Obnoxious Ideas For A New Economy

So let's jump in

Idea 1. We have a problem

This is the first obnoxious thing I'm going to say, but not the last. But we have a problem...No one likes to admit they have a problem.

So pointing this out might seem obnoxious to those who believe differently and might seem obnoxious to those who have been saying it for years. If you fall into either of these camps then don't read on.

You're probably on holidays and not ready for this level of obnoxiousness.

You have to admit there is a problem before you can address it. It is the first step of most addiction treatment programs.

It doesn't matter if the problem is too much sugar, booze or climate change.

You cannot adequately address a problem until you define it as a problem.

Idea 2. It Is The Economy, Stupid.

Australia has seen prolonged drought, severe bush fires and record breaking heat waves (2 in the last month).

This confluence of events is horrific, but more than any previous 'theoretical' debate has shifted what most Australian's believe via a glimpse of an apocalyptic future.

A repressed inkling to an actual belief, that: there is a problem.

But what is the problem?

The answer to this question is very uncomfortable.

It is difficult and uncomfortable because our current environment is linked to our current economy.

In a personal way we don't want to suffer.

No individual would want to lose our Jobs, Consumer Options, Superannuation, Standard of Living, Place in Society, Economic Security, Ability To Provide For Our Kids Future.

All of this. All of our democracy, technology, humanity, sport and entertainment. They're made possible by our Economy.

(All of the stuff you're surrounded by: including whatever device you're reading this on.)

We don't want to see this economy go.

Nor do we (necessarily) want to blame (or can) the ones before us and amongst us that created this world of democracy, technology, humanity, sport and entertainment.

They put in genuine creativity, sacrifice, investment and discipline to make it this way. They're proud of the economy they've built.

Nor do we want to "break" the economy.

"Breaking things is bad". Or, at least that is what we teach kids. This is what we have been told by 3 decades worth of politicians - and 5 decades of Friedmanist Economics - that our economy will suffer, if it factored in the environment and climate.

In fact, the narrative has been... changing our economy will "cast us back to the stone ages".

That anything other than the current economy will forsake markets. (Although there's no reason to abandon markets in the New Economy).

That in turn, abandoning the current economic wisdom will cause us all to become "pinko", "commie", "immoral", "corrupt" and ultimately..."suffer".

In short, the "Economy" is the problem, and that is nightmare of a problem.

BUT.

The environment and climate-change constraints are being pushed in the wrong direction - as evidenced by drought, bush fires and heat waves - by our economy.

We want: to change the economy because we want to protect the environment.

But, we don't want to change to the economy - for the environments sake - so much, that we have to change how things in the Economy work.

This creates a cognitive dissonance.

• 'Change the economy that drives pollution of environment and climate risks'
• 'Don't change the economy too much or we'll break it'.

Idea 3. It's The Ecology, Stupid

Cognitive dissonance can't last.

Clearly, you have to bite the bullet.

The neo-liberal, capitalist, individualist, consumerist, debt-burdened, disruptive, tech-enabled, hyper-global economy is the problem.

It is a problem because it overshoots earths biological capacities and this undermines our very existence.

We know this from Sir David Attenborough.

We know this from Greta.

We know this from year 3 geography when we learned about 'finite' and 'infinite' resources.

We know this from breathing in car fumes.

We know this from the most basic of biology, chemistry or physics. That is why there is an IPCC (here is the Summary of the 2018 Report, worth a read if you haven't).

That is why there is 11,000 Climate Scientists demanding action to avoid catastrophic climate change.

Idea 4. We Should Take The Hit

To address the climate and the environment you have to change the economy.

That means we'll have to change what currently is done.

Changing is easier said than done, but this is the main suggestion of this post about being obnoxious. (You can't say you weren't warned).

We'll have to change our social behaviour (neighbourly relations), employment behaviour, consumer behaviour, investment behaviour and this isn't just theoretical.

In Australia, for example we will have to leave fossil fuels - and the associated wealth these give to our economy - in the ground.

We will have a lot of stranded assets. 

We will have losses in mining jobs and company valuations.

The stock-market and superannuation valuations could halve. 

