Common ground

Give a little

Do we really need more growth to combat poverty and inequality? Or do we just need to distribute what we already have a little more fairly and empathically?

Non-sense

Incentives

Understanding incentives is a pretty big part of Econ studies - but how well do we understand what actually does motivate people, and what makes for good incentives? The Venus Project, for example, proposes a world with NO MONEY, in which people work because they want to. Sounds crazy, right? Or is it?

Non-sense

The real invisible hand

"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greater good of everyone." - Attributed to JM Keynes

This quote belies something about economists' misguided beliefs about human nature (that is to say, when human nature is taken into consideration at all.) Economics is a social science, studying human behaviour. Humans are complex beings, so why don't we treat their economic decisions as such? True, behaviourial economics tries to take these factors into account - but the net needs to be widened still.

Neuroscience, for example, has made so much progress during the past few decades in explaining the functioning of the human brain, with all its complexities. Why do we choose to ignore this and still talk about "rational individuals who strive to maximise their own utility?" Self-interest is what is believed to drive the free market system - but human beings are NOT wired for self-interest. One of the greatest triumphs of the current capitalist system is that its proponents have managed to convince us that we have evolved to be greedy, violent and self-interested - and we think THIS IS ONLY NATURAL.

In truth:

• Empathy is the true invisible hand, not self-interest acting to coordinate supply and demand.
• We can't justify greed as being "just human nature" - we're only now starting to understand how evolution truly has shaped human nature, and the fact that it is constantly changing. 
• There really and truly is only one race, and that's the human race.

Common ground

Lessons in etymology: The economist's edition

I've focused in my last two posts on our neoclassical obsession with growth, and how that translates into development. Today I'd like to focus more specifically on the relationship between economic growth and development as defined in the neoclassical framework. It is first necessary to distinguish development from growth, and economists do agree that development is more than growth: it's about fundamental increases in people's quality of life - freedom, self-esteem, levels of living and the like.

I've discussed why growth won't translate into all of this, and contribute towards decreasing poverty and inequality (that, by the way, was just the tip of the iceberg - there is so much more wrong with our way of valuing economic activity). Why then, do economists still say that growth is "necessary" for economic development? (The fundamental philosophical problems underlying this statement are dodged by adding that growth is simultaneously necessary, "but not sufficient.")

Let's have a look at the meaning of the word, necessary, shall we? It's derived from the Latin necessarius, originally "necesse". It means something that is unavoidable and indispensible. Literally, something from which there is no "backing away" - ne (meaning not), and cedere (meaning to withdraw, go away, or yield.)

Why do we state that something is NECESSARY, or indispensable for contributing to human freedom, self-esteem and quality of life, if it clearly in so many cases is the thing that PREVENTS human freedom, self-esteem and quality of life? Once this basic fallacy is grasped, the "but not sufficient" clause at the end becomes moot. If we organise our way of doing more smartly, then growth isn't even necessary*.

The problem, of course, stems from Economics' inability to admit that it is a social science, and behave accordingly. We keep targeting numbers and stats (such as GDP), completely throwing the human side of the equation out the window. As Lynn Parramore reports: "The field of economics is known for attracting Asperger's-spectrum wonks better at formulating financial models than the flow of human interaction."  It's brutal, but true.

Take W.A. Lewis' (Nobel laureate in Economics) defence of the GDP growth=necessary for development paradigm:

"The advantage of economic growth is not that wealth increases happiness, but that it increases the range of human choice...The case for economic growth is that it gives man greater control over his environment, and thereby increases his freedom."

Sen neatly demolishes this view by explaining that freedom is much more complicated than just: I have more money, so I have more choice. There are various factors that could make it difficult, if not impossible, to convert higher levels of income into the capability to live life at a certain level: If you have more money, but you're physically or mentally disabled, how much more free are you really? If you have more money, but you live in a climate so prone to disasters that almost every spare cent you have needs to be spent on shelter, or food because another crop has failed - how much freer are you? If you have more money, but you're a gay man in Uganda - how much freer are you? And isn't man's "greater control over his environment" the very problem which has gotten us into the predicament of futureless growth?

This is why I say we need to re-examine the growth-development nexus. Economists make the mistake of thinking that human life can be so easily quantified: Oh, you have more income so naturally you have more freedom, or choice. We need to take the blinders off and rediscover politics, philosophy, sociology and other social sciences - because it's our entire system that needs changing.

*For those of you choking on your cappuccinos after reading this titillating morsel of economic blasphemy: Yes, really. It's called a Steady State. Look it up: www.steadystate.org

Plain and Common, Happiness

 

If GDP is a poor proxy for Happiness, why not measure Happiness DIRECTLY in some sort of a Happiness Index... Nic Marks says it best (also see Socialist Sally's last post)

Common ground

Why economic growth won't improve poverty and inequality

A few weeks ago I posted something on the obsession that neoclassical economics has with growth. We often also blur the lines between growth and development, forgetting that increases in GDP don't always translate into increases in quality of life or lower levels of inequality. Here are a few really basic reasons why not:

Growth may be jobless, meaning that GDP can grow, even though unemployment is high. It's not a phenomenon that's all that rare in a world where technology can replace what only humans could previously do - output increases, but more people are left with no income.

