Demolishing the Myth of Perpetual Growth

Life After Growth: Economics for Everyone

Leah Temper and Claudia Medina (2010)

Film Review

The purpose of Life After Growth is to challenge the perpetual growth paradigm in an era in which markets have taken the place of religion in determining major social values.

At present media pundits and policy makers champion continual economic growth as an unquestioned fact of life. In reality, it’s a fairly new phenomenon. Prior to the 19th century and the industrial revolution, all human civilization was characterized by a steady state economy in which both population and productive capacity grew very slowly.

The documentary argues that the urgent crises of poverty, inequality, shortages of water and energy and ecological destruction mean the time has come to explore better ways to design the economy other than infinite growth – especially as the latter is impossible on a finite planet.

At present a “healthy” economy is expected to grow at an average annual rate of 3% a year. At that rate, the size of the economy doubles every 23 years, as do carbon emissions and resource depletion.

Filmmakers also explore what the transition from a growth economy back to a steady state economy might look like. They do so by profiling a number of “DeGrowth” groups that have opted out of “corporate” society:

• The voluntary simplicity (aka voluntary simplicity) movement launched by Vicki Robin’s 1992 book Your Money or Your Life – where members vastly improve their quality of life by working 1-2 days a week, living more simply and consuming less.
• The Transition Towns movement – involving communities throughout the industrialized world collectively organizing to downsize their lifestyle and reduce their carbon footprint.
• The Catalan Integral Collective in Spain – funded by the civil disobedience of Enric Duran, in which he used credit cards to “borrow” 492,000 euros from 39 banks, an amount he couldn’t possibly repay. (See Spain’s Modern Day Robin Hood )
• Ecuador’s Keep the Oil in the Soil campaign – in which the president of Ecuador pledges to not to mine Yasuni National Park (one of the most biodiverse places on earth) for oil provided developing countries commit to replace Ecuador’s lost income.
• Bhutan’s decision to measure their country’s success through Gross Happiness Index (GHI) rather than Gross Domestic Product (GDP).
• The Church of England’s God is Green program dedicated to reducing Britain’s carbon footprint.

The Psychosis Called Consumerism

Consumed: Inside the Belly of the Beast

Richard Heap (2011)

Film Review

Consumed is a British documentary about the psychological basis of what the filmmakers call the “weird mental illness called consumerism” and “a kind of collective psychosis in which people value acquiring objects more than their children, partners or friends.” The film maintains that there are unique evolutionary features in the human species that make us uniquely susceptible to pro-consumption messaging.

The documentary begins by emphasizing the grave implications of “unfettered” consumerism on humankind’s ability to survive on this planet – both from the perspective of ecosystem destruction and growing resource scarcity.

They go on to analyze the primary biological drives that underlie most human behavior: the drive to survive and the drive to reproduce. Most marketing is deliberately aimed towards the latter. People who lack confidence in their ability to attract a mate are bombarded with messaging that they can increase their prestige and status by acquiring specific products.

As people get older, they realize this thinking is delusional: a new Porsche doesn’t make someone fall in love with you as a person. People who hook up with you for your car eventually get bored and leave.

Young people, however, are incredibly susceptible to the pro-consumption delusion. This is why billions are spent on marketing to kids from the moment of birth. Getting pre-teens and teens to think about mating early is also incredibly effective in capturing more of their money (as well as their parents’).

Consumed also examines our psychological disconnection from nature and why this has allowed us to become so indifferent to the environmental devastation caused by our consumption patterns.

The behavioral scientists Heap interviews differ on whether the sustainability movement can save the human species. They all agree it’s pointless to look to politicians – the very epitome of pathological narcissism – for a solution. Several are pessimistic that Transition Towns and similar sustainability-related groups can save us without addressing the root cause of the crisis: our psychology.

Others are more optimistic. Pointing to the 200+ million years humans survived without a multitude of consumer goods, they argue that learning to understand our psychological make-up can help us be less vulnerable to constant pro-consumption messaging.

Local Dollars, Local Sense

Local Dollars, Local Sense

by Michael Shuman

(Post Carbon Institute, 2012)

Book Review

Michael Shuman’s latest book, Local Dollars, Local Sense is valuable for three different groups of readers: sustainability activists seeking financial support for small locally owned businesses; local business owners seeking start-up and expansion capital; and investors seeking to move their IRA accounts and other Wall Street holdings to safer, more profitable and more socially responsible and environmentally friendly investments.

