Climate Change

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Debt, wealth and climate: globally coordinated Climate Authorities for green financing

Published by Anonymous (not verified) on Thu, 23/04/2020 - 11:54pm in

By T.Sabri Öncü & Ahmet Öncü

This article first appeared in the Indian journal, Economic and Political Weekly on 18 April 2020. The authors’ contact details are at he foot of this article.

Abstract

Based on the German Currency Reform of 1948 and the “Modern Debt Jubilee” of Steve Keen, a globally coordinated orderly debt deleveraging mechanism is proposed to address the global debt overhang problem. Since the global debt overhang and lack of sufficient climate finance flows are interconnected, Climate Authorities are added to the mechanism.

Note: We completed this article two months before the Coronavirus Crisis that started in January 2020. Although we present the article as is, the Climate Authority we propose can be expanded to meet the funding needs of fighting the Corona Virus Disease by issuing not only climate bonds but also corona bonds. The Deleveraging and Climate Authorities of this article are no different than any of the special purpose vehicles such as the Primary Market Corporate Credit Facility or the Term Asset-Backed Securities Loan Facility the Fed introduced on 23 March 2020 in its response to the Coronavirus Crisis. [1] Our proposal can be combined with the 30 March 2020 United Nations call for $2.5 trillion Coronavirus Crisis package for developing countries, to provide funding for the debt jubilee of distressed economies. [2]

Introduction

In a recent article (Öncü and Öncü 2019), we proposed a globally coordinated debt deleveraging mechanism with a climate component to address the global debt overhang problem. And a few days after we finished that article, on 14 November 2019, the Institute of International Finance (IIF) issued a warning in its Global Debt Monitor Report that “[h]igh debt burdens could curb efforts to tackle climate risk.” The IIF (2019) wrote:

Global climate finance flows remain far short of what’s needed for an effective transition to a low-carbon economy. Total global issuance of sustainable loans and securities to date amounts to slightly over $1 trillion: for context, the IPCC estimates suggest that an average of $3.5 trillion ($3 trillion) in 2010 U.S. dollars is needed annually to prevent global temperatures from increasing 1.5 (2.0) degrees Celsius by 2050. To achieve this goal, public and private climate finance flows will have to be scaled up rapidly.

 According to the IIF (2019a), global debt reached an all-time peak of about $250.9 trillion in the first half of 2019, and at a total of about $121.4 trillion, the debt of the non-financial private sector comprising households and non-financial firms is its biggest component. However, we should not fall into the fallacy of division. As the United Nations Conference on Trade and Development (UNCTAD) 2019 report documents, while in developed and high-income developing countries, the non-financial private sector is more over-indebted, in middle-income and low-income developing countries, the public sector is more over-indebted (UNCTAD 2019). Therefore, the high debt burdens that could curb efforts to tackle climate risk are neither only private nor only public, but both.

Based on the International Monetary Fund (IMF) Global Debt Database (GDD) comprising debts of the public and private non-financial sectors for an unbalanced panel of 190 countries dating back to 1950, Mbaye et al (2018) find that whenever the non-financial private sector consisting of households and firms is caught in a debt overhang and needs to deleverage, governments come to the rescue through a counter-cyclical rise in government deficit and debt, and that this is not just a crisis story but a more prevalent phenomenon that affects countries at various stages of financial and economic development. Mbaye et al (2018) then conclude that if the non-financial private sector deleveraging concludes with a financial crisis, “this other form of bailout, not the bank rescue packages, should bear most of the blame for the increasing debt levels in advanced economies,” and note that their results suggest that private debt deleveraging happens before one can see it in the non-financial private debt to gross domestic product (GDP) ratio.

Furthermore, the IIF numbers are based mainly on loans and debt securities. The IMF GDD all instruments [3] data available for 45 of the 190 countries imply that these numbers grossly underestimate the actual debt stock of the non-financial private sector. Given that the world GDP was about $85 trillion in 2018, the global non-financial private sector debt to GDP ratio must be way above 150%. At this level of debt overhang, a global non-financial private sector debt deleveraging is inevitable. This means that the public sector debts of the developed and high-income developing countries will also go up. As the ongoing non-financial private sector deleveraging in the developed and high-income developing countries deepens, unless we face what is coming in an orderly fashion, a deep global recession will ensue, further constraining the governments’ ability to spend on climate change-related projects for many years to come, and our hopes to make the necessary investments and innovations to address the now existential climate crisis on time will diminish.

And despite this, although - other than the extreme right-wing and sections of some industries that have vested interests in carbon-based fuels - no one denies the need for tackling climate risk, there is no serious discussion of the need for restructuring these debts among those who acknowledge the risks associated with climate change. They appear unaware of how these unpayable debts and insufficient global climate finance flows are interconnected. For example, although it received an A+ and ranks the first among the climate plans of the United States 2020 presidential candidates according to Greenpeace, the Democratic candidate Bernie Sanders’ Green New Deal Plan mentions the word “debt” only once, and in a totally different context.

A Proposal

Our proposal is a variation on the “Modern Debt Jubilee” of Keen (2017), which is a “helicopter money” proposal in the sense that Keen proposes a direct injection of the state-created money into the personal bank accounts of the residents. The main deviation of Keen’s proposal from other “helicopter money” proposals, such as those of Wolf (2014) and Turner (2016), is that it is a blend of “helicopter money” and debt reduction: make a direct injection of the state-created money to all private bank accounts, but require that its first use is to pay down debt.

Keen’s proposal avoids two problems. The first problem is that debt forgiveness favours debtors over savers, but since everyone gets the same amount of “helicopter money,” there is no discrimination against the savers in his proposed jubilee. The second problem he avoids is that without forcing the debtors to use the “helicopter money” first to pay down debt, the “helicopter money” need not reduce the level of personal debt of the households.

One shortcoming of “helicopter money” proposals, including Keen’s, is that they all focus on the household sector. However, IIF (2019) and UNCTAD (2019) indicate that the current global debt overhang is way beyond a household sector debt overhang. With this in mind we blended Keen’s “Modern Debt Jubilee” with the German Currency Reform (GCR) of 1948, which reduced all debts. Further, since the less affluent keep most of their savings in saving accounts whereas the more affluent in financial and real assets, as is the case in almost every country these days, we left the deposits intact to protect the less affluent, although the GCR of 1948 cancelled 93.5% of the deposits.

