Back again with another Monday Message Board.
Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please. If you would like to receive my (hopefully) regular email news, please sign up using the following link
http://eepurl.com/dAv6sX You can also follow me on Twitter @JohnQuiggin, at my Facebook public page and at my Economics in Two Lessons page
John Quiggin 
More evidence that we don’t have a free market, we have an affordable one. Caveats in the study include a lot of “we can only see holdings over 5% and listed companies”. I wonder what the private equity holders are doing?
In industries like these there’s a temptation to share the spoils — not to compete too hard on price or service. How much stronger would that temptation be if both dominant firms in each industry were owned by the same shareholder or set of shareholders?
There’s evidence to suggest this has indeed been the case in the United States where increases in common ownership have been linked to higher airline fares, more expensive pharmaceuticals, and higher bank fees.
(for those who don’t follow the Conversation already)
Ephemera 01. + ghosts & vampires & zombies.
JQ ref: “but with a characteristic of the system – what John Quiggin (2010), crediting Paul Krugman, has termed zombie economics.”..
“Finance, possessed: Sighting supernatural figurations in critical accounts of the financial crisis
“Ghostly matters in organization
By Sine Nørholm Just
Keywords: financial crisis, metaphor, figuration, vampire squid, zombie economics, spectral finance
Abstract
“In critical accounts of the global financial crisis, public commentators and academic investigators alike have sought to capture the causes and consequences of these disturbing events through figures of the supernatural. This paper sights three such supernatural figures: Vampires, zombies, and ghosts. Whereas the paper explores the figurative qualities and functions of each, the ghost is given special attention for two reasons: First, finance itself may be conceptualized as a fictitious form with no substance, a spirit with no body – a ghost. Second, the ghost is not only a conceptual figure of finance, but also holds a special place in the conceptualization of the figurative on which the paper relies. Thus, the paper is not only concerned with analysing figurative uses of ghosts in accounts of finance, but also with conceptualizing finance and figures as ghostly. As such, the main contribution is conceptual rather than empirical: The paper offers a grid that combines various functions of metaphor – stylistic, transactional, and constitutive – with their appearance in the guises of vampires, zombies, and ghosts, respectively, in the particular context of finance. ”
Introduction
. ..”Most notably, vampires and zombies feature prominently in critical accounts of the financial crisis, indicating the causal greed as well as the consequential grief of what went on (McNally, 2012). While unpacking these two figments of our social imagination will be one central concern of the present paper, emphasis will be placed on a third figure: That of the ghost. Ghosts appear to be, well, more ethereal than the vampires and zombies who more readily embody finance and its discontents. However, I will argue that it is particularly important to attend to ghostly matters in accounts of finance and financial crises. Turning to ghosts, I claim, does not only provide us with a fuller understanding of the use of a particular set of literary figures to explain recent events in finance, but points to the figuration of finance itself.”
…
“The more general figuration of the zombie is less faithful to the customary lack of an origin story – and, instead, posits the zombie as the pivot point of sweeping explanations of the causes as well as the consequences of the financial crisis. Here, we are not dealing with a certain financial character, but with a characteristic of the system – what John Quiggin (2010), crediting Paul Krugman, has termed zombie economics. The key question is, as the subtitle of Quiggin’s book informs us, ‘how dead ideas still walk among us’. Thus, the zombie metaphor undergoes a transition; from undead bodies to undead thoughts. It becomes the basis for an explanatory framework in which zombies connote a certain resistance to change even in the face of evident decay, a kind of rotten conservatism. As Quiggin (2010: 2) explains:
JQ-“…habits of mind and thought are hard to change, especially when there is no ready-made alternative. The zombie ideas that brought the global financial system to the brink of meltdown, and have already caused thousands of firms to fail and cost millions of workers their jobs, still walk among us. They underlie the thinking of those who are responding to the crisis and, to a large extent, of the commentators and analysts who assess those responses.”end JQ quote.
