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Herman Daly's World Bank story

I listen to a podcast called The Great Simplification. It is one of the most profoundly enlightening sources of information and ideas I’ve ever experienced, and I highly recommend it to anyone who might somehow be reading this post.

The show is consistently great, but one of several episodes that really stands out for me is the episode with ecological economist Herman Daly (RIP). In fact, if I had to recommend just one episode of the show to people, it would probably be this one.

My favorite part of this conversation is Herman’s story of how he tried to fix a diagram in a 1992 World Bank publication on sustainable development. The full transcript of the show is available, but I’ve reproduced the relevant story here (without permission) with only minor reformatting:

Nate Hagens (00:55:04):
So does everyone Herman. Any interesting stories about your experience at the World Bank?
Herman Daly (00:55:12):
Well, yeah. There are a number. But a story that I think is very instructive in the World Bank... As you probably know, the World Bank comes out with a World Development Report every year or sometimes two years.
Back in 1992, a couple years after I had just gone to the World Bank, they were going to do one on sustainable development, which at that time was the big new concept that had just come down from the UN and they had to deal with it. I was not on the team, which was going to write the report, because I was too low in the hierarchy. But because I was environmentalist in the environment department, I was on the review panel to comment on successive drafts of the report.
And I thought that was very important. Here's something really, the World Bank comes out and says... Okay, first draft comes. I eagerly start reading it. In the first chapter, there's a diagram, which is titled The Relation of the Economy to the Environment.
And it consisted of a rectangle labeled economy, and an arrow coming in from the left labeled inputs, and an arrow exiting to the right labeled outputs. Nothing else. That was the relationship of the economy to the environment.
So I said, "Okay." So I wrote a comment. I said, "This is a really good beginning here.  We've got a picture of the economy. It depends on inputs, and it generates these outputs. But the caption says Relation of Economy to the Environment. Where's the environment? These inputs are coming from nowhere. The outputs are going nowhere. So let's draw a big circle around the rectangle and label that environment, and then we'll see that the inputs are coming from the environment. We could talk then about depletion. The outputs are going back to the environment as waste. We can talk about pollution. We can talk about the capacity of the environment to regenerate the waste, so that some might be reusable again. We can talk about the balance between the two, inputs and outputs in terms of the loss of thermodynamics and the size of the subsystem relative to the total system. How big can the subsystem be relative to the total system? We can talk about the entropic nature of this throughput of matter, energy, etc., etc. We can really develop this picture into something important." And so I sent that back in as my comment.
Here comes the second draft of the thing. I look at the diagram again. There's the same diagram, but this time with a great big rectangle drawn around the original rectangle as basically a picture frame. You just took the same picture and put it in a frame. No labeling, no change in the text, no discussion of anything.
So I said, "Well okay." I said, "This is really the same thing." I repeated the things I'd said before, tried to be more diplomatic, sent it back in. Here comes the third draft.
The third draft, I look. No more diagram. Completely abandoned any attempt to draw a diagram of the relation of economy to the environment. Now, that's something, isn't it? That's not hard to do. I mean, this is kindergarten. You got a large system, and a smaller system inside it, and a relation of dependence. Why won't they look at it that way? Why do they not want to do it?
Well, I realized slowly the reason is that picture threatens you with questions to which you cannot give a good answer within the context of the World Bank, because it immediately says if the economy is a subsystem of a larger system, the larger system is finite, non-growing, and materially closed. How big can the subsystem be relative to the total system, before it disrupts it? Limits to growth. Holy cow. We can't talk about that.
Entropic relation to pollution, laws of thermodynamics. Hell, nobody understands that.  Nobody's going to listen to that. We don't understand it either. It's going to limit growth, we understand that much. And we can't do that, because the World Bank is in the business of growth. So better to abandon it.

Isn’t it simply AMAZING? This was 1992, and World Bank economists were still thinking in such simplistic terms?!?!

I wonder if any copies of those drafts containing the actual flawed diagrams survived. I would love to see them. Based on Daly’s descriptions, I imagine they would’ve looked something like this:

First Draft The Relation of the Economy to the Environment, first draft

(Notice how the outputs arrow is bigger than the inputs because GROWTH, you dummy.)

Second Draft The Relation of the Economy to the Environment, second draft (FIXED TO INCLUDE THE ENVIRONMENT, PER FEEDBACK FROM HERMAN DALY, LOL)

I feel like these flawed diagrams almost single-handedly sum up our entire current predicaments!

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