On his book Endangered Economies: How the Neglect of Nature Threatens Our Prosperity
Cover Interview of May 02, 2017
In a nutshell
Environmental conservation is essential to a prosperous,
healthy lifestyle. It is a necessity and not a luxury. We are part of the
environment: we evolved with nature and depend on nature. Conserving the
environment means conserving ourselves.
Yet our current economic model poses a threat; the threat is
catastrophic environmental change within decades. This conflict between economy
and environment is not inevitable, but arises from failures in our economic
system. We can readily fix the most egregious flaws in the system to allow the
economy and the environment to coexist and nurture one other.
External costs pose the biggest of these market failures
that threaten the environment. They occur when a third party must pick up the
tab for the negative consequences of a transaction. Let’s say, I buy gasoline
and burn it in my car. Thereby, I harm people, who inhale the exhaust fumes, and
people, whose climate is altered by the greenhouse gases that the car I drive generates.
The people who are injured did not purchase and burn the gas – I did. Yet, I do
not pay for the harm done to them, so there is little to make me aware of it, and
I have no incentive to stop.
A second problem is that property rights are not always
clearly defined, and here, too, the consequences are dire. Valuable capital is
destroyed or harmed. No one owns the fish in the sea; they become property only
in the marketplace. This leads to overexploitation because no one has an incentive
to conserve resources that they don’t own. As a result, many fish stocks have
plummeted by 90% in the last 50 years. It’s not just that the number of fish
has fallen. Small fish tend to mature faster and have a better chance to breed
before being caught; they also have a better chance of escaping capture. Thus, the
process of natural selection has resulted in a diminished population of
ever-smaller fish.
A third problem is that the natural world provides services that
are essential to our prosperity, but that are not valued in our economic
calculations. Natural assets provide a stream of services over time, just as
physical or intellectual capital goods provide a flow of benefits, which makes
the natural world a form of capital. Some of our most important and valuable
assets are in fact natural capital, yet we generally don’t include them in our
accounts or on our balance sheets. Our accounts don’t reflect their loss. Take
the case of fish stocks: we are depleting this asset, yet we don’t mark this in
any of our accounting at the national or personal levels.
The final economic flaw driving conflicts between the
economy and the environment concerns how we evaluate our economic performance:
we worship false gods. We use Gross Domestic Product (GDP) as the performance
standard, but it’s wrong. GDP can go up when bad things happen, such as a
hurricane or flood that necessitates rebuilding and generates income for
contractors and their employees and suppliers. GDP can fall because of good
outcomes, such as the introduction of long-lasting light bulbs. Fewer of these
are sold, leading to a drop in the income of producers – but overall we are
better off because we are using resources and energy more efficiently. We
shouldn’t be rating ourselves by GDP growth, but by sustainable increases in
human wellbeing.
[T]he Holocaust transformed our whole way of thinking about war and heroism. War is no longer a proving ground for heroism in the same way it used to be. Instead, war now is something that we must avoid at all costs—because genocides often take place under the cover of war. We are no longer all potential soldiers (though we are that too), but we are all potential victims of the traumas war creates. This, at least, is one important development in the way Western populations envision war, even if it does not always predominate in the thinking of our political leaders.Carolyn J. Dean, Interview of February 01, 2011
The dominant premise in evolution and economics is that a person is being loyal to natural law if he or she attends to self’s interest and welfare before being concerned with the needs and demands of family or community. The public does not realize that this statement is not an established scientific principle but an ethical preference. Nonetheless, this belief has created a moral confusion among North Americans and Europeans because the evolution of our species was accompanied by the disposition to worry about kin and the collectives to which one belongs.Jerome Kagan, Interview of September 17, 2009
In a nutshell
Environmental conservation is essential to a prosperous, healthy lifestyle. It is a necessity and not a luxury. We are part of the environment: we evolved with nature and depend on nature. Conserving the environment means conserving ourselves.
Yet our current economic model poses a threat; the threat is catastrophic environmental change within decades. This conflict between economy and environment is not inevitable, but arises from failures in our economic system. We can readily fix the most egregious flaws in the system to allow the economy and the environment to coexist and nurture one other.
External costs pose the biggest of these market failures that threaten the environment. They occur when a third party must pick up the tab for the negative consequences of a transaction. Let’s say, I buy gasoline and burn it in my car. Thereby, I harm people, who inhale the exhaust fumes, and people, whose climate is altered by the greenhouse gases that the car I drive generates. The people who are injured did not purchase and burn the gas – I did. Yet, I do not pay for the harm done to them, so there is little to make me aware of it, and I have no incentive to stop.
A second problem is that property rights are not always clearly defined, and here, too, the consequences are dire. Valuable capital is destroyed or harmed. No one owns the fish in the sea; they become property only in the marketplace. This leads to overexploitation because no one has an incentive to conserve resources that they don’t own. As a result, many fish stocks have plummeted by 90% in the last 50 years. It’s not just that the number of fish has fallen. Small fish tend to mature faster and have a better chance to breed before being caught; they also have a better chance of escaping capture. Thus, the process of natural selection has resulted in a diminished population of ever-smaller fish.
A third problem is that the natural world provides services that are essential to our prosperity, but that are not valued in our economic calculations. Natural assets provide a stream of services over time, just as physical or intellectual capital goods provide a flow of benefits, which makes the natural world a form of capital. Some of our most important and valuable assets are in fact natural capital, yet we generally don’t include them in our accounts or on our balance sheets. Our accounts don’t reflect their loss. Take the case of fish stocks: we are depleting this asset, yet we don’t mark this in any of our accounting at the national or personal levels.
The final economic flaw driving conflicts between the economy and the environment concerns how we evaluate our economic performance: we worship false gods. We use Gross Domestic Product (GDP) as the performance standard, but it’s wrong. GDP can go up when bad things happen, such as a hurricane or flood that necessitates rebuilding and generates income for contractors and their employees and suppliers. GDP can fall because of good outcomes, such as the introduction of long-lasting light bulbs. Fewer of these are sold, leading to a drop in the income of producers – but overall we are better off because we are using resources and energy more efficiently. We shouldn’t be rating ourselves by GDP growth, but by sustainable increases in human wellbeing.