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Sam Thompson is a researcher and a consultant at nef’s centre for well-being.
.. there is joy in the presence of the angels of God over one sinner that repenteth (Luke 15:10).
“Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall – when Mother Nature and the market both said: “No more.”
We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …
We can’t do this anymore.”
Indeed we can’t, as nef and many others have been saying for ages. Still, nice to hear it from Thomas Friedman, for years one of the most vocal champions of free-trade and deregulated globalisation. In fairness, it’s been coming for a while, but such a plain-speaking recognition of the real environmental limits to our current economic model is nonetheless very welcome.
Andrew Simms is nef’s Policy Director and head of nef’s Climate Change programme.
The financial druids are all a flutter. Their worst fears have come true. It’s not only that we can now see the other side of the reckless credit boom: a long legacy of high unemployment, bankruptcy and wrecked public finances. The darkest fear of the priests of high finance is that we will never again trust and follow their sermons. Any faith faces disaster when people stop believing.
The “call to prayer” of conventional economics has been the incantation of economic growth figures: the accumulated monetary value of all the exchanges that take place in the economy. When it heads south, the system knows it has a problem.
Now, it has a real problem. Global economic growth is at its lowest level since shortly after the second world war, and the UK economy is shrinking fastest.
But here’s the problem. The fact that so much went so wrong, so quickly says that the long period of preceding growth hid a deep malaise. Growth conceals more than it reveals. It is about as informative as saying that when it rains things get wet. Yet the indicator retains an unbreakable grip on the imaginations of politicians and policymakers. Over 30 years of critique from the few dissident economists and environmentalists have not shifted its privileged position.
Growth tells us if things are happening, but not whether they are good or bad. Growth can be boosted by war, pollution and all kinds of social breakdown, from divorce to ill health and vandalism. That’s because they all require money to be spent, which shows up in the growth figures. This matters right now because the government is spending money simply to reboot growth, rather than to achieve particular, desirable outcomes, like creating green jobs to rebuild energy security, and tackle fuel poverty and climate change. It needs to get smart.
Dr Stephen Spratt is Director of nef’s Centre for the Future Economy.
Before our eyes the financial crisis is accelerating into a downward spiral of nightmarish proportions. Today it was confirmed for the first time that the UK is officially in recession, as the effects begin to hit the real economy in earnest. Nobody expects things to get better before they get a lot, lot worse.
‘Decisive action’, we are told, is being taken to deal with the banks. The latest £50 billion guarantee package comes hard on the heels of the untold billions to ‘recapitalize’, or to provide ‘liquidity’, or just to keep the lights on a little longer in the hope that something turns up.
The government resembles a grimly optimistic hot air balloonist, spat out of a storm and crashing to earth while frantically pumping more and more hot air into the balloon, only to see it flow out of huge holes rent in the fabric of his craft. The pilot, lets call him Darling, will certainly delay the crash a little bit, but only at the cost of using up all of his gas. Once the basket hits the ground – in whatever battered shape – it will surely stay there.
Andrew Simms is nef’s Policy Director and head of nef’s Climate Change programme.
October was a month that creaked and cracked. The insurance industry, already deeply implicated in the international financial crash, was battered by the fall-out from hurricanes Ike and Gustav. A bill in wreckage was left on their doorsteps estimated to be around $30bn (£18.2bn), far higher than predicted according to Lloyd’s of London. To show that God has a dark – you could call it “carbon black” – sense of humour, in the same month the oil giant BP’s quarterly profits of £6.4bn cracked another record high, representing a 148%, while Shell’s profits rose to £6.6bn.
The sky creaked in another way too. Relentless coverage of global warming, a deluge of green corporate claims, legislative flurries and a redesign of government departments should suggest progress on climate change. But the figures tell another, worrying tale. Far from going down, the global growth rate of carbon dioxide emissions is spiking upwards. Findings from the Global Carbon Project this month showed that the global average percentage rise since the year 2000 is now over three times higher than the previous decade, rising again significantly in the last year. These growth rates are now worse than the worse case scenario used by the UN’s Intergovernmental Panel on Climate Change (IPCC) to model potential global warming. Levels of carbon in the energy mix for both rich and poor countries are also going up.
Government confusion here in Britain was captured by two stories reported literally side-by-side in the national press. In one, Ed Miliband, new minister at the shiny new Department for Energy and Climate Change, announced the government’s commitment to cutting emissions by 80% by 2050. In the other, the Evening Standard reported that “ministers are planning to water down EU pollution curbs in order to allow Heathrow airport to expand”. Attempts at satire prove redundant. And the heat on the government over Heathrow is rising.
Eilís Lawlor is the acting head of the Valuing What Matters team at nef
Amid the economic gloom, it is taken as a given that the state of the economy will surpass all other priorities at the ballot box. But as the American election demonstrates, the relationship between a person’s economic position and their voting preferences is not nearly that straightforward.
The principle of representation is at the heart of the type of democracy which we in the UK share with the United States. In theory, it’s meant to prevent elites from acquiring and maintaining power: it ensures that the legislature mirrors the nation’s constituents.
