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Two-thousand and eight could mark the year when the world shifts toward sustainability.
The writing is on the proverbial wall. This year could be a watershed, one to earmark in the history books as the beginning of a worldwide transformation, specifically the US, where we start the march toward sustainability.
But before we dive too deeply into what’s shaping up to be, perhaps, the most idealistic thing we’ve ever written, we should probably define sustainability.
The big ‘S’ is not a term we use lightly, in part because it’s technical but mostly due to its gravity. Sustainability implies infinity. Not absolute infinity but rather the infinity of the human race i.e. the duration of our existence. In terms of natural resources like fish and forests, it means using them in such a way that they replenish at no less a rate than they’re consumed. In terms of finite resources like fossil fuels, the term applies much differently. Managing non-renewable resources sustainably means extracting them at no less a rate than we’re consuming them, while also preparing for the day when they’ll run out. We’ve clearly not done this with oil. And when this balance of extract and consume (supply and demand) is thrown off, we get the price shock of 2008. It’s not sustainable, and something has to give.
We can also look at sustainability in purely economic terms. You cannot spend more than you earn. You can use credit, of course, but that’s not sustainable. This truth applies to the individual as well as the nation. The below chart shows the U.S. savings rate and how we crossed the demarcation line in 2005, shifting from sustainable to unsustainable.
It’s the first time this has happened since the Great Depression, with the WWII era registering as a big anomaly due to war bonds and the like. Otherwise, this is not the type of history one likes to repeat. Considering the economic climate, it will either continue to get worse or else things will change.
The impetus for this post is Umair Haque’s assertion that peak oil is a symptom of a much deeper trend: peak consumption.
“We’re not just addicted to cheap oil, as Tom Friedman and Al Gore have eloquently argued. There’s a deeper economic truth at work here. It’s not just cheap oil we’re addicted to: it’s cheap everything. And the world we’re entering isn’t really of Peak Oil as it is one of Peak Consumption.
Let’s re-examine the house of cards that is the global financial system. Emerging markets seek export-led growth: they undervalue their currencies, so their exports are more competitive purely in terms of price. That’s essentially a subsidy to consumers on the other side of the table – those in the developed world. As emerging markets accumulate surpluses, they recycle them: they lend them back to the US and UK in the form of government and mortgage debt, stabilizing their economies, and amplifying the existing consumption subsidy through leverage.”
In 2006 or thereabouts, the music stopped. The game of musical chairs the financial industry had been playing came to an abrupt end. Unfortunately, all of the players were still in the game, and there wasn’t a chair to be found. Indeed, this is playing out quite literally in the housing market. A recent story in the Financial Times is sobering to say the least. We’re in for a rough ride. But there could be a silver lining.
As we reported in Gas Price Cloud, the best thing to come from high gas prices would be its impact on demand and thus downward pressure on price. Lo and behold, Americans drove 10 billion fewer miles in May, and gas prices have fallen almost 20 cents since its high on July 16th. Meanwhile, Congress is pushing for higher efficiency standards, and consumers are starting to demand more efficient and economical cars. These are steps toward sustainability.
If our addiction to cheap oil is but one aspect of our addiction to consumption. And if the global economic crisis will have the same impact on consumption (less spending on better products) that oil has had on transportation (less driving with better cars), then this could be the makings of something quite remarkable.
In Haque’s article and another written by Green to Gold co-author Andrew Winston, each author challenges the conventional wisdom of American capitalism by claiming we’ll be better off by consuming less. And these are pro-capitalist individuals. Haque says,
“At the heart of next-generation advantage is, paradoxically, being able to break yesterday’s maladaptive consumption addiction – not fuel it. It is firms who can shift past nihilistic, meaningless industrial-era corporate purpose – beyond acting as mere pushers of an addiction – who will power the next global financial system.”
And Winston says,
“Green marketing expert Jacquie Ottman recently gave an eye-opening talk about green marketing today (at Sustainable Brands ‘08). [She] suggested that companies could start encouraging sustainable consumption. Perhaps, she said, companies could pitch buying less of something.
The big ad campaigns, combined with real world environmental pressures, will prompt many consumers to ask for something very different from the companies they buy from. Innovative companies will answer the call and happily eat their competitors’ lunch.”
This may not even be a choice on the part of companies. With help from good policy, we might actually witness a spontaneous shift toward sustainable consumption as a result of market forces, both from the bottom up and the top down. It could come about as a matter of necessity, just as we’re seeing with oil and cars. The costs of wasteful, toxic, and/or disposable products that are manufactured half a world away will become too great. We’ll become much more discerning about the products we buy because we’ll have less to spend and because the true costs will be factored into the price. Stuff will cost more up front.
