I have been wading through this
book this weekend. It was published
originally in 2000 and updated recently.
This essay by one of the authors captures the essence of the book.
I fully agree with the diagnosis
but am far less in agreement with the proposed solutions which as usual love
top down programs. That thinking got us
here.
Without a dissertation of our
economic system it is enough to say that it has failed to develop properly from
the ground up where attention to the natural capital can be properly understood
and optimized. The trend is back toward
such a model, but it takes time and common will.
In fact the application of
intelligence is steadily clearing away the damage and establishing superior
protocols that will certainly recapture lost natural capital. The hard part is to understand it as process
sometimes taking decades and ultimately millennia even.
My best example of a millennial operation
is the restoration of the Sahara as a vibrant
natural growing environment for a population of billions. The billions are necessary to actually
sustain the environment itself at optimized efficiency.
Actually doing it right is quite
easy and culturally acceptable and ultimately stunningly productive. One objective of this blog is to provide
clear guidance to initiatives that aim to support such a transformation.
Economic Objectives
1
Full active employment for all individuals from cradle
to grave with a natural reward system linked to the social context itself.
2
Constant application of sound husbandry to the utilized
land and resource base as a natural outcome
3
Ample credit on the basis of land, community and the
rule of twelve. This ensures
maximization of the economic wealth managed by a community.
Such a system could provide an
initial growth spurt during implementation and the first generation of
maturation. I suspect that a combination
of field training, credit instruments and government guarantees could swiftly
draw down at least half the population and disperse that population away from
concentrations that occludes major aspects of employability for a large part of
the population.
The bottom line is all forms of
waste cost us and ignoring that waste means that we stick future generations
with a superfund bill. Perhaps we need
to threaten to create a generational liability applicable to any and all
beneficiaries including those employed for any economic activity. Thus everyone is born into a financial
liability that he is conscious off. This
is joking of course, but as the story here from Hamburg shows us. Shock is often necessary.
Natural Capitalism
We can create new jobs, restore our environment, and promote social
stability. The solutions are creative, practical, and profitable.
—By Paul
Hawken
Somewhere along the way to free-market capitalism, the United States
became the most wasteful society on the planet. Most of us know it. There is
the waste we can see: traffic jams, irreparable VCRs, Styrofoam coffee cups,
landfills; the waste we can't see: Superfund sites, greenhouse gases,
radioactive waste, vagrant chemicals; and the social waste we don't want to
think about: homelessness, crime, drug addiction, our forgotten infirm and
elderly.
Nationally and globally, we perceive social and environmental decay as
distinct and unconnected. In fact, a humbling design flaw deeply embedded in
industrial logic links the two problems. Toto, pull back the curtain: The
efficient dynamo of industrialism isn't there. Even by its own standards,
industrialism is extraordinarily inefficient.
Modern industrialism came into being in a world very different from the
one we live in today: fewer people, less material well-being, plentiful natural
resources. As a result of the successes of industry and capitalism, these
conditions have now reversed. Today, more people are chasing fewer natural
resources.
But industry still operates by the same rules, using more resources to
make fewer people more productive. The consequence: massive waste -- of both
resources and people.
Decades from now, we may look back at the end of the 20th century and
ponder why business and society ignored these trends for so long -- how one
species thought it could flourish while nature ebbed. Historians will show,
perhaps, how politics, the media, economics, and commerce created an industrial
regime that wasted our social and natural environment and called it growth. As
author Bill McKibben put it, "The laws of Congress and the laws of physics
have grown increasingly divergent, and the laws of physics are not likely to
yield."
The laws we're ignoring determine how life sustains itself. Commerce
requires living systems for its welfare -- it is emblematic of the times that
this even needs to be said. Because of our industrial prowess, we emphasize
what people can do but tend to ignore what nature does. Commercial
institutions, proud of their achievements, do not see that healthy living
systems -- clean air and water, healthy soil, stable climates -- are integral
to a functioning economy. As our living systems deteriorate, traditional
forecasting and business economics become the equivalent of house rules on a
sinking cruise ship.
