HARDING: The End of Growth - 3 Parts

HARDING: The End of Growth - 3 Parts

Postby Oscar » Tue Jan 29, 2013 8:17 am

THE END OF GROWTH – Part 1

http://crowsnestecology.wordpress.com/2012/09/23/
the-end-of-growth-first-in-a-series/

by Jim Harding

Published in R-Town News September 21, 2012

In 1972 the book Limits to Growth was published. This year, forty years later, the book The End of Growth came out. The first book emerged from the elite think tank the Club of Rome; the second comes from Jeff Rubin, past chief economist for CIBC. Others, writers like Herman Daly, have long written about the need to move to a steady state economy which doesn’t destroy the planet for short-term economic gain.

Pushed by a deepening awakening that we can’t continue “business as usual”, the worldwide environmental movement has tried to get government and industry to recognize that there can’t be endless growth without undercutting the biodiversity that society and the economy depend upon. Mega-projects have come under more scrutiny but it has remained much the same.

The UN established the World Commission on Environment and Development. In 1987 it issued its watershed report advocating “sustainable development”, changing how we do things today so that future generations can meet their needs. This appeal to inter-generational justice went beyond social justice. However, due to the accelerating globalization of lucrative markets it was only a few years before the term “sustainability” got twisted to mean “sustaining the profit-driven corporate economy”.

Globalization seemed to be unstoppable until the financial crash of 2008 and the recessions that have ensued. Are we finally getting ready to collectively re-evaluate economic growth?

THE 2008 CRASH

The conventional view of the 2008 crash is that there was insufficient backing for the massive debt-load in the expanding housing market. Home-purchasers were taking out higher and longer mortgages for ever-higher priced houses without sufficient earning-power to back them up. Implicitly we blamed working people who were caught between a rock and a hard place by the real estate market and the banks. There is understandably widespread resent that after a massive taxpayer bailout, banks continue to make billions.

Rubin sees it differently, saying “soaring oil prices” spurred on by the hike in interest rates “pricked the housing bubble.” For him, “higher energy prices aren’t a symptom of our economic problems – they’re the cause”. “Oil powers economic growth”, and as Rubin reminds us, “each year the global economy needs more barrels of oil”. If the price of oil rises too high then growth gets cut back.

WAR AND ECOCIDE

Pressure to get more oil on the market has played a major role in recent warzones and environmental crises. Military interventions in the Middle East, starting with the 1st Gulf War, involved security of supply for oil-addicted America. So did the steady deregulation leading to BP’s gigantic spill in the Gulf of Mexico and the ongoing assault on eco-systems from Alberta’s tarsands.

Demand for more oil also contributed to pressure to expand nuclear power to free up more oil for transporting goods in the globalizing market. However, the Fukushima disaster has stalled the nuclear industry, making economic growth even more dependent on oil and other fossil fuels.

Rubin turns this co-dependency of oil and growth on its head, arguing that “energy scarcity could become the environment’s best friend.” Without cheap oil there can’t be unlimited growth, which will reduce carbon and other pollutants. He doesn’t accept that we can have our cake and eat it too. There won’t be a tech fix, like energy efficiency or a revolution in cheap renewables that will allow economic growth to continue without a huge ecological cost.

ANOTHER VIEW

Amory Lovins’ work shows that we can decouple energy growth from economic growth, but the whole world can’t sustain energy usage on the scale that accomplished European and North American colonial development. However, while China’s boom has it on a par with the US as the largest global carbon polluter, on a per capita basis it hasn’t been anything like the West. I keep reminding people that Saskatchewan’s per capita footprint is 70 tonnes; China’s was 7 in 2011.

Rubin goes to great lengths to show that as oil prices quadrupled, economies deteriorated. Deficits and unemployment have both grown, which he suggests shows that the compulsive drive for more oil and growth is a major “misdiagnosis”. The policies of both the conventional left and right are both misguided; neither fiscal stimulus nor austerity linked to monetary demands can “substitute for cheap oil.”

