Monday, March 12, 2012

Rio + 20, Part 2: Europe’s economic cost of past voluntary goodwill.



            As I promised in the February article on the same theme, I intend to write a monthly article about the upcoming June Rio Earth summit.  I am pleased with the level of interest February’s article has received from viewers, because this is a very important topic, even if it is currently not a mainstream media story.  As I stated in February, humanity’s fate will in fact be decided by the level of success that this summit will yield.  The problem of sustainability is now, twenty years after the initial 1992 summit, a real and increasingly dominant factor in global economic performance, despite the lack of acknowledgment it receives on political campaigns and in the media.

            The lack of any chance of success is the thing that worries me the most.  The summit will in fact be dominated by proposals for enhancing voluntary initiatives to protect basic human rights, the environment and promote efficiency.  The problem I have is with the voluntary and non collective part of the proposal.  Since there are currently no viable proposals that are being put forth, we automatically know that the summit will be a failure. 

            Sustainability is no different in the global economy, than parks and sidewalks in the local economy.  In the local economy, we achieve partial (non-unanimous) consensus on what needs to be done in terms of building public goods, and then, through coercive means, we extract the means to build these goods from those who agree as well as those who do not agree.  In the absence of this process, we simply cannot achieve the building and maintenance of the crucial and desired public infrastructure.  This is a simple basic economic principle, which has been proven to hold true through the ages.  Cities and states around the world operated on this basic principle for centuries or in some cases, thousands of years.

            It is hard for me to gauge, whether people are failing to understand the fact that global sustainability is a public good, and therefore only collective action, which in some cases has to include mechanisms of coercion, like I proposed in my book will work, or whether people are discouraged by recent failures to achieve collective consensus, and therefore have resigned themselves to pretending that this basic fact is not true.

In this article, I intend to show the reader that it is a true fact, by concentrating on the negative economic effect voluntary compliance had on the economy of Europe.  The cost so far has in fact been massive, despite claims to the contrary, while the benefit, if any, has been questionable in terms of its overall impact.

EU & China:  Two different directions.

Europe has been the backbone of the Kyoto agreement as well as most other global sustainability initiatives.  China on the other hand has focused on economic growth, with little regard for environmental, human rights and sustainability issues.  The result is that Europeans are on the brink of certain long term hardship, if not outright collapse.  Some may be quick to applaud the Europeans for their voluntary sacrifice, and point to it as a shinning example that should be followed.  Truth is that it is an example of idealistic foolishness.  Most realize it; few will follow it, and there are increasing indications that even the Europeans are now ready to abandon it.

Coal consumption since last Rio summit: EU versus China. (Yearly consumption according to EIA data)


Country
1992
2010
change
% change
EU
1.25 billion t
.96 billion t
-.29 billion t
-30%
Germany
.36 billion t
.26 billion t
-.1 billion t
-40%
China
1.2 billion t
3.7 billion t
2.5 billion t
+200%


As we can see from the table, the EU has done quite a bit in the name of helping prevent climate change.  Some may argue that they should have done even more, but the fact that they decreased consumption of the most polluting fossil fuel by 300 million tons per year is really something.  Petroleum consumption has also stayed flat, despite rising in every other region of the world during the same period.  They increased their dependence on natural gas somewhat, which pollutes only one third as much as coal.

As we can see, China’s increase has been over 200% during this same period.  They now use more coal per capita than Europeans do.  Their increase in consumption of 2.5 billion tons, makes Europe’s effort to cut consumption by .3 billion tons seem extremely pointless.  There is an argument to be made that it was in fact completely pointless, because on a global scale, consumption was in part shifted (outsourced) together with manufacturing jobs, rather than cut.

China also more than tripled its use of petroleum, so the herculean efforts made by Europe to prevent their own use of petroleum from rising by 1-2 mb/d, as it should have, if economic potential would have been met, is also made to look just as pointless, given the 7 mb/d rise in consumption, we saw in China during this period.