One is tempted to say that there is nothing wrong with capitalism
except that it has never been tried. Our current industrial system is based on
accounting principles that would bankrupt any company.
Conventional economic theories will not guide our future for a simple
reason: They have never placed "natural capital" on the balance
sheet. When it is included, not as a free amenity or as a putative infinite
supply, but as an integral and valuable part of the production process,
everything changes. Prices, costs, and what is and isn't economically sound
change dramatically.
Industries destroy natural capital because they have historically
benefited from doing so. As
businesses successfully created more goods and jobs, consumer demand soared,
compounding the destruction of natural capital. All that is about to change.
Natural Capital
Natural systems provide trillions of dollars in services that have no man-made substitutes, as Biosphere II's failure shows.
Everyone is familiar with the traditional definition of capital as
accumulated wealth in the form of investments, factories, and equipment.
"Natural capital," on the other hand, comprises the resources we use,
both nonrenewable (oil, coal, metal ore) and renewable (forests, fisheries,
grasslands). Although we usually think of renewable resources in terms of
desired materials, such as wood, their most important value lies in the
services they provide. These services are related to, but distinct from, the
resources themselves. They are not pulpwood but forest cover, not food but
topsoil. Living systems feed us, protect us, heal us, clean the nest, let us
breathe. They are the "income" derived from a healthy environment:
clean air and water, climate stabilization, rainfall, ocean productivity,
fertile soil, watersheds, and the less-appreciated functions of the
environment, such as processing waste -- both natural and
industrial. Nature's Services, a book due out this spring edited by Stanford University biologist Gretchen C. Daily,
identifies trillions of dollars of critical ecosystem services received
annually by commerce.
For anyone who doubts the innate value of ecosystem services, the $200
million Biosphere II experiment stands as a reality check. In 1991, eight
people entered a sealed, glass-enclosed, 3-acre living system, where they
expected to remain alive and healthy for two years. Instead, air quality
plummeted, carbon dioxide levels rose, and oxygen had to be pumped in from the
outside to keep the inhabitants healthy. Nitrous oxide levels inhibited brain
function. Cockroaches flourished while insect pollinators died, vines choked
out crops and trees, and nutrients polluted the water so much that the
residents had to filter it by hand before they could drink it. Of the original
25 small animal species in Biosphere II, 19 became extinct.
At the end of 17 months, the humans showed signs of oxygen starvation
from living at the equivalent of an altitude of 17,500 feet. Of course, design
flaws are inherent in any prototype, but the fact remains that $200 million
could not maintain a functioning ecosystem for eight people for 17 months. We
add eight people to the planet every three seconds.
The lesson of Biosphere II is that there are no man-made substitutes
for essential natural services. We have not come up with an economical way
to manufacture watersheds, gene pools, topsoil, wetlands, river systems,
pollinators, or fisheries. Technological fixes can't solve problems with soil
fertility or guarantee clean air, biological diversity, pure water, and
climatic stability; nor can they increase the capacity of the environment to
absorb 25 billion tons of waste created annually in America alone.
Natural Capital as a Limiting Factor
The new limits to prosperity are natural systems -- not boats, but fisheries; not sawmills, but forests.
Until the 1970s, the concept of natural capital was largely irrelevant
to business planning, and it still is in most companies. Throughout the
industrial era, economists considered manufactured capital -- money, factories,
etc. -- the principal factor in industrial production, and perceived natural
capital as a marginal contributor. The exclusion of natural capital from
balance sheets was an understandable omission. There was so much of it, it
didn't seem worth counting. Not any longer.
Historically, economic development has faced a number of limiting
factors, including the availability of labor, energy resources, machinery, and
financial capital. The absence or depletion of a limiting factor can prevent a
system from growing. If marooned in a snowstorm, you need water, food, and
warmth to survive. Having more of one factor cannot compensate for the absence
of the other. Drinking more water will not make up for lack of clothing if you
are freezing.
In the past, by increasing the limiting factor, industrial societies
continued to develop economically. It wasn't always pretty: Slavery
"satisfied" labor shortages, as did immigration and high birthrates.
