Transcript The Three Waves of Community Economic Development First Wave

Creating Economic
Security
Engaging the World More Compassionately
AmericInn Conference Center, Ashland, WI
April 3, 2008
JERRY HEMBD
Northern Center for Community and
Economic Development
University of Wisconsin-Superior
University of Wisconsin-Extension
Outline
• Economic security and the White
House
• Contemporary economic context
or “markets are us”
• National notes
• The sustainability imperative
• Global notes and considerations
“ . . . the ideas of economists and political
philosophers, both when they are right and
when they are wrong, are more powerful than
is commonly understood. Indeed the world is
ruled by little else. Practical men, who believe
themselves to be exempt from any intellectual
influences, are usually the slaves of some
defunct economist. Madmen in authority, who
hear voices in the air, are distilling their frenzy
from some academic scribbler of a few years
back.”
John Maynard Keynes in The
General Theory of Employment,
Interest, and Money, 1936.
Positive Economics
What is
(explanation and prediction)
Normative Economics
What should be
(control and management)
Market Society
Social system in which
economic life is dominated by
a market economy (little or no
government “interference”) and
motivated/driven by individual
self-interest
The Economic Playing Field
Command
Economy
Central
planning
Market
Economy
 Institutions differ 
Price
system
• WHAT should be produced?
• HOW should it be produced?
• FOR WHOM should it be produced?
• What provision should be made for GROWTH?
A Perfectly Competitive Market
• Many buyers and sellers
• A standardized (homogeneous) good or
service
• No barriers to entry or exit
• Perfect information (about prices and
availability of all resources and products)
• Firms and resources are freely mobile
• No external costs or benefits
Market Failure
• Imperfect competition
• Public goods (nonexclusivity and
indivisibility)
• Externalities
• Imperfect information
• Income distribution
• Intergenerational considerations
• Institutional failure
Underlying Considerations
• Supply and demand reflect wants and the
response to them – and not needs
• Markets (when they work properly)
produce efficient outcomes but they may
not be equitable according to your sense
of fairness
• Market failure brings up the question/issue
of role of the government  market
intervention
A Social-Welfare Model for the U.S.?
• The U.S. does not have to accept
continued high poverty as the price to pay
for a vibrant market economy, since social
insurance can be combined with a highproductivity market economy
• The U.S. does not have to choose
between its own poor and the world’s poor.
It can help both, at modest cost, and with
budgetary funding sources that are easy to
identify.
Source: Sachs, Jeffrey D. Common Wealth: Economics for a Crowded Planet. New York: The Penguin
Press, 2008.
A Social-Welfare Model for the U.S.?
• The U.S. can learn from the success
stories of social-welfare states to foster a
greater degree of social harmony and
confidence in public institutions
• The U.S. social insurance system is even
more tattered than it looks, because of the
increased variability of incomes and risks
facing American households
• The costs of major corrections are small
relative to U.S. national income
Source: Sachs, Jeffrey D. Common Wealth: Economics for a Crowded Planet. New York: The Penguin
Press, 2008.
Confronting the Triple Crisis
Climate change
Peak oil
(The End of the Era of Cheap Energy)
Global resource depletion
(And species extinction)
Ehrlich-Holdren “IPAT” Equation
I=P*A*T
I = environmental impact of the economy
P = population
 growing
A = average material standard of living
 growing rapidly (consumption)
T = throughput (resource consumption,
pollution, and ecosystem impacts) per unit of
output
 technology term to compensate for P and A
Original Source: Ehrlich, P., and Holdren, J. 1971. “Impact of Population Growth.” Science 171: 1212-19.
World
Population
11
World
PopulationSince
SinceAD
A.D.
