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I've been getting a lot of emails from readers asking me my thoughts on the mortgage crisis and the market meltdown. So here goes.
First, this from Sheryl Canter over at Climate 411:
Former President Bill Clinton gave an interesting analysis last night on the Late Show with David Letterman of how we got into our current economic mess. It all started at the beginning of the decade with lots of money to invest and no place to invest it. (For more on this, listen to the excellent report from This American Life on "The Giant Pool of Money".) Since most of the economic activity at this time was in real estate, investment bankers invented something called "mortgage-backed securities". This worked well and they wanted more, so lenders started giving mortgages to people with no ability to repay them - leading to the current mess.
We could have avoided this problem, Clinton said, if government had provided incentives for investment in the next big thing - clean energy.
EDF's position is that the green economy is our best hope for the future.
The question then becomes, what exactly is a green economy? Of course, clean energy. Of course, renewable materials. Of course, clean production practices. But what else?
I would argue that the "environmentally-effective economy" (see here for my definition of environmental effectiveness) is one that delivers the highest quality of life to people while using the lowest planetary resources.
And what we've discussed a lot here on this blog is that an economic policy that facilitates people getting a lot of "stuff" is not necessarily one that delivers high quality of life. Happiness research is showing that it is not material possessions but relationships, community, meaning, a sense of purpose, and use of one's most valued skills that make us happy.
Looking at the diagram above, this implies that good economic policy might be one that helps to strengthen our relationships with the communities, nature, friends, family, etc. Instead, current policy works to strengthen our relationships with corporations. Everything from our food to our healthcare comes from corporations.
And because these bonds are lopsided, we are particularly at the mercy of changing fortunes of these corporations. But if our lives were more anchored in the other relationships, perhaps we would have less to be frightened of. What if our food and healthcare came locally, from our communities, for example?
In other words, government policy that did not cause us to be so particularly dependent on economic throughput, but instead helped us to forge other reliable bonds, might provide more stability in the face of changing corporate fortunes.
Plus, it would have the benefit of providing us with higher quality of life with lower material and energy throughput. Happier planet, happier and safer people.