CDAE 237: CDAE 237: Economics of SustainabilityEconomics of Sustainability

Course IntroductionCourse Introduction

Joshua FarleyJoshua Farley

Assoc. Prof, CDAEAssoc. Prof, CDAE

205 B Morrill Hall205 B Morrill Hall

Quotable Quotes from famous Quotable Quotes from famous economistseconomists

• “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” - John Maynard Keynes

• “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” Kenneth Boulding

• “Economics makes a wonderful servant but a terrible master ”-- Joan Robinson

Quotable Quotes from famous Quotable Quotes from famous economistseconomists

• “You must learn economics to keep from being snowed by economists” --Joan Robinson

• "But nobody can become a great economist who is only an economist-- and I am even tempted to add that an economist who is only an economist is likely to become a nuisance if not a positive danger." F.A. Hayek

Quotable Quotes from Nobel Quotable Quotes from Nobel LaureatesLaureates

• ". . . economics has become increasingly an arcane branch of mathematics rather than dealing with real economic problems"Milton Friedman

• “[Economics as taught] in America's graduate schools... bears testimony to a triumph of ideology over science.” Joseph Stiglitz

• “We live in an uncertain and ever-changing world that is continually evolving in new and novel ways. Standard theories are of little help in this context. Attempting to understand economic, political and social change requires a fundamental recasting of the way we think” Douglass North

One more Nobel Laureate, One more Nobel Laureate, plus a valid critique...plus a valid critique...

• “There is no reason we can’t have a perfectly healthy economy with virtually no resources whatsoever” Robert Solow

• “neo-classical economics is a form of brain damage” -- Hazel Henderson

Course OverviewCourse Overview

ContentContent

• We pick up where CDAE 61 leaves off

• 200 level course

• Focus on real life problems and solutions

• The allocation of available resources among alternative desirable ends, primarily at macro level– What’s the difference between micro and

macro economics?

ContentContent

• Transdisciplinary

• Economic system is part, not whole

• Core issues:– Ecological sustainability– Just distribution– Efficient allocation

Course GoalCourse Goal

• Explore the three basic questions that arise from the definition of economics, particularly as they apply to essential resources with no substitutes:– What are the desirable ends towards which society

should allocate its scarce resources?– What are these scarce resources, and what are their

characteristics relevant to allocation?  – Based on the nature of the scarce resources and

human nature and institutions, what allocative mechanisms are best for achieving these desired ends?

• All economics courses should focus on these questions, or they are not courses in economics by definition

Course ObjectivesCourse Objectives• Apply the theories of ecological economics and market failure

to some of the most pressing problems society currently faces: global climate change, peak oil, biodiversity loss, natural resource depletion, the degradation of ecosystem services, poverty, and misery AND DEVELOP SOLUTIONS– The current financial crisis/recession?

• Review empirical studies of human behavior/psychology in order to:– Better assess the desirable ends for economic activity;

– Examine the role of rationality and emotionality in the economic decision process;

– Scientifically test the neoclassical assumptions underlying human behavior to better understand the potential role of competition and cooperation, selfishness and altruism in economic systems.

Course ObjectivesCourse Objectives• Critique conventional theories of macroeconomics from

empirical validity of underlying assumptions to desirability of theoretical outcomes.– Assess the effectiveness of GNP and its alternatives as measures of

economic welfare.

– Analyze the current monetary system, identify its strengths and weaknesses, investigate more sustainable, just and efficient alternatives.

– Analyze the current distribution of wealth and income and its role in quality of life and economic efficiency. Examine mechanisms for creating a more desirable distribution.

– Review monetary and fiscal policy, and apply it to ecological economic goals. How should we use it to address the current financial crisis?

Course ObjectivesCourse Objectives• Critique conventional theories of international economics from

empirical validity of underlying assumptions to desirability of theoretical outcomes.– Critically analyze theories of international trade and build superior

alternatives.

– Critically review theories and outcomes of globalization, and build a theory of internationalization as an alternative.

– Analyze international fiscal crises, including the current one, and discuss potential solutions.

