Arquivo da tag: Economia

Koch brothers sought say in academic hiring in return for university donation (The Guardian)

Florida university receives $1.5m from rightwing billionaires

Kochs wanted appointment of ultra-rightwing economics faculty

theguardian.com, Friday 12 September 2014 19.56 BST

Americans for Prosperity Foundation Chairman David Koch in 2013.David Koch, above, and his brother Charles donated to 163 colleges and univerisites in 2012. Photograph: Phelan M Ebenhack/AP

The billionaire Koch brothers attempted to wield political influence over appointments and teaching at a major US university in exchange for donations, newly published documents reveal.

Internal emails and memos from the economics department of Florida State University (FSU) open a window into the kind of direct pressure the Kochs seek to exert over academic institutions in return for their largesse. The 16 pages of documents, obtained by the Center for Public Integrity, show that the energy tycoons demanded through their grant-giving arm, the Charles Koch Foundation, a role in faculty appointments and an emphasis on teaching that was in tune with their radical political views.

Charles and David Koch are major funders of the Tea Party and other ultra-rightwing movements that oppose government intervention and advocate for an unregulated free market.

A memo drawn up by the then chair of the FSU economics department, Bruce Benson, set out the Kochs’ terms for funding, noting that “the proposal is … not to just give us money to hire anyone we want and fund any graduate student that we choose. There are constraints.”

A section of the memo headlined “Constrained hiring” says: “As we all know, there are no free lunches. Everything comes with costs. In this case, the money for faculty lines and graduate students is coming from a group of funding organisations with strong libertarian views. These organisations have an explicit agenda.

“They want to expose students to what they believe are vital concepts about the benefits of the market and the dangers of government failure, and they want to support and mentor students who share their views. Therefore, they are trying to convince us to hire faculty who will provide exposure and mentoring. If we are not willing to hire such faculty, they are not willing to fund us.”

The documents date back to 2007, when the Koch deal was first being negotiated with FSU. Among the other demands made by the foundation was that Benson, a free-market libertarian who shares many of the Kochs’ beliefs, must have his term as chair of the economics department extended for three years as a requirement of the donation.

Dave Levinthal, the centre’s senior political reporter, who broke the story, said: “The documents give a blueprint of what the Kochs wanted and if ultimately they didn’t get everything they demanded it still gives a rare view into their intentions. They were saying ‘We want this, this and that, and if you don’t do it, we are not going to give you any money’.”

The Koch’s financial gift was finalised in 2009 at the sum of $1.5m (£920,000) to be spread over six years – a drop in the ocean for the brothers who own the second largest privately owned company in the US and are valued at $36bn each. The university says that as of April this year it had received $1m.

Under the initial deal with the Kochs, they had direct input into the appointment of faculty members in the economics department through a three-person advisory board set up specifically to liaise with the Charles Koch Foundation over hiring. The terms of the donation have been a running sore within FSU, prompting considerable internal opposition.

In the face of widespread criticism, the university authorities in 2013 revised the terms of the Koch funding to weaken the brothers’ grip on appointments. A statement from the university released earlier this year said that “the decision was made to eliminate any role whatsoever of the advisory group in the hiring of tenure-track faculty members in the department of economics”.

Benson did not immediately reply to questions from the Guardian. But he told the Center for Public Integrity that the documents had been intended for internal use and were written at “early stages of discussion” over the Koch grant, well before it was finalised in 2008.

Florida State University is not the only academic institution that the Kochs have financial relationships with. According to the CPI, the brothers dispensed $13m in 2012 to 163 colleges and universities.

A bolha global de carbono (Eco21)

06/11/2014 – 12h25

por Ricardo Abramovay*

carbono1 A bolha global de carbonoOs combustíveis fósseis são fortes candidatos a ocupar o epicentro de uma nova crise financeira global. A avaliação do jornalista Ambrose Evans-Pritchard está baseada em uma série de entrevistas com influentes protagonistas do setor de energia e em dois relatórios recentes sobre os impactos das negociações climáticas sobre estes mercados. Tendo em vista que, do trilhão de reais que, segundo o BNDES, devem ser investidos em infraestrutura no Brasil até 2017, quase metade vai para o setor de óleo e gás, o tema é de interesse estratégico para o País.

O primeiro relatório é o da Carbon Track Initiative, um grupo de trabalho dirigido pelo empresário, pesquisador e ativista Jeremy Leggett e que ganhou imenso prestígio internacional mostrando a existência de uma bolha de carbono (carbon bubble) no mercado global de energia. A expressão tem um duplo sentido, físico e financeiro. A bolha física está relacionada, evidentemente, à mudança climática. Para cumprir o objetivo de limitar a elevação da temperatura global média a, no máximo, 2°C, até o final do Século 21, a quantidade de fósseis a ser queimada pelo sistema econômico não pode ultrapassar o que corresponde à emissão de algo entre 900 e 1.000 gigatoneladas de Gases de Efeito Estufa entre 2010 e 2050. Ocorre que o patrimônio fóssil em mãos das empresas (em petróleo, carvão e gás) é quase três vezes superior a esse limite.

É nesse sentido que há uma bolha de carbono: este patrimônio só se converterá em riqueza se destruir o sistema climático. Em tese, seria possível capturar e armazenar o carbono lançado na atmosfera: mas, até hoje, os custos dessas operações são exorbitantes e não há indicações de que estejam prestes a se tornar economicamente viáveis. Portanto, não há terceiro caminho: ou se deixa sob o solo dois terços das reservas fósseis em poder dos gigantes da energia ou a elevação da temperatura global média chegará a um patamar em que consequências como a seca atual na Califórnia e os furacões Katrina e Sandy são apenas pálidas expressões.

É aí que ganha importância a dimensão financeira da bolha de carbono: apesar das evidências crescentes reunidas pelos cientistas e do acordo internacional (aprovado em 2010, em Cancún, México) de manter a elevação da temperatura aquém de 2°C, grandes empresas e seus financiadores continuam enxergando nos fósseis uma extraordinária fonte potencial de ganhos.

A Agência Internacional de Energia mostra que, globalmente, os investimentos em combustíveis fósseis dobraram entre 2000 e 2008, quando se estabilizaram em um patamar de US$ 950 bilhões por ano. Isso representa, segundo recente relatório da organização Ceres, 3,3 vezes mais do que os investimentos em renováveis realizados em 2012. Nos últimos seis anos, os gastos globais na busca de fósseis foram de US$ 5,4 trilhões. Praticamente todo esse investimento é feito em fontes não convencionais: areias betuminosas (sobretudo no Canadá), exploração no Ártico, gás de xisto e busca em águas profundas no Brasil e no Golfo do México. Essas fontes não convencionais exigem um esforço (e, portanto, têm um custo) muito maior que as convencionais. Elas só se viabilizam se o preço global do petróleo superar um patamar em torno de US$ 75 o barril.

Mas, se houver um acordo internacional para impedir a ruptura do sistema climático, a consequência será a queda na demanda e, portanto, nos preços dos fósseis. O crescimento exponencial das energias renováveis (a China dobrou sua geração solar nos primeiros seis meses de 2014, relativamente ao mesmo período do ano anterior) também deve resultar em menor demanda por fósseis. Portanto, o risco financeiro em torno dessa corrida à produção de fósseis é imenso.

O segundo relatório citado por Ambrose Evans-Pritchard e no qual se apoia a hipótese de crise financeira global, vem da consultoria Kepler Cheuvreux. Ele calcula as perdas financeiras dos gigantes da energia, caso um acordo para preservar o sistema climático seja alcançado. Nos próximos 20 anos, o prejuízo seria de US$ 28 trilhões, dos quais US$ 19,3 trilhões no setor de petróleo.

Os segmentos mais suscetíveis são justamente os não convencionais: Ártico, areias betuminosas e águas profundas. De que maneira esses números se relacionam com nosso pré-sal é um tema cuja discussão não pode ficar apenas entre especialistas.

* Ricardo Abramovay é professor Titular do Departamento de Economia da FEA/USP.

** Publicado originalmente no site Eco21.

(Eco21)

Mudança climática (Folha de S.Paulo)

7/11/2014

Eduardo Giannetti

Em “Reasons and Persons”, uma das mais inovadoras obras de filosofia analítica dos últimos 30 anos, o filósofo Derek Parfit propõe um intrigante “experimento mental”. A situação descrita é hipotética, mas ajuda a explicitar um ponto nevrálgico do maior desafio humano: limitar o aquecimento global a 2°C acima do nível pré-industrial até o final do século 21.

Imagine uma pessoa afivelada a uma cama com eletrodos colados em suas têmporas. Ao se girar um botão situado em outro local a corrente nos eletrodos aumenta em grau infinitesimal, de modo que o paciente não chegue a sentir. Um Big Mac gratuito é então ofertado a quem girar o botão. Ocorre, contudo, que quando milhares de pessoas fazem isso –sem que cada uma saiba dos outros– a descarga de energia produzida é suficiente para eletrocutar a vítima.

Quem é responsável pelo que? Algo tenebroso foi perpetrado, mas a quem atribuir a culpa? O efeito isolado de cada giro do botão é por definição imperceptível –são todos “torturadores inofensivos”. Mas o resultado conjunto dessa miríade de ações é ofensivo ao extremo. Até que ponto a somatória de ínfimas partículas de culpa se acumula numa gigantesca dívida moral coletiva?

A mudança climática em curso equivale a uma espécie de eletrocussão da biosfera. Quem a deseja? Até onde sei, ninguém. Trata-se da alquimia perversa de inumeráveis atos humanos, cada um deles isoladamente ínfimo, mas que não resulta de nenhuma intenção humana. E quem assume –ou deveria assumir– a culpa por ela? A maioria e ninguém, ainda que alguns sejam mais culpados que outros.

Os 7 bilhões de habitantes do planeta pertencem a três grupos: cerca de 1 bilhão respondem por 50% das emissões totais de gases-estufa, ao passo que os 3 bilhões seguintes por 45%. Os 3 bilhões na base da pirâmide de energia (metade sem acesso a eletricidade) respondem por apenas 5%. Por seu modo de vida e vulnerabilidade, este grupo –o único inocente– será o mais tragicamente afetado pelo “giro de botão” dos demais.

Descarbonizar é preciso. Segundo o recém-publicado relatório do painel do clima da ONU, limitar o aquecimento a 2°C exigirá cortar as emissões antropogênicas de 40% a 70% em relação a 2010 até 2050 e zerá-las até o final do século. Como chegar lá?

A complexidade do desafio é esmagadora. Contar com a gradual conscientização dos “torturadores inocentes” parece irrealista. Pagar para ver e apostar na tecnologia como tábua de salvação seria temerário ao extremo. O protagonista da ação, creio eu, deveria ser a estrutura de incentivos: precificar o carbono e colocar a força do sistema de preços para trabalhar no âmbito da descarbonização.

What were they thinking? Study examines federal reserve prior to 2008 financial crisis (Science Daily)

Date: September 15, 2014

Source: Swarthmore College

Summary: A new study illustrates how the Federal Reserve was aware of potential problems in the financial markets prior to 2008, but did not take the threats seriously.


Six years after the start of the Great Recession, a new study from three Swarthmore College professors illustrates how the Federal Reserve was aware of potential problems in the financial markets, but did not take the threats seriously.

Published in the Review of International Political Economy, the study is the result of a collaboration between Swarthmore College economist Stephen Golub, political scientist Ayse Kaya, and sociologist Michael Reay.

The team looked at pre-crisis Federal Reserve documents to come to its conclusion, focusing particularly on the transcripts of meetings of the Federal Open Market Committee. The meeting transcripts indicate that policymakers and staff were aware of troubling developments but remained largely unconcerned.

Drawing on literatures in economics, political science and sociology, the study demonstrates that the Federal Reserve’s intellectual paradigm in the years before the crisis focused on ‘post hoc interventionism’ — the institution’s ability to limit the fallout should a problem arise. Additionally, the study argues that institutional routines and a “silo mentality” contributed to the Federal Reserve’s lack of attention to the serious warning signals in the pre-crisis period.

To speak with Professors Golub, Kaya, or Reay, please contact Mark Anskis (manskis1@swarthmore.edu / 570-274-0471) in the Swarthmore College communications office.


Journal Reference:

  1. Stephen Golub, Ayse Kaya, Michael Reay. What were they thinking? The Federal Reserve in the run-up to the 2008 financial crisis. Review of International Political Economy, 2014; 1 DOI: 10.1080/09692290.2014.932829

Wind blows away fossil power in the Nordics, the Baltics next (Reuters)

Wed Oct 15, 2014 9:13am EDT

* Rising wind power output pushes Nordic prices down

* Low power prices cut gas, coal power profitability

* Denmark, Finland seen shutting abt 2,000 MW of condensing power

* Norway mothballs 420 MW Kaarstoe gas-fired power plant

By Nerijus Adomaitis

OSLO, Oct 15 (Reuters) – Wind power is blowing gas and coal-fired turbines out of business in the Nordic countries, and the effects will be felt across the Baltic region as the renewable glut erodes utility margins for thermal power stations.

Fossil power plants in Finland and Denmark act as swing-producers, helping to meet demand when hydropower production in Norway and Sweden falls due to dry weather.

The arrival of wind power on a large scale has made this role less relevant and has pushed electricity prices down, eroding profitability of fossil power stations.

“Demand for coal condensing power in the Nordic power market has decreased as a result of the economic recession and the drop in the wholesale price for electricity,” state-controlled Finnish utility Fortum said, booking an impairment loss of about 25 million euros($31.67 million).

Nordic wholesale forward power prices have almost halved since 2010 to little over 30 euros per megawatt-hour (MWh) as capacity increases while demand stalls on the back of stagnant populations, low economic growth and lower energy use due to improved efficiency.

Short-run marginal costs (SRMC) of coal generation were 28.70 euros per megawatt-hour (MWh), the Nordic power regulators said, while costs of gas-fired power generation were much higher, at 53 euros/MWh in 2013.

“The Nordic system price will likely more often clear well below the production cost for coal fired power production,” said Marius Holm Rennesund Oslo-based consultancy THEMA.

“This will, in our view, result in mothballing of 2,000 MW of coal condensing capacity in Denmark and Finland towards 2030,” he added.

Adding further wind power capacity at current market conditions could lead to power prices dropping towards as low as 20 euros per MWh, the marginal cost for nuclear reactors, Rennesund said.

PART OF A PLAN

Denmark and Finland have about 11,000 MW of coal, gas and oil-fired generating capacities, Reuters estimate shows.

Pushing fossil-fuelled power stations out of the Nordic generation park is part of government plans across the region.

Denmark wants to phase all coal use in power generation by 2030 and to generate all power and heat from renewables by 2035.

Wind power is expected to meet half consumption in Denmark by 2020, up from 33.4 percent in 2013.

In neighbouring Sweden, wind meets about 8 percent of total consumption, and installed capacity has more than doubled to about 5,000 MW in 2014 from 2010. Its wind power association predicts the capacity to rise to some 7,000 MW by 2017.

In Norway, the government has pledged to change tax rules to catch up with Sweden.

These plans are beginning to bear results.

Naturkraft, a joint venture between Norway’s Statoil and Statkraft, said this month it would put its 420 megawatt (MW) Kaarstoe gas-fired power plant in “cold reserve” from January.

Mothballing the 2 billion crowns ($302 million) plant, which had operated for only a few days per year, would help to save 50-80 million crowns per year, Naturkraft’s chief executive John Terje Staveland told Reuters.

Earlier this year, Finnish utility Fortum shut its 695 MW Inkoo coal-fire power plant.

Sweden’s Vattenfall said in May it will shut down its 409 MW coal-fired Fyn power plant in Denmark from May 2016.

The state-run utility sold its 314 MW coal-fired Amager power plant in Copenhagen to a Danish utility HOFOR, which plans to replace coal with biomass.

The developments in the Nordic countries is also beginning to affect utilities in the Baltic states as their grids get more integrated.

Estonia’s energy group Eesti Energia saw its power sales to drop by 30 percent during the first half of the year after a 650 MW link to Finland came online at end-2013.

Cheaper power imports from the Nordics have halved Eesti Energia’s profit margin to 12 euros per MWh in the second quarter, the company said in its quarterly report.

Lithuania, which expects to have a 700 MW interconnection to Sweden by end-2015, has said it would shut 900 MW of gas-fired capacity by 2016 due to negative margins. (1 US dollar = 6.6199 Norwegian krone) (1 US dollar = 0.7895 euro) (Editing by Henning Gloystein and William Hardy)

Once a Symbol of Power, Farming Now an Economic Drag in China (New York Times)

 

Li Haiwen, 47, grows medicinal plants, rather than grain, on the plot of land he rents from the local government in Yangling. “The more grain you plant,” he said, “the poorer you get.” Credit Gilles Sabrie for The New York Times

YANGLING, China — For about 4,000 years, farming in this region has been a touchstone of Chinese civilization. It was here that the mythic hero Hou Ji is said to have taught Chinese how to grow grain, and the area’s rich harvests underpinned China’s first dynasties, feeding officials and soldiers in the nearby imperial capital.

But nowadays, Yangling’s fields are in disarray. Frustrated by how little they earn, the ablest farmers have migrated to cities, hollowing out this rural district in the Chinese heartland. Left behind are people like Hui Zongchang, 74, who grows wheat and corn on a half-acre plot while his son works as a day laborer in the metropolis of Xi’an to the east.

Mr. Hui, still vigorous despite a stoop, said he makes next to no money from farming. He tills the earth as a kind of insurance. “What land will they farm if I don’t keep this going?” he said of his children. “Not everyone makes it in the city.”

Farm output remains high. But rural living standards have stagnated compared with the cities, and few in the countryside see their future there.The most recent figures show a threefold gap between urban and rural incomes, fueling discontent and helping to make China one of the most unequal societies in the world.

The nation’s Communist leaders have declared that fixing the countryside is crucial to maintaining social stability. Last year, they unveiled a new blueprint for economic reform with agricultural policy as a centerpiece. But the challenge confronting them resembles a tangled knot.

It begins with the fact that farms in China are too small to generate large profits, about 1.6 acres on average, compared with 400 acres in the United States. Yet it is difficult to consolidate these farms into larger, more efficient operations because Chinese farmers do not own their plots — they lease them from the government.

Privatizing farmland would allow market forces to create bigger farms. But that would be a political minefield for the Communist Party. It would also risk exacerbating inequality, by concentrating land ownership in the hands of a few while leaving many rural families without farms to fall back on if they hit hard times in the cities.

“All of these issues are interlocked and require a series of reforms to be solved,” said Luo Jianchao, a professor at Northwest A & F University in Yangling, and a government adviser. “There’s no magic bullet.”

In late September, President Xi Jinping endorsed an experiment underway in Yangling and other parts of China to untangle this knot. The measure, called liuzhuan, stops short of privatization but gives farmers land-use rights that they can transfer to others in exchange for a rental fee.

The goal is to simulate a private land market and allow China’s family-run, labor-intensive farms to change hands and be amalgamated into large-scale, industrialized businesses. In theory, liuzhuan allows this to happen without cutting ties between rural families and the land, because they collect rental fees as a safety net.

Mr. Xi has presented the policy as critical to China’s next phase of economic reform. Skeptics, however, say it shows the government remains unwilling to consider a bold measure that has worked in many countries: giving farmers full ownership of their land.

“Privatization of land is a key issue but it’s completely taboo,” said Tao Ran, an agricultural expert at Renmin University in Beijing. The party leadership, he said, “cannot countenance it.”

More is at stake than the socialist credentials of the Communist Party, which came to power in a peasant revolution in 1949 and immediately collectivized farmland. State ownership of land is also a major source of government revenue. In areas near cities, local officials often rezone agricultural land and flip it to developers at a huge premium, sometimes setting off violent protests by residents who are left out.

Others see the system of political control of the countryside at stake. “The rural system they’ve had since the 1950s is based on the state ownership of land,” said Fred Gale, who writes an influential blog on China’s agricultural sector called Dim Sums. “If this unravels, then the bureaucrats would be at a loss as to how to manage the countryside.”

In Yangling, a district of 155,000 people that has been a center for agricultural sciences since the 1930s, several problems with the government’s attempt to sidestep privatization are apparent.

Because farmers do not own their land, they cannot sell it and get a large, lump sum payment that could be used to make a new start. Nor can they mortgage land for funds that could be reinvested in their farms or in other businesses.

Yang Tewang, a branch manager of the state-run Yangling Rural Commercial Bank, said he has made about $3 million in mortgage-style loans since the liuzhuan experiment began. But he said they were not true mortgages since the banks cannot repossess land if the farmer defaults — the state owns the land, not the farmer. As a result, Mr. Yang said he minimizes risk by lending only to large-scale vegetable and fruit farmers.

“The rest don’t pay,” he said. A grain farmer, for example, could never get a loan, he said.

Another problem has been figuring out how to set the rental fees that rural families collect if they transfer their land-use rights.

Yangling set up a land bank that took over land-use rights in an area of 36 square miles, then set an annual rental fee of at least $750 per acre of land. Farmers could choose between giving up their land and collecting that rent, or leasing their land back from the state and continuing to farm.

But the fees can distort the market. For example, they have discouraged production of grain, which does not sell for enough of a margin over the cost of renting the land. Grain pays only about $1,250 per acre, for an annual profit of about $500, said one resident, Li Haiwen.

“The more grain you plant,” he said, “the poorer you get.”

Mr. Li grows magnolia bushes used in traditional Chinese medicine instead. But he said farming is just a sideline for him. His main source of income is in professional landscaping. “I think our minds are opening up and we realize there are other ways to make money,” he said.

Exactly why rental prices are so high is open to debate. In some parts of China, rents are even higher than in Yangling, topping $1,200 per acre. By contrast, the average acre of farmland in the United States rented for $136 in 2013, according to the United States Department of Agriculture. Some experts say the rental fees have been driven up by the same sort of speculation that has made apartments so exorbitantly expensive in Chinese cities. Even in a remote area like Yangling, an apartment of 1,000 square feet sells for $50,000, and in cities like Beijing the price can easily be 10 times that.

In recent months, banks like the China International Trust and Investment Corporation have been buying rural land-use rights at high prices. Li Ping, an agricultural expert at Landesa, a nongovernmental organization focused on rural issues, said he believed the purchases have been made with an eye toward rezoning land for housing or industrial use.

“It’s like the housing prices here being higher than in most parts of the U.S.,” Mr. Li said. “It’s not sustainable.”

One of the success stories in Yangling has been the case of Zhang Hongli, who took over 197 acres once farmed by three villages and pays about $150,000 per year in rental fees.

Mr. Yang, the banker, described it as a win-win exchange. Mr. Zhang uses the land to grow watermelons, which sell for a nice profit in Xi’an. Meanwhile, the families who gave up their land are collecting about $500 per year on average, and almost all received free apartments from the government as well.

Government planners hope that more farmers will be moved to the cities so the countryside gradually depopulates and ever-larger-scale farming takes over. For farmers with a job already lined up in the city, this system is attractive. But for people still wanting to work the land, like Zhou Yuansheng, 66, it is an example of how little say he has.

“The big decisions are made by the government,” he said. “No one asked me what I wanted to do with my land.”

Number-crunching could lead to unethical choices, says new study (Science Daily)

Date: September 15, 2014

Source: University of Toronto, Rotman School of Management

Summary: Calculating the pros and cons of a potential decision is a way of decision-making. But repeated engagement with numbers-focused calculations, especially those involving money, can have unintended negative consequences.


Calculating the pros and cons of a potential decision is a way of decision-making. But repeated engagement with numbers-focused calculations, especially those involving money, can have unintended negative consequences, including social and moral transgressions, says new study co-authored by a professor at the University of Toronto’s Rotman School of Management.

Based on several experiments, researchers concluded that people in a “calculative mindset” as a result of number-crunching are more likely to analyze non-numerical problems mathematically and not take into account social, moral or interpersonal factors.

“Performing calculations, whether related to money or not, seemed to encourage people to engage in unethical behaviors to better themselves,” says Chen-Bo Zhong, an associate professor of organizational behavior and human resource management at the Rotman School, who co-authored the study with Long Wang of City University of Hong Kong and J. Keith Murnighan from Northwestern University’s Kellogg School of Management.

Participants in a set of experiments displayed significantly more selfish behavior in games where they could opt to promote their self-interest over a stranger’s after exposure to a lesson on a calculative economics concept. Participants who were instead given a history lesson on the industrial revolution were less likely to behave selfishly in the subsequent games. A similar but lesser effect was found when participants were first asked to solve math problems instead of verbal problems before playing the games. Furthermore, the effect could potentially be reduced by making non-numerical values more prominent. The study showed less self-interested behavior when participants were shown pictures of families after calculations.

The results may provide further insight into why economics students have shown more self-interested behavior in previous studies examining whether business or economics education contributes to unethical corporate activity, the researchers wrote.

The study was published in Organizational Behavior and Human Decision Processes.

Journal Reference:

  1. Long Wang, Chen-Bo Zhong, J. Keith Murnighan. The social and ethical consequences of a calculative mindset. Organizational Behavior and Human Decision Processes, 2014; 125 (1): 39 DOI: 10.1016/j.obhdp.2014.05.004

The Pricing of Everything (The Guardian)

The Natural Capital Agenda looks like an answer to the environmental crisis. But it’s a delusion.

By George Monbiot, published on the Guardian’s website, 24th July 2014

This is the transcript of George Monbiot’s SPERI Annual Lecture, hosted by the Sheffield Political Economy Research Institute at the University of Sheffield. The lecture was delivered without notes, and transcribed afterwards, so a few small changes have been made for readability, but it’s more or less as given. You can watch the video here.

“Ladies and gentlemen, we are witnessing the death of both the theory and the practice of neoliberal capitalism. This is the doctrine which holds that the market can resolve almost all social, economic and political problems. It holds that people are best served, and their prosperity is best advanced, by the minimum of intervention and spending by the state. It contends that we can maximise the general social interest through the pursuit of self-interest.

To illustrate the spectacular crashing and burning of that doctrine, let me tell you the sad tale of a man called Matt Ridley. He was a columnist on the Daily Telegraph until he became – and I think this tells us something about the meritocratic pretensions of neoliberalism – the hereditary Chair of Northern Rock: a building society that became a bank. His father had been Chair of Northern Rock before him, which appears to have been his sole qualification.

While he was a columnist on the Telegraph he wrote the following:

The government “is a self-seeking flea on the backs of the more productive people of this world. … governments do not run countries, they parasitize them.”(1) He argued that taxes, bail-outs, regulations, subsidies, interventions of any kind are an unwarranted restraint on market freedom. When he became Chairman of Northern Rock, Mr Ridley was able to put some of these ideas into practice. You can see the results today on your bank statements.

In 2007 Matt Ridley had to go cap in hand to the self-seeking flea and beg it for what became £27 billion. This was rapidly followed by the first run on a British bank since 1878. The government had to guarantee all the deposits of the investors in the bank. Eventually it had to nationalise the bank, being the kind of parasitic self-seeking flea that it is, in order to prevent more or less the complete collapse of the banking system(2).

By comparison to Mr Ridley, the likes of Paul Flowers, our poor old crystal Methodist, were pretty half-hearted. In fact about the only things which distinguish Mr Flowers from the rest of the banking fraternity were that a) he allegedly bought his own cocaine and b) he singularly failed to bring the entire banking system to its knees.

