Having your cake and eating it

Monday, 16th December 2013

Imagine you had a choice of three political parties. The welfare party promised better public services, but admitted it may need to increase taxes. The small business party promised lower taxes, but admitted it will need to cut public services. However the magic bullet party promised to slash taxes and boost investment in healthcare, education and transport infrastructure as well as increasing pensions and disability benefits, a sure vote-winner for the economically illiterate. The extra funds would be raised by taxing billionaire bankers and printing money. Of course it wouldn't work, because the billionaire bankers would just hop aboard their yachts and sail to the nearest tax haven, while hyperinflation would devalue the national currency. This logic seems apparent to most reasonable people, but to many economists who believe it does not apply to economic growth. Somehow we can reap all the benefits of greater consumption without worrying about the long-term social and environmental consequences.

More disturbingly, many Greens buy into the growth mantra, especially in regard to welfare provision and open door immigration. Almost instinctively, many left-leaning greens, myself included until recently, tend to blame the grotesque waste of our times on the mega rich. If only a handful of billionaires would do without their private jets and yachts and let the unwashed masses occupy their secluded villas and concrete over their golf courses, we could easily solve all our environmental challenges. For such politically correct greens environmental disasters are not caused by over 1 billion vehicles worldwide that enable their owners to participate in a consumption frenzy or millions of Brits jetting off to Spain's beaches and buying imported goods with borrowed money.

Yet the disproportionate wealth of the banking and business classes depends on an economy hooked on consumptive growth. They thrive on more cars, fridges, cheap holidays in the Sun, booze, cosmetic surgery etc. sold to the masses. In the aftermath of 2001’s 9/11 disaster, George W Bush famously urged his fellow Americans to show their patriotism through shopping. In the UK as manufacturing facilities moved abroad, new shopping malls, leisure centres and casinos sprung up everywhere. In the ensuing years both the US and UK governments continued to subsidise mass consumption, underwriting dodgy loans and letting a tarantula-like finance sector lend to low-wage workers and, especially in the UK, to welfare dependents. New Labour’s much hailed flagship policy of working family tax credits (alongside others that went to those who didn’t work) fuelled the country’s biggest shopping spree. Back in my days, in the late 60s and early 70s, many children felt lucky if they received a lego set, an action man or a plastic helicopter. Now, they expact the very latest and greatest games console, a laptop and/or smartphone, yet their parents real earning power has actually declined. This is largely because houses used to be a lot cheaper, electronic gadgets were considered luxuries and most children still lived in traditional families.

Now imagine another choice between three hypothetical political parties. The first party wants more economic growth and an open door immigration policy, while admitting this may lead to greater dependence on imports, a larger population more roads and more building on arable land as well as a potential social conflicts. The second party wants a greener environment and greater social cohesion, while admitting the country’s GDP may decline and its international competitivity may suffer. This may sound like a choice between accepting a high-stress job as a stock broker and running a small family farm with a few acres of land. While the stock broker employs a team of underlings to expand his empire, the smallholder painstakingly builds a farm that will feed not just his family, but provide gainful employment and a sense of true purpose for future generations, handing down skills from father to son and mother to daughter. In the short-term and given good economic fortune the stock broker role may well yield much more, but in long term the finance sector is just a giant ponzi scheme with a few lucky winners, but many more losers. The third option, one currently proposed by many on the mainstream left, is to have a greener, happier, more prosperous future with endless opportunities and fun for all simply by rebranding everything we do now as green.

Imagine somehow we can continue to grow both in numbers and in carbon footprint, while miraculously reducing our collective impact on the environment. In this fantasy world, bad diesel-fuelled 4x4s will be replaced not with fewer journeys, bicycle and trains, but with trendy more expensive electric cars. It matters little that such vehicles not only require more resources to manufacture, but rely on electricity generated elsewhere effectively merely displacing pollution. To many on the left, political correctness trumps environmental responsibility. Should all disabled Indians drive specially adapted cars? Maybe that's a big untapped growth market. Suggesting paraplegic Indians make do with mere wheelchairs could lead to accusations of racism and intolerance of the physically disabled. As it happens big business loves green solutions where it sells. Big business does not market gas-guzzlers because they pollute, but because they drive profitable consumption. If they could sell solar-powered helicopters made of recycled paper, they would, but such vehicles are pure fantasy. Likewise if the earth had bountiful supplies of abiotic oil below its crust or wind energy could power millions of irons, washing machines and fridges with minimal investment in wind farms, then why would they be pursuing environmentally risky and expensive strategies like hydraulic fracturing or deep-sea drilling ?

A pragmatist may seek a compromise between a maze of multilane highways and shopping malls and a Quixotic return to an idyllic agrarian age of green fields, windmills, hardworking peasants and horse-drawn carts. However, an unlikely coalition of corporate lobbyists and wishful thinking leftists would like to have their cake and eat it. They want to see our economic numbers continue to grow, but believe technological innovation can lessen our collective impact on our precious environment. So we can allow more people to drive more cars to bigger supermarkets making bigger profits and offering better products, but still have a greener environment. Indeed in such an optimistic scenario greenness just becomes another commodity one can purchase. A two-bedroom flat sandwiched between a motorway and a high-speed railway line is usually much cheaper than a similarly-sized apartment in a quiet suburb overlooking a park. Likewise a few million quid, bucks or Euros can buy you an exclusive villa in verdant surroundings complete with solar panels and its very own wind turbine. The rich love greenery and who can blame them ? As the world become more crowded and climate disruption makes many regions uninhabitable, we can expect unspoilt nature to be a luxury only the hyper-rich can enjoy.

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