Reflections on Garden World Politics Douglass Carmichael

367. MAHB seminar at Stanford today

Mar 17th, 2010 by doug carmichael

1. Per person divided from society, say on the order of $20k for everyone whose income is under 100k, after the age 6. Normal social welfare costs could be eliminated through this alternate and easier to manage system. It also deals with student costs.
2. Massively intense industrialization with zero emissions technologies that produce the needed items for society.

A very good discussion following up on the coal discussion last week ( the need to buy out the coal companies to prevent their co2 production). We ended last week with questions about money and finance. And today we added to it the problem of “unemployment”, which was reframed as a “problem” that the label “unemployment” hides aspects of that may be part of the solution. Obviously the core problem of not working is not receiving an income, under the normal model of no job no pay. To call it “unemployment” however suggests that the answer must be “employment”, but there are alternatives. Follow the argument:

If we desperately need a major tech push because the currently anticipated pace of tech innovation and deployment is too slow and small scale to sum up to enough change to deal with warming issues (and others such as pollutions), then we must be able to do such an enlivened push on innovative technologies (think nano and bio).

But what gets in the way of such a major escalation in tech innovation and new industrialization to meet the needs of a more open and sustainable society is that such an expansion would be highly automated, and lead to further loss of jobs, which people rightly fear, both in loss of jobs and loss of wealth.

But if this resistance were to disappear, rapid tech progress could be made.

How? It requires something like a negative income tax or guaranteed annual wage. More attractively this could be called a “social dividend” paid to everyone in society based on their being a part of a productive society which in part they “own” and deserve a dividend on the profits thereof. Alaska sends a check to each resident based on the amount of the state owned oil pumped each year. A good outline of this approach is in Capitalism 3.0 by Peter Barnes.

This led us this afternoon to the political question of how it could be done. We are now talking about two proposals. (we are talking US at this point, but as a model to be extended to the rest of the world).

There obviously would be massive shifts in social needs (for example long commutes for the poorest workers would dissapear).

What would be necessary for this to work is a new compelling social narrative that conveys the major aspects in a convincing and attractive systems – holistic way.

So to get to the narrative we expanded the picture:

We must avoid

Radical climate change
Civil wars based on resources and migrations

Agricultural collapse through climate and overuse.

Coping with the brittleness of the necessary energy shift.
Failing world economies

As one can see, sustaining, even enhancing feelings of economic security and well being are absolutely essential.

So the positive moves are

New industrialization
Annual citizen dividend and

Legalize drugs (the cost savings would be large).

Other issues necessary to face.

The need to constrain the concentration of profits obtained through leveraged investments. Basically to take banking back to the original function of loans for productive activities, not derivatives nor selling loan portfolios.
Higher taxes as proposed by Warren Buffet (whose taxes were lower than his staff’s.)
The need to create a culture that gives meaning to non-job holding lives. Extended leisure (the promise of which after ww2 was confiscated by policies that paid workers less and the rich more), and local projects.

If dividends are ok for the rich, they should be ok for the poor.

But the key point here is to get on with the necessary elements for coping with the crisis of a successful expanding species (what a rocky road that has been!) that has reached the boundaries of a round and increasingly crowded world. In other words, the time has come to give up conquest and empire (our ten thousand year history) and embrace meeting our fellow humans in a humanizing project of enhancing the quality of life through appropriate technologies and management of the natural world.

We also discussed the need to take everyone’s opinion seriously and try to meet all argument – mostly fears of economic loss and loss of social roles. Thomas Jefferson’s “Declaration” phrase.. “and the pursuit of happiness” meant for him the number of happenings in a life, the range of roles that brought one’s talents into the social process. Not hedonism but engagement.

We expect in part this question of self worth would be met by increased local initiatives in agriculture, schooling, and recreation. There are plenty of needs and so plenty to do.

So this is the first draft of our alternative narrative.

see http://mahb.stanford.edu

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366. Continuing UN report on “other worlds are possible.”

