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Green Economic Ideas

Green Economic Ideas. Prepared by Bill Hulet of the Guelph Greens. The “Miracle” of Compound Interest. 3% Annual Growth 20 years: 1.8 times 40 years: 3.3 times 60 years: 5.9 times 80 years: 10.6 times 140 years: 62.7 times. 8% Annual Growth 20 years: 4.7 times

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Green Economic Ideas

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  1. Green Economic Ideas Prepared by Bill Hulet of the Guelph Greens.

  2. The “Miracle” of Compound Interest • 3% Annual Growth • 20 years: 1.8 times • 40 years: 3.3 times • 60 years: 5.9 times • 80 years: 10.6 times • 140 years: 62.7 times • 8% Annual Growth • 20 years: 4.7 times • 40 years: 21.7 times • 60 years: 101.2 times • 80 years: 472 times • 140 years: • 47,788.8 times! As an economy grows, the demand for natural resources and distress to nature grows with it. Even at the modest rate of 3% per annum, it is impossible for Canada's economy to grow without destroying our environment.

  3. World Population Growth 2050

  4. Economic and population growth are closely linked. Population growth is a key part of economic growth, which is why governments and businesses tend to support it. They also multiply together to increase the damage to the ecosystem. It isn't just how big our impact is individually, it is also how many of us there are doing it. (Economic Growth) x (Population Growth) = (Environmental Stress)‏

  5. The earth is only so large and it will not grow any larger. At some point the human population, and the economic activity it generates, will stabilize and live within these limits. It will either do so through a conscious choice by the human population to live within the bounds of our ecosystem or else we will overshoot it and suffer a “die off”. Key Fact One

  6. Human Perception and Geometric Progression: a Practical Example Purple Loosestrife

  7. A Biologist notices a new plant--- Year One

  8. A Paper Gets Presentated at a Learned Conference--- Year Two

  9. An Application for Further Research is Written--- Year Three

  10. An Article is Published in the Popular Media--- Year Four

  11. An Environmental Group Protests Government Inaction--- Year Five

  12. A Political Party Makes the Issue Part of their Policy Platform--- Year Six

  13. Government Action. Oops! Too Late--- Year Seven

  14. One half of all exponential growth happens in the last doubling cycle. This means that human institutions that are reactive instead of proactive, will always be blindsided by the last doubling cycle. This means that human society needs to develop the ability to think ahead instead of simply reacting. Key Fact Two:

  15. A steady state economy is one where the total amount of goods and services produced in a nation is stable over time. It is not a situation where no economic activity happens, but rather one where the total amount amount does not increase because additions and subtractions added together equal zero. Steady-State Economy

  16. Compound Interest and Pensions: a Practical Example • Invest $50 per paycheck and do it for 40 years at 5% interest and you get $330,000 when you retire • At 4% you get $257,000 • 3% is $202,000 • 2% is $160,000 • 0% is only $104,000 • The closer an economy comes to a steady state, the less people can rely upon compound interest to support their retirement!

  17. An end to economic growth will require a massive restructuring of retirement programs because it will not longer be possible to fund pensions with the surplus from compound interest. This is such a scary prospect that it has frozen key sectors of the government, business and academic communities into a dangerous form of denial. Key Fact Three

  18. Cornucopianism is the belief that all the environmental problems facing the human race can be solved by the free market and technological innovation. People who support this point of view tend to oppose programs to deal with environment problems because they can see no reason for change or sacrifice. Cornucopianism

  19. Introducing, the Jevons Paradox

  20. History has shown that whenever technological innovation has increased the output from a natural resource, the capital freed from this has been used to find new ways to use the natural resource in question. The result is a net social increase in the use of that resource as technology allows individuals to use it more efficiently in specific applications. Jevons Paradox

  21. A Practical Example of Jevons' Paradox • Insulation in Frank's house cuts his natural gas use by three quarters, which saves him $750 • He then uses this money saved on a yearly trip overseas • As a result, the carbon saved on heating is then burnt as jet fuel • The end result is no gain whatsoever for the earth, no matter how much more efficient it is to now heat Frank's home!

  22. People who believe that technological innovation will save the planet don't understand that because of the Jevons Paradox we will also have to develop mechanisms to control the demand for natural resources. Otherwise, new technology will increase demand for other goods and services that will use up all the resources saved. Key Fact Four

  23. In order for a government to expand the services it offers to citizens, it needs to find new sources of revenue. Since there is a limit to the percentage of income a citizenry can pay in taxes, this means that the economy must grow if the government is going to expand services. Growth in Government Programs is Based on Growth in Tax Base

  24. Growth in Canadian Government Spending per Capita Surplus Deficit

  25. Expansion of government programs is dependent on expansion of the tax base, which depends on expansion of the GNP. This means that any government that seeks to create a steady-state (or environmentally sustainable) economy will have to freeze and cut back government programs. Key Fact Five

  26. Quality of Life Standard of living plusAmount of spare time Interpersonal relationships Environmental quality Social goods Aesthetic qualities Measured by “Genuine Progress Indicators”, GPI “Standard of Living” vs “Quality of Life” • Standard of Living • Income • “things” • Doesn't count public goods • Totally individualistic • Measured by “Gross National Product”, GNP

  27. Gross National Product vs Genuine Progress Indicators D o l l a r s p e r C a p i t a 18000 16000 14000 12000 10000 8000 6000 4000 GNP GPI 1950 1960 1970 1980 1990

  28. Growth in the economy is not synonymous with human progress. It should be possible to create a society with a growing quality of life, even though the standard of living is constant or in decline. This offers a way out of the dilemma humanity faces---but only if we accept significant change in our lives. Key Fact Six

  29. Building That New World

  30. Future modules will focus on two important topics: the need to create a new type of politics, based on public mobilization instead of just elections; and; the role that modern technology can play in this and the organizational model provided by the Open Source software movement. New Political Model + New Technology = Hope

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