There is growing consensus among economists and anticorporate activists about the importance of relocalization as the centerpiece part of any realistic solution to the economic, energy and environmental crises that face us. Across the planet, thousands of neighborhoods and towns are coming together to opt out of corporate agriculture and energy production in favor of local food and energy production schemes. The biggest obstacle they face is finding sustainable funding to support their work.

A Dearth of Funding Options for Local Business

At present options for small businesses seeking start-up funding for organic farms, solar installation companies and similar “green” enterprises are extremely limited. A small business owner needing finance has two basic choices. They can take out a time-limited loan at interest or they can sell shares and allow other people to become part owners and share in the profits (or losses).

Even prior to the 2008 economic crisis, it was virtually impossible for small business owners to find conventional bank loans. Nearly all the neighborhood banks we grew up with have been bought out by global investment banks, which have no incentive to make loans to small local businesses. The recent move by millions of Americans to move their accounts out of global banks to local banks and credit unions – which do support local business – has been a move in the right direction. Yet as Michael Shuman points out in Local Dollars, Local Sense, this is merely a drop in the bucket compared to the $30 trillion Americans have invested – mostly through IRAs and pension plans – in Wall Street Fortune 500 companies.

Shuman, a member of the Post Carbon Institute and partner at Cutting Edge Capital makes, a compelling case for moving half ($15 trillion) of it out of Wall Street and investing it locally.  He presents strong evidence that local businesses provide a higher and more reliable return than the Wall Street casino, as well as providing a host of benefits for society and the environment. Unlike multinational corporations, they have to be accountable to local residents who patronize them. This translates into a strong incentive to be environmentally responsible, to treat workers fairly and to contribute positively to the community.

How Banks and Corporations Game the System

Although small local businesses produce 50% of the US GDP, as well as providing 50% have the jobs, fewer than 1% of Americans’ combined savings and investments help to finance local business. Most Americans still keep their short term savings (if they have any) in large multinational banks. In most cases, their only long term savings are tied up in IRA plans and pension funds. With the exception of municipal bonds, nearly all of this is invested in Fortune 500 corporations with no loyalty whatsoever to any community, state or country.

The main reason most Americans invest in Wall Street is because powerful bank and corporate lobbies give them no choice. There are serious legal obstacles preventing people from investing in local business. Outdated securities laws passed during the Great Depression make it virtually impossible for “unaccredited” investors (approximately 98% of Americans) to invest even small amounts in local companies. “Accredited investor” is a term delineating the qualifications needed to participate in “high risk” investments, such as seed money, limited partnerships, hedge funds, private placements, and “angel” investments. In the US, an accredited investor must have an income of $200,000 (for three years) and a net wealth of at least $1 million (excluding their residence).

A new business seeking funding from “unaccredited” investors is required to register with the SEC and state regulators. This, in turn, requires the creation of a disclosure and other legal documents at a cost of $25,000-150,000 in attorney fees. The U-7 or SCOR (Small Company Offering Registration) form alone is 39 pages, and each form must be accompanied by 14 disclosure documents.

There seems little hope of reforming these archaic laws while powerful Wall Street lobbies control both Congress and the White House. However according to Schuman, communities across the US are trying exciting new financing models that circumvent existing securities law:

• Worker and/or consumer cooperatives – workers and/or workers and consumers pool their resources and share ownership in the local business they are starting or taking over from a prior owner.

• Pre-sales Contracts – companies generate start-up funding by lining up customers to pay in advance for their products.

• Local Investment Opportunities Networks (LIONS) – local networks deliberately cultivate relationships between business owners and potential investors (the SEC and state regulators often waive the requirement for a SCOR if the investor is a family member or “friend”).

• BIDCOs (Business Development Companies) – a type of investment club. BIDCOS aren’t required to register with the Security and Exchange Commission (SEC) but must provide managerial and technical assistance to beneficiaries as well as capitol. No Small Potatoes in Maine is an example of a BIDCO

• Low cost DPOs (Direct Public Offerings) – if the business is limited to operating within state or offers the investment opportunity without public advertising, it may qualify for exemption from registration requirements. The business owner will still need to fill out a SCOR, but a number of public interest attorneys are seeking to streamline the process by creating “fill-in-the-blank” software.

• Crowdfunding – a technique for pooling of large numbers of small contributions, usually via the Internet, for a specific project. If there is no expectation of return (except for a token gift or premium), there is no requirement to register with the SEC. Small business owners can register potential projects for crowdfunding at Kickstarter.

• Local/Regional stock exchanges – in 1985 there were approximately a dozen regional exchanges (for example the Pacific Stock Exchange and the Boston Stock Exchange). Most were bought out by either the NYSE the AMEX or the NASDEQ. However according to Shuman, Mission Markets in New York is the most promising model for what future regional exchanges will look like. Mission Markets calls itself a “private marketplace” because obtaining SEC approval to become an “exchange” (where shares are traded) would involve major bureaucratic hurdles and cost half a million dollars.

