What is LtEconomy

What Is LT-Economy

“Economy plays a key role in ruling
the human behavior; a myopia economy
could generate a self-destruction process”

“The human kind has reached a phase of the history in which it has to define its relationship with the development in order to answer to this question: is it better to manage the development in order to get the eternity or being destroyed by it?”. Economy plays a crucial role in this struggle against the development degeneration. If the technology development is led exclusively by the economic interest, the challenge will be lost; the path of the humanity toward the future is bound to fail.

The only way to avoid the self-destruction is to manage the process that leads the technology development and its exploitation. For this purpose, the economy content needs a change: it must serve the humanity in the long term. Classically the object of economy consists in using the available sources in order to produce a good/service following the principles of maximum efficiency (minimizing costs) and effectiveness (maximizing the output).

This content is right in the perspective of one person utility (everyone wants to obtain the maximum output using the minimum amount of energy): but it doesn’t work as a guiding point for the future generation wellness. It is important to explain why we have to substitute the classical content of a myopia economy (I live and the future doesn’t matter) with a new long term approach (I live for my children future).

It makes no sense to live well now without ensuring the existence of the humanity and of other earth species in the future. One person, after his birth, lives and dies: our life has a limited time. Our eternity is the life we are able to ensure to the generations that will follow us. Without this ability we are “nothing”.

But what are the mistakes that our lifestyle is committing toward the future. Think of pollution, excessive exploitation of lands, continuing generation of waste and, moreover, think of the social inequalities inside and outside the countries risking to spark off riots and wars that threaten our future.

In conclusion, at this point of the history, we need a careful consideration in order to change the direction of our path toward the Long term economy: “we are allowed to live well now, but only if we are able to ensure the existence of the humanity, other species and more generally of the world in the long period”. See in your children’s eyes and there you will find the Long term economy.

Definition

The Long term economy is an economy in the service of the protection and development of the world. It supports behaviors that ensure a better future to the following generations.
It is based on 4 principles:

1) The Basic principle;
2) The Earth protection principle;
3) the Good parent principle;
4) The Technology and universe integration principle.

The development of technologies and systems useful to the adoption of these principles can also ensure a prosperous economic growth as it produces occupation and wellness. Long Term Economy doesn’t mean a sacrificing life, but “a rational exploitation of the available sources in order to ensure a better life to our children”.

Principle 1°

Basic

“The man is nothing if he is not able to ensure a future to himself”

Principle 2°

Earth protection

“Any action generating damages to the earth must be avoided unless its damaging effects are less then its improving ones"

Principle 3°

The good parent

“The man has to adopt any economic sacrifice generating benefits to our children and future generations"

Principle 4°

Technology and universe integration

“The man has to develop the knowledge and the technology useful to the preservation of the humanity, to defend the earth from outside threatens and to permit  a future colonization of the universe"

Definitions and Mission

Mission

The web-site mission s to sensitize the public opinion and the main International institutions on the important relation that links our lifestyle with the future existence of the human being and of the other living beings. Human intelligence is at the same time a privilege that ensures him with a dominant position and a burden that asks him to find a solution that ensures the eternity to him and to the other species.

For this purpose the web-site will elaborate, with an annual frequency, a series of measures judging each country behavior (and of all the countries, together considered) in compliance with the Long term economy principles. We expect that international institutions will take these measures as guiding lines to incentive such kind of behaviors. Moreover, it would be a good thing if each country will adopt these principles in their constitutions.

Finally, thank to a series of partnerships, the web-site will provide visitors with information developed by specialized organizations and coherent with each topic related to the Long term economy.

 

From the GDP Per Capita to New Measures

Now-days a country performance is measured by the per capita Gross Domestic Product growth. But what are the points in favour and not of this measure? First of all, let us to give the definition of GDP: the total value of goods and services produced inside one country; the GDP per capita divides this value for the number of people living in this country.

Now, in order to examine it, we will proceed trough Hypothesis:

  • Hypothesis a):

the world consists of one only country and the civilization is at the beginning. The GDP per capita is very low. In this case it would be a good thing an increase in the GDP per capita: people could consume a major quantity and variety of goods and services; under the condition that the GDP is equally distributed among the population, the average wellness will rise. But, with the increase of the GDP per capita, its marginal utility will decrease (a basic rule of Microeconomics – when the goods are few one more good is very useful, but when the goods are many, one more good is less useful -). We have found two points that undermine the GDP per capita as a wellness measure:

-    It is not sure that the GDP is equally distributed;;
-    Its marginal utility decrease at a certain point.

