I am President of the Institute for Integrated...
Could our children be equally happy, or even happier, with less material wealth? Could we ourselves be happy if next year’s income is lower than this year’s? In most advanced economies today’s reality is imposing those exact questions upon us, whether we want it or not. Average incomes, except for the top earners, are shrinking almost everywhere, and even a good education is no longer a guarantee for a prosperous life.
At the Institute for Integrated Economic Research (IIER) we address these questions by trying to create an honest picture of economics, a picture of how our ‘human ecosystem’ works. In doing so we’re trying to match economics with the reality of our planet and the boundaries of its environment. In short: we are trying to bring economics and natural sciences together.
When you make that shift in thinking, you become aware of some basic principles that apply to humans as to any other life form. Everything that has a ‘price’ involves an energy conversion of some kind – from the fast food burger you eat to the petrol you put in your car. All biological systems – including ours – rely on a stable supply of energy and other important inputs. If those inputs change, become scarce or more expensive, our system changes too.
Until the end of the 20th century we’d seen everything go up as more and more people consumed more food, used more steel, burnt more oil – more of just about everything. But the situation becomes critical when you can't afford more, or if there simply isn’t any more. This is exactly the point our planet is now approaching.
And actually, it’s nobody’s fault. We may blame the politicians in power for an economy that no longer grows as expected, but apart from the fact that we’ve all used too many resources for too long, there wasn’t a specific mistake that got us into this situation. Now we just need to accept it and take action.
All our research suggests that it seems unlikely that fossil fuels will continue to be available with the same benefits we enjoyed until recently – either due to extraction limits, higher cost or because we start to burden their use with carbon taxes or the cost of carbon sequestration efforts.
Unfortunately, when looking at the elementary physics involved, it is unlikely that renewable energy sources will ever become as beneficial to our societies as oil, coal and gas were last century. This doesn’t mean that we can’t and shouldn’t use renewables, and that they will further improve, but the benefits we were able to draw from easily accessible compressed and condensed solar energy that was buried in the earth over millions of years – and this is exactly what oil, gas and coal represent – will always be higher than what we can extract from renewable energy technologies like wind, solar power, or biomass production.
So what can we do? Buying a hybrid car or taking one or two fewer flights each year won’t be enough. So why not follow a different path – one that would adjust to that reality of ‘less’ without pain, and allow improvements in the quality of life, health, and wealth for most of us?
Research we conducted at IIER found that introducing simple, mostly non-industrial renewable and sustainable technologies could help the rural poor who make up the majority of the population in developing nations, and 70% of those living on less than $1.25 per day. They’d benefit from significant life and wealth improvements, while greenhouse gas emissions would stay the same or even shrink. But an ‘improved rural lifestyle’ is not what everybody strives for, this goes against the desire to lead lives with a dishwasher, a car and a TV, where most food comes from the supermarket shelf.
But ultimately, this isn’t about aspiring nations, it is about all of us. We’re at a point where ‘more each year’ simply becomes impossible based on the laws of physics. We can fight it or accept it.
So maybe, in order to get in tune with the realities of planet Earth, we might have to accept that less might in fact be more, a place where we will grow some of our food in our backyard, and spend an evening playing board games instead of watching TV. To achieve this, we need to learn to have more fun with fewer resources. If we accept this as a positive challenge, the results might be rewarding.