Le Gross National Happiness

As countries begin emerging from the global financial crisis, France is proposing to measure progress in a new way - one that includes happiness and well being, as well as traditional economic benchmarks.

In France, Mr. Sarkozy says focusing too much on gross domestic product as the main measure of prosperity contributed to the financial crisis. He wants other countries to follow France's example in looking at less materialistic indicators of progress.

Read the rest from Voice of America News.

"Except What Makes Life Worthwhile"

In a 1968 speech, Robert F. Kennedy warned Americans against measuring progress by wealth alone. His message--that GDP is a terrible indicator of progress--still resonates.



Learn more at the Glaser Progress Foundation.

Rock Steady

The term “steady state” derives from the 19th-century classical economist John Stewart Mill’s assertion that, after a certain period of growth, economic policy makers should strive for a “stationary state” in which capital stock is held relatively constant and population levels are stable. If left unchecked, Mill argued, economic growth would inevitably lead to a decline in human welfare and to irreversible environmental damage.

Read the rest of Susan Arterian Chang's excellent article on steady-state economics at The Investment Professional.

Another Reason to Worry About Climate Change: National Security

“We will pay for this one way or another,” Gen. Anthony C. Zinni, a retired Marine and the former head of the Central Command, wrote recently in a report he prepared as a member of a military advisory board on energy and climate at CNA, a private group that does research for the Navy. “We will pay to reduce greenhouse gas emissions today, and we’ll have to take an economic hit of some kind.

“Or we will pay the price later in military terms,” he warned. “And that will involve human lives.”

Read the full New York Times article.

A Bedside Moment with Thomas Friedman

Last night I had something akin to what NPR calls a "driveway moment"; only, living in a high-rise apartment building in Brooklyn, I have no driveway. Instead, it was more like a bedside moment, involving not a car radio but the New York Times app on my iPhone, which I had just opened up one last time before climbing into bed. I'm not proud of this, but there I was in the dark, sitting at the edge of my mattress, squinting into the bluish light of the screen, amazed at what I was reading.

In Sunday's New York Times--on the "most-emailed" list no less--was this:

Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”

Granted, Thomas Friedman, the author of the article and the man with whom I was sharing this bedside moment, was writing as an op-ed columnist, not as a "true" journalist. But still, there those words were; the "whole growth model" was being questioned in the nation's newspaper of record.

Riveted, I read on. Friedman quotes physicist and climate expert Joseph Romm, author of the excellent book Hell and High Water and creator of the Climate Progress blog. Romm compares our current growth-centered approach to a Ponzi scheme, in which we are (or until recently, were) getting rich at the expense of future generations by depleting our natural stocks of fish, farmland, forests, petroleum, and just about everything else, wreaking havoc on the climate in the process.

Friedman goes on:

Over a billion people today suffer from water scarcity; deforestation in the tropics destroys an area the size of Greece every year — more than 25 million acres; more than half of the world’s fisheries are over-fished or fished at their limit.

As I understood it, Friedman's point so far was that the growth model is not only unsustainable from an economic point of view (he mentions our propensity to borrow from abroad to finance our insatiable appetite for foreign-manufactured consumer goods), but that this entire system of growth, even if it were to keep on "working," depletes our limited resources too fast and takes too much of an ecological toll to be desirable. He quotes Paul Guilding: “We are taking a system operating past its capacity and driving it faster and harder. . . . No matter how wonderful the system is, the laws of physics and biology still apply.”

Right on, I thought.

But then Friedman makes a jarring mid-paragraph transition. His very next sentence is "We must have growth," which he qualifies by writing, "but we must grow in a different way."

Wait a second! Didn't he just finish suggesting that our growth paradigm is flawed, unsustainable, as doomed to eventual collapse as Madoff's empire? Why this U-turn? And what is this "different way" he says we ought to grow?

