplete.
Schumacher is relevant to our critical 21st century challenges precisely for this reason. His philosophy, his concern about the limits of materialistic scientism, his distinctions between divergent and convergent problems, and his ideas of decentralism, appropriate technology, and human scale to name but a few, are all rooted in the great spiritual and philosophical teachings. Not surprisingly, his ideas, in addition to being humane and just, are aligned with nature and nature's sustainable way, the only truly sustainable system we know. They are, I believe, rooted in truth as best as Schumacher could discern it, and therefore they represent wisdom, the wisdom of permanence.
If you examine Schumacher's personal library, which is carefully stewarded at the New Economics Institute's Berkshire office, you will find that most of the texts are not about economics. Instead, they include the great philosophical and spiritual texts from all traditions. Schumacher's gift and genius was to derive economic principles and ideas from these teachings, to have the courage to speak the truth, despite knowing it often flew in the face of conventional economic thinking, and to make the truth accessible with his clear and witty prose. What emerges is certainly not the final word on the economics of permanence. Some of his thinking is outdated, or simply missed the mark. But as a foundation to build upon, it is invaluable. The reason his ideas about economics ring true is because they are built upon these wisdom traditions. The contradictions of modern economics are gone.
Our challenge now is to refine and update this thinking and to chart a practical path of convergence between the reality that exists in our economic system today and the principles we strive to uphold and upon which our long run prosperity undoubtedly depends.... The opening decades of 21st century may be our best chance to launch the critical transformation of our economic system to an economics of permanence. We need to get it right, as only our collective consciousness will allow.
Transitioning to a sustainable and just economic system is the ultimate challenge of the 21st century. History no doubt will judge our generation by how well we acknowledge, embrace and take up this challenge.
John Fullerton may be reached at jfullerton@capitalinstitute.org

Sign up for New Economics Institute's e-newsletter here, visit the tribute page they are putting together for E.F. Schumacher here, and send them your own comments, stories, and essays of how reading or meeting E. F. Schumacher influenced your life and work here, via email with "Schumacher" in the subject line.

The Business Case Against Coal

gmoke — Wed, 04 May 2011 21:11:03 GMT

In less than 2 minutes, Gil Friend, CEO of Natural Logic, Inc and author of The Truth about Green Business, makes a clear business case against coal:

http://www.youtube.com/v/Eqifc...
Another two minutes from Gil on green business:
http://vimeo.com/22278163

This video is part of the Sustainability in 7 series from Designers Accord
http://www.core77.com/blog/sus...

This is a very good primer on the principles of sustainable design from many of the best thinkers and practitioners in the field.

To look at coal from another perspective, I saw David Rutledge from Caltech speak at MIT May 4, 2011. He believes that the IPCC has overestimated coal and oil reserves and that more realistic projections produce significantly lower greenhouse gas levels in the atmosphere. He calculates that peak CO2 will happen around 2065 at around 446 ppm, which will also be near the exhaustion level for fossil fuels, and thus no climate change policy is actually necessary.

However, according to the Fourth IPPC report, we need to be at 445-495 CO2 equivalent (carbon equivalent is a measure for all the anthropogenic greenhouse gases) for stabilization under a 2ºC rise. Rutledge has some interesting ideas about the possibility of peak coal but I sorta kinda think that he doesn't quite understand climate change. He is an electrical engineer by training.

You can take a look at his PowerPoint and article at
http://rutledge.caltech.edu/

He didn't mention that the IEA's 2010 World Energy Outlook announced that Peak Oil happened in 2006:

Crude oil output reaches an undulating plateau of around 68-69 mb/d by 2020, but never regains its all time peak of 70 mb/d reached in 2006, while production of natural gas liquids (NGLs) and unconventional oil grows strongly.

Source: http://www.worldenergyoutlook....

Happy Tax Day!

eli_beckerman — Sun, 17 Apr 2011 03:00:13 GMT

Watch US Uncut, The Ruckus Society and the Brass Liberation Orchestra drop some tax day love on Bank of America:

Herman Daly: Fitting the Name to the Named

eli_beckerman — Thu, 31 Mar 2011 01:23:47 GMT

From The Daly News blog

by Herman Daly

There may well be a be a better name than "steady-state economy", (SSE) but both the classical economists (especially John Stuart Mill) and the past few decades of discussion, not to mention CASSE's good work, have given considerable currency to "steady-state economy" both as concept and name. Also both the name and concept of a "steady state" are independently familiar to demographers, population biologists, and physicists. The classical economists used the term "stationary state" but meant by it exactly what we mean by steady-state economy-briefly, a constant population and stock of physical wealth. We have added the condition that these stocks should be maintained constant by a low rate entropic throughput, one that is well within the regenerative and assimilative capacities of the ecosystem. Any new name for this idea should be sufficiently better to compensate for losing the advantages of historical continuity and interdisciplinary familiarity. Also, SSE conveys the recognition of biophysical constraints and the intention to live within them economically-which is exactly why it can't help evoking some initial negative reaction in a growth-dominated world. There is an honesty and forthright clarity about the term "steady-state economy" that should not be sacrificed to the short-term political appeal of vagueness.
A confusion arises with neoclassical growth economists' use of the term "steady-state growth" to refer to the case where labor and capital grow at the same rate, thus maintaining a constant labor to capital ratio, even though both absolute magnitudes are growing. This should have been called "proportional growth", or perhaps "steady growth". The term "steady-state growth" is inept because growth is a process, not a state, not even a state of dynamic equilibrium.

Having made my terminological preference clear, I should add that there is nothing wrong with other people using various preferred synonyms, as long as we all mean basically the same thing. Steady state, stationary state, dynamic equilibrium, microdynamic-macrostatic economy, development without growth, degrowth, post-growth economy, economy of permanence, "new" economy, "mature" economy. These are all in use already, including by me at times. I have learned that English usage evolves quite independently of me, although like others I keep trying to "improve" it for both clarity and rhetorical advantage. If some other term catches on and becomes dominant then so be it, as long as it denotes the reality we agree on. Let a thousand synonyms bloom and linguistic natural selection will go to work. Also it is good to remind sister organizations that their favorite term, when actually defined, is usually a close synonym to SSE. If it is not then we have a difference of substance rather than of terminology.

Out of France now comes the "degrowth" (decroissance) movement. This arises from the recognition that the present scale of the economy is too large to be maintained in a steady state-its required throughput exceeds the regenerative and assimilative capacities of the ecosystem of which it is a part. This is almost certainly true. Nevertheless "degrowth", just like growth, is a temporary process for reaching an optimal or at least sustainable scale that we then should strive to maintain in a steady state.

Some say it is senseless to advocate a steady state unless we first have attained, or can at least specify, the optimal level at which to remain stationary. On the contrary, it is useless to know the optimum unless we first know how to live in a steady state. Otherwise knowing the optimum level will just allow us to wave goodbye to it as we grow beyond it-or as we "degrow" below it. Optimal level is one thing; optimal growth rate is something else. Once we have reached the optimal level then the optimal growth rate is zero; if we are below that level the temporary optimal growth rate is at least known to be positive; if we are above the optimal level we at least know that the temporary growth rate should be negative. But the first order of business is to recognize the long run necessity of the steady state, and to stop positive growth. Once we have done that, then we can worry about how to "degrow" to a more sustainable level, and how fast.

There is really no conflict between the SSE and "degrowth" since no one advocates negative growth as a permanent process; and no one advocates trying to maintain a steady state at the unsustainable present scale of population and consumption. But many people do advocate continuing positive growth beyond the present excessive scale, and they are the ones in control, and who need to be confronted by a united opposition!

Nicholas Georgescu-Roegen, adopted by the "degrowth" movement as its posthumous founder, indeed recognized that the very long run growth rate must be negative given the entropy law and the final dissolution of the universe. But he did not advocate speeding up that cosmic result by negative growth as an economic policy, nor for that matter did he in the least advocate a steady-state economy! In fact he speculated that the destiny of mankind might be to have a short, fiery, and exciting life rather than a long and uneventful one. He did, however, tentatively suggest a "minimal bio-economic program"[1] that would surely reduce growth. In general he was interested in what is possible more than in what is desirable. The question-given the limits of the possible, what is the most desirable policy for mankind?-was not his main focus, although he did not entirely ignore it. The closest he came to explicitly dealing with that question was in the following footnote[2]:

Is it not true that mankind's problem is to economize S (a stock) for as large an amount of life as possible, which implies to minimize sj (a flow) for some "good life?

In other words, should we not strive to maximize cumulative lives ever to be lived over time by depleting S (terrestrial low-entropy stocks) at an annual rate sj that is low, but sufficient for a "good life"? There is no point in maximizing years lived in misery, so the qualification "for a good life" is important. I have always thought that Georgescu-Roegen should have put that question in bold in the text, rather than hiding it in a footnote. True enough, eventually S will be gone and mankind will revert to what he called "a berry-picking economy" until the sun burns out, if not driven to extinction sooner by some other event. But in the meantime, striving for a steady state at a resource use rate sufficient for a good (but not luxurious) life, seems to me a worthy goal, a goal of maximizing the cumulative life satisfaction possible under limited total resource constraints. This puts at the very center of economics the questions:

* How much resource use per capita is sufficient for a good life?
* How do we ensure that everyone gets that amount?
* How large a population can be supported at that standard of consumption without sacrificing carrying capacity and future life?

Needless to say these questions have not been central to modern economics-indeed, not even peripheral!

Georgescu-Roegen did not like the idea of "sustainability" any more than that of a steady-state economy because he interpreted both to mean "ecological salvation" or perpetual life for our species on earth-which of course flies in the teeth of the entropy law. And he was right about that. So sustainability should be understood as longevity, not eternal species-life in the sense of perpetuity. Clear scientific thinking about "forever" seems, interestingly, to lead to the religious model of death and resurrection, new creation, not perpetual continuation of this creation. Perpetuity in this world is just a glorified perpetual motion machine! To think about forever we must cross from science into theology. But longevity (a long and good life for both individual and species), even if it falls short of forever, or "ecological salvation", is still a worthy goal both for scientists and theologians, not to mention economists. A steady-state economy is arguably the best strategy for achieving longevity-regardless of what we call it.

[1] N. Georgescu-Roegen, "Energy and Economic Myths", reprinted in H. Daly and K. Townsend, Valuing the Earth, MIT Press, 1993, p. 103-4.

[2] Ibid. p. 107, fn 11.

When Growth Bumps Into the Biosphere

eli_beckerman — Thu, 31 Mar 2011 00:59:10 GMT

John Fullerton of the Capital Institute, and formerly an executive of JP Morgan Chase, calls for a holistic, ecological approach toward a new economy. Sounds like he should think about the political alternatives that agree.

It's the New Economy, Silly!

eli_beckerman — Wed, 02 Mar 2011 18:56:15 GMT

New Economy, New Wealth on Prezi

The End of Growth: Economics for the Hurried (Part I)

eli_beckerman — Tue, 01 Mar 2011 05:40:04 GMT

The Post Carbon Institute is posting early release chapters from Richard Heinberg's book The End of Growth, coming out in July. Read other early chapters here.

Chapter 1, Part 1: Economics for the Hurried

The first economists were ancient Greek and Indian philosophers, among them Aristotle (382-322 BC)-who discussed the "art" of wealth acquisition and questioned whether property should best be owned privately or by government acting on behalf of the people. Little of real substance was added to the discussion during the next two thousand years.

The 18th century brought a virtual explosion of economic thinking. "Classical" economic philosophers such as Adam Smith (1723-1790), Thomas Robert Malthus (1766-1834), and David Ricardo (1772-1823) introduced basic concepts such as supply and demand, division of labor, and the balance of international trade. As happens in so many disciplines, early practitioners were presented with plenty of uncharted territory and proceeded to formulate general maps of their subject that future experts would labor to refine in ever more trivial ways.

These pioneers set out to discover natural laws in the day-to-day workings of economies. They were striving, that is, to make of economics a science on a par with the emerging disciplines of physics and astronomy.
Like all thinkers, the classical economic theorists-to be properly understood-must be viewed in the context of their age. In the 17th and 18th centuries, Europe's power structure was beginning to strain: as wealth flowed from colonies, merchants and traders were getting rich, but they increasingly felt hemmed in by the established privileges of the aristocracy and the church. While economic philosophers were mostly interested in questioning the aristocracy's entrenched advantages, they admired the ability of physicists, biologists, and astronomers to demonstrate the fallacy of old church doctrines, and to establish new universal "laws" by means of inquiry and experiment.

Physical scientists set aside biblical and Aristotelian doctrines about how the world works and undertook active investigations of natural phenomena such as gravity and electromagnetism-fundamental forces of nature. Economic philosophers, for their part, could point to price as arbiter of supply and demand, acting everywhere to allocate resources far more effectively than any human manager or bureaucrat could ever possibly do-surely this was a principle as universal and impersonal as the force of gravitation! Isaac Newton had shown there was more to the motions of the stars and planets than could be found in the book of Genesis; similarly, Adam Smith was revealing more potential in the principles and practice of trade than had ever been realized through the ancient, formal relations between princes and peasants, or among members of the medieval crafts guilds.

The classical theorists gradually adopted the math and some of the terminology of science. Unfortunately, however, they were unable to incorporate into economics the basic self-correcting methodology that is science's defining characteristic. Economic theory required no falsifiable hypotheses and demanded no repeatable controlled experiments. Economists began to think of themselves as scientists, while in fact their discipline remained a branch of moral philosophy-as it largely does to this day.

The notions of these 18th and early 19th century economic philosophers constituted classical economic liberalism-the term liberal in this case indicating a belief that managers of the economy should let markets act freely and openly, without outside intervention, to set prices and thereby allocate goods, services, and wealth. Hence the term laissez-faire (from the French "let do" or "let it be").

