3.
Lighten Up
‘A love of nature keeps no factories busy.’
Aldous Huxley, Brave New World
Activity is not evidence of achievement. Being busy is not proof of productivity. Throwing away unused things is the very opposite of efficient. And increasing the amount of stuff that is bought and sold is not in itself a sign of a strong economy. In fact, when much of the stuff being produced is of no real use, and when much of it was purchased with borrowed money, such economic activity is more likely to weaken an economy than strengthen it.
The stated goal of economics is the efficient allocation of scarce resources. But as we have seen, consumerism results in countless tonnes of perfectly useable food, appliances, clothes and sporting equipment being thrown away each year. While some of the raw materials might be recycled, the labour and energy that went into producing products that have hardly been used is lost forever. Likewise, the enormous amount of labour and energy used to transport these things to and from factories, warehouses, shops, households and garbage dumps is lost forever. The only legacy of these products is the harm that was done to the natural environment in order to enable their brief and often useless lifespan.
In recent times, the conventional wisdom in most Western countries has been that private-sector activity is inherently efficient, and that while some public-sector activity is a necessary evil, a large public sector is evidence of inefficiency and the need for ‘reform’. By this logic, if the time, effort and resources wasted producing unwanted foot spas were redirected to the provision of public health or education, it would be evidence of a growing inefficiency. Conversely, the less a country spends on public health and public education, the more efficient it supposedly is. Indeed, the process of making things people don’t need and then recycling them into other things they don’t need is called now called ‘wealth creation’ or ‘job creation’. More accurate descriptions would be ‘resource destruction’ and ‘waste creation’.
In his book The General Theory of Employment, Interest and Money, the economist John Maynard Keynes once posed the following thought experiment:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again . . . there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
Keynes was making the important (and, at the time, radical) point that if the government wanted to create jobs, it could simply fund the construction of useful infrastructure, or even useless hole-digging. But many of his modern counterparts seem to have taken him literally about the garbage while ignoring his point about the public sector. Today, factories create a torrent of wasted resources, from which recyclers extract some remnant with which the factories can repeat the process. And the faster they do it, the more ‘economic activity’ they create, and the richer we are told our countries are becoming.
There is no doubt that the cycle of production, consumption, disposal, recycling and production creates economic activity, jobs and, for some in the supply chain, wealth. But does this process in any way ensure the efficient allocation of scarce resources? Is throwing away functional goods really a good way to ‘make the economy strong’?
WHY DON’T ECONOMISTS CARE ABOUT WASTE?
‘You can mine for gold, but you can sell pickaxes.’
Anonymous
One of the biggest fortunes made in the Californian gold rush of the nineteenth century was that of Levi Strauss, who made his money selling everything from tents and buckets to the denim pants that still bear his name. He got paid whether his customers found gold or not. All retailers make money whether we find happiness in the products they sell us or not. Indeed, the longer people search for gold, or happiness, the more pants and other stuff Mr Strauss and other retailers can sell them.
Affluenza has fuelled a massively inefficient search for happiness. Rather than dig through the earth in search of gold, or dig through Keynes’ rubbish dump looking for bottles of money, modern capitalism relies on billions of people searching for new products that will fill the hole in their lives that was briefly plugged by the last purchase. The banks, the manufacturers, the advertisers and the retailers all make their fortune by selling us the dream that ‘there’s happiness in them there hills’. Of course, the last thing retailers want is for us actually to find it.
As we have seen, poorly understood economic indicators such as GDP help to ensure the global debate about building strong economies focuses on the flawed idea that the amount of economic activity is in some way a proxy for the rate of economic or social progress. In fact, the empirical link between growth in the size of an economy and human happiness is very weak – some would say non-existent. This should come as no surprise. Consider the following:
•No shareholder would be impressed to learn that their company was spending lots of time and money having meetings with itself, even if the meetings required a lot of expensive travel that necessitated new teams of people dedicated to booking that travel.
•No parent would be impressed to find that their child had spent hours moving the mess from one side of their bedroom to the other.
•No government would be pleased to have riots and vandalism, even if they caused a boom in the local window repair, painting and construction industries.
So why are politicians and business leaders impressed when told that GDP has grown because of a spike in the consumption of imported appliances and bottled water (otherwise known as ‘strong retail sales figures’)?
The answer is both simple and cynical. Wasting natural resources to produce stuff that will soon be thrown away doesn’t generate true national wealth, but it does generate enormous wealth for some people in the supply chain. That’s all it does, and that wealth creation is naturally very, very important to those people. But to suggest that borrowing money from overseas to buy things that were made overseas – things that are quickly thrown out and buried in local landfill – plays an important role in making a national economy strong is simply absurd.
It is hard to believe that all the rowing machines that accumulate in the spare rooms of the nation might be seen as an indicator of wealth or progress. But, as enormous amounts of energy, natural resources and human labour are wasted on making products that are never used, or that are designed to fall apart, what have the economists and politicians had to say about this consumerism-induced waste? Almost nothing, except for implicit praise. Indeed, rather than highlight the economic and environmental harm of such waste, an enormous number of economists and politicians have spent decades trying to shift the rules of global trade, and the norms of ‘sensible economic policy’, to generate more such waste.