Conventional economics calculates supply, demand and price as if the economy is separate from the environment. This is delusional, but it has taken the environmental crisis, and particularly the climate crisis, to challenge us to get it right. Humans with vested economic, political or ideological interests can be stubborn; so in spite of the accelerating climate and economic crisis, those in the corporate board rooms and the cabinet offices are still trying to do “business as usual”. Rubin says they will fail!

THE GRAND DELUSION

Politicians “chasing re-election” are hooked on the delusion that extracting more fossil fuels can continue to drive economic growth and job creation. They have failed to understand basic causation. It was cheap energy, mostly oil, often extracted forcibly through neo-colonial industrialization that fueled post-WW II economic growth. With escalating energy prices and the hopeful democratization of oil-exporting countries, that era is over. If we want to protect the natural environment, avert catastrophic climate change and see the burgeoning human population get basic needs met, we’ll have to reduce what Rubin calls the “economic speed limit”. More fairly distributing basic goods and services, not creating even more billionaires at the expense of the planet, is what is now required.

Rubin’s analysis is convincing. Economic growth and demand for more energy are entwined. For four decades recessions have followed spiking oil prices. After the 2008 financial crash and the global downturn, “global oil demand actually fell for the first time since 1983”. Previously, since the 1970s, geo-political shocks in Middle East oil supply led to short-term recessions. Things have escalated. In 2004 oil was trading at $30 a barrel; four years later it was peaking at $147. This speedy quadrupling of price slowed economic activity and some began to envisage world depression.

Inflation rose as oil prices escalated. Predictably central banks increased interest rates. The five-fold rise in US interest rates from 2004 to 2006 was too much for the speculative housing market and the bubble burst. The global financial house of cards collapsed. After that, in an energy craving economy, global prices for food continued to rise; they are now 40% higher than after the 2008 crash. Some stimulus packages tried to encourage a shift from fossil fuels, though not in Canada, where Harper is further locking us into oil-dependent growth. Ill-conceived stimulus mostly backfired into greater public debt. Austerity budgets have been on the backs of ordinary people already struggling.

RADICAL RETHINK

The globalized economy creates massive collateral damage. Big investors still make money while ordinary people can lose life savings and risk losing jobs and homes. Meanwhile, without diagnosing the problems accurately, governments, most notably the Harper government, try to reestablish economic growth based on ever-increasing and costly oil consumption.

It is time for a fundamental rethink of how we got into and how we’ll get out of our mess. The environmental crisis is mostly a result of an economic system which takes the planet for granted and to “save the environment” we’ll have to retool the economy. Are we up to it? Is there the political will to finally take this on? Do we really have any practical alternative?

Next time I will discuss why hitching our economic wagon to China’s authoritarian economy won’t move us towards sustainability

= = = = = =

DEPENDENCE ON CHINA’S GROWTH NOT PATH TO SUSTAINABILITY – Part 2

http://crowsnestecology.wordpress.com/2012/09/26/
dependence-on-chinas-growth-not-path-to-sustainability/

BY Jim Harding Published in R-Town News September 28, 2012

Media coverage of Premier Wall’s recent trip to China was “dumbed-down”. It takes courage to criticize an economy that is “doing well” in conventional terms. Conventional terms are exclusively about economic growth; not health, or justice, not human rights or the environment.

Once the global market becomes the political “be-all and end-all”, market-dependent politicians are inclined to simply follow the money, without a balanced consideration of outcomes, domestically or abroad. Surely governance and its reporting should involve more than cheerleading the hitching of our economic wagon to China’s totalitarian economic growth.

FLIP-FLOPS

Politicians can be so fickle. In the 1980s Brian Mulroney told us we had to hitch our wagon to the U.S.’s economic growth; without free trade with America we were economically doomed. How quickly the tide turns; now Prime Minister Harper is trying to convince us that we must tie our prosperity to China.

This only addresses half of the new reality. China’s economic growth has been driving the global economy. But why, and is that a good thing? Should we passively accept that our fate is to flip-flop from one economic superpower to another! Don’t we have our own political and social objectives?

