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Podcast episode

Growth or Degrowth? w/ Oliver Hartwich, NZ Initiative – EP208

Show host Gene Tunny delves into the concept of Degrowth: the idea of deliberately shrinking economies to avoid the runaway climate change, ecological collapse, and societal breakdown that degrowth proponents are worried about. Gene first discusses degrowth with Oliver Hartwich from the New Zealand Initiative, and then responds to questions about degrowth at a recent University of Queensland Politics, Philosophy, and Economics student event. 

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About this episode’s guest: Dr Oliver Hartwich, NZ Initiative

Dr Oliver Hartwich is the Executive Director of The New Zealand Initiative. Before joining the Initiative, he was a Research Fellow at the Centre for Independent Studies in Sydney, the Chief Economist at Policy Exchange in London, and an advisor in the UK House of Lords. Oliver holds a Master’s degree in Economics and Business administration and a PhD in Law from Bochum University in Germany.

What’s covered in EP208

  • [00:04:39] Degrowth to stop climate change? 
  • [00:08:00] Economic growth and adaptation to climate change? 
  • [00:11:53] How a threatened lungfish colony stopped a new dam in South East Queensland. 
  • [00:15:47] Are we rich enough already? 
  • [00:20:20] Democratization of wealth and prosperity. 
  • [00:24:05] Economic growth as a positive. 
  • [00:30:39] Carbon pricing. 
  • [00:34:10] Decreasing Antarctic sea ice extent.

Links relevant to the conversation

Gene’s September 2023 Centre for Independent Studies (CIS) paper on Degrowth:

https://www.cis.org.au/publication/debunking-degrowth/

NZ Initiative podcast from which part 1 of this episode was borrowed:

https://www.nzinitiative.org.nz/reports-and-media/podcasts/podcast-debunking-degrowth/

Transcript: Growth or Degrowth? w/ Oliver Hartwich, NZ Initiative – EP208

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Oliver Hartwich  00:03

William Stanley Jevons in the 1860s actually predicted the word would run out of coal. This is general tendency to do linear thinking where everything is always continuing on a certain path. I mean, there was a letter right I believe, in the London Times in the early 20th century, predicting that London at some stage would be under six feet of bossman year from all the offices in the city. It is this tendency to always think we’re just continuing on the same path and it will never change.

Gene Tunny  00:41

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode. Please check out the show notes for relevant information now on to the show. To grow or not to grow, or indeed to D grow. That is the question. Do we need to rapidly shrink our economies to avoid runaway climate change, ecological collapse and societal breakdown? This episode features on my recent conversations on degrowth I speak with Oliver Hartwich from the New Zealand initiative. And thanks to Oliver for letting me reuse the recording from the New Zealand initiative podcasts that are recorded with him. This episode also includes a response that I gave to a question from Joe Christiansen at a recent event hosted by the University of Queensland politics, philosophy and economics society. Okay, let’s get into the episode. I hope you enjoy it. After you Listen, please reach out and let me know your own views on whether we should pursue D growth or not.

Oliver Hartwich  02:07

Hello, and welcome to the New Zealand initiatives podcast. My name is Oliver Hartwich, and today we are joined by our special guests from Australia we have gene Tunny, who is an adjunct Fellow at the Centre for independent studies, and also a director of ADAPT economics consultancy in Brisbane. Welcome to the podcast Gene.

Gene Tunny  02:24

Hello, Oliver, pleasure to be here.

Oliver Hartwich  02:26

Great to have you with us because we want to talk about a paper you just published last week with a centre for independent studies called debunking degrowth. Now, I thought we should start this conversation by just admitting freely that we are both economists. So degrowth is something that doesn’t come naturally to us usually, because normal economic theory, correct me if I’m wrong is all about trying to find better ways of combining factors to do more with less or to do more with the same, to find different combinations to create growth, to really find out what works and make an economy grow. And now suddenly, we’ve got a bunch of scholars turning this on its head telling us to actually try to not create so much wealth and not create so much prosperity, but really put the reverse gear in and go in the other direction. Is that a fair summary of what this movement is about?

Gene Tunny  03:16

Yes. I mean, they certainly want us to go in the other direction. I mean, the two steel man, their argument, I think, how I describe it is that they think we’re breaching these planetary constraints. So they think that we’re at a level of consumption, whereby we are essentially, you know, we’re sacrificing the well being of our children or grandchildren. So they’re concerned that we’re, we’re going to destroy the planet, some of this degrowth literature is it’s apocalyptic. It’s, I mean, I think it’s catastrophizing. But you know, they, they’re worried about climate change. They’re worried about ecological breakdown. They’re worried about resources being exhausted. So yeah, look, I largely agree with you, but to to steal man their argument, they think there’s evidence to support the view that we’re consuming too much if we want to have you know, sustainable living standards for future generations.

Oliver Hartwich  04:18

Right. And in your paper, you then produce a reproduce their claims, and you’re debunking them one after the other. And you’ve got five claims in your paper. So I thought what we might do so much is go through the list, and try to figure out what this movement wants and your response towards so the first unproven claim you talk about in your paper is one that you already alluded to. We need to de grow to stop climate change. Why do they say that and why do you think this is wrong?

Gene Tunny  04:46

Oh, well, essentially they’re they think that we’re on these tipping points. I mean, you’d know that it appears that the planet is warming I mean, there’s scientific support for for co2 We were warming the atmosphere to an extent. So that’s difficult to contest. But they claim that they believe these real these tipping points sort of scenarios. Whereby, I mean, the permafrost melts. There’s all this methane release, you know, we have the, what is it one of those ocean currents that shuts down? And I mean, all sorts of apocalyptic scenarios. And I mean, just looking at it. I mean, I think that the evidence for that is, I mean, a lot of it comes out of computer modelling, there are all these computer simulations, whereby if you look at what they’re doing a lot of the conclusions, the apocalyptic conclusions are essentially assumed or built into the model. So I mean, my feeling is that the evidence isn’t, isn’t strong enough to justify that apocalyptic thinking. Sure, there’s some warming going on. But there are policy measures been introduced to try to address that, or, I mean, none of the credible modelling on climate change mitigation has degrowth. in it. I mean, we can still grow, we’ll still be wealthier in per capita terms. Maybe the growth rates less or more if we respond to climate change. I mean, now we’ve got people saying that if we don’t address climate change, we’ll have lower growth. So look, I think they’re making big claims about how we’re going to, you know, have this unsustainable runaway global warming if we don’t do something radical and massively cut back our consumption. So that’s essentially their argument. And I just don’t think the evidence supports that.

Oliver Hartwich  06:43

But of course beyond that, because we’ve already decoupled economic growth to a degree from emissions. Yeah. So just because you’re growing doesn’t mean you’re necessarily growing your emissions.

Gene Tunny  06:53

Yeah, yeah, exactly. And I think they’re ignoring a lot of the technological change. They’re, they’re ignoring our capacity for innovation. Yeah, that’s absolutely correct. So I guess not to not to necessarily defend them, but they do address that decoupling argument. And they do acknowledge that that, you know, the emissions intensity of GDP is declining. But in their view, I mean, we’re still increasing co2 emissions, or sorry, we’re still, you know, the co2 in the atmosphere is still growing. So they’re a bit sceptical of that whole decoupling argument.

Oliver Hartwich  07:31

There’s another aspect to the whole climate change debate. And that’s adaptation, of course. So I mean, if we’re comparing countries like the Netherlands and Bangladesh, Bangladesh is subject to flooding, but so is the Netherlands because they are mainly under normal sea levels. And yet, the Dutch build dikes and all sorts of infrastructure to deal with that, because they could afford it. And then Bangladesh, and they’re still waiting for that to happen. So actually, isn’t actually economic growth, the thing that saved the Netherlands from flooding

Gene Tunny  07:58

out? Yeah, look, that’s, that’s a good point. I mean, you wouldn’t want to de grow and stop emerging economies from getting wealthier, because that will decrease their capacity to actually adapt to deal with it. I absolutely agree with you there. And look, that’s one of the things that the degrowth movement misses in my view. I mean, there’s all of this, you know, it’s a lot of the standard sort of criticism of, of capitalism and, and economists that you get from people on the left, and yeah, I mean, it ignores the fact that I mean, since countries such as China and India embrace the market, right, China in the 80s, and things are paying and then we had the, the end of the licence, Raj and in India, I mean, they’ve they’ve had, you know, much better growth than previously and we’ve had over a billion people lifted out of poverty. So yeah, absolutely agree with you there, Oliver.

Oliver Hartwich  08:52

Okay, then let’s move on to your second unproven claim, we need to de grow to stop resource depletion, environmental degradation and biodiversity loss. That leads us straight into the debate around Julian Simon, or if we want to go back a little bit further. Thomas Malthus. Yeah, absolutely.

Gene Tunny  09:08

And I think history shows that I mean, we are able to address these issues. And a lot of the concerns came best addressed through the market through clear delineation of property rights. A lot of the problems we have in Brazil, for example, that there was a recent economist article I’ve mentioned in the, in the paper, which is essentially saying a lot of the problem with the rainforest, destruction of the rainforest is lawlessness, it’s bad enforcement. Right. And look, you know, there are efforts all around the world to, to conserve to the off the common Exactly, exactly. So it’s really just, yeah, they just seem to ignore that. You know, what economists know about the people who own a resource are going to, you know, protect it and conservator. So yeah, absolutely. And look, I mean, look, you have to acknowledge that there has been a loss of biodiversity over over decades. And I mean, I think we’re starting to address that we’re starting to arrest that decline. And certainly the so I’ve got a there’s some evidence there about the decline in biomass globally or number of animals. And, you know, that’s, that’s been arrested that decline, which, which is good. So look, I think, you know, it’s a lot of just negativity, and isn’t capitalism awful. Whereas, really, I mean, we can address these issues, they’re within our ability to control and look, just look what we’re doing in Australia. I mean, we’re a wealthy country. So we, and this goes to your point before all over that the wealthier countries are going to be better able to address these issues. I mean, we’ve got things like biodiversity offsets. Anytime you want to do a development that impacts the environment, you have to prove about how you manage those impacts. And we’ve even stopped, we stopped the dam in southeast Queensland, even though we need the water. Right, it’s good. We’ve got a hugely growing population. And we stopped a dam because we were concerned about a lungfish. So yeah, I mean, we are trying to address these issues. And I think, yeah, that that argument really doesn’t, doesn’t hold up. And the other point too, as you know, as an adopt a dam over length, yep. Travis didn’t dam. That sounds like an episode straight out of utopia. Well, it happened. It was Peter Garrett, who was environment minister here. So um, yeah, it was a huge issue, because we had a water crisis in the 2000s here in southeast Queensland. And so we built a desalination plant, which is hugely expensive. We built a recycled water plant. And then we were looking at a dam north of Brisbane in the Murray Valley, the travesty and dam and it got right to the point where the federal government had got to the federal approvals process and it was blocked by the environment minister, Peter Garrett, former lead singer of Midnight Oil. Yes, I have this man. He was the environment minister. It’s a burning blocked it because the lungfish was threatened. So yeah, apparently there was no way of, of looking after the lungfish if you built the dam. So yeah, that’s that’s just an example of how we do care about the environment in this country. It’s not as if we’re sacrificing the environment for growth.

Oliver Hartwich  12:31

The other idea of course, in all of us resource depletion seems to be one of these ideas that you simply cannot ever refute, keeps coming back. Going back to Morpheus, of course, that’s the starting point. But William Stanley Jevons in the 1860s actually predicted the world would run out of coal. It’s this general tendency to linear thinking where everything is always continuing on a certain path. I mean, there was a letter right, I believe, in the London Times in the early 20th century, predicting that London at some stage would be under six feet of horse manure from all the horses in the city, it is this tendency to always think we’re just continuing on the same path, and it will never change.

Gene Tunny  13:11

Yeah, exactly. So and the thing with the scarcity of resources, I mean, we know that as they do become scarcer, the price is going to increase. And that’s going to encourage conservation, or it’s going to encourage people to switch to two alternatives. So and you mentioned, you alluded to the Julian Simon Paul Ehrlich bet, which ended up losing because he thought we were in the 70s, they thought we were on a path to, you know, massive resource scarcity. And that

Oliver Hartwich  13:41

perhaps, just for the benefit of listeners who may not be aware of that, so can you tell us briefly what this bench was about?

Gene Tunny  13:49

It was about prices of commodities, they selected, maybe a couple of dozen commodities, major commodities. And Ehrlich was betting that that increase in price over the the 80s by a certain percentage, amount across extreme people would run. Exactly because there was all of that modelling in the world. Ehrlich was infamous for that population bomb book in the late 60s, which forecast that you know, would, you know, even with, like, what was it 888 billion people which where we are now we’d end up with, you know, massive famines and the chaos and all of this. And

Oliver Hartwich  14:27

then we’ve got the Club of Rome, of growth and all of our

Gene Tunny  14:30

forests and meadows, and there was all of this apocalyptic thinking, you know, Doomsday was at hand. So I think what I found interesting looking at this old degrowth literature, is a lot of the a lot of the concerns or a lot of their arguments could could be questioned or rebutted, if you go back to just what sensible people like Robert Solow and then the Treasury here in Australia, what they were saying in response to the club Right, right. Yeah. So

Oliver Hartwich  15:03

we make made a very similar point in one of our publications. A few years ago, we had a little booklet published under the title The Case for economic growth. And we were talking about environmental Kuznets curve, where, first of all, when the economy grows, yet there is an impact on the environment, and it might be negative. But once you get past a certain point, people will demand action and clean it all up. Yeah. And actually, it gets better over time.

Gene Tunny  15:26

Yeah. And that’s one of the points that I made in the paper. Yeah, absolutely.

Oliver Hartwich  15:31

Your third point, your third unproven claim is perhaps even more interesting. We are rich enough already? Well, it would be harder to make that claim in New Zealand, because we’re 25% behind Australia. What’s the thinking behind that?

Gene Tunny  15:47

Oh, well, they make the argument that if you look at happiness, Carl, you know, correlations of happiness and GDP per capita beyond a certain level, it starts to flatten out. And so the argument is that countries such as Australia, and I mean, maybe New Zealand doesn’t qualify yet, but we’re wealthy enough already got a way to go. It’s all about you know, it’s it’s an issue of inequality. So there’s this sort of argument that I look, the West is rich enough already. It’s if you concern about the rest of the world, and it’s, you should redistribute that income. And you know, the people in the West were the ones who, of course, we’ve caused all the problems with climate change, et cetera, it’s all our fault, imperialism, and all of that. And so that we should redistribute our income and wealth, the problem is, that’s only going to go so far. Right? It’s not going to solve the problem. And it’s not good for, you know, incentives. Right. It’s not good for it’s not sustainable. So it’s just a really bad argument, I think. And, and it also, I mean, when you look at it, this, this is going to require authoritarian measures to introduce because at the moment here in Australia, we’re going to cost a living crisis, right? So you’re not going to be able to tell people, and we’ve got no shortage of housing, you’re not gonna be able to tell people, you’re rich enough already. Because a lot of people who don’t know when I’m What are you talking about this nonsense? You’d have to engage in really authoritarian measures to bring about D growth. So yeah, I think it’s a really bad argument of the D growth people.

Oliver Hartwich  17:20

Exactly. Right. I think there is another point actually, that we should consider. Sometimes it’s not so much the absolute wealth that you hold. It’s the direction of travel. So I’ve actually seen some really happy people and countries that are not that rich yet, but they’re travelling in the right direction, whereas you can be in a richer country that’s kind of stagnating, declining, and feel really miserable about it. So actually, people want to have hope they want to see that the future is better. And then it almost doesn’t matter from which starting point you come in just the direction of travel that actually determines how happy you are.

Gene Tunny  17:51

Yeah, that’s a good point. I mean, the the example of a country that was rich and started declining, everyone was miserable. It’s probably Britain in the 1970s. So yeah, I think that’s a that’s a good point. Yeah.

Oliver Hartwich  18:03

unproven claim number four, we need to de grow to reduce inequality. What about well,

Gene Tunny  18:11

yep, I mean, I guess this is this is related to that previous point. So and this is part of their whole critique of capitalism that capitalism makes the rich richer and the poor, poor? And look, I think that’s a really silly argument. And there’s not a lot of evidence for that. And, and if you look at just the huge gains we’ve had in living standards in emerging countries, emerging economies over the last 30 years, since we’ve opened up to the market, and it’s just extraordinary, over a billion people taken out of out of poverty, there are a few stats that I use, or that the World Bank’s produce, which shows that I think, around 1990, it might have been 70% of the world was living on $6 us a day or something like that. So not the diarist poverty of $2 a day, but And now that’s under 50%. Right. So if you look at the numbers living on $2 a day, then you have, you know, a big decline there, too. So we’ve got huge gains, so that in relative terms the world is becoming more equal, but we are seeing in some countries that, you know, there is an increase in inequality, particularly in the United States. But I think you don’t want to then conclude that our the market systems terrible isn’t, because a look I mean, that’s associated with new technology. I mean, we’ve gone through a period of, of huge technological disruption and I mean, America, America is the leader in that and so therefore, the people who are responsible for that are doing doing very well. And look, you probably you’re better off having a more productive a wealthier economy. And you know, having In the pie bigger and then sure you can then have a debate about the, the shares of that pie. But you want to have the biggest pie possible, I’d say,

Oliver Hartwich  20:09

because in the end, what capitalism and what economic growth? Does it actually share us? The wealth with more people, it’s the democratisation of luxury, if you like. Yeah, I remember actually speaking as an event, and quite a few years ago, under the headline, people with flat screen TVs should stop whinging about capitalism. One of the arguments I made was actually, if you teleport at someone who was really, really rich a few 100 years ago, so you take the Sun King Louis Catorze, and you kind of get do rica tours and visit 21st century Australia or New Zealand? What would Luca tours be really impressed about? Well, that you could switch on the light with a switch, or that you could read your newspaper from a foreign country on your phone, or that you could just call someone in a distant city. But I think what he would really be surprised about was that this was available not just to his modern day equivalent, but to everybody. And so we have actually completely democratised wealth and prosperity to a degree that we had never seen it before in the history of humankind. No, absolutely.

Gene Tunny  21:13

I mean, indoor plumbing is one of the great innovations and better sanitation. I mean, the world today is clearly much better, even even if you’re a king and seventh eighth 13th centuries, and yes, you’d much rather live today I’d say yeah.

Oliver Hartwich  21:30

Yeah. Even if you’re not a king. Which then leads us to the combination of all these unproven claims. Number five, we need to de grow to avoid economic and social collapse. So listening to you, it seems obvious, it is the opposite. If we want to avoid social and economic collapse, we need to grow.

Gene Tunny  21:50

Yeah, well, this is part of that whole, apocalyptic or catastrophic line of thinking. And you know, that there was that study a few years ago by she was a consultant. And she wrote this, I should have I’ve got the I’ve got the reference in the in the report, but she reproduced the the meadows analysis, or the the Limits to Growth analysis from the 1970s. And she’s saying, Oh, if you look at the data, we’re on track for societal economic and societal collapse, which is what the limits to growth model was predicted. So she had an update to limits of growth. Harrington is a surname. But I mean, it just, it’s part of this, you know, catastrophizing, when you look at these models, and this is a point that solo made back in the 70s, when he just tore apart the, the whole Limits to Growth analysis in his great challenge article he wrote is the is the end of the world at hand that are referenced in the paper. And I mean, they just build in the fact that we’re going to hit some point of no return, and then everything’s just going to collapse. So there’s a in their simulations, they have eventually population industrial output, reach some peak and then just collapse. But it’s just built into the model that programme that into it. And you can’t say that because we’re or maybe some variables are tracking with what the model forecast, you can’t then conclude, oh, here, well, then we’re gonna hit this peak, and then we’re going to suddenly collapse because there’s no evidence that that’s going to happen. And any person who does forecasting knows that these tipping points, these turning points are the most difficult things to actually forecast. So yeah, it’s just, again, it’s just catastrophizing.

Oliver Hartwich  23:42

Absolutely. So, in conclusion, you have saved conventional economics, you have actually demonstrated that what economists have been telling us all along is basically Correct. Actually, economic growth is a positive. And by finding better ways of combining economic factors of production, we are improving prosperity, we are making societies return that’s a good thing.

Gene Tunny  24:05

Look, yeah, I largely agree with that, Oliver. And what I would say is that, just as we degrowth, like targeting negative growth would be silly, or not, when I’m not necessarily advocating that we target a specific rate of economic growth, because ultimately, that’s going to be the product of, of the market of people making. Yeah, and I don’t want to be, I’m not saying that look, unfettered capitalism is what we want. I mean, we need some regulations, we, you know, there are some market failures we may need to address but what I’m saying is that, you know, this whole degrowth thing is rather silly and, and there’s no evidence to suggest that we can’t continue to grow and really, I mean, growth is a solution to a lot of problems. So particularly if you’ve got a shortage of housing, you know, if we want to lift living standards in emerging economies, where they’re still much lower than, than here in Australia and New Zealand,

Oliver Hartwich  24:58

and of course for the last few years we’ve had a movement, trying to make the case that actually it’s not about growth. It’s not about conventional economic measures, it should be something bit fuzzier, something like a well being budget. That’s what we pay on it here in New Zealand. And I think your minister of finance or whatever he’s called an Australian federal, Jim Sharma has has bought completely into that narrative. And, you know, also on to wellbeing budgets, but that’s not really compatible with and with a growth mind or growth. Focus.

Gene Tunny  25:27

Yeah, I mean, that’s, that’s a separate thing. I mean, I don’t necessarily have a problem with looking at a broader range of indicators than than GDP per capita, but you just don’t, I mean, look at a lot of that. The well being or to

Oliver Hartwich  25:42

me, it always sounded as if they were trying to find an excuse for not having to deliver GDP per capita increases. And so they’re looking for something fire and quality well being. Yeah,

Gene Tunny  25:51

quite possibly. And, yeah, I mean, it’s another thing that the treasurer couldn’t launch and, you know, makes them look like they care about different concerns of the community. So look, yeah, I think it’s a bit, you know, a bit of a waste of time, the whole well being budget, because, yeah, a bit of a distraction. But yeah, take your point. Maybe that is what they’re trying to do that it’s a, it’s a cover for not actually achieving a decent rate of economic growth.

Oliver Hartwich  26:19

Well, that could be a topic for your next paper. And if you’re looking for materials, you’ll find them all in New Zealand. Very good. Okay. Sounds good. But, but for now, can I just thank you for sharing your thoughts with us on the podcast. And just for all our listeners, genes paper is called debunking degrowth, you can find it on the Centre for Independent Studies website in Australia sets ci s.org.au. But for now, thank you, gene for being our guest. And good luck for your future papers, we look forward to seeing them.

Gene Tunny  26:50

Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  26:55

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Gene Tunny  27:24

Now back to the show.

Joe  27:29

You mentioned the environment there and sort of political movements and value judgments obviously very, very important. For everyone alive, yeah. But especially with the sort of younger generation. And one idea that is sort of gained popularity in recent years has been this idea of D growth as a way to sort of solve the ongoing climate crisis. And you wrote an article, I think recently, the Centre for independent studies about about D growth. And you said that any attempt will like to sort of implement this idea that we need to have negative growth will greatly reduce the living standards and cause significant unemployment. We have a question here that says, if it is as severe as predictions suggest, then is not some form of dramatic economic structural change necessary to prevent continued pollution, mass production, carbon emissions, environmental degradation. So yeah, it seems that either this change will be voluntary, in that we will decide to do it, whether that be D growth or some other sort of economic restructuring, or it will be forced by the nature of the crisis in that our economic system will collapse?

Gene Tunny  28:46

Well, I hope that’s not the case. You talk about prediction. So well, this is where it’s difficult. Like this is a very difficult area to actually talk about, because there’s so much complexity going on there. And in terms of predictions, there are projects, some predictions that have catastrophe of permafrost melting all this methane being released to the atmosphere, this Supercharged global warming, ocean currents shutting down in Arctic melting. And I mean, horrible scenarios. Now, that’s not generally what we think is going to happen. I mean, that suppose look, there’s anything really could happen, right? I mean, I’m not a climate modeller or an expert on climate change. But if you look at what the IPCC has been, what it’s been modelling or projecting what our own governments have been doing, they do show that there is a path to get into net zero by 2050. There will be warming of one and a half to two degrees, probably two degrees Celsius on average. There seems to be an acceptance that by many that, okay, that that’s something we can adapt to it’s there will be a First consequences of that, but it’s not going to be catastrophic or lead to that Armageddon scenario. Now look, the question, if that is the case, if it is the case that we are in that situation where the worst predictions do come to come, you know that they do occur, then we will have to do something radical, it won’t be a matter of trying to get that change gradually over time. And the idea of having a carbon price is to send that signal to the market to, in an efficient way, reduce your emissions, invest in new technology to get to net zero. So that’s what the policy’s been now, governments are finding it very difficult to do that. Okay. So we’ve got an implicit carbon price in Australia, we’ve got these Australian carbon credit units, we’re going to market for that. We’ve got a safeguard mechanism, which is going to be requiring big emitters to reduce emissions. And so we’ve got an implicit carbon price. But you could, you know, there’s arguments about what that should be, are we are we doing it fast enough, there’s the how many we’re gonna have to keep coal going coal fired power stations going for a lot longer than we expect. We wanted to because we’re worried about the reliability of the energy grid. Unless we can get the hydropower stations on on schedule. And then that’s pretty difficult to see what’s happening with snowy 2.0. They’ve had one of the tunnel boring machines stuck. So it’s, it’s a big challenge. Now, I don’t know if you saw what Rishi Sunak has done in the UK, they’re delaying their transition to net zero. So Boris Johnson had committed to stopping the sales of petrol powered vehicles by 2030. Rishi Sunak, push that back to 2035. And there are a few other things to do with I think, gas in the home. So I think the push push that back when I have to stop having guests in the home, because these policies are they’re challenging to implement, or politically, they’re difficult. And as we we really need American leadership, we need China, America and China, the EU and Japan. They’re the major economies we need them to come up with a binding global agreement. And we go along with that. Yeah, it’s, it’s a big challenge. So we’ll get my opinion there. And I’m, I’ve got to admit, I’m not an expert on the climate. So for what for what it’s worth, my opinion is those predictions. There’s apocalyptic predictions, I like to think of them as catastrophizing. We’ve had predictions of doomsday for as long as I’ve been alive. And before then Malthus were Club of Rome. I mean, this is the latest. And in that sort of line of thinking, I’d like to think that there though, those horror stories, I mean, look, if that if we if it does come to be that that is the situation, we will have to change very rapidly. And that will require very strong measures. And it may be that yeah, there is a big hit to GDP. But at the moment I my sort of judgement, the judgement of I think practically all the people in governments around the world is that that’s not the situation we’re in. Could they be wrong? It’s very possible that I sit? I hope not. But look, I admit there, there are certainly concerning signs out there. I mean, and, you know, I’m a lot older than than you are. So you’d have to live with it more than I will. So maybe that’s something to that. I know that I understand why young people are concerned about it, for sure.

Joe  33:24

Yeah. Yeah. Awesome. Thank you. For that perspective, we have John Quiggin. Yes, he teaches still, he teaches one of the PPE courses, and that’s sort of his, like the the environmental economics perspective on climate change is very much up his alley way. So it’s, it’s good to hear your perspective as well. But not

Gene Tunny  33:45

having John here. So we can get you on the question, but I’m not. I don’t imagine John Wooden is there’ll be arguing for degrowth would eventually be arguing for a high carbon price to bring about that transition as rapidly as possible. And to try and encourage innovation. And the great thing about him is that we’re proven is that we are great innovators when there’s a challenge. So be maybe there’ll be people we did have to have that that radical policy shift because the Antarctic starts, you know, I mean, we know that the sea ice is the extent of that is not as great as it has been. It looks. You look at that chart. Okay, that’s a bit of a worry if that continues. And if we do have all of these record heat waves, I mean, we’re currently in El Nino at the moment here. So that’s driving as the lot of the heat. Yeah. If things get really bad, then yeah, sure. We may have to act rapidly. There may be a hit in the short term, but I expect we’ll solve it somehow. Humans are great innovators, loose. That’s the hope maybe that’s naive optimism.

Joe  34:48

No, definitely. Definitely something to cling on to at least with hope. Yeah. Awesome.

Gene Tunny  34:56

Righto, thanks for listening to this episode of Economics Explored If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting outlets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.

35:43

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Credits

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

Categories
Podcast episode

Highlights of last 100 incl. Brad DeLong, Sir David Hendry, Leonora Risse, Andrew May – EP200

In this special 200th episode of Economics Explored, host Gene Tunny is joined by Tim Hughes to discuss some of the highlights from the last 100 episodes. The episode features clips of Brad DeLong (UC Berkeley) describing how we’ve been slouching towards utopia since 1870, Sir David Hendry (Oxford) on the merits of small modular nuclear reactors, Leonora Risse (RMIT) on the benefits of diversity, and Super Forecaster Warren Hatch on what makes a good forecaster, among others.  
Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored

You can listen to the episode via the embedded player below or via podcasting apps including Google PodcastsApple PodcastsSpotify, and Stitcher.

What’s covered in EP200

Links relevant to the conversation

Episodes from which clips were taken from:

Slouching Towards Utopia w/ Brad DeLong – EP163 – Economics Explored

The Progress Illusion w/ Jon Erickson – EP166 – Economics Explored

Thriving w/ Wayne Visser, Cambridge & Antwerp sustainable business expert – EP130

Sir David Hendry on economic forecasting & the net zero transition – EP198

Superforecasting w/ Warren Hatch, CEO of Good Judgment – EP176 – Economics Explored

Women in Economics with Dr Leonora Risse of RMIT, Melbourne – EP124

Truth (or the lack of it) in politics and how to think critically with help from Descartes – EP123 – Economics Explored

The importance of physical & mental health for top CEO performance w/ Andrew May – EP193

Link to info about Windscale fire mentioned in conversation between Gene and Tim:

Windscale fire – Wikipedia

Transcript:
Highlights of last 100 incl. Brad DeLong, Sir David Hendry, Leonora Risse, Andrew May – EP200

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It was then checked over by a human, Tim Hughes from Adept Economics, to see if the otter missed anything in it’s rush to catch fish or star in YouTube videos. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:06

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show.

Hello, thanks for tuning in to the show. It’s episode 200. And joining me this episode to chat about some of the highlights of the last 100 episodes is Tim Hughes, Tim, good to have you with me again.


Tim Hughes  00:56

Hey Gene, good to be here. Thanks for inviting me on, and congratulations on your bicentenary.


Gene Tunny  01:01

Yes, yes. Thanks, Tim. Well, you’ve been part of, you know, quite a few episodes over the years, and I thought it’d be good to get you on to get your perspective as the man on the street so…


Tim Hughes  01:16

Isn’t it the guy on the Clapham omnibus, is that right?

Gene Tunny  01:19

Yes. The man on the Clapham omnibus, I think it is. Yes. Exactly.

Tim Hughes  01:23

Looking forward to it.

Gene Tunny  01:25

Right. Well, that’s the reasonable man test. So yes, what’s the reasonable man on the street think?


Tim Hughes  01:33

Well, I’ll try and be as reasonable as I can.


Gene Tunny  01:35

Okay, so what I’m going to do, Tim, is I’ll play some of the clips that I think are the best of Economics Explored over the last 100 episodes. Now. I mean, there’s so much good content. And I mean, they’re great. There’s great material that I haven’t been able to include. But these are ones that I really think are great. But look, I’m grateful for all the people who come on the show. So yeah, let’s get into it, we’ll go over these ones that I think are, you know, really standouts. So okay, so to start with, I’m going to play a clip from the episode we did, so this was episode 163, last year with Brad DeLong.


Brad DeLong  02:24

And that’s the state of the world before 1870. And that means that unless you’re in an extremely lucky place, or like Australia, or an extremely lucky class, that life is going to be kind of brutal, short and without very many options, which means that in most times, in most places, governance is going to be how does an elite figure out how to grab enough for itself and maintain its rule over society. And after 1870, everything changes, technological progress becomes rapid, the technological competence of the human race globally doubles every generation, you quickly get a world in which people are kind of rich enough that infant mortality falls substantially. And with that falling infant mortality, and with the erosion of patriarchy, all of a sudden, you don’t have to concentrate a lot of effort on having children, to be confident that if you reach the age of 50, you’ll still be able to run your own life. And so you’ll we get the demographic transition, now headed toward a stable world population of 9 billion. So for the first time after 1870, technology wins the race with human fertility, you know, and we begin to look forward to a time when humanity will be able to bake a sufficiently large economic pie so that everyone can have enough. And you know, people back in 1870, and before, you know, they thought most of the problems of society came because incomes were low, and technology was underdeveloped. And you had this elite running a kind of domination and exploitation game on everyone. And once you can bake a sufficiently large economic pie for everyone to have enough, those things should fall away. And the problems of properly slicing and tasting the economic pie, right? Of equitably distributing it and then utilising it so that people can feel safe and secure and live lives in which they’re healthy and happy. Yep, those should be relatively straightforward to solve. And so we today, at least we today in the rich countries should be living in a Utopia, which we are manifestly not. And so the story of history after 1870 is how we’re well on the way to solving the problem of baking a sufficiently large economic pie. While the problems of slicing and tasting of utilise, of distributing and utilising it continue to flummox us.


Gene Tunny  04:59

Okay, so I thought that was a really great clip, Tim and I was talking to Brad about his new book, or new last year, Slouching Towards Utopia. And it’s a the economic history of the world, basically. And, yeah, I thought that was a really nice way that he talked about just all the, the economic gains we’ve had since 1870. He sees 1870 as the hinge of history, before that we’re in this sort of subsistence way of living. And then after that, when the industrial revolution really took off, and we got electrification, then we just had these massive increases in living standards. So we’ve solved well with I wouldn’t say solved, but we’re so much wealthier, and the, you know, our production possibilities are so much greater. But we’ve still got, we haven’t got everything, you know, perfectly right, obviously. And there are issues, arguably issues of distribution. And there are also environmental issues, too, that I wanted to talk about. So I thought that was a good one to kick off with, because it reminds us that when we think about the economy, when, as economists we should be thinking not just about the GDP, not just about production, but we should also think about distribution. And we should also think about other impacts, so impacts on environment, etc.


Tim Hughes  06:29

Yeah, it’s actually a really good one to start with, because it sort of sets the scene. I know you’ve grouped together a few clips, that are of the same kind of genre. So this is a good one to lead off. It gives a good sort of snapshot of the, of where we’re at and where we’ve come from in the last 150 years. So it’s the equitable distribution question, I guess, is, is really a big one. And of course, a very, as simple as it should be, or could be, clearly it’s, it’s not simple to execute it, it ends up with a lot of the equity being in the hands of a few and people are struggling in great numbers around the world. So that slicing up at the pie seems to be a big challenge that we haven’t really cracked,


Gene Tunny  07:14

Well, fewer people struggling around the world than previously. So I think one of the great things about the last 30 or 40 years, particularly since the economic reforms in China, as we have seen hundreds of millions of people get out of dire poverty. So that’s great. And that’s a that’s a real win for market economics. So it’s a, you know, a win for free markets. Now, I think what Brad is, he’s really concerned about what’s happening in the States, because in the States, particularly since the 80s, you you’ve seen a lot of the gains, the economic gains, go to the top, go to the top 10%, top 1%, top 0.1%. So that’s one of the things he’s concerned about. Now. You know, there’s a there’s a trade off there, because there’s this trade off between equity and efficiency. The big trade-off as Arthur Okun called it. Whereby, I mean, you don’t, you need some inequality. I mean inequality is unavoidable to an extent and you need some you need rewards for people taking risks and working hard. Otherwise, people will, they won’t, they won’t be working hard or taking risks, and you can end up with the Soviet Union. Right? So we want to have a system of rewards. But then there is a question of, you know, what are the right tax policy settings to make sure that those who can pay more, those who can afford it pay more? There’s some redistribution, there’s a, there’s a big debate to be had about that what those appropriate settings are?


Tim Hughes  08:55

Yeah, yeah, I know, we get into a little bit more detail in certain areas in the next few clips. But it’s a massive conversation, and knowing our ability to go at great depth with these, I’m going to cut myself off there, because I’ve got more to say on that on the next few clips.


Gene Tunny  09:12

Very good. Well, I should play some more clips. I thought that, that one from Brad DeLong is Professor of Economics at University of California Berkeley, so very distinguished American economist, a former senior official in the US Treasury, and in the Clinton administration, so very prominent economist, so I was really glad to have him on the show. Okay, so that’s, that was from Brad DeLong. The next clip I want to play is from Jon Erickson, and he’s an ecological economist. He’s from Vermont, and he’s been an adviser to Bernie Sanders. And he’s got some interesting things to say about, well he’s got his, you know, an interesting perspective on the constraints on economic growth. So I’ll play this now. This is from episode 166.