The term ‘Washington Consensus’ has often been used to summarise the fundamental tenets of the neoliberal agenda at the global level. According to its adherents, who have shrunk in visibility if not number since Donald Trump was elected and the UK supported Brexit, the way to increase the efficiency of an economy is:
•To cut tax rates for wealthy citizens, allowing them to spend more money on consumer goods;
•To cut taxes on businesses, allowing them to appropriate a larger share of national income, on the promise that they will invest some of the proceeds into the production of more stuff;
•To cut spending on the labour-intensive community services used most heavily by low-income earners (such as public schools, hospitals and public transport), on the basis that such activity is inefficient and crowds out more efficient private-sector activity;
•To cut the wages of low-income earners, who spend the smallest proportion of their income on the disposable consumer goods that have the highest profit margins;
•To reduce protections for workers, consumers and the environment, so as to increase producer profits; and
•To increase trade with developing countries whose environmental, labour and consumer protections are much lower to help reduce such standards in developed countries.
While there is no doubt that there are times when lowering trade barriers can lead to an increase in the quality of life of some people in some countries, there is also no doubt that far more effort has been expended by groups such as the World Bank and the International Monetary Fund on trying to reduce trade barriers than on trying to reduce water pollution and income inequality – which have also been shown to improve economic performance and human wellbeing.
Once we draw a distinction between whether an activity will create wealth for a producer and whether it will create wellbeing for a community, it becomes much easier to decode the flood of econobabble used to justify the obsession among advocates of the Washington Consensus for lower taxes and less regulation rather than for reduced tax evasion and more environmental regulation. While it is possible for the owners of multinational companies to profit from poor labour and environmental standards in low-income countries that export stuff to rich countries, it is far harder for rich people in rich countries to benefit from an improvement in the standard of living of workers in those developing countries.
Economists have always been aware of the difference between the amount of stuff a nation consumes and the wellbeing of its citizens. The question we must ask is not ‘Why don’t the economists get it?’ but ‘Why don’t the economists say much about it?’
A cynical answer to that question is that most economists operate on the assumption that the customer is always right. So when the IMF and the World Bank offer to pay economists to explain the benefits of using borrowed money to buy new stuff, most of them are happy to take the money. On the other hand, many economists have highlighted the problems with placing the pursuit of GDP ahead of the pursuit of community wellbeing, but such economists are far less likely to be asked to give keynote addresses at the most ‘prestigious’ events. Culture shapes not just economics, but the economists anointed to explain economics to the populace.
ALL ECONOMIC ACTIVITY WAS NOT CREATED POLITICALLY EQUAL
If millions of people voluntarily gave up buying bottled water tomorrow and instead donated the money they saved to medical research, there would be no reduction in GDP, but there would be a devastating impact on those who profit from the sale of bottled water. There would also be a surge of new jobs in medical research. Given how few people are employed to fill a bottle with water and how labour-intensive research is, there would likely even be an increase in overall employment.
Similarly, if a tax was imposed on the sugary drinks that cause so much ill health, and the tax revenue used to fund a labour-intensive program such as active playgroups for kids, supporters of small government would likely scream about the inefficiency of a program that improved health and created jobs at no net cost to the budget.
It’s not the size of government that is a key concern for many conservatives, but the size of the private sector’s profit margin. When we spend $100 on pie makers and table-top electric wine chillers, the majority of the money goes as profit to the owners of the various parts of the supply chain, but when we spend $100 on a publicly funded teacher, nurse or aged-care worker, there is little or no profit margin to be sliced off. That’s why the proponents of small government who rage against excessive spending on public health care usually don’t mind huge public expenditure on aircraft carriers and fighter jets. They know the military hardware will be built by the private sector and that the manufacturers, like Levi Strauss, will make their profits whether or not the ships, jets and weapons are ever used. The shape of our economy doesn’t just determine how much harm is done to the environment, it helps determine how much profit will be collected by the owners of the supply chain. One thing that manufacturers, retailers, advertisers and transport companies can agree on is that none of them make a buck out of higher taxes being used to fund better quality high schools.
While choosing which activities do most to improve community wellbeing will always be controversial, identifying the economic consequences of such choices is quite straightforward. For example, if consumers shifted away from buying lots of stuff towards buying lots of services, it would have a huge impact on the shape of the economy but almost no impact on its size. And if citizens switched their spending away from stuff they didn’t need and towards services that governments provide efficiently – health care, education, public transport, bigger parks and more museums – there would be no reduction in the size of GDP, but there would be a significant reduction in the amount of profit earned in the economy (the profit margin on $1000 worth of publicly provided childcare is a lot smaller than the profit margin on $1000 worth of branded merchandise . . . but there are more jobs created per dollar spent on childcare than for each dollar spent on handbags and sunglasses).
A shift away from privately provided stuff towards publicly provided services would also lead to much lower consumption of natural resources. Yet as long as people get the same or more satisfaction from high-quality public services as they do from foot spas they don’t use and food they throw away, this shift would have no adverse impact on the happiness of citizens. Indeed, people would likely be happier.
THE TIMES HAVE ALWAYS BEEN A-CHANGIN’
Once upon a time, enormous quantities of copper wire were required to connect every household to every other household to enable phone calls; over time, much of this copper was replaced by fibre-optic cable. But a growing number of households, and even entire countries, are now relying heavily (in some cases entirely) on wireless transmission of information. The composition of economic activity is always shifting in response to technological change, social change and change in the relative price of things. In turn, the impact on the natural environment and the distribution of jobs, income and political power is also ever-changing. The way we make phone calls is just one example of this.
