The Problem
What if the 2008/09 economic crisis represents something much more fundamental than just a financial system meltdown? What if it’s the first alarm bell warning us that our consumer-driven way of life is wrong; that the model we use to define and calibrate growth is simply flawed and unsustainable?
After all, an ever increasing demand on finite resources is clearly a one-way ticket without natural balance or equilibrium. We have at present a system for defining growth of relentless consumption. Vast amounts of disposable stuff shipped in from economies reliant on vast amounts of coal driven factories, causing vast amount of climate change, all so that we can fill vast amounts of landfills.
This will have to stop – capitalism as we know it will have to peak. We will not be able to pass this unsustainable way of life on to our children and their children.
Countless generations of humans have lived, worked and prospered under a year’s worth of sunlight, making the best of life under this natural confine. But then came the industrial revolution, and with it came a cultural explosion. Monumental growth in lifestyle has been fueled by burning up millions of years of sunlight, in a fossil-fueled feeding frenzy.
At the same time, there has been a depletion of much of the world’s natural resources — water, forests, rivers, fish, arable land, minerals, species and the list goes on.
And so today, over a billion people suffer from water scarcity, deforestation in the tropics destroys an area the size of Greece every year, more than half of the world’s fisheries are over-fished or fished at their limit, peak oil is passing or has already passed, and peak gas and coal is less than a generation away.
Spewing millions of years of locked-up carbon into the atmosphere also has another price. Co2 in the atmosphere has jumped from a steady 280 parts per million before the industrial revolution to over 385 ppm today, and it is climbing fast. Excess carbon dioxide is warming planet Earth. The Earth is warmer now than it has been for at least a thousand years. Out of the 20 warmest years on record, 19 have occurred since 1980. By projecting the relationship of temperature and CO2 to today’s carbon dioxide levels, researchers have estimated a sea level rise of 25 meters (82 feet) above today’s levels, plus or minus 5 meters.[1] 53% of the world's population lives within 120 miles (less than 200 km) of a coastline. The number is expected to reach 75% by 2050.[2]
In the last 75 years, or about the life of an average baby-boomer, half of the world’s non-renewable resources have been consumed.[3] That is more resource consumption than every other prior generation combined. In the context of human evolution it is quite staggering and in terms of a legacy, it is likely that our generation will be vilified.
But from every problem there is the opportunity to solve, and so our generation is also in the privileged position of having this opportunity to take human evolution to the next stage, the sustainable stage.
Any Solution Requires Everyone
As all of humanity shares this wonderful world, so all must be a part of solving this problem. Moreover, the sheer size of the problem mandates full coordination and universal action.
However, it must be recognized that only the western world has enjoyed the glut of the fossil-fueled gravy train. And this is clearly visible as we look at the current world distribution of wealth.
“The richest 2 percent of adults in the world own more than half the world's wealth, according to a new study released by the Helsinki-based World Institute for Development Economics Research of the United Nations University. The study's authors say their work is the most comprehensive study of personal wealth ever undertaken. They found the richest 1 percent of adults owned 40 percent of global assets in the year 2000, and that the richest 10 percent of adults accounted for 85 percent of the world's total. In contrast, the assets of half of the world's adult population account for barely 1 percent of global wealth.”[4]
It would be tough to win over that half of human population owning only one percent of wealth to partake in any form of conservation program. In fact it would be insulting if a solution failed to recognize that the problem is directly tied to the Western form of wealth generation.
Any solution would have to address the social injustice in the world. The ‘haves’ have the luxury of recognizing the problem, but also have the responsibility of providing the ‘have nots’ with hope and with fair empowering solutions.
Attempting to rebalance social injustice must be an integral part of any solution.
Real Wealth
Real Wealth is a sustainable flow that can be shared by generations, unlike short-term wealth from just consumption and depletion. As of today, we have generated little Real Wealth, and in the process are destroying a perfectly livable planet.
A recent New York Post op-ed succinctly states that “We must have growth, but we must grow in a different way. For starters, economies need to transition to the concept of net-zero, whereby buildings, cars, factories and homes are designed not only to generate as much energy as they use but to be infinitely recyclable in as many parts as possible. Let’s grow by creating flows rather than plundering more stocks.”[5]
Let Real Wealth be defined as something our grandchildren can enjoy with their grandchildren.