• Local Savings Pools – issues interest-free loans for a fixed period. According to Shuman, there is less risk of fraud as lenders and borrowers are more likely to know one another. Since there is no expectation of financial return, there is no requirement to register with the SEC or state regulators.

• P2P (person-to-person) lending – www.kiva.org, an international microlending (providing loans as small as $25 to third world entrepreneurs) website, is the best example. Inspired by the Grameen Bank founded in Bangladesh by Muhammad Yunis, Kiva has many imitators.

A Film About Economic Relocalization

The Economics of Happiness

Helena Norberg-Hodge (2012)

Film Review

The term “economic relocalization” describes a global movement of loosely knit grassroots networks working to strengthen local and regional economies and systems of food and energy production. Most of the last eight years of my life have been focused on grassroots relocalization activities.

What I like best about Economics of Happiness is learning I am part of a global movement. I hate the title, which suggests the film concerns some kind of airy-fairy New Age spirituality. It doesn’t.

The 2011 film, narrated by Helena Norberg Hodge, is based on her 1991 book Ancient Futures: Learning from Ladakh and her 1993 film by the same name. The book and both films draw their inspiration from the nearly forty years Norberg-Hodge spent living and working in Ladakh, a small Himalayan region in the India-controlled (and disputed) state of Jammu and Kashmir. Economics of Happiness includes local footage from the 1993 film, as well as substantial documentary footage relating to the world’s current economic crisis and impending ecological crisis (stemming from catastrophic climate change and mass extinctions).

The Psychological Devastation of Globalization

The film opens with the same narrative Norberg-Hodge recounts in her earlier Ancient Futures film. We are shown the “before” image of Ladakh, a rich thriving culture in which residents live in large spacious homes, enjoy generous leisure time and have no concept of unemployment. Then we have the “after” image where, thanks to globalization, cheap (government subsidized) food, fuel and consumer goods have flooded the region and destroyed residents’ traditional livelihoods. Previously pristine communities face rising levels of air and water pollution, while Ladakhi teenagers face continual bombardment with pro-consumption messages.

It’s heartbreaking to see the psychological effect of all this. Most young Ladakhi have come to regard themselves as backwards and poor, while the communities they live in face rising racial tensions, juvenile delinquency and epidemic levels of major depression.

The Destructive Nature of Urbanization

The film goes on to sketch the mechanics of globalization, stressing the deregulation that forces small self-contained regions like Ladakh to open their markets to foreign goods, which quickly supplant local products. Norberg-Hodge paints an even uglier picture of urbanization, an inevitable result of forcing millions of small formers off their land. She stresses that city living is vastly more resource intensive than rural lifestyles. All city residents rely on food, energy and water transported from some distant source. They burn up additional fossil fuels transferring their waste as far away as possible. She stresses that most city residents go along with the massive ecological and social devastation they produce because it occurs on the other side of the world. Thus they don’t see it.

Rebuilding Local Communities and Economies

The solutions Norberg-Hodge offers for all these problems are similar to those proposed by an increasing number of dissident (non Wall Street) economists. First and foremost we must acknowledge that humankind has exceeded the earth’s carrying capacity – that the corporate drive for continual economic growth must end. Secondly people of conscience need to opt out of the corporate economy to facilitate the creation of more efficient and environmentally accountable regional and local economies.

Norberg-Hodge also sees the process of rebuilding local communities as a remedy for what she describes as the “crisis of the human spirit.” She blames this pervasive spiritual crisis on the demise of community engagement that has accompanied globalization and urbanization.  Although the process is most striking in remote regions like Ladakh, where it occurred suddenly, nowhere in the developed or developing world has escaped it.

The film ends on an extremely optimistic note, with numerous examples of international and community organizations supporting people in reclaiming their lives from multinational corporations.

Economics of Happiness can be rented (and watched online) from the filmmakers for $5

World Change Starts in Your Neighborhood

A liberated lawn

Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not – Dr Seuss

Through the re-localization movement people are taking back power from corporations and reconnecting with nature and other human beings. An inspiring film from Australia describes how to make your own block a Super Hood.

We’re building our own Super Hoods here in New Plymouth (check us out at our Transition New Plymouth Facebook page). I started one in my street by liberating my front lawn to plant potatoes and silver beet (chard).

If and when summer arrives, we’re going to close the road down for a street party.

Photo credit Manawatu Harvest Festival