Posts Tagged ‘economics’

Economics and Climate

October 17, 2017

Its simple really.

If destroying the environment makes a profit and saving it has a potential cost, then saving the environment will not happen – especially under capitalism.

However, this point can be generalised.

If destroying the environment allows more tax payers’ money to be given to the established wealthy then that will happen especially under a ‘free market’ government

If destroying the environment conserves the power of the established elites, and saving it might challenge them, then saving it will not happen.

If it is easier to destroy the environment by continuing as we have done or persisting with the default position, and saving it takes effort and thought, it won’t happen.

That’s all the economics you need to know


Capitalism vs Feudalism

October 5, 2017

Capitalism and Feudalism are not the same, but it is useful to make a comparison between them focusing on power and privilege – however much free market apologists do not want to talk about these issues.

In feudalism we basically have the following set up – a largely hereditary class system composed of:

  • 1) Aristocracy, Lords etc. with command of land, law and violence.
  • 2) Crafts people, restricting knowledge of their ‘mysteries’, organised in guilds. Some travel, some are stationary.
  • 3) Merchants and traders who convey goods between cities. Monetary wealth starts to concentrate here. Some cities manage to establish a degree of independence.
  • 4) Church: control of communications, more esoteric non-craft based knowledge, cosmology, salvation.
  • 5) The peasantry, largely bound to a Lord and an estate. Peasants are dependent on the Lords for their livelihood.
  • There is also division by gender. Aristocratic women have more power, privilege and opportunity than peasant women, but they can still lead a relatively constrained life, being bargaining chips for their fathers for alliances. There is some upwards mobility (the idea that people can move up from their parents’ position in life). Historians dispute how much, but there are examples of people being recognised for combat virtues, mercantile abilities and intellectual virtues and moving up the class system to a degree.

    The Church and the Lords have an uneasy truce, but in general the Church promotes the ideas that the Lords have the necessary inherent virtues to rule, and are put there by God, and revolt is bad.

    There is little resembling the present day state. Lords are tied together by ties of oath and kinship. The king is the supreme lord, but he only has a small administration and his own loyal troops. As Shakespeare said “uneasy lies the head that wears the crown”. A quick study of British feudal history will show kings being killed or displaced or disciplined with regularity. It was only with the end of the Wars of the Roses that we get the start of something approximating a modern State. Henry VIII takes over the church and builds a new aristocracy loyal to him through redistribution of its wealth. Elizabeth continues the trend with a secret police and more admin, but even she is so poor that she has to regularly travel the country with her court living on the beneficence of fellow aristocrats. Merchants get more and more control over the wealth. In the middle of the next century a mercantile and largely popular revolution kills Charles I, and sets up an independent government. The Merchants and Presbyterians crush the more democratic elements. Eventually the kings come back, but they are subordinate to Parliament and mercantile wealth for funding – James I and the Stuarts are thrown out. Capitalism develops.

    Out of this history the traditional power and class structure of capitalism appears and is something like this:

  • 1) State: control of law and violence.
  • 2) Capitalists and remaining aristocrats: owners and controllers of business, wealth and land.
  • 3) Professionals: control of knowledge (science) education and entrance to the professions.
  • 4) Media, distribution of knowledge.
  • 5) Unions, representative bodies of workers. Workers are generally dependent on capitalists for their livelihood.
  • 6) Churches.
  • However over the last 40 years, since the Thatcher/Reagan neoliberal (talking about the freemarket) revolution, wealth has become the dominant source of power, purchasing, curtailing, taking over or destroying all the other bases of power. Wealth has the potential to be the ultimate source of power because it can take over anything.

    We now have a situation in which wealth controls State, law and violence though politicians and party funding; it controls knowledge through think tanks and corporatisation of universities; it largely controls media and the distribution of knowledge; and has largely destroyed or crippled unions.