Jon Erickson  10:01

Well, what would an economy look like that was built on maintenance, resilience and cooperation instead of growth, efficiency and competition, right? A late stage maturing economy like yours in the Australia ours in the US. So that’s what I’m asking, you know, an economy, a mature economy should have different goals than an economy at pioneering stages. So it really is about a reprioritization of our goals, especially on consumption, right? Because there’s ample evidence to show that we in the West are over consumers, and our kind of addiction to consumption is creating psychological problems, social problems, that consumption has been kind of become a cure for social ills, right, like a distraction. I mean, the whole advertising industry is designed around the idea of kind of making you and I feel bad about ourselves, right? To sort of fill the void, with more consumption. And I actually think this is one of the lessons coming out of COVID, right? It’s this sort of people were, especially, you know, high income people who, who could weather the storm, better than most, were forced to slow down, were forced to be at home, were forced to kind of reevaluate life’s priorities, and found out that, you know, this kind of ever burning hamster wheel of economic growth isn’t all that it’s cut out to be. So it’s a reprioritization of goals, which is going to have to reprioritize policy instruments. Daly, Herman Daly, used the analogy of a Plimsoll line, I’m not sure I’m pronouncing that right, of a cargo ship, right. So this is the line that’s painted on a ship, very easy technology. And as the as the cargo ship is loaded, it sinks into the water. And when they get to the line, you’re supposed to stop, right, because you’re in danger in danger of overloading the ship. So if we sort of reprioritize and think about the Plimsoll line of an economy, we can’t just more equally or equitably distribute the cargo of an overloaded ship and expect it to be resilient. We can’t just more efficiently load an overloaded ship, and expect it to weather the storm, as the Plimsoll line goes underwater, right. And there’s ample evidence to say that we are a kind of in an overshoot on a lot of environmental parameters, you’re in danger of sinking the ship, especially in stormy waters. So this analogy implies that as we run up against planetary boundaries, planetary limits to growth, the scale of the economic system is way more important to stress than distribution or efficiency. And if we can’t count on a growing system to solve distribution problems, then we’re going to have to quickly think about the fairness of the distribution of benefits and costs of that system. And then and only then can we get to efficiency, which is the priority of economics. So this means that you know, new policy instruments that that focus on scale, distribution, then efficiency is the way to go. And I talk a lot about this in the last chapter of the book, as I kind of wrestle with the idea of, how did I put it, radical pragmatism, right? Lots of pragmatic things that we can do now, for example, to wean ourselves from fossil fuels, you know, home weatherization, and carbon taxation, and, you know, maintenance of our systems, electrification of transportation, transition to renewable energy. But all of these are really hard to do in an economy that continues to bloat, an economy that continues to grow. So we have to be thinking about the scale of the system and that’s probably the radical part of radical pragmatism, right? What’s it going to take to rein power away from the status quo, that part of the system that’s benefiting from this growth model, and create an economy that works for all?


Gene Tunny  14:25

Okay, so that was Jon Erickson, from University of Vermont. Jon Erickson is the David Blittersdorf, Professor of Sustainability, Science and Policy at the University of Vermont. And we were talking about his new book, The Progress Illusion, and I thought that was a great clip, Tim, to play because it’s a completely different perspective from my perspective. And so I’m all for having, well being open to different perspectives and having that conversation. I think he makes you know, some of the points I agree with in terms of what we’ve got to do, I mean, I think long term, there’s no doubt we’ve got to get off fossil fuels. I agree with that. We’ve got to electrify, I’m not disagreeing with that. I’m probably sceptical of what, to what extent we’re, we’re hitting these planetary boundaries already. To what extent we, we should be trying to, I don’t know, he didn’t use the term degrow. But there is this, you’re aware of this term degrowth, aren’t you? And this is something I’m looking at, at the moment for a paper for Centre of Independent Studies. So I think the whole Ecological Economics field, I think, coming out of that there is this, this concern that we are hitting up against these planetary boundaries, we need a, if not degrowing, if we don’t degrow, we at least have to have a steady state economy. They’re worried that we’re just, you know, this, this ever growing economy, ever growing demands for resources that’s causing us a lot of problems. So it’s an interesting perspective. I mean, I’m, I’m a bit sceptical of it. But I did enjoy that conversation with Jon, he’s, he’s a great guy, and I thought that would be a good clip to play.


Tim Hughes  16:09

Yeah, I really enjoyed this one. I think the whole aspect of sustainable contraction, for instance, which we’ve talked about before, as opposed to sustainable growth, like at some point, there’s only so much that can be done, there are parameters. I mean, I see the planetary parameters being quite clearly defined as we get, as the population gets bigger, 9 billion, 10 billion, up to 11 billion by the end of the century, forecasted population. You know, the oceans aren’t infinite, the atmosphere isn’t infinite, the soils, everything that we pollute, you know, we, there’s a point at which, with so many of us on the planet, that, yeah they’re the parameters, and I think they’re quite well defined, Whether people believe in climate change or not, I think the question should be that, given the, the fact that these aren’t infinite resources, at some point, it’s going to be an issue, even if people don’t think it’s an issue yet. And I think we do have the technology and the know-how, and the the will now to, to make ourselves more efficient. So we have less waste, cleaner energy, you know, look after the planet more. So it sort of fits in with, you know, environmentalists that have been talking about this for years. And I think, I think it’s great that it’s come to the fore in conversations around economic policy, because yes, I mean, for instance, I, I firmly believe that it’s really important, it’s possibly the most important thing that we could do, is to be really good in these areas. So talking about, you know, like, so from going from more and more, which we’ve had this incredible growth, you know, going back to Brad DeLong, from 1870 through to now, it’s all been more, more, more. And, and at some point, the question becomes, well can we do it better, better, better, not just more, more more like, it’s, we’ve got enough, like, we’ve got enough to feed the planet, for instance, we’ve got enough to feed everybody on the on the planet. But we don’t distribute it. You know, it’s the whole way of working out who gets what or how we manage our resources isn’t done well enough to do on a good social scale, or a scale that would work financially, economically. And I think that’s the right way to go about it. You know, he talks about the ever burning hamster wheel of economic growth, you know, and that’s a great, great term, radical pragmatism needed to sort of have a fresh look at how we do things. And I couldn’t agree more. I think it’s really good and clearly contentious and not easy to do. But I think that’s the right direction to point in. And there is momentum going towards us, you know, net zero for 2050 fits in with this kind of thinking. And it has a, you know, a lot of support behind it. And I think it’s good.


Gene Tunny  18:50

Yeah, I think the more, well we might have to have a, an episode on degrowth, specifically, because some of the more radical people who are concerned about these planetary boundaries would be saying that we need to do even more than net zero, right? Because conceivably, we could get to net zero, and still keep growing the economy. And there are people who are optimistic. And then there are others who say, well, though, those techno-optimists, they’re naive. Now, I mean, I’m a great believer in technology. And I think technology is one of the reasons that we have had that strong growth since 1870. Or we’ve had all of these amazing gains in productivity, gains and living standards, because we’ve managed to solve our problems, have managed to, we haven’t run out of resources, we’ve managed to, well we’ve explored with our new resources, we’ve switched to new sources. I mean, we switched from whale oil to, to oil to from originally from Pennsylvania and then from the Middle East and all other places. So we’ve managed to, to, you know, to actually to innovate to avoid those constraints. And we’ve historically we’ve been able to do that. Now, I’m not naive enough to think that we, you know, we’re always going to be able to do that. But so far, we’ve had an incredible run at it. Really? So we haven’t really hit those constraints we’ve managed to grow so far.


Tim Hughes  20:22

Well, as far as planetary constraints, I mean, I see that as a resources thing and space, air, water, you know, soil, those kinds of things. That’s what I was, was, yeah, I was reading into that.


Gene Tunny  20:34

And we’re trying to manage those, certainly, in Australia, I guess the problem is in, in other countries and in emerging economies, and you had that great chat with Guillaume Pitron didn’t you…


Tim Hughes  20:44

Yeah, I was thinking of that, too. And it is that thing about, and that’s part of managing our expectations, because the more, more, more in economic growth can be directly transferred over to us as humans materialistically wanting more, more and more, and so our driving, desire for these things, you know, for possessions, is part of that whole story. And so part of managing the planet’s resources better, I think, would also be a question of maybe managing our expectations better as well, you know, like, if we can, I don’t know, become more content with less, you know, which is is often referenced around the world where people seem to be extremely happy with very little because they they engage in, they have strong communities, they don’t necessarily necessarily have a lot of wealth or material goods. But they engage with the things that as humans, we, we need the most, which is social connection. And, you know, that contact, which is lacking more and more, there’s more loneliness in the Western world. And, you know, people unhappy, they have more, but they’re, they’re less happy. So it’s this thing of like, okay, well, maybe we need to look at that, as well as part of this whole conversation about our expectations and who we are as people and what we need as people.


Gene Tunny  22:02

Yeah, well, there’s that concept of the hedonic treadmill. Yeah, so I might put a link in the show notes to that, because you’re right, I mean, you can, at our standard of living, additional increases in standard of living aren’t necessarily going to make us happier, right? I mean, we can, we could be happier on much lower incomes than we do have in Australia. Well, this is what the…


Tim Hughes  22:25

Haha I know I’m kidding, we all we’re all sort of influenced by this, and I…


Gene Tunny  22:28

Or an average or a lower average, lower average income, I suppose. Because part of the problem, I guess, is the yeah, there’s the Keeping Up with the Joneses. And there are a lot of expectations on us.


Tim Hughes  22:40

Well, again, I know, this comes up in one of the other clips, you know, with, in the realms of free market, and you know, the ability for entrepreneurs to do their thing, to be supported or not, etc. And so, with those freedoms come risk, you know, and that’s part of the game if you like, but with most of the western countries, there were social systems that are good enough to help people who are struggling, and you know, that’s, that’s so important to have that, of course, and it gets into the realms of UBI, universal basic income, where that may form part of a fairer society. But you know, it’s, I think, again, it’s, it’s good to point in that direction to see where we might be able to manage, I, you’re the policy guy, I don’t know much about it, until I see it and see what it does as a man on the street, the guy on the street. But clearly, there seems to be a lot of wealth in a few hands and not so much in others. So if it can all be managed better, to be better, equitable distribution, then I’d like to see what that looks like.


Gene Tunny  23:45

Well this is what a lot of the political debates are about. I mean, yeah, again, it’s that trade off, right. I mean, equity and efficiency. I mean, if you have too high tax rates, and you know, you’re not encouraging entrepreneurship. You’re not encouraging people to work hard. But then again, I mean, if if you don’t have some form of progressive taxation, then you can end up with high inequality. And, you know, arguably, what you’re seeing in the US at the moment. You’ve got the, yeah this huge gap between the wealthy and the US and, you know, the middle class, the former middle class. I mean, it’s there’s still a middle class, but it’s not as large as it was back in the, in that post war era. The first 30 years after the war, so yeah, there’s there’s big issues there. Tim, I’d better move on to the next clip, I guess, because I want to play a clip from someone who’s super optimistic. So a South African Professor, I think he was South African, Wayne Visser and he’s, he’s got some role at Cambridge. I’ll put a link in the show notes. And he’s also he’s a Cambridge pracadamic. That’s right. Remember, we were chatting about that? Yes. Actually, he’s not South African. He was born in Zimbabwe. Okay, very good. Well, Wayne, he wrote a book, Thriving, and I interviewed him last year. And that was episode 130. So we’ll hear from Wayne. And he’s got a really optimistic perspective on just how technology is going to help us get out, or get us out of a lot of these environmental challenges.


Wayne Visser  25:29

Eu Green Deal, it’s effectively the Europe strategy on climate change, very, very comprehensive and very ambitious. And it touches everything. It’s got a Farm to Fork area, which touches agriculture, it’s got a mobility area, all around electrification of mobility, it’s got a circular economy element, it’s got a finance element. So yeah, I mean, it’s, it’s a very, very strong policy and it’s being, in some ways, you know, America is, is trying to copy that with the new Green Deal. So, so yes, policy helps with the coherence piece. And then you’ve got creativity, which we’ve talked about a little already. So for things to change for all living systems to change, they need innovation, and that happens through diversity. Again, something we’re working very hard on, but we, we are living in an age of innovation, no doubt about it. And many of our most difficult problems, we are seeing some amazing solutions coming. If we just pick on one, for example, we know electric cars, I’ll leave that alone, but just remember that that is changing much faster than people think. I mean, Norway is banning fossil fuel cars by 2025. That’s just around the corner. And most other countries, you know, UK, it’s 2030. So within 10 years, it’ll really be something to watch. But take food, for example. There’s a whole movement of course around going more plant based, that makes sense from a health perspective, because 20% of mortality can be reduced, just by going more plant based, but also from a climate perspective, and a biodiversity perspective, and of course, animal welfare perspective. But here we see innovation, you know, you’ve seen the Beyond Burger and the Impossible Burger, you know, these are really engineered to look and taste, you know, like the real thing I know that may be a hard sell in in Australia but uh, on blind tests, actually, they they’ve done extremely well. Not only that, but we’ve got cultured meat coming. You know, this is grown in labs, meat essentially grown fermented, grown in vats, like you do for insulin. And this is this is going to completely change everything because again, you don’t have the the input of land and water. You have much lower energy input and you’re not killing anything. So you’re literally just taking cells, live cells from a cow, for example. And you’re creating that is already in Singapore, you can already go to a restaurant that sells cultured chicken. So this is innovation happening very fast, massive amount of investment going into this.


Gene Tunny  28:27

Okay, so that was Dr. Wayne Visser, Professor of Integrated Value and holder of the Chair and Sustainable Transformation at Antwerp Management School. So he wrote a book, Thriving, I was really grateful to have him on the show last year. Tim I thought that was a really good, well, there was some great observations about technological change. And I mean, he had lots of other good examples in his book, I’d highly recommend it. He’s someone who is incredibly optimistic. So I was really glad to talk to him last year. Do you have any reflections on what Wayne said in that clip?


Tim Hughes  28:59

Yeah, I thought it was really good. I’m going to quote from him, he said, “for all living things or systems to change, they need innovation and that happens through diversity.” And it’s great seeing that highlighted as something that is perfectly natural in our world. Like it’s funny diversity is often seen as something that we have to accommodate or get used to and, and bring in, and it’s like, it’s been there all the time. It’s, it’s a perfectly normal part of how we’ve evolved, of how everything’s evolved. And, and the importance of diversity, the role that diversity plays in so many different things. And again, I know this is going to come up with a couple of other clips. But it just shows I mean, and to have, to have it mentioned in this regard, it’s like yeah, great, that that makes so much sense. And also you can see how those things are coming together with technology that fits in with the economic efficiency, if you like or the way of making sure that we can do something better instead of just more and more well, how can we do it differently? You know, what would be a different way of doing this and, and those plant-based meats or meat alternatives are good examples of how we can do something where it’s better for animal welfare, it’s better for human health, it’s better for the environment, there’s a lot of wins with that direction in that area.


Gene Tunny  30:15

Well, I think the cultured meat or the meat grown in a lab that’s effective, it’s effectively the same thing. It’s like the real thing. But you don’t have the you don’t have to raise the livestock and you don’t have the all of the ethical and animal welfare issues associated with with livestock. So I think that’d be terrific. If we could do that on scale.


Tim Hughes  30:36

Yeah, I think there are still a couple of ethical issues around that. But then ethically, you know, as long as it’s safe, and all these different things, as long as it can, you know, tick that ethical box. It’s ethically better than, you know, the the amount of meat that’s going through the current system with the abbatoirs and everything. I eat meat, you know, so like, you know, I wouldn’t, I’m not wanting to be a hypocrite about this and I think meat is important as a choice. But I would like to see, raised ethically, killed ethically, you know, as much as possible. And to have less, you know, I’d be I’d happily eat less meat, with these kinds of alternatives available to, you know, sustain us with our protein intake, for instance.


Gene Tunny  31:18

Yeah, yeah. Very good. Well, I thought that was great from Wayne now, just on this whole theme of economy and equity and environment. Then this theme, I thought I’d play a clip from our recent conversation with Sir David Hendry. So professor at Oxford, he’s an absolute legend in econometrics. And we will, I was really glad to have him on the show. And he made some really interesting observations on the potential role of nuclear energy. So that that surprised me in that conversation. And it’s good that we’re glad that we got onto that subject. So I’ll just play this clip from Sir David Hendry.

We don’t have nuclear energy here, and the opposition party is trying to push it. But then I think there’s going to be a lot of community resistance to that here in Australia.


David Hendry  32:08

Yeah, I can believe that. But do people understand small nuclear reactors? That’s the only ones we’re arguing for, not the big ones, the small ones. In Britain, lots of big ones. And they’ve produced a lot of transuranic waste, that’s going to be a huge problem for humanity. Now, there are two advantages to small nuclear reactors. One, they can use that transuranic waste as their fuel, and greatly reduce the amount of radioactivity that needs to be dealt with from it. And secondly, they’ve been used in nuclear submarines for 50 years, and there’s never been an accident. So they’re very safe, and they don’t have any fissionable material that terrorists might want for bombs. I mean, the stuff they’re using is useless. Other than burning up the waste that’s a problem anyway. If the public knew that these are harmless, that they’re getting rid of a problem, you don’t have nuclear reactors so it’s less of an argument there. But in Britain, people would jump at the chance to cut the amount of nuclear waste that needs to be disposed of burying it, or putting it in deep caves, etc. And these guys can do it.


Gene Tunny  33:23

Right yeah. These are the small modular reactors are they?

David Hendry  33:26

Yes. they are indeed,

Gene Tunny  33:23

Yeah, I think that’s what Peter Dutton, who’s the Opposition Leader here, what he’s talking about.

David Hendry  33:33

Good for him. I think they are actually an important component, but only one possible component, of an electricity provision that would give more energy security and, and be something that can work in almost all circumstances.


Gene Tunny  33:50

Okay, that was Sir David Hendry on nuclear energy. Tim, I mean, we’ve chatted about this conversation with Sir David before, haven’t we? And we both thought, yeah, good stuff.


Tim Hughes  34:00

Yeah it was great and this was something for instance, that I hadn’t heard of before, the SMRs, small modular reactors. And it’s funny that I like it made me very much aware of my own prejudice towards something nuclear, towards being a viable power source because it gets such a bad rap, understandably, from you know, Chernobyl and Windscale and different things around the world where the consequences are catastrophic. And the amount of waste, nuclear waste that has to be buried, like is dangerous for 1000s of years, whatever it like, it’s not great. So the clean, the push for clean energy, seems to be something that would be without anything nuclear. However, it was, it was good because that my first response was like, that doesn’t sound great. But listening to these SMRs, or small modular reactors, and what their capabilities are and what the consequences are. You know, here we are in 2023. There’s a net zero target for 2050. There’s a transition period there of 27 years and in that transitional period, you know, something like SMRs could well be part of that picture to be able to get us through that time or may be part of the future for longer. But I think it helps in opening up the conversation about what these, this range of possibilities might look like. It does not, it seems to be clear, there’s not one thing that’s going to be our main power source. It may be but there’s certainly going to be several. And so if this forms part of that transition, or part of the solution, to be able to get us to net zero, then I think it’s really important to have the right conversations around it.


Gene Tunny  35:36

Absolutely. You mentioned Windscale, so I was I wasn’t aware of that. So there was a fire on 10, October 1957. The worst nuclear accident in the UK’s history. So yeah, I’ll put a link in the show notes to that, I wasn’t aware of that.


Tim Hughes  35:50

Up around the Lake District if I remember correctly around Cumbria? If it’s still called Cumbria, I’m not sure. It is that thing of like, you know, the consequences and concerns or, you know, naturally like, you know, people don’t want to be living near a nuclear reactor. And if they’re big ones, well, the, the spread or the the possible influence of, you know, geographically, the disaster zone is quite big. Right. So, these SMRs, it was interesting. That was something new. And, and hearing the rest of the talk with Sir David, it was like, well, this is coming from a guy who is looking towards net zero, you know, incredibly smart guy and this is the kind of thing that you know my ears really prick up when I see or hear people talking about these things. It’s like, ok, well, this, this is worth, you know, really considering or learning more about.


Gene Tunny  36:46

Okay, we’ll take a short break here for a word from our sponsor.


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Gene Tunny  37:21

Now back to the show.

We might leave that theme now and move on to the next theme of of great clips from the last 100 episodes, which has to do with decision-making, forecasting and critical thinking. So the first clip I’ll play is from our conversation early this year, Tim with Warren Hatch, CEO of Good Judgement in New York City. So Warren’s been involved in the whole superforecasting project with Philip Tetlock. So I’m going to play a clip from Warren on what makes good forecasters.

How do you get on this superforecasting panel? Who’s a super forecaster? What are their characteristics?


Warren Hatch  38:05

That’s a great question. And that’s something, and something to keep in mind, too, is that in the research project, that wasn’t part of the research plan at all. They just observed that in the first year, there were some people who were consistently better than everybody else. And being researchers that caused a new research question, what would happen, they asked themselves, if we put them on small teams? Would they get better or would they revert to the mean? And they did not know at all, a lot of people thought there’d be a mean reversion, turns out, no, they continue to get even better. And so we still do the same process now with our public site, where we’ll just take within the top 1% of the forecasting population there, and other platforms too invite them to come and join the professionals. And they have certain things in common. For sure, they gave us a lot of psychometric tests, hours of them before we got to do the fun stuff, you know, when forecast on elections in Nigeria and the like, and then to see what kinds of characteristics correlated with subsequent accuracy. And there’s certain things that really pop out. One has been really good at pattern recognition, right? So you can think of, you know, you’ve got a mosaic about the future that you’re trying to fill in and see what’s coming faster than anybody else and fill in those tiles. And being good at that is a fundamental characteristic of a good forecaster. Another is being what they call cognitively reflective. And basically that means that if you’re confronted with a new situation, you don’t automatically go to what first pops into your head because what first pops into your head might not be right, you might be overfilling the mosaic too quickly and getting the wrong picture. So you want to slow down and in Kahneman terms, let system two be your friend. You know, it’s hard work, but that’s the way you get a better a better result. So those are two very fundamental characteristics that good forecasters have.


Gene Tunny  40:03

Okay, so that was Warren Hatch from Good Judgement. Tim, that was another great interview subject that you lined up along with Sir David Hendry. So well done on getting Warren onto the show. Yeah, I thought that was terrific. Everything he was saying there about the importance of pattern recognition and being cognitively, cognitively reflective. So any thoughts, any reactions?


Tim Hughes  40:28

Yeah, I loved this episode, I got so much from it. We’ll have a round two I’m sure, at some point soon. It was really interesting. And like, it fits in with a lot of the, well, conversations that we’ve had. I mean, for instance, you know, I try and bear those things in mind, you know, if, for my own decision-making, etc. So, so for instance, cognitive being cognitive, cognitive. I’ll start that one again. Gene.


Gene Tunny  40:56

Is that because I struggled with it?


Tim Hughes  40:59

No I’m just trying to make you look good! Being cognitively reflective, is what I, for instance, did with the SMRs that David Henry mentioned. So my first response was nuclear, nuclear, whatever, that doesn’t sound good. But keep listening, keep, keep the mind open as to what that might look like, you know, so there’s good lessons, there’s so much good stuff in that episode, with Warren Hatch, and everything he was doing and talking about. They’re all things that we can all do as humans in our everyday life. So you don’t have to be a super forecaster to benefit from those same practices. You can make better decisions for yourself, for your family, for your colleagues. It’s a good way to approach you know, the way our thought processes are. And yeah, I got a lot from it. I thought it was great. He didn’t actually mention in that clip. But in the episode, he did explain how important the diversity was in getting a group of super forecasters together. Yeah, that’s like six to 12 people and the importance of them not just coming from the same area. The reason that why they outperformed the CIA in a test was because the CIA are all white 50 year old males from the West Coast of America or from a very similar sort of background.


Gene Tunny  42:15

Yeah, East Coast. The old they used to talk about the wasps in the States, you know, from the East Coast, often from the ivy Ivy League schools, so they all went to prep schools, like you know, Phillips Exeter, or whatever.


Tim Hughes  42:31

So the lack of diversity in that regard, held them back as far as like having a better overview or being able to make a better forecast or decision on something. So again, it just showed it was another reason that diversity is such an important part of our build up as humans and you know, to be better as humans make better decisions. And in this case, better forecasts.


Gene Tunny  42:54

Excellent. So just on diversity you because that’s come up twice now, hasn’t it? I’ve got a clip on diversity from Leonora Risse is at RMIT. Leonora is as a former Queenslander. But she’s been doing great work down in Melbourne, she’s involved with the women’s, Women in Economics network, she’s really grown that. And yeah we had a conversation on women in economics in Australia. And we got into this issue of diversity. So Leonora is a Senior Lecturer in Economics at the Royal Melbourne Institute of Technology. So I’ll play this clip from Leonora now.


Leonora Risse  43:36

The issue of diversity, at first glance, it’s about broadening topics, broadening ideas, and broadening the range of issues that are being considered. And then that is really a guard against the risks and the downfalls of what we might call groupthink. If people think the same, you are, by virtue, narrowing your spectrum of potential ideas and potential topics, and then by an extension of that is also the process. So think economics, really an analysis, you know, from identification of the problem, to analysis of the problem to a solution to the problem is a process of interrogation and asking the right questions and deciding on methodologies. It’s all a set of decisions. And what you find in this research is that, that process, you can shortcut it if you all think the same, and you probably just have a standard way of doing things and are less likely to interrogate, you know, are we taking the right decision here? Is there an alternative? Is there a perspective, we just haven’t thought about? Where can we road test this? And if you had that diversity within your pool of minds and brains working on this, you are more likely to engage in those process of interrogation. Now, that doesn’t mean it’s easy this, there’s a quote in the paper to where I found this amazing quote by Justice, the late Justice Ruth Bader Ginsburg. And she talks about dissent, you know, having a different differing opinion. And when they’re, when dissent occurs amongst judges or lawyers, you know, weighing up the evidence, it necessitates a deeper and more robust and more thorough interrogation of the evidence, it forces you to come up with a more convincing argument or to question any assumptions that you may have jumped to. And I love that quote from from Ruth Bader Ginsburg, because I think it has such applicability to economics, where we are, we are weighing up the evidence where we’re making decisions as to what you know, how do we act on this evidence? What gets more weight? What, what do we choose to? You know, what do we judge is good quality or inferior quality? All those all those points of decision making along the way, I think are all ultimately a value based or a subjective choice that we’re making as objectively as possible. But there’s always scope to think, Oh, there’s another way of doing this. So I think the advantage of having diversity of thinking is that it presses for a more robust process. If anyone’s doubtful, then I would, I would say, well, think about the topics that you study, or the the areas of interest that you have, it’s probably been influenced by something throughout your life. So it’s about being shaped by your life experience, which isn’t specifically about gender. It’s just about, you know, those gender, we have gender patterns in our life experiences. And so ultimately, you know, how we operate is a subjective dynamic, because it’s, it’s a function of our view of the world and the bundle of experiences that we carry around with us.


Gene Tunny  47:00

Okay, that was Leonora Risse from RMIT. Tim, what did you think of what Leonora had to say?


Tim Hughes  47:06

I thought it was terrific. It’s right up my street. First of all, Gene, I want to pull you up. You said that Leonora was a former Queenslander and I don’t think there’s such a thing as a former Queenslander…


Gene Tunny  47:18

Aah very good point! That’s a good point yeah exactly. I mean, she’s not living in Queensland anymore, but she went to University of Queensland,

Tim Hughes  47:22

you know what I’m saying?

Gene Tunny  47:24

You’re right. That was poor form on my part.


Tim Hughes  47:28

Ok sorry I just had to point that one out. This was great. And, again, yeah, so diversity of thinking leads to developing robust processes. And it’s so good. There’s so much in there, and it fits in, it dovetails in with so many of the other clips that we’ve just talked about. And it makes sense, you know, the thing that I love about this stuff for me anyway is, like it completely makes sense that accepting of diversity, that necessity for diversity, it’s better. It shows how important it is to stand up for what you think’s right, and to explain why. So that thing of dissent, to push back against groupthink, and all the banal commentary that might come through accepted norms that aren’t good enough, all these kinds of things. And I had to say she didn’t actually mention the quote by Ruth Bader Ginsburg, and I checked it out. And I’m going to read it out here because I thought it was so good. So Ruth Bader Ginsburg said, “dissents speak to a future age, it’s not simply to say, my colleagues are wrong, and I would do it this way. But the greatest dissents do become court opinions and gradually, over time, their views become the dominant view. So that’s the dissenters hope that they are writing not for today, but for tomorrow.” And that’s the thing you know, it needs people to stand up, it needs people to speak their mind, it’s important to listen to hear and you know, not everything is going to be good, not everything is going to make it but you know, by, again, not going with our first what was it? Count? What was that one?


Gene Tunny  49:08

we want to be cognitively reflective…


Tim Hughes  49:11

That’s the one Gene! That’s the one, we want to be cognitively reflective, so not just go with our first opinion, our knee jerk reaction, but to let it settle, give it more thought. And to be okay, listening from places that you wouldn’t normally listen to, I think is a big part of that is so if you find you vote for the red team, listen to what the blue team has to say, in the best possible way and vice versa. And from different news channels, different areas, different people, let it sink in, because it’s quite possible that you can hear something that will land from anywhere. And it doesn’t mean you will agree with everything from that place or person but there’ll be parts of it that maybe should be heard.


Gene Tunny  49:50

Yeah, I think that’s a really good point. Tim, try to genuinely see where the other person’s coming from what their their point of view is. That’s the advice Dale Carnegie, I think it’s it’s been well tested through history that that’s, that’s a good thing to do. So absolutely.


Tim Hughes  50:08

And another thing is to consider, you know, what part you might be playing in groupthink? You know, like, because we’re all influenced by this stuff, whether we’re conscious of it or not. And you could find yourself following or repeating stuff that is just within the group of people you’re with, or political preference, or whatever it is. So be mindful of what you repeat, you know, just blindly I guess that’s, that’s one of the things I get from that.


Gene Tunny  50:32

Yeah. So I mean, I would say that there was a lot of that during the pandemic. So, yeah…


Tim Hughes  50:38

Which is good. So on reflection, this is where, with those, especially when things are heightened in the moment, you know, I guess is how this works. On reflection, we can look back and maybe do a better dissection, you know, with the benefit of hindsight and all of that. But so for instance, with the pandemic as an example, well, the chances are that something like that could well happen again, there’s no reason why it couldn’t happen tomorrow, you know, so, what would we do then? You know, with that benefit of having gone through that, and what would be a better decisions or better decision to make?


Gene Tunny  51:08

Yeah. Okay, Tim, well, I think we’ve got time for one more clip, in this session, I’ve still got the four or five other clips to play, but I might save them for a bonus episode, or for another episode, if we ever catch up. We’ll just play one more clip that’s on this whole theme of critical thinking and, and being cognitively reflective. And it’s from Professor Deb Brown from University of Queensland, who’s in the she’s a philosopher, isn’t she in the philosophy department? And that was someone who, John Atkins, so your friend John Atkins put us on to because she’s been running a project on critical thinking, and was it in the media, evaluating media? Critically, she talks about her Critical Thinking project, yes…


Tim Hughes  51:57

That’s right, with schools, I believe. And yeah, yeah, it was, it looked really good.


Gene Tunny  52:01

So she’s a Professor in the School of Historical and Philosophical Inquiry at the University of Queensland, and we spoke to her early last year. So I’ll play this clip from Professor Deb Brown, Episode 123.


Deb Brown  52:20

And, you know, what we do fundamentally is distinguish between critical thinking, which entails being able to evaluate the quality of one’s own thinking. And so it’s essentially metacognitive. It’s, you know, it’s about, you know, What reasons do I have to believe that, you know, does this evidence stack up, you know, what’s the what’s the contradicting evidence, you know, sort of being disposed to look for not just evidence or reasons that support what you already believe, but actually looking for disconfirming evidence, right, you know, doing doing due diligence in the foundations for what one believes. And we distinguish that from other forms of thinking that that don’t concern that kind of the kind of quality of the foundations for one’s beliefs. So these might be things like, you know, free association, or associative thinking. And that’s very common. And often people mistake that for critical thinking. So, associative thinking is where you’re essentially looking, you know, you’re selecting for information that supports what you already believe. And what you find, then naturally coheres with what you believe, so we all sort of move around the world with these mental models, and the associative thinker, will be looking for things that fit with their mental model. And in you know, in science and in, you know, in other disciplines, this is, this often is connected with what’s called the confirmation bias, right? So that sort of, you know, preferencing, confirming evidence over disconfirming evidence and so on. And it also passes, it also, critical thing is also distinguished from what we call careful thinking, which is where somebody might be, you know, applying rules or procedures, think about, you know, a student in the class, you know, applying their procedural knowledge of mathematics, let’s say to, you know, to derive an answer or value on the basis of the arguments they have, you know, and that careful thinking, people often think they’re being critical thinking when they’re doing that as well. But what’s distinctive of critical thinking, is that critical attitude that one’s, one takes to one’s own reasons, and also to the principles or methods one’s relying on in drawing inferences on the basis of what one understands. So critical reasoning is very much connected up with what Descartes would have called the method of doubt right? Subjecting what one believes, you know, to doubt and, you know, in order to establish a better foundation for, for one’s belief and really being careful about the foundations for one’s belief.


Gene Tunny  55:08

Okay, that was Professor Deb Brown from the University of Queensland, Tim, I thought that was a great clip, I love the idea of thinking about how you’re thinking or metacognition, she really nailed what critical thinking is, and it’s not what you might think it is necessarily. I mean, you might think you’re doing critical thinking, but if you’re just applying a method that you’ve always applied or an algorithm, that’s not necessarily critical thinking, you’ve got to think about, okay, why am I doing that? Is that the right paradigm, the right framework? Is that does that really make sense? What are the implicit assumptions, I think that’s good for economists to do because when we analyse problems, we often go into analysing problems with a specific model in mind.


Tim Hughes  55:53

Again, this was such a good one with, with Deb, and everything she talked about, I found fascinating, because that whole area of like, for instance, to have critical thinking project, delivered in schools makes so much sense. Everybody could benefit from this, but the sooner the better, you know, like, you know, to get these things in as part of your DNA as part of your thought processes. And I think that’s a big part I get from a lot of the guys we’ve just listened to, it’s about the process, you know, what’s your process in, you know, discerning whether something is true or not, or what a good direction is to go in, and what’s a good process. And that’s what these guys talk about. Well, here’s a process that you can use, that’s tried and tested. It can be improved upon no doubt. But it’s, here’s something to go by, because there’s so much bad dialogue in the public forum, where it’s just people shouting at each other or opposing views where, quite realistically, they could probably agree on something that the other person is doing, but because of the party lines, they they have to be opposing and this is quite tedious, you know, to sort of watch, and it’s certainly not a way to come to a good decision. There are better ways out there. And we can employ these individually. And again, like within, you know, for yourself, within families within businesses, you know, with colleagues, here are good processes that are worthwhile going with because they’re better for us as humans, and the better, you come to better outcomes.


Gene Tunny  57:20

Yeah, exactly. Okay, Tim, we might have to wrap up. I’m gonna put links to all of the episodes that all of these clips are from in the show notes. I’ve still got a handful of clips left, but I think we’ll leave that for a bonus episode. There are some others on some other great conversations, but so many great conversations over the last couple of years. aah Tim okay. Yeah, Tim, you did want me to play one clip.


Tim Hughes  57:50

Now you chose this clip, you chose this clip…


Gene Tunny  57:53

I chose this clip that’s right, it’s a good one to finish up on, a good one for your ego so…


Tim Hughes  57:59

No, no, no you chose you chose the clip, it wasn’t about that. It’s about what is said not…


Gene Tunny  58:05

So this is our conversation with Andrew May the Australian Performance Coach, the coach to CEOs on the importance of fitness and business and when, it was funny when he because he hadn’t seen you in years had he Tim? No. And so I mentioned to Andrew about his book Match Fit. And then Andrew makes an observation about speaking of being match fit. So and we’ll just I’ll just play this clip.

How do you go from being a performance coach of the Australian cricket team? If I’m getting that right to coaching CEOs? Can you tell us a bit about that story, please, Andrew?


Andrew May  58:43

Yeah absolutely but before I do, if you want to know about being match fit, look at the guy sitting on your left. I first met Tim 20 years ago, he still looks the same, full head of hair, I’m very envious, so it’s great to reconnect with Tim.


Tim Hughes  58:55

Smoke and mirrors.


Andrew May  58:57

Ok so how did I end up coaching executives and doing mental skills for elite athletes around the world? There was no definitive plan Gene, and a lot of your listeners are going, “What do you mean you didn’t have a 20 year plan?” No. I was a good athlete, not great. I mean I won multiple state championships but never won at the national level, had a scholarship at the IIS in Tasmania. And we moved down to Hobart, which was wonderful in my early 20s. And I just finished studying exercise science. I had a physiology base and then went to the Institute of Sport. And it was a great learning in that high pressure environment. And when I look back, I got to the level I believed I could get to and I believe coaches should coach what they’re good at or what they’ve stuffed up and if you can combine the two you’ve got a really interesting mix. I left talent on the track literally, that any athlete any executive I work with, my real fuel is to help them fulfil their potential. So back to in Hobart, as a runner in Australia you don’t get paid a lot of money. Unless you’re a Craig Mottram or perhaps a Sally Pearson, so I had to supplement my income back then. It’s not politically correct, but I used to walk fat blokes. It’s now called personal training. So the clients I had, that’s Timmy when I met you, when I moved back to Sydney, after I finished down in Tasmania. And Gene a lot of the clients, I were training, they would lose 10 or 15 kilos. And then they’d say, Do you realise I’m not as cranky with my wife or my husband on the weekend, and the kids are not saying I’m an A hole, and I’m actually conscious at their school sport. And I’m not just thinking about what’s going on here. And I’m making better decisions, and I’m more creative. And we’ve opened up this other offshoot in Asia, what have you done to me? And I said I don’t know, just keep walking, don’t drink as much alcohol and keep swimming in the ocean. So I then really started to look into oooh, there’s a link between well-being, physical and psychological well-being and executive performance that was 20 plus years ago.


Gene Tunny  1:01:01

Okay, so wise words from Andrew May there, Tim.


