domenica 30 gennaio 2011

Happy decrease


The therocians of happy decrease gain every day more approval. They correctly address the problem that resources are not infinite, and that it is necessary to begin to reason about the decrease of the richness of the world. The ideas of these people meet those of the environmentalist, in particular the old idea sponsored in particular by WWF, that GIP doens't consider environmental assets and that it is necessaty to consider in economical polithisc also the ecological footprint.


The fact that we are consuming more resources than are available in the world and that growth cannot increase indefenitely are self-evident, and most countries in the world (not Italy) are considering seriously these problems. Nonetheless, I think that this line of reasoning is incomplete.


1) Rent is distributed very unequally among people, in particular in countries such as USA, UK and Italy (much less so in Germany. Sweden and other social-democratic countries). In the United States, 10% of the population own (and consume) about 90% of the national wealth. This means that should the remaining 90% of the people halve their income, the GIP and therefore the consumption of resources would decrease globally only by 5%. To my knowledge this arithmetical fact has not been even considered. It means that reducing inequalities of income - a traditional aim of the socialists - can reduce the consumption of resources without touching anyway the standard of living of people and even increasing the average income per person.


2) The supporters of the footprint have understood the fundamental yet rarely appreciated that GBP measures income and not assets; boradly speaking, GBP depend on the increase of assets, and not on asset in itself. Referring to the well known logistic curve, GBP is proportional to the tangent to the curve, whereas any point of the curve is the asset in a give moment of time. Growth at the beginning is slow, in the middle part is rapid, at the carrying capacity it is slow again, but now the assets are enormously larger than at the beginning. The supporters of the idea of the happy decrease do not stress the fact that we can decrease the growth without decreasing the asset - we can be very rich without increasing our richness. Of course this means a complete rearrangement f the economic, since in free market economy profits - the engine of the economic system - depend fundamentally on the increase of assets and not on assets per se(this is the reason why GBP, although obviously faulty, is fundamental in economy).

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