Through the second half of the twentieth century, telephone handsets sat unchanging in households around the world. But while few people in those days thought to ‘update’ their home phone, these days we replace our smartphones every couple of years. The batteries in the hundreds of millions of smartphones we now rely on have driven global demand for rare earth minerals to record levels; in turn, extraction of these minerals has surged. Hundreds of thousands of telephone operators have lost their jobs in recent decades, but hundreds of thousands of mobile phone salespeople, technicians and screen repairers have been employed. But while mobile phone technology is improving steadily, the main reason for rapidly replacing smartphones is cultural, not functional. Like a new car and some new shoes, for many people (not you, of course, dear reader, but others) the main function of a new phone is symbolic, not material. New phones make us cool.
It is not just the wealth, political influence and environmental impact of the phone companies that are affected by the changing technological and cultural drivers of phone choice. Those who own and work in the copper mines are highly unlikely to own and work in the rare earth mines. Even if the old telephone operators and the newly employed mobile phone salespeople are all members of a union, it is unlikely they are members of the same union. And even though the extraction of copper and the extraction of rare earths both harm the natural environment, it is unlikely that the same rivers, the same farmers and the same species will be harmed.
Changing what we buy destroys jobs, industries, the political power of some groups and different parts of the environment. But we do it all the time. Few politicians stood up for the workers in photo development labs (remember them?) when digital cameras became popular. But many politicians proudly stand up for coal workers threatened by the growing preference for renewable energy. A simple explanation might that the profits and political power of the coal industry are bigger and more focused than those of the small-business people who owned the photo development labs.
The fact that the composition of the things we produce and consume will inevitably change over time is cold comfort to those people harmed by change. Indeed, the fact that moving from film cameras to phone cameras might reduce the cost of living, reduce the impact of photography on the environment and drive the creation of new companies such as Instagram does not mean that Kodak or its workers were excited about the increase in economic efficiency associated with that technological change.
The following sections provide a wide range of examples of how cultural and technological change can reshape the economy in ways that will reduce environmental harm. But as the oil, gas and coal industries’ response to climate change shows, those who have hundreds of billions of dollars invested in a specific product have hundreds of billions of reasons to focus on influencing the technological, cultural and policy context in which that product is sold.
Put simply, the potential for future benefits for the broader community will do nothing to reduce the determination of those who profit from the status quo to oppose change. As Renaissance political thinker Niccolò Machiavelli observed:
There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries . . . and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it.
RICH ECONOMIES ARE GETTING LIGHTER
People in Western countries are consuming less steel, less oil, less electricity, less paper and a lot less photographic film than they once did. While some of this is explained by the shift of manufacturing to developing countries, the change is mainly driven by culture and technology.
Car ownership has always been much lower in New York than in Los Angeles, but it is declining steadily among young people in developed countries around the world. In the US the proportion of 20- to 24-year-olds with a driver’s licence fell from 91.8 per cent to 76.7 per cent between 1983 and 2014.4 In New South Wales, the largest state in Australia, the share of people under twenty-five with a driver’s licence has been falling by around 1 per cent per year for the last decade.5
Cars, once a symbol of freedom and adulthood for many young people, now call to mind only traffic. (Also relevant, perhaps, is the fact that cars render young drivers unable to interact with their friends on social media as they move around the city. Technology influences culture.) Significantly for those who think ‘price signals’ such as a carbon tax hold the answers to all environmental problems, both cars and oil are becoming cheaper. It’s not price that is changing the transport choices of young people.
A major determinant of the demand for steel, concrete, oil and insurance over the coming century will be the extent to which the cities being built in Africa and Asia pursue the transport and urban design culture of LA, New York, Singapore or Amsterdam. The demand for cars, and in turn the demand for steel and concrete, is significantly shaped by those who choose to promote roads, rails or footpaths in their city’s design. The ability to walk to work reduces the amount of economic activity, but there are few (perhaps only those in the car industry) who would consider that a problem, or a sign of a weak economy.
People in the 1980s used to buy a lot of Liquid Paper to correct the mistakes they made with their typewriters. Carbon paper was big too. Carbon paper massively increased the productivity of typists, who could suddenly make two, three or even four copies of a document at once. If they got to the post office early enough each afternoon, documents might even be delivered to recipients the next day. Imagine that!
It’s hard, perhaps impossible, for humans to anticipate how technological or cultural change will yield the potential to lighten our material impact on the planet while simultaneously reducing our cost of living and improving our lifestyle. While some saw early on how personal computers might eventually lead to the paperless office (maybe one day it will), few in the 1980s anticipated that smartphones linked to a global internet and a network of GPS satellites would destroy the need for telephone books, printed business directories and street directories. When was the last time you used a fax machine, let alone changed the roll? (People over the age of about forty will know what I’m talking about.) The savings in time, money and trees associated with the substitution of pixels for paper is enormous.