The original plan of the Allied powers occupying the western zones of Germany, the United States, the United Kingdom and France, consisted of

(i) conversion of currency and all debts at a ratio of 10 Reichsmarks for one Deutschemark, leaving payments, including wages, rents, taxes, and social insurance benefits, as well as prices other than those of debt securities intact, and

(ii) a fund built with a capital levy for the Lastenausgleich (equalisation of burdens), which would correct part of the inequity between owners of debt, and owners of real assets and shares of corporations.

Had that happened, the balance sheets of all financial institutions would have remained unimpaired, assuming no bad debts. However, the actual GCR deviated from the planned GCR in that it required all financial institutions to remove from their balance sheets any securities of the Reich and cancel all accounts and currency holdings of the Reich, and of a few others, which impaired the balance sheets of nearly all of the financial institutions (Bennet 1950).

The solution the GCR offered was the equalisation claims: “Financial institutions to receive state equalisation claims to restore their solvency and provide a small reserve if either or both were impaired by these measures” (Bennet 1950). The equalisation claims were interest-bearing government bonds of the then non-existing government and had no set amortisation schedules. They were just placeholders on the assets side of the balance sheets to ensure that financial institutions looked solvent. They later became bonds of the Federal Republic of Germany, established on 23 May 1949.

The equalisation claims were used for the second time in 1990, during the German reunification, because unified Germany also faced a severe balance sheet problem in the financial sector, again resulting from unequal conversion of assets and liabilities. The equalisation claims are well-tested, and historians have found no evidence that the equalisation claims imposed any long-term negative repercussions on either the viability of financial markets or economic growth (van Suntum and Ilgmann 2013).

The Lastenausgleich Law was passed after the establishment of the Federal Republic of Germany. Effective from 1 September 1952, it increased the compensation of the savers by an additional 13.5% so that their loss was reduced to 80%. The law also imposed a nominal 50% capital levy on capital gains, but allowed payment in instalments over 30 years, making the levies merely an additional property tax rather than a wealth tax.

Deleveraging, Lastenausgleich and Climate Authorities

We proposed two authorities in each country: a deleveraging authority and a Lastenausgleich authority. We also proposed to establish a multi-currency “Global Climate Fund” under the UN and allowed to maintain deposit accounts at the central banks of all countries. But, if the Green Climate Fund (GCF) already under the United Nations Climate Change (UNFCCC) is any indication, such a fund cannot exist without national authorities representing their governments. There are such authorities in the GCF.

Therefore, there would be three authorities to maintain a deposit account at the Central Bank in each country: A deleveraging authority for leverage reduction, Lastenausgleich authority for capital levies, and a climate authority for financing needs in developing national climate plans. But since debt forgiveness and capital levies for the equalisation of burdens in a single country would lead to a capital flight to tax havens, the efforts of the national authorities must be coordinated globally.

Given their mandates, the GCF under the UNFCCC, the Financial Stability Board (FSB), and the UN Economic and Social Council (ECOSOC) could coordinate the efforts of the national climate authorities, deleveraging authorities, and Lastenausgleich authorities, respectively. Indeed, there already exists a tax committee in the UN ECOSOC, and there have been proposals to turn it into an intergovernmental tax body within the UN ECOSOC. Further, the global coordinator of the national Lastenausgleich authorities should consider the creation of a central database on worldwide ownership of financial assets, that is, a “global financial register,” that Thomas Piketty and Gabriel Zucman have proposed. The Independent Commission for the Reform of Inter­national Corporate Taxation (ICRICT) expanded the idea to a “global asset registry” (ICRICT 2019), and Stiglitz, Tucker, and Zucman (2019) further expanded it to a “global wealth registry.” The more comprehensive is the registry, the better it would be for the equalisation of burdens.

The Lastenausgleich authority would be under the finance ministry, whereas the Deleveraging and Climate Authorities would be non-profit corporations promoted by the government. The government would capitalise the Deleveraging and Climate Authorities by the Treasury issuing zero-coupon perpetual bonds, that is, our proposed equalisation claims. The Deleveraging Authority would then sell its equalisation claims to the Central Bank in exchange for an increased balance in its deposit account at the Central Bank while the Climate Authority would wait until the deleveraging concludes. Further, the Climate Authority would not be allowed to open deposit accounts to its borrowers, to ensure that it would be a pure financial intermediary, not a bank, although it has the privilege of maintaining a deposit account at the central bank.

Deleveraging process

We assume that a globally agreed-upon debt reduction percentage that would bring the global non-financial sector leverage well under 100% is determined, and that all countries agreed to act simultaneously. Under these assumptions, the mechanism is:

(i) the financial institutions comprising the banks and non-banking financial institutions (NBFIs) write down all the loans and debt securities on both sides of their balance sheets by the required percentage,

(ii) the Deleveraging Authority compensates the banks and NBFIs for the loss if any, and

(iii) the Deleveraging Authority pays each qualified resident their allocated amount less the debt relief if any. Since our percentage-based debt reduction proposal is equivalent to the Deleveraging Authority purchasing a portion of each of the loans and debt securities and cancelling the purchased portions, there is no violation of any of the loan and debt security contracts in our proposed mechanism.

Given that almost all corporations in all countries are debtors, there should not be a need to pay any amount to corporations. Further, it is possible for some NBFIs after the above debt reduction that their liabilities go down more than their assets, and they gain. When a gain happens, the institution should owe equalisation liabilities to the Deleveraging Authority of its jurisdiction. Note that equalisation liabilities are not novel either as they were used during the German Reunification of 1990. We propose that the national deleveraging authorities should independently determine the interest rates of the equalisation liabilities based on the prevailing government interest rates in their countries. We should also mention that as all debts mean all debts, public sector debts will also be written down by the same percentage. Hence, our deleveraging mechanism addresses the public sector debt overhang also. One exception is the official debts of the sovereigns that fall out of the scope of our proposed mechanism. Official debts should be handled by other means.