Ruthless growth refers to a situation in which healthy GDP statistics mask the ugly economic truth about a country: high levels of inequality, exploitation and poverty.

The pursuit of growth as we currently practice it is also futureless. This means that we are sacrificing future wellbeing in order to grow more now - the destruction of environmental capital, which is irreplaceable, is continuing at an alarming rate and, ironically, means less production possibility in future.

As lower income countries start to grow, the growth experienced is often rootless. This means that GDP grows as foreign firms invest in and trade more with the developing country, but the exposure to new, Western products, lifestyle and general pace of life erodes the unique cultural identity of the developing country, often leading to a loss of meaning in life.

Finally, growth is also often voiceless - GDP races along, soaring from one pinnacle to the next, while human rights are ignored in the process. (Ahem. China.)

These factors combine to give growth that is just generally meaningless - societies chase after "wealth" and "prosperity", measuring these items according to money value, and in the process lose perspective about what's truly important. Morality erodes as "it's just business" and "business is business and business must grow, regardless of crummies in tummies, you know" takes centre stage. Less and less time is available as more and more hours need to be clocked up at the office - leading to the demise of relaitonships, health and creativity.

So if all of this is true...

Why isn't any of it mentioned in Econ textbooks (I have so far found ONE text book which refers to these problems. It is not prescribed anymore).

And why do development practitioners still believe that "Growth is a necessary, but insufficient condition for development"?

More on this in my next post.



Non-sense

We love stuff, we love shit.  We are in a culture… nay, in a lifestyle… that loves to love stuff.  Anything really… you name it – we will buy it.  Even if there is absolutely no use for it – then we really want it!!

I recently was fortunate enough to participate in a Buy-‘n-Go.  It works like this: the University has a lot of extra stuff that they throw out; beautiful solid wood tables, chairs, cabinets, old school authentic bureaus, etc.  Then they mark it down to next to nothing (you won’t be able to buy candy from a baby with that money), and then it is open for the public to purchase.  You have to go early to stand in line.  Then they open the gates – now you have to stand behind a marathon-like line.  When the foreman says go and you run faster than you’re legs can carry you and put a sticker on you’re desired item.  Then the item it is yours – CONGRATULATIONS!

What do you think is going to happen?  Let me give you a hint, take a bunch of stuff-loving humans, let them loose in a hanger full of first grade stuff priced at prices that seem to need a extra couple of zero's at the end.  What do you get?  That’s right barbarism!

What does Barbarism mean?  Let’s be civilized and agree on a definition of barbarism.  The famous anthropologist Claude Levi-Strauss explained barbaric behavior with the metaphor of a train; that two cultures are like two different trains crossing each other: each one believes it has chosen the good direction.  

Thus, the Buy- `n –Go was barbaric.  Each of us had a destination; a track laid towards it and everybody steamrolled towards their beloved artifacts – no conductors, no traffic lights, no schedule, no platforms, no tickets… just pure buying lust driven by adrenalin and low-low prices.

So there I was, standing in the line, waiting for the foreman to give the go-ahead and let the wild herd loose.  The moment evaporated in front of me: first, he said ‘go’, then I was shoved to the left, I tripped over my own – usually loyal – feet.  I recovered – reached out, grabbed a flock of hair from the nearest head and pulled myself upright.  I used my elbows to beat fast little children who was annoyingly on my heals.  I was getting closer to MY table; if I can only plant the flag… I mean, if I can only put my sticker on it.  My sticker will seal by colonization… I mean, if will declare my ownership and I, oh I, would once again be fully happy.  I was so close – I could smell my table.  When I got to the first green chair I had to make a sharp right.  Someone was blocking my way, I panicked, but then this unimportant person got shoved and my way was cleared - there were good in the world after all.  I got to my table. The shear force of my momentum carried me over the table – while I was sliding over the table top I kept busy by sticking stickers as far as I slid.  I fell over the other side on the hard cement floor, smiling.

Afterwards… well, it was awkward.  Because now you have to face the people with humanity, trying to ignore the fact that moments earlier you screamed a war cry, pissed in your pants and try to slam their face on to the cold wet (from your pee) cement.  So you give them a polite: “Well done, Sir.” Or “You are very fast…: or  “Would you like a tissue to stop the bleeding?”. Yes, we are barbaric.

Shopping doesn’t always take on this intense form.  Mostly we just go into a store and buy something.  Return home – enjoy our purchase for a day or two and leave it on the top shelf were it will soon be full of dust and forgotten.  Yeah, you can never have enough of something you don’t need.  And we have a lot of it!