"For starters," Friedman writes, "economies need to transition to the concept of net-zero, whereby buildings, cars, factories and homes are designed not only to generate as much energy as they use but to be infinitely recyclable in as many parts as possible."

Really? "Cars . . . that generate as much energy as they use"? Really? The "Mr. Fusion"-powered flying Delorean from Back to the Future II notwithstanding, it seems pretty unlikely that such an invention will ever exist.

Sadly, despite any efforts to make economic growth less resource intensive and emit less carbon, such efforts can do nothing more than slow down the rate of destruction. Without tackling the growth model itself, such nominal gains in efficiency merely lead to a bit less carbon emitted per unit of GDP growth.

Even if we were to get to the point where factories had enough solar panels (or whatever) on the roof to run the machines, there is still no such thing as "net-zero" growth if our economy continues to depend on more factories sprouting up each year. If we were to somehow apply today's most energy-efficient technologies to all the world's factories, homes, and cars, ecological collapse would be slower to arrive, but it would be no less inevitable.

That is because economic growth, as we pursue it, is exponential. Even at a modest rate of growth, say 2.5% per year, a country's GDP will double after just twenty-eight years. At 8%, a growth rate not unheard of in parts of Asia in recent years, GDP doubles in a mere nine years. Plot a country's annual rate of GDP growth, even a modest one, and you get what looks like a hockey stick. Sooner or later, the line heads almost straight for the sky, and so do rates of resource depletion and levels of carbon emissions.

When anyone (even an environmentalist such as Tom Friedman) argues that "We need growth," think of the hockey stick and reply, "Nonsense!" Will a baby born today need twice as many goods and services when she reaches the age of twenty-eight as we enjoy now? Of course not. Would holding steady at, say, our current level of economic output ($14.2 trillion in the United States in 2008) mean life would get worse or that economic activity would have to cease or that we would have to become socialists? Absolutely not.

In fact, diverging from this harmful path of exponential growth is the only way to ensure that our children and grandchildren inherit a planet as habitable as the one we enjoy now ourselves. Even if we believe that scientists will come up with brilliant technological solutions to our energy and ecological problems, wouldn't it be prudent to avoid runaway growth for the time being, at least until such technologies are implemented?

I respect Friedman's opinions and commend him for daring to question growth--that universal panacea of our age. It's just a shame that he seems to have come up with the wrong answers.

Bad Bank

A reader forwarded me a link to a recent This American Life episode in which Alex Blumberg and Adam Davidson . . .

tackle a very tough subject: trying to explain exactly what a bank is and does. They talk to a number of experts about what has gone wrong in banking, but not before bringing us all up to speed on some banking basics, like understanding a bank balance sheet, and a bank’s assets and liabilities, and the squishy business of what banks say about their balance sheets compared to what they are.

Alex and Adam walk us step by step through the complications of the US government buying up bad assets from banks, and explain why, when it comes to footing the bill, the government might just prefer to not be in charge of the very banks it is having taxpayers bailout. From a dollhouse, to a hypothetical bank worth tens of dollars, to the trillions of dollars being spent to keep banks afloat, Alex and Adam talk economy, and where we might be headed. (39 minutes)

Listen to the episode for free here.

Does Wall Street Need to Be Replaced?

David Korten of Yes! Magazine says yes.

He writes,

We have been in thrall to a pervasive cultural story, continuously reinforced by academics, government officials, and corporate media, which led us to believe our economy was functioning splendidly even when it was quite literally killing us.

“Economic growth, as measured by Gross Domestic Product, creates the wealth needed to provide material abundance for all, increase human happiness, end poverty, and heal the environment. The faster we consume, the faster the economy grows and the wealthier we become as the rising tide lifts all boats.”

The logical conclusion from this story is that the faster we convert useful resources to toxic garbage, the richer we are. The only true beneficiaries of this obviously stupid idea are a few very rich people who reap financial gains from every economic transaction—whether the transaction cures a disease or clearcuts a rainforest. It is a system that deifies money and dilutes wealth.

