The age of fossil fuels is ending

According to Joe Romm in “In Historic Paris Climate Deal, World Unanimously Agrees To Not Burn Most Fossil Fuels

The economic and environmental implications of this deal for Americans are staggering. In the near term, it will unlock an accelerating multi-trillion-dollar shift in capital investment away from carbon-intensive coal and oil, which were the cornerstone of the first industrial revolution, into clean technologies like solar, wind, LED lighting, advanced batteries, and electric cars. It means far less harmful carbon pollution will be emitted in the coming years.

The agreement “sends a very powerful message to the business and investment community that the age of fossil fuels is ending,” explained the Union of Concerned Scientists’ Alden Meyer. Thus, “continued investments in high-carbon assets conflicts with their fiduciary responsibility.”

Advertisements

MLK on true compassion and a revolution of values

According to Martin Luther King on April 4, 1967 (exactly a year before he was martyred in Memphis on April 4, 1968)

A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.

and

A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand, we are called to play the Good Samaritan on life’s roadside, but that will be only an initial act. One day we must come to see that the whole Jericho Road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway. True compassion is more than flinging a coin to a beggar. It comes to see that an edifice which produces beggars needs restructuring.

According to Clayborne Carson, as interviewed in “Clayborne Carson: King’s Chronicler

He always put the immediate issue into greater context. In all of his great speeches, what he does is say we’re here, engaged in this immediate struggle, but the broader struggle is global and historical. The movement for human rights is taking place on a global level. And it has deep historical roots. It’s been going on since the time of slavery and after the passage of civil rights legislation, and if he were alive today he would say it’s still going on. That’s why he was an inspiring, visionary figure. He understood the larger context.

and

What I try to emphasize in my work is how deeply rooted his ideas were and how radical they were. Look at love letters he wrote to Coretta in 1952, which I quote in the book. If those letters had been revealed in the late ’50s — where he’s talking about his anti-capitalism orientation — he probably would have been seriously damaged as a leader. That’s why Coretta kept the letters hidden — rumored to be under her bed — almost to the end of her life. She realized how politically damaging they could be to him.

Turning natural resources into garbage and pollution as fast as possible

According to a commenter somewhere on the web

Most jobs in this world involve turning natural resources into waste, throwing away energy in the process. All this, for the most trivial and inconsequential desires, desires that are implanted into the minds of the people through advertising.

According to another

Everything our economy does is based on turning natural resources into garbage and pollution as fast as possible.

But as I wrote in “Devouring the Earth is a traditional value

It’s easy to blame our unsustainable devouring of the Earth on capitalism, but the human tendency to kill the goose that laid the golden eggs far predates that system.

It’s natural, like metastatic cancer. If a society consumes and kills and reproduces as quickly as possible, it will outcompete a society with longer-term vision.

The world desperately needs a rational, new economic system designed against this root cause.

According to another commenter

Give a man a fish, and you’ll feed him for a day. Teach a man to fish, and he’ll ruin an ecosystem.

Cheapest, fastest path to development is deworming, immunizing, antibiotics, clean water, …

According to Hans Gosling in one of the most famous TED talks

I would like to compare Uganda with South Korea with Brazil. You can see that the speed of development is very, very different, and the countries are moving more or less at the same rate as money and health, but it seems you can move much faster if you are healthy first than if you are wealthy first.

and

Health cannot be bought at the supermarket. You have to invest in health. You have to get kids into schooling. You have to train health staff. You have to educate the population.

According to Physorg.com, regarding the scientific study “Parasite prevalence and the worldwide distribution of cognitive ability” by Christopher Eppig, Corey L. Fincher and Randy Thornhill,

Researchers in the US have noted areas of the world with the lowest average intelligence quotient (IQ) also tend to have the highest rates of infectious diseases, and suggest the energy required to fight off the diseases may hinder brain development in children because both are metabolically costly processes.

and

Eppig points out the study does not suggest “that parasites are the only thing affecting the global diversity of intelligence,” but that it may be even more important than factors such as wealth and access to education. He said disease saps the body’s energy and in the early years of childhood a lot of energy is going into building the brain. “If you don’t have enough, you can’t do it properly.” If the results are right, the IQ of a nation will not be raised unless the burden of disease can be lifted, Eppig said.

An obvious example are the helminth infections that, according to WHO and UNICEF, affect at least 2 billion people, because

Studies have shown clearly the detrimental effects of infection on educational performance and school attendance, as well as the significant improvements in language and memory development that can be realized following treatment. Helminth infections are also associated with nutritional deficiencies, particularly of iron and vitamin A, with improvements in iron status and increases in vitamin A absorption after deworming.

