Tuesday, November 10, 2009

Why do we need sustainable capitalism?

"The Gross National Product measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to country. It measures everything, in short, except that which makes life worthwhile." [Robert F. Kennedy]

The Keynesian system of "national accounts," which still serves as the backbone for determining today's gross domestic product, is incomplete in its assessment of value.... dangerously imprecise in its ability to account for natural and human resources.

We are too focused on the short term: quarterly earnings, instant opinion polls, rampant consumerism and living beyond our means. Short-termism results in poor investment and asset allocation decisions, with disastrous effects on our economy.

At this moment, we are faced with the convergence of three interrelated crises: economic recession, energy insecurity and the overarching climate crisis.

By challenging America to generate 100% carbon-free electricity within 10 years -- with the building of a 21st century Unified National Smart Grid, and the electrification of our automobile fleet -- we can encourage investment in our economy, secure domestic energy supplies, and create millions of jobs across the country.

We also need to internalize externalities -- starting with a price on carbon. The longer we delay the internalization of this obviously material cost, the greater risk the economy faces from investing in high carbon content, "sub-prime" assets.

Sustainability and long-term value creation are closely linked. Business and markets cannot operate in isolation from society or the environment. We need a more long-term and responsible form of capitalism. We must develop sustainable capitalism.

We Need Sustainable Capitalism

No comments:

Post a Comment