Future Positive — David Korten writes: Wall Street is bankrupt. Instead of trying to save it, we can build a new economy that puts money and business in the service of people and the planet — not the other way around.

Whether it was divine providence or just good luck, we should give thanks that financial collapse hit us before the worst of global warming and peak oil.

As challenging as the economic meltdown may be, it buys time to build a new economy that serves life rather than money. It lays bare the fact that the existing financial system has brought our way of life and the natural systems on which we depend to the brink of collapse. This wake-up call is inspiring unprecedented numbers of people to take action to bring forth the culture and institutions of a new economy that can serve us and sustain our living planet for generations into the future.

The world of financial stability, environmental sustainability, economic justice, and peace that most psychologically healthy people want is possible if we replace a defective operating system that values only money, seeks to monetize every relationship, and pits each person in a competition with every other for dominance.

From Economic Power to Basket Case – Not long ago, the news was filled with stories of how Wall Street’s money masters had discovered the secrets of creating limitless wealth through exotic financial maneuvers that eliminated both risk and the burden of producing anything of real value. In an audacious social engineering experiment, corporate interests drove a public policy shift that made finance the leading sector of the U.S. economy and the concentration of private wealth the leading economic priority.

Corporate interests drove a policy agenda that rolled back taxes on high incomes, gave tax preference to income from financial speculation over income from productive work, cut back social safety nets, drove down wages, privatized public assets, outsourced jobs and manufacturing capacity, and allowed public infrastructure to deteriorate. They envisioned a world in which the United States would dominate the global economy by specializing in the creation of money and the marketing and consumption of goods produced by others.

As a result, manufacturing fell from 27 percent of U.S. gross domestic product in 1950 to 12 percent in 2005, while financial services grew from 11 percent to 20 percent. From 1980 to 2005, the highest-earning 1 percent of the U.S. population increased its share of taxable income from 9 percent to 19 percent, with most of the gain going to the top one-tenth of 1 percent. The country became a net importer, with a persistent annual trade deficit of more than three-quarters of a trillion dollars financed by rising foreign debt. Wall Street insiders congratulated themselves on their financial genius even as they turned the United States into a national economic basket case and set the stage for global financial collapse.

All the reports of financial genius masked the fact that a phantom-wealth economy is unsustainable. Illusory assets based on financial bubbles, abuse of the power of banks to create credit (money) from nothing, corporate asset stripping, baseless credit ratings, and creative accounting led to financial, social, and environmental breakdown. The system suppressed the wages of the majority while continuously cajoling them to buy more than they could afford using debt that they had no means to repay.

A Defective Operating System – The operating system of our phantom-wealth economy was written by and for Wall Street interests for the sole purpose of making more money for people who have money. It makes cheap money readily available to speculators engaged in inflating financial bubbles and financing other predatory money scams. It makes money limited and expensive to those engaged in producing real wealth — life, and the things that sustain life — and pushes the productive members of society into indebtedness to those who produce nothing at all.

Money, the ultimate object of worship among modern humans, is the most mysterious of human artifacts: a magic number with no meaning or existence outside the human mind. Yet it has become the ultimate arbiter of life — deciding who will live in grand opulence in the midst of scarcity and who will die of hunger in the midst of plenty.

The monetization of relationships — replacing mutual caring with money as the primary medium of exchange — accelerated after World War II when growth in Gross National Product, essentially growth in monetized relationships, became the standard for evaluating economic performance. The work of the mother who cares for her child solely out of love counts for nothing. By contrast, the mother who leaves her child unattended to accept pay for tending the child of her neighbor suddenly becomes “economically productive.” The result is a public policy bias in favor of monetizing relationships to create phantom wealth—money—at the expense of real wealth. (06/08/09)

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CommUnity of Minds — Herman Daly writes: A steady-state economy is incompatible with continuous growth—either positive or negative growth. The goal of a steady state is to sustain a constant, sufficient stock of real wealth and people for a long time. A downward spiral of negative growth, a depression such as we are entering now, is a failed growth economy, not a steady-state economy. Halting an accelerating downward spiral is necessary, but is not the same thing as resuming continuous positive growth.

The growth economy now fails in two ways: (1) positive growth becomes uneconomic in our full-world economy; (2) negative growth, resulting from the bursting of financial bubbles inflated beyond physical limits, though temporarily necessary, soon becomes self-destructive. That leaves a non-growing or steady-state economy as the only long run alternative.

The level of physical wealth that the biosphere can sustain in a steady state may well be below the present level. The fact that recent efforts at growth have resulted mainly in bubbles suggests that this is so. Nevertheless, current policies all aim for the full re-establishment of the growth economy. No one denies that our problems would be easier to solve if we were richer. The question is, does growth any longer make us richer, or is it now making us poorer?

I will spend a few more minutes cursing the darkness of growth, but will then try to light ten little candles along the path to a steady state. Some advise me to forget the darkness and focus on the policy candles. But I find that without a dark background the light of my little candles is not visible in the false dawn projected by the economists, whose campaigning optimism never gives hope a chance to emerge from the shadows.

We have many problems (poverty, unemployment, environmental destruction, budget deficit, trade deficit, bailouts, bankruptcy, foreclosures, etc.), but apparently only one solution: economic growth, or as the pundits now like to say, “to grow the economy”– as if it were a potted plant with healing leaves, like aloe vera or marijuana.

But let us stop right there and ask two questions that all students should put to their economics professors.

