tag:blogger.com,1999:blog-8524070301101240472.post606903497830255921..comments2023-09-28T08:13:11.489-07:00Comments on Only In It For The Gold: A Prolonged Economic RelaxationMichael Tobishttp://www.blogger.com/profile/08229460438349093944noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-8524070301101240472.post-10294004360250272972008-02-13T18:54:00.000-08:002008-02-13T18:54:00.000-08:00I once read that Simon Kuznets, the economist who ...I once read that Simon Kuznets, the economist who created the concept of GNP measurement for the U.S. in the 1930's, initially included the value of natural resources as an asset, but they were taken out of the equations when the government actually put his work to use.<BR/><BR/>On consumption, Veblen is still worth reading:<BR/><BR/>http://en.wikipedia.org/wiki/The_Theory_of_the_Leisure_ClassAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-89729042204774342562008-02-11T15:26:00.000-08:002008-02-11T15:26:00.000-08:00Just read these egregious quotes and thought I wou...Just read these egregious quotes and thought I would post here, because, unfortunately it speaks volumes for how anithetical "the environment" is for certain branches of economic thought...<BR/><BR/>The quotes are from Jean-Baptiste Say, of "Say's Law" fame (colloquially "supply creates its own demand")... Say's writings had a major influence on the development of neoclassical economics, and directly influenced people like Thomas Sowell and Art Laffer...<BR/><BR/>Ok. Here is M. Say discussing natural resources: "Natural resources are inexhaustible, because if they weren't we wouldn't obtain them for free. Since they can be neither multiplied nor exhausted they are not the object of economic sciences." As preposterous as that is, one is tempted to think that Say was just having a bad day when he wrote that. Nope. He later comments: "We cannot consume natural resources; by breathing atmospheric air, we alter, in fact we destroy, its property to sustain life: but we do not consume any resource, because it had no value; because we could enjoy it without acquiring it for a price, without paying for it."<BR/><BR/>Omg, it is so backwards... Granted, he was writing in the early 19th century, but you can get some inkling of the long-standing "place" that the "the environment" has held in history neoclassical economic thought...<BR/><BR/>I still think that the policy prescriptions for GHG's, etc.(pigovian taxes, cap&trade, etc.) are the right tools, but I shudder when I think about all the other baggage that comes along with so much of the prevailing economic paradigms...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-29606809012648721802008-02-10T15:03:00.000-08:002008-02-10T15:03:00.000-08:00While the economy 'produces money' much of it is i...While the economy 'produces money' much of it is illusory, and disappears -- the banks only have to put one dollar in their vault out of say ten you bring them to put into savings, they lend out the rest.<BR/><BR/>And they figure each of the dollars lent out increases over time.<BR/><BR/>Where does the projected future money go? <BR/><BR/>There are roughly as many millionaires in the USA as there are children in poverty.<BR/><BR/>"One Bush Left Behind<BR/>by Greg Palast<BR/>January 29, 2008<BR/><BR/>Here’s your question, class:<BR/><BR/>In his State of the Union, the President asked Congress for $300 million for poor kids in the inner city. As there are, officially, 15 million children in America living in poverty, how much is that per child? Correct! $20.<BR/><BR/>Here’s your second question. The President also demanded that Congress extend his tax cuts. The cost: $4.3 trillion over ten years. The big recipients are millionaires. And the number of millionaires happens, not coincidentally, to equal the number of poor kids, roughly 15 million of them. OK class: what is the cost of the tax cut per millionaire? That’s right, Richie, $287,000 apiece."<BR/><BR/>Imagine no child left in poverty.<BR/>Affordable. Easy. What's the point of an economy that sucks money from the shallow end and pumps it always to those who have the most already, and consumes the natural stocks of the planet far faster than they can be restored?<BR/><BR/>Picture it:<BR/><BR/>http://www.lcurve.org/LCurveVideo.htm<BR/><BR/>How much of that 'money' the rich have is illusory? Maybe 200 billion dollars. Some of it's a bubble in your retirement 401k account, too.<BR/><BR/>http://www.ft.com/cms/s/0/486fb178-c2b9-11dc-b617-0000779fd2ac.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-28186255517589476112008-02-07T18:23:00.000-08:002008-02-07T18:23:00.000-08:00Thank you Michael. I'd add to your excellent littl...Thank you Michael. I'd add to your excellent little essay and to mail's point that perfect Vonnegut quotation:<BR/><BR/><I>The good earth: we could have saved it but we were too damn cheap and lazy</I><BR/><BR/>Best,<BR/><BR/>DDanohttps://www.blogger.com/profile/03709762632849004871noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-29838494609602937632008-02-07T17:25:00.000-08:002008-02-07T17:25:00.000-08:00I agree that the belief that continuous endless gr...I agree that the belief that continuous endless growth is desirability, necessary and forever possible is nuts and in the end dooms us and the planet. We have a situation where our economies are geared to always be growing and any period of negative growth (recession) is considered to be abnormal and disastrous. The economy will always fluctuate, so we need to find a way to structure it so that it can oscillate between phases of growth and recession, staying on an even, sustainable trajectory.<BR/><BR/>I wonder if a solution may be to engineer the economic system such that during recession phases, the public sector soaks up the un- and under-employed to undertake sustainability and community service related tasks.