We will get less export dollars.

We will be less attractive to offshore investors.

We will lose comparably more in Australia than other countries because we'll leave more in the ground than other countries.

But, we should still do this because the "bullet" is already travelling.

The only question is will it hurt us, where we take a hit - or will it kill us, where we kill us (along with a whole range of other species as collateral damage).

Idea 5. The New Economy Will Be Better

This is not an exhaustive list but it should provide enough information to be obnoxious and justify the statement: a New Economy Can Be Better.

Premium Markets

Fossil Fuels could go from being commodities to premium products.

We would still require some coal for new steel. New steel after all goes into new wind turbines.

But we would need far less coal in a world powered by renewables.

Products like fossil fuels / coal would demand a premium in the market.

Renewables

Australia is beautifully positioned to leap forward with solar, wind, geothermal and hydrogen as energy sources for our own grid.

This can replace what's currently powering our grid - and even start a large scale energy export business - to replace exported fossil fuels.

Not only will renewables be less polluting. It will be reducing the price of energy - for energy intensive manufacturing and consumers alike.

Reduced energy prices is deflationary.

The Gross Domestic Product (GDP) drops with deflation, but replacing fossil fuels with renewables as a power source in the Australian economy can contract GDP, but everyone including employees, community, customers and the organisations distributing locally generated and consumed energy can still be better off.

Re-Industrialising

Lower energy costs from cleaner sources doesn't cast us back to the stone ages instead it can feed into a boost for the circular economy, local manufacturing and clean re-industrialisation.

Cosmo-Localisation

CosmoLocalism is the work of Dr Jose Ramos and please read more about it here. It's fascinating and important work.

CosmoLocalism can be best explained by thinking of things according to their weight. Are they light or heavy?

Light things: megabytes, data, designs, licenses, images, plans, processes, protocols.

The Digital Commons: Light things are free to move globally, improved constantly through application and re-shared for the benefit of all. You can see examples of this in Peer-to-peer environments like Wikipedia. This is the philosophy of Open-Source Computing and Open Source Software development.

Heavy things: people, food, manufacturing, processing and transport.

Heavy things are best done locally to avoid costs and emissions associated with transport.

Heavy things should be part of a circular economy.

Across the world examples of CosmoLocalisation with "heavy things"

Examples in agriculture include the Open Food Network Farm Hack, Le A’terlier Paysans and FarmBot. In manufacturing Maker-spaces, Fab Labs, Precious Plastic, Open Motors, AbilityMade and OpenROV. In housing construction, including Hexayurt and Wikihouse are great examples.

There are many more examples like the Open Insulin Project which takes head-on the Big Pharma racketeering around health/disease/sickness.This could occur with the Cosmo-Localisation principles:

Soil Carbon

We could keep fossil fuel wealth in the ground and build new carbon wealth in our soils. (See, how here).

Keeping soil carbon in the soil, helps productivity and the environment. What is more the loss of soil carbon is a bigger contributor than fossil fuels has been to carbon pollution.

Australia is better positioned in this change than we are in fossil fuels.

In fact we’re world leading. But, farmers getting more money won’t on its own come close to offsetting the huge losses on fossil fuels.

Regenerative Agriculture

Farmers doing Regenerative Agriculture (that puts carbons in soil) will also potenetially fix the food chain.

Fix food production so we don’t have cows eating corn or cotton seed meal. We have them eating grass as part of the natural relationship between grazing animal, perennial plants and soil.

Better Laws

The role of government, judiciary and rule of law remains largely the same.

Maybe just tweak to the Directors Responsibilities under the Corporations Act, to:

1. Include social and environmental Dereliction Of Duty as a crime, and
2. Make "Prosperity, People and Planet" a Duty Of Care for those who are Directors.

Velocity of Money

One of the many confounding negative side effects of the current inequality in wealth is that those with lots of money and low interest rates across the world, are just sitting on piles of capital and cash.

This has reduced the 'velocity of money' or the amount of times it changes hands. It contributes in turn to economic malaise, but is reported as a good thing in main stream media. For example, the fact that Apple sits on hundreds of billions of dollars of capital is reported as a sign of strength not a sign of slow velocity.

