Lomberg on Sustainability

Bjorn Lomborg is often disparaged by environmentalists for questioning what in my view have generally been very questionable public policy prescriptions that environmental advocacy groups have promoted around the issue of climate change.  In a recent Newsweek article, Lomberg takes a great shot at properly defining the concept of sustainability.  He quotes the UN Brundtland report defining sustainable development:

“meets the needs of the present without compromising the ability of future generations to meet their own needs.”

He suggests:

The measure of success, then, is whether or not we give future generations the same opportunities that we have had.

Lomberg goes on to define sustainable solutions in terms of economic opportunities, educational opportunities and technological opportunities that we provide for future generations. After outlining progress the world has made over the last century or so he suggests:

Rather than celebrating this amazing progress, many find it distasteful. Instead of acknowledging and learning from it, we bathe ourselves in guilt, fretting about our supposed unsustainable lives.

At the end of the article he concludes:

We forget too easily that innovation and ingenuity have solved most major problems in the past. Living sustainably means learning the lessons from history. And chief among those is that the best legacy we can leave our descendants is to ensure that they are prosperous enough to respond resiliently to the unknown challenges ahead.

It would be great if environmentalists could celebrate and learn from our long legacy of creative solutions rather than continually viewing the world as a zero sum game.  Lomberg is right. The path to a sustainable future is not through excessive environmental regulation or redefining the fundamental rules of our economy, but rather through economic prosperity, educational opportunity, technological progress, peace and the fair rational enforcement of the rule of law.

Decarbonization, Pollution And Economic Prosperity

My friend Bob Preston who manages a clean energy investment portfolio for Merrill Lynch, sent the following charts the other day from the work of Jesse H. Ausubel and Paul E. Waggoner at Rockefeller University.

They confirm  some long term beliefs of mine:

The history of technological progress is one of increasing decarbonization of primary fuels and cleaning up of waste streams – from animal energy and  wood to coal to petroleum to natural gas to electricity to renewables and hydrogen.

The solution to climate concerns, like all the environmental concerns, is not more regulatory burdens and dictates, but solutions encouraging a free prosperous market economy that allows the wealth and prosperity for the luxury of environmental protection that poor and developing countries have never invested in and only wealthy nations have ever been able to afford to pursue. As these charts show, there is a clear link between economic prosperity and decarbonization and reduced pollution.

Hopefully more in the environmental community will both accept and advocate for maintaining this critical linkage between new environmental policy and maintaining real economic prosperity.

The Need For Healthy Introspection

We advocates of environmentally responsible economic and technological solutions should consider the possibility that instead of a permanent paradigm shift, what we may be living through could possibly be a green bubble, not unlike the solar bubble of the Carter years, the tech bubble of the late 90s and the recent housing bubble.

That isn’t a politically correct possibility to consider or discuss. But if we are going to be more successful this time around than we were in the seventies, especially at a policy level, we should try to maintain a broad perspective, a healthy level of skepticism and some introspection regarding our efforts and the heavily subsidized success we are experiencing in the “green economy” sectors these days.

George Will has an interesting editorial in the Washington Post “Green With Guilt”. It includes a link to a new TV show I had never heard of before called “The Goode Family which from the clips looks hilarious, though it might hit a few sensitive nerves.

Will suggests in his conclusions that “Reengagement with reality is among the recession’s benefits.” Recent polls show that the American public in general considers Climate Change to be at the bottom of the list of issues they are concerned with and which they think the government should address.

Those of us who want to help create a real paradigm shift to a sustainable future have to engage more clearly in the issues that most people are concerned with and reach beyond preaching to the choir. We need to be clearer regarding how what we do realistically fits in the larger context of the changes all around us, especially the economic changes. To be sustainable, “green” solutions need to compliment and build upon the successful aspects of the legal, economic and social systems that our modern society was built from.

Rethinking Corporations And The GDP

In “The GDP is accorded far too much respect”, Tracy Fernandez Rysavy suggests it it is time to replace the GDP with better metrics of  economic well being.

She quotes David Korten who “recommends adding non-financial indicators to the GDP, as 150 other countries have already done. The Human Development Index (HDI), conceived by Pakistani economist Mahbub ul Haq, replaces a country’s GDP with a collection of measurements that examine the overall well-being of its people by looking at statistics on health, education, and standard of living.”

She also quotes Neva Goodwin, an economist at Tufts University, who suggests we re-examine the role and regulation of corporations in our society and return them more to their originally conceived purpose. “In the 19th Century, it was understood that a corporate charter was given to allow a group of people to do something that was in the interest of society,” says Dr. Goodwin. “Corporate charters were sometimes given for limited periods of time, and if the producer wasn’t living up to its part of the bargain, the charter could be taken away.”

The current economic crisis we are facing, along with the growing general desire in our culture to create a more sustainable society, may hopefully lead to examining some of the sacred cows of corporate dominance of our economy and our political establishment. If that positive agenda of real hope can overcome the politics of fear being peddled to justify giving trillions to Wall Street banks, the crisis that is upon us can become a real opportunity to create a better world.

We are living in interesting times.

Defining A Sustainable Financial System

Over at the NESEA Blog, my friend Joel Gordes defines The First Tenet of Sustainablity.

Joel’s definition of Sustainability is precisely right: “meet[ing] the needs of the present without compromising the ability of future generations to meet their own needs”.  He goes on to refine the definition to include: Social & Intergenerational Equity, Environmental Quality, Quality of Life and Economic Vitality.

One may also think of sustainability fundamentally as just making responsible decisions, acting as if we are accountable for the long term impacts of those decisions and being good citizens of the planet.

Many seem to think about this term Sustainability on environmental terms only. But it is no coincidence that the words ecology and economy share the same greek root, oikos, or home.

The current economic crisis is highlighting more than ever before the serious threats created by a lack of understanding of sustainability, responsibility and accountability.  Specifically, the lack of sustainability and accountability embedded in the structure of the financial securities system is a major threat to all the other systems that a modern society depends on.

Our financial system has not been operating in a remotely sustainable manner for several decades. And our government is now borrowing and spending at completely irresponsible levels to prop up a financial system built on securitization and avoided accountability. The federal government’s recent economic endeavors are themselves completely unsustainable.

The global financial institutions that our government is most trying to sustain are neither sustainable, healthy or competitive. In fact they seriously distort and disrupt the functioning of healthy markets. They should not be considered too big to fail, but rather too big to exist.

Like the natural selection of ecology, a critical part of a healthy economy is truly competitive markets. We don’t need to restore the markets for complex incomprehensible and unaccountable financial securities. Indeed we need the opposite –  rules that restore the health and diversity of the financial system that has been disrupted by a cancerous invasion of securitization.

As a small business owner, I have found local community banks to be the most responsive to my needs. In those seemingly old fashoned institutions,  lending decisions are made by bank officers that know the borrowers personally and business loans are still often held in house.

Perhaps all the financial system needs to return to health and sustainability is a return to the older banking regulations that enabled a financial system comprised of thousands of small local banks that were accountable to the local communities they served and whose businesses were intimately dependent on the health of those local communities.

Sustainability advocates should be out in front of the effort to restore a truly sustainable financial system in which feedback mechanisms are clear and effective, enforcing real accountability, like in any healthy natural system.