Nicholas Ashford '72 on Employment, Environmental and Financial Sustainability

Excerpted from The European Financial Review:

For a long time, the earlier sustainability literature focused almost exclusively on environmental sustainability, which included resource exhaustion, toxic pollution, ecosystem destruction, and global climate disruption. The sources of environmental problems were acknowledged to stem from industrialization and the ever-increasing consumption of materials and energy. Some attention surfaced on environmental justice, reflecting the disparate effects of environmental deterioration on poor people and poor nations. Recently, concerns with environmental sustainability have become dominated by global climate change, almost to the exclusion of other environmental concerns.

While concerns about poverty and earning capacity were raised now and then, it was only after the 2008 financial crisis that employment and the earning capacity of people were catapulted into the center stage of political discourse. Part of this discourse has focused on the relationship between employment and consumption, where the tension between providing jobs and decreasing the environmental footprint of industrialized and industrializing states was acknowledged. This relationship has historically focused on increasing production and consumption with insufficient or little regard to their effects on the environment, and energy and resource limits.

The Perfect Storm: Sustainability at a Crossroads
The crises we encounter today could be described as the ‘perfect storm’ (see the box). Now in the still-unfolding aftermath of the global financial crisis that began in 2008, it is imperative to understand its related structural causes and effects. This will help us discover what solutions might be worth pursuing to deal with this perfect storm of several crises: financial, production and economic, employment, consumption, and environmental.

The financial crisis has left consumers with too little money and/or willingness to spend. In the United States, a loss of some forty percent of family wealth has forced a cut in spending. The experience in Europe has been worse in some countries. The United States is suffering from the greatest income inequality since 1928 with an unprecedented concentration of wealth.¹ Similar disparities are seen in Europe. This results in too few goods and services being produced (an investment and production crisis) and too little being purchased (a consumption crisis).

This in turn causes increasing unemployment and under-employment (an employment crisis). As a result, a vicious circle is created in which there is less money spent in consumption and in investment in subsequent and repeated cycles, further exacerbating the crisis in consumption.

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