Two recent reports challenge the conventional wisdom that decarbonization via carbon taxes or other methods in concert with divestment from fossil fuel marketers means diminished prosperity. Both reports were widely covered and come from authoritative international groups. Both the New Climate Economy Project and a working paper from the International Monetary Fund (IMF) find that robust policy action reducing carbon emissions would have very limited negative effects on economic growth and shared prosperity. They also advance substantive arguments and analysis that such policies may indeed accelerate growth.
Notably and not without a soupçon of irony, economist and vocal climate change climate skeptic Richard Tol, argued in 2013:
In sum, there is no carbon bubble. If there were a carbon bubble, it would not be about to burst. If it would burst, the economic impact would be minimal.
So interestingly, there is agreement from distinct and opposite quarters that decreased use of fossil fuels poses limited economic risk. For example, as Paul Krugman wrote earlier this week in reference to the two reports from the New Climate Economy Project and the IMF:
This might sound too good to be true, but it isn’t. These are serious, careful analyses….
On one side, there has been dramatic progress in renewable energy technology, with the costs of solar power, in particular, plunging, down by half just since 2010. Renewables have their limitations — basically, the sun doesn’t always shine, and the wind doesn’t always blow — but if you think that an economy getting a lot of its power from wind farms and solar panels is a hippie fantasy, you’re the one out of touch with reality.
On the other side, it turns out that putting a price on carbon would have large “co-benefits” — positive effects over and above the reduction in climate risks — and that these benefits would come fairly quickly. The most important of these co-benefits, according to the IMF paper, would involve public health: burning coal causes many respiratory ailments, which drive up medical costs and reduce productivity.
And we may be in later stages of divestiture than some opine. For example, Fund Balance has created an ETF on the Motif Platform that tracks Coal Stock prices. It was initiated after Stanford University’s signal move to divest from coal stocks. This ETF is down 32% since inception in May 2014 vs. 5.9% return for the S&P 500 and down 77% over the past five years vs. a 109% return for the S&P.
What of the argument that China and India will continue to rapidly increase their respective carbon emissions even as US and EU emissions fall? We can see now that there are many health benefits and hence productivity gains from cleaner air and water. Factor in the inevitable pressure such efforts will put on these two nations to curb emissions as well as their budding sustainability movements (not to mention pollution so bad that major cities must be shuttered and entire rivers cleaned ever more frequently), and such arguments suddenly reveal their superficiality.
So, critical mass for decarbonization is ever closer as the World Council of Churches, Rockefeller Foundation, Google among many other large scale organizations join in with major universities in their divestment commitments. As Eric Schmidt said when asked about Google’s withdrawal from fossil fuel promoters/renewable energy policy antagonists, The American Legislative Council a.k.a. ALEC:
“The facts of climate change are not in question anymore. Everyone understands climate change is occurring, and the people who oppose it are really hurting our children and our grandchildren and making the world a much worse place,” Google Chairman Eric Schmidt told NPR’s Diane Rehm in explaining the decision. “And so we should not be aligned with such people — they’re just, they’re just literally lying.”
Does it make sense to tell someone that doesn’t have health insurance to go to the doctor? Does it make sense to expect jobless and underemployed citizens to save more? Many of the most profitable corporations across the US perennially underfund their pensions while simultaneously funding campaigns for privatization of social security paired with cuts to the program.
Yet, these same corporations oppose raising the cap on payroll taxes or asking Wall Street financiers to sacrifice via minimal financial transaction taxes common in the US during many a bull market and still common in the EU and Asia. All of this set against a backdrop of historically high corporate profits, S&P record highs, and stratospheric ratios of CEO pay to that of middle management and wage earners. The term generational theft is popular argot for corporate bureaucrats and their funding recipients in Washington, DC. Many of the CEO’s and hedge fund managers recommend pain of the majority and none for themselves. Yet, US taxpayers currently fund corporations at an historical scale via low interest rate loans and subsidies. This is the real generational theft: draining the the US middle class so financial speculators can ship away jobs, keep cash in tax havens, and speculate on Asian markets.
Gillian Tett writing in the Financial Times makes notes of a statement by a top executive of a consumer goods conglomerate:
We see a pronounced difference between how people are shopping today and before the recession,” the executive explained. “Consumers are living pay cheque by pay cheque, and they tend to spend accordingly. Then you have 50 million people on food stamps and that has cycles too. So for our business it has become critical to understand the cycle –when pay [and benefit] cheques are arriving.
