Climate chaos will halve our wealth

I’ve been thinking of the costs of “staying in place” (in terms of consumption) while CC damages arrive since I read 2052 a few years ago (my review).

It works like this: CC means that free and useful ecosystem services (e.g., cleaning water, regulating temperatures) are turning into expensive and harmful ecosystem attacks (e.g., storms, floods, heat waves). The result is that (a) we are poorer for lack of what we used to get for free and (b) poorer still because we need to divert production aimed at consumption into production aimed at defense and recovery, a double-whammy.

So we need to run, faster and faster, only to stay in place.

This recent article from The Economist estimates that “the costs of climate change [to housing over the next 25 years]… may amount to almost a tenth of the value of the housing… or roughly $25trn.” The costs to agriculture, infrastructure, industry, goods and services, etc. should be added on top of that $25 trillion figure.

Fun facts: World GDP is now around $100 trillion. In 2014, scholars estimated that ecosystem services were worth $125 trillion per year based on 2007 data, and that the value those ecosystem services has already fallen by around $15 trillion. (A 2017 estimate gives $155 trillion, but note that the value per unit of ecosystem is rising with scarcity, i.e., as physically damaged ecosystems go “out of service.”)

So, at some point in the near future (I’d say next 10 years), we will be receiving a “net negative” flow of ecosystem services, which human produced GDP will not be able to replace, such that we are not just poorer (our benefits from GDP are smaller) but radically poorer.

Say that we gain net benefits from GDP and ecosystem services of $100T + $185T* or $285T now. If GDP grows by 3% per year and ecosystem services go to zero (remember they will be going negative) in 10 years, then our net benefits will be $134T + $0T, or $134T, a fall of more than 50 percent.

How will that go? Terribly, I am pretty sure. Here’s what TE says about the impact on property:

The impending bill is so huge, in fact, that it will have grim implications not just for personal prosperity, but also for the financial system. Property is the world’s most important asset class, accounting for an estimated two-thirds of global wealth. Homes are at the heart of many of the world’s most important financial markets, with mortgages serving as collateral in money markets and shoring up the balance-sheets of banks. If the size of the risk suddenly sinks in, and borrowers and lenders alike realise the collateral underpinning so many transactions is not worth as much as they thought, a wave of re-pricing will reverberate through financial markets. Government finances, too, will be affected, as homeowners clamour for expensive bail-outs. Climate change, in short, could prompt the next global property crash.

…and that’s just property.

I have been saying for quite some time now (since 2021, and in this paper) that CC is going to “shrink the pie” of economic production, i.e., reversing the positive trend that we’ve enjoyed since the beginning of the Industrial Revolution (200 years, to be conservative).

Consider the brutality of our fights right now, in a world with a growing pie. Now consider how those fights will worsen as the pie shrinks.

Shit’s gonna get ugly.

*The 2017 article estimates a 1.85:1.00 ratio of ecosystem services to GDP.

Interesting stuff

  1. Watch: Wow, food delivery apps are way worse than I expected (John Oliver)
  2. Listen to this excellent discussion of global geo-politics (Fareed Zakaria)
  3. Read: Mergers and acquisitions [in the US] have created food oligopolies that are inefficient, barely regulated, unfair, and even dangerous.
  4. Read: Climate chaos is making parts of Africa uninhabitable. Where will people go?
  5. Read: Households, rather than choose more leisure as their productivity increases, still work an average of 67 hours/week. Keynes didn’t understand middle class aspirations.
  6. Listen to this discussion of NIMBYism and housing prices, i.e., the boomers winning at millennials’ expense.
  7. Watch: How the US fails to teach financial literacy.
  8. Read: Your “smart” TV is not your property — it belongs to advertisers
  9. Read: For years, I was told to worry about spreading sewage sludge on land… and now we see the danger: PFAS in drinking water that causes many terrible diseases.

Are you logos- or mythos-oriented?

The terms “mythos” and “logos” are used to describe the transition in ancient Greek thought from the stories of gods, goddesses, and heroes (mythos) to the gradual development of rational philosophy and logic (logos). Source

Most of us turn to one or the other of these two perspectives, depending on circumstances, but most of us tend to favour one over the other.

I am logos-oriented. I am not religious, barely patriotic, and skeptical of policies that rely on good will to succeed. I tend to think that people act rationally, in the sense that they seek goals, that incentives can change those goals, and that they will respond in a fairly predictable way.

OTOH, I know there are many instances where people “go nuts” — sometimes for noble causes (to help a stranger) and sometimes to support strange beliefs (to fight an imagined foe).

So I need to be sensitive to the type of person or situation that I am in.

In most interactions with most people, I think it’s kinda normal to see the two different sides of the same person and we can get along just fine.

