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It's the Economy, Stupid: A macroeconomic primer for design(ers) and sustainability, by Robert Blinn
By Robert Blinn - July 1, 2008
Last week the International Energy Agency called for serious investment into alternative energy and carbon sequestering. At the same time, United States Senate blithely blocked environmental legislation with many elected officials indicating that our suffering economy could not bear such a cost. While the gulf between these two modes of thinking seems irreconcilable, a reframing of terms may go a long way toward closing the philosophical distance.
Having studied economics as an undergraduate and then worked on Wall Street for nearly a decade, I feel relatively attuned to the economy and economic thought. Having read and studied design for the last four years, however, I've begun to realize that much of what I studied and practiced (in both design and economics) was based on misunderstandings and taxonomic differences between science, economics, politics, and design.
While it is tempting to treat sustainability as a production or a materials problem, such a view neglects the realities of our global economic system. To truly do "sustainable" design, the solution must reach beyond the drawing board and into economic reality. Economists and scientists have actually already paved the way toward robust arguments for sustainable energy and design, but to understand them it is first necessary to profoundly reframe the lens through which we view the world.
Looking at the world through such a lens makes one thing clear: Despite our mansions and our roadways, our designer jeans and our iPhones, human beings have made very little. Instead we've transmuted stored energy into temporary value in exchange for long-term waste. All of the growth that our politicians seek to perpetuate is not growth at all.
Politicians and naysayers will often object to sustainable initiatives on the grounds that they limit "growth" and increase "costs." While these arguments remain difficult to refute on a commercial level, two simple observations are enough to defuse or derail even the most economically sophisticated political arguments against sustainability. Market forces cannot align with the common interest of humanity so long as prices reflect costs and benefits that occur in: (A) displaced locations and (B) periods of time other than the present. This piece of knowledge casts an "inconvenient" shadow over our current system of production, but in doing so provides hope not only for the environment but also for our economic future. Displaced Locations: The Tragedy of the Commons In the past, economic growth has been partially predicated upon population growth. As long as the number of people kept growing, manufacture and production could be expected to grow at a commensurate rate. To date our growth has been effected as a zero-sum game in which we displaced other species and used their habitats and bodies as raw materials. Individuals and corporations could pollute the environment freely and were incentivized to do so before their neighbors had the chance. This should come as no surprise to even the most conservative businesspeople, since there's already an economic term for the results: The Tragedy of the Commons.
When mankind took up only a small portion of the planet, our growth could subsist on the losses of the far larger animal population. Now, instead of displacing the habitats of others, we're beginning to disturb our own. The "commons" were so large relative to us that our abuses were barely noticeable, but now that we're over six billion strong, our damage is starting to show. We're contributing to what's being termed the anthropocene era, where human pollution is influencing the geological fate of our planet. The commons can no longer afford to be discounted; they're all we have.
The tragedy of the commons is a type of collective action problem, a social trap where all parties agree that action should be taken, but gains will not be realized unless they all act as one. While each player knows what would be best for the communal good, self-maximizing choices fail to realize the optimal outcome for all parties.
Fortunately, democratic agents can recognize the greater good and voluntarily restrict their actions for the betterment of all. To date, the tragedy of the commons has been dealt with by national governments. In the global scheme, however, bickering nations have only further displaced the problem of the commons to a larger venue. While daunting, any solution must come through collective action a global level. Organizations like the IAE and initiatives like the Millennium Development Goals are a step in the right direction, but no pan-global organization has the capacity to enforce them at the moment (sorry United Nations). With that disappointment in hand, we must search for alternative solutions to the problem of sustainability.
There's no Time like the Present: Net Energy vs. Net Entropy Another economic paradox stems from an incompatibility between what we perceive as economic growth and natural paradigms of growth. Historically, there have only been a few primary inputs to the system of life on earth: solar energy, geothermal energy and time. Excluding meteorites, no new physical matter has ever been produced. Instead, the cycle of life has been ruled by transformation and transmutation, with solar and geothermal energy as a guide. Human beings, however, seem to care little for the labors of time. Instead, we have been remarkably adroit at using energy sources from other eras (burning fossil fuels collected over millennia, eating high-trophic level foods, and chopping down old-growth forests).
Looking at the world through such a lens makes one thing clear: Despite our mansions and our roadways, our designer jeans and our iPhones, human beings have made very little. Instead we've transmuted stored energy into temporary value in exchange for long-term waste. All of the growth that our politicians seek to perpetuate is not growth at all. It burns stored solar energy to provide the illusion of growth. The amount of stored energy, real value, in the world is actually shrinking. Our process of "growth" is entropic, creating local pockets of order at a greater net cost in energy.
While it is tempting to treat sustainability as a production or a materials problem, such a view neglects the realities of our global economic system. To truly do "sustainable" design, the solution must reach beyond the drawing board and into economic reality.
