Archive for the ‘Business’ Category
Book Review: What Would Nature Do? by Ruth DeFries
Filed under: Book reviews, Business, Co-operatives, Covid-19, Environment | Tags: Kern River Oil Field, Ruth DeFreis
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This book essentially says, if humanity had paid more attention to how nature deals with the uncertainties of life on Earth, then we might have avoided some of its calamities – for want of a better word. Of course, there are two so-called calamities afflicting humanity at the moment; namely, a global pandemic and climate change.
One can often tell the whether the author truly has something to say in the final chapter. Can the content be summarised and rendered coherent? Does it hang together? In this case, I am not entirely sure. In fact, the author herself admits it:
In a fit of writer’s block for this final chapter, I ventured downtown to the New York Public Library to see for myself the tiny Hunt-Lenox globe with medieval-style etchings of dragons and strange sea creatures…etched pictures of dragons and monsters signalled seas and lands not yet seen by European eyes, although other peoples had lived in those lands for eons.
(p151)
The dragons, of course, represent all of the things that humanity has not yet discovered. But in getting to where humanity sits currently, the global commons have been well-and-truly “over-grazed” and pathogens serially mis-managed, despite the lessons of history, let alone nature. I’ll return to the calamity shortly, but DeFreis does discuss what humans have learned, though probably inadvertently.
Ancient trees had arteries and veins in their leaves that if severed by a pest – or just something that ate them – the effect on the overall plant would be significant in a detrimental way. The ancient tree is the Gingko, which eventually evolved a toxin to put off insects. But other plants and trees evolved alternative approaches such as “loopy veins”. In the event of part of the leaf succumbing to insect lunch, the sugars created in the leaves could still be delivered to the rest of the tree because they could be re-routed. The most obvious human-created analogy of this is the internet’s packet system whereby the data generated by this blog are put into small packages and sent on their way, often taking different routes and then reconstituted in the reader’s computer and browser. However, much of the human world is hub-and-spoke; i.e. centralised. When things go wrong, bottlenecks occur and all things – commodities, manufacturing components, finished products, foodstuffs – get jammed. In the case of food, hunger ensues.
DeFreis (right) writes extensively about pathogens and viruses in the human and animal world. In the human world, in the absence of politicians, viruses have been dealt with and eradicated by science on the one hand, and (disease) management on the other. Management here is track-and-trace as well as equitable global distribution of vaccines and other technologies. As with Covid-19, no one is safe until everyone is safe. However, we can learn from ants, bees and termites. Ants, famous for living cheek-by-jowl, secrete disinfectant into their nests collected from wood resin. Termites spread their own faeces in their nest benefitting from antimicrobial properties (that seems counter-intuitive). Bees can kill pathogens by flapping their wings! And so on. Ultimately, though, highly social creatures can isolate their kin should they succumb to disease. Primarily, this is to protect the queen and not for the benefit of the sick individuals.
Moving on from viruses and disease, DeFreis talks about the commons – the atmosphere, the seas, water and land. I had not previously been aware of Garrett Hardin, a man who believed that the solution to the commons was to de-commonise them, enclose them and “protect” them from over-exploitation. DeFreis counters his work with a celebration of the studies of Elinor Ostrom who demonstrated that human beings can adequately manage and protect the commons. They do not need permission by a central authority. However, one size does not fit all; what works in one place, does not in others. This is, of course, part of the problem. People have to be given the space and time to work things out, set quotas and agree sanctions for those who either free-ride or break the rules.
Talking about breaking the rules, I had equally not previously been aware of the Biosphere experiment in Oracle, Arizona, back in 1991. Three men and three women entered a CELSS – closed ecosystem life support system – and stayed there for two years testing whether it was possible to replicate the Earth’s life support systems (with a view to building one on the Moon or a planet). It was funded by a Texan billionaire, Edward P Bass, the Elon Musk or his time, perhaps. It took 11 years to build. Nothing that was not already in the CELSS when they entered would be added. It was not plain sailing – crops were blighted by pests and the air became thin as the plants generated carbon dioxide and oxygen mysteriously disappeared.
And so back to what nature would do. Nature is parsimonious. The limiting factor is always energy. All energy is derived from the sun. First in plants, then animals and humans. Most animals conserve as much energy as they can. Certainly through a winter, food can be in short supply. However, nature also builds in redundancy. Those loopy leaves use more energy to build, but when under attack, they are a life saver. Some humans have adopted this principle in their products. Most aeroplanes have redundancy – if one part fails, another kicks in. Apollo 11 would not have made it to the moon had it not been for Margaret Hamilton’s redundant computer code! But our economy is parsimonious – global supply chains do not react well to disruption, something that is increasingly occurring.