    We live in a hierarchical capitalist plutocracy. This is perhaps the inevitable consequence of putting business and profit first. Business people become the only people worth talking to, or listening to, and their think tanks promote ‘free markets’ (ie the total dominance of business interests) as the only important part of society. They funded Hayek, Mises, Cato inst etc. to make a coherent justification for their unimpeded rule. We now know that the wealthy are wealthy because they “worked hard”, have “special talents”, are “innovative”, are “blessed by God or the market” etc. Revolt, or even objection, is bad.

    This is not to say that the corporate class is completely united. There are divisions which struggle against each other. For example a rough division occurs between those capitalists (and their hangers on) who have a relatively humanistic attitude to the rest of the world, think environments and people require some support or equalising of opportunity, and those who don’t, or who think all good and only good all arises through ‘the market’ or the actions of corporate capitalists.

    There are also gender divisions, relatively few women control wealth production, and the same is true of race/ethic divisions within the country. Everything I have read suggests that upwards mobility has declined over the same period. This implies that class has ossified the more free markets are valued.

    Basically in such a system, the “billionaire next door” can do whatever they like, unless they are opposed by another billionaire, and we see this happening all the time. All other controls on the power of wealth have largely evaporated. It is possible to see most right wing policies at aiming for the removal of any restrictions on wealthy individuals, or any possibility of poorer individuals curtailing the impact of these individuals on their own lives.

    It seems pretty obvious that has well as ‘totalising’ power into plutocracy and rendering it largely (if not completely) hereditary, capitalism likes to displace the costs of its activities on to others, through distribution of pollution, injury environmental destruction, subsidy and so on. So the rest of us end up subsidising their wealth. This increases profits and anyone who does not do it, is at risk in loosing investment, and of being destroyed by a less principled company….

    So one difference between capitalism and feudalism, is that there were more bases for power in feudalism and likely more freedom to exit the system, or to curtail excessive destruction of the system by one particular group. Another is that there was less material wealth. Most of the practical benefits of that wealth have arisen through better technology and medicine, whether the professional organisations could have done that in western feudal society is unknown, but it certainly started there.

    Libertarian Fantasy….

    October 3, 2017

    I’ve just been reading an article by Australian Parliamentary libertarian David Leyonhjelm (ie a government man) which starts “Living in Australia sometimes feels like living in a bureaucrats’ version of a spaghetti western. The heroes are the brave and all-knowing public servants, while the villains are the naughty people who are too foolish to realise that government knows best.”

    I sometimes wonder what world the silly right live in. Where are these pages of news articles, or TV programmes, saying how wonderful public servants are?

    I’d be surprised if he could find more than a couple in the last ten or so years. The organised hue and cry against them is huge… and business people have their own section of the news in which we can constantly hear how heroic they are and how they fight against people being protected from them (unless, perhaps, some journalist has decided that the public should be informed of what seems like normal corruption.)

    Instead of bureaucrats hindering business, we have daily reports of businesses being allowed to ride over people, being given permission to injure or poison people for profit with full governmental support. Want to industrially fish in a national park? Go ahead. Want to destroy the climate, build pointless roads, or denude the Great Barrier Reef? Here’s some taxpayer money. Want to scrap regulations? Lower worker’s wages? Destroy the water table? Mine in people’s backyards? Here’s the legislation.

    “We are open for business” – not people.

    We live in a plutocracy in which “Business is not the solution, business is the problem” (see I can do slogans too…)

    The reason why things like AirBnB might needs *some* regulation is easy to find if you live in a block with a number of such units. All night parties, damage to surrounds and so on. Costs spread on the rest of the strata owners… just like most business loves to spread the cost of pollution and take the profits for itself.

    I guess the libertarian capitalist solution is just to let business get on with destroying people’s lives and for those who object to move somewhere else – where they will probably get done by another business…

    We can all cheer for that…

    Climate change and prosperity

    September 23, 2017

    People can argue that climate change will bring economic prosperity. This is supposed to arise because currently frozen areas will become less frozen, the northwest passage will open, and we can more easily obtain minerals and oil from currently inhospitable locations.

