Eco-Economy: Economics in Environmental Campaigns

Thanks for inviting me here.

I have been given a certain amount of latitude with my speech, and I understand the focus for this session is ‘Using Different Tactics: Business and Behaviour.’ I have also been asked to challenge you. So here we go.

To write this speech I thought of all the environmental issues I could dream up. Here is my list:

There are global issues of climate change, species loss, deforestation, loss of soil productivity, pollution of lakes, rivers or ground water. Some of you, like Greenpeace activists, will be working at the global level.

There are national issues like - well there are the same things. Perhaps we can add genetic modification of food, rainforest destruction.

And then there are local issues. This is a big list - sewerage discharge, ground water depletion and pollution, siting of cell towers, airport noise, motorway extension proposals, preservation of wetlands, the protection of heritage buildings, siting of a council dump for Christchurch and Hamilton, winter air pollution in Christchurch, land use issues like the damage to the river banks of the South Island as dairy farming takes over from other types of farming, and campaigning for an inner city park for Wellington.

This is a long list and I know you can add to it. Local issues are issues which environmentalists like you are all fighting for all over the world. And you will know if you are campaigning against a cellphone tower near your school that the best way to gain knowledge is to jump on the Internet and reap the experience of other campaigners round the world.

The Union of Concerned Scientists in 1993 warned that human beings and the natural world are on a collision course and that some of the changes are irreversible. They said no one can escape from injury when global biological systems are damaged. Scientists argue whether loss of species is more serious than global warming, it matters not. The issues affect everyone.

So I am glad you have taken time out today to sit back and reflect. Many of you have been campaigners for years. A change of Government has at least brought some respite for logging of native bush.

But are we winning the larger environmental battle? Agenda 21 people must surely be pessimistic. Our last decade’s lack of success in keeping down our greenhouse gases emissions must surely cause alarm. Can we see the wood for the trees? Are we so desperate to save the last few of this species here and the last patch of native bush there that we haven’t time to sit and think for a while as to what is causing all this? Why, despite the activity of hundreds of thousands of environmentalists worldwide have we collectively not made more progress to reverse the destruction?

I will be suggesting the answers are in the way the global economic system is set up, because under the current system, economies must grow or there is economic collapse.

Whether as part of your commitment to the environment you are campaigning on global issues, national issues or local issues, you will probably have the same frustrations. Year after year the same issues arise - issues of development versus conservation. I look at the list and see there are common themes. There is always a conflict, the conflict between dollars and preservation, a conflict between money and beauty, or between money and ecological wisdom.

Let’s take one issue - the campaign for Chaffers Park in Wellington. As you may know, Wellington is very short of inner city parks and over the last few years there has been a huge migration into the inner city as people buy up apartments. Over the last three years Mary Varnham and her band of campaigners have successfully modified the City Council’s plan to allow high rise buildings on the waterfront and have managed to persuade the Council to dedicate a certain amount of land to a park. People need to be able to walk in a park, play in a park, sit in a park. Human life needs recreating from time to time. So why do councillors resist the proposal for a park? Partly because of their desire for rate income. The issue becomes one of money versus life.

Whatever issue you are fighting, sooner or later you will come across the inevitable - there is money involved. There might even be big money against you - an industry, a megacorporation. And it is the campaigners who address the economic issues who are the successful campaigners. Put yourselves into the shoes of your opponents. Try and think like them. Then come up with economic solutions. Then approach your opponents with new suggestions. Let them try to knock down your ideas.

If you are working on issues like traffic congestion in Auckland or opposing the Waikato pipeline proposal, then you will be addressing the economic issues -the cost of rail versus the cost of road transport, the cost of bank interest that local councils end up paying for infrastructure plant.

Last week I read with sadness the obituary of Maxine Harris who had set up a group to reduce airport noise in Wellington. They worked untiringly for eleven years, even taking the issue to the Environment Court. They had a partial win, and it cost the airlines big money to fit their planes with noise reducing equipment. Economics comes into every argument.

So think for a moment about the issues you are involved with, whether it is whaling or nuclear power, genetic modification of food, preserving water quality or air quality. Now think about the economic issues. Are your opponents just stupid and thoughtless or are they greedy, ruthless, and cruel? Why do they have to make that money? Who is pushing them?

You will know of a children’s book by Dr Suess called ‘A Fly Went By’. The text goes: ‘The fly ran away in fear of the frog, the frog ran away in fear of the cat, the cat ran away in fear of the dog.' And so on. And on every page comes the refrain. ‘So you are the one at the back of all that! You are the one which made the dog mad.’ And of course at the back of the chain it turns out to be an innocent lamb with his foot in a pail that causes this ridiculous chase. Take the foot out of the pail and the chase is over.

