Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Top Firms Cause $2.2 Trillion in Eco-Damage (UN)From the Guardian; hat-tip to Larry P.World's top firms cause $2.2tn of environmental damage, report estimates Report for the UN into the activities of the world's 3,000 biggest companies estimates one-third of profits would be lost if firms were forced to pay for use, loss and damage of environment Juliette Jowit | Thursday 18 February 2010 18.19 GMT The cost of pollution and other damage to the natural environment caused by the world's biggest companies would wipe out more than one-third of their profits if they were held financially accountable, a major unpublished study for the United Nations has found. The report comes amid growing concern that no one is made to pay for most of the use, loss and damage of the environment, which is reaching crisis proportions in the form of pollution and the rapid loss of freshwater, fisheries and fertile soils. Later this year, another huge UN study - dubbed the "Stern for nature" after the influential report on the economics of climate change by Sir Nicholas Stern - will attempt to put a price on such global environmental damage, and suggest ways to prevent it. The report, led by economist Pavan Sukhdev, is likely to argue for abolition of billions of dollars of subsidies to harmful industries like agriculture, energy and transport, tougher regulations and more taxes on companies that cause the damage. Ahead of changes which would have a profound effect - not just on companies' profits but also their customers and pension funds and other investors - the UN-backed Principles for Responsible Investment initiative and the United Nations Environment Programme jointly ordered a report into the activities of the 3,000 biggest public companies in the world, which includes household names from the UK's FTSE 100 and other major stockmarkets. The study, conducted by London-based consultancy Trucost and due to be published this summer, found the estimated combined damage was worth US$2.2 trillion (£1.4tn) in 2008 - a figure bigger than the national economies of all but seven countries in the world that year. The figure equates to 6-7% of the companies' combined turnover, or an average of one-third of their profits, though some businesses would be much harder hit than others. "What we're talking about is a completely new paradigm," said Richard Mattison, Trucost's chief operating officer and leader of the report team. "Externalities of this scale and nature pose a major risk to the global economy and markets are not fully aware of these risks, nor do they know how to deal with them." The biggest single impact on the $2.2tn estimate, accounting for more than half of the total, was emissions of greenhouse gases blamed for climate change. Other major "costs" were local air pollution such as particulates, and the damage caused by the over-use and pollution of freshwater. The true figure is likely to be even higher because the $2.2tn does not include damage caused by household and government consumption of goods and services, such as energy used to power appliances or waste; the "social impacts" such as the migration of people driven out of affected areas, or the long-term effects of any damage other than that from climate change. The final report will also include a higher total estimate which includes those long-term effects of problems such as toxic waste. Trucost did not want to comment before the final report on which sectors incurred the highest "costs" of environmental damage, but they are likely to include power companies and heavy energy users like aluminium producers because of the greenhouse gases that result from burning fossil fuels. Heavy water users like food, drink and clothing companies are also likely to feature high up on the list. Sukhdev said the heads of the major companies at this year's annual economic summit in Davos, Switzerland, were increasingly concerned about the impact on their business if they were stopped or forced to pay for the damage. "It can make the difference between profit and loss," Sukhdev told the annual Earthwatch Oxford lecture last week. "That sense of foreboding is there with many, many [chief executives], and that potential is a good thing because it leads to solutions." The aim of the study is to encourage and help investors lobby companies to reduce their environmental impact before concerned governments act to restrict them through taxes or regulations, said Mattison. "It's going to be a significant proportion of a lot of companies' profit margins," Mattison told the Guardian. "Whether they actually have to pay for these costs will be determined by the appetite for policy makers to enforce the 'polluter pays' principle. We should be seeking ways to fix the system, rather than waiting for the economy to adapt. Continued inefficient use of natural resources will cause significant impacts on [national economies] overall, and a massive problem for governments to fix." Another major concern is the risk that companies simply run out of resources they need to operate, said Andrea Moffat, of the US-based investor lobby group Ceres, whose members include more than 80 funds with assets worth more than US$8tn. An example was the estimated loss of 20,000 jobs and $1bn last year for agricultural companies because of water shortages in California, said Moffat. Read the original article. (There's a great set of graphs.) Labels: climate change, enviromental crisis, Environment, externalities, global warming, pollution Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Copenhagen Climate TalksThe long-awaited talks start today, with progressives mostly pessimistic about the outcome. Bill McKibben makes a case for pessimism at TomDispatch—sobering and well worth reading. Paul Krugman claims to be optimistic in his New York Times op-ed today, but based on a remarkably apolitical analysis of the situation (cutting carbon is affordable and makes sense, so it will happen??!!).As Copenhagen begins, it’s also worth looking back at this post on Slate from last February by a fellow at the Shorenstein Center at Harvard (and Bloomberg News columnist) who looked at media coverage of climate change. He lays out the high degree of consensus among economists of most stripes on the economics of climate change: that the benefits of prompt strong action far outweigh the costs. Then he looks at how wrong most media coverage of the economics has been. Not the only factor that explains why public pressure is lacking in the United States on this issue, but no doubt one of them. Labels: Bill McKibben, climate change, Copenhagen Climate Conference, Eric Pooley, Paul Krugman, Slate Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Sustainability and Horsesh*tHere are two items related to climate change that read well next to each other.One is from a magazine called Tin House—an article by Curtis White skewering the idea of sustainability. A taste: For environmental, business, and political organizations alike, the term that has come to stand for the hope of the natural world is "sustainable." Sustainable agriculture. Sustainable cities. Sustainable development. Sustainable economies. But you would be mistaken if you assumed that the point of sustainability was to change our ways. It's not, really. The great unspoken assumption of the sustainability movement is the idea that although the economic, political, and social systems that have produced our current environmental calamity are bad, they do not need to be entirely replaced. In fact, the point of sustainability often seems to be to preserve—not overthrow—the economic and social status quo.Read the full article (and admire Tin House's design). The other is from the current issue of The New Yorker—Elizabeth Kolbert gives the Freakonomics guys a well-deserved skewering. Their new book, SuperFreakonomics, sounds even stupider than their first one. Kolbert (I can't help pronouncing her last name with a silent "T" as with Stephen Colbert) starts her review with an historical anecdote about how for a while there it looked like horseshit from all the horses used to transport people and goods all around New York City would eventually take over the city: The problem just kept piling up until, in the eighteen-nineties, it seemed virtually insurmountable. One commentator predicted that by 1930 horse manure would reach the level of Manhattan's third-story windows. New York's troubles were not New York's alone; in 1894, the Times of London forecast that by the middle of the following century every street in the city would be buried under nine feet of manure. It was understood that flies were a transmission vector for disease, and a public-health crisis seemed imminent. When the world's first international urban-planning conference was held, in 1898, it was dominated by discussion of the manure situation. Unable to agree upon any solutions—or to imagine cities without horses—the delegates broke up the meeting, which had been scheduled to last a week and a half, after just three days.This anecdote, it turns out, is a curtain-raiser to the Steves' (Steven D. Levitt and Stephen J. Dubner, that is) "argument" that we shouldn't fret about climate change, since someone is sure to come up with some kind of technological fix so that we can keep consuming, growing, and using fossil fuels. Their preferred idea is to cool the earth by shooting tons of sulphur dioxide into the atmosphere using an 18-mile-long hose (hence the title of Kolbert's review, "Hosed"—if only that could be taken as referring doubly to their idea and the Steve's careers or reputations). And here are two of the skewering bits, one sober, the other light-hearted: [W]hat's most troubling about "SuperFreakonomics" isn't the authors' many blunders; it's the whole spirit of the enterprise. Though climate change is a grave problem, Levitt and Dubner treat it mainly as an opportunity to show how clever they are. Leaving aside the question of whether geoengineering, as it is known in scientific circles, is even possible—have you ever tried sending an eighteen-mile-long hose into the stratosphere?—their analysis is terrifyingly cavalier. A world whose atmosphere is loaded with carbon dioxide, on the one hand, and sulfur dioxide, on the other, would be a fundamentally different place from the earth as we know it. Among the many likely consequences of shooting SO2 above the clouds would be new regional weather patterns (after major volcanic eruptions, Asia and Africa have a nasty tendency to experience drought), ozone depletion, and increased acid rain. Meanwhile, as long as the concentration of atmospheric CO2 continued to rise, more and more sulfur dioxide would have to be pumped into the air to counteract it. The amount of direct sunlight reaching the earth would fall, even as the oceans became increasingly acidic.She's probably right, but let's hope she's not about the Steves in particular. Maybe the scorn getting heaped on them for this particular pile they've produced (e.g. here) will hose their reputations permanently. Read Kolbert's review; read White's article. Labels: climate change, Curtis White, Elizabeth Kolbert, Freakonomics, horseshit, sulphur dioxide, sustainability Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Just in Time for Copenhagen...comes this happy bit of news. Not that the findings will increase the likelihood of serious action, anyway. Particularly noteworthy is this riposte to supporters of geoengineering:"Scientists have proposed all sorts of geo-engineering solutions to global warming," said Gattuso. "For instance, they have proposed spraying the upper atmosphere with aerosol particles that would reduce sunlight reaching the Earth, mitigating the warming caused by rising levels of carbon dioxide. From today's (Sunday) Observer: Arctic seas turn to acid, putting vital food chain at risk With the world's oceans absorbing six million tonnes of carbon a day, a leading oceanographer warns of eco disaster Robin McKie, science editor The Observer, Sunday 4 October 2009 Carbon-dioxide emissions are turning the waters of the Arctic Ocean into acid at an unprecedented rate, scientists have discovered. Research carried out in the archipelago of Svalbard has shown in many regions around the north pole seawater is likely to reach corrosive levels within 10 years. The water will then start to dissolve the shells of mussels and other shellfish and cause major disruption to the food chain. By the end of the century, the entire Arctic Ocean will be corrosively acidic. "This is extremely worrying," Professor Jean-Pierre Gattuso, of France's Centre National de la Recherche Scientifique, told an international oceanography conference last week. "We knew that the seas were getting more acidic and this would disrupt the ability of shellfish--like mussels--to grow their shells. But now we realise the situation is much worse. The water will become so acidic it will actually dissolve the shells of living shellfish." Just as an acid descaler breaks apart limescale inside a kettle, so the shells that protect molluscs and other creatures will be dissolved. "This will affect the whole food chain, including the North Atlantic salmon, which feeds on molluscs," said Gattuso, speaking at a European commission conference, Oceans of Tomorrow, in Barcelona last week. The oceanographer told delegates that the problem of ocean acidification was worse in high latitudes, in the Arctic and around Antarctica, than it was nearer the equator. "More carbon dioxide can dissolve in cold water than warm," he said. "Hence the problem of acidification is worse in the Arctic than in the tropics, though we have only recently got round to studying the problem in detail." Read the rest of the article Labels: climate change, environmental crisis, oceans Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More on Effective Levels of Carbon CutsNeedless to