What Greenspan Can't See

A thoughtful and thought provoking essay by Jonathon Rowe On the Commons about the limitations of measuring even just economic value purely through monetary flows.

The era of blaming government could be over. Not only that, the era of portraying environmental concerns as the self-indulgence of tree-hugger elites is over too. If Katrina proved nothing else, it is that this thing called the “environment” isn’t a matter of sentimentality and aesthetics. It is about life support, and economics in the most elemental sense – that is, the mustering of available resources to meet urgent human need.

Alan Greenspan and his fellow divines have been hunched over their calculators trying to work out the consequences of Katrina to what they call “the economy.” Their computations are warped from the git-go, and not a little sick. They fixate on the part of life that is transacted through money. Thus anything that increases the slosh of dollar bills – or of some other currency -- is by definition “good for the economy.”

Where this thinking leads was apparent in a recent article on Forbes.com entitled (I’m not kidding) “Katrina’s Silver Lining.” Here’s the key passage.

“When a hurricane comes, count on large-cap investors to snap up stocks of not only home improvement companies, but also discount retailers (everyone's running for flashlights and other supplies and will be replacing losses from flood damage), home builders (all those houses need to be rebuilt) and oil companies (damage to refineries down in the Gulf sparks supply worries and kicks up prices)...

The worse things are the better they are, so long as someone is making money from the distress. In this way of thinking, obesity, stress, car crashes and divorce also are great for “the economy” because they occasion the expenditure of a great deal of money. Toxics in the air and water are a double gain: once when the corporation makes money by producing them, and then when people have to spend additional amounts on cancer treatments and the like. (By the way, what does it say about Vice President Cheney that Haliburton, his former company, ends up cashing on both the disasters of the Bush years – Katrina and 9/11. Just a coincidence I guess.)

As I said it’s a little sick. And myopic too. Greenspan et al are staring at an economic failure of epic proportions, and they can’t even see it because it’s beyond the focal plane of money. I’m talking about the economy of nature, the natural life support system that is no less important than the monetized economy and – as Katrina has shown – often is much more important.

Katrina was a man-made disaster even more than a natural one. It was not the hurricane alone that caused the devastation in New Orleans. It was the hurricane plus the absence of the wetlands that should have buffered the city from the storm. Every 2.7 miles of wetlands reduces a storm surge by about one foot. Louisiana has been losing wetlands equal to the size of Manhattan every year. You don’t need a slide rule to see where that calculus leads.

It’s not malls and vacation homes that are destroying these wetlands, as in other parts of the country. In Louisiana it’s largely oil. Offshore drilling has required the dredging of large canals, which enable salt water to flow into the marshes and cause land to sink. The other culprit is the extensive system of levees built to protect New Orleans from the Mississippi floods. These floods used to carry sediment into the marshlands which nourished and replenished them.

No floods means no replenishment. What used to be a buffer zone is now just open water, and a clear shot for the hurricane that experts have been warning of for years...

This includes the stupidity in the way the nation measures “growth” -- ie the GDP. How can they say the economy is “growing”, if it is cannibalizing the commons economy upon which our very lives depend? When the oil industry destroys wetlands, shouldn’t that be a subtraction from growth rather than an addition? When it takes billions of dollars to dig out from a man-made disaster – a growth-made disaster – then should those expenditures count towards growth at all?