Bill McKibben on the Deep Economy

According to Bill McKibben, in his new book Deep Economy, the growth-obsessed economic dogma is due to be overthrown. This, for three reasons:

  1. While it’s succeeding in creating wealth of a quantifiable sort at the large scale, it’s not enriching most people, and indeed is exacerbating insecurity and inequality.
  2. It’s fundamentally dependent on the lucky accident of vast supplies of cheap fossil fuels. This isn’t going to last much longer, for one thing, and for another, we can’t afford to keep tossing carbon into the atmosphere at the current rate, much less at a growing rate.
  3. While economic growth is good at pulling people out of poverty, the evidence seems to show that its benefits to individuals, families, and communities level off and then diminish. In other words, for those of us lucky enough to be already among the world’s fortunates, more money and more stuff isn’t likely to make us any happier, and in fact the pursuit of more money and more stuff may interfere with other paths that would be more likely to make us happier.

Deep Economy makes the case for these deficiencies in the petroleum-based, globalized, super-sized, growth-happy economy, and then makes some suggestions for what a better model might look like — one that solves these three problems without creating too many new ones — with some real-world examples.

I like McKibben’s writing and what he has to say with it. I really enjoyed The Age of Missing Information when it came out , and then I read his earlier The End of Nature and later Hope, Human and Wild and liked those as well.

He’s a good writer (a former New Yorker staffer) and an energetic reporter (Deep Economy hops with him to such far-flung places as Yiwu, China and Curitiba, Brazil and Reykjavík, Iceland and Gorasin, Bangladesh).

And he makes a good argument as well. His story — full of peak oil, global warming, local eating, globalization criticism, big box bashing, alternative energy boosting, and the like — covers bases that ought to be pretty familiar by now to any left-leaning person who keeps up with ideological fashion. But he avoids the clichés and (mostly) avoids the sloppy thinking that often makes such arguments unpersuasive.

I’m in a sort of a strange canoe, myself. Ideologically, I’ve been won over by the free-marketeers, and on this scale I find myself to the “right” of Ronald Reagan and Milton Friedman. Temperamentally, though, I have little in common with most of the free market advocates I know about — I’m car-free, brew my own beer, “live simply,” eschew expensive processed food and television, and complain about air pollution.

And I get my influences from both camps, which I think of as a good thing. The leftish granola sorts typically strike me as hopelessly naïve about economics, so I get correctives here from the libertarian set. The libertarians, though, I’ve found to be largely untrustworthy on such topics as global climate change — which they wish away as energetically and disingenuously as Rush Limbaugh does Abu Ghraib — and so here I usually turn to The Land of the Left or to the hard science itself.

McKibben can be a little fuzzy with the economics at times, but he makes some solid main points. For instance: The current American agricultural model — in which massive farms are run with much of the traditional labor replaced by machinery, pesticides, and chemical fertilizers, and with the products produced and processed in centralized operations and then shipped globally — is strikingly, magnificently efficient if and only if there’s plenty of cheap petroleum. Without that, the whole thing falls apart: the machinery, pesticides, and fertilizers no longer are cheaper than the labor they replace, the shipping costs overwhelm the benefits of the economy of scale provided by centralization, and so forth.

Also: say what you will about the affluence and hyperconsumption of the American lifestyle (and there’s certainly a lot to be said in its favor) — it’s hard to seriously argue that the Earth can support China or India adopting it too:

…if China alone were to match America in the extent of car ownership, there would be 1.1 billion more vehicles on the road. Those vehicles might be “clean,” in the sense that the Chinese would be able to afford catalytic converters for their tailpipes. But they would also produce more carbon dioxide annually than the whole of the rest of the world’s transportation systems. …if China consumed as much seafood per capita as Japan now does, it would require 100 million tons of fish all by itself. This exceeds the total of the current world catch…

…if the Chinese ate meat the way we do, they’d use two-thirds of the world’s grain harvest; if they drove as many cars as we do, they’d use all the oil the world currently produces plus 15 million extra barrels a day.

The point, of course, is not that we should have it and they shouldn’t; it’s that extending Western-style consumption to the developing world is not going to work.