say, they're a lot more than what's being discussed in "serious" policy circles. From The Guardian and Vox EU.And one more article on geoengineering. One "entrepreneurial" company actually claims to have found out how to harness "dark matter". Sometimes you just want to cry. Labels: 10:10 pledge, climate change, Copenhagen Climate Conference, environmental crisis, geoengineering Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Monbiot on the Most Recent Climate ScienceFrom The Guardian:We're pumping out CO2 to the point of no return. It's time to alter course Scientists now say peak temperatures will not fall back. Join me in taking the 10:10 pledge--it's the best shot we've got leftGeorge Monbiot The Guardian Tuesday 1 September 2009 Until a few months ago, government targets for cutting greenhouse gases at least had the virtue of being wrong. They were the wrong targets, by the wrong dates, and they bore no relationship to the stated aim of preventing more than 2C of global warming. But they used a methodology that even their sternest critics (myself included) believed could be improved until it delivered the right results: the cuts just needed to be raised and accelerated. Three papers released earlier this year changed all that. The first, published in Proceedings of the National Academy of Sciences in February, showed that the climate change we cause today will be "largely irreversible for 1,000 years after emissions stop". About 40% of the carbon dioxide produced by humans this century will remain in the atmosphere until at least the year 3000. Moreover, thanks to the peculiar ways in which the oceans absorb heat from the atmosphere, global average temperatures are likely to "remain approximately constant...until the end of the millennium despite zero further emissions". In other words, governments' hopes about the trajectory of temperature change are ill-founded. Most, including the UK's, are working on the assumption that we can overshoot the desired targets for temperature and atmospheric concentrations of CO2, then watch them settle back later. What this paper shows is that, wherever temperatures peak, that is more or less where they will stay. There is no going back. The other two papers were published by Nature in April. While governments and the United Nations set targets for cuts by a certain date, these papers measured something quite different: the total volume of carbon dioxide we can produce and still stand a good chance of avoiding more than 2C of warming. One paper, from a team led by Myles Allen, shows that preventing more than 2C means producing a maximum of half a trillion tonnes of carbon (1,830bn tonnes of carbon dioxide) between now and 2500 – and probably much less. The other paper, written by a team led by Malte Meinshausen, proposes that producing 1,000bn tonnes of CO2 between 2000 and 2050 would give a 25% chance of exceeding 2C of warming. If you want an idea of what this means... Read the rest of the article Labels: 10:10 pledge, carbon emissions, climate change, Copenhagen Climate Conference, environmental crisis, George Monbiot Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Climate DisobedienceNice piece by Mark Engler at TomDispatch.com. They gave a nice introduction to the article, too, and they've also posted an interview with Mark, available here.Climate Disobedience Is a New "Seattle" in the Making? By Mark Engler In the early morning of October 8, 2007, a small group of British Greenpeace activists slipped inside a hulking smokestack that towers more than 600 feet above a coal-fired power plant in Kent, England. While other activists cut electricity on the plant's grounds, they prepared to climb the interior of the structure to its top, rappel down its outside, and paint in block letters a demand that Prime Minister Gordon Brown put an end to plants like the Kingsnorth facility, which releases nearly 20,000 tons of carbon dioxide into the atmosphere each day. The activists, most of them in their thirties and forties, expected the climb to the top of the smokestack would take less than three hours. Instead, scaling a narrow metal ladder inside took nine. "It was the most physically exhausting thing I have ever done," 35-year-old Ben Stewart said later. "It was like climbing through a huge radiator -- the hottest, dirtiest place you could imagine." In the end, the fatigued, soot-covered climbers were only able to paint the word "Gordon" on the chimney before, facing dizzying heights, police helicopters, and a high court injunction, they were compelled to abandon the attempt and submit to arrest. They could hardly have known then that their botched attempt at signage would help transform British debate about fossil-fuel power plants -- and that it would send tremors through an emerging global movement determined to use direct action to combat the depredations of climate change. The case took on historic weight only after the Kingsnorth Six went to court, where they presented to a jury what is known in the United States as a "necessity" defense. This defense applies to situations in which a person violates a law to prevent a greater, imminent harm from occurring: for example, when someone breaks down a door to put out a fire in a burning building. In the Kingsnorth case, world-renowned climate scientist James Hansen, director of the NASA Goddard Institute for Space Studies, flew to England to testify. According to the Guardian, he presented evidence that the Kingsnorth plant alone could be expected to cause sufficient global warming to prompt "the extinction of 400 species over its lifetime." Citing a British government study showing that each ton of released carbon dioxide incurs $85 in future climate-change costs, the activists contended that shutting the plant down for the day had prevented $1.6 million in damages -- a far greater harm to society than any rendered by their paint -- and that their transgressions should therefore be excused. What surprised both Greenpeace and the prosecution was that 12 ordinary Britons agreed. The jury returned with an acquittal, and the freed defendants made the front pages of newspapers throughout the country. The tumult also produced political results. In April, British energy and climate change minister Ed Miliband announced a reversal in governmental policy on power stations, declaring, "The era of new unabated coal has come to an end." Discussing Kingsnorth, Daniel Mittler, a long-time environmental activist in Germany, told me recently, "it was probably one of the most impactful civil disobedience cases the world has ever seen, because it was the right action at the right time." Read the rest of the article. Labels: climate change, Mark Engler, TomDispatch.com Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Big Supply Chain Shift To Counter Globalization?From The Financial Times:Crisis and climate force supply chain shift By Richard Milne in Amsterdam Published: August 9 2009 18:43 | Last