Friday, October 31, 2008

Celebrities - so what?

Hard to find much to say about a couple of grubby boys on TV.

All celebrities remind me of the end of The Truman Show – although everyone’s completely enthralled while it’s on, the moment he walks away they just change channels and watch something else. That’s the difference between being a celebrity and someone who matters (such as my doctor, children’s teachers, even my dentist).

What worries me rather more us that there is a constant supply of celebrities to be enthralled by, though – it’s becoming increasingly difficult to keep a hold on real life.

Thursday, October 30, 2008

Nationalisation is a right-wing policy

Today the Financial Times reported that:

The overwhelming majority of Germans would welcome the nationalisation of large segments of the economy, including its energy, transport and financial infrastructure, according to a new opinion poll that underlines the strength of popular opposition to free-market liberalism in Europe’s largest economy.
Perhaps there will be unreconstructed lefties like me cheering at the news.

Well, not really ‘unreconstructed lefties like me’, given that nationalisation is a truly bogus leftwing policy. What does it achieve? Instead of organisations being directly in the hands of capitalists who prefer profit to people, they are put in the hands of the state. But in what sense is the state anymore leftwing than business? It is true that, under a leftwing government they may be put to socially progressive purposes, but when can we expect to see a leftwing government again? Who would be a candidate? The current German government? The current UK government? Any current government?

And once they pass into the hands of a rightwing government, what can we expect of them then? Only that they become instruments of a pro-capitalist economic and social policies, starting with starving them of resources and holding down state workers’ pay as a way of controlling private sector wages.

No, the leftwing solution is not nationalisation but socialisation – direct control over economic organisations by their workers and managers, based on unqualified legal title and unqualified democratic control.

Getting the sums right

The International Energy Agency – described by the Financial Times rather implausibly as the ‘oil watchdog’ – announces that if we don’t invest very heavily indeed in new exploration and production, world oil production can be expected to fall by 9.1% per annum from now on. Apparently meeting the demand from China, India and other developing countries’ demand will cost around $360bn each year until 2030. And even if we do make all that investment, it will fall by 6.4% anyway. So peak oil is well and truly here.

Curiously, this does not occur to the FT, who then add that the IEA has consequently revised its projections for oil consumption downwards from 116 mbd (million barrels a day) to 106 mbd - a little under 10% less. Yet we are currently producing only about 87 mbd. So according to the FT, if we start with 87 and subtract at least 6% a year, we will get to 106 in 2030…

Who says educational standards are falling? Evidently some of the best educated members of my own generation – the FT’s journalists – can’t add up either.

But the FT are hardly alone in this peculiar visual impairment. Governments everywhere seem to be totting up the figures for economic development – especially in the developing countries – and coming up with equally fantastic numbers for all sorts of things. Oil, gas – even coal looks a bit shaky now. Industrialisation will proceed apace, yet the supply of many of the most important inputs will peak soon. Nor do we have even an idea about substitutes for most of them. So prices will rise and rise, supplies will grow scarce and then fall to nothing – but industrialisation will proceed apace.

Population too – it will level off at around 9 billion sometime around 2050. Yet many of the basic ‘inputs’ for population growth – water for crops and drinking, fertile land, farming skills, people in the right places (i.e., not in giant slums) – are not only in hopelessly limited supply for such a number but we are actively reducing them by our current policies. We are currently producing less and less cereals per head each year, we spent most of the summer sorting out a global crisis in rice supply, we are responding to the melting of the glaciers on which a huge proportion of the world relies for basic drinking water by introducing crops that demand more water – but there will still be another 2,500,000,000 of us by 2050.

Why the double vision? Because a) we don’t want it to be true, b) most of the tools we have for analysing the problem simply don’t work when faced with problems like this, and c) we haven’t a clue what to do about it, not least because we have absolutely no faith in popular willingness to support radical change.

Take environmental economics – surely that can give us the answers? The clue’s in the name!

Not really. Like all other flavours of ‘modern’ economics, environmental economics assumes that most problems can be understood in marginalist terms - balancing claims on our resources to maximise marginal utility, optimise the distribution or substitution of resources, etc. But it has nothing to say about a situation in which resources fall below basic survival level and we haven’t any substitutes, or where the decision to be made about ‘utility’ is about who will die and who won’t. Not really a ‘marginal’ question, unless you are willing to regard the falling over the edge of a cliff as just another incremental step.