But some interactions can be troubling, such as when — for example — a Christian tells me that (a) God made the Earth 4500 years ago (their mythos against my logos) or (b) that Trump is a good president — despite being a terrible human — because he sells Bibles (their logos against my mythos). In those cases, I prefer to “agree to disagree” because it’s not worth trying to engage with such a different perspective, let alone get them to change it — since they may think that I am the one who needs change saving.

But how often can that happen, that you run into someone so different?

In the academic world, it’s a bit too common for my taste because academics can easily go for years (decades!) without facing the consequences of their beliefs, either in the people they interact with (peers agree; students better agree), which means that these academics can be more radical in their thoughts and less tolerant of those who do not hold them.

In this post, I discussed how academics in STEM and the humanities (BSc and BA, respectively) are fighting for control or power in universities. Those fights* are much worse due to their inexperience in dealing with “mixed” people in the real world, which is not just bad for their students but also for society, since the academics will not “give way” to the other side.

My bottom line is that you should “know thyself” but also know that “thy” has no monopoly on truth.

*An old joke: “Why are academic fights so brutal? Because the stakes are so small.”

Interesting stuff

  1. Read about Franz Fanon’s difficult relationship with violence, which is relevant in the face of so many people claiming he justifies “anti-colonial”  murder (cf., Gaza).
  2. More from Graham:
  3. Vote: I like “limitarianism” — putting an upper limit on wealth
  4. Listen to this fascinating (and smart) discussion of AI and life itself
  5. Read: The US government improved completely cocked up financial aid to college students.
  6. Read: “EU pumps four times more money into farming animals than growing plants.”
  7. Read the breakdown of costs for a (new) house in the US.
  8. Cry: Realpolitik is giving way to Feelpolitik – where doing stuff is replaced by just saying the stuff you would like to have done
  9. Read: Birth control for men, who won’t tolerate inconvenience like women will (costs/benefits), may lead to improvements for women’s birth control.

H/T to CD

Gimme somethin’ mister!

How can we reconcile voluntary, “win-win” market transactions with the popular notion of “giving back” ?*

Consider how sellers have traditionally marketed to you: the street vendor who tosses in an extra “free” orange; the points (or stamps) you get for spending money with X; the “complementary” peanuts or bottled water you get while traveling; “new improved” products, now with “20% free” — and so on.

Every one of these examples raises the cost of what you DO pay for, but most people seem to think they are actually getting something for free.

The same can be said about the rich people, companies and nations who “give back” to various charities. They wouldn’t need to give back if they hadn’t taken too much in the first place — via tax dodges, harmful competition** and colonialism/mercantilism, respectively.

The bottom line? You ain’t get sump’m fer nuthin.

* This post was partially inspired by Chris Rock, who complains in his latest special about “everybody’s talking bullshit… companies say ‘we give back… we give back… we don’t even like the money!'” So true (the BS part).

** My definition of “harmful” competition is much narrower than that of most people — i.e., breaking laws, externalizing negative costs, abuse of market power, etc. I am not too worried about price gouging, excess profits, etc. that are the reward for bearing risk.

Interesting stuff

  1. Read: Yet another example of American confusion over whether housing prices should be rising or falling. (It’s the same in other countries, sadly.)
  2. Read: The urban doom loop (the dynamic that I said was hitting San Francisco 10 months ago) isn’t really happening?
  3. Read the case for “moving to Detroit” to avoid climate chaos. (I brought this up years ago.)
  4. Listen to this comparison of “Catholic” vs “Protestant”  bureaucracies.
  5. Listen: What Does “Unbiased” Mean in the Digital World?
  6. Watch and learn how to use UV to kill airborne bacteria.
  7. Read: Sure, AIs are really good at translating, but there’s more to a language (culture, ways of thinking, inclusion) than just reading the menu.
  8. Listen and understand how concentrated corporate power raises American food prices while harming workers, taxpayers and the environment.
  9. Daniel Kahneman — author of Thinking Fast and Slow — has died. His example of intellectual humility deserves more emulation.
  10. Watch this interview with Dr. Nutt on how the UK’s drug policy fails. Alcohol, for example, is far more dangerous:

H/T to PB

“Exploiting” workers

My students are quick to call a job “exploitative,” and I wrote the following to frame my thoughts on those jobs and to push them to be more careful about calling too many jobs exploitative.

Workers are exploited when… 

  • They cannot chose where they work.
  • They are screwed because agreed terms are not delivered (wages, housing, hours, etc.)
  • Their working conditions are worse than agreed.

Workers are NOT exploited when… 

  • They work many hours, with bad conditions, for poor wages.
  • They can quit and go work elsewhere
  • They cannot pay for a decent standard of living.

I make these distinctions because there’s a difference between exploitation and being poor. There are MANY poor people in the world, which is why many of them are “economic refugees” to richer countries. But shit luck (those of us in the “lucky sperm club” were born with the right papers) is not the same as getting exploited.  I’ve traveled in many countries, and I appreciate our common humanity, but I am also aware of the really big differences between rich and poor countries.

