Wednesday, October 28, 2009

The Paradox of the Economic Crisis

The economy has definitely slowed, and everyone is feeling it. I am thinking about all those Americans that are laid off, or worse: those that are on their last unemployment check or beyond. But not just them. What about the millions that are now homeless due to flooding in India and now Vietnam, the Philippines, Maldives.....all over it seems. What is their future going to be like? How will they economically survive? How does the global financial crisis impact their lives on top of the physical emergency they find themselves in ?

The world's GDP was coasting along till recently at the growth rate of about 3.5% per year. And every year CO2 emissions have increased: from about 18.500 million metric tons in 1990 to about 26.000 million metric tons per year in 2006 --a stunning 71% increase of CO2 emissions or also an increase of around 3.5% per year. In our economy growth in world GDP has meant growth in CO2 emissions as well.

 During this time only a few economists have fretted about the price that will be exacted to the natural world -- a price that has never been part of the profit driven equations. Or maybe we should ask that question the other way around: what is the price in ecological damage that will be exacted by the natural world, Gaia if you like,  as response to the manifestations of greed and senseless consumption? After all the natural resources and processes that create real wealth and allow higher levels of development are usually not extractive --they follow an economy of generosity-- and thus defy any quantitative equivalency in most economic models and thinking. In other words the resources that nature provides, such as clean air and rain, ecological abundance, diversity,  have yet to be duly calculated as real costs and benefits in prevalent economic models.

But even if you did bring those type of factors provided by nature into account --they wouldn't be able to count for the costs of natural disasters. Capitalism in the late 20th and beginning 21st century is coming to its logical conclusion within the context of resource depletion and extreme inequality, perhaps most grotesquely so in the US. Unregulated capitalism has not only been a financial disaster, it has brought  ecological disaster and lately it has ruined the very pillars of democracy.
Global 'Weir-ding' (global warming gives the wrong impression to the masses), the melting of the 3 poles (including the Himalayas), the agricultural  collapse, the drying of the Amazon, the depletion of the oceans, etc. -- they all have to do with an extractive greed driven model that monopolizes wealth and marginalizes most people in the world. The limitations of this model come into stark view when resources such as oil and food are getting scarce and inequality reaches its peak. It is now when the whole system breaks apart --it is so deeply unsustainable.

I am re-reading my own gloomy writing so far and was wondering where I might find a ray of hope --and that is where the paradox of the economy comes in.
Despite the best efforts of informed minds such as Al Gore and Lester Brown, the the vast majority of the body of politics, hasn't been able to hear  the 'inconvenient truth'  --let alone act on it with urgency. America, still consuming more than 20% of the worlds resources, curiously exempted itself from Kyoto, the urge to develop China has polluted vast ecological resources, hundreds of coal plants are still being built, and most politicians have never seen a dollar they don't like (and have thus sold their souls to the vested (corporate) interests and destroyed democracy). Next year, 2010 China's CO2 emissions will start to exceed those of the US.  Things have been stuck.

 Until now: the time of  the worldwide economic crisis: long simmering, but showing itself starting in 2007, growing into 2009 and probably reaching its low point in my estimate not until 2011 or 2012 --if at all. In 2008 the worlds GDP dropped by almost 3% and, in its footsteps so did CO2 emissions. Optimistically stated: since we assumed an increase of about 3% and we actually got about a 3 % decrease, CO2 emissions have dropped 6% in one year compared to what was expected. Say the crisis lasts another 3 years or so, and economic activity recedes accordingly, we can expect a drop of let's say another 10% to 15% or so in CO2 emissions. I just found some graphs from Lester Brown and his Earth Policy institute that thinks that emissions have dropped since 2007 by a whopping 9%. That is very significant.
Here is the graph for the US--look at the funny tail at the end -- brings us back to the CO2 emissions in the mid 90-ties:

As a consequence in the last year many plans for new coal plants have been shelved --there may not be any demand. Nobody is consuming in quite the same way any longer since people's budgets are limited and debt is seen in a different light: debt has become real since the days of easy credit based on housing hilarity are over for good.The recession succeeds where the politicians failed: a much needed drop in CO2 emissions. Clearly nature itself could be one of the 'winners' and CO2 may be brought back in line from about 390 ppm to the desirable 350 ppm by say 2040 (optimistically), not though the success of politicians, but through their failure.

I point this 'positive side effect' of the recession out --reduced CO2-- not to make light of human suffering during this transition when we see the end of capitalism in sight. Budgets are constrained due to lack of currency flow throughout the system, any credit is sucked into the hole of credit default swaps, while food reserves in storehouses have been strained to the max. In the resulting smaller and larger 'resource wars' there is very little consideration for the population itself  -- in fact many warlords feed on chaos and anomy--with failed states on the rise: think of Iraq or the Horn of Africa or Sub-Sahara or Afghanistan, some say even the US itself (and the list goes on and on) with countless dispossessed people on the run and war and violence becoming a way of live. Top that scenario off with Global 'Weir-ding' and its endless parade of droughts and floods and suddenly there are a lot of people driven out of their houses and off the land...... a flood of refugees, perhaps over a billion, is on its way.

from climate.....
or war....

Thus for the poorest and totally exposed and vulnerable, the capitalist crisis means: less help in an already desperate situation. Often times it means hunger and demise. A shocking 16.000 children per day die from starvation. That is 11 children per minute. That is right now.....and again.....
Yet food aid has dropped dramatically: the US has pledged 800 million less to food aid in 2009. Rich Saudi Arabia went down from 500 million in 2008, to 10 million so far in 2009, the EU dropped its contribution by 130 million, etc.
Josette Sheeran, head of the UN World Food Programme (WFP) warned that the result of these drops in funding may well be the "loss of a generation of children to malnutrition, food riots and political destabilization".

What all of this points out is that conventional economic thinking has missed the boat completely on understanding the roots of the recession and thus failed to sound the alarm. Now the economic models and teaching should be overhauled and revolutionized to start actively creating survival models that are in tune with the planet we live on and who (and how many) we are as humans.
For models of economic sustainability in a post capitalist world, we need to be inspired by Gaia and its regenerative power more deeply, and start mimicking its intricate and inclusive 'economy of generosity" --if we want to survive as a human family.

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