Even if the above deleveraging materialises, it is likely that there will remain some bad debts to be resolved in many countries. If that happens, the Deleveraging Authority could then purchase the bad debts at their book values less the provisions from the impaired financial institutions with the funds in its central bank account to resolve through asset management companies (AMCs) it establishes and, in addition, may invite private AMCs. While personal and small and medium-sized enterprise debts that cannot be paid would be cancelled fully, other debts should be subjected to usual resolution procedures such as the ones detailed in the “Key Attributes of Effective Resolution Regimes for Financial Institutions” document of the FSB (2014).

After the deleveraging

After the deleveraging, the balance of the Deleveraging Authority account at the central bank goes down and the total balance of the bank accounts at the central bank, that is, reserves go up by the total payment the Deleveraging Authority made. Hence, the base money goes up by the total payment of the Deleveraging Authority. Since NBFIs and residents cannot maintain deposit accounts at the central bank by law and, therefore, cannot be paid in reserves, they have to be paid through a bank which creates deposits for the NBFIs and residents against reserves. Hence, the broad money goes up by the amount of the payment to the NBFIs and residents.

One issue is that in many countries, the bank and NBFI balance sheets are multi-currency balance sheets. However, the Deleveraging Authority payments are in domestic currency, which may create currency risk for some banks and NBFIs. Backed by the central banks, the globally coordinated national deleveraging autho­rities should stand ready to intervene to avoid potential crises. Furthermore, capital controls should also be considered to curtail the surge in capital outflows, to reduce illiquidity driven by sell-offs in developing country markets and to arrest declines in currency and asset prices.

The authorities would require their domestic banks and other financial institutions to spend an internationally agreed-upon percentage of their newly found money, if any, after the deleveraging on the interest-bearing, finite-maturity climate bonds the national climate authorities would issue. Since the promoter of the Climate Authority is the government, the climate bonds would have the same credit with the government bonds, and the Central Bank would accept the climate bonds in its open market operations.

Therefore, the Climate Authority bonds backed by the funds in its Central Bank account and the green loans it would make, would be one of the tools to manage the reserves and, although to a lesser extent, the deposits created through the equalisation claims. In addition, the climate bonds could be used for the greening of the financial system through the investment of foreign exchange reserves of the central banks the Bank of International Settlements (BIS) proposed (BIS 2019).

A second tool to manage the reserves and deposits created through the equalisation claims, a form of which Coppola (2019) also proposed, could be that the Central Bank issues its interest-bearing finite-maturity bonds backed by the equalisation claims for sale in the market and also for its open market operations.

A third tool could be the loan-to-deposit ratio restrictions on the banks’ credit extension to manage the liquidity in the economy. The loan-to-deposit ratio restrictions have been employed in many countries and two important examples are China and India, although effective from 1 October 2015, China abandoned the 75% loan-to-deposit ratio requirement on banks—which was enacted into law and put into effect in 1995—on 29 August 2015, to bolster lending as the Chinese economy started to slow down in 2015. [4]

However, the loan-to-deposit ratio requirement, called the statutory liquidity ratio (SLR) requirement, is still in effect in India. The SLR requirement can be met not only by holding reserves but also by holding gold and government-approved securities (see Öncü, 2017 for details). The current SLR requirement in India is 18.5%, and the aggregate loan-to-deposit ratio of the Indian banking system is about 77.5% in November 2019. [5]

Lastly, equipped with a “global wealth registry,” the Lastenausgleich authorities would collect progressive wealth taxes from the owners of real and non-debt financial assets for the equalisation of burdens. While a part of these taxes could be used to retire some of the equalisation claims and the corresponding reserves and deposits created in the deleveraging process, another part could be transferred to the climate authorities, and the rest could be spent in the interests of the society such as on healthcare, elderly care, education, and public transportation, to name a few.

Debt relief, inevitable though it may be, is not enough. All it would do is to give the world a break, after which another speculative debt bubble will form. Under the existential threat of climate change, we must take extraordinary measures to break up this cycle of excessive debt build-up, before it is too late. The Lastenausgleich and Climate Authorities could be among the other measures.

Authors: Ahmet Öncü, aoncu@sabanciuniv.edu Sabancı University, İstanbul, Turkey and T. Sabri Öncü sabri.oncu, @gmail.com İstanbul Kültür University, İstanbul, Turkey

The authors would like to thank Yılmaz Akyüz, Dirk Bezemer, Jayati Ghosh, Michael Hudson, Michael Hughes, Steve Keen and Richard Vague for discussions. Michael Hudson brought the German Currency Reform of 1948 to our attention. Michael Hughes helped us improve our understanding of the German Currency Reform of 1948.

References

Bank of International Settlements. 2019. Green Bonds: the Reserve Management Perspective. Available online at: https://www.bis.org/publ/qtrpdf/r_qt1909f.htm, last accessed on December 18, 2019.

Bennet, J. 1950. The German Currency Reform. The Annals of the American Academy of Political and Social Science, 267, 43–54.

Financial Stability Board. 2014. Key Attributes of Effective Resolution Regimes for Financial Institutions. Available online at: https://www.fsb.org/wp-content/uploads/r_141015.pdf, last accessed on December 18, 2019.

Independent Commission for the Reform of International Corporate Taxation. 2019. A Roadmap for a Global Asset Registry. Available online at: https://www.icrict.com/press-release/2019/3/25/icrictnew-paper-a-roadmap-for-a-global-asset-registry-measuring-and-tackling-inequality-curbing-tax-avoidance-tax-evasion-corruption-and-illicit-financial-flows, last accessed on December 18, 2019.

International Institute of Finance. 2019. Global Debt Monitor, November 2019. Available online on subscription at: https://www.iif.com/Research/Capital-Flows-and-Debt/Global-Debt-Monitor, last accessed on November 29, 2019.

Keen, S.  2017. Can We Avoid Another Financial Crisis? Cambridge and Malden: Polity Press.

Mbaye, S., M. Moreno-Badia and K. Chae. 2018. Bailing Out the People? When Private Debt Becomes Public. IMF Working Paper 18/141.