Tim Hughes  1:01:05

Oh, yeah. And, and so just want to reiterate, he was very kind with his comment about me at the beginning. And that’s not the reason that I wanted you to play it. It was very kind, but I just wanted to, because this is the space I’ve been working in myself for the last 17 years and so it’s close to my heart. I’ve known Maysie for many years, even though we’ve been out of touch for quite a few. So it was really good to reconnect. But I just wanted to point out like, I mean, this is one of the areas I think of improvement that we all have at our disposal, which is often overlooked, you know, and that goes back to the pandemic, and all these kinds of things, you know, what can we do next time? Well, next time, the first thing we can do is to get healthier. Now, the healthier the population is, the less devastating anything, any kind of pandemic will be. So that’s like, that’s the first thing I would say. But the link between physical and psychological well-being and executive performance that Andrew was talking about, it’s so true, like we perform better all of us, you don’t have to be an executive or CEO. We’re better when we eat better, and when we move better, and it just makes so much sense. And as far as resilience goes, like with Andrew’s story himself. So he, by his own admission, was a good athlete, but didn’t reach the heights that he he hoped to. But in doing that, like he was able to become a world class coach with what he’s done since then. So he’s, he used that, which some may see that as a failure, ah you didn’t get what you set out to do, you failed. Not at all, like he was able to, it’s a very stoic sort of approach or sort of road he’s taken to say, Okay, well, that didn’t work. Let’s see, why it didn’t work? Or how could it, how could I help that work for someone else, which is what he’s done. And so the research is done on physical and psychological well being helps him, or has put him where he is now as this world class coach. And so for all those reasons, I wanted that to be included. Because I just see that as such a good thing for us all to learn from like we could all the, things he talks about, obviously, there’s there’s detail in there that we don’t have time to go into. But it comes back to the simple things of like, if you can eat well move well sleep well and connect with others, you’re going to tick a lot of boxes that as humans, when we’re going back to one of the earlier conversations about the economy, and in our equitable distribution, all these kinds of things well, just being healthier is, is one of the easiest and at reach, things that we can do. And it’s often overlooked, because we’ve got shiny things, material things that are further away. And these things I think, help us become better humans. And so along with that, the thought processes as well. It’s all part of how we can be better. You know at being, being human.


Gene Tunny  1:03:49

Yeah, just responding to that Tim, the point you make about connection is really an important point. And this is one of the things I really love about podcasting right? And it’s the ability to connect, I mean, like just us having a conversation helps us connect, right? I mean, I’m learning your perspectives. The guests we have on, people I’d never would have connected with otherwise, someone like Andrew May for instance. And you know, being able to get you know, really eminent economists such as David Hendry or Brad DeLong on the show that’s just amazing and then I’ve got listeners who’ll reach out to me with you know what they think and then you know, some of them I’ll, I’ll have on the show even so it’s just amazing for that connection. So that’s one thing I’d say that’s one reason I’m really glad I started podcasting. So that’s connection. The other point I’d make is that yep, since yeah listening to Maysie and also other stuff I’ve been reading, I read his book Match Fit. I read that other great book by Kelly Starrer, Built To Move, Kelly Starrett. Yeah, that’s right, that’s great. And, and since then, I’ve been trying to not just get out of like going to the gym or going for a walk or, or doing some exercise. It’s so easy to go. I’ve just got so much on. I’ve got so many projects on, I can’t find the time. But the attitude you’ve got to have and I think I got this from Laura Vanderkam who in her book, Tranquillity by Tuesday, I think it was, I think it was from her. If it’s not, whatever mentioned is, her book’s worth reading, is a great book regarding how you manage your time. But the attitude you’ve got to have is that working out or exercising, it doesn’t take time it gives you time. I think that’s so true. Because you’re so much more productive, like maybe you lose an hour or an hour and a half even. But when you go back to work, when you go back to the office, you’re really focused, because you could just have an hour a couple hours at work. Like imagine if you don’t take that time, your last few hours at work, you could just be unproductive. You could be demotivated, you could just be checking out what’s happening on on the news? What’s, you know, what’s on YouTube? You know, it could be? It could be, you could just be distracted?


Tim Hughes  1:06:01

Absolutely. And there’s so much good information out there. The big one is prioritising you know, in your diary in your day, to make sure you have time to do this, because most people would say they don’t have time. Well you do, it’s just not a priority, and it needs to be a priority. Or if it is a priority, you’d be better off for it.


Gene Tunny  1:06:19

Yeah. And I mean, I guess maybe it’s easier for me, because I do work for myself. But I guess if you if you’re an employee, then I guess Yeah, go on your lunchtime, or, you know, maybe have a chat with your manager or your boss and say, This really helps me out get makes me more productive. And I’ll stay a bit longer than than I would otherwise. I mean, there are sort of, you know, I think there are ways you can find that time to, to train.


Tim Hughes  1:06:44

Well people like Andrew May are at the leading edge of how this might work in with, with companies. In fact, we’ve got a round two that we have to do with Andrew, we spoke about executive performance for CEOs. Andrew doesn’t know about it yet. But I’m going to email him this week to talk about the impact, of course, on the workforce, you know, which is like everybody else, but it’s a fascinating area, because, you know, quite often, especially with these podcasts, and first of all Gene, congratulations on 200. It’s a huge achievement.

Gene Tunny  1:07:00

Thanks, Tim. Yeah,

Tim Hughes  1:07:02

and you’ve introduced me to guests and areas that I wouldn’t even thought about. And even though you know, like, you said I represent the guy on the street, which is basically, that’s that was an example of we saw that, you saw the value in that diversity, for instance, because as an economist, sometimes you would see things purely through an economists eyes. And so you told me, you you found value in some of the things that I would come up with, I mean, I know, I’ve probably said some crazy stuff. But you saw value in some of the things I saw from a different perspective. So that diversity, just between the two of us was valuable. Yeah, so I appreciate everyone that has been a guest on the show, especially ones I’ve spoken on, because it’s been great, you know, I’ve been opened up to all these different things. And a lot of the subjects or what you would say are outside our control or in the realms of things that are outside our control, which then brings it back to the health perspective of like, well, that’s really very much in people’s control. So it’s something that you can have an impact on.


Gene Tunny  1:08:17

Yeah to a large extent. I mean, obviously, you can have bad luck in your life. For Yeah, for the majority. Absolutely. Okay, Tim Hughes. Thanks so much for joining me on episode 200. It’s been a blast. And I’ll put links to all of the episodes that these clips are from in the show notes. So if you’re listening in the audience and you want to, you’re interested in checking them out, then you can go, go listen, so yeah, thanks for joining us, Tim. Thanks for for being here. It’s been terrific.


Tim Hughes  1:08:43

Yeah no, thank you, Gene. And I want to extend the thanks again to all the guests that have been on the show and to the listeners and for your feedback. It’s been great, and looking forward to next 200


Gene Tunny  1:08:53

Terrific thanks Tim. Righto, thanks for listening to this episode of Economics Explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.


1:09:43

Thank you for listening. We hope you enjoyed the episode. For more content like this or to begin your own podcasting journey. Head on over to obsidian-productions.com

Credits

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

Categories
Podcast episode

French Journalist Guillaume Pitron argues the Digital World is Costing the Earth – EP189

French journalist Guillaume Pitron discusses his book “The Dark Cloud: How the Digital World is Costing the Earth” with guest host Tim Hughes. The book explores the environmental impact of the digital world. Pitron delves into concerns about energy usage, e-waste, and the carbon footprint of the internet. The episode concludes with a debrief of Tim by regular host Gene Tunny on the conversation. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored

You can listen to the episode via the embedded player below or via podcasting apps including Google PodcastsApple PodcastsSpotify, and Stitcher.

About this episode’s guest

Guillaume Pitron is a French journalist, author and filmmaker. He has written two books, published in some fifteen countries, about the natural resources needed for new technology. He has been invited to share his ideas in the French and international media (Le Figaro, BBC World Service, Bloomberg TV, El País, La Repubblica) and at international forums and institutions (Davos, IMF, European Commission, Unesco).

Link to Guillaume’s website:

https://www.en-guillaumepitron.com/

What’s covered in EP189

  • Introduction to this episode. (0:06)
  • What is the dark cloud? (1:27)
  • There is no digital life without rare earths. (3:54)
  • What is the real cost of digital technology? (8:06)
  • What’s the cost to the environment? (13:07)
  • What can we do as individuals to make this better? (17:38)
  • Facebook’s Lapland data center. (22:22)
  • Facebook uses hydro-electricity to run its servers. (24:25)
  • What happens if there’s no water? (28:05)
  • What is the future of the internet going to look like in 10 years? (33:18)
  • Are there any governments around the world that are taking steps forward to regulate the internet? (41:02)
  • What can be done to address this issue? (43:59)
  • What were the main takeaways from the conversation? (48:11)

Links relevant to the conversation

The Dark Cloud book:

https://scribepublications.com.au/books-authors/books/the-dark-cloud-9781922585523

Digital Cleanup Day:

https://www.digitalcleanupday.org/

Jevons paradox:

https://en.wikipedia.org/wiki/Jevons_paradox

It appears the Amiga hard drive Gene’s neighbour in the late 1980s had was a 20MB hard drive:

https://bigbookofamigahardware.com/bboah/product.aspx?id=534

Transcript:
French Journalist Guillaume Pitron argues the Digital World is Costing the Earth – EP189

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:06

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Thanks for tuning into the show. This episode features an interview with French journalist Guillaume Pitro, about his new book, The Dark Cloud, how the digital world is costing the Earth. Guillaume visited Brisbane a few weeks ago for the Brisbane Writers Festival. I was in Adelaide when he visited and so Tim Hughes stood in for me and interview VR. I’m very grateful for Tim. First, I’m going to play the conversation between Tim and Guillaume. And then I’m going to catch up with Tim for a debrief on the conversation. I hope you enjoy it.

Tim Hughes  01:27

Okay, so welcome to Economics Explored. I am Tim, you’re standing in for your host, Gene Tunny. And we’re very excited to have with us today Guillaume Pitro. I’ve pronounced that correctly. Very well. Thank you. And Guillaume has a couple of books out that we’ll discuss. But the main one at the moment is called the Dark Cloud. So again, without any further ado, would you mind just letting us give an overview or give us an overview of the Dark Cloud?

Guillaume Pitron  01:56

Well, again, thank you for receiving me here in Brisbane, I am giving Bitcoin, just to introduce myself in a very few words, a French journalist based in Paris, I am an on the field reporter. That’s what I do most of the time, do documentaries and also write books. The Dark Cloud is my second book published by scribe in Australia. It’s basically a worldwide investigation, which took me two years on the trail of my email. Yeah, if I do send an email to you, for example, you’re sitting just less than a minute away from me, where does my email go? What is the real trip of my email between you and I, and actually, the real distance between you and I is that one metre, it’s several 1000s of kilometres, because this data will actually travel through 4g antennas, Wi Fi boxes, but also submarine cables, constellations of satellites, it will be stored in data centres maybe all around the world. So it’s a huge infrastructure that has been built over the last decades by the digital industry, in order to make us live connected. And we are not aware of the physical impacts of the so called virtual life, and also of the environmental costs of being connected. This is what the book is all about.

Tim Hughes  03:18

That some really interesting because I know that this is a subject that has been talked about quite a lot. And one of the areas that I mean, for instance, particularly here in Australia, so we have a lot of rare earths rare metals at our disposal for mining. So some of the areas that you talk about the the environmental cost, the human cost of our digital technology, our use of digital technology. What are the biggest pitfalls or what are the biggest problems? So you talk about, for instance, you know how far that email goes, for instance, what are the costs of us environmentally and a human cost.

Guillaume Pitron  03:54

For the rarest extraction? Yeah, okay. First, there is no digital life without rare earths rares is you find rare earths into your smartphone. And this is the magnet of your phone, which vibrates is made of iron, boron, and a rare earth, which is called neodymium. So you wouldn’t be able to be on silent mode, if you didn’t have rare earths to make your phone vibrates. Basically, this earth is in a way being extracted in Australia, in the Western Australia region. And most of the barriers are being extracted in China, where I’ve been several times I’ve been in rare earths mines and refining areas north of China, south of China for the last years. So I can tell you that extracting these resources is nothing but virtual, everything that is called virtual stems from a scar in the ground which are called a mine. And the refining process of the rare earth is actually very, very dirty. You need to separate the rare earth using water and chemicals. The water which is very polluted is just being rejected directly into, into the nature, it causes cancers, a lot of problems right for the human health and also for the environment. And you have in your phone not only one rare earths, but you have 60 metals in your phone, whether it’s cobalt and lithium and graphite to run the battery, but also a silver, a bit of gold, you have Indium in your phone, on your phone in gym is a mineral, which in the form of powder, makes your phone tactile, so you wouldn’t be able to leave your modern life without having an tactile screen, which is made six to indium, once again, this is being studied in China. So basically, all these metals come from mine, and it comes at an environmental cost.

Tim Hughes  05:45

So is the is the issue of the processing of those minerals. Is that where the impact is largely found mostly? Yep. And so does that vary around the world, I mean, what was the percentage of where these minerals and metals come from?

Guillaume Pitron  06:02

On the initial basis, these metals would come from third world, underdeveloped countries with less strict regulations and the one we would have, if we were in Australia, or in Europe, or in the United States and Canada, we’ve been offshoring the production of this metals for the last decades, we haven’t wanted to have this metals being extracted on our ground, I may make an exception for Australia, because you’re the world’s most producer of lithium. But most of the time, we just have preferred to let poor countries extracting these resources in a way, which is just not consistent with an environmental standards, not sustainable. So that we could just get the metal refined, cleaned. And we could say how we can use this metals for virtual and clean technologies. This is where the paradox is, I wouldn’t be able to precisely give you a figure like in terms of percentage, it depends from a metal to one another. But most of the time, you will find this resources in China, in Burma, in Indonesia, DRC in Africa, and also in South America, for instance.

Tim Hughes  07:12

So DRC, that’s predominately cobalt. Is that right?

Guillaume Pitron  07:15

Yeah, from the Democratic Republic of Congo DRC, you may extract, this is a country, which extracts and trades about 60% of the world’s cobalt production. And you have no smartphone without such a cobalt, which is being used for batteries.

Tim Hughes  07:33

So it’s really the processes in the extraction and the processing of those minerals and metals. That’s the issue.

Guillaume Pitron  07:41

Most of the environmental costs of the digital world comes from the manufacturing of the tablets, the screens, smartphones, sorry, 4 billion units are being used and speak to you right now around the world. Each of them requires such metals. So manufacturing these devices, these electronic devices, is the main cause for digital pollution. This is very first and foremost, a material pollution or resource production pollution.

Tim Hughes  08:14

I think that leads us into one of the other questions which I was going to ask, because part of the this unseen, this invisible side of our digital technology. One thing is the hardware. And then the other one, which he started off with, which is that you know that an email, for instance, appears to be of very little consequence or very little energy needed. However, that’s not the full story. The energy consumption is one of the big issues as well as that right.

Guillaume Pitron  08:40

So once I’ve said that, making a phone stands for the most important part of the digital pollution, that doesn’t mean then that watching video on streaming, or sending an email doesn’t have a cost, right? Basically, I can give you a figure of if you send an email to someone with a big attached piece like one gigabyte, we roughly consider that sending it emits about 20 grammes of co2 into the atmosphere. 20 grammes is as if I was driving 150 metres with my car in for one gigabyte, for such an email. Yeah, so basically, you see, it’s not that much, but it’s not nothing. And if you keep sending emails and emails, and we send every day 363 billion emails, mostly spams, still. And if you add to that, well, you know the costs for the environment or of you know, swiping on a dating site or watching a video, listen to music. I’m not saying here is that we shouldn’t do that. I’m no the Taliban and coming here to tell you don’t listen to music because it has enormous environmental cost. But I’m just saying, even if it’s the short impacts, little impact for each and every tiny action that you have on your phone, if you multiply that by the 4.5 billion users of internet multiplied by the number of digital interaction that they have every day, that starts meaning something,

Tim Hughes  10:12

The invisible part of it is that normally when there’s a resource involved, water, electricity, etc, we have to pay for it, you know, we pay for them as utilities. And, and so it’s clear, if we leave a tap running, we’re going to have to pay for that. So even though it’s, it’s poor management, it’s expensive. And we can see that. So it seems to be there’s a bit of a disconnect with our use of digital technology. And like I say, understanding really the real cost of this because it’s taken up elsewhere. It’s out of sight, all that information. I mean, I was thinking, for instance, I’ve got 20,000 photos on my phone, I don’t need 20,000 photos on my phone, I got 800 videos, I mean, it just accumulates. So that is sitting somewhere that’s taken up,

Guillaume Pitron  10:58

Actually, the photos on on your phone, there are in the cloud. Yeah. So I mean, you believe that these are on your phone, that may be actually, they may be stored on your phone, but they may be on your Apple drive or whatever things and actually you connect yourself from your phone to an account, which is a server, which is somewhere sitting into data centre, wherever it is. So you access the cloud, because you access the pictures, which are once again outside of your phone.

Tim Hughes  11:29

So there’s a there’s a cost to that.

Guillaume Pitron  11:32

The cloud is a data centre, whatever you use your phone, whenever you want to send an email, you’re not sending an email to someone else’s phone, you’re sending an email to someone else’s account, your Gmail account, which is stored somewhere and this person will connect herself or himself from him his phone or her phone to such a server which is stored with other servers in huge warehouses, which are called data centres. And a data centre can be can be as big as dozen soccer size of a dozen of soccer fields. And you find hubs of data centres all around the world. Washington, DC, Sydney, Paris, Frankfurt, London, Beijing, it says a commonly accepted figure that there are around 3 million data centres around the world where all of our data are stored. And these data centres, you know, cannot break down there cannot be any electricity breakdown. Because that means that you can’t access your emails. And you don’t want that right. So if you want to make sure that you get an access to whatever device, whatever internet service for 24 hours a day, you want to make sure that the data centres are running all the time that the data is being replicated in another data centre. So that if the first data centre runs out of electricity, another one is just working instead of the first one. So you duplicate the infrastructure in order to just you know, secure the service continuity of the internet. And this needs electricity to run. And this is where we realise that there’s some points where the cloud touches the ground. And when it touches the ground, it needs to be fed with electricity, which comes either from coal, or from oil, or from a solar power plant or from a nuclear power plant. And this, again, is a cost.

Tim Hughes  13:28

That currently stands at 10%. Is that right? Yeah,

Guillaume Pitron  13:31

10% of the world’s electricity is being used for digital technologies. And that figure is going is increasing at such a fast pace, that there are some, you know, estimations saying that these 10 person may become 20 persons within a decade.

Tim Hughes  13:48

Okay, so it appears to me that like it seems to be, amongst other things, it’s very much an efficiency situate or an efficiency problem. So for instance, like, if emails and pictures and everything was physical, and we could see them, and we were to put them in our backyard, our backyard would become very messy very quickly, we would be compelled to tidy up. This is out of sight. It’s somewhere else we need to as consumers be aware that there’s a cost to this, which is I guess where you’re coming from? Is that right? This is a sure this is a big message. I mean, very much it opened my eyes massively like this. I had no idea. I knew it was something but again, I didn’t really know what understand these terms cloud, etc. A very fanciful or ethereal, whereas in fact yet as you’re pointing out, they’re real.

Guillaume Pitron  14:36

And this is what’s interesting what you’re saying because that maybe that makes me rebound on Education Day, which has been created a couple of years ago by an Estonian lady. She’s an activist, and she created I forget her name right now, but he she created the first World Digital cleanup day. So basically, you’re not going to go into the streets to clean the rubbish on the sidewalk. You’re going to go back to your phone and your computer, and you’re going to follow a course it’s going to take you a couple of hours during that specific day, usually takes place in March depends from countries to countries in my country, France, it takes place in March. And basically, they’re going to tell you how to clean, not your room, or the sidewalk, but to clean your email to clean your cloud. And you’re going to realise that on the rubbish of your cloud, there had been for years old pictures and old videos, yeah, which were still being, you know, kept in the cloud, running thanks to electricity, and you just didn’t know them. So how do you clean that? And how do you actually make a good contribution to the environment by following such a course. But as you said, it’s about cleaning your digital world in a way. The name of the girl is Anilee Overal.

Tim Hughes  15:51

So could you say that again.

Guillaume Pitron  15:54

Anilee Overal, the Estonian militants who created this world digital cleanup day.

Tim Hughes  16:01

That’s really cool. Because it strikes as being an education, which I guess is a big part of your message is like to let people be aware of it, because people will generally do the right thing. If they know,

Guillaume Pitron  16:12

Oh, yeah, we’re turning virtual. Everything is dematerialised, your paycheck in is a cloud. Okay, why not about the cloud, you know, people don’t really understand what that really means. They don’t understand that all these virtual things are really material, very physical. And the first challenge here, as you say, is to educate. And we are just at the beginning of this process, where we just try to understand what this reality is all about. And how do we educate the young generation, the climate generation, they want to do good, they’re on strike on the Fridays, telling me not to take planes and not to eat meat. But actually, they’re spearheading such kind of a pollution. And they’re just not really aware of that. And so the very first challenge is to make people understand that this is becoming big.

Gene Tunny  17:03

Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  17:09

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Gene Tunny  17:38

Now back to the show.

Tim Hughes  17:42

Part of this is this efficiency, you know, reducing the waste and stopping the habits that produce more waste, you know, so, for instance, if you’re taking photographs to delete the ones you don’t want and try and minimise the ones that you keep thinking about what you send as an email, trying to minimise all of that. And should we be deleting as we go far more because I know that my email for instances and there is this with spam, and all sorts of other things. It’s a massive, I can’t imagine what percentage if it’s easy to put a number on it, it’s okay, if you don’t have one, but spam obviously contributes a lot to it. There’s so much unnecessary information being stored, it’s clear. So we can do some things as individuals, are there any technical or is tech coming to the party with this to try and make it a little bit more efficient.

Guillaume Pitron  18:32

First, where you could do run the next World Digital cleanup day course, maybe all the picture that we’re talking about, I’m just talking about my own example. Yeah, my phone is an iPhone seven, I don’t have much space into my iPhone seven, which is a good thing. So I don’t change my phone. So that, you know, I’m running out of space at some point, so that I have to take my pictures out of the cloud. And I just put them on a hard drive on an external hard drive. And that doesn’t cost much more to the environment that just storing it in this device that puts less picture on the cloud. What you could do personally, individually to, which is a very important thing is to keep your smartphone and other computers as long as you can. Yeah, I mean, once again, my example iPhone seven, I bought it three years ago, it was a secondhand phone already. And for the last three years, I’ve broken it seven times, four times the screen twice, I had to change the battery. And one time I had to change the main button. But that could be repaired. And actually, I still have the same phone and maybe I can keep it for three more years. And maybe once I don’t want it anymore. I can resell it. If we all do this rather than changing our phones on average, every 18 months, 24 months. Yeah, it’s a huge it’s makes a world of a difference because this main pollution impact, which is once again, the manufacturing of the phone, you can developer to issue keep your phone twice as long. So that’s a very important thing to do. And then you ask me another question, which I forgot

Tim Hughes  19:59

well I was going to, part of that was what the tech companies are doing. Like if they’re on board with this, I mean, because clearly, so for instance, in that regard, they’re looking to sell phones, you know, as a business, they’ll be looking to sell their hardware. So, and I know that, in many areas, the quality of many things has dropped in our printers, for instance, like it’s cheaper to buy a new printer than No, nobody gets one fixed anymore, which is an awful waste of resources. And it’s a really bad way of, you know, going around business for us as custodians of this planet, if you like, you know, so is there anybody in the tech space that’s looking to make this better.

Guillaume Pitron  20:39

It starts being something which companies care about, and they care about it, because first, it costs money to change devices every two years, it costs money to run your data on electricity for service company, the digital devices, and running the digital part of the company may account to 30% of the consumption of electricity of such a company. And it’s also becoming a reputational issue you want to have in your company’s new brains from the new data generation very much worried about the, you know, environmental impact of everything they do. You need to have a message here, and you need to do actions. And I’m very much invited myself by companies, which are just like, we want to be better in a way. And suddenly we realise that there is this new chapter of human pollution, which is digital, how do we cope with this? What do we do? And obviously, they’re starting to understand that. And Google and Facebook and Amazon are very much into these things now, because they don’t want to be seen as being ecologically non friendly companies. You know, when you have Greenpeace, you’re flying a huge balloon over the data centres. And the headquarters of Google in California. And what’s printed on the balloon is How clean is your cloud? That is the good for the reputation. So they want first to green, their electricity mix. They want to say, oh, okay, we need electricity. But this electricity come from solar panels and wind turbines. It doesn’t emit any co2. They do offsetting also, which is kind of a problem, in a way kind of a scam. Because you never know, where’s the trees being planted in? I can tell you many more stories about that plane is claimed, basically, yeah, very much. And also, what Facebook is doing is very interesting. Facebook has been moving some of its data centres for European consumers to Lapland, they moved it close to the Arctic Circle to cool your data, because your servers, the servers where your data is, are actually heating to 60 degrees Celsius, that need to be cooled back to 25 degrees. So either you use an air conditioning system, which is very much energy intensive, or why don’t you move the cloud to places where it’s just naturally cold. So your exercise videos of cats and other emails are literally sleeping under metres of snow in the nose of Lapland, where I’ve been? Alright, I’ve been there. I’ve been to send a data centre not inside I was just outside of it. Yeah. But basically, I was where my Facebook account is. Well, the good news for Facebook is to say, well, not only is it cold, so I use less electricity. I don’t need air conditioning devices. But the thing of the thing is, they say whatever electricity I use, it comes from agile electricity plants.

Tim Hughes  23:21

So this is they’ve got one in Sweden. This is face but would you like to tell us more about about that the hydroelectric plants so I’ve

Guillaume Pitron  23:28

been there. I took a train from Stockholm crossed the Lapland in order to meet my friends, because we’re all there. literally speaking. Yeah, there was a lady in the train. And she came to see me she was just she just wanted to discuss her number. She was a tourist. And she said to me, okay, you want to travel? What are you doing here? And I said to her what I was doing and she looked at me she was just like, this is gonna cycle literally speaking, I went to this data centre couldn’t get in and took my stuff on a picture with all this huge warehouse behind thinking my WhatsApp account is here. My I don’t have an Instagram account. Our Instagram accounts are here. My Facebook accounts are here my 600 and something friends are literally here. This is where all of it is. It’s not for the European, the African Middle East consumers, okay for your designers truly, I believe they are storing US States probably in Oregon, where Facebook is. Okay, the data centre from Facebook is in Oregon. So basically there was a story and then I figured out but so the electricity comes from the Lhuillier river. And this is on that reverse that back in the 60s, some electricity dams. Hydroelectricity dams have been built, not for Facebook because no one at the time knew that Facebook would come to an existence, but Facebook is still using this electricity infrastructure in order to actually run my Facebook account. And I found out by travelling through Lapland, that back in the 60s Is the Swedish state had dried up. So small little river for about 15 to 20 kilometres. And this is the driest. This is the longest river ever dried up by human activity in Western Europe, in order to change the direction of the water and feed this hydroelectricity dam, there’s a guy here, a horrible Mo, I had an amazing countering with him because he’s no is in 60s, but even for the times back in the 60s, where suddenly from one minute to the other, this part of the rivers a smaller river just ceased to exist. It’s just disappeared, and is still crying for this Lost River. And is writing is trying to attract Facebook attention, saying, Have you got a single ID about the impacts of running the electricity that makes today your infrastructure work? So that was amazing story that was in place before? Yes, Facebook is not responsible for the, for the building of such an infrastructure. But Facebook does still today use such an infrastructure. And it keeps this river still dried up today.

Tim Hughes  26:15

I mean, I guess, um, any hydroelectric plant that was in Australia, there’s the Snowy Hydro plant down the snowy mountains. I think it’s 2.0. Now, I’m not too sure. But that has been going since the 50s. I believe like a you know, it’s and now they are big, any damage or anything is gonna have consequences, I guess for downstream. It’s the waterways of the world are getting very much challenged by agriculture and the taking of lands and everything. So it’s sort of getting into into different areas in some ways. But what we’re talking about in many ways is resources and not not wasting those resources. And so the amount of electricity used to fund our digital technology, our habits is significant and growing. So water is also one of those resources. Yeah, that’s getting that’s getting challenged. Sorry, gone.

Guillaume Pitron  27:10

No, no, because we are surfing on internet, we are looking videos and streaming. But let’s take it literally these expressions, these phrases, literally, we literally wouldn’t be able to surf on internet, if there was not water for real.

Tim Hughes  27:28

And now when you mean as a resource,

Guillaume Pitron  27:32

as a resource for making the electricity producing the electricity as part of the process as a resource for refining the metals that are being used in your phones and other servers as cranes as a resource for running the air conditioning systems, the data centres, a big data centre may use as much as 600,000 square metres of water every year. So you need such a water for making internet work. And yeah. Is there risks that at some point, you couldn’t serve anymore on internet? Because there is no water?

Tim Hughes  28:06

Well, this is I guess, with any resource, it has to be managed wisely. And with water. There was something with the NSA in America. So we had a quick chat about this before we started recording. So would you mind? Sure, just telling the listeners,

Guillaume Pitron  28:20

the National Security Agency stores that are from everyone. And back, I think it two sons 13 as they started to run their biggest data centre, and they made it run in the city of Bluffdale, which is in the state of Utah. As you will understand this data centre needs water in order to run the cooling systems. The thing is, we are in Utah, which is the secondary states of the United States, some local journalists started to ask the question to the NSA. But what is your consumption of water? The NSA would first reply, I don’t want to tell you because if I tell you how much we are consumed, that will tell you information about how much data store, okay. Eventually, they found out and the NSA replied, and it was clear that the NSA was not consuming that much water, taking water out of the Jordan River, which is just running through Bluffdale city, Byrd suddenly some NGO militants, and we’ve had the moment where it was Snowden hadn’t made the revelations about all this surveillance politican stuff. And they start to think but if the NSA doesn’t have water, there is no operations anymore. What if we strike an action on courts in order to forbid the state of Utah to make water available to the NSA? What if we could afford or to the NSA? Maybe this is the actual tool of the NSA. And if there is no water, we just stopped as a server and stuff, because this is the resource that is being needed for surveillance, which is an amazing story, right?

Tim Hughes  29:58

So with that, so Same with the water would be diverted towards civilian use or towards the NSA is that there

Guillaume Pitron  30:05

was no such a conflict of usages. Okay. So once again, there wasn’t so much question of consumption, so the water would have probably remained in the Jordan River and whatever kind of things. But once again, if the water cannot be fueling the NSA the same way as oil can be fueling a motor of a car. You don’t run this system anymore. And there was a thing a bit crazy ID that this NGO militants were having. They were being supported by also by a local senator or local parliamentary member to stop the civilians literally by by just stopping the availability of such an important resource for such a panopticon.

Tim Hughes  30:48

Right. Okay. So the implications are far reaching, basically. Yeah. Okay. I want to circle back to the question of efficiency. So cryptocurrency? I guess that’s included in our digital technology very much. I know that the the energy consumption for cryptocurrency to perform is really high. I’ve heard statistics that it takes the same amount of energy as Portugal, as a whole country does for all the transactions to happen, especially for the Bitcoin. Yeah, because last year, I think it was last year Aetherium managed to develop a new way of doing their transactions where it’s massively undercut, I think it was 99.9% reduction. That’s right. So that kind of tech, technical, technological improvement, if you like that efficiency, is there anything on the horizon in other areas where we might be able to clean up our act by just reducing the amount of power that we need to run our digital technology,

Guillaume Pitron  31:47

the data centre industry must no respect some specifications, which are being called the P e, u e, the power unit efficiency. So basically, it is a ratio that tells you how much power you need, in order to run a server to run a certain amount of data. And this PUE can be very high, maybe close to two. And then you can go as low as as low as 1.2, which shows that your data centre is kind of more eco friendly. And the more we are going with, you know, investments in researchers, the more the PU E is going down, and the more it’s a good news and the more the industry can say, Look, we’re doing efforts in order to store our data and to run the internet in a more efficient way in a more ecologically friendly way. And once again, this is important that is good. This industry tries for reputational reasons for money reasons to do better, I think is we can take that for granted because we consume more and more and more data. So at the same in the same by the same token at the same time. We keep discovering new ways of using the internet. Yeah, this is new cryptocurrencies. This is maybe tomorrow creating new avatar in the metaverse this in requesting, asking questions to the chat boat chat GPT for Yeah, that’s

Tim Hughes  33:12

the new thing. AI is a massive new one. Definitely arising introduction to this.

Guillaume Pitron  33:18

Yes. And, you know, 10 years ago, we would not have thought that we would be speaking in 2023 about you know, Metaverse and Chad GPT. For what is internet going to look like in 10 years? Nobody knows. But it’s going to be crazy. We are just in the, you know, very early ages of the internet. We’re just turning. We’re just discovering this new technology. Where will it take us in the future? I don’t know, what I’m absolutely sure about is that is going to make us produce more and more and more data. And this is what a techno profits from the Silicon Valley, an American techno profits, cause the Internet of Everything is advocating for the Internet, everything, the internet, the internet of everything is basically we’re going to connect everything, my glass will be connected, your body will be connected with sensors, animals will be connected trees will be connected, we’re going to connect everything because everything that is connected, produces information, produces data speaks to someone else, or some or something else, which is connected. And that is information, which is money and which is power. So we are in a world where on one hand, technologies are getting much better, and much more efficient, very good news. But on the other hand, there is a rebound effects. Oh, because I don’t have any impact on the internet because for each data I produce, it has less and less impact. Why don’t I just you know, produce and consume more data. And the other dynamics here is the fact that in the next 15 years, humankind with will probably produce and consume 50 times more data than what it does today. So there is a race here between the tech nology, which is getting much more efficient, and the fact that our usages of such technologies are getting exponential. So this is where the big story comes. figures tell us that in the next 10 years, the 10%, electricity consumption of the digital world might become 20. And the four persons of co2 emissions, which is more than planes might become eight persons. Yeah, I’m not sure. But if these figures are true, that means that the race is being lost by the technology, and that we consume more new data than the technology is able to offset them in a way,

Tim Hughes  35:35

how much difference can we expect to make through changing our own habits? Like is that just not going to be enough like, because I can’t imagine the way that you say that the way that data is coming to us, it’s coming more and more from different directions. It’s unmanageable, in many ways, on a personal level, to sort of having a habit all in order. What’s the best we can do here? I know, we know, we sort of touched on this week we go back to it. And do we really have to depend, for instance, on the technology changing to suit us, you know, like, rather than us changing our habits to try and manage that amount of data.

Guillaume Pitron  36:12

You’re asking me a difficult question. Yeah. And I wish I would be able to answer to you in a clearer way. But when I look at the way we are using Internet today, when you want to look at the ways young generation is spending, its time, you know, sticked to talk in other kinds of devices. I don’t think there is anything here that relates to the very basic wisdom we should be having while using such devices. And I don’t think any of these new technologies are being offered to us in the future. Whether it’s Metaverse new cryptocurrency is the niche, next version of chat boat would make us use the internet in a more sober way. So I’m a bit worried in a way that we behave like child’s in front of this technology were so much impressed by what they can do. And we don’t want to change our habits. Now, there are limitations, which are starting to appear into the debates, limits to the way we will be using internet in the future. The first one can be ecology, as I speak with you right now, okay, so whenever I am on such devices, I have an impact on the planet. So that may, in the future, play a role in changing your habits, first and foremost, keeping your phone longer. Second, is democracy. We have seen states, including in Europe, trying to, you know, frame the use of certain social networks, because it spreads hatred, because it’s pray to fix news. And we want to protect a beautiful value, which is democracy. So you want to make sure these social networks don’t go too far in the face of such a value, which is democracy. And there’s certainly mutations that I see coming, right now is health, whether it’s your physical health, spending your days on your couch, watching a video on your phone, or whether it’s mental health, and we can’t count today, it’s the number of scientific studies, which are being produced, telling you how that much affects your attention capacities, such tic toc and other kind of things. I would like to believe that ecology, health and democracy may be some hurdles to just keep using these devices, without any real thinking about the impact that they may have. That makes a

Tim Hughes  38:43

lot of sense, because it can feel very insignificant as to what your own contribution might be to a solution such as this problem. But the reality is that we shouldn’t underestimate market pressure. So you know, companies, individuals, demanding or asking of the tech of the companies who are providing the services in this hardware, that they’re not happy with it, they’re not okay with it, and they want it to change. So that kind of pressure coming from the bottom up, is quite likely the thing that will most likely change what happens,

Guillaume Pitron  39:15

I very much agree with you. And we live in such a contradictory age in a way because on one hand, what I’m telling you, in my view, make sense is debatable. But I think we know we can understand this message. And on the other end, everyone understands that the country which in the future will be the most powerful in the cyberspace, cyberspace will, you know hold many strings of the future of geopolitics. So if you want to keep running in this race that we’re all watching right now between the United States and China, you need to be up to date with these technologies. 5g has come to France. And there’s not been such a big debate over the impacts of the environment of 5g antennas. The French that said, but we need to have our own 5g devices. Why not because they know what 5g will be used for. We have no ideas or roughly an ID. But because we don’t want to have Chinese 5g networks installed in France, with potential spying capabilities. So it’s all about geopolitics, accelerating towards the 5g is just because you want to remain independent, sovereign, technologically, independent from the countries, and you will still want to play an important role in the future of geopolitics. So, in a sense, what you were saying just a minute ago is so interesting, because we are codes in this contradictions involved in makes sense, but geopolitics. And independence from other powers makes a lot of sense, too. And I would like to be Macomb my president, or I would like to be Albin ease, and be able to see clearer in the future. How do I make a choice between these two contradictory messages?