Mining companies exploited coal, oil, and gas to meet increased energy demands.
The need for labor-saving devices provoked the invention of steam engines,
spinning jennies, cotton gins, and telegraphs. Financial capital became
universally accessible through central banks, credit, stock exchanges, and
currency exchange mechanisms.
Because economies grow and change, new limiting factors occasionally
emerge. When they do, massive restructuring occurs. Nothing works as before.
Behavior that used to be economically sound becomes unsound, even destructive.
Economist Herman E. Daly cautions that we are facing a historic
juncture in which, for the first time, the limits to increased prosperity are
not the lack of man-made capital but the lack of natural capital. The limits to
increased fish harvests are not boats, but productive fisheries; the limits to
irrigation are not pumps or electricity, but viable aquifers; the limits to
pulp and lumber production are not sawmills, but plentiful forests.
Like all previous limiting factors, the emergence of natural capital as
an economic force will pose a problem for reactionary institutions. For those
willing to embrace the challenges of a new era, however, it presents an
enormous opportunity.
The High Price of Bad Information
Economists make no distinctions when reporting growth -- whether we've invested in new schools or paid to clean up a toxic waste spill.
The value of natural capital is masked by a financial system that
gives us improper information -- a classic case of "garbage in, garbage
out." Money and prices and markets don't give us exact information about
how much our suburbs, freeways, and spandex cost. Instead,everything
else is giving us accurate information: our beleaguered air and
watersheds, our overworked soils, our decimated inner cities. All of these
provide information our prices should be giving us but do not.
Let's begin with a startling possibility: The U.S. economy
may not be growing at all, and may have ceased growing nearly 25 years ago. Obviously,
we are not talking about the gross domestic product (GDP), measured in dollars,
which has grown at 2.5 percent per year since 1973. Despite this growth,
there is little evidence of improved lives, better infrastructure, higher real
wages, more leisure and family time, and greater economic security.
The logic here is simple, although unorthodox. We don't know if our
economy is growing because the indices we rely upon, such as the GDP, don't
measure growth. The GDP measures money transactions on the assumption that
when a dollar changes hands, economic growth occurs. But there is a world of
difference between financial exchanges and growth. Compare an addition to your
home to a two-month stay in the hospital for injuries you suffered during a
mugging. Say both cost the same. Which is growth? The GDP makes no
distinction. Or suppose the president announces he will authorize $10 billion
for new prisons to help combat crime. Is the $10 billion growth? Or what if a
train overturns next to the Sacramento River
and spills 10,000 gallons of atrazine, poisoning all the fish for 30 miles
downstream? Money pours into cleanups, hatchery releases, announcements warning
people about tainted fish, and lawsuits against the railroad and the chemical
company. Growth? Or loss?
Currently, economists count most industrial, environmental, and
social waste as GDP, right along with bananas, cars, and Barbie dolls.
Growth includes all expenditures, regardless of whether society
benefits or loses. This includes the cost of emergency room services, prisons,
toxic cleanups, homeless shelters, lawsuits, cancer treatments, divorces, and
every piece of litter along the side of every highway.
Instead of counting decay as economic growth, we need to subtract
decline from revenue to see if we are getting ahead or falling behind. Unfortunately,
where economic growth is concerned, the government uses a calculator with no
minus sign.
Wasting Resources Means Wasting People
Reducing resource waste creates jobs.
Industry has always sought to increase the productivity of workers, not
resources. And for good reason. Most resource prices have fallen for 200 years
-- due in no small part to the extraordinary increases in our ability to
extract, harvest, ship, mine, and exploit resources. If the competitive
advantage goes to the low-cost provider, and resources are cheap, then business
will naturally use more and more resources in order to maximize worker
productivity.