And it’s not just steel and paper. The world’s most famous manufacturer of stylish but disposable furniture, IKEA, has suggested that in Western countries we might be approaching ‘peak candleholder’ and, indeed, peak stuff. In 2016 IKEA’s chief sustainability officer said that ‘broadly, you saw a tremendous expansion in consumption and people’s livelihoods through the twentieth century. And the use of stuff is plateauing out.’6
The idea that the amount of stuff we produce will always grow is so hard-wired into modern economic and political debate that questioning the composition of that growth, the ratio of stuff to services, or the idea that people might want to buy more leisure and fewer things, has become anathema. While it is acceptable to discuss the economic effect of a shift from bricks-and-mortar bookstores to online bookstores, it is apparently beyond the scope of polite debate to discuss that middle-class people in rich countries have thrown away so many perfectly functional television sets that many charities will no longer accept old-fashioned cathode-ray TVs – the old ones in a box with a curved screen – because they can’t even give them away.
While no economic textbooks, and few politicians, ever actually come out and say it, it is widely accepted that responsible citizens aspire to work more hours and spend more money to keep the economy strong. And if we have to throw away perfectly functional things to make room for them, so be it. A collectivist spirit might be noble, but the idea that we all owe it to the economy to waste time, money and resources is entirely incompatible with the neoliberal tenet of rugged individualists acting solely in their self-interest.
Going one step further, imagine if cultural change led people to make their own coffee and drink it in their own homes. The impact on employment in cafes and on the size of measured GDP of such a simple cultural shift would have a bigger impact on employment in Australia or United States than the immediate closure of all coalmines. Likewise, if billions of people opted for tap water, made their own sandwiches or gave homemade cakes . . . Such outbreaks of choice or efficiency would be as devastating for cafes, beverage companies and retailers as digital cameras were for Kodak – but the overall macroeconomic impact would be trivial. The money not spent on coffee would be spent on something else.
People often tend to underestimate the degree to which one good or service can substitute for another – especially in a consumer society, where people spend a lot of money on things that are primarily designed to say something about them. But if one of the main reasons, if not the main reason, to spend $100,000 on a car is for people to say something about themselves, why don’t they just buy an ordinary car and pay a famous painter to give it a unique, and expensive, paint job? Of course, while spending $100,000 on a ‘sports car’ that can’t fit your family but can go four times the legal speed limit is an acceptable way to say something about yourself, only a weirdo would support the arts.
The following sections outline simple ways to reshape the economy to significantly reduce the harm done to the natural environment. They are not predictions, but possibilities. The biggest obstacle to realising them will be the harm they could do to the powerful groups profiting from the current mix of goods and services that we take for granted.
EXPERIENCES AS A SUBSTITUTE FOR STUFF
Would you prefer a massage or some new shirts for Christmas? Would you prefer to drive a race car around a track at high speed once a month, or drive a sports car through a traffic jam every weekday morning? Would you prefer to have a world-class chef prepare a meal for you and your guests in your own kitchen, or would you prefer to own a $20,000 oven?
There is, of course, no right answer to these questions. The point is simply that many services can substitute for many goods. Technological and cultural change can help tip the balance towards services, and policy change can amplify or dampen the size of the effect. But the financial, employment and environmental implications of renting a chef rather than buying a new oven are significant.
Probably as a result of countless late-night advertisements, garages around the Western world show proof of the inability of most people to predict their own level of motivation, determination or interest in losing weight, building muscle or having ‘killer abs’. Billions of dollars’ worth of treadmills, rowing machines and exercise bikes are being used to dry clothes and keep boxes off the ground because millions of people thought that their inactivity was the result of lack of equipment rather than a lack of motivation. Substituting $1000 worth of personal training for $1000 worth of imported machinery would be far more likely to solve the underlying motivational issue, and at the same time help people realise that their local park and the stuff they already have is everything they need to make their bodies stronger and healthier.
Similarly, paying money to learn to sing or dance, to learn a language or even to learn the trapeze will bring at least the same benefit for the economy and for your wellbeing as paying to ‘modernise’ your lounge-room furniture or kitchen benchtop again.
Finally, although I have significant doubts about the social environment that encourages such choices, it is clear that the growing demand for cosmetic surgery reflects a shift in consumer preference away from stuff and towards services. Regular renovations of the face consume far less of the world’s natural resources than regular renovations of the kitchen. That said, a smile might achieve the same result at even lower financial and environmental cost.
LEISURE AS A SUBSTITUTE FOR STUFF
Would you prefer a 4 per cent pay rise or an extra two weeks of paid annual holidays? While surveys suggest that most full-time workers would prefer more time to more money, both the workplace and national culture make the pursuit of more leisure a difficult goal for many workers to pursue. For cultural reasons, putting in long hours and having short holidays is often seen as a signal – to colleagues, family and the community – of one’s commitment as a worker. While data suggests that grinding work hours are usually associated with a loss of motivation, camaraderie and productivity, symbolism matters in the workplace as well as the shopping centre.
The problem for individuals who would prefer an extra few weeks at the beach to some extra takeaway food through the year is that, when it comes to signalling one’s commitment to a job, it is not the absolute number of holidays an individual takes that matters, but the relative amount. That is, it’s not how many days’ leave you take each year that will likely cause you grief, but whether you have more days away than everyone else in your workplace.
