Is the fish on your plate older than your grandmother?

The Conversation: The real cost of taking fish out of the water. This excellent piece gives a good snapshot of overfishing (the carbon footprint of fishing was something I didn't realise until reading this). It also suggests one of the ways we can be part of the solution: by eating less fish, and eating smarter, which means either checking sites like Good Fish Bad Fish (an Australian version; UK readers can use the Good Fish Guide) or asking questions of potential fish meals such as: "Are they older than your grandmother? Did catching them kill tonnes of other innocent species? How much carbon was used to get it onto your plate?"

Al Jazeera: Overpopulation is not to blame for famine. The causes are famine in the Horn of Africa are complex. Simplistic analyses that blame a single factor do not help.

Guardian: Salty rice is not so nice - rising seas, rising salt in the Mekong. Concerns about sea level rise are not limited to infrastructure damage or coastal erosion; salination is the big issue in many places and especially for the densely-populated Mekong delta.

Grist: The great oyster crash. This is where ocean acidification is starting to bite.

CP: S&P Downgrades Planet Earth and Humanity. This will only make sense if you have been following recent US economic news.

Larry Elliott: The global economy is not in good shape. The crisis from 2008 has not gone away; it has simply shifted form.

Mongabay: Conflict correlates with warm weather, at least in the tropics. This isn't good news in a warming world.

Guardian: One billion cars. "Between 2000 and 2010, the number of cars and motorcycles in China increased twentyfold. In the next 20 years it is forecast to more than double again, which means there will be more cars in China in 2030 than there were in the entire world in 2000."

Inside Job: what's the deal with the credit crisis?

Yesterday we finally got around to watching Inside Job (despite having recommended it all the way back here). If you, like me, often feel out of your depth in discussions of banking, finance, stock markets and the global economic instability of the last few years, then this is the film for you. Bringing dry and complex details into vivid comprehensibility, this film cuts through the bafflement factor and, via a series of fascinating and jaw-dropping interviews with key players, lays out many of the key threads that that led to the headline-grabbing events of 2008 and its aftermath (which continues to play out today).

The film won best documentary at the 2010 Academy Awards and currently sits at 97% on Rotten Tomatoes. It is easy to see why. Tackling an important subject with insight, emotion and sensitivity, this film is pure outrage mixed with damning evidence of systemic problems in the US financial industry from traders to CEOs, from regulators to investors, from president to ratings agencies, from academic economists to congress. There is plenty of blame to go around. And yet, somehow, no one is in gaol for the greatest inside job in history.

And very little has changed.

A tale of two debtors

Two island nations who experienced enormous economic bubbles on the back of cheap credit prior to the financial crisis that began in 2008 are separated by only a single letter in their names. Yet Iceland and Ireland, while each suffering crushing economic woes in the aftermath, have nonetheless followed diametrically opposed paths in their responses to the crisis. Ireland followed the textbook: a bailout involving huge figures being pumped into the banking industry to keep it going and to ensure international creditors did not miss out, effectively nationalising the bankers' mistakes. These debts then led to austerity cuts. In Iceland, the crisis brought down the government and the new administration did not guarantee the banks' debts. A referendum refused public backing to the bad decisions made by their bankers, allowing them to fail and for this to have its effect on Iceland's overheated economy. They have even now prosecuted the prime minister at the time for criminal negligance in failing to provide adequate regulation of the banking industry.

When debts are defaulted upon, it is not only the debtor who may be shown to have erred. Creditors take a risk and there is such a thing as a credulous creditor. Although it remains difficult to predict what the ultimate outcome will be for both nations, I admire Iceland's willingness to allow the banks to pay for their own mistakes and their desire to hold those involved in causing the problems to account. Despite the staggering sums involved in the credit crisis and the gross negligence of various political and financial figures, Iceland have been the first to bring criminal charges against those responsible.

