Wednesday, February 18, 2009

Economic instability, and car ownership

We're in an economic crisis and the news is full of stories about the need to restart consumer spending. Consumer confidence is a phrase often used and appears to be derived from trends in spending. If spending goes down then presumably individual people are less confident about their future and are saving their money. Some of the news coverage is focusing on the problems with the car industry and especially the bailout plans focused on keeping the U.S. car industry in business. It would seem the old adage about what's good for General Motors is good for America is alive and well, thank you very much. But do we really need all the crap we've been buying? Do we really need to buy new cars? But the problem is if slowing down spending, well, we can see the problem around us, it's impacting the health of the businesses that has sold us all this excess stuff.

The story being presented in the news is that our duty as citizens of this great country is to keep up spending. The same message is given to us every Christmas season when the news is full of stories gauging how good of a Christmas it is, and pondering the economic effect on businesses based on how much we spend buying gifts for each other. The same message was given in September 2001 after the terrorist attacks, remember that Pres. Bush told us all to go out and buy something? Over and over the message given to us in the news is: Consume, spend.

We can see around us the effect of a slowdown in consumer spending. It has resulted in an economic crisis which threatens to be a new Great Depression, as if anything about economic depressions can be great. Supposedly the path to avoiding economic calamity is to buy more stuff, because the stuff we buy has to be made by someone and buying stuff means jobs for the people who make, design, and distribute the stuff we buy. However it is a positive feedback loop. Normally investors give high valuation to companies with high projected revenue growth, meaning that businesses have a strong incentive to be continually growing. That, I believe, is what's behind the "keep buying" message we're being given. Continuing the cycle of buying that keeps businesses growing makes for a game we're all playing where the payoff is in the stock market. Stock prices continually rising because we keep buying more stuff, making for a positive feedback loop of ever-increasing rates of buying stuff to continue the game.

In the same context we have the Obama administration claiming that 'Green Jobs' and growing the 'Green Economy' is going to save our economy. The theory is that we all are living non-Green lifestyles, we all need to adjust how we live to be Green, because there is an ecological calamity facing us. An Inconvenient Truth pointed to that calamity, yes? If we all just used compact fluorescent lights we'll be greener than before and perhaps that will be enough to stave off ecological collapse, and oh by the way it means lots of jobs building the green infrastructure, green businesses, and green goods. However the Obama-Green message doesn't include rethinking whether we need to consume as much as we do.

But, is it Green to keep consuming resources at such a high rate? There's a fairly well known statistic: The US consumes 25% of the world's energy (with a share of global productivity at 22% and a share of the world population at 5%). The U.S. has the 7th highest percapita energy use among countries in the world beaten out by a handful of small countries, most of them oil producers and interestingly one (Iceland) who is also going through a severe economic meltdown.

The U.S. Department of Transportation National Household Travel Survey publishes a number of statistics about travel and vehicle use. Energy Use and Fuel Efficiency has data relevant to resource consumption. Number of Drivers and Miles per Driver shows the number of drivers doubling between 1969 and 2001 and that the number of miles per driver per year increased from about 9,000 (1969) to 14,000 (2001). Meaning that over the years the total number of cars has increased dramatically, and total traffic has increased faster than the increase in number of cars due to a higher rate of miles per driver per year.

This is "consumption" at work. We are all consuming more, we are driving more and probably buying cars at a higher rate than in the past. The ever-increasing number of cars mean:

  • Because our cars primarily burn gasoline (or diesel) every car is a little greenhouse gas bomb spewing poisonous gasses for all those ever-increasing number of miles driven per driver per year.
  • The need for bigger roads, more parking lots, etc.
  • Ever-higher resources (metals etc) put into building those vehicles, especially as modern vehicles tend to be larger than in the 1960's (SUV's)

From a 'Green' perspective those are negative effects that we want to reverse. We want to reverse the environmental poisons emitted by cars, we want more park land, we want to reverse the negative effects that mineral mining has on the earth, etc. One way to reverse those effects is to buy 'green' cars that use less resources to build and drive. But perhaps a better way to reverse those effects is to buy fewer cars per capita. A car that isn't required doesn't cause minerals to be mined and converted into the car, and the car which doesn't exist cannot burn gasoline, and the car which doesn't exist doesn't require roads to drive on nor lots to park in.

A possible lesson to draw from relative per capita resource use around the world is that Americans are wasteful. There are plenty of countries who have good standards of living and use much less per capita resources than we do in America.

It may be more 'Green' to simply buy less stuff, to drive less, to live in a smaller house, to take fewer trips, etc. Less resources consumed per person will result in less ecological effect on the planet resulting in a better overall ecological climate for us to live in.

But as I showed above, decreasing resources consumed per person also will mean less stuff bought per person. That negatively impacts the economic cycle meaning a decrease in business activity. To be 'green' may mean going through an economic depression and downsizing of our entire business climate.

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