Hence, the mostly austerity driven so-called recovery further reveals another deteriorating economic indicator for the middle class. Compare and contrast this with austerity champion the Walton Family and its Walmart. Without accounting for its massive local and federal tax breaks and subsidies, Walmart receives even more welfare from US taxpayers by paying its workers so little that they cannot afford healthcare and so must utilize social programs funded by their neighbors and fellow Walmart customers. In short, the world’s largest employer, after the US Department of Defense and the Chinese Military, relies on taxpayers rather than participation in the general welfare of the communities in which it operates and generates huge profits for its small group of majority shareholders (5% of of its owners possess 50% of its shares). Is this an example of good corporate citizenship?
Nevertheless, the most economically secure in our society mostly talk of deficits and are enabled by our nation’s highly consolidated media to dominate the public debate thereby granting them disproportionate exposure. Yet, their arguments that austerity and fiscal contraction will resolve the unemployment crisis fail logical and evidentiary tests time and again. Sequestration is projected to shave a point off GDP this year. As GDP shrinks consumers have less money to spend and consequently labor demands falls. Further, low-paying and low-to-no benefit jobs, which are the bulk of jobs now being created in the US, threaten a generation’s retirement security and access healthcare (health services as opposed to health insurance need disintermediation). Furthermore, corporations and the super affluent pay lower taxes than ever. Supporters for this program argue that it frees up capital to be reinvested in the economy. But, this not the pattern of the past 30 years. In the last decade the pace of reinvesting these perquisites into the economy or funding pensions has all but completely lapsed. Rather, these windfalls are shipped to hedge funds and tax havens. Additional study finds deeper problems.
That was my goal in my first law review article, “Improving Retirement Options for Employees”, which recently came out in the University of Pennsylvania Journal of Business Law. The general problem is one I’ve touched on several times: many Americans are woefully underprepared for retirement, in part because of a deeply flawed “system” of employment-based retirement plans that shifts risk onto individuals and brings out the worse of everyone’s behavioral irrationalities. The specific problem I address in the article is the fact that most defined-contribution retirement plans (of which the 401(k) is the most prominent example) are stocked with expensive, actively managed mutual funds that, depending on your viewpoint, either (a) logically cannot beat the market on an expected, risk-adjusted basis or (b) overwhelmingly fail to beat the market on a risk-adjusted basis.
Could this meltdown have been avoided? Should rating agencies have spotted it? Well, this is how it would work with the rating agencies when we were building a new CDO. They would tell us their parameters and criteria; if you meet this requirement, you get that rating and so on. And they gave out a free model so we could test our product and tweak our portfolio for the CDO until it fit, I mean get the rating that we wanted. We would do a lot of stress-testing ourselves too, of course we would. We’d pretend the market changed and run the models to see how our products would hold.
But what happened during the financial crisis was like a perfect storm. In our tests we would assume the market moved, say, 10% – while in reality it rarely moved more than 1%. Now the crisis happens and suddenly the market moves 30%. Our models were based on what we saw as normal. Now we saw numbers behave in ways barely conceived possible.
Consequentially, a quartet of corporate sector driven storm clouds hang on the horizon:
Underfunded pensions from corporations with record amounts of cash and an investment climate skewed towards insiders and Wall Street
Their ongoing failure to hire new employees and consistent blockage of publicly funded programs to fund infrastructure investment
A largely fossil fuel derived economy that requires large scale degradation of our present and next generations air and water resources
Over-priced/under-performing privatized healthcare drives healthcare inflation at unsustainable rates all the while forcing the good neighbors in US society to pick up the tab for the uninsured, many of whom are employed by highly profitable firms
Whats going on?
Why are record profits and CEO pay more and more divergent from the economic well being of the society’s whose labor and resources they use?
We at Fund Balance are concerned that the only mention of climate change in President Barack Obama’s 2012 State of the Union address was “The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change.”
The U.S. National Academy of Sciences states, “The world is heating up and humans are primarily responsible. Impacts are already apparent and will increase.” Greenhouse gas (GHG) induced climate change is a clear and present threat to our civilization and way of life. Its continued politicization is dangerous. We accept the consensus of the world’s scientific community which is summarized well by the American Chemical Society:
Careful and comprehensive scientific assessments have clearly demonstrated that the Earth’s climate system is changing in response to growing atmospheric burdens of greenhouse gases (GHGs) and absorbing aerosol particles. (IPCC, 2007) Climate change is occurring, is caused largely by human activities, and poses significant risks for—and in many cases is already affecting—a broad range of human and natural systems. (NRC, 2010a) The potential threats are serious and actions are required to mitigate climate change risks and to adapt to deleterious climate change impacts that probably cannot be avoided. (NRC, 2010b, c).
