A handout for the General Treasurer March 2013

The original impetus for this meeting came about when during the 2010 campaign I was at several events you were at and I thought that it would be good to have a conversation with you about my work on prosperity and the ecology /economy interface. It took this long for the follow up.  It is clear the last 50 years have not been the best for the  RI economy using traditional measures.  But it is also clear that the approach to economic development  that has been used the last 50 years is tied to a system that is failing the people of Rhode Island and has been relatively unresponsive to changes in the conditions on planet Earth.  Economic planning is based on the assumption of fast continuous growth forever.  It is my contention that growth is essentially dead in the industrial world, the conditions required for rapid growth do not exist, and that efforts to create rapid economic growth are likely to lead for a further deterioration of the conditions in our communities.  Our communities would be better served by a smart shrinkage of the economy.   It should be noted that nearly all of the low unemployment states are seeing booming employment from industries that contribute to more rapid climate change and the polluting of waters.

In regard to investments for state pension funds, one of your primary responsibilities, there are several points.  There is a growing separation between the things one would do to get higher returns on investments and what is good for the community.  A stock market valuation growing much more rapidly than the employment, and 121% of all the income gain in 2011 going to 1% of the population are merely exclamation points in this long term trend.    Investing in off shoring, investing in businesses cutting corners, investing in the destruction of ecosystems may bring the returns needed to meet investment targets (though those targets have not been met for at least 5 years) but they are not helping Rhode Islanders except for a relatively small group of retirees.  The expected returns are unrealistic except by investing in the most destructive economic practices, such as fracking, and make the overall economic situation in RI worse,  Of special note for environmentalists is that returns on investment faster than the ecosystem can operate always lead to destruction of forests, soils, and fisheries.  The forest in New England grows about 3% a year and cutting it faster than that (which a higher rate of return to investors seems to demand)  depletes the forest, harms the water, increases flooding, destroys fisheries.  Economists do not normally make that connection, but they should,

Investing directly in ecological healing in Rhode Island creates more jobs in Rhode Island with widespread benefits to communities and the economy, and even a lower rate of return on these investments than Wall St offers would provide more of a boost to Rhode Island than a higher rate of return from Wall St.  it is a bit of a different approach to prudent man investing, but in the long run more prudent.

Economic justice, a more equal economy, is inextricably linked to prosperity and ecological health.  Where the people have the right to stop inappropriate development or prevent their poisoning the health and conversely direct what kind of development is appropriate in the community, the prosperity of the community improves.  When communities have no say, when the economy skews toward the rich, when communities are uprooted for private gain and at public cost, communities become less prosperous.  The result of the skewing of the economy is always faster resource depletion, lower incomes, lower public health, shorter lives and less democracy.  The best examples of doing it right are starting to emerge in the tropics, where according to the World Bank,  when communities retain control of their forest the health of the forest is maintained while the lowest income people in the community eat better and have higher incomes than similar communities that lose control of the forest to outside logging interests.

Full cost accounting is the idea of counting all relevant information, not just the flows of money in determining what is going on economically.  Too often we count resource depletion and other damage to our communities as a growth in the economy.  Is repairing hurricane damage really something to be added to the economy, or should it be subtracted from he planetary budget as it furthers resource depletion to have to rebuild stuff that probably was in the wrong place all together, and incurs great societal liabilities if rebuilt .

I am happy to follow up further and provide references.  And I invite you to a conference on October 12 2013  Entitled    “Ecological Healing, Ecological Economics, Economic Justice:  Creating Prosperity for the 99% in Rhode Island”

Greg Gerritt     Prosperity For RI.com


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