How Sex, Politics, Money and Religion are Killing Planet Earth

Thursday, September 3, 2009

Notes on the Economy - Part III

Who owns the earth?

Is the earth’s bounty is a common resource to be shared by all her inhabitants, human, animal and vegetable? In the beginning, resources were plentiful, free and equally available to all. If one was hungry, he/she hunted, gathered or cultivated. For shelter, a few trees or a buffalo’s hide made a fine dwelling. Air, water, sunshine, food, shelter, energy for heat and cooking and even healthcare were provided by nature free of charge. The services nature provided were abundant and rained equally upon all living things. And so it was for most of history. Things have certainly changed. While hominids and other animals have always competed with one another for the best territories, the distribution of earth’s resources has reached an unprecedented state of inequality. Now, a few humans are holding all the cards to the detriment of the earth and all the rest of the souls that call her home.

According to the World Institute for Development Economic Research of the United Nations University*, at the end of 2006, 2% of the adults on planet earth control over half of the global wealth. Shockingly, the unfortunate 50% of people at the bottom of the economic food chain can claim less than 1% of the global bounty for themselves. In the year 2000, the total wealth of all individuals on the globe was estimated as $125 trillion, which amounts to $26,000 per person if the wealth were equitably spread. Unfortunately, the bounty is not spread evenly and more than half the people on earth live on around $2,000 or even less.

The neoclassical economist’s argument for the perpetually growing global free market has always rationalized that economic growth will trickle its wealth down from the wealthy to the poor and raise the standards of living for all. As the economic divide between rich and poor widens, it is sad that political leaders continue to spout the mistruths of the obviously flawed neoclassical economic model.

Ronald Reagan was the father of trickle down economics (or piss on economics, as I see it). Reagan spouted the neoclassical wisdom of tax cuts for the wealthy, deregulation of industry and unimpeded trade. Bush Jr. was Reagan’s protégé and took the trickle down policy even further. During the Bush and Reagan years, the rich certainly got richer, but everybody else including the middle class got relatively poorer. Since Reagan’s inauguration the incomes of the top .01% of Americans has increased sevenfold while the rest of us have experienced a slight decrease in real wages when adjusted for inflation. For those who are surprised by these figures, why? If our tax and trade policies favor the rich, they will get richer. If we deregulate international trade, jobs will go overseas where labor is cheap, good jobs will be lost and regular working people will be worse off. What is surprising is that the financial elite were able to convince the voting public to go along with a theory that has always defied basic logic.

How can we balance the equation towards fairness once again? Ecological economist, Herman E. Daly** suggests going back to the basic premise that nature, her services and her resources are communal property that is becoming increasingly scarce. It is in everyone’s interest to ensure that nature’s resources continue to provide for all living things. Using scarce resources beyond a rate at which they can be replenished is bad for everyone. Furthermore, since the resources and services belong to everyone, everyone should be compensated for their consumption. When manufacturers take natural resources, they should compensate the public in the form of resource taxes that are proportionate to the value of the resource. Having to pay a realistic price for the services that nature provides will ensure responsible use. The proceeds collected can be used for a variety of public services including environmental stewardship or even healthcare.

When Adam Smith first proposed a free market of unfettered growth, the seas were full of fish, the great old growth forests of North America were untouched and the earth’s crust was filled with fossil fuels. As economic growth expanded exponentially, it consumed the earth’s resources in its wake and created the world we have today of depleted fisheries stocks, deforestation and the plethora of environmental woes that plague the planet. The economic practices of the past 300 years are the cause. We cannot persist in the same fashion and expect a different outcome. Our economic policies must modernize to match the world as it is today, not as it was 300 years ago.

Current economic gospel promotes the maximization of both production and consumption, as it is the sale of goods that is calculated as GDP – the current ultimate measure of economic fitness. When resources are consumed and thrown away and more resources are then consumed and thrown away, the GDP increases. In an ecological economy, both consumption and production would be minimized in favor of maintenance. In this fashion, valuable resources would not be exploited simply for their sale and then to be thrown away.

We need to replace our quantity mentality with a quality mentality. As a society, our constant consumption of goods has not improved our quality of life. We are overweight, stressed out and overworked – all symptoms of our culture of excess.

To be continued…

*For more information visit

** For more information about ecological economics see Daly, Herman E., 2007. Ecological Economics and Sustainable Development – Selected Essays of Herman Daly. Edward Elgar Publishers.

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