“The underlying premise (one that the book, it should be said, seeks to substantiate), then, is that current economic theories not only provide inadequate explanations of and solutions to the crisis, but are the root cause of current maladies. Such ideas should be dead, but are not; in fact, they continue to dominate not only academic discussions, but also policy decisions. The reason being that most economists stay so committed to these ideas so as to be unable to put them out of their misery – maybe they cannot even see their suffering. Thus, the figuration of zombie economics is an arch of rise and fall that does not, sadly, lead to replacement; a journey from wedlock to deadlock, we might say.”…
http://www.ephemerajournal.org/contribution/finance-possessed-sighting-supernatural-figurations-critical-accounts-financial-crisis
-:Half steps forward:
“Biden tax plan can recover $640bn but OECD proposal would shrink gains and reward worst perpetrators
https://www.taxjustice.net/press/biden-tax-plan-can-recover-640bn-but-oecd-proposal-would-shrink-gains-and-reward-worst-perpetrators/
“Live blog: Global minimum tax rate at G7
Mark Bou Mansour
Published: 1 June 2021
https://www.taxjustice.net/2021/06/01/%f0%9f%94%b4-live-blog-global-minimum-tax-rate-at-g7/
https://www.theguardian.com/business/2021/jun/03/global-corporation-tax-reform-what-are-the-key-issues-in-g7-negotiations
– One step back;
“El Salvador President Nayib Bukele announces plan to adopt Bitcoin as legal tender
https://abc.net.au/news/2021-06-07/el-salvador-to-introduce-bitcoin-as-official-currency/100194700
https://theconversation.com/new-finding-in-49-australian-industries-the-major-firms-are-owned-by-common-investors-159809
Sorry, aliens kidnapped the link.
The G7 tax deal (communiqué, para 16 https://www.gov.uk/government/publications/g7-finance-ministers-meeting-june-2021-communique/g7-finance-ministers-and-central-bank-governors-communique) is, at first sight, a historic step towards tax justice and corporate transparency. Tax avoiders are experts at undermining these with fine print (the 10% profit margin exemption looks like an early example), but Biden and the EU leaders aren’t fools. The former at least seems determined to get real reform, never mind his sentimental affection for Ireland. The deal will now have to be okayed by the G20 and finally adopted as a treaty at a diplomatic conference held by the OECD maybe in October.
More surprising, it also joins the Paris climate agreement as advertisements for the continuing vigour of the model of international relations embedded in the 1648 Treaty of Westphalia that ended the Thirty Years’ War. It is based on the polite legal fiction of the equality of sovereign states. To adopt a treaty, you need unanimity, so Mecklenburg then and Panama now have a paper veto over the great powers. But a fiction it is.
First, if one country out of n tries to block a deal the other (n-1) agree on, nothing stops the (n-1) from reconvening in the next room and signing the same treaty between themselves. The holdout is left with nothing. Second, the great powers have plenty of means of coercing the minnows outside the negotiating room, up to and including the threat or use of overwhelming armed force. The formula gives assertive minnows the option of 15 minutes of fame and can sometimes secure minor concessions *, but that’s it. Then as now, the crucial factor in the deal is agreement among the major players, a fact well known to Mazarin and Oxenstierna then as much as to Yellen and Kerry now.
The major problem with the Westphalian model is time. The Westphalia negotiations took 7 years, during which rampaging mercenary armies continued to inflict on Germany the horrors accurately depicted by Jacques Callot: https://en.wikipedia.org/wiki/Les_Grandes_Mis%C3%A8res_de_la_guerre#Gallery It took the UN 24 years to translate the aspirational feelgood 1991 Rio climate treaty into the more or less operational Paris accord in 2015. Tax reform has been around even longer. If you are in a hurry, you will be sympathetic to Jean Monnet’s argument – developed in the context of managing shipping in WWI – for delegating real political authority to common institutions. There’s a high price in democratic accountability to pay for this, unless you go all the way to a federal state.
* The inclusion of a 1.5 degree C target in the Paris accord, proposed by the Marshall Islands, was of course not a minor concession. It’s likely that the microstate was acting as a cat’s-paw for the United States. https://www.samefacts.com/death-of-a-salesman/
“We don’t have a free market, we have an affordable one.” – Moz.
That is correct. I assume by “affordable” Moz means you can get something if you can afford it. If you can’t afford it, too bad for you under this current system, except for public goods, services and welfare for bare essentials, if you are lucky. This current system we can call RECD (Really Existing Capitalist Democracy) after Noam Chomsky. This captures the facts that it is real and extant, it is capitalist (kind of – depending on definitions) and it is democratic(kind of – depending on definitions). I also like that the RECD acronym can be pronounced “wrecked”. When unfettered capitalism goes too far, as in neoliberal capitalism, we see people wrecked and environment wrecked.
We don’t have a free market. We have a regulated market badly distorted by many perverse incentives. The first goal should be a regulated market with perverse incentives removed. The goal of a truly free market is chimerical, “existing only as the product of unchecked imagination (and) fantastically… improbable..” [1]
The democratic state and the capitalist economy in RECD are conjoined but very odd twins. Capitalism cannot exist without the state. The state conceivably could exist without capitalism but it would be very different and radical surgery would be needed to make the separation. Capitalism would die without the state as host (to change metaphors somewhat). The state would struggle on and perhaps thrive in another way. But that last is speculative and not my focus here.
