Regulating The Economy Is Like Regulating Football

The world today is facing a number of different crises, climate change, pollution, income inequality, social unrest, the list goes on. Sustainability issues are complex and affect people from all walks of life and spill across borders. It's difficult to find someone with depth of knowledge and experience in these issues who can also explain them clearly and succinctly. Janez Potočnik is one such man. Potočnik is from Slovenia in central Europe and is an economist and politician who has worked tirelessly for decades on sustainability issues in Europe. He served as European Commissioner for Environment from 2009 to 2014 and is winner of numerous environmental and sustainability awards including the Champions of the Earth Award from the United Nations Environment Programme in 2013. He has a delightful accent and a calming voice and sounds much like a kindly grandpa Dracula. 

In April 2014, he gave an impressive TEDx talk, New Environmentalism and the Circular Economy. For me, there were two main takeaways from the talk.

The first gets right to the heart of the issues.. Mr. Potočnik quoted a paper published in the journal Nature in July 2012, 

 "Human population growth and per capita consumption rate underlie all of the other present drivers for global change."

We tend to think of things like climate change, pollution, poverty, habitat destruction, resource scarcity, social inequalities, and mass relocations as separate problems with separate solutions, but if we look a little deeper, we can see that they are really different symptoms stemming from the same cause. If we truly want to work toward a sustainable future we must realize all these issues are interelated.

The second was a great metaphor for economic regulation, football( I call soccer). If you went to the best players in the world and asked them if they want 1) better referees and 2) more clearly defined rules of the game, of course they would say yes. If you think back to our prehistory, disputes were solved by cavemen bashing each other's brains in. Not a very good way to solve problems. Later we developed athletic competitions with clearly defined rules which is not only less dangerous, but fun. If you look at any major professional sport, baseball, basketball, volleyball, tennis, etc., the best players are not necessarily just the biggest or strongest or fastest. They are the ones with the best rounded skills that can excel within the rules of the game. More clearly defined rules actually creates better players. If everyone ignores the rules, the game quickly devolves into chaos and as Mr. Potocnik observes, the most successful players are simply the most agressive. We revert back to cavemen.

This is the exact situation we see today in many economies. Decades of deregulation and weak enforcement have led not only to environmental degradation, but financial crises like in 2008. Many critics say increasing regulation will hurt the economy. Nothing could be further from the truth. In the same way, regulation cannot hurt the sport, it defines the sport. Regulation cannot hurt the economy, it defined the economy. All it can do is potentially punish those businesses who are not in line with the new regulations. 

In nature, environmental change can lead to some organisms going extinct, but also creates new opportunities for others. We should create new, sustainability -based opportunities for businesses to thrive in the future.