How to think about the economy and why it hasn’t happened yet.

2017-07-02

The Green Economics Forum

Meet the doughnut (Figure 1). This framework was created by Kate Raworth at Oxford University. At the centre of the doughnut is the area that shows eleven critical Human Rights, including hunger, illiteracy and poverty. The theory is that these areas of Human Rights must be addressed in a just and equitable way to have a stable society. The doughnut recognises that our ability to achieve a stable society against these Human Rights needs depends on whether we can collectively stay within nine critical planetary boundaries that form the outside of the doughnut. The idea is that if we (everyone on the planet) can use this doughnut to understand trade-offs and make decisions then we can live in the safe and just space for humanity. That is, where we have not compromised the Earths planetary boundaries to address Human Rights and we have not compromised Human Rights to prevent impacting the earths planetary boundaries.

From Raworth, “It [the doughnut] implies no limit on increasing human well-being; indeed, it is within this safe and just space that humanity has the best chance to thrive. Human Rights advocates have long focused on the imperative of ensuring every persons claim to lifes essentials, while ecological economists have highlighted the need to situate the economy within environmental limits. The framework brings the two approaches together in a simple, visual way, creating a closed system that is bounded by Human Rights on the inside and environmental sustainability on the outside.”

Figure 1. The doughnut (from https://www.kateraworth.com/doughnut/)

Figure 1 provides visual summary of where we are at on the journey to a safe and just planet for all.   Right now, there are billions of people in the middle of the doughnut where basic Human Rights have not been met, while four of the planetary boundaries have been passed. To read the doughnut, the red shaded part on the outside indicates where a planetary boundary has surpassed the safe limit and to what extent, while the red shaded part in the middle of doughnut shows how many people (percent) do not live in a just society on all Human Rights, relative to the total population. Where you see two shaded areas for a social foundation (e.g. health) this indicates that two metrics are attached and being measured to understand progress.

The issues for both Human Rights and the planetary boundaries may look overwhelming until you start to look at the numbers. You then realise that we are entirely capable of moving into the safe and just space for humanity, if we just stopped the excessive resource consumption by roughly the wealthiest 10 percent of the worlds population. Statistics, calculated by Oxfam, show that around 50 percent of global carbon emissions are generated by just 11 per cent of people and that 33 percent of the worlds sustainable nitrogen budget is used to produce just meat for people in the European Union (just 7 per cent of the worlds population). These are distribution problems that can and should be fixed without causing harm to anyone and anything on the planet. 

Globally, poverty has been decreasing at an accelerating pace over the past 30 years. Indeed, the share of the global population living in poverty has decreased from more than 50 percent in 1981 to 17 percent in 2011. Though, as research by Naomi Klein points out, while some peoples incomes may have risen from under 1 USD a day, as they moved to urban areas to earn an average of 5 USD a day, they lost access to nutritious food, clean water and often the community support that they previously had living in more rural areas. In addition, in 2016, the eight wealthiest individuals in the world had the same wealth as 3.6 billion of the worlds poorest. One in nine people still go to bed hungry every night and one in 10 people still earns less than 2 USD a day. Globally poverty, even just on financial metrics alone, is therefore still stark, even though it is relatively decreasing.

Despite global trends showing an overall decrease in poverty, two thirds of the planets population live in countries more unequal than they were in 1990. By the late 2000s, income inequality had risen in 17 out of the 22 OECD countries, including by more than 4 percent in Finland, Germany, Israel, New Zealand, Sweden and North America. Indeed, since the 1980s the share of income going to the top 1% has increased in the United States, United Kingdom, Canada, Ireland and Australia (although not in Germany, Japan, France, Sweden, Denmark or the Netherlands).

Global macroeconomic events in 2016 and 2017 have shown the frustration of those who feel left behind by this widening wealth gap. Indeed, the term “reforming market capitalism” was added to the World Economic Forum agenda in 2017 out of an awareness and fear that the widening gap between the very rich and everyone else needs to be addressed in standard “new” economic doctrine. The World Economic Forum in 2017, also (finally) acknowledged that where planetary boundaries are exceeded and operating unjust societies occurs, then economic growth is negatively impacted as a result. So if everyone is now on the same page about the issues and can see straight into the lens of a terrifying future, why are we not changing our behavior and reversing these trends?

To jump to a more micro level, at the heart of decisions are people, who either challenge or uphold the status quo of inequality. This is evidenced by the overconsumption of the few at the expense of the many.