In the United States, employers don’t have to give workers any paid vacation but typically full-time workers get two weeks. In Canada workers get at least two weeks, and in Australia it’s four weeks. European Union countries have a minimum of four weeks, but some, such as France and Germany, have six weeks a year. Imagine that – a month and a half off work each year, on full pay!
Of course, leisure is not just about how many weeks’ holidays we have each year. Many people around the world work seven days a week, either from financial necessity or love of their work. The two-day ‘weekend’ is a historically recent phenomenon, with the term first appearing in print in a British magazine in 1879. Henry Ford starting shutting his factories down for all of Saturday and Sunday in 1926, and the Amalgamated Clothing Workers was the first US union to demand and obtain a two-day weekend in 1929.
The only thing preventing widespread adoption of three-day weekends is culture. That and the adverse impact working less would have on those who make profits from selling us stuff.
Certain employers offer more radical substitutions of time for money. Some teachers in Australia can work full-time for 80 per cent of their normal wage in exchange for working only four years in every five. Every five years they get a whole year off work, on what they have come to know as ‘full pay’, and they have a secure job to return to. And every five teachers who make such a choice creates a job for a new full-time colleague. It gets better. In most countries there are taxation benefits that accompany such
‘smoothing’ of income, as the tax payable on four years of full pay and one year of no pay will almost always be more than the tax payable on five years of 80 per cent pay. Who’d have thought taking a year off could be a tax-minimisation and job-creation strategy?
Consider the following:
•If a worker took an extra two weeks’ holiday each year instead of a 4 per cent pay rise, their employer might employ a casual worker to perform the extra work. The impact on total wages paid would be approximately zero, but wages would be more evenly distributed across the workforce.
•If a worker took an extra two weeks’ holiday each year instead of a 4 per cent pay rise, their employer might decide the business can make do without replacing the worker by spreading tasks over existing workers. In this case, the wage/profit share of national income would change slightly, but the impact on the size of national income would be approximately zero.
•If all workers decided, as they did over the first seventy years of the twentieth century, to gradually and collectively seek to reduce the number of hours they worked each day (the eight-hour-day campaigns), the number of days worked each week (the two-day weekend) and the number of days worked each year (annual leave and public holidays), then the rate of growth in national income would be slower than if the hours worked per year had remained stable. But if such choices were voluntary, and those who wanted to work longer hours were free to do so, then while measured economic activity would be lower, national wellbeing would unarguably be higher.
In 1930 Keynes wrote an essay entitled ‘Economic Possibilities for Our Grandchildren’, in which he predicted that, by our time, people in rich countries would be working around fifteen hours per week. Needless to say, he was way off, but it was his assumptions about culture, not his economics, that led him astray.
Keynes assumed that as income rose, people would buy more of the things they valued most – and he wrongly assumed that people would value leisure time. Put simply, as new technologies enabled us to produce the same amount of stuff with fewer hours of labour, Keynes thought people would opt for more time off; it is now obvious that, collectively, we have instead opted to have far more stuff than Keynes could ever have imagined, and less leisure than people enjoyed forty years ago. Since governments abandoned the use of Keynesian economic policies to achieve full employment in the 1970s, the average number of hours worked by full-time employees has increased significantly in most developed countries.
While all rich countries spent the first three-quarters of the twentieth century converting technological progress and productivity growth into shorter working hours, not all rich countries have reversed course as fast as the United States and Australia. France, for example, enshrined the 35-hour working week in law. Northern European countries have pursued significant increases in paid holidays, with weekend work now less common in Europe than in the USA. Of course, no culture is permanent. In the 1950s and 1960s, as Europe rebuilt after the destruction of World War II, the average European worked more hours each year than the average US citizen. The Americans might have won the war, but they lost their leisure time.
While we’ll consider the obstacles to shorter working hours in subsequent chapters, the idea that middle- and high-income earners in rich countries could consume more leisure time instead of more stuff has enormous potential to improve the quality of their lives, health and relationships. To give a sense of scale, if the richest 10 per cent of US citizens decided to buy an extra two weeks’ annual leave (and lowered their wages by 4 per cent), they would have $80 billion less to spend. That’s a lot more leisure time and a lot less stuff to dust and dispose of.
There’s something else, too. The more people take weekends and holidays, the more fun it is for other people to take weekends and holidays. Put simply, the benefit an individual gets from taking time off increases when their friends or family take time off as well. (That is, if they like their friends and family . . .)
SHARING INSTEAD OF BUYING
While we try hard to teach our children to share, most adult consumers in rich countries avoid the practice themselves. While we might lend our ladder to a neighbour, it’s a rare pair of neighbours who will go halves in a lawnmower. Why would anyone want to save half the price of a lawnmower when to do so would limit your ability to use it any time you want?
Whether sharing is informal (between friends and family), formalised (through wider community networks) or commercialised (with people hiring rather than owning seldom-used appliances), it has great potential to make better use of scarce resources, reduce the cost of living and reduce pressure on the environment.
While the financial and environmental benefits of households owning only a share of a lawnmower, a leaf blower, a chainsaw, a bench saw and a demolition drill are substantial, so too are the personal and financial benefits of discussing the use of these tools with others in the community. Many people have the time and motivation, but not the confidence, to take on small repair jobs around the house. And many others enjoy sharing their knowledge and experience with those who want to learn something new. Sharing is an opportunity to save money and natural resources, but it’s also a great way to make friends.
