A Money Coach in Canada

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Well this is a little odd.

In Chicago, nearly every single tree on the street downtown has a price attached to it: The value it will return to the environment over the coming year.

Apparently for every $1.00 the City spends on tending the tree, it will return $2.70 in cleaner air, reduced need for air condition due to shade provided, and helping filter polluted water before it goes back into the City sewer system.

Makes you think! Should we be billing the equivalent for every tree that gets cut down?

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When I was a kid, China, like Russia, scared the crap out of me.  It was communist.  Communist China.  People who shared my faith, Christians, got tortured there.  In fact, lots of people got tortured there.  WE might, under very rare circumstances, be allowed to visit, but Chinese people could never visit us because they were locked inside. It was a secretive, faraway, very scary country.

It’s such a different story now.  We witnessed the opening ceremonies stream from Beijing. I’ve enjoyed getting to know several immigrants from China. And above all it’s become nearly impossible to purchase anything that’s not made in China.

Can you relate?

Let’s get familiar with this new super-power, this country that has encroached our lives every which way. This money coach found some econ 101’s:

China makes

  • 1/2 the world’s clothes
  • 1/2 the world’s computers
  • More than 1/2 the world’s digital electronics
  • More than 3/4 of the world’s toys (ed note:  uh-oh)

Factors that make this manufacturing do-able by China

  • 104 million workers
  • 1/10 of the wage compared to Europe and the US
  • for every $1 sale in the US of designer clothers, the manufacturer receives 10¢
  • workers can work up to 18 hours a day in busy months

To create these goods, China uses

  • 1/2 the world’s iron ore
  • 1/3 the world’s aluminum
  • 1/2 the world’s copper
  • nearly 1/2 the world’s hard coal
  • nearly 1/10 the world’s oil production (ed note: that’s less than I’d thought.  I guess because they use coal instead)

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I got these stats from an offbeat but very intelligent magazine called The New Internationalist. It’s introducing me to all kinds behind-the-scenes stories that affect my every day life.  If you, like me, want to be better informed, I recommend subscribing!  It’s causing me to see the world differently – in a good way.  (no, I get nothing for the pitch! I am just really impressed by the mag.  And they use a creative commons license – what’s not to love?)

I’m here at the Explorer Hotel in Yellowknife, which has wifi! (and offers wild goose pate – but isn’t that a contradiction in terms?)

Peter Victor authored the book Managing without Growth in which he “challenges the priority that rich countries continue to give to economic growth as an over-arching objective of economic policy”.  Peter is an economics professor in Environmental Studies at York University.  As a green party member, I’m very interested in ecological economics.   Here’s the liveblog, ftw!

Last minute disclaimer:  I’m not an economist;  the information was fast and furious;  please construe this liveblog as my inept attempt to capture the evening – double check everything below in his book!

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Background:

One way of understanding why we’re not taking good care of our home, the globe, is to understand how we “do” economics.

Economics is:  Firms provides goods and services to Households, who provide land, labour and capital.  If that’s all there is to it, it’s easy to imagine an economy that could grow and grow.  Hard to imagine we would ever question growth as an objective.  Here’s a diagram of this.

Missing:  The Environment.  First thing we have to do is add in the Environment.  Let’s include Natural Inputs – flows of materials and energy from Sources and Environmental Service.    How will these Natural Inputs re-emerge in the economy?  as Waste Outputs.  (Side: the only thing that goes and comes from the earth is Energy.)

Most of the information we rely on to make decisions is PRICE.  But our information is becoming less and less reliable re: Price.

Background #2 re: technology

1820 Population 1.1 billion;  1940 population 2.4 billion; 2009,  6.8 billion.

This population, of course, is not equally catered to.  Most of the wealthy are in NA and Europe.

Geek-out moment:  he’s showing slides of computers from 1946 to present, and also slides of phones.

Note: ironically, miniaturization allows us to build and design much larger machines – they can be computerized.  Eg. world’s largest container ship carries 11,000 containers and only employs 13 people.  So technology can work in many different directions.

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Thesis:  Growth is not possible over the long term.  In fact, growth is disappointing.

Despite reduction in energy intensity,  global primary energy consumption is rising.  (ie. individual units are more efficient, but the scale is increasing).  Same with resource extraction – we’re getting better at using less material when extracting, but the net effect is still an increase of using energy.  Peak Oil:  (money coach shudders)  Production started to exceed discovery in 1990.

We need to make a fundamental energy transition.  We’ve done that in the past:  wood – coal – oil/gas, electricity.  We’ve increased our use of energy by over 20 times in the past 200 years.  In the past, it was not hard to switch because it had more readily apparent benefits – cheaper, better, more powerful.  Renewable options now do not have these characteristics.

