11 March 2014

The global economy—a case of bad engineering

For a number of years I toiled in the oil industry as an engineer, and not infrequently lessons I learned from my engineering experience return to inform me in other contexts. Recently I have been thinking of the global economy in such terms, and it fails miserably to pass the test of good engineering.

When an engineer designs a bridge he doesn't simply design the supports to meet the stresses he expects to be imposed upon them. He conservatively designs the supports to meet the expected stresses—and then adds a generous safety factor. In other words, he follows the precautionary principle, knowing that he cannot account for every eventuality.

And that is the way a sensible society would design its economy. It would conservatively estimate the demands the environment is capable of meeting from resource extraction and waste disposal, and then add in a generous safety factor. It would then design its economic activities to fit into the calculated environmental capacity.

Unfortunately for society after society, civilization after civilization, throughout history, humanity has not done that. The usual practice has been to exploit the environment to whatever extent the desired economy demands, even if that pushes it to the maximum. And then, when the maximum shrinks, as it always does, due to drought or flood or other whim of nature, that society's economy is threatened, not infrequently to the point where it collapses, bringing society down with it. This is a pattern repeated over and over, yet we have never learned the lesson of living within our means, or more correctly, within the means of our environment.

Past civilizations might have been able to plead ignorance for their failure. They didn't fully understand the relationship between their economy and the environment. We do, we are by far the best informed generation in history, and yet we are making the same mistake. In our case, it isn't ignorance, it's stupidity.

According to the Global Footprint Network, we are using the equivalent of 1.5 planets to provide the resources we use and to absorb our waste. UN scenarios suggest that if current trends continue, by the 2030s we will need the equivalent of two Earths to support us. Unfortunately, we only have one.

Representing the amount of productive land and sea area necessary to supply the resources a population consumes plus the waste it produces in global hectares (gha), the Earth's biocapacity is estimated at 1.8 gha per person. Our actual demand, however, our global footprint, is 2.6 gha per person. We are sucking the planet dry.

We frequently hear talk about balancing the economy and the environment, but this is an error. The environment has no need of our economy, indeed it would be vastly better off without it, but our economy is totally dependent on the environment. Our economy must, therefore, not balance the environment but fit comfortably within it with room to spare. Only then will we have a well-engineered economy and only then will our civilization be able to sustain itself.


  1. Bill, you're describing the fundamental premise of Steady State or Full Earth economics. It recognizes that, contrary to neo-classical economics, the economy must be a subset of the environment.

    Economists such as our prime minister consider that heretical. If something doesn't fit they label it an 'externality' and write it off the books. That fuels their belief in endless growth.

    We target 3% annual growth in GDP. That of course is compounded annually. If you take that 3% and compound it over 50-years you wind up with an economy that has grown 4.3 times. Over 100 years it jumps to 19.3 times. 150 years is 84 times larger than the economy in Year 1. 200-years and you have grown your economy 369 fold. Think of the resources, the consumption and the waste of that model and then try to fit that into a finite world.

    We are 'sucking the planet dry' as you suggest and the evidence is manifest. We can see it with the naked eye from the ISS orbiting overhead. Deforestation, desertification, rivers that no longer flow to the sea, the Athabasca tailing ponds, the dust plumes that rise in China and cross the Pacific to North America, the vanishing sea ice and retreating glaciers. These are all visible to the naked eye from space. Satellites can detect surface subsidence from fossil aquifers being drained for agricultural irrigation. Look at the collapse of global fisheries as we continue to "fish our way down the food chain." There's a confluence to these events that will hit our civilization all too soon.

    Bill, after wrestling with these issues for years, I have come to the conclusion that even threats such as climate change are really merely symptoms of a fundamental malady that exists in how we, as a global civilization, are organized socially, politically and economically. Because of the enormity of our foundational dysfunction I don't think we have a hope of solving climate change or any other existential challenge of the day. Maude Barlow is right when she says the already critical freshwater crisis is as great a threat as climate change. Add to that overpopulation and, especially, the rise of mega-middle class consumerism in China, India and other emerging economies which send per capita consumption soaring.

    I think we will prove the theory that aliens haven't visited Earth because intelligent life is inherently self-extinguishing. Sorry to be a downer, Bill, but I reckon that, barring some global epiphany, we're done.

  2. Good to hear from you, Mound, the downer notwithstanding. I'll keep my fingers crossed for the epiphany.