The Shrinking Economy: Time to Get Real about Ecology

The Shrinking Economy: Time to Get Real about Ecology

The Shrinking Economy: Time to Get Real about Ecology (this article appears in the spring/summer 2011 issue of Green Horizon)

Greg Gerritt

For weeks after the 2010 elections the mass media continued to produce election analysis with the premise that the American electorate is very good at kicking out the party in power when the economy is not doing very well. Not doing well appears to mean the economy is not growing fast enough, at least 3 percent and preferable 4 or 5 percent a year. The articles claim that without this rate of growth unemployment rises and a swath of Congress pays with their seats.

Neither party has been able to find a path out of the endless morass we find ourselves in, at least not using the conventional wisdom and the conventional approach to governance.  So we end up in gridlock and a holding pattern that allows the large corporations and Wall Street to continue to loot America while the rest of us struggle. We throw the bums out of Congress whenever we have to bail out the rich after another bubble bursts. We replace them with other bums who will continue to bail out the rich.   Such is progress

My premise, and that of many others who look closely at the linkage between ecology and economy, is that due to ecological collapse it may no longer be possible to grow the economy of the United States. The conditions essential for rapid economic growth — a massive infusion of natural resources and cheap places to throw the tras — are no longer applicable to the United States or for the most part on the planet. Cycles of prosperity in the industrial west are becoming ever shorter, and are based more on bubbles and chicanery than actual production. Wall Street and the government pretend that we have economic growth, but if the U.S. adopted some sort of full-cost accounting, refusing to count capital depletion as income, not adding the repair of the damage done to communities by industrialism to the economy, but rather subtracting the damage and cost of repair from the economy, the numbers would show the U.S. economy was actually shrinking. It would not even register the phony growth we now see only during bubbles.

The proximate cause of the economic crash were the financial games played by Wall St. Some claim the continuation of the economic slowdown is the tax structure or the size of the government. The reality is that it is the destruction of ecosystems and depletion of natural resources: the overfishing, deforestation, erosion, elimination of wild things, dirtying of the water and fouling of the air, that has caught up with us. Our technology is not going to fix this in a way that opens the door to growth ever after. Until the political parties describe what is really going on, why a gearing down is appropriate and necessary and how they are going to engineer it rather than doing ever crazier things to prop up the appearances of growth, they will alternate in failed policies and majorities in Congress.

The original version of this essay, available at http://prosperityforri.org/?page_id=95 <http://ProsperityForRI.org/?page_id=95>   provides a variety of links to the ecological data and the data that points out that nearly all of the growth in income in the US has for more than 20 years gone to the richest 1% of the population. For at least 40% of the population their actual wealth, wealth, not income, has already shrunk.  In other words both ecological collapse and the complete stagnation of the economy are our daily reality despite what the media tells us about the American Dream.

Part of Getting Real: Full Cost Accounting

The US is actually gearing down.  A system of Full Cost Accounting would clearly demonstrate less is available after subtracting all the damage.    Our old forests are gone and we struggle to keep the second growth we have regained. Our oil is depleted and more and more found in very difficult places to work like the bottom of the Ocean. Food is cheap but has a huge carbon footprint and more and more of our soil sits at the bottom of the Gulf of Mexico creating dead zones. We have already made it harder for working people to retire safely, have made medical care harder to access and ever more expensive, fallen behind the rest of the world in clean energy production. Our bridges are failing, and the talk is of shrinking government investments that ameliorate the worst effects of the games the rich play.  Detroit is coming back as an agriculture center, not a builder of cars.

Rhode Island is probably a bit further along the road to ruin than most places. The starting point for the Western Hemisphere’s industrial revolution, Rhode Island is highly urbanized, has few natural resource industries, dammed rivers, poor soils, depleted fisheries, little agriculture, slowly recovering forests (the flip side of little agriculture), and more industrial brownfields than you can shake a stick at. It has some design based industries, many artists and other knowledge workers, but what it has placed its hopes on, besides windpower, seems to be the medical industrial complex, which is by far the biggest industry in the state.  Unfortunately the faster the medical industrial complex grows, the more it sucks the life out of the rest of the economy by making health care for all unaffordable, and draining resources that might be productively utilized elsewhere. (  http://prosperityforri.org/?page_id=37 <http://ProsperityForRI.org/?page_id=37>     http://prosperityforri.org/?page_id=29<http://ProsperityForRI.org/?page_id=29>    “Health Care in the Economy”  RI Policy Reporter issue 17   March 29, 2006 )  The unacknowledged fundamental incompatibility between using health care as a growth industry and affordable healthcare for all, and the squeeze this puts on businesses, households, ecosystems, and communities when overall growth is exceedingly limited has become unbearable and an economic disaster, but understanding of this has not yet made it to the legislative chambers or city halls of Rhode Island.  Expanding TF Green Airport or giving money to Curt Schilling to produce video games are also not going to change the fundamental problems or provide a way forward.  Like Detroit, the fastest growing industry in Rhode island is agriculture.

A way out of the vicious cycle?

The politicians and the rich propose tax cuts as the answer to all of our problems.  This is the only way they can give themselves more money in a shrinking economy.  Unfortunately the only result of this is bad schools, deteriorating infrastructure and an unwillingness to face climate change and the ways people are contributing to the problem. Sometimes it seems as if China understands our problem much more clearly than American politicians do and therefore is willing to lend us more money as a way of hastening our demise as a great power.

All over America, and for that matter all over the world, people are experimenting with new forms of economic development. Microlending, clean energy, organic agriculture, community gardens, Zip cars, and mass transit just to name a few. It is still on the edge, on the margins, and ignored by Wall Street until it becomes the next big thing, such as the pseudo organic agriculture being touted by biotech industries, but it is exactly these new ventures, focused on healing ecosystems and doing well and doing good simultaneously that are transforming and bringing prosperity to communities undone by Wall Street.

The American election system is broken. A poll in The Economist found 77 percent of respondents agree. Some of the new tools of democracy would help. Ranked choice votes and proportional representation would help insure that all voices are heard and that new ideas have an opportunity to filter up from the practitioners. But any democracy would be threatened if basic honesty about the conditions we find ourselves in are kept from the discussion. Until discussion of the American economy takes into account ecosystem collapse and the end of growth, we shall continue to get governments that cannot solve the problem and we will get wildly swinging electoral cycles. We shall throw the bums out but we will bring in new bums and continue with the mess they made.

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