Doughnut Economics

I recently read an article in TIME magazine about an interesting new economic theory called Dougnut Economics. The concept was first introduced by the British economist Kate Raworth in a 2012 Oxfam report and then developed more fully in her 2017 book ‘Doughnut Economics: Seven ways to think like a 21st century economist‘.

Raworth proposed the new economic model as a way to address one of humanity’s most challenging problems: how to reduce global poverty without depleting or damaging the planet’s limited natural resources.

The economic theory comes by its name because it is visually represented by two doughnut-shaped discs as shown below. The disc in the center represents a social foundation consisting of the basic fundamental rights all humans ought to have, like access to food & water, housing, education, work, etc. The outer disc represents earth’s ecological ceiling consisting of the environmental thresholds which cannot be exceeded if we want to guarantee the future prosperity of the human species.

The middle green area represents the doughnut, the space where humanity can thrive and progress if the planet’s boundaries are respected. Society’s goal should be to bring all of human life into the “goldilocks zone”; that sweet spot area where everyone has what they need to live a good life, but without overshooting the ecological ceiling limits which would cause further degradation of the environment and jeopardize the health of the Planet.

Capitalism has been the world’s dominant economic system since the 16th century and its adoption by the world’s fastest growing countries has transformed life on earth by helping to lift billions of people from poverty. It is an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

Proponents of the Doughnut economic theory argue that capitalism is an imperfect system because it emerged during a time when humanity saw itself as separated from the web of life, one where ecological issues were ignored or labeled externalities.

The broad measure used as an economic scorecard in capitalist economic systems is the Gross Domestic Product or GDP. It is a measure of the total monetary or market value of all the finished goods and services produced within a country’s borders during a specific time period.

The Doughnut economic theory recognizes that economic prosperity depends not only on growth as measured by GDP but on human and natural well-being as well; and it encourages societies to shift to an economic model that is more regenerative and distributive than today’s capitalistic system.

They argue that continued application of 20th century economic thinking is not sustainable or responsible now that the world is aware that the planet is teetering on the edge of a climate breakdown and we know we will witness the death of the living world unless we transform the way we live.

In a doughnut world, local economies would sometimes be growing and sometimes shrinking. It recognizes that growth is a healthy phase of life but endless uncontrolled growth, like cancer, can be harmful to our overall health. Significant GDP growth may be very much needed in low and middle income countries to ensure that their communities can overcome the shortfalls that create deprivations for their citizens, while richer countries would focus not so much on growth but on maintaining their thriving social foundations but at a reduced ecological cost.

Adopting such an economic theory would help balance the inequities that are present in the world today – one where the high living standards of the people in rich countries have them overshooting the planet’s ecological ceiling, while people in poorer countries fall short of the fundamental human rights that comprise the doughnut’s social foundation.

Many economists are skeptical of the doughnut economic theory because in order for it to work it asks humans to magically become indifferent to wealth and income or how well they are doing compared to others. That is a difficult ask when the world includes 7.3 billion people.

Different class and national interests are always fighting one another and it is naïve to believe that globalized capitalism will suddenly transform itself to become more cooperative and gentle; especially when all indicators point towards citizens today becoming more commercially motivated, self-centered and focused on money and success.

I too am skeptical that something as revolutionary as a Doughnut economics system could be universally adopted given today’s political divisiveness, uncompromising culture wars, and money-fueled corporate lobbying interests. Too many rich and powerful people benefit from the economic status quo – and would use their influence within the halls of power to protect their self-interests.

However, the encouraging thing about doughnut economic programs is that they can be run at a grassroots level. Since its introduction many homes, towns, cities, and states have bypassed their national governments and done what they could to apply the concepts behind doughnut economics from the bottom up – to try and help their local societies become more resilient.

Cities have become the laboratories of doughnut economic programs. The simple way that the doughnut economic model captures both the needs of the people and the needs of the planet makes it a convenient tool for leaders to have big conversations about reimagining and remaking the future. Ideas based on doughnut economics are now being discussed, debated and put into practice in academia, business, and in town, city and national governments worldwide.

Amsterdam, Brussels, Copenhagen, Dunedin, Melbourne, Berlin, Portland and even Austin TX are examples of cities applying the new economic concepts as a way to help their cities attain social and environmental sustainability. Since the theory doesn’t lay out specific policies or goals, stakeholders are free to have constructive conversations to decide what benchmarks would help bring their communities inside the doughnut.

Amsterdam’s lofty ambition is to bring all 872,000 of their residents inside the doughnut, ensuring that everyone has access to a good quality of life, without putting more pressure on the planet than is sustainable. They have implemented a true price initiative which takes into account the carbon footprint of the goods and services they produce as well as the living wage requirements of the workers. To satisfy the dual need for more affordable housing and reduced CO2 emissions, Amsterdam has implemented laws making the use of recycled and natural materials mandatory in the construction sector and they have started transforming neighborhood parking lots into community gardens.

Without a series of universal solutions, which do not exist and will probably never exist, it will be up to the politicians and economists to determine which elements of the donut system can be implemented successfully and to what extent. Amsterdam has made a start by applying this litmus test question to all their municipal project decisions: “Will doing this project actually make our community healthy and happy?”