Where’s Mr Ridley now? Oh, we don’t call him Mr Ridley any more. He sits in the House of Lords as a Conservative peer. That, ladies and gentlemen, is how our system works.

It is not just that neoliberalism has failed spectacularly in that this creed – which was supposed to prevent state spending and persuade us that we didn’t need state spending – has required the greatest and most wasteful state spending in history to bail out the deregulated banks. But also that it has singularly failed to create the great society of innovators and entrepreneurs that we were promised by the originators of this doctrine, by people like Friedrich Hayek and Milton Friedman, who insisted that it would create a society of entrepreneurs.

As Thomas Piketty, a name which is on everybody’s lips at the moment, so adeptly demonstrates in his new book, Capital in the Twenty-first Century, what has happened over the past thirty years or so has been a great resurgence of patrimonial capitalism, of a rentier economy, in which you make far more money either by owning capital or by positioning yourself as a true self-serving flea upon the backs of productive people, a member of an executive class whose rewards are out of all kilter with its performance or the value it delivers(3). You make far more money in either of those positions than you possibly can through entrepreneurial activity. If wealth under this system were the inevitable result of hard work and enterprise, every woman in Africa would be a millionaire.

So just at this moment, this perfect moment of the total moral and ideological collapse of the neoliberal capitalist system, some environmentalists stumble across it and say, “This is the answer to saving the natural world.” And they devise a series of ideas and theories and mechanisms which are supposed to do what we’ve been unable to do by other means: to protect the world from the despoilation and degradation which have done it so much harm.

I’m talking about the development of what could be called the Natural Capital Agenda: the pricing, valuation, monetisation, financialisation of nature in the name of saving it.

Sorry, did I say nature? We don’t call it that any more. It is now called natural capital. Ecological processes are called ecosystem services because, of course, they exist only to serve us. Hills, forests, rivers: these are terribly out-dated terms. They are now called green infrastructure. Biodiversity and habitats? Not at all à la mode my dear. We now call them asset classes in an ecosystems market. I am not making any of this up. These are the names we now give to the natural world.

Those who support this agenda say, “Look, we are failing spectacularly to protect the natural world – and we are failing because people aren’t valuing it enough. Companies will create a road scheme or a supermarket – or a motorway service station in an ancient woodland on the edge of Sheffield – and they see the value of what is going to be destroyed as effectively zero. They weigh that against the money to be made from the development with which they want to replace it. So if we were to price the natural world, and to point out that it is really worth something because it delivers ecosystems services to us in the form of green infrastructure and asset classes within an ecosystems market (i.e. water, air, soil, pollination and the rest of it), then perhaps we will be able to persuade people who are otherwise unpersuadable that this is really worth preserving.”

They also point out that through this agenda you can raise a lot of money, which isn’t otherwise available for conservation projects. These are plausible and respectable arguments. But I think they are the road to ruin – to an even greater ruin than we have at the moment.

Let me try to explain why with an escalating series of arguments. I say escalating because they rise in significance, starting with the relatively trivial and becoming more serious as we go.

Perhaps the most trivial argument against the Natural Capital Agenda is that, in the majority of cases, efforts to price the natural world are complete and utter gobbledygook. And the reason why they are complete and utter gobbledygook is that they are dealing with values which are non-commensurable.

They are trying to compare things which cannot be directly compared. The result is the kind of nonsense to be found in the Natural Capital Committee’s latest report, published a couple of weeks ago(4). The Natural Capital Committee was set up by this Government, supposedly in pursuit of better means of protecting the natural world.

It claimed, for example, that if fresh water ecosystems in this country were better protected, the additional aesthetic value arising from that protection would be £700 million. That’s the aesthetic value: in other words, what it looks like. We will value the increment in what it looks like at £700 million. It said that if grassland and sites of special scientific interest were better protected, their wildlife value would increase by £40 million. The value of their wildlife – like the chalk hill blues and the dog violets that live on protected grasslands – would be enhanced by £40 million.

These figures, ladies and gentlemen, are marmalade. They are finely shredded, boiled to a pulp, heavily sweetened … and still indigestible. In other words they are total gibberish.

But they are not the worst I’ve come across. Under the last Government, the Department for Transport claimed to have discovered “the real value of time.” Let me read you the surreal sentence in which this bombshell was dropped. “Forecast growth in the real value of time is shown in Table 3.”(5) There it was, the real value of time – rising on a graph.

The Department for Environment, when it launched the National Ecosystem Assessment in 2011, came out with something equally interesting. It said it had established “the true value of nature for the very first time”(6). Unfortunately it wasn’t yet able to give us a figure for “the true value of nature”, but it did manage to provide figures for particular components of that value of nature. Let me give you just one of these. It said that if we looked after our parks and greens well they would enhance our well-being to the tune of £290 per household per year in 2060.

What does it mean? It maintained that the increment in well-being is composed of “recreation, health and solace”; natural spaces in which “our culture finds its roots and sense of place”; “shared social value” arising from developing “a sense of purpose” and being “able to achieve important personal goals and participate in society” enhanced by “supportive personal relationships” and “strong and inclusive communities”(7). So you put solace and sense of place and social value and personal goals and supportive personal relationships and strong and inclusive communities all together into one figure and you come out with £290 per household per year.

All we require now is for the Cabinet Office to give us a price for love and a true value for society and we will have a single figure for the meaning of life.

I know what you’re thinking: it’s 42(8). But Deep Thought failed to anticipate the advent of Strictly Come Dancing, which has depreciated the will to live to the extent that it’s now been downgraded to 41.

It is complete rubbish, and surely anyone can see it’s complete rubbish. Not only is it complete rubbish, it is unimprovable rubbish. It’s just not possible to have meaningful figures for benefits which cannot in any sensible way be measured in financial terms.

Now there are some things that you can do. They are pretty limited, but there are some genuinely commensurable pay-offs that can be assessed. So, for instance, a friend of mine asked me the other day, “What’s the most lucrative investment a land owner can make?”. I didn’t know. “An osprey! Look at Bassenthwaite in the Lake District where there’s a pair of ospreys breeding and the owners of the land have 300,000 people visiting them every year. They charge them for car parking and they probably make a million pounds a year.”

You can look at that and compare it to what you were doing before, such as rearing sheep, which is only viable because of farm subsidies: you actually lose money by keeping sheep on the land. So you can make a direct comparison because you’ve got two land uses which are both generating revenue (or losing revenue) that is already directly costed in pounds. I’ve got no problem with that. You can come out and say there is a powerful economic argument for having ospreys rather than sheep.

There are a few others I can think of. You can, for instance, look at watersheds. There is an insurance company which costed Pumlumon, the highest mountain in the Cambrian mountains, and worked out that it would be cheaper to buy Pumlumon and reforest it in order to slow down the flow of water into the lowlands than to keep paying out every year for carpets in Gloucester.

There were quite a few assumptions in there, as we don’t yet have all the hydrological data we need, but in principle you can unearth some directly commensurable values – the cost of insurance pay-outs, in pounds, versus the cost of buying the land, in pounds – and produce a rough ballpark comparison. But in the majority of cases you are not looking at anything remotely resembling financial commensurability.

So that is Problem One, and that is the most trivial of the problems.

Problem Two is that you are effectively pushing the natural world even further into the system that is eating it alive. Dieter Helm, the Chairman of the Natural Capital Committee, said the following in the same report I quoted from just a moment ago. “The environment is part of the economy and needs to be properly integrated into it so that growth opportunities will not be missed.”(9)

There, ladies and gentlemen, you have what seems to me the Government’s real agenda. This is not to protect the natural world from the depredations of the economy. It is to harness the natural world to the economic growth that has been destroying it. All the things which have been so damaging to the living planet are now being sold to us as its salvation; commodification, economic growth, financialisation, abstraction. Now, we are told, these devastating processes will protect it.

(Sorry, did I say the living planet? I keep getting confused about this. I meant asset classes within an ecosystem market.)

It gets worse still when you look at the way in which this is being done. Look at the government’s Ecosystems Markets Task Force, which was another of these exotic vehicles for chopping up nature and turning it into money. From the beginning it was pushing nature towards financialisation. It talked of “harnessing City financial expertise to assess the ways that these blended revenue streams and securitisations enhance the return on investment of an environmental bond.”(10) That gives you an idea of what the agenda is – as well as the amount of gobbledygook it is already generating.

What we are talking about is giving the natural world to the City of London, the financial centre, to look after. What could possibly go wrong? Here we have a sector whose wealth is built on the creation of debt. That’s how it works, on stacking up future liabilities. Shafting the future in order to serve the present: that is the model. And then that debt is sliced up into collateralised debt obligations and all the other marvellous devices that worked so well last time round.

Now nature is to be captured and placed in the care of the financial sector, as that quote suggests. In order for the City to extract any value from it, the same Task Force says we need to “unbundle” ecosystem services so they can be individually traded(11).

That’s the only way in which it can work – this financialisation and securitisation and bond issuing and everything else they are talking about. Nature has to be unbundled. If there is one thing we know about ecosystems, and we know it more the more we discover about them, it’s that you cannot safely disaggregate their functions without destroying the whole thing. Ecosystems function as coherent holistic systems, in which the different elements depend upon each other. The moment you start to unbundle them and to trade them separately you create a formula for disaster.

Problem Three involves what appears to be a very rude word, because hardly anyone uses it, certainly not in polite society. It begins with a ‘p’ and it’s five letters long and most people seem unable to utter it. It is, of course, power.

Power is the issue which seems to get left out of the Natural Capital Agenda. And because it gets left out, because it it is, I think, deliberately overlooked, what we are effectively seeing is the invocation of money as a kind of fairy dust, that you sprinkle over all the unresolved problems of power in the hope that they will magically resolve themselves. But because they are unresolved, because they are unaddressed, because they aren’t even acknowledged; the natural capital agenda cannot possibly work.

Let me give you an example of a system which doesn’t work because of this problem, despite high commensurability, simple and straightforward outputs and a simple and straightforward monitoring system. That is the European Emissions Trading System, which seeks to reduce carbon emissions by creating a carbon price.

I am not inherently opposed to it. I can see it is potentially as good a mechanism as any other for trying gradually to decarbonise society. But it has failed. An effective price for carbon begins at about £30 a ton. That is the point at which you begin to see serious industrial change and the disinvestment in fossil fuels we so desperately need to see.

Almost throughout the history of the European Emissions Trading System, the price of carbon has hovered around five Euros. That is where it is today. The reason is an old-fashioned one. The heavily polluting industries, the carbon-intensive industries, which were being asked to change their practices, lobbied the European Union to ensure that they received an over-allocation of carbon permits. Far too many permits were issued. When the European Parliament started talking about withdrawing some of those permits, it too was lobbied and it caved in and failed to withdraw them. So the price has stayed very low.

What we see here is the age-old problem of power. Governments and the Commission are failing to assert political will. They are failing to stand up for themselves and say, “This is how the market is going to function. It is not going to function without a dirigiste and interventionist approach.” Without that dirigiste and interventionist approach we end up with something which is almost entirely useless. In fact worse than useless because I don’t think there has been a single coal-burning power station, motorway or airport in the European Union approved since the ETS came along, which has not been justified with reference to the market created by the trading system.

You haven’t changed anything by sprinkling money over the problem, you have merely called it something new. You have called it a market as opposed to a political system. But you still need the regulatory involvement of the state to make that market work. Because we persuade ourselves that we don’t need it any more because we have a shiny new market mechanism, we end up fudging the issue of power and not addressing those underlying problems.

Let me give you another example: The Economics of Ecosystems and Biodiversity project, overseen by Pavan Sukhdev from Deutsche Bank. This huge exercise came up with plenty of figures, most of which I see as nonsense. But one or two appeared to be more more plausible. Among the most famous of these was its valuation of mangrove forests. It maintained that if a businessman or businesswoman cuts down a mangrove forest and replaces it with a shrimp farm, that will be worth around $1,200 per hectare per year to that person. If we leave the mangrove forest standing, because it protects the communities who live on the coastline and because it is a wonderful breeding ground for fish and crustaceans, it will be worth $12,000 per hectare per year(12). So when people see the figures they will conclude that it makes sense to save the mangrove forests, and hey presto, we have solved the problem. My left foot!

People have known for centuries the tremendous benefits that mangrove forests deliver. But has that protected them from being turned into shrimp farms or beach resorts? No, it hasn’t. And the reason it hasn’t is that it might be worth $12,000 to the local impoverished community of fisher folk, but if it’s worth $1,200 to a powerful local politician who wants to turn it into shrimp farms, that counts for far more. Putting a price on the forest doesn’t in any way change that relationship.

You do not solve the problem this way. You do not solve the problem without confronting power. But what we are doing here is reinforcing power, is strengthening the power of the people with the money, the power of the economic system as a whole against the power of nature.

Let me give you one or two examples of that. Let’s start on the outskirts of Sheffield with Smithy Wood. This is an ancient woodland, which eight hundred years ago was recorded as providing charcoal for the monks who were making iron there. It is an important part of Sheffield’s history and culture. It is full of stories and a sense of place and a sense of being able to lose yourself in something different. Someone wants to turn centre of Smithy Wood into a motorway service station(13).

This might have been unthinkable until recently. But it is thinkable now because the government is introducing something called biodiversity offsets. If you trash a piece of land here you can replace its value by creating some habitat elsewhere. This is another outcome of the idea that nature is fungible and tradeable, that it can be turned into something else: swapped either for money or for another place, which is said to have similar value.

What they’ve said is, “We’re going to plant 60,000 saplings, with rabbit guards around them, in some other place, and this will make up for trashing Smithy Wood.” It seems to me unlikely that anyone would have proposed trashing this ancient woodland to build a service station in the middle of it, were it not for the possibility of biodiversity offsets. Something the Government has tried to sell to us as protecting nature greatly threatens nature.

Let me give you another example. Say we decide that we’re going to value nature in terms of pounds or dollars or euros and that this is going to be our primary metric for deciding what should be saved and what should not be saved. This, we are told, is an empowering tool to protect the natural world from destruction and degradation. Well you go to the public enquiry and you find that, miraculously, while the wood you are trying to save has been valued at £x, the road, which they want to build through the wood, has been valued at £x+1. And let me tell you, it will always be valued at £x+1 because cost benefit analyses for such issues are always rigged.

The barrister will then be able to say, “Well there you are, it is x+1 for the road and x for the wood. End of argument.” All those knotty issues to do with values and love and desire and wonder and delight and enchantment, all the issues which are actually at the centre of democratic politics, are suddenly ruled out. They are outside the box, they are outside the envelope of discussion, they no longer count. We’ve been totally disempowered by that process.

So that was Problem Three. But the real problem, and this comes to the nub of the argument for me, is over the issues which I will describe as values and framing. Am I allowed to mention Sheffield Hallam? Too late. In response to an article I wrote that was vaguely about this issue last week, Professor Lynn Crowe from Sheffield Hallam University wrote what I thought was a very thoughtful piece(14). She asked this question: “How else can we address the challenge of convincing those who do not share the same values as ourselves of our case?”.

In other words, we are trying to make a case to people who just don’t care about the natural world. How do we convince them, when they don’t share those values, to change their minds? To me the answer is simple. We don’t.

We never have and we never will. That is not how politics works. Picture a situation where Ed Miliband stands up in the House of Commons and makes such a persuasive speech that David Cameron says, “You know, you’ve completely won me over. I’m crossing the floor and joining the Labour benches.”

That’s not how it works. That is not how politics has ever proceeded, except in one or two extremely rare cases. You do not win your opponents over. What you do to be effective in politics is first, to empower and mobilise people on your own side and secondly, to win over the undecided people in the middle. You are not going to win over the hard core of your opponents who are fiercely opposed to your values.

This is the horrendous mistake that New Labour here and the Democratic Party in the United States have made. “We’ve got to win the next election so we’ve got to appease people who don’t share our values, so we’re going to become like them. Instead of trying to assert our own values, we are going to go over to them and say, ‘Look, we’re not really red; we’re not scary at all. We are actually conservatives.’” That was Tony Blair’s message. That was Bill Clinton’s message. That, I’m afraid, is Barack Obama’s message.

Triangulation possibly won elections – though in 1997 a bucket on a stick would have won – but it greatly eroded the Labour vote across the intervening years. We’ve ended up with a situation where there are effectively no political alternatives to the neoliberalism being advanced by the coalition government. In which the opposition is, in almost every case, failing to oppose. It is in this position because it has progressively neutralised itself by trying to appease people who do not share its values.

As George Lakoff, the cognitive linguist who has done so much to explain why progressive parties keep losing the elections that they should win and keep losing support even in the midst of a multiple crisis caused by their political opponents, points out, you can never win by adopting the values of your opponents(15).

You have to leave them where they are and project your own values to people who might be persuaded to come over to your side. That is what conservatives have done on both sides of the Atlantic. They have been extremely good at it, especially in the United States, where they have basically crossed their arms and said, “We’re over here and we don’t give a damn about where you are. We don’t care about what you stand for, you hippies on the Left. This is what we stand for and we are going to project it, project it, project it, until the electoral arithmetic our stance creates means that you have to come to us.”

So what we’ve got there is a Democratic Party that is indistinguishable from where the Republicans were ten years ago. It has gone so far to the right that it has lost its core values. I think you could say the same about the Labour Party in this country.

This, in effect, is what we are being asked to do through the natural capital agenda. We are saying “because our opponents don’t share our values and they are the people wrecking the environment, we have to go over to them and insist that we’re really in their camp. All we care about is money. We don’t really care about nature for its own sake. We don’t really believe in any of this intrinsic stuff. We don’t believe in wonder and delight and enchantment. We just want to show that it’s going to make money.”

In doing so, we destroy our own moral authority and legitimacy. In a recent interview George Lakoff singled out what he considered to be the perfect example of the utter incompetence of progressives hoping to defend the issues they care about. What was it? The Natural Capital Agenda(16).

As Lakoff has pointed out, these people are trying to do the right thing but they are completely failing to apply a frames analysis. A frame is a mental structure through which you understand an issue. Instead of framing the issue with our own values and describing and projecting our values – which is the only thing in the medium- to long-term that ever works – we are abandoning them and adopting instead the values of the people who are wrecking the environment. How could there be any long-term outcome other than more destruction?

There’s another way of looking at this, which says the same thing in a different ways. All of us are somewhere along a spectrum between intrinsic values and extrinsic values. Extrinsic values are about reputation and image and money. They’re about driving down the street in your Ferrari and showing it to everyone. They are about requiring other people’s approbation for your own sense of well-being.

Intrinsic values are about being more comfortable with yourself and who you are. About being embedded in your family, your community, among your friends, and not needing to display to other people in order to demonstrate to yourself that you are worth something(17).

Research in seventy countries produces remarkably consistent results: these values are highly clustered(18). So, for instance, people who greatly value financial success tend to have much lower empathy than those with a strong sense of intrinsic values. They have much less concern about the natural world, they have a stronger attraction towards hierarchy and authority. These associations are very strongly clustered.

But we are not born with these values. They are mostly the product of our social and political environment. What the research also shows is that if you change that environment, people’s values shift en masse with that change. For instance, if you have a good, functioning public health system where no one is left untreated, that embeds and imbues among the population a strong set of intrinsic values. The subliminal message is “I live in a society where everyone is looked after. That must be a good thing because that is the society I live in.” You absorb and internalise those values.

If on the other hand you live in a devil-take-the-hindmost society where people, as they do in the United States, die of treatable conditions because they cannot afford medical care, that will reinforce extrinsic values and push you further towards that end of the spectrum. The more that spectrum shifts, the more people’s values shift with it.

People on the right understand this very well. Mrs Thatcher famously said, “Economics are the method; the object is to change the heart and soul.”(19) She understood the political need to change people’s values – something the left has seldom grasped.

If we surrender to the financial agenda and say, “This market-led neoliberalism thing is the way forward,” then we shift social values. Environmentalists are among the last lines of defence against the gradual societal shift towards extrinsic values. If we don’t stand up and say, “We do not share those values, our values are intrinsic values. We care about people. We care about the natural world. We are embedded in our communities and the people around us and we want to protect them, not just ourselves. We are not going to be selfish. This isn’t about money”, who else is going to do it?

So you say to me, “Well what do we do instead? You produce these arguments against trying to save nature by pricing it, by financialisation, by monetisation. What do you do instead?”

Well, ladies and gentlemen, it is no mystery. It is the same answer that it has always been. The same answer that it always will be. The one thing we just cannot be bothered to get off our bottoms to do, which is the only thing that works. Mobilisation.

It is the only thing that has worked, the only thing that can work. Everything else is a fudge and a substitute and an excuse for not doing that thing that works. And that applies to attempts to monetise and financialise nature as much as it does to all the other issues we are failing to tackle. Thank you.”

http://www.monbiot.com

References:

1. Matt Ridley, 22nd July 1996. Power to the people: we can’t do any worse than government. The Daily Telegraph.

2. http://www.theguardian.com/commentisfree/2010/may/31/state-market-nothern-rock-ridley

3. http://www.hup.harvard.edu/catalog.php?isbn=9780674430006

4. http://nebula.wsimg.com/d512efca930f81a0ebddb54353d9c446?AccessKeyId=68F83A8E994328D64D3D&disposition=0&alloworigin=1

5. http://www.persona.uk.com/bexhill/HA_DOCS/HA-05.pdf

6. http://www.defra.gov.uk/news/2011/06/02/hidden-value-of-nature-revealed/

7. http://uknea.unep-wcmc.org/LinkClick.aspx?fileticket=ryEodO1KG3k%3d&tabid=82

8. http://www.bbc.co.uk/cult/hitchhikers/guide/answer.shtml

9. http://nebula.wsimg.com/d512efca930f81a0ebddb54353d9c446?AccessKeyId=68F83A8E994328D64D3D&disposition=0&alloworigin=1

10. http://webarchive.nationalarchives.gov.uk/20130822084033/http://www.defra.gov.uk/ecosystem-markets/files/EMTF-VNN-STUDY-FINAL-REPORT-REV1-14.06.12.pdf

11. http://webarchive.nationalarchives.gov.uk/20130822084033/http://www.defra.gov.uk/ecosystem-markets/files/EMTF-VNN-STUDY-FINAL-REPORT-REV1-14.06.12.pdf

12. http://www.unep.org/documents.multilingual/default.asp?DocumentID=602&ArticleID=6371&l=en&t=long

13. http://www.sheffieldmotorwayservices.co.uk/

14. http://lynncroweblog.wordpress.com/category/valuing-nature/

15. George Lakoff, 2004. Don’t think of an elephant!: know your values and frame the debate. Chelsea Green, White River Junction, VT, USA.

16. http://www.theguardian.com/books/2014/feb/01/george-lakoff-interview

17. http://assets.wwf.org.uk/downloads/common_cause_report.pdf

18. http://assets.wwf.org.uk/downloads/common_cause_report.pdf

19. http://www.margaretthatcher.org/document/104475

Robert Rubin: How ignoring climate change could sink the U.S. economy (Washington Post)

By Robert E. Rubin

July 24

Robert E. Rubin, co-chairman of the Council on Foreign Relations, was treasury secretary from 1995 to 1999.

Good economic decisions require good data. And to get good data, we must account for all relevant variables. But we’re not doing this when it comes to climate change — and that means we’re making decisions based on a flawed picture of future risks. While we can’t define future climate-change risks with precision, they should be included in economic policy, fiscal and business decisions because of their potential magnitude.

The scientific community is all but unanimous in its agreement that climate change is a serious threat. According to Gallup, nearly 60 percent of Americans believe that global warming is caused by human activity. Still, for many people, the effects of climate change seem like a future problem — something that falls by the wayside as we tackle what seem like more immediate crises.

But climate change is a present danger. The buildup of greenhouse gases is cumulative and irreversible; the pollutants we are now emitting will remain in the atmosphere for hundreds of years. So what we do each day will affect us and the planet for centuries. Damage resulting from climate change cuts across almost every aspect of life: public health, extreme weather, the economy and so much else.

What we already know is frightening, but what we don’t know is more frightening still. For example, we know that melting polar ice sheets will cause sea levels to rise, but we don’t know how negative feedback loops will accelerate the process. As polar ice melts, the oceans absorb more heat, which causes more ice to melt. And the polar ice sheets have already started to melt.

When it comes to the economy, much of the debate about climate change — and reducing the greenhouse gas emissions that are fueling it — is framed as a trade-off between environmental protection and economic prosperity. Many people argue that moving away from fossil fuels and reducing carbon emissions will impede economic growth, hurt business and hamper job creation.

But from an economic perspective, that’s precisely the wrong way to look at it. The real question should be: What is the cost of inaction? In my view — and in the view of a growing group of business people, economists, and other financial and market experts — the cost of inaction over the long term is far greater than the cost of action.

I recently participated in a bipartisan effort to measure the economic risks of unchecked climate change in the United States. We commissioned an independent analysis, led by a highly respected group of economists and climate scientists, and our inaugural report, “Risky Business,” was released in June. The report’s conclusions demonstrated the significant harm that climate change is causing now and that will almost certainly be far more severe in the future — to the agricultural, energy and coastal-property sectors, as well as to public health and labor productivity more generally.

By 2050, for example, between $48 billion and $68 billion worth of current property in Louisiana and Florida is likely to be at risk of flooding because it will be below sea level. And that’s just a baseline estimate; there are other scenarios that could be catastrophic.

Then, of course, there is the unpredictable damage from superstorms yet to come. Hurricane Katrina and Hurricane Sandy caused a combined $193 billion in economic losses; the congressional aid packages that followed both storms cost more than $122 billion. We can’t attribute all the damage caused by Katrina and Sandy to global warming, but we know that rising sea levels led to significantly worse surges, and that the frequency and intensity of superstorms are almost certain to increase if global warming persists. It’s highly likely that as climate change continues, the damage will not increase on a straight line. Instead, it will increase on an upward-sloping curve, that could become catastrophically steep, because of negative feedback loops and other factors.

And dramatically rising temperatures in much of the country will make it far too hot for people to work outside during parts of the day for several months each year — reducing employment and economic output, and causing as many as 65,200 additional heat-related deaths every year. That’s almost twice as many deaths as those caused by motor vehicle accidents in 2012.

The U.S. economy faces enormous risks from unmitigated climate change. But the metrics we currently use to measure economic growth, fiscal prospects and business earnings do not incorporate these risks. If we are going to have a well-informed and accurate debate about the economic costs of action vs. inaction, the public and private sectors need metrics that honestly reflect climate-related risk.

First, future federal spending to deal with climate change is likely to be enormous and should be included in fiscal projections, whether in existing estimates or in additional estimates that include climate change. If nothing is done to prevent climate-related crises, the federal government will be forced to deal with them later — from property losses to public health crises to emergency aid. These huge risks are not currently in official future estimates or federal budget plans.

To cover those costs, we will have to increase the deficit; raise taxes; or significantly cut spending on defense, our social safety net, and public investment including infrastructure, education and basic research. Which means that, whatever your public policy views, whether you care about our national debt and deficits, our tax rates, or government investment in everything from national security to job creation, you should care about the costs of coping with climate-related damage. By forcing policymakers to recognize likely future expenditures — and the trade-offs required to make them — we may increase the political appetite for policy changes now.

