Stagflation: Green Businesses Preserve more Green when the Going Gets Tough

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I, for one, don’t remember the stagflation of the 1970s.

It was a time when prices were increasing at the gas pump and grocery store, and when the economy sputtered along with little or no growth. Some neighbors saw their wages flatten — or their jobs disappear altogether. Gold, often seen as a barometer of economic confidence, was at an all time high (adjusted for inflation). I was pre-teen in a comfty Detroit suburb with a father who worked at then stalwart, GM, so a roof over my head and food on the table was never a concern.

But here we are today, with Priuses outselling Suburbans. Oil and gold are at all time highs. Things seem far more perplexing, interconnected, global. First, there’s the perception of a housing crunch, even though fretting over a 15 percent decline in home values over the last year or two seems rather odd given the incredible run-up of many homes over the past decade, sometimes by over 100 percent.

Second, the sub-prime mortgage mess has snared many who agreed with greedy lenders that living beyond our means was okay. That more jobs are being outsourced overseas or replaced by fancy machines in this increasingly global marketplace isn’t helping either.

Even if the Federal Reserve or Congress and the Bush Administration do manage to convince the American people that they should keep on spending by splurging with windfall tax refund checks — thus avoiding a recession — the printing presses rolling off fresh greenbacks and mounting debt on a national level could result in the onset of stagflation. Oil, while swinging up and down with the speculator’s bets and value of the dollar, will continue on its upward trajectory reflecting the reality of “peak oil,” the period by which its extraction and refinement will get ever more expensive and difficult. Our economy, and those linked around the world, are based on this fuel and this fuel is largely denominated in US dollars. When the dollar falls in value, the price of a barrel of oil must increase.

So why will ecopreneurial businesses fare any different than all the rest if, in fact, our economy morphs into stagflation? Because green businesses are based on ecological principles and, more importantly, practices. Self-reliance, localization, community-based interconnections and wise use of all resources, including energy, materials, and people. For the best ecopreneurial businesses, there is no waste. Like in nature, green businesses seek to use resources in the most efficient way possible.

Only the most productive, innovative and energy efficient businesses will continue to thrive during a period of stagflation. As my wife and I write about in Rural Renaissance and ECOpreneuring, our business model — a model that’s rooted in a fiscally and ecologically conservative approach to enterprise — will sustain us and our community because most factors of inflation are less pivotal to the profitability of our business. What if your energy costs are zero or food costs but a fraction of the typical food costs for a comparable business? What if your local market needs the goods or services you provide, fairly priced and based on the fair wages you pay your employees? Many of the ecopreneur profiles in ECOpreneuring actually create products from the waste stream rather than from virgin materials. Some have embraced the “service economy” where products just keep getting used over and over again; for example, Interface Inc. offers floor coverings that are ecologically sound and can be replaced through a service contract with their clients (the old carpets are then transformed into new carpets).

No matter whether stagflation or recession set in, an ecopreneurial business can weather the economic storms ahead. In fact, many will emerge at the top of their game because — as in nature — stress and turmoil spur innovation. Our ecopreneurial business, Inn Serendipity, set out to produce more electricity than it uses. Now we’re exploring ways to eliminate the need to refuel our car at a gas station, perhaps through the investment in a plug-in hybrid. Until then, at least some of our local commuting will take place in an all-electric CitiCar, recharged with a photovoltaic system on site (which also recharges a lawn mower and other items).

How is your ecopreneurial enterprise set up to prosper despite a slowing economy, recession or stagflation? What’s your business strategy of survival, or, rather, as we write about in ECOpreneuring, your business strategy of abundance? In our case, rather than be dependent on limited and decreasing supplies of oil, we’re largely powered by unlimited and renewable wind and solar energy. Worth mentioning, solar and wind energy are also generated tax free (and for businesses, ecopreneurist owners may often qualify for tax credits for actual generation).

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