updated: August 9 2009 18:43 Manufacturers are abandoning global supply chains for regional ones in a big shift brought about by the financial crisis and climate change concerns, according to executives and analysts. Companies are increasingly looking closer to home for their components, meaning that for their US or European operations they are more likely to use Mexico and eastern Europe than China, as previously. "A future where energy is more expensive and less plentifully available will lead to more regional supply chains," Gerard Kleisterlee, chief executive of Philips, one of Europe's biggest companies, told the Financial Times. Supply chain experts agreed, with Ernst & Young underlining how as much as 70 per cent of a manufacturing company's carbon footprint can come from transport and other costs in its supply chain. Dan O'Regan, the accounting firm's head of supply chains, said: "It is not just the prospect of regulatory changes but also the downturn that is forcing many organisations to consider restructuring their supply chains in their entirety. I think you will find smaller, more regional supply chains." Mr Kleisterlee said businesses needed to find ways to build an economy on a sustainable basis ahead of the Copenhagen summit on climate change later this year, with "a review of global logistics and transport” one of the important steps. He said that until now cheap transport costs had meant “Mexico wasn't competitive with China for supplying the US". Read the rest of the article Labels: climate change, energy, financial crisis, globalization, multinational corporations, supply chains Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Monbiot on Climate Change BillObama should really change his slogan to "Yes, We Can't". I suspect this sort of thing will characterize the crafting of legislation on financial regulation and health care as well:Environment George Monbiot's blog The Guardian Why do we allow the US to act like a failed state on climate change? The Waxman-Markey climate bill is the best we will get from America until the corruption of public life is addressed It would be laughable anywhere else. But, so everyone says, the Waxman-Markey bill which is likely to be passed in Congress today or tomorrow, is the best we can expect--from America. The cuts it proposes are much lower than those being pursued in the UK or in most other developed nations. Like the UK's climate change act the US bill calls for an 80% cut by 2050, but in this case the baseline is 2005, not 1990. Between 1990 and 2005, US carbon dioxide emissions from fossil fuels rose from 5.8 to 7bn tonnes. The cut proposed by 2020 is just 17%, which means that most of the reduction will take place towards the end of the period. What this means is much greater cumulative emissions, which is the only measure that counts. Worse still, it is riddled with so many loopholes and concessions that the bill's measures might not offset the emissions from the paper it's printed on. You can judge the effectiveness of a US bill by its length: the shorter it is, the more potent it will be. This one is some 1,200 pages long, which is what happens when lobbyists have been at work. Read the rest of the blog entry Labels: Barack Obama, climate change, George Monbiot, lobbyists Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). TDCotE (viii): The Use and Abuse of TrustThe Dull Compulsion of the Economic (viii)A series of blog postings by D&S collective member Larry Peterson Links: (1) Scientists think sea level rise from global warming may be far greater than previously thought. (2) On the economics profession's adamant refusal to seriously engage with the crisis. (3) Yves Smith eviscerates former Fed governor Alan Blinder's arguments against nationalization of the banks. (4) How could the brutal job losses shape the future economy? Perhaps should be read in conjunction with this 2005 piece where manufacturing is concerned. (5) Nice piece on CDSs and AIG's collapse. Reminds one of the staggering sums involved. (6) Private Equity meltdown to turn into "the greatest transfer of ownership from equity owners to creditors in history?" (7) Will stimulus packages reverse green gains? (8) Another relatively recent (December) thought-provoking piece on the crisis, by David McNally (9) Michael Mandel on something of relevance to the last link, the striking developments in the relation of financial to nonfinancial profits in the economy over the last few years. (10) A bank run on a country: the UK. (11) Odds are very much against self employment as a means to escape the crisis. Commentary The Use and Abuse of Trust Last week I wrote a piece about the tendency of economists to speak of the crisis in overly psychological terms, or in a manner that suggests that the crisis is (still) primarily about the confidence of consumers, investors and employers. Accordingly, the implication seems to be that the economy is basically sound at best, once we--somehow--strip even historically high levels of abuse out of it, or that it needs perhaps a serious overhaul at worst, but that in all cases we cannot even think about the establishment of a fundamentally alternative economic system. This week I saw yet another Nobel-laureate economist weigh in along these lines. But Amartya Sen, in a piece in the New York Review of Books, seems to attempt to finesse this problematic out of existence altogether. Sen distinguishes himself by stating that looking at the present crisis as one peculiar to capitalism is misleading: capitalism and markets have always relied on independent legal, cultural and ideological supports, and, in this sense, to try to isolate "capitalism" out of the mix, especially in the context of today's hyper-complex societies, is bound to lead to confusion, particularly of an historical sort: Underlying this issue is a more basic question: whether capitalism is a term that is of particular use today. The idea of capitalism did in fact have an important role historically, but by now that usefulness may well be fairly exhausted. Sen then goes on to show how Adam Smith had a far more nuanced view of the role of the market mechanism even in the society of his time, in which markets played a far lesser role than they do today, and suggests that, precisely because of Smith's extraordinary institutional sensitivity, it behooves us to look to Smith in an attempt to rehabilitate our appreciation for the proper role of markets in society. But then he begins, to me, anyway, a very strange meditation. First he notes, once again, that capitalism did not emerge until new systems of law and so on, which solidified notions of private property, allowed for economic growth and capital accumulation. And he says, "Profit-oriented capitalism has always drawn upon support from other institutional values." But then he shifts gears: The moral and legal obligations and responsibilities associated with transactions have in recent years become much harder to