Biting the Hand that Feeds

Greenism is Unsustainable

It has been a long time since the developed world had a really, really good recession. Possibly the oil shocks of the seventies and their aftermath was the last really good one. Since then the world has had mere speed bumps along the way.

New Zealand's history is slightly different. In the late eighties and early nineties we had a deflationary recession, deliberately caused by the Reserve Bank, to drive inflation and its attendant expectations out of the economy. It was the recession we had to have. It was an attempt to deal with the dead weight of double digit inflation under which the country laboured at the time. It worked. But it was the last decent recession.

It looks now as if we maybe about to have a genuine recession again. We are now all aware of the litany.
Our economy has shrunk. Unemployment is on the rise. Manufacturing businesses are migrating offshore. The speculative residential housing market is reversing; house prices and volumes are falling markedly. The share market (always a leading indicator of future economic activity) has fallen to three and a half year lows, and there appears more falls to come. Consumer confidence has plummeted. Interest rates and our currency remain stubbornly high. Inflation is rising. The price of energy and food staples is rocketing upwards. Most people have less disposable cash as a result of rising food and petrol prices. Taxes have risen. People realise they are worse off than they were several years ago, unless they have been fortunate enough to achieve wage rises, or they are dairy farmers.

In the past twenty-five years we have become used to short, sharp downturns—then everything picks up and goes on again. There are indications, however, that this latest recession, while certainly sharp, might also be far from short. Neither food nor fuel prices are going to come down: contrary to the superficial popular wisdom, the changes in food and energy markets are secular, not cyclical—which is economist jargon referring to long term changes in either supply or demand of a good or service. Essentially, a tide of rising global demand for food and energy is pushing up prices. The tide is now surging due essentially to the rapid economic growth occurring in China and India, leading to rising living standards and consequent increasing demand for food and energy. The scale of increase is prodigious.

Once the New Zealand dollar falls—as it inevitably must—the exporting sector will boom. But the consumer consumption economy—which for the past thirty years has been fueled by government welfare handouts and rising household debt—will be hit by a second shock, and will likely collapse. The price of all imported consumption goods will ratchet up again, leading to dark and difficult days for free wheeling, big spending, debt laden New Zealanders, who have lived beyond their means for far too long.

The end result is likely to be a sharp and continuing drop in living standards. At such a time, greenism will become hugely unpopular. Greenism always was a world view that belonged to those who had the luxury of being well enough off to be bothered about it. When you are shivering and cannot heat your house, or you cannot afford groceries, saving the planet is the last thing on the mind. In this sense, greenism as a political movement or as a philosophy is unsustainable. It requires conditions of prosperity and wealth to gain public traction. There is no greenism amongst the poor. It was only ever trendy amongst the upper middle classes od developed economies. Greenism gets no time of day in China, Africa, and India—the race to survive is too all-consuming.

There is an irony here: greenism wants everyone to become poorer—to consume less, to emit less carbon, to waste less—and the only way this can be done is by a voluntary or involuntary lowering of living standards. Some economists have calculated that in order to reduce carbon concentrations in the atmosphere to the levels greenists say are required for a stable world climate, living standards would have to fall back to what they were in the mid-nineteenth century. But this goes against human nature. As soon as people are faced with the stark choices of greenist prescriptions versus maintaining living standards, support for the greens disappears. In other words, the more influential greenism becomes, the less attractive it turns out to be. It succeeds to failure. It is unsustainable.

The present government and its chattering classes have forgotten this. The current crop of government politicians is unlikely to recall it, either. They are now securely locked in the “beltway”, with all system feedback coming from likeminded supporters and thinkers. Recently, our greenist Prime Minister said she looked forward to fighting the election over climate change as “the defining issue”, were the Emissions Trading Scheme to falter. This confirms just how far out of touch with reality she is. Does she really believe that her former voters in South Auckland, West Auckland, and Tawa are going to be so committed to saving the planet they will be enthralled by policies that will increase their living costs? Apparently.

With recession upon us, support for greenism is withering by the day. Greenism has always been a western, upper middle class luxury. If that luxury has been engendered by consumption and increasing debt, greenism, like the wealth which gives it traction, will inevitably fade away.