Mar 15th, 2010 by doug carmichael

There is some real courage in this short book. The metaphor of “other worlds” is right to the core. The write, and quote

Since the Second World War, development, so-called, has been as much about power play and geo-politics as it has the improvement of people’s lives. As Chaterjee and Finger write, the Cold War underpinned the Western development paradigm and the values upon which it is based: The Cold War became one of the driving forces of industrial development, because it stimulated scientifc and technological progress on the one hand, and promoted military-induced industrial production on the other…the Cold War cemented the nation-state system and thus reinforced the idea that nation- states were the most relevant units within which problems had to be addressed. Indeed, because of the Cold War, the nation-states continued to be seen as the units within which development occurs and must be promoted, because it is economic and military strength that defnes each nation’s relative power… Again, industrial development came to be seen as a means to enhance national power…9

Another frame, the cold war.Win by out producing. “we will bury you.” what a terrible heritage! That takes us back to the origins of WW! and he clash of empires, also over production and competition to be a player. Banks.

Climate change is a serious threat to human development. But it is also holds opportunity. Rethinking how to share a fnite planet, meeting our collective needs whilst living within environmental limits could not only rescue civilisation (yes, the stakes are that high) but be a way to tackle deeply entrenched problems of social injustice, and greatly improve overall human well-being.

So, we expand successfully till we bump into the round planet problem, and failing to respond, lose the chance to get to civilization. Remember Fred Hoyle on nuclear power?

They quote Jeffry Sachs he is mostly a problem in my mind)

The good news is that well more than half of the world, from the Bangladesh garment worker onward…is experiencing economic progress. Not only do they have a foothold on the development ladder, but they are actually climbing it. The climb is evident in rising personal incomes and the acquisition of goods such as cell phones, television sets, and scooters… The greatest tragedy of our time is that one sixth of humanity is not even on the development ladder.

Besides the obvious climate implications, there is no sensitivity to the fact that third world people are scrambling against larger economic realities. Life is painful just to keep up with others getting ahead. My recent rip to Guatemala showed a country both making progress and burnt out.this lack of sympathy and imagination i take as one of the real failures of American power.

Use of literature:

In Goethe’s famous tragedy there is a parable for development and the growth economy. Faust’s character has many incarnations. His frst self is the dreamer. But the dreamer is dissolved and Faust transformed into the lover. Finally, in his last transformation and ‘romantic quest for self-development… he will work out some of the most creative and some of the most destructive potentialities of modern life,’ writes Berman, ‘he will be the consummate wrecker and creator, the dark and deeply ambiguous fgure that our age has come to call, “the developer”.’

a good way of putting it (quoting in the text).

and 4). He wrote that the physical view of the economy ‘is governed by the laws of thermodynamics and continuity’ and so ‘the question of how much natural resource we have to fuel the economy, and how much energy we have to extract, process and manufacture is central to our existence’.

This normalizes the question without much ideology. Who cannot take this seriously? Our own local Hewlett Foundation gets into the mix. One can imagine the committee meetings where this happened.Perhaps i can track down a participant and get the story.

Yet there is a continued focus on economic growth as the answer to all the world’s ills. For example, the Commission on Growth and Development (funded by the governments of Australia, the Netherlands, Sweden, the United Kingdom, the World Bank, and the William and Flora Hewlett Foundation) was ‘brought together by the belief that the world’s challenges – political, environmental, misunderstandings within and between nations, vast differences in living standards within and across countries – are best met in conditions of rising and sustained prosperity, and expanding opportunities’.20 Its underlying assumption is that ‘…poverty cannot be reduced in isolation of economic growth…’21

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365. Stanford students.

Mar 15th, 2010 by doug carmichael

The topic for the seminar this last week was “what can happen.” After lots of directions mentioned, we focuses on education, especially in the sense of communities of practice dealing with climate change, and concluded that education would be more important in dealing with climate change than technology. Strong statement, woke me up.