trace, thanks to the rapid development of secondary markets involving derivatives and other financial instruments. A subprime lender who misleads a borrower into taking unwise risks can now pass off the financial assets to third parties—-who are remote from the original transaction. Accountability has been badly undermined, and the need for supervision and regulation has become much stronger. Moreover, The insufficient regulation of financial activities has implications not only for illegitimate practices, but also for a tendency toward overspeculation that, as Adam Smith argued, tends to grip many human beings in their breathless search for profits. Smith called the promoters of excessive risk in search of profits "prodigals and projectors"--which is quite a good description of issuers of subprime mortgages over the past few years. So, even if you accept that the fundamental problematic surrounding the present crisis has more to do with some sort of unchanging psychology of investors (the tendency to get carried away with temptation of excess profits) than the real economic conditions under which investments are made (and which invariably appear in and influence relations between classes), there is a question here. Why was it that the institutional supports that allowed for the spectacular growth of postwar capitalism became so quickly and thoroughly undone from the 'seventies on? He says, as we have seen, that capitalism has always relied on institutional support from non-market entities and structures, but he fails to explain the extraordinary turn away from such entities and structures during the deregulatory period that followed and went more-or-less unchallenged until last year. So rather than explaining this development, he simply describes it: And yet the supervisory role of government in the United States in particular has been, over the same period, sharply curtailed, fed by an increasing belief in the self-regulatory nature of the market economy. Precisely as the need for state surveillance grew, the needed supervision shrank. There was, as a result, a disaster waiting to happen, which did eventually happen last year, and this has certainly contributed a great deal to the financial crisis that is plaguing the world today. But then he makes yet another transition: The present economic crisis is partly generated by a huge overestimation of the wisdom of market processes, and the crisis is now being exacerbated by anxiety and lack of trust in the financial market and in businesses in general--responses that have been evident in the market reactions to the sequence of stimulus plans, including the $787 billion plan signed into law in February by the new Obama administration. Here Sen touches upon something that has really been making the rounds in the financial press these days, namely, the role of trust in market interactions and in capitalist societies. Most commentators I have seen tend to focus, again, on the role of investors in this vein, in speaking of the present crisis. So, to explain things like the pronounced lack of willingness of banks to lend, or of investors to buy into government-sponsored bailout programs, writers focus on the idea that, having been burned so badly already, such people are naturally extremely reluctant to put more money down. But such a situation then leads, inexorably, to further contractions of economic activity. Investors know this. And governments are going to great lengths to make money available to combat this. But takers have been few. So the reason must be an essentially irrational lack of trust. Sen doesn't actually say this, but I sense in the progression of his argument that this is a key assumption. Sen, like Alan Blinder (see link 3 above), seems to believe that once we sober up, we can, with the aid of governments, sort the mess out and live happily ever after. And despite the huge damage done to the economy, we need more confidence in our leaders, and, presumably, in ourselves, to emerge from the mess. But the problem here is that Sen looks at trust in exactly the same way he does all the other psychological propensities that influence market behavior: as relatively unchanging constants in stable equations. But the type of trust engendered in the lead up to the crisis was a wholly peculiar one, which was influenced by all sorts of specific factors, many--perhaps to a peculiar degree--of which reflected intensified class dynamics. So, in the period before the crisis in the US, virtually no-one was prepared to imagine that the entire system could melt down with the speed it did. But many noted that the underlying dynamic, of hyper-consumption (as Stephen Roach has noted, US consumption still amounts to some 70% of the economy, down only a percentage point or two from the height of the bubble) aided by copious amounts of credit, but unaccompanied by rises in savings, or wages that came even close to tracking key outlays like those involving education, healthcare and pensions (not to mention lodging or home-finance, which is another story) that were rising out of sight, was dangerously unsustainable. But everyone trusted that, at the end of the day, someone else would take the fall if things fell apart. And this kind of thinking was encouraged by the incentive structures that proliferated from a governmental/business complex that was noteworthy for its venality and conspicuous corruption. And this, almost certainly, had much to do with the kind of degradation of social feeling that was a factor behind, and consequence of wider deregulatory dynamic. "Trust", under such conditions, far from being the strangely lacking factor behind a partially inexplicable collapse of the financial system, should perhaps be viewed, in the highly skewed from it took on as a result of the severely distorted economic conditions that came to become prevalent in the final years of neoliberalism and deregulation, the Bush years, as a key occasioning cause of it. After such a denouement, it's hardly surprising that "trust" is noticibly lacking; but it's even more unsettling to think that the authorities (many of whom, as we all know too well, like Summers, Geithner et al, were instrumental in conditioning us in the new variant of "trust") want to revive it. Labels: Adam Smith, AIG, Alan Blinder, Amartya Sen, bailout, CDSs, climate change, David Hale, David McNally, financial crisis, Larry Peterson, Michael Mandel, the dull compulsion of the economic, Yves Smith Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Bard College Fires Joel KovelJoel Kovel, editor of the ecosocialist journal Capitalism Nature Socialism, was recently fired from his job as a professor at Bard College, apparently because of his political views on Zionism. See a statement from Kovel below; we found it at MRZine this morning. The March/April issue of Dollars & Sense will include an interview with Kovel on climate change and ecosocialism, part of our article series on the economics of