Summary and Conclusions

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Summary and Conclusions
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What I hoped you learned in this course...
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The Nature of Reality

• The earth is finite
• The laws of thermodynamics apply
• The economic system is a subsystem of the global
  ecosystem

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The Order of Analysis

• Desirable ends (ethics, psychology, sociology,
  etc.)
• Scarce resources (ecology, physics)
• Nature of scarce resources (ecology, physics,
  economics)
• Allocation (economics, politics)
• We can only decide how to allocate after we know
  what we want, and the resources we have to attain
  it.

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Desirable ends What makes people happy?

• Money?
• (Not very, and only relative wealth once basic
  needs are met)
• Desiring less
• The aspiration gap
• Friends and family
• Community
• Helping others
• Getting old
• Keeping lists of things for which youre grateful

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Satisfaction and income
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What makes people unhappy?

• Pursuit of material gainyoung adults who focus
  on money, image and fame tend to be more
  depressed, have less enthusiasm for life and
  suffer more physical symptoms such as headaches
  and sore throats than others. Kasser, T.
  (2002). The High Price of Materialism. Cambridge,
  MIT Press.
• Comparing yourself with others
• Status is a never-ending tread-mill

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Economics Should be a Science, not an Ideology

• Science empirical testing of hypotheses and
  theories
• Ideology refuse to test hypotheses, or refuse to
  discard them when empirical evidence contradicts
  them
• Starting from the assumption that markets
  (private property rights) are always best is
  ideology
• Starting from assumption that socialism (public
  property rights) is always best is ideology

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The Economic system is inherently complex

• We depend on natural resources, and must
  understand both physics and ecology
• Some resources meet the criteria for efficient
  market allocation, most do not
• Human desires are complex
• Human motivations are complex
• Markets are never perfect

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Market model is super-simplified

• Natural resources are infinite
• Most goods and services fit the market model
• Only matters, more is always better
• Calories model of nutrition
• Only concern is efficient allocation

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Therefore, economists must look at

• Ecological Sustainability
• Social Justice
• Efficient Allocation

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Trade-offs

• Conventional course
• Clear understanding of over-simplified market
  system
• Indoctrination into dominant paradigm
• Faith based
• Better prep for advanced NCE

• This course
• Fuzzy understanding of complex system
• Adequate exposure to ask questions, decide for
  yourselves
• You must test theories against experience
• Adequate prep for EE and NCE

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Sometimes, it is better to be vaguely right than
precisely wrongAmartya Sen
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What has my generation done for the world?

• Weve inherited more from the past generations
  than all others
• Weve taken more from future generations than all
  others
• Half of all oil ever used was used in your life
  time
• Under business as usual, ¾ of all oil ever to be
  used will be used in my lifetime

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What must your generation do?
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Would Addressing Ecological Problems be be a
Sacrifice?

• Stern review on climate change estimates that
  investing 1 of annual GNP required to stabilize
  climate
• Would returning to your living standard in July
  be a sacrifice?
• Economists say yesthe cost of mitigating climate
  change is too high
• Could we solve the problem with 1 of GNP?

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Would Addressing our Problems be a Sacrifice?

• Over 90 reduction in fossil fuel use required
• Per capita income (adjusted for inflation) in
  1969 was lt1/2 of todays GDP, and poverty was
  lower
• We could live at 1969 standard with 1/2 of
  current CO2 emissions
• With European efficiency levels, we could have a
  1969 lifestyle with ¼ of current emissions
• With proper incentives in place, we could do
  much, much better

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How Miserable was Life in 1969? The Genuine
Progress Indicator
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How do We Get There?

• Information flows
• Transparent government
• Independent media
• Education
• Changing the rules
• Democratic control over our shared natural and
  cultural heritage
• Cooperative provision/management of non-rival
  resources
• Just distribution of resources provided by nature
  and society

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How do We Get There?

• Changing the goalswhat is desirable?
• Shared vision of a sustainable and desirable
  future.
• Continuous economic growth is undesirable
• Doom and gloom doesnt win converts
• Changing the paradigmwhat is possible?
• Economy is sustained and contained by the global
  ecosystem
• Continuous economic growth is impossible
• Macroallocation is central problem

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Summary and Conclusions

• We have the knowledge and policies to build a
  sustainable economy
• One of the most powerful (and most neglected)
  tools is developing and communicating a shared
  vision of a sustainable and desirable future
• Another powerful tool is the democratic process,
  which we have abandoned in this country

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Summary and Conclusions

• The first steps (maybe the first 2/3 in the US)
  can be cost free (no changes in QOL, education,
  health, happiness) with current technology, or
  even beneficial
• e.g. Less fossil fuels more health mental,
  physical, financial, environmental
• Appropriate policies provide incentives for
  better technologies
• The remaining 1/3 can be cost free with new
  technologies

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Summary and Conclusions

• Sustainability is not a sacrifice our current
  lifestyle is
• Naïve and utopian?
• So were the ideas of democracy, an end to
  slavery, women's rights
• It's naïve and utopian to think we can survive
  without making these changes

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Take Home Message for Course Sustainability
does not Require Sacrifice,Economic Growth Does
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Course Number 90162

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