Before the recession, we were on a collision course with an environmental disaster.
The recovery offers a rare opportunity to do things differently; to rebuild a better economy that can support living standards without irreparably damaging the environment.
The closer we get to irreversible climate change, the more difficult it will become.
The ideas set out in his book, subtitled Seven ways to think like a 21st century economist, are increasingly used around the world, including through a new collaboration Regen Melbourne, which looks for ways to make Melbourne a better, more socially just and more environmentally friendly city.
The image to remember is that of a donut, inside which is the economic and social free fall.
We need a certain level of economic and social / political development so that everyone can live a healthy and healthy life with full social and political participation.
The perfect place, “the safe and fair space for mankind” is, of course, in the donut itself. Mmm… donuts.
Conceptually, it’s pretty straightforward. In practice, this is a challenge.
Economics is traditionally defined as the study of how societies allocate scarce resources. But in the modern world, the reality is that for rich countries like Australia there is no general shortage.
The challenge is to stay in the donut
These countries have homeless people and hungry people, that’s for sure. But they also have enough resources, homes and food to support themselves. Whether they don’t is a matter of distribution rather than scarcity.
In terms of the diagram, we’re already using enough resources to make sure no one needs to be left in the hole inside the donut. The danger is that we are using too many resources and moving beyond the outer edge of the donut towards climatic and ecological degradation.
Here is another diagram.
For a while, economists trusted what is called the Environmental Kuznets curve, where increased consumption would lead to increased environmental degradation to some extent.
Beyond this point, as a society becomes post-industrial, additional consumption would lead to less environmental degradation, as people become more aware of the environment and use their wealth to buy different things – more of services (such as yoga classes) and fewer goods (such as like burgers).
We will have to reduce the peak, and it will be difficult for precisely the same reasons that people remain poor amidst extraordinary wealth.
One is the ability of deep interests to influence regulators and governments to maximize profits. The other is the extent to which neoliberal economic thought permeates social and political structures.
Modern neoliberal thinking tells us that the best results are obtained when markets are “free” without “interference” from government.
The government’s attempts to impose, amend or charge for environmental damage are described as interference rather than environmental protection.
This is easy because every hectare of vegetation that is cleared does not, on its own, cause much damage to the environment, just as every ton of carbon dioxide that is released does not do much damage to the climate.
It is possible to introduce a carbon price or a carbon tax, but it is easy to lobby. Australia lasted two yearsand governments are afraid to start over.
The pandemic has expanded what is possible
The pandemic has shown us that it is possible to overcome this fear.
Environmental activist George Monbiot points out that for 10 years the number of people living – and dying – on the streets of Britain has increased year on year. There was not enough money to house them.
Then suddenly, when the pandemic hit, and they were seen as potential carriers, the money could be found.
He says that for decades government and industry have argued that people will never give up on international vacations and business flights. When the future of mankind was seen to be at stake, they did.
It was possible to accept the move to “private sufficiency and public luxury“.
This is a challenge not only for the economy but also for individual economists.
For better or worse, our discipline has a lot of power in the modern world, and our opinions carry disproportionate weight.
We need the best of our economic minds to help us build frameworks that will keep us in the donut. The future of our species depends on it.