climate change. (We will be posting the interview in full online soon.) There's information at the bottom of this post about how to contact the Bard administration.Statement of Joel Kovel Regarding His Termination by Bard College By Joel Kovel Joel Kovel holds the Alger Hiss chair in social studies at Bard College and is the author of Overcoming Zionism among other titles. He has recently been informed by the college that his contract will not be extended beyond July 1. In the statement below, by Kovel, he argues that his views are to blame. Introduction In January, 1988, I was appointed to the Alger Hiss Chair of Social Studies at Bard College. As this was a Presidential appointment outside the tenure system, I have served under a series of contracts. The last of these was half-time (one semester on, one off, with half salary and full benefits year-round), effective from July 1, 2004, to June 30, 2009. On February 7 I received a letter from Michèle Dominy, Dean of the College, informing me that my contract would not be renewed this July 1 and that I would be moved to emeritus status as of that day. She wrote that this decision was made by President Botstein, Executive Vice-President Papadimitriou and herself, in consultation with members of the Faculty Senate. This document argues that this termination of service is prejudicial and motivated neither by intellectual nor pedagogic considerations, but by political values, principally stemming from differences between myself and the Bard administration on the issue of Zionism. There is of course much more to my years at Bard than this, including another controversial subject, my work on ecosocialism (The Enemy of Nature). However, the evidence shows a pattern of conflict over Zionism only too reminiscent of innumerable instances in this country in which critics of Israel have been made to pay, often with their careers, for speaking out. In this instance the process culminated in a deeply flawed evaluation process which was used to justify my termination from the faculty. A Brief Chronology
Irregularities in the Evaluation Process The evaluation committee included Professor Bruce Chilton, along with Professors Mark Lambert and Kyle Gann. Professor Chilton is a member of the Social Studies division, a distinguished theologian, and the campus' Protestant chaplain. He is also active in Zionist circles, as chair of the Episcopal-Jewish Relations Committee in the Episcopal Diocese of New York, and a member of the Executive Committee of Christians for Fair Witness on the Middle East. In this capacity he campaigns vigorously against Protestant efforts to promote divestment and sanctions against the State of Israel. Professor Chilton is particularly antagonistic to the Palestinian liberation theology movement, Sabeel, and its leader, Rev. Naim Ateek, also an Episcopal. This places him on the other side of the divide from myself, who attended a Sabeel Conference in Birmingham, MI, in October, 2008, as an invited speaker, where I met Rev. Ateek, and expressed admiration for his position. It should also be observed that Professor Chilton was active this past January in supporting Israeli aggression in Gaza. He may be heard on a national radio program on WABC, "Religion on the Line," (January 11, 2009) arguing from the Doctrine of Just War and claiming that it is anti-Semitic to criticize Israel for human rights violations -- this despite the fact that large numbers of Jews have been in the forefront of protesting Israeli crimes in Gaza. Of course, Professor Chilton has the right to his opinion as an academic and a citizen. Nonetheless, the presence of such a voice on the committee whose conclusion was instrumental in the decision to remove me from the Bard faculty is highly dubious. Most definitely, Professor Chilton should have recused himself from this position. His failure to do so, combined with the fact that the decision as a whole was made in context of adversity between myself and the Bard administration, renders the process of my termination invalid as an instance of what the College's Faculty Handbook calls a procedure "designed to evaluate each faculty member fairly and in good faith." I still strove to make my future at Bard the subject of reasonable negotiation. However, my efforts in this direction were rudely denied by Dean Dominy's curt and dismissive letter (at the urging, according to her, of Vice-President Papadimitriou), which plainly asserted that there was nothing to talk over and that I was being handed a fait accompli. In view of this I considered myself left with no other option than the release of this document. On the Responsibility of Intellectuals Bard has effectively crafted for itself an image as a bastion of progressive thought. Its efforts were crowned with being anointed in 2005 by the Princeton Review as the second-most progressive college in the United States, the journal adding that Bard "puts the 'liberal' in 'liberal arts.'" But "liberal" thought evidently has its limits; and my work against Zionism has encountered these. A fundamental principle of mine is that the educator must criticize the injustices of the world, whether or not this involves him or her in conflict with the powers that be. The systematic failure of the academy to do so plays no small role in the perpetuation of injustice and state violence. In no sphere of political action does this principle apply more vigorously than with the question of Zionism; and in no country is this issue more strategically important than in the United States, given the fact that United States support is necessary for Israel's behavior. The worse this behavior, the more strenuous must be the suppression of criticism. I take the view, then, that Israeli human rights abuses are deeply engrained in a culture of impunity granted chiefly, though not exclusively, in the United States -- which culture arises from suppression of debate and open inquiry within those institutions, such as colleges, whose social role it is to enlighten the public. Therefore, if the world stands outraged at Israeli aggression in Gaza, it should also be outraged at institutions in the United States that grant Israel impunity. In my view, Bard College is one such institution. It has suppressed critical engagement with Israel and Zionism, and therefore has enabled abuses such as have occurred and are occurring in Gaza. This notion is of course, not just descriptive of a place like Bard. It is also the context within which the critic of such a place and the Zionist ideology it enables becomes marginalized, and then removed. Joel Kovel, the Alger Hiss Chair of Social Studies at Bard College is the author of, among other books, Overcoming Zionism. The statement was made available at <http://www.joelkovel.org/#bardstatement> and has been also published by the Alternative Information Center. For further information: www.codz.org; Joel Kovel, "Overcoming Impunity," The Link Jan-March 2009 (www.ameu.org). To