That doesn’t add up either. Perhaps it’s time for remedial maths classes for economists or politicians.

Tuesday, October 28, 2008

A summary of where I think we are now

The problems posed by the human impact on the environment are huge and extremely urgent and we have no previous experience in solving problems of this type or magnitude. The means at our disposal are not only essentially incapable of solving these problems but they are inherently inclined to make them worse. Yet there is no time to create new systems. Therefore the only realistic option is to learn to manage these systems far more radically and on a far larger scale than we do at present. But so radical are the necessary changes that they are likely to be heavily resisted, and resisted by some of the most powerful forces on the planet.

The problems posed by the human impact on the environment are huge and extremely urgent. We need to reduce the impact we are having on the environment radically. In the leading industrial countries we need to reduce our collective carbon footprint by 90% or more, or perhaps even shift to a carbon-negative economy, in which we compensate for past excesses by absorbing more carbon than we emit. We are starting to move, but even the most ambitious national and international targets commit us to probably failing to halt this process. Meanwhile, almost every worst-case scenario – Arctic melting, climate damage, habitat loss – is turning out to be the best case. At this rate, we may well be living in the last century – if not the last few decades - of industrial civilisation.

At the same time, many strategic materials on which our current economic system relies – not only oil and natural gas but many metals and minerals - will become scarce to the point that they will start to disrupt our current economic systems within the foreseeable future. A number of absolutely basic resources such as fresh water and fertile soil will also come under threat within the same timescale, affecting so many people (especially in developing countries) that their effects are imaginable only if you are prepared to imagine the very worst.

But we started to exceed the Earth’s carrying capacity about a quarter of a century ago, and we have already started to witness the consequences.

We have no previous experience in solving problems of this type or magnitude. Pundits like to compare the impending crisis with the Second World War. As the next couple of chapters will make clear, if we do not take vigorous actions quickly enough, the fall of the Roman Empire may well turn out to be a better comparison – if not the last Ice Age. We are already losing – in many cases, actively destroying - the means to solve our problems. Within a few decades the losses will trigger a sequence of environmental implosions in which the collapse of this or that area – the Amazon forests, the Siberian tundra, vast undersea methane hydrate reservoirs - will release enough additional carbon to change the question from ‘How do we manage this?’ to ‘How do we survive this?’

Other events will be equally devastating. The melting of the Greenland and Antarctic ice sheets alone will make some of the world’s most heavily populated areas uninhabitable and flood many of the world’s greatest cities. The droughts that inevitably follow the final melting of most of the world’s glaciers (which feed many of the most important rives) will turn many of the world’s most densely populated – and nuclear-armed – regions to scrublands capable of supporting only the most meagre of populations. In the same timescale we can expect some of the world’s most fertile and productive agricultural areas to fail, including the American Midwest and California’s Central Valley, several of China’s rice-growing regions$$ and the Ganges valley.

Taken together, these processes will combine to ignite civil and political conflicts on an unprecedented scale even while massively damaging the social and political systems we rely on to manage such conflicts.

Meanwhile, the means at our disposal to solve all these problems are not only essentially incapable of solving these problems but they are inherently inclined to make them worse. Faced with any global problem, our most important resource is our economy. It is this that produces the means to do anything else, especially create the new systems and technologies we will undoubtedly need to deploy to escape our predicament. More than three decades after the first credible warnings of what would happen if we continued with unabated industrial growth and almost two decades since global targets and agreements on climate change were first promulgated, we have failed to meet practically every target we have set ourselves.

The fundamental reason for this is, straightforward enough. A capitalist economy relies absolutely on the continual expansion of profits. Without continuing the cycle of profit, investment and profit, it has no rationale and will cease to function. With that, all the remainder of society that relies so entirely on capitalist relationships – employment, consumption, taxation, government – will also collapse. With such a large proportion of all capital tied up in industrial machinery, global transport systems, vast retail networks and an enormous advertising and marketing industry – not to mention an almost official post-ideology ideology of consumerism – not only is our current economic system not designed to help us cut back, but it positively demands endless expansion. Although industry as such is not a problem – any machine can be turned off – capitalist industry is an absolute catastrophe. Under a capitalist regime, turning off the machines would put an end not only to the profits but also to the only system we possess that is capable of creating the means to solve our current environmental problems. Even replacing them with more environmentally friendly alternatives before they had recouped their original investment would cripple businesses.