In theory, the Market was a beneficent quasi-deity tirelessly working for everyone's good by distributing the bounty of nature and the products of human labor as efficiently and fairly as possible. But in fact everybody wasn't benefiting equally or (in many people's minds) fairly from colonialism and industrialization. The Market worked especially to the advantage of those for whom making money was a primary interest in life (bankers, traders, industrialists, and investors), and who happened to be clever and lucky. It also worked nicely for those who were born rich and who managed not to squander their birthright. Others, who were more interested in growing crops, teaching children, or taking care of the elderly, or who were forced by circumstance to give up farming or cottage industries in favor of factory work, seemed to be getting less and less-either proportionally (as a share of the entire economy), or often even in absolute terms. Was this fair? Well, that was a moral and philosophical question. In defense of the Market, many economists said that it was fair: merchants and factory owners were making more because they were increasing the general level of economic activity; as a result, everyone else would also benefit . . . eventually. See? The Market can do no wrong. To some this sounded a bit like the circularly reasoned response of a medieval priest to doubts about the infallibility of scripture. Nevertheless, despite its blind spots, classical economics proved useful in making sense of the messy details of money and markets.

Importantly, these early philosophers had some inkling of natural limits and anticipated an eventual end to economic growth. The essential ingredients of the economy were understood to consist of labor, land, and capital. There was on Earth only so much land (which in these theorists' minds stood for all natural resources), so of course at some point the expansion of the economy would cease. Both Malthus and Smith explicitly held this view. A somewhat later economic philosopher, John Stuart Mill (1806-1873), put the matter as follows: "It must always have been seen, more or less distinctly, by political economists, that the increase in wealth is not boundless: that at the end of what they term the progressive state lies the stationary state. . . ."

But starting with Adam Smith, the idea that continuous "improvement" in the human condition was possible came to be generally accepted. At first, the meaning of "improvement" (or progress) was kept vague, perhaps purposefully. Gradually, however, "improvement" and "progress" came to mean "growth" in the current economic sense of the term-abstractly, an increase in Gross Domestic Product (GDP), but in practical terms, an increase in consumption.

A key to this transformation was the gradual deletion by economists of land from the theoretical primary ingredients of the economy (increasingly, only labor and capital really mattered-land having been demoted to a sub-category of capital). This was one of the refinements that turned classical economic theory into neoclassical economics; others included the theories of utility maximization and rational choice. While this shift began in the 19th century, it reached its fruition in the 20th through the work of economists who explored models of imperfect competition, and theories of market forms and industrial organization, while emphasizing tools such as the marginal revenue curve (this is when economics came to be known as "the dismal science"-partly because its terminology was, perhaps intentionally, increasingly mind-numbing).

Meanwhile, however, the most influential economist of the 19th century, a philosopher named Karl Marx, had thrown a metaphorical bomb through the window of the house that Adam Smith had built. In his most important book, Das Kapital, Marx proposed a name for the economic system that had evolved since the Middle Ages: capitalism. It was a system founded on capital. Many people assume that capital is simply another word for money, but that entirely misses the essential point: capital is wealth-money, land, buildings, or machinery-that has been set aside for production of more wealth. If you use your entire weekly paycheck for rent, groceries, and other necessities, you may have money but no capital. But even if you are deeply in debt, if you own stocks or bonds, or a computer that you use for a home-based business, you have capital.

Capitalism, as Marx defined it, is a system in which productive wealth is privately owned. Communism (which Marx proposed as an alternative) is one in which productive wealth is owned by the community, or by the nation on behalf of the people.

In any case, Marx said, capital tends to grow. If capital is privately held, it must grow: as capitalists compete with one another, those who increase their capital fastest are inclined to absorb the capital of others who lag behind, so the system as a whole has a built-in expansionist imperative. Marx also wrote that capitalism is inherently unsustainable, in that when the workers become sufficiently impoverished by the capitalists, they will rise up and overthrow their bosses and establish a communist state (or, eventually, a stateless workers' paradise).

The ruthless capitalism of the 19th century resulted in booms and busts, and a great increase in inequality of wealth-and therefore an increase in social unrest. With the depression of 1893 and the crash of 1907, and finally the Great Depression of the 1930s, it appeared to many social commentators of the time that capitalism was indeed failing, and that Marx-inspired uprisings were inevitable; the Bolshevik revolt in 1917 served as a stark confirmation of those hopes or fears (depending on one's point of view).

Beginning in the late 19th century, social liberalism emerged as a moderate response to both naked capitalism and Marxism. Pioneered by sociologist Lester F. Ward (1841-1913), psychologist William James (1842-1910), philosopher John Dewey (1859-1952), and physician-essayist Oliver Wendell Holmes (1809-1894), social liberalism argued that government has a legitimate economic role in addressing social issues such as unemployment, health care, and education. Social liberals decried the unbridled concentration of wealth within society and the conditions suffered by factory workers, while expressing sympathy for labor unions. Their general goal was to retain the dynamism of private capital while curbing its excesses.

Non-Marxian economists channeled social liberalism into economic reforms such as the progressive income tax and restraints on monopolies. The most influential of the early 20th century economists of this school was John Maynard Keynes (1883-1946), who advised that when the economy falls into a recession government should spend lavishly in order to restart growth. Franklin Roosevelt's New Deal programs of the 1930s were a laboratory for Keynes's ideas, and the enormous government borrowing and spending that occurred during World War II were generally credited with ending the Depression and setting the nation on a path of economic expansion.

The next few decades saw a three-way contest between the Keynesian social liberals, the followers of Marx, and temporarily marginalized neoclassical or neoliberal economists who insisted that social reforms and Keynesian meddling by government with interest rates, spending, and borrowing merely impeded the ultimate efficiency of the free Market.

With the fall of the Soviet Union at the end of the 1980s, Marxism ceased to have much of a credible voice in economics. Its virtual disappearance from the discussion created space for the rapid rise of the neoliberals, who for some time had been drawing energy from widespread reactions against the repression and inefficiencies of state-run economies. Margaret Thatcher and Ronald Reagan both relied heavily on advice from neoliberal economists of the Chicago School (so called because of the widespread influence of the University of Chicago School of Economics, which graduated several generations of economists steeped in the ideas of monetarists like Milton Friedman, 1912-2006; as well as Austrian School economist Friedrich von Hayek, 1899-1992). One of the most influential libertarian, free-market economists of recent decades was Alan Greenspan (b. 1926), who, as U.S. Federal Reserve Chairman from 1987 to 2006, argued for privatization of state-owned enterprises and de-regulation of businesses-yet Greenspan nevertheless ran an activist Fed that expanded the nation's money supply in ways and to degrees that neither Friedman or Hayek would have approved of. As a side note, it's worth mentioning that the Austrian School of Ludwig von Mises (1881-1973) and Hayek should be distinguished from the Chicago School: the former has followed a more purely individualist, libertarian line of thinking, and usefully critiques central banks and fiat currencies; while the latter is more results-oriented and heterodox and accepts central banks and fractional-reserve banking as givens. Both reject Keynesian government intervention in favor of unfettered markets.

There is a saying now in Russia: Marx was wrong in everything he said about communism, but he was right in everything he wrote about capitalism. Since the 1980s, the nearly worldwide re-embrace of classical economic philosophy has predictably led to increasing inequalities of wealth within the U.S. and other nations, and to more frequent and severe economic bubbles and crashes.

Which brings us to the global crisis that began in 2008. By this time all mainstream economists (Keynesians and neoliberals alike) had come to assume that perpetual growth is the rational and achievable goal of national economies. The discussion was only about how to maintain it-through government intervention or a laissez-faire approach that assumes the Market always knows best.

But in 2008 economic growth ceased in most nations, and there has as yet been limited success in restarting it. Indeed, by some measures the U.S. economy is slipping further into a recession that might more correctly be termed a depression. This dire reality constitutes a challenge to both mainstream economic camps. It is clearly a challenge to the neoliberals, whose deregulatory policies were largely responsible for creating the housing bubble whose implosion is generally credited with stoking the crisis. But it is a conundrum also for the Keynesians, whose stimulus packages have failed in their aim of increasing employment and general economic activity. What we have, then, is a crisis not just of the economy, but also of economic theory and philosophy.

The ideological clash between Keynesians and neoliberals (represented to a certain degree in the escalating all-out warfare between the U.S. Democratic and Republican political parties) will no doubt continue and even intensify. But the ensuing heat of battle will yield little light if both philosophies conceal the same fundamental errors. One such error is of course the belief that economies can and should perpetually grow.

But that error rests on another that is deeper and subtler. The subsuming of land within the category of capital by nearly all post-classical economists had amounted to a declaration that Nature is merely a subset of the human economy-an endless pile of resources to be transformed into wealth. It also meant that natural resources could always be substituted with some other form of capital-money or technology. The reality, of course, is that the human economy exists within, and entirely depends upon Nature, and many natural resources have no realistic substitutes. This fundamental logical and philosophical mistake, embedded at the very heart of modern mainstream economic philosophies, set society directly upon a course toward the current era of climate change and resource depletion, and its persistence makes conventional economic theories-of both Keynesian and neoliberal varieties-utterly incapable of dealing with the economic and environmental survival threats to civilization in the 21st century.

For help, we can look to the ecological and biophysical economists, whose ideas have been thoroughly marginalized by the high priests and gatekeepers of mainstream economics-and, to a certain extent, to the likewise marginalized Austrian School, whose standard bearers have been particularly good at forecasting and diagnosing the purely financial aspects of the current global crisis. But that help will not come in the form that many would wish: as advice that can return our economy to a "normal" state of "healthy" growth. One way or the other-through planning and method, or through collapse and failure-our economy is destined to shrink, not grow.

Intro: The End of Growth

eli_beckerman — Tue, 15 Feb 2011 16:42:30 GMT

This article is an excerpt from Richard Heinberg's new book which has the working title 'The End of Growth' and is set for publication by New Society Publishers in July 2011. Given the urgency and fragility of the global economic crisis, the Post Carbon Institute is serializing the rough content as Richard writes it. Additionally, Richard will be offering 'live peeks' at the events and information that inform his writing process through Facebook and Twitter accounts created expressly for this publication.

The article was originally published as the MuseLetter #222

Introduction: The New Normal

The central assertion of this book is both simple and startling: Economic growth as we have known it is over and done with.

The "growth" we are talking about consists of the expansion of the overall size of the economy (with more people being served and more money changing hands) and of the quantities of energy and material goods flowing through it.

The economic crisis that began in 2007-2008 was both foreseeable and inevitable, and it marks a permanent, fundamental break from past decades-a period during which most economists adopted the unrealistic view that perpetual economic growth is necessary and also possible to achieve. There are now fundamental barriers to ongoing economic expansion, and the world is colliding with those barriers.
This is not to say the U.S. or the world as a whole will never see another quarter or year of growth relative to the previous quarter or year. However, when the bumps are averaged out, the general trend-line of the economy (measured in terms of production and consumption of real goods) will be level or downward rather than upward from now on.

Nor will it be impossible for any region, nation, or business to continue growing for a while. Some will. In the final analysis, however, this growth will have been achieved at the expense of other regions, nations, or businesses. From now on, only relative growth is possible: the global economy is playing a zero-sum game, with an ever-shrinking pot to be divided among the winners.

Why Is Growth Ending?

Many financial pundits point to profound problems internal to the economy-including overwhelming, un-repayable levels of public and private debt, and the bursting of the real estate bubble-as immediate threats to the resumption of economic growth. The assumption generally is that eventually, once these problems are dealt with, growth can and will pick up again. But the pundits generally miss factors external to the financial economy that make a resumption of conventional economic growth a near-impossibility. This is not a temporary condition; it is essentially permanent.

Altogether, as we will see in the following chapters, there are three primary factors that stand firmly in the way of further economic growth:

* The depletion of important resources including fossil fuels and minerals;
* The proliferation of environmental impacts arising from both the extraction and use of resources (including the burning of fossil fuels)-leading to snowballing costs from both these impacts themselves and from efforts to avert them and clean them up; and
* Financial disruptions due to the inability of our existing monetary, banking, and investment systems to adjust to both resource scarcity and soaring environmental costs-and their inability (in the context of a shrinking economy) to service the enormous piles of government and private debt that have been generated over the past couple of decades.

Despite the tendency of financial commentators to focus only on the last of these factors, it is possible to point to literally thousands of events in recent years that illustrate how all three are interacting, and are hitting home with ever more force.

Consider just one: the Deepwater Horizon oil catastrophe of 2010 in the U.S. Gulf of Mexico.

The fact that BP was drilling for oil in deep water in the Gulf of Mexico illustrates a global trend: while the world is not in danger of running out of oil anytime soon, there is very little new oil to be found in onshore areas where drilling is cheap. Those areas have already been explored and their rich pools of hydrocarbons are being depleted. According to the International Energy Agency, by 2020 almost 40 percent of world oil production will come from deepwater regions. So even though it's hard, dangerous, and expensive to operate a drilling rig in a mile or two of ocean water, that's what the oil industry must do if it is to continue supplying its product. That means more expensive oil.

Obviously, the environmental costs of the Deepwater Horizon blowout and spill were ruinous. Neither the U.S. nor the oil industry can afford another accident of that magnitude. So, in 2010 the Obama administration instituted a deepwater drilling moratorium in the Gulf of Mexico while preparing new drilling regulations. Other nations began revising their own deepwater oil exploration guidelines. These will no doubt make future blowout disasters less likely, but they add to the cost of doing business and therefore to the already high cost of oil.

The Deepwater Horizon incident also illustrates to some degree the knock-on effects of depletion and environmental damage upon financial institutions. Insurance companies have been forced to raise premiums on deepwater drilling operations, and impacts to regional fisheries have hit the Gulf Coast economy hard. While economic costs to the Gulf region were partly made up for by payments from BP, those payments forced the company to reorganize and resulted in lower stock values and returns to investors. BP's financial woes in turn impacted British pension funds that were invested in the company.

This is just one event-admittedly a spectacular one. If it were an isolated problem, the economy could recover and move on. But we are, and will be, seeing a cavalcade of environmental and economic disasters, not obviously related to one another, that will stymie economic growth in more and more ways. These will include but are not limited to:

* Climate change leading to regional droughts, floods, and even famines;
* Shortages of water and energy; and
* Waves of bank failures, company bankruptcies, and house foreclosures.

Each will be typically treated as a special case, a problem to be solved so that we can get "back to normal." But in the final analysis, they are all related, in that they are consequences of growing human population striving for higher per-capita consumption of limited resources (including non-renewable, climate-altering fossil fuels), all on a finite and fragile planet.

Meanwhile, the unwinding of decades of buildup in debt has created the conditions for a once-in-a-century financial crash-which is unfolding around us, and which on its own has the potential to generate substantial political unrest and human misery.

