(Although I’m usually pretty strict about keeping this website on local issues, this article on the big picture was in my recent newsletter and people found it interesting. Thanks to Richard Douthwaite for much of the content.)
Almost every day, an economist, a banker or an organisation like the
IMF tells us that the US economy will start to pick up at the end of
the year. Most of them then add that it could be two years after that
before life gets back to normal in Ireland and the rest of the world.
They are wrong. The world will never be “normal” again. It will never
return to the high-growth path that gave birth to the Celtic Tiger.
Here’s why: • Insufficient energy will be available to make global growth possible. The factor that sparked the credit crunch was the huge flow of purchasing power to energy- and commodity-producing countries. This was due to demand reaching the limit of supply because we are halfway through our geological endowment of oil. The recession has reduced demand and oil prices have dropped. Growth takes a lot of energy. If it were to resume, demand would soon exceed supply, energy prices would soar and, once again, knock the stuffing out of the global economy.
• People are not going to invest in the conventional economy. Around 20% of the jobs in the average country are the direct result of people, firms and governments investing in new houses, shopping centres, factories and infrastructure. These investments have stopped, causing massive unemployment, and will only resume when demand in the economy has returned to its 2008 peak and extra capacity is needed. But how can demand ever reach its previous level once investment has stopped?
Only the Greens know what to do about both problems. We see the crisis as the opportunity to build the stable, sustainable fairer world that we’ve been thinking about for a generation.
The Green Party is working towards an Ireland in which:
• Income is distributed more fairly. The large gap between the earnings of those at top and those at the bottom will be drastically reduced. In a less frenetic, more stable economy, over-incentivising risk-taking is the last thing you want to do.
• Housing costs take a much smaller share of everyone’s income. This would be achieved by restricting the size of the mortgages the banks could give in relation to a borrower’s earnings.
• Everyone shares in the benefits from the private use of our common resources through a citizen’s income. Most of this would come from a site value tax and from charging for greenhouse gas emissions.
• All our energy comes from our own renewable resources. This would create skilled jobs, provide the basis for pensions and reduce our reliance on our ability to export to a highly-competitive and potentially unstable world market.
In government, the Greens have been able to make tremendous changes in the areas for which we have ministerial responsibility. Environment Minister John Gormley has worked to ensure that the planning system supports the new low-energy economy and to put together a green new deal response to the economic crisis. Energy minister Eamon Ryan has been laying the foundations for the new investments. He’s already announced that the electricity grid is being strengthened to take more windpower and that three interconnectors are to be built to export surplus wind electricity to Britain. ESB Networks has started installing “smart” meters so that people can do energy-intensive things, like switching on their immersion heaters or charging the batteries of their electric cars when the wind is blowing and power is cheap.
This new type of investment will increase demand in the existing, conventional economy, boosting businesses and increasing the government’s tax-take. And don’t forget that Ireland has some of the best renewable energy resources in Europe.
In the longer term, though, we’ll have to work longer to earn the energy, food and everything else we need because the huge subsidy we’ve been getting from using fossil energy will no longer be there. This will reverse the historical trend. In the world that’s emerging, the higher-priced food will mean that farms can be smaller, less specialised and able to sell better food with less packaging locally again.
Although bulk sea freight will stay pretty cheap, hauling goods around the world by truck and plane will become much more expensive. As a result, you won’t be buying your kitchen via a catalogue from a firm in Italy but getting a local craft workshop to make it to your design. Far fewer manufactured goods will come from abroad and strong, diverse local economies will emerge. These will be much more stable than the present system and provide a wider range of career options in each community.
The challenge we face as a society is to manage this transition to a low-carbon economy. We must ensure that it happens smoothly and quickly. We can move to a stable long-term economy supporting a fairer society with better quality of life. This is the goal Greens are working towards at local, national and European level.