The one-handed economist

I’ve been alarmed about climate change chaos (CC) since 2016 (before that, I thought it was a distant, negligible threat to me), and I’ve been evolving my perspective on what it means to us.

My first conclusion was that mitigation had failed. So I turned my attention to adaptation, which was easy because it means dealing with a more aggressive water (and thus heat, storms, floods, etc.) cycle. 

In my first vision, I thought of a zombie apocalypse, of great waves flooding unprepared cities, Zero-day events everywhere, etc. I don’t think that any more because I see CC as a series of small cuts that draw a drop of blood per occurrence but, taken together, bleed you out.

But what does it mean to suffer these cuts? Can’t we ignore them, as we get richer and thus able to afford the costs of CC? Unlike William Nordhaus or Richard Tol (right), I think not. Indeed, I think that these cuts will resemble World War II in their impact on our lives, but be worse due to their never-ending nature that will build, exponentially, until our descendants curse our blind stupidity.

So what would a perpetual WWII (WWCC) look like?

First, there will be a permanent decline in our standard of living. We will have shortages, disruptions, additional costs, and spend way more time worrying about what we’re missing, what we “really need,” and if things will be better in the future — or not. (One woman is giving up a lifetime of buying new fashion for second-hand clothes.)

Second, the future of “growth/development” will not be hopeful. Our  productive assets will be destroyed. The resources directed to defense and recovery will leave less for production. People will not choose jobs for ideals, prestige or salary, but because those jobs still exist, are protected in some way, or must be done.

Third, everyone will experience a different type of WWCC. Politics, violence, alliances, and migration will vary from place to place, with laws, nationalism, (failing) institutions, and so on. My advice is to make sure you have all your paperwork in order. Many Jews (including Anne Frank) died because they couldn’t get visas to escape the Nazis. Don’t forget the horrors of recent civil wars in Rwanda or Yugoslavia, where close neighbors (and sometimes relations) turned genocidal. Many politicians will make matters worse.

Finally, WWCC, like the war on poverty or war on drugs, will never end. That fact will make it hard to “plan for the future” and depress a lot of people. It will also undermine business investment, innovation, and the dynamism of markets that originates in our basic optimism and tendency to trust. Human society will experience dark ages not seen since the Black Death, colonization, the Little Ice Age, etc. People will die in mysterious ways, strange goings on will surprise people, witches and healers will promise redemption to those who can cross their palms with silver.

My one handed conclusion is that humans will definitely survive in a climate chaos future, but sometimes wonder if it would be better to be dead.

Addendum (19 Oct): “Ultimately, capitalism is going to lose its customers. There won’t be anybody to buy the product because everybody is going to be so poor.“

I was thinking of doing two posts (one each on libraries and revolutions), but I think I found a reasonable way to combine them.

First, revolutions.

Some claim that low union membership in the US is a sign that unions are no longer valued by workers. I think something the opposite, i.e., that unions did such a good job that they were taken for granted by middle-class workers who felt their quality of life was secure from the depredations of “capital” and other “class enemies.” Today, few union jobs remain as a combination of declining membership and right to work laws have undermined the coordinated collective action necessary for unions to represent a countervailing force against employers.

The post-WWII decline in unions has been accompanied by increasing inequality in many countries — an increase that took off under the influence of Thatcher/Reagan reforms in the 1980s and has resulted in the crisis of inequality highlighted by Piketty, Occupy Wall Street and the Tea Party. (Trump has used a version of events to justify his moronic and self-serving agenda. His actions have worsened conditions, as I’ll explain when we get to libraries below…)

These post-WWII inequality dynamics got me to thinking of two ideas: First, revolutions up-end the old order, resulting in short term losses but then medium-term prosperity. In the long run, however, the rich/powerful/elite tend to centralize their control and direct income and wealth to themselves.

Thus, the agricultural revolution occurred ±10,000 years ago, replacing semi-egalitarian hunter-gatherer societies with settled communities. In the “short-run” of the first 4,000 years (!), this system was bad for the individual but good for the group (read my reviews of Sapiens and The Secret to Our Success). After that long adjustment, however, agriculture fed an explosion of human flourishing in which the average person was better off and communities were reasonably egalitarian, at least compared to the late middle ages, when the rich and royal owned most of the land and many slaves as they grew fabulously wealthy. 

The end of this age is often linked to the French Revolution (1789) but the Industrial Revolution also played a part in overturning power relations and opening up an entirely new set of possibilities based on a different model of production. 

The industrial revolution followed a similar pattern of painful disruption, growing benefits to the working classes, and a resumption of control over income and wealth by the rich and powerful, this time at about 50 times the speed (i.e., “bad times” for 80 years rather than 4,000 years). The beginning was terrible for workers (thus the rebellion of the Luddites), but matters improved as workers unionized, slaves were freed, and the benefits of mechanized agriculture and manufacturing went to the working classes. Industrialization brought globalization (the telegraph, steam ships, migration) but also total war, as seen in the millions of victims in the two world wars. After the Great Depression and WWII, there was a firm improvement in living conditions (from a very low base) that benefitted the “average Joe” between 1950 and 1980. (These benefits didn’t go to poorer countries, some of which were lucky to escape colonial rule.)