Öncü, T. S. 2017. Bad Bank Proposal for India: A Partial Jubilee Financed by Zero Coupon Perpetual Bonds, Economic & Political Weekly, 52(10), 12–15.

Öncü, A. and T. S. Öncü. 2019. A New Framework for Global Debt Deleveraging: Globally Coordinated Deleveraging Authorities, available at:  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3492749

Stiglitz, J. E., T. N. Tucker and G. Zucman. 2019. The Starving State: Why Capitalism’s Salvation Depends on Taxation. Available at: https://www.foreignaffairs.com/articles/united-states/2019-12-10/starving-state.

Turner, A. 2016. Between Debt and the Devil: Money, Credit and Fixing Global Finance. Princeton: Princeton University Press.

United Nations Conference on Trade and Development. 2019. Trade and Development Report 2019. Available online at: https://unctad.org/en/PublicationsLibrary/tdr2019_en.pdf, last accessed on December 3, 2019.

van Suntum, I. and C. Ilgmann. 2013. Bad Banks: A Proposal Based on German Financial History. European Journal of Law and Economics 35:367–384

Wolf, M. 2014. The Shifts and Shocks. London: Penguin

Footnotes

[1] https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm

[2] https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2315  

[3] https://www.imf.org/en/Publications/WP/Issues/2018/05/14/Global-Debt-Database-Methodology-and-Sources-45838

[4] https://economictimes.indiatimes.com/news/international/business/china-removes-75-cap-on-loan-to-deposit-ratio/articleshow/48724491.cms?from=mdr

[5] https://www.thehindubusinessline.com/opinion/indian-banking-continues-to-be-metro-centric/article30069880.ece#

 

Happy Sesquicentennial Birthday, Vladimir Lenin! (Oh, And Happy Half Century Earth Day)

Published by Anonymous (not verified) on Thu, 23/04/2020 - 10:24pm in

(Dan here…a day late to AB better than not) Happy Sesquicentennial Birthday, Vladimir Lenin! (Oh, And Happy Half Century Earth Day) A half century ago today was the first Earth Day, which I paerticipated in while at the University of Wisconsin-Madison.  Although I did not know him well, I even met the founder of the […]

The Solutions to the Climate Crisis No One is Talking AboutBoth...

Published by Anonymous (not verified) on Thu, 23/04/2020 - 5:43am in

The Solutions to the Climate Crisis No One is Talking About

Both our economy and the environment are in crisis. Wealth is concentrated in the hands of a few while the majority of Americans struggle to get by. The climate crisis is worsening inequality, as those who are most economically vulnerable bear the brunt of flooding, fires, and disruptions of supplies of food, water, and power.

At the same time, environmental degradation and climate change are themselves byproducts of widening inequality. The political power of wealthy fossil fuel corporations has stymied action on climate change for decades. Focused only on maximizing their short-term interests, those corporations are becoming even richer and more powerful — while sidelining workers, limiting green innovation, preventing sustainable development, and blocking direct action on our dire climate crisis.

Make no mistake: the simultaneous crisis of inequality and climate is no fluke. Both are the result of decades of deliberate choices made, and policies enacted, by ultra-wealthy and powerful corporations.

We can address both crises by doing four things:

First, create green jobs. Investing in renewable energy could create millions of family sustaining, union jobs and build the infrastructure we need for marginalized communities to access clean water and air. The transition to a renewable energy-powered economy can add 550,000 jobs each year while saving the US economy $78 billion through 2050. In other words, a Green New Deal could turn the climate crisis into an opportunity - one that both addresses the climate emergency and creates a fairer and more equitable society.

Second, stop dirty energy. A massive investment in renewable energy jobs isn’t enough to combat the climate crisis. If we are going to avoid the worst impacts of climate change, we must tackle the problem at its source: Stop digging up and burning more oil, gas, and coal.

The potential carbon emissions from these fossil fuels in the world’s currently developed fields and mines would take us well beyond the 1.5°C increased warming that Nobel Prize winning global scientists tell us the planet can afford. Given this, it’s absurd to allow fossil fuel corporations to start new dirty energy projects.

Even as fossil fuel companies claim to be pivoting toward clean energy, they are planning to invest trillions of dollars in new oil and gas projects that are inconsistent with global commitments to limit climate change. And over half of the industry’s expansion is projected to happen in the United States. Allowing these projects means locking ourselves into carbon emissions we can’t afford now, let alone in the decades to come.

Even if the U.S. were to transition to 100 percent renewable energy today, continuing to dig fossil fuels out of the ground will lead us further into climate crisis. If the U.S. doesn’t stop now, whatever we extract will simply be exported and burned overseas. We will all be affected, but the poorest and most vulnerable among us will bear the brunt of the devastating impacts of climate change.

Third, kick fossil fuel companies out of our politics. For decades, companies like Exxon, Chevron, Shell, and BP have been polluting our democracy by pouring billions of dollars into our politics and bankrolling elected officials to enact policies that protect their profits. The oil and gas industry spent over $103 million on the 2016 federal elections alone. And that’s just what they were required to report: that number doesn’t include the untold amounts of “dark money” they’ve been using to buy-off politicians and corrupt our democracy. The most conservative estimates still put their spending at 10 times that of environmental groups and the renewable energy industry.

As a result, American taxpayers are shelling out $20 billion a year to bankroll oil and gas projects – a huge transfer of wealth to the top. And that doesn’t even include hundreds of billions of dollars of indirect subsidies that cost every United States citizen roughly $2,000 a year. This has to stop.

And we’ve got to stop giving away public lands for oil and gas drilling. In 2018, under Trump, the Interior Department made $1.1 billion selling public land leases to oil and gas companies, an all-time record – triple the previous 2008 record, totaling more than 1.5 million acres for drilling alone, threatening multiple cultural sites and countless wildlife. As recently as last September, the Trump administration opened 1.56 million acres of Alaska’s Arctic National Wildlife Refuge to oil drilling, threatening Indigenous cultural heritage and hundreds of species that call it home.

That’s not all. The ban on exporting crude oil should be reintroduced and extended to other fossil fuels. The ban, in place for 40 years, was lifted in 2015, just days after the signing of the Paris Climate Agreement. After years of campaigning by oil executives, industry heads, and their army of lobbyists, the fossil fuel industry finally got its way.