REPAIRING AND RESELLING INSTEAD OF BUYING
While most car owners and homeowners are willing to spend significant amounts of money to maintain and repair their cars and homes, few people seek to get their television repaired. It wasn’t always this way.
We’ve already discussed how manufacturers today often engineer ‘designed obsolescence’ in their products, but they also build them in ways that make repair impossible or impractical. While product replacement might be more profitable for producers than product repair, the net effect is that costs for consumers rise. Similarly, as repair is more time-intensive than mass production, and requires more skill, it is likely that a community that repairs goods would employ more people, per dollar spent, than a community that instinctively disposes of them. Put simply, a shift back to a ‘repair culture’ could reduce the cost of living, save natural resources and create high-skill jobs. The only thing scary about such a scenario is the potential impact on some companies’ profits.
But as we have seen, the cultural desire to purchase new products for symbolic rather than material reasons is, in part, the responsibility of consumers. The re-emergence of a significant repair industry would likely require simultaneous shifts in consumer culture, production processes and regulation.
There are hopeful signs. The emergence of 3D printing is likely to give significant impetus to a repair culture, as 3D printers allow for the timely and low-cost production of the tiny bits of plastic and metal which a repair often requires. As manufacturers have no incentive to encourage repair, they often put little, if any, effort into distribution of spare parts. Indeed, it has been estimated that the cost of buying the spare parts required to build an entire car is more than five times the cost of a new car – and that’s before you include the labour required to assemble it.7 The ability of households, communities or repair technicians to produce their own spare parts has the potential to overcome manufacturers’ evident lack of enthusiasm for spare parts. Forbes magazine has reported that 3D printing is already a real threat to the $400 billion spare-parts industry.8
LOOKS CAN KILL
While our cultural norms and aesthetic preferences are often arbitrary, their consequences can be quite deadly. A preference for ivory carvings, a taste for shark fin or a man’s hope that eating ground-up tiger penis might make him virile can have devastating impacts on wild animal populations and even lead to the extinction of entire species. The way we like to look, like our houses to look and like our communities to look drives enormous amounts of economic activity and, often, enormous amounts of needless environmental harm.
The largest irrigated crop in the United States is the household lawn. The historian Virginia Scott Jenkins observed that the cultural shift towards irrigated, fertilised and weed-free ‘lawn’ took place after World War II. She argues that ‘American front lawns are a symbol of man’s control of, or superiority over, his environment’.9 While the perfect lawn is not pursued quite as vigorously in most other countries, it is not unheard of. Many Australians and Canadians take their mowing and weeding very seriously, but the average townhouse or country house in England is less likely to have a manicured lawn.
The pursuit of a pristine patch of grass makes no more or less sense symbolically than a preference for ironed clothes, shiny hair or bathrooms that smell like an industrial chemist thinks flowers should smell. The pursuit of (or rejection of) symbols plays an important role in all communities, and, as discussed in Chapter 2, those who wish to change the world need to take the role of symbols as seriously as they take ‘evidence-based policy’ or a cost/benefit analysis. In turn, rather than assert that it is ‘the economy’ that is doing enormous harm to the environment, it would be more accurate to say that ‘the culture’ is.
For example, imagine if the growing of vegetables at home or the production of homemade vegetable oil was seen as a symbol of humanity’s control over our environment, rather than the cultivation of a species of grass that can only survive in an urban environment when provided with enormous quantities of water, fertiliser and pesticide.10 Imagine if the billions of gallons of water used each day to water American lawns and the millions of tonnes of fertiliser poured onto those lawns each year were, instead, dedicated to the production of nutritious vegetables, which could then be consumed by the household that grew them, or exchanged with neighbours who have chosen to grow different crops.
Such cultural and aesthetic preferences are neither new nor uncommon – they simply shrank in popularity after World War II, when the massive boost in the productivity of Western economies, driven by the war-time need to produce weapons, was redirected to the provision of modern consumer goods.
During World War II, governments reshaped their societies to increase their productive capacity. In Australia, Prime Minister John Curtin launched a propaganda campaign encouraging Australians to ‘Dig for Victory’ and grow their own vegetables to support the war effort. Garden armies were formed, ‘victory gardens’ were created, and local governments prompted and incentivised participation by, among other things, awarding volunteers a badge with a ‘three carrot’ design.
Victory gardens were common in many countries during both world wars, with the term used in Australia, Canada, the United Kingdom and the United States. By 1943 there were 12 million household victory gardens in the US, and these accounted for one-third of all vegetable production. Tellingly, the US Department of Agriculture was initially opposed to Eleanor Roosevelt planting such a garden in the grounds of the White House, for fear that the movement would harm the nation’s agriculture industry.
Would a shift from growing lawns to growing vegetables represent ‘an increase in the efficiency of the economy’, or would it be ‘harmful’ and ‘cost jobs’?
GETTING EQUAL
The whole point of conspicuous consumption is to try to signal relative wealth, status and prestige, which means that if everyone in society had identical amounts of wealth and status, then such displays would be entirely ineffective. What would be the point in buying a new car every two years to impress your neighbours if all of your neighbours earned exactly the same as you? Indeed, under such circumstances, your neighbours might interpret your decision to update your car as evidence that you were planning to have a cheap holiday or postponing getting your roof fixed.