Fortunately, unlike the problem of the commons, sustainable energy is not a zero-sum game. While the sun's rays impart the earth with tens of thousands of terawatts of power, human consumption remains denominated in double digits. Any portion of solar power that we can claim is a permanent annuity. Admittedly the decision not to purchase hydrocarbons at artificially reduced prices does supply a competitive disadvantage for any nation who chooses to do so, but any investment in sustainable energy (taken in from the sun using either physical or biological mechanisms) yields ongoing results.
In other words, renewable energy is an investment into real growth. Rather than burning what economists refer to as stocks (our oil reserves), we would be investing in a flow (an ongoing stream of revenue, resources and value). Further, sustainable solar or wind power also tends to be local power. Through a geological accident, vast stores of hydrocarbons happen to be stored below the Middle East. The sun's rays and the winds, however, are shared across the earth. By investing in solar energy, we're investing locally rather than adding to the trade deficit. Any politician or business person who makes the claim that sustainable energy will hurt the economy is hopelessly out of date. Quite simply, we've never, ever had a growth economy. Perhaps this crisis is the time to start.
True Costs (and paying for them one way or another) Most of the problems our society is experiencing today stem from a failure to tabulate true costs of products. Indeed, barring backyard gardening and pedestrian travel, most of us have never paid the true temporal or geographic costs of a product in our lives. Now that we're feeling the pain of the oil crisis, we're realizing for the first time the true cost of energy (as priced into our means of production and transportation).
We're finally paying costs that we'd relegated to what traditional economic thought disregards as externalities (factors that aren't included in a cost calculus). Right now the sticker price in dollars of most products utterly fails to represent the environmental impact required for its production. Books like Cradle to Cradle, or the European system of prepaid disposal begin to tackle the fundamentals of external cost, but until it is done on a national or worldwide basis, our global economy won't be able to efficiently allocate resources; and that is a critical argument for any manufacturer to understand.
While we have known since the fall of the Soviet Union in 1991 that a top-down dictatorial system can't possibly allocate resources effectively, our current economic crisis is beginning to demonstrate that laissez-faire policies fail to safeguard the public good, another form of sub-optimal allocation. Although the market remains the best way to efficiently allocate individual resources, even the most die-hard capitalist will admit that problems of the commons are exceptions to the rule. Rather than a government-mandated economy or an economically-driven government, some compromise is necessary. A mechanism to include the public good in capitalist transactions must be found. For now, pigovian taxes, cap-and-trade policies and carbon taxes are the best tools we have for the government to implement protective policies without short-circuiting market forces.
While it's really easy for designers to get preoccupied with specifics and technologies, if the true costs of production are not included in immediate prices, people will continue to purchase seemingly inexpensive products that harbor large and hidden environmental costs. So as long as some providers embed their cost of production into the environment instead of the price tag, ethical manufacturers will be penalized for charging ethical prices, and the mass adoption required for manufacturing efficiency will be tragically delayed. Economic forces are excellent at distributing funding to ensure that the right initiatives get the right R&D, but until prices reflect real environmental and long-term costs, consumer expenditures will not be effectively allocated according to our needs.
When we imagine wealth, it's easy to get caught up in the idea of material possessions. Predictably, in a system with no inputs (which is largely the way we treat the world now), competition will center on matter. In a system with solar inputs, however, matter remains important to stockpile, but efficiency in storing energy creates an ongoing reward. Since matter is finite and can only be squabbled over rather than created, long-lasting gains cannot be found there. Instead, leveraging, using and storing solar energy would be the only way to create lasting gains. By harnessing external solar inputs, the net wealth (net energy) of the system could grow in a way that has been forgotten since the Precambrian.
Toward a New "Gold Standard" I'm a die-hard capitalist, and yet I'm beginning to realize that market forces no longer protect the common good. Those protections are left for democratic consensus instead. For that to happen the public must be educated, and controls must be put in place to safeguard its commons. Designers have long served as the interface between corporations, scientists and the public. Now that the public and private spheres have intersected on environmental issues, all of us (designers included) must be the mouthpiece for the will of the public, educating and demonstrating how capital should be allocated.
Fortunately, when our government speaks of growth, that growth does not need to be zero-sum. Growth can come not only from increases in production and population, but also from increases in efficiency, and we see technology growing at exponential levels that would have made Malthus or Moore proud. Now that the Internet and the global information economy have rightly taken center stage for humanity's most promising achievement to date (can you even remember life pre-Wiki?), the synergies and non-zero-sum games that come from human cooperation are poised to take us toward a technological singularity promising exponential growth.
Governments (and most particularly our own) can serve their interests, along with that of the corporations and their people by enacting price controls, taxes and/or cap-and-trade policies on hydrocarbon energy. If this can be done with a national or international consensus, as variously proposed by organizations like the IAE, thinkers like Jeffrey Sachs, commentators like Thomas Friedman, and even industry tycoons like Jim Rogers propose, it would benefit us all in the long term by evenly distributing the short-term costs and leaving no loss of competitive advantage. This remains the only path for the maintenance of the commons, but any one country choosing to convert to sustainable energy, even acting unilaterally, could also set itself up for real long-term growth.