Tim Hughes  41:02

That some as funny because that leads me into volley one is going to be one of my, my final questions. So I appreciate the time you’ve given us today. Is there any other any governments that are doing anything in this space, are making positive steps? In my view, what usually happens is what we mentioned before where it’s like, it’s the pressure from the voters, the people at the market demand, you know, that is often the most powerful things. And I think governments around the world are struggling to keep up with this, the speed of this technology. So things are being implemented before legislation can catch up with it. But are there any governments around the world who were making steps forward to try and take responsibility for the direction that this is all going in

Guillaume Pitron  41:45

from an environmental standpoint? So

Tim Hughes  41:47

all all of it really like? Health? Because I think the health perspective you mentioned is really, really valid, because the health implications from this are really quite strong, mentally and physically.

Guillaume Pitron  41:57

I have in mind the example of China, where, you know, there has been some regulations enacted by the state saying that when your Chinese teenager I think I’m not sure when you listen, under 1414, one four years old, you don’t have the right to use tick tock more than like 40 minutes a day.

Tim Hughes  42:17

And is that a regulated it within the household? Or is it on the devices? That’s I wouldn’t be able to tell you because there’s a parent, I know how challenging it is, but it’s not that they can’t be done. But I know, there’s challenges

Guillaume Pitron  42:30

the fact that the state says so in a know how the SLO is being respected. Yeah, tells you something about how the Chinese government can care in a way about the mental health of the young saying, all right, it’s fine to a certain extent with after that, you might get into trouble from mental viewpoint. In the United States, an average a young in the United States is spending seven hours and 22 minutes on internet every day, outside of school. So I would probably mention the Chinese state in terms of environment, the French are doing something right now they have passed a law, which is the first law in the world. I don’t say that they could infringe on here. But basically tackling on a general manner, globally is a question of the impact of internet on the environment. And so there have been many things being decided, whether it is that, you know, the tech companies must inform their consumers about the number of data that have consumed and what it means in terms of co2 emissions. There are some specifications to the data centres, and all this kind of thing. So that is, I think, a good thing that’s just starting, mostly North European countries, Germany are very much in advance when it comes to regulating such kind of ways of using internets, including on the environmental angle. But for the rest of the world, this is just an unknown subject. Yes.

Tim Hughes  43:59

And then that’s good to know that those things are happening in those countries, which is, which is a good start. And I guess it’s sort of points towards the fact that whatever needs to be done, clearly hasn’t been done on any level at the moment, just yet. But whatever can be done. Well, one of the things I guess about this as building awareness, which is what you’re doing is educating, making people understand what the issue is, and what the implications are around the world. The problems with the environment and the human costs that come with this. So that then we can take responsibility for this individually and as communities and countries etc.

Guillaume Pitron  44:36

Yeah, and this is why I quote Stephen Hawking in the beginning of the book, when he says the future is a race between the growing power of technology and the wisdom with which we’re going to be able to we’re going to be able to use it. And the such wisdom can only start with understanding with education. It’s a paradox that the knowledge economy and the knowledge technologies don’t make you knowledgeable about the way the work kind of products is going to take years before we understand all these technologies, which are being up in the air, or donor their feet buried into the ground in the form of wire networks, or laying in the depth of the oceans, in the form of submarine cable optics is going to take years before we really, you know, put some names figures and descriptions over this Leviathan, which we just don’t have an idea of because we haven’t sensed it with our senses. It’s huge battle coming in here, in order to to understand that enormous ecological challenge coming for the decades to come.

Tim Hughes  45:44

Well, that sounds like a good place to wrap this up. Do you have any further closing comments on that gear?

Guillaume Pitron  45:51

Pretty much. I don’t want to be looking like someone was coming to make lessons of normal. Because I use internet every day. I need internet’s to write my books. And I need you to podcast what I’m talking to you about. So I’m going to tell you, you know, you should feel guilty whenever you open your email account, or whatever kind of things. That’s not the position I can hold. And I really would like to make you understand that I’m adopting every day myself, I’m questioning myself all the time. But I keep always in mind this ID, this which is new to us, which is that whenever we will use internet in the future, we’re going to have to make something which we have never done, which is a cost benefit analysis.

Tim Hughes  46:38

Actually, that’s a really good question that I will put to Jim, because that’s his area of expertise. And so the book that you have is the dark cloud. Yep. And that’s now available, we’ll link to everything in the show notes, with some of the things we’ve talked about. And the Estonian activist will make sure she gets a link there. And you also have the rare metals war. So you have you’ve got my first book published was truly a couple of years ago. And I just want to thank you for the work that you do. Because I think it’s so important, you know, and it’s so easy to not be aware of this, I for one was somebody who had a feeling you get a general feeling that things aren’t always as they appear, and that there’s a cost. But thank you for bringing to light, the cost of our digital technology. And also, I would encourage all of us to have these conversations more and to know that it is something that will grow. And that we have a responsibility as we’re here now on this planet to ourselves and future generations to try and sort out this issue sooner rather than later. And if that then comes to how we might vote and what we might do with our personal practices with digital technology. We have the power. We have the power, we have the power. So Graham Photron. Very, merci beaucoup. Merci. Merci. And and thanks for everyone for listening. We’ll have everything in the show notes. And we’ll look forward to seeing you next time. Pleasure. Thank you.

Gene Tunny  48:11

Tim, he is good to be chatting with you again,

Tim Hughes  48:14

playing good to be here, Mike.

Gene Tunny  48:15

Thanks for filling into me for the conversation with Guillaume that was, that was great. I really appreciated it. You had a good conversation with Gam about his book, The Dark Cloud.

Tim Hughes  48:27

Yes, it was fascinating. I really enjoyed it really enjoyed it. Thanks for giving me that chance. And

Gene Tunny  48:32

overall, I mean, how do you think? Or how do you think it went? What were the main takeaways for you?

Tim Hughes  48:39

I was fascinated by what he had to say. And I really appreciate the fact that he was able to bring attention to this issue, because it’s clearly a big issue. And it’s growing. And I thought it was a really good thing to talk about. And to continue talking about because no doubt this is an ongoing problem that we need to work with.

Gene Tunny  48:57

Yeah, it’s important to raise this as an issue. It’s still unclear to me exactly how big a deal this is and how much we should worry about it. I guess what he’s highlighting is that the digital world is not necessarily providing the environmental benefit that people 30 years ago or 20 years ago may have thought it was we moved away from having paper, you know, paper based offices and, and also having more services delivered online rather than us having to travel somewhere or, you know, travel or conferences or whatever. So he’s highlighting that this increasing digital footprint that’s having an environmental impact. I think that’s an important point. It’s still unclear to me exactly. How big a deal this isn’t how much we should be concerned about. I mean, clearly we should be concerned about environmental damage, environmental impacts, and we have various regulations that are that are at attempting to resolve those. There is an issue with climate change, of course. And we know that internationally many countries aren’t really agreeing to on or they’re not they don’t have the framework or the policies in place to really do much about that. I mean, there’s a lot of talk. There’s not a lot of action. Yeah. So that’s, that’s possibly an area where you could argue that better policies are needed. You know, in other cases, there is, well, at least in Australia, there’s very stringent environmental protections. I guess the issue is, well, what if they do you know, that’s what Guillaume was talking about mining in the impact of mining in emerging economies, wasn’t he? So there there are issues. And so perhaps that’s something where it’s worth focusing attention on. And there needs to be there could be some international pressure to improve conditions in those those countries. Did he mention Congo? I’m trying to remember now. Yeah,

Tim Hughes  51:01

he mentioned DRC. And cobalt, most of the cobalt seems to come from there. And without a doubt, it’s the processes with getting these rare earths out of the ground, that are the issues, environmentally, and the human cost of that. So there was really, I mean, I thought it was very clear that there was some big impacts from our digital technology, our digital habits, that we should be aware of. And that can be improved on that was the big, I thought that came over really strongly. So just to repeat some of the figures, he said, 10% of the power that we use currently is running our digital technology. And that’s understandable, there’s going to be an amount that goes into it, we’re highly linked to the internet, really dependent on the all of this new technology. So it’s not surprising that there’s a cost there. However, the rate that that is expected to increase up to 20%. Within the next decade, it currently accounts for 4% of the carbon emissions, and that’s looking to double as well. So this is the tip of the iceberg in the way I guess, there were two main areas that I could see where this inefficiency was a problem. One was in the use of electricity with storing data and unnecessary data, which is, and it was something we were talking about a little bit before we did this wrap up. It’s unknown, I guess as to how much of this data that’s being stored currently in 3 million data centres around the world that Guillaume mentioned, how much of that data is necessary or not, which is, you know, can update for conjecture. But I think personally, we could all see from our own habits, there’s a lot of data that we have, that has been saved, that’s completely not necessary. So there’s an efficiency problem there for sure. That can be improved upon. And whether, you know, for any of us to go through our phones, or whatever storage, we have to retrospectively go through our photos videos is a daunting task that is unlikely to happen to be fair. So if technology can come to the help AI, with some kind of solution with this, which I know they have, they can detect duplicates, and this kind of thing. So that that kind of technology is already there, technology could hopefully come up with something quite clever to try and either compress the amount of data that we have, which is one possibility, I guess, or to somehow diminish the amount of storage that’s needed, because it’s clearly unnecessary for a lot of personal use, we don’t need anywhere near as much as we currently use. You mentioned before that it’s cheap data is cheap, which I think is great for the consumer. But this is, I think, allowing us to have bad habits of just being wasteful with the amount of things that we hold on to just in case or just can’t be bothered to delete because it’s too clunky or too time consuming currently,

Gene Tunny  53:50

well, I think you made a good point there. It’s too. It’s too time consuming. So therefore, if you’re doing this efficiency calculation, you should take into account the fact that if you were to go and clean it up, you’d have to spend all this time doing so. And yeah, I did mention when we were chatting, storage is cheap. And as an economist, I mean, as long as people are facing the irrelevant, or the proper prices at prices, which fully incorporate all the costs, then what’s the problem? I mean, if we want to have a lot of data stored online, there’s no real problem with that. I guess the issue does come if we’re not properly if businesses and are not internalising all the costs that they’re imposing on society if there are these environmental impacts that aren’t properly costed and then priced into the product so that your look that could be an issue, right? I’m not I’m not denying that. But in terms of the you know, the photos I mean, I don’t know how big a bigger deal that is and how big a part of the problem it is. And this 3 million data centres. factoid, that’s not the huge Google or Facebook data centres, there are 3 million of those around the world, he must be talking about various computers, various servers that are associated with different websites around the world. That must be what he’s talking about.

Tim Hughes  55:17

Yeah, I mean, we didn’t go into any detail of the sizes, but clearly, they vary in size, as some of the ones we did talk about with the bigger ones Facebook. Yeah, it’s an Oregon and was it Lapland I forget now, which country was part of that plan? Yeah. And Finland, one of the one of the colder regions, which makes sense, as far as energy expenditure goes, however, I thought it was really clear, like if that were those figures, as they stand 10% is a lot of power. And so there’s a real environmental impact from generating that 10% of electricity. So I think it was really clear that there were impacts big impacts already, which were only expected to grow. So I think whatever inspections can be done, they do need to be considered important, and also to be done as soon as possible. And but I do think that the big steps most likely will be technology steps, you know, somehow of reducing our capacity or not our capacity, but I need to source so much data. So if it’s a compression issue, I don’t know that

Gene Tunny  56:17

well, there is compression already. I think we’re probably solve the compression problem. They’ve got very good algorithms for compressing data. I don’t know how much more efficient we can get on there.

Tim Hughes  56:28

I mean, I’m coming from a non technical background. So I mean, you know, how, for instance, the initial computers were massive, and they became smaller and smaller to the point we had, you know, a small computer in our pocket that can take cameras has all this capability. That is amazing. Yeah. I don’t know how that happens. I just trust that, you know, it has happened. So I just go with it. And I just wonder, like, you know, hopefully, there might be some future leaps and bounds that we can do in the forms of storing data. You know, if that might be something if we might go through the same process of efficiency and finding better ways to to manage this before it gets more of a problem.

Gene Tunny  57:03

Yeah, in terms of storage technology. Yeah. Yeah, I’m not sure. I mean, I’m not an expert on that. Either. You were talking about the, the size, I mean, the compression comes into it, where you reduce something that is 10 megabytes down to two megabytes or whatever. That’s the compression. So it has a smaller storage requirements in terms of storage technology becoming better and, and cheaper. I don’t know. I’m presuming it will. I mean, I remember, back in 1989, my neighbour, Simon had a hard drive for his Amiga computer. And I think it’s stored a couple of megabytes. That was like a big deal for saw.

Tim Hughes  57:48

And that’s the thing, like, you know, neither of us are equipped to sort of see, I mean, clearly, there were constraints. And there are, you know, people are trying to no doubt make this as efficient as possible. Yeah. You know, so if, in, you know, in the meantime, what we can do, though, which are made some really good points is that, you know, we have a couple of options, you know, to store our photos or videos on external hard drives, which, like you said, rightly, before we started recording again, but that would come at a cost, to create that harddrive, etc. But the point being that, once it’s on that it’s not consuming electricity, to keep it stored, it’s not stored in the cloud, etc. So that’s one of the areas I thought was worth mentioning. And again, the digital cleanup day. So he mentioned, I think we worked out it was Anneli overall, as the Estonian activist, and, again, with whatever is at our disposal, now, we can use that technology or that little bit of time, or like, it’s okay. You know, we do the same with our gay marriage, or whatever storage we have at home, I think it’s okay to put a bit of time into into making our digital storage habits more efficient and less, less cluttered. So there’s good information on what does it digital digital cleanup day.org. So if anybody wants to check that out, there’s some good information there. So the other part of the efficiency process was back to what you were talking about with the rare earths and DRC, etc. And that was a big one big takeaway I felt was to hold on to your phone. So that’s in the hardware element of our digital habits, so phones, laptops, tablets, etc. The production of those is where all of this comes into it. And so if we can hold on to our phone, get it fixed. I think GM said he had an iPhone seven, and getting it fixed, meant that he wasn’t then getting the latest one, they’re all perfectly good. I don’t have to have quantum leaps of technology. With these things. You can do everything with, you know, a model that’s a few years old. And so there are definitely things we can do to to help with these current issues and to try and slowed down that dependence on requiring more energy to store and the issues that might come from extraction of these rare earths from different parts of the world.

Gene Tunny  1:00:09

Yeah, I’ll have to look up and put in the show notes. What that the size of that Amiga hard drive was it probably, I think it was a bit more than a couple of media or

Tim Hughes  1:00:19

anything I just said, Jane, are you just thinking about that? You’ve been thinking about that for a while. Sorry. That’s totally fine. I’m used to it. I’ve got three kids. But yeah, so quantum leaps in that regard in a relatively short period of Yeah, exactly.

Gene Tunny  1:00:41

Exactly.

Tim Hughes  1:00:45

That’s another big point, I thought was really interesting was the value that you put on democracy, you know, that we have the opportunity in democratic societies to make change. I thought that was a good point.

Gene Tunny  1:01:01

Yeah. Yeah, I think well, certainly is. Yeah, we hope that the changes are sensible. So I guess the challenge here is to come up with sensible policy recommendations and not just react to the fact Oh, there’s a lot of data, we’re using a lot of energy for the digital world? Well, of course, we are because we’re role online now. So what’s the actual problem? I think we’ve got to make sure the policies are addressed at where the so called market failures are addressed at tackling those who were not properly pricing the costs of, of the environmental impacts. So that’s what I would say.

Tim Hughes  1:01:44

I think one of the main points was this is out of sight. So we’re not we’re not aware of this cost, in power, or in environmental and inhuman impacts. It was just bringing it to the fore to bring it into view, I guess, you know, with with rubbish that we do household waste, etc, we can see that it gets picked up. And it’s it still goes into areas that we may not be so aware of. But we’re aware of that daily. Yeah, contribution to. And I guess this is like there’s a digital landfill that we need to be take some responsibility for. And I guess that was what I felt from from.

Gene Tunny  1:02:24

Yeah, look, I think he makes some good points. So I think it was a good conversation. And from doing the some reading on this, in preparation for our chat, I discovered that there isn’t really a lot of information or a lot of analysis of this. And there’s a great article I found on data camp.com that I’ll link to that goes through the impacts of digital technology in it right. And in that they write despite recent progress to improve corporate transparency, there’s still significant data gaps and blind spots and the evidence of environmentally relevant digitalization impacts, which I think is true. So it’s something that further research would be useful on.

Tim Hughes  1:03:04

Yeah, yeah. It’s a big subject, and no doubt one that’s going to stay with us for as far as we can predict at the moment. So yeah, it was it was good to get that perspective on it.

Gene Tunny  1:03:15

Very good. And one thing I liked about his book is he, he does talk about the economics of it. He talks about the Jevons paradox. I don’t know if you came across that I needed and talk to him about about that. But the idea is that as we become more efficient in something, rather than using less of it, we can actually end up using more of it because it’s, it’s cheaper, so electricity as we become more efficient, and well, if we become more efficient with electricity, so the use of electricity, more efficient lighting and refrigerators and washing machines, then those savings we just ended up, you know, getting more appliances in we that gives us some room to to use more electricity. And it can be that we ended up using more sounds like

Tim Hughes  1:04:03

Parkinson’s Law where yeah, we fill up the available space to do whatever we can. So if we have more money, we spend it if we have more, fill it.

Gene Tunny  1:04:12

Yeah, so I’ll put a link in the show notes on the Jevons paradox, which was originally discovered by a British economist Stanley Jevons. Thing was William Stanley Jevons in the 19th century with regard to coal. So I’ll put some I’ll put a link in about that. And that might be a good topic to cover in a future episode.

Tim Hughes  1:04:34

And there was a cost benefit analysis that Guillaume mentioned.

Gene Tunny  1:04:38

Well, I think he was saying that you really need to do a cost benefit analysis on any measures to deal with these issues. Was that what he was saying? Or you’d want to do a cost benefit analysis of our use of digital technology? Now my feeling is, it’s going to come out in favour of the use of digital technology,

Tim Hughes  1:04:54

for sure. And he was very clear with that, that he’s not against it, like he uses it. And so it’s not a question of, for or against, it’s a question of better use of and better practice in how we, how our hardware is made, and, and also being mindful of how much power is being currently used. And to see that, you know, wherever we can be more efficient in that whole process that we do what we can. And that was where the democracy sort of comes in, you know, we can, as voters, you know, this is something through discussions through this kind of discussion. And the kind of, you know, I guess this is the awareness that Guianas bringing to us. And it’s just making sure that we can have these conversations and talk about it so that, yeah, at some point, it can be better, or we can be less wasteful.

Gene Tunny  1:05:48

Absolutely. And I think he does the point that we’re not going to solve all these environmental challenges. If we just move to renewables and EVs, there’s still going to be environmental impacts that we need to think about. I think that’s a that’s a good point. So anything else, Tim, before we wrap

Tim Hughes  1:06:03

up? No, I really enjoyed it, Gene. And thanks again for giving me the guest spot. I really enjoyed it.

Gene Tunny  1:06:09

Oh, of course. Thank you, Tim. And one thing I should note, as you please check out the show notes, I might put in the the capacity of that Amiga hard drive for 1989. I may have underestimated underestimated that but it was very low relative to what they are now is quite incredible. Was it eight or 20 megabytes? I’m struggling to remember, but I’ll do some research on that. Very good. The 80s wonderful time. Okay, Tim? Yes. Thanks for your time. today. It’s been a pleasure. Right. Oh, thanks for listening to this episode of Economics Explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.

1:07:29

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Credits

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Categories
Podcast episode

China’s falling population & global population update   – EP174

The world’s population keeps growing and passed 8 billion in late 2022, but China’s population is now falling. There are concerns over what that means for its economy and the wider global economy. Is Paul Krugman right that a falling population means a weak Chinese economy? Show host Gene Tunny and his colleague Tim Hughes discuss the possible implications of a shrinking China, as well as global population projections out to 2100. The conversation touches on the environmental impact of a growing population and how well-placed we are to manage environmental challenges.    

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored

You can listen to the episode via the embedded player below or via podcasting apps including Google PodcastsApple PodcastsSpotify, and Stitcher.

What’s covered in EP174

  • The world’s population is on the rise and passed 8 billion in November 2022 [4:24]
  • Why post-war population growth was so strong [7:43]
  • What does a declining Chinese population mean for the Chinese and global economies? [14:09]
  • The importance of immigration in Australia population growth [19:27]
  • How the world’s population will eventually level out toward the end of the century [23:35]
  • Can governments solve environmental challenges? Discussion of the hole in the ozone layer and the Montreal Protocol [30:09]
  • Paul Krugman vs Dean Baker on the future of China [42:07]
  • Tim asks how do you maintain a growth mindset in a declining population? How do you make it work? [47:25
  • Will demographics and a weaker economy bring down the Chinese administration? [53:06

Links relevant to the conversation

UN World Population Prospects 2022 data

https://population.un.org/wpp/

Paul Krugman’s article “The problem(s) with China’s population drop”

https://themarketherald.com.au/the-problems-with-chinas-population-drop-2023-01-19/

Dean Baker’s article “Paul Krugman, China’s Demographic Crisis, and the Which Way Is Up Problem in Economics”

https://cepr.net/paul-krugman-chinas-demographic-crisis-and-the-which-way-is-up-problem-in-economics/

China’s old-age dependency ratio

https://population.un.org/wpp/Graphs/Probabilistic/Ratios/OADR/65plus/15-64/156

Stanford Business School article “Baby Bust: Could Population Decline Spell the End of Economic Growth?” discussing Charles I Jones views on the link between population, innovation, and economic growth

https://www.gsb.stanford.edu/insights/baby-bust-could-population-decline-spell-end-economic-growth

Transcript: China’s falling population & global population update   – EP174

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:07

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. This episode, I discuss China’s falling population and other global population issues with my good friend, Tim Hughes, who helps me out in my business Adapt Economics from time to time. Tim is not an economist, but I always enjoy chatting with him and hearing his views. And I think he asked very good questions, please check out the show notes, relevant links and for some clarifications, for instance, I need to clarify that the fertility rate for Hispanic women in the US has fallen over the last decade, and is now lower than what I remember it being although it’s still higher than for non-Hispanic women. The general point I make about Hispanic fertility contributing to a higher than otherwise, total fertility rate for the US is correct. I think about doing a deeper dive on fertility rates and other demographic issues in a future episode. Please stick around to the end of my conversation with Tim for an afterword from me. Okay, let’s get into it. I hope you enjoy the show. Tim, he is good to have you back on the show in 2023. Good to be back gene. Yes, Tim. Lots to chat about this year for sure. And today, I thought we could talk about one of the big bits of news that’s already come out this year is the news about how China has had a falling population. The population started to fall for the first time. So that was over last year. Did you see that news?

Tim Hughes  02:01

I do. Yeah. And it’s sort of in line with previous conversations we’ve had about world population and declining growth in a lot of countries. But that’s been mainly in the Western countries. So I think it’s the first time we’ve seen this in China.

Gene Tunny  02:15

Yeah, and this is one of the big concerns for China that China could get old before it gets rich. So it’s got an ageing population. And now it’s got a falling population. And there’s concerns about what that means for its economy, its economic dynamism, its ability to look after the elderly people. So that’s one of the concerns, you know, there’s concerns over the dependency ratio and the number of people of working age to support those.

Tim Hughes  02:46

So that’s the same principles. Because I know we’ve talked about a lot of the Western countries have declining, population rates are declining growth rates. So there’ll be the same challenges that those countries face as well, then yeah.

Gene Tunny  03:01

To an extent, it’s much worse in China than in many Western countries, because China really shot itself in the foot, really, if you think about it with that one child policy. And it seemed like a good idea at the time, because at the time, we’re concerned about, well, how do we feed a billion people or so. And so there was a government policy, instituted late 70s, early 80s, that each family can only have one child. And that seemed like a good idea at the time, to help improve living standards, and help feed the population. But what it’s meant 40 years later, is that they’ve now got a declining population. And while they’ve relaxed that one child policy, what they’re finding is that Chinese couples, they’re quite happy with one child, because you know, that’s been the norm for four decades or so.

Tim Hughes  03:56

Yeah, because that was in place until 2016, I saw,

Gene Tunny  03:59

Yeah, around then I think. Yeah.

Tim Hughes  04:03

So I mean, it’s pretty radical, because I guess China is one of the few countries that could implement that – that kind of law. I can’t imagine many countries being able to do that. So it’s interesting seeing it pan out, because it’s interesting that Western countries have a declining growth rate anyway. So without that being put in place.

Gene Tunny  04:24

Yeah. And one of the other big challenges for China, which is less of a challenge for Australia, and for the US, for example. Immigration is a that helps us alleviate some of the challenges from an ageing population, not completely. We’ve got a really strong immigration programme here in Australia, the US gets a lot of immigrants from all around the world. And also because the US has got the benefit of having a large Hispanic population and the fertility rate among Hispanics. So people from Mexico or from South America or wherever Puerto Rico, it’s, I don’t know, it’s over 2.1 For sure, which is the replacement rate. And so what that means is that the US, their fertility rate is not as low as in other other economies. And so they’ve there not the pressure doesn’t come a lot from that source. I mean, in Australia, we’ll end up having that that natural increase turned to a natural decrease eventually. And then we will have to start relying on immigration for additional people at the moment, we’ve still got some natural increase, because we’ve got, because the baby boomer cohort was so big, and then their children, there was plenty of them. And so there are still more people being born in Australia than dying. You get a problem if you don’t have people being born and you got everyone die in, that’s when you know, you don’t have immigration. And that’s what’s happening with China.

Tim Hughes  05:56

immigration has been a big part of national growth for so many countries for since forever. Like, that’s always been the case. And so certainly, places like Australia has count on that massively. Zooming out to a macro level. We’ve been talking about the cause, I remember we had this conversation years ago, and I was open-minded at the time but I was wondering, like, what happens, you know, if world population gets out of control? And you mentioned at the time that the thinking was it was going to level off around 2050 at around 10 billion? I think that might have been raised?

Gene Tunny  06:33

Yeah, it’s been revised. So if we look, we might go to the World Population Prospects. So I’ll put a link in the show notes to this. This is the really authoritative set of projections from the UN. And I mean, they’re really good. They essentially, they were forecasting that China’s population would start declining around now. Yeah. And, you know, India’s, the mean, India’s population is going to overtake China pretty soon, if it hasn’t already overtaken China’s population that we chat about that a bit later. There are some good references I found on that. They’re on the 8 billion mark now. Yeah, I think we crossed 8 billion last year. If you look at the world population, Prospects report, they’re released last year. So the world’s population is projected to reach 8 billion on 15 November 2022. Can you remember what you’re doing that day, Tim?

Tim Hughes  07:24

No,

Gene Tunny  07:25

No. But that was back to the momentous day for the world. So you know, 8 billion amazing. I don’t know what it was, when I was born, it might have been in the 70s. It might have been put it in the shownotes. But I remember when I was at school, it was 5 billion or so

Tim Hughes  07:43

This is a thing that I saw, I remember at the time when we first had this conversation, because the rate of the doubling of the world’s population was so fast. I mean, the turn of the century around the First World War turn of the previous century, is around the 2 billion mark, I believe. And so to get where we are now is like a billion. I mean, that’s a huge growth. And this is the history of the universe, for instance, like for our species on this planet, any planet, you know, to be this money. So it’s a really, it’s a really fast growth.

Gene Tunny  08:19

So why that occurred? It’s because of improvements in agriculture is because of the fertiliser, the ability that’s that process the was invented by those German chemists.

Tim Hughes  08:33

Those German chemists, yes.

Gene Tunny  08:34

I’m not going to pronounce it. I’ll mispronounce it for sure. But there’s a there was a process that to artificially or create ammonium, I think for fertiliser, if I remember correctly, so there’s a something like that there’s a there’s a chemical process that was perfected in the early 20th century by some German chemists. And that meant that we were able to produce, you know, fertiliser artificially, and then that meant that our agriculture could be much more productive. And all of these, you know, we could support much larger populations in India and Bangladesh, and all over Asia, in Africa. So that’s a big part of it. And the other part of it, of course, is just improvements in public health and understanding of germs and bacteria and viruses and all of that eradication of smallpox, all sorts of things that have that mean that billions of people who wouldn’t have been born or wouldn’t have survived beyond infancy, are able to survive and now we’ve got 8 billion people. It’s just incredible. When you think about it.

Tim Hughes  09:42

Infant mortality at that time was terrible, like, it was very common for families to have any number of kids who didn’t make it through to adulthood. And that has definitely improved.

Gene Tunny  09:58

Well, just got any I mean, you got any cemetery and yeah, any older cemetery and you just see all the graves and memorials to infants. It’s incredible, isn’t it?

Tim Hughes  10:08

But go back to the conversation that started this? Well, certainly, as far as I was aware, because so I was of the mind, like, you know, what happens if we just get more and more and more, there’s a massive problem, and it just gets out of control. But you mentioned that this was actually foreseen that there will be a levelling off. So this extreme growth that we’ve seen from so taking that 2 billion mark around the 1900 mark, 2 billion to where we are now 8 billion. I mean, if, you know, I’m thinking, Well, what happens at the point where we can’t sustain any more people, but it was foreseen that we would have this levelling off around 2050. And then 2100, not much growth between 2050 and 2100. Is that still the case?

Gene Tunny  10:49

Yeah, yeah. So if I’m looking, I’m looking at the UN, the world population projections that were put out last year, the latest projections by the United Nations, suggests that the global population could grow to around eight and a half billion in 2039. 9.7 billion in 2050. And 10.4 billion in 2100.

Tim Hughes  11:12

So that’s a real that’s slowing down a hell of a lot from where we are now.

Gene Tunny  11:15

Yeah, yeah. And that’s because of that demographic transition they talk about. So I think we talked about that last time. How as economies get wealthier, as people get wealthier, public health improves, then they have fewer children.

Tim Hughes  11:30

That’s interesting to me, because you would think it’d be quite logical to think it would go the other way, that people would have more children under those circumstances. But there’s actually fewer.

Gene Tunny  11:39

Yeah, yeah because in poorer economies in poorer countries, children are in insurance policy. And they help look after their parents in old age. Yeah, So that’s, that’s how it works.

Tim Hughes  11:52

 I’m thinking that my kids, I might have to mention that to them.

Gene Tunny  11:58

Yeah, so that’s why. And historically, yet, so you’d have that have more children, of course, birth controls, and other another thing, too, right. So birth controls part of the story. But I think largely, it’s, it’s due to the fact that if you’re in a more if you’re in a poorer economy, then it’s probably more likely to be agrarian, or you have lots of people on the farm. And you know, having children’s that’s, that’s your workforce. Right. Okay. Yeah. So, I mean, that sounds harsh, but that’s what it is, right. So that’s  your workforce, it’s to help you out in the home, and it’s to look after you when you’re old. And so that’s why in poor economies, they have more children, and there tends to be this demographic transition, that’s well observed that countries really have this sharp or this big drop in fertility, as they get wealthier.

Tim Hughes  12:53

It’s a really interesting, I mean, I think it’s a good thing, like, you’d have to say, you know, I mean, I was, I was pleased and relieved, to see that that was going to level off, you know, because it’s obviously, you know, if we think of like, a parasitic kind of relationship, you know, and the planet, if we’re a parasite on this earth, and just gonna get too many of us, and potentially, like, trash it, which is still possible with 10 billion people. But it looks like everything’s turning around there to make better choices towards the future generations. So hopefully, that works out. But if the population was going to keep growing, that was certainly going to be a bigger issue. But hopefully, that will make it easier for us to manage the planet and our lives on it in some more sustainable way, you know, that we can sort of level out and do something. And I know, this then brought us to another question of, you know, sustainable growth being constant. Always more, always more. What would that sustainable contraction look like? Or D growth or flexible growth, that we’ve got a few different terms for it that we’ve come with for it. But it’s an interesting sort of concept of like, well, you know, not everything is going to grow, grow, grow. So how do we sort of like, manage that levelling out, you know, as humans on this planet?

Gene Tunny  14:09

Yeah. Well, this is one of the big questions about the Chinese economy and what that means for the global economy. Paul Krugman wrote a really provocative, I mean, really well written piece in The New York Times following that news, or might have been earlier actually a better check when he released it. We might cover that in a moment because there is a question about what a declining population in China or Japan what that means for the dynamism of the economy and your ability to keep everyone employed. So we might talk about that. Just wonder if we need to go back over those world population implication?

Tim Hughes  14:47

Yes. Because that’s in China, for instance. That’s what implications already hasn’t it with what’s going on there. So there’s a lot to unpack just with China, let alone the rest of the world.

Gene Tunny  15:00

Yeah, so these are the big takeaways from this World Population Prospects report. So population growth is caused in part by declining levels of mortality as reflected in increased levels of life expectancy at birth. So globally, life expectancy reached 72.8 years in 2019. So that 72.8 years, that’s a globally that’s not that’s across the whole world, right, not just in the wealthy countries an increase of almost nine years since 1990. So that’s a huge achievement. The other thing I think’s really interesting, in this UN report, this is this demographic transition we were talking about. In 2021, the average fertility of the world’s population stood at 2.3 births per woman over a lifetime. So that’s above the replacement rate of 2.1. Because you need that extra point one to account for the fact that some children won’t make it out of childhood. So that’s 2.3 births per woman over a lifetime having for having fallen from about five births per woman in 1950. Wow, that’s extraordinary, isn’t it? Global fertility is projected to decline further to 2.1 births per woman by 2050.

Tim Hughes  16:14

So was the baby boom, in 1950, yeah?

Gene Tunny  16:18

Yeah, I mean, a lot of that’s going to be in the reason, it was five births per woman. A lot of those births would be occurring in the developing economies in the emerging economies in India and China, because I think China had a big baby boom. And in Australian trying to remember what our fertility rate got up to, I think it peaked in the early 60s, because I remember looking at the data, because we will look when we were working on the intergenerational report in treasury, we were all over this data, I think, maybe got to three or three, between three and four. In Australia, which was pretty high for Australia. Now it’s under two. So it’s below replacement, if I remember correctly.

Tim Hughes  17:01

That reminds me because wasn’t it Peter Costello, who said, have one for each other and one for the country? Yes. So that was the opposite of what China were doing. So Australia was like popping out? Well.

Gene Tunny  17:11

Because we were determined that we need people. Yeah, so it’s interesting. So historically, we wanted to grow Australia’s population for defence reasons. I think Arthur Cornwall who was a minister under Chifley I think that was his he wanted and that’s why he encouraged migration. Isn’t that how you got over here?

Tim Hughes  17:33

Do not tell the authorities, will you. No, my mom’s Australian. So that is my connection.

Gene Tunny  17:42

Oh, that is right, I am just kidding. We encourage, we encourage migration after the war to try to build up the population, I guess, because we thought there’s a limit to how many you know how many how fast you can grow the population just relying on the fertility of, of the population.

Tim Hughes  17:59

I know there was a big like that there’s been a constant source of people from the UK anyway, like, the Ten Pound Poms and all of those guys who came over.

Gene Tunny  18:08

BJs. Yeah. And it’s so I guess we were relying on immigration quite a bit. And even with immigration, we will still have facing this ageing population challenge. And then Treasury crunched the numbers, and it looked like, Okay, this is going to be bad and 30 or 40 years time, because there are going to be fewer people of working age supporting the people of the elderly people also children in the dependency, like, I can’t recall the figures off the top my head, but you’d often see figures, which would suggest that whereas once there were five working people, for every dependents by, some data, there’d be two and a half or whatever, they’d be those sorts of scary statistics, and the budget deficit would end up being 5% of GDP if we didn’t correct this. And so then they the government of the day developed a strategy to try to boost population, or boost the fertility rate and the baby bonus and there’s a huge debate over whether it was effective, whether it was whether it made sense to spend that money, because a lot of people just got the whatever it was $5,000 baby bonus and went out and bought a plasma TV.

Tim Hughes  19:27

We had a baby at least one baby in that time, maybe two, we had three altogether, but I think two of them had a baby bonus. Yeah. So we’re very happy with that.

Gene Tunny  19:37

Yeah. Totally, but the fertility rate did increase over that period. And which, which meant that there was all this talk about Well, Peter Costello’s being the only minister in the Western world, has ever managed to increase the fertility rate or something like that. So we got a lot of praise over that. And there’s that famous photo of him with all the babies surrounding him. Yeah, so I guess we work tried to address our concerns about ageing about declining population, well, we don’t I mean, we’ve still got a growing population, we’ll end up where 26 million now, I think and we’ll end up at 40 million by 2050. Possibly.

Tim Hughes  20:16

So the reality of that is that that’s going to be mainly from immigration.

Gene Tunny  20:19

Yeah, there’s still they’ll still be some natural increase, but a lot of it will be immigration. That’s correct.

Tim Hughes  20:25

I think it’s a really good. I don’t think it’s widely known by everybody, of the importance of immigration, like it’s it, as far as like feeding that growth and like, supporting the ambitions of a country, immigration is essential to have that growth. You know, it’s a big part of it. I know, certainly, in the UK. I know, people from West Indies and, you know, the Caribbean, India, Pakistan, you know, massive influx at different times to be invited over into work, you know, it. And, of course, then there were thriving communities of generations now of people who are British and add to the whole vibrancy and diversity in the country. And that’s part of I mean, I know, it’s a very controversial subject in many countries. You know, we’re not going to cover here. But the fact is that immigration is needed for that growth. Yeah.