First, there is a deep theorem in mathematics that says when something grows it gets bigger! So, when the economy grows it too gets bigger. How big can the economy be, Professor? How big is it now? How big should it be? Have economists ever considered these questions? And most pointedly, what makes them think that growth (i.e., physical expansion of the economic subsystem into the finite containing biosphere), is not already increasing environmental and social costs faster than production benefits, thereby becoming uneconomic growth, making us poorer, not richer?

After all, real GDP, the measure of “economic” growth so-called, does not separate costs from benefits, but conflates them as “economic” activity. How would we know when growth became uneconomic?

Remedial and defensive activity becomes ever greater as we grow from an “empty-world” to a “full-world” economy, characterized by congestion, interference, displacement, depletion and pollution. The defensive expenditures induced by these negatives are all added to GDP, not subtracted. Be prepared, students, for some hand waving, throat clearing, and subject changing. But don’t be bluffed.

Second question; do you then, Professor, see growth as a continuing process, desirable in itself– or as a temporary process required to reach a sufficient level of wealth which would thereafter be maintained more or less in a steady state?

At least 99% of modern neoclassical economists hold the growth forever view. We have to go back to John Stuart Mill and the earlier Classical Economists to find serious treatment of the idea of a non-growing economy, the Stationary State.

What makes modern economists so sure that the Classical Economists were wrong? Just dropping history of economic thought from the curriculum is not a refutation! (06/08/09)

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Visualizing Economics — Timothy Wilken writes: I was fortunate to come across a website created and presented by Economist-Artist Catherine Mulbrandon.

She describes herself and her passion like this:

At Catherine’s website you will find information about the US and World economy presented through graphs, charts and maps. You can contact her at: catherine[at]visualizingeconomics.com

This unique website presents some of today’s most complex economic information in striking and usually much easier to understand images. A free subscription is also available for bringing these amazing graphics to your email in-box. (06/08/09)

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BBC Environment & Technology — The world’s first floating wind turbine is to be towed out to sea this weekend. Statoil’s Alexandra Beck Gjorv told the BBC the technology, the Hywind, to be put off Norway’s coast - “should help move offshore wind farms out of sight”.

And it could lead to offshore wind farms eventually being located many miles offshore, away from areas where they cause disruption, Ms Gjorv added. This would benefit military radar operations, the shipping industry, fisheries, bird life and tourism.

“Taking wind turbines to sea presents new opportunities,” said Ms Gjorv, of Statoil’s new energy division. “The wind is stronger and more consistent [and] areas are large.”

Floating wind farms are set to be connected to mainland grids via cables across the seabed. The longer the cable, the more expensive it is, so the distance from land is not set to become unlimited, explained Ms Gjorv.

The Hywind, a 2.3 megawatt (MW) wind turbine built by Siemens, combines technologies from both the wind farming industry and the oil and gas sectors, and will be tested off the coast of Norway for two years. In a similar way to how large parts of icebergs are hidden below the sea surface, the turbine has a 100 metre draft that is anchored to the seabed with cables, that can be up to 700 metres long. …

Floating wind farms could later be established off both coasts of North America and off the Iberian peninsula and the coasts of Norway and the United Kingdom, she said. These farms could provide an additional source of energy for countries that have run out of space for their onshore wind farms, or where there is not enough wind on land, Ms Gjorv added. (06/08/09)

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BBC Animal Extinction Watch —The hangul - a sub-species of red deer found only in Indian-administered Kashmir - appears to be making a comeback. The latest census, conducted in March, puts the raw count of the endangered animal at 175. The increase in numbers may be nominal but wildlife authorities say it’s a sign of hope.

The hangul population started growing before the outbreak of armed conflict in the state two decades ago. Wildlife officials say at that time there were up to 800 in Dachigam National Park in the outskirts of Srinagar. People living in neighbourhoods outside the park say the hangul then was so commonplace that it even used to visit their mustard fields and vegetable gardens, damaging crops as it did so. …

Mohammad Qasim Wani, now aged about 90 and a retired wildlife official, says there were at least 3,000 hangul in the Kashmir area during the reign of the last monarch more than 60 years ago. “The hangul was widely distributed. I saw it in Lolab, Kupwara, Gurez, Teetwal, Uri, Kulgam, Pahalgam and other places. I saw herds of hangul as large as 200 and at times even 500. Today, when I think of the hangul, I cry.” …

The wildlife warden for central Kashmir, Rashid Naqash, says the latest census has shown an improvement in the number of male hangul which promises better prospects for mating. He says the female-fawn ratio has improved too - boding well for a sustained population growth.

The wildlife department is all set to start work on a $4.68m (£2.92m) plan to protect and promote the hangul.

Mr Qasim says the hangul became vulnerable after the fall of the monarchy in 1947. “Bureaucrats indulged in wanton killing of the hangul for sport.” Besides poaching, the hangul faced a threat to its existence from human encroachments on forestry which led to the fragmentation of its habitat.

The five-year project includes a survey and census of the creature and its habitat along with similar studies of the leopard and black bear. The project will use the latest wild animal photograph technology, including the use of satellite imageries and geographical information systems. As part of the project, the hangul’s habitat will be improved through reforestration, soil and water conservation, pasture development, fire protection measures and the construction of a carnivore proof enclosure.

It will also include infrastructure development to stop poaching and grazing. The co-operation of local communities will be sought through awareness programmes.

Wildlife officials say that credit for the increase of hanguls - even if modest - in the recent census goes to local communities who persuaded the bakarwals not to graze their sheep and cattle in designated areas. (06/08/09)

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