Read the complete article here or watch this three-part interview on Democracy Now.

Recession Leads Americans Back to Home Gardening

"Hard economic times are acting like instant fertilizer on an industry that had been growing slowly: home vegetable gardening," USA Today reports. For Americans squeezed by the recession and interested in a healthier alternative to store-bought produce, now is a great time to start planting.

Read the full story here.

When Consumers Cut Back: A Lesson From Japan

"As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect," writes Hiroko Tabuchi in yesterday's New York Times. The article offers examples of how the Japanese are cutting consumption:

Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990. . . . a survey last year by the business daily Nikkei found that only 25 percent of Japanese men in their 20s wanted a car, down from 48 percent in 2000, contributing to the slump in sales. Young Japanese women even seem to be losing their once- insatiable thirst for foreign fashion. Louis Vuitton, for example, reported a 10 percent drop in its sales in Japan in 2008.

The premise is that all this thrift is hurting Japan's ability to weather the global recession. "Japan’s economy is in free-fall because it cannot rely on domestic consumption to pick up the slack," Tabuchi writes. Saving instead of spending could lead to deflation, the author warns.

Yet the article, published in the Business section, does little to explain exactly what "disastrous effect" this frugality might have other than to spur deflation. Deflation, in which the prices of goods and services drop, and the value of a dollar (or yen) increases, can be self-reinforcing, possibly leading to what economists call a deflationary spiral, in which production and demand fall together. It is this potential for shrinking GDP--and the accompanying loss of jobs--that worries economists.

While deflation's potential to negatively impact individuals, especially those who haven't saved, is very real, let's look at it in a different way. Given what we now know about the earth's limited ability to provide the raw materials and energy for human consumption (and absorb its wastes), it is very likely that we will have no choice but to curb our consumption in the future, especially since there will be more and more people vying for limited resources. In other words, whether we like it or not (and there is much not to like), consumption cannot expand exponentially forever. Perhaps a shift from borrowing and spending to saving is a rational, sometimes even a desirable trend.

“As the world becomes full of us and our stuff, it becomes empty of what was here before," writes economist Herman Daly. In other words, "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"

The result is uneconomic growth. The question is not if we will reach that state if we keep growing, but when. Not surprisingly, the answer is subjective and depends on the value we place on “what was here before”—all those fish, minerals, and fossil fuels, not to mention ecosystems, familiar weather patterns, forests, biodiversity, and so on.

While we're used to measuring the well-being of a nation by how fast its economy grows, it is becoming apparent that at least some of this growth in GDP--which depends largely on rising consumption--is uneconomic in nature. That is, after we balance the benefits of our consumption with its deletrious effects, our quality of life may actually be diminished.

It is telling that the goods Tabuchi reports the Japanese are giving up are largely luxury items--designer handbags, expensive whiskey, personal automobiles, and the like. That highlights how dependent the world economic system is on what might be considered superfluous consumption. We make every effort to direct our economies to grow not merely to meet our needs, but for the sake of growth itself, doing so because we worry about the "disastrous" effects if we don't: mainly that the economy will contract.

But rarely do we consider the truly disastrous effects if we do continue to measure success only by growth. In a world running out of cheap energy and filling up with heat-trapping greenhouse gasses, the more sensible approach would be to strive for a more sustainable level of consumption. That's not to suggest that we should embrace the deflationary spiral. Rather, we must redefine the way we measure success--not by more Louis Vuitton handbags and cars but by quality of life and intact ecosystems.

My bet is that the future is going to be defined by limits, and the sooner we can start figuring out how to live comfortably and happily within them, the better chance we have at avoiding real disaster. So instead of brashly calling the reduced consumption in Japan, or anywhere else, "disastrous," we'd do better to keep an open mind and try to learn about how they're adapting. In the wake of our own big bubble popping and the collapse of the financial system as we know it, the spending and saving habits of disenchanted Americans may start to look a lot like those of the Japanese.