We can’t wait for these changes to be introduced in 5 or 10 years time — we need them now.

Fourth, require the fossil fuel companies that have profited from environmental injustice compensate the communities they’ve harmed.

As if buying-off our democracy wasn’t enough, these corporations have also deliberately misled the public for years on the amount of damage their products have been causing. 

For instance, as early as 1977, Exxon’s own scientists were warning managers that fossil fuel use would warm the planet and cause irreparable damage. In the 1980s, Exxon shut down its internal climate research program and shifted to funding a network of advocacy groups, lobbying arms, and think tanks whose sole purpose was to cloud public discourse and block action on the climate crisis. The five largest oil companies now spend about $197 million a year on ad campaigns claiming they care about the climate — all the while massively increasing their spending on oil and gas extraction.

Meanwhile, millions of Americans, especially poor, Black, Brown, and Indigenous communities, already have to fight to drink clean water and breathe clean air as their communities are devastated by climate-fueled hurricanes, floods, and fires. As of 2015, nearly 21 million people relied on community water systems that violated health-based quality standards. 

Going by population, that’s essentially 200 Flint, Michigans, happening all at once. If we continue on our current path, many more communities run the risk of becoming “sacrifice zones,” where citizens are left to survive the toxic aftermath of industrial activity with little, if any, help from the entities responsible for creating it.

Climate denial and rampant pollution are not victimless crimes. Fossil fuel corporations must be held accountable, and be forced to pay for the damage they’ve wrought.

If these solutions sound drastic to you, it’s because they are. They have to be if we have any hope of keeping our planet habitable. The climate crisis is not a far-off apocalyptic nightmare — it is our present day.

Australia’s bushfires wiped out a billion animals, California’s fire season wreaks more havoc every year, and record-setting storms are tearing through our communities like never before. 

Scientists tell us we have 10 years left to dramatically reduce emissions. We have no room for meek half-measures wrapped up inside giant handouts to the fossil fuel industry. 

We deserve a world without fossil fuels. A world in which workers and communities thrive and our shared climate comes before industry profits. Working together, I know we can make it happen. We have no time to waste.

Earth Day at 50

Published by Anonymous (not verified) on Thu, 23/04/2020 - 2:40am in

  “A unique day in American history…a day set aside for a nationwide outpouring of mankind seeking its own survival..a day dedicated to enlisting all the citizens of a bountiful country in a common cause of saving life from the … Continue reading

The post Earth Day at 50 appeared first on BillMoyers.com.

Happiness and the COVID-caused Recession

Published by Anonymous (not verified) on Wed, 22/04/2020 - 12:58am in

By Beth Allgood

Modified from the original published in Our Daily Planet (ourdailyplanet.com) on March 21, 2020.

In 2013, the United Nations designated March 20th as the International Day of Happiness to recognize the importance of happiness and wellbeing in the lives of people around the world. Last year I attended the launch of the annual UN World Happiness Report in New York. This year the UN is closed to the public, and the 2020 Report launch was virtual due to the COVID-19 pandemic.

What a difference a year makes. As we self-isolate and practice social distancing, we begin to ponder the nature of happiness. Can we still be happy in the midst of a pandemic and the resulting recession? Can we—the collective we as a society—look at this as an opportunity to make the necessary changes to support our wellbeing instead of focusing on GDP growth at all costs? Where will the world be by next March 20th? What lies beyond the crossroads we’ve come to?

Family dinner during the COVID recession

As stay-at-home orders are instituted across the country, we have time to consider what really makes us happy. (Image: CC BY 2.0, Credit: Rubbermaid Products)

The 2020 World Happiness Report FAQ indicates that COVID-19 poses great risks to some of the key drivers of wellbeing, especially to health and income. But, it also states, “A high trust society quite naturally looks for and finds co-operative ways to work together to repair the damage and rebuild better lives. This has led sometimes to surprising increases in happiness in the wake of what might otherwise seem to be unmitigated disasters.”

This is a profound finding, and one that can help us understand why some societies are more resilient in the face of disasters than others. The authors go on to say that when communities and institutions work together, their common effort “delivers a heightened sense of belonging, and pride in what they have been able to achieve by way of mitigation. These gains are sometimes great enough to compensate for the material losses. But, where the social fabric is not strong enough to support co-operative action on the required scale, then fear, disappointment and anger add to the happiness costs of a disaster.”

Those of us with the privilege of working from home have a rare chance to slow our lives down at the busiest edges (commuting, for example!) and reflect upon what really makes us happy. Some are conducting virtual meetings with cats and dogs on their laps as a form of stress relief. Others are having lunches or dinners with their family members, some for the first time in a long time. Still others simply get a sense of satisfaction seeing their car sit quietly on a work day, burning no gasoline and emitting no greenhouse gases.

Wildlife

During the COVID-caused recession, the world around us recovers. (Image: CC0, Source)

The social fabric also includes those who are not so fortunate with their working arrangements. Those who must serve the public in person—in hospitals, at the grocers, on the streets, and behind the scenes at municipal utilities—deserve our utmost appreciation and, for the faithful, our heartfelt prayers. The happiness of these essential non-home workers can be served under any circumstances, if we let them know how respected and valued they are by the rest of us.

In survey after survey by the UN, OECD, Gallup, and others, family relationships, friends and community, health and vitality, purpose and meaningful work, spirituality and religion, as well as being around animals and within nature, figure prominently in many respondents’ definition of happiness.

In the very short time that these COVID-19 restrictions have been in place, we have seen and heard some amazing stories of happiness and wellbeing in the face of difficult circumstances. Stories of Italian towns coming together (emotionally) by singing in concert from their balconies; birds filling the blue skies of Wuhan; canal water running clear in Venice; and smog lifting from European cities in lockdown. These examples encourage us with the fact that positive changes do occur—even during a pandemic coupled with a recession!

We are living through something historic: this is the year that Mother Nature or an act of God has forced the world to pause. While we are quarantined, the air is clearing up, deforestation has slowed, and our wildlife is living with a little less fear. For instance, the wildlife trade and consumption bans approved by China are a critical step forward for wildlife welfare and human health. On a broader scale, the “GDP bulldozer” has slowed, giving wildlife a break across the board.