The result: we are seeing a perfect storm of converging crises that together represent a watershed moment in the history of our species. We are witnesses to, and participants in, the transition from decades of economic growth to decades of economic contraction.

Why Is Growth So Important?

During the last couple of centuries, growth became virtually the sole index of economic well-being. When an economy grew, jobs appeared and investments yielded high returns. When the economy stopped growing temporarily, as it did during the Great Depression, financial bloodletting ensued.

Throughout this period, world population increased-from fewer than two billion humans on planet Earth in 1900 to nearly seven billion today; we are adding about 70 million new "consumers" each year. That makes further growth even more crucial: if the economy stagnates, there will be fewer goods and services per capita to go around.

We have relied on economic growth for the "development" of the world's poorest economies; without growth, we must seriously entertain the possibility that hundreds of millions-perhaps billions-of people will never achieve even a rudimentary version of the consumer lifestyle enjoyed by people in the world's industrialized nations.

Finally, we have created monetary and financial systems that require growth. As long as the economy is growing, that means more money and credit are available, expectations are high, people buy more goods, businesses take out more loans, and interest on existing loans can easily be repaid. But if more new money isn't entering the system, the interest on existing loans cannot be paid; as a result, defaults snowball, jobs are lost, incomes fall, and consumer spending contracts-which leads businesses to take out fewer loans, causing still less new money to enter the economy. This is a self-reinforcing destructive feedback loop that is very difficult to stop once it gets going.

In other words, the economy has no "stable" or "neutral" setting: there is only growth or contraction. And "contraction" is just a nicer name for Depression-a long period of cascading job losses, foreclosures, defaults, and bankruptcies.

We have become so accustomed to growth that it's hard to remember that it is actually is a fairly recent phenomenon.

During the past few millennia, as empires rose and fell, local economies advanced and retreated-but world economic activity expanded only slowly, and with periodic reversals. However, with the fossil fuel revolution of the past two centuries, we have seen growth at a speed and scale unprecedented in all of human history. We harnessed the energies of coal, oil, and natural gas to build and operate cars, trucks, highways, airports, airplanes, and electric grids-all the essential features of modern industrial society. Through the one-time-only process of extracting and burning hundreds of millions of years' worth of chemically stored sunlight, we built what appeared (for a brief, shining moment) to be a perpetual-growth machine. We learned to take what was in fact an extraordinary situation for granted. It became normal.

But as the era of cheap, abundant fossil fuels comes to an end, our assumptions about continued expansion are being be shaken to their core.

The end of growth is a very big deal indeed. It means the end of an era, and of our current ways of organizing economies, politics, and daily life. Without growth, we will have to virtually reinvent human life on Earth.

It is essential that we recognize and understand the significance of this historic moment: if we have in fact reached the end of the era of fossil-fueled economic expansion, then efforts by policy makers to continue pursuing elusive growth really amount to a flight from reality. World leaders, if they are deluded about our actual situation, are likely to delay putting in place the support services that can make life in a non-growing economy survivable, and they will almost certainly fail to make needed, fundamental changes to monetary, financial, food, and transport systems.

As a result, what could have been a painful but endurable process of adaptation could become history's greatest tragedy. We can survive the end of growth, but only if we recognize it for what it is and act accordingly.

But Isn't Growth Normal?

Economies are systems, and as such they (to a certain extent at least) follow rules analogous to those that govern biological systems. Plants and animals tend to grow quickly when they are young, but then they reach a more or less stable mature size. In organisms, growth rates are largely controlled by genes, but also by availability of food.

In economies, growth seems tied to economic planning, and also to the availability of resources-chiefly energy resources ("food" for the industrial system), as well as credit ("oxygen" for the economy).

During the 19th and 20th centuries, expanding access to cheap and abundant fossil fuels enabled rapid economic expansion; economic planners began to take this situation for granted. Financial systems internalized the expectation of growth as a promise of returns on investments.

But just as organisms cease growing, economies must do so too. Even if planners (society's equivalent of regulatory DNA) dictate more growth, at some point increasing amounts of "food" and "oxygen" may cease to be available. It is also possible for industrial wastes to accumulate to the point that the biological systems that underpin economic activity (such as forests, crops, and human bodies) are smothered and poisoned.

But many economists don't see things this way. That's probably because current economic theories were formulated during the anomalous historical period of sustained growth that is now ending. Economists are merely generalizing from their experience: they can point to decades of steady growth in the recent past, and they simply project that experience into the future. Moreover, they have ways to explain why modern market economies are immune to the kinds of limits that constrain natural systems: the two main ones have to do with substitution and efficiency.

If a useful resource becomes scarce, its price will rise, and this creates an incentive for users of the resource to find a substitute. For example, if oil gets expensive enough, energy companies might start making liquid fuels from coal. Or they might develop other energy sources undreamed of today. Many economists theorize that this process of substitution can go on forever. It's part of the magic of the free market.

Increasing efficiency means doing more with less. In the U.S., the number of inflation-adjusted dollars generated in the economy for every unit of energy consumed has increased steadily over recent decades (the amount of energy, in British Thermal Units, required to produce a dollar of GDP dropped from close to 20,000 BTU per dollar in 1949 to 8,500 BTU in 2008). Part of this increasing efficiency has come about as a result of the outsourcing of manufacturing to other nations-which burn the coal, oil, or natural gas to make our goods (if we were making our own running shoes and LCD TVs, we'd be burning that energy domestically). Economists also point to another, related form of efficiency that has less to do with energy (in a direct way, at least): the process of identifying the cheapest sources of materials, and the places where workers will be most productive and work for the lowest wages. As we increase efficiency, we use less-of energy, resources, labor, or money-to do more. That enables more growth.

Finding substitutes for depleting resources and upping efficiency are undeniably effective adaptive strategies of market economies. Nevertheless, the question remains as to how long these strategies can continue to work in the real world-which is governed less by economic theories than by the laws of physics. In the real world, some things don't have substitutes, or the substitutes are too expensive, or don't work as well, or can't be produced fast enough. And efficiency follows a law of diminishing returns: the first gains in efficiency are usually cheap, but every further incremental gain tends to cost more, until further gains become prohibitively expensive.

In the end, we can't outsource more than 100 percent of manufacturing, we can't transport goods with zero energy, and we can't enlist the efforts of workers and count on their buying our products while paying them nothing.

Unlike most economists, most physical scientists recognize that growth within any functioning, bounded system has to stop sometime.

The Simple Math of Compounded Growth

In principle, the argument for an eventual end to growth is a slam-dunk. If any quantity grows steadily by a certain fixed percentage per year, this implies that it will double in size every so-many years; the higher the percentage growth rate, the quicker the doubling. A rough method of figuring doubling times is known as the rule of 70: dividing the percentage growth rate into 70 gives the approximate time required for the initial quantity to double. If a quantity is growing at 1 percent per year, it will double in 70 years; at 2 percent per year growth, it will double in 35 years; at 5 percent growth, it will double in only 14 years, and so on. If you want to be more precise, you can use the Y^x button on a scientific calculator, but the rule of 70 works fine for most purposes.

Here's a real-world example: Over the past two centuries, human population has grown at rates ranging from less than one percent to more than two percent per year. In 1800, world population stood at about one billion; by 1930 it had doubled to two billion. Only 30 years later (in 1960) it had doubled again to four billion; currently we are on track to achieve a third doubling, to eight billion humans, around 2025. No one seriously expects human population to continue growing for centuries into the future. But imagine if it did-at just 1.3 percent per year (its growth rate in the year 2000). By the year 2780 there would be 148 trillion humans on Earth-one person for each square meter of land on the planet's surface.

It won't happen, of course.

In nature, growth always slams up against non-negotiable constraints sooner or later. If a species finds that its food source has expanded, its numbers will increase to take advantage of those surplus calories-but then its food source will become depleted as more mouths consume it, and its predators will likewise become more numerous (more tasty meals for them!). Population "blooms" (or periods of rapid growth) are always followed by crashes and die-offs. Always.

Here's another real-world example. In recent years China's economy has been growing at eight percent or more per year; that means it is more than doubling in size every ten years. Indeed, China consumes more than twice as much coal as it did a decade ago-the same with iron ore and oil. The nation now has four times as many highways as it did, and almost five times as many cars. How long can this go on? How many more doublings can occur before China has used up its key resources-or has simply decided that enough is enough and has stopped growing? The question is hard to answer with a specific date, but it must be asked.

This discussion has very real implications, because the economy is not just an abstract concept; it is what determines whether we live in luxury or poverty, whether we eat or starve. If economic growth ends, everyone will be impacted, and it will take society years to adapt to this new condition. Therefore it is important to know whether that moment is close at hand or distant in time.

The End of Growth Should Come as No Surprise

The idea that growth will stall out at some point this century is hardly new. In 1972, a book titled Limits to Growth made headlines and went on to become the best-selling environmental book of all time.

That book, which reported on the first attempts to use computers to model the likely interactions between trends in resources, consumption, and population, was also the first major scientific study to question the assumption that economic growth can and will continue more or less uninterrupted into the foreseeable future.

The idea was heretical at the time-and still is. The notion that growth cannot and will not continue beyond a certain point proved profoundly upsetting in some quarters, and soon Limits to Growth was prominently "debunked" by pro-growth business interests. In reality, this "debunking" merely amounted to taking a few numbers in the book completely out of context, citing them as "predictions" (which they explicitly were not), and then claiming that these predictions had failed. The ruse was quickly exposed, but rebuttals often don't gain nearly as much publicity as accusations, and so today millions of people mistakenly believe that the book was long ago discredited. In fact, the original Limits to Growth scenarios have held up quite well. (A recent study by Australian Commonwealth Scientific and Industrial Research Organization (CSIRO) concluded, "[Our] analysis shows that 30 years of historical data compares favorably with key features of [the Limits to Growth] business-as-usual scenario...").

The authors fed in data for world population growth, consumption trends, and the abundance of various important resources, ran their computer program, and concluded that the end of growth would probably arrive between 2010 and 2050. Industrial output and food production would then fall, leading to a decline in population.

The Limits to Growth scenario study has been re-run repeatedly in the years since the original publication, using more sophisticated software and updated input data. The results have been similar each time. (See Limits to Growth: The 30-Year Update.)

The Peak Oil Scenario

As mentioned, this book will argue that growth is over because of a convergence of three factors-resource depletion, environmental impacts, and systemic financial and monetary failures. However, a single factor may be playing a key role in bringing the age of expansion to a close. That factor is oil.

Petroleum has a pivotal place in the modern world-in transportation, agriculture, and the chemicals and materials industries. The Industrial Revolution was really the Fossil Fuel Revolution, and the entire phenomenon of continuous economic growth-including the development of the financial institutions that facilitate growth, such as fractional reserve banking-is ultimately based on ever-increasing supplies of cheap energy. Growth requires more manufacturing, more trade, and more transport, and those all in turn require more energy. This means that if energy supplies can't expand and energy therefore becomes significantly more expensive, economic growth will falter and financial systems built on expectations of perpetual growth will fail.

As early as 1998, petroleum geologists Colin Campbell and Jean Laherrère were discussing a Peak Oil impact scenario that went like this. Sometime around the year 2010, they theorized, stagnant or falling oil supplies would lead to soaring and more volatile petroleum prices, which would precipitate a global economic crash. This rapid economic contraction would in turn lead to sharply curtailed energy demand, so oil prices would then fall; but as soon as the economy regained strength, demand for oil would recover, prices would again soar, and as a result of that the economy would relapse. This cycle would continue, with each recovery phase being shorter and weaker, and each crash deeper and harder, until the economy was in ruins. Financial systems based on the assumption of continued growth would implode, causing more social havoc than the oil price spikes would themselves generate.

Meanwhile, volatile oil prices would frustrate investments in energy alternatives: one year, oil would be so expensive that almost any other energy source would look cheap by comparison; the next year, the price of oil would have fallen far enough that energy users would be flocking back to it, with investments in other energy sources looking foolish. But low oil prices would discourage exploration for more petroleum, leading to even worse fuel shortages later on. Investment capital would be in short supply in any case because the banks would be insolvent due to the crash, and governments would be broke due to declining tax revenues. Meanwhile, international competition for dwindling oil supplies might lead to wars between petroleum importing nations, between importers and exporters, and between rival factions within exporting nations.

In the years following Campbell and Laherrère's initial publication, many pundits claimed that new technologies for crude oil extraction would increase the amount of oil that can be obtained from each well drilled, and that enormous reserves of alternative hydrocarbon resources (principally tar sands and oil shale) would be developed to seamlessly replace conventional oil, thus delaying the inevitable peak for decades. There were also those who said that Peak Oil wouldn't be much of a problem even if it happened soon, because the market would find other energy sources or transport options as quickly as needed-whether electric cars, hydrogen, or liquid fuel made from coal.

In succeeding years, events appeared to be supporting the Peak Oil thesis and undercutting the views of the oil optimists. Oil prices trended steeply upward-and for entirely foreseeable reasons: discoveries of new oilfields were continuing to dwindle, with most new fields being much more difficult and expensive to develop than ones found in previous years. More oil-producing countries were seeing their extraction rates peaking and beginning to decline despite efforts to maintain production growth using high-tech, expensive secondary and tertiary extraction methods like the injection of water, nitrogen, or CO2 to force more oil out of the ground. Production decline rates in the world's old, super-giant oilfields, which are responsible for the lion's share of the global petroleum supply, were accelerating. Production of liquid fuels from tar sands was expanding only slowly, while the development of oil shale remained a hollow promise for the distant future.

From Scary Theory to Scarier Reality

Then in 2008, the Peak Oil scenario became all too real. Global oil production had been stagnant since 2005 and petroleum prices had been soaring upward. In July 2008, the per-barrel price shot up nearly to $150-half again higher (in inflation-adjusted terms) than the price spikes of the 1970s that had triggered the worst recession since World War II. By summer 2008, the auto industry, the trucking industry, international shipping, agriculture, and the airlines were all reeling.

But what happened next riveted the world's attention to such a degree that the oil price spike was all but forgotten: in September 2008, the global financial system nearly collapsed. The reasons for this sudden, gripping crisis apparently had to do with housing bubbles, lack of proper regulation of the banking industry, and the over-use of bizarre financial products that almost nobody understood. However, the oil price spike had played a critical (if largely overlooked) role in initiating the economic meltdown (see Temporary Recession or the End of Growth?).