Billion People
People
Billion
8
6
4
2
0
0
400
800
1200
Source: Engelman, UN
1600
2000
US Energy Consumption
U.S. Energy
Consumption, 1635-2000
1635 - 2000
Quadrillion
BTU
Quadrilion Btu
40
35
30
25
20
15
10
Coal
Natural Gas
Petroleum
Nuclear
Hydro Power
Fuelwood
5
0
1635 1685 1735 1785 1835 1885 1935 1985
Source: DOE
Carbon Emissions from Fossil Fuel Burning,
1751-2004
8,000
6,000
5,000
4,000
3,000
2,000
1,000
0
17
51
17
76
18
01
18
26
18
51
18
76
19
01
19
26
19
51
19
76
20
01
Million Tons
7,000
Source: UN, BP, DOE, IEA
Growth Trends Summary:
1950 to 2000
• Population
 more than 2X
• Economy
 7X
• Food consumption
 3X
• Water use
 3X
• Energy use
 4X
The Age of Oil
Billions of
barrels
35
30
25
20
15
10
5
0
0
500
1000
1500
Year
2000
2500
Finite Global Ecosystem
Natural Capital (Ecosystem)
Manmade Capital (Economy)
Source: Daly, Herman. Ecological Economics. Island Press,
2004
A Total Economic Valuation Framework
ECOSYSTEM GOODS
AND SERVICE
VALUES
Nonuse values
Use values
Consumptive use
e.g. existence, species preservation,
biodiversity, cultural heritage
Nonconsumptive use
e.g. harvesting, water supply
(irrigation, drinking), genetic
and medicinal resource
Direct
Indirect
e.g. recreation (boat/swim),
transportation, aesthetics,
birdwatching
e.g. UVB production, habitat
support, flood control, pollution
control, erosion prevention
The figure shows the multiple types of values from ecosystem goods and services that
are considered within a total economic valuation (TEV) framework.
Four Challenges Posed by the
Transition to Sustainability
•
•
•
•
We need more accurate models, metaphors, and
measures to describe the human enterprise
relative to the biosphere.
It will require a marked improvement and creativity
in the arts of citizenship and governance.
The public’s discretion will need to be informed
through greatly improved education.
It will require learning how to recognize and solve
divergent problems, which is to say a higher level
of spiritual awareness.
Source: David Orr. The Last Refuge: Patriotism, Politics, and the Environment in an Age of
Terror. Washington, DC: Island Press, 2004.
Security Perspectives
• Number of people who died in attacks on Twin Towers, 11
September 2001: 3,000
Number of people who died of hunger on 11 September 2001:
24,000*
• Number of children killed by diarrhea on 11 September 2001:
6,020*
• Number of children killed by measles on 11 September 2001:
2,700*
• Number of malnourished children in developing countries: 149
million
• Number of people without access to safe drinking water: 1,100
million
• Number of people without access to adequate sanitation: 2,400
million
Note: *Assuming annual deaths were evenly spread across the year
Source: New Internationalist 2001
Security Perspectives
• Number of people living on less than $1 a day: 1,200 million
• Number of African children under 15 living with HIV: 1.1
million
• Number of children without access to basic education: 100
million
• Number of illiterate adults: 875 million
• Number of women who die each year in pregnancy and
childbirth: 515,000
• Annual average number of people killed by drought and famine
1972-1976: 73,606
• Annual average number of children killed by conflict 19902000: 200,000
• Annual average number of children made homeless by conflict
1990-2000: 1.2 million
Source: New Internationalist 2001
Millennium Development Goals
• Goal 1. Eradicate extreme poverty and hunger.
• Goal 2. Achieve universal primary education.
• Goal 3. Promote gender equality and empower
women.
• Goal 4. Reduce child mortality.
• Goal 5. Improve maternal health.
• Goal 6. Combat HIV/AIDS, malaria, and other
diseases.
• Goal 7. Ensure environmental sustainability.
• Goal 8. Develop a global partnership for
development.
Blessed Unrest
• There are one to two million independent,
local citizens’ groups to devoted to
environmental, social justice, and
indigenous rights issues
• It has been labeled “The largest social
movement in the history of the world”
• It is not an organized movement
• It is a natural response to increasing
societal and ecological problems
Concluding Remarks
• We live and work in a market economy
• There is a role for the public sector in
terms of market intervention – and we
need to be engaged in shaping this role
• There is a role for civil society in terms of
market intervention and human welfare –
and we need to be engaged in moving this
movement forward
Spheres of Concern and
Influence
Sphere of
concern
Sphere of
influence
Some things
have to be
believed to be
seen.
Northern Center
for Community and Economic Development
Jerry Hembd, Director
University of Wisconsin-Superior
Belknap & Catlin, PO Box 2000
Superior, Wisconsin 54880
Phone: 715-394-8208
Fax: 715-394-8592
E-mail: [email protected]
Website:
http://www.uwsuper.edu/ncced