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Nature's Capital Is The Limiting Resource

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Economists have responsibility for earthlings' ignorance about their environmental dependence. Economics claims that man-made capital is a substitute for nature's capital. As nature's capital is depleted, reproducible man-made capital will take its place. This assumption is embodied in the production function that is the basis of modern economic theory. The assumption is absurd, because it assumes that finite resources can support infinite growth. Economists should begin their education with courses in physics.

The correct description of the production process is that natural resources are transformed into useful products and waste products by labor and man-made capital. Nature's capital and man-made capital are complements, not substitutes. Nature's capital is used up as resources are exploited to make useful products, and air, land, and water become polluted with the waste products from production. The capacity of the planet's "waste sinks" is limited.

GDP accounting does not include the costs of environmental destruction as a cost of production. For example, the costs of the unexpected consequences of genetically modified crops are not included in the prices of the wheat, corn, and soybeans. In 2011 plant pathologist and soil microbiologist Don Huber described these costs to the US Secretary of Agriculture. Toxic effects on soil microorganisms have disrupted nature's balance, resulting in an increase in plant diseases. Soil fertility, micronutrients, and the nutritional value of foods have all been harmed. Animal reproductive problems, weak immune response, and premature aging are linked to herbicide-resistant GMOs that have become animal feed.

According to ecological economist Herman Daly, if all the costs of production are included, the decrease in nature's capital could outweigh the value of the increase in GDP. As Hecht and Cockburn make clear, this has certainly been the case in the exploitation of the Amazon. The output is worth far less than the resources that were ruined in order to produce it.

, There is very little of the earth left that has not been ruined by humans. The little that is left is the Antarctic  the Arctic, and some parts of Alaska such as the wilderness above Alaska's Bristol Bay. The Antarctic is protected by treaty largely because no major power has figured out how to claim it. However, Shell Oil Company, with Obama's blessings, is now involved in offshore drilling in the Arctic, and a consortium of global mining corporations is lobbying Congress, the White House, and the Environmental Protection Agency for a green light for the Pebble Mine, an enormous open-pit mine to be placed in wilderness above Alaska's Bristol Bay. Scientists have concluded that the mine will make a dead zone out of a huge area of spectacular scenery encompassing the largest remaining wild salmon runs, and the wildlife, native inhabitants, and commercial fisherman dependent on the fish.

EPA's scientists have concluded that the Pebble Mine would be environmentally and economically devastating, but this is a weak argument in the face of the greed of a few powerful moneybags for more profit. Just as Easter Islanders cut down their last trees, Americans are set to destroy their last wilderness and its fish, wildlife, and water resources. The mining lobbyists call this ecological destruction "progress" and "jobs," but do not count as an offset the 14,000 jobs related to the salmon fishery that will be destroyed by the Pebble Mine or the dead waters, fish, and wildlife that their toxic process will certainly produce.

Robert Redford and the National Resources Defense Council have arrayed with the EPA scientists against the Pebble Mine. Will Washington listen to fact, or will homo sapiens yet again discard fact for temporary profit and take another step toward finishing off the planet's life-sustaining capability?

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Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available here. His latest book,  How America Was Lost, has just been released and can be ordered here.

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Will Washington listen to fact, or will homo sapie... by Daniel Geery on Friday, Jan 25, 2013 at 10:53:42 AM
Natural Capitalism, by Amory Lovins, et. al.,... by Daniel Geery on Friday, Jan 25, 2013 at 10:58:15 AM
Without going too much into the weeds (pardon the ... by Scott Baker on Friday, Jan 25, 2013 at 11:40:07 AM
the ads that T. Boone (Mr Selfish Easter Island) P... by Lester Shepherd on Friday, Jan 25, 2013 at 11:52:18 AM
Louis T. McFadden - "We have in this Country one ... by Lance Ciepiela on Friday, Jan 25, 2013 at 2:01:36 PM
With several of Mr. Roberts's points I concur, whi... by Daniel Vasey on Saturday, Jan 26, 2013 at 4:20:50 AM
A moving summary of the situation at hand. The ... by Ned Lud on Saturday, Jan 26, 2013 at 6:24:53 AM
to destroy all of the creativity and beauty the hu... by intotheabyss on Saturday, Jan 26, 2013 at 3:58:04 PM
We remain in the dark ages of human ecology/human ... by JoAnne VanDatta on Tuesday, Jan 29, 2013 at 2:00:54 PM