Such a strategy was eminently sensible when the population was smaller
and resources were plentiful. But with respect to meeting the needs of the
future, contemporary business economics is pre-Copernican. We cannot heal the
country's social wounds or "save" the environment as long as we cling
to the outdated industrial assumptions that the summum bonum of commercial enterprise
is to use more stuff and fewer people. Our thinking is backward: We shouldn't
use more of what we have less of (natural capital) to use less of what we have
more of (people). While the need to maintain high labor productivity is
critical to income and economic well-being, labor productivity that corrodes
society is like burning the furniture to heat the house.
Our pursuit of increased labor productivity at all costs not only
depletes the environment, it also depletes labor. Just as overproduction can
exhaust topsoil, overproductivity can exhaust a workforce. The underlying
assumption that greater productivity would lead to greater leisure and
well-being, while true for many decades, has become a bad joke. In the United
States, those who are employed, and presumably becoming more productive, find
they are working 100 to 200 hours more per year than 20 years ago. Yet real
wages haven't increased for more than 20 years.
In 1994, I asked a roomful of senior executives from Fortune 500
companies the following questions: Do you want to work harder in five years
than you do today? Do you know anyone in your office who is a slacker? Do you
know any parents in your company who are spending too much time with their
kids? The only response was a few embarrassed laughs. Then it was quiet --
perhaps numb is a better word.’
Meanwhile, people whose jobs have been downsized, re-engineered, or
restructured out of existence are being told -- as are millions of youths
around the world -- that we have created an economic system so ingenious
that it doesn't need them, except perhaps to do menial service jobs.
In parts of the industrialized world, unemployment and underemployment
have risen faster than employment for more than 25 years. Nearly one-third of
the world's workers sense that they have no value in the present economic
scheme.’
Clearly, when 1 billion willing workers can't find a decent job or any
employment at all, we need to make fundamental changes. We can't -- whether
through monetary means, government programs, or charity -- create a sense of
value and dignity in people's lives when we're simultaneously developing a
society that doesn't need them. If people don't feel valued, they will act out
society's verdict in sometimes shocking ways. William Strickland, a pioneer in
working with inner-city children, once said that "you can't teach algebra
to someone who doesn't want to be here." He meant that urban kids don't
want to be here at all, alive, anywhere on earth. They try to tell us, but we
don't listen. So they engage in increasingly risky behavior -- unprotected
sex, drugs, violence -- until we notice. By that time, their conduct has
usually reached criminal proportions -- and then we blame the victims, build
more jails, and lump the costs into the GDP.
The theologian Matthew Fox has pointed out that we are the only
species without full employment. Yet we doggedly pursue technologies that will
make that ever more so. Today we fire people, perfectly capable people, to
wring out one more wave of profits. Some of the restructuring is necessary and
overdue. But, as physicists Amory Lovins and Ernst von WeizsScker have
repeatedly advised, what we should do is fire the unproductive
kilowatts, barrels of oil, tons of material, and pulp from old-growth forests
-- and hire more people to do so.
In fact, reducing resource use creates jobs and lessens the impact we
have on the environment. We can grow, use fewer resources, lower taxes,
increase per capita spending on the needy, end federal deficits, reduce the
size of government, and begin to restore damaged environments, both natural and
social.
At this point, you may well be skeptical. The last summary is too
hopeful and promises too much. If economic alternatives are this attractive,
why aren't we doing them now? A good question. I will try to answer it. But,
lest you think these proposals are Pollyannaish, know that my optimism arises
from the magnitude of the problem, not from the ease of the solutions. Waste is
too expensive; it's cheaper to do the right thing.
Resource Productivity
Innovations -- from ultrasound washing machines to virtual malls -- will radically reduce resource inefficiency.
Economists argue that rational markets make this the most efficient of
all possible economies. But that theory works only as long as you use financial
efficiency as the sole metric and ignore physics, biology, and common sense.
The physics of energy and mass conservation, along with the laws of entropy,
are the arbiters of efficiency, not Forbes or the Dow Jones or the
Federal Reserve. The economic issue is: How much work (value) does society get
from its materials and energy? This is a very different question than asking
how much return it can get out of its money.
