Tuesday, August 9, 2011

Money - What the rich cannot afford

We have a government that spends money on practically everything, including more than six hundred billion dollars each year on a military machine for "peace" and "democracy." We have a government that at some point decided that it could afford tax cuts on the richest and most powerful in the country, to the tune of two trillion dollars over the lifespan of the cuts. We continue to borrow money from other nations, and the citizens of this very country, to finance government spending. There seems then to be no dearth of money, or "value" more generally in this country. (The value I am talking about here is not what something means to you emotionally, but rather the hard currency value of a "good" or "service.") This country affords to do a lot, and chooses to do things that it thinks it can afford, especially in the name of economy.

If you've spent even an ounce of time reading the news over the past two or three years, you cannot go once without hearing some talking-head or reading some headline about how this nation's, and the world's economy is in peril, that we are in a "recession," and that "investor confidence is low." But it is very difficult to get away from the fact that even in a recession, this country generated on the order of a fourteen trillion dollar gross domestic product (GDP), a quarter of the world's total. Hard to argue with data from one of the very defining institutions of this economy, the World Bank.

The GDP is an indicator of the "value" of goods and services in the economy, and you are right in thinking that this is a "money" value. Of course, the GDP isn't measured in smiles or hugs or quality of the land, but rather dollar or currency terms. Looking at equations used to calculate the GDP, I do not think I am incorrect (I am no expert, of course.) in assuming that the value of these goods and services are tradeable, which is basically what money is an indicator of - the tradeability of value. So, there's a lot that this country can afford to do. I mean, fourteen trillion dollars...

What the numbers tell me is that the economy doesn't care about you or me or your neighbour. It does not care about what is happening in Ann Arbor, or in Detroit. It does not care about the quality of water you are drinking. The way we've structured the economy, especially in our minds, is that it is endless, and that the only way for it to exist is for it to consume itself, for the furtherance of itself. And so what is tossed at the wayside are the air we breathe, the water we drink, and everything that sustains us. But when it actually comes to thinking about life and the environment, we cannot get past the monetary value of the "services we are provided." It seems as if this is the only language we understand. Whether it is a cost put on your life in the cost-benefit analysis done by some government agency, or the monetary value of "ecosystem services," a Pigouvian tax that necessarily results in a degraded environment, or just plain old Pareto-optimality, a monetary value is essential in determining the fate of the environment.

And yet, at every climate change negotiation, at every mention of the phrase "protection of the environment," we are told that this country just cannot afford to value the environment. "We promise we'll protect the environment voluntarily. We'll agree to this accord! We'll also come up with the best new technologies that will not only save the environment, but will spur innovation, grow the economy! Win-win-win!"

Nothing could be further from the truth.

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