It's the dilemma of our time: the IPCC is calling for less wasteful consumerism at the same time as the Reserve Bank is prompting more spending.
The major headlines here at the time were about the Reserve Bank of New Zealand jolting the dollar downwards and surprising markets by dropping the Official Cash Rate by half a percentage point to just 1%. Reserve Bank Governor Adrian Orr did not quite say, “Come on, you slackers, get out and spend”. But the new interest rate said it for him.
The bank’s monetary policy committee “acknowledged the importance of additional spending from households, businesses and the Government, to meet inflation and employment targets”. Business confidence, the committee said, had dampened in 2018 and not picked up this year. And softening house prices could potentially further subdue household spending. Perhaps lower interest rates would spur more house buying, more inflation and more spending.
Herein lies the dichotomy: the IPCC’s latest report says that over-consumption, particularly in the Western world, is doing possibly irreparable harm to the planet and almost everything that lives on it.
Although an estimated 821 million people are undernourished, about 2 billion are obese. Shockingly, food loss and waste amount to a third of total global food production. If we were all to be honest, though, that is not such a shock.
Yet, at the heart of the Reserve Bank’s latest OCR move is the belief that we need more consumption to grow the economy. It is through economic growth that governments get to spend more on the things that the public demands and desires.
If both institutions are right in their hypotheses, how are we to proceed? This central question has become the dilemma of our age. How to continue to enjoy the benefits of growth that we have become accustomed to as a right, without continuing to inflict the damage on the environment and other species’ habitats that we have also claimed as a right?
The doomsayers would have it that we are at the edge of a cliff, a dead end, a pick-your-own-cliché point on the continuum of human evolution. They demand ever more drastic solutions, including an end to capitalism itself. Our own Prime Minister, Jacinda Ardern, is not immune to blaming capitalism for poverty, as though poverty is unknown in other political systems. It seems staggering that the benefits of capitalism, including lifting millions out of poverty, can be so easily overlooked.
Yet, the latest IPCC report was not as without hope as the Economist headline suggested. Agriculture can be made more efficient, and the report recommends improved harvesting, storage, packaging and transporting of food. On the demand side of the equation, the IPCC suggests that healthier diets, less meat, less dairy and fewer sugary drinks would be good starters. None of that involves stopping spending. However, it does involve spending differently.
Importantly, the report suggests that by changing how we live – purposefully though not radically – we can not only arrest the damage but also begin to repair it. There is no suggestion that we need to ditch capitalism to do so.
We can, it seems, make the most of low interest rates by continuing to spend, thus keeping the economy growing, without destroying the Earth. The key is what we spend our money on.
Equally important is the IPCC’s suggestion that consumer demand – particularly for healthier diets – will make a difference in reducing land degradation and carbon emissions. We do not all need to become vegan. Cumulatively, the small decisions and actions each of us takes to lower our own carbon footprints matter. But we need to act now.
None of this is to suggest that Westerners can shop their way out of trouble, or that significant lifestyle changes will not be forced upon us all – possibly catastrophically – if we do not choose them first. But if we know anything about humanity, it is how endlessly innovative, inventive and creative it is.
We cannot have our cake and eat it too, but we can have a growing economy and a healthier environment if, by our deliberate actions, we choose to.
This editorial was first published in the August 24, 2019 issue of the New Zealand Listener.