We further acknowledge and accept the conclusions of our medical community. The American Medical Association (AMA) urges that we as a society confront the health issues of climate change now.
Scientific evidence shows that the world’s climate is changing and that the results have public health consequences. The AMA is working to ensure that physicians and others in health care understand the rise in climate-related illnesses and injuries so they can prepare and respond to them. The Association also is promoting environmentally responsible practices that would reduce waste and energy consumption.
We see that escalating carbon emissions are seriously damaging our oceans depleting them of oxygen and acidification. Carbon dioxide emissions caused by human activities over the last century have increased the acidity of the world’s oceans far beyond the range of natural variations, which may significantly impair the ability of marine organisms to live. We realize that rapid deforestation increasingly impedes nature’s ability to buffer carbon dioxide concentrations in our atmosphere and thus keep our air suitable for breathing.
The time is now for President Obama and Congress to heed science and pursue evidence based policy formation in addressing the real and gathering dangers of Climate Change. Putting a price on carbon is a critical first step.
“The conservation of natural resources is the fundamental problem. Unless we solve that problem it will avail us little to solve all others.” Theodore Roosevelt
What’s In a Petrodollar?
Fossil Fuel producing nations should extract their resources consistent with the health needs of their people, air, land, and water. History shows us that regulation plays an essential role in this mandate. Energy marketers insist regulations are counterproductive. Implied though not often stated, nations like Russia and China can more easily form capital and drive labor demand from fossil fuel exploitation because they can act largely unencumbered by regulation. This unproven assumption ignores the escalating costs of unconstrained fossil fuel extraction to present and future generations. Should we be more concerned about poisoning our planet for future generations than leaving large amounts of debt for them? I argue yes. Does the regulation of fossil fuel extraction impede aggregate labor demand? The evidence indicates no. The earth is the source of all money so worrying about debt instead of planetary health puts the cart before the horse. A sick, weakened planet will create less value, profit, and wealth. Concurrently, as oil supplies wane, systemic risk will form around basing currencies on fossil fuels, oil in particular. Searches for fossil fuel resources will grow into fierce and destabilizing conflicts. Increasingly scarce tracts of clean, fertile land can only deepen them.
Unregulated Nations and Quality of Air, Water, Land and Life Russia and its oil country exemplify the realities of unregulated, petrodollar capitalism. Its oil producing areas constitute what experts describe as our planet’s worst ecological oil catastrophe. Based on reporting from the Associated Press, estimates are that roughly one Deepwater Horizon-scale leakage occurs about every two months. Outdated infrastructure, minimal and unenforced regulation allow for oil to contaminate soil, kill plant life, and damage habitats for mammals and birds. State-funded research shows 10-15 percent of Russian oil leakage enters rivers with nearly 500,000 tons flowing into the Arctic.
From Chernobyl to more recent paper mill pollution seeping into Siberia’s Lake Baikal, which holds one-fifth of the world’s supply of fresh water, Russia’s lax regulatory posture renders great swaths of territory uninhabitable and fallow. Russian oil spills are more numerous than in any other oil-producing nation. “Oil gets spilled literally every day,” said Dr. Grigory Barenboim, senior researcher at the Russian Academy of Sciences’ Institute of Water Problems. His is not alone. And by all accounts the estimate is conservative since under Russian law, leaks less than 8 tons rate as “incidents” and can thus go unreported. By contrast, the U.S., the world’s third-largest oil producer, logged 341 pipeline ruptures in 2010 — compared to Russia’s 18,000 — according to the U.S. Department of Transportation.
The republic of Komi, just south of the Arctic Circle, is the scene of Russia’s largest oil spill. Up to 40 kilometers of two local rivers were polluted, killing thousands of fish. Respiratory diseases rose by over 28 percent in the year following the leak. Komi’s officials blamed neglected infrastructure and oil companies reporting that “companies that extract hydrocarbons focus on making profits rather than how to use the resources rationally.”
“Reality leaves a lot to the imagination.” — John Lennon
Imagination, that force which when coupled with discipline, drives the arts. Such a force is necessary to successfully protect and sustain our biosphere as it represents the best alternative to cynicism and defeatism. My work, involvement, and strong passion for the arts catalyze a lifelong love and respect for our improbable orb, the earth. A few examples of this force which are set out below as well asBeethoven’s 6thalways leap to mind. Clearly many members of the artistic community share this sense of connection.