That’s why I left the US (as an economic — but also social — migrant) to live in the Netherlands.  

Your thoughts? 

Interesting stuff

  1. Here are five interesting (to me) essays by Paul Graham to read:
    1. Mentoring doesn’t scale… but peer networks do.
    2. The Best Essay… is not the goal — it’s to improve your writing. Also: Writing is thinking.
    3. Experts don’t have crazy ideas — they have insights. Also: Genius comes from undirected obsession. Also: This essay (“Beyond Smart”) really describes me well, not because I am smart, but because I have lots of new ideas — the point of the essay. That difference reconciles, I think, my average intelligence with my above average ability (to me, sorry if this is egotistical) to engage with ideas.
  2. In his second 1967 essay on the “Industrial state” (dominated by large companies), Galbraith claims that large corporations “control demand” to match their production targets, a claim that many anti-capitalists are parrot without reservation. Not that Galbraith had any himself. Indeed, he goes on to say: The planning functions of the state are not ad hoc or separate developments. They are a closely articulated set of functions which supplement and fill the gaps in the planning of the modern large firm — a bold claim that does not deserve defence, especially given the fact that shortages and inflation (i.e., planning failures) were already damaging the US economy (and society). Semi-related: Paul Graham writes on the aberration of the “big company 60s” compared to the long history of start-up culture in the US.
  3. Listen: The True Story of America’s Supremely Messed-Up Immigration System
  4. Read (and make changes): The environment in which kids grow up today [with smart phones and social media] is hostile to human development.
  5. Read: They still make shoes in America.
  6. Listen to this interesting history of the notebook, and thus paper, thinking and creativity.
  7. Read a few of Paul Graham’s thoughts on sort up culture (in his essay on how he went from programming to painting to start ups — and back again):

    I learned some useful things at Interleaf, though they were mostly about what not to do. I learned that it’s better for technology companies to be run by product people than sales people (though sales is a real skill and people who are good at it are really good at it), that it leads to bugs when code is edited by too many people, that cheap office space is no bargain if it’s depressing, that planned meetings are inferior to corridor conversations, that big, bureaucratic customers are a dangerous source of money, and that there’s not much overlap between conventional office hours and the optimal time for hacking, or conventional offices and the optimal place for it.

    But the most important thing I learned, and which I used in both Viaweb and Y Combinator, is that the low end eats the high end: that it’s good to be the “entry level” option, even though that will be less prestigious, because if you’re not, someone else will be, and will squash you against the ceiling. Which in turn means that prestige is a danger sign.

    [snip]

    It’s not that unprestigious types of work are good per se. But when you find yourself drawn to some kind of work despite its current lack of prestige, it’s a sign both that there’s something real to be discovered there, and that you have the right kind of motives. Impure motives are a big danger for the ambitious. If anything is going to lead you astray, it will be the desire to impress people. So while working on things that aren’t prestigious doesn’t guarantee you’re on the right track, it at least guarantees you’re not on the most common type of wrong one.

Some articles on urban planning

As a subscriber to The Atlantic, I can read articles from 1857 to the present. It’s fascinating to read how people understood/discussed topics over these 160+ years.

Here are a few that I found searching for “urban planning” (I used my normal tools to make them accessible to you without hitting their paywall.)

If you have good articles to read, then please leave links in the comments!

Interesting stuff

  1. Read: The oceans are transitioning to become more acidic, hotter and higher  (+15m by 2500, so goodbye Netherlands… and many other cities!)
  2. Listen: Good discussion of how Chinese women are getting richer while women in “cloistered” cultures (think stay at home) are just waiting to be let out.
  3. Read: AIs offer effortless knowledge but they are likely to push us to conform to the beliefs of its algorithmic designers. Related: AIs are contributing to the “enshitification” of the Internet (Have you noticed? I see it in the fall in quality at Amazon shopping and Google search. I’m not on social media, thanks god!)
  4. Read this 1967 essay on the “New Industrial State” by John K. Galbraith. His main idea is that large corporations — as bureaucracies that dominate “market economies” — mean that markets are more planned than free. This theme is part of my recent post on setting prices, but JKG does make the mistake (from what I’ve read) of assuming that large firms can maintain power, despite their planning (failures). I can say this with confidence because none of the largest 10 firms in 1967 are in the top 10 today — and many are gone altogether.
  5. Read Jane Jacobs’s 1984 essay on urban economics and development [pdf]. Insightful!
  6. Read a slightly terrifying description of the personalities of the TechBros who are shaping our lives.
  7. Read: Local governments are bulling the press (which is calling attention to shenanigans) — just another sign of end times for America?
  8. Read: Climate chaos is already disrupting seasonal fruits… and much more to come!
  9. Read: Another step in collapse: Climate chaos is hitting Europe, but nobody is doing “anything” about it (compared to pursuing other goals that make CC worse)
  10. Read: We need more heresy, not less.