Gene Tunny  21:18

Yeah, there’s one way that you can get around this, this challenge in particularly in the western economies, which are projected to have falling populations, you can take advantage of the fact that, well, the population is not falling in other parts of the world in the emerging economy. So there is that opportunity for migration. And we’ve got to look at better ways of allowing people to, to migrate, including on a temporary basis, a lot of the concerns about migration or about people migrating for work purposes, and then settling there permanently and bringing their families. So there’s a lot of concern that. So countries like Germany, which have had bad experiences with or they do them perceive the perceived that they’ve had bad experiences with guest workers in the past, that they’d want to make sure that any migration is temporary. So I think countries are looking at ways that they can have temporary workers schemes that I mean, we’ve got all sorts of visas for temporary workers now. And we’re getting people over from the Pacific where we were before COVID, to help pick fruit here in Australia. So that’s, that’s, yeah, I think migration, certainly part of the solution. At the same time, you want to make sure that it’s, it has community acceptance, and you’re not putting too much pressure on community services, you want to make sure you’ve got the infrastructure to support the population. Yeah, so a bit of a challenge there. Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  22:57

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Gene Tunny  23:27

Now back to the show. Let me just check that Australian population forecast Tim.

Tim Hughes  23:35

So I was gonna ask you Gene like, with that levelling out, frustrating gets around 40 million.

Gene Tunny  23:41

That’s what I wanted to check. Yeah. Right, because that’s the number I had in my head. But let me just check with that. That, but go ahead, keep going. 

Tim Hughes  23:48

Yeah, I was gonna say, I mean, I guess Western countries are already there, where they’re starting to level out and have a very slow rate of growth, or in decline. And so it’s just with infrastructure, and all those different things like at some point, you can imagine that people will still want to move around the world. So even with 10 billion, 11 billion, it might be a case of people leaving one area on mass to try and get into other areas, which happens all the time. I guess it’s certainly happening now. Yeah. And so a big part of that is just managing the amount of people that are on this planet, but with the sustainability sort of question, you know, it’s that up until now, everything’s been about growth, you know, population growth, and more, more and more, to getting back to the point I was talking about earlier, like, you know, it’s gonna get to the point where it’s like, well, this is we have to manage this the best way we can. And so yeah, it was going back to those areas of D growth or flexible growth, sustainable contraction.

Gene Tunny  24:45

Yeah, sure what you mean by that, Tim. And well.

Tim Hughes  24:47

I guess, I guess it’s the kind of thing because of, with that levelling out of the population, I mean, like I said, I think it’s a good thing, you know, because there are enough of us.

Gene Tunny  24:57

Yeah. If you’re concerned about the ability of the planet to support the population and there are plenty of people who are who are saying, Oh, well, we’re actually exceeding the planet’s carrying capacity at the moment, which I don’t believe because if we were, I mean, we wouldn’t be able to keep growing our population, and obviously, where we’re able to support the current population, just by the fact that we are supporting it, right,

Tim Hughes  25:20

I guess at some point as a planet, they’ll still be moving people moving around, like I mentioned, like, yeah, that’s understandable. But the growth mindset, as far as population goes, will have to change at some point, you know, like, you know, it’s not just going to be more and more, it’s a case of like, doing better with what we have. Does that make sense?

Gene Tunny  25:38

I think we should always be trying to do better with what we have. I mean, as an economist, as an economist, I think, yeah, I totally agree with that. We’ve got to be more efficient and do better and, and make sure we’re not we’re properly pricing our impact on the planet. So we’re talking with, we’re not polluting too much, or we’re managing the environment as best we can. Yeah,

Tim Hughes  26:02

yeah. I mean, I see good things coming from it. Like, I think it’s a good sort of place to be, because everything up until this point, like it’s, you know, from 2 billion in 1900, to a billion now to 10, or 11 billion. This is, I would imagine that things will have to change in the way that the world is looked at, as far as its population goes and said, Well, this is, this is, how many of us are going to be putting, you know, waste into landfill? How many of us are going to be, you know, how we deal with our own sewerage, and all that kind of stuff? You know, what I mean? Like, the stuff that ends up in the oceans, how we treat our soil, all of that, like as a global sort of, like management of, okay, how do we do this to the best of our abilities, so we can keep doing it indefinitely. And if we have if we had an exploding population that was getting forever, and that was going to be a scenario that would be potentially catastrophic. And so that’s, I guess, we’re looking at it’s like a macro sort of like view of the whole planet, it’s okay. Well, you know, what can we expect to do better? Where we’re not just constantly expanding? As far as like the population goes?

Gene Tunny  27:07

Yeah, I think why is this definitely an issue to manage? How do we deal with all of that, and greenhouse gas emissions? We’ve got to, we need to get them under control sometime, and then you can debate how quickly or not in the Greta Thunberg, we’re all going to die in 10 years, or there’s a climate catastrophe. I think we’re gonna I can’t say, well, basically,

Tim Hughes  27:36

I haven’t heard that.

Gene Tunny  27:39

Oh, yeah. I think so, I mean, we’ve had 30 years of blah, blah, blah, not doing anything, which is actually true, right? I mean, the government’s leaders around the world will talk about how they’re doing all of this, all of these great things to reduce greenhouse gas emissions and get climate change under control. And meanwhile, global emissions keep rising. And so this is one of the points that are the conservative critics of Jacinda Ardern pointed out was, she’s very popular. She’s a progressive politician. She’s very popular among progressives worldwide. And yet, before COVID emissions were rising in New Zealand, according to these commentators, I probably should fact check that one. It’s a big challenge, because our whole industry of our industry, and our economies have been reliant on fossil fuels for so long. And it’s like turning the Queen Mary around. Right?

Tim Hughes  28:34

Yeah, because I know, we’ve talked about that with the energy sector changing massively, yeah, at the moment, and there are good things that potentially can come from it, it seems to be heading in the right direction, but it’s, you know, obviously, in a transition period, at the moment. And I wonder how much of that, you know, is down to having short term governments, who, you know, we’re expecting too much from governments, with a limited term of three or four years to be able to make these changes, you know, like, because obviously, this is a long term view that we need to take, I don’t know, 2050. Net Zero, are these sort of like goals that get put in? But sometimes I think with the longer goals, it’s easier for people to say, Yeah, we’re gonna do that. And then the action is less than what it needs to be.

Gene Tunny  29:15

Hmm. I think you’re right. I mean, the system we have the democratic system, the three or four year electoral cycle, yeah, I think that makes it harder. But I think it’s better than the alternative. I mean, we wouldn’t want to have a dictatorship was I mean, they could end up imposing, you know, a very rapid decarbonisation or that is incredibly costly on us if they thought that that was the right policy, like look what China was doing with the lock downs with the COVID zero until I realised that okay, we’re going to have a revolution on our hands if we don’t relax this policy. I think you’re right I mean, I think the democratic system we have this short term focus. Yeah, the fact that it is easy to always point to the cost the short term costs of any action. Yeah.

Tim Hughes  30:09

I mean, because I have to say like, you know, at times it seems that with governments, it’s hard to know how much difference they do make, or they can make, you know, even with the best intentions in a term, which goes very quickly.

Gene Tunny  30:21

Well, I think they can make a lot of difference. Look at problems we have solved, look at the Montreal Protocol, which meant that we eliminated the use of Chlorofluorocarbons. The ozone hole.

Tim Hughes  30:36

I saw that that was that had improved that that was a Yeah, a good improvement from what it had been.

Gene Tunny  30:42

So 1987. I think that was the Montreal Protocol. Where all the governments, particularly all the governments of the world agreed that yet we’ll phase these things out. Now. That’s different from the climate change challenge, because there were easy substitutes or substitutes, which weren’t too expensive for CFCs. Yeah, that we could replace them in the aerosols. But I think, yeah, I think governments can make a huge difference. The problem with the current mean, there are all sorts of problems is the issue of, well, for Australia. I mean, the view I’ve always had is there’s no point us doing, doing much of if China and India are still going to keep increasing their emissions, and also the states. I mean, we need ultimately, you need the major economies to be leading this. Otherwise, it’s not, it’s not really going to happen.

Tim Hughes  31:37

Well, it seems clear that innovation is going to drive it, you know, because and I get that, yeah, because it’s hard to put yourself at a disadvantage when everyone else is able to take advantage of that, you know, so that argument, for instance, here in Australia, where we’re smack fairly small country, but not necessarily been supporting too many of the netzero sort of ambitions around the world, you know, because of what you’re saying, like, let the big guys lead the way. But innovation, I think we’ll do that as soon as it gets to the point where the energy is cheaper than digging coal out of the ground. If there’s a clean way of producing that energy, then everyone will follow.

Gene Tunny  32:16

Oh, exactly. And that’s what we need. We need that technological innovation.

Tim Hughes  32:21

And the market, like from our discussions before with people in the energy sector, has been that the market is driving this. So we don’t have to, I mean, governments can help by making it easier and sort of greasing the path towards encouraging those changes to happen. But certainly the market is driving it and innovation is providing the opportunity for the market to take up those options with renewable energy.

Gene Tunny  32:42

Yeah, you’re thinking about that conversation we have with Josh. Yeah, yeah, that was interesting. Or he’s talking about the fact that the nature of this transition of any transition really is it’s going to be disorderly, it’s hard to get these things done in an orderly fashion.

Tim Hughes  32:58

I always manage to steer it back to this, don’t I Gene. It doesn’t matter what we talk about.

Gene Tunny  33:01

It’s important. If I’m thinking about, well, what’s the big potentially the big risk to I mean, other than nuclear war, I mean, it’s always a threat, particularly with what’s happening in Ukraine. Now I’m in the risk of that elevated, but the other big, potentially existential risk. I mean, you’ve got to put some probability on it. I’m not as concerned about it as some other people. I’ve got the Steve Koonin view of it, he used to work for Barack Obama, he was in the administration, I think it was in science, one of the I don’t know if he was in cabinet, or he had a, he had a senior position in the Obama administration is a scientist, he was at Cal Tech. And his view is that Yep, this is something we’re going to deal with. But we’ve got decades to deal with it. So what we’ve got to do is to start putting in place agree on some policies globally that are going to get us on this smooth transition path and, and also fund innovation trying, you know, it’d be great if we could find the cost effective solution, perhaps nuclear fusion, that there’s, there’s a lot of excitement about that. But then you got to deal with the nuclear waste. And what was that? What was actually, maybe there isn’t waste with nuclear fusion? Maybe that’s one of the advantages of it. Well, there’s less waste.

Tim Hughes  34:18

I still get my fusion and fission mixed up. So

Gene Tunny  34:21

Fusion is more powerful. Fusion is what the sun does.

Tim Hughes  34:26

Yes, right. Yeah. Fission is the separating of fusion is the joining. Yeah. Yeah. But so and with and there was a breakthrough with Fusion then yeah, just the other week, but it was still claimed that that could be decades away from it being useful for an energy source on a commercial scale. However, if it’s decades where that’s significant in the history of humans, however, with that, especially with that conversation with Josh, it was record notion that, you know, having a suite of different options for clean energy makes a lot of sense. You know, we don’t have to put all our eggs in one basket. And, you know, one choice so, and clearly those things are happening as we speak. And quite successfully. I mean, like the, you know, there’s still a lot of clean, renewable energy is getting more and more prolific.

Gene Tunny  35:22

Oh, no doubt about that. I mean, aren’t they turning the North Sea into a wind farm in? Have you seen that in? Because the North Sea is really good for the wind turbines. Well, it’s I mean, it’s not shallow, but it’s it’s not very deep the North Sea? Was there’s bits of the North Sea that are only a few 100 metres deep, I think, isn’t there?

Tim Hughes  35:48

I mean, obviously, it must be, you know, viable. But it seems odd to me that a wind farm in an ocean, you know. But, obviously, there’s, you know, there’s something in it. Yeah, yeah. It’s extraordinary. It’s a really interesting time. So because all of this is coinciding with this levelling out of the population. So it seems to be a, I don’t know, it feels like it’s a good place to take stock and see how we can sort of really manage this planet. Well, you know, and cleaning it up is the first way to do it, you know, so how we can keep the oceans cleaner than they currently are, like, clean them and stop polluting them and how we can manage our waste, you know, 10 billion, it’s a lot of foods.

Gene Tunny  36:30

Well, I guess this is what’s part of this is what’s motivated all of these measures or measures we’ve had in Australia to reduce plastic waste, and then I was growning about it when they initially announced it. But I guess you adapt. I mean, you can’t get the single use plastic bags any more at the supermarket.

Tim Hughes  36:48

You’re still hurt about that one.

Gene Tunny  36:51

You can’t get the single use plastic cutlery Well, anyway, we should get back to this population stuff. It is important. I do recognise the importance of what you’re talking about. The population of Australia is projected by the Treasury, this was last year, or this was 2021, I mean, who knows. But if they updated and they’ve got different migration projections, these numbers could be significantly different. But they were forecasting the population would grow from around 26 million, around 2021, up to 32 million in 2041, 36 million in around 2050-51 and then 39 million by 2060-61. I think I’ve seen previous, I think I hadn’t had in my head the idea that it’d be about 40 million by 2050. And yeah, it’s hard. It’s hard to forecast. It depends on fertility, it depends on migration, and then all of that sort of thing. So and life expectancy. So quite a few moving parts there. Right. The other thing I want to talk about, Tim, if you still got time, yeah, it’s this issue of what does the declining population mean? So what is China’s declining population mean for its economy and therefore the global economy? One thing to keep in mind, of course, is that I think, what were we talking about a reduction of a population of 850,000 people. So that’s under 1 million, the Chinese population is 1.4 billion. So in percentage terms, we’re talking. What’s that less than point one of a percentage point? Yeah. Does that make sense?

Tim Hughes  38:37

Yeah, I mean, it’s. So it’s level that basically.

Gene Tunny  38:42

I guess that’s one way of looking at it is that it’s yeah, it’s hardly you’d have like, really noticed that on a chart, if you drew the population. The thing is, it’s a sign of things to come, because we all know that it’s expected that the Chinese population would, is going to start falling. And there are all sorts of projections as to where it could get to. By 2050-2100, I think I’ve seen an estimate somewhere that their population by 2100, could end up being, I don’t know, 700 million or so. Yeah, it’s a really big reduction because of that one child policy. I’ll put the actual figure in the show notes, but it’s quite dramatic. Just looking at what that impact of that one child policy, ultimately will be on their population in the future, because you’re not replacing your population. Right. So that’s, yeah.

Tim Hughes  39:42

So it’s funny actually, China is like a microcosm of the globe in a way, isn’t it? Because it sort of has fairly tight borders. And so the decline that that would be for China, would be an example of like, how do you manage that sustainably, how do you sustainably contract successfully from 1.4 billion to 700 million. And yeah, the thing is like, you know, China is extreme in many ways. They may manage it very well. Now, I’ve got no idea how but I think that’s a really interesting sort of point. I mean, they’ve had massive change. Was it 1962 to see the great leap forward? You know, I mean, certainly from 1980. They’ve made in the last 20 years, 25 years, they’ve made themselves this sort of, like, workshop of the world, you know, they’ve produced so much stuff. And they’ve become very wealthy in that time.

Gene Tunny  40:36

Well, the wealthier and some people have become very wealthy, their per capita income is still I don’t know, it’s under a third of what it is in the States. It’s gone. It has gone through big changes. I mean, yeah, considering that once but I mean, I don’t know when you were young and when I was young people were saying, well eat your food, because there are people starving in China. Right. I don’t know if maybe that’s an Australian thing. Yeah. I mean, yes. It was probably still true when I was when I was young. Right. But it’s not, I don’t think it’s true now. Or it’s only in small pockets. Right. Whereas famine used to be a huge problem. And you know, people were incredibly poor. And most people lived on the land. But now I’ve had all the shifts of hundreds of millions of people from the agricultural areas in China into the cities. And it’s just, it’s just amazing.

Tim Hughes  41:27

It is fascinating, because made in the 80s, like you couldn’t go to China, like it was closed off to I think it was around the mid 80s, that they sort of opened up or towards the end of the 80s. You know, and it was a new thing, like tourism in China was a new thing. And of course, it’s really well, I mean, COVID aside, you can travel there freely now. But it’s gone through massive change in a very short period of time. It’s really, you know, I don’t know, if they’ve come to a critical point in their sort of growth as, as this powerhouse of production. With a declining population, I guess that’s going to make a big impact.

Gene Tunny  42:07

Yeah. So a lot of the discussion that pundits and commentators and economists having at the moment is around well, what does this mean for their economy? What does it mean for their society? Paul Krugman had a great article. I’m not sure I entirely agree with it, because there’s a really excellent response from another American economist, Dean Baker, which I’ll link to in the show notes. But so Paul Krugman in the, in the New York Times the other day wrote, a declining population creates two major problems for economic management, these problems aren’t insoluble. But will China rise to the challenge? That’s far from clear, the first problem is the declining populations, also an ageing population. And so you’ve got this issue of the dependency ratio, paying for looking after those people. The other thing Krugman is worried about is that a society with a declining working age population tends other things equal to experience persistent economic weakness, Japan illustrates the point. Now there’s a debate about just how badly Japan’s fared relative to other countries, it certainly hasn’t grown as fast as the US or, or the Australia. But it hasn’t collapsed either. I mean, it’s managed to maintain reasonably low unemployment, it’s kept people employed. But at the same time, they’ve been the government’s had to try to prop up the economy, it’s accumulated a huge amounts of debt. So there are certainly challenges with Japan. And partly that is because it’s, it does have that declining population, as Krugman notes. So the point Krugman is making its a Keynesian point, in a way. What he’s saying is that if you’ve got a growing population, then that, from that, for what follows from that is the need for additional capital investment in your economy, additional spending that helps keep people employed. Yeah, so that’s the that’s the point he’s making, and that if you don’t have that growing population, then you’re at risk of what Japan experience with his last decade or so and potentially at risk of deflation. So I’ll put a link in the show notes here, because we’re getting up to near the time we set for ourselves. This might take a while. Yeah. It’s incredible. And so Krugman is concerned because he thinks that what this declining population could mean ultimately is that China has a period it ends up being economically weak. And there’s also some evidence or there’s an argument from this, this economist at Stanford School of Business, Charles Jones, he argues that we’ll get a declining population is problematic because then you’ve got fewer people to solve problems, it’s less likely you’ll get an Isaac Newton or Albert Einstein, etc. So that’s one of the concerns. When who knows if that’s, I don’t know how valid that is. That’s enough. That’s a hypothesis. I mean, we’ve still got billions of people, right?

Tim Hughes  45:21

I mean, you can say those guys came around when there’s a far fewer people on the planet.

Gene Tunny  45:24

Exactly. So who knows if that’s actually a legitimate concern or not. But that’s quite a, that’s a, I should have him on the show just to talk through. It’s no Charles Jones, you know, and get him on the show rather than just say, I don’t agree with it, or maybe I haven’t done the the concept justice. But there’s certainly I can see the logic, but there are concerns that the dynamism of your economy would be at risk. If you have fewer people. There are concerns about well, how does your economy adjust to this in the short term as you’ve got declining population, and you’ve got less need for investment? We’ve got all of these buildings that have been, you know, what we don’t have as much need for new housing or new construction, which does help employ people? How do we how do we manage that? And that on the other hand, there’s this great critique of Paul Krugman by Dean Baker, who’s an economist and co founder of the Centre for Economic Policy Research, which is DC Think Tank, it’s a progressive Think Tank. I really thought this is a clever critique. And Dean Baker, apparently, his Wikipedia entry claims that he was one of the first people to have foreseen the subprime mortgage crisis in the States. So yeah, I think he’s, he’s got a good reputation. He makes the point that well, Japan’s not really as bad as you think. And then it hasn’t collapsed. They seem to manage to muddling through in some way. And then it’s not, obviously they’ve still got problems because of all the debt. But he’s saying look at something you can you can manage, and there are actually benefits from a declining population. He, he notes that Japan cities are less crowded than they would be if its population had continued to grow. This means less congestion and pollution, less time spent getting to and from work and less crowded beaches, parks and museums, these quality of life factors don’t get picked up in GDP. I’m actually not sure. Does Japan have many beaches? I mean, I understand his point.

Tim Hughes  47:25

Yeah, Echo Beach, yes that is in Japan. That’s one beach that I know.

Gene Tunny  47:32

I was just wondering, I don’t know, never haven’t been to Japan on an island. So I guess it’s yeah. Oh, of course, they have beaches. Yeah.

Tim Hughes  47:39

But that’s actually a really good way of putting, I guess one of the things that we’re talking about is like, you know, declining population doesn’t have to be bad news. I mean, I guess, you know, the, the challenge would be how do you keep maintain a growth mindset in a declining population where can you make it work to your advantage? Or, you know, how can you do the best, you know, with, because part of it would be in a declining population. Once that first surge of older people goes, then it should level out with the number of older people as opposed to the number of younger people, I guess, because as you’re peaking towards your peak population, you’d have the most amount of old people is that right? I’m sort of thinking out loud here. But I’m just wondering,

Gene Tunny  48:25

Tim, is a good question mate. I mean, you’re asking does the as if as your population declines, what happens to the age composition of the population? So I’m gonna have to take that on notice. I mean, I think that’s a hard one. I mean, there could be a point, there could be a time when both the dependency ratio gets worse and your population keeps falling? That’s a good question. I don’t know, let me put something in the afterword about that. I don’t know, conceptually, I can’t figure it out right now on the fly. That’s good question. 

Tim Hughes  49:00

But it’s that thing of like, I imagine, like the you know, because the challenge is this is to manage that. Well. Yeah. And like, so. I mean, one thought that comes to mind with that is, like, the whole thing of retiring at 65 has been around for a long time and around 65, whatever it is now.

Gene Tunny  49:16

67 in Australia now.

Tim Hughes  49:19

Y eah, this thing of like, it’s not necessary for people to stop doing what they do, you know, there’s so much wisdom and, you know, a good life experience that gets lost with that mindset of like, see you later at 67. You know, and I think opening up the opportunity for people to stay in a lower capacity timewise you know, because I think it’s important for people to wind down or do something different or start a new career, you know, like whatever it may be. So, I think maybe the way that you know, we approach ageing or the way we look at ageing, could be one of the factors that changes that declining population as to no right this could actually be looking at how do we manage a declining population better you know, maybe it’s our attitude towards all the roads that we can start with.

Gene Tunny  50:04

Yeah, I think it has to start changing because all the baby boomers are nearly retired, aren’t they? And then Generation X will start retiring.

Tim Hughes  50:13

But it’s that thing of like, you know, as we live longer, we can expect to have more good years, you know? Yeah, hopefully, yeah. And they can be, they can be good years to contribute back towards society as well. It doesn’t have to be just a retirement where you don’t pay any tax at all, because that’s part of the problem isn’t like we’re fewer people paying tax to support an ageing population. You know, so I guess and it’s not just making people work later unwillingly. You know, to give people the opportunity to have different options, different levels of engagement, you know, so they don’t have to do 40 hours a week, of course, but yeah, doing something different stimulating that, you know, people could enjoy doing for longer.

Gene Tunny  50:57

Podcasting.

Tim Hughes  50:58

Podcasting. Exactly. Everybody wants it to be a DJ, everyone was a DJ in the previous life.

Gene Tunny  51:05

Yeah, exactly. I don’t have the turntable, give it time, give it time and we can bring that into the show. Cable

Tim Hughes  51:13

Maybe that’s the way we merge the two.

Gene Tunny  51:17

See how we go. Okay, so I’ll put a link in the show notes to this, these articles by Paul Krugman and Dean Baker. I mean, I don’t know. I mean, some hours of the day I think Krugman is right, then I think I actually Dean Baker is making some great points. I’m still processing it all myself. So Dean Baker, I’ll put a link to this article. It’s on the Centre for Economic Policy Research website. One final point, I thought that well, I thought I should make that Dean Baker may not that was a good one is that? Well, actually, I mean, see it as an opportunity. I mean, China’s got a, it’s got an ageing population, still, while its population is starting to decline, you can put people to well, you’ve built all of that’s right. He’s saying one of the issues that Krugman identifies is that they were building all of this, all of these buildings that, that they may not need these ghost cities. Well, you could use them for aged care accommodation. Or, you know, I don’t know how feasible that is. But that was one of the points that he made. So I thought that was that’s potentially interesting. I mean, there will always be things people can do that the challenge is, can your economy adjust to employ them? So do you have a flexible economy? Gotta make sure you’ve got you’re not regulating business, there’s not the burden on businesses and to hire so that there can be that that adjustment, you don’t have rigid wages or rigid, rigid IR policies that prevent people moving into to new occupations? Yeah, so Dean Baker’s quite positive about what could happen in China. And I’ll encourage, if you’re listening, please read his article. I probably haven’t done it, done it justice. With that, that quick summary there. So yeah, I’d recommend reading that I thought that was really good. And Oh, one other thing we should talk about is that there’s one other concern with the declining population. And the issues with ageing population in China lack of dynamism and what it could mean for their economy, the stability of the whole country, right, the political issues. So Peter Zeihan, I think that’s how you pronounce it. He’s a academic over in the States, he’s come out with his controversial view that the Chinese system as it exists now, that Communist Party regime can only last another 10 years out.

Tim Hughes  53:44

And I mean, it’s been speculation, but it could be true.

Gene Tunny  53:47

If it turns out to be right, he would be held as a genius, the genius.So who knows.

Tim Hughes  53:52

Someone, somewhere will be making those calls.

Gene Tunny  53:54

I mean, my feelings is what I was talking about with Alan Morrison in this chat about enterprise China toward the end of last year. And I think ultimately, that there has to be a regime change in China. I think as economies get wealthier, then there’s naturally more support for democracy.

Tim Hughes  54:14

There seems to be a bit of a paradox with ideology in China at the moment. I mean, we’ve communism is the main ideology, of course, but they’ve embraced capitalism, to the point where individuals are getting mega wealthy, but then they’re sort of getting called into the headmaster’s office and sort of like, you know, put in detention for a bit to sort of keep them in line Jack Ma, from Alibaba, and different people who sort of like disappear off the, you know, public space or forums. And so there seems to be a bit of a tussle there going on, and you wonder how long that can go for. But yeah, there certainly, I think it’s fair to say that there would be an expectation of change coming sometime in the next 10 years. I mean, it’s really everywhere. I mean.

Gene Tunny  54:57

I guess change of some sort. I mean, let’s hope it’s a peaceful change. And there is, uh, you know, maybe the I mean, I don’t know whether they’re going to relinquish power will Xi Jinping I mean what what are the chances of him relinquishing power? I mean, given he set himself up as Emperor for life or whatever it was, I mean.

Tim Hughes  55:15

There’s only Jacinda Arden that I can think of this relinquish power. Yeah, it’s it’s pretty rare thing.

Gene Tunny  55:22

It is very rare because power is seductive, isn’t it?

Tim Hughes  55:27

So they say?

Gene Tunny  55:31

Tim, that’s been an amazing discussion. That’s been fun. Yeah, it’s been good. I’ve really enjoyed that. As always, we managed to go much longer than we expect to or prepared for. Any final thoughts?

Tim Hughes  55:45

No, I mean, it’s funny because it does crossover. I mean, I guess that’s why other things come into it, you know, because they’re all connected. And they, it’s a really fascinating time to be going through this. I mean, like, you know, we’re at a really interesting time, for anywhere in humanity’s history in our like, we’re at these sort of peaks that haven’t been reached before. So yeah, I’m really, and I personally enjoy the direction that things are going in for, you know, the environmental future of the planet, you know, like, I think it’s the right way to go. And I think that’s the overriding direction that it has to get when because otherwise, potentially, yeah, we’re gonna end up in a situation that’s going to be very difficult to reverse. And so seems to be heading that way, which I think is a really good thing. And hopefully, we’ll get there as quickly as we can. Safely.

Gene Tunny  56:39

Yeah, yeah. I mean, I’m optimistic. I think the biggest threat we’ve got is nuclear annihilation. So see how that goes.

Tim Hughes  56:49

It’s still it’s funny, isn’t it? Because that was those threats come and go. But I think our capacity to have our attention on it sort of comes and goes, I mean, it’s sorry, the threats always been there. But our focus on it sort of comes and goes with different things. It’s hard to live under that existential threat constantly.

Gene Tunny  57:09

Yeah, very true. Very true. Okay, Tim Hughes. Thanks so much for your time. I really enjoyed that conversation. I thought that was really he really enjoyed it. We got through a lot, and it was a good discussion to kick off the new year. So thanks so much. Yeah.

Tim Hughes  57:22

Thanks, Gene. You’re welcome.

Gene Tunny  57:25

Okay, I hope you found that informative and enjoyable. In my view, the main takeaway is that China’s declining population is a big challenge to the Chinese economy. And by implication, the global economy, it will be difficult for the Chinese regime to manage this declining population. And indeed, it could even contribute to the end of Communist Party rule, if the declining population actually does lead to a weaker economy and hence an erosion of support for the party. Arguably, one thing that Chinese administration could do to help partly offset the problem of a falling population is to have a more liberal immigration policy. Of course, the administration may worry that bringing in too many foreigners may create political instability which could cost at power. I’d note that for countries which are more open to immigration, and also which didn’t have as bigger collapse in the fertility rate as China did, I’m talking about countries such as the US and Australia, those countries are much better able to cope with demographic challenges. And indeed, they’re actually projected to grow over the future decades. For example, the UN projects that the US will have a population of 375 million in 2050. And between 390 and 400 million in 2100. That’s up from 335 million or so today. Before I go, I better respond to a question that Tim had in the episode. Paraphrasing, Tim asked a question about what happens to China’s old age dependency ratio as the population peaks and starts falling? To answer this question in the shownotes. I’ll put a link to a chart from the UN showing the projected old age dependency ratio for China. That is the ratio of the number of people aged 65. And over to the number aged 15 to 64. The chart shows the old age dependency ratio in China will keep rising for several decades, probably into the 2080s. So in China, we’ve got a falling population, and we’ve got rising old age dependency. So that ratio will increase from around 20 People age 65 and over per 100 working age people. So that’s today it will increase from 20 to 90 people aged 65 and over per 100 working age people in the 2080s. It’s expected China will eventually have almost as many old age people as working age people. That’s the median projection from the UN and everything depends on how closely reality complies with the UN’s assumptions of course, that said there’s no doubt The dependency ratio is increasing and China has a big problem. China’s one child policy has meant that too few people have been born in the last few decades, nowhere near enough to keep the population growing and to look after an increasingly elderly population. Many of the Chinese born are the big cohorts after the 1949 revolution, and before the one child policy was introduced in 1980. They’re still alive and they’re ageing. Right? Oh, I must confess that population dynamics are complicated. And I might try to get a demographer under the show and a future episode for a deep dive. If that’s something you’d be interested in, please let me know and I’ll see what I can do. Okay, thanks for listening. rato thanks for listening to this episode of Economics Explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if you’re podcasting outlets, you then place router review and later writing. Thanks for listening. I hope you can join me again next week.

1:01:30

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Credits

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Economics Explored is available via  Apple PodcastsGoogle Podcast, and other podcasting platforms.

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Podcast episode

Do environmental and business sustainability go hand in hand? w/ John Engelander  – EP172

Planet Earth Cleaning Co. and Ecobin founder John Engelander proposes that environmental and business sustainability can go hand-in-hand. Show host Gene Tunny asks John about the benefits and costs of businesses adopting more environmentally-friendly practices. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored

You can listen to the episode via the embedded player below or via podcasting apps including Google PodcastsApple PodcastsSpotify, and Stitcher.

What we discuss with John Engelander, founder of Planet Earth Cleaning Co. and Ecobin

  • John’s epiphany that led to the birth of the Planet Earth Cleaning Company [4:15]
  • What are the costs and benefits of adopting environmentally friendly business practices? [8:00]
  • “It’s not an investment if it is destroying the planet” discussion, in which Gene mentions how economics has been trying to account for environmental impacts [20:38]
  • Do we have enough time to avoid a climate/environmental crisis? [25:50]
  • John asks Gene if we need to own cars? [33:54]
  • John’s final thoughts on the importance of being a conscious consumer [44:29]

About this episode’s guest: John Engelander

A true force of nature, CEO & Founder John was green way before it was cool. It was his belief in profit with a purpose that led him to start The Planet Earth Cleaning Company circa 1994, and he has been inspiring people and companies to be greener and better for the planet ever since.

In 2007, John completed his certificate in Sustainability Advocacy at Swinburne University.  He believes, “when you look after the planet, you look after yourself”. When we influence others to take responsible actions, there is a ripple effect. And that’s part of doing good by being good.

Today, John works with people that are looking for a healthier alternative & genuinely cares about making a difference to the planet, whether that’s through The Planet Earth Cleaning Company, the EcoBin business, or his personal advocacy & public speaking. John believes “conscious consumption is a great way to start. After all, less is more, and your planet will be healthier for it.” Now that’s good for business.

Out of the office, John burns off some of his high energy levels with water sports, snow skiing, mountain bike riding, cardio pilates and enjoying time in nature. And when not running after his kids and dogs, he likes to tinker on the piano, watch movies and have dinner with friends.

Links relevant to the conversation

John’s business EcoBin:

https://www.ecobin.com.au/

Quote by Vandana Shiva:

https://quotefancy.com/quote/925201/Vandana-Shiva-It-s-not-an-investment-if-its-destroying-the-planet

Mastercard study quoted by Gene:

https://www.mastercard.com/news/insights/2021/consumer-attitudes-environment/

CSIRO article on natural capital accounting:

https://ecos.csiro.au/knowing-the-price-of-nature-the-rise-of-natural-capital-accounting/

UN article on The Rise, Fall and Rethinking of Green GDP:

https://seea.un.org/news/rise-fall-and-rethinking-green-gdp

Australian Government guidance note on cost-benefit analysis, which makes it clear CBAs should consider environmental impacts, quantitatively if possible but otherwise qualitatively:

https://www.pmc.gov.au/sites/default/files/publications/cosst-benefit-analysis.docx

Transcript: Do environmental and business sustainability go hand in hand? w/ John Engelander  – EP172

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Ep 172 31 December 22

Sat, Dec 31, 2022 6:16AM • 49:58

SUMMARY KEYWORDS

people, business, economists, cleaning, planet earth, john, economics, planet, sustainability, clients, cleaners, green, company, eco, thought, buy, organisation, price, good, world

SPEAKERS

Gene Tunny, John Engelander, Female speaker

Gene Tunny  00:00

Coming up on Economics Explored,

John Engelander  00:03

And I do believe that businesses that are purpose driven, people are attracted to that. And that attraction makes people happier and more productive.

Gene Tunny  00:15

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny broadcasting from Brisbane, Australia. This is episode 172 on environmental and business sustainability. My guest is John Engelander, founder of the planet Earth cleaning company, and also the founder and CEO of Ecobin. In this episode, John and I discussed his proposition, but environmental and business sustainability go hand in hand. After my chat with John, I provide some reflections on the conversation, so please stick around for those. Also, please check out the show notes for relevant links and information and for details where you can get in touch with any questions or comments. Let me know what you think about what either John or I have to say in this episode, whether you have any thoughts on environmental and business sustainability? To what extent are they aligned or in conflict? I’d love to hear from you. Before we get into it, I would like to let you know that I’m going to take a short break from the podcast over January and come back in early February. Righto, and now for my conversation with John Englander of Ecobin. Thanks to Obsidian Productions for their assistance in producing this episode. I hope you enjoy it. John Engelander, welcome to the programme.

John Engelander  01:26

Well, it’s an absolute pleasure to be here today, Gene. So, thanks for having me.

Gene Tunny  01:30

It’s it’s fantastic to chat with you, John. So you’re very keen to chat about issues around business and environmental sustainability. So you’ve had a very successful career as a business owner, with the planet Earth cleaning company. And also with you’ve been involved in Eco Bins. I’m keen to understand those businesses, what you’ve done there. To start off with, I’d like to ask you about this. This philosophy of yours, I think it is that environmental and business sustainability go hand in hand. I mean, what do you mean by that? What does that mean to you, John?

John Engelander  02:14

Okay, it’s a good one because often I feel incredibly fortunate that I’ve been able to combine sustainability, and commerciality almost as a cocktail. And ther is some perfection in that because you give a lot of thought, I give a lot of thought and consciousness to how we think about the products that we consume, or what we offer our clients. Because I feel that the impact matters. And I think the price we pay for something, let’s call it whatever it might be, dollars, whatever. And then the price we have on our planet require some kind of balance, because, frankly, we don’t have an economy without getting it right with the ecology. Wouldn’t you say?

Gene Tunny  02:58

No, I absolutely agree with you there. I mean, we certainly need the environment to sustain us. So yeah, absolutely, absolutely, agree there. And would you be able to tell us about the planet Earth cleaning company? How you got involved in that? How did you figure out that this was a way that you could have a business that that met these, you know, that was both financially sustainable, and also environmentally friendly?

John Engelander  03:28

I think the like most things that can work out well, is there’ll be a problem. And if you can solve a genuine problem, then there’s likelihood there’s an opportunity, I don’t think you can make up. Often an idea, I’ve done it many times, it’s a good idea should do it. But in fact, there’s no problem to really fix or it’s not going to give people a great deal of joy. And I think there’s a problem when people buy a mountain bike, they buy that for joy, that’s not a problem. So it’s two ways, you either look at it as joy or you’re solving a problem. From my perspective. So how did it come about? I think, purely, it was by accident. I wasn’t planning on going into the cleaning industry at all. In fact, I still don’t plan on getting into the cleaning industry. I plan on trying to resolve something that made sense, and that was that. For those who have heard my story before, it was that one of the cleaners were sick, like they didn’t show up, and I ended up rolling my sleeves and ended up in a toilet cubicle of all things. Cleaning a toilet bowl, which never imagined that would happen. And as I opened up, the cleaning chemicals, the fumes were intoxicating. I also thought I was gonna suffocate and then if I thought that was bad, my hands were starting to crack split from the stingingness, I felt stinging you know, it was like burning, and that was it. Honestly, there’s got to be a better way. How can you subject people to this who were cleaning every day when that happened, and I guess that was one would call an epiphany moment, you know, if there has, if I can look after a way of fixing it for people cleaners, then there’s a there’s possibly a business opportunity, hang on a minute, if it’s good for them, it’s good for the planet. And that was essentially the birth of the Planet Earth cleaning company. Totally. Now, that didn’t mean that three decades ago, people talked about sustainability, then you can talk about green, greens is a fairly new word, back then it was just a colour. So I guess, feeling and believing and having purpose in my day-to-day life all the time drove me. And I could actually lead my people. So they understood that I was actually looking for a way to make their lives healthier. And that was a huge thing, until people started to wake up. Probably more recently, and I say recently went out when Al Gore brought out the documentary Inconvenient Truth, there was a bit of aha moment. And then that slowed down. And that now it just seems, there’s a real inertia in terms of the word impact. And it seems like that the whole idea of impact has become a big topic around what I do and probably attract investors, you know, get the calls, you know, I’ve been doing it for so long that I must know. I do. So that’s it sort of come together. So yeah, it was by accident to see a problem, the problem made sense to fix. And then I figured this is a good business to get into.