In the Times article, Tabuchi quotes a twenty-year-old Tokyo college student: “I’m not interested in big spending. . . . I just want a humble life.” It's an attitude that's certainly not as sexy as that of our recent pre-recession, high-rolling, ultra-leveraged past, but it's one that's much more grounded in reality.

Car-less in Kaua’i

By guest contributor Pamela Salmon

“I like your Bike Friday,” chimed a middle-aged woman with vibrant eyes, a broad smile and a pink Terry Bicycles tank top. I thought with excitement, she is the first person in six days of being on Kauai who noticed my unique mode of transportation. I was riding a new-fangled folding bicycle that I had purchased for two reasons: I wanted to see if a tourist could navigate Kaua’i without having a car, and on my vacation, I wanted to maintain my training for endurance rides that I do in my home state of New Mexico.

My husband Rick says my bike looks like a cross between a BMX and a road bike. It is truly an engineering marvel, foldable and easily packed into a 30-inch, hard-sided Samsonite suitcase.

“My daughter has traveled all over the world with a Bike Friday,” added Cookie Kiacz from Norman, OK, when I asked how she recognized my bike. Then as fate would have it in chance encounters, Cookie became the source of information I had been seeking. She told me for years she had been vacationing on the eastern shore of Kauai for weeks at a time without a car, motivated by the desire to protect her environment and to experience the local flavor.

Her adventure in bidding the automobile goodbye began 12 years ago when she and her late husband, Dan, started coming to Kauai, the northern most island in the Hawaiian chain. “We were going to be here for six weeks. We rented a car at the airport and drove to Wal Mart in Lihue where we bought groceries and other necessities. We also bought two bicycles.”

The couple loved being close to nature and on their bikes had one adventure after another. That first year, after emptying their Wal Mart essentials, they packed their bikes back in their rental car, drove back to the airport, returned the car and bicycled the eight miles north on the highway’s wide shoulder to Kapa’a where they were staying.

They were enchanted. “We saw things on the bikes that we would never see in a car,” she said. “We got a real sense of the energy and spirit of the island.” Throughout the years, Cookie and Dan rode bicycles from Kapa’a to Kilauea and past Princeville to Hanalei. They rode to farmers’ markets and carried their vegetables and papayas home in backpacks and draped their bouquets of birds of paradise, red ginger and heliconias across their handlebars. If their loads were too heavy or they wanted to venture further, they and their bikes caught a ride on The Kaua’i Bus.

Cookie notes that currently few locals walk or ride bikes for transportation, but they do take the bus. “The bus system is wonderful,” she added, explaining that you can get almost anywhere you want to go and you meet island residents at the same time. She also noted that the new Kapa’a bike trail, which follows an old sugar cane road, is making the island more friendly to cyclists.

Because the couple had no storage in Kaua’i, when they left that first year they gave their bikes to local friends. Each year thereafter, they rented bicycles, spending about a third of what they would on a car. They also got plenty of exercise and prided themselves on being good stewards of the land.

Cookie, 63, continued the practice following the death of her husband four years ago. She takes a cab from the airport to Kapa’a, rents a bike, buys groceries at the local markets, and takes her bike out every day for a new adventure. “I saw three people on the new bike trail along the Kapa’a shore the other day and they all had Bike Fridays,” Cookie said, making me feel I was in good company.

I shared her excitement. My husband and I rode that bike path in late January along the cliffs, looking for whales and hypnotized by the waves on Donkey Beach. We took a side trip from the beach to a roadside stand selling huli huli chicken on the highway. As our meal swung rhythmically in a flimsy bag hooked over my handlebar, we made our way back to the cliff to eat our locally-cooked chicken, rice and corn overlooking the Pacific and felt as if we were the only people on the planet.