Economic doctrine seems diverge at a very personal belief point. Do you believe the world is made up of winners and losers, or in the other camp, that we could all be winners if we could just distribute wealth fairly in line with the needs of achieving the total doughnut? For Donald Trump and many dictators, you need to be a winner at all costs or you will be a loser. In real world terms, it can convert to: if I dont dig up all the coal and sell it all as quickly as possible while I still can, then some other person or nation is going to do it anyway and then they are the winner and I am going to be the loser. Hence the haste of “enterprise” to rip it all up to make money today, at the expense of someone being able to generate safe and just wealth from tomorrow.

It means that those who do think long-term, in terms of fair distribution and safe planetary boundaries, spend all their energy fighting the urgency and rush of short-term decisions made by those who want to be winners today, instead of having time to focus on creating a just and safe future for all tomorrow. The “distributors” are often in reaction mode, fighting the short-termism and often stupid decisions of those with decision making power instead of formulating a new way of operating, where decisions are being made equitably within the confines of the doughnut. We must collaborate to get to a place where we are all winners. So what is creating this fairly consistent winners and losers mentality in our decision makers?

“Hubris syndrome” may be the answer to why those who are rich and powerful display such a lack of empathy for the needs of the other, resulting in the kind of decision making that impacts Human Rights and exceeds safe planetary boundaries. Defined by Jonathan Davidson and David Owen in Brain in 2009, Hubris Syndrome is a “cluster of features ('symptoms) evoked by a specific trigger (power), and usually remitting when power fades.” It is a disorder that actually occurs through the possession of power, which has been associated with overwhelming success (including inherited “success”) held for a period of years.

From the Brain article, “Hubris syndrome was formulated as a pattern of behaviour in a person who: (i) sees the world as a place for self-glorification through the use of power; (ii) has a tendency to take action primarily to enhance personal image; (iii) shows disproportionate concern for image and presentation; (iv) exhibits messianic zeal and exaltation in speech; (v) conflates self with nation or organization; (vi) uses the royal 'we in conversation; (vii) shows excessive self-confidence; (viii) manifestly has contempt for others; (ix) shows accountability only to a higher court (history or God); (x) displays unshakeable belief that they will be vindicated in that court; (xi) loses contact with reality; (xii) resorts to restlessness, recklessness and impulsive actions; (xiii) allows moral rectitude to obviate consideration of practicality, cost or outcome; and (xiv) displays incompetence with disregard for nuts and bolts of policy making.”

Hubris syndrome, has been described before by different names. Henry Adams described being in power as “a sort of tumor that ends by killing the victims sympathies.” Dacher Keltner, a psychology professor at UC Berkeley, found in studies spanning two decades, that those in power acted as if they had suffered a traumatic brain injury, becoming “more impulsive, less risk-aware and critically, less adept at seeing things from other peoples point of view”. This power created deficit has also been validated through neuroscience where, when powerful and the not-so-powerful people were put under a transcranial-magnetic-stimulation machine, it was found that power impairs the specific neural process of “mirroring” (where one copies another to show awareness of feelings and that psychologists think may be a cornerstone of empathy) (Obhi et al. 2011).

Further, a 2006 study that asked participants to draw the letter E on their forehead for others to view, found that those people primed to feeling powerful were three times more likely to draw the E the right way to themselves, and backwards to everyone else, demonstrating that powerful people by and large find it very difficult to see the world from someone elses point of view.  

This is concerning because staying within a safe and just doughnut space, could be hamstrung by placing decision makers in such positions of power which may engender Hubris Syndrome. Indeed, the very decision making we need from our global leaders and decision makers, is that which is collaborative, evidence based and done from the others (in a truly global sense) point of view with empathy. However, the research shows that those in charge may be neurologically incapable of making decisions that consider the many, as they are blinded by a sense of their own vitality.

The solution to hubris syndrome is to apparently help those in power stop feeling so powerful all the time. We can do this by holding our leaders to account and using our collective weight as the voting population to ask for respect and service, thereby lowering the feeling of omnipotence which can lead to self-centered decision making. Only by helping our decision makers see their true responsibility, engender empathy and connectedness can we create a world where we can successfully make decisions that place us in the safe and just space of the doughnut. We need to do this, otherwise, ultimately those short-term “winners” will make long-term “losers” out of all us (including themselves).

Header photo: Julius Caesar, afflicted with the Hubris Syndrome. Credit:  http://www.tomcollinsscribbler.com/the-hubris-syndrome-and-how-to-avoid-it/