Designers have long served as the interface between corporations, scientists and the public. Now that the public and private spheres have intersected on environmental issues, all of us (designers included) must be the mouthpiece for the will of the public, educating and demonstrating how capital should be allocated.
If we begin to tax hydrocarbons to better reflect the damage they cause to the commons, the government would immediately receive funds that it could invest into renewable energy for our future. More importantly, such a tax would make sustainable energy appear cheaper relative to oil. Because mass production operates on economies of scale, every dollar spent on sustainable energy rather than oil is effectively a vote to invest in R&D as well. Consequently, a carbon tax not only provides funding for public research, but also indirectly pushes the private sector towards sustainable development. America, in particular, will be hobbled by rising energy prices because of the vast and extensive roadways that separate our population, manufacturing and agricultural centers. Perhaps more than any other country, we would benefit from renewable energy; once we provide incentives to overcome the externalities, our extensive technological and capital infrastructure will pave the path sooner than the pundits imagined.
Government sponsored sustainable energy initiatives are not expensive travesties. They are instead the new gold standard--a mechanism reflective of the solar energy absorbed and retained by the earth in real time. Rather than basing our economy on precious metals or petroleum locked within the earth, economic productivity should be measured in sustainably produced BTUs or calories, which are the only measures of real and lasting value our planet has ever known.
While some may discount such thinking as naive, I retort that the alternative is tragic, and the world cannot afford to be anything but utopian at this juncture. We, as human beings, are gifted with foresight. Now is the time to use it. A growing scientific consensus is demonstrating that tragedy looms, and an enlightened minority offers ways around it. It is time to let our higher processes overcome our baser nature. This can only be accomplished by entreating our governments to enact global regulation along the lines the International Energy Agency proposes. We are the polis, we are the people, and we need to let our wills be known.
That is the world I'd like to give to my children's children, but for some reason that paradise seems so far away. It isn't as long or hard a journey as one might think. Anyone who tells you it's not worth the trip is acting in their own self-interest and at great cost to the rest of us. Those voices must be corrected, or collectively shouted out. Let's silence the free riders, lend our voices to the politicians and all take a walk toward that future together. It's closer than you might think.
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Robert is an NYC based industrial designer with an emphasis on industry. The work he's doing in fluid dynamics might someday translate into improved water filtration and desalination systems, but he realizes that without price intervention it might never be economically feasible. He's happy to say that he has not yet littered the landscape with injection molded plastic knick-knacks, but freely admits that he still isn't immune to lusting for useless baubles. Finally, he'd like to tell the readership that he's more a scientist than a proselytizer and he really isn't into this whole "call to action" thing, but is beginning to realize that the crisis is getting so urgent that every added voice helps. Photo image by Wendy Moody
20 Comments
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Fascinating article by Thomas Friedman in the Times linking the current recession with the concept of an environmental Ponzi scheme rather than Bernie Madoff's. As this new recession emerges, I easily returned to thinking about it in terms of housing starts and bad mortgages rather than synthesizing it with my very own passionate thoughts from a year prior. Friedman takes that inductive leap. Quality talkback there as well.
http://community.nytimes.com/article/comments/2009/03/08/opinion/08friedman.html!Report as spam -
"If we want to compare we can go to Soviet Union after 2nd World War how the state ruled economy advanced nothing in prosperity, availability and knowledge.".......
Not true, you must have been educated thru Western Propaganda. You should ask several older people who grew up there during Communism after Stalin's era......
"We can have this kind text here because all our primary necessities are solved: Food,Cloth,House,Security." ........
How are they solved? Unaffordable housing market exploding, rising food costs bought with a valueless dollar, security is your govt now being able to monitor all of your communications & search your house & computer when you are not home. .........
"And because we are rich enough we have resources to make investments outside primary necessities.".......
Ignorance is not knowing you are a different type of slave, on a different type of plantation.......
Most of us will live & die as consumers & in the name of consumerism It is sad. The word even sounds piggish when you repeat it enough times & relate more to it's true meaning.!Report as spam -
"It's truly amazing that the concept of carbon trading can elicit a "yawn" in talkback. When I wrote this a scant two months ago, most people had barely heard the term. Between Al Gore and T. Boone Pickens, environmental thought has made a lot of progress in public discourse recently. I don't think the concept warrants such quick dismissal, but I'm happy that awareness has progressed that fast."
I truly disagree with this statement as environmental thought has always been in our thought concept however now people are making more conscious choices. I grew in Canada where this country set standards for Environmental policy however hid behind America's Environmental credits. For many years I have believed there there should be stricter laws in place however now many professions are listening to designers for solutions as a result things have changed. The speed in which this is changing is fast however, it's expected when you compare the speed in which technology changes.
When you think of people like David Suzuki, Peter Fitzgerald-Moore, James Harkin, & Jane Jacobs I think how they were already vested in the environment and that strict laws needed to be in place more than 2 decades ago. So for me it's a yawn as I think we are behind in terms of the rate of consumption. I have never seen so much educated backlash, as you have politicians, designers, writers, etc... buying products like Hummers, Gas Mowers, high voltage power supply products.
