Posts Tagged ‘environmental economics’

It is happening finally. According to an article in the San Francisco Chronicle, ‘Dollar’s Fall Forces New Standard of Frugality‘ amidst Americans. I could not be more pleased. ‘Squeezed by food and energy prices, tight credit, stagnant incomes and falling home and stock values, many consumers are throttling back.’

‘Ins and Outs of New Economic Order’

Source: Chronicle research, BudgetSavvyMag.com

What puzzles me however, are the responses from the economists:

We are going back to the good old days of living within our means . . . This is not the end of the world. It’s not Armageddon. It doesn’t mean we’re going to have to live in a cave or a hut or an RV. The areas of retrenchment are in areas we can do without, such as cutting out that extra vacation.’ David Rosenberg chief North American economist for Merrill Lynch

‘We are seeing the first pangs of a new economic structure. The next year or three will be about the transition to a new equilibrium. Consumption by households will grow more slowly than their incomes, which is the exact opposite of the last 25 years when consumption grew faster than incomes.’ Neal Soss, chief economist for Credit Suisse First Boston

‘Standards of consumption have to fall. The burden really falls on households.’ Ronald McKinnon, economist at Stanford University

‘The world has become multipolar. Our dominance will decline.’ Barry Eichengren, international economics expert at UC Berkeley

‘We should not look at today’s rising of credit standards as being bad. We’re returning to a more realistic credit paradigm after a period of excess. What people are comparing it to is something that was outlandishly unrealistic.’ Catherine Mann, professor of international economics and finance at Brandeis Business School

‘I see no reason that we can’t continue to enjoy productivity gains and double the standard of living in the next 30 or 40 years. I still sense that there’s lots of excitement for things like solving our clean echnology problem. I don’t see a country that’s down on its luck and out of ideas.’ Joen Shoven, director of the Stanford Institute for Economic Policy Research

You would think these new behaviors from the American people would be the perfect occasion for a paradigm shift in the economics narrative, but no . . .

Being an optimist, I am choosing to retain the good news. People do respond to limits. And in its own twisted way, the market system does work, including for climate protection.

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Last night, dinner at my house with some Silicon Valley brains. The discussion turned to global warming. I ventured that we needed some leadership and smart policies to force people and corporations into carbon neutral lives. Policies as in carbon taxes and financial incentives for sustainable choices.

I was met with protest: ‘You’ve got to let the market regulate things. It’s the most efficient, most intelligent mechanism. Otherwise you are going to be second guessing, and make matters even worse. Look at the ethanol disaster!’

To which I respond, along with Robert Kennedy Jr., which market? I don’t mind free market capitalism per se, as long as the economic parameters are set correctly. Right now, polluters are polluting the planet, without having to suffer the costs. We are polluting the air with our cars with no direct negative consequences. And as discussed in the Financial Times, water is treated as a free commodity, despite near term world shortages. These are examples of some very serious flaws that need to be fixed.

It’s common sense, folks.

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I have become a good green girl. Whenever possible, I combine my errands, so as to minimize car trips. A visit to the hairdresser yesterday, became the perfect opportunity to stop by Bloomingdale‘s next door, to replenish my supply of Clinique makeup. I rarely go to the mall now, and when I do, it is no longer a source of temptations and excitement, as was the case not too long ago. I have watched The Story of Stuff, and I am a conscious consumer.

I was on a mission, and went straight to the Clinique counter. I was going to buy some foundation and blush. The blush, I really needed, was down to the last bit. The foundation, I still had half of a bottle. I debated for a second, then decided against buying more. And bought just the blush. Preempting the sales lady with a “And no bag please”. Dropped the small box into my purse, and started walking out. I felt weird, leaving just like that. I was in the mall, after all. Wasn’t I supposed to shop? I felt the pressure, the slight pull. No, the desire had left me. I was going to walk straight back to my car.

That is, until I caught a whiff of . . . a smell so pleasant and so intoxicating. It made me want to linger. My nose could not get enough of the stuff. Had I not been thinking about what was going on, I would have stopped and turned left, into the nearby Abercrombie store. I had smelled the scent many times before, whenever I had gone shopping in the store. The Abercrombie people have it down to a science. I’ve got to admit. They nearly got me, once more.