If we already deployed materials or energy efficiently, it would
support the contention that a radical increase in resource productivity is
unrealistic. But the molecular trail leads to the opposite conclusion. For
example, cars are barely 1 percent efficient in the sense that, for every 100
gallons of gasoline, only one gallon actually moves the passengers. Likewise,
only 8 to 10 percent of the energy used in heating the filament of an
incandescent lightbulb actually becomes visible light. (Some describe it as a
space heater disguised as a lightbulb.) Modern carpeting remains on the floor
for up to 12 years, after which it remains in landfills for as long as 20,000
years or more -- less than .06 percent efficiency.
According to Robert Ayres, a leader in studying industrial metabolism,
about 94 percent of the materials extracted for use in manufacturing durable
products become waste before the product is even manufactured. More waste is
generated in production, and most of that is lost unless the product is reused
or recycled. Overall, America 's
material and energy efficiency is no more than 1 or 2 percent. In other words,
American industry uses as much as 100 times more material and energy than
theoretically required to deliver consumer services.
A watershed moment in the study of resource productivity occurred in
1976, when Amory Lovins published his now-famous essay "Energy Strategy:
The Road Not Taken?" Lovins' argument was simple: Instead of pursuing a
"hard path" demanding a constantly increasing energy supply, he
proposed that the real issue was how best to provide the energy's "end use"
at the least cost. In other words, consumers are not interested in gigajoules,
watts, or Btu, he argued. They want well-illuminated workspaces, hot showers,
comfortable homes, effective transport. People want the service that
energy provides. Lovins pointed out that an intelligent energy system would
furnish the service at the lowest cost. As an example, he compared the cost of
insulation with that of nuclear power. The policy of building nuclear power
plants represented the "supply at any cost" doctrine that still
lingers today. He said it made no sense to use expensive power plants to heat
homes, and then let that heat escape because the homes lack insulation. Lovins
contended that we could make more money by saving energy than by wasting it,
and that we'd find more energy in the attics of American homes than in all the
oil buried in Alaska .
His predictions proved correct, although his proposals remained largely
unheeded by the government. Today, the nuclear power industry has become
moribund, not because of anti-nuclear protests but because it is uncompetitive.
In 1976, energy experts used to argue about whether the United States
could achieve energy savings of 30 percent. Twenty-one years later, having
already obtained savings of more than 30 percent over 1976 levels -- savings
worth $180 billion a year -- experts now wonder whether we can achieve an
additional 50 to 90 percent. Lovins thinks we might possibly save as much as 99
percent. That may sound ridiculous, but certainly no more so than the claim that
textile workers could use gears and motors to increase their efficiency a
hundredfold would have sounded at the beginning of the Industrial Revolution.
The resource productivity revolution is at a similar threshold.
State-of-the-shelf technologies -- fans, lights, pumps, superefficient windows,
motors, and other products with proven track records -- combined with
intelligent mechanical and building design, could reduce energy consumption in
American buildings by 90 percent. State-of-the-art technologies that are just
being introduced could reduce consumption still further. In some cases -- wind
power, for example -- the technologies not only operate more efficiently and
pollute less, they also are more labor-intensive. Wind energy requires more
labor than coal-generated electricity, but has become competitive with it on a
real-cost basis.
The resource revolution is starting to show up in all areas of
business. In the forest products industry, clearinghouses now identify hundreds
of techniques that can reduce the use of timber and pulpwood by nearly 75
percent without diminishing the quality of housing, the "services"
provided by books and paper, or the convenience of a tissue. In the housing
industry, builders can use dozens of local or composite materials, including
those made from rice and wheat straw, wastepaper, and earth, instead of studs,
plywood, and concrete. The Herman Miller company currently designs furniture
that can be reused and remanufactured a number of times; DesignTex, a
subsidiary of Steelcase, a leading manufacturer of office furniture, sells
fabrics that can be easily composted.
