What makes an economy successful?
Americans are just beginning to realize that widespread inequalities dampen and retard economic vitality, but the more foundational–and to me, at least, more interesting–question is: what does a “successful” economy look like? In the United States, a great proportion of our economic life revolves around “stuff”–the production and consumption of consumer goods. There’s nothing wrong with producing items that people want to buy, but a model that requires constantly increasing consumption has obvious drawbacks, especially when large numbers of workers lack disposable income.
As readers of this blog are aware, one of my sons lives in Amsterdam. He has made me aware of that city’s experiment with a different economic approach. In April of last year–even while the pandemic was raging–Amsterdam became the first city in the world to formally implement what is called “doughnut economics.” Brussels then followed, as did
the Canadian city of Nanaimo.
Scholars advocating for a new approach argue that the current economic system sacrifices both people and environments at a time when everything from shifting weather patterns to rising sea levels is global in scope and unprecedented in nature.
The premise requires us to re-envision what really constitutes economic health–to define it as a system that ensures that “nobody falls short of life’s essentials, from food and water to social equity and political voice, while ensuring humanity does not break down Earth’s life support systems, such as a stable climate and fertile soils.”
The doughnut’s social goals are based upon the Sustainable Development Goals promulgated by the United Nations. These are food security, health, education, income and work (not limited to paid employment), peace and justice, political voice, social equity, gender equality, housing, networks, energy and water.
The nine ecological boundaries are drawn from proposals developed by a group of Earth-system scientists. These are climate change, ocean acidification, chemical pollution, nitrogen and phosphorus loading (inefficient or excessive use of fertiliser), freshwater withdrawals, land conversion (removal of habitat), biodiversity loss, air pollution, and ozone layer depletion.
Kate Raworth’s 2017 book “Doughnut Economics” explains the doughnut economy as one based on the premise that “Humanity’s 21st century challenge is to meet the needs of all within the means of the planet. In other words, to ensure that no one falls short on life’s essentials (from food and housing to healthcare and political voice), while ensuring that collectively we do not overshoot our pressure on Earth’s life-supporting systems, on which we fundamentally depend – such as a stable climate, fertile soils, and a protective ozone layer.”
Raworth recognizes that “significant GDP growth is very much needed” for low- and middle-income countries to be able to meet the social goals for their citizens.
Using a simple diagram of a doughnut, Raworth suggests that the outer ring represents Earth’s environmental ceiling — a place where the collective use of resources has an adverse impact on the planet. The inner ring represents a series of internationally agreed minimum social standards. The space in between, described as “humanity’s sweet spot,” is the doughnut.
Amsterdam formally adopted the model on April 8, 2020.
The city of Amsterdam has always been a pioneering city. It loves to be a pioneer which is a brilliant attribute because there are many cities that will not lead. They will only follow when they see someone else go,” Raworth said.
“It is not going to work to have three, four, five separate strategies all trying to connect. When they encountered the concept of the doughnut, I know that they said: ‘Aha, this is a concept that sits above and embraces everything that it is that we want to do.’”
Van Doorninck, who’s responsible for spatial development and sustainability in the Dutch capital, said the city’s circular strategy was focused on areas where local government “can really make a difference.”
These areas include food and organic waste streams, consumer goods and the built environment. As a result, the city has targeted a 50% reduction in food waste by 2030, implemented measures to make it easier for residents to consume less (by establishing easily accessible and well-functioning second-hand shops and repair services over the next three years) and pushed for construction companies to build with sustainable materials.
According to the article, a number of cities around the globe are watching, and considering whether to follow suit. It’s a very encouraging effort to marry economic growth with social equity and environmental responsibility.
Fingers crossed…..
Thank you for this. I wondered about what Nanaimo might be up to, and for others also interested, here is a link. It’s a long document, and I guess pretty much in ‘planner speak’. However, it fleshes out the idea thoroughly, and, for me, is happening just down the road, more or less.
https://www.nanaimo.ca/docs/property-development/reimagine-nanaimo/rpt_gpc210308updateondoughnuteconomicsframework_published.pdf
Cheers!
