1. CDAE 237: Economics of Sustainability Course Introduction Joshua Farley Assoc. Prof, CDAE 205 B Morrill Hall

2. Quotable Quotes from famous economists “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

3. Quotable Quotes from famous economists “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

4. Quotable Quotes from Nobel Laureates "... 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

5. One more Nobel Laureate, 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

6. Course Overview

7. Content 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?

8. Content Transdisciplinary Economic system is part, not whole Core issues: –Ecological sustainability –Just distribution –Efficient allocation

9. Course 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

10. Course 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.

11. Course 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?

12. Course 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.

13. Course 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

14. Teaching 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.

15. Course 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

16. Instructional 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

17. Teaching Philosophy

18. Administrative Stuff

19. Course 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

20. Course Texts Ecological Economics: Principles and Applications, 2 nd 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.

21. Contact Info Instructor: Joshua Farley 205 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

22. Course Requirements Attending lecture is necessary –Participation = 25% of grade –I will occasionally take attendance Readings must be done carefully.

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

24. Assignments 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

25. Class policies This is an upper level course. I expect you to act accordingly.

26. What is Sustainability? Do we 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

27. 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?

28. Is sustainability a sacrifice?

29. News 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