Introducing a carbon tax will make private vehicular transport prohibitively expensive and limit car trips. Balancing the greater need for mass transit are tax incentives to trigger huge investments in public transport, as well as in the technology required to run vehicles on renewable energy. Already electric cars are becoming much more affordable. Air travel's large carbon footprint can be reduced with reliance on virtual reality travel.
Disagreement over how much economic growth we will ultimately be able to achieve - ranges with optimists claiming technology will allow huge amounts of growth without increasing our impact on the planet to others pointing to sectors of the economy generally thought to be purely qualitative, such as information technology, actually involve significant use of physical resources - the raw materials required to make computers and displays, for example. Even people working in IT spend most of their income on physical goods such as cars, houses and holidays. Besides, for the growth we do achieve to benefit the poor, they are going to need clothing, shelter and food, not electronic music and internet recipes.
Another area that has will shift is finance. A steady-state economy will not support the bloated superstructure bubble of finance which is accustomed to expectations of future growth. Investment is reserved for replacement and qualitative improvement, and the enormous, endless pyramid of debt that was previously balanced on top of our economy has disappeared. The percentage of money deposited that banks are required to keep in reserve - will gradually rise. As a result, commercial lending will resume as banks cease their reliance on income from financial intermediation and service charges. Investing and lending will be collateralized with deposits from savings.
Different kinds of goods will be produced. Paying the environmental costs of what we use makes natural resources more expensive, reflecting an accurate social cost. So making short-lived, disposable goods no longer makes economic sense - giving way to manufacturing what we need, and products built to last - so disposable consumer tech that has to be updated every six months is no longer sustained. New forms of ownership will emerge: rather than buying a car or carpet, you are likely to lease it from an owner who is responsible for maintaining it, and who will recycle it at the end of its useful life.
"This means that maintenance and repair - as opposed to production - are much more important sources of employment than ever before. So are science and technology. We have all kinds of opportunities there, from the government-funded ecologists and scientists working on values for concepts such as "carrying capacity" (the number of people Earth can sustain) or modelling the effects of rising sea levels, to the entrepreneurs developing renewable technologies. Without as much economic growth as before, we can't maintain full employment - but then, our old growth economy wasn't so good at doing that either. Instead, people work part time, generally as a co-owner of a business rather than as an employee. The whole pace of life is more relaxed. Incomes are lower but we are rich in something that many of us had never experienced before: time.
Completely free trade isn't feasible any more, of course, because we have to count many costs to the environment and the future that foreign firms in growth economies are allowed to ignore. So we allow regulated international trade under rules that compensate for those differences. As the number of countries committing to sustainability increases, however, we're forming a rapidly expanding club within which we can trade freely. Eventually we hope that club will encompass the whole world."
One of the toughest issues, politically, has been population. We know that we will have to stabilise our population - and that includes immigration rates as well as birth rate. We're not quite there yet, but we are compelled in that direction. This will push up the average age of the population, putting pressure on the viability of pension plans, but economists are tasked to set contributions at financially, socially and ecologically sustainable levels.
How will a steady state economy affect our quality of life? The outlook here is pretty good. During the growth economy, psychologists and economists have found correlation between absolute income and happiness extends only to a certain threshold. Once basic needs are satisfied, only relative income - how well off we are compared to our peers - influences how happy people say they are. This held for comparisons between rich and poor countries at a given time, and in comparing a single country before and after a significant growth in income. Abandoning economic growth will not mean a decline in total happiness.
referenced in Life in a land without growth
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1. Cap-auction-trade systems for basic resources. Cap limits to biophysical scale according to source or sink constraint, whichever is more stringent. Auction captures scarcity rents for equitable redistribution. Trade allows efficient allocation to highest uses.
2. Ecological tax reform—shift tax base from value added (labor and capital) and on to “that to which value is added”, namely the entropic throughput of resources extracted from nature (depletion), through the economy, and back to nature (pollution). Internalizes external costs as well as raises revenue more equitably. Prices the scarce but previously unpriced contribution of nature.
3. Limit the range of inequality in income distribution—a minimum income and a maximum income. Without aggregate growth poverty reduction requires redistribution. Complete equality is unfair; unlimited inequality is unfair. Seek fair limits to inequality.
4. Free up the length of the working day, week, and year—allow greater option for leisure or personal work. Full-time external employment for all is hard to provide without growth.
5. Re-regulate international commerce—move away from free trade, free capital mobility and globalization, adopt compensating tariffs to protect efficient national policies of cost internalization from standards-lowering competition from other countries.
6. Downgrade the IMF-WB-WTO to something like Keynes’ plan for a multilateral payments clearing union, charging penalty rates on surplus as well as deficit balances—seek balance on current account, avoid large capital transfers and foreign debts.
7. Move to 100% reserve requirements instead of fractional reserve banking. Put control of money supply and seigniorage in hands of the government rather than private banks.
8. Enclose the remaining commons of rival natural capital in public trusts, and price it, while freeing from private enclosure and prices the non rival commonwealth of knowledge and information. Stop treating the scarce as if it were non scarce, and the non scarce as if it were scarce.
9. Stabilize population. Work toward a balance in which births plus immigrants equals deaths plus out-migrants.
10. Reform national accounts—separate GDP into a cost account and a benefits account. Compare them at the margin, stop growing when marginal costs equal marginal benefits. Never add the two accounts.
Herman Daly: Towards A Steady-State Economy
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"The idea of moving to a steady-state economy will appear radical to many, perhaps politically impossible. But the alternative, a macro-economy that is structurally required to grow in scale beyond the biophysical limits of the Earth, is an absurdity, and heading for the ultimate crash. Before we reach that radical physical limit, we are already encountering the economic limit at which benefits of extra growth are increasingly outweighed by the costs."
from Economics blind spot is a disaster for the planet - 15 October 2008 by Herman Daly
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"According to the study, coal is the largest source of atmospheric CO2 and the one that would be most practical to eliminate. Oil resources already may be about half depleted, depending upon the magnitude of undiscovered reserves, and it is still not practical to capture CO2 emerging from vehicle tailpipes, the way it can be with coal-burning facilities, note the scientists. Coal, on the other hand, has larger reserves, and the authors conclude that “the only realistic way to sharply curtail CO2 emissions is phase out coal use except where CO2 is captured and sequestered.”
In their model, with coal emissions phased out between 2010 and 2030, atmospheric CO2 would peak at 400-425 ppm and then slowly decline. The authors maintain that the peak CO2 level reached would depend on the accuracy of oil and gas reserve estimates and whether the most difficult to extract oil and gas is left in the ground.
The authors suggest that reforestation of degraded land and improved agricultural practices that retain soil carbon could lower atmospheric CO2 by as much as 50 ppm. They also dismiss the notion of “geo-engineering” solutions, noting that the price of artificially removing 50 ppm of CO2 from the air would be about $20 trillion.
While they note the task of moving toward an era beyond fossil fuels is Herculean, the authors conclude that it is feasible when compared with the efforts that went into World War II and that “the greatest danger is continued ignorance and denial, which could make tragic consequences unavoidable.”
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