Although a new "hypercar"
is now in development, "new urbanist" architects, such as Peter
Calthorpe, Andres Duany, Elizabeth Plater-Zyberk, and others, are designing
communities that could eliminate 40 to 60 percent of driving needs. (A recent San Francisco study
showed that communities can decrease car use by 30 percent when they double
population density.) Internet-based transactions may render many shopping malls
obsolete. Down the road we'll have quantum semiconductors that store vast
amounts of information on chips no bigger than a dot; diodes that emit light
for 20 years without bulbs; ultrasound washing machines that use no water,
heat, or soap; hyperlight materials stronger than steel; deprintable and
reprintable paper; biological technologies that reduce or eliminate the need
for insecticides and fertilizers; plastics that are both reusable and
compostable; piezoelectric polymers that can generate electricity from the heel
of your shoe or the force of a wave; and roofs and roads that do double duty as
solar energy collectors. Some of these technologies, of course, may turn out to
be impractical or have unwanted side effects. Nevertheless, these and thousands
more are lining up like salmon to swim upstream toward greater resource
productivity.
Resource Politics
Reducing income taxes while increasing resource prices will stimulate employment and environmental restoration.
How can government help speed these entrepreneurial "salmon"
along? The most fundamental policy implication is simple to envision, but
difficult to execute: We have to revise the tax system to stop subsidizing
behaviors we don't want (resource depletion and pollution) and to stop taxing
behaviors we do want (income and work). We need to transform, incrementally but
firmly, the sticks and carrots that guide business.
Taxes and subsidies are information. Everybody, whether rich or poor,
acts on that information every day. Taxes make something more expensive to buy;
subsidies artificially lower prices. In the United States , we generally like to
subsidize environmental exploitation, cars, big corporations, and technological
boondoggles. (We don't like to subsidize clean technologies that will lead to
more jobs and innovation because that is supposed to be left to the
"market.") Specifically, we subsidize carbon-based energy production,
particularly oil and coal; we massively subsidize a transportation system that
has led to suburban sprawl and urban decay; we subsidize risky technologies
like nuclear fission and pie-in-the-sky weapons systems like Star Wars.
(Between 1946 and 1961 the Atomic Energy Commission spent $1 billion to develop
a nuclear-powered airplane. But it was such a lemon that the plane could not
get off the ground. History's dustbin also includes a nuclear-powered ship, the
Savannah , that
was retired after the Maritime Administration found she cost $2 million more
per year than other ships.)
We subsidize the disposal of waste in all its myriad forms -- from
landfills, to Superfund cleanups, to deep-well injection, to storage of nuclear
waste. In the process, we encourage an economy where 80 percent of what we consume
gets thrown away after one use.
As for farming, the U.S.
government covers all the bases: We subsidize agricultural production,
agricultural nonproduction, agricultural destruction, and agricultural
restoration. We provide price supports to sugarcane growers, and we subsidize
the restoration of the Everglades (which
sugarcane growers are destroying). We subsidize cattle grazing on public lands,
and we pay for soil conservation. We subsidize energy costs so that farmers can
deplete aquifers to grow alfalfa to feed cows that make milk that we store in
warehouses as surplus cheese that does not get to the hungry.
Then there is the money we donate to dying industries: federal
insurance provided to floodplain developers, cheap land leases to ski resorts,
deposit insurance given to people who looted U.S. savings and loans, payments
to build roads into wilderness areas so that privately held forest product
companies can buy wood at a fraction of replacement cost, and monies to defense
suppliers who have provided the Pentagon with billions of dollars in
unnecessary inventory and parts.
Those are some of the activities we encourage. What we hinder,
apparently, is work and social welfare, since we mainly tax labor and income,
thereby discouraging both. In 1994, the federal government raised $1.27
trillion in taxes. Seventy-one percent of that revenue came from taxes on labor
-- income taxes and Social Security taxes. Another 10 percent came from
corporate income tax. By taxing labor heavily, we encourage businesses not to
employ people.
To create a policy that supports resource productivity will require a
shift away from taxing the social "good" of labor, toward taxing the
social "bads" of resource exploitation, pollution, fossil fuels, and
waste. This tax shift should be "revenue neutral" -- meaning that for
every dollar of taxation added to resources or waste, one dollar would be
removed from labor taxes. As the cost of waste and resources increases,
business would save money by hiring less-expensive labor to save more-expensive
resources. The eventual goal would be to achieve zero taxation on labor and
income.
