In the November/December World Watch, Alan Durning described six
waves of "extractive" industry that swept through the
Pacific Northwest region of North America over the past two centuries.
The Northwest's history, we noted, has been a microcosm of the
world's. Those industries brought great short-term wealth to the
region's human populations, but the cost of that wealth was a
dangerous drawing-down of the region's natural capital. The fur trade
brought profits to colonial traders and luxury to European aristocrats
but it decimated populations of mammals in the Columbia River basin.
Similar patterns followed with the industries of high-volume salmon
fishing, irrigation-intensive farming, industrial logging,
hydroelectric power, and mining.
Those industries aren't inherently destructive, of course; but
the enormous scale on which they were practiced couldn't be sustained
without courting calamity. When the Chinook Indians extracted small
quantities of fish, furs, or wood for the sustenance of small, stable
communities, natural balances were sustained. But when the human
population surged along with the quantity of resources consumed by
each person, the demand for products grew exponentially and the
natural balances crashed. It is these two forces -- population growth
and consumption -- that are the "horses pulling the Northwest
economy off the track of sustainability," says Durning.
How to rein in these horses? While stabilizing population growth
is essential and has become an overriding concern in most regions,
Durning argues that the goal of cutting excess consumption is equally
essential. In the following sequel to his account of the Six Waves,
Durning offers a strategy for achieving that goal. This strategy
requires two key changes: first, to reform the prices of natural
resources and the products made from them (prices that are now
fundamentally dishonest because they avoid covering many of the real
costs of production); and second, to reform the dominant "world
view" that drives modern economics -- a view that subordinates
the natures and needs of local communities to abstract "national"
and "global" economic demands such as the demand for
incessant economic "growth." The two changes are connected,
of course, since that demand for unfettered growth is one of the
reasons prices have become so dishonest in the first place; it's
easier to show profits when a lot of the true costs are not paid.
In his discussion of prices, Durning begins by relating a
conversation he had with Carolyn Alkire, a resource economist for the
Wilderness Society, who came to the Yakima Basin of the Cascade
Mountains to assess the condition of one of the region's chief natural
assets -- its salmon.
The Editors
by Alan Thein Durning
Prices That Don't Lie
Wild salmon are natural capital," says Carolyn, sitting on
a rock beside Lake Keechelus.
"They're just like financial capital or physical capital.
The fish that aren't harvested or killed go off and reproduce and
produce new wild salmon in the same way that if you have stocks, you
get dividends. In the case of wild salmon, however, we have dipped
into our capital; we have harvested and killed many more fish than we
should have to maintain a constant stock."
"A wild chinook salmon in the Columbia basin is natural capital
worth $2,148. A wild coho is worth $488. But on the market, they go
for $49 and $10 respectively."
"As natural capital, you are looking at each fish as what
the potential earning value is," she explains: how much income a
fish's offspring would provide over the next century if people allowed
the fish to spawn rather than killing it with cattle grazing, clear
cuts, fishing nets, hydroelectric dams, irrigation diversions, and
water pollution. Her assessment is conservative, Carolyn notes,
because it ignores non-monetary values.
The value of chinook is so high because many Columbia basin
chinook populations are endangered. They should not be killed or
caught at all. Yet nobody behaves as if each of the Columbia basin's
remaining wild chinook salmon were a share of stock worth $2,148. The
money economy, and government cost-benefit analyses, have long treated
salmon as cheap, abundant, and indestructible. This largely explains
their near eradication in the Yakima and in many of other rivers.
Similar discrepancies between cost and price are woven through the
fabric of the Northwest economy. Prices -- the money economy's main
tool for conveying information -- do not tell the truth. They
therefore fail to do their job of regulating consumption so as to
maximize good and minimize bad. Prices are blind to most ecological
and many social costs.
In commodity after commodity critical to the long-term viability
of life in the Northwest, market prices are a fraction of true costs.
The gasoline burned by the automobile that brought Carolyn over the
Cascades from the airport in Seattle was priced at $1.29 a gallon. The
full cost of that gallon of gasoline, including such side effects as
air pollution damage to human lungs and farm crops, was perhaps $6.
The price of using the highway to get here, paid through fuel taxes,
was less than one cent a mile, but the cost of using the highway -- if
you add in tax subsidies from nondrivers and damage to air, water, and
wildlife habitat -- was closer to a dime a mile. The map that guided
Carolyn to the lake sold for $2.50, but its cost -- counting the
pollution released in making and transporting its paper and ink -- may
have been three times that.
The list goes on and on. The clothes Carolyn wears, the water that
runs past her feet and into irrigation canals or hydroelectric
turbines, the airplane ticket she bought to get here, and just about
everything else that uses natural resources intensively is also
underpriced.