In the immediate aftermath of that global financial near-death experience, both the Peak Oil impact scenario proposed a decade earlier and the Limits to Growth standard-run scenario of 1972 seemed to be confirmed with uncanny and frightening accuracy. Global trade was falling. The world's largest auto companies were on life support. The U.S. airline industry had shrunk by almost a quarter. Food riots were erupting in poor nations around the world. Lingering wars in Iraq (the nation with the world's second-largest crude oil reserves) and Afghanistan (the site of disputed oil and gas pipeline projects) continued to bleed the coffers of the world's foremost oil-importing nation.

Meanwhile, the debate about what to do to rein in global climate change exemplified the political inertia that had kept the world on track for calamity since the early '70s. It had by now become obvious to nearly every person of modest education and intellect that the world has two urgent, incontrovertible reasons to rapidly end its reliance on fossil fuels: the twin threats of climate catastrophe and impending constraints to fuel supplies. Yet at the Copenhagen climate conference in December, 2009, the priorities of the most fuel-dependent nations were clear: carbon emissions should be cut, and fossil fuel dependency reduced, but only if doing so does not threaten economic growth.

The Financial Component of Economic Contraction

If limits on resources and environmental sinks were closing the spigots on growth, the palpable pain that ordinary citizens were directly experiencing seemed to be coming mostly from another direction entirely: loss of jobs and collapsing real estate prices.

As we will see in Chapters 1 and 2, expectations of continuing growth had in the previous decades been translated into enormous amounts of consumer and government debt. Americans were no longer getting rich by inventing new technologies and making consumer goods, but merely by buying and selling houses, or by moving money around from one investment to another, or by charging transaction fees as others did so.

As a new century dawned, the world economy lurched from one bubble to the next: the emerging-Asian-economies bubble, the dot-com bubble, the real estate bubble. Everyone knew that these would eventually burst, as bubbles always do, but "smart" investors aimed to get in early and get out quickly enough to profit big and avoid the ensuing mayhem.

In the manic days of 2002 to 2006, millions of Americans came to rely on soaring real estate values as a source of income, turning their houses into ATMs (to use once more the phrase heard so often then). As long as prices kept going up, homeowners felt justified in borrowing to remodel a kitchen or bathroom, and banks felt fine making new loans. Meanwhile, the wizards of Wall Street were finding ways of slicing and dicing sub-prime mortgages into tasty collateralized debt obligations that could be sold at a premium to investors-with little or no risk! After all, real estate values were destined to just keep going up. God's not making any more land, went the truism.

Credit and debt expanded in the euphoria of easy money. All this giddy optimism led to a growth of jobs in construction and real estate, masking the underlying ongoing job losses in manufacturing.

A few dour financial pundits used terms like "house of cards," "tinderbox," and "stick of dynamite" to describe the situation. All that was needed was a metaphoric breeze or rogue spark to produce a catastrophic outcome. Arguably, the oil price spike of mid-2008 was more than enough to do the trick.

But the housing bubble was itself merely a larger fuse: in reality, the entire economic system had foolishly come to depend on impossible-to-realize expectations of perpetual growth and was set to detonate. Money was tied to credit, and credit was tied to assumptions about growth. Once growth went sour in 2008, the chain reaction of defaults and bankruptcy began; we were in a slow-motion explosion.

The effort of governments since then has been directed toward getting growth started again. But, to very limited degree that this effort temporarily succeeded in late 2009 and early 2010, it merely masked the underlying contradiction at the heart of our entire economic system-the assumption that we can have unending growth in a finite world.

What Comes After Growth?

The realization that we have reached the point where growth cannot continue is undeniably depressing. But once we have passed that psychological hurdle, there is some moderately good news.

Not all economists have fallen for the notion that growth will go on forever. There are schools of economic thought that recognize nature's limits and, while these schools have been largely marginalized in policy circles, they have developed potentially useful plans that could help society adapt.

The basic factors that will inevitably shape whatever replaces the growth economy are knowable.To survive and thrive for long, societies have to operate within the planet's budget of sustainably extractable resources. This means that even if we don't know in detail what a desirable post-growth economy and lifestyle will look like, we know enough to begin working toward them.

We must convince ourselves that life in a non-growing economy can be fulfilling, interesting, and secure. The absence of growth does not necessarily imply a lack of change or improvement. Within a non-growing or equilibrium economy there can still be continuous development of practical skills, artistic expression, and certain kinds of technology. In fact, some historians and social scientists argue that life in an equilibrium economy can be superior to life in a fast-growing economy: while growth creates opportunities for some, it also typically intensifies competition-there are big winners and big losers, and (as in most boom towns) the quality of relations within the community can suffer as a result. Within a non-growing economy it is possible to maximize benefits and reduce factors leading to decay, but doing so will require pursuing appropriate goals: instead of more, we must strive for better; rather than promoting increased economic activity for its own sake, we must emphasize whatever increases quality of life without stoking consumption. One way to do this is to reinvent and redefine growth itself.

The transition to a no-growth economy (or one in which growth is defined in a fundamentally different way) is inevitable, but it will go much better if we plan for it rather than simply watching in dismay as institutions we have come to rely upon fail, and then try to improvise a survival strategy in their absence.

In effect, we have to create a desirable "new normal" that fits the constraints imposed by depleting natural resources. Maintaining the "old normal" is not an option; if we do not find new goals for ourselves and plan our transition from a growth-based economy to a healthy equilibrium economy, we will by default create a much less desirable "new normal" whose emergence we are already beginning to see in the forms of persistent high unemployment, a widening gap between rich and poor, and ever more frequent and worsening financial and environmental crises-all of which translate to profound distress for individuals, families, and communities.

Graphical Depiction of the 2011 Commonwealth of MA Budget

gmoke — Sat, 12 Feb 2011 00:03:17 GMT

http://byjess.net/masstax/

Pioneer Institute sponsored this graphic depiction of the 2011 Commonwealth of MA budget. This seems to be a great tool for those who want to examine this subject in depth. There is also a graphic depiction of the Federal budget.

$127 billion giveaway to Bank of America?

eli_beckerman — Fri, 07 Jan 2011 18:38:58 GMT

I am no expert on Wall Street shenanigans or the economy more generally, but thanks to The Automatic Earth, it's always possible to see what's being reported in business news, with a bit of insight into the bigger picture. (I suppose I should also shout out Barry Ritholtz's The Big Picture since that's where they picked up on the story I'm sharing here... but I'd have to say that The Automatic Earth presents a much bigger picture).

While corporate media makes big noise about inaugural pageantry in Boston and in Washington DC, and even less meaningful distractions, some incredible Wall Street maneuvering is happening without much fanfare.

In what Ritholtz calls a "back door bailout of the banks", Freddie Mac and Fannie Mae have been negotiating with Bank of America, JP Morgan and others who sold them no-verification "liars loans", namely via "buy back demands."

Bank of America just settled these demands with Freddie Mac and Fannie Mae for a total of $4.1 billion. But the Freddie deal is particularly insidious.

According to Bloomberg News, Bank of America paid $1.28 billion to Freddie Mac to buy back $1 billion of outstanding loans. But the deal also covers future potential repurchase of up to $127 billion of outstanding loans sold by Countrywide (now serviced by Bank of America). In other words, if these liars loans prove to be worthless, Freddie Mac will take the hit, and not Bank of America. And while Freddie Mac is a privately-owned company, it's basically got the backing of the US taxpayer.

The deal is being considered a template for how Freddie, Fannie, and Ginnie (often referred to as the GSEs, or "government-sponsored enterprises") can negotiate similar deals with JP Morgan, Citigroup, Wells Fargo, and Ally/GMAC. To screw over the American taxpayer and give Wall Street this backdoor bonus. The stock market soared on the news of this b.s. And it's probably a sign of what's ahead, with Obama's hiring of Midwest Chairman of JP Morgan as his Chief of Staff.

At least that's the picture as I can see it. I welcome any better-informed insights.

Towards a New Economy and a New Politics

eli_beckerman — Tue, 23 Nov 2010 04:07:57 GMT

Ed. note: This piece is striking for its most obvious, unstated conclusion. I blame Greens for not being a visible answer for Speth's call... but I'm glad to see Speth's colleague, David Korten, make the obvious more explicit. It's time for a new economics and a new politics, and a renewed Green Party to lead the charge.

By Gus Speth
Read the original at Solutions Online

If America's present system of political economy were performing well, there would be little need to question it or seek fundamental change. But that is not the case. Asked what the key goals of economic life should be, many would reply, "to enhance social well-being while sustaining democratic prospects and environmental quality." Judged by this standard, today's political economy is failing. It is a failure that reaches many spheres of national life-economic, social, political, and environmental. Indeed, America can be said to be in crisis in each of these four areas.1, 2

The economic crisis of the Great Recession brought on by Wall Street financial excesses has stripped tens of millions of middle class Americans of their jobs, homes, and retirement assets and plunged many into poverty and despair.
A social crisis of extreme and growing inequality has been unraveling America's social fabric for several decades. A tiny minority has experienced soaring incomes and accumulated grand fortunes, while wages for working people have stagnated despite rising productivity gains and poverty has risen to a near 30-year high. Social mobility has declined, record numbers of people lack health insurance, schools are failing, prison populations are swelling, employment security is a thing of the past, and American workers put in more hours than workers in other high-income countries.3

An environmental crisis, driven by excessive human consumption and waste and a spate of terrible technologies, is disrupting Earth's climate, reducing Earth's capacity to support life, and creating large-scale human displacement that further fuels social breakdown.

And a political crisis is reflected in governmental paralysis and a democracy that is weak, shallow, and corrupted-the best democracy that money can buy.4-7

The case for fundamental change is underscored especially by the urgency of environmental conditions.1 Here is one measure of that problem: All that human societies have to do to destroy the planet's climate and biota and leave a ruined world to future generations is to keep doing exactly what is being done today, with no growth in the human population or the world economy. Just continue to release greenhouse gases at current rates, just continue to impoverish ecosystems and release toxic chemicals at current rates, and the world in the latter part of this century won't be fit to live in. But, of course, human activities are not holding at current levels-they are accelerating dramatically. It took all of history to build the $7 trillion world economy of 1950; recently, economic activity has grown by that amount every decade. At typical rates of growth, the world economy will now double in size in less than 20 years. We are thus facing the possibility of an enormous increase in environmental deterioration, just when we need to move strongly in the opposite direction.

Accelerating environmental deterioration is most starkly revealed in the global trends-trends in which the U.S. economy and U.S. politics are deeply complicit. About half the world's wetlands and a third of the mangroves are gone. An estimated 90 percent of the large predatory fish are gone, and 75 percent of marine fisheries are now overfished or fished to capacity. Twenty percent of the corals are gone, and another 20 percent severely threatened. Half the world's temperate and tropical forests are gone. The rate of deforestation in the tropics continues at about one acre per second. Species are disappearing at rates about 1,000 times faster than normal. The planet has not seen such a spasm of extinction in 65 million years, since the dinosaurs disappeared. Over half the agricultural land in drier regions suffers from some degree of deterioration and desertification. Persistent toxic chemicals can now be found by the dozens in essentially each and every one of us.

Human impacts are now large relative to natural systems. The Earth's stratospheric ozone layer was severely depleted before the change was discovered. Most importantly, human activities have pushed up atmospheric carbon dioxide by more than a third and increased other greenhouse gases as well, with the result that we have started, in earnest, the dangerous process of warming the planet and disrupting the climate. Everywhere, Earth's ice fields are melting. Industrial processes are fixing nitrogen, making it biologically active, at the same rate that nature is; one consequence is the development of hundreds of dead zones in the oceans due to over-fertilization. Each year, human actions already consume or destroy about 40 percent of nature's photosynthetic output, leaving too little for other species. Freshwater withdrawals doubled globally between 1960 and 2000 and now represent over half of accessible runoff. The Colorado, Yellow, Ganges, and Nile Rivers, among others, no longer reach the oceans in the dry season.

To seek something new and better, a good place to begin is to ask why today's system of political economy is failing so broadly. Environmentally, the answer is that key features of the system work together to produce a reality that is highly destructive. An unquestioning society-wide commitment to economic growth at almost any cost; powerful corporate interests whose overriding objective is to grow by generating profit, including profit from avoiding the environmental costs they create and from replicating technologies designed with little regard for the environment; markets that systematically fail to recognize environmental costs unless corrected by government; government that is subservient to corporate interests and the growth imperative; rampant consumerism spurred by an addiction to novelty and by sophisticated advertising; economic activity now so large in scale that its impacts alter the fundamental biophysical operations of the planet-all combine to deliver an ever-growing world economy that is undermining the ability of the planet to sustain life.1

This environmental reality is linked powerfully with growing social inequality and the erosion of democratic governance and popular control. Only a powerful democratic reality can guide and regulate the economy for environmental and social ends, and only a society that is cohesive and fair is likely to rise fully to shared challenges like the environment. Unfortunately, Americans today live and work in a system of political economy that cares profoundly about profits and growth and that cares about society and the natural world mainly to the extent it is required to do so. It is thus up to us as citizens to inject values of fairness, solidarity, and sustainability into this system, and government is the primary vehicle we have for accomplishing this. But typically, we fail at this assignment because our politics is too enfeebled and government is excessively under the thumb of powerful corporations and concentrations of great wealth. Consider the similarity between the recent financial collapse and the ongoing environmental deterioration. Both result from a system in which those with economic power are propelled, and not restrained by government, to take dangerous risks for the sake of great profit.

The prioritization of economic growth and economic values is at the root of the systemic failures and resulting crises America is now experiencing. Today, the reigning policy orientation holds that the path to greater well-being is to grow and expand the economy. Productivity, wages, profits, the stock market, employment, and consumption must all go up. This growth imperative trumps all else. It can undermine families, jobs, communities, the environment, and a sense of place and continuity because it is confidently asserted and widely believed that growth is worth the price that must be paid for it. Growth is measured by tallying GDP at the national level and sales and profits at the company level, and pursuit of GDP and profit is the overwhelming priority of national economic and political life.

