economics

Amsterdam: The Economy is a Doughnut

- Adam Clare

coffee and chocolate

Amsterdam is embracing an ecological approach to their economy by looking at it as if it’s a doughnut. Of course, it’s not a literal snack they are using, it’s a metaphor to visualize how different aspects of life interact with each other in an economic model. Classical economic models assume there’s always an external source of input and an external output where waste can be dumped (like the sea, air, landfills, etc.); but ecological models take into consideration the whole economic system. As a result these doughnut models capture reality much better since it’s no longer possible to socialize the costs of waste from running a modern economy.

“Within these two boundaries, between the social foundation that is on the inside and the ecological ceiling, there is this doughnut-shaped space where it is possible to meet the needs of all within the means of the living planet,” says Ilektra Kouloumpi, a senior strategist at Circle Economy, a nonprofit that has been working with Raworth, along with the nonprofits Biomimicry 3.8 and C40 Cities, to help the Amsterdam government adopt the doughnut model to make policy decisions. “The overarching question is: How can our city be home to thriving people, in a thriving place, while respecting the well-being of all people and the health of the whole planet?”

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Renewable Energy Keeps Growing While Oil Companies Shrink

- Adam Clare

Solar panels on grass

Without a doubt all business have been negatively impacted by the pandemic with some being hit more than others. The dirty and climate-destroying fossil fuel industry has really been hit hard (unfortunately it’s the workers who have been hurt by this and not the lying executives) and the industry isn’t even benefiting from reduced gas prices at the pump. On the other hand renewable energy companies are doing fine with only a slow down and not an industry-stopping problem. Renewable energy growth is expected this year with more utilities investing in renewable instead of fossil fuel because renewable are still cheaper than carbon-intensive alternatives.

Even the decline in electricity use in recent weeks as businesses halted operations could help renewables, according to analysts at Raymond James & Associates. That’s because utilities, as revenue suffers, will try to get more electricity from wind and solar farms, which cost little to operate, and less from power plants fueled by fossil fuels.

“Renewables are on a growth trajectory today that I think isn’t going to be set back long term,” said Dan Reicher, the founding executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford University and an assistant energy secretary in the Clinton administration. “This will be a bump in the road.”

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Work Less to Save the Planet

- Adam Clare

economic chart

You already know you’re working too many hours, so let’s change that and save the planet in the process. Economic growth has physical limits and we’re hitting those already as we run out of finite resources, or those resources are getting harder and harder to reach like oil. So to maintain growth we need to switch to a renewable energy based economy and fast. We can also just work less and focus on decreasing the growth of consumer capitalism.

This is where the idea of degrowth comes in. Degrowing our economy focuses on getting rid of things awe don’t need and are incredibly destructive to the environment (like fast fashion) and focusing our attention to bettering society as a whole (like free daycare). Another way to degrowth the economy is to reduce our working weeks to produce more jobs and give everybody more leisure. Aren’t we all working for the weekend anyway?

To get emissions to zero, it will involve a kind of “degrowth,” but one targeted specifically at fossil-fuel consumption. “That doesn’t mean we have to degrow everything,” Pollin said. “We really need to degrow the fossil fuel industry to zero, but massively expand the clean energy systems, the investments in renewable energy and energy efficiency.” This is essentially the Green New Deal: a push to increase renewable energy while eliminating fossil fuels, and including an effort to create a just transition for the people who have jobs in that sector.

To Pollin, even this would be a radical improvement. A plan to get to zero carbon emissions in 30 years would mean shutting down one of the world’s most powerful industries. He thinks that that is ambitious enough without trying to implement other broad societal changes.

“If we take the climate science seriously, we only have a few decades to make huge progress,” Pollin said. “And whether I like it or not, we’re not going to overthrow capitalism in that time.”

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Walkable Towns are Economically More Productive

- Adam Clare

housing

Any visitor to a North American city knows that a lot of the geography is designed for single occupant car-based transportation. Anybody who’s spent months in any of these places knows that this car-focused design has been an unmitigated disaster. People are dying, the planet is being killed, and so many other problems stem from building cities for cars.

That badness all being acknowledged, we are at turning point of urban design. The evidence for making our streets for pedestrians over cars is overwhelming; cities which life easier on people are witnessing demonstrable benefits. Those benefits are quantifiable and more research comes out every month highlighting the benefits of desiring for people. Over at Strong Towns they have compiled a great article outlining some of the benefits of pedestrian friendly design.

The cost of paving sidewalks for people is minuscule compared with the cost of paving wide roads for cars, installing traffic signals, paying the salaries of traffic cops, etc. Even the cost of providing enhancements to pedestrian space such as trees and benches pale in comparison to what we spend when we build around cars.

Furthermore, the wear and tear caused by foot traffic is also negligible compared with the wear and tear caused by car and truck traffic, meaning that long-term maintenance costs for walk-friendly areas are also much lower than for auto-oriented places. (Ironically, most cities spend exponentially more on their roads while utterly neglecting their sidewalks.)

In short, a simple sidewalk could serve millions of people traveling on foot for decades, even centuries, with only a small amount of up-front investment and minimal maintenance costs for the city — yet it would support dozens or hundreds of local businesses. The same length of street designed primarily for cars would cost exponentially more to build and keep up and would only serve a handful of businesses.

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Learn Economics for Free in the Most Effective Way

- Adam Clare

carbon output

Economics is a large field filled with nuance – and assumptions. One of those assumptions is that environmental concerns and inequality are secondary to that of economic concerns. These assumptions are questioned in a new course prepared by an international team of economists called the core team. Their work is available for anybody around the world to download and use for free, unlike traditional economic textbooks. You can check it out at The Economy.

Traditional, wallet-busting introductory textbooks do cover topics like pollution, rising inequality, and speculative busts. But in many cases this material comes after lengthy explanations of more traditional topics: supply-and-demand curves, consumer preferences, the theory of the firm, gains from trade, and the efficiency properties of atomized, competitive markets. In his highly popular “Principles of Economics,” Harvard’s N. Gregory Mankiw begins by listing a set of ten basic principles, which include “Rational people think at the margin,” “Trade can make everybody better off,” and “Markets are usually a good way to organize economic activity.”

The core approach isn’t particularly radical. (Students looking for expositions of Marxian economics or Modern Monetary Theory will have to look elsewhere.) But it treats perfectly competitive markets as special cases rather than the norm, trying to incorporate from the very beginning the progress economists have made during the past forty years or so in analyzing more complex situations: when firms have some monopoly power; people aren’t fully rational; a lot of key information is privately held; and the gains generated by trade, innovation, and finance are distributed very unevenly. The core curriculum also takes economic history seriously.

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