Threatening to leave

In other news, Jimmy Riches, 9, of Little Waddington, has threatened to take his bat and ball away from the local village boys' game of cricket unless his special rules are retained. Since he owns the only equipment in the small settlement, he demanded to set the terms on which the game is to be played. "Jimmy's code" included extra lives for Jimmy while batting and all his runs counting triple, plus being allowed to be sole umpire for contentious calls. The other boys felt these rules gave Jimmy an unfair advantage and sought to soften them, suggesting that perhaps he should only score double and that he had to state how many extra lives he had today before coming to the crease. Jimmy rejected these modifications and has warned that if the other boys insist on them, he will go and play with the lads in the next village.

Tax dodging: Barclays paid 1% corporate tax last year

After asking "who are the real cheats?" a while back and pointing to figures that claim up to £120 billion in tax is avoided, evaded or deferred in the UK each year (enough to make a very sizable dent in the budget deficit and hence in the public justification for the vandalistic cuts currently being implemented), the campaign against tax dodgers has been gaining momentum. Another day of protest actions is planned for today.

And with perfect timing, we get this story, which illustrates this concern all too well. In 2009 Barclays Bank made £11,600,000,000 in profits and yet paid only £113,000,000 in corporate tax - less than 1% rather than the legislated rate of 26%. Under such circumstances, the commonly expressed fear that closing loopholes and chasing tax dodging companies might make them up and leave, taxing their tax revenue with them, starts to look like a very small fig leaf. It was always a poor argument, akin to avoiding legal confrontation with the Mafia because they keep the local economy flowing.

"Pay to all what is due to them — taxes to whom taxes are due, revenue to whom revenue is due, respect to whom respect is due, honour to whom honour is due."

- Romans 13.7 (NRSV).

And in other news, the documentary Inside Job was released in the UK yesterday, investigating the role major banks played in fuelling the global financial crisis. It is currently at 98% on Rotten Tomatoes.

"The next twenty years will be completely unlike the last twenty"

This is the first of six videos taking a total of 45 minutes to outline the ideas in Chris Martenson's "Crash Course". I don't agree with everything he says (for instance, he reduces "the environment" to "resources", making no mention of climate change or biodiversity decline) and some of the analysis is simplified (what do you expect in 45 minutes?), but this isn't a bad summary of the three interlocking crises on the horizon: economy, energy and ecology (I prefer the term ecology over "the environment").

I would love an economist to evaluate his analysis of debt and how money is created (which he skims over in this short version, but spends twenty minutes on in the full version, available here). This is the area with which I am least familiar and I have heard others characterise our money system in a similar way, but I wonder whether this is how experts would put it.

The End of Growth

"Economic growth as we have known it is over and done with.

"The 'growth' we are talking about consists of the expansion of the overall size of the economy (with more people being served and more money changing hands) and of the quantities of energy and material goods flowing through it. [...]

"[T]here are three primary factors that stand firmly in the way of further economic growth:

• The depletion of important resources including fossil fuels and minerals;
• The proliferation of environmental impacts arising from both the extraction and use of resources (including the burning of fossil fuels)—leading to snowballing costs from both these impacts themselves and from efforts to avert them and clean them up; and
• Financial disruptions due to the inability of our existing monetary, banking, and investment systems to adjust to both resource scarcity and soaring environmental costs—and their inability (in the context of a shrinking economy) to service the enormous piles of government and private debt that have been generated over the past couple of decades. [...]

"[W]e are seeing a perfect storm of converging crises that together represent a watershed moment in the history of our species. We are witnesses to, and participants in, the transition from decades of economic growth to decades of economic contraction. [...]

"It is essential that we recognize and understand the significance of this historic moment: if we have in fact reached the end of the era of fossil-fueled economic expansion, then efforts by policy makers to continue pursuing elusive growth really amount to a flight from reality. World leaders, if they are deluded about our actual situation, are likely to delay putting in place the support services that can make life in a non-growing economy survivable, and they will almost certainly fail to make needed, fundamental changes to monetary, financial, food, and transport systems.