To all my readers, wherever you may be: I hope you are healthy and happy and living comfortably in the sweet spot of the donut – and I hope that you are thinking about what life decisions you can make today to ensure that future generations will have that same chance to have a bite out of the donut as you.

Guard against the impostures of pretended patriotism

It’s a Presidential election year in America and, as a resident of “The Live Free or Die” state of New Hampshire, I am one of those privileged voters who is sought out and courted every four years by candidates who are hoping to fare well during the first in the nation Primary.

With the Primary now over, I am glad the campaigns and media are moving on to the other States. It feels good to have relief from the constant barrage of text messages, phone calls, television commercials and campaign literature that have been assaulting the State for weeks.

Many people are disillusioned with the political process and have become frustrated by everything they believe is wrong with American politics today, including:

• Special interests spending big money and exerting undue influence on elections and laws
• State legislators that gerrymander voting districts and enact restrictive voting rules to protect career politicians and suppress voter turnout
• A polarized and poisoned political environment that discourages qualified people from running
• A lack of diverse candidates
• Uncontrolled government spending racking up huge budget debts that threaten future prosperity

It is no surprise that 45% of eligible voters choose not to vote during a presidential election. These voters feel disenfranchised and believe that their vote does not matter and will not change anything.

Although politics is depressing most of the time, I still take my right to vote very seriously and believe it is the best way for citizens to elect leaders who will faithfully represent them and move the country in the direction that they want to see it go.

It took some effort for me to seriously weigh the positions and platforms of the dozen or so candidates who were vying to win this year’s presidential nomination contest and to choose the candidate that I felt would be best for the country.

I worked to dive below the surface of the political jingoism, platitudes and slogans that seem to be built into every professional political campaign; reminding myself of the sage advice George Washington shared during his farewell address warning the American public to “Guard against the impostures of pretended patriotism“.

Unfortunately, too many candidates try to deceive voters by pretending to be someone they are not. They resort to demagoguery in an attempt to whip up passions in the electorate by exploiting emotions, prejudice, and ignorance and by shutting down reasoned deliberations.

The two most common expressions you hear spoken by politicians trying to win votes is “American Dream” and “America First“. Both expressions were born nearly a century ago and they instantly became code words embodying opposing views in the fierce political battle to define the soul of the nation.

Sarah Churchwell, a Chicago native and professor of American literature at the University of London, traces the evolution of the two expressions in her book Behold, America; a Smithsonian Magazine Best History Book of 2018.

She writes that the current meanings of these expressions is quite different from those they held originally. American Dream first began as a pledge for democratic and economic equality, representing the noble communal pursuit of justice for all of America’s citizens.

Over time, as anxieties in the country over Communism rose and the ideals of equality came to be considered a threat to unfettered capitalism, American Dream was reclaimed to mean something quite different – the individual desire to ‘make it big’ and the personal drive for success and material wealth. The ideals of justice, liberty and equality gradually morphed into a justification for selfishness and greed.

Woodrow Wilson first spoke in 1916 of putting America First as a way to urge his countrymen to remain neutral in World War I so that the nation would be in a good position to help both sides at the conflict’s end.

The expression was soon taken up by opponents of immigration and advocates of isolationism, who feared that the nation would be contaminated by contact with foreign elements. America First has now been adopted as a hugely influential isolationist slogan and put to sinister use by hate groups including white supremacy and pro-Nazi movements.

‘The American dream is dead,’ said Donald Trump in 2015 when announcing his candidacy for president. He would revive it he promised, “By putting America First“.

Trump, in his pronouncements, was exploiting political terminology that has long appealed to racists and right wing extremists. The subtle, and not so subtle, messages Donald Trump sent to his supporters is that the reason many Americans are not successful and wealthy is because our country lets in too many immigrants and is being treated unfairly by foreign nations who are taking advantage of us .

Gone was any notion of the original meaning behind those expressions, when American Dream referred to economic fairness and justice for all citizens and America First reflected a policy to keep America neutral and a voice of reason in the presence of world conflicts so that we remain a beacon for the rest of the world.

As America struggles again to project a shared vision, to itself and to the world, perhaps the meanings and history of these expressions needs to be understood afresh before the true spirit of America can be reclaimed.

In this time of great political division in our nation, when many ask what America’s future holds, perhaps it is best to remember the words spoken at the 1895 dedication of a monument to President Ulysses S. Grant. The speaker asked his listeners to view the journey America had taken since its beginning to become a flourishing great nation.

Oh, critic and cynic, dreamer and doubter, behold America, as this day she stands before her history and her heroes. See her millions of people, her free institutions, her equal laws, her generous opportunities, her schoolhouses and her churches; you see misfortunes and defects. for not yet is fully realized the American dream; you surely see her mighty progress toward the fulfillment of her philosophy.

Oration in Honor of President Ulysses S. Grant, 1895

The speaker informs us that America is in a constant state of becoming, always moving forward in an attempt to form that more perfect union envisioned by the founders. We will never fully arrive – each successive generation will need to battle for the soul of the country and decide for themselves what it is America stands for.

If you believe that “Political society exists for the sake of noble actions“, as Aristotle did, then it is comforting to have faith that America’s political leaders will eventually act nobly and do the things that will move our country into the future as a stronger moral nation.