If you want to freak out a little (money coach’s words), check out the Stern Review. It delineates the impact of each degree centigrade of average temperatures.

Services from planet earth

Approximately 60% of the ecosystem services examined are being degraded or used unsustainably, for example:

World Grain Production per person: peaked in early 1980’s. In decline ever since.

Canada:  collapse of Atlantic Cod (result of big factory ships – made possible by technology)

Rising evidence that growth does not make us any happier.

Gross Domestic Product v. Genuine Progress Indicator Until 1970, gdp and gpi moved together.  After that, gdp keeps rising, but gpi stayed nearly flat.

Since 1975, real income per person has increased, but percentage stating they were “very happy” stayed flat (money coach loves these kinds of stats).

Canada’s substantial economic growth from 1976 – 2006 – our gdp per person grew by 70%, but:

  • Never had full employment in that period
  • Had more unemployed people in real numbers
  • Reduced percentage on low income, but more in real numbers (now 3.4 million)
  • Increased inequality in incomes and wealth

How slowing the rate of growth could help climate change:

1990:  $950,000 GDP, and 592 mt (metric tonnes of greenhouse gas emissions) in Canada.  US, about 10 times this.

Green Growth means starting at 592mt and moving towards less.

Canada now:  747 mt.   We need an 87% reduction by mid-century.   We can achieve that in various ways:

  • reduce energy per output down to 13% of current if we don’t grow our economy at all.
  • if we have 3% economic growth, we have to get down to 0% (I think I got that right?)

Dilemma – if we don’t spend enough money, more people unemployed.  What makes an economy grow?

  • what we spend money on (consumption)
  • new equipment
  • gov’t expenditure
  • trade
  • what we produce

If we do business as usual to 2035, what would happen?  Gov’t debt goes doen, gdp per capita goes up, green house emissions go up, poverty goes up (yes, goes up).

What if we eliminate all growth? Disaster:  unemployment, poverty, stabilized gdp per person, gov’t debt becomes unmanageable.

The real issue is whether its possible to challenge the “growth at any cost model”.

A better model is low/no growth scenario.  poverty comes down, gdp goes up, unemployment goes down.   How?  (nerd moment coming up)  Macro demand (C,I,G,X-M) and supply (K,L,t)  stabilized;  Carbon price; Shorter work year;  More generous anti-poverty programs.  What would change:  new meanings and measures of success;  limits on materials, energy, wastes and land use; more meaningful prices; more durable, repairable products; fewer status goods, more public goods; more local, less global; education for life not just work; reduced inequality.

(interesting sidenote of interest to this money coach  about status – it’s a zero-sum game.  One person purchases for status, then another does, so original person back to where they started, so they buy again)
We must knock economic growth off its pedestal.

(Nobel Prize winner) Robert Solo’s endorsement:  “It’s possible that the US and Europe will find that either continued growth will be too destructive to the environment and they are too dependent on scarce natural resources, or that they would rather use increasing productivity in the form of leisure”

Can our universities adapt fast enough to this way of thinking?

Can our religious institutions adapt fast enough to this way of thinking?

Can our legal systems adapt?

Will it take disaster to make it happen, or could we look and think ahead?





Most of us have heard of Adam Smith’s theory of invisible hand. (If you haven’t, the gist of it is: Left to pursue our personal self-interest, we will also inevitably help the greater good as well.)

Here’s a lesser-known theory by WiIlliam Lloyd, a contemporary of Smith. It’s called The Tragedy of the Commons. It goes like this.

Many herdsmen over the centuries grazed their cows in the commons (ie. a space owned by no-one, and used by anyone). Herdsmen naturally tried to maximize the number of cows they had grazing there. Because of disease, tribal warfare and poaching, the numbers were still small enough that the commons was not overgrazed.

Eventually, social stability was achieved and veterinary practices improved, so that the former limits on growth were no longer in place.

When an individual herder would decide whether or not to purchase another cow, he/she had to factor in the cost/benefit.

The benefit was all those included in having another cow – increased milk production, ability to sire other calves, and money gained at slaughter.

The cost was increased grazing in the commons – but this cost was distributed among all the herders, ie., the overgrazing meant everyone’s cattle suffered a bit, not just the individual’s new cow.

You see the dilemma – each herdsman is motivated to maximize the number of cows they have, yet collectively, they rush towards ruin (overgrazing and hungry, unhealthy cattle).

OK, Readers, over to you: What’s the solution?
528135849_b28de394c6 Photo Credit: Erin