"As a result, what could have been a painful but endurable process of adaptation could become history’s greatest tragedy. We can survive the end of growth, but only if we recognize it for what it is and act accordingly."

- Richard Heinberg, "The end of growth".

This article is well worth reading in full. Although Heinberg emphasises peak oil a little more than I do and ecological degradation a little less, it is a good summary of the three interlocking challenges (economy, energy, ecology) that will define the next few decades (even if they are manifest first for some people through secondary effects). If you're not thinking about these issues and how they will (and already are) affecting almost every aspect of your life and the lives of those you know for the foreseeable future, you're not really paying attention.

We live in interesting times.

Forgive us our debts

Australian economist Steve Keen predicted the global financial crisis years ahead of when it broke, and doesn't think it is over yet, not by a long shot. He has given a somewhat lengthy and graph-heavy interview over here, in which he doesn't have a great deal of good news to offer.

For those without time to read it, he thinks the government response to the crisis (throwing lots of stimulus money at it) has mainly just masked the underlying debt problems (or rather deferred and increased them). America is already in a depression (hidden by misleading unemployment figures). A significant further period of deflation is inevitable. Australia (largely) avoided the bullet in 2008-09 through propping up a speculative property bubble which will come back to bite us (as speculative bubbles are wont to do). And he claims that the only responsible mitigation policies at this stage would be perceived to cause a crisis when really they would simply be unmasking the crisis that is currently ongoing. Here is his graphic analogy:

"[I]f my preferred remedies were enacted now, they would be blamed for causing an ensuing crisis, when in fact all they would do is make the existing crisis more obvious. I make the analogy between my situation and that of a doctor who has as a patient a comatose mountaineer who climbed too high without sufficient insulation and now has gangrene. If you operate before he regains consciousness, he might only lose a foot, but he’ll blame you for making him a cripple. If you wait till he regains consciousness and sees what the alternative might be, he’ll thank you for saving his life when you remove his leg.

"America in particular — but also much of the OECD — has substituted essentially unproductive Ponzi speculation for real productivity growth in the last four decades, which the rising debt bubble has obscured as it simultaneously allowed Americans to live the high life by buying goods produced elsewhere using borrowed money. There’s no way to come to terms with that without suffering a substantial fall in actual incomes."

He's a cheery chap. But then we get to the kicker: "I regard Peak Oil and Global Warming as far greater challenges to our species than the financial crisis — which I refer to sometimes as Peak Debt".

Keen is articulating something similar to the idea I put (briefly) here, namely, that of the three crises of economy, energy and ecology, the first is most immediate temporally, but is actually a smaller threat than the second, which in turn is closer to us but likely less significant in ultimate ramifications than the third (which, I would argue, is broader than climate change).

Fasten your seatbelts.

The party's over? Living on credit

So just how big is one trillion dollars? If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

- Michael Snyder, "3 Charts That Prove
We Are Living In The Biggest Debt Bubble In The History Of Our World".

Over the last few months, I've been starting to get a sense of the significance of a debt-based economy and why it is such a ludicrously bad idea. Effectively, living on credit only makes sense if you are confident that the future will be (economically) bigger than the past. This has proven to be true for the last sixty years (and especially for the last thirty, which is when the credit society has really got going), and yet the comforting image of year-over-year global economic growth has been fuelled by the creation of ever larger mountains of debt. Check out the linked article to get a sense of the scale of the issue in the US, though remember that many other countries have debts of proportional size (or larger).

While the bet we've been making with the future has held up so far, what was revealed in 2008 is the downside of this scenario. If we don't keep piling up more debt, we face a very nasty period of deleveraging, which could make the Great Depression look like a party. But the higher the debt levels get, the worse the hangover when we stop drinking from the debt bottle.

