Economic Externality Headwinds and the No-Go Zone
Imagine beginning on a journey in unchartered waters with a constant and massive headwind. But that is not the biggest obstacle. The greatest obstacle is that you don’t know you are facing a massive headwind. The headwind is so encompassing, so consistent, never ending, and of course, invisible, that you never know it is there.
Your instrumentation seems like it is working, but there is a “No-Go Zone” that you can never reach.
Headwinds restrict boaters from entering the No-Go Zone, similar to economic externalities limiting progress of sustainability efforts.
In today’s economy, one of the No-Go Zones is society’s sustainability and regenerative goals. And the headwind, is a strong, consistent headwind estimated to be blowing at $50T-$100T a year.
No Hope using Simple Markets
Bluntly speaking, there is no hope of us ever incentivizing, subsidizing, regulating, or pleading with enough people that will get us to the No-Go Zone goals. Mathematically and realistically, we would first have to cover that sum (~$50T-$100T) prior to making progress to the No-Go Zone. Even then, the headwinds would keep blowing.
No entity can get us to the edge of the No-Go Zone. The $9T corporate finance giant, BlackRock, was blown away by the externality headwinds. Governments and NGOs fared no better during the last two decades.
Yes, that is a harsh reality that few to no one has accepted. Until capitulation occurs that the externality headwinds are too much to overcome with simple markets, we will be kept out of the No-Go Zone.
No Apparent End-Arounds
Besides the externality headwinds, BlackRock and others have gotten resistance from legislators and governors who stated ESG goals are not supported in shareholder charters.
And more recently 22 state attorney generals claimed major accounting firms such as PwC, Deloitte, and other members of the Net Zero Financial Service Providers Alliance may have violated antitrust and consumer protection laws in their efforts to coordinate GHG reductions.
Is it time to Capitulate?
Sometimes the only solution left is to admit to the problem. The problem, of course, is an economic system that was “designed” with environmental externalities and a fiat currency whose value is not associated, in any manner, to the production capacity of ecological systems.
This economic-ecological gap is a problem, because the environment is not just another sector of the economy, but the foundation of wealth for the economy.
The economy is subset of the ecology and hence the health and wealth of the economic is rooted in the Earth’s ecology. If the soils are depleted, and the waters don’t flow somewhat clean and regular, groundwater is depleted, and if the oceans lack fish stocks, then the people in the economy suffer and then the economy suffers.
Nature is magical, but it is not magic. And eventually the Fed will be unable to pull another economic solution out of their…hat.
We are Stuck with our Failing Economic System
A definition of a failing economy is one that contains externalities. Check.
And there is no way to fix it. Check.
Not only is it chock full of externalities, it is an archaic system with old institutions that are not in a mood or position to change one iota. The institutions and the peoples in them, whether they are government, NGO, or corporate, are content with the fiat money, top-down governance, and global status.
Much like we need to capitulate that the economic system cannot be fixed, we need to capitulate that we can’t get rid of it sans some cataclysmic event.
Economic Systems as a Service
What we need is an alternative economic system with an associated currency that can internalize the externalities of interest. With a higher level of socio-economic consciousness and emerging technologies, an economic system template can be offered that consists of a canonical or base unit, and Capital, Output, Currency, and Governance domains.
An Economic System Template and its Four Domain
Economic Systems as a Service (ESaaS) contains the modules to design and implement the economic system that is needed.
This generic template was adopted to design EcoCommerce and its associated currency based on the NCU (natural capital unit), the canonical unit of the economic system.
The NCU, with the capacity to account for the entire global stocks of natural capital and the full suite of ecosystem services, is up to the task to internalize the $50T-$100T of ecological externalities.
Into the No-Go Zone
EcoCommerce does not create the headwinds that will keep out the sustainability and regenerative goals. Smooth sailing? Probably not, but it will keep us from sinking.
Who’s On Board?
Tim Gieseke has managed natural and other capitals during his four-decade career. This led him understanding the importance of natural capital too his livelihood, his communities, his nation, and the global society.
As a farmer for some of those four decades he is instilled with the wisdom that viable shortcuts don’t exist. It is all about emergence and the long game.
In 2011, the published EcoCommerce 101: Adding an ecological dimension to the economy that laid out the conundrum and the micro- and macro-EcoCommerce components that were needed to internalize environmental externalities.
In 2016, he introduced the NCU in Shared Governance for Sustainable Working Landscapes to organize the economic values identified in his first book.
His third book, Collaborative Environmental Governance Frameworks: A Practical Guide (2019) introduces a governance assessment and design model to create a framework for asymmetrical, dynamic, and often temporary governance forms needed to address the complexity of any economic system.
He is nearing the completion of a white paper that describes the EcoCommerce business ecosystem necessary to support an EcoCommerce Crypto-Economic System.
A growing group of individuals are supporting this effort in hopes that they can contribute to internalizing the most valuable economic externalities on Earth. If you are interested, please connect.