The focus here is to note that the capitalist system is held up and run by the state. The proof is in the price capitalists are willing to pay to suborn and buy the state by buying politicians and capital-friendly legislation via the legalized process of political donations. Political donations in the USA at all government levels run in the billions over the combined election cycles. The state and its apparatus fundamentally determine how the market functions but in turn these determinations (at least some of them) are up for auction by political donation system. We should add lobbying to the donations industry for an influence total.
Under these pressures, a vast tax break and business subsidies complex supports price-making and price-taking in the so-called free market. In addition, state funded infrastructures and laws can and do support companies and corporations as much (or more?) as they support persons. meaning real persons not corporations as fictive persons.
Under these conditions, how can we talk of a free market? There is clearly no such thing. And if there is no free market, there is, in value theory, no way we can say that the market (or the mere consumer) determines value or price except at less important lower order and trivial levels (like the relative amounts of vanilla ice-cream consumed compared to choc-chip). The institutional and power environment (political and financial) determines the market determines the values. Which is to say that the institutional and power environment determines economic values. The values, or at least value ranges, are assigned by the state-business nexus. Insofar as voters influence the state and then insofar as the state exercises or hobbles itself in relation to business, the state, or rather its politicians and apparatchiks, may determine aspects of the market or it may sell out the power to make that determination to business, but in particular to dominant business as dominant capital.
Any value theory, such as rank dependent generalized expected utility, must take the institutional and dominant capital perspectives into account and not posit or imagine that consumers, as consumers, are the “sovereign” and sole determiners of price. Thus any RDGEU model ought NOT fail to condition or supplement its axioms with axioms modelling or stylizing institutional, infrastructural and company-corporate causative or influencing factors operating on prices. If the RDGEU does not do so (and it would of course not be a “mere” RDGEU if it did so) then it must openly declare itself to be a prescriptive and normative model and not an empirical model. It does not model all important elements of the RECD system. It must then declare, after self-examination and self-analysis, what its real or purported usefulness is ever to be. How can its theorems (based on normative axioms) ever be imported usefully into the RECD? This is not an impossible “ask”. Such statements could be feasible and valid but they need to be made and made explicitly for debate and assessment.
But what must explicitly be done away with is any theory that prices in the numeraire measure value. Prices under capitalism assign value. They do not measure it. At the bowdlerized and public discourse level of classical and neoclassical economics everyone non-expert in economics believes prices measure and compare “value”. If the rarefied academics believe this too their edifice does not hold up as empirically and ontologically supoortable. If they do not believe this then they must state it openly and explicitly and explain what practical and pragmatic outcomes their theories may hold or lead to. Non-ontological thinking (fantasies) is fine in fiction. It is not acceptable in practical enterprises.
The practical value of understanding that prices assign value rather than measure it, is to make the move to NOT EVER making ethical, political and governance decisions based on prices. What is most important (e.g. preventing climate change) must be mandated first.(This democratic statist method for sure gets more complex as you drill down to many discrete cases and competing priorities) A socially, democratically mandated list, as it were, must be drawn up. Then real resources must be assigned, re-assigned or left “fallow” or “wild”, as the case necessitates, to meet the goal. Prices as money amounts are simply chits written (or electronically transmitted) as permissions to consume.
Note.
1. Merriam – Webster.
Buffett and Gates plan to build a sodium SMR in Wyoming (https://www.theguardian.com/us-news/2021/jun/03/bill-gates-warren-buffett-new-nuclear-reactor-wyoming-natrium). Cost $1bn they say, construction time 7 years they say, output 345 MW. They plan to buy the land this year. No timeline is given for regulatory approvals, but let’s suppose a miracle and they start building in 2022. Construction goes smoothly and the plant works perfectly. So at the very best, it’s reliably producing at a 90% CF from January 2039. I’d give them no better than a 1% chance of achieving all this, but let’s be generous. So 310 MW of baseload power it is.
The currently largest Chinese PV manufacturer, Longi, has announced plans to add 25 GW of annual production capacity this year, spread over several factories. Assume a 75% plant utilisation factor. In the 7 years of the SMR construction these new factories will produce 131 GW of solar panels, all of which will be installed and running by the time the reactor is switched on. Assume a 25% CF for solar. So the new PV farms will be putting out each year the continuous equivalent of 32.8 GW. That’s *106 times* the Buffett-Gates reactor. Check my arithmetic if you feel like it or fiddle with the sssumptions, you will get a similar result. Longi has other plants already, also active large competitors, and many are likely to be adding new capacity in 2022, 2023 and so on.
