Econ4’s Gar Alperovitz and Thomas Hanna write in the New York Times:
THE great 20th-century conservative economist Joseph Schumpeter thought the left had overlooked a major selling point in pressing the case for public — i.e., government — control over productive capital. “One of the most significant titles to superiority,” he suggested, was that public ownership produced profits, which means not having to depend on taxes to raise money.
The bulk of the left never took up Schumpeter’s argument. But in an oddly fitting twist, these days the mantra of public control in exchange for lower taxes has been embraced by a surprising quarter of the American political leadership: conservatives.
The most well-known case is Alaska. The Alaska Permanent Fund, established by a Republican governor in 1976, combines not one, but two socialist principles: public ownership and the provision of a basic income for all residents. The fund collects and invests proceeds from the extraction of oil and minerals in the state. Dividends are paid out annually to all state residents….
Read their oped piece here.
It’s time for Greece to exit the euro, if not the EU, writes Simon Jenkins in the Guardian:
Sometimes the small voice of economics should rise above the shrieking hysterics of politics. The laws of bankruptcy were invented by the Victorians not to stick plaster over capitalism’s wounds. Insolvency and limited liability lay at the core of commercial enterprise. Borrower and lender alike had to accept risk for capitalism to thrive. Greece within the eurozone was allowed to borrow riskily and was lent to riskily. Any fool (except a eurofool) knew it would end in disaster.
The IMF last week admitted Greece’s debts were “unsustainable”. But such is the political arthritis now afflicting Europe’s “technocratic” rulers that they ignored the fact. They concentrate on their one concern: somehow extending Greece’s repayments so German, French and British banks could have even larger loans underpinned. It is bankers, not Greeks, who are being “bailed out”. They want Greek taxpayers to go on paying interest even if the principal is as beyond reach as a tsarist bond.
Read his piece here.
Also Eduardo Porter’s recent New York Times piece on Germany’s own debt write-down after World War II.
These days trade agreements are not just about imports and exports. They’re also about undermining the power of governments to protect public health and the environment by regulating corporate behavior – via provisions slipped into trade agreements in the guise of “Investor-State Dispute Settlement” (I.S.D.S.), as James Surowiecki explains in the New Yorker:
In the old days, aggrieved American investors would call on the Navy to protect their interests—thus the phrase “gunboat diplomacy.” How much better that now they just call their lawyers.
But these days signing such agreements is risky for countries. I.S.D.S. lawsuits used to be rare, but they’re becoming a growth industry. Nearly a hundred have been filed in the past two years, as against some five hundred in the quarter century before that. Investor protection, previously a sideshow in corporate law, is now a regular part of law-school curricula. “We’ve also seen an expansion in the types of claims that have been brought,” Lise Johnson, the head of investment law and policy at the Columbia Center on Sustainable Investment, told me. I.S.D.S. was originally meant to protect investors against seizure of their assets by foreign governments. Now I.S.D.S. lawsuits go after things like cancelled licenses, unapproved permits, and unwelcome regulations.
A new IMF working paper estimates world spending on fossil fuel subsidies:
Fossil fuel companies are benefitting from global subsidies of $5.3tn (£3.4tn) a year, equivalent to $10m a minute every day, according to a startling new estimate by the International Monetary Fund.
The IMF calls the revelation “shocking” and says the figure is an “extremely robust” estimate of the true cost of fossil fuels. The $5.3tn subsidy estimated for 2015 is greater than the total health spending of all the world’s governments.
Read more here.
This week’s student protests put the heat on Harvard:
“Throughout Harvard heat week, Harvard’s top decision-makers have been hiding from both their students and from the issue of climate justice,” protesters wrote in a statement on Wednesday. “They must face the broad, diverse, and growing coalition behind divestment from fossil fuels.”
John Ashton, formerly Britain’s top climate diplomat, writes in an open letter to the president of Shell Oil:
You deny your assets will be stranded. True, first tier assets are cheap, and those that are heavily invested in tend to bear fruit quickly. But your case also assumes failure on 2C and rates of renewables deployment long surpassed by reality.
The Bank of England is watching the carbon bubble. Bloomberg screens include a carbon risk valuation tool. The divestment movement may still be small but it is rallying young people, has moral authority, and can now make a prudential case as well as an environmental one.
Writing on the wall. Story of the world.
You could accept squarely that the days of yesterday’s business model are numbered, that the challenge now is to manage its decline and build alongside it a new business fit for today.
Bill McKibben writing in The Guardian on the coming shift in the world energy economy:
What in 2013 was the rallying cry of a few student campaigners has by 2015 become the conventional wisdom: there’s a “carbon bubble,” composed of the trillions of dollars of coal and oil and gas that simply must be left underground. Here’s the president of World Bank speaking in Davos: “Use smart due diligence. Rethink what fiduciary responsibility means in this changing world. It’s simple self-interest. Every company, investor and bank that screens new and existing investments for climate risk is simply being pragmatic….”
Mark Carney, governor of the Bank of England, did his best to explain the unwelcome news to the industry at a conference last October: the “vast majority” of the planet’s carbon reserves “are unburnable,” he said. When Shell’s chief executive hit back last month, calling a rapid transition off fossil fuel “simply naïve,” it was Tory veteran and chair of parliament’s energy committee Tim Yeo who told him off: “I do believe the problem of stranded assets is a real one now. Investors are starting to think by 2030 the world will be in such a panic about climate change that either by law or by price it will be very hard to burn fossil fuels on anything like the scale we are doing at the moment.”
Read his analysis here.
The Washington Post reports from the electricity battleground in the clean energy transition, where surprising political realignments are emerging:
“Conservatives support solar — they support it even more than progressives do,” said Bryan Miller, co-chairman of the Alliance for Solar Choice and a vice president of public policy for Sunrun, a California solar provider. “It’s about competition in its most basic form. The idea that you should be forced to buy power from a state-sponsored monopoly and not have an option is about the least conservative thing you can imagine.”
Read more here.
Peter Barnes writes in Yes! magazine:
THERE’S LONG been a notion that, because money is a prerequisite for survival and security, everyone should be assured some income just for being alive. The notion has been advanced by liberals such as James Tobin, John Kenneth Galbraith, and George McGovern, and by conservatives like Friedrich Hayek, Milton Friedman, and Richard Nixon. It’s embedded in the board game Monopoly, in which all players get equal payments when they pass Go. And yet, with one exception, Americans have been unable to agree on any plan that guarantees some income to everyone. The reasons lie mostly in the stories that surround such income. Is it welfare? Is it redistribution? Does it require higher taxes and bigger government? Americans think dimly of all these things.
But then, there’s the exception.
Read all about it here.
From the Economist:
“I DON’T care who writes a nation’s laws, or crafts its advanced treatises, if I can write its economics textbooks.” So said Paul Samuelson, an American economist who more than achieved his aim by producing a bestseller. But debate swirls around the teaching of the dismal science—nowhere more so than in Britain.
Read more here.