The 1980s is seen by many as a turning point of inequality, which I’ll agree to. Yes, there was more freedom for “individuals,” but there was also a massive swing of wealth, from the majority to job creators, masters of the universe, and global tax dodgers.

The information revolution began in the 1960s, but it really took off in the 1990s, as the Internet matured and spread, driven ahead by Moore’s Law and an emerging economics of “winner takes all” platforms and economies of scale. In this scenario, short-term disruption and middle-class gains took only a decade to process before the elites were again collecting the majority of gains. Yes, Facebook is free. Yes, many people spend hours being “entertained” by their feeds. But most of this activity is a distraction from the massive concentration of income and wealth in tech companies based in the US and China (except when it comes to taxes). I’ve complained before about the negative impacts of tech — and its loss of innocence — so I’ll just leave it there.

My one-handed perspective is that revolutions are temporarily disruptive, until the elites find a way to regain control and enrich themselves at the expense of the rest of society.

So how does this relate to libraries?

A few months ago, my girlfriend was telling me that her old hometown in Romania did not have a library, as there was “not enough money” to support such an institution.

I went on a rant about how a library is probably more important than a school, as a library provides a public, free meeting space for people to study, talk and cooperate in tackling problems, planning their future or doing their homework. These “public good” services help allow anyone in the community to benefit without payment, unlike private clubs, most schools or cafes. Those benefits are probably radically higher than the cost of libraries to taxpayers, which means that they should be set up as soon as possible in new communities and protected for as long as possible in the face of tight finances. (Read this, this or most anything here.)

Try telling that to Trump voters. In this NYT article, the author visits an Arkansas community that supports Trump but doesn’t see the point of a library — or paying taxes. Instead, they seem to think it’s better for folks to “take care of their own” without funding or support from the government. I see their “go it alone” attitude as the product of a mix of bravery, naiveté and ignorance: They beleive they don’t need help, assume they can survive everything from medical emergencies to natural disasters with their own resources, and believe that taxes and spending represent a zero-sum game. This last point is perhaps the most damaging, as it denies the main reason that we have governments: the provision of public goods that cost some money to provide but provide much greater benefits to people. More importantly, public goods (like the library but also security, information, clean air, etc.) are pro-poor because they are free to users. (This article makes that point indirectly, as students care more about the basics — quiet space, wifi — than the fancy bells and whistles that tech consultants sell to trend-chasing bureaucrats.)

Thus, we arrive at a terrible paradox: Inequality is rising as the information revolution rewards elites but the poor are turning against means of helping themselves (libraries, Obamacare, etc.) due to their mistaken belief that Trump and Republicans — their tribe — cares about them. They don’t.

My one-handed conclusion is that America’s less fortunate are only going to be worse off as the rich and Republicans conspire against them. What happens next? Either they will eat cake or start another revolution — and it won’t be pretty.

 

I live in the West district in Amsterdam, where the local council has given residents power to allocate €300,000 to projects proposed by anyone.

I welcome this participatory process, but it has some flaws, which I’ll discuss here, along with my recommendations for improvement.

First, let’s clarify that this process is heavily managed. The amount to allocate is a tiny fraction of the total budget for the district, and experts make sure that proposals from the community are “feasible.” 

Even still, the voting process is flawed. Last year, I was surprised to see that I was asked to allocate the total budget of €300,000 among proposed projects. This process gave far too much weight to big projects, since projects were selected based on the number of votes they got from residents.

For example:
1st place: €50.000 project chosen via 12,839 votes = €4.03/vote
2e place: €5.000 project via 12,367 votes = €0.40/vote

As you can see, the way to win is to have a big budget, which will crowd out other projects (by absorbing the vote budget) as well as benefitting from voter fatigue, since it’s easier to choose one €50k project than choose ten €5k projects. (I’m pretty sure city bureaucrats also prefer to administer one big project over ten smaller projects, since per project set up costs are probably similar.)

Luckily, there’s an easy solution: give voters a “personal budget” of, say, €300, and then let them put 0-100 percent of that onto as many projects as they can afford. 

Thus, I can vote €150 to project 1 (€50.000, meaning its now 0.30% closer to happenings) and €150 to project 2 (a €5.000 project that’s now 3.0% to funded).

My one-handed conclusion is that voters will get better value for their taxes if they vote a personal budget. 

Addendum (19 Oct): The local bureaucrats in charge of this initiative clarified that this process will allocate 21% of the budget (good!) but they like their current method (sad!).

I wrote the headline for this post before I decided to add more content (below), but it’s good to start off with the Brexit parallels.

Climate chaos, like Brexit, combines uncertainty, missing leadership, and wild promises into a realistic scenario of enduring disaster and regret.

But climate chaos is also not like Brexit, which some interpret as a game of “chicken” between the EU and BoJo, each trying to force the other side to swerve (to avoid a messy crash) and thus win. Although BoJo is doing a terrible job, the climate chaos game is more like a game of Bambi Vs. Godzilla in which humans (Bambi) don’t do so well.

If you’ve taken the 20 seconds to make it this far, then here’s the next bit:

Climate chaos will make us poorer and undermine our futures. 