And to think that a designer made this product is what I find the most disappointing.
As for the feminist comment I don't think this fits in this space as it's about the people of the world. I didn't know this article as gender specific!
And yes, Carbon is important, so what about water! Since water is more expensive than gasoline I think that this is huge problem. We can get Coke products in remote villages in Africa in very little time however getting them fresh drinking water seems to be the real problem. Capitalism has it's role. There are holes to your argument and we have our opinions. The main point I wanted to make is that Capitalism does effect carbon and carbon caps have been on the radar for politicians for a long time. The question remains, who puts their foot down in politics?
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"While we have known since the fall of the Soviet Union in 1991 that a top-down dictatorial system can't possibly allocate resources effectively"
No, what we do know is that *one particular* top-down system failed to allocate resources effectively.!Report as spam -
It's truly amazing that the concept of carbon trading can elicit a "yawn" in talkback. When I wrote this a scant two months ago, most people had barely heard the term. Between Al Gore and T. Boone Pickens, environmental thought has made a lot of progress in public discourse recently. I don't think the concept warrants such quick dismissal, but I'm happy that awareness has progressed that fast.
I also hope that I made it pretty clear (and indeed argued) that capitalism can't solve these problems � it's a job for democratic government. I agree with all of Cas's comments (though I remain puzzled as to why the involvement of women in the community holds more value than any other constituency). I'm just trying to articulate that capitalism (with strong constraints) can do a good job of allocating resources to the problem. Further, the same concept of cap and trade can be applied not to only carbon, but also land, chemical pollution and water, which are all quite worth of protection. Carbon just seems to be the most pressing now, though I'm certain that we'll have to deal with the others in time. The big argument, though, is that simple tax systems can effectively do the work of multiple laws, without requiring regulations for each project.
This connects with LuckyLucky's comments. I think my use of zero-sum transactions needs to be clarified. I'm not a Luddite; I even talk about the "Singularity." Clearly technology's role in the future of mankind is almost inconceivably important. Lucky's right that we wouldn't have gotten here without our past efforts. Again, Robert Wright's book explains this very well. When I talked about zero-sum, I wasn't speaking of happiness or individual health (the latter has improved vastly in Western nations). I was talking about our planet on a holistic basis -- viewing economic consequences as part of an ecosystem. Clearly love and learning are not zero-sum. My desire is that consumption to attain those goals can be done in a more balanced manner. Hopefully Lucky will be one of those entrepreneurial minds racing to, as he puts it, make sure that economic advancements continue to outpace resource consumption.!Report as spam -
carbon trading - yawn...
what is needed is better anti-pollution laws, grass-roots design, protection of natural resources, clean water/sanitation facilities, more women involved in their communities future etc
you don't get that from capitalism.
see : greenbeltmovement.org, wen.org etc!Report as spam -
"Though I'm tempted to get into more economic detail to defend my apolitical critique from ideological assault, I'll close with the simplest non-economic argument I know."
Well that is a clear sign of warning to me. When someone want to affect lives, policies and behavior in so deep levels and says he is apolitical. If you want that assume your point, you don't need to have a tag attached into your neck but it is political. There are not free launches. Embending Politics into Design will kill Design. A designer will not be free to have is own ethics.
"You don't keep your car exhaust running by your bedside table."
Neither i put some chemical used to make some "green" product or a wind farm.
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I have no problem with sustainability, i will make a party when i never have to deal with my energy provider or any other utility.But i have a big problem with the way it is trying to be achieved = forced and running contrary to much of economic rules, diverting resources that would instead make us richer that would also makes us having more resources to speculate in technology. I also have problem with "green" that doesn't accounts for all production steps and disposal, but that is another issue.
Our time in earth has not been a zero sum game. If it was, how life expectancy improved 3x, diseases treatments and knowledge and comfort ? Are we better prepared to deal with issues that might faces us now or in Industrial Revolution , Medieval , Classical times? I think so. So how is that a zero sum game?
It had cost, of course it had costs, that is why i said 3-1 2-1 or whatever value. It goes with us, some plants and animals benefited from us other don't, same for all plants and animals, we went where we had water,food and could after nomadic times start agriculture, we affect each other.
I dont see any lack resources at all. There are much less people than the world can survive with. We just have to look for example to Angola a country with double the size of France, much more richer and with half population. Many more places available for Humans, around.
If we want to fathom danger we have to see population movements. What they have been doing? Well going to cities the most difficult place in times of lack of resources.
"Do we have unlimited global resource?"
No we don't have ,Earth is finite so by definition there is a limit somewhere. But we are far to get near any limit on Earth, even more if we count other planets. We have an issue is that if technological economical advancements(notice the economical) do not go faster as we spent resources that cannot can be recycled(recycling might be or not an extra cost too).