But an expanding body of evidence is now telling us to think again.8-18 Economic growth may be the world's secular religion, but for much of the world it is a god that is failing-underperforming for most of the world's people and, for those in affluent societies, now creating more problems than it is solving. The never-ending drive to grow the overall U.S. economy undermines communities and the environment. It fuels a ruthless international search for energy and other resources; it fails at generating the needed jobs; and it rests on a manufactured consumerism that is not meeting the deepest human needs. Americans are substituting growth and consumption for dealing with the real issues-for doing things that would truly make the country better off. Psychologists have pointed out, for example, that while economic output per person in the United States has risen sharply in recent decades, there has been no increase in life satisfaction, and levels of distrust and depression have increased substantially.1,19,20

Writing in Yes! A Journal of Positive Futures, psychologist David Myers sees this pattern of soaring wealth and shrinking spirit as "the American paradox." He observes that at the beginning of the twenty-first century, Americans found themselves "with big houses and broken homes, high incomes and low morale, secured rights and diminished civility. We were excelling at making a living but too often failing at making a life. We celebrated our prosperity but yearned for purpose. We cherished our freedoms but longed for connection. In an age of plenty, we were feeling spiritual hunger. These facts of life lead us to a startling conclusion: Our becoming better off materially has not made us better off psychologically."21,22

Before it is too late, America should begin to move to a post-growth society where working life, the natural environment, our communities, and the public sector are no longer sacrificed for the sake of mere GDP growth; where the illusory promises of continuous growth no longer provide an excuse for neglecting to deal generously with compelling social needs; and where citizen democracy is no longer held hostage to the growth imperative.

For the most part, advocates for change have worked within the current system of political economy, but in the end, this approach will not succeed when what is needed is transformative change in the system itself. The case for immediate action on issues like health care and climate change is compelling, but the social and environmental challenges just reviewed will not yield to problem-solving incrementalism. Environmentalists and other progressives have gone down the path of incremental reform for decades, and the results of that experiment are in. The roots of our environmental and social problems are deeply systemic and thus require transformational change-the shift to a new, sustaining economy ushered in by a new politics. George Bernard Shaw famously said that all progress depends on not being reasonable. It's time for a large amount of civic unreasonableness.

What circumstances might make transformational change and the birth of a sustaining economy possible? A decline in legitimacy as the system fails to deliver social and environmental well-being, together with a mounting sense of crisis and loss-both occurring at a time of wise leadership and accompanied by the articulation of a new American narrative or story and by the appearance across the landscape of new and appropriate models-were all these to come together, real change would be possible. Most of all, what is needed is a new politics and a new social movement, powerful and inclusive. The best hope for such a new political dynamic is a fusion of those concerned about environment, social justice, and political democracy into one progressive force. They all have a shared fate because they face the same reality: a political economy that does not prioritize sustaining human and natural communities.

Policies for a New Economy

Americans are told routinely that the priority must be a strong economy. Yet many now appreciate that of equal or higher importance are a strong society, strong nature, and a strong democracy. Today's economy offers little help in these regards. We must move beyond it. We need to reinvent the economy, not merely restore it.

Americans now face a great imperative to build a new economy-a sustaining economy. Sustaining people, communities, and nature must henceforth be seen as the core goals of economic activity, not hoped-for byproducts of market success, growth for its own sake, and modest regulation. The watchword of the sustaining economy is caring: caring for each other, for the natural world, and for the future.23-25

America's open-ended commitment to aggregate economic growth is consuming environmental and social capital, both now severely diminished. That said, it is also clear that even in a post-growth America, many things do indeed need to grow: growth in good jobs and in the incomes of the poor; growth in the availability of health care and the efficiency of its delivery; growth in education, research, and training; growth in security against the risks of illness, job displacement, old age, and disability; growth in investment in public infrastructure and in environmental protection and amenity; growth in the deployment of climate-friendly and other green technologies; growth in the restoration of both ecosystems and local communities; growth in non-military government spending at the expense of military; and growth in international assistance for sustainable, people-centered development for the half of humanity that lives in poverty, to mention some prominent needs.

Jobs and meaningful work top this list because they are so important and unemployment is so devastating. Likely future rates of economic growth, even with further federal stimulus, are only mildly associated with declining unemployment. The availability of jobs, the well-being of people, and the health of communities should not be forced to await the day when overall economic growth might deliver them. It is time to shed the view that government mainly provides safety nets and occasional Keynesian stimuli. Instead, government should have an affirmative responsibility to ensure that those seeking decent jobs find them. And the surest and most cost-effective way to that end is direct government spending, investments and incentives targeted at creating jobs in areas where there is high social benefit. Creating new jobs in areas of democratically determined priority is certainly better than trying to create jobs by pump priming aggregate economic growth, especially in an era when the macho thing to do in much of business is to shed jobs, not create them.

Of particular importance for the new economy are government policies that will temper growth while simultaneously improving social and environmental well-being, policies such as shorter work weeks and longer vacations, with more time for children and families; greater labor protections, job security, and benefits, including generous parental leaves; guarantees to part-time workers; restrictions on advertising; a new design for the twenty-first-century corporation, one that embraces re-chartering, new ownership patterns, and stakeholder, rather than shareholder, primacy; incentives for local production and consumption; strong social and environmental provisions in trade agreements; rigorous environmental, health, and consumer protection, including full incorporation of environmental and social costs in prices; greater economic and social equality, with genuinely progressive taxation of the rich and greater income support for the poor; heavy spending on public services; and initiatives to address population growth at home and abroad. Taken together, these policies would undoubtedly slow GDP growth, but our well-being and quality of life would improve.

If the market is going to work for the betterment of society, environmental and social costs should be incorporated into prices, and wrong-headed government subsidies, a vast empire today, should be eliminated. Honest prices will ensure that people take into account the environmental and social impacts of their purchases, whether they are environmentally conscious or just minding their pocketbooks. High prices are a problem not so much because they are high but because people don't have the money to pay them and alternatives (such as truly fuel-efficient vehicles) are not readily available. Honest prices would be higher prices for many things, but that does not mean Exxon should pocket the difference or that equity issues should remain unaddressed.

Responsibly high energy prices-driven, for example, by a declining cap on carbon dioxide emissions-will help protect the Earth's climate, increase demand for efficient vehicles and public transportation, spur new renewable energy industries, decrease the supply vulnerabilities and international entanglements of imported oil, strengthen local communities, and encourage localization rather than globalization. But honest energy prices must be accompanied by measures that make them affordable for those on whom they would otherwise impose a serious hardship. Challenging America's growth fetish and consumerism will not go far when so many barely get by and are desperate for jobs and greater income security.26 Clearly, addressing social and environmental needs must go hand in hand.

Conventional wisdom on the clash of economy and environment is that we can have it both ways, thanks to new technology and innovation. We do indeed need a revolution in energy, transportation, construction, and agriculture technologies. This ecological modernization can be driven by quantitative restrictions that ensure extractions from the environment do not exceed its regenerative capacities and discharges to the environment do not exceed its assimilative capacities. But the rate of technological change required to deal with environmental challenges in the face of rapid economic growth is extremely high and rarely achieved. If pollution from an industrial facility is cut in half but growth spawns another, similar plant, there is no net gain. Housing, appliances, and transportation can become more energy efficient, but the improvements will be overwhelmed if there are more cars, larger houses, and more new appliances - and there are. There's a limit to how fast and far new technology can take us; technological change alone is not enough.

Americans are struggling today with the combined impacts of lost financial assets, underwater mortgages, and layoffs. These problems are associated with a slowdown in GDP growth, but they were not caused by a failure of growth, and they will not necessarily be cured by more growth. We have had jobless growth before. As is now appreciated, the current Great Recession and its consequences are the result of government failing to intervene appropriately in the marketplace-in financial markets, in housing markets, in labor markets, and elsewhere. Today we are feeling the effects of misguided policies, including massive deregulation, that have led to deep structural maladies. One lesson is clear: Today's markets do not function well without strong and effective government intervention.

The economic crisis should also teach us to live more simply and focus more locally. It is time to move beyond consumerism and hyperventilating lifestyles. There has been too little focus on consumption and the mounting environmental and social costs of American "affluenza," extravagance, and wastefulness. Being less focused on getting and spending (initially, in part, because there is less to spend) can help society rediscover that the truly important things in life are not at the mall nor, indeed, for sale anywhere.

Psychological studies show that materialism is toxic to happiness and that more income and more possessions do not lead to a lasting sense of well-being or satisfaction with life. What makes people happy is warm personal relationships and giving rather than getting, things that are possible at a human scale.1,27-29

The good news is that more and more people sense that there's a great misdirection of life's energy. In one survey, 83 percent of Americans said society is not focused on the right priorities, 81 percent said America is too focused on shopping and spending, 88 percent said American society is too materialistic, and 84 percent want to spend more time with family and friends.30

These numbers, even if half right, suggest that there is a powerful base on which we can build. Indeed, new signposts are emerging: Confront consumption. Practice sufficiency. Create social environments where overconsumption is viewed as silly, wasteful, ostentatious. Establish commercial-free zones. Buy local. Revitalize local economies. Eat slow food. Downshift. Public policy should support these directions, and it should also devise new measures to track improvements in social welfare, a purpose for which GDP is a miserable failure.31,32

Beyond policy change, another hopeful path into a sustainable and just future is to seed the landscape with innovative models. One of the most remarkable and yet under-noticed things going on in the United States today is the proliferation of innovative models of "local living" economies, sustainable communities and transition towns, and for-benefit businesses that prioritize community and environment over profit and growth. The community-owned Evergreen Cooperative in Cleveland is a wonderful case in point. An impressive array of new-economy businesses has been brought together in the American Sustainable Business Council and the B-Corporation program, and a new Fourth Sector is emerging, bringing together the best of the private sector, the not-for-profit NGOs, and government.33-41

A New Politics

The transformation of today's economy requires far-reaching and effective government action. How else can the market be made to work for the environment rather than against it? How else can corporate behavior be altered or programs built to meet real human and social needs? Government is the principal means available to citizens to collectively exercise their stewardship responsibility to leave the world a better place. Inevitably, then, the drive for transformative change leads to the political arena, where a vital, muscular democracy, steered by an informed and engaged citizenry, is needed.

Yet, merely to state the matter this way suggests the enormity of the challenge. The ascendancy of market fundamentalism and anti-regulation, anti-government ideology has been particularly frightening, but even the passing of these extreme ideas would leave deeper, more long-term deficiencies. It is unimaginable that today's American politics will deliver the transformative changes needed.

There are many reasons why government in Washington today is too often more problem than solution. It is hooked on GDP growth-for its revenues, for its constituencies, and for its influence abroad. Government has been captured by the very corporations and concentration of wealth it should be seeking to regulate and revamp. And it is hobbled by an array of dysfunctional institutional arrangements, beginning with the way presidents are elected.

Building the strength needed for change requires, first of all, a unified agenda among progressives. As mentioned, the best hope for a new political dynamic is a fusion of those concerned about environment, social justice, and political democracy into one progressive force. A unified agenda would embrace a profound commitment to social justice and environmental protection, a sustained challenge to consumerism and commercialism and the lifestyles they offer, a healthy skepticism of growth-mania and a new look at what society should be striving to grow, a challenge to corporate dominance and a redefinition of the corporation and its goals, and a commitment to an array of major pro-democracy reforms.

The new agenda should also incorporate advocacy of human rights as a central concern. For example, though environmental justice has gained a foothold in American environmentalism, it is not yet the priority it should be. Many established environmental issues should be seen as human rights issues-the right to water and sanitation, the right to sustainable development, the right to cultural survival, freedom from climatic disruption and ruin, freedom to live in a non-toxic environment, and the rights of future generations.

The new politics must turn major attention to the urgent need for political reforms in campaign finance, elections, the regulation of lobbying, and much more. In their book Off Center, political scientists Jacob Hacker and Paul Pierson have developed an important and innovative agenda for political reform, including the revitalization of large-scale membership organizations that give citizens more leverage in the political process and measures that could increase voter turnout, open primaries, pursue nonpartisan redistricting, guarantee a minimum free TV and radio time for all federal candidates meeting basic requirements, reduce the perks of incumbency, and bring back the Fairness Doctrine requiring equal air time for competing political views.42 Meanwhile, Common Cause, Americans for Campaign Reform, and others have developed a powerful case for clean and fair elections through public financing, a case now even stronger due to the Supreme Court's decision in Citizens United v. Federal Election Commission.43-45

Successful political reform will also depend on addressing issues of social justice. In his book On Political Equality, America's senior political scientist Robert Dahl concludes it is "highly plausible" that "powerful international and domestic forces [could] push us toward an irreversible level of political inequality that so greatly impairs our present democratic institutions as to render the ideals of democracy and political equality virtually irrelevant."46 The authors brought together by political analysts Lawrence Jacobs and Theda Skocpol in Inequality and American Democracy document the emergence of a vicious cycle: Income disparities shift political access and influence to wealthy constituencies and businesses, which further imperils the potential of the democratic process to correct the growing income disparities.47

If the first watchword of the new politics is "broaden the agenda," the second is "get political." Lawyering and lobbying are important, but what the new politics must build now is a mighty force in electoral politics. Building the necessary muscle will require major efforts at grassroots organizing; strengthening groups working at the state and community levels; and developing messages, appeals, and stories that inspire and motivate because they speak in a language people can understand, resonating with what is best in both the American tradition and the public's values and presenting compelling visions of a future worth having for families and children.

Our environmental discourse has been dominated thus far by lawyers, scientists, and economists. It has been too wonkish, out of touch with Main Street. Now, we need to hear a lot more from the poets, preachers, philosophers, and psychologists. And indeed, we are. The world's religions are coming alive to their environmental roles-entering their ecological phase, in the words of religious leader Mary Evelyn Tucker. And just last year, the American Psychological Association devoted its annual gathering to environmental issues. The Earth Charter text and movement are providing a powerful base for a revitalization of the ethical and spiritual grounds of environmental efforts.

The final watchword of the new politics is "build the movement." Efforts to build strength in America's electoral process and to bring together a wider array of constituencies embracing a broader agenda should contribute to the emergence of a powerful citizens' movement for change. The new politics must be broadly inclusive, reaching out to embrace union members and working families, minorities and people of color, religious organizations, environmentalists, the women's movement, and other communities of complementary interest and shared fate. It is unfortunate, but true, that stronger alliances are still needed to overcome the "silo effect" that separates progressive communities, including those working on environment, domestic political reforms, the liberal social agenda, human rights, international peace, consumer issues, world health and population concerns, and world poverty and underdevelopment.