Aside from the evident loss of our fossil fuel sustainability, due to large increases in consumption, which brings us ever closer to a point of reckoning, given that fossil fuels are a non-renewable resource, CO2 emissions from China have tripled during this inter-Rio summit period, while the Europeans struggled to keep emissions levels flat (The collapse of communism in Eastern Europe helped a great deal towards this goal).  The increase in emissions from China during this period, is greater than the level of emissions of the entire continent of Europe, excluding Russia.  So to truly make a difference, the Europeans would have had to achieve close to 0 emissions in order to truly affect climate change prospects, by at least offsetting the rise in emissions from China.  It can once again be argued however that even that would have not helped, because in the long term the true effect would have been one of outsourcing.

The Europeans could have done nothing, allow for their own emissions to increase 10%, during this period, and nothing of consequence would have changed.  Total global emissions increased by over 40% during this period, according to EIA data.  A 10% increase coming from the Europeans would have only made a difference of roughly 1% more out of that total.  If they would have been wise enough to do so, we would not see today Angela Merkel going to China with cap in hand to beg for help in helping the EU stay afloat financially.

The effect on Europe’s economy:

            The defense of Europe’s policy of starving its economy, while the others continued to expand is that as a result, it is now a Europe that is far ahead of most of its competitors in terms of efficiency, and they are therefore set to be more competitive in a world of increasing scarcity.  Reality is a far different however, and as the evidence thus far shows, the countries that are most solid financially are the ones which are best prepared to deal with the problem of scarcity.

            China may be willing to use and abuse its land and resources, but as a result of this abuse, they have a $3 trillion dollar war chest, which they are already employing wisely to acquire the rights to resources around the world, which other countries abused and exploited to a lesser extent.  It may be said about many African countries for instance that they are better off in terms of food sustainability, because they employed less destructive farming methods, by not engaging in industrial farming.  It is the countries which did use and abuse their land among other resources, which have the financial power to purchase their land and use it to take care of their own however.  So while many in Africa are starving, there are plans underway to produce bio-fuels from portions of their farmland, which in many cases have been purchased by countries which need the bio-fuels.

            Europe’s story of sustainability is now turning into the same direction.  Their policies of promoting global sustainability have led to a competitiveness gap in attracting or retaining many industries.  Keeping a cap on emissions led to Europe being one of the most expensive places for business to purchase energy for their needs.


Country
Price kilowatt/hour
Gasoline per liter
China
$ .034
$ 1.20
US
$ .087
$ .96
Germany
$ .33
$2.20


As Europe’s economy is being systematically starved, the hope that the higher price would lead to incentives for innovations and eventually a more dynamic economy are fading, as increasingly we realize that firms are not interested.  In many cases, they prefer to seek out places that allow them to pollute at a lower price instead.  The realization that the economy is sinking is taking hold. Given the slow trajectory in Europe’s economic expansion, it is impossible to keep up with the growth in deficits and personal debt.  Now we have a policy of austerity taking shape which will slow the continent even further.

Eventually the political right will prevail over the greener oriented left.  Even If they will not, and the current policies will continue, it will eventually end in economic disaster, and the green agenda will further be discredited, making it even harder to offer a viable green option for the world in the future.  Germany’s recent announcement that it is ending subsidies for solar power is a signal that the game is over.  Europe will in the current decade probably turn its back on continuing to shoulder the burden of being the only stewards of sustainability.  Survival is more important.

Survival is in fact what is at stake for Europeans at this point.  The level of youth unemployment is so dramatic that young people are forgoing reproduction (In some places like Spain it has reached unbelievable levels, of close to 50%).  Not having a steady source of income means that people are no longer forming families.  Europeans are in essence starving themselves into extinction.

Conclusion:

It may upset those who are looking to build voluntary goodwill across the globe in order to promote sustainability that I am attacking the work they achieved in the last two decades.  Reality is that their efforts towards sustainability are not sustainable, and as I already said, they have no impact worth mentioning.  As long as we fail as a global society to treat sustainability as a public good, we will not have this public good available to us.  Sidewalks do not generally get built through voluntary donations of money and time.  We would have few sidewalks indeed if this was the approach we would decide to take.  Even if we would achieve a drive to get people to donate the means to build a sidewalk, we cannot go back to the same people over and over again as the need for more sidewalks and the need to preserve the old ones arises.  People will get tired and financially worn down from contributing, while the ones who did not contribute but benefited from the free sidewalks will have grown accustomed to doing so, and also became richer and more influential.  Does this sound like a sustainable path?