Right now technological development have been limited to Western World until Second World War and after 60-70's included Japan in 90's Taiwan, Korea . So a great deal of humanity have been outside advanced production and developing technology and ideas ,usually experimenting with some failed collectivist program. That was too many intelligent brains not helping developing economy and without healthy economy there is no science. People only invest when there is no worries about food next day and when they trust there are rules that protect their investment. Thankfully that is changing right now and poverty is decreasing every year in the World so we could expect a great deal of technological development.!Report as spam -
I think some math needs to be applied to the principles of the capitalist model. The basic premise of capitalism is based on unlimited growth, but unlimited growth requires unlimited resource. so we have to ask some questions:
1 Do we have unlimited global resource?
2 Here is where we apply the math: is the western lifestyle ideal, sustainable globally if all developing countries were to attain the same level with the same penetration, we currently enjoy ?
If the answer is no, then it is the capitalist trade model that needs to change, in order for sustainability to be properly considered. Then the real issue becomes what do you replace capitalism with? if we can't replace it then how do we fix it? by that I mean the west has created a highly desirable but unsustainable lifestyle dream, which developing countries want. This goes wey beyond fuel. The real challenge is how do we make that lifestyle dream available to everyone without destroying the planet? and is the west prepared to make some sacrifices to its founding principles achieve this ???!Report as spam -
Really, really, beautifully put Mr. Blinn.
As designers we come into the profession seduced by the tactile sensuality of materials, and the lustful joy we get at bending them to our will. It's a passion that we are lucky enough to make a profession, but it's also shallow. All surface with no depth. We honor our beauty queens with design awards, but mainstream award criteria still doesn't ask deep questions about production, stakeholder impacts, or any other probing questions that would help the judges discern "True Beauty" from "Fatal Beauty." To me the most beautiful product in the world is one that carries its -- full -- production/use/disposal impact-costs, can reflect that in the selling price so the users of the thing actually PAY for the thing, and STILL sells well. Now THAT'S some seriously sexy, award worthy thinking.
One of the things I was insistent on as we developed the Sustainable Design Certificate program at MCAD (http://mcad.edu/sustainable), was that among all the hundreds of class hours devoted to understanding materials and processes that touched on social and economic issues as part of the mix -- that there be one class where we could deeply explore the impacts of design decisions on a socioeconomic level. In our class "Making the Business Case" we explore things like supply chain integrity and corruption, resource and waste trade, impacts on developing countries from global warming, information equity, fair trade, understanding risk, and the list goes on. Stuff as a designer shoving pixels around you would never dream you were impacting. Like the idea of the butterfly beating its wings in Brazil causing a hurricane in Florida -- a simple change of color, material option, or even size "tweak" starts in motion a chain of events that have huge, huge, far-reaching impacts.
Today, though "moving green," designers and their companies still approach problems the same way they always have -- thinking they've done their part if they can just locate the "happy list" of magically green materials, pick something off the menu and check "get eco" off their to-do list. But as all eyes turn to designers to -- get us out of this mess -- we can't approach problems with the same thinking that got us here in the first place.
We designers here in the US, and Americans in general, have a distorted view of the world. We whine about gas creeping up to $4 a gallon, when Europeans have been paying $5++++ for decades (taxed to pay for externalities). Even with this burden, they manage to have the same or higher standard of living than we do in the US. Are we saying then to the rest of the world, we in the US can only be successful if everyone else carries our burden for true costs? Wow, how sad are we?
The first step of course is just say things like Mr. Blinn did -- out loud. The moment we admit we have a problem, we've put ourselves on the path to fixing it. This does though mean that there has to be a fundamental change in each of us. Our buddies still drunk on the "I'm only one person, what can I do?" excuse will have to go by the wayside. Maybe they'll find some inner strength and join us, maybe not. But this very unsexy word we call sustainability is not a fad, or a trend -- it's a paradigm shift -- and it's not going away.
Kudos to Mr. Blinn for this much needed discussion.!Report as spam -
John:
I'll try to answer a few of your questions in this forum:
Your $100 bill analogy is perfect. That's zero-sum in a nutshell. One man's loss is another's gain. (if they value the dollar the same way). So too is your description of plants, storing solar energy and releasing it later when burned. When you talk about the differences between stocks and flows, and in the value of taking a shower in solar heated hot-water you totally understand. Yet somehow we had a misunderstanding elsewhere; perhaps in my unclear use of zero-sum outside of an economic perspective. I think this sentence sums it up: "We get all the benefits of the fossil fuel energy here and now (the sum), and others get nothing (the zero)." Maybe your confusion lies there. Let me clarify the meaning of zero-sum:
Rather than meaning that one party gets nothing and the other gets something, it means that the *total* sum (the good created) is zero in the transaction. In other words, the guy who drops the $100 loses it, the guy who picks it up gains it, thus -$100+$100=$0. That's zero-sum, -- the sum of costs and benefits is zero. Economists use the word "utility" as a substitute for value or price, but we can stick with dollars. Most of human economic exchange is nothing like picking up that lost bill. Instead, cooperation is "positive-sum." Its a lot easier to scratch someone else's back than it is my own, so if I can find someone else with the same problem, I should trade roles with them and we'll both benefit because having my back scratched is worth more than the effort it takes my fingers to scratch someone else's (my gain from scratch - my effort + gain of other - effort of other > 0). Market specialization gives us "positive-sum" transactions (financially, not energy wise) all the time. Whatever role you choose -- lawyer, plumber, schoolteacher -- you'll get better at it than if you tried to do all three. So you're happy trading your services because you feel you're well compensated for what you do, and other people know that you're better at a specific job than they would be themselves. That's why I don't go to my mechanic when I'm having chest pains. Eventually, my doctor will see a mechanic, and my mechanic will buy a tool built by an industrial designer, etc. It's "positive sum" because even if I make $50/hour and I have to pay a lawyer $400 an hour, for me to do a good enough job to replicate my lawyer's hour would probably take at least 8 hours of my work doing law research instead of doing paid design. The lawyer is happy with $400 and I'm happy (or at least satisfied) to pay it. We're both better off by specializing and transacting. Societies set up around "positive sum" transactions tend to thrive. I hope that explains the "zero-sum" vs. "positive-sum" concept in the context of economics and utility.