It would be so cheap to stop wasting this human potential! The above study says

Deworming improves health, nutrition and physical development, makes pregnancy safer and improves birth outcomes. It is inexpensive, with a school-based deworming programme typically costing between US$ 0.25 and 0.50 per child per year.

By the way, did you know that pneumonia is the #1 killer of children worldwide, killing about 1.4 million children under age 5 each year? According to WHO fact sheet 331

Pneumonia can be prevented by immunization, adequate nutrition and by addressing environmental factors. Pneumonia can be treated with antibiotics, but around 30% of children with pneumonia receive the antibiotics they need.

and

The cost of antibiotic treatment for all children with pneumonia in 42 of the world’s poorest countries is estimated at around US$ 600 million per year. Treating pneumonia in South Asia and sub-Saharan Africa – which account for 85% of deaths – would cost a third of this total, at around US$ 200 million. The price includes the antibiotics themselves, as well as the cost of training health workers, which strengthens the health systems as a whole.

According to Gourdas Choudhuri

The role of vaccines in preventing the disease cannot be overlooked. However, a vaccine may work well against some of these but not all. So it is difficult to have a complete vaccine for full protection.Some vaccines, like the Hib vaccine, are good and a must, which can be given routinely. The pneumococcal vaccine is another good vaccine. But the issue is whether the strains causing the disease, which are present in the community, are the same as those present in the vaccine, otherwise the vaccine will not work, and the money spent will not get the protection one is expecting. Pneumococcus, one of the germs that cause pneumonia in children, has many strains. The vaccine, which is currently available, has strains that are found chiefly in the western world, and its profile does not match with the strains found in our country. So a routine immunization with one vaccine may not work.

Humans spend US$ 2 trillion per year on the military. It would take a tiny sliver of that to crush helminths, pneumonia, and the rest. Humanity chooses to let its children be stunted and killed.

A question I’d love an answer to: If I wanted to tithe some portion of my income to defeating the parasites, viruses, and bacteria of children, which avenue of donation would save the most lives per dollar, and which would save the most cognitive potential?

Wheat and water — money is just information, it’s not real wealth

Pavan Sukhdev in 2009 made a strange comparison here between the loss of notional capital during the banking crisis and the ongoing loss of actual capital such as forests. According to the SAPA news story

The world was losing as much potential capital annually through the destruction of forests as was wiped off the major markets in last year’s financial crisis, an economist warned on Friday. […] He said the current pace of forest loss meant a potential economic cost of the order of two to $4.5 trillion a year. “In other words, if we continue business as usual that’s how much natural capital we are throwing down the tube,” he said. That was comparable to the amount of capital lost by Wall Street and City firms when the worst financial crisis in the history of the world hit in 2008.

According to Hakim Bey

Information in the form of culture can be called wealth metaphorically because it is useful and desirable – but it can never be wealth in precisely the same basic way that oysters and cream, or wheat and water, are wealth in themselves. Information is always only information about some thing. Like money, information is not the thing itself. Over time we can come to think of money as wealth (as in a delightful Taoist ritual which refers to “Water and Money” as the two most vital principles in the universe), but in truth this is sloppy abstract thinking. It has allowed its focus of attention to wander from the bun to the penny which symbolizes the bun. In effect we’ve had an “information economy” ever since we invented money. But we still haven’t learned to digest copper.

According to Wikipedia

According to Silvio Gesell, all human-produced goods are subject to expensive storage, whereas money is not: Grain loses its weight, metal products rust, housing deteroriates. Therefore money has a supreme advantage over all other goods. John Maynard Keynes found another effect, which he deemed more important: liquidity preference. Being “liquid” with money is a great advantage to anybody, much more so than having comparable amounts (past utility) of any product. The result is that people will not even provide zero-risk, inflation corrected credits unless a certain interest rate is offered. Freigeld simply reduces this ‘primordial’ interest rate, which is estimated to be somewhere around 3% to 5%, by an absolute, in order to lower the average interest rate to a value around 0.

According to the dek of “The second economy” via Sean Murphy’s blog

Digitization is creating a second economy that’s vast, automatic, and invisible — thereby bringing the biggest change since the Industrial Revolution.

See also these ( 1 2 ) summaries of the most recent Singularity Summit.

Re-hypothecation and the shadow banking system

According to Christopher Elias in “MF Global and the great Wall St re-hypothecation scandal” (via Zero Hedge)

A simple example of a hypothecation is a mortgage, in which a borrower legally owns the home, but the bank holds a right to take possession of the property if the borrower should default.

