Digest: 28 July 2013
Recent income-wealth ratios suggest a return to the 600-700% of the 18th and 19th centuries, a recent survey of the national balance sheets of the top eight developed economies suggests. – The potential for wealth taxation strengthens the ability for the carrying of high national debts, but holders of wealth have the political clout to relatively effectively avoid such taxation. – Some aspects of capitalism are particularly egregious, specifically, the view that free markets are able to govern themselves, the avoidance by corporations of the payment of taxes, the notion that global warming is a hoax, the perception of students as mere products for the creation of greater profitability, and the denial of the power of money in politics. — The subsidization of green technology by government is preferable to protectionist tariffs in the development of the domestic economic infrastructure. – Seas will continue to rise (up to 12 meters) over the coming hundreds of years, the mid to long term repercussions of not addressing global warming are severe. — Two professors (one Chinese and one American) consider three different approaches to achieving equity in the allowed Greenhouse Gas emissions between different countries. – The release of methane from melting arctic regions will cause costs of as much as US$60 trillion as a result of flooding, sea-level rise, and damage to agriculture and human health. — US surveillance efforts started with the development of a domestic surveillance system in the context of the US colonization of the Philippines in 1898, another development took place in the context of the First World War, another during the Vietnam War, and the last in the aftermath of 9/11. – Generally our democratic society will shy from allowing the notion that traditional “high culture” is objectively superior to “popular culture”, preferring to understand them as applying to mere subjective individual preferences. — The Supreme Court has disallowed the patenting of human genes, a rare anti-corporate decision by a court generally characterized as favoring business interests. – It is difficult in the US to have a serious conversation in apocalyptic terms, but we should become more comfortable with apocalypse because if we don’t we risk walking straight into it.
In Capital is Back: Wealth Income Ratios in Rich Countries1700-2010, Thomas Pitketty and Gabriel Zucman (of the Paris School of Economics) discuss their survey of the national balance sheets of the top eight developed economies for the period 1970-2010, and in the case of the US, UK, Germany and France, for the period 1700-2010. This survey demonstrates a gradual rise of wealth-income ratios – 200-300% in 1970 to 400-600% in 2010. Current ratios suggest a return to the 600-700% of the 18th and 19th centuries. The results have important implications for capital taxation and regulation. Editor’s consideration: It may be expected that many of those in the top economic bracket would not be averse to their social position, just as the aristocracy of the 18th and 19th century European aristocracy were not opposed to theirs.
In Wealth Taxes: A Future Battleground, Tyler Cowen (for The New York Times) discusses the implications of the results of the Pitketty/Zucman survey (see Highlight above). Cowen points out that the return of wealth-income ratios to 18th-19th century levels suggests that this will be a future battleground. He discusses how low income growth reflects slow productivity and population growth, but also that rising wealth reflects relative peace and capital gains. High levels of wealth can have an effect on capacity for carried debt, as in Japan and Italy, where wealth-income ratios are 600-650% – the potential for wealth taxation can do much to pay down the debt; but wealth taxation is highly contentious, and holders of wealth have the political clout to relatively effectively avoid such taxation. Editor’s consideration: For how long will the holders of high levels of wealth avoid taxation, and what will be the result of them doing so? In Russia and France, in the 18th and 19th centuries, the maintenance of very high wealth-income ratios eventually led to revolutions. In the modern day, such revolutions would have a harder time in light of 21st century surveillance technology and military capability, and the threat of them increases the incentive for governments to increase that surveillance/military capacity in the name of stability. If this result holds any strength of probability, is it the desired path?
In Obscenities of Capitalism, Paul Buchheit (for Nation of Change) discusses some aspects of capitalism that can be seen as particularly egregious. Specifically, the notion that free markets are able to govern themselves without external regulation, the extent to which the payment of taxes is avoided to the maximum extent possible by sophisticated corporations, the notion that global warming is a hoax and should not be taken seriously unless it means that money can be made off it, the arising perception of students as products and the notion that they should be treated as such in the pursuit of greater profitability, and the denial of the power of money over political processes. Editor’s consideration: These results lead to a very particular picture that will be embraced or shunned depending on particular interests – it is a matter of policy – what is the probable result of such policies in their individual spheres, and what is the probable result of those policies acting in concert?