The free marketer in me is nagging to me that this is self-correcting: If China continues to grow and “the biggest car-buying boom in world history” continues, gas prices will rise, pricing more people out of the car market, making petroleum-using industries more expensive, and thereby encouraging alternatives. If China bids up the world grain market in a quest for more feed grain for its meat animals, eventually this will make grain expensive enough to slow the demand all on its own, or increase production to keep up with demand, or in some way meet an equilibrium.

But McKibben reminds me that while the economic system may indeed self-correct in this manner, it may not do so comfortably. Take an impoverished African country, one that already spends 80% of its export earnings importing oil: what happens when it gets priced out of the grain market, but doesn’t have appropriate land to take advantage of the same market? And with pollution and greenhouse gases poorly accounted for in both the quasi-free market of the West and the Chinese communist model, an economic equilibrium may be equivalent to a terribly costly ecological deterioration.

McKibben’s book hints at being prescriptive (we’d better do something different), but it can be read just as well as being descriptive (we’ll end up having to do something different whether we want to or not).

What is that “something different”? The traditional alternative that has been offered to the prevailing economic model has been some form of state socialism. “But,” McKibben writes, “one real benefit of living in is that taught us an awful lot about what didn’t work.… It’s a great luxury for us to not even have to entertain the possibility that state socialism might be the way out of our troubles.”

The something different is instead, in part, a half-way point at which the world’s poor emerge from chronic need into sufficient wealth, and the world’s rich take stock of their good fortune and step off of the treadmill. And it’s in part a new reliance on local, small-scale production of food and goods to replace the megamultinationals that produce and sell much of what we buy today, but that rely fundamentally on increasingly scarce and costly fossil fuels, and therefore are themselves as doomed as the dinosaurs.

Even today, McKibben notes, mega-agriculture is not inherently more efficient than micro-agriculture. Small plots can grow more food per acre, even if larger ones grow more food per dollar by relying on cheap petroleum instead of expensive labor — and relying also on government subsidies. According to McKibben, about 70% of the value of the American soy bean comes straight from government subsidy, and it’s only government subsidies that allow U.S.-grown megafarm corn to compete with (and bankrupt) small Mexican farms. So it’s not as though we need the government to step in and break up Big Agriculture so much as we need it to get out of the way and stop propping Big Ag up and giving it an unfair advantage over the little, less oil-dependent, guy.

When it comes to convincing Americans to step off the treadmill, McKibben has a hard sale to make — though as one who stepped off and hasn’t looked back, I have a difficult time remembering what’s so hard about it.

In , people in the United States enjoyed a standard of living that was the envy of the world. , labor productivity (the amount of economic value an American worker produced in a given span of work) increased by 80%. Why didn’t we decrease our hours worked, maintaining our world-envied lifestyles without having to work so hard for them? It seems that we wanted more money more than we wanted more time. McKibben argues that, in retrospect, we made the wrong choice.

Our lifestyles are more expensive now — we live in bigger houses, buy more and pricier stuff — but we haven’t gotten an equivalent boost in satisfaction. Indeed, in many ways, our lives feel worse — we have more trouble with mental illness, when surveyed we say that we are less content in general and less satisfied with our jobs and marriages, we have fewer friends, and our kids are more troubled (the average American child today reports feeling more anxiety than the average child who was institutionalized for mental illness did fifty years ago).

Up to a certain point — about $10,000-per-year, McKibben reports — increasing income increases happiness. After that point, money seems to stop helping very much, and people would be wiser to put their energies into pursuing or defending other things in their lives instead if they want to become more satisfied — things like their families, their social groups, and their neighborhoods. Instead, people seem to get stuck — they sacrifice the things that would really improve their lives in order to pursue more money, which isn’t providing as much real value as what they are giving up to obtain it.

This can probably be explained in much the same way as the obesity epidemic. Evolution designed us to scarf down calories when we could find them, because scarcity was not infrequent and it was nice to have a reserve. We did not evolve in an environment like today’s in which high-calorie foods were plentiful and easy-to-get year-round.

Similarly, it’s pretty rare historically (and even contemporarily, on a global scale), for people to be able to routinely earn the equivalent of $10,000-per-year. So the strategy of earn-as-much-as-you-can has almost always been a good one for successful living. Now that calories are ubiquitous, and (in the rich world at least) good salaries too, we need to stop relying on our instincts and instead examine our behavior with rational self-interest in mind.