If only it was so easy! Environmental destruction, for the most part, hasn’t as its root cause an innocent lamb with his foot in a pail. Behind this system is greed and the desire for power and control. It is BIG, BIG and SCARY. Billions, trillions, of dollars are involved.

Green economist Richard Douthwaite has written a book called ‘The Growth Illusion’ in which he concludes that economic growth is forced because businesses have to invest and grow or else they collapse. He attributes this to the fact that every year they have to go out and find the interest to repay, and to do this they must compete with everyone else for the limited supply of money around. He says that under the current system the alternative to economic growth is bankruptcy and economic collapse.

Since the days of the Values Party twenty five years ago, New Zealanders have been questioning why politicians are always advocating economic growth and why, for the most part, do they, and the journalists putting together stories on economic issues, always praise economic growth, as if it were identical to progress and wellbeing. You know that it isn’t the case, but you probably haven’t thought of why we have this system with these two horrendous alternatives.

Imagine you were a politician and you said to your policy advisor ‘Think me up some alternatives for a financial system please.' And the policy advisors said to you ‘Well here is one. Here is an economic system which requires continuous growth. It must keep growing or you will get into real trouble. The problem is that if you adopt this you will eventually have a seriously threatened environment. It might just cause global warming, species loss, soil degradation, increasing gap between rich and poor, crime, and social decay. Well the alternative to that in this system is economic collapse - people going bankrupt, businesses collapsing, people being unemployed in their millions.'

Now what would you say to such a policy advisor? A wise politician would tell them to go back to the drawing board and try again. You will say ‘Think up an economic system which will be sustainable, one which will work please.’

You know it is only in the last year that I have understood this issue. It has been a long search. I was a Values Party candidate in 1975, I was a member of the Alliance in the midnineties, and when I realised that Jim Anderton was never going to address the issue of the validity of the growth of GDP as a indicator of progress, I left the Alliance to edit a newsletter called The Indicator for a couple of years. It was through this that I learnt a little about green economics.

While editing this newsletter and accompanying Richard Douthwaite on his tour of New Zealand I began to understand that economic growth is essential to avoid collapse. I learnt a lot about local currencies and how communities can issue interest and inflation free money. In fact they did this during the last Depression in Europe and America extremely well.

But it wasn’t till I read Michael Rowbotham’s The Grip of Death in 1999 that I understood how the system is really set up in the first place. I learnt the architecture of the structure we use. It came clear. I started to study money, the stuff we use, worry about, work for, angst over but seldom examine. It is the way we allow our country’s money supply to be created and issued as interest bearing debt which causes forced economic growth which in turn wrecks our environment.

How does this happen? Well most people believe that banks only lend out their deposits. It isn’t true. Economists (or some of them) know that banks create money every time they issue a new loan and the loan is spent and the deposit enters another bank. But since the banks don’t also create the interest to pay back that loan, the borrower must either go further into debt or acquire the interest money by earning it from others. But not all can win as there isn’t enough money to go round. This is a system of winners and losers. Collectively the interest can never be paid back and someone has to go under. There is more debt in the system than there is credit.

It doesn’t matter who issues the money, it won’t work either if governments, local authorities, community groups, counterfeiters or anyone else issues it as interest-bearing debt money. Rowbotham carefully describes the chain of disastrous events originating from this destructive financial system. Because of competition for money to pay interest owing, there are mergers and acquisitions. Because many gain the needed interest by going further into debt, countries, firms and individuals go further into debt. And because of indebtedness countries have to resort to export warfare to reduce their indebtedness.

All the while the power of megacorporations continues to increase. A 1999 study of the top 100 corporations and national governments of the world showed that 66 are corporations and only 34 are governments. The top six TNCs - Exxon-Mobil, General Motors, Ford, Mitsui, Daimler-Chrysler and Mitsubishi- together have more annual revenues than any national government except the US . As you may know the world’s corporations have a mighty hold on the various international bodies which exist - the Bank of International Settlements, the World Bank, the IMF, the World Trade Organisation and regular private meetings such as the one soon to be held in Melbourne by the World Economic Forum. They set the agenda.