Protection of animals

As we look to the future, we see our wellbeing connected with Earth and animals as well. (Image: CC0, Credit: Tatiana)

Now is the time—indeed a rare opportunity—to look at what truly matters in our lives and for society, and to redesign our public policies to better support wellbeing for all. In my opinion this ought to include species conservation, habitat protection, and pro-climate policies. How happy could we be without all people, animals, and Earth thriving alongside us? None of these policies will succeed if the greater goal is GDP growth.

So, let us do what we can to work toward a vision of the future that is happier for everyone. The COVID-caused recession is helping us realize that such a future does not include the rabid pursuit of GDP growth. What will make us happier in the long run is a deeper connection with people, animals, and the planet.

Next March 20th, let’s really have something to celebrate!

 

 

Beth Allgood is the US Country Director at the International Fund for Animal Welfare.

The post Happiness and the COVID-caused Recession appeared first on Center for the Advancement of the Steady State Economy.


Meanwhile…climate change

Published by Anonymous (not verified) on Mon, 20/04/2020 - 12:50am in

(Dan here…I know its long, broad, … but I think it says somethings that need be said.  Another look??) by reader Ken Melvin The Anthropocene and Global Warming Anthropocene: geological epoch dating from the commencement of significant human impact on Earth’s geology and ecosystems. Someday, anthropologists and historians will look again at the possible causes […]

From Social Distance to Social Justice: An Unsolved Riddle

Published by Anonymous (not verified) on Thu, 16/04/2020 - 1:40am in

In the last two weeks of March and the first week of April, 2020 16.5 million new claims for unemployment were filed in the U.S. After the novel coronavirus is successfully contained some but not all of those jobs will return. The post-pandemic economy will not be the same as the economy before and to […]

This ‘Carbon-Negative’ Burger Is Fighting Climate Change

Published by Anonymous (not verified) on Sat, 11/04/2020 - 12:45am in

Everyone from Miley Cyrus to Trevor Noah is raving about the Impossible Burger, the vegan beef with the trademark “bleed” that debuted in 2016. It’s one of a handful of plant-based meats that have surged in popularity on claims that they can “drastically reduce humanity’s destructive impact on the global environment,” as Impossible Foods CEO Pat Brown has put it.

But what if there’s another, earth-friendlier option? What if a juice-dripping burger from an actual cow could be better for the planet than vegan-but-you’d-never-know-it imitation meat? A few burger chains are tacitly suggesting as much, offering real beef burgers that, by some measures, are more sustainable, and show how farming, done correctly, can be good for the earth.

Carbon-negative beef

Burgerville, a 60-year-old fast-food chain in the Pacific Northwest, launched the No. 6 Burger in September, so named for the sixth element in the periodic table, carbon. The No. 6 is a lesson in regenerative agriculture, a holistic land management practice that reverses climate change by rebuilding soil’s organic matter and restoring its biodiversity. 

burgervilleThe original Burgerville restaurant in Vancouver, Washington, before it closed in 2011. Credit: Wikipedia

The 100-percent grass-fed beef burger is from Carman Ranch, which practices rotational grazing on pasture, sequestering carbon back into the soil. (More on that later.) The brioche bun is baked at Grand Central Bakery from wheat grown on two Northwest farms (Small’s Family Farm and Camas Country Mill) that practice minimum tillage, which prevents erosion and carbon loss. And the aged cheddar melted atop is from Face Rock Creamery, which works with small-scale dairies within 15 miles of its facility. Every one of these enterprises is based in Oregon or Washington. The burger is currently sold at nine of Burgerville’s 41 locations. (It was slated to roll out at 16 additional locations in March, but then the coronavirus pandemic hit.) 

“Soil health is the core principle of what we do,” says Cory Carman, the 40-year-old owner of Carman Ranch. The pasture at Carman Ranch is rich with deeply rooted perennial grasses and nutrient-dense cover crops like winter pea, oats, sunflowers and a brassica mix—all plants that feed soil microbes as well as the cattle, eliminating the need for trucking in carbon-reliant feed like corn. The cattle are rotated on pasture and cycle the nutrients through their bodies, nourishing the soil with their manure, which in turn feeds the next cover crop. After they graze, that area is left fallow for as long as a year so it can regenerate. Crucially, the grasses and cover crops that the cattle munch on also pull carbon from the atmosphere and store it in the soil. 

Though Carman doesn’t have funding to test how deep a carbon sink her grazeland is, other ranches that practice regenerative grazing have. White Oak Pastures, a Bluffton, Georgia-based farm, recently had an outside firm conduct a “Life Cycle Assessment” of its rotationally grazed beef. The results show that the operation produces a net total of negative-3.5 kilograms of carbon emissions for every kilogram of beef produced. In other words, the cattle of White Oak Pastures have a net-negative impact on the environment—the very process by which they’re raised reduces climate change.

A partnership, rare and well done

Back in 2017, before the No. 6 Burger was on their menu, a few Burgerville executives visited Carman on her family’s ranch in Wallowa County, Oregon. The company wanted to put its money where its values were—fostering a more resilient regional supply chain. But the executives were wary, in part, because of the premium price that Carman Ranch beef commands. 

cory carman ranchCory Carman on her ranch in Wallowa, Oregon. Credit: Steven Jackson / Flickr

Carman convinced them that supporting her ranch would help bring the operation to scale, allowing her to lower her prices —a virtuous cycle of its own. “I told them, ‘Listen, if you want us to scale up so we can become one of your suppliers eventually, you can’t just sit around!’” she recalls. The Burgerville execs agreed, and committed to making the ranch’s grass-fed beef about seven percent of the beef in all their burgers.

The partnership worked. Burgerville’s commitment to buying a steady weekly volume allowed Carman to scale up, doubling the ranch’s production from 20 head of cattle a week to 40. Today, the Carman Ranch beef Burgerville buys goes first to the No. 6 Burger, and if anything is leftover, they’ll use it in the grind for the regular burgers. (The chain uses Country Natural Beef, which is grass-fed and corn finished, for its other burgers.) And even though the coronavirus pandemic shuttered all Burgerville restaurants to dine-in customers (38 remain open for drive-through or delivery business), they’ve stuck by their weekly order from Carman Ranch. 

