You Can't Eat Gnp: Economics As If Ecology Mattered

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Summary: Economics as a Life Science
Review: Both ecology and economics share the same Greek root, oikos, meaning, literally, "house." Linked with nomics it means management of the house. Linked with logy it means study or knowledge of the house. Obviously, study and knowledge should go hand in hand with management, and good ecology should be a basic ingredient in good economics. Unfortunately, in the recent past, ideas about management of our world as encoded in conventional economic theory, in biologist E. O. Wilson's words, "can be summarized in two labels: Newtonian and hermetic. Newtonian, because economic theorists aspire to find simple, general laws that cover all possible economic arrangements. ... hermetic - that is sealed off from the complexities of human behavior and the constraints imposed by the environment." Eric Davidson's book is a readable summary of many of the main ideas of ecological economics. He begins by describing three basic fallacies of the mainstream economic model. The first he calls the "Marie Antoinette" fallacy. The mainstream model assumes near perfect substitutability between land (natural resources), labor, and capital. If we deplete all our natural resources, "no problem" claims the mainstream model, we simply substitute more labor or capital - or as Marie Antoinette reportedly said when the French peasants were complaining about not having any bread - "well, let them eat cake!" The truth is that manufactured capital, human capital, social capital, and natural capital function more like compliments than substitutes and a sustainable economic system requires a safe minimum of each of these four types of capital. The second fallacy Davidson calls "Custer's folly" - the assumption that the technological cavalry will come over the hill to save us from ecological disaster just in time. The problem is that while technology might come up with solutions, it is foolhardy to assume that it will, especially when the stakes are so high. It is much more rational to assume that technology will not come to the rescue at the last minute and take a more precautionary approach that assures our sustainability regardless of hoped for technological changes. The third fallacy is "False complacency from partial success." If we can solve some environmental problems, we can, by extension solve all environmental problems. Davidson likens this line of argument to a claim by a spouse abuser that he is a good person because he no longer beats his spouse as much as he used to. The truth is that many environmental problems that have appeared to be "solved" have actually just been moved to other regions or countries or social groups, often as a consequence of more open trade. Also, in the crowed world in which we now live, many new technologies have unintended consequences that may completely undermine and outweigh their initial, positive effects (i.e. DDT, chloroflorocarbons).

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Summary: Quick, straight forward, engaging
Review: Over the Thanksgiving break I read You Can't Eat GNP: Economics as if Ecology Mattered by Eric Davidson (Perseus Publishing, 2000). The economics aspects would probably be way too basic for most economists, and the ecology aspects too basic for environmentalists, but I was extremely pleased with its straightforward explanations of the interaction of economics and ecology. A book like this might get these two groups to begin to understand each other's language.

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Summary: a perfect little book
Review: This book is great for the beginner in environmental economics. For someone who is concerned about the environment but insecure about defending arguments against those with some economic background, here is you ammunition. It is easy to read and full of examples of how natural resources are not taken into account properly in current economic theory, and therefore not conserved as they should be. It is a basic idea but this book maps it out wonderfully. I think this would be a great read for intro level environmental studies courses in high school or college.