Consume like it's 1969
Economic production in 1969 was about half of what it is now, so energy use could be halved as well.
By Tim Johnson
Free Press Staff Writer
When leaders of the world's richest nations pledged this month to halve greenhouse gas emissions by 2050, they didn't specify how this would be accomplished.
By one reckoning, however, Americans could roughly halve their emissions, and their energy consumption, much sooner - simply by scaling back their lifestyles. How far back?
If Americans could settle for the same living standard they had in 1969, that might do the trick.
Such was the novel notion that University of Vermont economist Joshua Farley tossed out this spring during a panel discussion on global warming and carbon trading. Americans could substantially cut their energy use, he declared, if they could manage to live at the level that prevailed in 1969.
Asked later for the basis of this assertion, Farley said he was assuming that reduced economic production would lead to a comparable reduction in energy use. Economic production in 1969, as measured by inflation-adjusted per capita income, was about half of what it is now, so he reasoned that energy use could be halved as well.
A seat-of-the-pants calculation, perhaps, but worth chewing on nevertheless: Could we stand living the way we did in 1969 if that meant cutting our carbon footprint by half?
Benchmark year
Ah, 1969 - the Apollo moon walk, "Midnight Cowboy," 35 cents for a gallon of gas, $25,000 for a new home, Vice President Agnew. Nostalgia only goes so far.
As a benchmark year, though, 1969 has some economic significance, Farley contends. It was toward the end of what some economic historians call "the Great Compression," an era of relative middle-class prosperity when income was distributed more equitably than at other times in U.S. history, and with a lower poverty rate. The average 1969 living standard might not be what most Americans aspire to nowadays, but for many, it was adequate in providing basic needs and then some.
Curiously, per capita consumption of energy wasn't much different in 1969 - 324 million Btu per person then compared to 337 million Btu per person in 2007, according to the Energy Information Administration. Meanwhile, energy efficiency has increased markedly - as reflected in household appliances and tighter building standards, for example. Energy consumption per dollar of gross domestic product is about half what it was in 1969, so by that measure, energy efficiency has about doubled.
It follows that if we lived at the same level we did in 1969, but with the benefit of today's more energy-efficient technology, we would be using considerably less energy than we do in maintaining our 2007 living standard.
To put it another way: In 1969, a typical middle-class home could be about 1,500 square feet, inefficiently heated and poorly insulated. Today, a new home can be 3,000 square feet, efficiently heated and well-insulated. Why not scale back to the 1969 dimensions, cutting energy use and the carbon footprint to boot? Or, why not make do with one family car instead of two?
Too much of good thing?
Of course, the notion of scaling back economically runs counter to conventional wisdom, which holds that more is better and that growth is invariably a good thing.
But what if economic growth - as measured in such commonly cited statistics as the gross domestic product - includes the growth in expenditures society makes to deal with crime, pollution, disease? Is that kind of growth a good thing?
Some economists, Farley among them, argue it is not. Over the last 20 years, economists of this persuasion have come up with alternative national accounting methods that factor in such things as volunteer work and parenting (which are left out of the gross domestic product) and factor out the spending on such things as automobile accidents and environmental degradation. One of these measures, developed in a West Coast think tank, is called the genuine progress indicator. That index also puts a premium on economic equity, on the presumption that rising inequality of income hinders the growth in economic welfare.
From 1969 to 2004, the real gross domestic product per capita - one of the conventional measures of economic progress - increased about 97 percent. The real genuine progress indicator per capita, however, increased just 15 percent.
Proponents of the alternative accounting argue that doubling one's income level, using the standard measure, doesn't necessarily improve one's welfare proportionately. In other words, we might not be so much better off than we were in 1969, so maybe the notion of scaling back isn't so outlandish after all.
This idea - that more is not necessarily better - remains a minority view among academic economists, many of whom take a dim view of "subjective measures" of well-being and of the genuine progress indicator, which some critics consider to be ideologically tainted. For example, Rick Vanden Bergh, associate professor in the UVM School of Business Administration, wrote in an e-mail, "the index assumes that any level of unequal income distribution reduces progress," which could imply that progress would be maximized, holding other factors constant, if "100 percent of the people are all dirt poor."
"The overwhelming majority of the economics profession would argue that while there are flaws with real gross domestic product per capita as a measure of well being, it is probably the best indicator out there," wrote Marc Law, an assistant professor of economics at UVM, in an e-mail. "In general, people are better off if the bundle of goods and services they consume is larger." What's more, Law said, the quality improves as quantity increases, citing health care: "Given the option, nobody with half a brain would choose 1969 health care over what is available today."
More or less
Farley and the alternative school, many of whom are inclined to apply the ecological principle of sustainability to the economy, have no quarrel with technological improvements, but they argue that growth, per se, doesn't necessarily lead to a better quality of life. As an example of what he calls "the futility" of making economic growth a policy goal, Farley cites a comparison of U.S. and European health care systems.
"The U.S. health care system falls behind European countries' on almost every indicator, from infant mortality to life expectancy," Farley wrote in an e-mail. "The one place we exceed Europe by a factor of two is on per capita expenditures."
That is, the United States outspends Europe for a worse outcome - yet this health spending helps feed the economic growth that policy-makers regard as a good thing.
Growth means increased consumption, but to what end?
"If increased consumption measures quality of life," Farley said, "then the 30 percent of Americans that are obese must be happy indeed."
Another question on which the ecological economists and the mainstream diverge is whether growth has a ceiling, or limit.
The ecological school says yes: Resources are finite, so growth can't continue for ever.
The mainstream says no: "Technological advance allows us to work with given resources (labor, capital, raw materials) more efficiently," Law said. "As long as we have technological progress, we can have growth in real per capita incomes."
So runs the debate, but if the era of cheap oil is really over, as Farley sees it, the balance might shift.
"Environmentalists used to offer the 'I have a nightmare' vision, to which economists responded with the dream of ever increasing consumption and technological substitutes for nature's services," Farley said. "Now things have flipped. Ecological economists offer the dream of happy, satisfying lives with a fraction of current resource use, and conventional economists will face the nightmare of believing that more growth is necessary, yet we no longer have the cheap energy to fuel endless growth."
Until some technological breakthrough supplants fossil fuels, at least.
Contact Tim Johnson at 660-1808 or tjohnson@bfp.burlingtonfreepress.com