Second, investors should demand that companies disclose their exposure to climate risks, including the impact that climate change could have on their businesses and assets, the value of their assets that could be stranded by climate change, and the costs they may someday incur to address their carbon emissions. Former New York mayor Michael Bloomberg, who was a co-chair of the “Risky Business” report, and former Securities and Exchange Commission chairwoman Mary Schapiro are leading an effort to encourage businesses to incorporate such reporting into their quarterly disclosures, but it is still considered optional by the SEC. I believe that such disclosures should be considered material and mandated by the SEC, not just requested by investors. If companies were required to highlight their exposure to climate-related risks, it would change investor behavior, which in turn would prod those companies to change their behavior.

Third, I believe that gross domestic product — the current standard measure of national economic health — is inadequate and misleading, because it fails to account for significant externalities, beginning with climate change. Others might think we should incorporate additional externalities beyond climate impacts, and that’s a good discussion to have. But we should start with a parallel GDP that incorporates the impact of greenhouse gas emissions. Without that, we are using an incomplete measure of economic output to inform policy decisions. Currently, GDP simply reflects the goods and services produced by our economy. However, it does not account for the present and future damage resulting from the emissions involved in producing those goods and services. And bad data leads to bad policy.

We do not face a choice between protecting our environment or protecting our economy. We face a choice between protecting our economy by protecting our environment — or allowing environmental havoc to create economic havoc. And a major step toward changing the debate is to change the way we measure the health of our economy, our fiscal conditions, and the health of individual companies and businesses to better reflect the world as it will be.

The Compelling Conclusion About Capitalism That Piketty Resists (Truthout)

Thursday, 26 June 2014 00:00

By Fred GuerinTruthout | Op-Ed

2014 626 tem sw

Temporary, like sadness. Temporary, like capitalism. Temporary, like life. (Photo: Dominic Alves / Flickr)

The excesses of capitalism are not simply a question of bad management and a political unwillingness to properly regulate it by imposing the right sort of checks and balances, but symptoms of a fundamentally and irretrievably flawed system that tends toward destruction of human and other life.

The idea of capitalism as an expression of economic freedom that also secures moral and political freedom of thought, or the notion that “free-market” economies are guided by an impartial mechanism of supply and demand – an “invisible hand” to use Adam Smith’s metaphor – are both powerful indoctrinating notions. As such, they bear little resemblance to actual reality. Smith himself never used the word “capitalism,” preferring to call his economics a “system of natural liberty.” In fact, the inner logic of capitalism can be difficult to get hold of simply because there have been different configurations of capitalism throughout history. In its classic form, before the advent of corporations (when there was still an implicit sense of social responsibility, and insatiable greed was considered a vice), capitalism might have appeared less virulent. Additionally, there is reason to believe that capitalism unfolded differently in different countries with distinct political and legal frameworks.

“There is “capitalism” and then there is “really existing capitalism.” What then is ‘really existing capitalism?'”

All of these contingent factors are worthy of consideration in any assessment of capitalism. However, it is also reasonably clear that once we actually look at history, it is difficult not to conclude that pretty muchevery embodiment of capitalism – classical capitalism, oligarchic or corporate capitalism, casino capitalism, entrepreneurial capitalism – presuppose similar elements: private property, ownership of the means of production, notions of unlimited growth, the maximization of profit, using wealth to create wealth. They also all embody a form of instrumental rationality, the kind of rationality concerned with maximizing profits and minimizing costs. In its globalized corporate form, capitalism has been able to relentlessly realize this form of instrumental reasoning on a large scale – and thereby show itself as one of the most destructive and undemocratic economic system humans have ever come up with.

Unfortunately, neither propaganda nor abstract economic theory can help us to grasp this fact. The reason is primarily that the latter do not really speak to the false theories of human nature capitalism presupposes. Nor do many of them elaborate capitalism’s legitimating normative-moral or political origins. Most crucially, they are often silent regarding the devastating impact that it has had on the environment since it first emerged during the course of the eighteenth and nineteenth centuries. As Chomsky insightfully puts it, “There is “capitalism” and then there is “really existing capitalism.” What then is “really existing capitalism’?

Thomas Piketty’s Capital in the Twenty-First Century gives us a few clues, though not by any means, the whole picture. Replete with startling empirical evidence in the form of charts, graphs, informative statistics, mathematical-logical expressions and astute critical-historical analyses, Piketty’s work draws a number of sobering conclusions about the present dynamics of wealth and income distribution that exposes not merely the dark underside of capitalism but a central contradiction within it. Thus, Piketty concludes “. . . wealth accumulated in the past grows more rapidly than output and wages. This inequality expresses a fundamental logical contradiction. The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labor. Once constituted, capital reproduces itself faster than output increases. The past devours the future.”

The past devours the future. But, what if the bizarre inverted logic of capitalism has always been its real point? What if, under the rubric of capitalism, the powerful elite are given permission to act as if it simply doesn’t matter whether their ever-expanding wealth might actually devour the future, or “wear the world out faster” to borrow a phrase from Orwell? Do they not often appear to live in an all-consuming present – get what you can for yourself right now, and don’t worry about others, or even about tomorrow? Moreover, is not such an attitude, sanctioned by capitalism, the reason why this particular economic system requires endless cycles of economic crisis?

Perhaps Piketty’s point is that if it doesn’t matter to the elite, it should at least matter to us. But if it does matter, then it is up to the rest of us – including experts like Piketty who grasp the reality of capitalism better than anyone else – to imagine real alternatives to such an economic system, to think outside of the present paradigm of endless development, profit maximization and disastrous austerity measures imposed on whole populations. Despite the apparently glaring “logical” contradiction within capitalism, Piketty still holds to the idea that it can be properly disciplined through a progressive annual tax on wealth. It is not the conclusion he should have reached given his thorough and prescient analysis.

Looking at the history of capitalism, it is difficult not to conclude that growing inequality expresses a fundamental property of and not a contradiction within capitalism.

Of course, Piketty is by no means alone in wanting to save capitalism from itself. Capitalism – no matter what its excesses, or how destructive it is for life or democracy – is invariably held as our default economic system, grudgingly acceded to even by popular left-oriented economists such as Paul Krugman, Nouriel Roubini or Joseph Stiglitz. As Chrystia Freeland unabashedly concludes in Plutocrats, The Rise of the New Global Super-Rich and the Fall of Everyone Else, despite all its faults, we continue to need capitalism because, “very much like democracy,” it is “the best system we’ve figured out so far.” [1] Thus, if capitalism appears to go wrong, this is not because it is grounded on a misreading of history, internal contradictions, false theories about nature or human nature, or misguided moral and political presuppositions. Rather, the excesses of capitalism are simply a question of “bad management’ and a political unwillingness to properly regulate it by imposing the right sort of checks and balances.

In fact, Piketty’s proposed wealth tax solution may do more to obscure than resolve the really existing contradictions of capitalism. Looking at the history of capitalism, it is difficult not to conclude that growing inequality expresses a fundamental property of  and not a contradiction within capitalism. Inequality is built into capitalism. If there is a contradiction here it is a material not a logical one. In other words, it is the contradiction between an economic system that is radically indifferent to the health and well-being of the planet as a whole versus the economic, moral and environmental obligation to preserve and sustain such health and well-being.

If I am right that the inner logic of capitalism inevitably leads to a hegemonic, macro-structural world-system of unequal human social, political and economic relations guided by elite greed that does not reflect the best interests of the majority of people, the common good or indeed the good of the planet itself, then Piketty’s assumption that we could ever regain control over an “endless inegalitarian spiral’ by imposing a progressive tax on capital seems, is at best, rather fanciful. A more fitting conclusion in the aftermath of the 2008 financial crisis and the efforts of the elite to profit from the latter would be to ask the question whether we should continue advocating for a capitalist system that glorifies profit over people or start thinking about how to reorganize our economy around common goods such as the health and well-being of our present world.

Instead, many contemporary economists repeatedly tell us that our only tenable alternative is to tame capitalist excess through regulative initiatives. This has been done before and it can be done again, the argument goes. Thus, it is claimed that we can and did rein-in or mitigate the severity of capitalist exploitation, and the massive wealth and income disparities that followed from it. However, it should now be abundantly clear that the internal and structural logic of exploitation, wealth-income disparities and the profit-oriented colonization of social and political relations can only be regulated for short periods. It can never be fundamentally altered. Indeed, as Piketty has persuasively argued, relentless exploitation, colonization and massive inequality were only temporarily pre-empted by a war economy and FDR’s regulatory initiatives. By the late 1970’s, the internal logic of capitalism had re-established its hegemonic status and all of the built-in excesses of the capitalist economic system once again became normalized and necessary.

What if . . . we are all conditioned to see the world in terms of individual economic self-interest rather than in terms of common human good or planetary limits, health and equilibrium?

What this tells us is that regulatory reform of capitalism will only be allowed for a brief period. In other words, to the extent that it can obscure or prevent us from perceiving the inner logic of a system of structured inequality, or distract us from the most deleterious effects of capitalism on the environment and on human health and well-being, minimal regulation may be deemed necessary by the elite for a short period of time. However, as Naomi Kleinhas convincingly argued, the “collective vertigo’ caused by wars, economic upheaval, environmental or political crisis, environmental disasters can also be exploited as the perfect means through which a capitalist system of greed takes over markets, amasses fabulous fortunes and bankrupts the wealth of the commons.

Perhaps the refusal to ask critical questions about the viability of capitalism might be explained by the fact that even today many economists still hold onto the mythic assumption that the “impartial” self-regulating market is no more than a theoretical expression of the “order of human nature” itself and not, after all, a product of powerful political and moneyed interests. This belief has distant origins in Thomas Hobbes fear-inspired mechanistic account of human beings who in their natural state are war-like and driven by self-interest. Not only does the latter perspective resonate in many manifestations of capitalist theory, it also underscores a desire to replicate in economic theory what nature apparently prescribes – a war-like disposition disciplined through competitive markets based on innate selfishness. But what if the incapacity to imagine alternatives is not because we are naturally selfish, but simply a function of the reality that in capitalist societies we are all conditioned to see the world in terms of individual economic self-interest rather than in terms of common human good or planetary limits, health and equilibrium?

This perfectly predictable inversion, where government becomes a handmaid to moneyed interest, is precisely the “logic of a capitalist system.”

Over time, the promotion of selfishness as a virtue not only changes the way we look at ourselves, it influences the way we relate to each other and to the planet itself. Instead of citizens who define themselves in relation to common goods, we are reduced, under the selfish orientation of capitalism, to aggregates of self-interested atomistic individuals encouraged to believe that we can continue a lifetime of limitless consumption. Those who are entirely left out of the consumer game – the increasing numbers of homeless, stateless refugees, destitute and imprisoned whose day-to-day life is taken up by the fight for mere survival – are the necessary residue of a global capitalist system.

From its inception, capitalist economic theory has pushed the idea that the market would only be able to regulate itself if it were not subject to external and coercive government interference or regulation. However, the reality is that capitalist accumulation was never actually severed from politics or government, but invariably parasitic upon it. It has always been intimately tied to publicly funded government tax-breaks and subsidies, to war, colonial-imperial expansion, and industrial ambitions. What happened is simply that massive capitalist accumulation was allowed to entirely invert the power relation between moneyed interests and government. Thus, an elite class of bankers, financiers and industrialists (eventually expressing itself through corporate ownership) have become so powerful, they are able to coerce governments and states to go along with whatever is in their minority interest. This perfectly predictable inversion, where government becomes a handmaid to moneyed interest, is precisely the “logic of a capitalist system,” which renders any suggestion of government imposed progressive taxation rather fantastical.

Related to this, faith in the promise of capitalism might also have to do with a kind of wilful blindness about the actual origins of capital. As Karl Polyanyi reminds us, many scholars and economists tenaciously hold to Adam Smith’s idea that the division of labor has always been based upon markets of some kind because our “propensity to barter, truck and exchange one thing for another” is simply ingrainedin the natural order of things. But, clearly we do not need capitalism – the privatizing of wealth and the socializing of costs – to show us how to barter, truck or trade goods. Indeed, capitalism is actually inimical to bartering or trading, precisely because it is driven by individual profit and monopolization, not by the fair exchange of goods. The FTA (Free Trade Agreements), NAFTA (North American Free Trade Agreement) and TPP (Trans-Pacific Partnership) are the awful modern exemplars here.

There is nothing impartial about early capitalism’s inextricable relation to colonialism, slavery or plunder for private gain.

Polyani quickly dispels Smith’s historical misreading of the division of labor as structured by capitalism by reminding us that up to Smith’s time such a propensity toward the individual pursuit of unfettered profit based on wage labor “had hardly shown up on a considerable scale in the life of any observed community and had remained, at best, a subordinate feature of economic life . . . “[2]. The historical and anthropological evidence clearly suggests that it was not until the industrial age that the capitalist-inspired “wealth of nations” was realized by a hegemonic economic system guided by self-interested priorities and the exploitation of material goods and human beings in a relentless pursuit of profit for the few. Before this period, our economics were oriented by social, community, tribal and familial concerns that were considered far more important than the private possession and accumulation of goods based wholly on economic self-interest.

A more precise and broad-based historical study would conclude that, in point of fact, there isn’t anything in nature, the human condition, morality or history that necessitates the adoption of capitalism. It would also disclose that there is nothingimpartial about early capitalism’s inextricable relation to colonialism, slavery or plunder for private gain. In point of fact, the historical reality is that market capitalism is intimately tied to a colonial-imperialist political agenda. This imperialist history clearly demonstrates that there is also very little that is “free” about a “free-market” that derives its freedom to accumulate wealth by way of slave labor, slave wages, debt bondage, unjust land confiscation and the expropriation of common lands and resources into private hands. In America, the so-called “free market” wedded private self-interested exploitation of labor with imperialist state interest on a scale that dramatically dwarfed the brutality of old-world Europe. It should not be in the least surprising then that the slave plantation might capture the essence of our modern global capitalist system, insofar as it is built on the premise of extracting maximum labor at minimal cost.

Of course when one looks at history, it is not immediately apparent that the “founding fathers’ of capitalism – John Locke, Adam Smith, David Ricardo – wanted to intentionally construct a system that would entrench massive inequality. The latter figures were highly articulate, systematic, future-oriented thinkers who believed that private property, free trade, competition and laissez-faire capitalism were inherently good, and had an unlimited potential to raise the general welfare of society. However, even here, those who enjoyed the fruits of a capitalist political economy were relatively few – certainly not the working class or slaves. Each of these illustrious thinkers exemplifies in his writings the material contradictions that capitalism represents.

To be fair, from the perspective of the 18th and 19th centuries, the planet did appear to have unlimited potential for growth, not to mention individual and social enrichment.

Moreover, the science of pollution and toxicity of industrial chemicals 200 years ago was nowhere near the advanced state it is now. However, the material contradictions of capitalism are starkly illustrated even in its earliest philosophical foundations. Thus, on the one hand, John Locke’s (1632-1704) political philosophy begins (as against Hobbes’) with the idea that in our “original state of nature,” we are not in a state of war, but in a state of ” ‘perfect freedom’ to order our action, and dispose of our possessions and persons, as we think fit, within the bounds of the law of nature, without asking leave, or depending upon the will of any other man.” This state of nature, Locke believed, is also a state “. . . of equality, wherein all the power and jurisdiction is reciprocal, no one having more than another.” [3]

However, on the other hand, not all people were heir to such “perfect freedom” in their “natural state” or otherwise; nor did they have possessions or reciprocal power. In fact, a good many of them were not even treated as “persons” or individuals, but as mere “savages.” There is nothing fair or equal about the fact that Locke’s tremendous wealth was directly the result of investments in the silk and slave trade. Indeed, he believed that important, moneyed land barons should form “a government of slave-owners” and suggested that children over 3 years of age who were from families on relief should attend “working schools” so they would be “from infancy . . . inured to work” [4]. Appearances notwithstanding, the “sacred and inviolable right to property” that Locke espouses is not something either slaves or the laboring classes were granted. The “perfect freedom” was indeed “perfect servitude” of those who were not white Europeans.

Behind the wonderful talk of liberal values, “increasing the common stock of man through money” and individual rights, Locke put forward an absolutist theory of property that would provide legitimacy to the imperialist ambitions of England and wealthy English landowners in America. The problem is that Locke’s morally grounded theory of the right to private property presupposes the expropriation of ancestral native lands, the existence of slavery and the impoverishment of laboring classes. As Ronald Wright has astutely noted, quoting from Senator Dawes in his Allotment Act, the problem with “Indians” is that they lacked “selfishness, which is the bottom of civilization”![5] What we are compelled to conclude here is that these historical facts are not unpredictable events or anomalies of capitalism, but perspectives and practices intrinsic to the expansion of a capitalist economy.

The unavoidable question is why Smith advocated a “capitalist economic system” that glorified unbridled competition – a practice he intuited would inevitably corrupt our “natural sentiments” and deepen a proclivity toward selfish behaviour?

The Scottish Enlightenment thinker Adam Smith (1723-1790) believed that not only did competition mitigate the ruthlessness of self-interest, but the providential “invisible hand of the market” would ensure that in promoting our self-interest we would be simultaneously promoting the interests of society, whether we intended to do so or not. But, the rational or enlightened self-interest of Smith’s economic man breaks down fairly quickly within the logic of monopolistic capitalism. Smith, like Piketty, is prescient enough to caution about the monopolistic trajectory of capitalism and the potential that industry and business had for influencing politics in their favour over the good of consumers and society as a whole. Moreover, against the logic of unfettered capitalist accumulation, he also thought laborers should be well paid and the rich and indolent taxed for the benefit of the poor.

At the same time, Smith’s “merchant” is not much different than the modern corporate CEO. A merchant he explains “. . . is not necessarily a citizen of any particular country. It is in a great measure indifferent to him from what place he carries on his trade; and a very trifling disgust will make him remove his capital, and together with it all the industry which it supports, from one country to another.” [6]It is not hard to imagine that the “trifling disgust” classical merchants or modern CEOs experience is a consequence of having unions or governments interfere with their profits by demanding workers receive a living wage.

In the end, the unavoidable question is why Smith advocated a “capitalist economic system” that glorified unbridled competition – a practice he intuited would inevitably corrupt our “natural sentiments” and deepen a proclivity toward selfish behaviour? If the answer is that it is the self-correcting, providential “invisible hand” that reconciles selfishness and the general welfare of society, then Smith’s entire economic system rests on a fiction: There just is no such thing as an “invisible hand,” nor has there ever been any such providential or moral self-correcting mechanism within capitalist economics. Given this, it is difficult not to conclude that Smith (again, like Piketty) did, in fact, fully grasp the adverse effects and inherent material contradictions of capitalism. Nevertheless, he held steadfastly to the idea that a phantasmal occult force (the invisible hand) would enable our natural sympathy with the plight of others and our natural self-interested expression of individual freedom to live peacefully together.

What is startling is not how different, but how similar the speculative capitalist mindset has always been. The early 19th century economist, broker and speculator David Ricardo “. . . made the bulk of his fortune as a result of speculation on the outcome of the Battle of Waterloo, using methods that today would result in prosecution for insider trading and market manipulation.”[7] It is not a great leap from insider trading (which Milton Friedman, much later, enthusiastically endorsed) to securities fraud, negligent subprime mortgage lending, unregulated credit default swaps and so on. But it is also evidently true that wealth is  power – power cashed out at the political level. Ricardo, who was able to use his largesse to buy a seat in the UK Parliament, would probably not have had any problem with the Supreme CourtCitizens United decision to remove limits on corporate political donations. Perhaps we have here one of the earliest exemplars of how moneyed interest, power and political ambition are easily woven together in a capitalist political economy. At any rate, it is clear that the very visible hand of the elite class inevitably renders government “by and for the people’ pretty much irrelevant – or better, invisible.

As for economic theory, Ricardo’s assumption that with social progress, the price of labor is “dear when it is scarce and cheap when it is plentiful” might explain why today the superrich have “stopped worrying and learned to love unemployment and under-employment.” As the rich have become even richer since the 2007 financial crisis, the global unemployment rate has steadily increased such that by 2015, 205 million people will be out of work – and this doesn’t even touch those who have given up looking for a job. Of course, Ricardo, like Marx after him, was clever enough to recognize that the interests of wealthy landowners were often in direct opposition to the good of society and would inevitably create tension and upheaval. This did not, however, prevent him from advocating for the abolition of the Poor Law which, he believed, encouraged people to be lazy and irresponsible – “are there no prisons? . . . are there no workhouses?”

Despite some indications to the contrary, Hobbes’ theory of human nature is unambiguously presupposed in Locke, Smith and Ricardo’s elaboration of capitalist political economy. All are essentially in agreement with the idea that we are “by nature” selfish creatures. Perhaps it is only in this sense we can be said to be “equals” – we are all equally selfish. However, such a presupposition, by any objective measure, is simply false. We know today, from abundant empirical, sociological, psychological, genetic, archaeological and anthropological evidence, that Hobbes’ theory of human nature as intrinsically “selfish” is deeply flawed. We are not “naturally” selfish – though we can, indeed, learn to be so. In other words, within a capitalist system it can become trueover over the course of time that an elite few will be chiefly oriented by greed, narcissism or selfishness – and some of the latter not so very far from the “squeezing, wrenching, grasping, scraping, clutching, covetous old sinners!” Dickens describes Mr. “Scrooge” as in A Christmas Carol. Of course, today the latter are no longer viewed as “sinners.” The real problem is that in our present world they are the “glorified masters” of our economies and governments. They are continuously praised, deferred to, considered “above the laws of the land” and allowed to live in a world of unabashed opulence entirely walled off from the rabble of mankind. Succinctly put, in capitalism, the greedy of the world have discovered their ideal legitimating cover: the promotion of a self-serving economics that turns the vice of selfishness into the highest virtue human beings can realize! [8]

History aside, from our own contemporary perspective, we can get a sense of “really existing capitalism’ by virtue of the following thought-experiment, which reveals the latter in its unadorned state. Imagine that we were able, right now, to ask the 7 or so billion people living on the planet whether they would choose an economic system that would inevitably lead to massive wealth and income inequalities, that would severely limit equal opportunity, that would force whole populations to live under perpetual economic austerity, that would erode any possibility of meaningful and democratic political participation, that would devastate the health of the planet and the human body while externalizing the costs of such destruction onto everyone, with the exception of a very privileged few.

Now . . . how many people do you think would actually opt for such an arrangement? Honest answer: Almost no one! The only people who would agree to such a set of conditions would be an infinitesimally small group whose present privileged economic status would be protected and furthered by maintaining the status quo. The fact is that though there are many manifestations of the capitalist system, the intentional logic of capitalism always was, and still is, the same: to protect and perpetuate the power, status and privilege of the few, while impoverishing everyone else.

Given this, you might think that we would seriously question anyone who asserts that capitalism best captures or reflects the essential capabilities, wants, desires or needs of human beings – or that it, in any way, helps to preserve or sustain the resources of the planet for future generations. If anything, capitalism has become the medium where what is worst in us is magnified and given legitimacy – materialism, greed, indifference to the suffering of others, deceitfulness and hubris – while diminishing the importance of justice, benevolence and environmental stewardship. Hopefully, Piketty’s book will be a wake-up call – not a call to fix capitalism, but to overcome it. The fact is that even if a tax on wealth could somehow reconcile the logical contradiction within capitalism, it will do nothing to prevent corporations from their “race to exploit what is left” [9]; it will not stop them from moving us closer to ecological disaster by extracting oil from bituminous sands or minerals from impoverished third world countries; it will not deter the Wall Street mega banks like Goldman Sachs, the “vampire squid wrapped around the face of humanity” (to borrow Matt Taibbi’s startling and vivid description) from sucking the life out of national economies; it will not impede the chemical industry from polluting the environment and using whole populations as unwitting research objects for profit; it will not avert the continuing dissolution of democracy by the superrich Koch brothers . . . and on and on.

Notwithstanding all that has been said, it is still conceivable that we could reverse our present “conditioning” by thinking and acting in different ways – by recognizing that, progressively, with the help of others, we could cultivate radically different perspectives and practices (economic and otherwise). But any such effort must assume that we are also acutely aware of the ubiquity and the powerful force of capitalist propaganda. As Henry Giroux reminds us “dominant power works relentlessly through its major cultural apparatuses to hide, mischaracterize or lampoon resistance, dissent and critically engaged social movements. This is done, in part, by sanitizing public memory and erasing critical knowledge and oppositional struggles from newspapers, radio, television, film and all those cultural institutions that engage in systemic forms of education and memory work.”[10]

Above all, the possibility of alternative economic visions, perspectives and practices have to be grounded in the reality that we share a limited world, and that we are and have always been capable of creating an economic system and public policies that preserve the health and well-being of the planet and all of the creatures that inhabit it.

NOTES:

1. Chrystia Freeland, Plutocrats, The Rise of the New Global Super-Rich and the Fall of Everyone Else. Anchor Canada 2012. p. xvi. Freeland is likely drawing from Churchill’s oft-quoted conclusion that “Democracy is the worst form of government, except for all the others.”

2. Karl Polanyi, The Great Transformation, The Political and Economic Origins of Our Time, Beacon Press 1957 pp. 45-58

3. John Locke, “The Second Treatise of Government”, in Princeton Readings in Political Thought, edited by Mitchell Cohen and Nicole Fermon. Princeton University Press, 1996. pp. 243-4

4. See Howard Zinn, A People’s History of the United States, Harper Perennial Modern Classics 2005. pp. 73-75

5. Ronald Wright, What is America: A Short History of the New World Order, Vintage Canada, 2009. p. 116

6. To really understand the tension within Smith’s thought it is helpful to read both An Inquiry into the Nature and Causes of the Wealth of Nations and The Theory of Moral Sentiments.

7. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations Book III, Chapter IV.

8. You can find Ayn Rand’s and Nathaniel Branden’s The virtue of Selfishness: A New Concept of Egoism.

9. See Michael Klare’s The Race for What’s Left: The Global Scramble for the World’s Last Resources, Picador, 2012

10. Henry Giroux, “Hope in the Age of Looming Authoritarianism,” Truthout.

The fight to reform Econ 101 (Al Jazeera)

Economics is a dismal nonscience, but it need not remain that way

July 16, 2014 6:00AM ET

by 

During the last weekend of June, hundreds of students, university lecturers, professors and interested members of the public descended on the halls of University College London to attend the Rethinking Economics conference. They all shared a similar belief: that economics education in most universities had become narrow, insular and detached from the real world.

For a brief period after the financial crisis of 2008, the shortcomings of the economics profession and the way it is taught were recognized. Many economists offered up mea culpas of various kinds and conceded that since they did not foresee the biggest economic event since the Great Depression, there was probably something seriously wrong with the discipline. But as time passed and many economies began to experience gradual, somewhat muted recoveries, the profession regained its confidence.