Course ObjectivesCourse Objectives• Evaluate and Design policy tools based on ecological

economic principles– Investigate basic policy principles

– Evaluate existing policies addressing sustainable scale, just distribution, and economic efficiency.

– Design new policies for solving specific scale, distribution, and efficiency problems

Teaching PhilosophyTeaching Philosophy• My goal is not to teach you facts, but to teach you how to

think: analysis, synthesis and communication– If you can’t apply it to something new, you haven’t learned it

• I don't know all the answers, and no professor does (nor does the boss in any job you'll ever have)– In an evolving system, knowledge must also evolve.

Much of what I teach is wrong now, or will be wrong in the future (or irrelevant, I hope!).

• You are not here to absorb and regurgitate, but rather to think, apply and contribute. I expect to learn from you.

Course StructureCourse Structure

• Follows layout of Daly and Farley textbook from Ch. 11 on (for the most part)

• Integration of seminar, discussion and lecture formats– Lectures are meant to stimulate discussion

Instructional ApproachInstructional Approach

• Discussion, original thinking and application more important than memorization– Come to class prepared: review “think about

it” and “big ideas” sections– Keep up with the news and explain how

course material relates to real life• I hope to promote systems thinking:

Synthesis/integration as important as analysis.

• Learning pyramid philosophy

Teaching PhilosophyTeaching Philosophy

Administrative StuffAdministrative Stuff

Course ResourcesCourse Resources

• Blackboard will be used to:– Post the syllabus and important announcements– Post required and recommended readings – Post and receive assignments– Facilitate discussions between students– Communicate with all of you – Receive feedback on the course– Keep track of grades??

• http://bb.uvm.edu/– Log in like you do for e-mail

Course TextsCourse Texts

• Ecological Economics: Principles and Applications, 2nd ed. by Herman Daly and Joshua Farley, Island Press, 2010 ABBREVIATED AS DF IN THE TENTATIVE SCHEDULE– If you have the older version, I can post the chapters

with the biggest changes• Perhaps of interest:

Farley, J., J. Erickson, et al. (2005). Ecological Economics: A Workbook in Problem Based Learning. Washington, DC, Island Press.

Contact InfoContact Info

• Instructor: Joshua Farley205 H Morrill Hall 656-2989

• Use Blackboard for e-mails• Office Hrs.: Morrill Hall, T 2:30-4:30; Th

10-12 or by appointment• TAs: Skyler Perkins and Anders

Christiansen

Course RequirementsCourse Requirements

• Attending lecture is necessary– Participation = 25% of grade– I will occasionally take attendance

• Readings must be done carefully.

GradingGrading• Class Participation: 20%• Big ideas 14%• Macro policy paper: 30% • Editorials: 20%• Group discussions: 12%• Group feedback 04%• TOTAL 100 %

AssignmentsAssignments

• Look at syllabus for week items are due, Assignments for specific day

• It is your responsibility to keep track of deadlines. I will likely forget to announce things in class

Class policiesClass policies

• This is an upper level course. I expect you to act accordingly.

What is Sustainability? Do we What is Sustainability? Do we Want it? Why?Want it? Why?

• Strong sustainability vs. weak sustainability

• Ethical issues:– Do we care about the future?– Technological advance, like human impact on

ecosystems, is inherently unpredictable– Ecological impacts inherently unpredictable,

often irreversible.• Implications of irreversibility

– How can we develop substitutes if we don’t even know what we are losing?

– Dealing with risk and uncertainty

How much do we want it?How much do we want it?• Do we want to curb our consumption so the

future can have more?– What level of reduction is required?– Who should reduce?

• Maximum income?– How much is enough?

• Population control?• Would we sacrifice to provide more for those

who don’t have today?– How much of our GNP currently aids developing

countries?• Is the future more important than the

present?

Is sustainability a sacrifice?Is sustainability a sacrifice?

News StoriesNews Stories

• Climate Panel Cites Near Certainty on Warming

• Papers Find Mixed Impacts on Ocean Species from Rising CO2

• Public Policies, Made to Fit People• We’re All Still Hostages to the Big Banks• At a Fed Conference, Views Differ Sharply

on Stimulus’s Effect• This Age of Bubbles• How to Charge $546 for Six Liters of

Saltwater