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  • Why Environmentalists, Saifedean & Austrian Economics Should Work Together

    Posted by Petter Englund on September 16, 2024 at 15:02

    Why Saifedean’s Dismissal of Environmentalism Misses the Point

    I’ve been following Saifedean’s teachings closely, and while I agree with him on many fronts, particularly his criticism of inflation and its distortive effects on the economy, I take issue with his dismissal of environmentalists as alarmists.

    His stance often seems to imply that the environmental movement— as if they were one and the same —uses alarmism to obscure the real problem of inflation, and while I agree that inflation is the root cause of the issue, many of these individuals have diagnosed something real. They may propose flawed solutions, but that doesn’t mean their diagnosis is wrong.

    What surprises me is that someone as intellectually sharp as Saifedean doesn’t better distinguish between the diagnosis of unsustainability and the flawed solutions proposed by environmentalists. Furthermore, he doesn’t clearly enough differentiate between the idea of unsustainable versus sustainable growth.

    The Difference Between Sustainable and Unsustainable Growth

    Unsustainable growth is growth that borrows from the future. It creates the illusion of progress and efficiency by “cheating” the system. For example, imagine growing one tomato into two, not by improving efficiency, but by eroding the soil or overwatering the tomatoes. These practices, while providing short-term gains, deplete the soil, and over time, lead to a future where tomatoes are nutrient-poor, and the land is barren.

    On the other hand, sustainable growth is regenerative and builds a better future. It’s about creating real value without exploiting resources to the point of destruction. In the same example, sustainable growth would mean growing two tomatoes by improving farming methods that enhance the soil rather than deplete it, allowing the land to continue producing well into the future.

    Saifedean is spot on when he says that human time and innovation are boundless resources. But that doesn’t mean all human endeavors are inherently positive. Throughout history, species have faced extinction because they failed to adapt. If we spend our time pursuing unsustainable practices—like deforestation for the sake of overconsumption—we are following a path that isn’t adaptive and will eventually lead to collapse. In this sense, we make the planet’s resources finite because our actions deplete what could otherwise be regenerative.

    Inflation as the Engine of Unsustainable Growth

    The real issue here is inflation. It’s inflation that drives companies to pursue unsustainable growth rates. The relentless pressure to outpace inflation forces businesses into unsustainable practices, not out of greed, but out of necessity. Those who engage in these short-term, unsustainable tactics thrive, while those who invest in the future through sustainable practices struggle because the inflationary system disproportionately punishes long-term thinking.

    In this system, people with fewer moral constraints often rise to power, while those trying to build something sustainable are pushed aside. It’s a system where investing in the future is inherently discouraged, and that’s the true cost of inflation.

    Playing Devil’s Advocate on Oil

    Saifedean is also very vocal about oil, arguing that it’s the most efficient energy source due to its high energy concentration and would be chosen in a free market.

    But what Saifedean rarely acknowledges is the role of the Petrodollar system, reinforced by the U.S. military’s monopolistic power. The global demand for oil is artificially propped up by this system with the aim to stabilise the U.S. dollar. My point here is that in a truly free market, it’s impossible to say what energy solutions would emerge, but it’s not unreasonable to suspect that the demand for oil could also diminish relative to cleaner forms. Like Saifedean points out, value is subjective, so we can’t just look at the energy concentration and ignore all other factors. Right now, the U.S. dollar’s dominance keeps oil in high demand.

    My Stance on this matter is:

    • Yes, the science behind climate change is valid and concerning. Those who argue otherwise are engaging in a straw man argument. The specifics of “when, where, and how severe” can be debated, but the fact that climate change will have negative consequences can not.
    • Yes, it’s linked to unsustainable practices, such as overconsumption, waste, overexploitation.
    • No, the planet’s resources aren’t inherently finite.
    • But, if we continue borrowing from the future by exploiting resources unsustainably, we effectively make those resources finite—in a way. Perhaps more accurately, we make our time on this planet finite, as nature has a way of weeding out those who fail to adapt and live beyond their means (it’s called evolution).
    • Inflation is, indeed, the real problem. Inflation drives unsustainable practices by distorting incentives. Sound money would restore those incentive structures, aligning our economy with nature’s ethics-which favours sustainability over unsustainability.

    Let me clarify that I think Saifedean’s course is one of the best out there. I’m also studying economics at a university level, and much of what’s taught there doesn’t make sense to me compared to what I’ve learned here.

    My overall point is this:

    Sometimes, those you perceive as adversaries are actually on the same page when it comes to the diagnosis of the problem. They just have different, and often flawed, solutions. But that doesn’t mean the diagnosis is wrong. If we remain open, we can help guide others toward more enlightened solutions that align with sound economic principles.

    Petter Englund replied 3 weeks, 1 day ago 1 Member · 0 Replies
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