When I was completing my master’s degree at Kingston University last year, I experienced this firsthand from the more mainstream faculty there. Lecturers offered potted explanations of the crisis using old analytical tools such as supply and demand graphs that cannot incorporate expectations to explain asset price bubbles. The same economists who, just a few years ago, told us that financial markets were the conduits of perfect information began to introduce doublethink phrases in the media such as “rational bubble” (in which investors allegedly act irrationally by bidding up asset prices in full knowledge that prices are heavily inflated but think they can bail out of the market before prices fall) to explain the events of the past few years. There is nothing rational about investors’ acting this way, because they cannot know when the bubble will burst and so cannot time their exit from the market. They cannot know when the herd movement that they are part of will come to an end, so any action that they take to ride the wave will be just as irrational as those of people unaware of the bubble. The entire exercise appeared to be an ad hoc attempt to reinterpret the facts to fit the pet theory — economic agents aware of relevant information act rationally — rather than to alter the theory in light of the facts.

It was difficult not to sense the Soviet-style revisionism that had occurred within the halls of learning: The party had tossed history down the memory hole and introduced a strange, seemingly self-contradictory language that they were busy foisting upon an unwitting public. One Chicago school economist, Ray Ball, argues that the now notorious efficient market hypothesis (EMH), which states that financial markets price in all relevant information, is actually supported by the recent crisis. He argues that the capital flight that led to the bank meltdowns lends support to the EMH because it shows how rapidly financial markets react to new information. But as many will remember, investigations clearly showed that information was not being processed efficiently by market participants in the run-up to the crisis. The most colorful example of this was the Standard & Poor’s employee who, responding to a colleague who said that they should not be rating a mortgage-backed security deal because the estimations of risk were incorrect, said that cows could be estimating the risk of a product and S&P would still rate it.

Shine a light

Despite such attempts to shore up the orthodoxy, students have sensed that something is wrong: Over the past two years, they have been organizing across more than 60 countries with the aim of forcing the vampire that is the economics profession into the light of day. While the students in the movement have a diversity of opinions on various issues, they have all come to believe that the best way to reform economics is to demand that a plurality of approaches be taught. They have rightly identified the key fault with contemporary economics teaching: the monoculture it engenders. Currently only one approach to economics is taught in the vast majority of departments in the U.S. and Europe: what is usually called neoclassical or marginalist economics, epitomized by Harvard’s Gregory Mankiw — a former chairman of the Council of Economic Advisers under President George W. Bush — and Chicago’s Gary Becker, a Nobel laureate. This is the economics of the rational, atomized individual purged of all social context, whose only goal is to maximize a mysterious, effervescent quantity called utility. In this view, the economy tends toward an equilibrium end point, at which everyone has a job and wages and profits are set in line with what each individual contributes to society.

Donald Gillies, a former president of the British Society for the Philosophy of Science, told a stunned audience that he had examined three well-known Nobel Prize–winning papers in economics and could find nothing in them that he could call scientific.

When I spoke with the students, they were struck by how even those who dissented from contemporary economic policies like austerity shared this overarching vision. Paul Krugman, for example, to whom many turned after the crisis to provide context — including many of the students I met — also accepted the orthodox view (although he has not embraced some of the worst excesses echoed by his peers).

True dissenters

The students at the June conference also said that there were true dissenters in the discipline who found that economics was a highly contested field. Cambridge University’s Ha-Joon Chang pointed out that there are any number of schools of economic thought, each with their own approaches and insights. Their opinions range from the Austrians, who believe that government interference in the economy leads to wasted resources, to post-Keynesians, who believe that capitalist economies are inherently unstable and require government intervention to stave off collapse and stagnation, to Marxians, institutionalists, Schumpeterians, neo-Ricardians and so on. Chang argued that none of these schools of thought were inherently right or wrong; they all had insights into the working of the economy, and every one of them had a right to be taught to students as a competing point of view. It was up to the students, he said, to find what they found interesting, useful and credible.

One of the conference speakers pointed out that this is required in all the other disciplines that study people and society. He told an anecdote about being in the psychology department of his university when an inspector from a psychological association turned up to ensure that there was an adequately pluralist approach being undertaken. The speaker quipped that it would be far more likely that an inspector from an economics association would turn up to ensure that the current doctrine was being firmly adhered to.

But what, exactly, constitutes this dogmatic thinking? For starters, the firm belief that economics is a science on par with physics and chemistry. After all, these economists say, only a crank would demand that a plurality of approaches to physics and chemistry should be taught in universities. But the truth of the matter is that economics is not a science on par with physics and chemistry and it never will be. Donald Gillies, a former president of the British Society for the Philosophy of Science, told a stunned audience that he had examined three well-known Nobel Prize–winning papers in economics and could find nothing in them that he could call scientific. Rather, he said, they utilized sophisticated mathematics to hide the fact that they were not saying anything remotely relevant about the real world that could be proved or disproved.

The dirty little secret about economics is that it cannot, like other sciences, undertake proper laboratory experiments. Even the experiments of the behaviorist economists are open to doubt in that it seems unlikely that the manner in which people act in a lab while under observation is identical to how they act day to day. Economics is therefore ill equipped to make claims with the same confidence as bona fide sciences. What economists offer are instead interpretations of the world around them. Once this is understood, it becomes very difficult to argue against a plurality of opinions in the discipline. This was what the students sensed, and this is why their clarion call became one for pluralism.

New curriculum

These students are well organized, and their numbers are growing; their commitment is unlikely to go away anytime soon. They are focused in a manner that is impressive for a protest movement, willing to transcend their political differences in order to fight for a common goal. Every week a new group springs up. At the conference I attended, organizers went around with pads and pens collecting the contact details of sympathetic faculty members and other students in countries where the movement was only partially developed.

Even institutions are hopping on board. Many employers complain that the mainstream departments are churning out employees with mathematical skills completely out of proportion to the jobs they do but who seem unable to undertake basic economic analysis. Often these employees have to be retrained on the job in order to function at their institutions. The chief economist of the Bank of England, Andy Haldane, wrote in the foreword to the students’ international manifesto that “employers of economists, like the Bank of England, stand to benefit from such an evolution in the economics curriculum.” Given that mainstream economists often claim that the consumer is king and competition is sacrosanct, it is increasingly difficult to see how they make a case for their current monopoly over the educational process.

In September another conference will take place in New York, and rumor has it that an enormous international meeting will soon be organized too. If and when the movement reaches that level of international organization, it could start putting real pressure on companies, governments and economics departments to rethink their models and their ways. If the profession wishes to uphold what is left of its credibility, it would do well to pay attention.

Philip Pilkington is a London-based economist and member of the Political Economy Research Group at Kingston University. He runs the blog Fixing the Economists.

Eduardo Viveiros de Castro: El consumo no evita la queja (Clarín)

16/06/14

Tensión. Para el pueblo brasileño, “el gobierno se vendió a la FIFA”, sostiene el antropólogo Viveiros de Castro.

El antropólogo carioca Eduardo Viveiros de Castro estuvo recientemente –y por primera vez– en Buenos Aires. Participó del seminario “La bolsa o la vida. Modelos de desarrollo, nuevas conflictividades sociales y derechos humanos”, organizado por la Biblioteca Nacional y presentó el libro La mirada del jaguar. Una introducción al perspectivismo amerindio (Tinta Limón), que compila una serie de entrevistas donde cuenta su trayectoria como investigador. O mejor dicho, su experiencia fugitiva: cómo se conectó con los indios para huir de Brasil. “Fui a estudiar a los indios porque los indios justamente no eran brasileños. Me interesaba su total incompetencia ciudadana. La pregunta era ¿cómo salir de Brasil?, en el sentido de evitar esa problemática teórica de la nacionalidad, el destino de Brasil como nación, el carácter nacional”. La incorrección política que planteaba esa posición en los años 70 no deja de ser actual y sigue generando polémica. En esta conversación Viveiros de Castro cuenta cómo se vivieron las recientes movilizaciones callejeras y lo que se espera para este 2014 que luego del Mundial, afronta las elecciones presidenciales.

–La consigna que circuló en estos meses era sintética pero directa “No habrá copa” ¿Qué concentra esa frase?
–Para el pueblo la imagen es que el gobierno se vendió a la FIFA. La sensación es que la FIFA ha logrado que se instale un micro-estado de excepción que entrará en vigor incluso antes del campeonato. Hay una indignación patriótica por el modo en que Brasil se ha sometido a esa mega máquina de explotación capitalista que es la FIFA en tanto reduce el fútbol a un puro negocio. En Río, muchas favelas fueron removidas para hacer obras para el mundial, también por cuestiones de “seguridad”. Todo eso sucede al mismo tiempo de la propaganda de que Brasil es la nueva potencia económica mundial, con obras de infraestructura enormes, que incluye el desmonte de la Amazonía, hechas por las cinco constructoras más grandes del país que son las que contribuyen históricamente a financiar las campañas de todos los partidos, sean de derecha o de izquierda.

–¿Cómo caracterizaría esas manifestaciones?
–Son bastante inéditas. Hubo partidos de izquierda pero sin ningún control sobre la movilización. Los partidos de derecha no van. Y toda vez que un periodista de la red O Globo se acerca es expulsado, por eso estas manifestaciones son fuertemente atacadas por la prensa. Han producido su propia prensa, que se llama Midia Ninja. No hay además un solo tema. Aunque podría decirse que existen dos cuestiones fundamentales. El problema de la movilidad urbana de la población obrera de San Pablo que vive en las periferias de la ciudad y tiene que viajar horas, lo cual supone un reclamo por el tiempo que lleva ir de las casas al trabajo, una reivindicación del tiempo libre. La segunda es contra la reacción represiva de la policía frente a las marchas, ante lo cual muchos jóvenes se indignaron.

–¿Esto está en el origen de la formación de los black bloc (grupos de protesta)?
–La práctica del black bloc, especialmente en Río, tiene que ver con la respuesta al accionar de la policía militar con la que cuenta cada Estado provincial, que es como un ejército privado y una herencia del imperio. Es una policía que usa armas pesadas y entrenada para la guerra. El gobierno es acusado de complicidad con esta violencia de los Estados provinciales. Dilma ha dicho por tv que está en contra de toda manifestación que ponga en peligro el orden público. Estas palabras, viniendo de una mujer que estuvo en la guerrilla, que dijo haber sido revolucionaria, orientan el discurso del PT hacia una retórica de orden propia de una derecha más clásica.

–Las movilizaciones en Brasil, a diferencia de las últimas en Europa o EE.UU., no se dan en un momento de crisis o ajuste. Más bien lo contrario: es claramente un momento de desarrollo en términos de inclusión masiva al consumo. ¿Cómo lo interpreta?
–Hay algo muy complejo vinculado al llamado crecimiento. Una gran parte de este aumento de los ingresos por medio de beneficios sociales como el de “Bolsa Familia” ha sido utilizado como método de endeudamiento para los jóvenes pobres. El prototipo podríamos describirlo como un joven de 22 años, sin educación formal, que trabaja de cadete, cuya familia recibe ahora estos subsidios, además de las posibilidades de acceso al microcrédito que el gobierno implementó. ¿Y qué es lo primero que hace este joven? Compra una moto y se endeuda por muchísimos años de su vida con un préstamo muy oneroso con los bancos. Parte fundamental del crecimiento es por este endeudamiento general de las clases populares, especialmente con electrodomésticos. Y no está mal que alguien que no tenía heladera pase a tenerla, todo lo contrario. El problema es que no pasan a tener la heladera sino a ser tenidos por ella, es decir, por la deuda a la que quedan obligados, casi siempre por medio de tarjetas de crédito. En la medida en que ciertos gobiernos de la región se diferencian de las políticas neoliberales tal como se dieron durante los años 90 y promueven un aumento general del consumo, se genera un consenso sobre la legitimidad de estos modelos y cualquier crítica se la clasifica como proveniente de la derecha. En Brasil los que argumentan así son los que llamamos “gobernistas”, es decir, la gente de la antigua izquierda que apoya al gobierno más allá de la medida que se trate porque siempre dicen “otro gobierno sería mucho peor”. Comparado con la Argentina, en Brasil resulta más complicado porque la dictadura no terminó, los militares no han sido juzgados y siguen diciendo públicamente que salvaron al país del comunismo. Y esto, me parece, funciona en acuerdo con el PT: los militares “toleran” que el actual gobierno “de izquierda” gobierne y el gobierno “tolera” que los militares sigan diciendo lo que dicen y no se los juzgue.

–Volviendo a la cuestión del consumo, ¿no cree que cierta crítica al consumo debería plantearse el desafío de deshacerse de toda carga moral?
–Me parece que la democratización en América Latina no llega por el consumo sino por la ampliación de servicios del Estado: salud, transporte, educación. Lo que pasa en Brasil es que el consumo ha sustituido esa provisión de servicios para las clases populares. Entonces, las clases populares en vez de tener más y mejores servicios tienen su crédito para comprar bienes producidos por el gran capital, sea su motocicleta o su heladera. La cuestión es qué resulta más importante: ¿que el gobierno invierta en cloacas, puestos de salud y escuelas o que invierta en liberar de impuestos la compra de autos baratos para que los pobres puedan tener un auto? Se podría responder “las dos cosas” y es una buena cuestión. El hecho a subrayar es que el gobierno brasileño ha invertido masivamente en el consumo mediante el crédito. Y el pedido de mejoramiento de servicios públicos es justamente uno de los reclamos del Movimiento de Passe Livre que inició la ola de manifestaciones. La verdadera inclusión pasa por la inclusión en el acceso a servicios que el Estado tiene la obligación de proveer a todos. Además creo que hay dos tipos diferentes de consumo que hay que distinguir.

–¿Cuáles?
–Por un lado, el consumo de quienes no tenían nada y ahora pueden comprar su tv o su heladera. Nadie puede oponerse. De todas maneras, eso no los convierte en clase media, como dice el gobierno. Pasan de ser pobres a un poco menos pobres. Y después está el consumo inmenso de una clase media-media que pasa a ser una clase media-alta y protagoniza un ascenso de clase verdaderamente consumista: es la gente que va a Miami o a Buenos Aires para llenar valijas con productos importados de marcas de lujo. Esta gente se multiplicó tanto o más que los pobres que acceden a un crédito.

Tipping the scale: how a political economist could save the world’s forests (Mongabay)

By: Wendee Nicole

Mongabay.org Special Reporting Initiative Fellow

May 29, 2014

Can Elinor Ostrom’s revolutionary ideas halt climate change, improve people’s livelihoods, and save the world’s forests?

“[T]here’s a five-letter word I’d like to repeat and repeat and repeat: Trust.”

Thus spoke Elinor Ostrom in her 2009 Stockholm lecture, when at age 77 she became the first woman to receive the Nobel Prize in Economics. A professor of political science at Indiana University-Bloomington until her death in 2012, she’d spent a lifetime traveling the world and observing everyday citizens cooperating against all odds.

Ostrom's famous smile.  Photo courtesy of the International Land Coalition under a Creative Commons license from Flickr.com.Ostrom’s famous smile. Photo courtesy of the International Land Coalition under a Creative Commons license from Flickr.com.

Ostrom frequently encountered groups of people managing commonly shared resources, creating systems based on trust, such as peasant farmers in Nepal cooperatively managing simple irrigation systems, and people working to solve human-wildlife conflict with forest elephants in Kenya. Why, she wondered, were these people sacrificing their own time and energy to collectively solve social and environmental problems, creating local institutions that lasted many generations? Such collective behavior flew in the face of the longstanding theory of the day, which said that people will selfishly take whatever they can, ultimately causing a “tragedy of the commons” – depleting fish stocks, destroying forests and pastures, usurping groundwater, and otherwise destroying the planet and ultimately, their own livelihoods. People, so the theory went, were too stupid or selfish to solve their own problems and needed regulation by market forces or a top-down government, or the planet was toast.

Yet through trial and error and much research, Ostrom had found the secret. “When people have trust that others are going to reciprocate and be trustworthy, including their officials, they will be highly cooperative,” Ostrom said in an interview with journalists after the Nobel Committee announced her prize. “When there’s no trust, no matter how much force is threatened, people won’t cooperate unless immediately facing a gun.” When people don’t trust others, they “cheat” – breaking rules and seeking their own self-interest.

In her 1990 book Governing the Commons – which the Nobel Committee called her most important contribution – Ostrom proposed eight “design principles” (see Sidebar) that she found were consistently present in sustainable, cooperatively managed commons (any resource shared by multiple people). Drawn from several decades of research, Ostrom’s insights stemmed from personally witnessing examples in the real world, but she named the specific principles by statistically analyzing thousands of published studies in many fields.

Ostrom found environmentally and socially sustainable ‘common pool resources’ had several of these principles in place.

Ostrom found environmentally and socially sustainable ‘common pool resources’ had several of these principles in place.

Ostrom devoted the last decades of her life to figuring out how to have sustainable communities and healthy ecosystems (particularly forests) – rather than humans and nature being at odds. She believed in the power and intelligenfce of ordinary people to collectively solve their own problems so long as higher-level governments did not interfere. Her alma mater, UCLA, called her “an ardent champion of the idea that people will learn to share and thrive if given the opportunity.”

“If given the opportunity” is key. Ostrom’s research did not find that people always cooperate. “There are settings in which they will grab like mad,” she explained in a video interview with Nobelprize.org. “Humans are neither all angels or all devils. It is the context in which they find themselves that enables them to have more willingness to use reciprocity, to trust one another.”

“The resources in good condition around the world have users with long-term interest who invest in monitoring and building [trust]. I really want that to be a big lesson,” she said in the final moments of her Nobel lecture. “Unfortunately, many policy analysts and public officials haven’t absorbed the lesson yet, and that’s a problem.”

Ostrom’s work lives on at Indiana University’s Vincent and Elinor Ostrom Workshop in Political Theory and Policy Analysis, and in the many scholars and colleagues who continue to study, refine, and apply her theories in the real world. However, her untimely death from pancreatic cancer three years after receiving the highest honor in her field deprived her work of a folksy, outspoken, kind-hearted champion of the common man and woman.

“She had incredible energy and determination, and an easy way of communicating with ordinary people,” says her colleague Mike McGinnis, IU political science professor and Workshop member.

“VincentVincent and Elinor Ostrom Founded The Workshop in Political Theory and Policy Analysis in the 1970s, where Lin co-directed it until her death in 2012. It is housed in an old house on the Indiana University-Bloomington campus, and Workshop members (professors, graduate students, postdocs, and visiting scholars) have offices in this as well as two neighboring buildings. Photo (c) copyright 2014 Wendee Nicole.

The Nobel brought Ostrom’s already robust theories greater acclaim, and the theories remain super-hot in academic circles, yet her lessons have yet to be fully absorbed into global policy. While many countries have now embraced some forms of decentralization – giving more power to regional and local authorities – these policies do not always mean local people are given more influene. And among the general public there remains a general lack of awareness of Ostrom’s revolutionary ideas; say “polycentricity” or “commons” to a friend, and watch their eyes glaze over.

Yet Ostrom’s theories cut across political party lines and offer deep, meaningful insights about how to manage forests, fisheries, and communities – all of which are in flux as global climate change may reach crisis proportions in the coming decades. In her latter years, Ostrom grew deeply concerned that the United Nations REDD+ [reducing emissions from deforestation and forest degradation] mechanism would lead to more, not less, deforestation if indigenous and local people are not given rights and land tenure, and she openly discussed the applicability of her research to global climate negotiations. Even though REDD+ policies are designed to benefit locals, without land tenure, those policies could lead to evictions of forest users when people with more power and wealth engage in a “carbon grab,” as a recently publishedreport called it.

“If local users and Indigenous peoples in the developing world are not recognized and assigned clear rights, REDD could lead to more deforestation,” Ostrom said at the 2009 United Nations Climate Change Conference of the Parties (COP15) in Copenhagen. Neglecting her work could be suicidal in times such as these.

Real Life vs. Theory

“AA portrait of Ostrom at the conference with the laureates of the memorial prize in economic sciences in 2009. Photo courtesy of Holger Motzkau 2010, under a Creative Commons Attribution-Share Alike 3.0 Unported license.

Understanding how cooperation and trust help people create sustainable social-ecological systems began to gel for Ostrom in the 1980s, during her travels around the world. “I came back from a particularly vivid occasion in Nepal … where someone had dug into an irrigation channel and several [people] went running down the hill yelling and screaming [at the perpetrator] and others started patching it immediately,” she says in the Nobelprize.org interview. “I mean, the energy they put in! There was no rational calculation about this. They just did it. The game theory prediction was they wouldn’t.”

She knew the theory must be wrong, because the real world was staring her in the face.

Game theory came into the public consciousness with the 2001 biopic A Beautiful Mind, about the life of Economics Nobel Laureate John Forbes Nash. The movie simplified his theory this way: most guys go for the best-looking girl (“the blonde”), resulting in a lot of losers since only one gets the girl. In a similar vein, biologist Garrett Hardin theorized in his famous 1968 Science article, “Tragedy of the Commons,” that people adding cows to a commonly used pasture would act selfishly, ignoring the collective good.

“Each man is locked into a system that compels him to increase his herd without limit—in a world that is limited,” Hardin wrote, adding dramatically, “Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.”

With daily news reporting razed tropical forests, biological extinctions, eroded and desertified land and an atmosphere rapidly accumulating CO2, it seems that these theories match reality. Why then, did Ostrom keep finding real-world situations that defied the predictions?

“ABatwa men and women in Uganda’s Makongoro village process reeds from the forest to weave baskets which they sell to make money for their families and communities. Now conservation refugees evicted from their traditional forest home, now they must receive permits from the Ugandan government to harvest forest products, but most are not educated and need assistance to fill out forms and paperwork. In contrast with Ostrom’s design principles, the government did not actively consult the Batwa when evicting them from the forest but chased them out with guns, giving no land or resources to establish new lives. Photo (c) copyright 2014 Wendee Nicole.

Taking Hardin, Nash and similar theorists to heart, policymakers opted for two opposite solutions to protecting the commons: privatize natural resources (leading to “payment for ecosystem services” type projects), or have governments lock natural areas up in preserves. The latter usually meant stripping rights from locals who had long used these commons for subsistence fishing or hunting, or in the case of forests, gathering firewood, medicinal plants, and other forest products. Many governments (supported by large conservation organizations) evicted indigenous peoples from their homeland in the belief they damaged ecosystems. Ostrom’s research found that such policies are sometimes counterproductive. Many of the evicted people receive little or no government assistance and end up as “conservation refugees,” adrift with nowhere to go and no means to support themselves.

In Uganda, indigenous Batwa forest pygmies lived within the Echuya Forest Reserve, acting as forest monitors for non-indigenous locals who could only access the forest once per week. Compared to four other community-managed forests where Batwa did not live, the Echuya forest experienced the least illegal firewood harvest and other non-sanctioned activities. Yet in 1992, Uganda evicted Batwa from all government forests in order to create national parks for tourism. Regaining rights to harvest forest products has been a slow, uneven process and these indigenous people now suffer some of the worst poverty in all of Uganda. As Ostrom’s theories would predict, evidence suggests that poaching and illegal access of the forest have increased since the Batwa were evicted.

“Three
Three young Batwa children run and play in their land adjacent to Uganda’s Bwindi Impenetrable National Park. The Batwa were evicted by the government in 1991 and now live as conservation refugees outside the park, often in extreme poverty. Research by Workshop scholar Abwoli Banana (who runs the Uganda IFRI Center) showed that forests in which Batwa lived before their eviction had less, not more, forest degradation, than other community-managed forests, which matches Ostrom’s theories. Photo (c) copyright 2014 Wendee Nicole.

“There are environments, especially in some of the developing world, where [locals’] own institutions that had evolved over long periods of time were taken away from them. They’ve lived under top-down regimes and some of the trust and capability of working together have been destroyed,” Ostrom said in a documentary created about the 2009 Economics Nobel Laureates, herself and Oliver Williamson. “It’s very hard to re-establish [trust] once you’ve taken it away.” Ostroms found that taking rights away from locals and indigenous can lead to more, not less, forest degradation.

Lin the Connector

Described by The Economist as “a little like Agatha Christie’s detective, Jane Marple, apparently a bit sweet and scatty, in reality sharp as a paper cut,” Ostrom was remarkably far-sighted in her long, illustrious career.

“I’ve never met anyone like her in my life. She was a ball of energy,” says Burnell Fischer, her IU colleague and current co-director of the Workshop in Political Theory and Policy Analysis, which Ostrom directed until she died in June 2012. (Her husband, Vincent Ostrom, died within weeks of Lin’s passing).

“She was connected to all kinds of people around the world, says Fischer.”

Ostrom not only knew people in varied fields the world over, she connected them – and their ideas. She was what Malcolm Gladwell would call a Connector, one of the rare few whose “ability to span many different worlds is a function of something intrinsic to their personality, some combination of curiosity, self-confidence, and energy” – the type of person who can spark a fire, tip the scales, and change the world. “By having a foot in so many different worlds,” writes Gladwell in The Tipping Point, “[connectors] have the effect of bringing them all together.”

“Stories of Ostrom’s collaborative genius are legion: suggesting just the right article or idea to jump-start a dissertation; making a contact that launches a recently minted Ph.D.’s career,” wrote Jeremy Shere in IU’s SPEA (School of Public and Environmental Affairs) magazine.

Born Elinor Awan, her life – and her interest in cooperation – began under less than ideal circumstances. Raised mainly by a single mom in Los Angeles during the Depression, she first saw people cooperating during the war, planting victory gardens and voluntarily limiting the use of their resources. Whatever passions drove her, Ostrom overcame obstacles throughout her life with a surprising degree of self-confidence. Peers taunted her over her father’s Jewish heritage, even though she attended her mother’s Protestant church, and setbacks she experienced as a woman in academia gave her much empathy for those who experience discrimination. Setbacks only seemed to push her forward.

“Photo
Photo taken January 1992 of Vincent Ostrom, Tej Kumari Mahat (chair person of the FMIS in Sera-baguwa bandh irrigation system, Tharpu, Tanahu) and Elinor Ostrom in Tharpu village, Tanahu. Photo under the Digital Library of the Commons.

In an article about her life, Ostrom explains that because she stuttered in high school, a teacher told her to join Speech Club. When she recited poetry in the club, others called poetry a “sissy” thing, so she enrolled in debate instead. She loved debate so much that upon enrolling at the University of California Los Angeles (UCLA), she asked her undergraduate advisor if she could major in debating. He recommended education, ‘the best major for a girl.’ Her parents, neither of whom had attained a university degree, considered college a wasted investment, so she worked to pay her way. Her freshman year, she took a political science class and made it her major, despite the advisor’s advice. After graduating, she became the first woman with a job higher than secretary at a firm in Cambridge, Massachusetts, where she helped her first husband through Harvard Law School. The first question asked in her interview was, “Do you know shorthand?”

After her divorce in the early 1960s, she returned to L.A. and was easily accepted in a political science Masters program at UCLA, but applying for a doctorate proved challenging. She wanted a Ph.D. in Economics, but did not have enough mathematics because her undergraduate advisors had dissuaded her from those classes. But soon she became one of four women – the first in 40 years — accepted into the political science Ph.D. program after the department faculty argued vehemently over whether to admit any women.

Lin – as everyone called her – met her second husband Vincent Ostrom in a seminar in which each student picked a groundwater basin in southern California to study. They soon fell in love, and married in 1963. She continued studying irrigation systems for her graduate research, and when Hardin published his famous “Tragedy of the Commons” article, she was immediately skeptical – and stayed so, eventually showing that his theory was wrong in many situations.