    So, let’s be clear – there may well be parts of the world which do appear to get a strategic or financial advantage from climate change. That is indeed possible. That does not mean the rest of the world will not suffer severely, nor that the melting ice will not mean that sea levels will almost certainly rise impacting many communities, that mountain glaciers will almost certainly shrink lessening water supplies, that deserts will probably expand, and that existing farming areas may become less productive. It is also possible that this could cause global warfare as people fight over access to water and arable land.

    Indeed, I might argue that one of our problems is that we live in an economic system in which fantasies of wealth are encouraged to take precedence over survival, or even over having a healthy eco-system. Wealth has become symbolically equivalent to life and happiness. However, there is no prosperity if a civilisation undermines the ecologies it needs to survive or flourish. With current trends of climate change, it would seem that there is only increased hardship for most people, whatever the new economic openings (at best – it is hard to predict what the worst could be).

    The fantasy of boom, also tends to be unreal because our economic system is problematic. Since the 1980s it certainly does not look like the proceeds from economic booms have been shared around. They have mostly gone to particular, and very small, groups of people, while the problems of economic busts have been shared around. So an economic boom arising because of the artic opening up, or tundras melting, is not likely to help that many people, or compensate the rest of us for the climate becoming tumultuous and hard.

    It is probably better to put the money and effort into stabilizing climate, before pursuing fantasies of gain.

    Action on Climate Change

    September 17, 2017

    Some random comments.

    Let us be clear, the issue is that people should not emit more greenhouse gases than the environment can handle, if we wish our ‘civilization’ to survive – not that we should not emit any. Not emitting any greenhouse gases is impossible, and the system emits and reprocesses these emissions naturally, just not as much as we are currently emitting.

    Coal is particularly bad in terms of the poisons it emits at all stages in its production and use. There is very little positive to say about coal (that is not in the ground) at this stage in our history. Coal mining and power probably needs to be eliminated, as there is no evidence that coal can be made ‘clean’ or environmentally friendly to the degree that we need it to be.

    We probably also need to work at changing what seems to constitute modern life. Modern life is not a product of free choice but of what we were offered and chose within a particular set of social arrangements that did not value ecological survival.

    That needs to change – and frankly I’m not sure people really ‘need’ or ‘want’ disposable bottles, polluting and failing concrete, coal power, massive amounts of beef, destroyed fishing grounds, and so on. This can be modified, and hopefully will modify.

    It will be hard of course. Some of the problem may well be that the system we live in seems to create a psycho-spiritual emptiness which we fill by purchasing products – and this keeps us acting as wage slaves and generally making ourselves feel empty. This is part of the pattern of domination which we often call neoliberalism, but is probably better ‘capitalist plutocracy’.

    Recognising plutocracy is important. I’ve rarely met anyone who is interested in renewables, who is not aware that these new technologies are being resisted by people who have lots of wealth, power, status and symbolic resonance tied up in fossil fuels. It’s pretty much an every day experience, and the established powers have heaps of money to throw around to influence the debate. Without them, and without the triumph of neoliberalism, we probably would not be having a debate; we would be engaged in finding the best solutions. Resisting plutocracy is important but difficult.

    My main problem with the “energy problem” is that it distracts attention from the other ecological crises which are happening simultaneously. These are produced by building (concrete), mining, farming methods and so on, which are destroying our fresh water supplies, downing our oxygen supplies, wrecking the phosphorus cycle, killing the oceans and so on.

    To be real, we need a lot more action on a lot more fronts.