Velocity can be improved by opening up a new exit strategy: Exit To Community. This can drive economic velocity via ownership, which in turn drives incomes, asset growth and underlying economic performance.

Stakeholders With A Stake

If an organisation is member-owned like a Co-operative, Employee-owned or Community-owned it gives the stakeholders an actual stake. This leads to more responsible management but has an amazing economic effect for the other stakeholders.

If a business doesn't have to service accelerated returns to shareholders it can better serve or serve cheaper its customers. It can do this without negatively affecting employee or other major stakeholder groups.

The future demands Co-operatives according to Evan Thornley (read full speech) instead of Corporations.

"We can start building member owned enterprises using the best of modern social commerce and shared economy platform technology. At 500 households we can play in property and real estate together, at 2,000 households we can build our own schools, at 10,000 our own retail outlets, at 100,000 our own media and at 1M or more, our own banks, telco’s and most importantly, shared data warehouses and member-controlled privacy infrastructure."

Technology

Technology can be powered via renewables but we need to make the devices themselves part of a circular economy.

We have already made enough handsets and computers to give everyone their own device many times over.

We just haven't been smart enough to recycle the precious materials that made them up. Going forward we should.

Markets

The role of a marketplace / market in the Economy is a good one.

Competition of ideas is a good thing.

The New Economy doesn't have to be a centralised government or without the market. References to this sort of political structure or references to communism are scare-mongering. They come from the same narrative that suggests we cast ourselves back to the stone ages, if we simply disagree with current orthodoxy.

The current economy orthodoxy you could argue is the one that has perverted market forces. Just look at what Coles and Woolies do with market power.

Look at how Silicon Valley "buys the market" through artificial support of loss-making ventures i.e Uber, WeWork

Look at how Quantitive Easing (QE) perverts markets or at how banks and government collude to pervert the Australian housing market.

Change The Goal Posts

Instead of Gross Domestic Product being the measure of economic "goodness" we can change the measure to something more akin to New Zealand's Gross National Wellness or Bhutan's Gross National Happiness.

Businesses can move from reporting on "profit" to "impact". In fact, they already are doing this across many organisations. The next step will be measuring "impact" to "mutual value". When this happens we will have goal posts that make business a "force for good".

Changing Time Scales

Short-termism has contributed to the troubles we find ourselves in because we ask and reward management to do things within the next quarter.

If we move goal posts from annual reports to decade reports, move the 5 year plan to a 20 year plan and move 10 year goals like the SDG's to hundred year goals we may get financial, human and biological time to be more aligned.

We could act like there is a world 'tomorrow' that management has to care for (steward) and be rewarded for their work in doing this. As such changing the goal posts and changing the time scales concurrently makes sense.

Obnoxious Conclusions

Short Term

If this article has been of interest to you then a first-of-its-kind conference - Common Wealth - should be too.

Common Wealth: "Stakeholders With A Stake", is being held at UTS Centre for Business and Social Innovation in Sydney 27 and 28 of February. Tickets here

As enterprises provide equity to stakeholders, be they employees, customers, suppliers, neighbours, the “crowd” or Members – with that equity comes new opportunities, investment instruments, legislation and risks.

This topic is alive with potential. Here are some examples

• Shared Ownership: The rising interest in Neo Mutuals, Platform Co-ops and local Co-operatives
• Investors: Innovating in order to invest in organisations that empower stakeholders.
• Exit mechanism: Founders and Angels using “community buy-outs” as an alternative exit to trade sales or IPO’s.

Medium Term

We need to take the hit. We need to face the Ecology is limited and the Economy - as it is currently constructed - is extractive, polluting, degenerating, short term and based on finite resources that must be left in the ground.

In the end, we have to also return the carbon released so far through industrial agriculture and industrial economics back to the soils. Within the soils it will improve water-holding capacity, mineral flow, nutrient density, biology and regenerate the resource base.

We also need to measure different 'goals' and put them on biological not arbitrary human time-scales.

Long Term

I only hope there is one.

If we don't move to change the current economy, I doubt there will be one.

Not one that supports anything like what we enjoy today.