We should stop wasting time treating the nuclear fantasies of billionaires as a serious contribution to energy and climate policy.
BTW, the wave of new solar capacity does create a very real and serious grid management problem, viz. firming against intermittency. The solutions are various forms of flexible and despatchable generation, storage, or demand management: pumped hydro, hydrogen, grid batteries, V2G, long-distance trade, demand response, thermal storage, geothermal, at a pinch cheating with natural gas. The firming options do not include baseload nuclear reactors. The modellers and Lazards concur that intermittent renewables plus storage already comes out much cheaper than best-case nuclear.
James W. I have a piece coming out in Independent Australia along the same lines. The sad thing is that Buffett, Gates and Musk are by far the best of the billionaire class. The majority have no interest beyond keeping everybody else down.
Bezos is planning to go into space. My message to him is don’t come back.
It is extremely troubling that coal, oil and gas still contribute so much to our energy mix. Something like 11.5Gt out of 13.5 Gt Oil equivalent globally comes from fossil fuels still today. To reliably save the world from catastrophic climate change we should have already reduced our use to the point that we could reach zero fossil fuel use by 2030. We have already used up almost all of our carbon budget.
https://www.anu.edu.au/news/all-news/our-carbon-budget-is-all-but-spent-but-who-is-counting
“After doing the sums, humanity has only 95 billion of the original 1000 billion tonnes (carbon budget) left to spend on carbon dioxide emissions. To put that in perspective, globally humans emit 10 billion tonnes of carbon every year.
That means that in less than 10 years, without dramatic action, humanity will have spent all of its remaining 2-degree budget. At that point, the chances of holding warming to 2 degrees will drop below 2/3, and we might as well flip a coin to estimate whether the climate will exceed boundaries maintained for over a million years.” – ANU, 6 May 2019.
That puts us at exceeding our 2-degree C carbon budget by 2029. And we are still doing nothing substantive about this. Indeed, CO2 emissions are still rising. When will enough people and the right people realize that the emergency has already started?
“Carbon Dioxide, Which Drives Climate Change, Reaches Highest Level In 4 Million Years” – Eric McDaniel, June 7, 2021.
“The amount of carbon dioxide in Earth’s atmosphere reached 419 parts per million in May, its highest level in more than four million years, the National Oceanic and Atmospheric Administration announced on Monday.
After dipping last year because of pandemic-fueled lockdowns, emissions of greenhouse gases have begun to soar again as economies open and people resume work and travel. The newly released data about May carbon dioxide levels show that the global community so far has failed to slow the accumulation of heat-trapping gases in the atmosphere, NOAA said in its announcement.”
On the spectrum of abusive labour practices Musk is pretty close to the Bezos end of the spectrum, in terms of cheating shareholders with exorbitant CEO pay, he’s a solid no1, so I’m having a hard time putting him in the nicer type of billionaires category, even by US standards.
Published yesterday morning (Jun 8) at the SMH was an article by Nick O’Malley and Matt Wade headlined “NSW coal industry would die in 20 years, worst-case scenario predicts”.
The article reports that the NSW Treasury Department has prepared three scenarios on the NSW coal industry for the NSW government to consider:
Scenario 1: NSW coal jobs would disappear entirely within 20 years, with shrinking international demand;
Scenario 2: NSW coal jobs would decline from current level of about 22,000 to just over 5,000 by 2047; and
Scenario 3: NSW coal jobs would decline to about 10,000 by 2047.
https://www.smh.com.au/national/nsw-coal-industry-would-die-in-20-years-worst-case-scenario-predicts-20210607-p57yvy.html
I wonder why this wasn’t revealed before the recent NSW Upper Hunter byelection (on 22 May 2021)? I’d have thought that was key information to consider before voting.
Yesterday morning on ABC RN Breakfast, former ADF chief Chris Barrie was interviewed to discuss the implications in the “The World Climate and Security Report 2021”, published by the International Military Council on Climate and Security, that warns that climate change is likely to increase global food shortages and displacement, leading to instability and conflict.
In the “The World Climate and Security Report 2021”, five key risks are listed on page 7 and six key opportunities are listed on page 8.
