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Deep Economy: Balancing Marginal Returns

24 March 2009

Bill McKibban opens his wonderfully readable Deep Economy with an elegant metaphor: More and Better are two birds who for most of human history resided in the same bush. A person could throw the stone of his life’s pursuit at the bush with a good chance of hitting both. However, things have changed. In the first world today, better has moved to a different bush. But many people still have yet to realize that we now have to choose.

At it’s heart, Deep Economy is about a fundemental economic principle: The Law of Diminishing Marginal Returns. DMR an almost universaly applicable phenomenon where each subsequent unit of a good or service obtained is worth less than the previous one. So that first ice cream cone might be delicious, the second unethusiastically good,, and by the fifth you might be downright sick of them.

Bill McKibben is telling us that we’re on our seventh cone of economic growth with sprinkles of environmental degredation. While the first couple provided us great gains of prosperity, utility, and happiness, the recent ones are not making us better off, and possibly even less happy.

Microeconomics tells you that the sensible thing to do is to build until marginal benefit equals marginal cost, but McKibban argues, and I agree, that we are already far past that inflection point.

Instead of ecoonomic growth, which we have too much of already, he proposes that we focus our energies on cultivating communities. Americans have sacrificed community in favor of a materialistc hyper-individualism, which worked until we overdosed. If our economy, our society is more community based we will be happier with a simultaneous lessened desire to consume fewer material resources.

(McKibban provides the caveat that there are still some places where More = Better, mostly in poor developing countries, where close-knit families and communties exist (and in some clases, might be all they have) but their lack of material prosperity provides a very low quality of life.)

Most of the book deals with providing examples of successful local community initatives: Urban market gardens in Cuba, Local radio in Vermont, Bus Rapid Transit in Brazil, “community intersections” in Portland, small-farmer rabbit co-ops in China, CSAs in Massachusettes and the possibility of localizing the food supply. He wants to reinforced that a “deep economy” is not only a theoretically possibility, but a budding reality.

Considerations McKibban does not touch on are how to speed change from a “more”-focused society to a “better”-focused one (besides, of course, everyone buying his book and becoming enlightened…) and what kind of econometric model would be necessary to consider all manners of costs and utilities. Of course, the latter is outside the lay scope of his book, but possibly necessary if Sustainable Economics is to be considered a sersious discipline within in the field.

McKibban does not advocate a radical shift to frugality and communes nor roamnticizes peasent living. Instead, he is a champion of balance, something much of our society sorely lacks.

Bill McKibban is a sustainable economist.

Love,
Herbert.

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