My first collaborative project out of college was an effort to broadcast an image of the earth from outer space onto the Jumbotron in Times Square. At this time, the World Wide Web remained a research project in labs and universities including the one I attended. So I learned early on what an amazing treasure of earth imagery was stored at NASA, the JPL, and other labs. This project partially resulted from my studies in Kenya at the Athi River research station. Each night the research assistants would lie in the savanna watching satellites pass overhead in their equatorial orbits. Witnessing the absolutely divine beauty of our planet in Africa, from other ecosystems such as the Togiak River basin in Alaska and much of the the American West, and in the woodlands of Alabama where I roamed growing up, has made me a naturalist at heart. So, knowing that the earth was entering a crisis, I wanted people to simply see her from space everyday as they scurried about one of her busiest intersections.
My grant application to the Whitney Museum’s fellowship program to rent the Big Screen in order to broadcast the images of our planet was rejected. That hardly slowed me down. Seeing these images and thinking of what I know of astronomy and astrophysics, the shear improbability of Planet Earth has always struck me. For this reason alone, it seems we should cherish the earth and its unlikely ability to support and sustain a broad and diverse array of life forms.
Looking at our solar system, our galaxy the Milky Way and beyond, we notice one thing: most planets are rocky and uniform, lack an atmosphere, or are so stormy and gaseous as to not credibly support life. A great many are too close to their sun or too far away to sustain life. (This essay is not to say one way or the other if life as we conceive it exists out there.)
My travels to Africa, which included skin diving in the Indian Ocean, particularly heightened my sense of the earth’s lungs and plasma- its forests and oceans. In travels since to places such as Beijing, China, it grew increasingly clear that Earth was entering a serious crisis.
Surely since the first rain dances began, art has transmitted an acceptance that humanity’s dominion over the earth is limited, and that somehow every technological discovery is limited in its ability to help mankind. The Christian Bible charges mankind with stewardship over the earth, as does the Koran and numerous other religious texts. This is not to say we do not need technology or agriculture. We do. The very satellites I watched traverse the sky in Kenya are now used to observe earth and alert us to the rapid degradations in her life support systems. In short, sustainable agriculture and tool-making are essential for a thriving civilization.
Artistic expression reinforces the notion that both agriculture and technology are critical for the survival of our civilization. Artists, along with farmers and technologists, have after all, strong histories of technological innovation. They have done so in provisioning means for survival and media for creating deeper connections amongst humankind. In the 21st century, we see new challenges in the how we must shape the methods of agriculture and technology. This will help us sustain our planet, which had literally a vanishingly small chance of existing.
For the sake of brevity, excuse me if I leave it to you, the reader, to think of your own examples. There are many: I will touch on just a few. I think of Shakespeare’s sonnets and
Jonathon Franzen’s recent novel Freedom. Interpretive movement, from the rain dances of the Anasazi to Igor Stravinsky’s Rite of Spring, share a seamless flow of connection to the earth through their rhythm and movement. Film making brings appreciation of ecosystems to the fore through such works as Avatar and Godfrey Reggio’sQatsi trilogy. One of our collaborators at Fund-Balance, Jessica Baron, has given us a great exemplar as well with the Green Song Book from her work to preserve and protect arts education via Guitars in the Classroom. Artists get it.
As someone who studied visual art formally for over a decade, I have a great many favorites from this discipline. The work of Andy Goldsworthy always captures my imagination. Another British artist Jason DeCaires Taylor’s recent Silent Evolution presents the convergence of past and present, human and ocean. I hope you will seek out the works of these artists if you are not yet familiar with them.
Another important way that imagination helps us “remain in light” with respect to the crisis that our earth faces is cultivating empathy, the ability to imagine what it is like to be in another creature’s skin or circumstance. The arts amplify my consideration of what it’s like for someone else and their life in their time and space.
From perhaps a broader perspective, Aristotle’s prescient distinction between “oikonomia”, use value of products in the real economy, and “chrematistics” the maximization of exchange value measured by money, seems as relevant now as then. Contemporary finance and resource extraction operate irrespective of their environmental impact and hence lack empathy for natural systems they destroy. These pursuits fail to employ imagination towards finding ways to minimize such degradation and thus sustain the very systems that create capital and wealth. The arts generate value for objects and/or expressions beyond crude additions of the cost of materials. This is a deeply human mode of thinking that our civilization should factor back into our economies and ecologies. And to wit, artists have a long, hallowed, and harrowed tradition of working together with very limited resources to solve problems.