Shanks and i worked with Castilleja school on integrating globalization issues, including climate, into their curricula. The faculty and board seem ready to move on an education that meets the basics more quickly so that real time can be spent on more advanced and challenging projects of engagement.

I am reading the UN report mentioned earlier and it has some paragraphs worth critiquing.

Industrial development…can be traced back to the Industrial Revolution and beyond. Indeed, the idea of development is rooted in the Enlightenment ideal of a rational society of free and responsible citizens, i.e., ultimately a society governed by scientifc principles and managed accordingly. The emergence of industrial production in the nineteenth century was rapidly incorporated into the development paradigm: industrial development came to be seen as a means – so to speak the motor – of making this modern and rational society come true.
Unfortunately, the means turned into an end, development became a goal in itself.

The problem here is that it looks like a desire for progress was the engine, but alternative view is that banking used the IR for profit, not for any intrinsic reasons.

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364. Obama lost year. a good analysis of why people are so angry, esp on the right.

Mar 15th, 2010 by doug carmichael

Many people do not trust te experts. who have brought war, bank failure, population, and increasinglyly thratening technologies they can’t afford. The anger at lost jobs, children dead in the two wars, all add up. here is some first hand reporting about that world.

George Packer, A Reporter at Large, “Obama’s Lost Year,” The New Yorker, March 15, 2010, p. 4

ABSTRACT: A REPORTER AT LARGE about President Obama and the economy. Martinsville and the county that surrounds it, within Virginia’s Fifth Congressional District, have lost twelve thousand jobs, and the town now has an unemployment rate of twenty per cent—the highest in Virginia, and one of the highest in America. In the middle of January, Representative Tom Perriello, the freshman Democrat who represents the Fifth District, visited the town. The Obama Administration’s agenda was stalled in Congress, and Perriello was at the top of the list of endangered Democrats in the fall election. So it was with more than a little urgency that Perriello wanted to publicize the distribution of ten million dollars in grants from the American Recovery and Reinvestment Act, otherwise known as the stimulus package. One of his aides, Ridge Schuylers, found dozens of nascent projects in renewable energy in Martinsville, all initiated by local farmers and entrepreneurs. Perriello was an emblematic member of the Obama generation—a practical-minded idealist, skeptical of Washington but also eager to make government work on behalf of the farmer, the seamstress, the small businessman. But he expressed frustration over the Administration’s first year in office, and he bemoaned the Democrats’ failure to explain the Recovery Act to the public. His concern was that the Obama Administration was too cautious, and too close to Wall Street. Some liberal economists had argued for direct government spending on infrastructure, but the Administration ignored such calls. Obama had a goal to be post-partisan, and that hampered him. Perriello faulted the Administration not just for the size and composition of the stimulus, but for its lack of imagination. The Administration’s approach to the Recovery Act set the pattern for everything that followed: legislative compromises that watered down the bill’s impact; an immediate campaign by opposition politicians and media to declare the program a failure; a weak, uncoordinated Administration effort to explain and champion the stimulus package; gradual public disillusionment. According to Perriello and other Democrats, a turning point was in mid-March, when news broke that A.I.G. would pay its employees almost a hundred and sixty-five million dollars in bonuses. The Administration could have seized the moment and put Republicans on the defensive, but it chose not to. Mentions Paul Begala and Gene Sperling. For David Axelrod, the Administration’s lapses in communication were almost a point of honor. A year in, Obama’s Presidency resembles in uncanny ways Ronald Reagan’s at the same point. Reagan’s talent for phrasemaking and anecdote derived from having a strong world view, but the same qualities that had allowed Obama to make a case for himself in 2008; his aversion to partisan small-mindedness and ideological oversimplification—prevented him from making the case for his political agenda in 2009. As President, he has not rendered the country’s story in a way that is memorable and convincing. Mentions Dean Price, the co-owner of Red Birch biodiesel truck stop.

via Obama : The New Yorker.

