“I think all of us here today would acknowledge that we have lost that sense of shared prosperity” Barack Obama.
In my view this quote could not be more accurate. As the world has developed and ever more globalised we have lost touch with our long term goal of prosperity and sustainability for the future. As we buy more to satisfy our needs we have forgotten to look after the planet in which we live in. With prices for carbon increasing nowadays in order to make up for this, maybe it is time for a new economic system that is based around not producing emissions for the sake of the savvy consumer.
All the evidence for rising prices of fuels and oil is all over the news but this doesn’t tell us how much each emission is costing us. This is obviously hard to determine but economists have come up with a way of analysing. These rates are called Carbon intensity and tell us how much emissions we emit for every dollar we spend and the figures tell us that we need to be a lot more efficient with our production/. Now this is a bit confusing at first but if I told you that the current rate is roughly 700 gCO2/$ and for the world to just become carbon neutral it needs to be at 40 gCO2/$. Some say these need to be as low as 6 gCO2/$ by 2050 in order to fulfil the requirements from the IPCC. The current rate of change at -0.7% a year will not quite cut that.
Obviously changing these figures by such a dramatic amount would cost the governments far too much to come up with the kind of technologies to support this infrastructure straight away and so we must be able to reduce the cost of emissions ourselves through another method.
Decoupling is the first stage and we must do this to get the carbon intensity figures that we desire. Decoupling is the process of moving away from reliability on Carbon intensive processes like the transport system we have at the moment to a much more sustainable on based on renewable and not on using up the worlds limited resources. Price Waterhouse Coopers estimate the cost of cutting the worlds emissions by 50% to 3% of the worlds GDP. This may not seem like much but looking into it, it would wipe out all growth within the world’s economies and the longer we leave it the more of an effect this will have.
Now the usual model of consumerism is based on the population buying goods and services in order to satisfy their wants and capitalism fits in perfectly to fulfil these wants and gain a profit. But why should capitalism be based around profits in monetary terms. I propose a way of abolishing capitalism to r get rid of the consumerist society we live in. The diagram shows the engine for growth in the economy that we base ourselves in. Profit is the key to this or else there would be no money to keep the cycle going. So why not change this to a much more ecological thinking economy where the main aim of investment is into environmentally friendly project. This may not seem like much of a change from what you think we do at the moment with current investment in the economy. But the reality is that most large MNC`s don’t care about the effects of their actions especially in terms of sustainable for the future. They only look at the short run without thinking of the negative externalities they bring. This is obviously a big generalisation to make but in the whole it is not one of the concerns of a private company.
As marginal social costs tend away from marginal social costs the negative externalities come into play, shown by the Red area. The cost of this negative externality is the height of the triangle at that given level of output. This is what we need to try and stop by making investment purely on the private by increasing prices to firms that want projects that harm the economy but also encourage environmentally friendly investment. This should be the profit that firms yearn for. The economical gains that they will get from not having to pay for the social cost themselves will give them the advantage. This is very similar to the credit system that has been suggested in many reports on Climate change have suggested. The difference is the focus of the policy is that there is more emphasis on the firm’s actions rather than a country or factory.
These are all part of a new ecological thinking for governmental policy’s aptly named “the Green New Deal” after President Roosevelt’s New deal in the 1930s to kick start the economy after the Wall street crash. It was put forward by Paul Krugman who won a Nobel Prize in Economics for his work. He stated that a stimulus equivalent to 4% of GDP would be needed as an initial investment. This would be put into green projects in the public sector such as
- Freeing up resources for household spending and productive investment by reducing energy and material costs.
- Reducing reliance on imports and exposure to fragile geo-politics of energy supply.
- Providing a boost to jobs in the expanding environmental industries sector.
- Making progress towards the demanding carbon emission reduction targets needed to stabilize the global atmosphere.
- Protecting valuable ecological assets and improving the quality of our living environment for generations to come.
The need for investment in the Public sector is to stop private firms searching for profits rather than a strictly controlled environment in search for ecological rewards and prosperity within its stakeholders. This would then increase GDP for a country allowing them to regain the sum lost in the initial investment. Reasons for this are the increase in capital investment and consumer expenditure as they get higher incomes or general increased satisfaction.
Now this whole project will target capitalism with the abolishment of Private firms searching for profit and a huge investment in the public sector. This then leads us to a non-consumerist society as the rising prices in the private sector due to their increased costs with lack of investment. And with the help of the Green Taxes on negative externalities and Social costs they will have to raise prices even more and the laws of supply and demand show that this will decrease the level of demand. Meaning a lower quantity produced (less emissions) and a higher price (less buyers). This gets rid of the Novelty factor of buying products that the consumerist world is full of. People will only buy what they need or buy it from the public sector which will be significantly more environmentally friendly. This overall tackles two huge problems while solving the world’s huge environmental problems.