Yet there is no time to create a new economic system. The problem is Now, and every past transformation as radical as the replacement of capitalism has taken literally centuries. Therefore the only realistic option is to learn to manage these systems far more radically and on a far larger scale than we do at present. The famous ‘turning on a penny/dime’ at the start of the Second World War is encouraging, but the changes needed now are far more fundamental. We have longer to complete them, but there is scarcely an area of everyday life they will not touch, and unlike the changes wrought at the start of the Second World War, this is not a transient change to be made in the face of a clear and present danger. If we are to succeed, we must take far more radical steps than anything ever contemplated before, forcing an extraordinary level of change (and perhaps disruption).

But so radical are the necessary changes that they are likely to be heavily resisted, and resisted by some of the most powerful forces on the planet. The situation is essentially that the next century will be by any standards the most expensive century in human history. That is, we will be investing not so much in grow as in change – often accompanied by shrinkage. Faced with such a situation, most governments and practically all businesses will try to deal with this problem by either evading their responsibilities or making someone else pay for them. Given that at least a significant fraction of governments and businesses have demonstrated a willingness to obtain economic resources and avoid social obligations by a combination of force and fraud, this may well prove to be the most violent century in human history too.

Yet there is a great deal we can do. But only if we are prepared to face up the reality of the situation, and only if we are willing to take action. Now.

Friday, October 24, 2008

Tax the rich till they hardly notice!

Descending briefly from my City eyrie in search of a decent cup of coffee, I am accosted by Mansoor. He sidles up to me, looking mischievous and slightly guilty, and it is soon clear why. He works for Shelter, the housing charity, and after a while people like him realise what evil parasites they truly are.

For what does Mansoor want from me? He wants £5 a month to help a homeless family get back on their feet. And why should he feel bad about that? Because as far as most people seem to be concerned, he might as well be asking the earth. When we walk a little too swiftly past Mansoor, carefully avoiding eye-contact and pretending we are too busy/already gave/dum-dee-dum-dee-daa, we know what a bunch of liars and moral inadequates we are. And we feel bad. And it’s all Mansoor’s fault.

But I stop and talk. We talk about how the poor are rendered invisible. How we seem to hate (or at least despise) the poor. Well, that's what I say, and he doesn't seem to disagree, though I have found that when I say things like that to charity workers, they get a bit nervous. Perhaps they have been trained to get the punters on their side, to appeal to their better natures. Waste of time, I would say - the ones with a better nature do not need it appealing to, and the ones without have already walked right by. As a measure of just how effective the charities' approach is, Mansoor is absurdly grateful that anyone is willing to give him two minutes, let alone £5 a month.

So there Mansoor and I stand, right on the edge of the world’s greatest financial centre, surrounded by more money than anyone could even imagine, talking about £5 a month to give children a roof over their heads.

So how much money are we surrounded by? Just the other day I found out that, each year, the total value of all the transactions carried out around here runs into the quadrillions of pounds/dollars/euros. I don’t know how much that is (other than that one quadrillion is 1,000,000,000,000,000), but I do know that we could solve all the world’s poor’s problems with a minute fraction of that much money.

And then I have a bright idea. Why not take a minute fraction of that much money? Straight off the top. How about taking just one millionth of the total value of every transaction that goes through London, New York, Hong Kong, Chicago – all the top 20 financial centres – and putting it into a fund whose sole purpose is to solve the problems of the world’s poor. Starting with their debts to the world’s richest, perhaps.

How about starting off by asking the London Stock Exchange to consider it as part of their corporate social responsibility? Ask them to give it all to environmental charities as part of their offsetting for the zillions of air flights their members make every year?

How much would that raise? I’ve no idea how much it would come to in total, but it would come to a billion out of every quadrillion pounds/dollars/euros worth of transactions. Would it harm our economies? I would guess not. Hard to see how raising a billion in a world that operates in quadrillions would come to more than their coffee money.

Good man, Mr Greenspan

Well at least someone's putting their hands up. From this morning's Financial Times:

Alan Greenspan, the former Federal Reserve chairman, said on Thursday the credit crisis had exceeded anything he had imagined and admitted he was wrong to think that banks would protect themselves from financial market chaos.

“I made a mistake in presuming that the self-interest of organisations, specifically banks and others, was such that they were best capable of protecting their own shareholders,” he said.

Good man (though he does qualify his responsibility a little later in the story). Now maybe we'll see as much candour from the FT itself. (Though with panto season looming, I am tempting to add, 'Oh no we won't!')