The economy worse off since 1978

3 07 2013
eat money

Can’t eat money

I was only a little tacker in 1978, and as any little tacker, I was blissfully unaware that I had just lived through a world-changing event. Just like that blissfully ignorant child, most people have no idea how important that year was.

It was around that year that humanity exceeded the planet’s capacity to sustain itself in perpetuity1. As I’ve just discovered today, it was also the same year that the per-capita Genuine Progress Indicator (GPI) peaked.

Now for a little detour and disclaimer before I explain all that. I’m not an economist, but I have a dabbled with the odd economic concept and bolted-on economic sub-routine in a few models I’ve written. Some would argue that conservation (i.e., the quest and methods needed to conserve biowealth) is almost entirely an economic pursuit, for economics is the discipline that attempts to explain (and modify) human behaviour. I tend to agree insofar as we now know enough on the biological side regarding how species become threatened and go extinct, and what kind of things we need to do to avoid losing more of the life-support system provided by biodiversity. Being completely practical about it, one could even argue that the biology part of conservation biology is complete – we should all now re-train as economists. While that notion probably represents a little hyperbole, it does demonstrate that economics is an essential endeavour in the fight to conserve our home.

Almost everyone has heard of ‘GDP’ – the Gross Domestic Product – as an indicator of economic ‘performance’, although most people have little idea what it actually measures (I’m including businesspeople and politicians here). GDP is merely the sum of marketed economic activity, which is only one small facet of the economy. For example, growing a tomato and preparing a salad for your family with it is not included, yet buying a frozen meal in the supermarket is. Even an oil spill increases GDP via increased expenditures associated with clean-up and remediation, when clearly it is not a ‘good’ thing for the economy on the whole because of the lost opportunities it causes in other sectors. Read the rest of this entry »