The Executive Summary (on page 9 and 10) includes:
“Climate Security Risk Perception Survey and Capabilities Game. The IMCCS Expert Group administered a survey in February-March 2021 to assess perceptions of climate security risk among a select group of 57 security and military experts and practitioners from across the globe, most of whom are familiar with climate security dynamics as either practitioners or analysts, and many of whom are IMCCS Participants, Observers or members of its Leadership. Specifically, this survey assessed perceptions on how these changes will affect global security over three time periods: this year (2021), 10 years from today (2031) and 20 years from today (2041).
The most important integrated findings from this survey are that experts anticipate all climate security phenomena presenting severe-to-catastrophic risks by as soon as 2031, with water, ecosystem, health, and national security climate threats posing the most consistent risks. In addition to the survey, the analytical Climate & Security Strategic Capabilities game was introduced in the inaugural WCSR in 2020 and digitized in 2021 for online play. The game’s focus on how to build resilience and climate-proof security operations facilitated valuable data collection from climate and security practitioners, and is available for public access via The Hague Centre for Strategic Studies (HCSS).
Climate Security Risk Matrix Methodology. The IMCCS Expert Group collaborated on a first of its kind Climate Security Risk Matrix, a data-driven methodology that helps to identify and evaluate climate-driven risk by assessing the probability and consequences of potential hazardous climate change-related events. The risk assessment methodology aims to inform decision-makers by identifying specific targets to prevent, mitigate, or avert the security impacts of climate-related extreme weather events. Moreover, progress in disaster risk reduction can be measured and the effectiveness of certain strategies assessed.”
Click to access World-Climate-and-Security-Report-2021.pdf
NOAA Mauna Loa Observatory atmospheric CO2 concentration data – WEEKLY AVERAGES:
2021 Apr 18 – Apr 24: _ 418.20 ppm
2021 Apr 25 – May 1: _ 420.01 ppm
2021 May 2 – May 8: _ 419.53 ppm
2021 May 9 – May 15: _418.48 ppm
2021 May 16 – May 22: 419.09 ppm
2021 May 23 – May 29: 418.92 ppm
2021 May 30 – Jun 5: _ 419.55 ppm
NOAA Mauna Loa Observatory atmospheric CO2 concentration data – MONTHLY AVERAGES:
2021 May: 419.13 ppm
2020 May: 417.31 ppm
https://gml.noaa.gov/ccgg/trends/
See also Scripps Institution of Oceanography Mauna Loa Observatory CO2 concentration graphical data at: https://keelingcurve.ucsd.edu/
The month of May is usually when the annual peak of CO2 concentrations occurs at Mauna Loa.
The Mauna Loa data are being obtained at an altitude of 3400 m in the northern subtropics, and may not be the same as the globally averaged CO2 concentration at the surface.
Global Monthly Mean CO2:
2021 Mar: 416.34 ppm
2020 Mar: 413.35 ppm
Belated happy World Ocean Day
https://www.dfat.gov.au/people-to-people/new-colombo-plan/news/world-oceans-day-2021
Dfat mixed ocean vs oceans.
How many oceans are there? Hint above. https://oceanservice.noaa.gov/facts/howmanyoceans.html
“BLUE is the story our generation need to hear. The industrialization that has occurred in the oceans over the last century, mirrors the events that triggered mass extinctions on land. Industrial scale fishing, habitat destruction, species loss and pollution have placed the ocean in peril. The very nature of the sea is being irretrievably altered. BLUE is a provocative journey into the ocean realm, witnessing this critical moment in time when the marine world is on a precipice.
“Our ocean has been the guardian of life on earth. Now it is our turn to be guardians for the ocean.”
https://bluethefilm.org/watch
“Using state-of-the-art equipment, a group of activists, led by renowned dolphin trainer Ric O’Barry [who caught & trauned Flippers], infiltrate a cove near Taijii, Japan to expose both a shocking instance of animal abuse and a serious threat to human health. Bold and brutal filmmaking at its best, this is an exhilarating, infuriating, heartbreaking monument to how bad and how good mankind can choose to be.”
https://www.sbs.com.au/ondemand/video/411390531740/the-cove
I need reminding more… of less…
Set up: “Adding bricks cost 10c, but removing bricks is free”. And we still need reminding even with explicit rules and incentives. Plus 20% used less strategy, only after reminder. A ‘Less strategy’ was discarded when distracted or under cognitive load – most of the time for normal humans in normal situations.
“Less is more: Why our brains struggle to subtract
“Experiments show that people default to adding as a solution in various situations
By Shamini Bundell
“When solving problems, humans tend to think about adding something before they think of taking something away — even when subtracting is the better solution. Experiments show that this newly discovered psychological phenomenon applies across a range of situations from improving a physical design to solving an abstract puzzle. People think about what they can add before they think about what they can take away.”
