Category Archives: Growth and development

LIMITING HIGH ENERGY USERS

Energy was rationed in war-time to conserve scarce supplies. Less severe scarcity was dealt with by allowing the price to rise. A person’s energy consumption was mostly unregulated, without limits on demand. 

The Paris Agreement in 2016 . . .

‘. . . set out a global framework signed by 192 nations to avoid dangerous climate change with a long-term goal of keeping the increase in global average temperature to well below 2°C above pre-industrial levels; to aim to limit the increase to 1.5°C, since this would significantly reduce risks and the impacts of climate change; the need for global emissions to peak as soon as possible, recognising that this will take longer for developing countries; to undertake rapid reductions thereafter in accordance with the best available science, so as to achieve a balance between emissions and containment in the second half of the century.’

Under this agreement, nations ‘volunteered’ to limit emission levels. A small number of nations emit most of the emissions and these high emitters would observe the same growth limits as low emitters. Nations causing most warming would have the same proportional restriction as those causing least. 

The focus on so-called greenhouse gases, having warming qualities which are hypothetical, are associated with energy emissions from combustion, either by direct release in combustion or indirectly from intermediate products such as electricity, during and after use. Thermal energy emissions are more significant but not included.

The burden of emissions reduction would fall on developed nations with the highest per capita electricity consumption, with self-indulgent demand such as for air conditioning, whereas poor nations might possibly have no electricity connected and need the growth desperately? In developed countries, most energy is consumed as electricity and petrol.

In a developed country, the restriction of emissions growth could conceivably limit the use of a third family car, whereas in an undeveloped country, a carless family could have use of its washing machine limited, requiring more manual labour. Is this an equitable difference?

There is no precedent for the limitation by The Paris Agreement, of demand for energy, or any commodity, in order to make a contribution to reducing universal external costs of climate change. It is an unprecedented restriction of energy growth with disproportionate effect on developing countries. At best, it is a bold attempt to rein in emissions growth but heavily weighted against low energy users who need that growth to develop.

At worst, the regulation of emissions limits standards of living, because emissions are associated with combustion and energy consumption, as is the standard of living. 

Do people have a right to limitless energy consumption, as they do to oxygen from the air? Per capita emissions in developed nations are much larger than in undeveloped nations who would be cutback proportionally. Could the developed nations cutback their emissions without preventing developing countries attaining a similar standard of energy use? Could emissions cuts depend on emissions, in the same way that income tax rates depend on income. Emitters should have to suffer greater cuts proportional to their high energy use. High polluters should have to compensate low polluters.

An energy consumption tax is needed, whose function is to penalize high personal consumption of high-emission energy and subsidise low consumption, low-emission energy.
If you agree, tell your politician.

My other writing on growth, energy and rights is at https://martinknox.com

CAN THERMAL POLLUTION BE FAIRER?

Suppose countries’ heat energy inputs to the environment would be proportional to their electricity consumption. This is shown for a selection of countries in the table on a per capita basis. Their growth in electricity consumption is given over the past 35 years. Would the fairest way be to 1) assign cuts in electricity consumption to get an equal percentage reduction in per capita consumption or 2) for high consumers to pay compensation to low consumers? My purpose is to demonstrate thermal pollution can be fairly assigned by arbitrary reduction of growth in per capita electricity consumption.

Source: ourworldindata.org My writing on growth is at https://martinknox.com

Countries could reduce thermal pollution by taking a percentage cut in per capita electricity consumption or high users could compensate low users. Presumably World citizens have rights to an amount of thermal pollution?

ECONOMY IN TRIAGE

Could policy leaders decide the priority order of treatment for parts of the economy injured or disabled by pandemic restrictions? My proposal draws informally on Keynesian, Classical Monetary and Modern Monetary theories. I reject Laissez Faire theory because governments have already begun large expenditure commitments. I have attempted to derive priorities by screening out activities that could be helped by governments to bring happiness of various kinds: hedonistic, eudaimonic, psychological and spiritual to the various stakeholders employees, customers, suppliers and investors. 

I will not identify my analysis with particular local, state or federal government jurisdictions in any country. I live in Australia, but I describe below phenomena that have been prepared from thought rather than by social research and they could be enumerated in many locations.

Because of their multiplier effect, outputs that are inputs to employment-intensive follow-up activities should have priority e.g. trucks not cars.

Infrastructure projects that cause most sustainable employment should be preferred e.g. construction of public park amenities, not National Broadband Network fibre optics installation.

Public funding should support the greatest good of the greatest number, like public transport, not narrow interests, such as subsidisation of airlines. Haemorrhaging of public funds to support unsustainable industries should cease.

Developments requiring sustainable skilled employment are more desirable than casual unskilled labouring. 

Funding of arts, entertainment and education should recognise their potential for multiplier effects in stimulating development in other sectors.