Now Mark Prain has painted a picture of some good news. A new shoot of ethical business is emerging from the business soil. That is great. And ethical investment is emerging too. Great again. I am possibly not as optimistic as Mark because of what I got out of reading David Korten, author of When Corporations Rule the World. Korten talks of the difficulty of ethical companies. Because they all need to grow, sooner or later they are taken over by a bigger corporation which cares less about employment or environmental standards than they do. In his subsequent book The Post Corporate World he describes what most of you know well - human beings have a choice between life and money and we must choose life. And Korten, who has praised Rowbotham’s book, recognises that the system of money creation as interest bearing debt is at the root of much of the environmental destruction.

Now obviously in a speech like this I am not going to go into further detail, but I must say, now that I am sitting at home writing a book on Healthy Money I feel I am doing more for the environment now than I have ever done. And for the prevention of crime and development of community and for jobs and sustainability. I am excited.

And where are economists in this debate?
Many economists are working hard, and are sincerely embarrassed about the negative public opinion of economists. There are feminist economists and environmental economists and some progress is being made. But my concern is that when approached on money creation, many prestigious economists say: ‘Oh that is macroeconomics. I leave that to the experts in the field.’ I have heard this reply from many respected NZ economists.

This fills me with consternation. If a doctor were asked what they knew about blood, and replied, ‘Very little. I leave that to the haematologists’ you would be concerned. If an architect told you they leave knowledge of building materials to the experts, or a dentist told you they left knowledge of tooth enamel to the experts you would have every right to be rather uneasy.

Why should we trust a profession which does not know about its basic building blocks? I believe all economists should be able to say whence money came, how it was created, and what the effects are of issuing it in the way we do now.

If economists avoid addressing the most basic part of economics, the issuing and creation of our medium of exchange, the lifeblood of healthy economies, we too are on a pathway to doom. Homo economicus will go down with other disappearing species. Heads in the sand if you like, but that won’t protect species, or prevent freak weather events caused by global warming. Forest fires will rage in USA and floods will continue to ravage Mozambique, China and Timaru.

I am sorry, I wish I could trust economists. They have made a bit of a mess of the world. Collectively they appear to be preserving the mystique about how the issuing and creation is privatised for profit with Government approval. When pushed, and in their textbooks, they acknowledge banks in all modern economies create over 95% of a country’s money supply (in NZ it is nearly 98%). But when asked why this should be so, they say they believe that is the best way.

It is economists who can help humanity avoid environmental disaster, but as a group they show little inclination. Closing ranks, the majority want to keep the field to themselves.

Meanwhile the human species is under stress. We live in a system of winners and losers, not a system which in any way emulates Nature. A mother doesn’t feed three of her children and neglect the fourth.

Now one last idea. As environmentalists you will probably have a wonderful appreciation of the principles of ecology. Why don’t we apply these principles to our economic system and our governance system? As trucks criss-cross New Zealand transporting goods like milk all over the country to do homage to competition and market forces, let us look at Nature where an organism always lives close to its food source. A natural economic system will have, as Korten has explained, short lines of supply, managed borders, full information and communication, zero energy waste and recycling of all materials. Each part will have a deep awareness of the whole. We have come a long way from that!

So! Happy campaigning! If all goes as it has been going, environmental issues will be there to fight for a long time yet. And as you are focussing this weekend on campaigning I have for sale a book called The Joy of Lobbying (which is about lobbying central government), and also a small booklet called Lobbying Your Local Council which I have just completed for this weekend.

Good luck and thank you again.

Deirdre Kent
Gateway Lobbyskills
PO Box 19-121
Wellington
Ph 04 802 4640
Deirdrek@paradise.net.nz

Recommended reading

Douthwaite, Richard, Short Circuit: Strengthening Local Economies for Security in an Unstable World, Dublin, Ireland: Lilliput Press, 1996

Douthwaite, Richard, The Growth Illusion. How Economic Growth Has Enriched the Few, Impoverished the Many, and Endangered the Planet, Dublin, Ireland: Lilliput Press, 1992

Galbraith, John Kenneth, Money: Whence it Came, Where it Went, London: Andre Deutsch Limited, 1975.

Greco Thomas New Money for Healthy Communities Pbl Thomas Greco 1994

Korten, David C., When Corporations Rule the World, West Hartford, Conn.: Kumarian Press and San Francisco: Berrett-Koehler, 1995

Korten, David C., The Post-Corporate World: Life After Capitalism, West Hartford, Conn.: Kumarian Press and San Francisco: Berrett-Koehler, 1999

Lietaer, Bernard A., The Future of Money: Beyond Greed and Scarcity (forthcoming)

Rowbotham, Michael, The Grip of Death - A Study of Modern Money, Debt Slavery and Destructive Economics, Oxfordshire: Jon Carpenter Publishing, 1998

ENDS

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