An Agenda for Analysis and Action

Building a new economy and a new politics must be an ecumenical endeavor open to many progressive perspectives and ideas. Progress requires concerted efforts from many communities in at least three areas: challenging the current order of things, envisioning a new order and identifying the initiatives needed to realize it, and building capacity to promote change.

Challenging the current order. A great many Americans remain enthralled by a reigning mythology now deeply embedded in the national consciousness: GDP growth is an unalloyed good. Government regulation and other interference in the economy must meet the test of economic benefit. America is a land of economic opportunity and consumer sovereignty. The poor are poor because they deserve to be. We are well on our way to solving our environmental problems. America is the most democratic nation on Earth, and also the most generous, with the best health care.

The reality, of course, is far from these propositions. It is important that this mythology be dethroned and that accurate information about actual conditions and trends be brought to an ever wider audience. Real life in America too often sharply conflicts with the country's best values and highest aspirations.

Envisioning a new order. Envisioning the new economy and a new politics involves three linked projects:

1. The Values Project. What are the core values to be prioritized and harmonized?
2. The Transformations Project. What transformations are needed in order to realize core values? What measures would best characterize and carry forward these transitions? It is not difficult to identify areas where transformative change is essential:

The market: from laissez-faire to regulation and governance in the public interest;
The corporation: from shareholder primacy to stakeholder primacy, from one ownership and motivation model to many;
Social conditions: from economic insecurity to security, from vast inequities to fundamental fairness;
Economic growth: from growth fetish to post-growth society, from mere GDP growth to growth in human welfare and democratically determined priorities;
Indicators: from GDP to accurate measures of social and environmental health and quality of life;
Consumerism: from consumerism and "affluenza" to sufficiency and mindful consumption;
Communities: from ruthless runaway enterprise to vital local economies, from rootlessness to rootedness and solidarity;
Dominant cultural values: from having to being, from getting to giving, from richer to better, from separate to connected, from apart from nature to part of nature, from transcendent to interdependent, from now to forever;
Politics: from weak democracy to strong, from corporatocracy to true popular sovereignty;
Global vision: from economic globalization to planetary civilization worthy of the name, from invidious division to global citizenship;
Foreign policy and the military: from exceptionalism to interdependence, from hard power to soft, from war economy to peace economy.

3. The Synthesis Project. Presenting a positive, integrated vision of life in a world transformed is a powerful motivator of change. Narrative is important-telling a new American story and forging a new American dream.

Building capacity to promote change. Much needs to be done to strengthen capacities for transformative change. Areas needing attention include:

"Progressive fusion" in politics: overcoming silos, forging a common progressive agenda, and uniting unexpected allies with shared values;
Social movements: building a powerful movement for transformative change;
Community actions: seeding the landscape with innovative "new economy" models;
Key institutions: engaging religions, local governments, youth, colleges and universities, and others;
International solidarity: building ties to those abroad with common concerns;
Crisis anticipation: getting ready for crises that will surely come;
Ideas, research, and writing: building think-tank capacities and linking ideas to action.
An important initial step is to identify and elaborate on early initiatives and objectives that are plausible and not seemingly utopian, but that create momentum towards long-term goals and shape future paths.

Conclusion

Historian Richard Hofstadter made the following interesting observation in The American Political Tradition:48

"Although it has been said repeatedly that we need a new conception of the world to replace the ideology of self-help, free enterprise, competition, and beneficent cupidity upon which Americans have been nourished since the foundation of the Republic, no new conceptions of comparable strength have taken root and no statesman with a great mass following has arisen to propound them...."

"Almost the entire span of American history under the present Constitution has coincided with the rise and spread of modern industrial capitalism. In material power and productivity the United States has been a flourishing success. Societies that are in such good working order have a kind of mute organic consistency. They do not foster ideas that are hostile to their fundamental working arrangements. Such ideas may appear, but they are slowly and persistently insulated, as an oyster deposits nacre around an irritant. They are confined to small groups of dissenters and alienated intellectuals, and except in revolutionary times they do not circulate among practical politicians."

Times change. It is now clear that American society is no longer in "good working order." It is time to foster ideas that challenge the "fundamental working arrangements."

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How the Green Party Can Become America's Most Significant Political Force

eli_beckerman — Mon, 22 Nov 2010 17:04:22 GMT

Ed. note: this is a stunning development. I dare say it represents the beginning of a changing tide from timidity regarding the Green Party to explicit investment of hope in its development. Korten's courage here is noteworthy, moving from theoretical ideas of a sustainable and just economy to the practical work of designing its political roadmap and beginning road construction.

2010 Pacific Northwest Regional Green Gathering
David Korten, November 13, 2010
Read the original article.

I was delighted to be invited to address this gathering of Pacific Northwest Regional Green Party leaders. I had not realized at the time that would be an exclusive gathering of the party elders. We do have the benefit of bringing a depth of experience and connections to the significant work at hand.

I'll be laying out my take on what is at stake at this point in America's history and how I believe we need to rethink and reposition the Green Party to function as the political arm of a much larger social movement devoted to advancing the universal human values that frame the Green Party's agenda. It requires, among other things, coming up with a much more concise statement of what we are about-our elevator speech.
A Moment of National Need and Opportunity

Here is our current national political situation in quick overview. Republicans are celebrating their electoral victory. Democrats are licking their wounds. Meanwhile, record numbers of people are still contending with the hardships of unemployment and foreclosure with no relief in sight. And the nation braces for deepening political gridlock.

It is a moment of opportunity for America to set a new course, but neither of the two major parties shows any sign of providing the needed leadership. Washington DC is consumed by short-term thinking and fragmented political contests centered on narrowly defined issues. The primary goal of the Republican party is to assure that President Obama is a one-term president. The primary goal of the Democratic Party is to achieve his re-election. Neither party has a credible vision for the economic future of our nation.

Republicans offer only their standard prescription of tax cuts for the rich, a rollback of regulations on predatory corporations, and elimination of the social safety net-a proven prescription for further job loss and devastation of the middle class.

President Obama is surrounded by advisors who continue to cling to the failed economic theories that led to the current mess. He and the Democrats are floundering, with no identifiable program for economic recovery or for addressing the reality of a national and global economic system that is driving toward accelerating financial instability, environmental destruction, concentration of wealth, and political corruption.

We now have 15 million unemployed people who feel deeply betrayed and upwards of two million homeowners whose homes have been foreclosed-all as a direct consequence of the actions of Wall Street bankers. No adjustments at the margin of the existing Wall Street-dominated economy are going to resolve the plight of the jobless and the homeless.

The reality that returning to pre-2008 business as usual is not an option, seems totally to escape the awareness of those in power. It is, however, evident to an ever greater segment of a deeply frightened electorate increasingly susceptible to the siren call of political demagogues.

The Green Party Advantage

Defenders of Wall Street interests used conceptual deception backed by massive political spending to swing the election in favor of right wing extremists devoted to policies that can only accelerate the devastation.

The deception sows the seeds of its own self-destruction and creates potential political support for a much needed economic restructuring-but only if there is an organized public voice articulating a credible alternative to that being offered by the forces of extremism.

The nation longs for a vision and a supporting agenda that among the political parties, only the Green Party can provide. It falls to us, therefore, to frame and build support for the missing vision and agenda.

We meet here in the real world Washington located in Cascadia as representatives of the Green Party members of this mythical heartland of the environmental movement. The fact our party is not a player in the competition for the presidency and seats in Congress gives us an advantage in that we are not distracted by visions of electoral victory.

The Green Party begins not with an ideology, not with a quest for political power, but with a set of ten positive values that align with the needs of our time and frame a vision of the world of peace, justice, and environmental vibrancy for which most psychologically healthy humans have longed for millennia. These 10 values are: (1) Grassroots Democracy, 2) Social Justice and Equal Opportunity, 3) Ecological Wisdom, 4) Non-Violence, 5) Decentralization, 6. Community-Based Economics and Economic Justice, 7) Feminism and Gender Equity, 8) Respect for Diversity, 9) Personal & Global Responsibility, 10) Future Focus and Sustainability.

Our current economic system advances exactly the opposite of each of these values. We need to replace the defective system with a new system that honors these universal human values. I say more about the defining structures of this system in a moment, but first we need to be clear why the existing economic system is failing.

A Look Upstream

My graduate education was in business. One of the most important lessons I learned in business school is that when something goes wrong, don't just treat the symptom. Look upstream and address the cause. We are dealing with systemic failure on a grand scale and must deal with the upstream sources of that failure. These include policies that support:

The use of financial indicators to assess economic performance,
Wall Street control of the creation and allocation of money.
Extreme inequality in the distribution of income and ownership and thereby creates a power imbalance that mocks the ideal of political democracy and a market economy.
A system of absentee ownership based on the public trading of corporate shares that separates the power of decision-making from its social and environmental consequences,
The use of corporate charters to create legally protected concentrations of global-scale economic power under unified management devoted to narrow and exclusive private interests.
The fragmentation and control of local economies by outside interests that seek only short-term financial profit and are unaccountable to the people who depend on their local economy for their livelihoods.
Global rules that support all of the above.

These seven primary sources of system dysfunction are mutually reinforcing. Each is a necessary focus for policy action.

The Green Alternative

Before turning to our action agenda I want to say a bit more about the false stories of the politics of deception that wins the support of so many people for a system deeply destructive of their individual and community interests.

Let's start with the story that the politics of left and right is defined by a choice between big business or big government-capitalism or socialism-rule by Wall Street speculators or rule by government bureaucrats. By the narrative of this story, capitalism, rule by Wall Street bankers is synonymous with a market economy, democracy, and human liberty. It is total nonsense, but it is so relentlessly repeated that most people never stop to question it.

As Wall Street so clearly demonstrates, capitalism seeks monopoly control of every aspect of daily life to avoid market discipline and uses its financial power to circumvent democracy and hold politicians hostage to Wall Street interests in disregard of the interests of the electorate. Far from being the champion of markets and democracy, capitalism is the mortal enemy of both.

Far from facing a choice between capitalism and socialism, we face a seamless consolidation of economic and political power in a Wall Street-Washington axis dedicated to the further consolidation of its power beyond public accountability.

We are not supposed to notice the real story that the obvious alternative to capitalism is what capitalism promises, but denies us: real democracy and real market economies responsive to the needs and values of ordinary people. I speak of the Green alternative of locally rooted, rule-based markets and democracy within a framework of community values and mutual caring-the economy envisioned by the Green Party values statement and policy platform. We speak of the real, locally rooted markets of Adam Smith and the real locally rooted democracy of Thomas Jefferson.

We, the Green Party, are not left. We are not right. We are not center. We embody the best of both liberal and conservative values within a framework of community values and popular sovereignty.

Power and the Phantom Wealth Illusion

Another key to the success of the politics of deception, particularly its success in building political legitimacy for Wall Street excess, is an illusion-the illusion that money is wealth. Breaking the hold of this illusion is a key to our liberation from Wall Street's threat to real democracy and real markets.

Recognizing the true nature of money and its role in shaping our current self-destructive human course is an essential key to breaking the cultural trance that binds us to Wall Street rule. It is a stunning commentary on our time that most graduates from our institutions of higher learning-even with degrees in economics and business-have no idea how the money system operates as a system of power and have no intellectual tools to address its role in distorting society's values and resource allocation decisions.

Modern money is perhaps the most mysterious of human inventions. It is nothing but a number of no substance or intrinsic worth. It has no reality outside the human mind. Yet in contemporary societies, money determines our access to virtually every essential of life. The decisions of those who control the creation and allocation of money determine the fate of nations and drive disruptive cycles of economic boom and bust. They determine who among Earth's people will have food, shelter, education, and health care and who will not.

In a modern society, money is the ultimate source of power and control. Yet it is all just creative accounting.

The system that generates and allocates these numbers we call money is the most effective and undemocratic of tyrannies, because its inner workings are largely invisible and therefore difficult to understand and challenge. We may express outrage against the bankers who abuse the power the system gives them, but we generally take the system itself for granted.

We have been conditioned by language and education to accept the myth that money itself is wealth and that people who make money are thereby creating wealth. Consider. When someone speaks of "capital," "wealth," "assets," or "resources" we have no idea whether they are talking about money-which is just a number-or something real like land, labor, a factory, or knowledge.

Economist John Kenneth Galbraith once famously observed that the process by which money is created is "so simple it repels the mind." When you take out a loan from a bank, the bank opens an account in your name and enters the amount of the loan in its ledger. That becomes a liability on the bank's accounts. It then makes a second entry for your corresponding promise to repay the loan with interest. That becomes an asset on the bank's books. Two simple accounting entries and money magically appears from nowhere. This simple fact makes banking a very profitable business and is the key to the ability of the institutions of global finance to rule the world.

Mayer Amschel Rothschild, founder of the Rothschild banking dynasty once famously said, "Permit me to issue and control the money of a nation and I care not who makes its laws."

Money created out of nothing unrelated to the creation of anything of corresponding value, is phantom wealth. In the United States, Wall Street has built a whole industry devoted to creating phantom wealth. They call it financial innovation. It is a form of theft and should be treated as such.

From a Phantom Wealth Economy to a Real Wealth Economy

So what is real wealth? It is anything that has real intrinsic value: land, labor, knowledge, food, and knowledge are all examples. The most valuable of all forms of wealth, however, are those that are beyond price: love, a healthy happy child, a job that provides a sense of self-worth and contribution, membership in a strong caring community, a healthy, vibrant natural environment, peace. None of these most precious forms of real wealth find any place on corporate balance sheets or in our calculations of Gross Domestic Product. Consequently, many of our ruling economic institutions have become highly efficient in converting real living wealth into phantom financial wealth.

Here's a simple summary of our situation: We humans have been reduced to serfs in an economy of the walking dead organized and managed by psychopaths bereft of a basic human capacity for conscience, compassion and moral responsibility.

This economy

Values money as the economy's purpose and life only as a means to make money
Concentrates power in global financial markets
Celebrates the successful conversion of real living wealth of the society to phantom wealth financial wealth/money to increase the fortunes of Wall Street billionaires.

It should certainly be no surprise that we are as a result in deep trouble. We must declare our independence from this insane and self-destructive economy and build a New Economy that:

Values life as the economy's purpose & money as a means
Distributes and roots power in people & community
Celebrates the successful conversion of phantom financial capital into real living capital-which literally means managing for a negative rate of financial return.