write the Bard administration: President Leon Botstein president--at--bard.edu>. Executive Vice-President Dimitri Papadimitriou dpapadimitrou--at--bard.edu>. Labels: Bard College, climate change, ecosocialism, Israel, Joel Kovel, Palestine, Zionism Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Dull Compulsion of the Economic (iii)Links only today; there's lots of stuff out there, and I have a headache anyway:(1) Some people may have missed these Financial Times articles earlier in the week (I didn't see them covered on any of the blogs I monitor): (i) it seems that half of all Collateralized Debt Obligations (the favored vehicle for peddling subprime-mortgages) created out of other securitized bonds (namely, asset-backed securities, or ABSs) have failed; (ii) Could the TALF lead to a two-tier market? and (iii) in a sign that the yen carry trade, which played no small role in channeling Asian savings into wacky investments in the US, is kaputt, Japanese retail traders have started buying yen. (2) On climate change, a member of the International Panel on Climate Change refers to two mechanisms which may make climate change worse than forecasted. He also notes that the 2007 IPCC report, covering 2000-2007, seriously underestimated the amount of carbon emissions, largely because it failed to take into account the vast increase in coal-generated electricity use in India and China. (3) Ambrose Evans-Pritchard writes that Eastern Europe may prove to be the ruin of many Western European banks, if not the countries in which the banks are domiciled. He comments on the frantic efforts of Austria to cobble together a rescue plan, and notes that as European banks are more leveraged than American ones, they could be more harmed by losses in Eastern European than US and UK banks have been by the subprime mess and exposure to property bubbles. This is an extremely dangerous situation, particularly with the EU being pulled in several different directions in dealing with the crisis as it is. (4) The Independent on Sunday reports that the HBOS (which just announced a cool 10 billion pound loss) whistle-blower whose revelations led to the resignation of a top UK regulator plans to make public documents he says will show Prime Minister Gordon Brown's personal culpability in the banking crisis (Brown was Chancellor of the Exchequer during the lead-up to the crisis). (5) Business Week's Michael Mandel on the end of the "trade bubble". (6) Japan's 4Q GDP falls a jaw-dropping 3.3% (or 12.7% annualized). (7) Inquiries into the role of US officers in graft schemes in Iraq. This is important because, as the report says, "The wider investigation raises the question of whether American corruption was a primary factor in damaging an effort whose failures have been ascribed to poor planning and unforeseen violence." (8) Michael Perelman makes an important point about the lack of bank lending (short). (9) Marxist writer David Harvey reveals Brad DeLong's refuge in pedantry. Hat tip to Ian J. Seda-Irizarry of the Marxmail list. John Hicks' IS/LM formalization, which DeLong alludes to in support of his screed against Harvey, is dissected by Steve Keen in his book Debunking Economics; it's also referred to in several of his works available online for free, but I can't remember the titles right now. Larry Peterson Labels: bailout, Brad DeLong, climate change, David Harvey, Eastern Europe, financial crisis, Gordon Brown, HBOS, Iraq, Larry Peterson, Steve Keen, Trade Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Hansen: President Has 4 Years To Save EarthA few weeks ago ("Nasa Scientist: Cap & Trade Not Sufficient," Jan 1st) we posted an item featuring the thoughts of climate scientist James Hansen criticizing elements of Obama's likely climate change strategy. Now, in another Observer piece, he gives the administration a mere four years to take action concerning this problem, four years which are likely to be best with a whole host of other catastrophes vying for his attention and, potentially, increasingly limited political, financial and other means:President 'has four years to save Earth' US must take the lead to avert eco-disaster Read the full interview with James Hansen here Robin McKie in New York The Observer, Sunday 18 January 2009 Barack Obama has only four years to save the world. That is the stark assessment of Nasa scientist and leading climate expert Jim Hansen who last week warned only urgent action by the new president could halt the devastating climate change that now threatens Earth. Crucially, that action will have to be taken within Obama's first administration, he added. Soaring carbon emissions are already causing ice-cap melting and threaten to trigger global flooding, widespread species loss and major disruptions of weather patterns in the near future. "We cannot afford to put off change any longer," said Hansen. "We have to get on a new path within this new administration. We have only four years left for Obama to set an example to the rest of the world. America must take the lead." Hansen said current carbon levels in the atmosphere were already too high to prevent runaway greenhouse warming. Yet the levels are still rising despite all the efforts of politicians and scientists Read the rest of the article Labels: Barack Obama, climate change, James Hansen Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Nasa Scientist: Cap & Trade Not SufficientFrom The Guardian. N.B: Hansen lambasts the current international approach of setting targets to be met through "cap and trade" schemes as not up to the task. "This approach is ineffectual and not commensurate with the climate threat. It could waste another decade, locking in disastrous consequences for our planet and humanity," the Hansens wrote.Climate change policies failing, Nasa scientist warns Obama Award-winning researcher James Hansen says new president's rhetoric must be backed by action James Randerson, science correspondent guardian.co.uk, Thursday 1 January 2009 15.23 GMT Current approaches to deal with climate change are ineffectual, one of the world's top climate scientists said today in a personal new year appeal to Barack Obama and his wife Michelle on the urgent need to tackle global warming. With less than three weeks to go until Obama's inauguration, Prof James Hansen, head of Nasa's Goddard Institute for Space Studies, asked the recently appointed White House science adviser Prof John Holdren to pass the missive directly to the president-elect. Obama spoke repeatedly during his campaign about the need to tackle climate change, and environmentalists fervently hope he will live up to his promises to pursue green policies. The letter, from Hansen and his wife Anniek, is a personal plea to the first couple. It begins: "We write to you as fellow parents concerned about the Earth that will be inherited by our children, grandchildren, and those yet to be born...Jim has advised governments previously through regular