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363. Europe On the Ropes An alternate compelling scenario

Mar 15th, 2010 by doug carmichael

Good to read it all this is just an exccerpt. I;ve been interested in stories that people feel more compelling than global climate issues. Here is another such.

let;s take a closer look at the European banking industry. The following is not pretty reading. I have rarely, if ever, felt this apprehensive about the outlook. So, if the crisis has made you depressed already, don't read any further. What is about to come, will make your heart sink.

More leverage in Europe

Let;s begin our journey by pointing out a regulatory 'anomaly' which has allowed European banks to take on much more leverage than their American colleagues and which now makes them far more vulnerable. In Europe, unlike in the US, it is only risk-weighted assets which matter to the regulators, not the total leverage ratio. European banks can therefore apply a lot more leverage than their US counterparties, provided they load their balance sheets with higher rated assets, and that is precisely what they have been doing.

,,,

On the 11th February the Daily Telegraph’s Brussels correspondent Bruno Waterfield wrote an article under the header: “European banks may need £16.3 trillion bail out, EC document warns.” In the article, the reporter revealed that he has seen a secret document produced by the EU Commission which briefed the union’s finance ministers on the true extent of the banking crisis. Less than 24 hours later, the article’s header was changed to “European bank bail-out could push EU into crisis” and two paragraphs had mysteriously disappeared. Here they are:

“European Commission officials have estimated that “impaired assets” may amount to 44pc of EU bank balance sheets. The Commission estimates that so-called financial instruments in the ‘trading book’ total £12.3 trillion (13.7 trillion euros), equivalent to about 33pc of EU bank balance sheets.

In addition, so-called ‘available for sale instruments’ worth £4trillion (4.5 trillion euros), or 11pc of balance sheets, are also added by the Commission to arrive at the headline figure of £16.3 trillion.”

Do yourself a favour – read those two paragraphs again. Newspaper editors do not change content light-heartedly. Did the Telegraph editor receive a call from Downing Street? Or Brussels? Did he have second thoughts about the avalanche that he could possibly instigate? I don’t know and I probably never will. But one thing is certain. If the EU Commission’s estimate of £16.3 trillion of impaired assets is correct, then the crisis is far worse than any of us could ever imagine. Not only would we have to get us

via Europe On the Ropes – John Mauldin’s Outside the Box – InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors..

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362. and further, back to the 1850’s and electricity

Mar 15th, 2010 by doug carmichael

I like it when the frame is extended.

Brad DeLong ultimately nailed it in my opinion with the Electrical Revolution starting in 1850. Though he refers back to 1825 when the same problems seemed to occur, I do not think they were as nearly correlated in 1825. By 1850, the electrical revolution was on and it never stopped. Every generation of capitalists, since then, was presented with the next generation of technology so powerful they could gleefully knock out the old stalwarts and force an economic wide restructuring to their benefit.

via Economist’s View: Shiller: A Crisis of Understanding.

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361. Further on “causes”

Mar 15th, 2010 by doug carmichael

a further quote in the article.

As George Akerlof and I argue in our recent book Animal Spirits, the current financial crisis was driven by speculative bubbles in the housing market, the stock market, and energy and other commodities markets. Bubbles are caused by feedback loops: rising speculative prices encourage optimism, which encourages more buying, and hence further speculative price increases – until the crash comes.

Note again, nothing about causes outside the financial sector, such as the desire of money to cut costs inorder to maximize profits and in doing so to cut jobs, welfaare, higher level taxes, and push costs of society on to poorer people..

via Economist’s View.

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360. Trying to understand the causes of the economics, and the profession

Mar 15th, 2010 by doug carmichael

Here is a good attempt..Economist’s View: Shiller: A Crisis of Understanding

The causes given were “distributed widely among government, labor, industry, international politics and policies.” They included misguided government interference with markets, high income and capital gains taxes, mistaken monetary policy, pressures towards high wages, monopoly, overstocked inventories, uncertainty caused by the reorganization plan for the Supreme Court, rearmament in Europe and fear of war, government encouragement of labor disputes, a savings glut because of population shrinkage, the passing of the frontier, and easy credit before the depression.