As for true costs, it's a little trickier. First, let's understand "negative-sum." That means that the bads outweigh the goods. It isn't clear yet how bad carbon emissions are, but they're getting worse every day. If it isn't already, some time soon the good that comes out of using electricity will be overshadowed by all the other costs, such that the total will be negative.
When I say we've never paid "true costs" what I mean is that every transaction that you have, even for services, you're also paying for the massive carbon infrastructure that runs our system. The earth's future is paying the price for our transaction today. Even in our "positive-sum" cooperative economic interactions, when we add in all of the unseen damages from carbon fuels or chemical pollution, the total costs and benefits balance out on the negative side. In other words, when we see the price of a banana it's "$0.50," not "$0.50 + X square inches deforestation + Y grams of airborne carbon + Z mL leaked insecticide, etc." That's what I mean by we've never paid true costs. But if we put caps on all of those things, your banana might cost $0.75 or far, far more (sorry). It'd be worth it though in the long run. Right now, though, I have no idea how much "airborne carbon" is worth vs. "fair trade" vs. "local" vs. "no-till." If we put caps on that stuff, my banana price would include it. Once that's in place, *ethical* decisions will be made by the voters when they limit negative behavior, not by buyers or corporations. Property rights are, after all, a foundation of capitalism, and the air is "owned" by us all. That one democratically made decision to protect the commons frees Adam Smith's hand to let public expenditure distribute funds.
As for using the term "zero-sum" in an energy perspective, I admit that I'm playing a little fast and loose with words. The laws of thermodynamics pretty much guarantee that physics is always zero-sum. Energy must be conserved. Positive-sum energy use would be perpetual motion and we don't get that. In physics there's ALWAYS a cost. The question is who pays the cost and which constituencies suffer for it. That observation actually fits right into your other major point: What about fusion? Does that somehow trump the conservation of matter argument? I guess the answer is yes and no, but not for the reason that you may think. We already have a giant working fusion engine ... called the sun.
It's the source of energy I'm calling upon. The sun is undergoing fusion like crazy whether or not we harness it. Eventually the sun will go nova, the universe will undergo a heat death, and that will be the end of the party. In some ways the sun is another problem of displaced location and displaced cost, but the key is that it isn't "suffering" and our passive collection of it's radiation isn't affecting it at all. Sure, we would be "stealing" energy from the sun, but the sun is burning its matter with or without us, so we might as well take advantage of it. The sun's loss (which will happen anyway) is the Earth's gain, whereas burning fossil fuels is the earth's loss and our (short-term) gain.