In practice, however, it doesn’t always work that way. It’s not unusual for people to vote for candidates who are quite unlike themselves, but who they think will represent their interests. I doubt that many people who elect the current Conservative Party front bench would aspire to join their clubs or their social circle. At other times, we vote – in good faith – for candidates who subsequently let us down. When small shopkeepers voted for Margaret Thatcher in their droves, they probably didn’t expect her to unleash a wave of deregulation that would culminate in one of the most concentrated business sectors in the world.
But nowhere has the link between class and voting preferences been as successfully eroded as in the US. The unholy alliance between economic neoliberals and social conservatives means that people will regularly vote against their own material interests for cultural, religious and patriotic reasons. So while 63% of voters said that the economy was their top concern this did not necessarily translate into a vote for the person, or party most likely to represent their economic interests.
Democracy is problematic for elites when 60% of the electorate earn less than $70,000. It’s not that the relationship between income and voter preference is inverse, the very rich also veer towards the Republican Party. It was only amongst minorities – where race played a greater role – that this asymmetry was turned on its head
The Republican base of poor white Southerners stayed loyal to a party that has cut taxes for the rich and eroded their healthcare and benefits and shunned Obama’s more progressive tax plan.
As well as capturing the language of human dignity and freedom, the right claim a monopoly on morality and national pride however narrowly defined. Hence, guns, God and abortion trumped jobs, insurance and a mortgage even during a month in which another quarter of a million swelled the ranks of the unemployed. This is fiendishly clever because it undermines the saleability of a more equitable system to the very people it should benefit thereby shifting the goalposts further rightward. Whether Obama’s consensus approach can reach those that reject their own economic representation remains to be seen.
Sam Thompson is a researcher and a consultant at nef’s centre for well-being.
The nef/Foresight Five Ways to Well-being seem to be generating plenty of discussion.
It was especially interesting to hear how John Humphrys went straight for the five ways when interviewing Professor John Beddington on Today this morning. Humphrys claimed that our suggestions were a bit obvious and Pollyannaish, and the fact that people weren’t already doing them meant that they had somehow “chosen” not to.
Well, possibly. But if they’re so obvious as to be truisms and are also supported by stacks of empirical evidence, then individual choice looks like an odd explanation. Don’t people want to be happy?
Maybe we should be looking elsewhere. Think about our five suggestions in the context of how most of us live our lives thesedays. Isn’t it striking that we seem to have engineered a socio-economic system that actively limits opportunities for doing the very things that both psychological research and homespun wisdom tells us are good for well-being?
For instance, because our economy systematically fails to value non-market activities like community work and volunteering, while making a fetish of paid employment, “giving back” becomes ever more difficult even though most people say they would like to. Because we are bombarded with advertising messages that trade on making us dissatisfied and telling us all the things we should be aspiring to, savouring the moment and “noticing” is implicitly discouraged and perhaps turns out to be a slightly discomforting experience. The emphasis on individual sovereignty and its attendant me-first model of social relationships crowds-out real “connecting”. And come on, with all the hours we have to work just to pay the mortgage and the credit card bills, who on earth has time to “be active” or “keep learning”?
In a nutshell, perhaps our failure to maximise our own well-being reflects systemic problems rather than revealed preferences.
Andy Wimbush is nef’s Communications Assistant and blogmaster.
Orthodox free market economists often like to portray their discipline as being as objective and impartial as any of the natural sciences. Milton Friedman once argued that economics should be considered an ‘exact science’, like chemistry, physics or medicine.
But when free market principles have pushed us into financial meltdown and are stoking the fires of global climate change, practitioners of those ‘exact sciences’ are rejecting the Friedmanite orthodoxies of deregulation and unrestricted growth. This week’s NewScientist is a case in point. It features a special report on the economy, with contributions from the likes of Herman Daly, David Suzuki and nef’s own Andrew Simms.
The conclusion? We need a steady-state economy, with upper limits on wages and a drastically reduced financial sector. If we want the planet to continue sustaining human life, then we must steer the economy away from growth and ever-increasing production of consumer goods.
Much of this is in line with the recommendations of A Green New Deal and nef’s back-catalogue, particularly Growth Isn’t Working.
Susan George’s article will be of particular interest to Green New Deal fans. She calls for a Roosevelt-style reshaping of the economy along the lines of ‘ecological Keynesianism’.
Perhaps it’s worth remembering that history is littered with human pursuits which failed to qualify as real science. Alchemy. Phrenology. Astrology. If the ‘dismal science‘ doesn’t change quickly, it’ll be the next on the list.
David Boyle is a nef fellow, a writer and the editor of nef’s newspaper, Radical Economics.
The BBC’s ever-present business correspondent Robert Peston has referred in his blog to an email exchange uncovered at Lehman’s describing a conversation with the US Treasury Secretary Hank Paulson, which reveals his ambition to heavily regulate surviving hedge funds. Nor is this very surprising. The hedge funds ’shorted’ the banks, helping drive them into disaster, just as they have made a massive amount over the past week by shorting the stock market. Imagine in ten years time Chinese hedge funds shorting the US dollar, as the hedge funds did to the Far Eastern currencies in 1997. The mere possibility reveals the truth: we can’t go back to business as usual. American national security rules out the old dispensation.
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