The greater the disparity in incomes in a society, and the greater the acceptance of the desirability of that disparity, the greater the opportunities for conspicuous consumption will be. When the gap between rich and poor is as enormous as the gradations between middle class, comfortable, affluent, rich and loaded are numerous, then the signalling significance of watches, handbags and sunglasses is very high, as is the likelihood of an outbreak of affluenza.
But it is not just disparities in relative income that can drive our consumption patterns. On average, rich people waste more money than poor people, they buy more food they don’t eat, they buy more clothes they don’t wear and they even buy more house, or even houses, than they can really use.11 The transfer through tax reform of billions of dollars from those who don’t know what to do with their money to those who have to borrow to make ends meet would, therefore, mean that society consumes less disposable stuff.
A society in which income is more evenly distributed than it is in ours would need far less concrete overall to build its homes (there would be fewer holiday homes, for example), less timber and plastic to furnish them, and less electricity to heat and cool them. In Australia, the average size of a new house has more than doubled in sixty years, from about 100 square metres in 1950 to about 230 square metres today.12 Meanwhile the average household has fallen from 3.7 people to 2.6.13 In other words, Australians have gone from 27 square metres per person to 88 square metres per person. Australia is not the only country to see this trend. In the USA, new single-family houses have gone from 154 square metres in 1973 to 222 square metres in 2010.14 Household size went from 3.0 to 2.6 people.15
The indirect impacts of a more equal society are likely to be even more important. In a society where there is a significant gap between those with the most and those with the least, and a culture that attaches significant honour to being wealthy and significant shame to being poor, the amount of money we spend on social signalling is substantial. Imagine if we spent our excess money on something more worthwhile, or at least less destructive.
INFORMATION AS A SUBSTITUTE FOR CARS AND CONCRETE
It would have been hard, if not impossible, to imagine in 1980 that ‘data’ stored ‘in the cloud’ would one day be a substitute for photographic film, printed photographs and photo albums. Similarly, in the 1970s the idea that information would be a substitute for the materials dedicated to the storage of music on vinyl and cassette tapes would have seemed far-fetched. Today, the idea that information could be a substitute for the bricks and mortar in our homes (and holiday homes), and the metal in our cars (and taxis) seems equally unlikely. But it is already happening.
Around the world, Uber, Airbnb and their many rivals are already reducing the ratio of cars to passengers, and hotel rooms to tourists. Just as neighbourhood sharing can reduce the number of lawnmowers and bench saws a street needs, technology and culture are already significantly reducing the amount of material resources a community requires to meet its transport and accommodation needs. For many travellers, unused cars, spare bedrooms and empty holiday houses are now attractive substitutes for private car ownership or hotel rooms.
Working from home, similarly, has enormous potential to reduce an economy’s ratio of concrete to GDP. Just as the average car is in use 5 per cent of the time, most office workers require two (sometimes three) physical spaces to meet their needs: a home, an office and (for some) a holiday home. A person who is in their office is not in their home. Many jobs, of course, require the physical presence of an employee in a traditional workplace – a waiter, a cleaner, the police – but there is also no doubt that culture, rather than necessity, is a major determinant of the amount of time people spend at a workplace.
Technological and cultural changes create opportunities for office work to be relocated from expensive and materials-intensive office buildings, which of course are largely empty for more than half the time. Enormous amounts of space are currently dedicated to the display of new cars, because of the cultural norm that someone seeking to inspect or test-drive a car should travel to the seller’s car yard. Tesla has shown that it is not only possible but actually profitable for a car dealer to bring the car to you. Intriguingly, just as laws about flag-bearers initially slowed the transition to car use, laws prevent Tesla selling cars in some US states as it lacks a traditional dealer network.
Speaking of cars: for every billion commuters who work from home just one day per week, there are roughly 100 billion fewer commuting trips per year (two trips per week, around fifty times per year). That is a lot less demand for petrol, cars, roads and concrete. And even if those billion people still chose to own their own cars, their reduced use frees up an enormous supply of peak-hour vehicles for others to take advantage of via ride-sharing services such as Uber.
MATERIALS AS A SUBSTITUTE FOR MATERIALS
The houses of families with children are often full of plastic toys, which, while once cherished, end up waiting to be chucked away. Much of this plastic will be buried as landfill. Some of it will be recycled, but the energy costs from transporting huge volumes of plastic from family homes to recycling plants, to toy factories, to warehouses, to retail outlets and back to family homes (in elaborate new and disposable packaging) is far from trivial.
Imagine if, when children tired of them, toys could be melted down and converted by a 3D printer into new plastic toys for the same household. Even more efficient would be for communities to share a 3D printing facility. Not only do such 3D printers exist, some can even fabricate consumer products from metal. In fact, some 3D printers have the capacity to make 3D printers!
Of course, it’s not just children’s toys that clutter up our houses. Most kitchens have a drawer full of plastic and metal devices that haven’t been used for years, and most garages have a stockpile of unwanted things. Over the last fifty years the idea has emerged that toys, utensils and even appliances are disposable – but this notion is not irreversible. The financial and environmental benefits of households and communities themselves reusing raw materials are enormous. Such a change would also encourage and reward creativity.
IS THE CONSUMER KING OR ARE WE ALL JUST VICTIMS?