When you broaden your view or lengthen your time horizon, everything is unsustainable, because the universe will die. But that's not a recipe for nihilism any time in the near future. The key difference is that the sun's immolation is inevitable. Our planetary havoc, however, is fully preventable. Right now, we only live on one rock, and if we can't take care of it, I wouldn't have high hopes for our future here or anywhere else.!Report as spam -
Rob:
I'm trying hard to understand this fully, but all I remember from my sole economics course in college is why the US dollar is accepted worldwide and other currencies aren't (but now we've got the euro, and maybe the yen sneaks in there every now and then). So I'm struggling a bit. I think I've got the zero-sum concept worked out, but when applied to economics and fossil fuels and solar power, I don't quite get it. You've explained it once in your article, so rather than asking you to re-explain at risk of me staying confused, I hope that you can respond to the best explanation that I can muster and then show me where it's wrong or deficient. It's presumptuous to ask for this much personal attention, but I'll try anyway because I really am interested in understanding everything you say in your article (and I know some of my friends admit less than full comprehension, too). So here goes:
Currently, we favor fossil fuels. They come from prehistoric plants, and the energy put into the bodies of those plants came from the sunlight that struck the earth millions of years in the past. That incident energy is now stored in the fossil fuels. We take that fossil fuel's energy and use it to get electricity, heat and other stuff for our benefit. When this transaction is framed in terms of zero-sum, we benefit and get the energy (the sum) from the past's sunlight, but the past is gone and thus gets nothing (the zero) in return when we burn fossil fuels. At the time of the prehistoric plants, the sunlight was converted and stored and "allocated" to the future, so to speak. This took place at the expense of what is now the past but to our benefit, because instead of being used at that time to the past's benefit, it was sacrificed by the past and put away for future use starting mainly with our industrial revolution. We get all the benefits of the fossil fuel energy here and now (the sum), and others get nothing (the zero). That's what is meant by zero-sum in the article (I think). You say that "...sustainable energy is not a zero-sum game." According to this, solar power is not zero-sum. Something that is not zero-sum is "partial-partial," if you will. In other words, there is a benefit and a cost for both parties in the exchange...right? Let's look at a solar power example. I have taken hot showers in undeveloped countries despite having no electric, gas-burning, oil-burning or anything-burning utilities. The water had been heated in a network of black pipes on the roof, simply because sunlight hit the pipes when water was in them. We see that the sun shines for us here and now, and we get hot water here and now. So the benefit is apparent. But what about the cost? If it's not winner-take-all as zero-sum is, then it's some scheme of distributed benefits and costs, right? What price do we pay here and now for water heated by the sun? I understand that solar power is like dependable, constant income because it will never decrease nor increase (a "flow" rather than a stock, in the economics terms you use). This is what you must mean when you write that "any portion of solar power that we can claim is a permanent annuity." I understand how this contrasts with the fossil fuels we now prefer. Fossil fuels are not dependable, constant income for which we pay a price: they are like getting lucky and finding a $100 bill on the ground that someone else earned yesterday. My lucky find of $100 puts all of it (the sum) in my pocket, leaving the person who lost it in for a surprise (zero!). The sunlight is analogous to guaranteed daily income, because it's constant but I must pay the price of...of what? What's the price I pay with solar energy that makes it non-zero-sum?
You write: "Indeed, barring backyard gardening and pedestrian travel, most of us have never paid the true temporal or geographic costs of a product in our lives." I don't understand how this is true. Maybe I don't understand for the same reason I'm puzzled about the other stuff.
And I'm curious how the zero-sum framework treats cold fusion, a prospective energy source so vast it seems unlimited? Thanks for your thought-provoking article.!Report as spam -
I truly agree with pretty much all of your arguments...
And like you said; the onus is on society as a whole..
We can't leave it to business, politicians, engineers and such to sort it out within themselves; Not working together is the problem that has got us into this mess.
We certainly need a paradigm shift which needs to have a socio-cultural beginning; We need to change how people think; to do that we need to change how they grow, learn and breed; The way we own up to our house and car, and maintain it; we need to own up to the planet;
As a final note; I believe designers influence society and culture just as much as society inspires them; I think any initiative to increase common-folk education should start with us designers putting in that extra effort and setting an example..!Report as spam -
I've said this for years... Designers must remember what sustainability means.
Our designs must stand alone to be viably socio-economically sustainable.
For those who don't know what that means: Your iPhone should be attainable by every economic category. And while doing so it can't harm the planet in its production manufacturing.
People must remember that just because a product uses recycled plastic but has a price tag of $400 doesn't mean it's even close to sustainable.
And where the energy is derived to run/manufacturer that mechanism relates to it's overall performance in terms of environmental sustainment.
We have a long road ahead and even though I throughly agree with the Kyoto Protocol I think it's just smoke and mirrors in relation to Robert Blinn's excellent article!
!Report as spam -
Thanks to you all for the largely positive feedback. While there was some criticism, I'd far rather focus on the future than react to ad hominem arguments. After thinking and reflecting on the economics of sustainability, I inflicted the following aphorism on one hapless questioner:
When the commons seemed infinite, they could be ignored by all. Now that we know they are finite, they can be ignored by none.
And that pretty much sums it up from an economic perspective. Sustainable economic theory itself is an outlier. Anyone who includes it in their cost calculus is bound to make irrational choices relative to those who don't, or vice versa to far worse effect. It means that until we accurately price the commons, no one can make wise decisions about the costs of anything, which undermines the power of Adam Smith's invisible hand. Though I'm tempted to get into more economic detail to defend my apolitical critique from ideological assault, I'll close with the simplest non-economic argument I know.
You don't keep your car exhaust running by your bedside table.
Debating how long we can keep this up is missing the entire point. Every one of us knows deep down that real sustainability is a good idea. It's just that we're worried that the person next to us would rather wait another couple of years before they start paying for it. That's called an iterated prisoner's dilemma, and it's starting to look like we only get to play a few more rounds 'till we run out of chips.
