J500 Media and the Environment

Where’s My Eco-Friendly Econ? by Chardonnay
April 14, 2008, 10:02 pm
Filed under: Business + Politics | Tags: , , , , ,

Eco-aware econ book (Dorforyou.com)

Sunday night: The hours disappeared one by one, slowly ushering my 8 am economics test into my near future.

My tattered economics notebook taught me many things that night. I learned about unemployment and national income accounting. Debt and equity finance. On one page I learned that I forgot about some textbook reading. It was when I opened to the assigned article that I learned the most shocking information of all:

Natural resources are not running out.

Phew! Sorry Sim, the class is a bust. Peak oil? Deforestation? Worry no more- Mankiw says it’s all good.

I would love to include the entire article but I don’t know if that’s legal and I do know that a 2,000-word blog would be a hard sell. It starts by presenting population growth as a potential concern with regards to natural resources. He briefly entertains this viewpoint of “many commentators” and “conservationists” of the past. Then, he acknowledges kindly that “at first, this argument may seem hard to ignore.” And finally, he shows us the light.

It seems that our concern over limited resources stems from our lack of intimacy with the market economy. You see, scarcity is reflected in market prices.

If the world were running out of resources, then the prices of those resources would be rising over time. But in fact, the opposite is more nearly true. The prices of most natural resources (adjusted for overall inflation) are stable or falling. It appears that our ability to conserve these resources is growing more rapidly than their supplies are dwindling. Market prices give no reason to believe that natural resources are a limit to economic growth.

To be fair, my book was copy-written in 2006, so this article came before the price of oil topped $100/barrel.

And he’s not saying resources aren’t limited, he just believes in our ability to conserve.

An optimist?
…Eh, I doubt it. Economists aren’t exactly known for their rose-colored spectacles.

Of course, I do think our class’s ability to meet with shared enthusiasm is a direct result of our belief that we can figure out a way to conserve our way to a sustainable future. However, we see a long road of informing the public and changing public policies. We see transforming a wasteful society as an obstacle.

And Mankiw’s Don’-Worry-Abah-Dit philosophy didn’t strike me as a step in the right direction.

-Sonya English

Note: I am happy to report, there were no questions about cheap’n’easy resources on the test.


1 Comment so far
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I love this pix!
Okay, Greg Mankiw used to be George Bush’s economic advisor. Mankiw’s textbooks are what got me through econ when I was getting my MBA. And he’s right – if you buy into the assumptions of neo-classical economics:
1) People act rationally
2) People always maximize utility and firms always maximize profits
3) People have full information
I am not sure how we all drank this kool-aid and build a whole economy based on these false premises. Economics dazzles me because it is such a false and prolific practice (I just can’t call it a science).
We know better. People are not always rational and we don’t have all the information. If we are waiting for the markets to save us, then we will continue to wait for crises to inspire course correction. (Oil is at record highs, now let’s find a new source of fuel. . .Corn is too expensive to eat because we turned it into such a hot fuel commodity, quick, where’s the oil?)
Thank you for bringing this up, Sonya. It is a very important piece to consider as we tackle the value of our resources. For more information, take a look at the environmental economics blog on our blogroll.

Comment by j500

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