It may seem counter intuitive to some, but artists can inform business, banking, and policy making in the 21st century just as they have with Kabuki dances in Japan and in the plazas of Florence during the Renaissance. In this century, if Wall Street practiced empathy and took a long view of culture and civilization while they calculated their winning formulas while spinning their deals, abundance might occur without the depletion of the very land beneath our feet, without disregard for degradation of our air and water, and with respect for the mineral resources held deep in the earth. This in turn protects and preserves the means by which wealth happens. In sum, to protect the earth, we must protect the arts.
So I encourage you to join me in looking at the great Pacific garbage patch- a flotilla of discarded plastic in the South Pacific-estimated to be the size of Texas and the expanding dead-zones in our oceans with expansive imagination. I also encourage you to read a great essay by a great artist, Sigourney Weaver. She describes how empathy for women’s rights can preserve and reinforce a balance between ecosystems and human civilization. She writes
“Two groundbreaking studies, one from the U.S. National Center for Atmospheric Research and one from the Futures Group, found that simply by meeting women’s existing needs for voluntary family planning, we could reduce carbon emissions by between 8 and 15 percent. That is the equivalent of stopping all deforestation today. Empowering women to make critical decisions in their own lives can help solve the biggest environmental and humanitarian challenge of our time”.
This is another recent example of an artist using empathy and imagination to point to solutions for a major problem confronting civilization.
In the early 90’s, I participated in a project in which I enlisted a choreographer and composer to create a dance piece and compose music to be performed against a backdrop of images of the dancers’ brains via PET scans. It was a challenging and expensive endeavor. The concept was to present both the internal rhythm and flow of each dancer with each viewer’s external perception. My hope was that this effort to reveal the beauty of life both within and without would reinforce the audience’s sense of its sanctity.
That one got turned down as well with no explanation, just a simple rejection notice. Perhaps that was for the best as it doubtlessly led me to consider the need for development of green technology and the far nobler pursuit of finding sustainable means with which to power it. And, in turn, we at Fund Balance who with our newest partners join in putting imagination and empathy to work in order to inspire and inform investing in sustainability.
In the coming months, we will hear a lot about the Taxed Enough Already (TEA) Party’s plans for the U.S. during the 112th Congress. No doubt we shall hear how such plans signal a new, brighter era.
But do they?
The principles espoused by the Tea Party and their Republican allies already dominate policy across America in many of the red states, such as South Carolina and Nebraska. These states have for many decades now served as laboratories for TEA Party neoliberalism. They share very low tax rates on wealthy individuals and businesses, high carbon emissions, low unionization (enforced via so-called Right-to-Work statutes), privatized and under-funded public healthcare and so on.
When viewed in contrast with blue states, such as New York and Washington, what is the quality of daily life in the red states?
The picture that emerges from the numbers at left and below shows that blue states provide cleaner air, higher rates of education, and higher per capita income than red states. Furthermore, blue states pay more into the federal government than they get back while red states take more than they pay.
American states paying more into the U.S. Treasury (the blue states for the most part) also have higher rates of unionization combined with higher standards of living than their red tea party counterparts. In red states we find less unionization, lower rates of education and income coupled with higher rates of infant mortality and teen pregnancy. Arguments about the failure of abstinence only approaches to family planning aside, some may argue that a lower cost of living offsets some of these drawbacks for red state citizens. But given the extent of red tea party breastbeating about “economic growth,” it is an interesting irony that these red states take more from the Treasury than they provide and afford their citizens a lower quality of life as described in Chart 1.
Chart 2 breaks out how most red states are subsidized by blue states and have much higher rates of carbon emissions, the emerging standard measure of general pollution. The not so astonishing observation we make about Charts 1 and 2 is that they would appear to suggest that the well-being and productivity of blue state citizens surpasses that of their red tea party neighbors.
Recent and ample anecdotal evidence supporting this conclusion abounds.
In Florida, a state loosely defined by a deeply conservative northern panhandle, and a progressive Southern portion, we see HDI scores just above the national average and a consumption of roughly .97 cents for each dollar of tax revenue provided. Florida’s incoming governor, Rick Scott, recently made headlines by calling for an end to public education and providing vouchers for families of up to $5280 to attend private school. Yet Florida spends $8,800 per pupil. The average cost for private schools per year is $8,549 while the median income is $24,543. Where do the families get this extra sum which amounts to more than 10% of their income? Does this not in effect, amount to a new tax? Mr. Scott’s inability to grasp the glaring problem of federal subsidies to private enterprise (eg the bank bailout) is further demonstrated by his involvement as a CEO in the largest (medicare) fraud settlement in U.S. History according to the Department of Justice.