The purpose of this tax shift would be to change what is
taxed, not who is taxed. But no tax shift is uniform, and without
adjustments for lower incomes, a shift toward taxing resources would likely be
regressive. Therefore, efforts should be made to keep the tax burden on various
income groups more or less where it is now. (There are numerous means to
accomplish this.) The important element to change is the purpose of
the tax system because, other than generating revenue, the current tax system
has no clear goal. The only incentive provided by the Internal Revenue Code,
with its 9,000 sections, is to cheat or to hire tax lawyers.
A shift toward taxing resources would require steady implementation, in
order to give business a clear horizon in which to make strategic investments.
A time span of 15 to 20 years, for example, should be long enough to permit
businesses to continue depreciating current capital investments over their
useful lives.
Of course, a tax shift alone will not change the way business operates;
a broad array of policy changes on issues of global trade, education, economic
development, econometrics (including measures of growth and well-being), and
scientific research must accompany it. For the tax shift to succeed, we must
also reverse the wrenching breakdown of our democracy, which means addressing
campaign finance reform and media concentration.
It is easier, as the saying goes, to ride a horse in the direction it
is going. Because the costs of natural capital will inevitably increase, we
should start changing the tax system now and get ahead of the curve. Shifting
taxes to resources won't -- as some in industry will doubtless claim -- mean diminishing
standards of living. It will mean an explosion of innovation that will create
products, techniques, and processes that are far more effective than what they
replace.
Some economists will naturally counter that we should let the markets
dictate costs and that using taxation to promote particular outcomes is
interventionist. But all tax systems are interventionist; the
question is not whether to intervene but how to intervene.
A tax system should integrate cost with price. Currently, we dissociate
the two. We know the price of everything but the cost of nothing. Price is what
the buyer pays. Cost is what society pays. For example, Americans pay about
$1.50 per gallon at the gas pump, but gasoline actually costs up to $7 a gallon
when you factor in all the costs. Middle Eastern oil, for instance, costs
nearly $100 a barrel: $25 to buy and $75 a barrel for the Pentagon to keep
shipping lanes open to tanker traffic. Similarly, a pesticide may be priced at
$35 per gallon, but what does it cost society as the pesticide makes its way
into wells, rivers, and bloodstreams?
The Future
Our living systems and social stability are at risk. But the solutions are profitable, creative, and eminently possible.
In 1750, few could imagine the outcome of industrialization. Today, the
prospect of a resource productivity revolution in the next century is equally
hard to fathom. But this is what it promises: an economy that uses
progressively less material and energy each year and where the quality of
consumer services continues to improve; an economy where environmental
deterioration stops and gets reversed as we invest in increasing our natural
capital; and, finally, a society where we have more useful and worthy work
available than people to do it.
A utopian vision? No. The human condition will remain. We will still be
improvident and wise, foolish and just. No economic system is a panacea, nor
can any create a better person. But as the 20th century has painfully taught
us, a bad system can certainly destroy good people.
Natural capitalism is not about making sudden changes, uprooting
institutions, or fomenting upheaval for a new social order. (In fact, these
consequences are more likely if we don't address fundamental problems.) Natural
capitalism is about making small, critical choices that can tip economic and
social factors in positive ways.
Natural capitalism may not guarantee particular outcomes, but
it will ensure that economic systems more closely mimic biological
systems, which have successfully adapted to dynamic changes over millennia.
After all, this analogy is at the heart of capitalism, the idea that markets
have a power that mimics life and evolution. We should expand this logic, not
retract it.
For business, the opportunities are clear and enormous. With the population
doubling sometime in the next century, and resource availability per capita
dropping by one-half to three-fourths over that same period, which factor in
production do you think will go up in value -- and which do you think will go
down? This basic shift in capital availability is inexorable.
