Transcript L10-237 summary and conclusions

Summary and Conclusions
Course Goal
• Explore the three basic questions that arise from
the definition of economics, particularly as they
apply to essential resources with no substitutes:
– What are the desirable ends towards which society
should allocate its scarce resources?
– What are these scarce resources, and what are their
characteristics relevant to allocation?
– Based on the nature of the scarce resources and
human nature and institutions, what allocative
mechanisms are best for achieving these desired
ends?
Course Objectives
• Apply the theories of ecological economics and
market failure to some of the most pressing problems
society currently faces.
• Take home messages:
– Most of the serious crises we face were caused by
catastrophic failure of the current economic system
– We can't solve problems by using the same kind of thinking
we used when we created them
Albert Einstein
– Most pressing issues concern non-rival and/or nonexcludable resources: Cooperation essential to solve them
– Scale should be price determining, not price determined
Course Objectives
• Review empirical studies of human
behavior/psychology to build our economic theory on
a solid foundation
• Take home messages:
– People are not inherently insatiable
– Little evidence that more economic growth makes us better
off
– People are altruistic as well as selfish
– People are cooperative as well as competitive
Course Objectives
• Critique conventional theories of macroeconomics from
empirical validity of underlying assumptions to desirability of
theoretical outcomes.
• Take home messages:
– Conventional theories on macroeconomics reasonably good, but lack
any notion of ecological constraints
– Goals and indicators of conventional macroeconomists inappropriate
– Growth does not end poverty
– Monetary policy is a blunt instrument
– Fiscal policy far more effective at achieving goals of ecological
economics
– Government currently converting fiscal policy to monetary policy,
opposite approach is required.
Course Objectives
• Critique conventional theories of international economics from
empirical validity of underlying assumptions to desirability of
theoretical outcomes.
• Take home messages:
– Theory of comparative advantage is irrelevant in world of global
financial flows; absolute advantage pertains
– Goal of globalization is ever increasing growth
– Globalization tries to create one global economy, eliminating local
control. Better approach is internationalization
– Free global financial flows inherently destabilizing, primarily
speculative, not productive.
Course Objectives
• Evaluate and Design policy tools based on ecological
economic principles
• Take home messages:
– Policy tools exist to address serious problems of scale, distribution and
allocation
– Six policy principles
• In ever-changing system with irreducible uncertainty, all policies must use adaptive
management
• Need institutions on the scale of the problem
– Political will to implement them is lacking
– If goals are wrong, can never solve problems
Course Objectives
• Apply what you learn to a real life problem, use the problem to
better understand course material
– Reflect on the relationship between your project and the course, your
other UVM courses, your life goals and experiences.
How Can we Change Complex
Systems
• Leverage points
– Where can we have the most impact?
• See Meadows, Donella. 1997. “Places to
Intervene in a System,” Whole Earth,
winter issue.
10 Leverage Points
• 10. Numbers (subsidies, taxes, standards).
– Standard economists stuff
– Can still be powerful
• 9. Buffering capacity
– E.g. acid rain and calcium carbonate
• 8. Material stocks and flows.
– E.g. replacing transportation system,
10 Leverage Points
• 7. Regulating negative feedback loops
– Feedback has to be proportional to problem
– Markets and feedback loops
• 6. Driving positive feedback loops.
– Slow them down, let negative feedbacks do
their thing
– E.g. Financial crisis
• 5. Information flows.
– E.g. publicizing pollution, labeling, etc.
10 Leverage Points
• 4. The rules of the system
– Democratic control over the commons, the
media, and the problem of macroallocation
– Cooperative provision/management of nonrival resources, including information
– Return the right to seigniorage to government
– Just distribution of resources provided by
nature and society
• 3. The power of self-organization.
– Maintain diversity
10 Leverage Points
• 2. The goals of the system.
– What is socially and psychologically
desirable?
– Shared vision of a sustainable and desirable
future.
– Continuous economic growth is undesirable
– Doom and gloom doesn’t win converts
Would Addressing Current Crises
Require Sacrifice?
• Over 80% reduction in fossil fuel use
required
• Per capita income (adjusted for inflation) in
1969 was 1/2 of today’s GDP, and poverty
was lower
• We could live at 1969 standard with ½ of
current CO2 emissions
– With proper incentives and technologies, we
could do much better
How Miserable was Life in 1969?:
The Genuine Progress Indicator
10 Leverage Points
• 1. The mindset or paradigm out of which
the goals, rules, feedback structure arise.
– What is biophysically possible?
– Economy is sustained and contained by the
global ecosystem
– Continuous economic growth is impossible
– Macroallocation is central problem
– Humans are social animals, not homogenous
globules of desire, etc.
10 Leverage Points
• 0. The ability to transcend paradigms