This move toward sustainability does not have to come at the expense of our standard of living. In fact, it’s precisely due to our out-of-control consumption that our standard of living has been so threatened of late. Our economy doesn’t have to suffer from the shift to sustainability. It can actually thrive. Will we have less crap? Yes. But we’ll have more value, and our quality of life will markedly improve as a result.
As the saying goes, a rising tide raises all ships. Sustainability works in much the same way.
Update: Proper credit for the graphic goes to Writing Shop, which was well ahead of its time in 2005.
17 responses so far ↓
1 Scott Badenoch // Aug 1, 2008 at 10:17 am
love this post…this is why everyone needs to fully embrace the idea that every dollar spent (or more importantly, not spent) is a vote you cast in the race for more sustainability. So, when you’re at the store, buy the green product; when you don’t have to drive, keep the car in the garage etc. etc. The dinosaurs still operate by a simple supply and demand curve. Let’s show them where are demand is: sustainability…and they will undoubtedly comply.
Well done, Gladwell.
2 Paula Thornton // Aug 1, 2008 at 11:56 am
What everyone needs to fully embrace are the laws of economics. They ALWAYS win. Kudos for helping to further the story…
3 AvangionQ // Aug 1, 2008 at 1:10 pm
It seems to me that we can be on one of three paths … the first path, we do not start a public works project for alternative energy infrastructure and continue on the path of fossil fuels — this path will invariably lead to resource wars, with the United States becoming the greatest rogue state on the planet, and an eventual collapse of our economy and government through the waning end of the Peak Oil curve leading to law of diminishing returns leading to violent revolution in under 40 years based on the Peal Oil curve — suffice to say, I don’t like option number one … the second path, we invest lightly and half-heartedly into alternative energy infrastructure and thus becomes nothing more than temporary patchwork for fossil fuels, rather than a primary replacement, and does little more than delay the inevitable with a temporary reprieve — this path leads to an eventuality equal to the first path, but with a slightly longer term of under 50 years before the eventual collapse … the last path, where we see Peak Oil as a challenge to our nation to be overcome and heavily invest in public works projects to establish a nationwide infrastructure for renewable alternative energy sources sufficient to meet the ever-growing consumption needs of the populace — this would require a large scale initial investing and may take a few years to see an output, but would eventually entirely replace our dependency on petroleum … I like this option and see it as our only way out — now, all we need is either political leadership or a grass roots effort to force the hand of our politicians to see it through …
4 God Bless America // Aug 1, 2008 at 5:59 pm
There are good ideas above but they would improve if commenters debated them with you rther than unthinkingly & naively agree
The discussion on sustainability is 1st world and rich-person centric. Can such a view of sustainability lead to infinity of the human race?
you can spend more than you earn when you oppress others and disadvantage thru controlling the balance of power on world trade and global institutions.
The economic argument above assumes the US is an island. People in the US do spend more than they earn due to global currency trading (& developing nations trying to protect their currency by linking it to stronger currencies).
What reason do you have for believing that market collapse or peak oil will lead to sustainability? It could lead to such things as increased resource mining globally (as commodity prices fall, extraction rates rise to keep pace); cutting forests for fuel; disorder/anarchy; rapid shift in land use types (not necessarily good for environment); depletion of local resources at rapid rate to survive; power grabs by military etc. It’s very complex, and there is no basis on which to assume there would sufficient time or drivers to shift to utopia.
Also, research shows that consumers often don’t make green consumption choices even if they’ve said they will; and green choices are often tokenistic – not the solution to a pervasive problem. You can’t reach sustainability through consumption choices.
Also questionable logic above that companies will compete to get consumers to buy less. (How will the winner emerge – the largest consumer base that buys the least?!)
