A fault of flat earth economics as practiced in free enterprise economies is that it chops a nation’s economy into sections that are too often treated as being self-contained and independent of other sections. This is not a useful or realistic view. An economy’s resources, economic activities, and people must be viewed as a whole. This whole must in turn be treated as part of the larger whole, the world economy.
An example will illustrate this point. In the south-west of western Australia a serious pollution problem arose from the processing of crude titanium oxide, rutile, into pure titanium oxide (TiO2) for many important uses. The process used was digestion with sulphuric acid to dissolve everything, followed by precipitation of pure TiO2 and discarding the remaining solution. A heavy load of sulphuric acid contaminated with iron and other substances had to be disposed of each day and this was done by piping it to effluent ponds spread up the Leschenault Peninsula.
The pipes often burst or leaked. Effluent seeped into ground water, attacked the substrata, and got into the sea. Economic shrinkage, as defined in earlier postings, actually occurred on the Leschenault Peninsula due to the destruction of marine and dune life and the degradation of both ocean water and fresher water in underground aquifers. Economic growth is the increase or improvement of resources.
There was a solution. Purified TiO2 could be made available at the same rate with far less effluent and less energy consumption if the chloride process were used instead of the sulphuric acid process. The chloride process entailed the treatment of rutile to extract titanium in the form of titanium tetrachloride. This is liquid at normal temperatures, boils readily, and can easily be separated from the dry residue, harmless dust not hard to dispose of. The TiCl4 is rendered to pure TiO2 and the chlorine is available for recycling to the start of the process.
But the processing company said this was not good for them. It would take time and much money outlay to convert the process, and deprive them of cash flow because production and sales of TiO2 would stop during the conversion period. Also, the rutile would need to be of a higher grade, at least 70 percent, to be suitable for the chlorine process. The company would need a market for their product guaranteed to be much larger than before in order to recoup their investment, make up for lost sales and ensure the company’s survival.
The company’s point of view was that they couldn’t be concerned about the dunes, fuel resources, the plant and animal life of the seas and dunes or the poisoning of ocean and underground water. They were only concerned with the rutile, the TiO2 they produce from it and the maintenance of a cash profit for the company.
(NOTE: This overblown idea of the importance of money is a fault of present economics. A more practical view of money would be as the least important element in the economy, in the sense that money should be treated as subservient to other things for whose benefit money should be manipulated and moved freely about.)
Current economics thinks the company’s point of view quite reasonable and acceptable. The company were not to be blamed for going along with a flawed economic system. The system itself is not to be blamed for being flawed; progress occurs through a series of imperfect stages. But blame would be due to an attitude opposing change and progress towards a better system.
Such progress would be the development and teaching of a holistic view of the economy. The rutile, the fuel, the marine and coastal life and the aquifers would all be part of the resource pool. The TiO2 producing company would be one component of the economy’s throughput mechanism. If there is a method of getting the same amount of pure TiO2 with less negative economic growth, i.e., less resource depletion, then this method must be introduced as soon as practicable. The particular throughput component, the TiO2 company, must be enabled to show favourable cash balances during and after the conversion period by purposeful manipulation of the money in the economy. The over-riding goal must be to minimise the resource throughput entailed in realising goods and services or, to put it in terms already explained, to maximise the ratio of net throughput to gross throughput.
Incoming search terms:
digression in the process of becoming independent;
Posts in this Series
- Review of 1988 edition of Economics for a Round Earth
- Ends and Means
- Evolution Not Revolution
- Notes on Evolution Not Revolution
- Concepts and Terms – What is ‘wealth’?
- The Throughput Chain
- The Derivatives of Wealth
- Global Inequalities in Wealth
- Economic Growth Redefined
- Misconceptions in Practice
- Borrowing to Invest to Get Rich
- Environment versus Economic Progress
- Digression: Pollution Red Herrings
- Digression: Depletion and Inflation
- Value Inflation – the Trigger, not the Bullet
- Living Standard and Quality of Life
- Digression: Resource Consumption, Jobs, and Hands Off
- When the Boom comes
- The Effect of People’s Expectations
- Hard Work – Virtue or Vice?
- Who needs the Snail Darter?
- More Dollars for Conservation?
- Non-renewable Resources – Leave Them in the Ground?
- Digression: Fast Breeder Nuclear Fission Reactors
- Minerals in National Parks – Leave Them in the Ground?
- Population and Wealth
- Left, Right and The Environment
- Digression: “So Long As We Profit, Costs Elsewhere Aren’t Our Problem”?
- Limits to Growth?
- Solar Energy – a Special Case
- The Solar-Powered Car
- Money Supply, Throughput and Inflation
- Real and Money Wages: Living Standards
- Digression: Caution about “Increases” and “Decreases”
- The Idea of Proportionate Flows Applied to Wages: the Great Depression
- Deficit Financing
- The Optimum Proportionate Flow Condition
- Digression: Thrift versus Spendthrift
- Digression: the Private Motor Car – a Basic Necessity?
- The Idea of Proportionate Flows Applied to Wages – the Stagflation of the 1970’s and 80’s
- Excessive Wages Can Cost Jobs
- Fight Unemployment or Inflation First?
- Digression: Work and Jobs
- Other “Job Creation” Schemes
- Visual and Noise Pollution
- Digression: Renewal and Recycling of Resources; Wages and Jobs
- Ratio Distortion and Consumption
- Aggregate Demand – Components and Internal Ratio
- The Slave Economy
- Employment and the Steady State
- Consumer-Led Recovery
- Interest Rates and Ratio Distortion
- Demographic Trends and Living Standards
- Digression: Bad Economics Good for Conservation?
- Coping with Aging Populations
- Stabilising the Human Population
- Costs – What Really Costs Us and What Doesn’t?
- Digression: Other Comments on Statements in UN Report
- Discussion of Costs Resumed
- Budget Balancing Methods – Cost or Gain?
- Digression: Government Expenditure – Government Employees
- Expenditure on Weapons