McKibben says that this middle-ground alternative, in which people enjoy economic freedom and plenty without sacrificing mental health, family, community, or ecology, is already emerging. You can find hints of it on a community radio station in Barre, Vermont; in a cooperatively-owned clothing store competing with Wal-Mart in Powell, Wyoming; in the bus rapid transit systems of Curitiba, Brazil and Yunnan, China; in the rise of community-supported agriculture and farmers’ markets in the United States; in the mix of private ownership and ecological stewardship being pioneered by Vermont Family Forests; in the complementary currencies being used in many American towns; in the way the internet has killed off the music industry’s megastar model in favor of niche bands and live performers with regional notoriety; in the New Farming movement of Bangladesh and the Nine Seeds movement in India; in a Guatemalan cooperative that manufactures farm equipment from old bicycles; in Ren Xuping, the entrepreneurial and empowering “Rabbit King” of China; in the Pagal (“Crazy”) Party near Kabul, Afghanistan; and in the strange mixture of poverty and opportunity in Kerala, India.

These examples, many of which McKibben has investigated first-hand, make for thought-provoking reading.

My chief complaints with the book are two: One is that its economics seem sloppy and poorly-thought-through at times, and the other is that sometimes McKibben plays a little too fast-and-loose with the facts.

For instance, when McKibben is arguing that American economic growth hasn’t really enriched most Americans, he supports this with a statistic that says that the bottom 90% of income-earners in America were making less money (when adjusted for inflation) in than they were in . Later on, in the course of another argument, he mentions that “Americans spend 11 percent of their paychecks on food, less than half of what their grandparents spent before World War Ⅱ” and later still, “In a family might have spent a third of its income on food; middle-class Americans now spend more like a tenth.” If economic growth means most Americans aren’t earning much more money, but that money goes much further because goods are better and cheaper, that really has enriched us, and it’s a mistake just to look at the salary.

He notes also, to support this “rising tide submerges most boats” contention, that “Even for those with four-year college degrees… earnings fell 5.2 percent when adjusted for inflation, according to the most recent data from White House economists.” But if you look up the report this data came from, it also says that this group saw their inflation-adjusted earnings rise 12% . McKibben doesn’t mention this. Most of us remember, though, that the dot-com bust was preceded by the dot-com boom.

McKibben also attacks Wal-Mart, saying that it hurts whole “communities” for the benefit of mere “individuals.” But he divides these harms and benefits arbitrarily, so that by reducing prices on goods Wal-Mart is only helping the “individuals” who shop there, but by boosting wages or increasing health benefits, it would help the “community” at large. I’m not a big fan of Wal-Mart. I’ve almost never shopped at one and haven’t much cared for the few I’ve stepped into. But I also don’t much care for most of the criticism of Wal-Mart that’s so trendy in some circles. Most of it seems horribly classist — a sort of backhanded way of expressing disapproval of the sort of people who are poor enough to appreciate Wal-Mart’s low prices. The pro-Wal-Mart arguments I’ve read are so much more thoughtful and convincing (see for instance “Progressive Wal-Mart. Really.” and “The Empire Strikes Back”) when compared to those of Wal-Mart’s NIMBY critics that I’ve become a Wal-Mart booster despite not liking their stores or the cult of consumerism they represent. Enough said.

McKibben can sometimes let enthusiasm trump accuracy in the pursuit of facts to back his arguments. He’s better than most in this regard, I think, but every once in a while he gives into temptation. For instance, he quotes “Nobel Prize-winning Stanford economist Kenneth Arrow [and] a number of other researchers” as saying “We find reason to be concerned that consumption is excessive” but when I followed the footnote to the original paper McKibben is referencing, that quote was nowhere to be found in it. Similarly, he quotes “even an arch-conservative commentator like Dinesh D’Souza” as having called American income inequality “staggering.” But when I tracked down the source for that quote, I found that D’Souza was using that word to characterize someone else’s argument about income inequality, and not one to which he was particularly sympathetic.

I think on the whole McKibben is trustworthy and pretty good at trying to shine light on many facets of the topics he describes, but it only takes a few examples like these (and I only followed a handful of footnotes back to their sources, myself) to cast doubt on what he has to say.

Still, I think he’s on the right track and raises some good questions, and we’d do well to spend some time trying to come up with some good answers. Encouragingly, the answers cover the spectrum from individual lifestyle changes, to entrepreneurial and creative ones, to large-scale political ones, so there’s something any of us can take a bite of and start chewing.