  • Hypothesis b):

the world consists of more than one countries. The GDP per capita represents also the average money (richness) possessed by one citizen to buy goods coming from another country. In this case the GDP per capita growth plays a role in defining the power balance in the world: people with a higher per capita income (the US citizens for example), going in a country characterized by a lower level of per capita income will be, richer than local people. So the conclusion for this hypothesis are:

-   the GDP per capita growth is fundamental in order to ensure one country with a leading position in the world power balance;;
-   the run to the GDP per capita growth could generate strong differences in the distribution of the richness throughout the world; it could be dangerous if these differences were beyond a certain level as they could destabilize the world equilibrium;
-   the run to the GDP per capita growth can cause an excessive exploitation of the earth sources (with negative consequences on the environment) and can be a threaten to the human right preservation;
-   it would be better if there was a process of convergence between the GDP per capita of the various countries; under this condition, also the problem of massive migration could be avoided.

  • Hypothesis c):

    countries have the possibility to borrow money from their citizens or from other countries. In this situation, the country, in order to respect the repayment of its debt, need to emit a new debt. But if its debt is excessive compared with its gross domestic product, the country will have difficulties in finding new creditors. It could raise a negative process (circle) that probably will end in the default of the country (the country is not able to give back the money received as land). The only way to reduce its debt is to increase the GDP and generate a surplus between public incomes and expenditures. Many of the advanced countries, with their exaggerated debts, live in a chronic condition to search constantly an increase of the GDP in order to avoid their default. They live in a chronic addiction to the search of the GDP growth.

As countries haven’t reached yet an agreement toward the GDP per capita convergence, it remains an important means of comparison between the countries. Nevertheless, it isn’t sure that the GDP is equally distributed between citizens; moreover a persistent search of the GDP growth could generate damages for the future generations especially in term of sources exploitation.

Summarizing, we need other variables that join the GDP per capita in measuring the ability of a country in serving the development of the world in a long term perspective. Taking into account the principles of the Long term economy, we give a series of measures that pursue this goal. These measures are described inside the description of each principle.

Other efforts have been made in finding a measure that join the GDP per capita in measuring the wellness of a country (see the Commission on the Measurement of Economic Performance and Social Progress headed by Joseph Stiglitz); What distinguishes the variable used in this context and the others, is that the other cases measure the contemporary wellness while the long term indicators want to develop a series of measures that check and push the countries behaviors toward the future generations wellness.

 

The Principles

These are the 4 Long Term Economy principles:

1) Principle 1 – Basic : “The man is nothing if he is not able to ensure a future to himself”

2) Principle 2 – Earth protection: “Any action generating damages to the earth must be avoided unless its damaging effects are less then its improving ones”

3) Principle 3 – The good parent: “The man has to adopt any economic sacrifice generating benefits to our children and future generations”

4) Principle 4 – Technology and universe integration: “The man has to develop the knowledge and the technology useful to the preservation of the humanity, to defend the earth from outside threatens and to permit  a future colonization of the universe”

The development and the practice of these 4 principles will be able to donate the “Eternity” to the humanity.

 

The Indexes

For each analyzed country we will give a measure of his compliance with each of the Long term economy principle (exclusively for the principle 2, 3 and 4).

The average of these 3 indexes will give the index measuring each country alignment with the Long term economy.

The Opposition to pollution index (Principle 2) takes into account 3 variables, each of them standardized from 0 (worst value) to 1 (best value): 
1) Co2 per capita emissions;
2) Energy per capita use;
3) Combustible renewable and waste as percentage of total energy use.

The Principle 3 index (or The good parent index) takes into account 3 variables. 1) the Gross government debt (GGD) (% of the Gross domestic product); 2) the Economic freedom index (EFI) (by the Heritage Foundation); 3) the Corruption perception index (CPI) (by Transparency International). Each variable is standardized from 0 (the worst value) and 1 (the best value); the 2011 Principle 3 indicator is the average of these standardized variables taken with the latest available data.

 

The 42 Countries Analised

As data are not available for each country of the world, we have decided to limit are analysis to the 42 countries more developed: OECD countries and the remaining countries that form the industrialized G 20.