Name: Yuzhu Gong Due Date: 2015/11/26
Article Title: Economics in a Full World
Author/Source: Scientific American
Article Title: Economics in a Full World
Author/Source: Scientific American
A: List major ideas, concepts or key points - point by point
- Growth is widely thought to be the panacea for all the major economic ills of the modern world.
- Don’t try to redistribute wealth from rich to poor, because that slows growth.
- Increase demand for goods and services by lowering interest rates on loans and stimulating investment, which leads to more jobs as well as growth.
- Just push economic growth and rely on the resulting demographic transition to reduce birth rates, as it did in the industrial nations during the 20th century.
- Relying on growth in this way might be fine if the global economy existed in a void, but it does not.
- One problem is that some people benefit from uneconomic growth and thus have no incentive for change. In addition, our national accounts do not register the costs of growth for all to see.
- Humankind must make the transition to a sustainable economy—one that takes heed of the inherent biophysical limits of the global ecosystem so that it can continue to operate long into the future.
- The branch of economics that involves the careful measuring and balancing of costs and benefits of particular activities, individuals and businesses get a clear signal of when to stop expanding an activity.
- Some people think that a sustainable economy should sustain the rate of growth of GDP.
- The political purpose of this stance is to use the buzzword “sustainable” for its soothing rhetorical effect without meaning anything by it.
- Weak sustainability would suggest that the lack of fish can be dealt with by building more fishing boats.
- Strong sustainability recognizes that more fishing boats are useless if there are too few fish in the ocean and insists that catches must be limited to ensure maintenance of adequate fish populations for tomorrow’s fishers.
- Product lifetimes. A sustainable economy requires a “demographic transition” not only of people but of goods— production rates should equal depreciation rates.
- GDP growth. Because of qualitative improvements and enhanced efficiency, GDP could still grow even with constant through put—some think by a great deal.
- The financial sector. In a sustainable economy, the lack of growth would most likely cause interest rates to fall.
- Trade. Free trade would not be feasible in a world having both sustainable and unsustainable economies, because the former would necessarily count many costs to the environment and future that would be ignored in the growth economies
- Employment. In a sustainable economy, maintenance and repair become more important. Being more labor-intensive than new production and relatively protected from offshoring, these services may provide more employment.
- Happiness. One of the driving forces of unsustainable growth has been the axiom of insatiability—people will always be happier consuming more.
B: Summarize the author's main point or idea
Summary of Author's Main Points:
The expansion of economy will contribute to our ecosystems. But the facts are plain and unconte stable: the biosphere is finite, non-growing, closed, and constrained by the laws of thermodynamics. Any subsystem, such as the economy, must at some point cease growing and adapt itself to a dynamic equilibrium, something like a steady state. Birth rates must equal death rates, and production rates of commodities must equal depreciation rates. The economic status quo cannot be maintained long into the future. If radical changes are not made, we face loss of well-being and possible ecological catastrophe. The economy must be transformed so that it can be sustained over the long run. It must follow three precepts: first, limit use of all resources to rates that ultimately result in levels of waste that can be absorbed by the ecosystem. Second, exploit renewable resources at rates that do not exceed the ability of the ecosystem to regenerate the resources. Third, deplete nonrenewable resources at rates that, as far as possible, do not exceed the rate of development of renewable substitutes. Humanity needs to create an economy that can sustain the finite biosphere. Main idea of sustainability is to shift the path of progress from growth and toward development. Adjustments are product lifetimes, GDP growth, the financial sector, trade, taxes, employment, and happiness. If nobody makes these adjustments, then this planet will be more polluted.
Summary of Author's Main Points:
The expansion of economy will contribute to our ecosystems. But the facts are plain and unconte stable: the biosphere is finite, non-growing, closed, and constrained by the laws of thermodynamics. Any subsystem, such as the economy, must at some point cease growing and adapt itself to a dynamic equilibrium, something like a steady state. Birth rates must equal death rates, and production rates of commodities must equal depreciation rates. The economic status quo cannot be maintained long into the future. If radical changes are not made, we face loss of well-being and possible ecological catastrophe. The economy must be transformed so that it can be sustained over the long run. It must follow three precepts: first, limit use of all resources to rates that ultimately result in levels of waste that can be absorbed by the ecosystem. Second, exploit renewable resources at rates that do not exceed the ability of the ecosystem to regenerate the resources. Third, deplete nonrenewable resources at rates that, as far as possible, do not exceed the rate of development of renewable substitutes. Humanity needs to create an economy that can sustain the finite biosphere. Main idea of sustainability is to shift the path of progress from growth and toward development. Adjustments are product lifetimes, GDP growth, the financial sector, trade, taxes, employment, and happiness. If nobody makes these adjustments, then this planet will be more polluted.
C: Reaction to the article
My Own Thoughts on the Topic:
The interesting part in this article is that I have never thought the expansion of manufacturing leads to the loss of resources, but also growth of our economy contributes to the loss of our natural resources. If we do not make the adjustments needed to achieve a sustainable economy, the world will become ever more polluted and ever emptier of fish, fossil fuels and other natural resources. But the disaster will be felt eventually. Avoiding this calamity will be diffi cult. The sooner we start, the better. Even though it is a small step but we can still make a big difference.
My Own Thoughts on the Topic:
The interesting part in this article is that I have never thought the expansion of manufacturing leads to the loss of resources, but also growth of our economy contributes to the loss of our natural resources. If we do not make the adjustments needed to achieve a sustainable economy, the world will become ever more polluted and ever emptier of fish, fossil fuels and other natural resources. But the disaster will be felt eventually. Avoiding this calamity will be diffi cult. The sooner we start, the better. Even though it is a small step but we can still make a big difference.