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Posts Tagged ‘sustainable development’

I had the pleasure of speaking at an event about alternative economic models in Edinburgh this week, but I was as studious as the rest of the audience listening to Ian Johnson, Secretary General of the Club of Rome. Next time someone suggests economics is part of the problem of sustainable development, but can’t contribute to the solution, I’ll refer them to this… He laid out 6 challenges:

  1. Loss of ecological capital (biodiversity, climate, fisheries, forests).
  2. Unemployment and underemployment.
  3. Fiscal and banking crises, linked to inadequate regulation.
  4. Food crises, of which there have been 2 in the last decade
  5. Poverty crisis, including rising inequality in developed and developing countries.
  6. Security threats to social cohesion.

The root causes of these are linked to the underpinning value system, economic growth paradigm, and inadequate institutions and governance systems. He highlighted some economic faults in particular:

  • That growth (in GDP) is not growth in wealth, as it ignores the depletion of natural capital, social costs of unemployment and distributional issues.
  • The need to internalise more externalities, not just re: non-market goods, but also the public benefits of market goods.
  • Discount rates need to be rethought, as they discriminate against future generations.
  • Uncertainty and non-linear events need to be handled better.
  • Financial markets are now divorced from the real economy.

Finally, some suggestions to change for the better:

  • Formal incorporation of natural capital into economics.
  • Decouple unemployment from growth, and wellbeing measures from material flows, leading to new measures of welfare (new GDP).
  • Include the price of carbon in energy and start adapting to 2ºC warming.

Leaves you wondering why we aren’t more open to alternatives to GDP, or is this a problem that is too complex for people to grasp?

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Films from the event are now online and can be viewed on the Youtube channel.

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I went and chewed the cud with Britain’s top business herd (the Confederation of British Industry) last night, and witnessed the new Chancellor’s first major speech since taking office. He took the chance to make some expected attacks on the previous Government, but also announced some pointers for his emergency budget on 22nd June. Among these is the commitment to raise the threshold for paying income tax, a clear sign of the Lib-Dems’ influence on the coalition’s plans.

Osborne also tried to put down a strapline ‘Britain is open for business’. He is trying to capture his intentions to introduce more business- and investment- friendly policies (e.g. on corporation tax), but the audience may have felt a little confused because they weren’t aware we had shut.

The evening moved on to an after-dinner speech from Dame Ellen MacArthur, of global solo-yachting fame. She rightly gets respect for an incredible record, but having achieved her childhood dreams, she has found a new focus in life: sustainable development, or as she nicely phrased it ‘building a ship that sails forever’. This is probably not the traditional message for Britain’s business community, but it was refreshing to hear from such an inspiring source.

MacArthur’s views highlighted the lack of mention of the environment and resource use in the Chancellor’s speech – these topics still seem a long way down his priorities. So while he may be trying to reopen Britain for business, we should ask: ‘what sort of business?’ If it is business that seeks to make sustainable use of the environment, then I would wish the coalition a safe voyage.

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