Full paper.
doi: https://doi.org/10.1038/d41586-021-00930-2
https://www.nature.com/articles/d41586-021-00930-2
“Less is more: Why our brains struggle to subtract
“The more laws and order are made prominent, the more thieves and robbers there will be.”
Lao Tzu
JQ said “…” * As far as economic research is concerned, less is more. More precisely, an academic economist with a small number of publications in top-rated journals is better regarded by other economists than one with an equal (or even somewhat larger) number of ‘good journal’ publications along with more research published in less prestigious outlets.”…
https://johnquiggin.com/2017/05/28/less-is-more/
Less than 7 years to save the world.
https://climateclock.world/
“The Lifeline and Deadline on the Climate Clock tell us what we need to do, by when. There is still time to avert climate disaster, but only if we take bold, immediate action at the speed and scale necessary – beyond what politicians have deemed politically possible. The Climate Emergency is here. The next ~7 years is humanity’s best window to enact bold, transformational changes in our global economy to avoid raising global temperature above 1.5ºC, a point of no return that science tells us will make the worst climate impacts likely inevitable. The DEADLINE on the clock alerts us to the critical time window we have left to take the most meaningful action to combat it. The new LIFELINE on the clock shows the percent of global energy coming from renewable sources – wind, water, solar, and bioenergy. The Renewable Energy Lifeline is currently at 12.2% and rising. However, it is not rising nearly fast enough to meet our deadline.”
The Climate Clock science is apparently based on the following:
“In 2018, the Intergovernmental Panel on Climate Change published a Special Report outlining feasible greenhouse emissions pathways to limit global warming to 1.5ºC. In this report, IPCC researchers estimated that, beginning in 2018, humans could release an additional 420Gt of carbon into the atmosphere and still have a 67% chance of limiting warming to 1.5ºC.”
“Data for the deadline is sourced from the Mercator Research Institute on Global Commons and Climate Change. The MCC’s carbon clock assumes an average annual rate of 42 Gt of carbon emissions in order to calculate the time remaining on the clock; however, if rates of global emissions continue to rise, our carbon budget will run out even faster. If we cut the rate of global carbon emissions, time on the clock would hypothetically begin to increase.”
https://climateclock.world/science
The IPCC SR 1.5 report was published on 8 Oct 2018, and is based upon earlier data.
The latest scientific evidence I see indicates the assumptions and data used for the Climate Clock are flawed.
From Breakthrough’s Apr 2021 Briefing Paper titled “CARBON BUDGETS FOR 1.5 & 2°C”, the summary includes:
• IPCC carbon budgets underestimate current and future warming, omit important climate system
feedback mechanisms, and make dangerous assumptions about risk-management.
• 1.5°C of warming is likely by 2030 or earlier, a product of past emissions.
• There is no carbon budget for the 1.5°C goal; such “budgets” rely on overshoot, with unrealistic
reliance on speculative technologies.
• The current level of greenhouse gases is enough for around 2°C of warming, or more.
• 2°C of warming is far from safe, and may trigger the “Hothouse Earth” scenario.
• There is no carbon budget for 2°C if a sensible risk-management approach is taken.
• Even accepting the IPCC carbon budget for 2°C at face value, emissions need to be zero before
2030 for developed countries with higher per capita emissions.
https://www.breakthroughonline.org.au/briefings
Barring super-volcanic eruption, major meteor impact, and/or global thermonuclear war event(s), the Earth System is ‘locked-in’ to surpass the +1.5 °C global mean warming threshold, likely before 2030, and on current GHG emissions trajectory, is likely to surpass +2.0 °C global mean warming threshold before 2050 – see Table 1 in: https://esd.copernicus.org/articles/12/253/2021/esd-12-253-2021.pdf
There is NO CARBON BUDGET REMAINING for a safe climate for humanity.
We are well and truly overdrawn for 1.5 °C warming.
Not to mention this.
https://www.resilience.org/stories/2021-04-20/earth-abuse-and-the-next-pandemic/
What could possibly go right from here?
JQ, hix, Iko: to do Bezos justice, his new tech philanthropic Earth Fund is well-judged: https://www.independent.co.uk/climate-change/news/jeff-bezos-earth-fund-amazon-b1851348.html
Geoff Miell: a true worst-case scenario for Australian coal would have thermal coal dying in 10 years and metallurgical in 15. Markets and politics move slowly, until they don’t.