Gene Tunny  06:40

Yeah, for sure. John, would you be able to tell us a bit about I mean, how, what your scope of operations mean, where you operate the types of clients or customers that you have

John Engelander  06:52

Sure, so our clients are boutique large, or not so large, when I say not so large, that can fall under the type of clients that that would work with us. we have clients like Katmandu, we have clients like realestate.com, seek.com built a whole lot of building companies, McConnell Dow, which ones largest structural engineering firms in the world, and so forth, just to name a few and Cricket Australia, and other ones. So just a little, few little companies that probably they have good branding, good identity, recognise the need to not just take on cleaning, but see that by having planet Earth, it’s a huge upside for them in terms of letting their people know, when think about what that does to culture when you know, you’re a values based organisation. And we do this in Melbourne and Sydney, we’re looking at Brisbane, but at the moment, it’s really, really the two main cities in this country.

Gene Tunny  08:00

Okay, could you tell me a bit about what you do your operations? I’m interested in this because you mentioned the, the fumes, you mentioned the chemicals that cleaners traditionally use? And I imagine there are companies out there that are still using these chemicals? I mean, what what precisely are they are there some examples you could talk about? And then what what are substitutes? And are they as good? I mean, the thing that I’m wondering is, okay, do you do get the same quality of cleaning is at higher costs. So is this something that is a bit is a bit of a luxury? Or is this something that businesses across the economy can afford? Could you just talk about that, please?

John Engelander  08:44

Great question. First of all, chemicals. What price do you pay for your people getting sick? When those fumes go through your air conditioning wafting through something must happen, can’t measure it. But something must be going on, if it’s happening to my cleaners, because they’re right there and then it’s going to be happening somehow, indirectly to the clients. Better cleaning. Okay, let’s look at acid. It’s really good, isn’t it? I mean, you think about it, you’ve seen urinals we all have as men go into toilets and urinals and the only way to clean a urinal properly apparently is with acid, really. And an interesting story was some years ago, one of my prospective clients who became a client loved the whole story about Planet Earth, but he thought he would prepare cleaning his urinal without telling us so he went out and bought acid and did it. And a very sad story. He suffered for years. Now he called on us I would have gone no way. I’d never give that to my own people. He’s a client. I really adored this person. He took us on board for the very right reasons. And yet, sometimes consciously, it’s possible not to think so his health got a price when he paid for that. Do we have enough money for it? Well, I’m sorry, if you can’t look after yourself and pay for that. There’s an issue, how much more you pay is interesting, right? So think about this, we use chem free, we have a system, which is chem free by planet Earth, we actually installed it in the building’s plumbing system, it converts water through an electrolysis process and turns it into a sanitizer cleaner. The Cleaners just turn up with their little spray bottle, push it in, plug it in, it does that good noise rush, and then it fills the bottle up. And they can use that to clean and yes, it’s effective. And it’s not toxic. It was water, water through electrolysis process. Now, not every body wants to invest in that. So could you say it just cost us not, can do. But are we interested in getting it right for our people? And let’s face it, when you throw away chemicals into your waterways, after you clean toliets or mop floors, do you think that’s really good, can’t be good for the planet. And so all of that, and the beauty of about chem free is that we don’t have the containers. Because when you have containers delivered, that’s transport emission, then you have great big plastic containers filled with chemicals. That’s transport not only transported, but the plastic it took to make it one use. Maybe not, maybe you can send it back to the factory and they fill it up. Well, it’s got to be sent back again, transport. But imagine all you do is plug a little spray bottle in and it fills that up. Now, sometimes you just got to use a little bit more elbow grease. But if you care enough, you’ll do that. Is the price higher? I doubt it. I think what, if anything, it’s really good value. And it all comes down to the effort you put into the job. So the beauty also of that is, if I may, is that, think about this? Is everyone complaining about not being able to get labour at the moment, in this time? It’s 2022. And it’s really hard to find labour. Why is it that a purpose driven company like us doesn’t have a problem, that has to have a great outcome for our clients, because you’ve got people that actually are doing something because it matters for them beyond a dollar, because you’d never pay cleaners enough money to come do their job. But purpose will drive. And purpose if the message is properly conveyed to our clients, people, it all becomes it starts to build culture in terms of value based. And I do believe that businesses that are purpose driven, people are attracted to that. And that attraction makes people happier and more productive. Can you put a price to that? You betcha. You spent $100,000 on cleaning, you’ll get an outcome of three, four times then in your culture development, if you make sure you promote that you’ve taken on Planet Earth Cleaning Company, because it’s a big deal to make the right choices.

Gene Tunny  13:07

Yeah, I think the point you make about health and safety is a good one. I’m not familiar with the data for cleaning, I’ll have to check it out after this. I mean, I’m not sure what the studies show whether there is a significant improvement in health and safety outcomes with using these environmentally friendly products. 

John Engelander  13:35

Yeah, no, I’m saying the same thing I can’t measure. All I can say is it’s a good chance. But it’s good to know, if you’ve taken on a cleaning company they care enough about their people to you know, I mean, we go as far as even caring about their mental health, we have a service where they can call up if they’ve got issues. None of my management are allowed to know about it. So yeah, we’ve gone from product to people’s minds to actually having them, you know, on board with, with, with this whole idea of we’re getting it right, because let’s face it, we all have the planet in common.

Gene Tunny  14:13

John can ask you betting impact investing? I think you were talking about that earlier, you were talking about impact everyone people are interested or investors are interested in impact now. So does that. Have you been dealing with that in investment impact or what does it impact investing community? How substantial Do you think that is? Is? Is that going to help support or help grow a lot of businesses such as yours or other businesses and that are environmentally friendly?

John Engelander  14:43

I think that look I don’t know a lot about impact investing. I prefer to invest in myself. But the truth of the matter is that I do believe that there’s a there’s a whole movement towards looking at being ethical, and ethical and impact seems to have they complement each other, don’t they? So let’s, let’s look at it this way. My couple years ago, I think my brother in law showed me a return on investment with an organisation called Australian ethical. Did that year, he made close to 50%? I’ve never heard of that in my life. I fact, I was blown away. I don’t know if they continue to do that. Was that just a fluke that year? Either way, was it settled? It spoke volumes? Didn’t you look at businesses like? Well, if you bought Tesla a few years ago, just 2000. And I don’t know, let’s call it 2020 20, February to 2020. And that share price is $480. I know because I actually invested in that. And it got it went up and up and up and up, went to 2400 got split by five, what was that worth? Then it went up and up. And now I’ve got slipped by three, not doing so well at the moment, which is really interesting, because they’ve been more profitable than they ever have been. But they’ve actually led the field where they go to in the next 10 years. Who knows. Some have faith in it, and some don’t. But it brings a whole lot of other industries together about looking at what’s viable, both commercially and sustainably. Have To be frank, I’m not a big fan of the word sustainable. So which often shocks people, but I think we should consider the idea of being enabled enable the planet, the planets in trouble, we say it’s overheating the the blanket in the sky of greenhouse emissions that are just get thicker and thicker, holding the heat under. So our temperatures change on the planet. Is is that an interesting? An interesting idea. So I think, you know, when we consider the future we’re talking about so that the health of the planet, you know, with all these things, that people plan it all together pretty, pretty combined. I think there’s a good investment even to look after our children’s future that is enabling the planet, I think it’s an essential part of it all. So, you know, often I can call our teams and enablers, they’re proud of it. We recently had our tree growing programme, we do this, you know, half day tree grow, growing programme. And we’re actually looking to do that for our clients next year, too. So because the half day programme really enables a whole, I guess, one’s team to really come together and, and be connected, which is another part of it, too. We all feel connected, we feel better about ourselves and have something in common. So that whole thing has to be viable, I believe for the organisation. To give you an idea when we when we did the most recent one 30% of our staff actually weren’t working that morning. But they showed up to be part of it. What does that say? Yeah,

Gene Tunny  17:59

yeah, that’s a good culture. Yeah, not bad. That’s really good.

John Engelander  18:04

So that has to make, you know, if you have happy culture, and they’re more productive, which I mentioned earlier, that’s going to be a viable proposition for anybody.

Gene Tunny  18:11

Yeah, yeah. Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  18:20

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Gene Tunny  18:49

Now back to the show. I think I may have asked you this. So I think you may have answered it before. But one thing, one thing I’m interested in is whether it does cost you money to do the right thing as a as a business owner. So does it make you less profitable than than otherwise? You may have answered that earlier. But if you can just reflect on that, please, John, that’d be great. Good.

John Engelander  19:13

Okay. So yes, it can and, and like anything, what you choose quality always cost more. But let’s look at it this way. If it’s not, if you don’t see it as quality, but you see it as doing the right thing. Can it cost more? Possibly? I don’t believe if you buy quality, like if we offer a quality service, you pay for it. If we provide green, I don’t believe we’d need to charge you more because we’re agreeing. I don’t think that’s necessary if we manage it fine, right. But when you can talk about what would you pay to drive your workforce? Because you’re purpose driven? What would you would you bring a you know the term people and culture that and companies bring people in and spend Lots of money, right? We don’t have to do that with us. And I think that’s a huge, huge tip, as is bringing in Sustainability Consultants, you don’t need that we, we can give it all eco been planning to go in and give advice on what to do next next year will be big plans to helping organisations transition to a green future. Because I really believe that’s the direction we need to take otherwise, why would you do business with companies that are destroying the planet, and then look at that. It’s not investment, it’s destroying the planet.

Gene Tunny  20:38

So this is a quote behind you. That whose it

John Engelander  20:42

by John, Dr. Vandana Shiva writes it. 

Gene Tunny  20:47

not an investment if it’s destroying the planet? So look, I don’t think that that makes sense. What it’s suggesting, as an economist, the way I think about that, is that if you do have something that is degrading the environment, then if we were properly account doing if we were properly doing the economic accounts, then what we would do is we would, we would recognise the subtraction of value in the environment. And, look, I know that economists, you probably object to the way that economists look at this sort of thing, economists would put a value, they would try to put a value on the environmental capital stock, or the natural resources. And then to the extent that there’s degradation of that you could subtract from that. And we should be recognising that in our national accounts as a, as a negative investment as a disinvestment in that in that natural resource asset. So there is a, there are economists that are looking at how we can measure that environmental damage that’s occurring. And it’s a field called natural capital economics, if I remember correctly, or there’s an environmental economics field, and there’s ecological economics, which takes a different perspective. Yep. So it’s not as I mean, economists are thinking about these issues. So yeah, I think that’s that is an interesting quote, to reflect on. I’ll put a link in the show notes to while reproduce it in the show notes and link to put some links regarding it, because I think it is a it is a very good quote.

John Engelander  22:33

Look, I don’t blame economic, economical economists. I often believe that where I sit in this world is to be highly relatable. And you can’t do that without understanding others. It’s not enough for me to be persuaded and say, hey, you know, staunch Greenie and you guys are bad. I think that’s not the way to go. And nor is that the other way. Extreme. No one listens to extremist. Really, really interesting. I mean, look, I know both sides of the story. I don’t know if you’ve ever read the book, how the world really works. And it believes that we’re in such a heavy hitter, but

Gene Tunny  23:12

I’m trying to remember if maybe, maybe I haven’t read that one. I’ve read a I’ll have to look it up. I’ve read a book about maybe a thinking of a book about the deals that made the world I think I got confused momentarily. I don’t think I have read it. Sorry, John, can you tell me a bit about it’s okay,

John Engelander  23:29

so, look, all of us we don’t think about what we buy, we just buy it that way. And so don’t consider if we buy a plastic tub, how much oil has gone into it? Or we don’t think about whatever it might be. Oh, when was it the Climate March and I was wearing my planet Earth t shirt. And some young 21 year old came up to me and says, Hey, dude, I love your planet Earth T shirts. And hey, dude, I love your one use water bottle. And it went red. And I actually looked back at him. I said, Look, I’m really not looking at you. And judging, I just think we do forget not thinking. But when when you think about the different layers. For example, ATP is a good good case in point, we brought out a waste system for being able to separate your waste using different colours, red landfill blue for paper, green for food, yellow for recycling, and so forth for plastic recycling aluminium. And, and I’ll go back to the book in a second because it’ll all come together. And when I chose to do that, it’s really good that we’re able to help people sort waste because let’s face it when you change people’s ways, habits through colours, it’s much easier Yeah. Now it’s made in Melbourne, Australia. Not only is it Australia and I thought about what’s called an LCA, a lifecycle analysis, went through the whole thing and understood how much carbon we were able to find a plastic fabric, plastic, believe it or not, but a certain type of plastic that used to 80% less energy and its manufacturing of an equivalent sized plastic bin. How’s that? So the consideration was good, by the way, cost less to make. So I can charge less for other people use the no excuse. It’s quite affordable. So talk about is it costly? Do grain not in that case, but the separation of it means imagine, you throw a plastic whatever in there. And it turns eventually into plastic garden furniture. I mean, it’s it’s pretty phenomenal, isn’t it? I mean, you didn’t have to steal the resources out of Mother Earth. You actually did it, because it was available there and then and didn’t have to go back into it didn’t have to end up in landfill. It ended up converted, right. Good point, right. Here’s the thing. Look at this book. And it’s bizarre how the world really works. And it says, we’re addicted to plastic. We’re addicted to oil. We’re addicted to steel, we’re addicted to ammonia. How are we ever going to change? Then I’ve got another book on the other side of it called the carbon carbon Almanack. It’s not too late. So which one do you believe?

Gene Tunny  26:08

Which one do you believe the carbon Albert ACK or the how the world really works?

John Engelander  26:13

Yeah. Because the Almanack says it’s not too late. And the other one says are we’re in? We’ve got all these habits. Yeah. Plastic oil, you know, ammonia, concrete, you know?

Gene Tunny  26:25

Yeah. Well, I mean, I’d like to think it isn’t too late. I recognise that there is a need to decarbonize our economies? Our look, I think it’s, I mean, I’m, I’m of the view that we need to, I’d be probably advocating a more gradual transition, then then many others, including many other of my fellow economists, I think most economists would support a carbon tax or an emissions trading scheme, which imposes a carbon price, I think there’s a recognition that we need the right signal air to, so that businesses and consumers are considering the what you call the marginal social cost of, of greenhouse gas emissions. So that’s included in the in their economic calculation. So I think there’s there is a recognition that something needs to be done. I’ve just been concerned about the pace of it. And I think, with the issues over energy here in Australia at the moment, cost of energy rising. That’s, that’s something I’ve been concerned about. But I would like, yeah, so I guess I’m saying I’m probably more of a carbon Almanack view. Because I’m just trying to, I think we just need to understand that the world the way that economists think about this, and it is that with these resources, I mean, you mentioned these resources that have been depleted or being used. And you could say, you know, maybe they been used unsustainably. But the standard way that economists look at this is that to the extent that they are, then that’s going to be reflected in the price. And that will encourage conservation of those resources. So that’s the way the the economists tend to look at it. And the argument would be that we really haven’t run out of any essential resource globally. So that’s the that would be the economic argument there. So I guess what I’m saying is that if he asked me to choose between those two, those two books, what was the one that how the world really works?

John Engelander  28:44

It really works and the carbon Almanack Carbonell Almanack. It’s not too late. It says underneath it. Yeah.

Gene Tunny  28:49

Yeah. I mean, my, my view, or rather, my hope is that it isn’t too late. I think it’s something perfect. We can, we can sort out in time. I mean, a lot of these predictions of Apocalypse are coming from numerical models of the climate. Yeah. So Well, yeah. Okay. I know that there are there have been there. Definitely. There’s definitely change occurring. I’m not denying that. But my hope. And I guess my expectation, if I had to put if I had to make a best guess, my best guess would be that we have time. But look, I may be wrong. I’m not. I’m not 100% confident in that, that.

John Engelander  29:34

You don’t have to be Gene. I think the the point here is why wouldn’t we just do the very best we can? Yeah, there’s no harm in that sort of harm. And the other way, there’s no harm in that. And so you think we all live pretty well. Let’s look at look at Australia. How many TVs do we have in our house? How many cars do we drive? And what kind of is that quality of life or is there something else that’s actually hot at a higher value? I have to tell you I much prefer getting on my mountain bike in the country and writing that than then jumping into someone’s petrol car, you know? So it’s it’s those considerations, what is life? What is it? What is really the essence of the quality? That one would really require the kind of 140 square home carpark underneath? Or do we really need that much? Do we? I’m not saying it’s not a judgement call, by the way. Choices are there? But I don’t know, it’s like, I think it brings it down in my fundamental philosophy. And that is, if someone was to ask be you’re really passionate about the planet? And I’d say no. And so that shocks, but there’s a reason behind that. It’s not important for me to be passionate about that. I mean, I love my you know, I could have someone you ask someone, do you love your mother? Yeah, very much. Are you passionate about it? No. Love it. And so it’s those things that you kind of look at, it’s logical, I look after myself, do you look at yourself? Do you eat good food? Do you do all the right things for yourself? So you do it for the planet, wouldn’t you? You don’t have to be passionate, just passionate. From my perspective, live life fully is my passion. I do stuff, you know, I get out there enjoy the fresh air. I don’t want it to go naturally I want to look after and preserve what’s happening. And what price do you put to that? Now? $1 financial, you know, it’s not important. Entirely. Put it in perspective. But if you have very little it is important. But when you have more, how much more do you need? What is at what point do you say it’s enough? At what point do you tell your shareholders that, you know, we’re going to deliberately make this? It’s okay. But maybe it’s not? Because I didn’t come into business just on that basis, I need to be interested in what I do. And when I’m interested, that fuels me, and somehow Money takes care of itself. Not always. But most of the time, yes, I’ve made, we’ve all made mistakes, I brought out a product called Eco to life. Would it be 14 years ago, that in 14 years ago, while I was trying to and as we were building the product together, it was actually concentrate to sugar cane and corn made into a cleaning product. And there’ll be little little packets, he buys spray bottles. So once you once once you buy spray bottles, you’d have to buy them again, you have to go to the supermarket and get more, but you just add this little bit at the waters, you’re not carrying heavy loads of water home either. And I thought that would be a good idea. And I threw a lot of money into this idea. And it didn’t, didn’t happen. So the timing, you know, today I know what’s happening because I you can buy this, you can buy this. So in a sentence pioneering is it’s very painful. But I’m interested in the topic and it becomes part of my story. And I’m good with that. Instead of being sort of being a victim, you look at it and go, What have I learned? Where can i What, how can I use that moving going forward? And I do believe we’ve got a chance. And it’s a great story for all of us to come together and get it right. And there’s so much new technology coming out. It’s unbelievable. In terms of what we’ll see we’ll see people with solar on their roofs, sharing their power with other people. That’s a great example. Yeah. What about geothermal, and housing your home with heat and air conditioning from the natural substance of Earth, underneath us, and by the way, that could be economical to once we get the price down in terms of that technology.

Gene Tunny  33:54

I think the point you make about the local energy grids or whatever you call them, with the sharing of solar and if we can use EVs as batteries, and if we have smart metres in the household, I mean, there has to be a lot of investment that occurs before this all happens and you know more batteries around the place that Yep, EVS mean, everyone will need to get an EV they’re currently twice as expensive as they probably need to be to have widespread adoption by consumers.

John Engelander  34:27

Jane, question though, do we need to own cars? Ah, we currently use if you’re lucky one and a half hours worth of driving a day.

Gene Tunny  34:37

Yeah. Look, I agree with you there, John. And I mean, I’ve I myself have spent several years of my life without a car. But I recognise that the only reason I was able to do that was because I lived in the inner city. So I didn’t have to commute. I didn’t have a family to to ferry around. into. So I think I think it’s a fair point. And you know, we could look at mobility as a service, I think they call it. So yeah, yeah.

John Engelander  35:12

Call on it when you need it. And now that way, because battery technology, if it’s function properly, it can go a long way. Otherwise, we’re wasting a terrible resource. And we can have less cars on the road. And instead of people going, our batteries are bad. Well, maybe we can turn that whole notion to something that’s productive, as opposed to focusing on what’s wrong, rather than what’s right. You think?

Gene Tunny  35:42

Yeah, well, yes. I mean, I’m all for having fewer cars on the road. I try and walk wherever I can. I just, but that’s partly for self interested reasons. It’s not necessarily for the environment. I think it’s good that it is positive environmentally. But I, I look at it as incidental exercise. I mean, I think that I find that if I don’t, if I don’t walk, to go down to the shops then that I lose an opportunity to do a bit of exercise, and then I’ll go to the gym. But I find that if I can not take the car, I get a benefit that way. And yes, it is good that it is good for the planet. That wasn’t that probably wasn’t my first consideration, though.

John Engelander  36:25

But you know, you said something really profound is that you looked after yourself. Look at the planet, you look up.

Gene Tunny  36:34

Yeah, there’s a nice correlation. There are a nice coincidence of, of interest there. Yeah, yeah.

John Engelander  36:40

Yeah. I just, I just hope that the economists see the logic and the fact that, from what I understand is a sustainability scorecard that I that I believe will will come to come to businesses, whereby it’ll be just as important as your financial accounting, as it will be to show that you’re actually showing your impact.

Gene Tunny  37:04

Yeah, yeah. I mean, one thing I’m interested in it is, to what extent can this be led by this transition? To what extent can be led by business and consumers directing? Well, by their purchasing power, directing, production, directing the commercial activities of businesses and how they treat the environment? In particular, we have the scorecards, if there’s greater transparency, to what extent can change be led, in a bottom up way, rather than top down with government policy to have any thoughts on that? I mean, to what extent is a lot of this stuff already happening? Or does it? Or do we? Or do you need government policies such as carbon pricing as well?

John Engelander  37:53

Yeah, it’s, it’s, it can be, it feels a bit disappointing if you thought that’s what it would have to happen. Look, look at our young generation, they want to work for companies that are values based, they care that have this notion about the planet. So it could happen from the bottom up, down, right? Because you do attract. I’ve heard this so often attract and retain staff. I know, it happens, we do it. So if you, you can do it from the bottom up. And I don’t really want to see people forced to engage being engaged. It’s like leading a horse to water, isn’t it? So imagine if you just got people from a feeling of what would we call it excitement, or at least be happy and joyful about the fact that work for a company that actually cares put together green teams develop ideas together. It’s, that’s one of my missions next year, actually, is to help business transition to a green future. And there’ll be in this regard our membership base solopreneurs, coming together, and having evening discussions about what’s possible, and then see what of the possibilities we can actually put into action or influence others to put into action. But to I can’t have all the answers, but I can certainly bring the right people together in order to support the needs of of local organisations. And certainly one of the things I do find really of high value. And I mean, when you talk about bottom up, if I get invited as a speaker into an organisation, I’m talking with a level of enthusiasm that will that I’m believable, inspire everyone to actually feel like we can do this. We can all be planted enables. Because by that way, we enable the planet and they’re viable because they’ve got a sense of purpose when they come to work every day.

Gene Tunny  39:47

I think that does make sense. The challenge is, and this is this is probably obvious. It’s probably rather a trivial point. But the challenge is that you as a Business, you could be doing the right thing. But if your competitors aren’t doing the right thing, then they can get a competitive advantage by having a cheaper product. But then you’ve got the advantage that you’ve got, you can label well, you can promote yours as the clean green, the environmentally friendly alternative. So that could give you an edge in the marketplace.

John Engelander  40:20

I think it would accept that when you say that, and you have a cheap, cheap and nasty cleaning company, putting it together a quote, one needs to ask, what are you really getting for the money? Let’s put aside the green aspect. The Greens there to you know, from my perspective, you have that as a product, it better be good. Once it’s good, everything else should come together. I hope you know. And so I don’t, yes, it does give it does allow people to have their eyes pop out and go up, I’m going to listen to you because you’ve got a green way of doing things, but also gives you an opportunity to say how you’ll do it. And how you’ll do it better for them. If you get that chance that really shouldn’t have that boring conversation that most companies are, oh, you should use our business because we’re we give good service to our customers. And we do this and we do that. And you know, I’ve heard that everyone, everywhere. So what makes you really stand out? And it’s what you stand for. That makes you stand out?

Gene Tunny  41:27

Right? Yeah. And I mean, have you had? How do you prove that to to your customers? John, how do you are the fact that you’re the sustainability? You’ve got testimonials? And you’ve got? I mean, you got a track record now, haven’t you? I guess one thing that would be it seems like you’re talking about the service people trying to promote themselves based on superior service. And I mean, a lot of businesses will say that. How? Yeah, yeah, exactly. So I guess you do need to demonstrate that if you have this environmental commitment, you need you need some is that there’s a certification, I’m just trying to think how

John Engelander  42:13

it’s a great term certification, I think that does belong to some people who need it. And so when you’re born green, the birth of a planet back in 94. So essentially, that’s us were born green, we know it, we should be the ones giving the certification to others. And that’s why when companies take us on, they suddenly become greener, they, they have an opportunity to tell their people. And let me tell you that that’s a good news story for their for them. That’s, they want that message. And so when you offer eco bins, colour coded bins, systems, and you roll it out for no charge whatsoever, and then you give a morning tea talk on why we do what we do, and how they can also become plant enablers. The who does that, and then with, with all those other aspects about talking about chemical free cleaning, and then everything just comes together, you can’t find that just anywhere. You can’t. Even in the name planet Earth, we imagine this, you have the person who made the decision they send on their intranet, to their 500 cluster. We’d like to welcome to planet earth, their new caretakers around our building, starting on Monday, you can’t do that if you’re gonna make up a name Zen topless and Sons cleaning service, it just doesn’t feel it just it doesn’t register, right. And that’s more than ever, this whole idea, it has never been more relevant for what’s going on in business. And what’s and it’s relevant for what they tell the people, it’s relevant to attract people to your company. By golly, you know, all you have to do is ring up, see, all you have to do is ring up any of our clients. You know, it’s it’s a given. And in my decision, because I’ve done it for three decades, and know what I know and want to help and support organisations. How do you beat that? Warren Buffett has a great line. And he talks about enduring, competitive advantage. You can’t beat three decades. He can’t beat being born green. Can you?

Gene Tunny  44:29

Exactly John, that’s, that’s terrific. Any final thoughts before we wrap up?

John Engelander  44:35

Yeah, whatever you do, start to think about the choices. Because our choices do have impact. And being a conscious consumer makes a huge difference. And people notice you. They do they do when I when I bought my first TV seven years ago, boy, did they have a message. I didn’t just buy a car. So I think being conscious and other people watching you do what you do. You don’t even have to tell people, if they watch how you do it. Let them ask you the questions, but really, that don’t. I don’t think it’s a good idea to be an extremist. If you want to be listened to, and and hold an open mind, and we’d live with what’s possible, that’s what I do.

Gene Tunny  45:22

Okay, so a steady, can we take a steady approach? I mean, I’d like to be more conscious, more environmentally conscious. I’d find a difficult making radical changes at the moment. But I know that because I know there’s a movement for people to live off the grid. I don’t think I mean, I could never imagine myself doing that. But I mean, is that something you’d be considering? John?

John Engelander  45:43

Not? Yeah, I have solar and I have batteries. And very convenient. But depends. I like this term shades of green. Okay, where you sit, let’s just get, we don’t have to be perfect. Let’s you don’t have to be you just be better, not perfect. And if you just do one thing at a time and think about the one thing you can do today, I think that makes it simple. Otherwise, it becomes complex. And honestly, it’s not as hard as you think.

Gene Tunny  46:15

Yeah, I think that’s a great message to end on John, John Engelander. And that’s been great. I’ve really appreciated your, your thoughts and your insights into business and sustainability. So thanks much for your time.

John Engelander  46:29

It’s a pleasure, and I’m really glad that you’re able to catch up with me. So thanks, Gene.

Gene Tunny  46:36

Okay, so what are my big takeaways from my conversation with John? My first takeaway is that it’s clear that many business owners can have sustainable businesses and look after the environment to John’s businesses are great examples of how that can be done. As an economist, however, I wonder just how widespread this phenomenon can be. In the absence of regulation or policy measures covering all businesses, many businesses will probably choose lower cost and less environmentally sustainable practices. And many consumers will choose lower price options over more expensive, environmentally friendly ones. That said, public attitudes are changing and it’s possible consumer behaviour will drive more environmentally sustainable practices by businesses in the future. Following my chat with John, I found a really interesting study done for MasterCard and 2021. And I’ll put a link in the show notes to it. This study reported that more than half 54% of those surveyed across the world believe it’s more important to reduce their own carbon footprint since COVID-19. And more than three and 560 2% said it’s now more important than before that companies behave in a more sustainable, and eco friendly way. changing attitudes could have big implications for business in the future, and I’ll aim to have a closer look at consumer attitudes and behaviour in a future episode. My second big takeaway from my conversation with John is a reminder that we need to consider any degradation of our natural environment if we’re properly measuring the benefits of economic activities. The discussion I had with John in this point was inspired by a quote that John had on the wall behind him in our conversation over zoom. It’s not an investment if it’s destroying the planet. That quote is from Dr. Vandana Shiva, an Indian scholar and environmental activist. I would know that for several decades now, economists have thought a lot about how to account for any environmental degradation and cost benefit studies of projects. This is not something we’re ignoring or don’t care about. Economists have also thought a lot about how to augment the traditional national accounts to reflect environmental considerations. I’ll aim to cover how economists analyse environmental impacts in some depth in a future episode. For now, I’ll include some links in the show notes relating to the field of what’s called natural capital accounting. And I’ll also add some links regarding how economists have been trying to account for environmental impacts and cost benefit analysis. Okay, those are my big takeaways from my discussion with John Englander. The EcoBin, do you think I picked the most important ones? If you’re willing to share your own takeaways from the episode, please send them to me via contact at economics explore.com or send me a voice message via SpeakPipe. You can find the link in the show notes. Thanks for listening and Happy New Year. Okay, that’s the end of this episode of economics explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to contact@economicsexplored.com And we’ll aim to address them in a future episode. Thanks for listening. Until next week, goodbye

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Podcast episode

The Progress Illusion w/ Jon Erickson – EP166

Professor Jon Erickson is an ecological economist and advisor to policymakers including Senator Bernie Sanders. In his new book The Progress Illusion, he criticizes what he calls “the fairytale of economics” and argues we are failing “to design an economy that is socially just and ecologically balanced.” Show host Gene Tunny discusses Prof. Erickson’s new book with him in this episode of Economics Explored. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored

You can listen to the episode via the embedded player below or via podcasting apps including Google PodcastsApple PodcastsSpotify, and Stitcher.

About this episode’s guest: Jon Erickson

Jon D. Erickson is the Blittersdorf Professor of Sustainability Science and Policy at the University of Vermont, faculty member of the Rubenstein School of Environment and Natural Resources, and Fellow of the Gund Institute for Environment. His previous co-authored and edited books include Sustainable Wellbeing Futures, The Great Experiment in Conservation, Ecological Economics of Sustainable Watershed Management, Frontiers in Ecological Economic Theory and Application, and Ecological Economics: a Workbook for Problem-Based Learning. He is also Adjunct Professor at the University of Iceland, and has been a Fulbright Scholar in Tanzania, Assistant Professor of Economics at Rensselaer Polytechnic Institute, and visiting professor in the Dominican Republic, Norway, Germany, and Slovakia. Outside of the university, he is an Emmy-award winning producer and director of documentary films, co-founder and board member of numerous non-profit organizations, past-President of the US Society for Ecological Economics, and advisor to state and national policymakers. Jon lives in Ferrisburgh, Vermont with his wife Pat, their occasionally visiting sons Louis and Jon, and a menagerie of dogs, cats, horses, chickens, and donkeys.

Links relevant to the conversation

You can buy The Progress Illusion and if you listen to the episode Jon will reveal a discount code:

https://islandpress.org/books/progress-illusion

Transcript: The Progress Illusion w/ Jon Erickson – EP166

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:00

Coming up on Economics Explored.

Jon Erickson  00:03

Since at least the night, late 1970s. For a country like the United States, we’ve been in a progress recession, the GDP has grown, grown, grown, grown. But these alternative metrics, whether it be GPI, or surveys on quality of life, or the ecological footprint, these things have not improved. They have not kept up with the pace of growth, right.

Gene Tunny  00:25

Welcome to the Economics Explored podcast a frank and fearless exploration of important economic issues. I’m your host Gene Tunny broadcasting from Brisbane, Australia. This is episode 166 on the progress illusion, a new book from Jon Erickson, Professor of sustainability science and policy at the University of Vermont. Professor Erickson is past president of the US society for Ecological Economics. And he’s an adviser to state and national policymakers, including Senator Bernie Sanders. Please check out the shownotes for relevant links and information and for details where you can get in touch with any questions or comments. Let me know what you think about what either Jon or I have to say in this episode. I’d love to hear from you. Right oh, now for my conversation with Professor Jon Erickson on his new book The Progress illusion. Thanks to my audio engineer Josh Crotts assistance in producing this episode. I hope you enjoy it. Professor Jon Erickson, welcome to the programme. 

Gene Tunny 01:00

Thank you so much. 

Jon Erickson  01:03

It’s a pleasure, Jon to have you on. I’ve read your new book, progress, the progress illusion, reclaiming our future from the fairy tale of economics. So given this as an economics podcast, there’s definitely a lot to talk about with your new book. Yes, yes. So can I ask you first? Why do you think progress is an illusion? What are you trying to communicate in this book, please?

Jon Erickson  01:56

Sure. Sure. Yeah. So the progress illusion is really a reference to a fairy tale of humanity’s place and purpose in the world. Certainly, economics isn’t the only discipline that is subject to the solution, but it’s the one that I’m trained in. It’s a story that economists like myself have been teaching and practising for decades, decades that, you know, every time we see the size of the global economy double, which doubles every 25-30 years at current growth rates, that we erode the very foundations of life and human societies in the process. So, in this book, I questioned that, that reigning logic, that reigning story, I unpacked various dimensions of this grand illusion of economics, you know, which I see as an illusion of history and a lot of economics programmes, mine included, we don’t teach the history of economic thought we don’t discuss the debates of, of economists of the past. It’s an illusion of the individual, me, so much of the focus of economics is on the individual and what’s best for the individual in the assumption that whatever’s best for the individual is best for society. So I unpack that and think about the debates over that question. It’s an illusion of choice. I mean, economics sort of sets itself up as the science of choice. But it’s always framed this choice at the margin, right, the choice of the next incremental decision. Yet, when you add up all those decisions together, we very often get into situations that the original decision makers never would have voted for. Right. And ultimately, it’s an illusion of growth and illusion of, you know, a sort of fairy tale or dream of infinite economic growth on a finite planet.

Gene Tunny  03:52

Gotcha. I think it’s interesting. You mentioned that there were these debates, and they’re not always well covered in economics. I remember. I remember learning at least about Malthus, and there was the Malthusian prediction or his his view that, well, we’re in trouble because any economic growth we had, we just ended up having more children, and we’d be back to subsistence. Whereas I think the way that economists started to view that was all well, we solved that problem with technological progress. And, but I mean, look, I understand the point that that’s in a few 100 years or over the last couple 100 years say we’ll be able to do that. Who knows if that can continue indefinitely? I mean, who knows what shocks are coming? So, I mean, maybe, is that what you’re arguing? We could be we could be too optimistic based on recent history.

Jon Erickson  04:48

Well, look, I mean, we’re recording this in the second week of November during that latest Conference of Parties for the UN Framework Convention on Climate Change. And there’s ample evidence to show that this economic system we’ve created is putting dangerous strains on the global climate system, right? A climate system that is, is increasingly called as chaos as in danger of, you know, collapsing the whole experiment of the economy. So, you know, we can go back to Malthus if you’d like. But we’ve always seen that a growing economy creates benefits, and costs. And what we’ve seen, particularly over the last three or four decades is as those benefits have become super, super concentrated. And the costs have been spread out on more and more people, and especially on future generations. So we’re in kind of, you know, yet again, a kind of Malthusian tragedy.

Gene Tunny  05:51

Right. And so is that your biggest concern at the moment, climate change, or other other concerns,

Jon Erickson  05:58

tThere are plenty of concerns to go around. But having a habitable planet is a big one. It’s a big one that fellow economists are concerned about. You know, economists have been part of various signatures, signatories to various pledges of action. It’s a concern that’s related to mass extinction. It’s a concern that’s related to growing inequality and persistent poverty and declining quality of life, even in the richest countries. You know, I think it was, I think it was Alcoholics Anonymous, right, that said, you know, when you do the same thing over and over again, expect something different. You know, that’s the kind of insanity. And that’s what this book is about.

Gene Tunny  06:39

Right? Now, you mentioned, well, you talk about the fairy tale of economics, you mentioned you were trained in economics, do you still consider yourself an economist?

