Posted 03 September 2011, by Stuart Lovatt, Heat My Home, heatmyhome.co.uk
How much of the economic growth, the comfortable wealth, the salaries and pensions pots that our older generations accepted as normal, necessary even, over the last 60 years, was created by borrowing, both financially and ecologically- speaking and which cannot now be sustained either for the current or the next generations?
Look at Ireland as an example. Even its bricks and mortar economy is a mirage which now stands empty and worthless, as the whole economy is built on debt.
To sustain this illusion further, we have inflicted more environmental damage to the planet’s living eco- systems since the 1950’s than was achieved by humanity in the previous 100,000 years. This damage will last for centuries, compared to the benefits which won’t last even one more year. Ireland’s broken economy is showing us what the future holds.
Once our basic human needs were met, continued economic growth did little for most people. During the second half of this economic growth spurt, unemployment rose, inequality rose, social mobility declined, the poorer members of our society lost their basic amenities (such as council housing) while the rich enhanced theirs with second homes.
In 2004, at the height of the biggest economic expansion that the United Kingdom had experienced, there was a huge rise in mental health issues, which are associated with the improvements in economic growth.
Last week, the New York Wall Street consultant Nouriel Roubini, one of the few people who predicted the credit crunch, spelled out the problems:
- Governments can’t afford to bail out the big banks yet again.
- Monetary quantitative easing cannot help our currency depreciation.
- Italy and Spain will be forced to default with Germany not paying out any further aid.
- Karl Marx was partly right when he argued that globalisation and redistribution of income and wealth from labour to capital will lead to capitalism’s self-destruction.
The current economic system cannot address the environmental crisis. The current system advocates economic growth and any environmental damage could be sorted with better technology and efficiency, which will allow us to use fewer resources while increasing economic output.
Nothing remotely like this is happening and in all cases there has been a higher overall consumption of these resources, leading to them being taken from more environmental places such as the Arctic and the Antarctic.
To date, governments have responded to the crisis facing capitalism by seeking to invoke the old political magic again, by trying to ‘kick start the engine’ once more. The means to do this no longer exists anymore. Even if they succeeded, this would only delay the underlying issues.
- Mass youth unemployment and lack of future prospects.
- The inability for people to afford basic housing and get on the housing ladder.
- The affordability of basic amenities such as home energy and food.
The basic ‘glue’ by which any society is bound is cheap energy, and we are faced with a break down or complete collapse. We are at last beginning to talk about issues that are being ignored: exclusion, equality, the unequal rich and the displaced poor.
Are politicians now prepared to ask the big question ‘prosperity without growth’? It’s a revolutionary but much needed idea which is now two years old, and the time has now come.
The credit crunch was not caused by isolated malpractice but by the systematic deregulation of the banking system, in order to stimulate economic growth by creating more and more debt to keep growth going. Growth and the need to encourage growth is the problem.
So how do you escape from growth without risking the economy and our prosperity? Well, under the current financial system, you can’t, because when growth stops, it collapses – but likewise we cannot continue growth on a finite planet with finite resources.
Developing a macro-economic model allows economic output to be stabilised. Possible experiments with measuring the ratio of investment to consumption, changing the nature and conditions of investment, thus shifting the balance from private to public spending, while staying within tight constraints on the use of natural resources, may be the answer.
The redistribution of both income and employment through shorter working hours is essential, to provide everyone with employment and social satisfaction. So is re-regulation of the banks, enhanced taxation of resources and pollution, which discourages manic consumption, the like of which we have seen in the past, with much tighter restrictions on advertising.
This system isn’t much different to today’s system: people will still spend and save, companies will still produce goods and services, governments will still raise taxes and spend money. It requires more governmental intervention; but so does every option we face from now on, especially if we try to sustain the current growth illusion.
The results, though, are radically different, with a more stable economic system which avoids both financial and environmental collapse.
I fear we may be entering a stage of a positive feedback loop environmentally. Stronger larger hurricanes blow down houses – mankind uses more natural resources to repair the damage, meaning even more CO2 emissions and forest depletion resulting in stronger future hurricanes – mankind chops down more trees to repair the damage – and so on.
From this day forward, doing nothing is not an option, so re-investing in new ways to power our civilisation is now possible, and at least we have the beginnings of a plan B.
If you are serious about reducing your household’s dependence on conventional energy, then I would recommend more financially attractive micro generation systems such as solar panels and air source heat pumps.