J.W.,
A number of thoughts occur to me. Firstly, we should not even have billionaires but leaving that aside;
(1) It would take a lot of drilling down into the detail of the grants and the detail of the organizations receiving grants to really understand the possible impacts. One can’t say without a case by case analysis whether this is a good, bad or indifferent initiative. On a cautionary note, I would be concerned about the issue of the fund being a Trojan horse for market manipulation and even FUD designed to delay or manipulate environmental responses to the wishes of the donor. But that might be over-suspicion and pessimism on my part.
(2) Billions sound like a lot but superpower states and major economic regions can marshal trillions when they want to. Trillions wisely applied are what it is really going to take. This brings us to the issue of statism or dirigisme. Taking Wikipedia’s definition;
“Dirigisme or dirigism is an economic doctrine in which the state plays a strong directive role as opposed to a merely regulatory or non-interventionist role over a capitalist market economy. As an economic doctrine, dirigisme is the opposite to laissez-faire, stressing a positive role for state intervention in curbing productive inefficiencies and market failures.”
History shows that with every great state of the last 200 years, dirigisme played a major role in at least some of their leaps forward in economics and/or their survival and recovery from economic, war or endogenously caused catastrophes. Dirigisme works and works far better than laissez-faire. It comes with national (and international) strategies, long range plans of the state planning variety and involves planning via scientific and administrative methods. This stands in contradistinction to laissez-faire (now called neoliberalism) which generates extremes of inequality, inefficiency, infrastructural decay, whiteanting of all national capacities and inaction on national strategic matters be they environmental, social, economic or military.
Without naming too many historical examples (rise of Germany in the 19th/20th C, The US New Deal, the reconstruction of Europe post-WW2 and Japan and its MITI lead strategy) we can look at the modern example of China. The most statist nation in the world, it has vastly outperformed all nations of the West, and roughly comparable rivals like India and Brazil, with the West having been trapped in neoliberal-induced secular stagnation. This oversimplifies the case to be sure. There are other reasons why China rose and why the West stagnated. However, the unwillingness to do strong state planning and the willingness to let wealth and power accumulate in few hands and by default dictate national strategy, in the senses alluded to above, have been major reasons for the West’s failure.
Capitalist operations, in a mixed economy, perhaps have their place, as China’s example shows but the overall imposition of strong state dirigist planning is an absolute necessity or what happens is precisely the egregious mess we see in the West: decaying social and economic conditions and decaying infrastructure across much of the nation: an obsession with the tertiary fripperies of self-indulgent consumerism as opposed to useful tertiary services supplied by the state: and a woeful and shameful inability of developed nations to deal with a modern pandemic or with climate change.
Markets move slowly. Precisely! Politics moves slowly while it is dominated by rich market players who prefer the status quo. Precisely! It is faith in markets as THE guiding force of our society which must jettisoned and indeed consigned to the dustbin of history. Markets have a place but only well-regulated markets obeying the commands of the state as hopefully a democratic state of the people. Market economics merits a serious demotion to a fourth order decision making position in the running of our nations. Democracy, Ethics and Science must be the great informers of our decisions. They must be used to decide our resource allocations through coordinated state and community actions and decisions. Finance and markets must simply be the tool of the democratic state and democratized communities. Decide the priorities by non-market means (Democracy, Ethics and Science) then use managed and well-regulated markets and finance to move the money to the affordable needs. Money and markets must be the servant not the master of our decisions.
JW, since you mentioned Jeff Bezos, shout out to who might advise his philanthropic ventures, ex wife MacKenzie Scott…
“Giving Billions Fast, MacKenzie Scott Upends Philanthropy
“Through a streamlined operation, Ms. Scott has given away $6 billion this year, much of it to small charities and nonprofits.”
nytimes com 2020/12/20/business/mackenzie-scott-philanthropy.html
(spaces – replace w fullstops)
Ikon, imo he tail is now wagging dirigisme & laissez-faire dog. Depends on who’s objective or side you are on..
Defence is dirigiste – “Most modern economies can be characterized as dirigist to some degree as the state may exercise directive action by performing or subsidizing research and development of new technologies through government procurement (especially military) or through state-run research institutes.[5]” Wikipedia.
Ikon said: “Dirigisme works and works far better than laissez-faire. It comes with national (and international) strategies, long range plans of the state planning variety and involves planning via scientific and administrative methods.”
Dirigisme may work better. And may well be an apt descriptor now for;
Climate Change Authority
GBR Foundation
Etc… insert capital dominated quangos…
“Dirigiste policies often include indicative planning, state-directed investment, and the use of market instruments (taxes and subsidies) to incentivize market entities to fulfill state economic objectives.”