Lin followed Vincent to Indiana University, where he got a job as a tenure-track professor and she was hired only as a lecturer. As the Vietnam War escalated, the political science department asked her to serve as graduate advisor to some 90 students, at which point she negotiated to have IU hire her as a full-time faculty member.

During the 1970s, she and Vincent, who made furniture as a hobby, created the “Workshop in Political Theory”, modeled after an artisan-style woodworkers’ workshop, where people from varied disciplines could collaborate, brainstorm, and hammer out ideas. The workshop and the offices the Ostroms filled with their larger-than-life personalities are located in a large old house on the IU-Bloomington campus.

Design for the Commons

People in many academic fields and nations had studied the use of “common pool resources” or commons (any resource that is used in common with others), but since disciplinary and regional “silos” rarely communicate, nobody had synthesized the information to develop a unified understanding. “Historians, anthropologists, economists, political scientists – a vast array of people had written sometimes long histories or descriptions,” Ostrom said in her Nobel talk, “but they wrote about a particular sector or a particular region of the world.”

In the mid-1980s, the U.S. National Academy of Sciences gathered researchers from varied fields together, including Ostrom, to compile data on the management of common pool resources around the world. The NAS work resulted in the Common Pool Resource Database, still online, and Ostrom’s book, Governing the Commons. As she tested what made people cooperate and self-organize and worked on her book while on a sabbatical in Germany, she became exasperated.

“I tried like mad to see statistically, aha, the market always works, or hierarchy always works, or entry limitation [barriers to the number of people allowed in a system] always works,” she said in the Nobel documentary. “I really struggled.”

Photo taken March 1993 of elephant embankment platform in Ghadgain, (L to R) Indra Sharan K.C., Douglas Vermillion, Elinor Ostrom and Rabi Poudel during the final day of Workshop outing to the RCNP. Photo under the <a href=http://dlc.dlib.indiana.edu/dlc/>Digital Library of the Commons</a>.
Photo taken March 1993 of elephant embankment platform in Ghadgain, (L to R) Indra Sharan K.C., Douglas Vermillion, Elinor Ostrom and Rabi Poudel during the final day of Workshop outing to the RCNP. Photo under the Digital Library of the Commons.

“I tried to move up a level – [to ask] what were the generalities across the systems,” she explained in the NobelPrize.org interview. “Maybe we could call it best practices.” These became her eight design principles present in successful “institutions” and missing from unsuccessful ones.

The design principles include allowing the people most invested in the resource to both make and modify the rules of use; having clear, agreed-upon rules that outside authorities respect and that do not conflict with other levels of governance; allowing the users of a resource to monitor its use; having a system of graduated sanctions; and cheap, accessible means of conflict resolution. In the words of Tore Ellingsen of the Economics Nobel Committee, “successful groups are relatively democratic.”

“When rules are created and enforced by outside authorities, groups often fail to utilize resources efficiently,” added Ellingsen. “In part, such outside interventions fail because the interventions pay inadequate attention to local conditions.”

As Ostrom teased out her design principles from thousands of studies, including her own, she wanted to test what she saw in a simplified lab setting. “I was very fortunate that [IU Economics professor] Jimmy Walker came to Bloomington just as I was getting hungry for [asking], how would we ever put these things in a carefully developed laboratory experiment?,” she said in a 2009 interview with the Annual Review of Political Science. “It’s enabled us to take things that I observed in the field, then … go to the lab and test [it]. Was this just an unusual set of things that I saw in the field, or would you find it repeated under situations that were very carefully designed?”

Not Just Cheap Talk

As it turns out, Ostrom’s real-world observations matched what she and her colleagues found in their social science lab experiments beginning in the 1980s: communication completely changed the classic game theory predictions that the optimal behavior was to act selfishly or “cheat” rather than cooperate. In each experiment, eight people sat at computers and had the ability to “invest” either in a commonly shared resource, or in a private fund. The commons paid better – up to a point – just like a pasture that is vulnerable to overcrowding, or a forest that can be used sustainably or overharvested.

“When subjects … couldn’t communicate, the theory was right. They overharvested even worse than predicted,” Ostrom describes in her Nobel lecture. “However, when they could communicate face to face, theory was wrong.” Trust could be achieved through simple communication. It was a radical breakthrough: the commons need not be a tragedy.

Unlike a prisoners’ dilemma (as John Nash’s theory was often modeled), where people are, well, in prison, they often hold the power to change their circumstances in the real world. Ostrom boldly challenged the longstanding theories depicting people as always trapped or “rationally” self-interested – and with sarcasm to boot. “[T]hose attempting to use these models as a basis for policy prescription frequently have achieved little more than a metaphorical use of the models,” she writes in Governing the Commons. She calls such models “dangerous” when used as a foundation for policy because they assume “all users of natural resources are similarly incapable of changing their constraints.”

With characteristic optimism Ostrom concludes, “I would rather address the question of how to enhance the capabilities of those involved to change the constraining rules of the game to lead to outcomes other than remorseless tragedies.”

And who better to change the rules of the game than the people most invested in a resource? “Here we had this notion that rational individuals were ‘trapped’,” said Ostrom in her Nobel lecture. “Us theorists were supposed to come up with the optimal solution, give it to a public official and they’d impose it. And there were only two solutions: government or private ownership.”

Why did experts and authorities have solutions but ordinary citizens didn’t? It defied what she’d seen around the world. Even Hardin himself later admitted his theory of tragedy only applied to “Unmanaged Commons.”

Design for a Sustainable World

“Methodist
Methodist Primary School building. Elinor Ostrom standing in a school room with one teacher and one student posing in front of the blackboard. Photo under the Digital Library of the Commons.

As Ostrom became more involved in ecology and forestry research in the 1990s, the United Nations Food & Agriculture Organization (FAO) came to her, wanting systematic information on global forests and the people depending on them. She founded the International Forestry Resources and Institutions (IFRI) research network, still the only interdisciplinary, long-term research program focusing on both forests and social-ecological conditions. Researchers in the 15 centers around the world – including Tanzania, Uganda, Bolivia, Nepal, and India – use a common set of research protocols to facilitate global research.

In the last decade of her life, Ostrom became increasingly vocal about how her findings applied to climate negotiations, particularly REDD+ policies, which many indigenous groups oppose. REDD is a “market” mechanism, which compensates landowners either to maintain existing forest or plant new trees, but indigenous and locals relying on forests fear it may concentrate wealth in the hands of a few and cause conflict among neighbors. Also, many indigenous and local forest dwellers do not have formal tenure rights to the land they live on and use, which REDD requires; international markets are unable to compensate people who do not have secure land ownership, which offers no guarantee forests will remain intact.

Having seen how powerful governments and, environmental groups have at times trampled the rights of locals and indigenous groups, Ostrom was concerned. “I hope in our negotiations that … we are very, very careful to be sure that the rights of indigenous people and local owners that have not been recognized in the past are recognized, protected, and that they’re given a chance to get technical advice,” she said at COP15.

At the time, REDD policies were still being negotiated, and since the Warsaw framework for REDD+ was passed in November 2013, such projects have started around the world. But Ostrom’s research suggests that if REDD+ policies are merely designed by top-level authorities, without involvement of the local people who use the forests, the policies will fail to create the trust necessary for sustainable community-managed forests, and could instead lead to forest degradation and loss.

Ostrom had strong views on REDD, but according to her colleagues she was not anti-market, despite what some detractors have claimed. Neither is she anti-state, although her work has been both praised and criticized by people of varying political bents.

“Lin’s work has been misunderstood and misrepresented by advocates on both the left and the right,” explains McGinnis. “I vividly recall one day shortly after she received the Nobel when she came down from her office really frustrated because she had just completed two phone interviews. In one the reporter asked her why she was so vehemently anti-market, and in the very next interview she was asked why she was so vehemently anti-state. Her findings never fit neatly within the dominant left-right political discourse in the U.S., and she was very comfortable with that lack of fit.”

The Test of Time

“Framed
Framed pencil drawing of Elinor Ostrom that hang at the University of Mande Bukari. Photo under the Digital Library of the Commons.

Since they were first published in 1990, Ostrom’s design principles have stood the test of time. “Pretty much all [the design principles] have some degree of support,” says IU Anthropology professor Catherine Tucker, and also a Workshop member. “Some are harder to examine because they’re harder to find in the modern world, such as the lack of state intervention. The freedom to design institutions without interference from the state – that’s one that’s problematic [to test].”

Too often, though, top-down governments interfere with the solutions locals have crafted, as happens when governments evict indigenous people from their homelands, or government corruption wreaks havoc on local projects. Local projects can succeed even if higher governments are not supporting them, so long as they do not interfere.

One design principle with very strong empirical support is having locals monitor the use of a resource. “In sustainable forests around the world, the users are the active monitors of the level of harvest occurring in the forests,” Ostrom explained in her Nobel lecture. But the effectiveness of the monitoring depends on who does it. “Users monitoring forests is more [effective] than when government does it.” Also, as Ostrom saw in Nepal, resource users sanction others, but in a graduated way for repeat offenses. Draconian punishment for first-time infractions ends up causing mistrust and resentment, leading to less willingness to cooperate, she found.

Having outlined her big-picture design principles, Ostrom also identified the factors influencing whether people will cooperate and trust. “Field and lab experiments found that communication among participants, the reputation of participants being known, high marginal return, a longer time horizon so if [people] cooperate [they] really have a chance of gaining the benefits over time, [and] an agreed upon sanctioning mechanism,” as well as entry and exit capability (the ability of resource users to begin or end their participation), “are the factors that we repeatedly find have a strong impact on levels of cooperation.”

Eye to the Future

“A lot of people are now waiting for international negotiations to solve [the climate crisis],” she said, responding to a journalist’s question about the implications of her work in a recorded interview after the Nobel announcement. “That’s again this presumption that there are public officials who are genius and the rest of us are not. It is going to be important that there is an international agreement, but we can be taking steps at family level, community level, regional level, provincial, state, national, and there are many steps that have already been taken that are not going to solve it themselves but cumulatively can make a big difference.”

Indiana University-Blooomington Professors Mike McGinnis and Burnell Fischer near the Ostrom Room inside the The Vincent and Elinor Ostrom Workshop in Political Theory and Policy Analysis on campus.
Indiana University-Blooomington Professors Mike McGinnis and Burnell Fischer near the Ostrom Room inside the The Vincent and Elinor Ostrom Workshop in Political Theory and Policy Analysis on campus. Photo (c) copyright 2014 Wendee Nicole.

For example, even without federal emissions-reductions targets, at least 30 U.S. states have developed climate action plans and more than 1,000 cities have signed the U.S. Mayors Climate Protection Agreement. Individuals, communities, and groups can also take action.

Ostrom’s stance hails from her discovery that “polycentric” governance is the most effective way to govern – a concept first developed by Vincent in the 1960s. Polycentricity refers to having multiple levels of governance in place; for example, local people solve dilemmas while interacting in a cooperative manner with laws and regulations at regional, national and sometimes international levels. In an article written in the days leading up to the 2012 UN Rio 20+ Summit and published on the date of her death, Ostrom wrote, “Inaction in Rio would be disastrous, but a single international agreement would be a grave mistake… Decades of research demonstrate that a variety of overlapping policies at city, subnational, national, and international levels is more likely to succeed than are single, overarching binding agreements.”

Academics continue Ostrom’s research, but whether her findings get incorporated into policy in time to solve some of the world’s pressing issues remains to be seen. The morning Ostrom died, IU President Michael A. McRobbie called her “an irreplaceable and magnificent treasure,” and George Mason University professor of Economics and Philosophy Pete Boettke posted a fitting tribute to her legacy for the scholars who have studied under her, alongside her, and who continue the research she began. “Lin leaves behind a tremendous intellectual legacy,” Boettke wrote. “We have much work to do, and we will honor her by getting on with that task…Think about how much can be accomplished when the very best of us exhibit such traits and set the example for all the rest of us to strive to emulate.”

Elinor and Vincent Ostrom at Yuan Ming Yuan Gardens. Photo under the <a href=http://dlc.dlib.indiana.edu/dlc/>Digital Library of the Commons</a>.
Elinor and Vincent Ostrom at Yuan Ming Yuan Gardens. Photo under the Digital Library of the Commons.
Read more at http://news.mongabay.com/2014/0529-sri-nicole-ostrom-principles.html#loyu2YceaLRLDOMG.99

World Bank Revamping Is Rattling Employees (New York Times)

By ANNIE LOWREY

MAY 27, 2014

WASHINGTON — The World Bank, a famously bureaucratic institution, is undergoing its first restructuring in nearly two decades. The overhaul is intended to keep it relevant at a time when even the poorest countries can easily tap the global capital markets, but with just weeks to go, the process has turned into what several staff members described as a nightmare, stalling their work and sapping morale.

In an interview, Jim Yong Kim, the American doctor and former president of Dartmouth College who took over leadership of the bank two years ago, strongly defended his plan. The overarching goal is to break down the bank’s regional “silos,” he explained, which discourage, for instance, experts who are working on mobile banking in sub-Saharan Africa from sharing best practices with experts handling the same issue in Central America.

To tackle that problem, Dr. Kim has created more than a dozen new global practices — on subjects like trade, health and infrastructure. Technical staff based in Washington will be organized into those practice groups as of July 1. “We had to make this change in order to really force the information to flow,” Dr. Kim said.

“We had to make this change in order to really force the information to flow,” said Jim Yong Kim. Credit Jonathan Ernst/Reuters

Along with that restructuring of 15,000 bank employees, Dr. Kim has also undertaken a sweeping financial review, to squeeze out inefficiencies and cut $400 million from the bank’s operating budget.

“This is the first time we’ve been able to say: Here’s where the revenue’s coming from” and where the spending is going, Dr. Kim said. “For the first time, we’re going to be able to compare expenditures.”

Current and former staff members said they agreed that change needed to come to the World Bank. “The bank is losing its relevance in middle-income countries,” said Uri Dadush, the director of the international economics program at the Carnegie Endowment for International Peace, referring to countries like India, China and Brazil.

“These countries don’t need a $1 billion or $2 billion loan from the bank,” Mr. Dadush said. “And many of the countries now have a lot of indigenous capacity to analyze and make technical decisions” without assistance from World Bank experts, he added.

Dr. Kim pointed out that the bank had recently doubled its lending capacity for middle-income countries.

The complaints from the bank’s core staff in Washington, most of whom spoke on the condition of anonymity because they feared retaliation, started piling up almost as soon as Dr. Kim initiated the reorganization. And over time, more and more of those complaints have been directed at Dr. Kim personally.

“This is not the way you run a change program,” said Paul Cadario, who worked at the bank for more than three decades. “No vision. No communications mechanism. No indication when it’s all going to be over.”

That turmoil has created what some people inside the World Bank described as a toxic environment. In not-for-attribution interviews, midlevel officials voiced concerns about such moves as restrictions on travel expenses even as hordes of highly paid McKinsey and Booz Allen consultants roamed the halls — and Dr. Kim was accused of hypocrisy for his own expenditures.

“The staff are clearly unhappy,” said Nancy Birdsall, the president of the Center for Global Development, a Washington-based research group. “There’s been a loss of confidence, not necessarily in the idea of the reorganization, but in the process.”

Yet even some World Bank staff members said that employees’ own sense of entitlement, and the fact that the bank had not undergone such a major internal review in nearly two decades, also explained some of the negative reaction.

In part, employees said they were concerned about personnel decisions. Four dozen executives have had to apply for new jobs. Last year, three highly regarded female executives were also unceremoniously pushed from their positions, which angered many other women at the bank.

Others said they were unimpressed with the executives named to lead the global-practices teams. “They’re good people, they might be great people,” said one bank official. “But they’re not top-quality people. These aren’t big names.”

Moreover, the global-practices leaders did not include any people from Africa or East Asia, arguably the bank’s two most important client regions. When African governors of the bank objected, Dr. Kim sent a letter to reply, if not to apologize.

“Thank you for our meeting yesterday,” it said. “I apologize for having had to leave so quickly; I had a meeting scheduled immediately after our session. I would like to take this opportunity to reiterate to you my personal commitment to diversity and specifically the inclusion of Africans among all ranks of staff at the World Bank Group.”

Another central concern is that the restructuring has taken up too much time, distracting the bank’s workers, rattling relations with clients and leading to risk aversion. “People are desperately trying to justify themselves and veering away from projects that might raise questions,” a staff member said.

But Dr. Kim pointed out that the bank was on track to do more business this year than it did last year; during earlier restructurings, parts of the bank’s business shrank. High-level bank employees also stressed that Dr. Kim had instituted regular review processes that would reduce the need for such stark reorganizations in the future.

Pettier concerns have abounded, too. As part of the $400 million cost-cutting exercise, the bank issued new guidelines on travel, limiting business-class flights and even adjusting breakfast allowances. “Leadership needs to reflect: Are ‘breakfast savings’ worth the ‘expense’ of staff morale?” said one letter in a popular alumni newsletter.

Perhaps no change caused more outrage than the elimination of parking subsidies for the crowded and expensive downtown garages where many officials park. Yet “to subsidize parking is a little weird for an organization like us,” countered Bertrand Badré, the bank’s chief financial officer, pointing out that the bank is committed to combating climate change.

Many complaints, serious and frivolous, have also questioned Dr. Kim’s management — especially concerns about his lack of communication with rank-and-file employees and perceptions of his overspending when asking the rest of the bank to cut back.

A much-discussed Financial Times editorial rebuked him for his use of private planes. One other popular rumor had Dr. Kim purchasing a tuxedo and charging the World Bank for it.

A press officer responded that Dr. Kim had taken chartered planes only to otherwise inaccessible destinations, and that he had used them less frequently than past presidents. (More than 90 percent of his travel is commercial, the spokesman said.) And the tuxedo story is just a story, he said: Dr. Kim had purchased white-tie wear for a Nobel Prize event, but he paid for the clothes himself.

Dr. Kim said that he did think he could have communicated about the restructuring process more clearly, and sooner. “I’ve been told this a million times by people who have gone through this,” he said. “It’s this notion that you can never communicate enough.” He added: “If I were to give anyone else advice, it would be to overcommunicate from the beginning.”

For all the complaints, many others involved with the bank and its lending policies said they supported the reorganization. “Let’s keep the mission of the bank in mind,” said Ian Solomon, a former World Bank executive director. “This is not about whether people in Washington are comfortable, or whether the process is simple. Development is hard. There’s a lot more we don’t know about getting it right than we do know.”

He added: “I applaud Jim for taking this one on.”

The Obama administration, which effectively named Dr. Kim to his post, also threw its weight behind the reorganization. “The United States is confident that the World Bank’s restructuring addresses the changing development challenges of the 21st century and will better equip the bank to meet its global mission,” said Marisa Lago, the assistant Treasury secretary for international markets and development. “Implementation and execution are key to this process.”

And Dr. Kim himself said that he believed the bank’s staff would see dividends after July 1. “I think it’s going better than I could have imagined two years ago,” he said.

Setor privado é essencial para adaptação às mudanças climáticas (Fapesp)

Para Laura Canevari, da Acclimatise, engajar empresas em discussões sobre o tema significa criar uma economia resiliente, assegurar empregos e desenvolvimento. Para isso, no entanto, cientistas devem traduzir conceitos em experiências reais (foto:Rogério Lima)

28/05/2014

Por Karina Toledo, de Fortaleza

Agência FAPESP – As mudanças climáticas são uma realidade cada vez mais difícil de ser ignorada e à humanidade resta adaptar-se para reduzir seu grau de vulnerabilidade. Diante dessa necessidade premente, cientistas têm se esforçado para engajar os formuladores de políticas públicas nas discussões sobre o tema. No entanto, pouca atenção é dada a um importante ator da sociedade: o setor privado.

A análise foi feita pela colombiana Laura Canevari, consultora em adaptação às mudanças climáticas, durante a conferência internacional Adaptation Futures 2014, ocorrida entre 12 e 16 de maio em Fortaleza. Formada em Ciências Marinhas, com mestrado em Manejo de Mudanças Climáticas pela University of Oxford, no Reino Unido, Canevari já atuou como militante, defendendo a necessidade de adaptação das zonas costeiras contra a elevação do nível do mar.

Atualmente, trabalha para a Acclimatise, empresa britânica que presta assistência técnica a instituições governamentais e empresas privadas no entendimento de riscos relacionados às mudanças climáticas e ajuda a identificar soluções de adaptação viáveis.

Na avaliação de Canevari, o setor público tem o importante papel de regulamentar e criar um ambiente adequado para que ações de adaptação aconteçam, mas é o setor privado que vai colocá-las em prática. A fim de engajar as empresas na empreitada, porém, os cientistas terão de adaptar sua linguagem e traduzir os conceitos científicos em experiências reais do cotidiano.

Leia abaixo trechos da entrevista concedida por ela à Agência FAPESP.

Agência FAPESP – Qual é a sua formação e área de atuação na Acclimatise? 
Laura Canevari – Sou formada em Ciências Marinhas e fiz mestrado em Manejo de Mudanças Climáticas na University of Oxford, no Reino Unido. Antes de começar a trabalhar na Acclimatise eu era uma grande defensora da necessidade de adaptação da zona costeira contra a elevação do nível do mar.

Agência FAPESP – Vocês trabalham mais com o setor público ou o privado?
Canevari – Inicialmente nosso foco era o setor privado, mas temos nos voltado mais ao setor público, pois as negociações internacionais estão mais focadas em adaptação e os governos estão mais preocupados com as mudanças climáticas. Recentemente, ajudamos a elaborar o Plano Nacional de Adaptação do Quênia, por exemplo. Ajudamos a desenvolver a estratégia de adaptação das cidades de Londres e Leeds [ambas no Reino Unido], Moscou e outras cinco na Rússia. Muitas vezes, o que fazemos para os governos é fomentar a capacidade institucional, ajudar a identificar lacunas e necessidades em nível institucional. Se um país quer começar a pensar em mudanças climáticas, quais são as coisas que as instituições têm de ser capazes de lidar, como coordenar informação entre diferentes ministérios, como coletar e armazenar informações, como usar serviços meteorológicos para obter dados precisos sobre mudanças climáticas. Atuamos em diferentes setores, como energia, transporte, varejo e cadeias de abastecimento.

Agência FAPESP – Em sua palestra você afirmou que a academia, no que se refere às discussões sobre adaptação às mudanças climáticas, está muito focada no setor público e deveria prestar mais atenção ao setor privado. Por que pensa assim? 
Canevari – Não penso que devemos parar de investir tempo e energia no setor público. Ele é importante, pois permite regular as ações de adaptação às mudanças climáticas necessárias e criar o suporte e o ambiente favorável para que elas aconteçam. Mas não deveríamos olhar para o setor público como o implementador dessas medidas. Quem realmente vai colocar em prática as soluções de adaptação é o setor privado. O setor público deve permitir às empresas investir mais seguramente nesse tipo de tópico. Não é a primeira vez que falo da necessidade de os acadêmicos mudarem sua mentalidade sobre quais são os mais importantes setores da sociedade com quem temos de dialogar. Mas nós, cientistas, tendemos a ficar em nossas zonas de conforto, onde falamos todos a mesma linguagem e lidamos com os problemas da mesma forma. E dialogar com o setor privado requer uma mudança no discurso sobre as questões climáticas. Falamos do ponto de vista de políticas públicas e com uma mentalidade acadêmica e isso não vai funcionar. Precisamos mudar a forma como concebemos os problemas e as soluções.

Agência FAPESP – Como os cientistas conseguirão o engajamento do setor privado? 
Canevari – Primeiro, precisamos reconhecer que esse é um importante ator, pois isso nos fará ter curiosidade sobre como ele pensa. Os acadêmicos costumam ficar muito fechados na academia, mas viram rapidamente a necessidade de disseminar a informação para os governos. Fizeram, então, o esforço de compreender o que ressoa com a governança para discutir questões que vêm da ciência e transformá-las em políticas públicas. Mas os acadêmicos precisam entender que o setor privado tem diferentes formas de conceber riscos e lidar com eles. Para um homem de negócios, lidar com riscos significa a continuidade de sua produção. Então falar sobre a continuidade do negócio é uma forma de abordar questões de adaptação sem usar esse termo. É preciso traduzir a linguagem. Falamos muito aqui sobre o cenário de “4 graus Celsius” [de elevação da temperatura terrestre até 2100] e parece que todos entendemos o que isso significa sob um ponto de vista ambiental. Mas o que os 4 graus Celsius significam para uma empresa? Nós fizemos uma análise de risco para um porto na Colômbia na qual olhamos o impacto do aumento das temperaturas na performance do maquinário que retira a carga dos barcos e leva para o estoque. Essas máquinas são sensíveis ao estresse térmico e não trabalham tão bem com muito calor. Em vez de ir para o setor privado e dizer: “Há uma ameaça de subir 4 graus Celsius”, devemos dizer que os maquinários vão começar a trabalhar de forma mais lenta e não serão tão eficientes em realizar o trabalho e isso vai afetar os lucros. No fim das contas, é preciso abordar a questão do lucro e de como a mudança climática vai afetar a performance empresarial. Outro ponto de muito apelo para as empresas é: como conseguirão manter sua licença social e ambiental para operar. Se a força de trabalho atua ao ar livre e há uma alta incidência de estresse térmico, há um risco de segurança ocupacional. A empresa pode perder a habilidade de operar em uma determinada área se não se preocupar em avaliar como o estresse térmico provocado pela elevação de temperatura afetará seus empregados. É um trabalho de transformar conceitos em experiências reais do cotidiano.

Agência FAPESP – Se é tudo uma questão de lucros, por que é importante estimular o setor privado a se adaptar? 
Canevari – Porque se trata de construir uma economia resiliente. Precisamos parar de ignorar o setor privado, pois ele é parte importante das comunidades e oferece empregos, bens e serviços. Quando pensamos nos fatores que determinam o bem-estar das sociedades, temos as políticas públicas que criam regulamentações, códigos de conduta para as pessoas interagirem umas com as outras de formas não agressivas, garantem liberdade de expressão, democracia, etc. Esses são componentes importantes, mas os produtos e serviços que as pessoas desejam adquirir também são. As pessoas também desejam estar empregadas, pois é uma forma de conseguir reconhecimento na sociedade. Não é apenas pelo dinheiro em si, mas porque você assume um papel social quando tem um emprego. Por outro lado, o setor privado tem o dinheiro e o potencial de investir em atividades que podem ter implicações que vão além da própria organização.

Agência FAPESP – Já é possível perceber ações de adaptação no setor privado?
Canevari – Há dois tipos de empresas que estão liderando ações de adaptação. No primeiro, estão as empresas que fizeram grandes investimentos em estruturas de longa duração, como petrolíferas, empresas de energia e portos. São companhias que esperam que aquelas instalações durem 30 ou 40 anos. Nesse tipo de empresa também costuma haver muita pressão dos stakeholders e da sociedade, que espera padrões elevados em termos ambientais e sociais. Do segundo tipo fazem parte as empresas que estão se adaptando e que são as sensíveis a fatores climáticos, como as que produzem ou comercializam bens agrícolas e empresas que dependem fortemente de água. São empresas que já sentem fortemente os impactos das mudanças no clima e respondem a eles como forma de sobreviver, pois, se não melhorarem seus padrões de eficiência no uso de energia e água, poderão ter conflitos com a comunidade em que estão inseridas e com a mídia. Mas não há muita coisa sendo feita na América Latina, o que é uma pena, pois há grandes oportunidades em países como o Brasil, onde é possível começar da maneira correta. Muitos novos investimentos em infraestrutura podem ser feitos à prova do clima. É muito mais barato do que fazer a adaptação depois que já estiver pronto. Temos uma oportunidade que os países desenvolvidos já perderam, que é começar na direção certa. Temos experiências e aprendizados de outros países, sabemos o que vale a pena fazer, então é só colocar em prática.