In The Right Green Industrial Policies, Dani Rodrik (for Project Syndicate) discusses the subsidization of green technology by government and points out that this support is preferable to protectionist tariffs in the development of the domestic sector. While arguments can be made against the subsidization of green industry – e.g. Solyndra – they are weak when set against the benefits of such support. Indeed, such support must be considered necessary as long as cost distortions remain in the carbon context – were such market distortions to be corrected, then subsidization would quickly become unnecessary. As a matter of policy, subsidization is preferable in the global context to competitive tariffs, which drive against growth of the industry as a whole. If every country were to drive investment into green technology, its development would necessarily speed. Editor’s consideration: The extent of economic infrastructure that would be threatened by such a growth is significant and the notion of top-down guided investment and development is to some extent anathema to a free market, just as in the political spectrum it is anathema to democracy. Free markets and democracy are generally adhered to because they are considered to provide the greatest probability of general well-being, but where free markets and democracy produce results that are anathema to general well-being, our loyalty comes into question – are we loyal to general well-being, or to the systems we have set up to produce general well-being?
In Thousands of Years of Rising Seas, Kevin Bullis (for MIT Techonology Review) discusses the long term repercussions of not addressing the issue of global warming – it is not just that seas will rise, it is that they will continue to rise over the coming hundreds of years. Greenhouse gases already in place and being added to daily will show their effects over time. A new paper published by the National Academy of Sciences estimates that a 4 degree rise in temperature will eventually cause a sea level rise of 9 meters on average and up to 12 meters in some places. In the absence of immediate mitigation, the issue forces consideration of eventual geoengineering. Editor’s considerations: First, such a sea-level rise would put many of the world’s major metropolises underwater. Even if humanity had shifted to higher ground (or even into space) by the time such rise came into effect, the loss of historic environments important to our development would be an enormous cultural loss to humanity. Second, the potential for the use of geoengineering rests our ability to apply technology to mitigate/adapt in the future – where so much is at stake, taking comfort in geoengineering suggests profound self-confidence in our development – as a matter of capacity, we still are not able to perfectly predict whether or not it will rain in a given location, and as a matter of judgment in application, we continue to allow this situation of massive future risk to develop – should we be so confident in ourselves? The full dynamics of the earth’s atmosphere are incredibly far beyond our current understanding.
In Fairness and Climate Change, Peter Singer and Teng Fei (for Project Syndicate) discuss three different approaches to achieving equity in the Greenhouse Gas emissions between different countries. Unless an agreement can be found on a fair principle, it is unlikely that a useful reduction in emissions can take place. The authors, use the Gini coefficient to measure inequality in emissions between different countries. They apply this measure to three different emissions allocation approaches: equal per capita, equal per capita cumulative, and grandfathering. The latter of these was what was employed with the Kyoto Protocol, setting guidelines for developed countries according to their 1990 emissions levels – this is considered the least equitable approach. The second approach is considered the perfect approach – a way to achieve perfect equality of emissions over time. The first is a midpoint, achieving an emissions point that the authors argue should be considered the highest outside of what can be considered fair. Editor’s consideration: The presented approach considers fairness over time in the ability to produce emissions. While this is a necessary approach to considerations in the context of coming to agreement in the real world of setting limits in the context of international agreements taking development into account, perhaps the more important goal, ultimately, is not to seek equity between emissions, but to seek a way that developing countries can establish themselves without following the path of high carbon emissions. Should the developed world not have begun its move away from carbon intensive development in a more focused manner, and should not the developed world assist the developing world on a matter of mutual interest – the development of growth that does not imply high carbon outputs?
In Arctic Methane ‘Time Bomb’ Could Have Huge Economic Costs, Matt McGrath (for BBC News) discusses new research estimating that release of methane from melting arctic regions will cause costs of as much as US$60trn as a result of flooding, sea-level rise, and damage to agriculture and human health. While optimistic reports about arctic melting point out the increased economic growth that can take place as a result of new resources being made available, the estimated economic amount of that growth, US$100bn within the next ten years, pales in comparison to the costs that will allow it. Indeed, the release of methane on this scale has the potential to increase global temperatures by 2 degrees C in the next 15-25 years. Editor’s consideration: Referring back to the Bullis article above, this release of methane, a highly potent GHG, is thought to have the potential to drastically increase the speed at which warming will take place. Indeed, as northern regions melt, the release can be expected to increase over time, hastening further warming. Considering the state of our current knowledge, the complexity of the earth’s atmosphere, and the nascent stage of geo-engineering concepts, would it not be wise to (as discussed by Rodrik above) do all possible to promote, internationally, intensive subsidization of technology as can avoid the further imposition of GHGs while making immediate carbon-cost corrections in the pre-existing economy for purposes of protecting global well-being? Are our free market economies and democracies capable of making this change in the time required? Is the pre-existing evidence sufficient to conclude that so far they have proved unable?
