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The State of the Earth and the Reaction of France and the Western World to Terrorist Attacks

Sunday, January 18th, 2015

The West Antarctic Ice Sheet (about 2.2million cu.km, 10% of the total ice mass of Antarctica) has begun to collapse and may already have passed the point of no return. If all the ice in it will melt, sea levels will rise by about 4.6 m, and this may happen within the next few hundred years if greenhouse gas emissions continue to rise, flooding large coastal areas, coastal cities and even some cities far inland, such as Washington D.C. For details see here:

http://time.com/96173/antarctic-glacier-loss-is-unstoppable-study-says/

Overfishing, effects of climate change such as acidification, pollution particularly by plastics, etc., threaten the health of our oceans. Effects will be on the world’s food supply, air quality, climate stability, etc. The Global Oceans Commission has outlined a “rescue package” including a limit to gas and oil exploration, capping subsidies for commercial fishing, and creating MPAs, marine protected areas. For details see here:

http://www.commondreams.org/headline/2014/06/24-2

What is largely responsible for all the mess? Our present economic system, in other words neoliberal capitalism with its overexploitation and little consideration of environmental impacts. See here:

“That Was Easy: In Just 60 Years, Neoliberal Capitalism Has Nearly Broken Planet Earth”

http://www.commondreams.org/news/2015/01/16/was-easy-just-60-years-neoliberal-capitalism-has-nearly-broken-planet-earth

However, why worry about all this, humans apparently cannot wait and are trying to speed things up even more.

Consider the recent attacks by some Muslim fanatics on the French satirical magazine Charlie and the reaction of Western governments to it. It seems that the proper reaction of the French government would have been to play things down and not up. But it did exactly the opposite, it played things up thus demonstrating “strength” to the electorate (President Hollande’s ratings went up by about 15%!!) and demonstrated to potential terrorists how to successfully challenge the west. It seems that the reaction was exactly what the terrorists wanted. Things were made even worse by millions of copies of the magazine with a cartoon of Mohammed on the front page distributed in various languages, causing uproar among muslims in many if not all countries (see attacks in Niger, planned attacks in Belgium, and the reaction of governments of various Muslim countries). Even the Pope, in strong terms, objected to the obvious insults against the Prophet and indeed any religion. – We are seeing, it seems to me, an ever increasing disregard for the rights of others, of the future of mankind, all in the name of short-term gains for the few who own the riches, and the political class which is trying to hold on to power whatever the long-term costs.

Why the Trans-Pacific Partnership Agreement is a Pending Disaster

Thursday, January 8th, 2015

There are worrying trends towards an ever increasing concentration of economic and political power in the hands of a few. The negotiations about the Trans-Pacific Partnership Agreement (TPP) point in the same direction. Here are excerpts from a relevant article in Commondreams, January 7, 2015, by Robert Reich, one of the USA’s leading experts on the economy, Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley, who has served in three US administrations. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century.
Full article here: http://www.commondreams.org/views/2015/01/07/why-trans-pacific-partnership-agreement-pending-disaster

Why the Trans-Pacific Partnership Agreement is a Pending Disaster

“For three decades, free trade worked. It was a win-win-win.
But in more recent decades the choice has become far more complicated and the payoff from trade agreements more skewed to those at the top.

Tariffs are already low. Negotiations now involve such things as intellectual property, financial regulations, labor laws, and rules for health, safety, and the environment.

It’s no longer free trade versus protectionism. Big corporations and Wall Street want some of both.

They want more international protection when it comes to their intellectual property and other assets. So they’ve been seeking trade rules that secure and extend their patents, trademarks, and copyrights abroad, and protect their global franchise agreements, securities, and loans.

But they want less protection of consumers, workers, small investors, and the environment, because these interfere with their profits. So they’ve been seeking trade rules that allow them to override these protections.

Not surprisingly for a deal that’s been drafted mostly by corporate and Wall Street lobbyists, the TPP provides exactly this mix.

What’s been leaked about it so far reveals, for example, that the pharmaceutical industry gets stronger patent protections, delaying cheaper generic versions of drugs. That will be a good deal for Big Pharma but not necessarily for the inhabitants of developing nations who won’t get certain life-saving drugs at a cost they can afford.

The TPP also gives global corporations an international tribunal of private attorneys, outside any nation’s legal system, who can order compensation for any “unjust expropriation” of foreign assets.