If infinite growth were actually possible, then perhaps this wouldn't be a problem (though it would still face the risk of systemic shock being made much worse by all the debt hanging around). But infinite economic growth on a finite planet is not possible. We are betting against the future and keep doubling down, making our ultimate inevitable loss many times greater.

I am not an economist nor an economist's son and perhaps I'm missing something crucial, but this doesn't really sound like good news to me.

Is the economy too important to be left to the economists?

"The questions that the book leaves us with are, I think, primarily these: What kind of culture have we allowed to develop? Not only the subculture of financial institutions and money makers, but the culture in which that happens, the whole culture of our society. What are the sorts of behaviour we reward?

"What are the kinds of human beings we want to see around, that we've encouraged to be around? And that's certainly one of the issues that's come up very sharply in these conversations. Have we not begun to create a kind of human being, whose default setting is really profoundly selfish, profoundly introverted? And how on earth do we build a society on that kind of basis?

"So the questions about culture run very deep. They are questions about what we think is worthwhile in human behaviour. And unless we really tackle that kind of question, really revive our imagination about what human beings might be and should be, then the whole of our economic structure will not really change.

"Culture change begins, as one contributor to the book says, with behavioural change. And behavioural change begins with a change of vision, a change of horizon. So that the subsidiary question is, not only what have we taught people to value and reward, but what have we taught people to aim at? Have we shrunk their possibilities? Have we drawn in their horizon in a trivial way, a way that does less than justice to what human beings are really capable of?

"The authors of this book ask that question, fully conscious of the way in which the level of reward in the financial sector in recent years has been so enormous as to obscure ethical considerations quite a lot. But it's proved not to be an endless pot of resource, it's proved to be a path of self-contradictory and essentially destructive behaviour in practice.

"We need to recovery integrity, we need to recover a sense of the connection between economics and other things; and that's perhaps the other big question that comes up here. Is economics too important to be left to economists? And finance too important to be left to financiers? Don't economic questions always bring with them questions of value in something more than financial terms? How are we to get that back on the agenda?"

- Rowan Williams, "Crisis and recovery: the cultural roots of the financial collapse".

The panel discussion I mentioned yesterday was very interesting and worth spending 90 minutes on. A video will soon be available here.

Archbishop Williams was his usual complex and lovable self, even managing a reference to Sergei Bulgakov and this excellent essay. The Guardian economics editor, Larry Elliott had many interesting things to say, but it was Tory MP and former ecological journalist, Zac Goldsmith who really connected some important dots. It is good to know that there are some politicians at least who seem to "get" some of the issues and are willing to speak publicly about them. He joked that his political career was likely to be short. If I was in his electorate, I would vote for him.

Rowan Williams in debate: economics and ethics in a crisis

Rowan Williams has a new book and is to discuss the ideas with an interesting panel tomorrow night from 6.30pm in a live webcast.

"During the ongoing global financial crisis, the values on which our society and economic structures are based have been called into question. In a new book to be published by Palgrave Macmillan, Rowan Williams, the Archbishop of Canterbury, and Larry Elliott, Economics Editor of The Guardian, have brought together a collection of leading commentators to examine the role of morality and ethics in business. At this event, both discuss these fundamental themes together with Zac Goldsmith MP, Editor of The Ecologist, and Robert Skidelsky, professor of political economy, politician and historian."

Maxing out the credit card

I will return to yesterday's quote soon, though I note with interest the discussion about whether "urgency" is a theological category.

In the meantime, here are two interesting pieces by SMH economist Ross Gittins. The first from a few months ago, argues that "we have been paying off our economic credit card by racking up debt on our environmental credit card", an idea not unrelated to the idea of an ecological credit crunch. The second article, from a few days ago, is about the shortsightedness of government subsidies for middle class status symbols.

Understanding deflation

I mentioned back here that I'm not feeling very optimistic about the ecological, economic and political outlook of the next twenty years (whether one may be optimistic about the spiritual, relational and cultural outlook is another matter for another post or three).

