The pictures are everywhere and they are really ugly: the waters of the Gulf of Mexico marred with cocoa-brown blots of oil, seabirds brown-black with oil gunk that will probably kill them. Reportage of the explosion of the Deepwater Horizons offshore drilling rig is full of facts about ecological devastation, mismanagement of the rig, corporate wrong-doing and, rightfully, Barack Obama’s abominable stance on offshore drilling. But could something good come out of this mess? Astonishingly, yes. And I don’t mean Obama becoming an environmentalist – part of the president’s job description is to remain studiously unaware of environmental devastation until the Potomac starts flooding lobbyist’s headquarters on K Street.
No, it’s something else: much like the medical bills associated with treating cigarette-related lung cancer, some of the spill’s clean-up costs will contribute to the world’s Gross Domestic Product (GDP) this year. The presumption is that upticks in GDP signal a growing economy. Perhaps, this should be a selling point for supporters of offshore drilling. Americans are coached to love growth and when politicians start talking about it the reaction is almost Pavlovian. Pleasure floods our brains and we don’t stop to ask: what’s growing, anyway?
Still, the financial crisis should have stoked some suspicion about growth: the growth of the subprime loan market was metastatic and nearly killed the organism it afflicted – the American economy. Problem is, American economic accounting systems are, in principle, incapable of differentiating between healthy growth and unhealthy growth. The definition of GDP includes the yearly market value of “final” goods and services that are bought in a nation, plus all exports, net of imports. Final goods and services exclude “intermediate” goods and services, those that go on to be inputs in further production, but include the costs of cleaning up pollution. Spill carcinogenic chemicals into water supplies and use chemotherapy to kill the resulting bloom of cancers? The cost of the treatment and the cost of the industrial process that made it necessary both count for GDP. GDP is economic accounting for fantasy land.
In the case of the exploded petroleum rig around which the news-cycle rotates, BP estimates that cleanup costs rose as of May 11 to 350 million dollars. The rig that exploded along with its oil-pissing pipeline? Those cost a lot of money: the rig, reportedly another 350 million dollars. The busted, hyper-complex, hydraulic, blow-out preventer that will probably need replacing? That device costs money and now BP will have to head off to the factory and shell out for a new one. The rubber skirts, known as the boom, which should have been ready to corral the spill? They cost money – money to use and more money if they’re kept on stand-by in the case of “accidents,” a euphemism roughly as correct for inevitable industrial disasters as for when dumb bombs go astray near Jalalabad, killing a bunch of children though “accidental” collateral damage. The emergency crews boating in from surrounding areas, balefully late because BP wasn’t prepared when its rig blew up, add to GDP when they work overtime while cleaning up the water and attempting to cleanse the thousands or millions of sea animals coated with the gunk of utterly asinine folly. The tremendous fleet of 275 tugboats, barges, skimmers, and other nautical vessels that are involved in the cleanup effort cost money to operate, too.
Indeed, a few days after the explosion, BP said the effort had cost one million dollars a day. Last week, this sextupled to six million dollars a day. Now, it’s ticked up to ten million dollars a day. Plus drilling relief wells. Plus distributing money to Louisiana, Florida, Alabama and Mississippi, which will have to deal with the sticky residue contaminating their shorelines and fauna. The worst-case cost is 12 billion dollars. That money will come off of BP’s quarterly profit statement, or some of it will. But much of it will be added to America’s and Europe’s GDP, depending on how the costs ultimately break down. The conclusion is clear. GDP is not just economic accounting for fantasy land. It’s economic accounting for the Church of Economic Growth.
On planet Earth, this is a bit of a problem for a number of reasons. GDP conflates both quantitative increase – more widgets – with qualitative increase, higher quality widgets. The former contributes to growth. The latter contributes to development. Furthermore, according to the modern dean of ecological economics, Herman Daly, GDP does not account for the depreciation of human-made capital or what is absurdly called “natural capital.” To get a more accurate tally of how human economic activity affects human development, we must include household labor and volunteering, public expenditures and economic adjustments in the “plus” column, alongside personal consumer expenditure. In the “minus” column, there must be figures for international debt, the loss of human well-being that income inequality causes, pollution by noise or in the air and water and environmental damage: destroyed wetlands and coastal estuaries like those about to be devastated by the oil slick riding the currents toward land on the states bordering the Gulf of Mexico, or long-term atmospheric damage. When all of those measurements are included (among a few others), what we have is not GDP, but the Index of Sustainable Economic Welfare (ISEW).
And when we look at ISEW, things look a little different than the Utopia dreamed up in newspaper editorials and the business pages of our leading journals. The ISEW has barely increased since 1950 and has slightly descended since the mid-1970s, while GDP per capita has shot up, from about 14,000 dollars in 1960 to roughly 40,000 dollars today. The mid- to late-70s – the onset of, first, stagflation, then neoliberalism in the developed world, correlates pretty closely with the stagnant ISEW. That’s not a coincidence. The beginning of neoliberalism was when the business-class war on workers and the ecology began to steadily ramp up. When this new measure is used, not only does money spent remedying colossal debacles like the BP spill not count as part of the net economic tally, it counts against it. This creates an incentive to rejigger production and rebuild infrastructure so as not to cause such accidents in the first place.
Such an incentive leads logically to what Daly calls degrowth for Western industrial countries, concluding in a steady-state economy. Economic shrinkage is classically associated with depression, but that isn’t what Daly or the growing ecological economics movement advocate. Instead, degrowth means stopping economic activity associated with pollution – industrial agriculture, fossil-fuel extraction, chemical production – and building railroads and windmills to power them. That means that instead of a looking-glass world in which we get rich making one another sick with environmental toxins and then cleaning up the mess, in which we nearly kill egrets and dolphins just to rip the oil out of the ground that leads to us pumping CO2 into the atmosphere and then building carbon scrubbers to remove that CO2 from the atmosphere before it bakes the biosphere, we head all of that off at the beginning and shrink GDP, while increasing the quantity of sustainable solar infrastructure and using the sun and human labor to farm: Quantitative shrinkage, qualitative growth.
Avoiding the next Deepwater Horizons accident doesn’t mean putting in place byzantine safeguards that cost billions. It means changing the conditions that compel us to extract fossil fuels from seabeds – or anywhere – in the first place. The mantra is not growth but degrowth – degrowth with development.