Even better for global companies, the tribunal can order compensation for any lost profits found to result from a nation’s regulations. Philip Morris is using a similar provision against Uruguay (the provision appears in a bilateral trade treaty between Uruguay and Switzerland), claiming that Uruguay’s strong anti-smoking regulations unfairly diminish the company’s profits.

Anyone believing the TPP is good for Americans take note: The foreign subsidiaries of U.S.-based corporations could just as easily challenge any U.S. government regulation they claim unfairly diminishes their profits – say, a regulation protecting American consumers from unsafe products or unhealthy foods, investors from fraudulent securities or predatory lending, workers from unsafe working conditions, taxpayers from another bailout of Wall Street, or the environment from toxic emissions.

The administration says the trade deal will boost U.S. exports in the fast-growing Pacific basin where the United States faces growing economic competition from China. The TPP is part of Obama’s strategy to contain China’s economic and strategic prowess.

Fine. But the deal will also allow American corporations to outsource even more jobs abroad.

In other words, the TPP is a Trojan horse in a global race to the bottom, giving big corporations and Wall Street banks a way to eliminate any and all laws and regulations that get in the way of their profits.

At a time when corporate profits are at record highs and the real median wage is lower than it’s been in four decades, most Americans need protection – not from international trade but from the political power of large corporations and Wall Street.

The Trans Pacific Partnership is the wrong remedy to the wrong problem. Any way you look at it, it’s just plain wrong.

Two ways to mislead the public

Saturday, January 3rd, 2015

Australian media are highly concentrated, two thirds of the printed media are controlled by Rupert Murdoch’s News Cop. (of America’s Fox News fame), about one quarter by Fairfax. TV channels and radio also are heavily biased towards the political right, balanced to a small degree by the public broadcasters ABC and SBS. Murdoch media are almost ridiculously one-sided, favouring the Abbott government (Liberals/Nationals coalition). For example, it is almost impossible to find scientifically correct information on climate change in The Australian and The Daily/Sunday Telegraph, two of Murdoch’s principal newspapers, but a lot on the views of so-called climate change sceptics/deniers, such as Lord Monckton, which reflects the views expressed by the prime minister and various ministers. The Sydney Morning Herald, one of Fairfax’s main newspapers, gives more balanced views, which means that it publishes some excellent articles on economics, current political events, the science of climate change, etc., but also the views of right-wing ideologues.

The way how regular contributors to the Daily Telegraph, such as Piet Akermann (formerly a Vice-President of Fox News in the USA), and Amanda Devine, both climate sceptics, present their “information”, is straightforward, they ridicule the science of climate change as “socialism in disguise”, and propagate political issues from the angle of extreme right-wing economics, i.e., measures that favour the rich at the expense of the poorer. – The Abbott government acknowledged the contribution made by these right-wing commentators to its winning the election, by inviting them to a tête-à-tête soon after their election victory, and by doing its best to reduce the influence of ABC and SBS by cutting their funding and threatening direct interference in their political direction.

But there is another – more indirect and seemingly more persuasive – way, such as that taken by Paul Sheehan in the Sydney Morning Herald (Fairfax). An example in the Sydney Morning Herald January 1, 2015: “It’s high time to put aside bad news and focus on the good”. He points out that average household wealth in Australia is now close to $ one million, that Australia has “one of the world’s most stable, transparent and sophisticated financial sectors”, the “eigth largest share-market in the world despite having the 53rd largest population”, and among large economies with more than 10 million people, the third or fourth highest per capita income. My comment: All this, and the fact that the previous Labor government left a budget in much better shape than that of most other advanced economies, shows that the government’s claim that we are in an emergency situation and urgently require severe cuts to various welfare programs, foreign aid etc., is a lie. Nevertheless, Paul Sheehan goes on to make a comparison with Europe and Angela Merkel: “…..Angela Merkel…..likes to offer a set of basic facts to those constantly calling on government to do more, and thus spend more, in the name of fairness….Europe has 7 per cent of the world’s population. It produces 25% of the worlds economic output. But it represents 50 per cent of the world’s spending on social welfare. – In other word’s, Europe is on an unsustainable path, already reflected in high unemployment rates, stagnant growth, pervasive youth unemployment and demographic decline.”… Sheehan then continues that Australians do not “want to heed Merkel’s warnings.” They are “not willing to halt the growth in social spending….Australians are clearly willing to rip off their grandchildren,……”

