Chart by Stuart at Random Useless Info.
For the previous 30 years, 1950-1979, price was steady at about $0.30 - 0.40/gallon before spiking near the end of the 1970s.
Last week I wrote about Herman Daly's 10-step prescription for a steady-state economy. These 10 steps were policy actions to be taken by governments and regulators, and the article didn't provoke much response.
But
suppose we make this scenario personal. If these 10 steps were
instituted, today, what would our world look like five years from now?
Would limiting pollution and 'taxing bads not goods' change our lives
as citizens, producers and customers significantly?
I believe the changes would be astonishing, and I'm not sure most of us would like them. Here's what I think would happen:
- The
stock market is based on continuous, double-digit growth in profits. A
steady-state economy would not permit such growth. Stock prices would
fall to reflect the risk-related yield, which, without growth, would be
a fixed dividend. And they would stay there -- at perhaps one quarter
their current value. Without growth, stock equity would be largely
indistinguishable from debt, except that it would be unsecured.
- The
loss of 3/4 of the value of stocks would wipe out millions of people's
equity, and make a lot of pension plans, dependent on the value of
stocks increasing, next to worthless.
- Prices of goods dependent
on non-renewable resources ('bads') would soar as new taxes were
imposed on them. I think we could safely assume that the price of fuel,
heat, air conditioning and transportation would at least quadruple, and
that of food, clothing, health, furniture, home maintenance, cosmetics
and household products (all dependent on oil and other non-renewable
resources) would at least double. The revenues produced from these new
taxes would subsidize renewable energy innovations, which are
desperately needed but would not return much to the average citizen, at
least not in our lifetimes. Some of these new revenues would go to
provide Daly's guaranteed minimum annual income. I suspect a large
proportion of the population in countries like the US with great income
inequity would end up dependent on this minimum annual income to pay
for their basic necessities.
- A doubling of prices over five
years would push the inflation rate (which is already arguably
deliberately understated) to double digits, and borrowing rates would
rise to keep pace, perhaps to 15% or more. At the same time, the loss
of purchasing power would cause housing prices to plunge, perhaps by
half. Take the average variable mortgage, refinance it at 15%, compute
the mortgage payments on a house that may only be worth half the amount
of the mortgage, and you have a recipe for disaster. Financial
institutions would have to write off as much as half the value of their
customers' mortgages, since foreclosing would net them even less than
that. Few banks would be able to survive the turmoil.
- Many
large businesses with large debt loads would find themselves insolvent,
and go out of business. This would throw millions out of work. Many
others would face large cuts in salary.
- There is a positive
side to this. We would, of necessity, consume a lot less unneeded junk.
We would find workarounds to expensive 'consumer products' (by learning
to entertain ourselves for example). We would buy more locally-made
products. We would get around on our own power (walking and cycling)
much more. We would learn to fix things instead of throwing them away,
and gradually educate ourselves to buy better quality goods that would
last longer, even if they cost more. The gap between rich and poor
would narrow significantly. Affluent nation salaries would fall to
levels comparable to struggling nations', reversing the offshoring of
jobs. Imperial wars could no longer be financed with the drastic drop
in income taxes and prohibitive borrowing rates.
Of course,
the current public debate, about whether gasoline taxes should be cut
to stimulate consumer spending and lessen the recession, or how long
the recession will last before 'sustainable growth resumes', misses the
point entirely. Ever-increasing consumer spending, the engine of our
'growth' economy, is not sustainable, period. The longer we wait to
wean ourselves off our addiction to growth, the harder it will be.
The
pundits and politicians know that doing what Daly recommends is
immediate political suicide, and that not doing what he recommends is
accelerating ecological suicide. Not much of a decision there.
The
real debate, I think, shouldn't be over the wisdom and necessity of
instituting the policy changes that Daly recommends. It should be about
the political impossibility of doing what he proposes. And about what
we will do instead, and its consequences, for ourselves and future
generations.
|
MADE IN CANADA
trust your
instincts 