CHINA’S EXPANSIONISM

China’s investments in Western Canadian oil have risen sharply since the 2008 recession. In 2009 PetroChina invested $1.9 billion to get 60% share of the Athabasca Oil Sands Corporation. In 2012 it bought the other 40% interest. In 2010 Sinopec invested $4.6 billion to get 9% control of Syncrude, the largest player in Alberta’s four tarsand mines. In 2011 Sinopec paid $2.9 billion for Daylight Energy, which does energy exploration and production in Alberta and BC. Encana is already in a joint venture with the China National Petroleum Corporation doing shale gas extraction in BC. Now China’s CNOOC Ltd. has offered $15 billion to buy Nexen, which is involved in offshore oil and gas as well as Alberta’s tarsands.

Having approved the Syncrude sale and promoting free-trade with China, will the Harper government dare not approve the sale of Nexen? The sale requires approval under the Investment Canada Act so Harper faces the dilemma he did when the Australian firm BHP Billiton wanted to purchase the Potash Corporation. Then Premier Wall successful called for a ban on the sale because it was a “strategic resource”. Why don’t we hear Alberta’s Premier Redford calling for a ban on the Nexen sale?

FOLLOWING GROWTH

In the zero-sum world of “peak oil” one country’s increase in consumption comes at the expense of others. After the 2008 recession most of the drop in oil demand came from Europe and the US. China’s demand barely dipped and it recovered fairly quickly to its 10% annual rate of growth in oil consumption.

China isn’t less sensitive to oil prices because of state subsidies. Hidden corporate subsidies exist everywhere; there are $ 1.3 billion in annual subsidies to fossil fuels in Canada. Rather, in The End of Growth, Rubin argues that oil consumption is more sensitive to growth in income. While incomes have remained static in the West, economic growth in China is creating a new class of consumers who will be looking to buy their first car. China’s rising oil demand also has to do with it still using diesel-fuel as a back-up when it has difficulty importing coal for its electricity plants.

STRUCTURAL INEQUALITY

The US remains the world’s biggest “oil hog”, consuming 19 million barrels each day. But the shift of the oil market to the rising economies such as China continues. This will have a similar effect of creating structural inequality; the poorest countries will remain poor as China spreads its state-run energy corporations into resource rich regions like Saskatchewan and Alberta. As the head of the African Policy Forum said, referring to China’s $20 billion investments in Africa, “We should treat Chinese capitalism as we do any capitalism. It is state capitalism but it is still in it for the profit.”

Selling Canadian oil isn’t about loyalty or the public interest. It’s about selling to the highest bidder to make the greatest return on investment. And with its stockpiled cash from its trade surplus with the West, China is on a spending spree and willing to pay $20 a barrel more for Alberta’s oil than would be received from US refineries.

NATIONAL SECURITY

Loyalty to our neighbours and allies only goes so far in the commodity market. It matters little that Calgary became Canada’s most Americanized city through the oil boom. The oil industry and Harper government aren’t loyal to any particular country; they’re loyal to the market itself. If environmental protection gets in the way of the Keystone pipeline bringing more Canadian oil south, it will go elsewhere. Then there was the quick flip of the Harper government to supporting fast-tracking Enbridge’s Northern Gateway pipeline to get bitumen oil to China.

Neither place nor people are sacred in the commodity market; collateral damage falls where it may. Ironically it has taken CSIS to warn us that corporation sales to China can threaten national security. China’s Huawei now wants to buy into Canada’s telecommunications market, where they already have agreements with Telus, Bell and Wind Mobile. Last year Australia banned a Huawei takeover because of national security and the US bans commercial agreements with Huawei because it could become a “freeway for Chinese espionage”.

SASKATCHEWAN “AHEAD”

Meanwhile Sask Tel just negotiated a joint-venture with Huawei. Unbeknownst to many, China is already Saskatchewan’s second largest trading partner and this trade grows 20% annually. First it was potash, then crops, then telecommunications, and now uranium. And it’s all about business, without any regard for China’s abuse of labour or the environment. Japan’s big uranium market disappeared with its decision to phase out nuclear power after the Fukushima disaster. Japan will now turn the corner to sustainable energy. Without any qualms of conscience the Wall government simply looks to shifting uranium sales to China. As Cameco’s VP says, it provided “great help in gaining better access to the Chinese market for Canadian uranium”.