In that post, I mentioned not only the ecological and resource crises that I've been banging on about for a while, but also a financial crisis about which I've been on a steep learning curve. If you're like me and have only a fuzzy grasp of economics, then you might find this post by Aaron Wissner on understanding deflation useful. Although he doesn't go into why deflation is so destructive, he did help me get more of a grasp on the causes and logic of it. As he says at the end: "What is deflation? It is being sensible, all at once."
H/T The Automatic Earth.

The next twenty years

The next twenty years are very unlikely to be like the last twenty years. Most of the time, it is reasonable to expect and plan for the future on the basis of the recent past. This is how we are wired and the force of habits and the power of cultural inertia make this kind of thinking natural.

However, for all the reasons I have listed here (and quite a few more, which include consideration of the present economic situation and a debt-based economy that requires continued growth (or at least the perception of the likelihood of continued growth over the long term) to prevent meltdown), I am fairly pessimistic about the likely economic, social and/or political stability of the coming decades.

I am no prophet, nor a prophet's son and I make no claims to predicting what is likely in a massively complex and historically novel globalised system with all kinds of unexpected feedbacks. It is also very hard to be precise about the level of severity we're talking about it. I expect that we will face more than a recession, and something larger than the credit crunch of 2008.

However, I don't think we're talking Mad Max or The Road anytime soon (unless global tensions reach a point where someone reaches for the nuclear option, in which case all bets are off). But we're also not talking Star Trek or even . I think the possibility of political and/or technological silver bullets to avoid the raft of approaching crises is low enough to make it reasonable to hold a fairly bleak outlook.

There are three interconnected systems that are currently under grave threat, and the failure or further deterioration of any one of them will have significant knock-on effects on the others. These are economy, energy and ecology, or finances, fuel and flora & fauna (and fresh water and flooding and fires). I've written primarily about the third category, with occasional references to the second (especially regarding peak oil). In more recent weeks I've been learning quite a lot more about the first, and the ways in which the failures of the other two can be magnified and brought home by the financial system.

Two presentations
I plan to say more on this in due time, but I thought I'd flag the development of my thinking and suggest two presentations that might give you a taste of the kinds of things I've been pondering recently. Both are far from perfect and contain material or emphases which I think are wide of the mark, but at a broad level, I suspect they are identifying some of the most pressing issues of our day.

The first is this talk recorded at the Transition movement conference earlier this year by Stoneleigh, one of the authors of The Automatic Earth blog (H/T Sam and more thoughts here).

The second is called the Crash Course by Chris Martenson. This one is quite a bit longer, but most of the meat is in the second half so feel free to skip the explanations of what money is and how credit works if you like.

Both these presentations major on the first of the three crises (i.e economic), not because it is necessarily the most dangerous, but because it is most likely to make itself felt first and most directly. I suspect that the ecological crises which are largely in the background of these presentations will ultimately prove to be larger and more significant in the long term.

Credit crisis: a visual aid

An animation in two parts.


I found this to be quite a helpful summary of some of the structural causes for the present economic downturn. Notice the assumptions at play: that money can always be multiplied through the opening of new markets, that someone else can carry the risk, that my pursuit of wealth is good for the whole system. All false.

The ecological credit crunch

We are living beyond our means, running up a debt of up to US$4,500,000,000,000 every year. The parallels between the credit crisis and the ecological crises are not accidental. Both are symptoms of the myth of infinite growth.

The differences, however, are crucial. The financial crisis is primarily (as far as I understand it) a crisis of trust: financial institutions who are no longer sure from whom it is safe to borrow. The responses by governments have been to act as a kind of credit backstop, stopping (or slowing) the corrosive effects of cycles of mistrust.