Texas scores just under the national average of 5.17 at 4.67 on the HDI while its near neighbor Arizona manages 5.11 and takes 19 cents per dollar more from the U.S. Treasury than it pays. Perhaps that is why its Governor Jan Brewer (R) attracted attention from both parties recently for her statements that Arizona needs more Federal funds for Medicare. Gov. Brewer commented recently on her cuts to the state’s Health Care Cost Containment System, which have imperiled the lives of patients in need of an organ transplant. Brewer said that people branding the cuts as a real-life incarnation of death panels should be asking the federal government to send more money – a surprising position from someone who continues to oppose the The Affordable Health Care Act (AHCA) of 2010. As Think Progress points out, “AHCA would foot 100 percent of the bill for states to expand [Medicaid] until 2016 and 90 percent after 2020 for states that are able to maintain current eligibility levels in Medicaid and CHIP.” However, the Brewer Administration recently claimed that it had been forced to cut the transplant program because the health care reform overhaul had prevented the state from being able to save cash by making it harder to qualify for Medicaid. Go figure.
Brewer – who declined to hold a special session to reinstate the funds, a refusal that leaves some patients’ lives hanging in the balance – blames Arizona’s dire financial situation. (Apparently “death panels” aren’t such a big deal when a Republican is in charge.) She argues that if people are so worried about the transplant patients, they should ask the federal government for more money. A report from the Arizona Republic gives
some insight about how Brewer used stimulus funds, and clearly healthcare was not a priority for her. Whither the death panels, Governor Brewer?
All of the red tea party’s empty rhetoric about austerity (for the middle and lower classes, the rich need more tax breaks) needs to be viewed in the light of the past and future.
Aristotle wrote, “It is clear then that the best partnership in a state is one which operates through the middle people.”
The conscious effort by the founders to create this middle class defined American success and stability since the founding. But now, with more than 9 in 10 American families experiencing significant economic shocks year in and out, the middle class in the U.S. – and with it our nation’s future – is seriously endangered.
“Shaky Ground” , a recent study released by the Rockefeller Foundation and authored by Jacob Hacker and Mark Schlesinger of Yale University paints a grim picture of widespread economic insecurity in the era of the Great Recession.
The study concludes, “Economic insecurity has become the rule, not the exception, for many Americans — even in good times.” This report finds that between March 2008 and September 2009, fully 93 percent of American households saw substantial decreases to their wealth or income, or increases in emergency spending, often for medical needs. It further shows that the impact of those shocks was not confined to the working class. The report found that more than half of families making between $60,000 and $100,000 who experienced employment or medical disruptions weren’t able to meet minimum economic needs.
Importantly the study asserts that the recession — which officially lasted from December 2007 until June 2009 — exacerbated some of these economic woes, but that many were in place even before that. “Job-related concerns did increase dramatically during the recession,” Margot Brandenburg, an associate director of the Rockefeller Foundation, told The Lookout. “But other drivers of economic worry — wealth, medical needs, family-related issues — were very high before the recession, and they’ve remained high.”
This trend formed over the last three decades. In 1985, just 12 percent of Americans lived in households that saw a drop in available income of more than 25 percent from one year to the next. By 2009, it was 20 percent according to the report. Where does the shift come from? Why is economic insecurity the new normal? Brandenburg stated what many of us already realize: economic risk has gradually shifted away from corporations in recent years onto individuals through developments such as defined-contribution retirement and high-deductible insurance plans.
Professor Hacker, who authored “The Great Risk Shift” in 2006, argues that since last year’s “winner-take-all politics,” government policies have accelerated a shift that benefits the rich at the expense of the middle and working class. Brandenburg attributes growing economic insecurity to, “the hollowing out of the middle”. Increasingly, the sectors that produce the most jobs either pay high wages and require highly skilled workers, or pay low wages and require unskilled workers. By comparison, the sectors in the middle — manufacturing, technical support, and clerical work, for example – continue to evaporate. These members of the workforce find themselves replaced by cheaper foreign workers and machines.