But even this seemingly innocent purchase can be – and probably is – a barbaric train on the track and storms forth. Crossing a destroying other invisible tracks.  ‘Invisible’ trains, like child and unprotected laborers working in China (or wherever else) to produce cheap stuff.  ‘Invisible’ trains like, the environment in developing countries that is just to glad for a bit of money, food, clothes or liquor; they will give up centuries of trees in literally 15 minutes.  ‘Invisible’ trains, like workers of Wall- Mart that earn a mere $8.75 per hour (Windy City's Pullman) in contrast to the barbaric train of a CEO of Wall- Mart Michael Duke that earns $35million per year (approx $16 826,92 per hour) … please note that Duke earns more in a hour than his bottom workers in a year… Duke, you are an idiot!

It would have been one thing if we were better off for it, but you are probably just as (un)happy after your shopping war as before.  But just remember you are going to have to face your invisible trains someday.  Don’t let it be awkward if you have to return from barbarism to “civilization"*

 

*Please note 'Civilization' is a bullshit word!

Tragedy of Common Sense

Speak for the trees

So I went to see The Lorax yesterday, and it inspired me to contribute a post on the topic of sustainable growth. Tragedy of Common Sense is mostly Dodo's domain and I won't pretend to be quite as clued up on environmental economics, but as a development economist, the issue of growth is important to me.

I love Dr. Seuss, and The Lorax has to be one of my favourites. It's difficult to watch the movie, or read the book, and not start wondering about the point of this whole growth religion we're all so devoted to. This past weekend we celebrated Earth Day, and I had the privilege at that time of gazing through a telescope and getting a very clear understanding of just how isolated we are here on Spaceship Earth, as Dodo's previous post talks about. If anything, this has steeled my resolve that EVERYTHING MUST CHANGE. Growth and development practitioners in particular need to start thinking differently about what we mean with development. It's a topic that has been trudged through time and time again, sure. You can open any Development textbook and find a chapter devoted to "The distinction between growth and development." But it always concludes as follows: "Growth is a necessary precondition for development". We need to throw these textbooks away and really redefine the way we look at these issues, because we're killing ourselves and our planet in the process - all in the name of progress.

A musical number in the film stands out, where the Once-ler is singing about how bad he could possibly be. Sure, he's cutting down some trees and killing habitat in the process, but "I'm just doing what's natural", he argues. People are entrepreneurs, after all. It's natural for us to want to grow. What a crock of shit. The problem is that we have become so disconnected from nature, we don't even know what's natural anymore. Think about it. Do you know of ANYTHING here on Mother Earth that just keeps on growing indefinitely? How tall would I be now, for instance, if I had just continued growing after puberty, instead of leveling out at 5ft something, like all other humans do? Hamsters, though they double their weight each week from birth to puberty, do stop growing once they're mature. And thank goodness for that, since if they didn't, hamsters would weigh about 9 billion tons by the time they reach one year. (Seriously, check out the NEF's animation at http://www.youtube.com/watch?v=Sqwd_u6HkMo) Nothing in nature grows indefinitely. Our economies shouldn't either.

But it's just business right? As the Once-ler says after the forest animals start complaining that they've nothing left to eat: "Business is business, and business must grow, regardless of crummies in tummies, you know.''

I don't propose to have the ultimate solution, but I'm hoping I can convince you to at least start thinking differently about these things. So bear with me in the coming weeks as I investigate the relationship between growth and development in economics.

If you are an econ student reading this, do me a favour and start insisting on alternative textbooks and courses at your school. Talk about this with your fellow students and lecturers. Research it, present papers about it at conferences. Contribute to a new way of thinking, because "unless someone like you cares a whole awful lot, nothing is going to get better. It's not."

Tragedy of Common Sense

I always feel perspective is all one needs.  We are so quick to judge others who blatantly supported slavery, the holocaust or even Apartheid.  We are quick to see ourselves as a civilized nation.  I hate, I despise the word civilized, what a load of bullshit!  We see ourselves as CIVILISED (urgh) if we have huge bank accounts, five cars, if you have a Sweet 16 that has the budget of a small African country… we feel we are CIVILISED if we destroy Earth to get what we like… we feel we are civilized if we are disconnect from the earth (our life force)…

Are we civilized for you?  No one dares to criticize CIVILIZATION; no one questions the importance of economic growth, no one questions wealth, no one questions the value a time or more important the value of life.  Don’t get me wrong, I do NOT feel human life is the most important thing; to put all of our focus on human life (OUR needs, OUR hobbies, OURSELVES ) as the ultimate goal is wrong – there is also something like life in totality, life as a whole, life in abundance, life of others and of the earth.

The first photo of earth was taken by the Apollo 8 space mission in 1968, it was called Spaceship Earth.  The Apollo mission went up and on the way up, an astronaut, Bill Anders, looked back and took this picture:

Now this is perspective.  Perspective is difficult to get; you can get it by removing yourself in space or in time.  It is easy to judge stuff that happened long ago, because you weren’t THERE, you weren’t the middle of it.  It is difficult to judge stuff happening all around you; then you need to remove yourself in space to get some perspective, to be objective.  And what better space than outer space?

There we are planet earth.  A small dot, a speck; blink and you miss it.  It is not abundances of resources, it is not infinite life and it is not forever.  It is earth, a crumb of life, your life and life in totality needs to be the priority, not civilization…