In toto, Sheehan justifies the present government’s attempts to introduce budget measures that harm the less well off, although he does not mention specific ones (no unemployment benefits for a certain period, introduction of fees for seeing a doctor even for the poor, deregulation of university fees, etc.etc.). He does not mention that the rich are already heavily favoured by capital gains discounts, negative gearing, and other rules. He does not mention that the government’s could easily bring the budget back to surplus if the richer would be only slightly more heavily (but not only nominally) burdened, and he also forgot to mention that the government did not follow up on the rule introduced by the previous Labour government to cut down on tax avoidance schemes by large multinational companies which would have earned the government about $600 million. Last not least, he forgot to mention that Merkel’s comments refer to a much higher “starting point”: in Germany education from Kindergarden (preschool) to University is free, Germany does not send refugees including (until recently) children to camps on small islands overseas (Nauru, Manus Island) or to Cambodia, which has no facilities to absorb large numbers of refugees, but spends enormous funds to accommodate them decently, etc.

Perhaps even the poor would be willing to accept cuts in order not to rip off their offspring, if the rich would be asked to do the same. One should not forget, eminent economists have shown that an increase in inequality reduces economic performance!

World events and economics from a socialdemocratic perspective

Wednesday, December 31st, 2014

With this post I wish to draw attention to a blog by Professor John Qiggin. Professor John Qiggin is an economist in the School of Economics and the School of Political Science and International Studies, University of Queensland, Australian Research Council Federation Fellow, Laureate Fellow at the University of Queensland, and a member of the Board of the Climate Change Authority of the Australian Government. You will find interesting discussions on current world and particularly Australian political events in his blog. Among other topics, he argues that nuclear energy is not viable (in Australia) and that we need more efficient energy use and development of renewable energies: http://johnquiggin.com/2014/12/15/tell-em-theyre-dreaming/

http://johnquiggin.com/

Destructive changes to shareholder rights

Wednesday, December 31st, 2014

Josh Frydenberg, a former Federal Court Judge, has blasted as “destructive” the Abbott government’s intention to remove rules that force companies to hold extraordinary meetings of shareholders if requested by at least 100 shareholders. Reasons given by the government are to remove red tape, supposedly “abused” by unions, environmental and advocacy groups such as GetUp! which stand up for labour standards and protest against logging and the abuse of poker machines, etc. (SMH 31 December 2014).

Another step in concentrating economic and political power in the hands of a small elite.

Hockey lets corporate tax avoiders off hook

Wednesday, December 17th, 2014

Tony Abbott and Joe Hockey, the prime minister and treasurer, had repeatedly announced (recently at the G20 meeting in Brisbane) that they would cut down on tax avoidance by large multinational companies. It now turns out that this was all cheap propaganda.

According to the Sydney Morning Herald 17.12.14., the government now announced that it would not proceed with legislating a package to combat tax minimisation introduced by the former Labor government under Julia Gillard, which would have brought in Aust.$ 600 million. Also according to that newspaper, “one of the loudest opponents of the plan to abolish deductions was liberal party donor Paul Ramsay…..”. At the same time, the treasury announced that job cuts to the public sector would be more severe (thousands more) than forecast, and the OECD “slams Australian budget as unsustainable”.

Any doubts left what this government stands for and that the budget lacks all fairness?

Climate change policy and economics

Friday, November 28th, 2014

Scientists almost unanimously agree that human induced climate change will have serious effects on humans. They agree that action to reduce emissions of greenhouse gases, especially CO2 is urgently needed. Why then is it so difficult to convince governments to take efficient steps to tackle the problem? The answers seem to be: 1) humans have evolved to react to short-term changes in the environment but not to changes that may happen in the distant future, where distant is defined as something exceeding a few years or perhaps decades (the prime minister of Australia, Tony Abbott, for example, recently declared that what happened in 16 years does not interest him), 2) governments (in particular conservative governments) argue that switching to renewable energies would have serious consequences for the economy, reducing the average income of the population. By doing this, they play on the greed of people, who, they believe, like themselves do not care about the future of their children and grandchildren sufficiently to sacrifice some of their income. To get their policies through, they ignore or ridicule the science of climate change, and propagate the falsehood that economics is a “science” whose mathematical equations give an unequivocal answer to what economic policies must be followed, and that alternatives do not exist. These policies include 1) keep the budget always balanced or in surplus, 2) keep taxes low, 3) don’t worry about inequality, because a “secret hand” will always make sure that the rich will invest their wealth in ways best for everybody, 4) private business can do things always better than state-owned ones, 5) in toto: don’t interfere with the workings of the “secret hand”. These extreme neo-liberal ideas are based on Milton Friedman. Any ethical considerations aimed at removing inequality, or intrusions of the state for example by stimulating the economy in economic crises, are disallowed. In Australia, for example, the former Labor government was ridiculed and accused of wasting public money by financing government programs to avoid a recession as experienced by several states during the recent financial crisis. And programs supporting renewable energy programs (such as wind- and solar power) were scaled back as soon as the Liberal/National government took over in September 2013, for the reason that the Prime-Minister and many of his ministers did not believe in the “crap” of climate change. Policies favouring renewable energies were claimed of being “socialism in disguise”.

