Economics - Sarasota County Extension

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Economics - Sarasota County Extension

SarasotaCountyExtensionEconomicsSustainability the next evolution of the science?JP Gellermann, Growth Management Agent III


Right off• Economics is pretty boring…..• What is new is not always right or wrong…• Ishmael is more than your ordinary Gorilla!• Everything is one…at least there are a lotof connections!Sustainable Economics| 2


• Wombat speak truth!Sustainable Economics| 3


Economics• What is Economics?• Where did it originate?• What have been the milestones ofmodern economics?• What is Sustainable Development?• ‘Big Box’ and modern concept of retailand our local economy• What can we do?Sustainable Economics| 4


Origins of Economics• The term economicscomes from the AncientGreek οἰκονομία(oikonomiaoikonomia,"management of ahousehold,administration")• from οἶκος(oikosoikos,"house") + νόμος(nomos,, "custom" or"law"), ") hence "rules ofthe house(hold)".Sustainable Economics| 5


Origins of EconomicsEconomics, at itscore, studies the waysin which societiesallocate limitedi resources, such asland, to provide fortheir needs.Getting Sleepy Yet?Sustainable Economics| 6


Origins of Economics• The works of Aristotle had a profoundinfluence, who in turn influenced thelate scholastics of the 14th to 17thcenturies.• Joseph Schumpeter described thelatter as "coming nearer than anyother group to being the 'founders' ofscientific economics"Sustainable Economics| 7


Origins of Economics• The philosopher Adam Smith (1776)defined what was then called politicaleconomy as "an inquiry into the natureand causes of the wealth of nations",in particular as:a branch of the science of astatesman or legislator [with thetwofold objectives of providing] aplentiful revenue or subsistence forthe people ... [and] to supply thestate or commonwealth with arevenue for the public services.• J.-B. Say (1803), distinguishing i thesubject from its public-policy policy uses,defines it as the science of production,distribution, and consumption ofwealth.Father of Capitalism & Author ofWealth of NationsSustainable Economics| 8


• Alfred Marshallprovides a still widely-cited definition in histextbook Principles i ofEconomics (1890)that extends analysisbeyond wealth andfrom the societal tothe microeconomiclevel:• Economics is a study ofman in the ordinarybusiness of life. It enquireshow he gets his incomeand how he uses it. Thus,it is on the one side, thestudy of wealth and onthe other and moreimportant side, a part ofthe study of man.Sustainable Economics| 9


Economics: TheoryThe 18th century English philosopherand economist Thomas RobertMalthus expressed concern aboutsustainable growth in his 1798 work,"An Essay on the Principle ofPopulation." Malthus predicted thatpopulation growth would outpacesociety's ability to produce food,creating unsustainable conditionswith too many people crowded ontolimited land, resulting in famine, warand death.Economics became known as"the dismal science" in partbecause of Malthus'spessimistic forecast.Sustainable Economics| 10


Counter to Malthus• Food production is stillgrowing, and prices arefalling. According toRose, research andscience will enable us tofeed more billions.• Malnutrition andstarvation reflect politicalincompetence or war,not problems with thefood supply.• Malnutrition andstarvation reflectpoliticalincompetence orwar, not problemswith the food supply.Sustainable Economics| 11


Discussion Question• Was Malthus right?• Was he wrong?Let’s Discussfor 10minutesSustainable Economics| 12


• Neoliberalism… It was an attempt toformulate an anti-capitalist, anti-communistThird Way. Neoliberalismwas originally establishedas something quitedifferent from the freemarket radicalism withwhich it is usuallyassociated today.Current View ofEconomics• The term“neoliberalism” wascoined in 1938 by theGerman scholarAlexander RüstowSustainable Economics| 13


NeoLiberalism• The concept ofneoliberalism as “thepriority of the pricemechanism, the freeenterprise, the system ofcompetition and a strongand impartial state.”• Aimed at promoting thegrowth of nationaleconomies and grossworld productIn the model the individual is autility maximizer with insatiablematerial demands.Sustainable Economics| 14


NeoLiberalism• Neoliberalism is … atheory of politicaleconomic practices thatproposes that humanwell-being can best beadvanced by liberatingindividual entrepreneurialfreedoms and skills withinan institutional frameworkcharacterized by strongprivate property rights,free markets and freetrade.Sustainable Economics| 15


Lets Discuss• Pro’s and Con’s toNeo-Liberalism• In 2006 AllenGreenspan (formerhead of the FederalReserve) stated thatan economy cangrow forever.What do you think? Isthat possible?Sustainable Economics| 16


Myths and the EconomicSystem?Sustainable Economics| 17


Myths of the Modern Age……….. Myth is a universalproperty of human societiesand plays a vital role in everyculture.This assertion becomes easier toaccept when we consider……myths not as mistakenviews but as comprehensivevisions that give shape anddirection to life.”.Sustainable Economics| 18


Myths of the Modern AgeVirtually all ‘official’ internationalagencies and national governmentsshare a comprehensive vision ofglobal ‘sustainable development’centered on unlimited economicexpansion and fuelled by moreliberalized trade.At the heart of thisvision (also called the‘dominant economicparadigm’) is the belief thathuman welfare can be all butequated withever-increasing material wellbeing(income growth).Sustainable Economics| 19


Neo Liberalism ExplainsSustainabilityVision is the belief thathuman welfare can beall but equated withIncreasing material well-being (income growth).This has been a forcegiving shape anddirection to political andcivil life on everycontinent since the 1960s.Sustainable Economics| 20