In Surveillance Blowback, Alfred W. McCoy (for TomsDispatch) discusses the history of surveillance systems in the US. He describes the expansion and retraction of surveillance efforts starting with the development of a domestic surveillance system in the context of the US colonization of the Philippines in 1898, another development took place in the context of the First World War, and then another during the Vietnam War. The retractions, a result of Republican privacy advocates in the 1920s and of Democratic liberals in the 1970s, were push-back responses to the periodic expansions. In the current case, the expansion of surveillance efforts and capacity came largely as a result of 9/11 under President Bush, and has been greatly developed in the context of Middle East anti-terrorism efforts. But despite the more recent drawdown of troops in the Middle East and Afghanistan the security apparatus has continued to expand under President Obama. McCoy considers this expansion the locking in of global dominion in order to provide “a strategic, ever-widening edge in information control.” This development is consistent with a military strategy that consists of drawing down conventional armaments while building up a multi-layered network of space-, stratosphere-, sky-, and ground-based surveillance vehicles. Editor’s consideration: As the author points out, “the War on Terror has ‘proven remarkably effective in building a technological template that could be just a few tweaks away from creating a domestic surveillance state….’ That prediction has become our present reality – and with stunning speed.”
In Mozart vs. the Beatles, Gary Gutting (for The New York Times) discusses the relationship between the objective and subjective perspectives in the context of art and music. He describes how generally our democratic society will shy from allowing the notion that traditional “high culture” is objectively superior to “popular culture” – preferring to understand them as applying to mere subjective individual preferences. But within the context of pop music taken alone, many will not shy from preferring one band over another on the basis of characteristics such as greater emotional range or deeper intellectual content. These same measures applied to the two genres immediately demonstrate the superiority of “classical works” which are, generally speaking, “capable of much higher levels of aesthetic value than popular ones.” This is a matter of the expectations of classical composers and the technical capabilities of classical performers. In other words, performance capability can effect compositional ambition – the composer need not hold back in expression, whatever is desired is possible – this does not take away from the value of any given expression, but it does provide a reason for lovers of pop to take an interest in the classical. Editor’s consideration: What effect does the subjective construct have in other contexts of choice, such as economic, government, environmental, and social policy decisions? Does the democratic objection to the notion of inherent value prevent consideration of the best path to take? Where does the weight of decision take place – in the government, in our social institutions, in the marketplace? Where decisions are made everyday, there must be a value scale applied or decisions would be wholly random, so on balance what is it? And does it correspond to what we imagine it should be according to our most careful consideration?
In How Intellectual Property Reinforces Inequality, Joseph Stiglitz (for The New York Times) discusses the importance of a recent Supreme Court case that disallowed the patenting of human genes, and the importance of the issues it represents. This was, Stiglitz points out, a rare anti-corporate decision by a court generally characterized as favoring business interests. The case involved the attempted protection by the company Myriad Genetics of patents it had received for genes it had isolated that contain mutations that predispose women to breast cancer. The company argued that disallowing the patents would stifle research – as companies must have ownership of the results of their research to incentivize research. In fact, the holding of the patents prevented further research because the IP rights that accompanied the patents meant that others could not further the research without infringing on the IP that Myriad held. Ultimately though, those who would have lost out were low income women to the extent the patents increased the price of diagnostic tests for the genes.
In We Have to Embrace Apocalypse If We’re Going to Get Serious About Sticking Around on this Planet, Robert Jensen (for AlterNet) discusses how difficult it is in the US to have a serious conversation in apocalyptic terms. He argues that we should become more comfortable with the notion because if we don’t acknowledge it we risk walking straight into it. Jensen considers humanity in literary terms – the hero – but questions whether humanity will prove to be the epic hero (that wins in the end) or the tragic hero (that ultimately fails due to some inner character flaw). In avoiding the catastrophic notion, we avoid that which gives rise to that notion – knowledge of our flaws, our behaviors that are not conducive to sustainable living and are instead entirely conducive to failure. We need to act with a little more humility, acknowledge our limitations. To think in apocalyptic terms is not to give up on humanity, to not think in such terms is to give up on humanity. Editor’s consideration: Difficult issues are stressful – we can see the importance and scale of repercussions but we don’t have the necessary information to provide answers – and there is much else to consider. As a society, to what extent do we require the pressing of a challenging matter to force a response? Are all of the mechanisms in place to allow us to accurately gauge risks and respond to them quickly and efficiently? What are the collective repercussions of the choices we make?