2013/10/11
http://bilbo.economicoutlook.net/blog/?p=25691
https://nam-students.blogspot.com/2019/06/31521-phillip-lawn-environmental.html@
Environmental Sustainability and Economic Growth – Bill Mitchell – Modern Monetary Theory
2013/10/11
http://bilbo.economicoutlook.net/blog/?p=25691Environmental Sustainability and Economic Growth
I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to publish the text sometime early in 2014. Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.
Today, I am continuing to add the sections in Chapter 25. So far we have done 25.1 and 25.2. I am jumping to 25.5 today.
Chapter 25 Recent Policy Debates
In this Chapter we consider the following policy debates:
- 25.1: Ageing, Social Security, and the Intergenerational Debate
- 25.2: Twin Deficits and Sustainability Of Budget Deficits
- 25.3: Fixed Versus Flexible Exchange Rates: Optimal Currency Areas, the Bancor, or Floating Rates?
- 25.4: Economic Growth: Demand or Supply Constrained?
- 25.5: Environmental Sustainability and Economic Growth
25.5 Environmental Sustainability and Economic Growth
We started our course in macroeconomics by noting that the main macroeconomic policy goals are full employment and price stability.
A central idea in economics whether it be microeconomics or macroeconomics is efficiency – getting the best out of what you have available. At the macroeconomic level, the “efficiency frontier” is normally summarised in terms of full employment – where all available labour resources are being productively deployed.
We have learned that the concept of full employment is hotly contested among different schools of thought in macroeconomics but this does not negate the fact that the attainment of full employment – using our macroeconomic resources to the limit – remains a central focus of macroeconomic theory and policy. The debate is about what that limit actually is.
However, this debate is framed by economists in terms of the extent to which there are structural impediments which might mean our conception of full employment is associated with higher rates of unemployment than otherwise. We considered those issues in Chapter 14.
We learned that capitalist monetary economies are prone to deliver mass involuntary unemployment as a result of a lack of effective demand.
The solution to involuntary unemployment involves increasing the level of effective demand so that it is consistent with the level that is required to employ all those willing and able to work is filled with public net spending.
This can be achieved by increased government spending to ensure that the shortfall in non-government spending relative to the full employment level of demand is filled.
In addition, the government can also stimulate non-government spending in a number of ways including tax cuts, interest rate cuts, and investment and export incentive schemes.
This suggests that sustaining the economically and socially desirable goal of full employment requires continuous growth in aggregate demand and real GDP as populations expand.
In Chapter 3, we learned that the conventional market-based measures of national income as indicators of well-being are flawed in a number of ways. First, many activities that nurture well-being (for example, homeduties, caring for our children) are not counted as economic activity, unless a payment for service is made.
Further, any production that is sold in the market place will add to the conventional measures of GDP. So a society is considered to be “growing” and doing better if it produces increasing quantities of military weapons, which then wreak havoc during times of conflict.
Similarly, a major environmental disaster, such as the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, boosts economic growth as a result of the clean-up operation, even though the event devastates the local marine environment.
We also learned that national income measures of well-being largely ignore distributional issues. How might we feel about two economies which are recording the same growth rates, but where in one, the vast majority of the income growth is secured by a small minority and the rest of the population live in poverty, whereas in the other, the population broadly shares in the increased real income?
Conventional real GDP measures also ignore the costs of increasing depletion rates of non-renewable natural resources. The mining or forestry activity, for example, boosts economic growth but the environmental damage that is left behind is not considered because the firms involved do not count the damage as a cost of production.
Industrial production growth will be “good” for real GDP growth but the associated pollution of the land, water and air that results from the activity might be damaging for our health and, ultimately, undermine the capacity of the economy to produce as the natural systems die. There is growing evidence that unsustainable farming practices are reducing the amount of available productive land and destroying waterways but still count $-for-$ in our measures of economic growth.
It is clear that the capitalist system not only is prone to creating mass unemployment but it also grows on the back of environmental degradation which is destroying our natural capital. This would appear to require a shift in our “growth-at-all-costs” approach to economic policy making.
Mat Forstater (2001: 386) wrote that:
Environmental degradation in the form of unsustainable rates of natural resource depletion and excessive pollution of land, air, and water is characteristic of modern capitalist economies. Humanity now faces significant challenges in the form of both local ecological crises and global environmental problems, such as ozone depletion, global climate change, biodiversity loss, soil erosion, and deforestation …
The question that arises is whether the desire to maintain full employment and the requisite growth that is associated with that policy goal is consistent with environmental sustainability, given the increasing evidence that anthropogenic global warming and resource depletion is endangering the health of the natural environment upon which our economic and social settlements depend.