Despite its $8 price tag — several dollars more than Burgerville’s $5.39 Northwest Cheeseburger — the No. 6 has been a hit. “I thought there was going to be all this pushback on pricing, but there wasn’t,” says Michelle Battista, the chain’s senior vice president for brand and marketing. From September to April 5, Burgerville sold nearly 50,000 No. 6 Burgers, nearly 14 percent of the company’s quarter-pounder burger sales. 

Impossible in nature

The No. 6 Burger is a story of long-game sustainability, in which shared risk and commitment lead to scaled-up carbon-negative farming.

The Impossible Burger’s story is different. A Silicon Valley food-tech triumph, its genetically engineered soy-based “heme” compound (the part that makes it “bleed”) has won over even un-woke fast food chains like Burger King and White Castle. But as critics like Anna Lappé, author of Diet for a Hot Planet, have pointed out, the company’s reliance on genetically modified soy is problematic in ways that have nothing to do with animal rights. 

impossible burgerOne of the biggest impacts of “vegan beef” products may be how quickly they have shifted focus away from more sustainable methods of farming and toward tech-based solutions instead. Credit: Tony Webster / Flickr

GM soy is genetically engineered so that it can be sprayed with Bayer-Monsanto’s glyphosate-based herbicide Roundup. Not only has glyphosate use been linked to the decline in honeybee and monarch butterfly populations, it has been classified by the World Health Organization as a probable carcinogen. The company’s reliance on a monoculture crop — genetically modified soy — also perpetuates one of the worst aspects of the industrial food system. Growing one crop year in and year out degrades the soil and contributes to erosion — because there are no cover crops to keep the soil in place — and also requires chemical fertilizers and other fossil fuels to harvest and transport. According to the World Food LCA Database, soybeans have a footprint of two kilograms of carbon for every kilogram of beans produced.  

Rachel Konrad, the chief communications officer at Impossible Foods, says that the company routinely scans for pesticides and herbicides and that there is no glyphosate in the Impossible Burger (though she did not deny that glyphosate is used on GM soy crops). She also disputed that relying on soy would perpetuate a monocultural food system, saying, “Animal agriculture is the No. 1 reason we’ve developed dangerous, biodiversity-killing monocultures… For what it’s worth, if you want to avoid soy for some reason, then you must eliminate animal products from your diet since livestock consumes the vast majority of all soy.” This is entirely true of the cheap feedlot beef raised in America, which is what most fast-food chains depend on. However, it is not true of ranches, like Carman’s, that practice regenerative agriculture, since their cattle is grazed on only pasture; they never eat soy or corn.  

There is also the question of whether heme, made from fermenting a genetically engineered yeast, is safe to eat. Konrad cites conclusions from the U.S. FDA and third-party food safety scientists “that the heme in the Impossible Burger is totally safe to eat.” But organizations like the Center for Food Safety and Moms Across America argue that we don’t really know, since this is the first time humans have ever consumed this unique lab-made form of heme. 

But the biggest impact of these products may be how quickly they have shifted focus away from more sustainable methods of farming and toward tech-based solutions instead. Before fake meat made a splash, at least one fast-food chain had just begun committing to more sustainably raised beef. In 2015, Carl’s Jr. introduced an antibiotic-free burger sourced from free range, grass-fed cattle. It’s no longer on the menu — now the chain sells the Beyond Burger instead. 

While some regional chains like Elevation and Bareburger have continued to source grass-fed beef from smaller family-run farms, most are still sourcing their beef from confined animal feeding lots, which are devastating for the environment, horrific for the animals and not great for human health. (Cows evolved to eat grass, not corn, which tends to make them sick). This, at least, is something that Impossible CEO Brown and proponents of regenerative agriculture agree on: our addiction to cheap feedlot beef is harming the planet. 

Burgerville’s business has been crucial to Carman Ranch’s growth. But more important than revenue, the chain has given Cory Carman — and the other farmers behind the No. 6 burger — a chance to share her mission with the wider world. “We want to get the message out: Why should you pay a premium for grass-fed beef? Why is our species dependent on the health of the soil?” She, like other practitioners of regenerative agriculture, is concerned that lab-based meat perpetuates monocultures. “The integration of animals, in some way, is critical to all ecological systems,” she says.  

The benefits of regenerative agriculture are complex, but once customers are educated, says Battista, they’re on board. “As a marketplace, we got people to grass fed,” she says. “We got people to see the difference between grass-fed and conventional feedlot beef. And people are like, ‘Yeah, I get it!’ And they connect the dots back to their own health and wellness.” 

The post This ‘Carbon-Negative’ Burger Is Fighting Climate Change appeared first on Reasons to be Cheerful.

COVID-19 is our practice run. Our future survival may be at stake, but the solutions are within our grasp. NOW.

Published by Anonymous (not verified) on Sat, 11/04/2020 - 12:42am in

Planet Earch wearing a surgical maskImage by FunkyFocus from Pixabay

“How all this plays out ultimately depends on us. The emperor is now naked and the ground for a radical paradigm shift – one based on popular sovereignty, democratic control over the economy, full employment, social justice, redistribution from the rich to the poor, relocalisation of production and the socio-ecological transformation of production and society – is indeed more fertile than it has been in a long time. Yet change won’t come from above but only through mass mobilisation once the worst of the crisis is over.” – Thomas Fazi

 

 

The BBC reported this week that more than 150 top football players had launched an initiative to help generate funds for the National Health Service to ‘help those fighting for us on the front line’ during the Coronavirus Pandemic. It noted that whilst Premier League Clubs had previously said that they would ask players to take a 30% pay cut in order to protect jobs, the Professional Footballers Association had said that players were ‘mindful of their social responsibilities’. Matt Hancock, the Health Secretary, jumped on the solidarity bandwagon and according to the BBC ‘had warmly welcomed’ the ‘big-hearted decision’.