How then can we set things right? Stuart Kauffman, well known for his work on self-organization in evolution (The Origins of Order, At Home in the Universe) has extended his important findings to economics (Stuart Kauffman: On Ethical and Intellectual Failures in Contemporary Economics, In: Entangled Political Economy, Advances in Austrian Economics 18, 259-282). I give a brief outline of his most important findings.

Stuart Kauffman refers to “contemporary Anglo-American Economics” (as opposed to “Austrian Economics”) and criticises two major points, 1) that economics “at least since Milton Friedman” is supposed to be a positive mathematizable science free of normative issues” (i.e. does not consider ethical questions), and 2) that it does not consider the most important factor responsible for economic growth, i.e., the enormous increase in “goods and production capacities”. Thus, whereas there may have been 1,000 to 10,000 of these 50,000 years ago, today there are “perhaps 10 billion”. Concerning the first point, Kauffman discusses the Edgeworth Box and the Contract Curve, pointing out that there is no economic theory which explains on which part of the latter we settle, and that prices cannot resolve the matter, because different points of the curve correspond to different prices. Kauffman uses game theory to show that “fairness” usually determines on which part of he Contract Curve we settle, provided we must not trade with each other. But fairness cannot be mathematized, it is determined by our evolution. We are social animals like monkeys and apes. Give each of a group of monkeys 10 grapes a day, and they are all peaceful and harmonious, but give one of them suddenly some bananas and the rest the usual grapes, the latter will become agitated and throw the grapes at you. They believe to be unfairly treated. More important perhaps is the second point. As in the evolution of the biosphere and unlike physics, no laws exist which “entail” the evolution of the “econosphere”. In other words, we cannot foresee (or decribe by laws/differential equations) how the economy will develop, how it will increase its diversity. Economic development, like biological evolution, creates its own unforeseeable opportunities. This is simply ignored by “Anglo American Economics”, but shows how important diversification is for economies (The Australian Prime Minister Abbott’s policy to invest even more in coal and actively reduce development of renewable energy sources, seen in this context, is extreme economic vandalism and stupidity).

His conclusion (I quote): “The failures above are likely to play major roles in the lapse to mere greed in our major financial institutions, and in our inadequate capacities to help drive growth in much of the povery-struck world”.

Important references
Kauffman, S. (1995). At home in the Uinverse. New York: Oxford University Press.
Kauffman, S. 2014. On ethical and intellectual failures in contemporary economics. In Entangled Political economy. Advances in Austrian Economics 18, 259-282.
Longo, G., Montevil, M. and Kauffman, S. (2012a). No entailing laws, but enablement in the evolution f life. Physics ArXiv posted
Longo, G., Montevil, M. and Kauffman, S. (2012b). No entailing laws, but enablement in the evolution of he biosphere. In Proceedings of the fourteenth international conference on genetic and evolutionary computation conference companion 1379-1392

The Impossibility of Growth Demands a New Economic System

Sunday, June 1st, 2014

George Monbiot, well known for his books “The Age of Consent: a manifesto for a new world order” and “Captive State: the corporate takeover of Britain” has published an important article in Common Dreams: “The Impossibility of Growth Demands a New Economic System. Why collapse and salvation are hard to distinguish from each other”. Some excerpts in the following, link to full article below.

“Let us imagine that in 3030BC the total possessions of the people of Egypt filled one cubic metre”…….. and “that these possessions grew by 4.5% a year.” How big would that stash have been by the Battle of Actium in 30BC? ……..It’s 2.5 billion billion solar systems…….. ”
“It was neither capitalism nor communism that made possible the progress and the pathologies (total war, the unprecedented concentration of global wealth, planetary destruction) of the modern age. It was coal, followed by oil and gas”

“The trajectory of compound growth shows that the scouring of the planet has only just begun”
.