The ecological crises are a crisis of life: of too many human lives living lifestyles that undermine the stability of all living things. This helps give some idea why governments have not responded with a similar urgency and zeal as they have done in relation to the credit crisis. Not because the problem is smaller or less pressing, but because it is far larger and more difficult. How do millions and millions of people radically change their assumptions and consumptions?
H/T Box the Jack. Make sure you also read this post on his blog boxologies: GDP is a speedometer, the question is "where are we headed?".
Photo by ALS.

Some crises are more equal than others

Food for thought from The Australia Institute:

Have you ever wondered why, more than 15 years after the world’s leaders gathered in Rio and agreed to tackle climate change urgently, there always seems to be some other ‘crisis’ that is more pressing?

In recent weeks, we have watched the spectacle of the US Congress drafting a $700 billion bail-out package in a matter of days. When the bill was defeated in its original form it spread consternation from Wall Street to the Australian Parliament. Didn’t the Congress understand this was a crisis? Didn’t they understand this was a time for action rather than perfection?

The most interesting thing about the worldwide approach to bailing out the financial system is how pragmatic policy-makers have been. No one, from the US Treasury Secretary to Kevin Rudd, will put their hand on their heart and say they understand the full nature and extent of the problem.

Nor will they look the voters in the eye and declare that, after spending trillions of dollars to bail out banks, they are certain that the problem will be solved. On the contrary—when it comes to the world of finance, we all have to accept just how complex the systems are. We can’t really expect certainty, and we can’t really guarantee success. Rather, we all just have to comfort ourselves with the thought that it would be irresponsible to sit back and do nothing. It is, it seems, self-evident that we shou ld at least try.

But not, apparently, when it comes to climate change. Even though most of our bankers can’t explain the risks associated with the derivatives they have purchased over the years, our climate scientists are expected to be able to predict the weather to a high degree of accuracy in 70 years’ time.

Even though economists can’t predict the rate of GDP growth, inflation or the exchange rate next month, those determined to do nothing about climate change demand certainty about what the price of emissions permits will be in 20 years’ time.

The current financial crisis was unforseen by the major governments of the world. The cost of the bailouts combined with the flow-on economic effects are likely to dwarf the estimated costs of tackling climate change, yet there is little talk of abolishing private banking because of its potential to cause harm to the economy.

In the last month, trillions of dollars have been found. New regulations have been introduced. And countries have all committed to work collectively in the pursuit of a common goal. Unfortunately, none of this effort has been aimed at reducing greenhouse gas emissions; it has been aimed at something far more important—sustaining the banking system as we know it.

How are our perceptions of crises shaped? What factors make one more worthy of "emergency action" than another? Obviously, some of these factors include quite rational considerations such as the extent and likelihood of the threat and the projected cost of averting it, but what about irrational factors?

For all the damage they are both already doing, it is more accurate to consider both climate change and the credit crunch as potential rather than actual crises, since in both cases, there is far worse threatened as a result of inaction (though exactly what that "far worse" would be in the case of the credit crisis has yet to become widely publicised; instead, in most discussions of the issue the threat is kept fairly general).

Perhaps we can add other threats to this list: a nuclear terrorist attack (or simply a nuclear war); peak oil; a global pandemic; and so on. There are, at all times, a wide variety of potential threats to civilisation as we know it, though they differ considerably in scope, likelihood, cause and cost of possible solutions. Yet how are we to face the presence of such threats? I am not asking "how do you cope personally?", but how do we live together with them hanging over our heads? What effect do these threats over tomorrow have on our ability to pursue the common good today?
If you hadn't guessed, this post and the previous one are further attempts to try to articulate some of the questions I am interested in for my research. From these, I need to narrow down a more specific one.

Priorities

"It's extraordinary to me that the United States can find $700 billion to save Wall Street and the entire G8 can't find $25 billion dollars to saved 25,000 children who die every day from preventable diseases."

- Bono

The full story is, of course, more complex. But sometimes such blunt juxtaposotion throws new light on our assumptions and priorities.

UPDATE: Here's three.
UPDATE #2: And the other side of the equation is no longer looking like a given either.