My son and daughter-in-law received notice that their homeowner’s insurance had been increased; when she called to ask why, she was told it is because lumber prices are soaring so high. They then received their property tax notice; their taxes increased by $230 this year. Lumber prices?
I am trying to find someone to extend my front stoop into a small front porch but having problems because construction workers are too busy to take on another job. I am trying to put my $1,400 stimulus check into local economy which will require purchase of materials to construct the porch and provide income to construction workers to put into the economy to meet their needs for their Sustainable Development Goals. Houses in my small, low to low-middle income neighborhood are selling for unbelievable amounts, some in bidding wars. Evidently the the total lack of infrastructure maintenance and repairs in this and surrounding areas are no longer a consideration when buying a home. High rents and few houses on the market have been suggested as the reasons behind this situation but I am still questioning “Why”?
Construction workers too busy to take on more jobs and bidding wars on small, post Korean war housing, sounds like the economy is stabilizing. Add in the lowering jobless rate and it appears to be improving on the national level while many businesses are still closed and there are Pandemic restrictions on many which are open as the Covid death count is rising in Indiana and on the national level. All of this paints a picture of conflicting statistics as I watch family members and friends who are still struggling to maintain their status quo with their stagnant income levels against soaring costs of everything in our daily lives.
A vital, off issue situation here in Indianapolis; we have joined the lengthening list of mass shootings at one of our FedEx locations. Eight dead plus the shooter; injured victims transported to local hospitals and those able to drive themselves for medial care need to contact police. The Holiday Inn Express near the FedEx has opened their doors to family, authorities and workers leaving their job site as a gathering place. So far, only our Democratic U.S. Representative Andre Carson has spoken out as the only political representative for this state. CNN, MSNBC and our local NBC Channel 13 have not reported contact from Mayor Hogsett or the 2 Republican Senators. Hopefully that has changed while I have been on my computer.
God save us all from ourselves!
Raworth’s book is fascinating. One thing that prevents her ideas from being implemented is due to the power struggles at different levels of government. For example, state legislators are reluctant to let city governments run their operations without oversight (i.e. hindrance). Everyone thinks they know best, and are reluctant to cede authority to others.
According to the Social Progress Index, the Netherlands is ranked 10th and Germany 11th. Canada is ranked 7th.
The US is ranked 28th or the latter half of Tier 2 countries.
Our democracy is ranked 25th, and our free press is ranked 45th.
Our spending for military and executive pay is ranked 1st. Our number of billionaires is ranked first. We have the highest GDP of all countries.
Can you see the issues already from just the rankings? As a journalist who is more of a media critic, it is rather glaring.
As the communist country of China opens up further, it will overtake the US as the number one economy, probably within 5 years.
Smart people have been telling the US Oligarchy that we must change our systems because they fail to produce equitable outcomes, and we are falling behind our global partners. Even our neighbors are pointing out our decline. The US Oligarchy’s response is to elevate the threat of nuclear war with Russia, China, and Iran. Yes, Israel caused the damage to the nuclear centrifuges in Iran.
These “leaders” are so entrenched in winning a competition on a physical front (empire building), they cannot see the damage they are doing to this country. The more I watch and learn, the sicker I get over the race for global hegemony by a country failing its own people.
I must read “Doughnut Economics”. Thank you Sheila, for blogging Amsterdam’s positive position on corrective action for earth health. I have long agonized over the limits of consumer capitalism, and the only vision of change I had was more local economy. I know that won’t appeal to that many young people, most of whom aspire to improve the lifestyle they were born into. The devil is still in the details, and particularly in those red state governments that are currently quashing local regulations that are trying to address their particular needs. Still, I am so glad to know about Amsterdam, Brussels, Namaino, and the Doughtnut Economics graphic.
Good luck getting America to follow that path. If some cities do it they will likely be in the far northeast or northwest and won’t have much impact on the rest of us. America has yet to adopt single payer health care, which has proven successful everywhere.