Do factories make the products we demand, or do we demand the products that factories make? Economists assume that the consumer is king and that manufacturers respond to our preferences, yet Steve Jobs and Elon Musk have argued that consumers don’t know what they want until you show it to them.
Could both views be right?
Do workers choose the hours they want to work, or do employers choose the workers who will work in the patterns they prefer? Is the sharing economy a great opportunity to increase the efficiency of our economy, reduce our use of natural resources and create a stream of additional revenue for some workers? Or is it a new tool of oppression that will see workers’ pay and conditions cut, and ultimately rip consumers off?
Like the binary question of whether we should have more economic activity or less, questions like these probably do more to maintain the status quo than they do to help us understand it. Worse, their paralysing effect might simply create room for people with no concern for workers or the environment to shape the regulations and cultural norms that will ultimately settle such questions.
The potential to lighten the load our economy places on the natural environment is enormous. But the premise of this book is not that technology will fix everything, but that technology and culture can and will change everything. The pace and direction of that change, like the rope in a tug-of-war, will be determined by the relative strength of the forces pulling on it.
Attempts to radically reshape the patterns of consumption, and in turn the world of work, inevitably come with risks. But recent history suggests that maintaining the status quo is even more likely to harm the most vulnerable members of our community. And the natural environment simply cannot support the exponential growth in consumption that, unless we change course radically, is coming down the line.
Every citizen, community and country has the capacity to lighten the load that their economic activity places on the natural environment. Every law passed by parliaments and local councils, and every decision made by consumers, has the potential to reshape the economy. If billions of people consciously sought to pursue a lighter-weight economy, they could achieve that goal. Those in the supply chain who profit from selling the products that weigh most heavily on our environment and society will, inevitably, fight against such change; it would be irrational for them not to. But the idea that we should keep burning coal in order to keep coalmines profitable makes about as much sense as encouraging people to keep buying things they don’t need, just to make the economy strong. Oh, wait . . .
John Quiggin
Since the dawn of history (literally, of written records), civilisation has depended critically on paper. As living standards have risen, so has the volume of paper produced, printed and read. The more knowledge we have and the wider its distribution, the more paper is needed.
At least, that was true until the end of the twentieth century. With the rise of the internet, the correlation between paper and information broke down. Increasingly, information is created and manipulated in electronic form, with paper serving mainly as an official record of the process.
In 2013 the world reached Peak Paper. World production and consumption of paper reached its maximum, flattened out, and is now falling. In fact, the peak in the traditional use of paper, for writing and printing, took place a few years earlier, but was offset for a while by continued growth in other uses, such as packaging and tissues.
Peak Paper highlights the meaninglessness of using traditional measures of economic growth to measure growth in an information-based economy. Consider, for example, the assumption that resource inputs, economic outputs and the value of those outputs are all related to each other in ‘fixed proportions’. This implies it is reasonable to expect that if input use is growing, output will be growing, and if input use is shrinking, output will be shrinking. Until the end of the twentieth century, such assumptions worked reasonably well for the relationship between paper production, the number of books and newspapers consumed and the value of the information they transmitted. The volume of information grew somewhat more rapidly than the economy as a whole, but not so rapidly as to undermine the notion of an aggregate rate of economic growth.
Throughout this period, the volume of printed books, newspapers and so on grew steadily, to around a million new books every year. In total, Google estimates that 130 million different books have been published throughout history. The demand for paper for printing grew in line with that for books.
In the twenty-first century, these relationships have broken down. On the one hand, as we have seen, the production and consumption of paper has slowed and declined. On the other hand, there has been an explosion in the production and distribution of information of all kinds. The growth of information has passed the point where measurement is feasible, but almost certainly justifies Google founder Eric Schmidt’s 2010 estimate that ‘every two days we create as much information as we did up to 2003’.
Peak Paper is not an isolated example. Thanks to a combination of energy efficiency and innovations in renewable energy, the world has already passed Peak Coal. Self-driving electric vehicles seem likely to bring Peak Oil, not because we are going to run out of oil but because it will cease to be valuable enough to find and extract.
The case of Peak Steel is even more interesting. Steel lasts a long time and can be recycled almost endlessly, but demand is finite. In developed countries the stock of steel reached about eight tonnes per person decades ago, and has remained stable or declined slowly since then. With the stock of steel on a gently sloping plateau, the need for more can be met almost entirely by recycling scrap, rather than by burning coal to smelt iron ore in blast furnaces. Peak Steel may not be imminent, but it is achievable.
Contrary to what alarmists on both sides of the growth debate have often claimed, these developments do not imply a reduction in living standards or an end to the process of economic development. Rather, the information economy in which we are now living allows us to break the link between improving living standards and unsustainable growth.
In the process, we have the chance to realise some of the most appealing aspects of the ‘degrowth’ idea proposed by the Club of Rome in the 1970s. The information economy allows us to abandon the twentieth-century social model in which adults spend most of their days in an organised workplace. Instead, much of the value in the information economy is generated by informal interactions through various forms of social media. Combining this trend with steadily increasing productivity makes it possible to imagine a massive reduction in formal working hours, perhaps to the fifteen hours a week envisaged by Keynes nearly a century ago.
Professor John Quiggin is the author of Zombie Economics and maintains a blog at johnquiggin.com.