Economy vs environment
November 17, 2008
Posted by CindyW in : Opinions & Thoughts , trackback
The daily dose of ever so depressing economic news does not exactly cheer up any of us. A couple of days ago, a friend forwarded me the now famous doom and gloom slides many entrepreneurs had recently received from one of their elite venture capital firms.
The gist of the 56 page presentation is that this recession is unprecedented in a perfect-storm sort of way – housing recession, over-leveraged financials, frozen credit market, global slowing, and a few other factors have all come together and pushed our economy to where we are today. Worse yet, there is no telling where this storm is taking us.
Yeah, all very depressing.
The slide that really caught my eye was the one that screamed consumer-driven economy. In 1987, the US GDP was $4.7 trillion, to which consumer spending contribution 66%. Twenty year later, the US GDP grew to be $13.8 trillion and 73% of which came from consumer spending.
In other words, we shop to generate three quarters of our GDP!
In comparison, consumer spending accounts for 55% of the GDP of Japan, the second latest economy in the world.
I have been an advocate for buying less and enjoying life more for a couple of years. But I am beginning to feel that I am contributing to the recession.
Do I feel bad about wrecking the economy? Not really. We have an unsustainable economy driven by an unsustainable consumption lifestyle both from the financial and environmental perspectives.
But in front us is a tanking economy that is threatening to take more jobs away from productive members of the society. Then what? Social unrest?
How do we approach this dilemma? Do we really only have a bad option and a worse one – economic collapse or consuming the planet to death?
Is it possible to keep the economic pie just as big and the consumer spending slice just as hefty without pillaging natural resources?
A friend of mine thinks buying high quality and durable goods that are made with more renewable material is a step forward. Instead of having twelve pairs of throw-away shoes, she suggests that we buy four pairs that are made from sustainable material with durable quality, “You use less raw material, but pay a lot more per pair, thereby still contribute to the economy.”
But isn’t the concept entirely anti-fashion? Can the fashion world ever be convinced that durability can be trendy and classy? I don’t see it.
How about electronics? Stop making crap that falls apart at the magic two year mark (so called planed obsolescence)? But the computer industry, and by extension the electronic gadget industry, are based on Moore’s Law – a new generation every 18 months.
Then we also have the question about the employment. If we purchase fewer items, albeit things with much higher quality and durability, do we still require the same number of designers and workers? Shall we institute a 35 hour workweek to spread the work like some European countries? I’d personally enjoy the shorter workweek, but also recognize that it would be somewhat an anti-competition policy.
Instead of stimulating the consumer-based economy, should the government boost a green economy that is based on overhauling our long-term infrastructure?
Build national grid to connect energy sources (where solar and wind energy can be optimally generated) to consumption centers (where the energy is used)? A huge project with work for a whole lot of people.
Weatherize millions of old buildings to significantly cut down energy waste? Another tremendous project with massive employment opportunities.
Support innovative companies in driving renewable energy cost to lower than coal?
Alas, I have a lot of questions and clearly no answers. But by asking myself these questions, I begin to see opportunities rather than just the doom and gloom.
With crises come opportunities. If you are down from listening to the morning news, just imagine if we do it right this time, we may just be able to survive the perfect storm and change the world.
One can always hope.
CindyW at Organicpicks
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Comments»
Cindy, this is truly an optimistic post. I believe we are at a turning point in our economy, in the same way we were with the tech revolution. Another expample from the past: the move from horses to automobliles. In my town, most of the car dealerships have been in families for several generations, and prior to being car dealerships they were livery stabes. My own great grandfather made the change from blacksmith to auto dealer and mechanic. Change in industry comes, and with it, opportunity. The challenges we face environmentally offer great opportunity as well, and the most imaginative and flexible among us will make that leap forward. This may be a controversial statement, but this is why I oppose bailing out the auto makers. We need forward thinking entrepeneurs,not stagnant, old fashioned cry-me-a-river 100 year old thinking to move our transportation solutions into this century.
Okay, obviously you pushed my buttons! I’ve been thinking about so many of these same questions this past year.
There just has to be a balance in there somewhere. In the simplest situations, most often doing what’s best for us turns out to the best thing for the environment (eating locally, supporting local business, etc). Now the economy, of course, is a million times more complicated, but I’m sure, if we worked hard at it, that we could find a way to heal both our economy and dear sweet Mother Earth.
Cindy, this is a great post! Thanks for this.
I think there are ways we can grow our economy while reducing the waste of natural resources.
For example, let’s say that instead of spending quite as much money on shoes or whatever, we spent more on taxes so that we would have more teachers. What if there were enough teachers so that every class room first-sixth grade had under 20 kids in the class?