Todd,
You forgot one of the most important rankings – transparency v/s corruption:
Netherlands – 8
Germany – 9
Canada – 11
US- 25
Hmmmm
Doughnut economics has a lot of similar goals as Regenerative Economics, which was developed by John Ferguson. I like Regenerative Economics because it affirms the creative dynamism of free market capitalism, but frames it within the core principle of learning from and working in accord with nature’s time-tested and fully sustainable dynamism. I think this way of thinking about it opens up rather than shuts down creativity, which is crucial, and I think it can appeal across the American political spectrum. Also, the term “regenerative” is gaining traction as a good word to evoke what we most need in so many areas. This graphic of the Eight Principles of a Regenerative Economy” illustrates what I mean: https://capitalinstitute.org/8-principles-regenerative-economy/
Lester,
When your watchdogs (journalists) have a global ranking of 45th, corruption is a given. What was the first thing eliminated by Trump after the first Covid government bailout?
The Inspector General.
We’ve become the Mafia with a giant military.
Nature rewards adaption by species as conditions change. That applies to all species equally, including homo sapiens. The difference between humans and, say, bees, is that we cause things to change while other species have to react to changes that just appear to happen. If we were much better planners we could consider over longer terms the causes of the changes that we make and plan in advance for them.
The most rampant changes that we are making today are in our population, lifestyles, and technology. Most occur at rates that are all but unnoticeable day by day but we old folks can remember where we came from and the collective changes we have experienced.
Humans are much better at making changes than adapting to them. We now face a deficit in those two factors that simply can no longer be denied or ignored.
Nature also has a cure for those species who ignore that deficit for too long.
Extinction, habitat by habitat.
While bloggers continue to try to separate fly poop from pepper, it seems that another “disgruntled” employee at FedEx in Indianapolis has killed at least 8 people and himself with a gun.
I’ll bet the gun was legally purchased – somewhere. So, how much despair does corporate America engender that it creates such desperate, deranged people? It doesn’t seem limited to red or blue. Crazy is everywhere. Police killing unarmed teenagers with a gun. Police mistaking their taser for a gun that kills someone. Lunatics getting their hands on guns in the bluest of places like Boulder, Colorado and spraying bullets everywhere.
WHAT THE F***!!!!! Donut government? We have a much larger social problem than clutching our pearls or wringing our hands about the environment. At the way we’re going, there won’t be any consumers left because they’ll be too scared to go into stores or have their packages delivered by FedEx.
Wayne LaPierre and his gun lobbyist ilk should be identified in their complicit ness for the horror that is being visited on our people by our people. Of course, the testosterone-laced assholes will just go buy another assault rifle and enough ammunition to fill their trucks. We are clearly rotting from the inside out and guns are the tools for that internal erosion.
“It’s a very encouraging effort to marry economic growth with social equity and environmental responsibility.” A marvelous idea!
Todd, “these leaders” are considering nothing but what they think is in their personal “self interest,” and in the short run, I’m afraid.
I have a friend in Canada, and an ex-pat Dutchman find, now in Oz. I’m going to forward this to each of them.
In my opinion, as long as the word “equity,” which is an overarching goal, for me, is in the description of this novel concept, one can expect the GOP to fight it off, tooth and nail.
You’ll pardon my cynicism but I doubt that such as the donut will take hold where it needs to take hold. Business schools named after bequesting capitalists aren’t going to teach the donut since the purpose of business is to make money and professors and dreamers don’t have analysts’ reports to face every quarter. You won’t hear the words I just used from the Chamber of Commerce; they’ll dress it up with a bit of Americana and pioneer exceptionalism, but the stark lesson is the same, i. e., don’t mess with a system that is making us rich and keeping us in charge, you dirty commies. . .
In isolated context the donut economy sounds great, like who can argue with survival of the human race? Unfortunately, the answer is > terminal capitalists and some politicians who eschew survival itself – see the premature openings of business places while the virus and its variants are wreaking havoc on humanity and acts and failures to act by the governors of Texas, South Dakota et al., and all while such as Trump and his acolytes who have labeled masks as unnecessary and/or some Deep State plot to steal the freedom of ordinary Americans.
After such negative cant as the foregoing, let me be clear: I am for donut hole economics.
The UN’s Earth Charter is a clear and succinct statement of the values that you are discussing. Cf: http://www.EarthCharterIndiana.org .
My condolences and tears for any and all who might have lost someone they know, in today’s latest American craziness.