Diversity of outputs is desirable to reduce currency inflation effects on industries struggling with falling prices for their exports and increasing costs of imports e.g. farms, due to buoyant foreign exchange rates from high growth sectors e.g. minerals (Gregory Effect). 

Priority should go to primary industry supplying secondary and tertiary industry, when it conserves and sustains scarce natural resources.

Value-adding by secondary processing of products e.g. minerals, could have priority where efficient use is made of natural resources e.g. water, land.

Development of the tertiary sector should prefer industries with a high multiplier effect e.g. tourism, education, health. Activities that generate little sustainable employment, for example coal quarrying for export and retirement apartment construction, could be less attractive.

The priorities above are controversial. The task of calling help for some parts of the economy and denigrating others will be contested from personal experience and interest. I have made these calls to draw attention to the parlous state of government treatment of the economic pandemic. I want to register my disapproval for profligate government spending by highlighting some likely consequences.

 For further ideas see my writing on growth, development, government, Covid-19 at https://martinknox.com

TURNING DOWN GROWTH

As economies strive to regain momentum after Covid 19, should growth of Gross National Product, as a national goal, be limited by stopping certain types of development?

Below are five initiatives against uncontrolled growth. 

Costs of growth to a community can exceed the benefits to the developer. Governments should prevent a few people benefiting from development at the expense of others who have no legal redress. Winner-take-all is a development game won by wealth. Legislation is required to fully compensate losers. See: Does Growth Benefit Some Groups At An Equivalent Cost To Others? M P Knox 2020.

A steady state economy is the sustainable alternative to perpetual economic growth. Responding to an increasingly constrained world, the Centre for the Advancement of the Steady State Economy has policy goals of stabilized population and consumption.

Growth could be opposed. Disillusionment with societal development by technological and industrial systems has created interest in overthrowing it by popular revolution. See: Industrial Society and Its Future, Theodore Kaczynski, 1995.

Instead of setting happiness goals that would inspire their citizens, governments fix on GDP growth and increase in wealth. It is proposed that Maslow’s hierarchy of needs is a suitable template for government actions to achieve real happiness. See: A Plea For New National Goals That Inspire. M P Knox 2020.

Happiness Alliance’s mission is to improve the happiness, well-being, and sustainability of all beings on our earth. It has sought the replacement of GNP by Gross National Happiness as in the nation of Bhutan. 

Control of growth could consider four other concerns.

Jobs and Happiness

Whenever a development is touted, the number of jobs to be created is stated first. Public perception of developments has favoured the creation of still more jobs when there has been near full employment. A surplus of jobs has choice: occupation, income, social status, sociality location that people value. People’s ultimate happiness’s vary: hedonism, eudemonia, flow and spiritualism are the main types. A person’s job defines the types of happiness achievable and what he or she will strive for. Thus the value of growth is partly the summation of employees’ happiness’s. Jobs that reward merely with income for superficial hedonism would be inferior to those bringing higher quality happiness. 

Growth should be sustainable

When demand increases there can be growth in supply, or a chain of supply. The chains go back to primary production from natural resources, which may be abundant or possibly scarce and unsustainable. The supply chains often employ people in permanent jobs. Attractiveness of growth in a chain of supply depends on the overall multiplier effect, measured as the increase in GNP (including remuneration paid) or counted in jobs created.

Increased supply of cotton grown for export from Australia would employ few extra workers, require few supplies, take scarce land and water and devalue incomes in other sectors (Gregory Thesis).

The best growth is at the end of a long and variegated supply chain, with its output value added to by further local processing. It doesn’t matter whether the goods are machinery or fashion accessories, because the happiness generated depends on employment quantity and quality created. Growth from mining of non-renewable resources using scarce water, with low employment and loading them unprocessed into ships, could be turned down as of low benefit to the community.

Individuals and the Public Good

Adam Smith proposed that supply of goods to market buyers was all the public welfare society needed. Jeremy Bentham wanted the greatest good of the greatest number. In welfare economics, the public good is decided with money amounts. A development was good if the benefits exceeded the costs and whether the winners could compensate the losers, or perhaps the losers could pay-off the winners. 

But in practice there are wider considerations in deciding whether to approve a development. Monetary gain, utility, resources use efficiency, humanitarian concerns and environmental impact all affect computation of growth. Keynesian priming of economic project ‘pumps’ with low value public works could be turned down if they do not overcome these concerns. Growth by digging holes and filling them in again should be turned down.

Personal goals and achievement

John Stuart Mill put responsibility for growth on individuals, who pursued liberty within the confines of societal laws required to protect other individuals.  Simone De Beauvoir in her book The Ethics of Ambiguity has explained that true freedom cannot be obtained by walking over others’ freedoms. Growth that takes away individuals’ freedoms should be turned down. 

In conclusion, growth should be regarded with rational scepticism as a sectoral interest. Cargo cults and cranes on the horizon are ideologies of past times and have no place in the present or future.

https://martinknox.com 

Pruning controls growth
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