Agência FAPESP – Há quem diga que foi o próprio setor privado o responsável pelas mudanças climáticas.
Canevari – Podemos dizer que o setor privado é responsável pela maior parte das emissões de gases-estufa e a mudança climática é basicamente causada por eles. Mas estamos falando de apenas cerca de 20 grandes empresas, responsáveis por mais de 80% das emissões. A maioria é da área de óleo e gás, mineração e agricultura. Então, estamos falamos de um pequeno número de empresas em oposição a uma enorme gama de outras companhias que compõem o setor privado. Há uma enorme diversidade. Por que também não estamos culpando os governos por não criarem as regulamentações apropriadas para essas empresas? Muitos governos reduzem a rigidez de sua regulamentação para atrair essas empresas poluidoras. Penso que os governos também são responsáveis por permitir que essas empresas atuem como bem entendem. A empresa age de acordo com os seus interesses. Cabe ao governo regular essas atividades e garantir que estejam dentro de limites aceitáveis.

Eduardo Galeano Disavows His Book ‘The Open Veins’ (New York Times)

For more than 40 years, Eduardo Galeano’s “The Open Veins of Latin America” has been the canonical anti-colonialist, anti-capitalist and anti-American text in that region. Hugo Chávez, Venezuela’s populist president, even put a copy of the book, which he had called “a monument in our Latin American history,” in President Obama’s hands the first time they met. But now Mr. Galeano, a 73-year-old Uruguayan writer, has disavowed the book, saying that he was not qualified to tackle the subject and that it was badly written. Predictably, his remarks have set off a vigorous regional debate, with the right doing some “we told you so” gloating, and the left clinging to a dogged defensiveness.

“ ‘Open Veins’ tried to be a book of political economy, but I didn’t yet have the necessary training or preparation,” Mr. Galeano said last month while answering questions at a book fair in Brazil, where he was being honored on the 43rd anniversary of the book’s publication. He added: “I wouldn’t be capable of reading this book again; I’d keel over. For me, this prose of the traditional left is extremely leaden, and my physique can’t tolerate it.”

Hugo Chávez, president of Venezuela, handing President Obama a copy of Eduardo Galeano’s “The Open Veins of Latin America” in 2009. CreditMatthew Cavanaugh/European Pressphoto Agency

 

“The Open Veins of Latin America: Five Centuries of the Pillage of a Continent” was written at the dawn of the 1970s, a decade when much of Latin America was governed by repressive right-wing military dictatorships supported by the United States. In this 300-page cri de coeur, Mr. Galeano argued that the riches that first attracted European colonizers, like gold and sugar, gave rise to a system of exploitation that led inexorably to “the contemporary structure of plunder” that he held responsible for Latin America’s chronic poverty and underdevelopment.

Mr. Galeano, whose work includes soccer commentary, poetry, cartoons and histories like “Memory of Fire,” wrote in “Open Veins”: “I know I can be accused of sacrilege in writing about political economy in the style of a novel about love or pirates. But I confess I get a pain from reading valuable works by certain sociologists, political experts, economists and historians who write in code.”

“Open Veins” has been translated into more than a dozen languages and has sold more than a million copies. In its heyday, its influence extended throughout what was then called the third world, including Africa and Asia, until the economic rise of China and India and Brazil seemed to undercut parts of its thesis.

In the United States, “Open Veins” has been widely taught on university campuses since the 1970s, in courses ranging from history and anthropology to economics and geography. But Mr. Galeano’s unexpected takedown of his own work has left scholars wondering how to deal with the book in class.

“If I were teaching this in a course,” said Merilee Grindle, president of the Latin American Studies Association and director of the David Rockefeller Center for Latin American Studies at Harvard, “I would take his comments, add them in and use them to generate a far more interesting discussion about how we see and interpret events at different points in time.” And that seems to be exactly what many professors plan to do.

Caroline S. Conzelman, a cultural anthropologist who teaches at the University of Colorado, Boulder, said her first thought was that she wouldn’t change how she used the book, “because it still captures the essence of the emotional memory of being colonized.” But now, she said: “I will have them read what he says about it. It’s good for students to see that writers can think critically about their own work and go back and revise what they meant.”

Michael Yates, the editorial director of Monthly Review Press, Mr. Galeano’s American publisher, dismissed the entire discussion as “nothing but a tempest in a teapot.” “Open Veins” is Monthly Review’s best-selling book — it surged, if briefly, into Amazon’s Top 10 list within hours of Mr. Obama’s receiving a copy — and Mr. Yates said he saw no reason to make any changes: “Please! The book is an entity independent of the writer and anything he might think now.”

Precisely why Mr. Galeano chose to renounce his book now is unclear. Through his American agent, Susan Bergholz, he declined to elaborate. She said he had gradually grown “horrified by the prose and the phraseology” of “Open Veins.”

The Uruguayan writer Eduardo Galeano, in 2012. CreditSergio Goya/dpa-Corbis

 

Mr. Yates said Mr. Galeano might simply be following in the tracks of the novelist John Dos Passos, a radical as a young man “who became a conservative when he got older.” On Spanish- and Portuguese-language websites, others have suggested that Mr. Galeano, who in recent years has had both a heart attack and cancer, might simply be off his game intellectually.

In his remarks in Brazil, Mr. Galeano acknowledged that the left sometimes “commits grave errors” when it is in power, which has been taken in Latin America as a criticism of Cuba under the Castro brothers and of the erratic stewardship of Venezuela under Mr. Chávez, who died last year. But Mr. Galeano described himself as still very much a man of the left, and on other occasions he has praised the experiments in social democracy underway for the last decade in his own country, as well as in Brazil and Chile.

“Reality has changed a lot, and I have changed a lot,” he said in Brazil, adding: “Reality is much more complex precisely because the human condition is diverse. Some political sectors close to me thought such diversity was a heresy. Even today, there are some survivors of this type who think that all diversity is a threat. Fortunately, it is not.”

Still, Mr. Galeano has caught many admirers by surprise, including the Chilean novelist Isabel Allende, who wrote a foreword for the English-language edition of “Open Veins.” In it, she describes how she “devoured” the book as a young woman “with such emotion that I had to read it again a couple more times to absorb all its meaning” and took it into exile after Gen. Augusto Pinochet seized power.

“I had dinner with him less than a year ago, and to me, he was the same man, passionate and talkative and interesting and funny,” she said of Mr. Galeano in a telephone interview from California, where she now lives. “He may have changed, and I didn’t notice it, but I don’t think so.”

In the mid-1990s, three advocates of free-market policies — the Colombian writer and diplomat Plinio Apuleyo Mendoza, the exiled Cuban author Carlos Alberto Montaner and the Peruvian journalist and author Álvaro Vargas Llosa — reacted to Mr. Galeano with a polemic of their own, “Guide to the Perfect Latin American Idiot.” They dismissed “Open Veins” as “the idiot’s bible,” and reduced its thesis to a single sentence: “We’re poor; it’s their fault.”

Mr. Montaner responded to Mr. Galeano’s recent remarks with a blog post titled “Galeano Corrects Himself and the Idiots Lose Their Bible.” In Brazil,Rodrigo Constantino, the author of “The Caviar Left,” took an even harsher tone, blaming Mr. Galeano’s analysis and prescription for many of Latin America’s ills. “He should feel really guilty for the damage he caused,” he wrote on his blog.

But Mr. Galeano continues to have defenders. In a discussion on the website of the Spanish newspaper El País, one participant noted that in a world dominated by Apple, Samsung, Siemens, Panasonic, Sony and Airbus, Mr. Galeano’s lament that “the goddess of technology does not speak Spanish” seems even more prescient than in 1971.

And on his Facebook page, Camilo Egaña, a Cuban émigré who is the host of “Mirador Mundial” on CNN en Español, remembered meeting Mr. Galeano in Havana in the 1980s and hearing him tell a story about a man taking his son to the ocean for the first time. “In the face of that interminable blue, the child said to the man, ‘Daddy, help me to see,’ ” Mr. Egaña recalled.

“That is what Galeano has done with his book, 43 years after it having been published,” Mr. Egaña concluded. “Thank you.”

‘We Don’t Want to Die Again’: Yanomami Leader Kopenawa (Indian Country Today Media Network)

Courtesy Survival International. Davi Kopenawa, a Yanomami shaman, who has been fighting for his peoples rights for more than 20 years will be in California in April to speak about protecting the rainforest and his spiritual life. Kopenawa is seen here surrounded by Yanomami children.

5/16/14

“It’s very important to talk to everybody here. We don’t want what happened 500 years ago to happen again. We, the Yanomami people, don’t want to die again,” said Davi Kopenawa in an interview with ICTMN at the end of April.

Kopenawa, an internationally known advocate for the Yanomami people of Brazil and the rainforest, was in San Francisco at the end of April to meet with activists, scholars and political officials to alert them to an escalating crisis involving gold miners in Yanomami territory and to speak about his book “The Falling Sky.”

For the interview on April 25th, Kopenawa sat down with ICTMN along with his interpreter and friend, Fiona Watson, Research Director for Survival Internationaland longtime ally of the Yanomami and other indigenous peoples of Brazil.

During the 35 minute conversation Kopenawa began by asserting how dangerous the gold mining operations have been for the people and the environment in their territory.

“The gold miners are people with lots of vices. They bring alcohol, they bring illnesses. They couldn’t find jobs in the cities and got no help from the government and the only thing they want to do is get gold from Indigenous Peoples territories. They have spread all over our land.

“The gold miners (garimpeiros) only work in the rivers,” he explained. “They use mercury to clean and separate the gold from the sand. When they wash the gold with mercury, the mercury sinks to the bottom of the river bed. The communities who live downstream use this water for drinking, washing and bathing. The fish also swallow mercury when they are eating which in turn affects the people who eat the fish. So the Yanomami get ill from mercury poisoning. That’s how the mercury contaminates our place.”

Kopenawa also emphasized that there are laws currently being proposed in Brazil that would make it easier for miners and others to invade indigenous territories. Watson noted that the indigenous communities and their allies such as SI are very worried about three potential laws in particular: PEC 215 is a constitutional amendment that would allow congress, which has members influenced by a strong anti-indigenous lobby, to be involved with demarcation of land; Portaria 303 which would prohibit extending any indigenous territory and that indigenous rights to use their resources would not extend to preventing large scale hydro-electric and mining projects; and Law Project 1610 would open up all indigenous territories to large scale mining (and there were already hundreds of petitions to start mining in Yanomani territory).

“I will talk about these things,” Kopenawa said in regards to his then upcoming presentations (he later spoke with California Governor Jerry Brown about the mining issues).

“I want to talk about the concerns of the Yanomami people. We are beginning to get nervous and sad because the government is preparing to invade our territory even though it is demarcated and recognized by law.”

He stated that his book, “The Falling Sky,” explains those concerns and how the Yanomami are guardians of their region of the earth.

“It is important to explain this to the city people who know about their land and mountains and places but we Yanomami needed a book to explain things to white people so they would know our story. We are guardians of the knowledge of our region of earth, of the mountains and the rivers. For us, the forest is a thing of great beauty and it is our story. Some white people think that the Yanomami know nothing, so for this reason I thought about writing a book about the traditional knowledge of the Yanomami, my people.”

At the end of the interview, Kopenawa re-iterated his principal message to the people of the United States.

“All we Indigenous Peoples in Brazil are very worried because of the project to mine in the Yanomami’s territory and in the territories of other indigenous brothers and sisters. We Yanomami people don’t want mining because we don’t want to suffer and die of the white peoples’ diseases. Mining will not bring positive benefits to the Indigenous Peoples. It will only bring a lot of diseases and problems and fights with the indigenous people. For this reason all we Indigenous Peoples are against mining.

“I, Davi Kopenawa Yanomami, an indigenous leader, ask for support from the American people not to allow mining to start in the Yanomami territory. I would like you to help to defend the lungs of the earth. I thank you for your strength. Thank you very much.”

Read more athttp://indiancountrytodaymedianetwork.com/2014/05/16/yanomami-leader-kopenawa-we-dont-want-die-again-154849

Crazy Climate Economics (New York Times)

MAY 11, 2014

Paul Krugman

Everywhere you look these days, you see Marxism on the rise. Well, O.K., maybe you don’t — but conservatives do. If you so much as mention income inequality, you’ll be denounced as the second coming of Joseph Stalin; Rick Santorum has declared that any use of the word “class” is “Marxism talk.” In the right’s eyes, sinister motives lurk everywhere — for example, George Will says the only reason progressives favor trains is their goal of “diminishing Americans’ individualism in order to make them more amenable to collectivism.”

So it goes without saying that Obamacare, based on ideas originally developed at the Heritage Foundation, is a Marxist scheme — why, requiring that people purchase insurance is practically the same as sending them to gulags.

And just wait until the Environmental Protection Agency announces rules intended to slow the pace of climate change.

Until now, the right’s climate craziness has mainly been focused on attacking the science. And it has been quite a spectacle: At this point almost all card-carrying conservatives endorse the view that climate change is a gigantic hoax, that thousands of research papers showing a warming planet — 97 percent of the literature — are the product of a vast international conspiracy. But as the Obama administration moves toward actually doing something based on that science, crazy climate economics will come into its own.

You can already get a taste of what’s coming in the dissenting opinions from a recent Supreme Court ruling on power-plant pollution. A majority of the justices agreed that the E.P.A. has the right to regulate smog from coal-fired power plants, which drifts across state lines. But Justice Scalia didn’t just dissent; he suggested that the E.P.A.’s proposed rule — which would tie the size of required smog reductions to cost — reflected the Marxist concept of “from each according to his ability.” Taking cost into consideration is Marxist? Who knew?

And you can just imagine what will happen when the E.P.A., buoyed by the smog ruling, moves on to regulation of greenhouse gas emissions.

What do I mean by crazy climate economics?

First, we’ll see any effort to limit pollution denounced as a tyrannical act. Pollution wasn’t always a deeply partisan issue: Economists in the George W. Bush administration wrote paeans to “market based” pollution controls, and in 2008 John McCain made proposals for cap-and-trade limits on greenhouse gases part of his presidential campaign. But when House Democrats actually passed a cap-and-trade bill in 2009, it was attacked as, you guessed it, Marxist. And these days Republicans come out in force to oppose even the most obviously needed regulations, like the plan to reduce the pollution that’s killing Chesapeake Bay.

Second, we’ll see claims that any effort to limit emissions will have what Senator Marco Rubio is already calling “a devastating impact on our economy.”

Why is this crazy? Normally, conservatives extol the magic of markets and the adaptability of the private sector, which is supposedly able to transcend with ease any constraints posed by, say, limited supplies of natural resources. But as soon as anyone proposes adding a few limits to reflect environmental issues — such as a cap on carbon emissions — those all-capable corporations supposedly lose any ability to cope with change.

Now, the rules the E.P.A. is likely to impose won’t give the private sector as much flexibility as it would have had in dealing with an economywide carbon cap or emissions tax. But Republicans have only themselves to blame: Their scorched-earth opposition to any kind of climate policy has left executive action by the White House as the only route forward.

Furthermore, it turns out that focusing climate policy on coal-fired power plants isn’t bad as a first step. Such plants aren’t the only source of greenhouse gas emissions, but they’re a large part of the problem — and the best estimates we have of the path forward suggest that reducing power-plant emissions will be a large part of any solution.

What about the argument that unilateral U.S. action won’t work, because China is the real problem? It’s true that we’re no longer No. 1 in greenhouse gases — but we’re still a strong No. 2. Furthermore, U.S. action on climate is a necessary first step toward a broader international agreement, which will surely include sanctions on countries that don’t participate.

So the coming firestorm over new power-plant regulations won’t be a genuine debate — just as there isn’t a genuine debate about climate science. Instead, the airwaves will be filled with conspiracy theories and wild claims about costs, all of which should be ignored. Climate policy may finally be getting somewhere; let’s not let crazy climate economics get in the way.

Why We’re in a New Gilded Age (The New York Review of Books)

Paul Krugman

MAY 8, 2014 ISSUE

Capital in the Twenty-First Century
by Thomas Piketty, translated from the French by Arthur Goldhammer
Belknap Press/Harvard University Press, 685 pp., $39.95

 

krugman_1-050814

Thomas Piketty in his office at the Paris School of Economics, 2013. Emmanuelle Marchadour

Thomas Piketty, professor at the Paris School of Economics, isn’t a household name, although that may change with the English-language publication of his magnificent, sweeping meditation on inequality, Capital in the Twenty-First Century. Yet his influence runs deep. It has become a commonplace to say that we are living in a second Gilded Age—or, as Piketty likes to put it, a second Belle Époque—defined by the incredible rise of the “one percent.” But it has only become a commonplace thanks to Piketty’s work. In particular, he and a few colleagues (notably Anthony Atkinson at Oxford and Emmanuel Saez at Berkeley) have pioneered statistical techniques that make it possible to track the concentration of income and wealth deep into the past—back to the early twentieth century for America and Britain, and all the way to the late eighteenth century for France.

The result has been a revolution in our understanding of long-term trends in inequality. Before this revolution, most discussions of economic disparity more or less ignored the very rich. Some economists (not to mention politicians) tried to shout down any mention of inequality at all: “Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution,” declared Robert Lucas Jr. of the University of Chicago, the most influential macroeconomist of his generation, in 2004. But even those willing to discuss inequality generally focused on the gap between the poor or the working class and the merely well-off, not the truly rich—on college graduates whose wage gains outpaced those of less-educated workers, or on the comparative good fortune of the top fifth of the population compared with the bottom four fifths, not on the rapidly rising incomes of executives and bankers.

It therefore came as a revelation when Piketty and his colleagues showed that incomes of the now famous “one percent,” and of even narrower groups, are actually the big story in rising inequality. And this discovery came with a second revelation: talk of a second Gilded Age, which might have seemed like hyperbole, was nothing of the kind. In America in particular the share of national income going to the top one percent has followed a great U-shaped arc. Before World War I the one percent received around a fifth of total income in both Britain and the United States. By 1950 that share had been cut by more than half. But since 1980 the one percent has seen its income share surge again—and in the United States it’s back to what it was a century ago.

Still, today’s economic elite is very different from that of the nineteenth century, isn’t it? Back then, great wealth tended to be inherited; aren’t today’s economic elite people who earned their position? Well, Piketty tells us that this isn’t as true as you think, and that in any case this state of affairs may prove no more durable than the middle-class society that flourished for a generation after World War II. The big idea of Capital in the Twenty-First Century is that we haven’t just gone back to nineteenth-century levels of income inequality, we’re also on a path back to “patrimonial capitalism,” in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties.

It’s a remarkable claim—and precisely because it’s so remarkable, it needs to be examined carefully and critically. Before I get into that, however, let me say right away that Piketty has written a truly superb book. It’s a work that melds grand historical sweep—when was the last time you heard an economist invoke Jane Austen and Balzac?—with painstaking data analysis. And even though Piketty mocks the economics profession for its “childish passion for mathematics,” underlying his discussion is a tour de force of economic modeling, an approach that integrates the analysis of economic growth with that of the distribution of income and wealth. This is a book that will change both the way we think about society and the way we do economics.

1.

What do we know about economic inequality, and about when do we know it? Until the Piketty revolution swept through the field, most of what we knew about income and wealth inequality came from surveys, in which randomly chosen households are asked to fill in a questionnaire, and their answers are tallied up to produce a statistical portrait of the whole. The international gold standard for such surveys is the annual survey conducted once a year by the Census Bureau. The Federal Reserve also conducts a triennial survey of the distribution of wealth.

These two surveys are an essential guide to the changing shape of American society. Among other things, they have long pointed to a dramatic shift in the process of US economic growth, one that started around 1980. Before then, families at all levels saw their incomes grow more or less in tandem with the growth of the economy as a whole. After 1980, however, the lion’s share of gains went to the top end of the income distribution, with families in the bottom half lagging far behind.

Historically, other countries haven’t been equally good at keeping track of who gets what; but this situation has improved over time, in large part thanks to the efforts of the Luxembourg Income Study (with which I will soon be affiliated). And the growing availability of survey data that can be compared across nations has led to further important insights. In particular, we now know both that the United States has a much more unequal distribution of income than other advanced countries and that much of this difference in outcomes can be attributed directly to government action. European nations in general have highly unequal incomes from market activity, just like the United States, although possibly not to the same extent. But they do far more redistribution through taxes and transfers than America does, leading to much less inequality in disposable incomes.

Yet for all their usefulness, survey data have important limitations. They tend to undercount or miss entirely the income that accrues to the handful of individuals at the very top of the income scale. They also have limited historical depth. Even US survey data only take us to 1947.

Enter Piketty and his colleagues, who have turned to an entirely different source of information: tax records. This isn’t a new idea. Indeed, early analyses of income distribution relied on tax data because they had little else to go on. Piketty et al. have, however, found ways to merge tax data with other sources to produce information that crucially complements survey evidence. In particular, tax data tell us a great deal about the elite. And tax-based estimates can reach much further into the past: the United States has had an income tax since 1913, Britain since 1909. France, thanks to elaborate estate tax collection and record-keeping, has wealth data reaching back to the late eighteenth century.

Exploiting these data isn’t simple. But by using all the tricks of the trade, plus some educated guesswork, Piketty is able to produce a summary of the fall and rise of extreme inequality over the course of the past century. It looks like Table 1 on this page.

As I said, describing our current era as a new Gilded Age or Belle Époque isn’t hyperbole; it’s the simple truth. But how did this happen?

krugman_2-050814

2.

Piketty throws down the intellectual gauntlet right away, with his book’s very title:Capital in the Twenty-First Century. Are economists still allowed to talk like that?

It’s not just the obvious allusion to Marx that makes this title so startling. By invoking capital right from the beginning, Piketty breaks ranks with most modern discussions of inequality, and hearkens back to an older tradition.

The general presumption of most inequality researchers has been that earned income, usually salaries, is where all the action is, and that income from capital is neither important nor interesting. Piketty shows, however, that even today income from capital, not earnings, predominates at the top of the income distribution. He also shows that in the past—during Europe’s Belle Époque and, to a lesser extent, America’s Gilded Age—unequal ownership of assets, not unequal pay, was the prime driver of income disparities. And he argues that we’re on our way back to that kind of society. Nor is this casual speculation on his part. For all that Capital in the Twenty-First Century is a work of principled empiricism, it is very much driven by a theoretical frame that attempts to unify discussion of economic growth and the distribution of both income and wealth. Basically, Piketty sees economic history as the story of a race between capital accumulation and other factors driving growth, mainly population growth and technological progress.

To be sure, this is a race that can have no permanent victor: over the very long run, the stock of capital and total income must grow at roughly the same rate. But one side or the other can pull ahead for decades at a time. On the eve of World War I, Europe had accumulated capital worth six or seven times national income. Over the next four decades, however, a combination of physical destruction and the diversion of savings into war efforts cut that ratio in half. Capital accumulation resumed after World War II, but this was a period of spectacular economic growth—the Trente Glorieuses, or “Glorious Thirty” years; so the ratio of capital to income remained low. Since the 1970s, however, slowing growth has meant a rising capital ratio, so capital and wealth have been trending steadily back toward Belle Époque levels. And this accumulation of capital, says Piketty, will eventually recreate Belle Époque–style inequality unless opposed by progressive taxation.

Why? It’s all about r versus g—the rate of return on capital versus the rate of economic growth.

Just about all economic models tell us that if g falls—which it has since 1970, a decline that is likely to continue due to slower growth in the working-age population and slower technological progress—r will fall too. But Piketty asserts that r will fall less than g. This doesn’t have to be true. However, if it’s sufficiently easy to replace workers with machines—if, to use the technical jargon, the elasticity of substitution between capital and labor is greater than one—slow growth, and the resulting rise in the ratio of capital to income, will indeed widen the gap between r and g. And Piketty argues that this is what the historical record shows will happen.

If he’s right, one immediate consequence will be a redistribution of income away from labor and toward holders of capital. The conventional wisdom has long been that we needn’t worry about that happening, that the shares of capital and labor respectively in total income are highly stable over time. Over the very long run, however, this hasn’t been true. In Britain, for example, capital’s share of income—whether in the form of corporate profits, dividends, rents, or sales of property, for example—fell from around 40 percent before World War I to barely 20 percent circa 1970, and has since bounced roughly halfway back. The historical arc is less clear-cut in the United States, but here, too, there is a redistribution in favor of capital underway. Notably, corporate profits have soared since the financial crisis began, while wages—including the wages of the highly educated—have stagnated.

A rising share of capital, in turn, directly increases inequality, because ownership of capital is always much more unequally distributed than labor income. But the effects don’t stop there, because when the rate of return on capital greatly exceeds the rate of economic growth, “the past tends to devour the future”: society inexorably tends toward dominance by inherited wealth.

Consider how this worked in Belle Époque Europe. At the time, owners of capital could expect to earn 4–5 percent on their investments, with minimal taxation; meanwhile economic growth was only around one percent. So wealthy individuals could easily reinvest enough of their income to ensure that their wealth and hence their incomes were growing faster than the economy, reinforcing their economic dominance, even while skimming enough off to live lives of great luxury.

And what happened when these wealthy individuals died? They passed their wealth on—again, with minimal taxation—to their heirs. Money passed on to the next generation accounted for 20 to 25 percent of annual income; the great bulk of wealth, around 90 percent, was inherited rather than saved out of earned income. And this inherited wealth was concentrated in the hands of a very small minority: in 1910 the richest one percent controlled 60 percent of the wealth in France; in Britain, 70 percent.

No wonder, then, that nineteenth-century novelists were obsessed with inheritance. Piketty discusses at length the lecture that the scoundrel Vautrin gives to Rastignac in Balzac’s Père Goriot, whose gist is that a most successful career could not possibly deliver more than a fraction of the wealth Rastignac could acquire at a stroke by marrying a rich man’s daughter. And it turns out that Vautrin was right: being in the top one percent of nineteenth-century heirs and simply living off your inherited wealth gave you around two and a half times the standard of living you could achieve by clawing your way into the top one percent of paid workers.

You might be tempted to say that modern society is nothing like that. In fact, however, both capital income and inherited wealth, though less important than they were in the Belle Époque, are still powerful drivers of inequality—and their importance is growing. In France, Piketty shows, the inherited share of total wealth dropped sharply during the era of wars and postwar fast growth; circa 1970 it was less than 50 percent. But it’s now back up to 70 percent, and rising. Correspondingly, there has been a fall and then a rise in the importance of inheritance in conferring elite status: the living standard of the top one percent of heirs fell below that of the top one percent of earners between 1910 and 1950, but began rising again after 1970. It’s not all the way back to Rasti-gnac levels, but once again it’s generally more valuable to have the right parents (or to marry into having the right in-laws) than to have the right job.