Why not Gross Domestic Happiness instead of GDP? Or perhaps the growth in average human life expectancy? Growth of renewable energy production? Why not growth in total species diversity? Or perhaps many such ideas within an index of sustainability?
Sustainable flows instead of unsustainable consumption.
Wealth Transfer
The transfer of wealth via money, from commodity transfer to commodity-backed currency transfer, to today’s fiat currencies[6], i.e. paper not backed by any other commodity; has evolved as being an ideal fluid form for the transfer of goods and services. As the evolution continues, we are moving from paper inked with stamps from the Bank of England or the US Treasury to computers, with ones and zeros held in databases. Our wealth is becoming digitized, and we can see its value pop up on our computer screens.
In searching for a solution to the problem we can use the tools of currency and of the wonders of today’s digitized world.
Valuing Wealth That We Have Taken For Granted
What about the inherent value of the life support machine that is the world around us?
We have yet to put of price on a cubic mile of clean air, on life supporting water systems, on a thousand tons of rainforest oxygen, on the waste removal process of billions of bugs, grubs and bacteria, on the natural sequestration of carbon. So what is all this wealth worth?
That is not an easy calculation using conventional supply and demand economics. To highlight the point, let us try to visualize the extreme case of the price for the last barrel of oil, the last drink of non-toxic water, the last breath of oxygen. Sadly of course, the price is likely to be conflict.
So as we tend towards ultimate depletion, our conventional valuation of commodities breaks down. Chaos would erupt before the end and chaos is not an environment for resource management.
We can be sure this wealth is worth something, but how do we value it in real everyday terms?
A Solution: Dual Currency
A separate global currency which attempts to value the precious world around us, can help us value and steward the planet’s remaining resources fairly and responsibly, with the ultimate goal of sustainably.
For sake of discussion, I will call this new hypothetical currency GreenBucks (GBs).
Every adult on the planet would be entitled an equal amount of GreenBucks every day whether he or she lives in Beverly Hills or in rural Africa. This standard equitable entitlement represents an acknowledgement that we share the earth as equals, and that we all have a stake in striving for a sustainable future.
Every product purchased will be paid for both in terms of local currency and in terms of the internationally consistent GreenBuck.
The GreenBuck cost for all traded products will have to be derived based upon variables including:
1) The pollution or environmental impact of providing that product
2) The scarcity of a material used to create that product
3) The environmental cost of shipping the product to that location
For example, bananas purchased in the USA from clear cut plantations in South America would have a GreenBuck cost based upon such variables as:
1) the removal of the indigenous forest
2) the environmental impact of the fertilizers/pesticides used
3) the impact of the farming tools and vehicles
4) the impact of the processing packaging plant
5) the impact and carbon cost of transportation to final destination
Bananas purchased in a local store in the USA would have a price of 79 cents per pound AND of 2 GBs per pound. As you purchase the product you would pay in local currency and in GreenBucks. This GreenBuck cost for every product will be derived with international consensus and be wholly transparent in its derivation. The GB cost of products will also have to be dynamic based upon changes in technology and scarcity.
Of course, GreenBucks would not be a paper currency. The data will be stored on computer databases much like someone’s air miles is today.
Anyone desiring or requiring more than he or she has accrued could purchase GBs from those with a surplus. Computer transfer would provide for seamless electronic purchases across the planet based upon the current price of the GreenBuck, as with any stock or option purchase. The price of a GB would float as any commodity or currency based upon supply and demand. GreenBucks would be a ‘Cap and trade’ vehicle for resource management.
Auditing & Enforcement
An auditing system could be tied to the internal revenue system of each country. Every individual with a tax paying ID number would participate and be allocated his or her GreenBucks daily. For each purchase, GreenBucks would be deducted electronically and with complete transparency. Each individual would have access to each GB transaction and his or her current GB accrued balance.
Individuals would be encouraged to purchase GreenBucks from the open market to clear a GB deficit, but those who fail to maintain a surplus could have their GB liability transferred to a tax liability in local currency, thus providing enforcement.
