Greed is good?

My friend Lisa recently blogged about how living in Cambodia has caused her to reflect again on past university economics lectures. She questions whether the promotion of unrestrained consumerism is sustainable. Here are my evolving ideas:

"Greed is good"is a catchy opener for a macroeconomics lecture. Similarly, my high school economics teacher seemed to hold the faith statement that "there is no power greater than the invisible hand". I'm not really comfortable with either of these but I do believe that global trade is better than protectionist policies and economic isolation. Global trade (dare I use the word globalisation?) is better for the economy and for the environment.

An alternative is needed to counter the doctrine of "greed is good"and the accompanying belief that we should simply let the markets do their thing. One option is to argue the "trade or..." line. This point of view looks for ways to reduce consumption and buy locally produced goods. A second alternative is to adopt a "trade and...." perspective. This is to say that trade and aid and laws, charters & policies are necessary and beneficial for development. Trade needs to be supported and monitored to encourage governments, businesses and citizens to act responsibly.

It is important to try to understand the ecological stress put on the planet because of trade. Yet even the poorest countries, who contribute very little in terms of global commodities, are capable of causing immense damage to the environment. North Koreans strip their forests bare for fuel because they are desperately poor and cut off from the rest of the world. Subsistence farmers across the world use chemical fertilisers that damage their health as well as the soil. Why? Because they either don't know the dangers or they don't have a choice. Old, poorly maintained vehicles chomp petrol and pollute the air as they crawl along congested roads in Asian and African cities. Slum-dwellers in Nairobi, Kenya do not even have enough proper toilets (about one per 1300 people). Residents therefore use 'flying toilets,' which means they defecate in a plastic bag and then fling it into the street. [Katey- I did read your thesis!] Clearly this is an environmental problem as well as a health & social hazard.

Rich and poor countries need to cooperate in order to find solutions to these problems. Environmental challenges such as global warming are critical issues for our generation. A "trade and..." approach will help the poorest countries to grow and the rest of the world to develop more sustainable patterns of living. For example, green technologies may be traded so that continuous innovation is encouraged. Business leaders can network in order to discover creative ways of becoming more socially responsible. Government leaders need to set clear targets for reducing greenhouse-gas emissions and encourage investments in alternative energy. Australia and the US should ratify the Kyoto protocol.

In terms of economics I'm for a "trade and..."model for growth. I also believe in a power greater than Adam Smith's "invisible hand". This means that I seek to be empowered to make these issues personal through things such as periodically checking consumption patterns, sharing resources with the poor, living more simply in order to be free from greed, engaging in advocacy as well as enjoying amazing produce from local and international markets. Lisa- I agree that it is time to move beyond silly "greed is good" macroeconomics 101.