Growth, and The Future for our Grandchildren

Our macroeconomics textbook ends its final chapter with a power excerpt from economist John Maynard Keynes written in 1930. Of everything I have read so far, this narrative stuck with me, and has reinvigorated my drive for making changes to our current system. A copy of the full essay can be found here.

Norm wrote about this notion on his blog recently as well; the idea of a zero growth society. Norm states the emerging economies, like those of China, India, Brazil, Russia etc., seek the same levels of consumption that the rich nations of the world enjoy today.  This rich level of consumption and production is more than our planet can provide. Our global consumer culture and the nature of our economic system are predicated on constant economic growth.  In order to address the problem of global warming we will need a different culture and a different economic system.

We cannot continue in the current projection of social value being solely measured by economic growth. At some point we will reach a critical tipping point, and will be forced to explore other endeavors to obtain satisfaction and prosperity in our lives. I know that this movement is happening, particularly among many of my peers and classmates. We are exploring what is really important, and how we can continue to develop as contributing members of society, while balancing that with a sustainable future. 

We at BGI are not alone in this movement. There are many examples of community level actions, like the “Move Your Money” and “bank transfer day” campaigns; widespread efforts to shift millions of dollars from corporate institutions like Bank of America to community-benefiting institutions. Related to this are other “new banking” strategies. Since 2010, 17 states, for instance, have considered legislation to set up public banks along the lines of the long-standing Bank of North Dakota.

But how big is this movement? Those of us that see the need to change these structures are still faced with the challenge of slowing down a massive flywheel that has been cranking along long before any of us were born. The momentum is staggering. Sure, I can move my money into a credit union, and work on supporting local community businesses that will feed back into a smaller scale economy, but what about influencing the bigger picture.

Coal exports are a prime example of people speaking out against the momentum, and struggling to make inroads with the scale of these heavily funded projects. Information is out there. People care. Last week, one of my BGI classmates’ 10 year old daughter, Olive, stood up at a town hall meeting to give a speech on how these coal trains will impact her life. There is a movement on Facebook this week to change your photo to this image opposing coal exports. 

We are seeing public opportunities to share our opinions, but where does that get us? Where in our current culture is the opportunity to shift the momentum to make the shift Keynes spoke of in 1930, where “accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals…the love of money as a possession…will be recognized for what it is, a somewhat disgusting morbidity, one of those semicriminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.”

This is the change we need to make as a society. We can teach and learn and tear apart the textbook understanding of the triple bottom line. We can develop sustainable businesses within our communities, and support those that balance these values. But what needs to happen to promote this larger social change to challenge our economic structures and expectations of growth?

Becoming aware, and recognizing our interactions with these structures in our own experiences are paramount to start the change. We must ask ourselves why we are pursuing what we are, and to what ends. We must clearly understand our goals, and then uncover if our actions are actually leading us in that direction. As Olive Lewis stated so eloquently in her plea to the Spokane community, “is this the best we can do, or are we capable of something greater?” Keynes whole essay is about the social change that needs to occur to impact the future for today's children, like Olive. I hope that we all can start making this progress, and take responsibility for our small contributions to this system. I want is to start this transition, so that future leaders and decision makers can start from a place more innovative from where we stand today.

"Hello. My name is Olive Lewis and I am a 4th grader at Roosevelt Elementary. I live just four blocks from away from the rail road tracks that will carry this coal.

I come from a family of railroad employees, including my papa. My papa is concerned about me breathing in the diesel fumes along with the risk of a spill from hazardous cargo.

I am here because I want to play in the World Cup someday. Soccer is my life, and I've already seen a doctor about my lungs. On days of poor air quality I cannot practice or play outside.

I understand the need for jobs, but they need to be the RIGHT jobs. My neighborhood is full of kids breathing the same air and our future cannot be sacrificed for short term gain.

I researched some studies on the potential impact on the air and general pollution to ship this coal to China, and I want to ask: 'is this the best we can do, or are we capable of something greater?'"

words by Olive Lewis, from the Spokane Riverkeeper

US Coal to Asia: Globalization in Action

This week we have been focusing on globalization, processes that promote world-wide exchanges of national and cultural resources. International trade has been in existence since the earliest days of international exploration and human interaction. The modern economy moves a multitude of goods across international lines, everything from bananas and wheat to airplanes and cars.

This is a perfect tie to the surge of interest in exporting US coal to Asia, mainly China. As referenced in Norm’s blog, China is the center of globalization today. We are importing large quantities of goods and services from China, to the magnitude of $539 billion in 2011 according to the Office of the United State TradeRepresentative. Exports totaled $129 billion; Imports totaled $411 billion. The U.S. goods and services trade deficit with China was $282 billion in 2011. 

International competitive advantage trade theory would describe the coal trade system as the country with the cheapest, easiest production of coal to be the most competitive in the market. China boasts the world's third largest coal deposits, and leads the world, both in the production and the consumption of coal. The United States on the other hand, is the largest coal market open to foreign investors. Inaddition to being the second largest exporter of coal, the United States is the world's second largest coal producer. So how are recent changes in the coal market now making it competitive to export coals from the US into China and other Asian countries from Pacific Northwest ports?

My guess is limited resources globally, couples with an explosion in demand for this energy resource. Coal consumption in China increases at a rate of 10 percent a year, and continues to face challenges of keeping up a domestic supply to meet this demand. This increased demand in China is occurring at the same time the US is seeing a drop in demand domestically. To ensure a long term market is accessible, they see investment in export to China as a longer term project. The U.S. power generation sector saw demand fall by 1% between 2000 and 2010, while demand for coal in China’s electric generation sector surged by 163% during that same time to more than 1.5 billion tonnes per year. 

It is expected that China may import as much as 250 million tonnes of coal during 2012 (coking and thermal coal combined). As such, Wyoming and Montana coal miners have a solid opportunity to market their low-cost, clean burning Powder River Basin coal to power plants in Coastal China.

Foreign investors have become increasingly important in U.S. coal over the past decade or so. The industry is eyeing the region as a hub for export because of its proximity to Asia, said Al Knapp, project manager for Ambre Energy. He said multiple countries, including Japan, which is moving away from nuclear power – are looking to coal as a cheap and reliable energy source. Presently, most coal is shipped from the East Coast.

 “I think there is an opportunity in Asia, and like any good business person would want to do, you go where your market is,” Knapp said. “The Pacific Northwest is the quickest route there.” 

Coal industry experts predict that U.S. exports will surge to more than 100 million tons per year over the coming decade as consumption shifts away from the United States, where electric utilities are relying increasingly on natural gas and other fuel sources for power generation. The coal would go to emerging markets in China, Southeast Asia, India and Latin America where coal remains a primary fuel for electricity.

Even with a booming market, and a large supply of US coal, the export project along the US West Coast is not a fast solution. The string of Pacific Northwest terminals has garnered skepticism and outright opposition from those who believe a massive coal terminal will diminish air and water quality in the region while increasing noise, congestion and wait times at rail crossings. So the actuality of this global coal market may take some time before it is realized from the Pacific Northwest, and other coal exporting countries like Australia, Russia and South Africa may be quicker to respond to this global market.