<BR/><BR/>For example: it is apparent everywhere you look, that nature, landscapes and natural resources are in decline. It would be possible to arrest that decline, but it would take orders of magnitude more effort and resources that are currently devoted to the task. When I look at the rate at which weeds are invading the bushland remnants and reserves here in Australia I despare. If we employed thousands of trained bushland managers and we could manage it. But we have only a fraction of that number. The problem is that such work does not make profit, and certainly no export profit, so in our ever more privatized economy only token effort is put toward it.<BR/><BR/>Would it not make sense to work out a way to enable the economy to shift dynamically between greater or lesser employment in sectors undertaking such activities - in response to growth/recession phases, thereby flattening out the impacts of the cycles.Craig Allenhttps://www.blogger.com/profile/03856401669036430143noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-50391476048879800052008-02-07T14:59:00.000-08:002008-02-07T14:59:00.000-08:00Mark, I think there are people trying to make the ...Mark, I think there are people trying to make the lesson less striking than it might appear. There are those who like to believe that white people have a monopoly on overconsumption as well as those who don't want to believe inthe concept of overconsuption at all.<BR/><BR/>I can't imagine slavers fitting in with what I've read. The society had greatly contracted and was totally isolated when discovered by Europeans in the 18th c.<BR/><BR/>There is some argument that the trees could not reseed because of the rats imported by the Polynesians as an important factor.<BR/><BR/>Again, I highly recommend Jared Diamond's book "Collapse" about this. <BR/><BR/>There is little doubt that there was a prosperous society that had a hand in its own abrupt and severe decline. Furthermore, a previously adaptive ideology had become maladaptive. Much will always remain mysterious about Easter Island but the core similarities to our circumstances are very hard to escape.Michael Tobishttps://www.blogger.com/profile/08229460438349093944noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-53524985862733977352008-02-07T14:32:00.000-08:002008-02-07T14:32:00.000-08:00You cite Easter Island as an example of out-of-sca...You cite Easter Island as an example of out-of-scale development and ecological collapse. I've seen the suggestion that the Easter Island collapse was in fact driven from the outside, by slavers. Wikipedia...<BR/><BR/>http://en.wikipedia.org/wiki/Easter_island#Destruction_of_the_ecosystem<BR/><BR/>doesn't really mention this but does suggest there is some controversy about the state of the island when Europeans first arrived.<BR/><BR/>Do you have any comment on this? Is Easter Island perhaps not a good example to use?Markhttps://www.blogger.com/profile/16914264739638166750noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-29291831862963102732008-02-07T13:10:00.000-08:002008-02-07T13:10:00.000-08:00mz, note I did say "as a first cut".I am in favor ...mz, note I did say "as a first cut".<BR/><BR/>I am in favor of progress, indeed I think one of the saddest of the world's failures in my lifetime is in our losing sight of what "progress" once meant.<BR/><BR/>First we need to stop destroying what we already have in the name of an economic model that seems no longer even remotely suitable to our circumstances.<BR/><BR/>I think we're basically agreed.Michael Tobishttps://www.blogger.com/profile/08229460438349093944noreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-57792935314232512922008-02-07T13:03:00.000-08:002008-02-07T13:03:00.000-08:00One question is, who decides, when an economy is d...One question is, who decides, when an economy is developed enough and who decides, what things are necessary and what not?<BR/><BR/>I myself view a certaing kind of growth (more about this below) and progress as one of the fundamental goals of life and humanity.<BR/><BR/>But the short term profit making is instead working against this. It is detrimental. The progress must take into account the limited resources. And not rely on the limited and uncertain scientific and technological progress to fix planning errors. Else it will be subject to drastic drops.<BR/><BR/>I view myself as a green person but at the same time I'm fascinated with space exploration and a million other things that are only possible with high technology and great resource use.<BR/><BR/>Humanity could have such a great future if it grew up and excercised some self restraint and patience. Only then can it continue beyond the limits of the planet.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8524070301101240472.post-50414442526967215522008-02-07T08:59:00.000-08:002008-02-07T08:59:00.000-08:00This will be a bit of core dump, but I wanted to e...This will be a bit of core dump, but I wanted to engage this discussion.<BR/><BR/>Even "mainstream" economics is struggling with it's evident shortcomings:<BR/><A HREF="http://www.autisme-economie.org/article160.html?lang=en" REL="nofollow">Robert Solow: Economic History and Economics</A><BR/>"modern economics has an ambition and style rather different from those I have been advocating. My impression is that the best and brightest in the profession proceed as if economics is the physics of society. There is a single universally valid model of the world. It only needs to be applied. You could drop a modern economist from a time machine-a helicopter, maybe, like the one that drops the money-at any time, in any place, along with his or her personal computer; he or she could set up in business without even bothering to ask what time and which place... We are socialized to the belief that there is one true model and that it can be discovered or imposed if only you will make the proper assumptions and impute validity to econometric results that are transparently lacking in power.... Of course there are holdouts against this routine, bless their hearts... Let me recapitulate. If the project of turning economics into a hard science could succeed, it would surely be worth doing. No doubt some of us should keep trying... There are, however, some reasons for pessimism about the project. Hard sciences dealing with complex systems-but possibly less complex than the U.S. economy-like the hydrogen atom or the optic nerve seem to succeed because they can isolate, they can experiment, and they can make repeated observations under controlled conditions. Other sciences, like astronomy, succeed because they can make long series of observations under natural but essentially stationary conditions, and because the forces being studied are not swamped by noise. Neither of these roads to success is open to economists. In that case, we need a different approach."