It is difficult to see then, in light of the data and anecdotes above, how TEA Party and Right to Work states are valuable models for our nation and our civilization’s future. If workers cannot pool their risk via organized labor – much as insurers do with policy-holder liability – then the overwhelming majority of non-union workers will be at the mercy of resource-rich conglomerates and cartels when they are unfairly denied payment for services rendered. When citizens must stand alone in defending themselves against deep-pocketed polluters they find themselves in the same position. And this soon after the great crash of 2008, it is hardly necessary to point out that banking and other corporate and industrial concerns fail miserably at policing themselves.
Society does not need another instantiation of the TEA Party’s rehashed brand of laissez faire economics. That movie was called the Gilded Age, with all the familiar Upton Sinclair and Dickensian storylines: gussied up slave labor, excruciating poverty, and multi-generational tragedy in the lower classes. Nevertheless, 3D technicolor sequels to that movie are now playing in Red and TEA party states, not surprisingly, the data again tells a tragic story.
Looking forward in 2011, we must innovate away from the proven failures of these 19th century economic models. This does not require a revolutionary rejection of capitalism but rather its further refinement.
Early 21st century capitalism is succeeding only partially or pro tanto as J.K. Galbraith would say. Balancing social responsibility and sustainable economic practice has produced great success all across the Union. Within this framework, the world’s efforts to integrate sustainability into financial and industrial systems emerges as an obvious imperative, along with the rejection of loosely regulated 19th century style economic policy.
Not surprisingly, the data suggests that municipalities that value intelligent public sector-driven resource and pollution management systems will have healthier economies and ecologies than their deregulated neighbors. TEA party policies have already run their disastrous evolutionary course. Returning to them would be a giant and unnecessary leap backwards.
In the coming months at Fund Balance, we will be presenting some of the dawning precepts of the bright green future: policies, businesses and projects that build upon the lessons of the past, not its mistakes.
As we reach the end of the first decade of the 21st century, some dangerous misconceptions linger from the 20th. Two of which are that global warming is not happening and that it is not primarily a man-made phenomenon. While factors such as Solar Irradiance clearly have secondary and significant impacts, emission of heat trapping gases from human activity, coupled with wide scale deforestation of the Earth, compromise Gaia’s ability to manage such rapid change.
While that debate is settled one indication remains constant: Climate Crisis involving the rapid acceleration of Earth temperatures is real. And for the purposes of this post fighting it does not necessitate sacrificing employment in industrialized nations. In fact, an opposite case merits presentation.
This past summer anticipation of the political season overwhelmed common sense. Prominent Republican Senators Lindsay Graham and John McCain retreated from support for Cap and Trade legislation eyeing mid-term elections no doubt feeling pressure from Smog Lobby financiers and pollution advocates such as Koch Industries. Many politicians abandoned their support for the legislation in efforts to distance themselves from President Obama or please mainstream media king Fox News. A very informative post-mortem can be found in Ryan Lizza’s As the World Burns in last week’s New Yorker.
Once again into the breech is California. As the innovation pacesetter, it leads in the national debate regarding policy formulation around the Climate Crisis and is poised to set pace for the rest of the country. In California many Republicans are fighting against Proposition 23, which aims to halt the State’s bold Assembly Bill 32 (A.B. 32) legislation aimed at creating a clean-tech economic factor. Meanwhile Representative Darryl Issa threatens to re-open the so-called “Climategate” hearings if the GOP regains control of the House of Representatives.
Prominent and distinguished conservatives such as George Schultz back Governor Arnold Schwarzenegger in his battle against Big Oil. Two Texas oil companies with refineries in California, along with pollution rights financiers Koch Industries, fund a campaign to halt California’s landmark laws designed to slow global warming and promote clean energy innovation. These would require refiners to install state-of-the-art emission-control tools. Opponents of Assembly Bill 32 assert that the installation of such technology would not create any jobs. Yet, the State of California reckons that green technology creates the most jobs right now in California, 10 times more than any other sector.
In addition, former Secretary Schultz begs to differ with the Smog Lobby, “Prop 23 is designed to kill by indefinite postponement California’s effort to clean up the environment…This effort is financed heavily by money from out of state. You have to conclude that the financiers are less concerned about California than they are about the fact that if we get something that is working here to clean up the air and launch a clean-tech industry, it will go national and maybe international. So the stakes are high. I hope we can win here and send a message to the whole country that it’s time to put aside partisan politics and get an energy bill out of Washington.”
Since President Obama and Congress have failed to pass a clean energy bill, California’s laws are our nation’s best hope to stimulate clean-tech in America – and the job creation it would entail.
