Our planet is threatened by a wrong belief in a wrongly formulated

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Our planet is threatened by a
wrong belief in a wrongly
formulated growth
Speech for the congress Jenseits
des Wachstums, Berlin May 20-22
2011
What is economics?
• Briefly: economic theory deals with the
problems of choice with regard to the use
of scarce means for the satisfaction of
wants. It is about scarcity. A good is
scarce when something must be sacrificed
to obtain it.
• All economic action is directed to satisfy
wants, that is to welfare. Welfare is a
personal not measurable experience
2
What is economic growth?
• Economic growth is increase in welfare
• Welfare is dependant on more factors than only
growth of production e.g. employment, labour
conditions, income distribution and the possible
uses of the environment.
• Because welfare is inmeasurable we use
measurable factors that arguably influence
welfare: indicators
• The identification of economic growth with
growth of production as measured in national
income (NI) is theoretically wrong and
threatening the possible uses of the environment
3
What are environmental functions?
• The environment = the non human made physical
surroundings (NHMPS) that encompass a number of
possible uses, called environmental functions on which
humans are completely dependant
• Competing functions are by definition scarce and
consequently economic goods
• For scarce goods it holds true that more of the one
means less of he of the other. So ceteris paribus (e.g.
technology) more production means less environment
and vice versa
• Life support systems including ecosystems can never
completely be replaced by technology
4
Valuation: a practical solution for
an insolvable problem
• To determine the extent of loss of function we must
know its value
• This requires data of both preferences (demand)
and opportunity costs (supply)
• Because preferences can only partially be
determined valuation is impossible. It follows that
the correct prices of produced goods are also
unknowable. Assumptions can be made.
• From this it follows that both environmentally
sustainable national income (eSNI) and NI are
fictitious
5
sum of
money
per year
per
addition
al unit
of
function
d
d'
s
F
E
B
D
availability of standard for
function in
sustainable
the year of
use
investigation
availability of
env. function
(in physical
units)
6
The figure shows the relationship between
ecology and economy and how costs in
physical units can be translated into costs
in monetary units
The d-curve (demand) reflects the costs of
compensation and restoration of damage,
the s-curve (supply) reflects the costs
elimination of the burden
The d’-curve is the demand curve in the
case of assumed preferences for
environmental sustainability
The intersection points E and F correspond
with the minimum of the added total costs
7
B-D is the distance to be bridged to attain
environmental sustainability
Seven ways to combat the wrong identification
of production growth as measured in NI and
economic growth
• First way: publish a series NI ex
asymmetric entries (asyms).
• Environmental functions are collective
goods that remain outside the market.
Their loss remains correctly outside the NI
because they are not produced.
• However, it is not correct to enter expenditure on
their restoration and compensation as value
added, because they are costs. These are
asymmetric entries (asyms).
• Second way: publish a series of environmentally
sustainable national income (eSNI)
• eSNI is a production level by which vital
functions remain available for future generations
• eSNI shows the distance between the current and a
sustainable situation
9
• Third way: show the necessity of drastic
changes in price ratio’s.
• The bulk of NI growth is generated by industries
that cause the greatest losses of function, both
in production and consumption.
• By their enormous increase in productivity their
volume increased and their prices decreased as
did the price ratio’s between burdening and
environmentally friendly products.
• For attaining a lasting sustainable situation it is
necessary to internalize the costs of
environmental restoration in the prices of the
burdening products, e.g. by imposing levies. As
a result the price ratio’s between burdening and
friendly activities will increase
10
• Fourth way: refute the statement that production
must grow to finance safeguarding the
environment, using amongst others the following
arguments.
• (1)This would require technologies that
simultaneously : are sufficiently clean, do not
deplete renewable natural resources, find
substitutes for non-renewable resources, leave
the soil intact, leave sufficient space for plant
and animal species and are cheaper than
current technologies.
• (2) The bulk of NI growth is generated by the
most burdening products.
• (3) Reducing the burden by decreasing
population leads to a lower production level
11
• (4) Applying technical measures has a negative
effect on NI growth because more labour is
needed for the same product.
• Fifth way: refute the fallacy of a conflict between
environment and employment.
• The production and consumption of the same
amount of goods requires with safeguarding the
environment more labour than without.
• Sixth way: point out the consequences of
unsustainability occurring already today
12
Deforestation has contributed to flooding, causing
loss of harvests, houses and infrastructure and
to erosion leading to loss of soil. Greenhouse
gases and deforestation have caused reductions
in local rainfall, thus causing droughts.
Overfishing has led to loss of fish species.
Seventh way: refute the proposition that saving the
environment is unpayable.
Biking is cheaper than driving a car. Heating one
room and using a sweater is cheaper than
heating the whole house. Beans are cheaper
than meat. Raising two children is cheaper than
ten.
13
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