Meanwhile, things that use labor intensively, including health care
and most other services, are overpriced. So too are things where the
peculiar nature of the market results in hoarding, speculation,
artificial scarcity, and underinvestment.
If the Northwest economy is to endure, Northwesterners will have
have to make prices tell the truth. While laws, regulations, and
individual efforts to live ethically are crucial in moving toward
sustain ability, only prices are powerful enough to fundamentally
redirect consumption and production patterns. Look at the record.
Study the trends for energy consumption in the Northwest -- the best
single indicator of the environmental responsibility of the region's
economy. Over the decades, the lines have soared upwards in great,
uninterrupted sweeps, rising even through most recessions.
On the graphs of energy consumption, there is no evidence of the
great events of environmental consciousness raising. There is no sign
of the publication in 1962 of Rachel Carson's Silent Spring, regarded
by many as the birth announcement of the modern environmental
movement. There is no sign of Earth Day 1970, when environmental
awareness burst onto the public scene. There is no sign of milestone
environmental regulations passing legislative bodies. There is no sign
of Earth Day 1990, history's largest teach-in. The lines for
production and consumption of energy just keep rising. Environmental
education, moral exhortation, and government regulation do not visibly
alter the curve.
Where there are significant decreases, they are the consequences
of rising energy prices. For petroleum, the line dips twice: once
after the Arab oil embargo jacked up prices in 1973 and again after
the Iranian revolution did so in 1979. For electricity: the line goes
flat after the region's disastrous venture into nuclear power elevated
most Northwest electric rates in the early 1980s.
Each of these price increases caused inflation and contributed to
recessions. They did so, however, because they were sudden,
unanticipated, and siphoned money from the Pacific Northwest to oil
exporters and utility bond holders in faraway places. If prices of
energy -- and of labor, salmon, water, housing, parking spaces, and
everything else -- were gradually and predictably aligned, upwards or
downwards to match true costs, and if the money stayed at home, the
economy would benefit enormously. Jobs would proliferate even as the
environment improved.
This contention may seem exaggerated. Most people believe that they
must choose between a vibrant economy and a healthy environment. But
listen to thinkers such as Carolyn Alkire. Their message is so simple
and so revolutionary: To thrive -- even just to survive -- the
Northwest must teach prices to tell the ecological truth.
You cannot wave a wand and change the prices of hundreds of
goods and services. But there is a way to do it: by partially
replacing existing taxes with taxes on the pollution, depletion, and
disruption of nature. Prices, realigned through a shift of taxes, are
the reins for consumption.
How would a tax shift work? It would revise the existing tax
structure from top to bottom, because that structure has no reason to
it. It has an explanation: it is an accident of history, or a history
of accidents. It was cobbled together by a century and a half of
political compromises, half-baked theories, and special pleading. But
it has no reason, no consistent rationale, no underlying principle or
unifying form. The local, state, and national taxes affecting the
region exist solely to draw money for governments. Their succeed at
that: they claimed about thirty percent of the region's gross domestic
product in 1994, a total of $89 billion in government revenues that
was spent in pursuit of various public goals.
Yet the taxes' side effects work at cross purposes with those
public aims. Taxes in the Northwest penalize work, enterprise, and
investment, aggravate inequality, and accelerate environmental
decline. They give the wrong incentives to almost everyone. They are,
to borrow a phrase from energy analyst Amory Lovins, "spherically
senseless'' -- no matter how you look at them, they are nonsense.
By custom, economists speak of land, labor, and capital as the
three "factors of production." Whatever a business wants to
sell, it needs some combination of land, labor, and capital. In this
abstract bur useful framework, labor refers to people. Capital refers
to physical objects created by people, such as buildings, tools, and
machinery. And land refers, somewhat opaquely to all the gifts of
nature -- everything that is not created by people. Land includes not
only tracts of earth and natural resource commodities but also basic
ecosystem functions, such as the cycles of water, nutrients, and
energy. These goods are provided by nonhuman forces, free of charge.
The mispricing and consequent misuse of these gifts constitutes much
environmental harm.
Taxes on the gifts of nature raise the price of using them,
which tells people to conserve these gifts. Taxes on labor and capital
tell businesses and households to scrimp on workers and tools -- in
other words, to practice unemployment and underinvestment. A
reasonable tax policy would tax the gifts of nature first and only tax
labor and capital as a last resort.
Yet most existing taxes affecting the Pacific Northwest stand reason
on its head; they fall overwhelmingly on labor and capital. The
Northwest can stand reason on its feet again by shifting the tax
burden. Over the space of one to three decades, Northwest
jurisdictions could eliminate many existing taxes -- most of them
levies on income, sales, and property -- and replace them with taxes
on the gifts of nature.