channels. But urgency now dictates a personal appeal." In a covering letter to Holdren, Hansen explains that he wrote the letter a few weeks ago while in London. His wife had suffered a heart attack ("fortunately we were near a very good hospital") and while they waited for doctors to give the go-ahead to fly back to the US he decided to compose his petition to the new first family. Hansen has been one of the most prominent advocates of action to tackle climate change since he first spoke on the issue at congressional hearings in the 1980s. His testimony to the senate featured in Al Gore's film An Inconvenient Truth and he has received numerous honours for his work on the issue, including the WWF's top conservation award. Hansen wrote that there is a "profound disconnect" between public policy on climate change and the magnitude of the problem as described by the science. He praised Obama's campaign rhetoric about "a planet in peril", but said that how the new president responds in office will be crucial. The letter contains a wish list of three policy measures to tackle global warming. Read the rest of the article Labels: Barack Obama, climate change, James Hansen Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Flat-Earthers To Square Environment Circle?This is wacky, indeed. Got it off Agence France Presse site. A tidbit:"..."an astonishing switch" by former climate sceptics and conservative lobby groups in the United States. After years of denial or contestation, these powerful forces have now suddenly accepted that global warming is a problem. They have seized on geo-engineering as a solution that would make it unnecessary to slap costly curbs on big polluters..." Climate change: Sci-fi solutions no longer in the margins by Richard Ingham Richard Ingham Sun Dec 7, 5:30 am ET Climate change: Sci-fi solutions no longer in the margins AFP/File POZNAN, Poland (AFP) With political efforts to tackle global warming advancing slower than a Greenland glacier, schemes for saving Earth's climate system that once were dismissed as crazy or dangerous are gaining in status. Negotiating a multilateral treaty on curbing greenhouse gases is being so outstripped by the scale of the problem that those promoting a deus ex-machina -- a technical fix that would at least gain time -- are getting a serious hearing. To the outsider, these ideas to manipulate the climate may look as if they are inspired by science fiction. They include sucking carbon dioxide (CO2) out of the air by sowing the oceans with iron dust that would spur the growth of surface plankton. The microscopic plants would gobble up CO2 as they grow, and when they die, their carbon remains would slowly sink to the bottom of the sea, effectively storing the carbon forever. Another idea, espoused by chemist Paul Crutzen, who won the 1995 Nobel Prize for his work on the ozone shield, is to scatter masses of sulphur dioxide particles in the stratosphere. Swathing the world at high altitude, these particles would reflect sunlight, lowering the temperature by a precious degree or thereabouts. Read the rest of the article Labels: climate change Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Other Crisis: More Bad NewsFrom The Independent. Main point: "Their findings--which contradict a widespread belief that the atmosphere would recover quickly once humanity stopped polluting it..."Greenhouse gases will heat up planet 'for ever' New study shows the effects of CO2 pollution will be felt for hundreds of thousands of years By Geoffrey Lean, Environment Editor Sunday, 30 November 2008 Global warming is for ever, some of the world's top climate scientists have concluded. Their research shows that carbon dioxide emitted from today's homes, cars and factories will continue to heat up the planet for hundreds of thousands of years. Their findings--which contradict a widespread belief that the atmosphere would recover quickly once humanity stopped polluting it--come at the beginning of the most crucial week for the climate this year. Tomorrow Britain's powerful Climate Change Committee will lay out a road map to put the country on track to slash its greenhouse gas emissions by 80 per cent by 2050. At the same time, the world's governments will meet in Poznan, in Poland, to try to set the world on the path to agreeing a new international treaty next year, billed as the last chance to keep global warming to tolerable levels. Read the rest of the article Labels: climate change, Geoffrey Lean, The Independent Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Bailouts Dwarf Spending on Other CrisesA new report from the Institute for Policy Studies documents how much more money is spent to bail out banks and other financial instutions than to address other global crises, e.g. climate change and poverty. Here's the press release:Washington, D.C.—A new report finds that the approximately $4.1 trillion the United States and European governments have committed to rescue financial firms is 40 times the money they're spending to fight climate and poverty crises in the developing world. Labels: bailout, climate change, financial crisis, Institute for Policy Studies, poverty Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Words Can't Describe How Wacky This IsThere's an absolutely devastating critique of corporate-led globalization hidden (only a little) in this story somewhere. From today's Guardian:Paradise almost lost: Maldives seek to buy a new homeland The Guardian, November 10, 2008 Randeep Ramesh in Male The Maldives will begin to divert a portion of the country's billion-dollar annual tourist revenue into buying a new homeland--as an insurance policy against climate change that threatens to turn the 300,000 islanders into environmental refugees, the country's first democratically elected president has told the Guardian. Mohamed Nasheed, who takes power officially tomorrow in the island's capital, Male, said the chain of 1,200 island and coral atolls dotted 500 miles from the tip of India is likely to disappear under the waves if the current pace of climate change continues to raise sea levels. The UN forecasts that the seas are likely to rise by up to 59cm by 2100, due to global warming. Most parts of the Maldives are just 1.5m above water. The president said even a "small rise" in sea levels would inundate large parts of the archipelago. "We can do nothing to stop climate change on our own and so we have to buy land elsewhere. It's an insurance policy for the worst possible outcome. After all, the Israelis [began by buying] land in Palestine," said Nasheed, also known as Anni. The president, a human rights activist who swept to power in elections last month after ousting Maumoon Abdul Gayoom, the man who once imprisoned him, said he had already broached the idea with a number of countries and found them to be "receptive". Read the rest of the article Labels: climate change, globalization, Maldives Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