Why bother about China’s connections to Iran, Pakistan or North Korea and the dangers of proliferation? Why bother about future nuclear melt-downs and further radioactive contamination? Or about China’s build up of nuclear wastes? Selling 50 million pounds of uranium over the next 15 years at a value of $3 billion to Cameco is “the bottom line”, right? Wrong! Economic growth can no longer be the bottom line.

Climate change is the biggest reason. Fossil fuel exports are more likely to expand on a straight upward line if China gets much control of Canada’s huge oil resources. Then we will more surely move towards the 450 ppm of carbon in the atmosphere that scientists say will bring irreversible climate change. What value will oil profits, royalties and jobs have then? The UN’s projections about reaching this biospheric threshold are “extrapolations” of continued economic growth. So if we want to prevent irreversible climate change we have to collectively get off the present economic growth curve we are on. Resource rich regions like West Canada must play a responsible role in this transition.

It’s so revealing how Premier Wall played the “populist” card to stop an Australian take-over of the potash industry, while working to further integrate the Saskatchewan economy with China’s. Rather than simply cashing-in on China’s desire to control more of our resources to perpetuate its economic growth, we need to have a development plan that makes us less not more dependent on the unsustainable global economy.

Next time I’ll look at the dangers of Canada becoming an Energy Superpower.

= = = = = =

ECONOMIC GROWTH AND OUR COLLECTIVE DEMISE – Part 3

http://crowsnestecology.wordpress.com/2012/10/01/
economic-growth-and-our-collective-demise-part-3-of-a-series/

by Jim Harding For publication in R-Town News October 5, 2012

Stephen Harper wants to transform Canada into an “energy superpower”. Most Conservative policy seems to follow from this huge gamble with our future. On the surface this “vision” seems feasible; once examined it turns into a nightmare.

Oil is already Canada’s no 1 export and Harper wants to expand the oil-export economy. According to Rubin, in his End of Growth, Enbridge’s Northern Gateway pipeline to ship bitumen to China, which Harper wants to fast-track, “would move more than half a million barrels a day of very precious oil” and this would “lift the revenues of Canadian oil companies by billions of dollars”. Oil flows, money flows. How could anyone question such a seemingly self-evident vision for our country?

There remain vital questions about the risks and costs of environmental contamination, about who would really benefit and how much “trickle down” would actually occur. And whether this would make the economy more or less sustainable and what kind of society Canada will become if it continues down Harper’s path?

RIGHT UP THERE

Canada is right “up there” regarding heavy oil and bitumen reserves. The Orinoco belt in Venezuela contains an estimated 297 billion barrels of oil, larger than in the deserts of Saudi Arabia, which contain 265 billion barrels. Canada’s tarsands come in third at 170 billion barrels.

And there’s great demand for oil. The US economy consumes 20% of the world’s oil and, like China, it depends on imports. It’s therefore no surprise that being next to the huge US oil market, Canada is one of a handful of oil-and-gas -exporting countries, along with Venezuela, Saudi Arabia and Russia, which exports one-half of the natural gas Europe uses.

Rising consumption, but mostly rising prices, has made the value of this oil market mushroom. Consumption went from 76 million barrels of oil per day in 2000 to 87 million barrels a day in 2010. But the price per barrel went up from $28 to $80 in this decade. The annual fuel bill quadrupled from $791 billion to $2.5 trillion and we are now collectively spending more than $3 trillion yearly on oil, which isn’t sustainable and will continue to trigger recessions.

FOLLOWING SAUDI ARABIA

Harper’s favouring a shift of oil exports from the stalled US economy to the still booming Chinese economy is not unique. Saudi Arabia has been shifting its oil exports and according to Rubin “half its crude exports now go to China” and this market has “surpassed the US as the kingdom’s largest customer.”

Harper’s rise to power, and the political realignment taking Canada much further to the right, comes in large part from the global shift in the oil market. The shift of the US to more dependence on Alberta’s tarsands occurred because of the greater security of supply arising from free-trade with the US’s northern NATO ally. When you add in the military costs of waging oil-related wars in the Middle East, the US has experienced a double whammy from the shock of steadily rising oil prices. Its national debt is skyrocketing out of control.