Although economic theory today is much improved, if we ask people about the cause of the current crisis, we will mostly get the same answers. We would certainly hear some new ones, too: unprecedented real-estate bubbles, a global savings glut, international trade imbalances, exotic financial contracts, sub-prime mortgages, unregulated over-the-counter markets, rating agencies’ errors, compromised real-estate appraisals, and complacency about counterparty risk.

More likely than not, many or most of these people would be mostly or partly right, for the economic crisis was caused by a confluence of many factors, the chance co-occurrence of a lot of bad things…

via Economist’s View.

But note that it is all internal to finance. No sense that technology, innovation, unemployment, and increasing infrastructure costs might play a role.

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359. UN report on need for visions.

Mar 15th, 2010 by doug carmichael

This is quite excellent. Very GardenWorld.

Other worlds are possible
Other Worlds are Possible – the new economics foundation

This report argues that our chances of triumphing over climate change will rise dramatically if we change the context within which we ‘fght its fre’. More than that, it suggests that we are already surrounded by a sleeping architecture of better ways to organise our economies, communities and livelihoods. We have, in fact, much more choice about our collective economic future than we have been led to believe. The challenge, it seems, is now clear, and many of the solutions known. The task is to act.

In October 2004, Up in smoke? the frst report from the UK Working Group on Climate Change and Development, warned that climate change threatened a great reversal of human progress. It created a united call for action from environment and development groups and identifed three overarching challenges:
1 How to stop and reverse further climate change.
2 How to live with the degree of climate change that cannot be stopped.
3 How to design a new model for human progress and development that is climate proof and climate friendly and gives everyone a fair share of the natural resources on which we all depend.

Whilst great furries of activity now surround the frst and, to a lesser degree, the
second of these questions, it is the third which remains neglected. If anything, as the world struggles to recover from a major economic recession, the opposite is happening. From the banking sector to high street consumerism in rich countries, there appears to be a rush to return to business as usual. It as is if policy-makers and
commentators fnd it impossible to imagine a world fundamentally different, and better, than the one we already have. Yet the danger is that, without deeply rethinking our economic system to deliver good lives which do not cost the Earth, we will end up with a world much worse than the one we have.

A narrowing of visions

‘Development’ should mean different things in different places and cultural settings. It should describe a plurality of ways of seeing and interacting with a complex and varied world, itself shaped by diverse political and economic agendas. It should be a diffcult word to defne because its meaning changes across time and space.
Unfortunately, however, it is not. If anything, it has come to mean something uniform – a one-path-fts-all trajectory for societies, regardless of place, culture and circumstance. A narrow economic defnition of the term has come to dominate; its
meaning largely set by industrialised countries to favour their own economic interests.
But, this report is not an attempt to produce a singly alternative manifesto to
business-as-usual; it is an argument for plurality of development models. We have
the unprecedented challenge of meeting human need in the face of climate change,
resource scarcity and a deeply troubled world economy. To this upheaval, there is
unlikely to be a single other answer.

We are confdent, however, of the urgent need to use different models. In that light, the report is an invitation to consider them, to begin to think more creatively and
openly about how to organise human affairs on a planet whose life support systems are stressed by our presence. And what, anyway, is the meaning of development, if it undermines the very life-support systems upon which we depend. At the very least, we are convinced that no one-size-fts-all economic approach is viable any longer.

Summary and introduction
The faith in ‘development’ can no longer escape criticism, not only because it justifes huge increases in social inequality, but because it has become dangerous, by compromising everybody’s future

Gilbert Rist, author of The history of development

This is not a time for conventional thinking or outdated dogma but for fresh and innovative intervention that gets to the heart of the problem.
UK Prime Minister, Gordon Brown, October 2008

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