Jon Erickson  06:50

I mean, I often describe myself as an ecological economist, because I’m really trying to understand interdependencies between the economic system, and society and culture and the social system and the environment. I see this work as reforming economics for sure. I’d love someday, where we didn’t have to have all these kind of competing camps and different flavours of economics, we could just call it economics. But since I really don’t identify with the mainstream of economics, I tend to call myself an ecological economist.

Gene Tunny  07:22

Right? And you tell a story in the book about how just something like that was it the JEL, the Journal of Economic Literature codes, and you were stunned? Yeah, the way that Yeah, could you tell that story because of those fascinating, I’d never thought the JEL. Yeah, would be so controversial, or yeah, but please tell the story. I thought it was a good one.

Jon Erickson  07:47

I don’t know that they were controversial it just it just gave me pause. When I saw that ecological economics was given its own code, and treated as a sub discipline of a field that we were trying to overturn or be the alternative to. And this really is, you know, this, this is, you know, reflect on kind of why I wrote this book. You know, it’s a reflection on my career in Ecological Economics, when ecological economics was formalised in the late 80s and early 90s, before it got to JEL code, books and journals and organisations and degree programmes, and folks like me were supposed to be created to try to question the mainstream and reform it. So in many respects, this book is kind of my midlife crisis book, where I take a critical look at the history state and fate of this movement of ecological economics as an alternative to the mainstream. Funny story about 10 years ago, I was the president of the US society for Ecological Economics, and one of these professional societies that have emerged to support this field. And I was at our conference at Michigan State University, and I had thrown my back out. So I was like, during most of the meeting, I was horizontal in my hotel room, just miserable, just really grumpy. I was laying on my back, trying to write notes for my presidential address right, to the society’s membership. And I just was so grumpy, so grumpy, so grumpy. And it really got me thinking about the state and fate of ecological economics, and made me think about like this code, Q 57. Right, the seven hundreds plus subject areas of economics, and how ecological economics was increasingly being absorbed by the mainstream, including by folks who call themselves ecological economists. In fact, at that meeting, there were just, you know, all of these sessions on monetary valuation of ecosystem services, which I saw as, you know, a real slippery slope, you know, can we sort of challenge the mainstream with the logic of the mainstream and commodify nature. So, in a lot of ways that kind of grumpy week in Michigan, set the stage for this book, and, and my desire to really critique my own field.

Gene Tunny  10:16

Right. Okay. So I probably should provide some background on so these JEL codes, they’re the codes that you would put at the bottom of an abstract for a journal paper or a conference paper to signal this is the field or that the field of economics are the sub discipline of economics that it’s in. And so that helps them identify where it should go in conferences, for example, which session. Now, it’s interesting you mentioned how environmental economists have come to start valuing nature or to quantify environment, environmental damage, or to value what a wetlands are worth or in I mean, as a, as an economist, I’ve done various exercises like that in the past. I just want to understand where you’re coming from, do you think that’s the wrong way to go about it, to think about the the economy or the environment to think about? Well, we’re doing this many dollar dollars of damage to the environment, and therefore we need to impose this, this cost this charge on people who are damaging it, and to make sure we have, you know, where I’m going, what we’re trying to get ya get some sort of, we’re getting some solution by having the right taxes and charges in place or Pigovian tax, for example, what do you what are your thoughts on that, Jon?

Jon Erickson  11:43

Yeah, that the field of environmental economics and and before that natural resources, economics, really preceded this field that I’m describing of ecological economics, really treating the economy as an ecosystem, and environmental economics has its roots in the late 1960s, early 70s. And, you know, reaching back to Pergo, in the 20s, and 30s. And fitting the environment inside the marketplace, right, using prices to correct the so called market failures of what were framed as environmental externalities. So that’s how I was trained at Cornell University, I was in an agricultural economics department, learning natural resource, environmental economics, and kind of, you know, buying into that logic of, of the environment is just a failure of the marketplace. Ecological Economics. So that’s valuable. And that’s pragmatic. And I’ve done my share of work that is trying to make the case the economic case for environmental protection. The challenges is when that tool when that approach, when the sort of expansion of cost benefit analysis to environmental concerns, when that rises to a worldview, right? When you commodify all of nature and when you reduce all social relations of humanity to market logic, we start to run into what economic historians or people in the 40s and 50s The Economist name is escaping me right now, the fellow who wrote The Great Transformation, Karl Polanyi. Yeah, the Karl Karl Polanyi warned of the merging market society, right. Whereas the rules and priorities of a market system that envelop the democratic system, that envelop our social and environmental values. So I’m okay using economics as a tool and treating economists as mechanics or janitors to sort of tune the market system. But when economists are sort of framed as overlords of the social environmental system, right, or conveyors of a master worldview, that’s where my hairs go up. And that’s, that’s largely what this book is about, and thinking about the progress solution of economics.

Gene Tunny  14:08

Right? Is the problem that we have this objective of maximising economic growth where we’re concerned about GDP, are you arguing? We’re not as concerned about these environmental measures? How do you what do you think we should be concerned about? Or how should we be making decisions as a society?

Jon Erickson  14:30

I’m making the case that 21st century economics should reflect 21st century problems and values. I think when the mainstream of economics or what we often call neoclassical economics was formed in the late 1800s, early 1900s. Maybe the focus was well placed on growing an economy of the efficiency of market system right, of taking power away from the church and state and putting it into the hands of the consumer. and producer. You know, it’s much like thinking about an ecosystem at the early stages of any ecosystem. It’s the pioneering species that are prioritise its growth and competition and resource exploitation, that is prioritised. But as the system matures, as the system grows into a fixed, fixed environment, the goal should change, right, the goal should move away from growth and towards maintenance, bitterness, towards durability, towards resilience, away from competition and towards cooperation right away from sort of thinking about the number one priority is to grow our way out of problems, to realising that growth itself creates problems that growth can’t fix. So Ecological Economics reflects a maturing of economic thinking, that reflects the challenges of the 21st century.

Gene Tunny  15:59

Right. Okay. So it seems you’re, you’re concerned about the problems that growth can’t fix. Okay. You don’t think regulations can help? I mean, because we’ve got cleaner air?

Jon Erickson  16:12

Not exactly. I mean, I think we need to move beyond just economic instruments to fix things using the market to fix market failures, right. But really trying to find that balancing act between market mechanisms and government regulation between improving and making government work better, instead of the opposite narrative of, you know, government is the problem, not the solution. No, in this book, I reflect on kind of my own upbringing in the United States, and my parents generation, you know, and growing up in the Kennedy years, where the narrative was, you know, you know, ask not what your, what you can, what your country can do for you ask what you can do for your country. And I grew up in the Reagan Thatcher generation, right. And the Reagan narrative was, you know, it’s all about the individual, it’s greed is good. Don’t ask what you can do, you know, do for your country, get government off our backs, you know, that’s what we need to do. So, I think in an age of climate chaos, in an age of the sixth mass extinction, and an age of growing inequality, the narrative has to change, the story has to change, we have to recognise that a system and an economics that was created in the context of a 1940s 1950s expansion out of the Great Depression had its day. And now, the realities of our time, need to need to start to shape a new reality.

Gene Tunny  17:44

Okay. And so what does that? What does that mean, Jon? Does that mean, we need? Do we need redistribution policies? Is that what you’re arguing for to address inequality? We need greater environmental? Well, we need to prioritise the environment. I mean, that’s gonna be I mean, obviously, the environments important, I’m not denying that. I’m just thinking in in Australia here. I mean, it’s we’ve got very stringent environmental regulations already. And if we have more stringent environmental regulations, it’d be very difficult to develop anything. So I’m just wondering what it all means is it? Does it mean, we have to accept a lower standard of living in the future? are you pessimistic about technological change or ability to to innovate our way out of these constraints? Could you talk about that, please?

Jon Erickson  18:38

Yeah, I think that’s too narrow of a frame. When you think about economy environment, and what I’m concerned about, there is reams of evidence show that so called advanced economies, such as the United States and Australia, built on hyper individualism, built on the legacy of a social disease that sociologists call affluenza, right, or this addiction to consumerism, that this model of progress has leaves a little lot to be desired. And that in fact, maybe we’ve been in a progress recession for some time now. Scholars in the United States and Australia and dozens of other countries around the world have been estimating for years now. What’s called the genuine progress indicator, something that is meant to be compared to the more common gross domestic product. And what this indicator does is it recognises that a growing economy has benefits and has costs. In fact, I first discovered the GPI when I was in grad school in the early 1990s. And in the US, we were in in the the bush one recession. And there was a beautiful article written in the in the Atlantic and it had the title of something like if GDP is up. Why is America so down? Right? We were kind of in this recovery state. And people were, you know, economists are saying, hey, the economy’s growing, we’re all good again. And the average American, I’m not good, I can’t make ends meet. I’m miserable. And the same narrative has popped up at the tail end of every recession ever since ever since. In fact, it started working on this book at the tail end of the so called Great Recession. And the same thing was happening, we were using the instruments of economics using mainstream thinking to grow our way out of problems. And the average person was saying, who is benefiting? And who does who? Who’s paying the cost? Yeah. So the GPIO through this series of 26, some odd calculations and says, What are the true benefits of a growing economy? And what are the costs? What are the environmental costs? What are the social costs, and have shown quite convincingly that since at least the night, late 1970s, for a country like the United States, we’ve been in a progress recession, the GDP has grown, grown, grown grown. But these alternative metrics, whether it be GPI or surveys on quality of life, or the ecological footprint, these things have not improved, they have not kept up with the pace of growth, right. So we have to start asking at these kind of higher levels. What do we do with this for right? What’s, what’s the new balancing act in a maturing economy? How should we reprioritize what is the good life? And how should we I mean, you frame it as accept the lower standard of life, the standard of living the material standard of living, I frame it as as asking the question, how do we live better? How do we how do we live well, within our means?

Gene Tunny  21:47

Yeah, sure. I can, I can understand that. I guess what I’m thinking, Jon, is that at the moment, in Australia, one of the big issues is, well, the rising cost of living, high inflation relative to wages, and the lack of housing, I mean, we’ve got a dire shortage of housing here in Australia. Now. I mean, look, there are a variety of reasons for that, possibly. But I mean, at the moment, when I’m looking at things, I’m thinking a bit more economic activity to construct houses would have been good over the last 10 to 20 years. And, and we’ve got rising cost of energy. So yeah, I take your point, I think I think a lot of people out there would be concerned though, about this. Yeah, that they that, yeah, I’m not I’m not necessarily wanting to criticise what you’re saying, I understand where you’re coming from. I’m just yeah, that’s where I’m coming from, if that makes sense.

Jon Erickson  22:51

Yeah, that makes perfect sense. And that’s the big question, right? Like, can the same kind of thinking that got us into these current messes? That is making the billionaire class hugely, hugely more material well off, while the rest of us feel like we’re on a treadmill, just barely getting by? Can the same kind of system, right? That has privatised the benefit of growth and socialise, the costs? Can that continue? Or should it continue? Right? Should we sort of create a social movement and start to ask, what is the economy’s purpose? Who is the economy? And growth for whom and for what? Now, you know, when I debate economists, they always say, like, come on, come on, you know, you’re not being fair economics is just a model. It’s a model of progress. All models are wrong, some are useful, right? They quote George George Box. Right? All models are wrong, some are useful. And I said, Yeah, I, I agree, all models are wrong, some are useful. But what box didn’t ask is useful for? Right. So in the US, we’re seeing these energy prices, and we’re seeing record profits to oil companies. In the US, we’re seeing housing shortages, right? Yet we’re seeing record rents to the ownership class. In the US, we’re seeing families, you know, struggle to get by in these kinds of post pandemic months and year. And kind of returning to, you know, try and train as quickly as we can to get back to normal, right? Pre pandemic years. And a lot of us, and a lot of folks that are most vulnerable in this current system, are saying we don’t want to go back to normal normal was already in crisis.

Gene Tunny  24:47

Yeah, yeah. Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  24:55

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Gene Tunny  25:24

Now back to the show. Okay, can I ask about that genuine progress indicator? Who’s producing it? And can I ask him about what, what some of the the variables that go into? It are? Please, you’re really interested in that? Because look, I understand the criticisms of GDP. And I mean, at least if we’re destroying, or we’re subtracting from the environment, or we’re, we’re damaging the environment that you probably should recognise that as some sort of disinvestment or a loss of capital stock. So yeah, would you be able to explain the genuine progress indicator, please?

Jon Erickson  26:04

Sure. I mean, it starts with the basic premise, right, that the economy is subsystem of the environment, and that when the economy grows, it has opportunity cost. So I mean, it’s a basic, it’s built on basic economic system has benefits and has opportunity costs. So with GPI, we start with consumption, the biggest part of GDP, and we say, Okay, let’s take consumption, and then let’s correct it for income inequality, to recognise which what Pergo recognised in the 1920s and 30s, right, that growing incomes grow and give diminishing returns, right, that the next unit of of income to a rich person creates far less welfare society than the next income, a next unit of income to a low income family or a low income person. So we correct for income inequality. We then go through a series of calculations that for example, take consumer durables and GDP and say, you know, a society a GDP benefits by building a throwaway society. With durables, washing machines, automobiles, long lasting expenditures, if they were out often have to be replaced. That’s great for GDP. Right. But is it good for progress? So we say, Okay, here’s the expenditure of durables, and here’s the benefits of durables, right? Over time, these things are supposed to last more than a year or two or three years. So there’s economic adjustments, there’s an adjustment for over for underemployment, right. Idle work, people who wish they could work more. So it’s got that kind of basic economic logic built into it. But then there’s a whole category of depletion and pollution costs, right? We shouldn’t be treating depletion of our soils, our water, our air, as income. In fact, any business that treated depreciation of capital assets as as income instead of costs wouldn’t be in business very long. But that’s exactly what we do in our economic book keeping for nation states. Then there’s a whole series of interesting calculations on the social side of thing, right, we have to recognise that the GDP only recognises the value of your time in a market, earning income, earning wages earning profits. And so what the GPI the genuine progress indicator says is that there’s, um, use trade offs, right? Every hour extra hour work, the opportunity cost of that is an hour, not with your family, an hour, not in your community. And now we’re not leisure. So rather than feeding every single hour at work as a benefit with no costs, GPI goes through and says, let’s be honest here, right? Work is good, up to a point, income is good, up to a point consumption is good, up to a point. But we have to recognise that consumption and income and growth have diminishing returns. And at some point, at some point, the growth of an economy creates more costs than benefits. What Herman Daly, one of the founders of ecological economics, who, unfortunately passed away a couple of weeks ago, called an economic growth, right, a growing economy that creates more cost and benefits. Okay, we could do a whole podcast just on GPI, so don’t get me going.

Gene Tunny  29:40

Yeah, that’s fine. I might. I’ll have another look at it. Because, I mean, it’s one thing that comes up in various conversations I have, and I’ve been looking at the national accounts recently, I’ve had people on talking about that and their conceptual foundations and we’ve, we’ve we’ve mentioned that every

Jon Erickson  29:58

time we have a recession Yeah, the critique of GDP comes up, right? Yeah. Like, hey, wait a second growth isn’t providing what’s going on here. And every time coming out of recession, we question the metric. And then we kind of start growing again and says, Okay, let’s go back to normal. Yeah. But we have to kind of keep revisiting these alternatives. You know, the original architect architects of GDP back in the 30s, and 40s. Were very careful to say this is not a measure of human progress, human welfare. This is a measure of economic activity, which contributes to human welfare, but is not in and of itself. human welfare.

Gene Tunny  30:40

Yeah. Yeah. I agree there. Now, what about what can be done? Do you have a set of policy recommendations? Jon, are there? What would What do you think needs to be done? Are there things that there will be things that need to be done by governments? Are there things that need to be done by individuals? I mean, it sounds like, Well, okay, maybe you tell me if I’m wrong here. But when I read your book, and I heard about the progress, I was reading about the progress illusion that concerns about how we were consuming too much, I mean, do we need to show that we as individuals be consuming less Is that is that part of your argument? We should we shouldn’t be going on as many overseas trips, we shouldn’t be using the car as often we should think about our purchasing decisions, not get a new washing machine or get a I only get one, when it breaks down, try to repair things. What are you arguing in this book? Is the solution?

Jon Erickson  31:40

Well, what would an economy look like? That was built on maintenance resilience and cooperation is that growth, efficiency and competition, right, a late stage maturing economy like yours in the Australian ours in the US? That’s, that’s what I’m asking, you know, an economy, a mature economy should have different goals than an economy at pioneering stages. So it really is about a reprioritization of our goals, especially on consumption, right? Because there’s ample evidence to show that we in the West are over consumers, and our kind of addiction to consumption is creating psychological problems, social problems, that consumption has been kind of become a cure for social ills, right? Like, it’s a distraction. I mean, the whole advertising industry is designed around the idea of kind of making you and I feel bad about ourselves, right. And to sort of fill the void with more consumption. And I actually think this is one of the lessons coming out of COVID. Right, as sort of people were, especially, you know, high income people who, who could weather the storm, better than most, were forced to slow down, were forced to pee at home, were forced to kind of reevaluate life’s priorities, and found out that, you know, this kind of ever, burning hamster wheel of economic growth isn’t all that it’s cut out to be. So it’s the reprioritization of goals, which is going to have to reprioritize policy instruments. Daily Herma, daily use the analogy of a plinth Plimsoll line, I’m not sure I’m pronouncing that right, of a cargo ship. Right. So this is the line that’s painted on a ship, very easy technology. And as the as the cargoes ship is loaded, it sinks into the water. And when it gets to the line, you’re supposed to stop, right, because you’re in, you’re in danger of overloading the ship. So if we sort of reprioritize and think about the principle line of an economy, we can’t just more equally or equitably distribute the cargo of an overloaded ship and expect it to be resilient. We can’t just more efficiently load an overloaded ship and expect it to weather the storm. As the pump, some land goes underwater, right. And there’s ample evidence to say that we are kind of in an overshoot on a lot of environmental parameters. You’re in danger of sinking the ship, especially in stormy waters. So this analogy implies that as we run up against planetary boundaries, planetary limits to growth, the scale of the economic system is way more important to stress than distribution or efficiency. And if we can’t count on a growing system to solve distribution problems, then we’re gonna have to quickly think about the fairness of this distribution of benefits and costs of that system. And then it only then can we get to efficiency, which is the priority of economics. So this means that you know, new policy instruments stuff that focused on scale distribution, then efficiency is the way to go. And I talk a lot about this in the last chapter book, as I kind of wrestled with the idea of how did I put it radical pragmatism? Right? Yeah, that’s a pragmatic things that we can do now, for example, to wean ourselves from fossil fuels, you know, home weatherization, and carbon taxation, and, you know, maintenance of our systems, electrification of transportation, transition to renewable energy. But all of these are really hard to do in an economy that continues to bloat an economy that continues to grow. So we have to be thinking about the scale of a system. And that’s probably the radical part of radical pragmatism, right? What’s it going to take to rein power away from the status quo, that part of the system that’s benefiting from this growth model, and create an economy that works for all?

Gene Tunny  36:05

Okay, so I’m just wondering what exactly that involves? And is this part of this whole idea of D growth? Is that what you’re arguing for? I’ve heard about this concept of D growth, that that’s coming up, and there was an article in the FT about it the other day. So you’re just wondering, what needs to be done? I mean, do how do we, how do we have that, though? How do we recognise those constraints? I mean, you mentioned carbon tax. I mean, that’s something that, but you’re also saying that that’s not going to be enough and mean, given current magic

Jon Erickson  36:41

bullet, but it changes that changes the system? Yeah. Yeah. I mean, degrowth is the sort of social movement side of ecological economics, if you will. It’s a question of, how do we orchestrate a just transition to a right sized economy. Now in some parts of the world, and for some people in the world, you know, growth still creates more benefits and costs. But there are plenty of parts of the world and plenty people in the world where growth, Grace, more cost and benefits, right. So we have to orchestrate a kind of Race to the middle. And in fact, if you plot something like the HDI, the Human Development Index, which is a UN level index, this used to sort of monitor, you know, the benefits of development. If you plot HDI at national levels against energy per capita, you get this curve, right that the initial development improves considerably, with just a little bit more energy use per capita a little bit more than final impact per capita, Right. but only to a point that we get into this kind of club of countries, where continuing use of energy continuing depletion of the environment, continuing materialisation of the economy, doesn’t improve development doesn’t improve the HDI. And you get this long tail with countries with the same HDI of countries that that consume 20 or 30, or 40, or even some cases 80% less energy and material. So countries like mine, the US were way out on this tail, where we’re not getting improvements in human development. Yet, we’re consuming way, way, way more energy than the average human right. And way more energy in the countries that have similar levels of development, similar qualities of life. So what are we doing? Right? We’ve got to orchestrate a race to the middle and whether you call that d growth for the rich countries, and to be more agnostic about growth for everyone else, like grow, where it makes sense and shrink where it doesn’t. That’s the kind of century that we’re in. That’s the biophysical reality of the new economy.

Gene Tunny  38:57

So Jon, do you need a command economy to actually to orchestrate this transition to a right sized economy? I’m just trying to think about how this would happen. Because I mean, people, a lot of people out there, just, you know, they’re trying to live their lives and do the best they can. And a lot of people have to a lot of families, the couple have to work two jobs. They’re trying to make ends meet. I mean, they Yeah, they probably wouldn’t see themselves as as living a hugely materialistic lifestyle, but then compared with other parts of the world. Yeah, sure. It probably is. Yeah, I’m just wondering how we how we can do that. I mean, I’ll

Jon Erickson  39:37

yeah, yeah. My trainer has economists. I assume you’re trained economists. We were sort of taught these, these two different DS, roughly two different models, market economy and a command and control economy. And we were taught that this command and control thing is inefficient and unfair and results in a kind of an over regulated world and we need to the market economy is not perfect, but may Is it better than command and control? I’ve come to realise that that’s a load of BS. The market economy is also a command and control economy, right? Markets are designed by those and power markets are social constructs, especially the last three or four decades of neoliberalism has created a kind of free market experiment, right? That is concentrating the benefits and widely distributing the costs. So talk to the average guy or gal on the street and ask them, Is this economic system working for them? And if they say no, do you say, well, let’s double down on the logic of the system? Or do we try something different, right. So we’re finding that more cooperative forms of of economies are resulting in more shared benefits and shared costs. Were working with a group called the next systems project that has been sort of systematically cataloguing different political economics systems, local skills, community skills, United States that have dramatically different outcomes and dramatically different structures. It’s not just either or of command and control of free markets. It’s blending things in between, it’s the continuum in between, that is the secret sauce. So I don’t buy that we immediately just have to go to command and control. Although in crisis, what we learned from COVID is what happened is the world’s government goes goes to command and control, right? If climate is a crisis, if, if environmental depletion is a crisis, we might be using the very system of free market thinking, to push us into a state where the only option is going to be command and control. And I don’t want that you don’t want that. People don’t want that. We want our basic liberties and freedoms. But we want to do it in a way that creates an economy for all for children and for for future. I also kind of reject the the narrative of economic freedom, right? Because that’s awesome. That’s also painted as freedom to do things. And instead of freedom from tyranny, right, freedom from the impacts of, of the environmental costs of a growing system, freedom from the social inequalities, of a system that’s geared towards making the billionaire class even richer. Freedom from the costs of growing economies, what we should be thinking about, not freedom to do things to our neighbours, to our environment, and to future generations that ultimately are going to come back and bite us in the tail. Yeah, a buy in any of this.

Gene Tunny  42:58

Well, I’m interested in the new systems project. I’ll have to make system next systems project. I’ll have to look into that. I mean, do you have any examples of those communities you’re talking about?

Jon Erickson  43:10

Well, it’s examples of of. So you take the US and you think that we’re this kind of, you know, outside looking in and the narrative on the mainstream news channels is that, you know, we’re this free market, capitalistic system. It’s actually not true. So much of what makes the US economy work is cooperative ownership, collective ownership, state run, companies, state state run banking systems, state state runs systems of have that make the the economic system work. Take the banking sectors, trillions of dollars and coops where the depositors get votes on the matters of their banks. Take agriculture and education, and even energy and electric utilities. So much of those industries are run by cooperatives. In fact, electricity cooperatives deliver electricity, the United States, to a well over half of the geography of the high states, to rural communities, where the sort of economics doesn’t work for for industrial companies. There’s experiment after experiment, after experiment of different kinds of political economic institutions that have that we have lots of lessons to learn from. And this is what I meant in the beginning, when I talked about you know, economics, part of the Progress illusion is this kind of illusion of history right. To think that the current economic system, the neoliberal system, the free market, system, is is is the only one is has been perfected, right? Is the kind of logical inclusion of everything along the way, and that we don’t have to learn from our history. We don’t have to revisit the debates. We don’t have to consider the morality of our economic choices, or their biophysical consequences. And yeah, there’s a lot. I mean, I speaking mostly as a, you know, from the perspective of an American, maybe it’s different in Australia. But man, we have this sort of US centric view of the world, that everything we do is right. And every thing that we do is the best that ever was. And we don’t need to learn from our history. And we don’t have to need to learn from other other experiments around the world. And where I land is, that’s some pretty insular thinking,

Gene Tunny  45:45

huh? Yeah. Yeah. Okay. We’ll start wrapping up soon, Jon, this has been Yeah, really thought provoking. So it’s good to have you on the show. could ask you about neuro neuro economics. So you talk about that in the book. This is a new field, I’ve only learned about recently, what what’s that? What’s your interest in that field? And what’s it broadly trying to tell us? Or what’s it found?

Jon Erickson  46:11

Yeah, sure. Well, so this is where, you know, I’m kind of researching the book, like, what are some alternative ways to think about the human agent and our economic models? Because the economics, we’re taught a very, very, very narrow version of humanity, right, which is sometimes called like a subspecies of human homo economic is, yeah, isolated individual at a point in time, right, who

Gene Tunny  46:36

just wants more? The rational utility Maximizer? Yeah,

Jon Erickson  46:40

exactly. Exactly. And both within economics and outside of economics, you know, we’re learning that when we test our theories, with real data, and not just abstract mathematics, that this sort of foundations of this rational actor model, unravel. So what I do in the book is I explore what you might call borderline disciplines, right? Where economists have cooperated with other disciplines, especially other natural science disciplines. And so neuro neuro economics is one of those examples where economists have collaborated with neurosciences to ask questions of proximate cause. Right. So in science, we think of proximate cause and ultimate cause. And then the case of economic decision making proximate causes asking how we make decisions, whereas ultimate causes more a question of why do we make decisions that we do? Neuro economics is an example of a borderline disciplined, proximate cause where, literally economists are taking tests objects, with their neuroscience colleagues, asking people to solve economic puzzles, or make economic choices that are watching their brain light up, right, and trying to understand where and when do the kind of precepts of the rational actor model hold up? And where don’t they? So it’s one of these Borderlands this was, such as neural economics is an example. But also behavioural economics, experimental economics, where we’re trying to kind of understand the brain in the case of economics, the whole human case of behavioural economics, groups of humans in the case of experimental economics, groups of groups in the case of institutional economics. And then there are entirely evolutionary history as a species in the case of evolutionary economics. So these are all examples of, of the isolated discipline of economics, starting to cooperate with other fields, and building what I call in the book, borrowing from the biologist, EO Wilson, a more conciliate form of economics, where we find the jumping together of knowledge to really watch it watch the 21st century version of this field.

Gene Tunny  49:13

Right now. Okay. Well, yeah, oh, it’s something I want to have a closer look at, because I definitely recognise the limitations of that. That standard economic model. I mean, for years, economists were saying, Well, it’s, we recognise that all the assumptions are a bit unbelievable. But as long as it makes good predictions, and it’s, then it’s fine, but it turns out, it may not actually make good predictions. So,

Jon Erickson  49:39

I mean, I gotta go through the history of you know, the running joke, of course, right is that economists have successfully predicted seven of the last three recessions. So it’s, this this model of the rational actor model turns out to be not a very predictive model, or a model. Again, all models are wrong, some are useful. But we should start asking useful for whom? And it turns out this this isolated model is useful for the billionaire class but not useful for the rest of us.

Gene Tunny  50:10

Right I so we might start wrapping up, I’m keen to just learn about, what are you hoping this book we’ll achieve? Jon, what’s your What are your hopes for this, this book,

Jon Erickson  50:22

my generation, I’m 50 birthday this month, I’m 52 going on 53 My generation was inspired by the works of a number of like, you might call a renegade economist, right? Who sort of solid different path. Folks like Herman Daly, who I mentioned to, we just recently lost that 84 years old. I mean, Herman was on a similar journey that I was he started out with aspirations to be a growth economist, he thought that the logic and approach of market fundamentalism could be sort of bred when he was training to be an economist in the 50s and 60s, to solve problems, particularly problems of poverty, right to grow the economy, lift people out of poverty, but in his own educational journey, set against the aspirations of the Great Society in the US in 1960s, the civil rights and environmental movements of the 60s and 70s You know, he was inspired by inspired, inspired by the work of earlier group of renegades folks like Nicholas Dzerzhinsky regime who wrote on energy and the economic problem, bringing the principles of physics into economics, Kenneth Boulding, who wrote the infamous article, the economics for the coming Spaceship Earth that was really coming to terms with the opportunity costs of a growing economy inside of a fixed ecosystem. John Kenneth Galbraith, who, whose social critique in the affluent society really sort of, you know, early on question a society built around, creating more and more affluence into an affluent class. And, of course, the 1962 book by Rachel Carson’s Silent Spring, which was really impactful on Herman’s thinking, and design of an economic study of economy inside environment. So, you know, these sorts of scholars were also inspired by long standing debates about the function and purpose of the economy, you know, really going back to the classical era of economics, when economics was seen as as a branch of moral philosophy, right. Not not a pseudo science hiding behind abstract mathematics. So Herman’s work was another kind of link in the chain. His work on economics, the life sciences, first big published article, his work on steady state economics in 1977. Book, his work on for the common good that he wrote in 1989, with a theologian, John, John Cobb, you know, he was created another link in the chain that was trying to build a study of economics as if people and planet mattered. So I hope, you know, this book is yet another link in this chain of link that comes from my generation, that can continues to build a kind of more modest, more humble economics that can contribute to social well being and environmental, environmental protection, and not just simply,

Gene Tunny  53:39

okay, well, I’ll put a link in the show notes. So if you’re in the audience, and you’re interested in, in the in the progress, illusion, and look, it’s got a lot of, it’s got a lot of great information in it. Lots of lots of great analysis, and it’s very thought provoking. So I certainly enjoyed or I learned a lot reading it. I thought it was good. I liked how you went through the evolution of of economic thought and all the debates and even what I was struck by was, I didn’t realise that was Tinbergen, the famous Dutch economist. Yeah, he had a bit of a Nobel Prize winner. Yeah, he ended up he started to question the whole the the economic growth narrative in the was it the 80s or 90s? Are some of the you tell the story along those lines, I thought was interesting. Yeah. Yeah. So I think there’s a lot of good stuff in there. Okay, Jon, any final thoughts before we wrap up?

Jon Erickson  54:42

Look, I really appreciate this. Thanks so much for your podcast. I was listening to a bunch of your past thoughts in preparation for this and this is such a great show. Very valuable show. And yeah, folks are interested in this book. It’s, it’s been published by Ireland press which is One of the bigger nonprofit publishers of environmental books in the US and give your listeners the secret code. If they order a book from Island Press they get 20% off if they answer the enter the code illusion so but on my capitalism have there for a second

Gene Tunny  55:17

okay, is that all is that this capitalization matter is what did you just tell me that and I missed it sorry was

Jon Erickson  55:24

no I don’t know that it needs to be capitalised. But it’s the word illusion is the code for 20% off.

Gene Tunny  55:30

Okay, good one. Well, I guess people try it and if, yeah, hopefully it doesn’t matter whether you capitalise it or not, or try and capitalise that, that doesn’t work. Without caps. Okay. Very good. Okay. Jon Erickson. Thanks so much for your time. I really enjoyed the conversation and really appreciated your insights. So that’s been terrific. Thank you. Okay, that’s the end of this episode of economics explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to contact at economics explored.com And we’ll aim to address them in a future episode. Thanks for listening. Till next week, goodbye.

Thanks to Josh Crotts for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au

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Podcast episode

Thriving w/ Wayne Visser, Cambridge & Antwerp sustainable business expert – EP130

In Economics Explored EP130, we explore a new book Thriving: The Breakthrough Movement to Regenerate Nature, Society, and the Economy, by Professor Wayne Visser of the Cambridge Institute for Sustainability Leadership and Antwerp Management School. Wayne is reassuringly optimistic about the future of the planet due to a variety of technological and business practice changes that mean we are approaching “tipping points”, after which we will rapidly reduce the stress we are placing on the environment – all going well, of course, as nothing is guaranteed. 

In the episode, Wayne speaks about a convergence of positive developments, such as rapidly improving electric vehicles, cultured/lab-grown meat, blockchain and synthetic DNA to aid traceability of supply chains, green hydrogen, and Unilever committing to deforestation-free palm oil (by 2023, and whether it achieves that is still to be determined). You can listen to the conversation with Wayne using the embedded player below or via Google PodcastsApple Podcasts, Spotify, and Stitcher, among other podcast apps. 

Here’s a short video clip from the conversation in which Wayne introduces the concept of Thriving:

Links relevant to the conversation

DNA Spray-On Technology Could Revolutionize Food Traceability

Transcript of EP130 – Thriving w/ Wayne Visser

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:01

Coming up on Economics Explored.

Wayne Visser 00:04

Being optimistic or at least having thriving as a lens is just a more effective way to be, no matter what the state of the world is.

Gene Tunny  00:13

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist based in Brisbane, Australia, and I’m a former Australian Treasury official. This is Episode 130. In this episode, we explore a new book from a world leading expert in sustainability, Dr. Wayne Visser, who joins us from the UK via Zoom.

Wayne’s new book, published by Fast Company Press is Thriving: The Breakthrough Movement to Regenerate Nature, Society, and the Economy. Wayne currently serves as head tutor, fellow and lecturer at the University of Cambridge Institute for Sustainability Leadership. He is also Professor of Integrated Value at Antwerp Management School, where he holds the world’s first Academic Chair in Sustainable Transformation, as well as being a world leading authority on sustainability. Wayne is an accomplished poet, and he shares some of his poetry with us toward the end of this episode. Wayne’s new book Thriving considers issues with huge implications for our economies, so I was very glad to chat with him about it. His book contains lots of valuable examples of how businesses and communities worldwide are attempting to make themselves more sustainable.

Please check out the show notes for links to materials mentioned in this episode, and for any clarifications. If you have any questions, comments or suggestions related to this episode or the previous ones, please get in touch by SpeakPipe. See the link in the show notes or email me via contact@economicsexplored.com. I’d love to hear from you. Righto. Now for my conversation with Dr. Wayne Visser on his new book, Thriving. Thanks to my audio engineer Josh Crotts for his assistance in producing this episode. I hope you enjoy it. Professor Wayne Visser, welcome to the programme.

Wayne Visser  02:23

Hi. Great to be joining you.

Gene Tunny  02:25

It’s fantastic to have you on, Wayne. Yes, very happy to be chatting with you about your new book, Thriving, which is on a topic that is of great interest to me, and I know to many of my listeners. It’s this issue of sustainability. Climate change is related to that, obviously a big environmental challenge. I’d like to explore what your book is about, why you wanted to write it, what those key messages are. First, I’ve just got a couple of questions about your work. You’re at the Cambridge Institute for Sustainability Leadership. Could you tell us a bit about that, please?

Wayne Visser  03:20

Yeah. Great pleasure to be talking to. The Cambridge Institute is a department of the university that was set up many decades ago actually, firstly, mainly, at the request of the Prince of Wales, Prince Charles, one day soon to be king, I guess, who’s always had a passion for sustainability. He set up a business and environment programme through the university, and it just evolved from that. And ow they it’s a very large office and runs many, many programmes, I head up their business sustainability management online programme, which is getting great traction. We have upwards of 900 students, taking that four times a year. We’re seeing the uptake. I’ve been associated there for nearly 10 years, and I really see how it’s changed. In fact, 20 years. Yeah, since 2003. Really, the interest levels are up, and the demand for solutions, especially from business, is really rising.

Gene Tunny  04:39

Right. You’re certainly right about Prince Charles. I remember visiting his country estate, just as a tourist, Highgrove in Gloucestershire, and before you go on a tour of the estate, you have to sit through a 10 or 15-minute video of Charles, of the Prince of Wales talking about the importance of sustainability. I think he’s into organic farming and that sort of thing. I’ve certainly seen his commitment to that, so very good…

Wayne Visser  05:19

He was way ahead of his time, especially on the organics side, or what they sometimes call in Europe, Europe bio. Many of the programmes have been very specific. We have very good climate legislation in the UK, for example, and also in Europe. That’s partly down to the Prince of Wales Business corporate leadership group that we set up at Cambridge on climate change, where we tried to be an intermediary between business and government, because business was saying they couldn’t be bold in their commitments, because they didn’t have clear policy guidance, and the politicians were saying they couldn’t be bold in policy, because they thought business would lobby against them. Playing that kind of role has been very, very effective in making the progress that we need to make.

Gene Tunny  06:11

I’d like to ask you later about good legislation in the UK. and EU. I’m interested in what you consider good legislation. That’s something we can chat about. Also, you’re a professor at, is it University of Antwerp, is it, in Belgium?

Wayne Visser  06:31

Yes, Antwerp Management School. It’s actually a sister organisation of the university, but it is independent. Yes, I have a chair there in sustainable transformation. It’s supported by corporate partners, BASF, Port of Antwerp and Ronstadt. I run the Sustainable Transformation Lab there, where we mainly work with corporate partners on advancing sustainability, but also on embedding it into all of the teaching for the full-time and the executive MBA students.

