Monday, February 11, 2013

Achieving a Steady State Economy for Canada

What if the way forward isn't?   What if it's time for us to turn around, to go back?

James Lovelock said the future of mankind, if there is to be one, will require that we accept, not sustainable growth, but sustainable retreat.   We need to grow smaller.  It's not a matter of choice either.

There are too damned many of us, each demanding an ever-greater amount of resources, and we're far exceeding our planet's ability to regenerate the natural resources we need.   According to research by the Global Footprint Network, we're already using up an annual supply of renewables in just under nine-months.   That means we're in "overshoot" for three months of the year, consuming resources faster than they're to be had.   To make good the difference we're depleting our stocks, eating our seed corn, draining our aquifers, exhausting our farmland, turning forests into cropland, cleaning out our fisheries, on and on and on.

So, how do we go about achieving sustainable retreat?   Do we all go live in caves and eat mud, guarding the entrance with sharpened sticks?   Not at all.   We may, however, need to follow Japan's lead.

"Japan may economically be the “new normal”. By “new normal” I mean a situation where the economy is in recession for prolonged periods of time, seeing only fleeting periods of growth. My struggle relates to the fact that conventional wisdom would suggest that after two decades of recessionary tendencies, Japan should be an economic and societal wreck. But quite the opposite is the case. In many respects Japan seems to be doing fine. 

"Now what leads me to this latter conclusion? I was struck in particular by the findings of the 2012 Inclusive Wealth Report from the International Human Dimensions Programme on Global Environmental Change (IHDP).  Set up as an alternative to gross domestic product (GDP), the Inclusive Wealth Index reflects the state of natural resources, the economy and ecological conditions, the population’s health and productive capacity, and measures whether or not national policies are sustainable.

"In the report, the authors looked at various indicators in 20 countries, including Japan, over the period from 1990 to 2008, and I was surprised to read the following:

"'Japan depicts the most favorable situation, as it is experiencing wealth accumulation while at the same time increasing its natural capital stocks. This has been achieved primarily through investment in the forest sector. This position is also explained by a slower population growth rate in relation to other nations. This is to a large extent supported by the recent assessment of Japan’s ecosystem services…'

"Four years [after the crash of 2008], after a double-dip recession and with a potential triple dip on the horizon, the return to normality across the globe appears still a distant prospect. In this context, it is easy to understand how in recent years an increasing number of commentators suggest that we are witnessing the end of growth. There is Richard Heinberg, from the Post Carbon Institute and author of The End of Growth , who states that “economic growth as we have known it is over and done with”.

"Experts argue that we are facing the end of global growth and our institutions, policies and individual behaviours and aspirations are going to have to change.

"Jeff Rubin, former Chief Economist with CIBC World Markets, who also has a book with the title The End of Growth, argues that the real engine of economic growth has always been cheap, abundant fuel and resources. But that era is over.

"Energy and finance expert Nate Hagen in a recent lecture also argues that we now face the end of global growth and — although we in advanced economies are still incredibly rich — our institutions, policies and individual behaviours and aspirations are going to have to change.

"Both books and Nate Hagen’s lecture present a rather bleak and depressing assessment of our current situation. We are given three reasons as to why economic growth may be a thing of the past: over-consumption of resources, negative environmental impacts like climate change, and debt. We appear to have maxed out, or to be close to maxing out, the global economy and the biosphere.

"...In the years ahead we are likely also to see more reflection upon what Japan’s transition to the “new normal” might actually look like. And remember, this “new normal” will be the future path for most industrialized and industrializing countries, if people like Heinberg, Rubin, Nagen and Jackson are correct. 

"But the reality is that the new normal may not be as stark as we might expect. There are some who suggest that Japan has not lost anything at all — echoing the findings of the Inclusive Wealth Report.

"...Over at the New York Times, Eamonn Fingleton argues that in recent decades “Japan has succeeded in delivering an increasingly affluent lifestyle to its people despite the financial crash. In the fullness of time, it is likely that this era will be viewed as an outstanding success story.”

"He points out that average life expectancy grew by 4.2 years in the period from 1989 to 2009 while unemployment remains at 4.2 percent, about half that of the United States (US). He also states that the current account surplus has grown threefold since 1989, standing at US$196 billion in 2010.

" is important to recognize that Japan continues to invest in infrastructure, to maintain its facilities and to generally keep public places clean and safe. There is still a strong sense of civic pride and social cohesion in the face of economic difficulties. That is not to say that everybody is doing just fine and there are no problems, but the way that the Japanese people pull together in times of crisis is something to be admired.

"One strong proponent of an alternative viewpoint on how Japan is faring is Junko Edahiro, who set up the Institute of Studies in Happiness, Economy and Society (ISHES) in 2011.  She argues that:

"'We live not for economic growth. We live for happiness in our daily lives and we hope generations to come can enjoy their happiness. Economies and societies should do something to serve this purpose and should take on different forms and structures if they fail to meet their goals.”

"This begs the question: if we are witnessing the end of economic growth, not only in Japan but globally, what are the new forms and structures of economic and societal behaviour that we should be searching for? Surely some of the answers can be found in Japan. Heinberg perhaps captures this best when he states:

"'A few nations and communities are already moving in the direction of a steady-state economy. Sweden, Denmark, Japan, and Germany have arguably reached a situation in which they do not depend on high rates of growth to provide for their people. This is not to say these countries have only smooth sailing ahead (Japan in particular is facing a painful adjustment, given its very high levels of government debt), but they are likely to fare better than other nations that have high domestic levels of economic inequality and that have gotten used to high growth rates.”

Reaching a "steady state economy" will entail some measure of sustainable retreat, getting more out of less, undoing counterproductive inequality, breaking our addiction to growth for its own sake.   The forces of corporatism and globalization, within both the public and private sector, will have to be tamed but the writing is on the wall.   Their status quo, living beyond our means, no longer works.


Anonymous said...

Japan continues to kill whales in the name of 'research', whilst marketing whale products for great profit on the domestic market. The dark cloud to every silver lining.

Steady state economy sounds good, but I don't hear any Canadian politicians mouthing it....

The Mound of Sound said...

Every nation has its badge of shame. At least the Japanese people seem to be changing their attitude to whaling.

A steady state economy will be a tough sell in Canada absent some compelling change of circumstances. The Japanese have the advantage of being a more cohesive society with a fairly specific culture. I suppose the same could be said for Sweden, Denmark, Norway and, to a lesser extent, Germany.

We in Canada lack those roots and cultural traditions. It's going to be much harder for us to adjust and accept new realities.

Ultimately, however, we will be fighting a losing battle. There is only so much stuff to go around, more people demanding what there is and more wealthy individuals emerging to claim their share.

Canada could close itself off, apply its resources and assets to the betterment of the country alone but it's hard to see that happening. There seems no reason a nation so rich in resources with a skilled population of 36-million should not be capable of self-sufficiency if it chooses that path.

thwap said...

The idea that to provide adequate food and housing, ... we need to be researching this.

We can create fiat money out of thin air. Why do we think we have to coddle billionaires and flooding the world with useless consumer garbage in order to survive?

The Mound of Sound said...

How can we continue flooding world markets with useless anything when we have entered a state of permanent resource deficiencies?

Over consumption of "useless consumer garbage" today effectively claims resources - energy, water, materials - from other forms of production that may be needed to supply necessaries of life to someone without.