    Christiana Figueres 05

    September 17, 2017

    Notes on a talk given by Christiana Figueres (Ex-Executive Secretary of the United Nations Framework Convention on Climate Change) at the Energy Lab 05:
    [My comments in square brackets]

    [During the Paris talks, there was much activist discussion about the presence of fossil fuel companies at the discussion and the amount of influence they may have exerted. In this answer to a question, she may well be responding to this…]

    We all know that fossil fuel companies have large amounts of fossil fuel reserves and exploration processes on their balance sheets. These are reserves, which if abandoned [as we do need them to be], will probably cause massive loss in share price and could drive the companies out of business [- or make the subject to takeover bids from less principled companies]. Consequently, many of these companies are putting up a strong fight against change.

    However, they don’t want to be the “Kodak of the Twentyfirst century”, superseded by a newer and better technology.

    Their survival is ultimately in their hands. There is no point in demonising them, they are working within the parameters they are used to, and the parameters which ensure their survival. If you demonise them then they will see themselves as being a corner and fight to the death. They have huge amounts of money they can throw at this fight – they can win – relatively easily [see how well they have been doing so far and they are not yet desperate].

    We need them because of their experience and because they not only have masses of money which could be spent constructively, but because they have amongst the biggest engineering capacity and experience of anyone on the planet. We need this capacity devoted to being constructive. Energy demand will likely increase, so we need energy companies.

    So we invite them to the table to get them involved.

    There are some good examples of change in oil companies.

    StatOil from Norway. They have rights to drill the Artic. They know this is not popular. They know the drilling is expensive, especially given the price volatility of oil. The problem is that abandoning previously promised exploration, with money already sunk into it, would damage their share price.
    However, they are also seeking a future based on their experience, and building huge wind power platforms. They know heaps about building stable platforms at sea – so this is really good.

    Similarly, Total from France, is migrating its capacity. They have bought a big solar panel company and are set to improve its panels, especially for sale in high temperature countries. They have bought a lithium battery company and are set to try and improve the batteries.

    Change is happening.

    Christiana Figueres 01

    September 13, 2017

    Notes on a talk given by Christiana Figueres (ex-Executive Secretary of the United Nations Framework Convention on Climate Change) at the Energy Lab 01:

    There are two different principles which need to guide us.

    1) The moral imperative: Protection of vulnerable people
    Poor people throughout the world are the most at risk from Climate change, even though they have emitted very little of the CO2 that is the problem (even en mass). If we continue to destroy the climate, there will also be massive people movements away from unlivable areas.

    2) The economic imperative
    We can only emit another 600gt of greenhouse gases before we go into irreparable climate instability with uncontrollable and destructive weather.

    We are currently emitting more than 40gt per year. We are exceeding what the natural systems of the planet can deal with.

    If we stopped emissions completely that would be great, but we cannot do that without stopping the economy. So we need a transition period in which we move out of greenhouse gas emitting energy sources.

    Now 600/40 = less than 17 years.

    We have a time problem, but basically we need to start reducing greenhouse emissions within 3 years at most. We need to develop a trend of decreasing emissions until we reach zero emissions (or less).

    That involves changes in policy, a shift of finance and technological innovation. It is all doable, and is in people’s interests to do.

    Most capitalism is ‘crony capitalism’.

    September 10, 2017

    Often people speak of ‘crony capitalism’ as if it was an aberration of economics. However it is an inherent part of the capitalist system.

    It was recognised by Adam Smith when he said that:

    People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

    It seems to be an essential part of human nature for people to cooperate to further their group interests, and when the powerful and wealthy do this it has large consequences. They also try and break up cooperation amongst ordinary people by demonizing Unions and preaching individualism to workers. That helps magnify the power of their own cooperation.

    If business people can team up to manipulate the markets then they will. If capitalists can team up to make a State to enforce laws that benefit them, then they will. If capitalists can team up to take over the State to enforce laws that benefit them then they will. All of these acts help make money for them, and that is the point; such behaviours are a normal part of profit seeking. The bosses will call these laws, and these power structures, ‘free markets’, or say they are essential to the functioning of those markets.