As things stand now, this is what will happen at the summit and in the immediate aftermath.  The summit itself will be low key, and will produce few, if any tangible agreements.  Many key global players will shun the summit, because no one wants to be associated with failure.  In the immediate aftermath of the summit, many individuals will in fact become energized in promoting individual responsibility, which at this point makes little difference on a global scale unfortunately.  Some companies will make grand announcements about how they will install solar panels or something at their headquarters, in order to cut their environmental footprint.  Most will fail to realize that it is the same companies that use suppliers from China for their products, which they sell in the west, making the supply chain for their merchandise much longer and much less environmentally friendly.  So many will applaud, and few will realize that such gimmicks only serve to give us a mirage that we are on the right path, making progress, and therefore collective action will not be necessary.

As for any attempts to push for local collective action on sustainability, it will rightly be attacked ferociously from the right, because they are after all correct in claiming that it harms the local economy by pushing many manufacturers away.  There will be some pledges to work with the international community on proposals for global implementation, but let us not forget that as long as the benefit of non compliance is out there, there will always be countries willing to undermine the whole process by insisting on their own non-collaboration.  So the much needed action on sustainability will never materialize.

I want to end by reproducing a comment I received by a person signed in as LBL to last month’s article on this same theme.

The truth is that we can't trust the government to do anything about this because they have their own interest that they prefer to protect. So it comes down to us, you and me and the government just going to have to follow. If teachers choose to include in their teachings ways kids can help and each of us that believe and see the problem teach others around us this could become the new Christianity. We under estimate the power of the WORD. We just need somebody to "write the book" I know comparing Christianity to what needs to happen in our society may not be the same but just think about it. The power the people had when Christianity spread around the world was stronger then any government.”

I actually hope that a good idea, such as the one I proposed for sustainability, or one that is even better, will spread as Christianity did.  We should not forget however that after the initial spread of Christianity in the first few centuries, the main tool of its spread became coercion, as is similarly the case with any idea, which might actually make a real difference to the world’s chance of achieving a sustainable path.

Note:  As I wrote this article, I found out that Poland Vetoed the latest EU climate initiative.  There are increasing signs that Europeans have had enough.

2 comments:

  1. Yes China's pollution has increased, and that is because they allow all the other countries to go there open high polluting factories that in most countries would not be allowed to open because of that countries standards and cheaper labor. Now yes the population of china is growing by the second so it is normal that it will accept the fact that they may be the highest polluters in the world.They have to feed their people!!! Now all the countries have to come together and say " we need to set a standard and if the standard is not meet we need those companies to pay" And when this companies that are pretty much running our world will have to pay millions in penalties to the countries that are producing the pollution in they will think twice. And it should be based on their yearly profits. if this year your pollution is gone up 10% it should be a penalty of 10 million, if the second year it is still 10% or more is not going to be another 10 million is going to be 20.

    Now things like this would have to be achieved by our government and as I say is the big companies running the world not the governments, so what can you and me do.

    I guess for somebody like me if you would tell me that X and Y company is producing this much pollution or or using GMO I would stop supporting them, so in one way we do have the power we just have to be on the same page and unite against the wrong that they are doing. We have to demand from our government to support it's people not it's companies. If we would all stop going to McDonald's they would go out of business, and there would be no use if they go to our leaders and cry that their restaurants are dropping like flies, because they would not be able to take all of us by hand and take us there and make us spend our money. But then again it is so engraved in our way of life that this is our way of life and live with it. A lot of the European countries still know how to live a humble life so they still understand somewhat what needs to be done. They are not as far out the mentality that requires the adjustment that our society needs to improve our world. Same with the African countries, they still know how to live on basic necessity. And that is the secret. I would love getting milk in glass bottles and when I'm done take the bottle back to the store, I would love to work only 5 to 6 hours a day so I can do my daily fresh grocery shopping and go home to cook from scratch, and most of all I would like to be home more so I can raise my own kids but our mentality is that I have to work over time to get all the "wants" in our life all the things that large corporations tell us we can't live with out.

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  2. Hello dear.You have written a great post. Going to share with my followers on twitter. Thanks for sharing.

    Rio flat

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