<BR/><BR/>Or <A HREF="http://www.guardian.co.uk/comment/story/0,,863426,00.html" REL="nofollow">Joseph Stiglitz: There is no invisible hand</A> "Adam Smith's invisible hand - the idea that free markets lead to efficiency as if guided by unseen forces - is invisible, at least in part, because it is not there.... <I>That such models prevailed, especially in America's graduate schools, despite evidence to the contrary, bears testimony to a triumph of ideology over science.</I> Unfortunately, students of these graduate programmes now act as policymakers in many countries, and are trying to implement programmes based on the ideas that have come to be called market fundamentalism... Good science recognises its limitations, but the prophets of rational expectations have usually shown no such modesty."<BR/><BR/>Two branches of the "holdouts", as Solow refers to them, would include "ecological economists" (Daly, Costanza, Ayres, Farley... I recommend <A HREF="http://ebooks.ebookmall.com/title/ecological-economics-common-stagl-ebooks.htm" REL="nofollow">Michael Common's text</A> as good but comprehensive intro... Daly&Farley is good as well.). But I think one needs to also understand "environmental economics" - because that is the "standard" approach that "ecological economics" is trying to "replace"... although both the texts above discuss standard economics, their minds are made up, so normal caveats... <BR/><BR/>More radically, you have the <A HREF="http://www.paecon.net/" REL="nofollow">Post-Autistic Economics</A> folks.<BR/><BR/>Nevertheless, this stuff is so radical compared to today's social memes, etc., it's hard to imagine their broad adoption on the timescales required... Part three of <A HREF="http://www.climatecodered.net/" REL="nofollow">Climate Code Red</A> posits that until we start acknowledging the "problem" as an <B>emergency</B> rather than a <I>challenge</I> we are not likely to get much traction in changing our institutions/policies... Some of Ian Dunlop's quotes are particularly good: <I>"we have created a political and capitalist system which has proved incapable of recognising that the most important factor for its own survival is the preservation of a global biosphere fit for human habitation. Our institutions are totally short-term focused; politically due to the electoral cycle and corporately due to perverse incentives. Thus we are uniquely ill-equipped to handle these major problems, which are all long-term.<BR/>Our ideological preoccupation with a market economy based on short-run profit maximisation is rapidly leading towards an uninhabitable planet. As inconvenient as it may be politically and corporately, conventional economic growth and rampant consumerism cannot continue. Markets are important, but they operate within rules. Henceforth, the rules must change to ensure long-run sustainability.<BR/>Nationalism and short-term vested interests have so far prevented the development of a global governance framework capable of handling this “Tragedy of the Commons”. However, the issue of global sustainability is now much bigger than any nation state. Global warming, in particular, is moving far faster than the scientists had predicted, to the point where we are already in the danger zone.<BR/>The stark fact is that we face a global sustainability emergency. But it is impossible to design realistic solutions unless we first understand and accept the size of the problem. We know those solutions; what is lacking is the political will, firstly to honestly articulate the problem and secondly to implement those solutions."</I><BR/><BR/>The first two sections of that report (which were previously published separately last year as "The Big Melt" and "Target Practice") make the case that we are already in emergency mode. And it discusses how reticent most of us are to adopt this position for fear of being seen as "alarmist" or "crazy" or "not practical"... I can certainly relate to those feelings... But the case they make for the status quo continuing <B>unless</B> we collectively frame this as an "emergency" is persuasive... Unfortunately, I have trouble imagining the "Pearl Harbour" that will trigger that mindset shift "in time"... if the Arctic melt in '07, or Katrina '05 aren't enough, what will be?<BR/><BR/>But on that point, much of the third part of "Code Red" uses military metaphors... one quote is from Admiral Stockdale, a "Hanoi Hilton" POW: <I>"you must never confuse faith that you will prevail in the end - which you can never afford to lose - with the discipline to confront the most brutal facts of your current reality, whatever they might be"</I> <BR/><BR/>Well, like I said, a core dump... But I really think that this is the next big issue... The "science" has done its part... Now it is up to society to implement policies to deal with the crisis... The question is whether we can do so within the current economic and institutional paradigms, or do we have to fix both issues at the same time? I certainly hope the existing paradigms are up to the challenge, because that would reduce the overall challenge... but I fear that they are not...Anonymousnoreply@blogger.com