Eco-nomics: Truth or Consequences?

from Earth in the Balance by Al Gore

The hard truth is that our economic system is partially blind. It "sees" some things and not others. It carefully measures and keeps track of the value of those things most important to buyers and sellers, such as food, clothing, manufactured goods, work, and indeed money itself. But its intricate calculations often completely ignore the value of other things that are harder to buy and sell: fresh water, clean air, the beauty of the mountains, the rich diversity of life in the forest, just to name a few. In fact, the partial blindness of our current economic system is the single most powerful force behind what seem to be irrational decisions about the global environment.

Consider the most basic measure of a nation's economic performance, gross national product (GNP). In calculating GNP, natural resources are not depreciated as they are used up. Buildings and factories are depreciated; so are machinery and equipment, cars and trucks. So why, for instance, isn't the topsoil in Iowa depreciated when it washes down the Mississippi River after careless agricultural methods have lessened its ability to resist wind and rain? Why isn't that loss measured as an economic cost of the process by which our grain was produced last year? If the rate of topsoil loss is high enough in a given year, the nation may end up poorer, even if the value of the grain produced is taken into account. Meanwhile, our economic reports assure us that, to the contrary, we are richer for having grown the grain, and richer still because we didn't spend the money required to grow it in an ecologically sound manner and thus keep the topsoil from washing away. This is now more than economic theory: largely because we failed to see the value of growing grain in an ecologically sound manner, we have lost more than half of all the topsoil in Iowa.

Or take another situation, a little farther from home. When an underdeveloped nation cuts down a million acres of tropical rain forest in a single year, the money received from the sale of the logs is counted as part of that country's income for the year. The wear and tear on chain saws and logging trucks as a result of a year's work in the rain forest will be entered on the expense side of the ledger, but the wear and tear on the forest itself will not. In fact, nowhere in the calculation of that country's GNP will there be an entry reflecting the stark reality that a million acres of rain forest is now gone. This ought to strike anyone as alarming, if not absurd. Yet when the World Bank, the International Monetary Fund, regional development banks and national lending authorities decide what kind of loans and monetary assistance to give countries around the world, they base their decisions on how a loan might improve the recipients' economic performance. And for all these institutions, the single most important measure of progress in economic performance is the movement of GNP. For all practical purposes, GNP treats the rapid and reckless destruction of the environment as a good thing!

Accounting blindness is not limited to the valuation of products alone, however. According to the First Law of Thermodynamics, neither matter nor energy can be either created or destroyed; natural resources are therefore transformed into both useful products, called goods, and harmful by-products, including what we sometimes call pollution. Not surprisingly, our economic system measures the efficiency of production, or "productivity", in a way that keeps better track of the good things we produce than the bad. But every production process creates waste; why isn't it accounted for? If a country produces huge amounts of aluminum, for example, why isn't the calcium fluoride sludge, an inevitable by-product, accounted for?

Classical economics also fails to account properly for all the costs associated with what we call consumption Every time we consume something, some sort of waste is created, but this fact is conveniently forgotten by classic economists. (See The Story of Stuff) When we consume millions of tons of chlorofluorocarbons (CFCs) each year, are they gone? If so, then what is eating the hole in the ozone layer? When we consume 14 million tons of coal each day and 64 million barrels of oil, are they gone? If so, where is all the extra carbon dioxide (CO2) in the atmosphere coming from?

Past a certain point it is impossible to put a price on the environmental effect of our economic choices. Clean air, fresh water, the sun rising through the mist on a mountain lake, an abundance of life on the land, in the air and in the sea - the value of these things is incalculable. It would be cynical indeed to conclude that because such treasures have no price, it is reasonable to make decisions based on the assumption that they are worthless. As Oscar Wilde said, "A cynic is one who knows the price of everything and the value of nothing."

On November 12, 1936, Winston Churchill grew so exasperated with the continuing failure of Britain to prepare for Hitler's onslaught that he charged in a speech to the House of Commons; "The Government simply cannot make up their minds ... The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences."

IMF, dirty MF, takes away everything it can get
always making certain that there's one thing left
keep them on the hook with insupportable debt
- Bruce Cockburn

~~~~