Neo Liberalism ExplainsSustainabilityIf we continue privatizingresources and eliminatingbarriers to trade, a newround of growth in bothrich and poor countrieswill provide the wealthneeded both to redressand to generate theeconomic surplusesneeded, particularly inthe developing world,better to husband thenatural environment.• In short, mainstreamthinking holds that “...the surest way toimprove yourenvironment is tobecome rich”(Beckerman 1992, 491as cited in Ekins 1993,267).Sustainable Economics| 21


Neo Liberalism ExplainsSustainabilityAn ever-expandingeconomy even thepoorest of the poor willeventually enjoy amaterially adequate life.‘arising tide raises allships’—Sustainable Economics| 22


Break!Sustainable Economics| 23


EXTERNALITIESTRANSACTION SPILLOVERSustainable Economics| 24


Illegal DrugsAddictionFamily harmPrisonBirth DefectsEtcThese cost not a burdento the dealer but tosociety.Legal DrugsHeart AttackCancerSudden DeathDude Stuff….EtcThese cost not a burdento manufacturer butto society.Sustainable Economics| 25


Extra! Extra!• Externalities & • Regulation is sort of aRegulationsway to compensatefor externalities….• What is the link here?Sustainable Economics| 26


What is the alternative?Sustainabledevelopment??An increasing number ofeconomists have realized that;Infinite growth on a finite planet isfundamentally flawedA new economic system that issustainable and serves the needsof people and planet.AlternativeEconomy?Sustainable Economics| 27


Economics ofSustainability• What do you think ofthis new economicidea?• Is it possible?Sustainable Economics| 28


Some interesting debatesSustainable development, in short,has emerged as a significant issue ineconomics• Concerns about climatechange, poverty anddwindling supplies of fossilfuels, among other issues,raise concerns about theeffects of resourceallocation on society'sability to sustain itself andfuture generations.Sustainable Economics| 29


• Ecologicaleconomics sees thehuman enterprise as:• A fully-contained,dependentsubsystem of the non-growing ecosphere;• A equilibriumstructure t subject tothe second law ofthermodynamicsSustainable Economics| 30


Promise and ParadoxModern VisionSustainable Economics| 31


Ecological EconomicVisionUnsustainability’isan inevitableemergentproperty of theinteractionbetweenincompatiblesystems—thetheeconomy, aspresentlyconceived, andthe ecosphere.Sustainable Economics| 32


The prevailing economic ‘construct’does not map well to biophysicalreality.What the scientist’s and thelunatic’stheories have in common isthat both belong toconjectural knowledge.But someconjectures are muchbetter than others…lit (Popper 1972).Sustainable Economics| 33


Our current system - based onthe notion of perpetualeconomic expansion on a finiteplanet -• In contemporarymythology, thecornucopia of humaningenuity has clearlydisplaced nature asthe great provider.Sustainable Economics| 34


• Beyond a certain point—further material growth canoccur only at the expense ofthe depletion and pollution ofthe ecosphere.Corollary: There are clear limitsto material growth(throughput of energy andmatter) and the scale ofeconomic activity.Sustainable Economics| 35


Sustainable Economics| 36


Ok….So what does all that mean?Sustainable Economics| 37


If the moon onlylooked likeBrazil?Sustainable Economics| 38


From Present EconomicModel• Growth• Efficiency• Maximum scale• Capital accumulation• Minimal interference inmarkets• Ignoring ExtranalitiesTo SustainableDevelopment• Steady state• Inter- and intra-generational equity• Qualitative improvementSustainable Economics| 39


Ben Bernanke has aquestion for you: Areyou happy?In that speech, he said research has foundthat once basic material needs are met,more wealth doesn't necessarily makepeople happier."Or, as your parents always said, moneydoesn't buy happiness," Bernanke said then."Well, an economist might reply, at least notby itself.“ CNBCThe Kingdom of Bhutan has been tracking happiness forfour decades. The tiny Himalayan nation stopped trackinggross national product in 1972 and instead switched tomeasuring Gross National Happiness.Sustainable Economics| 40


Challenge: Where tostart?The economics ofsustainabledevelopmentconsiders issuesrelated to land use,demography, energy,the environment andconservation ofnatural resources.• EconomicConference @Bretton-woods-minute11Sustainable Economics| 41


Discussion Question• Can a new model bedeveloped?• What are theconstraints?• How do you think wecan do this and how?• Let’s Take 10 minutesto discussSustainable Economics| 42


• If today’s entire worldpopulation enjoyed thesame consumerlifestyles as residentsof North America, itwould take three tofour additional Earth-like planets toaccommodateeveryone sustainably!Steve Colbert!• Problem: “Goodplanets are hard tofind.”Sustainable Economics| 43


How Are Things WorkingSo Well Now?• Many countries‘occupy’ ecologicallya water and land-base scattered allover the planet thatis much larger thantheir domesticterritories.with other countriesand the globalcommons.• Such countries arerunning ‘ecologicaldeficits’• We are witnessing anincreasinglyunsustainableentanglement ofnations.Sustainable Economics| 44


What is the alternative?• ‘There is enough foreverybody’s er needbut not enough foranybody’s greed .Mahatma GandiSustainable Economics| 45


What can we do locally?ll TRIPLE BOTTOM LINE & LOCALBUSINESSESSustainable Economics| 46


LocalBusiness… vsBig Box Retail• Support your neighbor• Keeps money in yourcommunity• Creates a greatersense of community• Develops overallresponsibilitySustainable Economics| 47


Local Vs Chains• Food• Products• Services• Not always possiblebut do what you can!• Visit a local artisan,food producer orbusiness• Develop arelationship!Sustainable Economics| 48


Reactions• How has your opinionof our Malthusdiscussion changed?Or has it?i?• Are you more or lessinclined to buy local?Sustainable Economics| 49


Credits• Dr Rees,University of British ColumbiaSchool of Community andRegional Planning• John Ikerd, Universityof MissouriSustainable Economics| 50

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