#16 Forget wishful thinking; it is about realism and hope

I've had a rather delightful week on the island of Terschelling, preparing for the Springtij sustainability forum. I am now in Berlin after delivering a presentation for Triodos Bank Germany.

As my late grandmother used to say, "One moment you're here, the next you're there."

Being in vastly different environments can profoundly affect one’s mind (certainly mine). I've been reflecting deeply on whether I've been overly pessimistic about environmental issues or on possibilities for sudden changes, especially considering the tendency to dismiss those discussing degrowth or talking about ecosystem crises as too gloomy. When you are in Berlin, especially at the weekend when Iran attacks Israel, and you walk in the DDR museum, you realise history was never a straight line.

But I also realise that, although it is never a straight line, pressure builds in every system, and then it comes to an outburst. And during that pressure building, those in power tend to do wishful thinking. Look at the history of Germany. Until the last day, the leaders of the Communist Party clung to their seats, wishfully (or wistfully?), thinking that the demonstrations would fade.

The conclusion of my reflection: I think I am not excessively pessimistic. I think there is a lot of wishful thinking. A recent article in the American Economic Review, which highlights how people often succumb to wishful thinking, supports this. I have solid reasons to maintain my belief that we should radically change our economic system to have a future for humanity. Moreover, after reviewing the UN's report on financing for Sustainable Development, one would need considerable wishful thinking to remain optimistic about achieving the Sustainable Development Goals by 2050.

During my travels, I've become increasingly observant of my environment, paying closer attention to the presence or absence of features ranging from the natural landscapes of Terschelling to the street art in Berlin.

For example, we had an enlightening presentation with a representative from Staatsbosbeheer about efforts to restore the dunes to their original condition and achieve better ecological balance. This process involves extensive manual labour to return the area to a more sandy state. Instead of merely discussing nature-based solutions and their financing, this was hands-on work. It also brought me face-to-face with a harsh reality: nature restoration seldom presents a viable business case. Improving ecological balance is labour-intensive, with the sole reward being a healthier environment. No wishful thinking, simply hard work.

While in Berlin, aside from the museums and historical sites, my economist's curiosity was piqued by other aspects of the city. We stayed in a charming apartment in Kreuzberg. However, as you wander around Kreuzberg (or almost anywhere in Berlin), you're struck by a pervasive local hobby which, while irritating to some, adds a unique character to the area: graffiti and street art, including the murals on the East side gallery. The entrance to our building was completely covered in it. Notably, some murals are sanctioned (or even commissioned by the government), and it's fascinating to observe that successful graffiti artists can carve out lucrative careers as mainstream artists, much like Banksy.

In economic terms, graffiti exhibits positive externalities, such as offering free art to the public, and negative externalities, including the potential to spoil views and be seen as vandalism.

Policymakers have struggled to effectively remove graffiti, for instance, by painting over it. However, removing the visible signs of graffiti is an end-of-pipe solution, similar to carbon capture and storage technologies. This approach does not tackle the underlying causes.

My brief exploration of the academic literature on graffiti and street art (surprisingly extensive) highlights that addressing the root causes is crucial.1 Proactive measures such as thoughtful urban design (ensuring fewer appealing, blank walls in low-footfall areas, greening walls), designated graffiti areas, community murals, and public art workshops are more effective than reactive measures. Social policies (community building, social housing, etc.) that help reduce criminality and unemployment can also be beneficial. It's clear there is a fine line between graffiti and street art; what some view as simple vandalism, others may see as art.

We have solutions to the problems at hand at Terschelling and Berlin. However, these solutions are not implemented on the necessary scale, mainly due to priorities and wishful thinking. Wishful thinking that problems will go away if we keep doing what we have always done.

But why doesn't 'change' scale up? Why does it take so long to achieve more sustainable behaviour? The answer isn't economic; it's psychological and social. When faced with the prospect of change, we exhibit a confirmation bias for our current behaviours and experience loss aversion. Adjusting our habits and adopting new, more sustainable practices is challenging.

Good news is seen as confirmation that we don’t have to change our behaviours and that anything can be done. This leads to complacency. The bad news is ignored. The bad news about our ecology is that if we are on track to meet climate goals, people do cherry-picking. We should not be pessimistic, is the mantra.

However, what I want to highlight this week is (1) if we look at all the evidence, we can not be optimistic about progress on climate, on SDGs on ecosystem preservation, and (2) that loss aversion, wishful thinking and confirmation bias stand in the way to get to breakthroughs.

A transition is not about needing more technological innovation. We need social innovation to bring us to a social tipping point and improve our collective behaviour. We need to be anxious sometimes. Otherwise, we don’t see the necessity of changing.

For the rest of the analysis, see my Substack.

That’s all for this week.

Take care.

Hans