“The inescapable failure of a society built upon growth and its destruction of the Earth’s living systems are the overwhelming facts of our existence.”

A particularly interesting example from the article: the government of Ecuador has decided to go ahead with oil drilling in its high diversity Yasuni national park. It had offered to leave the oil in the ground if it could raise 3.6 billion Dollars from foreign donors, about half the value of the oil. It could just get 13 million. Ecuador is very poor, Australia is rich. For how much would Australia leave its coal, oil and gas in the ground, or protect its Tasmanian forests from logging?

Full article here:

http://www.commondreams.org/view/2014/05/28-0

United States will introduce an emission trading (cap-and-trade) scheme for controlling human induced climate change

Sunday, June 1st, 2014

In two previous posts http://blog.une.edu.au/klausrohde/2012/11/19/global-warming-obama-wants-to-take-action/ http://blog.une.edu.au/klausrohde/2013/05/19/the-results-of-misinformation-about-climate-change-in-the-u-s/I drew attention of President Obama’s intention to do something about climate change, but that nothing yet had happened. It now seems that significant action will be taken in the USA by introducing an emission trading scheme as also supported by the Greens and Labor for Australia. See here: http://www.theguardian.com/environment/2014/may/29/obama-unveil-historic-climate-plan-carbon-pollution

Excerpt:
“The rules……… will put America on course to meet its international climate goal, and put US diplomats in a better position to leverage climate commitments from big polluters such as China and India, Obama said in a speech to West Point graduates this week.

“I intend to make sure America is out front in a global framework to preserve our planet,” he said. “American influence is always stronger when we lead by example. We can not exempt ourselves from the rules that apply to everyone else.””

Is here hope that this might lead to change in attitude of the present Australian government? The outlook seems dim if one considers that Abbott had earlier referred to human induced climate change as “crap”, that among the first actions of the new Australian government were declarations that renewable energy targets would be reduced, that one of he first actions of the government after the election was removing the Climate Council, that investment in climate science at the CSIRO will be substantially reduced, and that even economically profitable renewable energy projects are targets for discontinuation. But miracles have happened before.

Thomas Piketty and David Harvey, a new look at what is wrong with our economic system

Thursday, May 29th, 2014

Two distinguished economists, Thomas Piketty and David Harvey, in two recent books, have critically examined the basic assumptions according to which economies are run today. Both arrive at the conclusion that an ever increasing inequality in income distribution is inherent in the capitalist system and needs to be urgently addressed.

For two reviews see here:

http://chronicle.com/article/Capital-Man/146059/

http://chronicle.com/article/Mapping-a-New-Economy/146433/

Excerpts:

Piketty: “The Economist declared that Piketty’s book may “revolutionize the way people think about the economic history of the past two centuries” and the “British magazine Prospect added Piketty to its annual list of the most influential world thinkers.”
Piketty’s claims that “inequality is intrinsic to capitalism, and, if not forcefully combatted, is likely to increase—to levels that threaten our democracy and fail to sustain economic growth. “For much of modern history, he contends, the rate of return on capital has hovered between 4 and 5 percent, while the growth rate has been decisively lower, between 1 and 2 percent,” which means that “in a slow-growing economy, accumulated wealth grows faster than income from labor……. the rich….. will get richer, while those who depend mostly on income from their jobs, will be lucky to keep up with inflation.”
“……… Piketty’s remedy for inequality: a progressive global wealth tax on fortunes over 1-million euros.”

Harvey: Harvey’s argument is based on “the conflict between use values and exchange values, particularly in housing, and the way that people have been deprived of homes because real estate has become a speculative investment. “For this reason, many categories of use values that were hitherto supplied free of charge by the state have been privatized and commodified—housing, education, health care and public utilities have all gone in this direction in many parts of the world,” he writes. “The political choice is between a commodified system that serves …….. and a system that focuses on the production and democratic provision of use values for all without any mediations of the market.
“At some point……the system can’t continue. “The longer it goes on,” Harvey says …….. “the less I think that there is a possibility that it will be a peaceful transition.”

In Australia, the present government does not only not try to reduce inequality but does the opposite, the austerity measures (co-payment for visiting the doctor, deregulation of university fees, etc.) of the new budget increase the burden on the poor, whereas the rich are hardly affected. These measures will not put Australia’s economy back on a secure and sustainable footing, as claimed by the government, all they will do is make the rich richer and the poor poorer.