Ironically, organizations like Earth First!, Rainforest Action Network,
and Greenpeace have now become the real capitalists. By addressing
such issues as greenhouse gases, chemical contamination, and the loss of fisheries,
wildlife corridors, and primary forests, they are doing more to preserve a
viable business future than are all the chambers of commerce put together.
While business leaders hotly contest the idea of resource shortages, there are
few credible scientists or corporations who argue that we are not losing the
living systems that provide us with trillions of dollars of natural capital:
our soil, forest cover, aquifers, oceans, grasslands, and rivers. Moreover,
these systems are diminishing at a time when the world's population and the
demand for services are growing exponentially.
Looking ahead, if living standards and population double over the next
50 years as some predict, and if we assume the developing world shared the same
living standard we do, we would have to increase our resource use (and
attendant waste) by a factor of 16 in five decades. Publicly, governments, the
United Nations, and industries all work toward this end. Privately, no one
believes that we can increase industrial throughput by a factor anywhere near
16, considering the earth's limited and now fraying life-support systems.
It is difficult for economists, whose important theories originated
during a time of resource abundance, to understand how the decline in ecosystem
services is laying the groundwork for the next stage in economic evolution.
This next stage, whatever it may be called, is being brought about by powerful
and much-delayed feedback from living systems. As we surrender our living
systems, social stability, fiscal soundness, and personal health to outmoded
economic assumptions, we are hoping that conventional economic growth will save
us. But if economic "growth" does save us, it will be anything but
conventional.
So why be hopeful? Because the solution is profitable, creative, and
eminently possible. Societies may act stupidly for a period of time, but
eventually they move to the path of least economic resistance. The loss of
natural capital services, lamentable as it is in environmental terms, also
affects costs. So far, we have created convoluted economic theories and
accounting systems to work around the problem.
You can win a Nobel Prize in economics and travel to the royal palace
in Stockholm in
a gilded, horse-drawn brougham believing that ancient forests are more valuable
in liquidation -- as fruit crates and Yellow Pages -- than as a going and
growing concern. But soon (I would estimate within a few decades), we will
realize collectively what each of us already knows individually: It's cheaper
to take care of something -- a roof, a car, a planet -- than to let it decay
and try to fix it later.
While there may be no "right" way to value a forest or a
river, there is a wrong way, which is to give it no value at all. How do we
decide the value of a 700-year-old tree? We need only ask how much it would
cost to make a new one. Or a new river, or even a new atmosphere.
Despite the shrill divisiveness of media and politics, Americans remain
remarkably consistent in what kind of country they envision for their children
and grandchildren. The benefits of resource productivity align almost perfectly
with what American voters say they want: better schools, a better environment,
safer communities, more economic security, stronger families and family
support, freer markets, less regulation, fewer taxes, smaller government, and
more local control.
The future belongs to those who understand that doing more with less is
compassionate, prosperous, and enduring, and thus more intelligent, even
competitive.
2 comments:
We may not be able to replace most "natural capital" but TOPSOIL I've got for you by the cubic mile. At the bottom of thousands of weed infested lakes and ponds there is a thick layer of silt built up by weeds that grow faster than they rot. In some places, clearing it would restore aquifer recharge areas and fix the downstream groundwater resources. This is a huge carbon sink I propose to destroy or redistribute, but climate is more a water issue than a greenhouse gas issue.
I am puting something together at http://xfoolnature.org/?p=10.
One of the core pieces of evidence there is from Richard Feynman, "Nature can not be fooled." In my piece, orwells boot, that concept is also featured. Nature always balances her books, and we are part of nature.
Orwells Boot
Enter the two words orwells boot into any search engine. The item(s)
that come up under the names factotum666 or dnusbaum.com are mine. If you think that those words are special, then use either orwell or boot, and almost any combination of: obedience, tyranny, government, authority. My article will be either 1st or 2nd.
I would like to do something with the popularity of this 6000 word article, either by way of talks / speeches or working on expanding the ideas in the article. I am currently doing that at http://xfoolnature.org/?p=10
Possibly there is some way of monetizing its popularity
Doug@dnusbaum.com
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