Miriam Lyons is one of those high-achievers who at first makes you jealous, but then gives you optimism for the future. The world could certainly do with a dozen more Miriam’s! An Australian policy analyst, writer, and commentator, Miriam was the founding Executive Director of the Centre for Policy Development, an independent public interest think tank set up in 2007. She’s a regular guest on ABC’s Q&A show, The Drum, and this September she’ll give a talk at the Opera House in Sydney at the Festival of Dangerous Ideas.
The whole basis of our ‘economic system’ has been about infinite growth, yet so many of the problems that we’re facing in the future are societal – which are considered ‘externalities’ by most economists. Why do you think it’s important to keep framing our social public debates in economic terms?
“A study by Trucost estimated that the world’s top 3,000 public companies caused US$2.15 trillion worth of environmental damage in 2008 alone. Obviously these negative impacts aren’t evenly distributed – they’ll be much higher for a fossil fuel company than, say, an education services company or a solar panel manufacturer. This means that there are lots of firms out there which are net destroyers of value. At the end of a hard day’s work at such a firm, you’ve left the world a worse place than when you walked in the door that morning. That’s not just a waste of precious resources; it’s a waste of human talent and ingenuity. We can do better.
“I certainly don’t think we should only talk about the case for a fairer and more sustainable society in economic terms. There’s no shortage of compelling moral arguments against pollution from coal combustion, for example, which is causing around 800,000 premature deaths a year. There is also no shortage of evidence that, in the long run, what’s bad for people and the planet is also bad for the economy. And when strong social arguments and strong economic arguments line up on the same side, it makes sense to use both.”
You’ve said before that what is good for society is good for the economy as well. Why is this?
“At the most basic level, there’s no point in an economy that doesn’t serve society – the economy exists to meet our needs, not the other way around. But to get more specific about it: we know that lower inequality is better for growth, higher levels of social trust decrease the costs of doing business, a strong welfare state supports entrepreneurial innovation and risk-taking, acting early on climate change is much cheaper than acting later, and so on.”
What can businesses do to help move in a ‘better’ direction?
“There’s no shortage of options, from registering as a B Corp, supporting fair trade, making radical improvements to resource and energy efficiency, shifting to a cradle-to-cradle business model… But there’s one powerful thing businesses can do which is less often considered, and that is political action. Resign from business peak-bodies that are standing in the way of good climate policy or fair tax systems, and instead join more forward-thinking bodies, like the Future Business Council or Sustainable Business Australia. Use your role as an employer or an investor to speak up publicly about the negative consequences of delaying the inevitable shift to an economy that operates within social and environmental limits. We need more businesses in Australia that are willing to play this kind of leadership role, and there’s safety – and power – in numbers. The more that speak out, the stronger their voice.”
What role do individuals have to play, and how can consumers best be fostered to move in a more ethical direction?
“Ethical purchasing is important, but it does have its limits, and we need to be aware of greenwashing and the ‘halo effect’, where we end up overconsuming a product that has plastered its packaging with glowing images of a tiny proportion of fair trade or organic ingredients. Digital campaigning organisations like SumOfUs.org provide a great avenue for pooling the power of individual consumers into something greater.”
You talk about market failures in your recent book – what kind of investments do you think are the most important for long-term market performance that are also ethically responsible?
“In the energy sector the medium-term answers are fairly obvious – get out of fossil fuels and into renewables, including the storage, distribution and transmission technology and services that will go with a more decentralised generation model. With energy going through such a massive and rapid structural transition, betting on the recovery of thermal coal prices is a lot like betting on the future of the horse-drawn cart industry just as the first Fords rolled off the lines. Internationally, the Climate Bonds Initiative has been doing a great job of mobilising debt capital markets to fund the problem-solving businesses of the century, and in Australia the beleaguered Clean Energy Finance Corporation is still managing to make good money.
“One of the key conclusions that we draw in the book I co-authored, Governomics, is that Australia’s history of commodity booms has conditioned many domestic investors to expect unrealistically high returns, leading them to turn up their noses at returns that European investors would jump at. Leaving ethical concerns aside, we may all have to adjust our profit expectations in a world where the full ramifications of the global financial crises are still playing out, where population growth is slowing down, where natural disasters are becoming more costly, where the risks of further credit-fuelled bubbles are apparent, and so on.
“In the long run, I believe that the true safe-haven investments are those that genuinely make a contribution to solving humanity’s most pressing problems. Goods and services that will help us live well within environmental limits: feeding, clothing, housing, transporting, educating, entertaining and caring for ourselves and each other on a finite planet. I’ll leave your readers to make their own calls though!”
What is the role that digital innovations can play in better future societies?
“On the software side there’s obviously enormous potential. It’s a sector in which the potential for infinite growth is broadly compatible with the laws of physics! Such promise can best be fulfilled with respect for social needs and social limits – particularly around privacy. Human attention is a limited and easily ‘polluted’ resource. Personally I’d be happier investing in tools that help us make the most of our limited time on Earth, rather than, say, the next Angry Birds copycat. More importantly, we need to be aware that the profitability of tools like Facebook and Google is underpinned by their successful attainment of near-monopoly positions. Monopoly power is often abused.
“Also, I’d like to see producer responsibility legislation for consumer electronics that is strong enough to foster the growth of product-as-a-service business models. I’ve also been impressed by the European Union’s move to impose a consumer and environment-friendly requirement for a universal charger cable for mobile devices – I’d expect that to spread if it works well. “
Creating equality is one of those over-arching dreams that everyone wants to achieve. So, why do we seem to have so much trouble with it?
“One explanation is that as inequality grows, so does the belief that those at the top deserve their wealth and those at the bottom deserve their poverty. When people in different income brackets live in entirely different suburbs, go to different schools, different hospitals and so on, then they are less likely to understand and support one another. This undermines support for policies that give everyone a more equal chance in life, and further increases inequality. It’s a bit of a vicious circle, most clearly seen in the US. Australia is not quite so far down that path, so hopefully we still have a chance to head in a different direction before it’s too late!”
We recommend checking out the book Governomics: Can We Afford Small Government? by Ian McAuley and Miriam Lyons valued at $32.99 (e-book $14.99). You could win 1 of 5 copies of this book by simply completing this form telling us what kind of growth you think is sustainable.