And this may only be the beginning. Figure 1 on this page shows Piketty’s estimates of global r and g over the long haul, suggesting that the era of equalization now lies behind us, and that the conditions are now ripe for the reestablishment of patrimonial capitalism.

krugman_3-050814

Given this picture, why does inherited wealth play as small a part in today’s public discourse as it does? Piketty suggests that the very size of inherited fortunes in a way makes them invisible: “Wealth is so concentrated that a large segment of society is virtually unaware of its existence, so that some people imagine that it belongs to surreal or mysterious entities.” This is a very good point. But it’s surely not the whole explanation. For the fact is that the most conspicuous example of soaring inequality in today’s world—the rise of the very rich one percent in the Anglo-Saxon world, especially the United States—doesn’t have all that much to do with capital accumulation, at least so far. It has more to do with remarkably high compensation and incomes.

3.

Capital in the Twenty-First Century is, as I hope I’ve made clear, an awesome work. At a time when the concentration of wealth and income in the hands of a few has resurfaced as a central political issue, Piketty doesn’t just offer invaluable documentation of what is happening, with unmatched historical depth. He also offers what amounts to a unified field theory of inequality, one that integrates economic growth, the distribution of income between capital and labor, and the distribution of wealth and income among individuals into a single frame.

And yet there is one thing that slightly detracts from the achievement—a sort of intellectual sleight of hand, albeit one that doesn’t actually involve any deception or malfeasance on Piketty’s part. Still, here it is: the main reason there has been a hankering for a book like this is the rise, not just of the one percent, but specifically of the American one percent. Yet that rise, it turns out, has happened for reasons that lie beyond the scope of Piketty’s grand thesis.

Piketty is, of course, too good and too honest an economist to try to gloss over inconvenient facts. “US inequality in 2010,” he declares, “is quantitatively as extreme as in old Europe in the first decade of the twentieth century, but the structure of that inequality is rather clearly different.” Indeed, what we have seen in America and are starting to see elsewhere is something “radically new”—the rise of “supersalaries.”

Capital still matters; at the very highest reaches of society, income from capital still exceeds income from wages, salaries, and bonuses. Piketty estimates that the increased inequality of capital income accounts for about a third of the overall rise in US inequality. But wage income at the top has also surged. Real wages for most US workers have increased little if at all since the early 1970s, but wages for the top one percent of earners have risen 165 percent, and wages for the top 0.1 percent have risen 362 percent. If Rastignac were alive today, Vautrin might concede that he could in fact do as well by becoming a hedge fund manager as he could by marrying wealth.

What explains this dramatic rise in earnings inequality, with the lion’s share of the gains going to people at the very top? Some US economists suggest that it’s driven by changes in technology. In a famous 1981 paper titled “The Economics of Superstars,” the Chicago economist Sherwin Rosen argued that modern communications technology, by extending the reach of talented individuals, was creating winner-take-all markets in which a handful of exceptional individuals reap huge rewards, even if they’re only modestly better at what they do than far less well paid rivals.

Piketty is unconvinced. As he notes, conservative economists love to talk about the high pay of performers of one kind or another, such as movie and sports stars, as a way of suggesting that high incomes really are deserved. But such people actually make up only a tiny fraction of the earnings elite. What one finds instead is mainly executives of one sort or another—people whose performance is, in fact, quite hard to assess or give a monetary value to.

Who determines what a corporate CEO is worth? Well, there’s normally a compensation committee, appointed by the CEO himself. In effect, Piketty argues, high-level executives set their own pay, constrained by social norms rather than any sort of market discipline. And he attributes skyrocketing pay at the top to an erosion of these norms. In effect, he attributes soaring wage incomes at the top to social and political rather than strictly economic forces.

Now, to be fair, he then advances a possible economic analysis of changing norms, arguing that falling tax rates for the rich have in effect emboldened the earnings elite. When a top manager could expect to keep only a small fraction of the income he might get by flouting social norms and extracting a very large salary, he might have decided that the opprobrium wasn’t worth it. Cut his marginal tax rate drastically, and he may behave differently. And as more and more of the supersalaried flout the norms, the norms themselves will change.

There’s a lot to be said for this diagnosis, but it clearly lacks the rigor and universality of Piketty’s analysis of the distribution of and returns to wealth. Also, I don’t thinkCapital in the Twenty-First Century adequately answers the most telling criticism of the executive power hypothesis: the concentration of very high incomes in finance, where performance actually can, after a fashion, be evaluated. I didn’t mention hedge fund managers idly: such people are paid based on their ability to attract clients and achieve investment returns. You can question the social value of modern finance, but the Gordon Gekkos out there are clearly good at something, and their rise can’t be attributed solely to power relations, although I guess you could argue that willingness to engage in morally dubious wheeling and dealing, like willingness to flout pay norms, is encouraged by low marginal tax rates.

Overall, I’m more or less persuaded by Piketty’s explanation of the surge in wage inequality, though his failure to include deregulation is a significant disappointment. But as I said, his analysis here lacks the rigor of his capital analysis, not to mention its sheer, exhilarating intellectual elegance.

Yet we shouldn’t overreact to this. Even if the surge in US inequality to date has been driven mainly by wage income, capital has nonetheless been significant too. And in any case, the story looking forward is likely to be quite different. The current generation of the very rich in America may consist largely of executives rather than rentiers, people who live off accumulated capital, but these executives have heirs. And America two decades from now could be a rentier-dominated society even more unequal than Belle Époque Europe.

But this doesn’t have to happen.

4.

At times, Piketty almost seems to offer a deterministic view of history, in which everything flows from the rates of population growth and technological progress. In reality, however, Capital in the Twenty-First Century makes it clear that public policy can make an enormous difference, that even if the underlying economic conditions point toward extreme inequality, what Piketty calls “a drift toward oligarchy” can be halted and even reversed if the body politic so chooses.

The key point is that when we make the crucial comparison between the rate of return on wealth and the rate of economic growth, what matters is the after-tax return on wealth. So progressive taxation—in particular taxation of wealth and inheritance—can be a powerful force limiting inequality. Indeed, Piketty concludes his masterwork with a plea for just such a form of taxation. Unfortunately, the history covered in his own book does not encourage optimism.

It’s true that during much of the twentieth century strongly progressive taxation did indeed help reduce the concentration of income and wealth, and you might imagine that high taxation at the top is the natural political outcome when democracy confronts high inequality. Piketty, however, rejects this conclusion; the triumph of progressive taxation during the twentieth century, he contends, was “an ephemeral product of chaos.” Absent the wars and upheavals of Europe’s modern Thirty Years’ War, he suggests, nothing of the kind would have happened.

As evidence, he offers the example of France’s Third Republic. The Republic’s official ideology was highly egalitarian. Yet wealth and income were nearly as concentrated, economic privilege almost as dominated by inheritance, as they were in the aristocratic constitutional monarchy across the English Channel. And public policy did almost nothing to oppose the economic domination by rentiers: estate taxes, in particular, were almost laughably low.

Why didn’t the universally enfranchised citizens of France vote in politicians who would take on the rentier class? Well, then as now great wealth purchased great influence—not just over policies, but over public discourse. Upton Sinclair famously declared that “it is difficult to get a man to understand something when his salary depends on his not understanding it.” Piketty, looking at his own nation’s history, arrives at a similar observation: “The experience of France in the Belle Époque proves, if proof were needed, that no hypocrisy is too great when economic and financial elites are obliged to defend their interest.”

The same phenomenon is visible today. In fact, a curious aspect of the American scene is that the politics of inequality seem if anything to be running ahead of the reality. As we’ve seen, at this point the US economic elite owes its status mainly to wages rather than capital income. Nonetheless, conservative economic rhetoric already emphasizes and celebrates capital rather than labor—“job creators,” not workers.

In 2012 Eric Cantor, the House majority leader, chose to mark Labor Day—Labor Day!—with a tweet honoring business owners:

Today, we celebrate those who have taken a risk, worked hard, built a business and earned their own success.

Perhaps chastened by the reaction, he reportedly felt the need to remind his colleagues at a subsequent GOP retreat that most people don’t own their own businesses—but this in itself shows how thoroughly the party identifies itself with capital to the virtual exclusion of labor.

Nor is this orientation toward capital just rhetorical. Tax burdens on high-income Americans have fallen across the board since the 1970s, but the biggest reductions have come on capital income—including a sharp fall in corporate taxes, which indirectly benefits stockholders—and inheritance. Sometimes it seems as if a substantial part of our political class is actively working to restore Piketty’s patrimonial capitalism. And if you look at the sources of political donations, many of which come from wealthy families, this possibility is a lot less outlandish than it might seem.

Piketty ends Capital in the Twenty-First Century with a call to arms—a call, in particular, for wealth taxes, global if possible, to restrain the growing power of inherited wealth. It’s easy to be cynical about the prospects for anything of the kind. But surely Piketty’s masterly diagnosis of where we are and where we’re heading makes such a thing considerably more likely. So Capital in the Twenty-First Century is an extremely important book on all fronts. Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.

O futuro de nosso planeta depende de 58 pessoas (IPS)

28/4/2014 – 11h23

por Roberto Savio, da IPS

RSavio0976 O futuro de nosso planeta depende de 58 pessoas

Roma, Itália, abril/2014 – Embora para muitos tenha passado inadvertidamente, o Grupo Intergovernamental de Especialistas sobre Mudança Climática (IPCC) publicou, no dia 13 de abril, a terceira e última parte de um informe no qual adverte sem rodeios que temos apenas 15 anos para evitar ultrapassar a barreira de um aquecimento global de dois graus. Além disso, as consequências serão dramáticas.

Somente os mais míopes não tomam consciência do que se trata: aumento do nível do mar, furacões e tempestades mais frequentes e um impacto adverso na produção de alimentos.

Em um mundo normal e participativo, no qual 83% das pessoas que vivem hoje ainda existirão dentro de 15 anos, esse informe teria provocado uma reação dramática.

Entretanto, não houve um único comentário dos líderes dos 196 países nos quais habitam os 7,5 bilhões de “consumidores” do planeta.

Os antropólogos que estudam as semelhanças e diferenças entre os seres humanos e outros animais há um bom tempo chegaram à conclusão de que a humanidade não é superior em todos os aspectos.

Por exemplo, o ser humano é menos adaptável à sobrevivência do que muitos animais em casos de terremotos, furacões e outros desastres naturais. A esta altura, eles devem manifestar sintomas de alerta e mal-estar.

O primeiro volume desse informe do IPCC, divulgado em setembro de 2013 em Estocolmo, estabelece que os humanos são a causa principal do aquecimento global, enquanto a segunda parte, apresentada em Yokohama no dia 31 de março, afirma que “nas últimas décadas as mudanças climáticas causaram impactos nos sistemas naturais e humanos em todos os continentes e em todos os oceanos”.

O IPCC é formado por mais de dois mil cientistas de todo o mundo e essa é a primeira vez que chega a firmes conclusões finais desde sua criação pelas Nações Unidas, em 1988. A principal conclusão é que, para deter a corrida rumo a um ponto sem volta, as emissões globais devem cair entre 40% e 70% antes de 2050.

O informe adverte que “só as grandes mudanças institucionais e tecnológicas darão uma oportunidade superior a 50%” para o aquecimento global não ultrapassar o limite de segurança, e acrescenta que as medidas devem começar, no mais tardar, em 15 anos, completando-se em 35.

Vale a pena assinalar que dois terços da humanidade têm menos de 21 anos e em grande parte são eles que terão que suportar os enormes custos da luta contra a mudança climática.

A principal recomendação do IPCC é muito simples: as principais economias devem fixar um imposto sobre a contaminação com dióxido de carbono, elevando o custo dos combustíveis fósseis, para impulsionar o mercado de fontes de energias limpas, como a eólica, solar ou nuclear.

Dez países são causadores de 70% do total da contaminação mundial de gases-estufa, sendo que Estados Unidos e China respondem por 55% desse total.

Ambos estão tomando medidas sérias para combater a contaminação.

O presidente norte-americano, Barack Obama, tentou em vão obter o beneplácito do Senado e teve que exercer sua autoridade sob a Lei de Ar Limpo de 1970 para reduzir a contaminação de carbono dos veículos e instalações industriais, estimulando as tecnologias limpas. Mas não pode fazer mais nada sem apoio do Senado.

O todo poderoso presidente da China, Xi Jinping, considera prioritário o ambiente, em parte porque fontes oficiais estimam em cinco milhões anuais o número de mortes nesse país em razão da contaminação.

Mas a China precisa de carvão para seu crescimento, e a postura de Xi é: “por que deveríamos frear nosso desenvolvimento, quando os países ricos que criaram o problema atual querem que tomemos medidas que atrasam nosso crescimento?”.

Dessa forma, cria-se um círculo vicioso. Os países do Sul querem que as nações ricas financiem seus custos de redução da contaminação e os do Norte querem que esses deixem de contaminar e assumam seus próprios custos.

Como resultado, o resumo do informe, que destina-se aos governantes, foi despojado das premissas que poderiam dar a entender a necessidade de o Sul fazer mais, enquanto os países ricos pressionaram para evitar uma linguagem que pudesse ser interpretada como a necessidade de eles assumirem as obrigações financeiras.

Isso deveria facilitar um compromisso brando na próxima Conferência das Nações Unidas sobre Mudança Climática, em Lima, onde se deveria alcançar um novo acordo global (lembremos o desastre da conferência de Copenhague, em 2009).

A chave de qualquer acordo está nas mãos dos Estados Unidos. O Congresso desse país bloqueia toda iniciativa sobre o controle climático, proporcionando uma saída fácil para China, Índia e o resto dos contaminadores: “por que devemos assumir compromissos e sacrifícios se os Estados Unidos não participam?”.

O problema é que os republicanos converteram a mudança climática em uma de suas bandeiras de identidade. A última vez que se propôs um imposto sobre o carbono, em 2009, depois de um voto positivo na Câmara de Representantes, controlada pelos democratas, o Senado, dominado pelos republicanos, o rejeitou.

Nas eleições de 2010, uma série de políticos que votaram a favor do imposto sobre carbono perderam suas cadeiras, o que contribuiu para que os republicanos assumissem o controle da Câmara.

Agora, a única esperança para os que querem uma mudança é aguardar as eleições de 2016 e esperar que o novo presidente norte-americano seja capaz de mudar a situação. Esse é um bom exemplo do que os gregos antigos diziam: que a esperança é a última deusa…

O quadro é muito simples. O Senado dos Estados Unidos tem cem integrantes, o que significa que bastam 51 votos para liquidar qualquer projeto de lei de imposto sobre os combustíveis fosseis.

Na China, a situação é diferente. Na melhor das hipóteses, as decisões são tomadas pelo Comitê Permanente do Comitê Central, formado por sete membros, que são o verdadeiro poder no Partido Comunista.

Em outras palavras, o futuro de nosso planeta é decidido por 58 pessoas de uma população de quase 7,7 bilhões de habitantes. Envolverde/IPS

Roberto Savio é fundador e presidente emérito da agência de notícias Inter Press Service (IPS) e editor do Other News.

(IPS)

Taking On Adam Smith (and Karl Marx) (New York Times)

By STEVEN ERLANGER

APRIL 19, 2014

PARIS — Thomas Piketty turned 18 in 1989, when the Berlin Wall fell, so he was spared the tortured, decades-long French intellectual debate about the virtues and vices of communism. Even more telling, he remembers, was a trip he took with a close friend to Romania in early 1990, after the collapse of the Soviet empire.

“This sort of vaccinated me for life against lazy, anticapitalist rhetoric, because when you see these empty shops, you see these people queuing for nothing in the street,” he said, “it became clear to me that we need private property and market institutions, not just for economic efficiency but for personal freedom.”

But his disenchantment with communism doesn’t mean that Mr. Piketty has turned his back on the intellectual heritage of Karl Marx, who sought to explain the “iron laws” of capitalism. Like Marx, he is fiercely critical of the economic and social inequalities that untrammeled capitalism produces — and, he concludes, will continue to worsen. “I belong to a generation that never had any temptation with the Communist Party; I was too young for that,” Mr. Piketty said, in a long interview in his small, airless office here at the Paris School of Economics. “So it’s easier in a way to reopen these big issues about capitalism and inequality with a fresh eye, because I was too young for that fight. I don’t have to justify myself as being pro-communist or pro-capitalist.”

In his new book “Capital in the Twenty-First Century” (Harvard University Press), Mr. Piketty, 42, has written a blockbuster, at least in the world of economics. His book punctures earlier assumptions about the benevolence of advanced capitalism and forecasts sharply increasing inequality of wealth in industrialized countries, with deep and deleterious impact on democratic values of justice and fairness.

Branko Milanovic, a former economist at the World Bank, called it “one of the watershed books in economic thinking.” Paul Krugman, winner of the Nobel in economic science and a columnist for The New York Times, wrote that it “will be the most important economics book of the year — and maybe of the decade.” Remarkably for a book on such a weighty topic, it has already entered The New York Times’s best-seller list.

“Capital in the Twenty-First Century,” with its title echoing Marx’s “Das Kapital,” is meant to be a return to the kind of economic history, of political economy, written by predecessors like Marx and Adam Smith. It is nothing less than a broad effort to understand Western societies and the economic rules that underpin them. And in the process, by debunking the idea that “wealth raises all boats,” Mr. Piketty has thrown down a challenge to democratic governments to deal with an increasing gap between the rich and the poor — the very theme of inequality that recently moved both Pope Francis and President Obama to warn of its consequences.

Mr. Piketty — pronounced pee-ket-ee — grew up in a political home, with left-wing parents who were part of the 1968 demonstrations that turned traditional France upside down. Later, they went off to the Aude, deep in southern France, to raise goats. His parents are not a topic he wants to discuss. More relevant and important, he said, are his generation’s “founding experiences”: the collapse of Communism, the economic degradation of Eastern Europe and the first Gulf War, in 1991.

Those events motivated him to try to understand a world where economic ideas had such bad consequences. As for the Gulf War, it showed him that “governments can do a lot in terms of redistribution of wealth when they want.” The rapid intervention to force Saddam Hussein to unhand Kuwait and its oil was a remarkable show of concerted political will, Mr. Piketty said. “If we are able to send one million troops to Kuwait in a few months to return the oil, presumably we can do something about tax havens.”

Would he want to send troops to Guernsey, the lightly populated tax haven in the English Channel? Mr. Piketty, soft-spoken, barely laughed. “We don’t even have to do that — just simple basic trade policy, trade sanctions, would do the trick right away,” he said.

A top student, Mr. Piketty took a conventional path toward the French elite, being admitted to the rarefied École Normale Supérieure at 18. His doctoral dissertation on the theory of redistribution of wealth, completed at 22, won prizes. He then decamped to teach economics at the Massachusetts Institute of Technology before returning two years later to France, disappointed with the study of economics in America.

“My Ph.D. is mostly about pure economic theory because that was the easiest thing to do, and I was hired at M.I.T. as a young assistant professor doing economic theory,” he said. “I was young and successful at doing this, so it was an easy way. But very quickly I realized that there was little serious effort at collecting historical data on income and wealth, so that’s what I started doing.”

Academic economics is so focused on getting the econometrics and the statistical interpolation technique correct, he said, “you don’t really think, you don’t dare to ask the big questions.” American economists too often narrow the questions they examine to those they can answer, “but sometimes the questions are not that interesting,” he said. “Trying to write a real book that could speak to everyone meant I could not choose my questions. I had to take the important issues in a frontal manner — I could not escape.”

He hated the insularity of the economics department. So he decided to write large, a book he considers as much history as economics, and one that is constructed to lead the general reader by the hand.

He is also not afraid of literature, finding inspiration in the descriptions of society in the realist novels of Jane Austen and Balzac. Wealth was best achieved in these stories through a clever marriage; everyone knew that inherited land and capital was the only way to live well, since labor alone would not produce sufficient income. He wondered how that assumption had changed.

As he extended his work on France to the United States in collaboration with Emmanuel Saez, a professor of economics at the University of California, Berkeley, he saw that the patterns of the early 20th century — “the top 10 percent of the distribution was full of rental income, dividend income, interest income” — seemed less prevalent from the 1970s through the early 1990s.

“It took me a long time to realize that in effect we were returning slowly in the direction of the previous equilibrium, and that we were part of a long transitory process,” he said. When he started working on the issue in the late 1990s, “there was no way this could be understood so clearly — having 20 additional years of data makes a big difference to understanding the postwar period.”

His findings, aided by the power of modern computers, are based on centuries of statistics on wealth accumulation and economic growth in advanced industrial countries. They are also rather simply stated: The rate of growth of income from capital is several times larger than the rate of economic growth, meaning a comparatively shrinking share going to income earned from wages, which rarely increase faster than overall economic activity. Inequality surges when population and the economy grow slowly.

Mr. Piketty’s work is a challenge both to Marxism and laissez-faire economics. The book’s core finding, based on centuries of data, is that the rate of growth of income from capital is several times larger than the rate of economic growth, meaning a shrinking share going to income earned from wages. CreditEd Alcock for The New York Times

The reason that postwar economies looked different — that inequality fell — was historical catastrophe. World War I, the Depression and World War II destroyed huge accumulations of private capital, especially in Europe. What the French call “les trentes glorieuses” — the roughly 30 postwar years of rapid economic growth and shrinking inequality — were a rebound. The American curve, of course, is less sharp, given that the fighting was elsewhere.

A higher than normal rate of population and economic growth helped reduce inequality, along with higher taxes on the wealthy. But the professional and political assumption of the 1950s and 1960s, that inequality would stabilize and diminish on its own, proved to be an illusion. We are now back to a traditional pattern of returns on capital of 4 percent to 5 percent a year and rates of economic growth of around 1.5 percent a year.

So inequality has been quickly gathering pace, aided to some degree by the Reagan and Thatcher doctrines of tax cuts for the wealthy. “Trickle-down economics could have been true,” Mr. Piketty said simply. “It just happened to be wrong.”

His work is a challenge both to Marxism and laissez-faire economics, which “both count on pure economic forces for harmony or justice to prevail,” he said. While Marx presumed that the rate of return on capital, because of the system’s contradictions, would fall close to zero, bringing collapse and revolution, Mr. Piketty is saying the opposite. “The rate of return to capital can be bigger than the growth rate forever — this is actually what we’ve had for most of human history, and there are good reasons to believe we will have it in the future.”

In 2012 the top 1 percent of American households collected 22.5 percent of the nation’s income, the highest total since 1928. The richest 10 percent of Americans now take a larger slice of the pie than in 1913, at the close of the Gilded Age, owning more than 70 percent of the nation’s wealth. And half of that is owned by the top 1 percent.

Mr. Piketty, father of three daughters — 11, 13 and 16 — is no revolutionary. He is a member of no political party, and says he never served as an economic adviser to any politician. He calls himself a pragmatist, who simply follows the data.

But he accepts that his work is essentially political, and he is highly critical of the huge management salaries now in vogue, saying that “the idea that you need people making 10 million in compensation to work is pure ideology.”

Inequality by itself is acceptable, he says, to the extent it spurs individual initiative and wealth-generation that, with the aid of progressive taxation and other measures, helps makes everyone in society better off. “I have no problem with inequality as long as it is in the common interest,” he said.

But like the Columbia University economist Joseph E. Stiglitz, he argues that extreme inequality “threatens our democratic institutions.” Democracy is not just one citizen, one vote, but a promise of equal opportunity.

“It’s very difficult to make a democratic system work when you have such extreme inequality” in income, he said, “and such extreme inequality in terms of political influence and the production of knowledge and information. One of the big lessons of the 20th century is that we don’t need 19th-century inequality to grow.” But that’s just where the capitalist world is heading again, he concludes.

Mr. Saez, his collaborator, said that “Thomas combines great perfectionism with great impatience — he both wants to do things well and do things fast.” He added that Mr. Piketty has “incredible intuition for economics.”

The last part of the book presents Mr. Piketty’s policy ideas. He favors a progressive global tax on real wealth (minus debt), with the proceeds not handed to inefficient governments but redistributed to those with less capital. “We just want a way to share the tax burden that is fair and practical,” he said.

Net wealth is a better indicator of ability to pay than income alone, he said. “All I’m proposing is to reduce the property tax on half or three-quarters of the population who have very little wealth,” he said.

Published a year ago in French, the book is not without critics, especially of Mr. Piketty’s policy prescriptions, which have been called politically naïve. Others point out that some of the increase in capital is because of aging populations and postwar pension plans, which are not necessarily inherited.

More criticism is sure to come, and Mr. Piketty says he welcomes it. “I’m certainly looking forward to the debate.”

Economist Receives Rock Star Treatment (New York Times)

But those halls of power are where Thomas Piketty, a 42-year-old professor at the Paris School of Economics, has been singing his song of late.

Since touching down in Washington this week to promote his new book, “Capital in the 21st Century,” Mr. Piketty has met with Treasury Secretary Jacob Lew, given a talk to President Obama’s Council of Economic Advisers and lectured at the International Monetary Fund, before flying to New York for an appearance at the United Nations, a sold-out public discussion with the Nobel laureates Joseph Stiglitz and Paul Krugman, and meetings with media outlets ranging from The Harvard Business Review to New York Magazine to The Nation.

The response from  fellow economists, so far mainly from the liberal side of the spectrum, has verged on the rapturous. Mr. Krugman,  a columnist for The New York Times, predicted in The New York Review of Books that Mr. Piketty’s book would “change both the way we think about society and the way we do economics.”

Thomas Piketty at one of his New York talks this week. CreditKarsten Moran for The New York Times

But through all the accolades, Mr. Piketty seems to be maintaining a most un-rock-star-like modesty, brushing away comparisons to Tocqueville and Marx with an embarrassed grimace and a Gallic puff of the lips.

“It makes very little sense: How can you compare?” he said on Thursday between gulps of yogurt during a break in his packed schedule — before going on to list the 19th-century data sets that Marx neglected to draw on in “Das Kapital,” his 1867 magnum opus.

“If Marx had looked at them, it would have made him think a bit more,” he said. “When I started collecting data, I had no idea where it would go.”

Mr. Piketty’s dedication to data has long made him a star among economists, who credit hiswork on income inequality (with Emmanuel Saez and others) for diving deep into seemingly dull tax archives to bring an unprecedented historical perspective to the subject.

But “Capital in the 21st Century,” which analyzes more than two centuries of data on the even murkier topic of accumulated wealth, has elicited a response of an entirely different order. Months before its originally scheduled April publication, it was generating intense discussion on blogs, prompting Harvard University Press to push the release forward to mid-February.

Since then, it has hit the New York Times best-seller list, and sold some 46,000 copies (hardback and e-book) — a stratospheric number for a nearly 700-page scholarly tome dotted with charts and graphs (as well as references to Balzac, Jane Austen and “Titanic”).

And not all those readers are economists. Six years after the financial crisis, “people are looking for a bible of sorts,” said Julia Ott, an assistant professor of the history of capitalism at the New School, who appeared on a panel with Mr. Piketty at New York University on Thursday. “He’s speaking to a real feeling out there that things haven’t been fixed, that we need to take stock, that we need big ideas, big proposals, big global solutions.”