We will be poorer because we will need to spend more and more of our income and wealth in defending ourselves against the massive forces of Earth’s climate systems.

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I’ve had a number of guests on my podcast discussing various dimensions of climate chaos. Here’s the playlist, but I recommend you listen to the most recent episode with Femke Gunneweg, a 19-year old who’s suspended her studies to join Extinction Rebellion. Our chat was quite interesting.

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Have you heard of Imelda? It was a tropical cyclone that dropped 40 inches (about 1 meter) of rain on the greater Houston area last week. Perhaps you heard of Dorian? That Cat-5 hurricane tied in first place for the strongest Atlantic hurricane ever recorded, with winds of 285 kph and a storm surge of 8 meters. The US was lucky to miss most of Dorian, but the Bahamas was hit hard, with over 1,000 people presumed dead. The hurricane season has just begun.

Our futures will be up in the air because “only a few degrees” can topple governments, undermine accepted wisdom, and reorder social norms. 

What’s to be done? Here’s a quick primer:

Climate chaos drivers

The Industrial Revolution was driven by coal and later oil power. These fossil fuels allowed us to multiply our wealth by burning the condensed energy of millions of years of sunlight and photosynthesis, in a decidedly non-renewable way.

As a result, we’ve had an explosion in population, from roughly 1 billion in 1800 to 7.7 billion today. These people are also wealthier, on average, than all previous humans, which means that each person’s “footprint” is bigger and more damaging. Technology has helped us do “more with less,” but there’s no sign of reducing the rate of fossil fuel consumption (and thus GHG emissions). Record and increasing deforestation reduces the absorption of GHGs, besides bringing many other problems.

Note the irony that it’s the middle class that is the main driver of climate chaos. The rich consume way too much, but they are too few. The poor just try to stay alive (sometimes causing environmental problems), but the middle class, with their desire to spend their disposable income on more,  cheaper stuff that’s really driving this process. Marx would be annoyed.

Climate chaos facts

1. Mitigation (reducing fossil fuel consumption) is failing due to greed, political distractions, and weak global mechanisms for collective action.

2. Many politicians accept this status quo because elections today are more important than survival tomorrow (ask Bahamians).

Take Germany, for example. Most of you know about Germany’s solar panels and wind farms, but did you know that its energy transition has cost nearly $1 Trillion, that the Germans are shutting down safe functional nuclear plants (due to an accident in Japan), and that Germany’s renewable energy production, despite reaching around 20-30 percent of the total, is still in the bottom half of EU nations? I’d say that this slow progress (contrary to press releases) reflects domestic political priorities, such as the those of the German car industry. And Germany is one of the good guys. Australia, Canada, and the US are shameful laggards.

3. Scientists have been very conservative in building their models, interpreting data, and projecting future harms. This conservatism (taken to its limit at the IPCC, where nothing is published without a consensus of all contributing nations) means that the news is always worse than we expect, since projections are based on best case, rather than average scenarios. The Paris Agreement, for example, requires “yet-to-be-invented” technologies to suck GHGs from the atmosphere to even meet Nationally Determined (voluntary) targets. Where’s the Manhattan Project or Apollo Project when you need it?

4. The denial industry has been very successful at scaring politicians and driving scientists into further timidity. Oil and gas companies have millions to spend on lobbying. Most humans are busy with life, but others have decided that “climate” is a political concept rather than a scientific fact. Their belief will not keep them from drowning, burning, starving or whatever element of climate chaos kills them. Economists — with William Nordhaus at the top of the list — deserve some blame here. 

5. All of these impacts were predicted decades ago, but scientists made the mistake of talking about rises of 2C and impacts in 2100, which led many to the unfortunate conclusion that impacts would occur after they were dead — and who doesn’t like a little more warmth, anyways? As it is, the hippie doomsayers of Population Bomb, Small is Beautiful, and Limits to Growth were right, just around the time I was born. But not enough people listened 🙁

Climate chaos dangers

We’re already seeing higher sea levels, record temperatures, powerful storms, and bigger fires in unexpected places. People will die in “accidents” at a greater rate.

Chaos means uncertainty instead of risk, so insurance companies will withdraw from the market, leaving people to face 100% of their losses.

Tipping points are coming fast. The Arctic is warming at alarming rates. Icesheets in Greenland and the Antarctic are sliding, rather than melting, into the sea. Massive forest fires are adding to warming by releasing more stored carbon. Fifty percent of corals are dead. This sad list is getting longer.

Humans are barely prepared. We’ve depleted groundwater that we’re want  when drought hits. We’ve built in flood zones that will soon be underwater. We’re more excited about electric cars, reusable bottles, and banning plastic bags than cutting air travel and meat consumption by 80%. People are more worried about “decluttering” their excesses than losing their lives to the results of over-consumption.

We need to act. By diverting resources from vacations to fortifications. By building political alliances rather than attacking others who also like living. By giving the youngest people among us hope for a decent future rather than “fuck you, I got mine.”

My one-handed conclusion is that we’re on a Highway to Hell, and it’s going to take a rebellion to stop this emergency. What are you doing?