Hurray for the crash

I was recently asked whether I thought the slow-down/credit crunch/recession/depression might have a positive side effect (specifically for the environment). It’s difficult to think along those lines in the face of the relentlessly apocalyptic news coverage, but the questioner apparently thought I might have a glass-half-full spin on it all.

Why? Because I had an article published in the online magazine New Matilda back in February provocatively entitled “Only a Recession can Save Us“, with the subject line “We should be looking at the slowing of the global economy with relief”. I was making the argument that climate change mitigation was going too slowly, and we needed the economy to ease off for a while before it was too late. Here’s an extract:

Before the Bali Conference last year, the world’s early warning system on climate change, the Intergovernmental Panel on Climate Change (IPCC), released their latest report. It was their most alarming yet. They then proceeded to criticise themselves for being too optimistic.

The problems are building too fast and we need to buy some time. A key measure of our efforts to mitigate climate change is called carbon intensity – the amount of carbon released per unit of GDP. It needs to go down, but at the moment, it’s stalling.

Only a recession can save us now.

[W]e should be looking at the easing of global demand with relief, not with dread. As well as buying us some time to deal with climate change, a global slow-down would ease the pressure on inflation, ease the housing affordability crisis [in Australia], and give us time to ease the skills deficit. In the long run, we would not be missing out on any opportunities in the resources sector. One of the advantages of relying on non-renewable resources is that anything we leave in the ground today, we are bequeathing to the next generation.

But that is not the way conventional wisdom sees it. The view is that Growth is unambiguously Good. The ‘growth religion’ pervades every aspect of today’s society, from the neoclassical economist’s pulpit to the faithful masses. Politicians argue over whose policies will lead to the most growth, like different denominations bickering over whose doctrine is the most holy. Economists who challenge this dogma – such as ecological economists – are cast aside as heretics.

All of this was written before things turned really ugly. Perhaps I should be more careful what I wish for.

But I should point out that the article was intentionally provocative, and deliberately one-sided. As I said in response to a negative comment:

You’re right, of course, that “let’s hope for a recession” is not an effective policy response. You’re right that there are better options, one of which is encouraging higher efficiency, that we need to aggressively pursue. My central point is really that the innovations are coming too slowly and the problems are coming too quickly. I’m trying to generate a sense of urgency, same as you.

At the same time, I’m calling into question the underlying assumption that pervades mainstream economics, that growth is some kind of cure-all for all our problems.

We have to get away from the idea that affluence will save us. The first step is to get these assumptions out in the open, so we can begin to examine them.

Returning to the original question, the events of the last few weeks have also shed some light on another potential positive of all this turmoil. With under-regulated free market capitalism apparently falling apart, western governments are decisively stepping in to take a much more central role. This, I hope, can only be a good thing for the environment. Governments should – and they must – act in the public interest, not in the interests of markets and profits. In the short term, we may see less focus on environmental issues like climate change, but hopefully once the dust settles, we will end up with governments that are more willing to intervene when they need to.

Of course, there are some fairly obvious downsides of a recession for the environment, which I’ll address in my next post.


One Response to “Hurray for the crash”

  1. Boo for the crash « Everything is changing Says:

    […] for the crash Following on from the last post, I thought I’d give some thoughts on the negative effects of the crash (I’m trying to […]

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