Phil's Occasional Blog

Still the Best Kiwi Band Ever

Like a Parrot in a Flaming Tree

But like a parrot in a flaming tree
I know, it's pretty hard to see
And I'm beginning to wonder if it's time for a change

- Lyric by Phil Judd, from Split Enz's Time for a Change, on their 1975 Mental Notes album

It's not just Phil Judd wondering.

Amanda Kovattana can see the parrot:

"Huge assumptions were going down here about competition being the guiding principle of societies, not cooperation. I was beginning to see the light at the end of the tunnel.



There were no real truths, here, about human nature at all, not even economic truths. These were just ideas forced upon us and here we were going along with it, giving lip service to free market rhetoric. I longed for the day that the ideology of free market capitalism would become as abhorrent as the theory of eugenics. Given the recent financial unraveling, I may not have to wait very long.

"

So can Michael Tobis:

The current financial disaster is based on people deluding themselves that they had eliminated risk, when in fact they had coupled risk. The consequence is that small failures were avoided at the expense of big failures.

The whole setup of modern human activity makes a comparable error. There is no such thing as unlimited growth. All growing systems reach limits. The most casual understanding of exponential growth (h/t HR) makes this clear.

Either fuel supply or carbon waste are likely candidates to be the limit we hit first, but there are others. It doesn't matter. The "growth forever" idea is really "growth until it stops". If we base everything we do and everything we think on an assumption of growth, we start to build things in to protect the growth.

Much of government of the past century has been about protecting the growth. Sooner or later it is doomed to fail.

Has this just happened? Has the system reached old-fashioned bubble-popping so emphatically and so hard upon its physical limits that we will be unable to right it? Maybe, but probably not.

The problem is that righting it is not what we need to do. What we need to do is relax.

What we will inevitably try to to is rebuild the tightly coupled growth-dependent system that has spectacular failures built into its whole M.O. Realistically, some of this is unavoidable at this stage, but it's an ill-timed distraction. What we ought to do, instead, is reduce growth dependency and increase redundancy and resilience.

We need to convert to a world where less wealth gets created, and less wealth gets destroyed.

This is the relaxation scenario; it is easier on everybody, but it will take some creativity. In a perceived crisis, can we find the creativity to say, "no, we don't particularly want things to get back to normal"?

Resilience, not growth, is the goal of our time. We need to build a world where time to think and time to enjoy and time to care is valued more, where time to achieve and money to spend is valued less. Say you don't want no diamond rings and I'll be satisfied. Tell me that you want the kind of things that money just can't buy.

Trying to find sustainability in conventional economics at a time of stress is a category error if ever there was one.

It turns out that many parts of neo-classical economics are just plain wrong. For instance, "Daniel Kahneman received the Nobel Prize for the work he did in collaboration with Amos Tversky [showing that systematic biases prevent humans from being truly rational] , who would have no doubt shared in the prize had he been alive" (from Wikipedia article). And while the 'law' of supply and demand, predicting price movement, appears to be a reasonable description of general effects, all other things being equal, there have proven to be far too many variables that interact with poorly rational agents to affect price. It can't explain what happens, for example, to the price of oil.

So many things in economics have turned out to be beliefs rather than real laws. Many times they have been wishful thinking rather than verified phenomena. We need to consider some of these commonly held beliefs and question their validity in an attempt to find real explanations for what is going on.

Let's start with a common belief held by economists, politicians, and the general public — most everybody — that growth is always and forever a good thing. Even Paul Krugman, the latest Nobel Memorial winner believes it. You probably do too. But let's consider the boundary conditions.

We live on a finite world. Economic growth, which is defined as a percentage increase, year over year, of Gross Domestic Product (or gross world product for the whole planet), implies that mankind's footprint on the Ecos is increasing each year. We achieve this by taking more of natural resources, converting them to human-desired capital, and belching out waste products for nature to absorb. Here is an absolute fact that should be easy for everyone to understand. You cannot grow infinitely in a finite world. It is physically impossible (not to mention the psychological stress of crowding).

