Herman E. Daly: Steady-State Economics

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PLOWBOY: What is the third stage of your system to establish a steady-state economy?

DALY: The third step would be to put a direct limit on our resource throughput. We would recognize our biophysical constraints—our planetary "budget"—and institutionalize the limits established by that world budget by setting up a financial counterpart to it. I suggest we do so by placing depletion quotas on basic resources. The government would auction rights for the aggregate amount of each material that could be taken from the environment In any one year.

Once again, this program keeps macro control but allows for micro variability and freedom. The government wouldn't own—or even set the sale price for— the mineral, fuel, or whatever. It would simply own, and profit from, the auction rights. Once a person bid for and bought a quota permit, he or she would then deal only with the mining or lumber company that he or she hired to harvest the raw materials. The quota right would simply be a ticket to enter the resource marketplace.

Such a policy would do several things: First, it would put a definite limit on energy and matter throughput. And, because the waste produced at the back of the system is determined by the raw materials going in the front, quotas would also lower aggregate pollution. Obviously, they'd raise a lot of money for the government, too . . . money for funding the minimum income plan or lowering payroll taxes.

In addition, the quota program would effectively raise the price of resources. Manufacturers would have to pay for the quota right as well as for the basic material and, naturally, they'd pass the cost increases on to their customers. It is to be hoped, of course, that the higher prices would force us to be more efficient in our use of resources.

This is the part of the quota plan that causes the environmental movement to clash with the consumer movement. You see, most consumer leaders want to lower all prices, but that's definitely unwise. If you have lower prices for both abundant and scarce resources, you're just going to use them all more lavishly. Higher prices on scarcer raw materials, on the other hand, would serve to discipline us to be more efficient in the use of those resources . . . and force our technology to economize on expensive materials by using them less or recycling them more.

PLOWBOY: What about the poor? Higher prices will hurt them most.

DALY: Once again the problem is not with the prices but with the fact that people are poor. Don't try to help impoverished people by lowering resource prices. That would actually subsidize the rich—who are the greatest consumers—more than the poor! The way to help the destitute is through a minimum income plan. Give them money, but require them—and the rich as well—to make their spending choices in such a way as to minimize the inefficient use of basic resources.

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