The good news is that while in a single game, mutual failure is virtually guaranteed, over multiple rounds you get to know the other players and can develop mutual trust. Indeed, some biologists think that sort of repeated interaction is the very foundation of morality, and the origin of the golden rule: "treat others as you'd like to be treated." Such reciprocal altruism need not be limited to individual interactions. It can work between nations as well, as it has before in limiting nuclear arms proliferation. Our current crisis is no less dangerous. Many nations in the world have already begun to play their hands in a gesture of good faith. Now it's our turn.!Report as spam -
superb and fits right in with what we're seeing regarding the value gap between the value propositions made by mainstream consumer culture not crossing the 'have not' divide to the value mindset at the BoP
most particularly, this framing of the challenge, from your post:
"Looking at the world through such a lens makes one thing clear: Despite our mansions and our roadways, our designer jeans and our iPhones, human beings have made very little. Instead we've transmuted stored energy into temporary value in exchange for long-term waste. All of the growth that our politicians seek to perpetuate is not growth at all. It burns stored solar energy to provide the illusion of growth. The amount of stored energy, real value, in the world is actually shrinking. Our process of "growth" is entropic, creating local pockets of order at a greater net cost in energy."
imho, it seems as though a system designed on principles of infinite resources, increasing consumption and waste has run its course. we need to redefine "growth" or begin to question whether its "growth" we need going forward, or "balance" ?
!Report as spam -
"To date our growth has been effected as a zero-sum game in which we displaced other species and used their habitats and bodies as raw materials. Individuals and corporations could pollute the environment freely and were incentivized to do so before their neighbors had the chance."
Well i wonder what author was doing in Wall Street with this kind of Math ... What is the evidence for zero sum? why it wasn't 2-1 3-2 or whatever? It was that "zero sum" that made possible todays technology that the author talks so much? so how it was zero sum? His knowledge(lets for a moment assume is right) has no value? So the past didnt contributed?
What is the evidence that there are too many humans and they are all destroying the earth. In my country outside the cities the wilderness is increasing and wolfes and falcons returning because so called "zero sum" brings people to cities.
What is the evidence that there are too many people WHEN Europe is 2,5% of Earth and if all world population was displaced there most US cities still will have more population density today?
What many are trying to bring and i see that here in Core77 is Ideological Design.
I would expect the author will know something about Economy, but Wall Street seems more and more insulated from it . If USA government would have put 1$Billion in Solar power in 1930 it would have been a waste of money like if it was in 1970 or 80 or 90. It is much wise to get resources(=getting rich) to have later way to invest when technology develops.
Efficiency means that is achieved in less time. We would probably be in a 1930 technology(and with that our knowledge) today if we wouldnt have polluted much.
If we want to compare we can go to Soviet Union after 2nd World War how the state ruled economy advanced nothing in prosperity, availability and knowledge. We can have this kind text here because all our primary necessities are solved: Food,Cloth,House,Security. And because we are rich enough we have resources to make investments outside primary necessities.
If Sun and Wind is good let the economy freely reach it. There are many firms investing in it that in 2010 the investment will reach parity with semiconductor industry. The Governments just need to step out of the way.!Report as spam -
Very intellectually athletic post! I am exhausted...
As the discipline of economics moves closer to the discipline of design, I see some of your points becoming more relevant. As a designer who has done his fair share of dotting the landscape with injection moulded baubles, I find myself more and more using economics arguments to support my design proposals.
Your piece does have a very New York centric flavor blending government, politics, wall street, science, media and business. There is however a whole emerging consumer oriented world outside of the US that is and will be controlled by forces outside of the western model of capitalism (and the US military). Understanding these cultures and their evolutionary histories is essential to any designer wanting to contribute to progress in a ever shrinking world with limited resources.
My work as a designer is in academia, government as well as the private sector, and find that change can only be implemented if you get in there and make a difference on all three levels.
Steve in Seoul, South Korea!Report as spam -
Ironically, the markets may have leapfrogged ahead of your concerns with the development of economical solar and potentially synthetic fuels developed through biotech. Check out nanosolar (www.nanosolar.com). I think there maybe 2-3 companies that are saying that they have a solution that is now economical (ie down to $1/Watt equipment costs and comparable to coal plants once installation is factored in).
While the bulk of your post seems to have been edited out (or temporarily disappeared?), I would suggest that it was a rather jaded perspective of economics - which is meant to reflect human needs first and foremost. It's for this reason that globally we live healthier, better and longer lives and the trends have been very encouraging as far as the human condition goes. I'm not sure that I subscribe to a pigovian approach or even carbon markets given the leaks the size of Australia embedded in those systems.
However, I think a good case can be made that oil has been underpriced for quite some time given the US role in providing relative security to the Arab world and elsewhere and an oil tax would have been as good as any to fund this subsidy. But now with oil being where it is, you don't need to look far to see the massive flows of capital being devoted to finding viable alternative sources of energy (and even improving the ones we have).!Report as spam -
Great stuff. Solar is the way to go. With subsidy and the newest progresses made on the "geometry" for catching all the photons, we are not that far off. Will Digg and Link to this for sure.!Report as spam
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I'm am so glad you've put this into words. Some of the information you talk about, particularly energy, brought to mind the writing of Saul Griffith (of Makani Power) with the Game Plan, available for reading over at http://www.wattzon.org.
I'll definitely be recommending this as reading to my friends. And/or citing it to them.!Report as spam
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