Understanding the Cost of Consumption: The “Magical Hexagon”

Understanding the Cost of Consumption: The “Magical Hexagon”

In Germany, every 6th grade student learns about the Magical Hexagon in economics, which symbolises the six economic policy objectives that are to be achieved simultaneously and to the same extent, in theory:

  • Steady and appropriate economic growth
  • Environmental protection
  • Fair distribution of income and wealth
  • Price level stability
  • High employment
  • External economic equilibrium

The “magic” about these six goals is that they are supposed to be of equal importance to each other, but are also in conflict with each other, hence they cannot all be achieved at the same time.

For example, meeting the goal of “economic growth” will make it impossible to simultaneously achieve the goal of environmental protection.

Hence, when we hear politicians talk about their desire to protect the environment while at the same time talking about growing the economy, we need to understand that these are conflicting goals and cannot be achieved simultaneously.

In North America we have certainly been prioritising economic growth “at all costs” and centralised riches in the pockets of a few. The cost of this economic growth we pay in environmental degradation and an unfair distribution of income and wealth. So, the Magical Hexagon is not balanced and we are all already starting to feel the impact of that.

Interestingly, when the environment has been degraded beyond repair, the economy will naturally collapse, because a wacky climate will impact our production and distribution systems, which will hamper the economy as a result. The same result will hit us if we keep “centralising all riches in the pockets of a few.” This will erode away the middle class and once the tipping point between rich and poor has been reached, there won’t be any “consumers” left for the products the rich produce.

So, it is time to embrace the concepts of the Magical Hexagon here in North America and aim for a balance between the environment and our economy (as well as fair and equal distribution of wealth). This is the only way forward.

Either one of these objectives can be achieved by reducing our consumption. So, replace the mantra you learnt in school (Reduce, Reuse, Recycle), with the mantra of the day: REDUCE, REDUCE, REDUCE.