Growth includes growth of profit, growth of sales, growth of markets, and, to make the latter possible, growth of the population. Growth creates more jobs so that the growing population has something productive to do and an income so as to buy the growing number of goodies and fa(s)t foods. What's not to like about growth? As long as we are growing at a 'reasonable' rate all is right with the world. Right?

So much for rational agent theory. No one in their right mind can believe that growth, even at a 3 - 5% rate per year could go on forever. At a five percent growth rate, whatever is growing doubles every 14.21 years! Given a finite volume in which to grow, how long will it take to fill the volume completely? It is patently absurd for anyone to believe that growth in and of itself is a goal of economic activity.

And Robert Nadeau:

• The market system is a closed circular flow between production and consumption, with no inlets or outlets.
• Natural resources exist in a domain that is separate and distinct from a closed market system, and the economic value of these resources can be determined only by the dynamics that operate within this system.
• The costs of damage to the external natural environment by economic activities must be treated as costs that lie outside the closed market system or as costs that cannot be included in the pricing mechanisms that operate within the system.
• The external resources of nature are largely inexhaustible, and those that are not can be replaced by other resources or by technologies that minimize the use of the exhaustible resources or that rely on other resources.
• There are no biophysical limits to the growth of market systems.

If the environmental crisis did not exist, the fact that neoclassical economic theory provides a coherent basis for managing economic activities in market systems could be viewed as sufficient justification for its widespread applications. But because the crisis does exist, this theory can no longer be regarded as useful even in pragmatic or utilitarian terms because it fails to meet what must now be viewed as a fundamental requirement of any economic theory—the extent to which this theory allows economic activities to be coordinated in environmentally responsible ways on a worldwide scale. Because neoclassical economics does not even acknowledge the costs of environmental problems and the limits to economic growth, it constitutes one of the greatest barriers to combating climate change and other threats to the planet. It is imperative that economists devise new theories that will take all the realities of our global system into account.

And Ilargi sees it with outstanding clarity:

There is a completely unfounded and utterly irrational picture of the world being touted that claims all will be fine, and soon too. When the economy rebounds, in that familiar imaginary place that’s just around the corner beyond the horizon, the wonderful certainty of unbounded growth will dissolve all debt and make us richer than we've ever been before. All of us.

It would not be correct to call this a fantasy. It is much more. It’s religion. It’s chasing the golden calf. And it does not condone critical views and questions. Growth is such a powerful deity that taking on additional, even unlimited, debt, in order to get to the promised land tolerates no scrutiny, a principle not unlike the mind-frame of your everyday suicide-bomber.

Growth, in the eyes of its believers, knows no more limits than do the powers of any of the all-seeing ever-present gods found in the monotheistic religions, Judaism, Islam and Christianity. The faithful growth flock, after having grown from A into A+, accumulating already seemingly infinite earthly possessions, blindly follows their shiny calf along its unidirectional and one-dimensional path to more of the same. The Lord of More. And as long as no questions are ever asked, the only limits will be those imposed by another deity, Gaia.

I have a question. I would like to know why no-one ever asks what exactly is is that they wish to grow into. Where it is they want to go. We have all seen the surveys that show, without missing a beat, that the happiest people on the planet do not live in the richest communities, but in the closest knit ones. Happiness is not two and a half people in a 10000 square foot mansion with wall-size TV’s and a garage filled with vehicles modeled after rhinoceroses.

So why the heck doesn't George Bush, Gordon Brown, the members of that strange pseudo-scientific cult of "economics", and everybody else get it?

The problem is in the fundamentals, not in the detail.

We can't see the flaming parrot for the tree.

Footnote:

Radio New Zealand has produced an excellent documentary series, EnzOlogy, about Split Enz. A live performance of Time for a Change appears at the end of part 10. (Warning, 98MB download.) Wonderful. The original album version is featured in part 2.