What if we spent more money on third world development? The United States is supposed to spend .7% of its GDP on development aid. Yes, that is less than 1%. You would think we’d be doing it, but we’re not. But what if we spent more money there, instead of on faux leather purses at Target?
What if we bought each other fewer gifts, but spent more time with each other at plays, or restaurants, or seeing concerts, or operas?
So I think there are options where we can spend money and not have as much resource waste.
As for fashion, I think the fashion industry could get behind having fewer classic, expensive pieces of clothing. In any case, Old Navy clothing isn’t really “fashion.” It’s essentially imitation of stuff they see on runways, a year late and made poorly.
Yes, people will have to change. The jobs that are available now will not necessarily be available in the future. But that’s also the unfortunate nature of life.
So I think our economy can grow and be sustainable, but it will require a shift in the economy that will be hard for some, but will ultimately, I think, be rewarding for all.
I’m not sure how we could sustain a service economy, or get more taxes out of people, if we aren’t producing widgets. It’s widget production that puts money into the service economy. Example: my husband is a graphic designer for our local PBS affiliate, associated with the university here. The PBS affiliate is about 70% dependant on donations from viewers and listeners. The biggest donors are several people who have invented things that were patented and wildly sucessful (i.e., the heirs of Nobelist John Bardeen, who invented the transistor). If there was no product manufactured to use that invention, there would be no wealthy family, donating money, or paying taxes in a higher bracket, etc., and ultimately no job for my husband.
It would be great if the money was just out there to be redirected to teacher’s salaries or opera companies, but it has to come from somewhere, when you trace it back, in the manufaturing sector.
I’m all in favor of buying fewer things of quality, and making them last- that’s how I was raised to consume. But ultimately, we must consume to have an economy at all. The key is to look at ways to manufacture things in a sustainable way.
I do agree that the U.S. should be giving more foreign aid than it is. Debt forgiveness for developing countries would be a great start. I agree with the OneCampaign, that debt forgiveness could be a positive turning point especially for the continent of Africa. We may not be able to do much to get the Tutsis and the Hutus to quit hating each other, but we could get the monkey off the backs of the national governments that need money for infrastructure and educational and health systems. Healthy economies in Africa and other areas would benefit our economy here at home (although that is NOT why I think would should pursue this policy).
Joyce: I too am against the auto bailout, not simply based on the principle that competition should be fair and square for everyone. It’s also from my practical side - the US auto industry has been going down the wrong road for the past few years. They have stopped being innovative and forward-thinking. Bailing them out does not help them change their direction and vision. As difficult as it may be, letting it go bankrupt may spur a whole new way of thinking. I am not naive enough to think that it does not have a huge impact on the entire supply chain from parts to services. But bailing out only serves to delay the demise. As well, apparently gambling industry is having a ton of financial woes. Casinos collectively are no smaller than an auto company. They purchase food, building material, other durable goods and they employ a huge number of workers. Are we going to bail them out?
Heather: Promoting local economy is another piece of the puzzle, I think. It seems that at this turning point, we need multiple solutions to solve our tremendous problems. There is not a silver bullet. The upside is this crisis will bring about innovations both in the way we think and in the way we live.
Ruchi: I definitely like the idea of moving toward more service-focused economy. Not only does it encourage doing things rather than owning things, it also supports localized economy. It’s much more difficult to outsource service jobs. This type of paradigm shift, accompanied by crises, is always painful. But I am a believer of seeking and seizing opportunities to transition into a better world. Call me a naive idealist
Joyce, I think you make a good point about the manufacturing industry being the building block of our economy, but I think we’re moving away from that already. Look at music. It used to be produced live, and that was the only way you could listen to it. You couldn’t physically own music, or hold it in your hand, you had to hear it, and that was it. Then we transitioned to records, then tapes and CDs. And now music is once again something you can’t hold in your hand … it’s just an mp3 file on your computer or your iPod. It’s once again an intangible. So I guess, I think the new technologies and inventions of the next century are going to be mostly intangibles like the internet … you can’t hold the internet in your hand either. The manufacturing industry wasn’t always the building block of our economy. It used to be agriculture. We moved on, and I think we can and will move on from manufacturing as well.
I don’t have any answers either I think just asking the questions matters. Interesting comments too.
I just finished Green Collar Economy and it got me on board. I think we could really benefit from rebuilding our infrastructure and from subsidizing instead of penalizing those entrepeneurs that think of new solutions, that create a company the deconstructs buildings instead of demolishing them.
We’re living in exciting times, girls! Let’s see where they lead.