I drove home mad. Mad, for having nearly been tricked. Another case of Not So Green Exposure, I thought. This one, so subtle though, that it was all the more potent and dangerous. I started to question the notion of freedom in a consumerist world. As much as I like to fancy myself as a free individual, the truth is my environment won’t let me. I remembered an interview, last year, on NPR Marketplace, between Kay Ryssdal and Benjamin Barber, when the two discussed Barber’s book, ‘Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole‘. Benjamin Barber, a political theorist, professor at the University of Maryland, blogger at Strong Democracy Blog and the Huffington Post, and principal member of the Democracy Collaborative, is one of the leading thinkers on capitalism and democracy.

This morning, Benjamin Barber wrote a very thought-provoking article in the Huffington Post. I urge you to read it. His question to presidential candidates is right on:

‘how do you suggest we get out of recession without getting into trouble? Without encouraging all those bad habits of too much spending, too little savings, too much foreign energy dependency and too much borrowing that have gotten us into our economic morass to begin with? How do we create a prosperous economy that does not depend on Americans buying not only more than they can afford, but far more than they need or want!?

Whoever can answer that question — or even understand it! — gets my vote.’

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Third day of Not So Green Exposure Project. I open the Business Section of my daily paper and I read this:

With just a few days left before Christmas, the nation’s retailers are in a lather to attract last-minute shoppers to salvage what has been a mediocre December.

Department-store operator Macy’s Inc. has slashed prices on everything from clothing to jewelry, while Toys “R” Us is offering price cuts of up to 75 percent this weekend. At stake are retailers’ profits for the year and perhaps even the strength of the economy.

While consumers jammed stores at the start of the season for big discounts and shopped early for Nintendo Co.’s hard-to-find Wii game console, popular video games like “Guitar Hero III: Legends of Rock” and Australian sheepskin UGG boots, they waited until the end for most everything else, to take advantage of the best deals amid a challenging economy.

The biggest disappointment comes from women’s apparel, extending a downturn that’s grown deeper in recent months and serving as an ominous sign for the health of retailing in general. Women do the primary shopping for the family, so analysts say it’s troubling that they are spending less time in the stores.

“I have no money or time to shop,” said Tina Morabito, who just started her holiday shopping on Friday morning at the Providence Place Mall, in Providence, R.I. She was buying some greeting cards and mint chocolates, but didn’t plan to buy clothing.

“There’s been a malaise” among women’s clothing sales and “it has spread to other areas,” said Dan Hess, chief executive of Merchant Forecast, a New York-based research firm. “The panic button has been pushed, particularly in department stores.”

And even with an expected sales surge this weekend, which traditionally accounts for about 10 percent of holiday sales, Lazard Capital Markets analyst Todd Slater expects that the last-minute spending will be “too little, too late” to save Christmas.

“When people think they are in a recession, they spend like they are in a recession,” Slater said.

A series of snowstorms hampered spending in recent days, but clearly, economic worries – particularly higher gas prices, an escalating credit crisis and a slumping housing market – weighed on shoppers’ minds.

According to ShopperTrak RCT Corp., a research company that tracks total sales at more than 50,000 retail outlets, business for the week ended Saturday slipped 0.4 percent compared to the same week in 2006. Total U.S. traffic for the same period slumped 8.9 percent from a year ago.

The apparel market was hit even harder because there was nothing new that wowed shoppers. The new style – cropped jackets with bell sleeves – failed to generate a lot of buzz, says research analyst Jennifer Black.

Hess estimated that discounts at department stores are about 10 percent to 15 percent higher than a year ago, a worrisome sign for profits. Price-cutting at specialty clothing stores, which had better control of their inventories, were at the same level as a year ago.

Slater said that he estimates that large department stores are missing their sales plan by as much as 10 percent so far in December.

Slater noted that even gift card sales have been disappointing; in some cases, the gift card business may be “even down,” based on spot checks with retailers. Gift card sales have been a bright spot in recent years though they mute pre-Christmas business because sales are not recorded until recipients redeem them.

The toy industry is expected to match last year’s sales, at best. In addition to a challenging economy, the industry was hurt by a slew of recalls of Chinese-made products that made some shoppers cautious.

Online retailers, which have had an uneven season, are ending with a strong finish. According to comScore Inc., consumers spent almost $25 billion online from Nov. 1 through Dec. 18, a 19 percent increase, though a bit below its 20 percent forecast.

While it’s hard to discern how much of the discounting in the final hours is unplanned, stores are clearly slashing prices to eke out sales wherever they can. Toys “R” Us stores are staying open till midnight every night until Christmas Eve. Beginning Friday at 7 a.m., several of Macy’s stores in the New York metropolitan area, including its flagship store in Manhattan, won’t close until 6 p.m. on Christmas Eve.