Prop 23 proposes to suspend implementation of A.B. 32 until California achieves four consecutive quarters of unemployment below 5.5 percent. The unemployment rate is currently above 12 percent. This is misleading. A.B. 32 was designed to reduce greenhouse gases to 1990 levels by 2020 and was supported by Republicans, Democrats, businesses and environmentalists. Prop 23’s provision requiring a 5.5 percent unemployment rate is deceptive because in the last 40 years California has rarely produced an unemployment rate below 5.5 percent for four consecutive quarters, hence the real intent is to kill clean air policy in California.
To quote Dan Becker, the director of the Safe Climate Campaign, “Now that industry and their friends in Congress have blocked progress there, the hope for action moves to the states and the Environmental Protection Agency… polluter lobbyists are tight on our heels. They’ve offered Senate amendments to block the E.P.A. from using the Clean Air Act to cut power plant pollution. Since that failed, they are trying to block California from moving forward. … If the people of California see through the misrepresentations of the oil industry, it throws climate denialism off the tracks and opens the door for a return to a science-based approach to the climate. It would be a triumph for the National Academy of Sciences over the National Academy of Fraud.”
Energy chemist Nate Lewis of Cal tech states, “The real joke is thinking that if California suspends its climate laws that Mother Nature will also take a timeout….We can wait to solve this problem as long as we want…But Nature is balancing its books every day. It was a record 113 degrees in Los Angeles the other day. There are laws of politics and laws of physics. Only the latter can’t be repealed.”
To put a fine point on the fact that much debate on climate change is manufactured, one need only look at what Republican spin-meister, Frank Luntz, noted in a memo to George W. Bush in 2002. “The scientific debate is closing [against us] but not yet closed. There is still a window of opportunity to challenge the science…Voters believe that there is no consensus about global warming within the scientific community. Should the public come to believe that the scientific issues are settled, their views about global warming will change accordingly. Therefore, you need to continue to make the lack of scientific certainty a primary issue in the debate, and defer to scientists and other experts in the field.”
But Mother Nature and the Chinese are not going to wait around for American political cycles. Let’s close with a quote from TheGovernator. “And they [Big Oil] are very deceptive when they say they want to go and create more jobs in California,….Since when has [an] oil company ever been interested in jobs? Let’s be honest. If they really are interested in jobs, they would want to protect A.B. 32….”
Editors Note: Many of the quotes and uncited sources in the last half this post are adapted from Thomas Friedman’s excellent piece in the October 5th, 2010 edition of the New York Times “The Governator vs. Big Oil”.
Fund Balance sees Green Computing as an essential component in economic planning for the coming decade and beyond. Many rare earth metals required for key components of workstations, laptops and smartphones are growing scarce. China possesses the most significant deposits of these essential rare earth metals. The PRC government is actively buying up rights to deposits in Africa. It also has the most developed capacity to extract and deliver the ores, from mine to manufacturing floor.
We noted at Fund Balance recently Chinese government signals to trading partners and sovereign funds of its inclination to halt exports of rare earth metals. It is also worth noting in the areas of Energy Technology that China has near monopolies on key elements for Wind Turbines, Neodymium, and the batteries in the Prius, Lanthanum.
We urge all consumers and producers of networked, digital media to consider the economic consequences of failing to plan ahead for these contingencies now. So critical actions items:
— Supplies of many of the rare earths can be found in Alaska and Canada, lets lay out sustainable plans and methodologies now to protect the air and water of these ecosystems once mining for them begins.
— Accelerate investment in solar, thermal and even kinetic (powering your cell phone while you ride your bike)
— Encourage certifications, much like the LEED certifications, for software and hardware design and engineering praxis
We have tremendous faith that such scarcity will drive industry and academia to innovate in the areas of materials science, optical switching and other methods for powering computational and information technology obviating much of the need for rare earth metals. And indeed Physorg.com covers some exciting work in the area of nanotechnology and near-threshold computing.
But in the meantime lets plan for sustainable industrial action.
We have been covering China’s intensive and substanstial focus on Green Technology, Smart Grids and non-petroleum-based energy sources and supplies here at fund-balance.com since our launch in October 2008.
Now that a picture of national stimulus spending is emerging for 2010, its no surprise then to see that China will outpace the United States in this area, as detailed by Zprýme Research and Consulting. The report also notes that the U.K and France have roughly double the smart grid capacity as the U.S. and major U.S. industrial concerns such as IBM and Hewlett Packard are busy deploying these projects in China. Basically we can see that China has leapfrogged the west in the last two years. An example of what Thomas Friedman calls their “Green Leap” forward. –W.B.