Of course, nobody would wish to deny public support for the NHS and its workers, or the growing solidarity with those who perhaps people are now just beginning to understand represent the backbone of our society without which nothing functions. As noted in an MMT Lens a few weeks ago, at this critical time people are beginning to realise the value of the public sector and other key strategic sectors of the economy. They are also beginning to question the long-promoted propaganda that society needs the rich to create wealth, which then trickles down from the top table like manna from heaven.

We cannot fail now to notice the huge wealth inequalities that have been created by the pernicious market-driven ideology, which have poisoned our human relationships with each other, sowed division and hatred, divided communities and working people and left our public infrastructure in a state of decay.

The upsetting and often poignant daily news reports which rend our emotions are making it ever clearer that something is very wrong, as the evidence piles up before our eyes as to the long-term consequences of austerity. Indeed, it was remarkable this week to hear a BBC journalist, Emily Maitlis, challenge the prevailing ideological dogma after having failed to do so for years when she said:

“They tell us Coronavirus is a great leveller. It’s not. It’s much harder when you are poor. How do we stop making social inequality even greater? You do not survive the illness through fortitude and strength of character, whatever the Prime Minister’s colleagues will tell us.”

A surprising but timely debunking of neoliberalism from an unlikely source. A challenge to the idea that individuals are alone responsible for their fate.  A first step? Let’s hope so.

It is also becoming clear that governments are much more powerful than they have been given credit for in a market-driven world. In fact, that the market is not an all-seeing god operating outside government control. That it is government alone, through political decisions, that provides the economic infrastructure for the market to exist. That only government can ensure that our public and social infrastructure is capable of operating in good times and bad and has the capacity to respond to emergencies like the COVID-19 pandemic or the very pressing challenges facing us with respect to climate change.

However, for too long, government has tipped its hat to democracy, relinquished its sovereign powers to deliver public purpose and served other masters all aided by a media owned by those same masters who manage the narratives for their own ends.

In recent weeks, however, we have been given an inkling of that sovereign power as the Chancellor of the Exchequer opened the spending taps, thus challenging the decade-long narrative of austerity that has been justified by the lie that Labour had overspent and that the State must now pull in its horns and get the public finances back into order.

It might be getting clearer, a week or so on, that these promises are not all they are cracked up to be, but it proves without doubt, that the world is not flat and that government, not the market, holds all the cards in terms of response, particularly when one notes the corporate queue at the door of the Treasury for handouts.  The government decides its spending priorities and indeed who benefits.

To return to the footballer story, on social media many noted the huge wealth inequalities that exist and expressed the view that it is only right that the rich, including footballers, share some of their wealth.  That, of course, would be a view that many of us would share and buys into the belief that we should all contribute our fair share in taxation for the public infrastructure that we all benefit from.  Indeed, for many people paying their tax is seen as their contribution to that infrastructure.

However, we need to challenge the notion that the public infrastructure requires charitable donations from the rich or for them to pay their tax to fund it. Because it is not true. The idea appeals to our sense of fairness and equity, particularly in the light of growing public awareness of the huge inequity and injustice which exists occasioned by governments who still favour tax breaks for the rich. But it reinforces the belief that without the rich we will all be poorer. The mantra of trickledown is still entrenched and this gives the rich more power, rather than diminishing it. The last few weeks make a serious challenge to the false assumption that the rich are needed as we realise what really sustains society when the chips are down.

We need to challenge the mindset that the NHS is a charity requiring donations. It does not. Aside from the fact that what is on offer is a mere drop in the ocean in respect to the annual NHS spend and would be a salve of conscience rather than real assistance, it is yet another example of the shift in public understanding that has occurred in recent years.

This has suggested that since money is ‘in short supply’, the Big Society, instead of the State should play a bigger role in public service – from lotteries to fund vital work in the community to the growth of charitable organisations providing services to volunteering to support the NHS and other public institutions, not to mention vital medical and other research.

The implication has been that the State can no longer afford to fund the public infrastructure and people’s generosity and desire to help has been cynically utilised to fill the gaps that have arisen by political choice.

In the meantime, COVID-19 has exposed – in the grimmest way – the state of our NHS, social care, policing and other public sector bodies like the civil service and local government. The poor state of these services being the result of government economic and spending policies.

We are at a crossroads in human history and as never before we need competent government to serve the people. COVID-19 may indeed be a practice for the greater challenges we will face in connection to climate change and human survival. We must strive to make it clear what is and is not possible and the constraints which will in future determine what can and cannot be done.

Essentially, that the government as the sovereign currency issuer makes its economic and spending decisions based, not on whether it has the money, but on ideological premises. Over the last 10 years, the coalition and Tory governments made a political choice to cut funding for the NHS and other vital public services and carried on the decades-old programme of privatisation.

There was, however, no shortage of money just as there is no need for the UK government to collect tax or borrow to fund its spending choices (although that is not an argument for not paying one’s tax and that is another matter). To reiterate the oft-repeated mantra – the government finances are not like a household budget.

We need to challenge our perceptions that government has a limited pot of money to spend and realise that the real constraints are real resources, not £ sterling. Indeed, there cannot be a starker acknowledgement as we are so poignantly reminded every day with the lack of PPE, ventilators, nurses and doctors and other facilities in an NHS cut to the bone.

The scale of the challenge may seem like a mountain to climb. This is not a moment, therefore, to challenge the validity of Modern Monetary Theory with spurious arguments as so many do, holding onto false narratives which suggest that we can’t afford to save ourselves.

We have nothing to lose by informing ourselves and challenging the entrenched notions which lead us by the nose. Indeed, our future depends on our willingness to do so.

 

 

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The post COVID-19 is our practice run. Our future survival may be at stake, but the solutions are within our grasp. NOW. appeared first on The Gower Initiative for Modern Money Studies.

The superiority of stay at home orders vs. voluntary social distancing: two graphic proofs

Published by Anonymous (not verified) on Fri, 10/04/2020 - 11:18pm in

The superiority of stay at home orders vs. voluntary social distancing: two graphic proofs Here are a couple of graphs I pulled last week that I’ve been meaning to post. Together they show that mandatory “stay at home” orders have been much more effective than voluntary social distancing. First, here is a graph of the […]

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