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Summary and
What I hoped you learned in this
The Nature of Reality
 The
earth is finite
 The laws of thermodynamics apply
 The economic system is a subsystem of the
global ecosystem
The Order of Analysis
 Desirable
ends (ethics, psychology,
sociology, etc.)
 Scarce resources (ecology, physics)
 Nature of scarce resources (ecology,
physics, economics)
 Allocation (economics, politics)
 We can only decide how to allocate after
we know what we want, and the resources
we have to attain it.
Desirable ends: What makes
people happy?
Desiring less
(Not very, and only relative wealth once basic needs
are met)
The aspiration gap
Friends and family
Helping others
Getting old
Keeping lists of things for which you’re grateful
Satisfaction and income
What makes people unhappy?
 Pursuit
of material gain
“young adults who focus on money, image
and fame tend to be more depressed,
have less enthusiasm for life and suffer
more physical symptoms such as
headaches and sore throats than others.”
Kasser, T. (2002). The High Price of Materialism. Cambridge, MIT Press.
 Comparing
yourself with others
Status is a never-ending tread-mill
Economics Should be a Science,
not an Ideology
 Science:
empirical testing of hypotheses
and theories
 Ideology: refuse to test hypotheses, or
refuse to discard them when empirical
evidence contradicts them
 Starting from the assumption that markets
(private property rights) are always best is
 Starting from assumption that socialism
(public property rights) is always best is
The Economic system is inherently
 We
depend on natural resources, and
must understand both physics and ecology
 Some resources meet the criteria for
efficient market allocation, most do not
 Human desires are complex
 Human motivations are complex
 Markets are never perfect
Market model is super-simplified
 Natural
resources are infinite
 Most goods and services fit the market
 Only $$ matters, more is always better
Calories model of nutrition
 Only
concern is efficient allocation
Therefore, economists must
look at:
 Ecological
 Social Justice
 Efficient Allocation
Conventional course
Clear understanding of
over-simplified market
Indoctrination into
dominant paradigm
Faith based
Better prep for advanced
This course
Fuzzy understanding of
complex system
Adequate exposure to
ask questions, decide for
You must test theories
against experience
Adequate prep for EE
and NCE
“Sometimes, it is better to be
vaguely right than precisely wrong”
Amartya Sen
What has my generation done for
the world?
 We’ve
inherited more from the past
generations than all others
 We’ve taken more from future generations
than all others
Half of all oil ever used was used in your life
Under business as usual, ¾ of all oil ever to
be used will be used in my lifetime
What must your generation do?
Would Addressing Ecological
Problems be be a Sacrifice?
 Stern
review on climate change estimates
that investing 1% of annual GNP required
to stabilize climate
 Would returning to your living standard in
July be a sacrifice?
 Economists say yes—the cost of
mitigating climate change is too high
 Could we solve the problem with 1% of
Would Addressing our Problems be
a Sacrifice?
 Over
90% reduction in fossil fuel use
 Per capita income (adjusted for inflation) in
1969 was <1/2 of today’s GDP, and
poverty was lower
 We could live at 1969 standard with 1/2 of
current CO2 emissions
With European efficiency levels, we could
have a 1969 lifestyle with ¼ of current
With proper incentives in place, we could do
much, much better
How Miserable was Life in 1969?:
The Genuine Progress Indicator
How do We Get There?
 Information
Transparent government
Independent media
 Changing
the rules
Democratic control over our shared natural
and cultural heritage
Cooperative provision/management of nonrival resources
Just distribution of resources provided by
nature and society
How do We Get There?
 Changing
the goals—what is desirable?
Shared vision of a sustainable and
desirable future.
Continuous economic growth is
Doom and gloom doesn’t win converts
 Changing
the paradigm—what is
Economy is sustained and contained by the
global ecosystem
Continuous economic growth is impossible
Macroallocation is central problem
Summary and Conclusions
 We
have the knowledge and policies to
build a sustainable economy
 One of the most powerful (and most
neglected) tools is developing and
communicating a shared vision of a
sustainable and desirable future
 Another powerful tool is the democratic
process, which we have abandoned in this
Summary and Conclusions
 The
first steps (maybe the first 2/3 in the
US) can be cost free (no changes in
QOL, education, health, happiness) with
current technology, or even beneficial
e.g. Less fossil fuels = more health: mental,
physical, financial, environmental
 Appropriate
policies provide incentives
for better technologies
 The remaining 1/3 can be cost free with
new technologies
Summary and Conclusions
 Sustainability
is not a sacrifice: our current
lifestyle is
 Naïve and utopian?
So were the ideas of democracy, an end to
slavery, women's rights
It's naïve and utopian to think we can survive
without making these changes
Take Home Message for
Sustainability does not
Require Sacrifice,
Economic Growth Does
Course Number: 90162
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are helpful
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Worst aspect of course
 Please
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