Yet, just as the continental energy corridor envisaged during the Mulroney era is taking shape, Canada, under Harper, seems ready to follow the path of Saudi Arabia. It may be purely coincidental that the Harper government is now distancing itself from America, including incessantly broadcasting a nationalistic and militaristic TV “ad” celebrating the British victory over the US in the War of 1812, which erroneously implies that this was a Canadian military victory before our country even existed. Is this Harper’s way of forging honour through a blood soaked flag?

CLIMATE CHANGE

Harper’s Conservatives have worked tirelessly with both oil-importing economic superpowers, the US and China, to undermine a carbon-cutting international agreement. China has refused to accept hard targets for absolute carbon emissions because such capping would curtail its rate of economic growth. Harper claims he opposed a post-Kyoto climate agreement because China disagreed with such binding targets, such as Canada initially agreed to under the Kyoto Accord. But this was always about stalling and managing public perception. Harper doesn’t want any binding targets for China or the US because these would interfere with their rate of growth and undermine the lucrative global oil-export market. This is the only bottom line!

Harper has steadily shifted to the narrative that Canada’s best interests are in unfettered economic growth based on oil-exports. It’s a crude, somewhat compelling and yet dangerous view of nation-building. He’d like Canadians to forget that since 1990, the base year for the Kyoto Accord, Canada’s carbon emissions have gone up over 30%; rather than being reduced by 6% by 2012, as previously agreed. Harper seems totally unconcerned about Canada’s loss of international reputation; he pulled out of Kyoto rather than pay up for emission credits from other countries who had worked in good faith to meet the treaty’s objectives. Harper’s “Canada” is already acting like a rogue Petro State that cares only for its oil sales.

CONSTRUCTED REALITY

Harper’s “energy superpower” will not automatically come from the market he seems to worship. In addition to undercutting climate change agreements, he’s maintained subsidies which favour this industry. While the US justifies its huge tax breaks to Big Oil as a way to promote energy self-sufficiency, Canada justifies the $1.4 billion yearly subsidy to protect our number 1 export. It’s a vicious circle designed to ensure the viability of the lucrative oil export industry. There is no level playing field for sustainable energy.

DEMYSTIFYING GROWTH

We need to quickly demystify all the deceptive hype about economic growth. Economists calculate economic growth based on productivity and labour force. If productivity goes up 2% and labour force growth goes up 1% then they say it’s reasonable to expect a 3% growth rate. Yet with fairer distribution and more intelligent production we don’t require perpetual growth to meet human needs. And perpetual growth will undermine our most fundamental need, a sustainable environment.

The growth ideology ignores all the vital matters of democracy, justice, peace and sustainability which must be front and centre in good government. China’s unprecedented growth rate of 10% is based on exploited labour and the degradation of air, water and human health. This isn’t sustainable. Using the conventional market model of economic growth which Harper upholds is simply irrational if we are to enhance human rights and environmental sustainability on a global scale.

THINNING DEMOCRACY

It’s no accident that Harper’s Conservatives are steadily undercutting parliamentary democracy, freedom of information, due process, and scientific inquiry while increasing the politics of “attack ads”, scapegoating and retribution. Despite all the rhetoric about small business, free enterprise and rural community they favour a one-dimensional, not an open society.

As we become more dependent on oil exports we will also become a more authoritarian society. No wonder that we are starting to feel a little more like Putin’s Russia, or even socially conservative Saudi Arabia, where the oil economy that keep the rich wealthy, always trumps democracy and human rights.

Remaking Canada along the simplistic lines envisaged by Harper is like pounding big square pegs into small round holes, which requires a lot of force and lots of collateral damage. Tying Canada’s economy to exporting oil to fuel China’s economic growth disregards human rights and ecological blowback. Deregulating environmental protection and sabotaging international treaties are signs that we already are moving towards an authoritarian Petro State.

We’ll need a much larger vision of human and biospheric common-interest to make the shift from economic growth scenarios that encourage our steady collective demise.

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Jim Harding is a retired professor of environmental and justice studies who resides in the Qu’Appelle Valley and writes a weekly column "Saskatchewan Sustainability" for R-Town News.
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Additional Articles by Dr. Harding:

http://crowsnestecology.wordpress.com/
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