How Does This System Benefit Those In Rural Africa?
Given the equal allocation of GreenBucks, there would be a daily surplus of GBs to those with a minimal footprint on resources. These individuals would accrue GBs until sold on the open market for local currency.
News will likely travel far and wide and fast: Register with the government, obtain a national or international identification and then participate in the resource-driven, sharing of wealth. Local farmers will be more likely to use sustainable practices if there are GBs at stake and wilderness areas are more likely to be saved. Capital transfer would be on the individual level and should bypass government corruption at the local and national level. With a long-term investment vehicle on the table, the developing world would buy into our collective global effort.
How Does This System Benefit Those In The West?
As we now know, the luxurious lifestyle of the West is not sustainable. For every person on the planet to live such a lifestyle, we would require the resources of many planets like Earth. Without a sustainable equilibrium, things change. And therefore, sooner or later, the Western way of life will have to change too. Ultimately, yet sadly, change will likely occur in desperate conflict. Relieved of the everyday struggle to find food and water, we in the West have the luxury to see this end coming, to realize it, to understand it, and to act. We now have this window of time to do something about it. Providing a solution as soon as possible is of significant benefit to someone in the West.
Positive Feedback As We Move Towards Sustainability
The number of GBs allocated per day would have to be derived though careful research in consideration of the likely daily average GB consumption per capita. The more GBs issued per day, the less each GreenBuck will trade for on the open market. Hence, the initial implementation could provide for more GBs than the per capita average in order to provide a more painless buy-in.
Ultimately, once the price of the GreenBuck has stabilized, we should be able to observe the value of resource management in real time, as a people. A drop in the price of the GB, with all other things equal, is indicative of a collective drop in resource demand-positive feedback.
As an example: Let’s say that Ireland switches to 100% renewable energy electricity production. Individual’s electricity consumption would then require less Greenbacks. The demand for GBs in Ireland would go down. Given that the worldwide supply of GreenBucks is the same, the overall price of the GreenBuck will fall. Everyone can share the collective satisfaction of a lower GreenBuck. Well done Ireland.
Of course, it can be argued that this decrease of the GB price will provide less of an incentive to conserve and adapt - probably true. However, this issue can be mitigated by a universal reduction in the daily allocation. Perhaps this reduction would warrant an international day of celebration!
So Where Do We Go From Here?
The purpose of this paper is to simply table the concept and it is understood that many questions will spawn from the idea of a dual currency.
Corporations and how they fit into the model?
Who will provide oversight? The UN?
How to aid those without access to technology?
Will population growth be affected and how so?
Enforcement measures and how to dovetail into tax law?
How to help the agriculture sector adapt to the new currency?
Realistically, the creation and oversight of a new international currency, its oversight and management, is a huge undertaking, requiring an unprecedented level of human co-operation. However, the magnitude of the problem and the sheer size of the stakes demand real solutions as soon as possible. And whatever we can collectively conceive, we can collectively achieve.
Conclusion
The problem facing our generation is indeed immense but we must always have hope. Beyond the overwhelming feelings of deflation that everyone must feel upon the realization of the problem, there must be a collective belief in a sustainable tomorrow. Optimism, in the face of this kind of adversity, is the only functional mindset for nurturing solutions. There are still some grains of sand left in the hourglass and we still have time.
There will be many avenues for hope, and they all should be explored. This concept of dual currency is tabled in hope that one day, every monetary transaction will be a small step towards a more sustainable way of life.
[1] http://www.sciencedaily.com/releases/2009/06/090622103833.htm,
[2] http://www.peopleandplanet.net/doc.php?id=429§ion=6
[3] From a speech by Richard Heinberg: Endless Consumption: The Party's Over
[4] Aaron Glantz Friday, December 22, 2006 by OneWorld
[5] The Inflection Is Near? By: THOMAS L. FRIEDMAN, New York Times, March 7 2009.
[6] Wikipedia: Historically, societies have relied on monetary systems where currency used in trade was either commodity money, composed of a physical commodity such as gold, or representative money, exchangeable for a predetermined amount of a named physical commodity ('specie'). Whilst specie-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of specie, fiat money's value is unrelated to any physical quantity.
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