Because Rick and I own a condominium near the south shore of Kaua’i, we visit once or twice a year. While I was unsuccessful in doing without a car this time, I will continue my quest. I had made a logistical start. I bicycled six days out of the nine that we were there, mostly near the Po’ipu and Kalaheo areas, exploring roads and meeting local cyclists riding upscale road bikes who wondered what in the world kind of bicycle was I riding.

I look forward to taking Cookie’s advice and making the bus part of my overall plan. I will be able to go anywhere. I can go to the nearby farmers’ market. I can get a back pack to carry groceries. I can be a role model and demonstrate that bicycling is a viable mode of transportation on the island. And if we want pizza? We can bike to the pizza restaurant and eat there or have it delivered.

E.P.A. Expected to Regulate Carbon Dioxide

Big overdue news: The federal government is finally set to regulate CO2 emissions. The regulations, however, are not yet taking the form of specific legislation, but will, for now, come as a reapplication of the old Clean Air Act.

"The Environmental Protection Agency is expected to act for the first time to regulate carbon dioxide and other greenhouse gases that scientists blame for the warming of the planet, according to top Obama administration officials."

More from the New York Times.

Gloomy with a 15% Chance of Depression

LBO has often described the U.S. economy by invoking the old Timex watch slogan from the 1950s, “Takes a licking and keeps on ticking.” Crash follows upon panic follows upon bust, and yet the thing keeps getting up again to binge some more. These remarkable feats of renewal, though, have always come with big help from the U.S. government, either multibillion dollar bailouts or long rounds of indulgent monetary policy from the Federal Reserve. But revive it always has, despite the forecasts from the hard left and the hard right that this time it was different and the medicine just won’t work.

Will it work again? Will the megadoses of stimulus do the trick? Or is the jig up? Will what’s widely touted as the greatest financial crisis since the 1930s be a prelude to Great Depression II?

More from the December issue of Left Business Observer.

A New Game

"Listen to recent debate about the $800+ billion federal stimulus package and you hear two strong underlying assumptions: the economy will recover within a few years, and it will function pretty much the same as today (except perhaps for some more wind turbines, more solar panels, and a dazzling new selection of fuel-efficient family cars)."

More from Daniel Lerch at postcarbon.org.

Helium Dream

Although not as ambitious as the original DIY balloonist Larry Walters, Ira Mowen and Luca Antonucci have captured a bit of that old helium magic with their Balloon Project. It's a simple idea: tie a video camera to a bunch of balloons, release, recover, repeat. Brilliant!

The Ponzi State

Driving around Florida's ghost subdivisions, you feel not just that their influence is waning but that they are physically hollowing out. In a place like Lehigh Acres, near Fort Meyers, where half the driveways are sprouting weeds, and where garbage piles up in the bushes along the outer streets, it's already possible to see the slums of the future. More and more of the residents in Hamilton Park will be renters like Lee Gaither. The vacant houses in Country Walk will be boarded up. The St. Augustine grass in the front yards of Tanglewood Preserve will grow three feet high. The open fields with street lights but no houses will become dumps.

More of George Packer's excellent article on Florida's speculative real estate disaster here (New Yorker subscription required) and a video here.

Our Love Affair with Malls Is on the Rocks

"DEARLY beloved. We are gathered here today, in the midst of economic calamity, to ask if we really should be gathered here today, in a funhouse of merchandise designed to send us deeper into debt."

More from the New York Times.

Rust Never Sleeps

Braddock, Pennsylvania, just a few miles from Pittsburgh is bankrupt, distressed, and falling apart. But unlike other Rust Belt towns that try to put a good face on their decay or merely try hide it away, this one is embracing it. The mayor of Braddock, thirty-nine-year-old John Fetterman, is hoping the town can capitalize on its neglect by attracting pioneering creative types looking for cheap space. The town's website, which the mayor paid for, asks visitors,

Can a town that lost nearly 90% of its population, homes, and businesses come back? Could Braddock's remaining assets be leveraged by new ideas, energy, individuals to spark a cultural and economic revitalization?