A tax shift alone will not solve the Northwest's problems. The
region will always need a strong framework of laws and regulations
against crimes, whether social, economic, or environmental. Taxes are
no substitute for prohibition of inadmissible actions. The Northwest
will also need to eliminate counterproductive subsidies, such as
below-cost and below-market sales of public timber, parking space, and
water. It will need to rewrite perverse regulations like those
affecting auto insurance. And it will need to make public investments
in the human services that meet vital social needs and reduce
unintended pregnancy.
Yet a tax shift, more than any other large-scale policy change, would
help align prices with costs, putting the power of the marketplace
behind the reconciliation of people and nature.
After the Deluge:
The Case for a New World View
There is a yawning chasm between what is politically possible
and what is achingly necessary.Ecological pricing, population
stabilization, and other requisites of sustainability are, politically
speaking, preposterous idealism. The short-term prospects of any
government in the region shifting from income, sales, or property
taxes to resource and Iand value taxes are nil. Nor is there hope
swift progress against the anti-ecological subsidies that riddle tax
and spending codes, such as fire-sale prices on publicly owned timber
and grass, deeply discounted hydropower rates for aluminum smelters
and irrigators, and the billion-dollar giveaways under U.S. hardrock
mining law.
This is true because advocates for the long-term future are up
against something devilishly difficult to fight: they are up against a
worldview.
Everyone operates from a worldview. It is a set of simplifying
assumptions, an informal theory, a picture of how the world works.
Worldviews are rarely brought out into the light of day. So people are
not usually aware of them They sit down deep in human consciousness
somewhere, quietly shaping reactions to new ideas and information,
guiding decisions, and ordering expectations for the future.
Worldviews are not necessarily internally consistent. Often, they are
not; in fact, they usually contain parts that are demonstrably false.
Still, their historical and psychological roots are long enough to
prevent easy uprooting.
In the Pacific Northwest, as elsewhere in North America, the
commonly held worldview is an old one from the frontier. It comes from
the rear-view mirror, reflecting times when the world was big and
people were few. Through this lens, the world looks empty and
indestructible. The environment and human community appear subordinate
to the economy, as things worth protecting if you can afford to after
paying the bills. In this worldview, production looks like the
creation of tangible objects that meet basic human needs. Resource
industries -- logging, farming, mining, energy production -- seem to
be the locomotive that drags the entire economy along. This view is
familiar and comforting, and demonstrably false.
The emerging worldview, held as yet by a minority of citizens,
is grounded in the reality of the present: a time when the world is
small and people are many. Through this lens, the world looks full and
fragile. The economy and human community are subsets of the broader
ecosystem. Production is the provision of desired amenities, services,
and qualities, physical and nonphysical, to people enmeshed in
communities. The pursuit of quality of life -- through the application
of human ingenuity -- is the locomotive of the economy. This set of
assumptions is new, unfamiliar, and accurate. Because few people yet
see the world in its terms, the majority of citizens misconstrue their
interests. They do not see their interests as tied up with those of
forested watersheds or as threatened by climate change.
Worldviews are parts of culture and change over time. They are
influenced by what parents teach their children, by what young people
learn in school, by what adults learn from peers, books, and social
insdtutions such as churches. They are also influenced by mass media.
The politics of sustainability, therefore, is about changing not only
laws and habits, but also --even primarily -- worldviews. The
challenge is to change them quickly enough.
Drawing on its tradition of turning outlandish dreams into
practical reality, the Northwiest mall be the place that demonstrates
how to trade the old worldview for the new and, in the process,
exchange sprawl and malls for compact, vibrant cities; clearcuts and
monoculture for enduring farms, forests, and fisheries; throwaways,
overpackaging, and rapid obsolescence for durability, reuse, and
repair; volume for value; and consumerism for community.
The Northwest could model a way of life -- of less stuff and
more time, of fewer toys and more fun. Above all, it could become a
place whose civility, culture, and humanity are as stunning as its
scenery.
The politics of place is a politics of hope. It is sustained by a
faith -- somewhat mystical perhaps -- in place itself. Whether their
are descendants of Asian hunters who crossed the Bering land bridge
during the ice Age or mongrels with New England puritan
Irish-Polish-Jewish blood, all people who put down roots are shaped by
their home ground. Over time, it seeps into them, and they become
natives. In the Northwest this means that they look up at twilight and
draw strength from the mountains. They seek renewal at the rivers and
the shores. They taste communion in the pink flesh of the salmon; The
rains cease to annoy.
Here is the hope: that this generation becomes the next wave of
natives, first in this place on Earth and then in others. That
newfound permanence allows the quiet murmur of localities to become
audible again. And that not long thereafter, perhaps very soon, the
places of this Earth will be healed and whole again.
Alan Thein Durning is a former senior researcher at the
Worldwatch Institute. This article is excerpted from This Place on
Earth: Home and the Practice of Permanence, published by Sasquatch
Books (Seattle). Reprinted from World Watch magazine, January/February
1997, pp.25-31.
