Getting Diplomatic About Doughnut Economics

For our final unit of the fall term, Econ:Risking Value, we dove into the book Doughnut Economics by Kate Raworth which takes a look into social/environmental economics. Her approach features the UN’s Sustainable Development Goals and how the state of our economy is not combating these issues effectively. While some of her issues seem controversial, like no longer using GDP as a form of measuring a nation's economic growth, Raworth brings issues to the table that are worth considering as we approach the twenty-first century. The doughnut concept she developed touches societal conflicts from climate change to peace and justice which while it may seem abstract, make a huge impact on our economy as we know it. While going through the chapters in class and holding discussions of our interpretations, we were asked to conceptualize the eighth chapter of Doughnut Economics as if the book had continued. I decided to take a deeper look into diplomacy and the impacts that foreign economic deals can make on environmental/humanitarian issues we face as a society today. Take a look at my economic perspective of Doughnut Economics!

Diplomacy and Economics. NBE. 2020

My description of chapter eight

Let’s talk about globalization. Globalization affects the way our(referring to ‘our world’) nations work with one another. It’s worth noting that in a world of free trade, the thought of the accumulation of fossil fuels is out the window. This is the case because of the freedom to import and export almost anything on the market. Free trade, that is international commerce without tariffs or restrictions for other nations, can play a key role for nationalism for other countries to rely on one another for foreign goods. These free trade agreements can also help the diplomatic state of how countries work with one another to solve other issues that involve the UN, like humanitarian issues. With the international exchange being open, there is an increase in the use of transportation. While benefiting our economy, this puts a setback on ending global warming. We also have to consider the fact that economic agreements can go into effect with other countries in order to either slow down the use of fossil fuels or limit the use of tariffs. These economic agreements can either be a benefit or detriment to our environmental and humanitarian problems that we deal with today. Even environmental agreements like the Paris Climate Agreement puts a huge risk on the state of the economy in which it limits the use of transportation abroad. We can look into how protectionism, the promotion of domestic producers and products in a domestic market, can put a positive effect on the environment while also causing harm for foreigners when wanting to transport items abroad. It’s important to look into these agreements and foreign deals because they affect not only the way our nations choose to interact with one another, as allies or adversaries, but also makes us consider looking into the long term effects of our climate/social justice issues we are currently facing as a society.

Discussion 

Some nations have thought long and hard about the detrimental impacts that foreign trade agreements have on global climate change and social issues. For example, the United States working on an economic agreement with countries like Canada and Mexico called the “NAFTA agreement” which eliminates any trade restrictions or tariff blockades in order to establish free trade throughout North America. Trade restrictions do not include the risk of environmental restrictions. The Institute for Policy Studies stated, “NAFTA’s environmental protections should be strengthened if it is to serve as a model for future trade accords” which is entirely true. Let’s look into this a bit more.

If the current NAFTA agreement, for example, doesn’t address the environmental harm we are making along the way, our progression towards putting an end to global warming seems to only be taking a negative turn. It’s important to consider the stances of other nations on their environmental issues and how they make their nation’s economy function because getting them onto an agreement can only expand our economy’s growth in a way we haven’t seen before. Diplomacy and the state of the global economy go hand in hand.

Diplomatic relations hold potential for the power of international commerce. Globalization works in a way we have never seen it before. Kate Raworth mentions, “We need to move from economies that need to grow whether or not they make us thrive, to economies that make us thrive whether or not they grow.” If GDP hasn’t significantly changed for over the past decades, it may be due to tariff blockades that usually sprout out of the competitiveness of the market and end up taking a turn for countries not wanting to sign off on economic deals with their adversaries. The competitiveness that comes out of a buyer/seller market is the main reason some countries are in something called tariff wars.

When thinking about the influence that economic agreements have on future accords, it’s important to consider the context of the world we live in currently. ”Since 2000, 37 measures on biofuels have been notified by 20 WTO members in the context of the Agreement on Technical Barriers to Trade,” according to the WTO. This data proves agreements countries make affect us in the long run. It’s not just a matter of nations, but the power the World Trade Organization holds when it comes to foreign trade.

These agreements of Tariffs and Trade are organized by the World Trade Organization. The WTO is in charge of holding a dispute settlement mechanism called the GATT. The way it works is one nation can file a dispute that they are facing with another country, the WTO approves it, and the nations are able to consult or come to an agreement that can make or break the economy of their country. The reason I bring this up is because this point of the GATT can not only influence diplomatic relations, but puts stress on issues like pollution, hunger, and business. While all the topics discussed in the book are completely relevant on the functionality of our economy in the future, it’s important that we focus on the main point which is coming together as a globe to make this change within one of the oldest systems, our economy. 

To conclude, I enjoyed getting Raworth's perspective of the potential our economy has. I was fortunate enough to take a summer course at the University of Chicago that dove into the topic of diplomacy and the way the world's economy functions, and I would say that sparked my interest in basing my project off this topic. It's pretty rare that people see the commonality in social issues today and how they effect our economic growth and potential, and I will say that Kate Raworth did a good job in pinpointing that issue. The book tapped on subjects I hadn't even thought of before, and motivated me on checking out work from other economists to get their perspective on how we can change our old concepts we hold for our economy. 

Citations:

1. Kate Raworth. “Want to Know How to Get beyond GDP? Start Here.” Kate Raworth, 19 May 2013, www.kateraworth.com/2012/07/01/want-to-know-how-to-get-beyond-gdp-start-here/. 

2.  “NAFTA and Environment.” Institute for Policy Studies, 7 May 2014, ips-dc.org/nafta_and_environment/.

3. “WORLD TRADE ORGANIZATION.” WTO, www.wto.org/english/tratop_e/envir_e/envir_e.htm.