At Macy’s Herald Square store, the entire inventory seemed to be on sale. Plenty of women’s career apparel was discounted by 50 percent, for example.

“I usually do all my shopping on Black Friday. But I missed it. So I waited for the deals,” said Goednee Coteland, of Manhattan, who was leaving Macy’s Herald Square store Thursday night carrying bags of clothing marked down 50 percent.

Subtle, but powerful. Our whole economic language is imbued with capitalistic values. Consumer spending needs to be up, and so do profits. At stake is a ‘strong’ economy. The signal I get as a consumer, is that spending is good for my country. Not a single mention of the associated environmental costs in greenhouse gases emissions. Spending would be good if it took into account those costs. Really, I am all for free market capitalism. But there’s got to be a new way of looking at and talking about consumer spending. I have heard it best described by Robert Kennedy Jr. Listen to his words – and forget the lousy image quality, this is the only video I could find that fully captures his views on free market capitalism – :

The common financial and economic language needs to make room for words like, green, carbon, environment. It needs to reflect a shift in the way our economy views and incorporates the external costs of greenhouse gas emissions. It also needs to make the distinction between goods and services that make a positive contributions to the environment, versus the ones that don’t.


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Day 8 of Daily Footprint Project. I have covered pretty much every aspect of my daily footprint, that I can think off.

Ecological Footprint, Looking Up and Out

Except for one glitch. In business, it’s called overhead. A mixed bag, where individual responsibility gets lost. In ecological footprint terms, it includes things in my house, such as, the fridge, the water heater, the heater, all the appliances that are plugged in 24×7, and the pool filter.

Going even further, and venturing into the field of environmental economics, I also need to look at my footprint contributions, as a consumer of external benefits. Included in that category are all the ‘free’ services I enjoy from collective entities. In most cases, I am paying for the services indirectly, e.g., city tax for public infrastructures such as street lighting, or merchant markup that covers store overhead costs such as heating. It is also clear, that I need to claim my share of the ecological footprint from such activities.

Daily Footprint Project
Daily Log
Day #8

flush toilet 2
wash face 2
brush teeth 2
wash hands 4
two showers at the gym
rinse grapes
rinse dishes
wash salad


electric toothbrush 2
microwave tea 4’
microwave oatmeal 4’
laptop on all day
cook cream of wheat
cook bacon
oven 325, 1hr 30’


oatmeal with organic milk
organic persimmon
prosciutto from Italy
organic milk
bacon from Canada
cream of wheat with organic milk
baked organic chicken
baked organic potatoes
organic salad


toilet paper
sheets of paper 3
paper towel to wipe off fat from bacon
#5 plastic container from takeout chicken
3 newspaper plastic wrappers
plastic wrap for chicken
1 plastic bag


2 papers


drive to appointment 5 miles
drive to gym 6 miles
drive to business meeting 5 miles

Non food shopping


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For $170, I could wash off my hands clean, and keep going with my life as it is. Drying our clothes in the dryer, taking endless showers, flying to far away places, driving whenever I feel like it, buying food and all the other stuff with no restraint, swimming in the privacy of my own pool, reading our two daily newspapers, ordering takeout three times a week, letting the junk mail come in every day, use the big oven for small dishes, print on one side of the paper, not feel a bit of discomfort. I could, $170, such an easy, painless solution to my environmental predicament. I could even end the Carbon Conscious Project right there. I could, and I don’t want to.

A quote from President Sarkozy, in this week’s Paris Match, got me thinking. “Le sort de chacun est lie a celui de tous.” (The destiny of each individual is linked to the destiny of all people). This is where the concept of moral obligation and green citizenry comes into play. I feel obligated towards my fellow human beings to do at least my fair share of work towards a more sustainable planet. That I have some financial means, does not absolve me from taking a hard look at my personal indulgences, and taking some steps to curb them. Green Guru and I just had an argument about this. Green Guru thinks, because he spent $30,000 putting up a solar installation on top of our house, and he is working on some solar deals in Hawaii, he should not have to worry about his flying whenever he feels like it. I disagree. I don’t think it works that way.

The whole discussions needs to shift away from accounting, to human values of respect, community, responsibility, and fairness. More selfishly, I also know I would feel very wrong if I bought my way out. And I don’t want to pay the price of guilt eating at me. My green conscience won’t let me. I know full well when I am taking more than my fair share. That much, I have learned from the past six months, spent observing my not so green actions, and learning about what is too much, and what is not. The $170 in carbon offsets? I will probably end up paying them anyway. It’s good, it’s just not enough.


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