…
“Most modern economies can be characterized as dirigist to some degree as the state may exercise directive action by performing or subsidizing research and development of new technologies through government procurement (especially military) or through state-run research institutes.[5]”
https://en.wikipedia.org/wiki/Dirigisme
Like command and control. If laissez-faire didn’t command and control, we would be the command and control. We just don’t see it much on the outside.
Ikon, I feel your use of dirigisme is, sadly, effected by Marilyn Strathern’s axiom of Goodhart’s Law. Please correct me as req.
And ‘who owns the gold makes the rules’. Deepak Lal said “the dirigiste impulse has not been stifled but merely transformed…” (link below)
****
“Generalization by Marilyn Strathern
“In a paper published in 1997, anthropologist Marilyn Strathern generalized Goodhart’s law beyond statistics and control to evaluation more broadly. The phrase commonly referred to as Goodhart’s law comes from Strathern’s paper, not from any of Goodhart’s writings:
● “When a measure becomes a target, it ceases to be a good measure.[4]”
“One way in which this can occur is individuals trying to anticipate the effect of a policy and then taking actions that alter its outcome.[5]”
https://en.wikipedia.org/wiki/Goodhart%27s_law
****
“Australian Competition Policy: Deregulation or Reregulation
Deepak Lal,
Alan Moran,
David Briggs,
Richard Scheelings,
Allan Fels,
Peter Allport
Institute of Public Affairs, 1998
“A collection of papers regarding Australian Competition Policy.
● “From Planning to Regulation: Towards a New Dirigisme? (Deepak Lal)
Regulating Mergers and Access to Essential Facilities (Alan Moran)
Taking Dynamics Seriously in Competition Regulation (David Briggs and Richard Scheelings)
The ACCC’s Attitude to Mergers (Allan Fels)
Natural Monopoly Regulation in New Zealand (Peter Allport)
From Planning to Regulation: Towards a New Dirigisme? (Deepak Lal)
“From Planning to Regulation: Towards a New Dirigisme? (Deepak Lal)
“Introduction:
“‘For many years I have been a student of what I have elsewhere termed the ‘dirigiste dogma’ (Lal, 1997a). With the worldwide discrediting of planning after the events of 1989, the dirigiste impulse has not been stifled but merely transformed from planning that sought to supplant the price mechanism to regulation that seeks to supplement it. The intellectual basis for both sorts of dirigisme is the same. Dirigistes spanning the political spectrum have rallied around the banner of bureaucratic regulation to correct various forms of alleged market failure. These relate to externalities, in particular those having to do with the environment and various forms of monopoly. Having dealt with the former elsewhere (see Lal, 1994, 1995) I shall be mainly concerned with the latter.
“This new metamorphosis of the dirigiste beast is one which has plagued the US since World War II: bureaucratic regulation of the market”.
http://www.australiancompetitionlaw.org/readingroom/book1998ipa.html
****
And i agree here Ikon…
“There seems to be a particular problem in running a late stage, hybrid dirigist-neoliberal system. A little dirgism in a neoliberal system is a dangerous thing. This, I think, is the crux of our problem.”…
https://johnquiggin.com/2019/07/09/the-murray-darling-basin-scandal-economists-have-seen-it-coming-for-decades/#comment-212219
Neoliberalism’s intent was to make the state more incompetent than big business capitalism and the people less powerful than a handful of billionaires. Only in that manner could oligarchic neoliberalism survive at all. The problem is that the whiteanting of government, society and political economy leads to total collapse in the long run. At some point the people must rebel against the collapse of all their hopes or else lie down and die. Biological and neurological imperatives will guarantee that most people will not simply acquiesce, lie down and die.
My capitalist small investor son notes, “the big capitalists get zero interest loans and pay no taxes. How are ordinary people supposed to compete against that?”
Michael Pascoe writes in The New Daily:
“Money is now free for big business, but that’s still not enough to entice the big end of town to increase investment in Australia….
Reserve Bank figures show the average cost of a variable loan for big businesses (defined as having output of more than $50 million a year) was just 1.6 per cent in February. After inflation and tax, 1.6 per cent is effectively free money.
By comparison, money costs medium businesses (annual output between $2 million and $50 million) 2.76 per cent and small businesses (output less than $2 million) 4.47 per cent.”
It’s not that hard to find, by due diligence, tech and other innovative companies which are paying up to 10% for finance and are still making money. But the interest difference is a huge headwind for innovative business as opposed to oligopoly businesses getting free money. This has to be one of the reasons real change is so hard under our neoliberal oligopoly.
We also have found out in the Propublica Tax Investigation what low taxes billionaires pay.
https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax