Category Archives: economy

Paul Hohnen: a better physically connected Europe could deliver multiple benefits

In the Financial Times today, Paul Hohnen* writes about the ‘hard realities of climate change’ showing across Europe, with the historic drought in Italy and Spain being only the latest example. He continues:

What seems increasingly clear is that Europe, with or without Britain, needs to invest hugely in climate abatement and adaptation infrastructure.

 A better physically connected Europe, in the form of enhanced inter-country electricity grids (for sharing surplus renewable power) and upgraded water catchment and distribution systems, could deliver multiple benefits.

In addition to reducing the risks to food, water and energy supplies, now and in the future, a grand European project to become collectively more resilient to energy and water stress could be just what is needed to give Europe the new and positive shared narrative so urgently needed. Not to mention the jobs, economic growth and technological innovation involved.

The EU’s enormous political and economic achievements over the past six decades are at risk on multiple fronts, including the environmental.

An ever closer power and water infrastructure union would help demonstrate why the European project is as relevant as ever.

*Mr Hohnen was trained as an international lawyer, closely involved in the 1992, 2002 and 2012 UN sustainability summits, as well as in a wide range of climate change and other global treaties. He worked from 1975 to 1989 as an Australian diplomat at the OECD in Paris (global economic, development and environmental issues), at EU institutions in Brussels, and in Fiji and Sri Lanka. He was with Greenpeace International (1989-1997, as Head of Climate Policy, later Director, Political Division), and Strategic Director of the Global Reporting Initiative (GRI). An independent consultant since 2004, his clients have included government ministries, intergovernmental agencies, business and non-profit organisations.

Read his views on the broader canvas in Reasons to be both hugely disappointed and very excited

 

 

 

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Fioramonti: growth is dying as the silver bullet for success – this may be good thing

In May, Lorenzo Fioramonti*, Professor of Political Economy, University of Pretoria, wrote an article for The Conversation, republished in Quartz. He opens: “GDP as a measure of growth fails to account for damages caused to the environment by industrial activity”.

In his new book “Wellbeing Economy: Success in a World Without Growth” he points out that the “growth first” rule has dominated the world since the early 20th century. No other ideology has ever been so powerful: the obsession with growth even cut through both capitalist and socialist societies”.

Edited extracts

He asks: “What exactly is growth? Strangely enough, the notion has never been reasonably developed” and presents a view beyond that limited to an increase in overall wealth (common sense): “Growth happens when we generate value that wasn’t there before: for instance, through the education of children, the improvement of our health or the preparation of food. A more educated, healthy and well-nourished person is certainly an example of growth”. He then outlines the paradox: “our model of economic growth does exactly the opposite of what common sense suggests”. Here are some examples:

  • If I sell my kidney for some cash, then the economy grows.
  • If a country cuts and sells all its trees, it gets a boost in GDP. But nothing happens if it nurtures them.
  • But if I educate my kids, prepare and cook food for my community improve the health conditions of my people, if a country preserves open spaces like parks and nature reserves for the benefit of everybody, it does not see this increase in human and ecological wellbeing reflected in its economic performance.

But if it privatises them, commercialising the resources therein and charging fees to users, then growth happens.

Preserving our infrastructure, making it durable, long-term and free adds nothing or only marginally to growth. Destroying it, rebuilding it and making people pay for using it gives the growth economy a bump forward. Keeping people healthy has no value. Making them sick does. An effective and preventative public healthcare approach is suboptimal for growth: it’s better to have a highly unequal and dysfunctional system like in the US, which accounts for almost 20% of the country’s GDP.

Wars, conflicts, crime and corruption are friends of growth in so far as they force societies to build and buy weapons, to install security locks and to push up the prices of what government pays for tenders.

The earthquake in Fukushima like the Deep Water Horizon oil spill were manna for growth, as they required immense expenditure to clean up the mess and rebuild what was destroyed.

Disappearing growth

However, Fioramenti brings the good news that growth is disappearing; economies are puffing along- even China, the global locomotive, is running out of steam. And consumption has reached limits in the so-called developed world, with fewer buyers for the commodities and goods exported by developing countries.

Energy is running out, particularly fossil fuels, and global agreements to fight climate change require us to eliminate them soon. Measures to mitigate climate change will force industrial production to contract, limiting growth even further.

The future of the climate (and all of us on this planet) makes a return of growth, at least the conventional approach to industry-driven economic growth, politically and socially unacceptable.

Fioramonti continues: “Decades of research based on personal life evaluations, psychological dynamics, medical records and biological systems have produced a considerable amount of knowledge about what contributes to long and fulfilling lives. The conclusion is: a healthy social and natural environment.

As social animals, we thrive thanks to the quality and depth of our interconnectedness with friends and family as well as with our ecosystems. But of course, the quest for wellbeing is ultimately a personal one. Only you can decide what it is. This is precisely why I believe that an economic system should empower people to choose for themselves. Contrary to the growth mantra, which has standardised development across the world, I believe an economy that aspires to achieve wellbeing should be designed but those who live it, in accordance with their values and motives”.

He points out that even the International Monetary Fund and mainstream neoliberal economists like Larry Summers agree that the global economy is entering a “secular stagnation”, which may very well be the dominant character of the 21st century – an apparently disastrous prospect for our economies, which have been designed to grow – or perish.

But it is also a window of opportunity for change. With the disappearance of growth as the silver bullet to success, political leaders and their societies desperately need a new vision: a new narrative to engage with an uncertain future.

This article is part of a series to be published following the release of Lorenzo Fioramonti’s new book: Wellbeing Economy: Success in a World Without Growth (MacMillan South Africa). Lorenzo Fioramonti does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above. The idea that the economic “pie” can grow indefinitely is alluring. It means everybody can have a share without limiting anybody’s greed. Rampant inequality thus becomes socially acceptable because we hope the growth of the economy will eventually make everybody better off.

 

 

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Not ‘commercially viable’? Fracking: environmentally, socially and financially a bad investment

The decision to sell its share in Third Energy, announced by Barclay’s chairman will be welcomed by many. Mainstream media, however, are failing to report this; five pages were searched and all witnessed to publicity coming only from campaigning groups – a snapshot of the first page may be seen below.

Third Energy, a Barclays subsidiary, which had a licence to frack just south of the North York Moors national park has “not become a profitable investment”. This is due to local opposition, which delays companies’ progress, according to Barclay’s chairman John McFarlane, speaking at the bank’s annual general meeting.

Barclays’ has now announced that it will sell its stake in fracking company Third Energy “in due course”.

Steve Mason of local campaign group Frack Free Ryedale said in a press release: “Clearly fracking is a bad investment environmentally, socially and financially. Where is the long term future of this industry? Why would you put money into an industry that is increasingly rejected by communities and could get banned at anytime?”

 

 

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Basic income

Readers who are unaware of the basic income concept can find an outline here.

As Ontario, Canada’s largest province, became the latest to announce a universal basic income three year trial (read on here), we read that a privately-funded, short-term pilot program is being run by this Silicon Valley accelerator, Y Combinator, in California.

The goal is to see how people react in the U.S., says Sam Altman, President, Y Combinator Group. The program gives “unconditional” payments to selected residents of Oakland. The administrators write, “we hope basic income promotes freedom, and we want to see how people experience that freedom.” If it is successful, the plan is to follow up the pilot with a larger, longer-term program”.

Altman says: “50 years from now, I think it will seem ridiculous that we used fear of not being able to eat as a way to motivate people.”

The Dutch universal basic income proposal is for UBI to replace other social security benefits. It would be paid for with revenue from a number of taxes, including a 30% tax on business profits, tax on air pollution, and a higher tax on “big fortunes,” according to Johan Luijendijk, co-founder of the Basisinkomen 2018 advocacy group, which argues that UBI would be affordable because it would replace other government support programmes.

Replacement or supplement?

Over the years in Britain the writer had always heard of UBI as a replacement proposal – but now she reads Professor Karl Widerquist, founder of Basic Income News, describing the Dutch proposal as unique.

The Basic Income European Network (BIEN) agreed at its general assembly in Seoul (in 2016) that universal basic income should not be a replacement of other social services or entitlements, but instead should work in combination with other services. Widerquist in an email with CNBC, is reported to have said universal basic income “is not ‘generally considered’ as a replacement for the rest of the social safety net. Some see it primarily as a replacement. Others see it as a supplement, filling in the cracks.”

The Swiss campaign for the basic income referendum

Earlier this year, a draft report, tabled by a Member of the European Parliament, Mady Delvaux-Stehres, warned that preparations must be made for what it describes as the “technological revolution” currently taking place, including provisions for the “possible effects on the labour market of robotics”. The report which urges member states to consider a general basic income in preparation for robots taking over people’s jobs passed by 17 votes to two.

Ms Delvaux-Stehres said: “We ask the commission to look at what kind of jobs — or more precisely what kind of tasks — will be taken over by robots. There needs to be a discussion about whether we need to change our social security systems. And even whether we have to think about universal revenue, because if there are so many unemployed people, we need nevertheless to insure that they can have a decent life”. 

However the recommendation to “seriously consider” basic income was rejected for inclusion in the final report, with 328 MEPs voting against the recommendation, 286 MEPs voting in favour, and eight abstaining from the vote.

A study by Oxford University’s Carl Frey and Michael Osborne estimates that 47% of U.S. jobs will potentially be replaced by robots and automated technology in the next 10 to 20 years. Those individuals working in transportation, logistics, office management and production are likely to be the first to lose their jobs to robots; according to the report universal basic income may be necessary.

 

 

 

Brexit: moving away from globalisation towards self-reliance’  

Colin Hines draws attention to Green MEP Molly Scott Cato’s publication and launch of  a report by Victor Anderson and Rupert Read: Brexit and Trade Moving from Globalisation to Self-reliance’

Although it regrets our leaving the EU and wishes we wouldn’t, the report is written as an alternative approach assuming we are outside the EU.

Its Executive Summary states:This report puts on to the political agenda an option for Brexit which goes with the grain of widespread worries about globalisation, and argues for greater local, regional, and national self-sufficiency, reducing international trade and boosting import substitution”.

Hines continues: “As I am aware it is the first time a report from a politician isn’t clamouring to retain membership of the open border Single Market”

It details the need for an environmentally sustainable future involving constraints to trade and the rebuilding of local economies. Indeed the report actually calls for ‘Progressive Protectionism’ rather than a race to the bottom relationship with the EU – see page14:

Reducing dependence on international trade implies reducing both imports and exports. It is therefore very different from the traditional protectionism of seeking to limit imports whilst expanding exports. It should therefore meet with less hostility from other countries, as it has a very different aim from simply improving the UK’s balance of payments. It could be described as ‘progressive protectionism’, or ‘green protectionism’. X1V reference adds: ‘For detailed proposals on how this could and should be done, see http://progressiveprotectionism.com/wordpress/

Also ground-breaking in Green Party literature of late is its discussion of the arguments for and against managed migration.

Its sensitive handling of this contentious issue for many in the Greens does mark an important step forward and hopefully will help to start an internal debate about whether or not the party should reconsider its open borders approach.

This recent Daily Telegraph article with Iain Duncan Smith and Nigel Lawson frothing to get rid of key environmental regulations shows how impossible any green future will be under a hard Brexit.

Hines feels that we won’t leave the EU and central to that happening will be a realisation across Europe that to see off the extreme right they must manage internal migration and protect domestic jobs. At that point the reasons for supporting Brexit for most are no longer valid.

He ends: “This timely report makes a crucial input to this debate, one that will rage for the next two years”.

 

 

 

Population: edited extracts from Progressive Protectionism:

Following the post on migration and immigration, we turn to Colin Hines views on population – a subject which, he notes, green groups have ‘fastidiously’ ignored, in the face of developing countries’ activists and leaders saying it was a form of colonialism and others claiming that the root of environmental problems was the consumption patterns of the rich, not the growing numbers in poor countries.

Two noted environmentalists, Jonathon Porritt and David Attenborough, disagree with their Green companions about population growth

Porritt has pinpointed a weakness: “they have a very deep fear that addressing population issues will distract people from the real issue: over-consumption in the rich world rather than overpopulation in the poor world” but stresses that “It really is possible to pursue two big issues at the same time”.

One of Attenborough’s key insights was in answer to a question about overcoming the problems of an ageing population. It is often argued that we’ll need more young people to look after the old, hence we should encourage larger families or more immigration. Attenborough’s riposte was: “The notion of ever more old people needing ever more young people, who will in turn grow old and need even more young people, and so on ad infinitum, is an obvious ecological Ponzi scheme”.

A United Nations Population Division study by David Coleman demonstrated that for the UK to retain its 1995 support ratio of working-age people to older dependants (4.09), it would need to import 59.8 million immigrants between 1995 and 2050. This would involve inward net migration of more than a million people every year and nearly double UK population by 2050.

Over the years Colin Hines relates that his focus has moved from population to food to nuclear power and proliferation, to automation and jobs then finally to an anti globalisation and pro localisation approach.

He says ruefully, “Along the way I frankly fell asleep at the wheel on the population topic. This has changed however when I woke up to the fact that if net migration continues at around recent levels, the UK population is expected to rise by nearly 8 million people in 15 years, almost the equivalent of the population of Greater London (8.7 million). 75% of this increase would be from future migration and the children of those migrants.

The population growth would not stop there. Unless something is done about this growth it is projected to increase towards 80 million in 25 years and keep going upwards”. See the Office for National Statistics here.

Chapter Two of his book (above, left) looks at the reasons why global population numbers are projected to rise by over a billion more than was forecast a mere six years ago and debunks the idea that ageing populations in rich countries need more immigration. It explores the right to fertility control as well as the responsibility for choice of family size. The policies of Progressive Protectionism which will help to reduce and eventually stabilise population growth – a crucial goal for a densely populated country like the UK – are detailed. Surprising facts are published by Migration Watch:

Over 90% of international migrants to the UK go to England, which now has a population density of 410 people per square km, just lower than India and nearly twice that of Germany and 3.5 times that of France.

As Hines says, the enormous rise in world population annually takes place at a time of increasing food, water, energy and raw material constraints, of ever worsening environmental degradation and mounting difficulty of providing adequate social needs such as education, health and housing in an increasingly unequal world. Acknowledging that population growth is not the only cause of such problems, he maintains that rising numbers also makes them much harder to deal with.

As life expectancy increases and birth rates fall, populations are ageing and it is currently thought that the only way to cope with the reduced ratio of those working to those who have retired is to increase the number of children or young immigrants

But Hines points out that longer, healthier lives mean more people can work longer, unless they are in very physically demanding labouring work. With more flexible working arrangements, more jobs can be done by older workers, enabling them to top up their pensions by working as much or little as they choose.

In the absence of immigration, it is estimated that the potential support ratios could be maintained at current levels by increasing the upper limit of the working-age population to roughly 75 years of age.

There is a fascinating ‘chapter within a chapter’ on the Japanese culture concludingAll these factors result in another advantage, people don’t just live longer, they stay healthier longer. A World Health Organisation study in 2000 found that Japanese people enjoyed an average of 74.5 years of healthy life, compared with 71.7 in the UK and just 70 in the US”. A linked FT study is also of great interest.

Hines’ conclusions:

Reduce the rate of population growth

Hines sees the cornerstone for this as being for people, from now on, to consider having no more children once they have had two. The current Conservative government appears to agree; it has today brought into force new rules on Child Tax Credit – worth up to £2,780 per child per year – so that it will only be paid for the first two children in any family. Like all this government’s cuts and ‘austerity’ this will only be a problem for low-income families.

Train workers in the UK to care for the elderly frail

A valid contribution to strengthening local economies is developing a better resourced and more caring approach to looking after the growing number of elderly who need some assistance will generate huge business and job opportunities in the care sector. A massive education and skills programme will be needed to train workers in the UK for an adequately paid career in this sector.

During this transition Hines realises that it might be necessary – and also in the nursing and agricultural sectors – for some shortfalls to be filled by immigrants for as short a period as possible. He stresses that we should in general avoid taking skilled and much-needed people from their country of origin, but short term transitional arrangements might also improve the skills of those coming and increase the benefit to their host country on their return.

See: http://progressiveprotectionism.com/wordpress/

Colin Hines will be speaking on Progressive Protectionism in Birmingham on April 22nd.

 

 

Moving towards a new, balanced, green economy

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In her recently published book, Dr Christine Parkinson sets out a series of measures which could move us towards a new, balanced, green economy:

 

  • introducing greater incentive schemes to encourage businesses to develop, use and market greener technologies and to penalise those who don’t. Examples of this could include: using and developing renewable forms of energy; phasing out motor vehicles which use petrol or diesel and introducing those that run on easily-accessible clean energy;
  • investing in research institutions which have the ability to develop innovative solutions to today’s climate-change problems;
  • introducing legislation to reduce the use of the motor car, such as restricting the number of cars owned by each household, unless they run on clean energy;
  • phasing out coal-fired power generation, ending fossil fuel subsidies;
  • introducing a carbon tax on those companies who continue to use fossil fuels;
  • rebalancing the economy, so that the rich are not rewarded for irresponsible behaviour that adds to the carbon load;
  • setting targets for meaningful reductions in carbon emissions by an early date, as suggested by Desmond Tutu in his petition (chapter 1) and ensuring that the calculations for this are correct;
  • phasing out nuclear power and nuclear weapons worldwide and re-channelling the money saved into the incentive-schemes and investments mentioned above;
  • proper funding of those institutions regulating the tax system, so that tax evasion and avoidance is properly penalised;
  • shifting the tax system to penalise those activities which need to be discouraged, such as greenhouse gas emissions and the accumulation of wealth;
  • banning certain household appliances and gadgets, which are not necessary and only add to the carbon load;
  • establishing a new institution, which will monitor the use of fossil fuels by companies and promote, and provide support for, the use of greener forms of energy;
  • encouraging less air travel, by raising awareness about the damage this is doing to the planet and encouraging airlines to invest instead in technologies that do not damage the planet;
  • working globally with other partners to reduce deforestation;
  • re-balancing international trading systems, so that goods and animals are not transported unnecessarily across continents and seas, adding to the carbon load;
  • encouraging countries worldwide to be self-sufficient in terms of goods and resources, so that goods are not imported which can be produced internally;
  • re-thinking and re-balancing entirely transnational trading systems;
  • working globally to find a better means of international co-operation in working jointly to reduce and reverse that damage that is currently being done to the planet;
  • encouraging partnerships between local government and local cooperatives and social enterprises;
  • encouraging the setting up of local groups (3G groups), where individuals can meet together to share what they are doing to reduce their carbon emissions and to encourage each other to keep going with it, even if the majority of others are still in denial (3G stands for three generations – the amount of time we have left).

She continues: “Some of the ideas above are already being worked on, and others are not about changing the economic system but about reducing carbon emissions, but I hope these are a starting point for others to add to, if we are really serious about taking meaningful anti-climate-change measures before it is too late”. 

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Christine will be speaking in Birmingham on April 22nd.

“Three generations Left” can be ordered direct from the publishers, using the following link: http://www.newgeneration-publishing.com/bookstore/reference/bookdetails/1778 or can be ordered from the Amazon website, print on demand, as follows: https://www.amazon.co.uk/Three-Generations-Left-Activity-Destruction/dp/1787190412/ref=sr_1_1?s=books&ie=UTF8&qid=1483704765&sr=1-1&keywords=Christine+Parkinson

It is priced at £11.99 per copy in paperback or £4.99 for an ebook.

Whilst much of the book is viewable on this website, she would prefer you to buy a copy as any profits from the sale of this book will be used to fund her son’s work amongst slum children in Uganda.  Last year was a difficult one for this project (Chrysalis Youth Empowerment Network), as due to the devaluation of the pound post-Brexit, monies sent from the UK to Uganda had lost a fifth of their value.

Contact: christine@cyen.org.uk