Gene Tunny  07:04

BASF, this is one of the biggest chemical corporations in the world, isn’t it? It’s a huge company, isn’t it?

Wayne Visser  07:14

It is, and right there, Port of Antwerp Zone, which goes for more than 30 kilometres, has one of the biggest chemical clusters in the world. And of course, it’s a great challenge, I must be honest, because the chemical industry has many, many impacts, and is one of the institutions, one of the sectors that has to transform, if you look at something like climate, and it’s not easy. There are massive technology investments that have to be made, whether that’s on using green hydrogen, to get their energy for their crackers, or even going for carbon capture and storage, investing in renewables, which they’re doing as well. But at least they’re one of the progressive ones, I would say, and they really are seeing that this is the future and they have to invest in it.

Gene Tunny  08:10

Okay, Wayne, what was that word you used? Was it crackers?

Wayne Visser  08:14

Yes, yes. Crackers are just the way that they get them, the molecules, the chemical molecules, how they break them apart. This is a very, very intensive, energy-intensive process, much like many other industries. Smelting I know is being done in Australia, for example, aluminium smelting, cement making. These are all very intensive industrial processes where there is no easy solution. For climate change, they really have to come with new technology, such as green hydrogen, where you get the renewable electricity to power the creation of hydrogen from water normally. That takes a lot of energy. But once you have that hydrogen, that can then create the heat that you need for these large industrial processes.

Gene Tunny  09:07

We might have to chat about that a bit later. I guess one of the things I’ve been fascinated by is just how a lot of these big corporations are… They’re seeing the future and they realise—well, many of them, I mean the more enlightened ones are realising, we probably have to get on top of this now, to start addressing this, or we could lose out in the future. I think that’s an example of that. Very good. One other thing I’ve saw in your bio, which I thought was really interesting, so you’re also a poet as well as a pragademic, if I’ve got that right, or pracademic. You’re a pracademic. You’re an academic and you’re also doing practical things involved in policy. You’re also a poet, and it turns out you’ve written 40 books. There are books on both environmental issues and also poetry? Is that right?

Wayne Visser  10:14

Yes, it is a mix. I must say, the majority of them are on sustainable business. And they range from the encyclopaedic, literally because I did an encyclopaedia the A to Z of corporate social responsibility, nd I’ve done a world guide on sustainable enterprise covering countries around the world, so that kind of reference work through to yes, even a fiction. Some poetry books, but also some fiction. There’s a parable on leadership, called Follow Me, I’m Lost, about a goose, a Scottish goose, who gets lost on the way to leadership school in London and ends up in Africa, travelling down and meeting strange creatures who each teach him a leadership lesson. There’s the full range.

Thriving is, I would say, in the middle. It’s really written for a broad audience. But it is about how we change society and the economy fundamentally. It includes some of the poetry actually in the book, as well as many stories, both personal stories, but also stories of the innovation that’s happening. I guess we’ll dive into that. But that’s one of the reasons I wrote the book is, there’s so much doom and gloom around now. Look at the statistics on many trends. Some of that is justified, even what’s going on in the world today with war breaking out in Europe. It’s hard not to be pessimistic, but you also have to take the bigger picture and see this global system that is in transformation and is actually speeding up. Many of the signals are all headed in the right direction. There’s so much innovation out there. This book was about capturing that innovation that’s happening.

Gene Tunny  12:09

That sounds great. That sounds great. With Thriving, so what you wanted to do, is basically you wanted to counter the doom and gloom. Is that what you’re saying? You think there’s too much doom and gloom? There’s actually a lot of innovation occurring out there, and are you trying to suggest, okay, given all of this innovation, this is what the appropriate policy settings are? Are you touching on policy settings at all, Wayne?

Wayne Visser  12:43

I touch on policy, but I would frame it like this. In fact, I start with something in the early chapter, called the Stockdale paradox. And this is named after Admiral Stockdale who survived a prisoner of war camp, I think he might have been in there for seven years, and came up with this philosophy that what you need to do to survive and thrive is to face the absolute reality, all the brutal facts, completely honestly. So don’t kid yourself about the state that you’re in. But at the same time, you can never give up faith or hope that things can change and can get better.

You’ll see in the book, it’s not a book of denial, or wishing things were better. I set out a lot of the facts on what’s going wrong, what’s really challenging, when nature, society, and the economy are breaking down. But then I look at the larger system and I look at how systems change, especially living systems, of which society is one nature is another, organisations as well. When you distil it down to the scientific principles of how those systems change and thrive, you actually see many signs that we are heading into a tipping point of change towards the better. It’s not that we don’t face these big challenges, but we’re seeing many transformational signals. And most people are not aware of that. And so yes, they get trapped in the pessimism or the doom and gloom.

It’s also that, you know, being optimistic, or at least having thriving as a lens, is just a more effective way to be, no matter what the state of the world is, because if you’re trapped in in pessimism, you’re disempowered. You sort of just give up before you’ve even made it a try to tackle the issues.

It’s a little bit philosophy, but it’s also backed up by some science of how change happens. And then lots of examples of where business especially, is really charging ahead and bringing the solutions that we need and starting to scale them, which is something that in my 30 years plus working in sustainability was always missing. We always had many of the solutions, but they weren’t scaling. Now they’re scaling. Tesla’s one of six trillion-dollar companies now, and its core mission is a sustainability mission. It’s to speed the transition to sustainable energy. That’s scaling. And it’s valued at more than all the other auto manufacturers, even though it makes less than 1% of the cars.

Gene Tunny  15:53

That’s extraordinary. That’s extraordinary. I want to go back to this point you made. You’re generally optimistic. However, you did note before that there are places where nature, society, and the economy are breaking down. Where is that, Wayne? Are you able to describe or tell us where that is most acute, because we hear all of these horror stories about bad things that could happen, tipping points, and all of that, but where are things breaking down? Could you tell us, please?

Wayne Visser  16:30

This gives a little insight into the structure of the book, really, because I structured into these six great transitions that we’re going through and that we need to go through. There are two breakdowns in nature, two in society, and two in the economy. I’ll briefly touch on each.

In nature, what we see is huge breakdown in ecosystems, so degradation of ecosystems. You’ve got the Great Barrier Reef on your shores there, and it’s literally dying, bleaching, just as one example. The loss of species is actually catastrophic right now. We are going through the sixth mass extinction. And we’ve lost 67% of wildlife populations since 1970. Something that took 3.8 billion years to build up on the earth, we’ve wiped out in one generation.

Yes, huge breakdown in ecosystems. But there is this counter movement of restoration, so protection and restoration of ecosystems. Yu start to see, there’s in fact a lot of work going on through the UN trying to create an equivalent international agreement to the Paris Agreement, which is on climate change, to have one on nature now. There is a widely promoted target for the world now to protect and restore 30% of our land and our oceans by 2030. Likewise, there’s a lot of work going on around deforestation coming out of the 26th Conference of Parties on Climate Change in Glasgow last year, where we have now more than 90% of the world’s countries committed, that have forests, committed to end deforestation and reverse it in the next few years. A lot of movement happening there, and a lot of big companies starting to actually put money into helping to protect and restore. If you look at the Bezos Earth Fund, putting more than a billion into the Congo, the rainforest in Africa, which always gets forgotten about because we know the Amazon, but the second largest tropical rainforest is the Congo. So that’s one example of a transition.

The second breakdown is depletion of resources. This is many, many nonrenewable resources, whether it’s water or timber or topsoil. All of these are being depleted at an alarming rate, nothing like what the earth can sustain. This has been going on—we call it the great acceleration—since about 1950, when we’ve had this exponential growth of economics, of economies and consumption, and of course, resources are finite.

The solution there is renewal of resources. This links to one of the market solutions I write about, which is the circular economy. How do we get it so that everything we use in our products and services either is made from nature and goes harmlessly back to nature—that’s one type of circle or loop—or is made artificially like chemicals and plastics and metals and so on, but continues to go back into manufacturing in an endless cycle. That’s the circular economy. Today, we’re around about 10% circular in the world. This is a massive transition. We have 90% of the economy that we need to change from a linear take make waste economy to a take or borrow, make and return economy. So that’s the second transition. Those are the two breakdowns and breakthroughs in nature.

In society, what we’ve got is disparity. Despite all of our economic growth over the last 50 years, inequality has gone up in almost every country. Even though we’ve had hundreds of millions of people coming out of poverty, the gap between the rich and the poor has gotten wider. And effectively, the rich are getting richer, faster than the poor are getting richer. And this has all sorts of social implications as well. If you look at a book like The Spirit Level, they do the research on this, and they find all sorts of social problems occur in the countries that have the highest inequality, including many developed countries.

The counterforce to that is responsibility. It’s actually to have what we call an access economy where we take care of diversity and inclusion. And again, there’s a big movement for that, but still a long way to go. If you just look at gender equality. If you look at the gender pay gap, according to the World Economic Forum, it will take more than 250 years to close that gap, if we continue on current trends, which is just ridiculous in the 21st century, but we still have a lot of progress to make there.

And then we have the second breakdown in nature, which is disease, which we’ve learned a lot about in the last few years with lockdown and everything else.

Gene Tunny  22:07

Sorry, Wayne, this is in society, you mean, is it? Second breakdown in society, disease.

Wayne Visser  22:13

The second breakdown in society is disease. We know all about COVID and communicable diseases, but the interesting thing is that 70% of people die from non-communicable diseases. These are things like heart attacks, strokes, diabetes, cancers. Many of these are lifestyle related. In fact, 40% are preventable because they relate to what we eat, especially how much meat we eat, in particular red meat, and also processed foods, and whether we live in toxic environments, polluted environments. Of course, there are things like stress as well that take that toll. What we want is revitalization, and so the well-being economy, which is again, a massive opportunity, lots of investment in innovation, lots of technology going in there, really exciting things happening, but plenty to do there. So those are the two breakdowns, breakthroughs in society.

Then if we look at the economy, I talk about disconnection. This is the technology piece. What’s happened is that we think we’re all connected, but we’re not. There is still roughly half of the world, maybe three or four billion who still don’t have an internet connection. Many, many billions still don’t have a mobile phone or live outside of mobile phone signal areas. The world is not all connected. And this refers to what we call the digital divide. It basically is an amplifier for inequality, because technology gives us opportunity. We have to really look at that gap and work on closing that gap. Meanwhile, of course, many are streaming ahead with the Fourth Industrial Revolution, and with 5Gg and artificial intelligence and virtual reality and all of those things, and so the gap potentially gets wider. So we have to address that.

Then there’s a second kind of disconnection, which is that the machines start to disconnect us. This is really about automation. 25% of jobs today are at high risk of automation, and another 70% at medium risk. It’s not that we want to go backwards, but we have to look at that and take care of that, start re-skilling people, upskilling people, to be ready for that hugely disruptive transition.

The solution there is all about, I call it rewiring. It’s really the digital economy, but it’s mainly about using all of those fantastic technologies, like big data, like 3Dd printing, like all of the other things, to be part of the solution rather than part of the problem. Artificial intelligence, huge potential there, but we very quickly found out that it’s racially biased. We have to take care of how technology is being used and whether it’s being used to solve the problems. I really believe that it does bring many of the solutions.

The last one is disruption. This has to do with crises and catastrophes, which we’ve also learned a lot about recently. This is where climate change comes in. If you look at the wildfires, you look at the storms and floods and the droughts, you know all about that in Australia, but also all around the world now. It’s costing the world hundreds of billions, of which roughly only a third is insured. You’ve got two thirds of the millions of people who are affected by this just left hopeless, so tackling this and other crises. By the way, COVID is another example of a massive disruption. You get industrial accidents, also disruptive. BP lost 50% of its value within 50 days after the Deepwater Horizon oil spill, just over 10 years ago, and has paid $65 billion since.

All of these have to be addressed. What do we want? We want to move to resilience. That’s the breakthrough. That means making our institutions but also our infrastructure more resilient. Some of that is physical infrastructure, like building flood walls and having buildings that can withstand earthquakes and lots of other very practical things we can do, but it’s also about how you build the economy, because what we’ve discovered is that our economy is very brittle in the crisis. Look at what’s happened with supply chains during COVID or during the Icelandic volcano a few years ago. There’s no longer any slack in the system to take the shocks. We think we’ve been very clever by making everything super efficient just in time, everything delivered, next-day delivery, everything like that. But actually, it makes us more vulnerable. This is all to do with a risk economy, everything that can reduce risk, but also help us survive and thrive through crises. Those are the six transitions.

Gene Tunny  27:28

That’s a very comprehensive overview. I’ve probably got comments on a lot of what you said, but I’ve got to ask you about that Icelandic volcano. That’s the one that no one can pronounce the name of, or certainly I can’t, if I remember correctly. Can you remind me what happened there? You mentioned that as an example of a disruption.

Wayne Visser  27:48

It was obviously just, they have a lot of volcanic activity there. But this one was so big that this cloud just spread across Europe and grounded everything, so planes couldn’t fly. As soon as you start messing with logistics, not only does it mean people literally stranded all around the world in countries, but also business grinds to a halt because of all of the trade that happens through logistics. It’s just an example of that kind of disruption. We’re starting to see more and more, the recent supply chain disruptions around COVID, but also to do with the oil price. Lots of these shocks just show us that… Even my book was delayed by over a month, because suddenly, there was no paper. They couldn’t get paper in the world. So we have to prepare for these kinds of shocks. This is the new volatile world, the VUCA world.

Gene Tunny  28:55

Yeah, well, it’s certainly taking a while for everything to get back to normal. I’m an economist, and I’ve got great faith in the ability of markets to adjust ultimately, but it takes time. We could have these sort of disruptions for another year or so. I think I saw one estimate.

Wayne Visser  29:21

And remember, the kind of COVID type disruption, earthquakes, volcanoes are a bit random, but COVID will most likely happen again. It still has a bit of course to run, but another type of infectious disease, we can expect those again. In fact, it’s linked to these risks we’ve been talking about because as we’ve wiped out nature, zoonotic diseases, which are these diseases that leap from animals to humans, also as we have this huge industrial agricultural system with livestock, the chances of, again, diseases going from animals to humans actually is going up. We can expect that kind of shock again. But all of the analysis that we’ve seen of climate change suggests that COVID is just a very mild dress rehearsal for what’s coming on climate change. The point is that we should be expecting to live in a world of disruption. We have to know how to cope with that, and how our economies can cope, how our organisations can cope, and personally, how we cope.

Gene Tunny  30:30

What will that disruption from climate change be, Wayne? What are your thoughts or what’s your expectation as to what we’ll see? You mentioned wildfires, and I guess flooding as well. We’ve just had some flooding here in Brisbane, where I am, on the east coast of Australia. Look, there’s a big debate. It seems to be it’s difficult to attribute any particular natural disaster or to say that that’s related to climate change. I’m not sure you can do that. But certainly, I understand that it could increase the risk of these things, so I accept that. What do you see as the potential future if we don’t stabilise the CO2 in the atmosphere?

Wayne Visser  31:28

You’re right, there’s weather, and there’s climate change, and weather changes. It’s hard to link individual weather events to climate change, although there is now a scientific centre that is doing exactly that through statistical analysis, showing the probability that this could have been just a normal weather event, without the climate driver. They can now very quickly, actually, on most events, give a rating as to whether this is likely to be climate related.

But essentially, what we’re going to look at is just more extremes, I think that’s one of the one of the mis-sellings of what was originally called global warming. People thought it’ll just get a little bit warmer, we’ll go to the beach a bit more. But actually, it is climate change. It’s more disruptive, because it’s hotter and it’s colder. The storms are more intense and more frequent. That’s for complicated reasons, largely that the oceans are warming up, which makes the weather more unstable. Just everything that used to be a very rare occurrence, like a massive storm or extended 10-year drought, will just become the new norm. Temperatures that we never used to see—Canada had its highest temperatures in the last 12 months—will again become the new norm.

This has impacts on all kinds of things. It has impacts on agriculture, of course, the food system, to survive those floods and droughts, but also the climate is moving. So if you’re in a particular area, and that’s no longer good for agriculture, because everything’s got warmer, then that becomes a problem. Tropical diseases will increase because we’re moving to a warmer world. So places that never had to deal with things like malaria or Dengue fever suddenly will be dealing with those. So there are health impacts. And also remember that for every degree, on average, warmer that it is, people are less productive. And there are statistics on that as well. You have economic losses as well, as the world gets warmer.

So lots of different impacts, but it’s all about the volatility and the extremes of climate and wheather our infrastructure and our organisations and even our homes are just ready for that. As I said, you know, only a third is insured of all the climate damage that we’re seeing year on year. So for two thirds of people, it’s not covered.

Gene Tunny  34:25

Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  34:30

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Gene Tunny  34:59

Now back to the show. Wayne, I think what’s terrific, what you’ve done is really good with these six great transitions, I think you call them, so two in nature, two in society, and two in the economy. And if you hear that, then you’re thinking, oh, okay, there’s some big challenges that the world faces. How are these going to be addressed? It sounds like you’re relatively optimistic. To what extent will they be addressed by what’s happening with business, business transforming itself with innovation that’s occurring right now? And then how much needs to be addressed by government policy, or changes in the household that could be encouraged by government policy—changes in households and business? Could you take us through that, please, because just looking at that, those six great transitions, it looks like we need some sort of, I hate to say great reset, because that’s become such a controversial term and really triggers people, so I don’t want to say that. But could you take us through, how are we going to get through this, please?

Wayne Visser  36:19

I don’t think it’s wrong to call it a great reset. It’s become a political term. But it is of that scale. We really are looking at reinventing capitalism and going through another industrial revolution that’s very different. World Economic Forum calls it stakeholder capitalism. Now, that’s a huge shift from shareholder capitalism.

But maybe I’ll give you a little insight into another part of the book, which is to look at the underlying science, because the science tells us where the change is happening. There are six keys to thriving, which is an insight into how these complex systems change. One is complexity. This is all about how many relationships there are in any given system. And what we see is the world getting more and more complex. Of course, we’re getting more and more connected. Social media can help; sometimes it can hinder. But just in so many ways, the connections are increasing.

One of the solutions we start to see more and more, partnerships, so companies getting into partnerships with government, with NGOs, and even getting into partnership sometimes with competitors to change the landscape. When Unilever decided to go for 100% sustainable palm oil, which is a big problem in the world today, if they did it on their own it’s useless. They had to convince their competitors as well to do it. The other big ones like Nestle, for example, Procter and Gamble, and so they went through the Consumer Goods Forum, and they got everybody signed up. We’re seeing far more of those kinds of initiatives. It’s all about creating more and more connections.

Then the second one is coherence. This is about having really big goals to aim for. Now we’ve got the sustainable development goals, which are certainly helping, these 17 global goals that all the world’s countries have signed up to, that has created a common focus. But we also see coherence arising around specific issues. Like I mentioned, the 30% land and water protected by 2030, or on climate change, consensus really has emerged around a 1.5 degree warming target, not even two degrees anymore, and net zero by 2050. That’s just become the new norm that everybody is going for. We see this coherence start to emerge in different ways. Policy certainly helps here, because that’s what good policy does is it sets the destination, and then lets business innovate to get there. And we’re starting to see more and more of that good policy. If we look at the Green Deal in the European Union, it’s a great example of that.

Gene Tunny  39:18

Sorry, the Green Deal. I’ve heard of the Green New Deal in the US, but that’s not been implemented. There’s just some sort of wish list from AOC and people of that sort of persuasion, but you mentioned a Green Deal.

Wayne Visser  39:44

Yep. EU Green Deal. It’s effectively Europe’s strategy on climate change. It’s very, very comprehensive and very ambitious. And it touches everything. It’s got a Farm to Fork area which touches agriculture. It’s got a mobility area, around electrification of mobility. It’s got a circular economy element. It’s got a finance element. It’s a very, very strong policy. In some ways, America is trying to copy that with the New Green Deal. Yes, policy helps with the coherence piece.

Then you’ve got creativity, which we’ve talked about a little already. For things to change, for all living systems to change, they need innovation. And that happens through diversity. Again, there’s something we’re working very hard on, but we are living in an age of innovation, no doubt about it. In many of our most difficult problems, we are seeing some amazing solutions coming. If we just pick on one, for example, we know electric cars. I’ll leave that alone, but just remember that that is changing much faster than people think. Norway is burning fossil fuel cars by 2025. That’s just around the corner. In most other countries, UK, it’s 2030. Within 10 years, it’ll really be something to watch.

But take food, for example. There’s a whole movement of course around going more plant based. That makes sense from a health perspective, because 20% of mortality can be reduced just by going more plant based, but also from a climate perspective, and a biodiversity perspective, and of course an animal welfare perspective. But here we see innovation. You’ve seen the Beyond burger and the Impossible burger. These are really engineered to look and taste like the real thing. I know that may be a hard sell in in Australia, but on blind tests, actually, they’ve done extremely well.

Not only that, but we’ve got cultured meat coming. This is grown in labs meat, essentially grown fermented, grown in fat, like you do for insulin. And this is this is going to completely change everything, because again, you don’t have the input of land and water. You have much lower energy input, and you’re not killing anything. You’re literally just taking cells, live cells from a cow, for example, and you’re creating that. In Singapore, you can already go to a restaurant that sells cultured chicken. This is innovation happening very fast. Massive amount of investment going into this.

Gene Tunny  42:41

Sorry, by cultured chicken, do you mean lab grown, do you?

Wayne Visser  42:46

Yes, lab grown.

Gene Tunny 42:48

Wow.

Wayne Visser 42:48

That’s the popular—

Gene Tunny 42:49

In Singapore.

Wayne Visser 42:50

For everything, for steak, and you can literally grow it how you want to try, so lean or however you want it. It is real meat. It’s just that it’s grown from cells rather than the living cow that you have to slaughter or chicken you have to slaughter. And it’s very sustainable, not only in terms of those impacts, but literally, if I remember the numbers correctly, if you’ve got a factory that’s making this, every two days that meat replenishes itself. It grows back. You’ve just got this endless supply of meat that is growing much faster than a cow that you have to grow for months and months, or years. It’s just an example of innovation happening. That’s the creativity piece of the underlying science.

You’ve got a really interesting one, which is convergence. Convergence is very linked to innovation. It’s really the perfect storm. It’s when things reinforce one another. We call this in the science, positive feedback loops. And this is what creates tipping points. And here again, if you look at what’s happening, there are many of these positive reinforcing tipping points. When you were asking do we need more policy, do we need more market forces, what do we need, this is where we’re seeing the convergence because in fact, what we’ve got are the breakthrough technologies, which are starting to scale, plus the policy, which has really been a huge amount of policy reform in the last five years. We’ve just had the UN agree, for example, now to also create a plastics treaty globally, similar to the climate treaty, which countries will need to sign up to. That will happen by 2024. A lot happening on the policy front. Plus the market forces are kicking in. The likes of a Tesla or an Ørsted, which many people don’t know the name, but used to be a fossil fuel company in Denmark, completely transformed to a renewable company and now is one of the largest offshore wind companies in the world. We’re seeing this kind of transformation really happening very quickly.

And then, in addition to that, so we’ve got the policy force, we’ve got the technology force, we’ve got the market force, and then you’ve got the social movements that are kicking in. This is whether it’s the climate strike movement, or the Black Lives Matter movement, or the Me Too movement, or the extinction rebellion, these are very, very significant, with millions and millions of people, especially younger generations of people, who are just starting to say, “We want a different world. We don’t want our future sold out.” All of these are reinforcing one another.

And if I throw in one last one, finally, finances come on board, coming out of the Glasgow climate agreement. From November last year, there was something called the GFANZ. It’s now the Global Financial Alliance. This is $130 trillion of assets under management that is lined up now from the 450 largest financial institutions in the world, top 10 banks in Europe, top 10 banks in America, all committed now to fund this transition to net zero carbon. Now, practically what that means is they have to go back now to their corporate clients and say, “Show me your plan to get to net zero not only by 2050, but how you’re going to halve your emissions by 2030.” It starts to put massive pressure right through the value chain. All of these things are reinforcing one another, which is why the change is speeding up and why I think on many of these issues, we’re getting to these positive tipping points.

Gene Tunny  47:03

You’ve got a lot of great examples in your book. I would recommend, if you’re listening in the audience, and this sounds interesting, then yeah, please, you should get a copy of the of the book. There’s lots of great examples in there.

I wanted to go back. You mentioned palm oil. That’s something of great interest to me. I’ve done a little bit of work with Indonesian ministries, and palm oils are a major commodity in Indonesia. And if you go to, I think it’s in Bogor, just south of Jakarta, if I remember correctly, there’s a botanic gardens near the presidential palace, and there’s an extraordinary thing. There’s a monument or a statue or a tribute to a palm oil tree I think it is, because it’s such an important crop in Indonesia. I think it was first they imported it to Indonesia from elsewhere in the world, maybe from Africa. I can’t remember correctly. But they tested it in Indonesia, in that the gardens there. There’s a large amount of deforestation, I think in Borneo, due to it. But you mentioned Unilever is now committed to, is it renewable palm oil? Is that right? Is that having a practical impact on deforestation?

Wayne Visser  48:35

Yeah. A couple of things happening there. And you’re absolutely right, I think Indonesia maybe supplies 60 or 70% of the world’s palm oil, along with Malaysia, which provides another 20 or so. It has been absolutely devastating for forests. Indonesia has the third of the world’s largest tropical forests, and that’s really under threat. So we’re destroying these lungs of the earth for commercial interests, because the demand is there. And often the demand is from us in the West, isn’t it, the rich countries, because palm oil is in one in 10 products that we buy, everything from detergents to food. It’s very, very useful.

Yes, quite some time ago now, they set up something called the Roundtable on Sustainable Palm Oil. This has a way of growing palm that doesn’t have the impact that the old commercial approach does, and doesn’t have the deforestation but also the biodiversity impact. Companies can get certified and supply chains can be certified to that RSPO standard. All the big players are on board, whether it’s Nestle or Unilever or Procter and Gamble. They’ve all committed to go 100% to that. It takes a bit of time, but there are large parts of the sector that are still not committed to that, and so it’s a partial solution right now.

But again, here you start to see the value of policy. Part of the EU Green Deal, one of the most recent things they’ve done in the last few weeks, they have a law being drafted now that they will refuse any export or import of commodities, of which palm oil is one, that can’t prove that they haven’t caused deforestation. The onus is on the supplier. If you’re Indonesia, and you can’t prove that this is palm oil that’s deforestation-free, you’ve just lost Europe as a market. This is going to have huge impacts. It’s not just palm oil, it’s coffee, it’s tea, it’s timber, and several others. This is how change really happens.

Gene Tunny  50:58

Yeah. One of the technologies you talk about in the book is blockchain. Can blockchain help us with traceability, with understanding the origins of or the history of the products that we consume?

Wayne Visser  51:16

Yes, blockchain has massive potential, and is one of those ones, it’s an early stage technology, which still has unfortunate unintended consequences. The upside is traceability. And there are companies using that, to show the sustainability of supply chains. A company called Provenance in the UK is a good example. They track and trace a whole value chain for fish or for gold, and they can show, in a very secure way, every step of that process. Another example is a company called Circularise that does this for plastics and can track all the… They actually even use artificial DNA, which they put into the plastic so that just by scanning it, you can tell at every stage of the supply chain, exactly what is in that plastic and how it needs to be recycled. That’s the upside.

The downside is the blockchain, like cryptocurrencies, takes massive amounts of energy. Until we can solve the energy problem—it helps of course if it’s 100% renewable energy—but so long as it’s largely fossil fuel energy, it’s just adding to the problem of climate change.

Gene Tunny  52:34

I’ll have to look up artificial DNA. I wasn’t aware of that. That sounds fascinating. I’ll put a link about artificial DNA in the show notes. Okay. Before we wrap up, Wayne, I want to ask you about a passage in your book. Now, you talk about economics. This is an economic show. I need to ask about this passage, because I’m not sure I entirely agree with it, but that’s fine. Look, I’m trying to be open-minded on this show.

You write that, “Contemporary economics is degenerative. It systematically disregards ecological limits and fails to ensure that fundamental human needs are met. Economy is good at creating jobs, product services and technologies, but what is the quality of these outputs? Do they create more harm than good? The impacts of economic activity are explained away as negative externalities, as if environmental integrity and social justice exist in some realm outside of the economy, but that is not true. Everything is interconnected.”

Look, I agree everything’s interconnected. My view is you’re probably being a bit unfair on economists. I think contemporary economics is trying to embrace the environment more. There’s a discipline of environmental economics, as I’m sure you’re aware, and even ecological economics, although that’s really sort of a minor discipline. My view would be that economists are increasingly conscious of these issues. I think externalities is an incredibly powerful concept. And it can help us think about potential policy solutions. My concern is that we’re not going to be able to get to net zero globally, because to do so you really need some sort of carbon tax. You need a carbon price of some kind. But to do that properly, you need to have that agreed internationally and you have to have it applying internationally, to the same extent. I just think that we’re just not going to get that international cooperation to be able to do that by 2050. I’m a bit pessimistic on that.

I just wanted to note that, that as an economist I probably… That was the one thing in the book I really reacted to. I’m not negative about the book because of that. But I just wanted to get an understanding of where you’re coming from there. Do you really think contemporary economics is really that bad?

Wayne Visser  55:19

Let me start by saying that I’m not anti-economics, I did a major in economics in my business degree. And I studied environmental, ecological and resource economics in my master’s degree. Economics is a tool that we use to better understand the world and to help manage our economies.

What I think we have to look at is what kind of economics system we’ve had, and what kind of behaviour it’s promoted. Certainly, since the neoliberal economics really took off, since the 1970s, and alongside that, the push for deregulation, it’s been a disaster for the environment. There’s just no other way to say that. It has externalised a lot of the costs. It’s gone for production in places where the environmental standards are the worst, where the social standards of the worst, labour standards are the worst. It has resulted in modern day slavery. We have more people in slavery today than we had when it was officially abolished in the 1700s. That’s all kinds of forced labour. It really hasn’t managed to create a system that is consistently good for all people and for the planet on which we depend. That’s the issue. It’s created an economy that is linear, that take make waste economy, where many of the resources are simply not priced right, they’re just too cheap. If you look at Virgin plastic, for example, it’s just too cheap. It doesn’t take into account those social and environmental costs that we have.

I do think the concept of externalities can be effectively applied to remedy some of this. If we do have taxes on carbon, for example, or on poor social labour standards, this can certainly start to rectify that. But we just have to ask whether those are strong enough.

I actually do believe that we will get a carbon price. It may not emerge as one global price, but I think it’s emerging in different places all around the world, lots of emission trading schemes popping up, lots of companies providing their own internal carbon pricing. I think a consensus will start to emerge on what that price is, and governments will start to impose it in different ways. They have to, because they can’t get to their net zero targets without imposing that restriction on companies and on citizens. It’s definitely coming.

Of course, we don’t get to net zero only by changing production. We also need to invest in nature. That’s the way that you also can draw down some of the carbon to make up… It’s a kind of a Pareto rule, like 80% you need to reduce directly from your lifestyle or your operations or your value chain, and then the remaining 20—or some say it needs to be more like 10%—should be in actually restoring nature, which makes up the balance.

I think all of those things are happening and will happen. I do think there is a brand of economics or a new understanding of economics that can get us there. If you look at Doughnut Economics, which you’re probably familiar with, Kate Raworth and her book, I think that’s the best coherently argued alternative to what would be more conventional economic thinking. All it’s really doing is saying, how do we better build and the ecological limits, or what we sometimes call the scientific planetary boundaries beyond which the whole system is in danger of collapse, and how do we build in those social foundations, the minimum requirements that people need. Economics has been dabbling with those things, but just hasn’t been very effective if you look at some of these trends we’ve been talking about. It’s just how do we improve economics and have a new version that is more effective than we have at the moment.

Gene Tunny  1:00:09

Wayne, you’ve written a really fascinating book with lots of great examples of what business and what communities around the world are doing to try to tackle these challenges to improve sustainability. Is there anything you’d like to say to wrap up, to conclude? This has been a great conversation, and we’ve gone over a lot. I could talk to you for another few hours, but we’ll probably have to wrap up for now. Is there anything you’d like to say in conclusion?

Wayne Visser  1:00:46

Yeah, let me just mention two things, and then I’ll have a cheeky suggestion. One is that there is a chapter on the book specifically on business and how business needs to integrate thriving, the practicalities of how they do that, and there’s six steps to that. That’s based on work that I do with companies, big companies like Johnson and Johnson, where we take them through these steps of integrating. It touches on all kinds of things, on how you consult with stakeholders, how you relook at your values, how you relook at your strategic goals, how you build in new and different metrics, how you redesign your portfolio of products and services. Just be aware that there is, if you’re coming from the business world there, besides all the innovation examples, there’s also this very practical, how do I do this on Monday morning.

There’s a chapter on leadership, because that is really crucial. We are seeing a different brand or a different type of leadership emerging, that is able to tackle these big challenges and turn them into breakthroughs and into thriving. I look at the different characteristics that those leaders have, obviously, with lots of examples.

The cheeky suggestion to end with—I’ve started to do this even in keynote speeches—is to end with a poem, since as you mentioned, I’m not only a professor, but a poet. I just find that it taps into a different part of the brain. With your indulgence, I might just end with one of those.

Gene Tunny  1:02:19

Please. Thank you.

Wayne Visser 1:02:21

I’ll do the one which actually opens the book. It is a poem called Thriving. It even has a stanza that is really all about markets and economics, so you should like it. But see what you think of this. Thriving.

Our life is so much more than a duty or a chore of merely getting by without a why or what for, the law of tooth and claw, the struggle to exist, to rally and resist against life’s slow decay, the way of entropy of living just to see another day, to stay, to endure and survive. No. Life is meant to thrive. In nature, all things grow from seed to tree. We know the cycle of living through giving of reap and so, the flow. Things come and go. The cycles of grooming from sprouting to blooming of stretching for the light, the bright palette of hope, the diverse ways to cope, to cherish and flourish, bursting forth and alive, for nature means to thrive. Society lives too. A melting pot we brew from cultures and crises with spices for flavour and kindness to savour, ideas for conceiving and goals for achieving, that stretch us and bind us, that find us together in all kinds of weather, wanting what’s fair, to care, longing to love and strive for society to thrive. The markets live and breathe in complex webs we weave. The synapses of trade have made the things we need, each deed a chance to lead. While tech is getting smart, yet still it needs a heart, a compass as a guide to tide us through the storm and find a better norm. A breakthrough to renew an innovation drive. Yes, markets too can thrive. All life is meant to rise, to reach up for the skies, to move beyond the edge, to fledge with hopeful cries. Life tries until it flies. It shakes and spreads its wings and trills each note it sings. While given time and space, the race of life is run, full powered by the sun, on land, in seeds, like bees’ sweet nectar from the hive. All life is made to thrive.

Gene Tunny  1:04:57

Very good. Excellent. Professor Wayne Visser, this has been terrific. I really enjoyed our conversation and your poem at the end and fully agree. All life and society and nature and markets are meant to thrive. What a great message to the end on. I’ll put links to all your social media and your website for the book in the show notes. This has been terrific. I really, really value your time and your thoughts and all the great insights in your book. Well done and thanks so much. Hopefully I’ll look forward to your future work. I’d really look forward to chatting with you in the future. That’s been great, learned so much. Thanks again, Wayne.

Wayne Visser  1:05:54

Thanks so much for having me on. Of course, I’m always happy to find an excuse to visit you down under. I used to teach also in Melbourne, and love it down there. I look forward to those opportunities. Just also to say for people, there are different ways to access the book, so not only e-book and hardback, but also an audiobook version, so whatever takes your fancy. Delighted actually that it’s already hit Amazon bestseller status, so really looking forward—

Gene Tunny 1:06:33

Wow.

Wayne Visser 1:06:34

That’s in its first week, and number one on the new titles in various categories, including several economics categories. I’m delighted with that. Just thanks very much for having me on. I love the conversation and I hope your listeners do too.

Gene Tunny  1:06:51

Oh, very good. I’m sure they will. Thank you, Wayne. Really enjoyed it.

Wayne Visser  1:06:55

Thanks a lot. Bye now.

Gene Tunny  1:06:57 Okay, that’s the end of this episode of Economics Explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to contact@economicsexplored.com and we’ll aim to address them in a future episode. Thanks for listening. Until next week, goodbye.

Credits

Big thanks to my guest Dr Wayne Visser and to the show’s audio engineer Josh Crotts for his assistance in producing the episode. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

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Podcast episode

What is the Economy? And Why It Matters to You | EP121

What is the Economy? And Why It Matters to You is a new book from UK economics writers Beth Leslie and Joe Richards, who are interviewed in episode 121 of Economics Explored. Legendary music producer Brian Eno has endorsed the book, writing “This clear and comprehensible book is long overdue.”

About this episode’s guests – Beth Leslie and Joe Richards

Beth Leslie is a writer and editor. She became interested in economics when she realised it was a great way to better understand the world around her. Beth is currently the Editor for Economy, a charity that seeks to make economics more understandable for everyone.

Joe Richards is an author, educator and economist. After the financial crash of 2008, Joe’s family lost their business and the home they grew up in. Spotting a lack of public understanding in the economy, Joe’s journey in economics began. Joe campaigned to make economics more accessible for everyone, working with organizations from the Bank of England and BBC News, to local schools and the UK government.

Where you can purchase What is the Economy? And Why it Matters to You:

US https://www.bloomsbury.com/us/what-is-the-economy-9781786995605/

UK https://www.bloomsbury.com/uk/what-is-the-economy-9781786995605/

Australia https://www.booktopia.com.au/what-is-the-economy–beth-leslie/book/9781786995605.html

Thanks to the show’s audio engineer Josh Crotts for his assistance in producing the episode. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

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