The last (I hope) extract from the climate change chapter of Economic Consequences of the Pandemic. I’m in two minds about whether this is really needed. The group of pro-nuclear environmentalists seems to be shrinking towards a hard core who can’t be convinced (and some of them, like Shellenberger turn out to have been concern trolls all along). But every now and then I run across people who seem open-minded enough, but haven’t caught up with the bad news on nuclear.
Category: Uncategorized
The full-court press
Another excerpt from the climate chapter of my book-in-progress, Economic Consequences of the Pandemic. Comments, constructive criticism and compliments all appreciated.
Read More »A zombie loan proposal re-emerges
2020 has not been a good year for thermal coal. Trends that were already underway have accelerated as a result of the pandemic. As the energy source with the highest marginal cost of operation coal has borne the brunt of reductions in electricity demand. As a result, planned closures have been brought forward, and new closures announced.
Financial institutions have announced ever more stringent divestiture policies, making new coal mines and coal-fired power stations increasingly uninsurable and unbankable. Insurance premiums for new and existing coal projects have risen https://www.eceee.org/all-news/news/news-2020/while-coal-premiums-soar-insurance-groups-still-supports-oil-and-gas/
National governments including tmajor coal consumers like China, South Korea and Japan have announced plans to reach zero net emissions by 2050 or 2060. Reaching this target implies a rapid end to new coal projects, and an accelerated phase out of existing ones.
It is striking, then, that emerging reports suggest that the State Bank of India might lend $1 billion to Bravus, the absurdly renamed Adani Mining, to finance its Carmichael coal and rail project in the Galilee Basin. A similar proposal, which reached the stage of a memorandum of understanding, was considered and rejected back in 2014.
Read More »RCEP
For some reason, I’ve been asked to do an interview with a Korean radio station about the Regional Comprehensive Economic Partnership, frequently described as “the world’s largest trade deal”, on the basis that the countries involved have a combined population of 2.2 billion, more than any previous deal.
The most interesting thing about the deal is what’s not in it (also, who’s not in it, notably India and the United States). Early drafts followed the classic pattern, with strong Intellectual Property and Investor State Dispute Settlement, while excluding environmental and labour protections (which never had a chance in this deal) . In the final agreement, the IP content, which previously included things like a binding commitment to Plant Variety Rights has been watered down to a generic agreement that IP is a good thing, while ISDS is gone altogether.
ISDS was always an appalling way of institutionalizing[1] corporate power. But the attempt by Philip Morris to use ISDS to overturn Australia’s plain packaging laws, using a spurious corporate base in Hong Kong, seems finally to have tipped the balance against it.
Much the same can be said about strong IP. The remorseless extension of copyright, calibrated to the lifetime of Mickey Mouse, seems finally to have come to an end in the US, and any attempt to extend the scope of IP now encounters vigorous resistance.
fn1. I’m sure there is a better word to express what I mean here, that corporate power is locked in more or less irrevocably by this kind of deal. But I can’t find it in the memory bank, or the Thesaurus. Any suggestions?
Why zero interest rates are here to stay
That’s the self-explanatory title of my latest piece in The Conversation. It’s wonkish, but important. As I’ve explained here and here, an economy with zero real interest rates works very differently from the kind we are used to.
For-profit services drive standards down
That’s the key point of my article in The Guardian this week. The intro focused on aged care and the headline picked that up, but the main points are general
There’s nothing inherently desirable about competition. If the alternative is collusion against the public interest, competition is a necessary evil. Far better, when it can be achieved, is cooperation to be the best we can at what we do. That’s the core value of the service professions, professions derided by market reformers as “producer interests”.
Much the same is true of choice. As far as flavours of ice cream are concerned, some people will like butterscotch, some will go for mango and some might even prefer Neapolitan. The more choices the better. But for the human services that matter most to us, it’s not a question of how many choices we have. What matters is the quality of the best choice. We want our doctors and nurses to keep us well, our teachers to educate and inspire us, and our carers to give us comfort and dignity.
Elections open thread
Post your thoughts on recent and coming elections here. Civil discussion and no coarse language.
I may have something to say a bit later.
Transmission too
In my article arguing that electricity from solar PV (and wind) could soon be too cheap to meter, I didn’t mention transmission networks. That was for space reasons.
The case for public investment is actually stronger for transmission than for generation. Electricity transmission lines have the same cost structure as renewables (low operational cost and long lives), if anything more so, meaning that the cost of transmission depends primarily on the need to secure a return to the capital invested.
More than this, the electricity grid as a whole is a complex network in which valuing the services of any individual component is just about impossible. That in turn means that relying on markets to make optimal investment decisions is untenable.
For these reasons, the electricity transmission network should never have been privatised. I’ve been arguing for renationalisation for years.
Amazingly, in the new low interest environment, this idea seems to be gaining traction, at least as regards new investment. Labor has proposed a $20 billion public investment. The government hasn’t gone that far, but is seeking to use its own borrowing capacity to provide low cost finance for transmission investment ( a half-baked compromise, but better than nothing).
The arithmetic of retirement income: the case of zero interest rates
Back in 2009, I looked at the implications of the GFC for retirement income, working on the assumption that retirees could safely aim for a 2 per cent real rate of return. The bottom line was that current workers need
double contributions, to 20 per cent of income and shift the work-retirement balance, so that you work from 25 to 65 to finance an expected 20 years of retirement income.
Since then, the real rate of return on safe investments like government bonds has fallen to zero (maybe below). That means that you can treat your net worth at retirement as being equal to the amount you have to live on for the rest of your life. In particular, if you work from 25 to 65 and want finance 20 years of retirement income holding your consumption constant, you need to save one-third of your income.
When I wrote in 2009, the general view was that we were saving too little, so the increase in required savings seemed like a good thing for the economy in general. Now, the reverse is probably true.
Budget reax
I have a couple of articles responding to the most momentous budget in Australian history. For those who’ve forgotten, it was introduced on Tuesday.
Here’s one in The Conversation on environment and energy policy (heavily edited and done in a hurry, so there are a few points I would have written differently).
And here’s one in Independent Australia, headlined Budget like its 2019, on the government’s failure to learn from the catastrophes of the last year.
John Quiggin 