While full employment appears to be a necessary social and economic goal, can we reconcile it with the obvious need to ensure our natural environment is also sustained?
Thus, even if it were possible to expand aggregate demand enough to promote growth sufficient to keep pace with labour force growth and productivity growth and mop up the huge stocks of long-term unemployment, how could the natural ecosystems, already under great strain, cope?
While the full treatment of what constitutes environmental sustainability is beyond the scope of this textbook some useful observations can be made. For further discussion of what constitutes environmental sustainability see Lawn (2001) and Forstater (2001).
What we will learn is that growth is not necessarily good or bad per se. We can certainly improve our measures of growth to reflect the shortcomings noted above.
At a minimum this requires us to include all the costs of production in our measures of economic activity. Our revised net measures of economic growth will then ensure that we understand whether the changing scale of economic activity is advancing our overall well-being or not. It is entirely possible that the conventional measure of real GDP might show a slowdown in growth (which we would currently interpret as a problem) while new improved measures of real GDP (net of costs) would show an improvement in sustainable growth.
But we can also engender growth that will be sufficient to ensure that all those who want work can find a job at decent pay and conditions and still satisfy the requirements of environmental sustainability.
Clearly, this suggests that it will be necessary to change the composition of final output toward environmentally sustainable activities. It is not increased aggregate demand per se that will be necessary to sustain full employment, but increased aggregate demand in certain areas of activity.
Policy makers intent on eliminating the waste of human potential need to ally that aim with the broader aim of preserving our natural capital and minimising the waste that arises from resource extraction.
That is, our notion of a “macroeconomic efficiency frontier” thus has an extra constraint on it – the need to protect our natural capital.
Phillip Lawn (2001: PAGE NO) defines this in terms of an “optimal macroeconomic scale” which is:
… where the physical scale of a nation’s macroeconomy and the qualitative nature of the goods with which it is comprised maximises the sustainable economic welfare enjoyed by its citizens. The notion of optimal macroeconomic scale is a crucial one because it enables one to understand how the nation can achieve SD without the perceived need for continued growth.
Several elements are present in the concept of an “optimal macroeconomic scale”. First, what are the benefits of creating and maintaining wealth derived from economic activity. Second, what does this cost in terms of depleting the available environmental services.
Natural capital is identified by Lawn (2001: PAGE NO) as “the original source of all economic activity” because it “is the sole source of low entropy matter-energy and the ultimate repository of all high entropy wastes”. Economic activity generates real income (which is the satisfaction derived from consuming goods and services produced) but also imposes social costs on those who produce these goods and services.
Lawn (2001: PAGE NO) notes we have to endure personal costs such as the disutility of work and the stress of commuting as part of the process of generating these economic benefits and the calculation of what he calls “net psychic income” reflects the human costs and benefits of economic activity.
While calculating the human costs of economic activity, we also have to take into account the costs of depleting the available environmental services. Extracting these services (the low entropy matter-energy) creates waste (high entropy matter-energy) which has no further use. This waste depletes our natural capital and is the ultimate resource cost of economic activity.
Trying to define the costs of natural resource depletion is fraught because the biosystem is a living entity and economists are unable to define the use point beyond which it dies.
Sustainable net benefits are the difference between the net psychic income and the environmental costs of economic activity. The maximum macroeconomic scale for a nation occurs when the sustainable net benefits are zero. Beyond this physical scale of production, the environmental costs exceed the net psychic income derived from economic activity.
However, this point is likely to be well beyond the point where the economy maximises its sustainable net benefits for any given technology. The maximum sustainable net benefits is the optimal macroeconomic scale because the difference between the net psychic benefits and the environmental costs are at their greatest.
The macroeconomic efficiency frontier thus is defined by the juxtaposition between the net human benefits and the environmental costs required to create those net human benefits.
The full employment goal then needs to be expressed not just in terms of the total number of jobs required but also the type of jobs and the activities these jobs will be engaged in.
Growth is necessary for employment as the population grows but it cannot be unfettered and left to the market. It has to be a carefully guided growth with new tools not normally used by economists to help governments decide on what their contribution should be and how they should regulate the contribution of the non-government sector.
Consideration of that will lead to a rather dramatic reshaping of our conception of productive work, which is current narrowly defined in terms of “gainful” paid endeavour in pursuit of (private) profit.
Conclusion
WE WILL CONTINUE NEXT WEEK! THE COMPLETE FIRST DRAFT IS NEARING COMPLETION AND I WILL START POSTING REVISED DRAFTS SEQUENTIALLY IN THE COMING WEEKS.
References
Forstater, M. (2003) ‘Public employment and environmental sustainability’, Journal of Post Keynesian Economics, Spring, 25(3), 385-406 – PDF download.
Lawn, P.A. (2001) Toward Sustainable Development: an ecological economics approach, CRC Press, Boca Raton, Florida.
Tcherneva, P.R. (2009) ‘Evaluating the economic environment viability of Basic Income and Job Guarantees’, in Lawn, P.A. (ed.) Environment and Employment: A Reconciliation, Routledge, London, 184-205.
Thought for the Week
Lars Ulrich, on band longevity (Source):
Somewhere along the line we learnt to get along, and somewhere along the line, we learnt that we would rather be in Metallica than not be in Metallica.
Saturday Quiz
The Saturday Quiz will be back again tomorrow. It will be of an appropriate order of difficulty (-:
That is enough for today!
(c) Copyright 2013 Bill Mitchell. All Rights Reserved.
Interview with Phil Lawn 2022
ミッチェル2019#31
where the
physical scale of a nation’s macroeconomy and the qualitative nature of
the goods with which it is -comprised maximises the sustainable economic
welfare enjoyed by its citizens. The notion of optimal macroeconomic
scale is a crucial one because it enables one to understand how the
nation can achieve [sustainable development] … without the perceived
need for continued growth. (2001: 1–2)
国家のマクロ経済の物理的規模とそれを構成する財の質的性質が、国民が享受する持続可能な経済的厚生を最大化する場合。最適なマクロ経済規模という概念は、国家が継続的な成長を必要とすることなく[持続可能な開発]を達成する方法を理解する上で、極めて重要なものである。(2001:
1-2)
Lawn, P.A. (2001) Toward Sustainable Development: An Ecological Economics Approach, Boca Raton, FL: CRC Press.
https://www.amazon.co.jp/Philip-Andrew-Lawn/dp/0367578956/
#31:521 Phillip Lawn: Environmental Sustainability and Economic Growth – Bill Mitchell –
2013/10/11
http://bilbo.economicoutlook.net/blog/?p=25691
https://nam-students.blogspot.com/2019/06/31521-phillip-lawn-environmental.html
Interview with Phil Lawn 2022
https://vimeo.com/684882621We've just heard from Dr. Phil Lawn who is an ecological economist in Australia.
今、オーストラリアの生態経済学者、フィル・ローン博士の話を聞きました。
Interview with Phil Lawn 0:00 / 0:00Press UP to enter the speed menu then use the UP and DOWN arrow keys to navigate the different speeds, then press ENTER to change to the selected speed.Speed1.0xClick on this button to mute or unmute this video or press UP or DOWN buttons to increase or decrease volume level.Maximum Volume.Video transcript Start of transcript. Skip to the end.
Well today, I'm speaking with Dr Phil Lawn, who is Australia's leading Ecological Economist and he teaches occasionally at the University of Adelaide. And Phil, thanks for joining us. (No worries. Thanks Bill. Thanks for inviting me.) Yeah. And the students have so far in this in the three weeks of the course have learnt a lot about MMT and the financial situation of governments and the role of taxes in a system where the government isn't financially constrained. And we've also talked a bit about climate change and the relevance of MMT to climate change. So what have you - what can you tell us about your work and how MMT fits into that big issue of ecological challenges, etc?
OK well, I think Modern Monetary Theory is a key to a green transition. It's as simple as that. And I think in relation to a green transition, there are 2 aspects to focus on. There is the demand side and the supply side. Governments, as you just mentioned, need currency-issuing central governments need to tax the non-government sector. Of course, not to finance their spending, but to make room - resource room so that they can spend together with the non-government sector in a way that's not inflationary. Well, if a government has to tax the non-government sector, then it can think creatively about how it can tax the non-government sector. Of course, one important way to tax the non-government sector is to tax it in such a way as to redistribute income. So the equity of the distribution of income is important. But from an environmental point of view, and to help the process, the green transition process, it's important that governments tax things that have an undesirable impact upon the natural environment. And of course, we're talking about things like resource depletion, pollution and greenhouse gas emissions. So governments can impose taxes in a way that can alter people's consumption behaviour so that they can move their consumption patterns away from resource-intensive, pollution-intensive, greenhouse gas-intensive goods and services towards those that have lower impact. So that's an important thing about taxation, which MMT can play a role in in encouraging and promoting. But of course, it's one thing to alter people's consumption behaviour and demand patterns.
フィル・ローンのインタビュー 0:00 /
0:00↑を押して速度メニューに入り、↑と↓の矢印キーで異なる速度を移動し、ENTERを押して選択した速度に変更します。速度1.0xこのボタンをクリックしてこのビデオのミュートまたはミュート解除、↑または↓ボタンを押して音量レベルを増減します。最後までスキップしてください。
さて、今日はオーストラリアを代表するエコロジーエコノミストであり、アデレード大学で時々教えているフィル・ローン博士にお話を伺いました。フィル、ご出演ありがとうございます。(気にしないで、ありがとう、ビル、招待してくれてありがとう。このコースの3週間で、学生たちはMMTと政府の財政状況、政府が財政的に制約されていないシステムでの税の役割についてたくさん学びました。また、気候変動とMMTの関連性についても少し話をしました。では、あなたの仕事について、またMMTが生態学的な課題という大きな問題にどのように適合しているかなど、何か教えてください。
そうですね、現代通貨理論はグリーンな移行への鍵になると思います。それはとてもシンプルなことです。そして、グリーンな移行に関連して、注目すべき2つの側面があると思います。ひとつは需要側、もうひとつは供給側です。今お話があったように、政府は通貨を発行する必要があり、中央政府は非政府部門に課税する必要があります。もちろん、自分たちの支出を賄うためではなく、インフレにならない方法で政府以外のセクターと一緒に支出できるような余地、つまりリソースの余地を作るためです。もし政府が非政府部門に課税しなければならないなら、非政府部門にどのように課税するかについて創造的に考えることができます。もちろん、非政府部門に課税する重要な方法の1つは、所得の再分配を行うような方法で課税することです。つまり、所得分配の公平性が重要なのです。しかし、環境保護の観点からは、グリーン・トランジション・プロセスを支援するために、政府が自然環境に望ましくない影響を与えるものに課税することが重要です。もちろん、資源の枯渇、汚染、温室効果ガスの排出など、さまざまな問題があります。政府は、人々の消費行動を変え、資源集約型、汚染集約型、温室効果ガス集約型の商品やサービスから、より影響の少ないものへと消費パターンを移行できるような形で、税金を課すことができるのです。これが税制の重要な点であり、MMTはこれを奨励し促進する役割を果たすことができる。しかし、もちろん、人々の消費行動や需要パターンを変えることは一つの方法です。
What needs - what is being the change in the demand, of course, needs to be supplied. And if we're talking about a green transition, a lot of the goods and the infrastructure that will be required to meet those changing demand patterns. We'll be talking about infrastructure. And we're not just talking about individual goods and services that you might have in your household. We're talking about infrastructure. And one of the things about infrastructure is that it tends to have public goods characteristics. And I won't go into any great detail as to what public goods are. I'll just point out that a lot of people do think that because traditionally governments provide public goods, that's the reason why they call public goods. It's not the reason why they're called public goods. It's the characteristic features of the goods that makes them public goods.
必要なもの、つまり需要の変化となっているものは、当然ながら供給する必要があります。グリーンな移行について語るなら、そうした需要パターンの変化に対応するために、多くの商品やインフラが必要とされます。私たちはインフラについて話すことになるでしょう。家庭で使うような個々の商品やサービスの話だけではありません。私たちはインフラについて話しています。インフラは公共財としての性格を持つことが多いのです。公共財とは何かということについては、あまり詳しく説明しません。ただ、多くの人が、伝統的に政府が公共財を提供するから、それが公共財と呼ばれる理由だと考えていることは指摘しておきます。それは公共財と呼ばれる理由ではありません。公共財と呼ばれるのは、その財の特徴的な性質によるものなのです。
Now, I won't go into any great detail as to what public goods are, but even mainstream Economics recognises that it's very difficult if you're supplying public goods to supply them profitably. It's very difficult to earn the revenue necessary to make profits. Well, the private sector could still provide public goods but they'd make losses and the private sector can't sustain losses. So if we need this infrastructure, this change in infrastructure to meet this changing demand to help with this green transition, then governments have to step in to provide this infrastructure in the same way they probably stepped in after World War II and built the roads, the hospitals and schools and so forth. Now, they still need to do those sorts of things but we need to retrofit the global economy and national economies so that the infrastructure, as I said before, is low resource-intensive, low pollution-intensive, low greenhouse gas-intensive. And of course, governments can do that. But the currency-issuing central governments can do that. They don't have the financing constraints so they can always access the resources, the real resources, assuming they're available, to build and provide this infrastructure. So that's a key thing about Modern Monetary Theory that standard Economics doesn't understand. Because the standard Economics approach would be that OK, governments have to provide this infrastructure. They're going to have to raise the revenue through taxation. And if they can't do that or don't want to do that, then we're going to have to sacrifice something else. We don't need to sacrifice something else unless, of course, resources are fully employed beforehand, but they're not. There are a lot of resources available for central governments to acquire to retrofit the economy.
さて、公共財が何であるかについては詳しく説明しませんが、主流の経済学でさえ、公共財を供給する場合、利益を上げて供給することは非常に困難であると認めています。利益を上げるために必要な収入を得るのは非常に難しいのです。民間企業でも公共財を提供することはできますが、損失を出すことになり、民間企業は損失を維持することができません。ですから、もし私たちがインフラを必要とし、グリーンな移行を支援するために需要の変化に対応したインフラの変化が必要なら、第二次世界大戦後に政府が介入して道路や病院、学校などを建設したのと同じように、このインフラを提供しなければならないのです。しかし、先ほど申し上げたように、資源集約型、汚染集約型、温室効果ガス集約型のインフラになるように、世界経済、国民経済を改革する必要があります。もちろん、政府にはそれが可能です。しかし、通貨を発行している中央政府にはそれが可能です。中央政府には資金調達の制約がないため、インフラを構築して提供するための資源、つまり実際の資源をいつでも利用することができるのです。これが、標準的な経済学が理解していない、現代通貨理論の重要な点です。標準的な経済学のアプローチでは、政府はこのインフラを提供しなければならない、と考えます。政府は税金で歳入を集めなければなりません。それができないなら、あるいはしたくないなら、他の何かを犠牲にしなければなりません。もちろん、あらかじめ資源が十分に使われていれば、他の何かを犠牲にする必要はありませんが、そうではありません。
And the capacity to finance that transition is no problem for a currency-issuing central government. So that's basically in a nutshell - what I would say is the key role and contribution that MMT can play towards the green transition - it's very important. It's all well and good for Environmentalists and Ecological Economists, being an Ecological Economist myself to say, we need to do XYZ but of course, the question that's always raised is how is the central government going to pay for it? Well, that's not a problem at all. MMT increases, opens up this policy space for the green transition to go ahead and proceed. There's nothing from a financial perspective that stands in our way. It's only real resources that matter. It may well be that if in undertaking the green transition that we find that there is a shortage of resources, well, then it might become a political decision - not an economic decision. Perhaps people will have to forego their 3rd, 4th, 5th flat screen television set or what have you to undertake a green transition. But that would be a small price to pay if people do have to be taxed a little bit more. So to free up some of the resources that used to make an extra flat screen TV to provide the infrastructure that's required for the green transition. I would summarise it in that way.
中央政府が経済を再建するために獲得できる資源はたくさんあります。そして、通貨を発行している中央政府にとって、その移行に必要な資金を調達する能力は問題ではありません。つまり、基本的に一言で言えば、MMTがグリーンな移行に向けて果たすことのできる重要な役割と貢献は、非常に重要なのです。環境保護主義者や生態経済学者が「XYZを行う必要がある」と言うのは良いことですが、もちろん、中央政府はどうやってその費用を支払うつもりなのかという疑問が常につきまといます。それは全く問題ではありません。MMTは、グリーン・トランジションを進めるための政策空間を拡大し、開放してくれます。財政的な見地から邪魔をするものは何もありません。重要なのは現実の資源だけです。グリーン・トランスフォーメーションに取り組む中で、資源が不足することがわかったら、それは経済的な決断ではなく、政治的な決断になるかもしれません。3台目、4台目、5台目の薄型テレビを買うのを諦めるかもしれませんし、グリーン・トランスフォーメーションに着手しなければならないかもしれません。しかし、それは、人々が少し税金を多く取られることになったとしても、支払うべき小さな代償でしょう。薄型テレビを作るために使っていた資源を、グリーン・トランスフォーメーションに必要なインフラのために解放することができるのです。そのようにまとめたいと思います。
OK, that's great and thanks very much for your insights - been really, really good.
Thanks Bill for the opportunity. (Bye) Bye.
素晴らしい洞察力をありがとうございました。
このような機会を設けていただき、ありがとうございました。(では、また。
www.DeepL.com/Translator（無料版）で翻訳しました。
https://vimeo.com/684882621/0e5be5ec9f
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