Digest: 11 August 2013

Abstract

GDP only takes into account that which can be priced and this has led to environmental and social costs being ignored. True wealth is a function of fundamental needs being satisfied and these needs go beyond what GDP growth alone can provide. Any index should have social relevance, not just statistical efficiency. – Speculative bubbles don’t necessarily go away, they are a social-psychological phenomena resulting from stories that spread through markets based on narrative strength causing contagion in traders and just because a bubble has deflated it does not mean it will not expand again. – Trillions of dollars in “green finance” investments are needed annually to prevent catastrophic results related to climate change, this is the perfect time for major investment in green technology, credit is cheap and the global economy is in need of stimulation, but policymakers are dropping the ball on developing more effective ways of incentivizing such investment. — Toxic insecticides called neonicotinoids are causing the decimation of the bee population, as many as 10 million beehives are thought to have been wiped out since 2007 and food production reliant upon bees’ pollination activities is worth more than $20 billion to the US and more importantly is vital for the production of nuts, fruit, and vegetables.

Highlight

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In The Gross Domestic Problem, Stephan Schmidt (for United Nations University) interviews GDP expert Lorenzo Fioramonti, author of the book Gross Domestic Product – The Politics Behind the World’s Most Powerful Number which critiques of the use of GDP as a measure of success.  He discusses the development of GDP in the 1930s and then considers some of the issues associated with its modern day use.  These include that GDP only takes into account that which can be priced – this has led to environmental and social costs being ignored.  True wealth is a function of fundamental needs being satisfied, and these needs go beyond what GDP growth alone can provide. But it is difficult, monetizing natural capital is problematic and controversial. A more mature global governance system is needed that favors diversity rather than homogenization.  Any index should have social relevance, not just statistical efficiency.

Economic

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In Bubbles Forever, Robert Schiller (for Project Syndicate) argues that our use of the term “speculative bubble” is careless.  Our general comprehension of a bubble is that it pops and disappears; but speculative bubbles don’t necessarily go away, they can grow again.  Schiller is the author of the book Irrational Exuberance in which he discusses the nature of bubbles. He describes them as a social-psychological phenomena, resultant upon stories that spread through markets based on narrative strength causing contagion in traders. When bubbles repeatedly arise, it suggests a speculative epidemic and just because a bubble has deflated somewhat it does not mean that the infection that caused the bubble is beaten.

In Greening Financial Reform, Simon Zadek (for Project Syndicate) argues that trillions of dollars in “green finance” investments are needed annually to prevent catastrophic results related to climate change. He discusses that this is the perfect time for major investment in green technology – credit is cheap and the global economy is in need of stimulation. But policymakers are dropping the ball on developing more effective ways of incentivizing such investment. Zadek gives five examples of regulatory actions that should be taken, but points out the difficulty of meaningful regulatory change in countries like the US and UK where lobbying power is strong. Developing countries have been able to make some strides that developed countries have not. But one way or another, regulatory changes should be forward looking, not just looking to prevent a crisis that has already happened, but understanding better what the next crisis will be.

Environmental 

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In Bill Seeks to Halt Bee-Killing Pesticides, Matthew Charles Cardinale (for Nation of Change) discusses a bill in the House of Representatives to take emergency action to stop the loss of bees in the US – a phenomenon called Colony Collapse Disorder. It is thought that toxic insecticides called neonicotinoids are causing the decimation of the bee population – as many as 10 million beehives are thought to have been wiped out since 2007. This is an important issue – the food production that happens as a result of bees’ pollination activities – which includes vegetables, fruits, and nuts – is worth more than $20 billion to the US per year and $125 billion to the global economy.  The EU has already banned the use of several neonicotinoids after a European Food Safety Authority report found they were threatening Europe’s bee populations.

Reference Library

Individuals added to the TND Reference Library include: A land management expert who specializes in holistic responses to desertification. — An economist who runs an advanced school at Oxford University to study 21st Century issues. —  A physician who argues that some of our most serious medical issues can be solved through lifestyle changes. A casual culinary master who is concerned with the ecological and health impacts of our modern diet. — An environmentalist who has developed a series of permaculture towns around the world and who is looking to establish the foundations for a life without oil. — An economist who developed microfinance amongst the Bangladeshi poor. – A professor who studies how inequality harms societies. – An economist who has come up with a plan to help close the gap between rich and and world’s 1 billion poor and an approach to help rebuild war-torn countries. — An expert on globalization who argues that capitalism does massive environmental and social harm, it is as a system unsustainable on a planet with finite resources. — A civil servant who ran the world’s largest humanitarian organization to mitigate hunger and starvation globally. — A social entrepreneur who founded one of the fastest growing microfinance companies in the world facilitating nearly $400 million in loans across 216 countries. An applied physicist who works on the interface between climate science, energy technology and public policy. — An investor whose firm has invested $200 million into green technology. — A politician who gives a very sober view of the power shifts that are currently taking place in the world. — An educationalist who believes that we are teaching the creativity out of our children by turning them into mere good workers. — A theoretical physicist who works to understand the structure of the universe.