The town has turned into a sort of laboratory of decay and renewal. People are willing to experiment in a place where things can't get much worse. Cheap real estate made it possible for residents to build a community farm the size of a football field right in the middle of town, which employs area youth. A bio-fuel company has set up shop. And creative types are starting to trickle in.

The mayor holds no illusions that his plan will work quickly, or even work at all. But the experiment he has set in motion is well worth paying attention to. Whatever lessons come out of it could have direct application to other decaying towns left behind by heavy industry, of which we are bound to see more of in coming years.

Read more about Braddock here, and see the town's website here.

Keeping Up with the Joneses

Many Americans may not care about their energy use, but they may care if their neighbors are doing a better job conserving.

The New York Times reports today that utility companies in Sacramento, Seattle, and elsewhere are learning that the human desire to compete is often a stronger motivator than the desire to do good. In pilot programs around the country, energy customers get smiley faces (and sometimes frowns) on their utility bills, as well as bar graphs comparing their own energy use to that of their neighbors.

A reality cable TV show, Energy Smackdown, takes it a step further:

Click to play

Pop Quiz: What's the #1 Thing You Can Do to Slow Climate Change?

A. Replace all your light bulbs with energy-efficient compact fluorescents (CFLs)
B. Trade in your car for a hybrid such as the Toyota Prius
C. Conduct a home-energy audit, add insulation, and install double-paned windows
D. Plant a vegetable garden and try to rely mostly on locally-sourced food

According to Bill McKibben, the correct answer would be E, none of the above. In a recent article in Orion, he argues that the immediacy and scale of the climate crisis turns the old adage, "think globally, act locally" on its head. What's needed most urgently is not little practical steps, but concerted political action to influence legislation in favor of limiting carbon emissions.

He makes an excellent point. Dedicated environmentalists make up a small percentage of the population. Alone, all their efforts to reduce their own carbon footprints add up to, well, just about zilch. By all means, people should keep doing what they can to reduce their own impact. But "the trick is to take that 5 percent of people who really care and make them count for far more than 5 percent." And that can only happen when they mobilize politically.

This argument makes intuitive sense. For every environmentalist out there counting every pound of carbon he or she emits, there are twenty others who could care less. So until the laws change, nothing changes.

Yet environmentalists are often timid in voicing this reality. They don't want anyone to stop doing these little things so they frame the issue in terms of mostly superficial individual actions. "Change your light bulbs, put out your recycling, and you're doing your part" seems to be the message.

The first order of business is for that dedicated 5 percent to dedicate more of their energy lobbying for structural change--the most important of which right now is a steep price on carbon.

At the same time, we might also inject a bit of reality into the conversation about what constitutes "saving the planet." If environmentalism's main message is that changing light bulbs and other slight modifications to business as usual is enough, then that's all we can expect people to do. If we admit that individual actions such as these are futile without accompanying changes to our laws, some people may indeed stop bothering to make even these small concessions. But a few may add their voice to that dedicated 5 percent and rally for real change.

High-Tech Vest Puts Bike Speed on Display

Wired, Forbes, and the Telegraph have all reported on the Speed Vest, recently introduced by DIY inventors Brady Clark and Mykle Hansen. The vest, which displays a bike rider's speed in large illuminated numerals on the back, is designed to make others aware that bicycling is a fast, efficient way of getting around.

"Have you ever outpaced cars and been honked at? Had a car almost wipe you out while making a turn?" the inventors write. "The Speed Vest was invented because we were curious to know if putting more information in front of drivers might change their awareness of bicyclists. That, and we suspect a lot of people don’t realize that an average person can bike 10-15 mph (15-25 km/h). "

You can't buy one of these yet, but bike advocacy organizations can borrow a prototype version for outreach and education by contacting info@speedvest.com. Learn more about the mechanics here and read an interview here.