5 Scott Badenoch // Aug 1, 2008 at 6:36 pm
is unthinkingly a word? sometimes it’s ok to agree…especially when you’ve discussed said topics with someone deeply. may i suggest that there’s absolutely no need to make such statements? just contribute to the discussion…
6 God Bless America // Aug 1, 2008 at 6:51 pm
yes it’s an adverb
7 AvangionQ // Aug 1, 2008 at 7:14 pm
GBA, you’re right — the United States isn’t an island — it is a nation amongst nations … but right now, we have to fix our domestic problems before we can even consider helping with fixing the problems abroad — our economy is thus that we can no longer afford to be the police of the world … if you want to talk about the ideals of utopia, I’d be happy to discuss it — for a purely hypothetical philosophical example, what happens when everyone’s wealthy, and there is a surplus supply of goods to be shared to the point where money no longer factors into daily decisions — where money is only useful for determining priority of acquisition for goods that are desired and not necessary for survival, or for acquiring limited edition collectible valuables — that’s the start of a utopia … its the sort of thing I don’t see happening until scientists manage to develop nuclear fusion into a mainstay renewable energy source …
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GBA, you’re also right that most people are driven by economic market factors, where they will buy the cheapest available item … I would argue that once the infrastructure for alternative energy is put in place as an equal replacement for fossil fuels, that green energies will be more cost effective (thus cheaper) than petroleum based energy sources … for example, watt for watt, solar energy is *right now* less costly than coal — the trouble being that that’s not including the initial investment costs of installing the infrastructure … if there was a government based public works project to install said infrastructure, people would swarm to the green alternatives, which would then become the mainstream …
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PS, unthinkably is a word — typically used when a person acts without thinking through about the action first … this ranges from flinching (autonomic reflexes and pain recoil) to what gamers like to call `getting into the zone` where you can perform complicated tasks all but automatically without thinking them through …
8 God Bless America // Aug 1, 2008 at 7:24 pm
Cheers. Note however that this kind of thinking “we have to fix our domestic problems before we can even consider helping with fixing the problems abroad” can itself be a root cause of the problem. I’d agree if you said the US needs to take action at home on same topics so it’s not hypocritical etc. But you’ll never get your island in order without simultaneously being a responsible & active player in the interconnected world. The current economic problems & peak oil/consumption are worldwide concerns and can’t be addressed by the US or fixed from within the US alone.
9 Max Gladwell // Aug 1, 2008 at 8:14 pm
There’s no doubt that this is idealistic and perhaps even a bit naive. But Paula hits the nail on the head: economics. We’ve been living in an era that defied economic laws. Whether it’s our savings rate, the massive subsidies taxpayers (directly and indirectly) pick up for oil and agriculture, or how we send our money to China for cheap consumer goods so they could loan it back to us at low rates so it can feed a record housing/credit bubble that continues to crash more than a year after it began, taking down much of the global economy with it.
GBA, you’re exactly right about America not being an island. We’re exporting our gluttonous and unsustainable way of life to other countries. We export our trash to China. We export tainted beef to South Korea, prompting a million to protest and requiring intervention from the White House. That steroid-filled beef has the support of American taxpayers and approval from your FDA. We’re even exporting obesity and type 2 diabetes.
The basis for this thought experiment is the mixed but often positive effect high gas prices have had. We’re using less and making better choices. It could be just a start. What if gas prices fall again? Then it’s up to government to put a floor under them via taxes and (a) use that revenue to pay down the national debt, (b) invest in alternatives, and (c) fund health programs for those affected by our use of fossil fuels. Etc.
The process will not be painless. We’ve lived at an unsustainable rate for far too long. But it’s not impossible. By definition, it’s a moral imperative. It’s high time we became sustainable and started to export sustainability. If America leads the world will follow.
Thanks very much for your thoughtful counterpoints.
10 Mario Vellandi // Aug 3, 2008 at 11:33 am
I have this post on my reference list to blog about. Also am halfway through reading “Natural Capitalism”.
Another great post, with a focus on economics, is from earlier this year by John Grant (author of green marketing manifesto), summarizing another author. Good stuff:
http://tinyurl.com/6dsdjb
11 Nick Aster // Aug 3, 2008 at 4:01 pm
Excellent post. Curious what the Y-Axis on the first graph is, but everything else rock solid. Will be passing this around to folks!
12 Mary // Aug 3, 2008 at 4:52 pm
Correction, Ottman may have also said it at Sustainable Life Media, but Diane MacEachern of Big Green Purse is the one who issued the challange to companies to tell their customers to buy 20% less.
In tandem with that thought – consumers need to demand the products are certified by SMaRT Sustainable Product Standard, which requires a life cycle assessment of the entire supply chain along with a third party global audit. C2C does not do that.
When you do such an assessment you find out that corn made fuel, unless it’s organically raised corn, is worse for the environment and for the world’s food economy than the gas that it makes.
The above arguments are why the SMaRT Products Standard was developed, to do everything described, i.e. cut pollution, cut carbon, follow the product globally, reward renewable fuels, reward bio-based products… in short, be the rules to transform the market to sustainability.
13 Max Gladwell // Aug 3, 2008 at 6:30 pm
Nick: The vertical axis appears to be peak oil and consumer debt. There’s obviously a lot going on in that graphic (http://www.writingshop.ws/html/perfect_storm.html). The post entitled “Perfect Storm” in which it originally appeared was 2005, so the author, John Schettler, basically called the current recession (which we define by unemployment not traditional GDP). The article sites Matthew Simmons, who we talk about here: http://www.maxgladwell.com/2008/07/peak-oil-prophet-plans-for-apocalypse/.
Let’s hope we take some action so the rest of those predictions don’t come true.
14 Deliggit.com | The social sites' most interesting urls // Aug 4, 2008 at 7:51 am
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