In investment banking, assets deposited with a broker will be hypothecated such that a broker may sell securities if an investor fails to keep up credit payments or if the securities drop in value and the investor fails to respond to a margin call (a request for more capital).

Re-hypothecation occurs when a bank or broker re-uses collateral posted by clients, such as hedge funds, to back the broker’s own trades and borrowings. The practice of re-hypothecation runs into the trillions of dollars and is perfectly legal.

and

Re-hypothecation transactions are off-balance sheet and are therefore unrestricted by balance sheet controls. Whereas on balance sheet transactions necessitate only appearing as an asset/liability on one bank’s balance sheet and not another, off-balance sheet transactions can, and frequently do, appear on multiple banks’ financial statements. What this creates is chains of counterparty risk, where multiple re-hypothecation borrowers use the same collateral over and over again. Essentially, it is a chain of debt obligations that is only as strong as its weakest link.

With collateral being re-hypothecated to a factor of four (according to IMF estimates), the actual capital backing banks re-hypothecation transactions may be as little as 25%. This churning of collateral means that re-hypothecation transactions have been creating enormous amounts of liquidity, much of which has no real asset backing.

Chair

The African Century

According to John Perry Barlow (of EFF fame) at the end of 1997 in “Africa Rising: Everything you know about Africa is wrong

Wired sent me to Africa to see if my optimism could return intact. I am pleased to say that it is doing better than ever. Ridiculous as this may sound today, it is within my ability to believe that a hundred years from now, historians might call the century we are about to enter the African Century. Am I still optimistic? My optimismometer is pegged, folks.

and

Africa, with the right confluence of investment and faith, could easily become the new Bangalore of software. As many have remarked, there is a certain overlap between the ability to make music – one of Africa’s prowesses – and the ability to make code. I have never met people anywhere who could learn how to operate a computer more quickly.

and

I lost some things in Africa, including my wallet and my health. And thanks to a light-fingered West African baggage handler with a taste for high technology, I returned to these shores without my new PowerBook and several expensive solar panels.

But not without my optimism.

I also gained some things. Here is what I’ve learned so far: Everything I knew about Africa was wrong: Africans are almost universally much more technologically advanced than I thought. Electricity and at least some minimal telephone service extend into even the most remote regions (and believe me, Tombouctou is just as remote as its reputation implies).

Despite that, everything I claimed about Africa is right: I am now more convinced than ever that Africans are about to even the score, having been economically and politically redlined for the last 250 years. They “get it,” as we digital élitists like to say, almost instinctively. I taught people who could barely read how to use a computer, what the Net is and how it works, and the basics of info-economics in far less time than it would take me to pass the same knowledge to your average member of Congress.

According to the home page for economist Edward Miguel’s 2009 book Africa’s Turn

Working in Busia, a small Kenyan border town, economist Edward Miguel began to notice something different starting in 1997: modest but steady economic progress, with new construction projects, flower markets, shops, and ubiquitous cell phones. In Africa’s Turn? Miguel tracks a decade of comparably hopeful economic trends throughout sub-Saharan Africa and suggests that we may be seeing a turnaround. He bases his hopes on a range of recent changes: democracy is finally taking root in many countries; China’s successes have fueled large-scale investment in Africa; and rising commodity prices have helped as well. Miguel warns, though, that the growth is fragile. Violence and climate change could derail it quickly, and he argues for specific international assistance when drought and civil strife loom.

According to Miguel in “Africa Unleashed: Explaining the secret of a belated boom“,

Africa’s prospects have changed radically over the past decade or so. Across the continent, economic growth rates (in per capita terms) have been positive since the late 1990s. And it is not just the economy that has seen rapid improvement: in the 1990s, the majority of African countries held multiparty elections for the first time since the heady postindependence 1960s, and the extent of civic and media freedom on the continent today is unprecedented. Even though Africa’s economic growth rates still fall far short of Asia’s stratospheric levels, the steady progress that most African countries have experienced has come as welcome news after decades of despair. But that progress raises a critical question: what happened?

Slavery and the rise of the West — US Civil War was necessary for ending slavery

According to Eric Foner

Among the many virtues of Robin Blackburn’s The American Crucible is its demonstration that slavery must be at the center of any account of Western ascendancy. Without the colonization of the New World, Blackburn notes at the outset, the West as we know it would not exist, and without slavery there could have been no colonization. Between 1500 and 1820, African slaves constituted about 80 percent of those who crossed the Atlantic from east to west. More than any other institution, the slave plantation underpinned the extraordinary expansion of Western power and the region’s prosperity in relation to the rest of the world.

