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The Paradox of the Economic Crisis

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The economy has definitely slowed, and everyone is feeling it. I am thinking about all those Americans that are laid off, or worse: those that are on their last unemployment check or beyond. But not just them. What about the millions that are now homeless due to flooding in India and now Vietnam, the Philippines, Maldives.....all over it seems. What is their future going to be like? How will they economically survive? How does the global financial crisis impact their lives on top of the physical emergency they find themselves in ?

The world's GDP was coasting along till recently at the growth rate of about 3.5% per year. And every year CO2 emissions have increased: from about 18.500 million metric tons in 1990 to about 26.000 million metric tons per year in 2006 --a stunning 71% increase of CO2 emissions or also an increase of around 3.5% per year. In our economy growth in world GDP has meant growth in CO2 emissions as well.

During this time only a few economists have fretted about the price that will be exacted to the natural world -- a price that has never been part of the profit driven equations. Or maybe we should ask that question the other way around: what is the price in ecological damage that will be exacted by the natural world, Gaia if you like, as response to the manifestations of greed and senseless consumption? After all, the natural resources and processes that create real wealth and allow higher levels of development are usually not extractive --they follow an economy of generosity -- and thus defy any quantitative equivalency in most economic models and thinking. In other words, the resources that nature provides, such as clean air and rain, ecological abundance, diversity, have yet to be duly calculated as real costs and benefits in prevalent economic models.

But even if you did bring those type of factors provided by nature into account --they wouldn't be able to count for the costs of natural disasters. Capitalism in the late 20th and beginning 21st century is coming to its logical conclusion within the context of resource depletion and extreme inequality, perhaps most grotesquely so in the US. Unregulated capitalism has not only been a financial disaster, it has brought ecological disaster and lately it has ruined the very pillars of democracy.

Global 'Weirding' (global warming gives the wrong impression to the masses), the melting of the 3 poles (including the Himalayas), the agricultural collapse, the drying of the Amazon, the depletion of the oceans, etc. -- they all have to do with an extractive greed driven model that monopolizes wealth and marginalizes most people in the world. The limitations of this model come into stark view when resources such as oil and food are getting scarce and inequality reaches its peak. It is now when the whole system breaks apart --it is so deeply unsustainable.

I am re-reading my own gloomy writing so far and was wondering where I might find a ray of hope --and that is where the paradox of the economy comes in.

Despite the best efforts of informed minds such as Al Gore and Lester Brown, the the vast majority of the body of politics, hasn't been able to hear the 'inconvenient truth' --let alone act on it with urgency. America, still consuming more than 20% of the worlds resources, curiously exempted itself from Kyoto, the urge to develop China has polluted vast ecological resources, hundreds of coal plants are still being built, and most politicians have never seen a dollar they don't like (and have thus sold their souls to the vested (corporate) interests and destroyed democracy). Next year, 2010 China's CO2 emissions will start to exceed those of the US. Things have been stuck.

Until now: the time of the worldwide economic crisis: long simmering, but showing itself starting in 2007, growing into 2009 and probably reaching its low point in my estimate not until 2011 or 2012 -- if it stops there at all. In 2008 the worlds GDP dropped by almost 3% and, in its footsteps so did CO2 emissions. Optimistically stated: since we assumed an increase of about 3% and we actually got about a 3% decrease, CO2 emissions have dropped 6% in one year compared to what was expected. Say the crisis lasts another 3 years or so, and economic activity recedes accordingly, we can expect a drop of let's say another 10% to 15% or so in CO2 emissions. I just found some graphs from Lester Brown and his Earth Policy institute that thinks that emissions have dropped since 2007 by a whopping 9%. That is very significant.

Here is the graph for the US--look at the funny tail at the end. This drop-off, if it continues, will bring us back to the CO2 emissions in the mid 90s:

As a consequence, in the last year many plans for new coal plants have been shelved -- there may not be any demand. Nobody is consuming in quite the same way any longer since people's budgets are limited and debt is seen in a different light: debt has become real since the days of easy credit based on housing hilarity are over for good. The recession succeeds where the politicians failed: a much needed drop in CO2 emissions. Clearly nature itself could be one of the 'winners' and CO2 may be brought back in line from about 390 ppm to the desirable 350 ppm by say 2040 (optimistically), not though the success of politicians, but through their failure.

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Willem Malten studied sociology and anthropology in Amsterdam. Afterwards Willem participated in the Tassajara Zen Monastery. In the last 25 years Since 1984 Willem has run the Cloud Cliff, a medium size bakery and restaurant in Santa Fe, and (more...)

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Great article, but all is not lost.Take a look at ... by Scott Baker on Sunday, Dec 6, 2009 at 4:21:00 AM
Mr. Malten has a good grasp of the economics invol... by JohnPeebles on Monday, Dec 7, 2009 at 2:36:10 AM