The differences turn on values and power: financial values vs. life values and power rooted in global financial markets vs. power rooted in people and communities that love and care for a place on the Earth.

Values and power are related. If you want financial values to prevail, give the power to create and allocate money to financial institutions that operate in a world of pure finance far removed from concerns for people or place. If you want life values to prevail, then give the power to create and allocate money to institutions that are rooted in and accountable to communities of place.

Navigating the transition from the money-serving old economy and the life-serving new economy is no small task. We have some serious work to do as a species and the leadership will not come from within our ruling institutions- certainly not from Wall Street or from the Washington on the far coast that marches to Wall Street's tune. It will come only from citizen leaders like us. And from our local governments in cities like Portland, Seattle, and Vancouver, BC-all current leaders in the sustainability movement.

System Transformation

Now let's turn to solutions. For the past two years I've been involved in a small alliance we call the New Economy Working Group (NEWGroup), which is a partnership of the Institute for Policy Studies in DC, YES! Magazine, the Business Alliance for Local Living Economies, and the People-Centered Development Forum. We are developing a framing vision and agenda for a New Economy that self-organizes toward financial stability, ecological balance, shared prosperity, and living democracy.

1. Financial Stability is a natural condition of a financial system devoted to sound productive investment, in contrast to a system devoted to predatory lending, financial bubbles, and speculation. We can achieve financial stability by replacing the Wall Street money system with a Main Street money system designed to provide true financial services in response to community needs and opportunities.

2. Ecological Balance: The defining human imperative of our time is to bring ourselves into balance with Earth's biosphere. This requires shrinking global GDP, starting with the most profligate nations while creating a planetary-scale economic system that mimics the structure and behavior of Earth's biosphere.

Listen closely, because the following is foundational. Earth's biosphere is segmented into countless self-organizing local ecosystems, each locally rooted, locally self-reliant, and exquisitely adapted to its particular place on earth to optimize the use of locally available resources in service to life. It involves a highly sophisticated and complex fractal structure of nested self-reliant, progressively smaller-scale ecosystems.

We must learn to organize our human communities around economies that mimic this structure and function as locally self-reliant, self-organizing subsystems of their local ecosystems. To the extent that each local economy is in balance with its local ecosystem, we as a species will be in balance with the biosphere.

3. Shared Prosperity: Earth's bounty is the shared birthright of all living beings. We must learn to share it equitably for the benefit of all. It requires an equitable distribution of work and material benefits to secure access for everyone to a healthy, fulfilling means of livelihood through a combination of jobs, household production, entrepreneurship, public services, and gifting. It is the right thing to do and essential to our survival.

It is also a necessary path to increasing human health and happiness. According to a massive body of public health research, societies that share wealth equally are healthier, have stronger families and communities, less crime and violence, and healthier natural environments than do those with greater extremes of wealth and poverty. Inequality creates psychological and emotional stress, including for those at the top, discourages sharing, and increases insecurity. Societies that distribute wealth equitably also tend to be more democratic and more resilient in the face of crisis.

4. Living Democracy means exactly what it says: living democracy as a daily practice of civic engagement. In living democracies, popular sovereignty is integral to the fabric of community life. Living democracies celebrate and affirm diversity within a framework of individual rights, community responsibility, and mutual accountability. Their political and economic institutions support local decision making within a framework of cooperation and mutually agreed rules. Shared power, shared resources, and shared prosperity go hand in hand.

The system transformation required to achieve these outcomes is, to say the least, ambitious. The vision and agenda are elaborated in my most recent book, the 2nd edition of Agenda for a New Economy: From Phantom Wealth to Real Wealth. It brings the Green Party values and agenda together into a coherent systems framework and spells out an implementing agenda.

A Three-Fold Strategy

Such a dramatic transformation of an institutional system supported by such powerful economic and political interests would be unimaginable, except for the fact that millions of people are already engaged in making it happen. This is the movement energy on which our work as the Green Party necessarily and appropriately builds. YES! Magazine, for which I serve as board chair, is devoted to telling the stories of these initiatives. You can find us at yesmagazine.org. Every serious Green Party member should be a YES! subscriber. It is the handbook for our political movement.

The clearer we are in our vision of the society we seek and the more intentional in our strategy for actualizing it, the greater our prospect for success. The change strategy implicit in the dynamics of the emerging movement features three elements: 1) change the defining stories of the culture; 2) create a new reality from the bottom-up; and 3) change the rules.

1. Change the defining stories of the mainstream culture. It is a simple, but rarely noted truth. Every transformational social movement begins with a conversation promoted through education and media outreach that challenges a prevailing cultural story and ultimately displaces it with a new story of unrealized possibility. The civil rights movement changed the story on race. The environmental movement changed the story about the human relationship to nature. The women's movement changed the story on gender. Our current task is to change the prevailing stories about the nature of wealth, the purpose of the economy, our human nature, and the path to prosperity.

The old story would have us believe that money is wealth. That the purpose of the economy is to make money. That it is our human nature to be individualistic, materialistic, greedy, competitive, violent. And that unleashing the unrestrained pursuit of individual greed is the path to universal prosperity. It takes only a moment's reflection to realize that each of these ideas is false and morally bankrupt. Together these story elements constitute the foundation of false and morally bankrupt economic theories and policies that lead to terminal species failure.

Our common future depends on expanding public awareness that money is only a number. That destroying real wealth to make money is an act of insanity. That it is our mature human nature to care and share. That unrestrained pursuit of individual greed in disregard of the needs of others is a sign of deep psychological dysfunction and presents a threat to the well-being of all. Positive action necessarily begins with new stories.

2. Create a new economic reality from the bottom up, as millions of people the world over are doing in their efforts to rebuild local economies and communities. They are supporting locally owned human-scale businesses and family farms, developing local financial institutions, reclaiming farm and forest lands, changing land use policies to concentrate population in compact communities that reduce automobile dependence, retrofitting their buildings for energy conservation, and otherwise working toward local self-reliance in food, energy, and other basic essentials. This is the work for example of the Transition Towns Movement. I serve on the board of the Business Alliance for Local Living Economies (BALLE), which serves as a support system for such efforts in the United States and Canada.

3. Change the rules: Current law and public policy largely favor the self-serving and deeply destructive corporate-led global economy. That works well for the interests of big money. People and planet are better served by rules and policies that support local control and protect community interests. To change the rules, however, is necessary first to build the necessary political support through work at local levels to change the defining stories and demonstrate their application by building a new reality from the bottom up. As we are seeing about the country, rule changes also best start at the local level with action by local governments that are close to the real life concerns of people and place.

A Coherent Economic Policy Agenda

When talking about rules, we are talking about the policy agenda. I previously outlined the need to change policies that support:

The use of financial indicators to assess economic performance,
Wall Street control of the creation and allocation of money.
Extreme inequality.
Absentee ownership.
Legally protected concentrations of unaccountable global-scale economic power.
Fragmented and dependent local economies easily exploited by global corporate predators.
Global rules that support all of the above.

We need to replace these policies with policies that instead support:

Living Indicators. We currently use gross domestic product (GDP) and corporate stock share price indices as the primary indicators against which we evaluate economic performance, and we manage our public policies to maximize their growth. GDP is basically a measure of the rate at which we are pumping money through the economy to generate financial profits by turning useful resources into toxic garbage. Stock price indices are basically a measure of the rate at which rich people are getting richer relative to the rest of us without doing any useful work.
We get what we measure, so we should measure what we want by assessing economic performance against non-financial indicators of the health of people, community, and nature. Meeting the nutritional needs of everyone. Energy self-reliance. The cleanliness and regeneration of our supplies of clean air and water. This applies at all levels from the local to the global.
A Living Wealth Money system.The Wall Street system centralizes and monopolizes control of the creation and allocation of money in the hands of a very few private banks that use this power to finance socially destructive speculation, asset bubbles, loan pyramids, and corporate buyouts, and to force working people and productive Main Street enterprises into debt slavery. The official money system is the operating system of the economy.
We once had a system of locally rooted financial institutions devoted to serving community needs. We can and should recreate a similarly system of local financial institutions managed as a public utility comprised primarily of locally rooted nonprofit or publicly owned community banks and credit unions providing basic financial services and creating credit to fund productive local investment.
Financial speculation should be eliminated either by legal prohibition or through the imposition of confiscatory taxes. For all the attention given to financial analysis, the money system is one of the least understood aspects of modern society and it gets little attention in university programs. Understanding money as a system of power and the implications for society should be considered an essential foundation of education for responsible citizenship.
Recall that money can be created with a computer key stroke. If we have a need and the unutilized labor, land, and technology required to address it, money should never be the deciding constraint. We need only agree to stroke that key. That we have not as a society figured this out is truly stunning.
Equitable Distribution: We need to pursue tax and fiscal policies that support an equitable distribution of income and ownership to achieve an equitable distribution of power and real wealth. Equitable societies are healthier, happier, more democratic, and avoid the excesses of extravagance and desperation.
Living Enterprises with Living Owners.The Wall Street economy is organized under the control of global mega-corporations with internal economies larger than those of most countries that are accountable only to absentee owners whose sole interest is financial return. The living economies of the future are properly organized around locally-owned small and medium sized living enterprises that root economic decision making in the community, treat profit as a means rather than an end, and define their purpose in terms of meeting community needs. Large corporations must be broken up and restructured as smaller worker or community owned businesses.
Real Democracy and Real Markets. Free both the market and democracy from corporate domination by breaking up large corporations and restructuring them as smaller worker or community owned enterprises, eliminating public subsidies for corporations, and limiting political participation to real people.
Local Living Economies. Local economies are where it comes together. Under the Wall Street system, local economies are fragmented and controlled by outside interests that seek only to extract profits and are unaccountable to the people who bear the consequences. The goal of the New Economy is to build diversified, self-reliant, energy efficiency, democratically self-organizing local economies comprised of locally rooted living-enterprises devoted to serving local needs and building real community wealth as subsystems of their regional ecosystems.
Global Rules. Restructure global rules and institutions to support all of the above.

The leadership on policy change is coming primarily from local governments that are close to and accountable to the people who bear the consequences of the current economic malfunction.

Jobs and Money as Entry Points

Jobs and money are the defining entry points for reframing the national debate on economic policy. The debate currently centers on how best to prime the pump to get economic growth going again. The right proposes tax cuts and deregulation. The left proposes government spending to provide economic stimulus.

Our natural instinct as Greens is to attack growth on environmental grounds. The more politically potent approach is to point out that within the existing economic system growth does not produce jobs, at least not the kind of jobs that increase the household incomes of average Americans.

From 1979 thru 2006 U.S. GDP grew from $5.2 trillion to 13 trillion in constant 2000 dollars-an increase of 250%. Virtually all of the benefit in terms of income increases went to the top 10% of households and predominantly to the top 1 percent. Growth is not the answer, even on purely economic grounds unless, of course, the goal is to further increase the fortunes and relative power of the richest 1% of Americans.

We need policies that focus on creating family wage jobs doing things that meet real needs and build real community wealth. We need policies that focus, not on maximizing returns to money, but rather on maximizing returns to our most critically limited resources, Earth's natural living wealth. For years we have focused on substituting natural resources for labor to increase labor productivity to maximize financial returns. Now we must focus on increasing natural resource productivity to maximize human well-being-using money as a means-not the defining purpose. It's all part of the new story that we must carry forward as a political movement to raise public consciousness of the economic policy choices before us and their true implications.

The conversation begins in our communities and connects to the work of those who are rebuilding our local food systems, increasing the energy efficiency of our local homes and businesses, and rebuilding local financial institutions to keep money circulating in the community and to issue credit to create local jobs using local resources to meet local needs.

The local conversation can build the foundation for a new public discussion to ultimately reshape the economic debate that will surely be central to the 2012 presidential election.

So what does this mean for the Green Party?

Rethinking and Repositioning the Green Party

The existing electoral rules almost inevitably reduce conventional third parties to spoiler roles at the national level. Until we change those rules, we need to take a lesson from the Tea Party and learn to think and act less like a conventional political party and more like a political movement devoted to reframing the political debate and reshaping the agenda of the two dominant political parties.

As a political movement, we can provide and popularize the missing framing vision for a new national conversation on economic choices. Our immediate goal should be to shake up the Democratic Party on the side of positive solutions in support of hope, caring, Earth Community, and Main Street, the way the Tea Party has shaken up the Republican Party on the side of fear, hate, and Wall Street big money interests.

We already have a Green Party consensus on the framing vision and agenda; we simply need to boil it down to a coherent story that connects with the concerns at the fore of the public consciousness: jobs and money.

Jobs and money are entry points to virtually all the issues central to the Green party vision. Our immediate priority should be to reframe the debate on jobs and money as an entry point to a broader discussion about economic policy options and the need for fundamental system transformation.

* * * * *

We humans are engaged in a monumental work of reinventing our societies and ourselves. It is the most exciting intellectual challenge and creative opportunity in the whole of the human experience. We have the power to turn this world around for the sake of ourselves and children for generations to come. It requires rethinking and reorganizing our institutions to align with the values to which the Green Party is committed. We have the opportunity, indeed the responsibility, to make the Green Party the most politically significant force in America. Now is the hour. We are the ones we have been waiting for. Thank you.

___________________________

David Korten is the author Agenda for a New Economy: From Phantom Wealth to Real Wealth, The Great Turning: From Empire to Earth Community, and When Corporations Rule the World. He serves as Board chair of YES! magazine, a board member of the Business Alliance for Local Living Economies, and co-chair of the New Economy Working Group.

Living beyond our Means

FrPeterPreble — Fri, 12 Nov 2010 14:48:10 GMT

There are many theories out there about how we ended up in the economic situation that we are in. This is a very bad situation and it has affected many people and it is looking like it is going to get worse before it gets better. Now I am not an economist but I too have a theory of how we got into this mess and I can sum it up with one word, GREED!

Americans have been living beyond their means for a long time now and I will call it what it is, sinful. We need to be good stewards of the gifts that God has given us and that does not include getting into more debt then we can handle. Yes the mortgage crisis lead to part of this but no one forced your hand to sign the loan application. As I wrote yesterday we need to start taking personal responsibility for our actions and that would include getting into debt. Americans today have more personal debt than any other time in history. By the way I am including myself in this as well.