Mr. Piketty’s book on sale after he spoke Wednesday at the Graduate Center at the City University of New York. CreditKarsten Moran for The New York Times

Those big ideas, and the hunger for them, were on ample display at N.Y.U., where the standing-room crowd was treated to Mr. Piketty’s apology for having written such a long book, followed by a breakneck PowerPoint presentation of its main arguments, illustrated with striking charts.

At the book’s center is Mr. Piketty’s contention — contrary to the influential theory developed by Simon Kuznets in the 1950s and ’60s — that mature capitalist economies do not inevitably evolve toward greater economic equality. Instead, Mr. Piketty contends, the data reveals a deeper historical tendency for the rate of return on capital to outstrip the overall rate of economic growth, leading to greater and greater concentrations of wealth at the very top.

Despite this inevitable-seeming drift toward “patrimonial capitalism” that his charts seemed to show, Mr. Piketty rejected any economic determinism. “It all depends on what the political system decides,” he said.

Such statements, along with Mr. Piketty’s proposal for a progressive wealth tax and income tax rates up to 80 percent, have aroused strong interest among those eager to recapture the momentum of the Occupy movement. The Nation ran a nearly 10,000-word cover article placing his book within a rising tide of neo-Marxist thought, while National Review Online dismissed itas confirmation of the left’s “dearest ‘Das Kapital’ fantasies.”

But Mr. Piketty, who writes in the book that the collapse of Communism in 1989 left him “vaccinated for life” against the “lazy rhetoric of anticapitalism,” is no Marxian revolutionary. “I believe in private property,” he said in the interview. “But capitalism and markets should be the slave of democracy and not the opposite.”

Even if he doesn’t expect his policy proposals to find favor in Washington anytime soon, Mr. Piketty called his meetings there gratifying. Mr. Lew, he said, seemed to have read parts of the book carefully. A member of the Council on Economic Advisers corrected a small error concerning Balzac’s novel “Le Père Goriot,” which includes a discussion of getting ahead through advantageous marriage rather than hard work. “I was impressed,” Mr. Piketty said.

His book, however, ends not with an appeal to policy makers, but with a call for all citizens to “take a serious interest in money, its measurement, the facts surrounding it and its history.”

“It’s too easy for ordinary people to just say, ‘I don’t know anything about economics,’ ” he said, before rushing to his next appearance. “But economics is not just for economists.”

Krugman: Salvation Gets Cheap (New York Times)

APRIL 17, 2014

Paul Krugman

The Intergovernmental Panel on Climate Change, which pools the efforts of scientists around the globe, has begun releasing draft chapters from its latest assessment, and, for the most part, the reading is as grim as you might expect. We are still on the road to catastrophe without major policy changes.

But there is one piece of the assessment that is surprisingly, if conditionally, upbeat: Its take on the economics of mitigation. Even as the report calls for drastic action to limit emissions of greenhouse gases, it asserts that the economic impact of such drastic action would be surprisingly small. In fact, even under the most ambitious goals the assessment considers, the estimated reduction in economic growth would basically amount to a rounding error, around 0.06 percent per year.

What’s behind this economic optimism? To a large extent, it reflects a technological revolution many people don’t know about, the incredible recent decline in the cost of renewable energy, solar power in particular.

Before I get to that revolution, however, let’s talk for a minute about the overall relationship between economic growth and the environment.

Other things equal, more G.D.P. tends to mean more pollution. What transformed China into the world’s largest emitter of greenhouse gases? Explosive economic growth. But other things don’t have to be equal. There’s no necessary one-to-one relationship between growth and pollution.

People on both the left and the right often fail to understand this point. (I hate it when pundits try to make every issue into a case of “both sides are wrong,” but, in this case, it happens to be true.) On the left, you sometimes find environmentalists asserting that to save the planet we must give up on the idea of an ever-growing economy; on the right, you often find assertions that any attempt to limit pollution will have devastating impacts on growth. But there’s no reason we can’t become richer while reducing our impact on the environment.

Let me add that free-market advocates seem to experience a peculiar loss of faith whenever the subject of the environment comes up. They normally trumpet their belief that the magic of the market can surmount all obstacles — that the private sector’s flexibility and talent for innovation can easily cope with limiting factors like scarcity of land or minerals. But suggest the possibility of market-friendly environmental measures, like a carbon tax or a cap-and-trade system for carbon emissions, and they suddenly assert that the private sector would be unable to cope, that the costs would be immense. Funny how that works.

The sensible position on the economics of climate change has always been that it’s like the economics of everything else — that if we give corporations and individuals an incentive to reduce greenhouse gas emissions, they will respond. What form would that response take? Until a few years ago, the best guess was that it would proceed on many fronts, involving everything from better insulation and more fuel-efficient cars to increased use of nuclear power.

One front many people didn’t take too seriously, however, was renewable energy. Sure, cap-and-trade might make more room for wind and the sun, but how important could such sources really end up being? And I have to admit that I shared that skepticism. If truth be told, I thought of the idea that wind and sun could be major players as hippie-dippy wishful thinking.

The climate change panel, in its usual deadpan prose, notes that “many RE [renewable energy] technologies have demonstrated substantial performance improvements and cost reductions” since it released its last assessment, back in 2007. The Department of Energy is willing to display a bit more open enthusiasm; it titled a report on clean energy released last year “Revolution Now.” That sounds like hyperbole, but you realize that it isn’t when you learn that the price of solar panels has fallen more than 75 percent just since 2008.

Thanks to this technological leap forward, the climate panel can talk about “decarbonizing” electricity generation as a realistic goal — and since coal-fired power plants are a very large part of the climate problem, that’s a big part of the solution right there.

It’s even possible that decarbonizing will take place without special encouragement, but we can’t and shouldn’t count on that. The point, instead, is that drastic cuts in greenhouse gas emissions are now within fairly easy reach.

So is the climate threat solved? Well, it should be. The science is solid; the technology is there; the economics look far more favorable than anyone expected. All that stands in the way of saving the planet is a combination of ignorance, prejudice and vested interests. What could go wrong? Oh, wait.

Repercussões do novo relatório do Painel Intergovernamental sobre Mudanças Climáticas (IPCC)

Brasil já se prepara para adaptações às mudanças climáticas, diz especialista (Agência Brasil)

JC e-mail 4925, de 02 de abril de 2014

Com base no relatório do IPCC,dirigente do INPE disse que o Brasil já revela um passo adiante em termos de adaptação às mudanças climáticas

Com o título Mudanças Climáticas 2014: Impactos, Adaptação e Vulnerabilidade, o relatório divulgado ontem (31) pelo Painel Intergovernamental sobre Mudanças Climáticas (IPCC) sinaliza que os efeitos das mudanças do clima já estão sendo sentidos em todo o mundo. O relatório aponta que para se alcançar um aquecimento de apenas 2 graus centígrados, que seria o mínimo tolerável para que os impactos não sejam muito fortes, é preciso ter emissões zero de gases do efeito estufa, a partir de 2050.

“O compromisso é ter emissões zero a partir de 2040 /2050, e isso significa uma mudança de todo o sistema de desenvolvimento, que envolve mudança dos combustíveis”, disse hoje (1º) o chefe do Centro de Ciência do Sistema Terrestr,e do Instituto Nacional de Pesquisas Espaciais (Inpe), José Marengo, um dos autores do novo relatório do IPCC. Marengo apresentou o relatório na Academia Brasileira de Ciências (ABC), no Rio de Janeiro, e destacou que alguns países interpretam isso como uma tentativa de frear o crescimento econômico. Na verdade, ele assegurou que a intenção é chegar a um valor para que o aquecimento não seja tão intenso e grave.

Com base no relatório do IPCC, Marengo comentou que o Brasil já revela um passo adiante em termos de adaptação às mudanças climáticas. “Eu acho que o Brasil já escutou a mensagem. Já está começando a preparar o plano nacional de adaptação, por meio dos ministérios do Meio Ambiente e da Ciência, Tecnologia e Inovação”. Essa adaptação, acrescentou, é acompanhada de avaliações de vulnerabilidades, “e o Brasil é vulnerável às mudanças de clima”, lembrou.

A adaptação, segundo ele, atenderá a políticas governamentais, mas a comunidade científica ajudará a elaborar o plano para identificar regiões e setores considerados chave. “Porque a adaptação é uma coisa que muda de região e de setor. Você pode ter uma adaptação no setor saúde, no Nordeste, totalmente diferente do Sul. Então, essa é uma política que o governo já está começando a traçar seriamente”.

O plano prevê análises de risco em setores como agricultura, saúde, recursos hídricos, regiões costeiras, grandes cidades. Ele está começando a ser traçado como uma estratégia de governo. Como as vulnerabilidades são diferentes, o plano não pode criar uma política única para o país. Na parte da segurança alimentar, em especial, José Marengo ressaltou a importância do conhecimento indígena, principalmente para os países mais pobres.

Marengo afiançou, entretanto, que esse plano não deverá ser concluído no curto prazo. “É uma coisa que leva tempo. Esse tipo de estudo não pode ser feito em um ou dois anos. É uma coisa de longo prazo, porque vai mudando continuamente. Ou seja, é um plano dinâmico, que a cada cinco anos tem que ser reavaliado e refeito. Poucos países têm feito isso, e o Brasil está começando a elaborar esse plano agora”, manifestou.

Marengo admitiu que a adaptação às mudanças climáticas tem que ter também um viés econômico, por meio da regulação. “Quando eu falo em adaptação, é uma mistura de conhecimento científico para identificar que área é vulnerável. Mas tudo isso vem acompanhado de coisas que não são climáticas, mas sim, econômicas, como custos e investimento. Porque adaptação custa dinheiro. Quem vai pagar pela adaptação? “, indagou.

O IPCC não tem uma posição a respeito, embora Marengo mencione que os países pobres querem que os ricos paguem pela sua adaptação às mudanças do clima. O tema deverá ser abordado na próxima reunião da 20ª Convenção-Quadro sobre Mudança do Clima COP-20, da Organização das Nações Unidas (ONU), que ocorrerá em Lima, no Peru, no final deste ano.

Entretanto, o IPCC aponta situações sobre o que está ocorrendo nas diversas partes do mundo, e o que poderia ser feito. As soluções, salientou, serão indicadas no próximo relatório do IPCC, cuja divulgação é aguardada para este mês. O relatório, segundo ele, apontará que “a solução está na mitigação”. Caso, por exemplo, da redução das emissões de gases de efeito estufa, o uso menor de combustíveis fósseis e maior uso de fontes de energia renováveis, novas opções de combustíveis, novas soluções de tecnologia, estabilização da população. “Tudo isso são coisas que podem ser consideradas”. Admitiu, porém, que são difíceis de serem alcançadas, porque alguns países estão dispostos a isso, outros não. “É uma coisa que depende de acordo mundial”.

De acordo com o relatório do IPCC, as tendências são de aumento da temperatura global, aumento e diminuição de precipitações (chuvas), degradação ambiental, risco para as áreas costeiras e a fauna marinha, mudança na produtividade agrícola, entre outras. A adaptação a essas mudanças depende do lugar e do contexto. A adaptação para um setor pode não ser aplicável a outro. As medidas visando a adaptação às mudanças climáticas devem ser tomadas pelos governos, mas também pela sociedade como um todo e pelos indivíduos, recomendam os cientistas que elaboraram o relatório.

Para o Nordeste brasileiro, por exemplo, a construção de cisternas pode ser um começo no sentido de adaptação à seca. Mas isso tem de ser uma busca permanente, destacou José Marengo. Observou que programas de reflorestamento são formas de mitigação e, em consequência, de adaptação, na medida em que reduzem as emissões e absorvem as emissões excedentes.

No Brasil, três aspectos se distinguem: segurança hídrica, segurança energética e segurança alimentar. As secas no Nordeste e as recentes enchentes no Norte têm ajudado a entender o problema da vulnerabilidade do clima, acrescentou o cientista. Disse que, de certa forma, o Brasil tem reagido para enfrentar os extremos. “Mas tem que pensar que esses extremos podem ser mais frequentes. A experiência está mostrando que alguns desses extremos devem ser pensados no longo prazo, para décadas”, salientou.

O biólogo Marcos Buckeridge, pesquisador do Instituto de Biociências da Universidade de São Paulo (USP) e membro do IPCC, lembrou que as queimadas na Amazônia, apesar de mostrarem redução nos últimos anos, ainda ocorrem com intensidade. “O Brasil é o país que mais queima floresta no mundo”, e isso leva à perda de muitas espécies animais e vegetais, trazendo, como resultado, impactos no clima.

Para a pesquisadora sênior do Centro de Estudos Integrados sobre Meio Ambiente e Mudanças Climáticas – Centro Clima da Universidade Federal do Rio de Janeiro, Carolina Burle Schmidt Dubeux, a economia da adaptação deve pensar o gerenciamento também do lado da demanda. Isso quer dizer que tem que englobar não só investimentos, mas também regulação econômica em que os preços reflitam a redução da oferta de bens. “Regulação econômica é muito importante para que a gente possa se adaptar [às mudanças do clima]. As políticas têm que refletir a escassez da água e da energia elétrica e controlar a demanda”, apontou.

Segundo a pesquisadora, a internalização de custos ambientais nos preços é necessária para que a população tenha maior qualidade de vida. “A questão da adaptação é um constante gerenciamento do risco das mudanças climáticas, que é desconhecido e imprevisível”, acrescentou. Carolina defendeu que para ocorrer a adaptação, deve haver uma comunicação constante entre o governo e a sociedade. “A mídia tem um papel relevante nesse processo”, disse.

(Agência Brasil)

* * *

Mudanças climáticas ameaçam produtos da cesta básica brasileira (O Globo)

JC e-mail 4925, de 02 de abril de 2014

Dieta será prejudicada por queda das safras e da atividade pesqueira

Os impactos das mudanças climáticas no país comprometerão o rendimento das safras de trigo, arroz, milho e soja, produtos fundamentais da cesta básica do brasileiro. Outro problema desembarca no litoral. Segundo prognósticos divulgados esta semana pelo Painel Intergovernamental de Mudanças Climáticas (IPCC), grandes populações de peixes deixarão a zona tropical nas próximas décadas, buscando regiões de alta latitude. Desta forma, a pesca artesanal também é afetada.

A falta de segurança alimentar também vai acometer outros países. Estima-se que a atividade agrícola da União Europeia caia significativamente até o fim do século. Duas soluções já são estudadas. Uma seria aumentar as importações – o Brasil seria um importante mercado, se conseguir nutrir a sua população e, além disso, desenvolver uma produção excedente. A outra possibilidade é a pesquisa de variedades genéticas que deem resistência aos alimentos diante das novas condições climáticas.

– Os eventos extremos, mesmo quando têm curta duração, reduzem o tamanho da safra – contou Marcos Buckeridge, professor do Departamento de Botânica da USP e coautor do relatório do IPCC, em uma apresentação realizada ontem na Academia Brasileira de Ciências. – Além disso, somos o país que mais queima florestas no mundo, e a seca é maior justamente na Amazônia Oriental, levando a perdas na agricultura da região.

O aquecimento global também enfraquecerá a segurança hídrica do país.

– É preciso encontrar uma forma de garantir a disponibilidade de água no semiárido, assim como estruturas que a direcione para as áreas urbanas – recomenda José Marengo, climatologista do Instituto Nacional de Pesquisas Espaciais (Inpe) e também autor do relatório.

Marengo lembra que o Nordeste enfrenta a estiagem há três anos. Segundo ele, o uso de carros-pipa é uma solução pontual. Portanto, outras medidas devem ser pensadas. A transposição do Rio São Francisco também pode não ser suficiente, já que a região deve passar por um processo de desertificação até o fim do século.

De acordo com um estudo realizado em 2009 por diversas instituições brasileiras, e que é citado no novo relatório do IPCC, as chuvas no Nordeste podem diminuir até 2,5mm por dia até 2100, causando perdas agrícolas em todos os estados da região. O déficit hídrico reduziria em 25% a capacidade de pastoreiro dos bovinos de corte. O retrocesso da pecuária é outro ataque à dieta do brasileiro.

– O Brasil perderá entre R$ 719 bilhões e R$ 3,6 trilhões em 2050, se nada fizer . Enfrentaremos perda agrícola e precisaremos de mais recursos para o setor hidrelétrico – alerta Carolina Dubeux, pesquisadora do Centro Clima da Coppe/UFRJ, que assina o documento. – A adaptação é um constante gerenciamento de risco.

(Renato Grandelle / O Globo)
http://oglobo.globo.com/ciencia/mudancas-climaticas-ameacam-produtos-da-cesta-basica-brasileira-12061170#ixzz2xjSEUoVy

* * *

Impactos mais graves no clima do país virão de secas e de cheias (Folha de S.Paulo)

JC e-mail 4925, de 02 de abril de 2014

Brasileiros em painel da ONU dizem que país precisa se preparar para problemas opostos em diferentes regiões

As previsões regionais do novo relatório do IPCC (painel do clima da ONU) aponta como principais efeitos da mudança climática no país problemas na disponibilidade de água, com secas persistentes em alguns pontos e cheias recordes em outros. Lançado anteontem no Japão, o documento do grupo de trabalho 2 do IPCC dá ênfase a impactos e vulnerabilidades provocados pelo clima ao redor do mundo. Além de listar os principais riscos, o documento ressalta a necessidade de adaptação aos riscos projetados. No Brasil, pela extensão territorial, os efeitos serão diferentes em cada região.

Além de afetar a floresta e seus ecossistemas, a mudança climática deve prejudicar também a geração de energia, a agricultura e até a saúde da população. “Tudo remete à água. Onde nós tivermos problemas com a água, vamos ter problemas com outras coisas”, resumiu Marcos Buckeridge, professor da USP e um dos autores do relatório do IPCC, em entrevista coletiva com outros brasileiros que participaram do painel.

Na Amazônia, o padrão de chuvas já vem sendo afetado. Atualmente, a cheia no rio Madeira já passa dos 25 m –nível mais alto da história– e afeta 60 mil pessoas. No Nordeste, que nos últimos anos passou por secas sucessivas, as mudanças climáticas podem intensificar os períodos sem chuva, e há um risco de que o semiárido vire árido permanentemente.

Segundo José Marengo, do Inpe (Instituto Nacional de Pesquisas Espaciais) e um dos autores principais do documento, ainda é cedo para saber se a seca persistente em São Paulo irá se repetir no ano que vem ou nos outros, mas alertou que é preciso que o Brasil se prepare melhor.

MITIGAR E ADAPTAR
O IPCC fez previsões para diferentes cenários, mas, basicamente, indica que as consequências são mais graves quanto maiores os níveis de emissões de gases-estufa. “Se não dá para reduzir as ameaças, precisamos pelo menos reduzir os riscos”, disse Marengo, destacando que, no Brasil, nem sempre isso acontece. No caso das secas, a construção de cisternas e a mobilização de carros-pipa seriam alternativas de adaptação. Já nos locais onde deve haver aumento nas chuvas, a remoção de populações de áreas de risco, como as encostas, seria a alternativa.

Carolina Dubeux, da UFRJ, que também participa do IPCC, afirma que, para que haja equilíbrio entre oferta e demanda, é preciso que a economia reflita a escassez dos recursos naturais, sobretudo em áreas como agricultura e geração de energia. “É necessário que os preços reflitam a escassez de um bem. Se a água está escassa, o preço dela precisa refletir isso. Não podemos só expandir a oferta”, afirmou.

Neste relatório, caiu o grau de confiança sobre projeções para algumas regiões, sobretudo em países em desenvolvimento. Segundo Carlos Nobre, secretário do Ministério de Ciência, Tecnologia e Inovação, isso não significa que o documento tenha menos poder político ou científico.

Everton Lucero, chefe de clima no Itamaraty, diz que o documento será importante para subsidiar discussões do próximo acordo climático mundial. “Mas há um desequilíbrio entre os trabalhos científicos levados em consideração pelo IPCC, com muito mais ênfase no que é produzido nos países ricos. As nações em desenvolvimento também produzem muita ciência de qualidade, que deve ter mais espaço”, disse.

(Giuliana Miranda/Folha de S.Paulo)
http://www1.folha.uol.com.br/fsp/cienciasaude/159305-impactos-mais-graves-no-clima-do-pais-virao-de-secas-e-de-cheias.shtml

* * *

Relatório do IPCC aponta riscos e oportunidades para respostas (Ascom do MCTI)

JC e-mail 4925, de 02 de abril de 2014

Um total de 309 cientistas de 70 países, entre coordenadores, autores, editores e revisores, foram selecionados para produzir o relatório

O novo relatório do Painel Intergovernamental sobre Mudanças Climáticas (IPCC) diz que os efeitos das mudanças climáticas já estão ocorrendo em todos os continentes e oceanos e que o mundo, em muitos casos, está mal preparado para os riscos. O documento também conclui que há oportunidades de repostas, embora os riscos sejam difíceis de gerenciar com os níveis elevados de aquecimento.

O relatório, intitulado Mudanças Climáticas 2014: Impactos, Adaptação e Vulnerabilidade, foi elaborado pelo Grupo de Trabalho 2 (GT 2) do IPCC e detalha os impactos das mudanças climáticas até o momento, os riscos futuros e as oportunidades para uma ação eficaz para reduzir os riscos. Os resultados foram apresentados à imprensa brasileira em entrevista coletiva no Rio de Janeiro nesta terça-feira (1º).

Um total de 309 cientistas de 70 países, entre coordenadores, autores, editores e revisores, foram selecionados para produzir o relatório. Eles contaram com a ajuda de 436 autores contribuintes e 1.729 revisores especialistas.

Os autores concluem que a resposta às mudanças climáticas envolve fazer escolhas sobre os riscos em um mundo em transformação, assinalando que a natureza dos riscos das mudanças climáticas é cada vez mais evidente, embora essas alterações também continuem a produzir surpresas. O relatório identifica as populações, indústrias e ecossistemas vulneráveis ao redor do mundo.

Segundo o documento, o risco da mudança climática provém de vulnerabilidade (falta de preparo), exposição (pessoas ou bens em perigo) e sobreposição com os riscos (tendências ou eventos climáticos desencadeantes). Cada um desses três componentes pode ser alvo de ações inteligentes para diminuir o risco.

“Vivemos numa era de mudanças climáticas provocadas pelo homem”, afirma o copresidente do GT 2 Vicente Barros, da Universidade de Buenos Aires, Argentina. “Em muitos casos, não estamos preparados para os riscos relacionados com o clima que já enfrentamos. Investimentos num melhor preparo podem melhorar os resultados, tanto para o presente e para o futuro.”

Reação
A adaptação para reduzir os riscos das mudanças climáticas começa a ocorrer, mas com um foco mais forte na reação aos acontecimentos passados do que na preparação para um futuro diferente, de acordo com outro copresidente do GT, Chris Field, da Carnegie Institution for Science, dos Estados Unidos.

“A adaptação às mudanças climáticas não é uma agenda exótica nunca tentada. Governos, empresas e comunidades ao redor do mundo estão construindo experiência com a adaptação”, explica Field. “Esta experiência constitui um ponto de partida para adaptações mais ousadas e ambiciosas, que serão importantes à medida que o clima e a sociedade continuam a mudar”.

Riscos futuros decorrentes das mudanças no clima dependem fortemente da quantidade de futuras alterações climáticas. Magnitudes crescentes de aquecimento aumentam a probabilidade de impactos graves e generalizados que podem ser surpreendentes ou irreversíveis.

“Com níveis elevados de aquecimento, que resultam de um crescimento contínuo das emissões de gases de efeito estufa, será um desafio gerenciar os riscos e mesmo investimentos sérios e contínuos em adaptação enfrentarão limites”, afirma Field.

Problemas
Impactos observados da mudança climática já afetaram a agricultura, a saúde humana, os ecossistemas terrestres e marítimos, abastecimento de água e a vida de algumas pessoas. A característica marcante dos impactos observados é que eles estão ocorrendo a partir dos trópicos para os polos, a partir de pequenas ilhas para grandes continentes e dos países mais ricos para os mais pobres.

“O relatório conclui que as pessoas, sociedades e ecossistemas são vulneráveis em todo o mundo, mas com vulnerabilidade diferentes em lugares diferentes. As mudanças climáticas muitas vezes interagem com outras tensões para aumentar o risco”, diz Chris Field.

A adaptação pode desempenhar um papel-chave na redução destes riscos, observa Vicente Barros. “Parte da razão pela qual a adaptação é tão importante é que, devido à mudança climática, o mundo enfrenta uma série de riscos já inseridos no sistema climático, acentuados pelas emissões passadas e infraestrutura existente”.

Field acrescenta: “A compreensão de que a mudança climática é um desafio na gestão de risco abre um leque de oportunidades para integrar a adaptação com o desenvolvimento econômico e social e com as iniciativas para limitar o aquecimento futuro. Nós definitivamente enfrentamos desafios, mas compreender esses desafios e ultrapassá-los de forma criativa pode fazer da adaptação à mudança climática uma forma importante de ajudar a construir um mundo mais vibrante em curto prazo e além”.

Conteúdo
O relatório do GT 2 é composto por dois volumes. O primeiro contém Resumo para Formuladores de Políticas, Resumo Técnico e 20 capítulos que avaliam riscos por setor e oportunidades para resposta. Os setores incluem recursos de água doce, os ecossistemas terrestres e oceânicos, costas, alimentos, áreas urbanas e rurais, energia e indústria, a saúde humana e a segurança, além dos meios de vida e pobreza.

Em seus dez capítulos, o segundo volume avalia os riscos e oportunidades para a resposta por região. Essas regiões incluem África, Europa, Ásia, Australásia (Austrália, a Nova Zelândia, a Nova Guiné e algumas ilhas menores da parte oriental da Indonésia), América do Norte, América Central e América do Sul, regiões polares, pequenas ilhas e oceanos.

Acesse a contribuição do grupo de trabalho (em inglês) aqui ou no site da instituição.

A Unidade de Apoio Técnico do GT 2 é hospedada pela Carnegie Institution for Science e financiada pelo governo dos Estados Unidos.

Mapa
“O relatório do Grupo de Trabalho 2 é outro importante passo para a nossa compreensão sobre como reduzir e gerenciar os riscos das mudanças climáticas”, destaca o presidente do IPCC, RajendraPachauri. “Juntamente com os relatórios dos grupos 1 e 3, fornece um mapa conceitual não só dos aspectos essenciais do desafio climático, mas as soluções possíveis.”

O relatório do GT 1 foi lançado em setembro de 2013, e o do GT 3 será divulgado neste mês. O quinto relatório de avaliação (AR5) será concluído com a publicação de uma síntese em outubro.

O Painel Intergovernamental sobre Mudança do Clima é o organismo internacional para avaliar a ciência relacionada à mudança climática. Foi criado em 1988 pela Organização Meteorológica Mundial e pelo Programa das Nações Unidas para o Ambiente (Pnuma), para fornecer aos formuladores de políticas avaliações regulares da base científica das mudanças climáticas, seus impactos e riscos futuros, e opções para adaptação e mitigação.

Foi na 28ª Sessão do IPCC, realizada em abril de 2008, que os membros do painel decidiram preparar o AR5. O documento envolveu 837 autores e editores de revisão.

(Ascom do MCTI, com informações do IPCC)
http://www.mcti.gov.br/index.php/content/view/353700/Relatorio_do_IPCC_aponta_riscos_e_oportunidades_para_respostas.html