Slavery was stronger than ever in 1860, because it was keeping evil men rich and powerful. We should be thankful to those who died to make men free.

According to David Eltis and David Richardson

the Atlantic slave trade remained strong until it was suppressed. Like the institution of slavery, the traffic that supplied captives did not die a natural economic death. The maps establish that in all the major importing areas of the Americas, the volume of the traffic peaked in the years just before its suppression. This pattern held for Brazil, the United States, and the British Americas as a whole.

According to James W. Loewen

Slavery was hardly on its last legs in 1860. That year, the South produced almost 75 percent of all U.S. exports. Slaves were worth more than all the manufacturing companies and railroads in the nation. No elite class in history has ever given up such an immense interest voluntarily. Moreover, Confederates eyed territorial expansion into Mexico and Cuba. Short of war, who would have stopped them – or forced them to abandon slavery?

To claim that slavery would have ended of its own accord by the mid-20th century is impossible to disprove but difficult to accept. In 1860, slavery was growing more entrenched in the South. Unpaid labor makes for big profits, and the Southern elite was growing ever richer. Freeing slaves was becoming more and more difficult for their owners, as was the position of free blacks in the United States, North as well as South. For the foreseeable future, slavery looked secure. Perhaps a civil war was required to end it.

Monopolists kill job growth and innovation

According to Barry C. Lynn and Phillip Longman

But while the mystery of what killed the great American jobs machine has yielded no shortage of debatable answers, one of the more compelling potential explanations has been conspicuously absent from the national conversation: monopolization. The word itself feels anachronistic, a relic from the age of the Rockefellers and Carnegies. But the fact that the term has faded from our daily discourse doesn’t mean the thing itself has vanished—in fact, the opposite is true. In nearly every sector of our economy, far fewer firms control far greater shares of their markets than they did a generation ago.

and

Antitrust enforcers weren’t content simply to prevent giant firms from closing off markets. In dozens of cases between 1945 and 1981, antitrust officials forced large companies like AT&T, RCA, IBM, GE, and Xerox to make available, for free, the technologies they had developed in-house or gathered through acquisition. Over the thirty-seven years this policy was in place, American entrepreneurs gained access to tens of thousands of ideas—some patented, some not—including the technologies at the heart of the semiconductor. The effect was transformative. In Inventing the Electronic Century, the industrial historian Alfred D. Chandler Jr. argued that the explosive growth of Silicon Valley in subsequent decades was largely set in motion by these policies and the “middle-level bureaucrats” in the Justice Department’s Antitrust Division who enforced them in the field.

See also “The too big banks already failed — let’s break them up to save the real economy“.

For-profit social entrepreneurs

In “Selling Water, Health Care In The Developing World” NPR’s John Ydstie visits a Healthpoint clinic in rural Punjab.

The Healthpoint model combines videoconferencing with cheap diagnostic tests and inexpensive water filtration all in one building. The company believes that in this way it can deliver affordable health care and clean water to the world’s low-income people — and make money doing it.

and

Jain says despite its low prices, Healthpoint’s water business is profitable, and it provides a constant stream of foot, bicycle and motor-bike traffic to its health clinic each day.

and

Jain says the eight pilot clinics are making a small profit, but obviously not enough to finance a global expansion, especially because a billion people around the world need these services. So to finance its growth, Healthpoint has looked to socially minded investors like Charly Kleissner, who’s based in Silicon Valley. […] Kleissner argues a profit-making enterprise is the only organization that can amass the resources necessary to meet the challenge. “If the objective is to grow to thousands, if not to tens of thousands, if not hundreds of thousands of villages, then there’s no foundation and no development organization that would actually be able to fund this,” he says.

According to Stephane Fitch in “The Bicycle Economy: F.K. Day designed a better machine for the developing world — then set out to teach people how to make it for themselves”

“The maintenance network is self-sustaining at this point,” Day says, meaning that the mechanics can make enough money selling services and parts to buy additional components and clear a modest profit. Eventually, Day is convinced, the manufacturer he helped set up in Zambia will become profitable even without new orders from his charity, just as the one in Sri Lanka did. While Day’s charity no longer operates in Sri Lanka, its former manufacturing partner there now profitably sells the bike model Day designed–it even exports it to bike-mad markets in Northern Europe starved for cheap, high-quality single-speed bikes.

“You can have all the goodwill in the world,” Day observes, “but if what you’re doing isn’t driven by the invisible hand of Adam Smith, you’re doomed to fail.”