During this past election cycle here in Massachusetts there was a statewide question on the ballot to roll back the state sales tax from 6.25% to 3%. Thankfully the question did not pass. If it had it was estimated that the Town of Southbridge would loose approximately $9.5 million in state aid. Okay my question is this, why is the Town of Southbridge, or any Town for that matter, relying on aid from the state? It was reported in today's Boston Globe that the Commonwealth of Massachusetts stands to loose money in Federal aid in the coming years as well. I ask the same question, why are we relying on Federal Aid? We are living beyond our means.

I believe is local control and that problems should be solved at the lowest possible level. With this in mind, when the Town starts the budget process it should not include any possible funding from any other source other than the revenue that the Town brings in, if we cannot live on that then we are living beyond our means. I, like most of you, get a paycheck each week. That is all the money I have for the week and when it runs out, it is gone. I cannot look to anyone else for money to get me over the hump; government should be run the same way.

Governments at all levels gather funds through taxes, property tax, meals tax, sales tax, income tax and the like. Each level of Government should exist on what funds are gathered at that level if not then cuts will need to be made. I realize this is pie in the sky but I believe if we want to get back on track we need to do this.

There has been much discussion the last few days about taxes and tax cuts. The highest earners in the country pay the least amount of taxes, so the argument goes. Taxes are never fair and taxes are a necessary part of life. I support a flat tax with no deductions for anyone, this way everyone pays their fair share. Just for example let us say the income tax rate is 15%. At the end of the year you would pay 15% of your income in taxes regardless of how much you make. No deductions for anything. I floated this idea on Facebook the other day and someone said that churches and other charities would stop getting money. Well I do not want people donating to my church because of the tax break; I want people giving to my church because they have an obligation to give money to the church. A Biblical obligation!

National debt is the highest it has ever been. Massachusetts is facing a $2 billion budget deficit and it is projected to get worse. We need to start living within our means, it will be difficult at the start, and of course I am not saying we should do this over night it needs to be phased in. That was my objection to the tax roll back question that it was too much too fast.

We need, at a personal level, to be good stewards of all that we have. We should not be living beyond our means, we should avoid personal debt at all reasonable costs, and we should pay down all credit cards and avoid using them to live on. We should look at streamlining our lives and consolidating things. Begin saving money and spending less. And we need to remember to be attentive to our spiritual disciplines of prayer, fasting, worship, tithing and serving. We need to live a more simple life and get back to basics and stop living beyond our means.

Cross posted at www.frpeterpreble.com

Is the income gap issue finally being realized?

liveandletlive — Mon, 18 Oct 2010 03:01:31 GMT

With all of the talk about the outsourcing of jobs overseas, Bush tax cuts for the wealthy, ridiculous health care costs and the many other issues that plague our economy, our ultimate problem can really be summed up to the disastrous income inequality situation we face in this country. We always hear that it's too many taxes, or too much regulation, or some other nefarious enemy that makes the problem someone else's fault. Here lies the truth about what is going on in our country that is literally destroying it day by day. The job outsourcing, tax cuts for the wealthy, and health insurance costs, etc are simply the methods for which the income gap can sustain itself and grow. Yet still, the media and our government rarely question the use of these tools by the powerful entities in our country. Some briefly condemn, then never do anything about it; others blatantly support such tactics as the American way and the patriotic thing to do. It is never ever mentioned that in order for the most influential businesses and top earning individuals to succeed in these epic proportions, there has to be those who must lose in order to subsidize the wealth of the mighty top 2 %. The money has to come from somewhere. In today's America, it is the working middle class that reluctantly supports and is forced to contribute to the epic wealth of biggest corporations and the top 2%.
Is there any thing our government can possibly do to help curb this trend. Is there anything the media can do, or the voters themselves to stop this crisis from perpetuating? The answer is yes. Our government can create policies that reward those businesses that use their success to lift more than their own boats. Our media can consistently express the value of workers and applaud business not just for success but for success that trickles down to the people who do the hard work for them. Voters can thank the grocery store clerk for their excellent customer service and then write a note to the corporate offices explaining that without that worker, there would be no store. We can all do something about this. It may take time for it to take hold, but as Robert H Frank does in this New York Times articles, it will happen as soon as we start raising raising broad awareness of this issue.

Energy and Equity: Speed-stunned imagination

eli_beckerman — Thu, 26 Aug 2010 02:30:15 GMT

{ Installment 3 of Ivan Illich's Energy and Equity series }

Speed-stunned imagination

Past a certain threshold of energy consumption, the transportation industry dictates the configuration of social space. Motorways expand, driving wedges between neighbors and removing fields beyond the distance a farmer can walk. Ambulances take clinics beyond the few miles a sick child can be carried. The doctor will no longer come to the house, because vehicles have made the hospital into the right place to be sick. Once heavy trucks reach a village high in the Andes, part of the local market disappears. Later, when the high school arrives at the plaza along with the paved highway, more and more of the young people move to the city, until not one family is left which does not long for a reunion with someone hundreds of miles away, down on the coast.

Equal speeds have equally distorting effects on the perception of space, time, and personal potency in rich and in poor countries, however different the surface appearances might be. Everywhere, the transportation industry shapes a new kind of man to fit the new geography and the new schedules of its making. The major difference between Guatemala and Kansas is that in Central America some provinces are still exempt from all contact with vehicles and are, therefore, still not degraded by their dependence on them.
The product of the transportation industry is the habitual passenger. He has been boosted out of the world in which people still move on their own, and he has lost the sense that he stands at the center of his world. The habitual passenger is conscious of the exasperating time scarcity that results from daily recourse to the cars, trains, buses, subways, and elevators that force him to cover an average of twenty miles each day, frequently criss-crossing his path within a radius of less than five miles. He has been lifted off his feet. No matter if he goes by subway or jet plane, he feels slower and poorer than someone else and resents the shortcuts taken by the privileged few who can escape the frustrations of traffic. If he is cramped by the timetable of his commuter train, he dreams of a car. If he drives, exhausted by the rush hour, he envies the speed capitalist who drives against the traffic. If he must pay for his car out of his own pocket, he knows full well that the commanders of corporate fleets send the fuel bill to the company and write off the rented car as a business expense. The habitual passenger is caught at the wrong end of growing inequality, time scarcity, and personal impotence, but he can see no way out of this bind except to demand more of the same: more traffic by transport. He stands in wait for technical changes in the design of vehicles, roads, and schedules; or else he expects a revolution to produce mass rapid transport under public control. In neither case does he calculate the price of being hauled into a better future. He forgets that he is the one who will pay the bill, either in fares or in taxes. He overlooks the hidden costs of replacing private cars with equally rapid public transport.

The habitual passenger cannot grasp the folly of traffic based overwhelmingly on transport. His inherited perceptions of space and time and of personal pace have been industrially deformed. He has lost the power to conceive of himself outside the passenger role. Addicted to being carried along, he has lost control over the physical, social, and psychic powers that reside in man's feet. The passenger has come to identify territory with the untouchable landscape through which he is rushed. He has become impotent to establish his domain, mark it with his imprint, and assert his sovereignty over it. He has lost confidence in his power to admit others into his presence and to share space consciously with them. He can no longer face the remote by himself. Left on his own, he feels immobile.

The habitual passenger must adopt a new set of beliefs and expectations if he is to feel secure in the strange world where both liaisons and loneliness are products of conveyance. To "gather" for him means to be brought together by vehicles. He comes to believe that political power grows out of the capacity of a transportation system, and in its absence is the result of access to the television screen. He takes freedom of movement to be the same as one's claim on propulsion. He believes that the level of democratic process correlates to the power of transportation and communications systems. He has lost faith in the political power of the feet and of the tongue. As a result, what he wants is not more liberty as a citizen but better service as a client. He does not insist on his freedom to move and to speak to people but on his claim to be shipped and to be informed by media. He wants a better product rather than freedom from servitude to it. It is vital that he come to see that the acceleration he demands is self-defeating, and that it must result in a further decline of equity, leisure, and autonomy.

Strategies to Grow the Green Economy in Western Mass

suzanneb — Mon, 23 Aug 2010 20:40:41 GMT

189 Pleasant Street, Easthampton, MA, Saturday, August 28th, 2010, 8 AM- 12:30 PM.

Project Retrofit of the Western Mass Green Consortium is holding its 2nd 2010 Workshop to involve community voices in strategies to grow the "green economy."

$992 Million Dollars in Federal Stimulus money has been spent in 4 Western MA Counties in the past 18 months.

How can we collaborate & work together to build an economy in Western MA that works for ALL of us. Help us build a vibrant Green Economy that builds upon what we have done AND outlasts the Stimulus Funding.

February 13, 2010 was the first Project Retrofit Workshop to identify regional barriers to growing the energy efficiency/retrofit industry. This meeting will bring together individuals, businesses, and community organizations at a morning planning session to begin implementation of the needed tools identified in February.

Participants who arrive at 8 and stay until 12:30 are welcome to stay for a party and BBQ, as well as guided tours of the sustainable designed property. Please bring a dish to share.

For a complete agenda, to volunteer, or for more information visit www.westernmassgreenconsortium.org.

Tech@State

gmoke — Thu, 05 Aug 2010 01:19:15 GMT

As part of Secretary Clinton's 21st Century Statecraft initiative,Tech@State
http://www.state.gov/statecraf...
connects established leaders, new innovators, government personnel, and others to work together on 21st century technology solutions to improve the education, health, and welfare of the world's population.
In its first iteration, Tech@State: Haiti,
http://www.state.gov/p/wha/ci/...
participants from the private sector, NGOs, academia, the Haitian Diaspora, and the public sector demonstrated and discussed their innovations in Haiti. The event served as an idea and technology exchange among participants and ignited those attending to collaborate on current and future projects in Haiti and in other nations.
The second iteration, Tech@State: Mobile Money,
http://www.state.gov/statecraf...
will be held August 2, 2010.

Video at
http://www.ustream.tv/channel/...
I learned of this series through Jan Chipchase, formerly of Nokia and presently with Frog Design,
http://janchipchase.com/2010/0...

His presentation
http://designmind.frogdesign.c... - text and slides
http://www.ustream.tv/recorded... - video

was part of the morning on Mobile Money on August 2, 2010:
http://www.state.gov/statecraf...

crossposted to bluemassgroup.com, dailykos.com, globalswadeshi.net, and eurotrib.com,

The Columnist, the Pollster, and Me

gmoke — Sat, 17 Apr 2010 00:16:14 GMT

I went to a talk by David Broder on the health care battle at Harvard's Shorenstein Center on Thursday, April 15. It was a small group with plenty of time for questions. It turned out that among the other people there were Scott Rasmussen, the pollster, generally assumed to lean Right, Ernest Istook, the former Republican Congressman and present Heritage Foundation and Harvard Kennedy School fellow, and Roger Porter, Kennedy School prof and former Reagan and GHW Bush official (I'm always amazed at how liberal Harvard is).

Broder had a few introductory remarks about the differences between the Clinton attempt at reforming health care and the Obama success. He credited Rahm Emmanuel with understanding Congress much better than Ira Magaziner did and pointed out that Obama made his push in his first year, with all his political capital intact, while Clinton began his health care initiative in his second year.

Then he took questions.
Porter asked about deficits, of course, and Broder wondered whether the prospective savings from reform would show up and how soon. Rasmussen answered some questions and had some colloquy with Broder and others over polling numbers. Turns out that Obama's and Pelosi's numbers have gone up significantly since health care reform was passed. Attitudes have frozen at about 53% against health care reform since the budget number of $1 trillion in costs became public. The OMB numbers on savings over the next ten years, however, are not believed.

I told Broder I'd gone back to read all his columns in the last nine months or so on health care and asked why he never mentioned the fact that the US pays more per capita by a large margin (about $7,260 per person per year as opposed to the next nearest in the industrialized nations, Norway, with about $4500 per person per year, which covers 100% of their population while we in the US cover maybe 85%). I also mentioned that we have the 24th or 25th highest life expectancy, a little higher than Albania. His response was, in my opinion, dismissive.

Broder didn't directly respond to his failure to point these kinds of facts out in his columns and made the general statement that "The media could have done a better job." He did say that his friend, T. R. Reid, wrote a great book comparing health care systems around the world, a book whose name he didn't remember although he recommends it to friends ( although not his readers, apparently). The people around the table allowed that Reid's book was called something like "the Odyssey" when it is actually The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care. I guess they haven't read it either.

Later on in the discussion, Broder said that Americans don't want to change from what they know, "even if it means exchanging their healthcare for that of Albania." I guess he didn't hear me. Albania has worse life expectancy than the US. Bosnia, with a slightly higher life expectancy, is the next step up from the US.

Afterwards, I asked Scott Rasmussen if he's polled on how many people know that they pay the highest amounts for health care while getting 25th rate coverage. He said he hasn't but suspects that very few are aware of the facts.

I've encountered this kind of cognitive dissonance from pollsters before at other Shorenstein events:

[Peter] Hart has one question on "cleaning up and taking on" fraud, abuse, and waste (FAW) in Washington and finds 67% for that position. I asked him to repeat that question and asked him about the premise as my understanding is that FAW amounts to a few percent of the budget since over 50% of the US budget is defense, the next largest chunk is Social Security and Medicare, and the next largest chunk goes to servicing the debt. Earmarks, I read, is less than 2% of the budget. I think this question presents a false premise. Hart responded by saying that elections aren't decided on reason. Willie Horton was one out of thousands of furloughed prisoners but it didn't matter. Alex Castellanos, the Republican media guru, nodded across the table. Richard Parker, biographer of John Kenneth Galbraith, said, "Everybody knows 60% of the budget goes to foreign aid." Basically, I was laughed at.
Unfortunately, they missed my point which was that the question buys into a false frame that the Republicans have used for years to talk about the "smaller government" they never enact. I believe that Hart could craft a poll question that measures acceptance of Republican values without promulgating a fiscal fantasy. This shows me, once again, that the "experts" may be smart and successful but don't live in the same world I do. Their reality has nothing to do with the reality I see.

http://www.dailykos.com/storyo...

I didn't stick around to talk to Broder about our differences in world-views but saw him a few minutes later, walking through Harvard Square. I just let him pass on by.

crossposted to bluemassgroup.com, eurotrib.com, and dailykos.com