Economics In A Full World
- The global economy is now so large that society can no longer safely pretend it operates within a limitless ecosystem
- Growth is widely thought to be the panacea for all the major economic ills of the modern world
- The economy is a subsystem of the finite biosphere that supports it
- When the economy’s expansion encroaches too much on its surrounding ecosystem, we will begin to sacrifice natural capital (such as fish, minerals and fossil fuels) that is worth more than the man-made capital (such as roads, factories and appliances) added by the growth
- This is called uneconomic growth in which "bads" are produced much faster than goods that makes us poorer and not richer
- Evidence suggests that the U.S. may already have entered the uneconomic growth phase
- Recognizing and avoiding uneconomic growth are not easy
- People benefit from uneconomic growth and thus have no incentive for change
- National accounts do not register the costs of growth for all to see
- Humankind must make the transition to a sustainable economy—one that takes heed of the inherent biophysical limits of the global ecosystem so that it can continue to operate long into the future
- If we do not make that transition, we may be cursed not just with uneconomic growth but with an ecological catastrophe that would sharply lower living standards
- Most contemporary economists do not agree that the U.S. economy and others are heading into uneconomic growth
- They largely ignore the issue of sustainability and trust that because we have come so far with growth, we can keep on going ad infinitum
- Mainstream (also known as neoclassical) economists consider sustainability to be a fad and are overwhelmingly committed to growth
- The economic status quo cannot be maintained long into the future. If radical changes are not made, we face loss of well-being and possible ecological catastrophe
- The biosphere is finite, non-growing, closed and constrained by the laws of thermodynamics
- Any subsystem, such as the economy, must at some point cease growing and adapt itself to a dynamic equilibrium, something like a steady state
- Birth rates must equal death rates, and production rates of commodities must equal depreciation rates
- “Ecological footprint” studies show that the total energy and materials needed to maintain and replace our artifacts has also vastly increased
- As the world becomes full of us and our stuff, it becomes empty of what was here before
- In the study of microeconomics, the branch of economics that involves the careful measuring and balancing of costs and benefits of particular activities, individuals and businesses get a clear signal of when to stop expanding an activity
- Because establishing and maintaining a sustainable economy entails an enormous change of mind and heart by economists, politicians and voters, one might well be tempted to declare that such a project would be impossible
- To implement such an economy, we must specify just what is to be sustained from year to year. Economists have discussed five candidate quantities: GDP, “utility,” throughput, natural capital and total capital (the sum of natural and man-made capital)
- Some people think that a sustainable economy should sustain the rate of growth of GDP
- The sustainable economy must at some point stop growing, but it need not stop developing
- Two broad types of capital exist—natural and man-made
- Most neoclassical economists believe that man-made capital is a good substitute for natural capital and therefore advocate maintaining the sum of the two, an approach called weak sustainability
- The policy most in accord with maintaining natural capital is the cap-and-trade system: a limit is placed on the total amount of throughput allowed, in conformity with the capacity of the environment to regenerate resources or to absorb pollution
- The cap-and-trade system is an example of the distinct roles of free markets and government policy
- The transition to a sustainable economy would require many adjustments to economic policy
- Product Lifetimes: A sustainable economy requires a “demographic transition” not only of people but of goods
- GDP Growth: Because of qualitative improvements and enhanced efficiency, GDP could still grow even with constant throughput
- The Financial Sector: In a sustainable economy, the lack of growth would most likely cause interest rates to fall
- Trade: Free trade would not be feasible in a world having both sustainable and unsustainable economies
- Taxes: A government concerned with using natural resources more efficiently would alter what it taxes
- Employment: In a sustainable economy, maintenance and repair become more important
- Happiness: One of the driving forces of unsustainable growth has been the axiom of insatiability—people will always be happier consuming more
- Growth cannot increase everyone’s relative income
- The wealthy countries have most likely reached the “futility limit,” at which point further growth does not increase happiness
- If we do not make the adjustments needed to achieve a sustainable economy, the world will become ever more polluted and ever emptier of fish, fossil fuels and other natural resources
- Avoiding this calamity will be difficult. The sooner we start, the better
Throughout the years, growth of the economy has been a major part of the human race to adapt and rely on. Such a large and increasing society of many people into the world has made this idea of growth a more bigger problem. The misconception of having more growth as a way to fix most of the issues such as poverty is seemingly in their eyes as the right way but in the long term, it is definitely not entirely correct. Growth has lots of structures and substructures just like the military. To sum up what growth really is is that more production means more sales means more growth means more jobs means more employment means the world is transitioning to an unsustainable environment. Overall, adding all of these factors together has created an uneconomic growth in which the natural capital is becoming more scarce than man-made capital. We are using up so much resources that it cannot basically support the people and nature simultaneously in the future. In reality, to ourselves, we are actually becoming poorer than richer. The world is fragile and yet we continue this madness. Sadly, people have already benefit from growth to the point where they won't reconsider. In addition, the government and higher officials do not believe that countries like the U.S is entering that phase of uneconomic growth because it seems more likely they are doing much more good than bad. However, more man-made "stuff" is added and contributes to more problems like pollution. If we do not stop what we are doing right now, there will be horrifying consequences that will later become either nearly impossible or too difficult to reverse the damages done. The stake of the human race and the world is in the peoples' hands. The early we start, the easier it will be.
It is alarming that after a long time, we have done so much to the planet that we now have to limit in what we do such as cut down in everything we do in hopes to possibly regain that sustainability. More importantly, keeping the population stable as well. When the population is growing or even too much, the amount of resources needed to support it is increasing. Then, we will eventually won't have any more to be able to survive. The ideals of growth and the creations of humanity is seriously hindering the standards of living because of pollution from cars, resources used to make the food that feed us, materials thrown away harming the environment, more buildings & houses that replace the land, forests being eliminated, entertainment purposes such as theme parks, more production, etc. That happens every single day and we need to realize that is of our big concern to pay more attention to because even Hippocrates once said, "Everything in excess is opposed to nature".