Economics can be understood as a study of various entities making choices with the limited resources available, and the market situation resulting due to these choices.
The earth too is an impermanent entity and so is everything on it, maybe except The Queen’s reign which never seems to end. The countries in power of these resources have way more power than we can imagine, and can make unbelievable changes if they really want to. Such a gathering of people was held this January, at the World Economic Forum conference, in Davos. Where world policy discussions were carried out, and Dr. Rajan interrupted himself, to admire a dog’s snow-friendly footwear. However, a crucial piece of information was not given enough attention.
Davos’ snow which is usually unbearable has not been the same in the past few years. Reason being, global warming. Davos spends almost 1/3rd of its water to make artificial snow, and carried on doing so to create the Davos that visitors were expecting to see.
So even though some of the world’s most powerful people and media were present there, it’s appalling that not too many people showed concern about this issue. The organisers of the event, arranged huge cranes that could populate the town with artificial snow. Most definitely the proportional expenditure on this ridiculous incident must be very little, when compared to the event’s budget. But this happened (and has been happening not uniquely in Davos) in the face of the world suffering from severe water crises in California, Karachi, Vidharbha, and many places.
Looking at economics, one of the first assumptions we’re taught is that humans are rational beings, and thus decisions made would be in the light of sensibilities. Most definitely that is not how we really work. We all are flawed. And assuming too much never leaves us in a good position.
So economics would not save the world, if it was for the assumption of rationality, neither would any other subject alone. I believe the absolute realisation of our impermanence could help us understand how doomed we are. We can save the world if we look at us, our surroundings, and our decisions, creating externalities at every step. These externalities affect living beings some how and some where.
Therefore, by channeling positive externalities where ever possible, economics can do its bit to save the world.