    In a society in which profit is the prime good, then the wealthy become the epitome of virtue and talent. They are by definition the good and worthy people, who have their status because of that virtue. They are supposedly the admirable and intelligent people who are worthy to rule, and critising them is base envy. They make sure that their kin inherent the wealth, and form a ruling class with a State to support them to make sure that even more of the social wealth goes to them. That is basically the history of the last couple of hundred years with a short interlude after the second world war.

    In capitalism, wealth eventually comes to control the means of communication, the means of learning and the modes of thought, and the means of violence and law enforcement. By owning and controlling these essential parts of social process, the wealthy make sure they cannot be attacked, and that ‘free markets’ seem sensible and legitimate – and if you don’t like these markets, well you are an enemy.

    The wealthy elites may try and deflect attention from their power by paying people to attack other groups as elites, but generally these other ‘elites’ are not that powerful to begin with – they don’t have that much wealth. Wealth ends up controlling the other elites (where do they get the money from to live on?)

    The system of free markets always makes plutocracy, and the State grows to maintain the systems of wealth and oppression.

    Indeed people/politicians who talk a lot about free markets carry out these policies all the time – this is what is called neoliberalism – and it has been working quite well for the wealthy for over the last 40 years.

    Climate hoaxes

    September 5, 2017

    I keep reading people arguing that climate change is a hoax promulgated by governments or by the corporate sector.

    I guess this shows something about how disinformation works, as the most obvious source for conspiracy would seem to involve those who make money from doing the things which are thought to cause climate change, and who generally have a reputation for ruthless political engagement; that is fossil fuel companies, oil and coal barons etc. In general renewable companies do not have the established connections with politicians, and do not have the money to throw at false research or think tanks. Most of renewable companies also came into being after climate change first seemed to be a highly probable trajectory in the late 1970s early 1980s.

    Perhaps because this is implausible, and because people who don’t like corporations will have some awareness of how fossil fuel companies have acted in the past, it is more common to argue that scientists ‘believe in’ climate change because governments pay them to and encourage it.

    There is only one minor problem with this argument. There are few governments in the English speaking world who show they are really interested in promoting the reality of climate change, and getting out of fossil fuels.

    Republican and other rightist governments often try to forbid people from talking about climate change, they never make it central to their agenda or say the situation is urgent, and they often try to remove research monies from people who study climate change, or gather data. They accuse people of politicising weather disasters when those people point out that these weather events could have something to do with the predicted consequences of climate change. They may appoint people from fossil fuel companies to Environmental Departments, or to enquiries into energy reform. Governments can even try to make it easier for corporations to pollute and frequently actively resist renewables. They can tell companies to continue with coal when the companies do not think it economic. Governments encourage heavily polluting fracking and so on. Even the few relatively active governments are not hostile to increased coal mining and exports, and do their best to protect established corporations, as in India and China. Governments rarely behave as if they actually believed that climate change was a real threat, or as if it was a convenient ruse to increase their power.

    There is no real government campaign, which I know of, in the English speaking world, which has promoted climate change and anti-climate change action. If you know of something consistent and coherent, which survived for more than a couple of months until the fossil fuel companies persuaded them otherwise, then please tell me about it!!

    The fact that scientists keep being persuaded by the evidence that climate change is real and humanly caused, when this goes against government instruction and bias, could be taken as persuasive evidence that it is real.

    The Purpose of Business

    August 14, 2017

    The purpose of business is profit.
    (keep costs low and charge as high as possible)

    Profit means survival.

    If something is profitable, then it will be done.

    If it is destructive to others, or hurts others, and profitable then it will be done.

    If it looks like high level executives will make a greater profit and their actions destroy the business, then it will be done.

    If business can use government to share its costs with taxpayers, or alleviate its responsibilities for harm, and that action increases profit, then it will be done.

    If its beneficial to others and costs, then it won’t be done.

    If it costs the high level executives, then it probably won’t be done.

    If a business can appear to be doing good, while doing nothing to affect profit or increase cost, then that can be done, but it might not.