Our economy is different in another way, too. It is extractive. Its whole rationale is perpetual growth. Its metrics – productivity, GDP – are just wrong. They perpetuate the extraction and ignore wellbeing. Moreover, instead of generating energy sustainably – from the sun as plants do – we draw on stored reserves of energy in fossil fuels. Growth is only possible by doing that. Nature does not do that. Nature is not capitalist. It does manage its commons – or it did until homo sapiens disrupted the equilibrium. DeFreis does not engage with this. The reality of an economic system that destroys not only itself by undermining the life-support systems of the planet is glossed over. There is no system change needed, only a closer attention to what nature would do.
I can see why this is not tackled. Authors who do end up being criticised like Andreas Malm was on publication of his book, Corona, Climate, Chronic Emergency. It is not pretty. But neither is climate change.
Pictures:
Ruth DeFreis: By One Earth Future – https://www.youtube.com/watch?v=kiU0AlDsiPgPeace in the 21st Century: Ruth DeFries, CC BY 3.0, https://commons.wikimedia.org/w/index.php?curid=96380874
Pumpjacks in Kern ROF, California: By Antandrus at English Wikipedia, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=16373401
Climate Watch: nothing in the UK budget for climate mitigation
Filed under: Business, Environment | Tags: investment bank, Rishi Sunak
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On 3 March 2021, Rishi Sunak (left) the British Finance Minister (aka Chancellor of the Exchequer), presented his budget for the year ahead and beyond. Headline issues – taxes are going up for corporations (from 19-25pc) and for workers (freezing of tax thresholds). Public-sector wages are going up at a level essentially half that of inflation (equating to a pay cut) and public services will receive less money into the future, including the National Health Service. There is no support for social care.
Whilst the idea of corporation tax going up seems good, it depends on how many small/medium-sized enterprises get caught out by it relative to those firms that offshore much of the taxable earnings.
The budget also provides perks for homeowners looking to sell already price-inflated properties (stamp duty). There are no proposals regarding wealth or capital gains taxes. Those with wealth will keep it, seemingly.
What about climate change? What about investment in sustainable technologies and lifestyle changes needed to reach net-carbon zero by 2050? Erm, nothing. One programme – £1.5bn green homes scheme – seemingly failed, despite grants available to insulate homes and switch to alternative heating methods such as heat pumps. What I did not know is that the government had outsourced this programme to a US company (Virginia) that failed to pay the grants to applicants. This led to some firms actually having to shed workers (Guardian, 5 March 2021).
There is a new investment bank being set up (the Cameron Government sold a very similar entity in 2012), but its capital is paltry – £12bn. That might sound a lot, but this is a climate emergency, and unlike the pandemic, it is not going away. And what is more, the investments are not guaranteed to be climate zero or below – the priority is jobs, it seems, not carbon.
Finally, as the Guardian rightly points out, there is no money for public awareness; to promote the small things that all citizens can do such as eat less meat, recycle/reuse, save energy, etc. Without a broad change in attitudes, it is business as usual until it is not.
Pic: By Chris McAndrew – https://tinyurl.com/yxyt5be7
Book Review: Banking on it by Anne Boden
Filed under: Book reviews, Business, Co-operatives, Environment, Finance and Economics | Tags: Anne Boden, Starling Bank
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Anne Boden, a 50-something female banker with a long career at RBS decides to leave. She gets headhunted to work at the failed Allied Irish Bank (one of the major casualties of the financial crisis in 2008). Whilst she is terribly excited about the innovations in technology deployment at the bank, as chief operating officer, actually, her day job was making people redundant. She left after 18 months.
Boden comes across as someone who doesn’t sit still for long. She mused over her future and decided to set up her own retail bank. Only this one would not have any legacy systems, branches, and crucially, it would not have an IT department. It would be an IT department. The bank would be, as the book cover suggests, an industry disruptor – a business that would strip down products to the basics. No frills. And what it did do, it would do better than any other retail bank. It would interface with customers through a mobile phone app. The core product would be the notoriously unprofitable current account; rendered profitable by a low cost base and intelligent rates for borrowing and saving.
There is much to recommend in this book. We know the ending – Starling Bank was launched and is on the cusp of profitability. It is award winning – though I am never really sure what that means. And as we might expect, the journey to this point has been fraught, involved near bankrupting herself, two unexplained burglaries and a big fall out with the core team about strategy. As a 50-something bloke, the idea of a 50-something becoming a successful entrepreneur is inspiring. I am myself embarking on ventures that perhaps should have been done a number of years ago. But there you go. What this story tells us that there is never a wrong time, but don’t expect to have a life if you try. And if one is going to set up a bank, expect to have to do a deal with the Devil (more of this later).
Here are a few things of note for budding entrepreneurs:
- Silicon Valley’s investors may not be receptive to non-Silicon Valley start-ups;
- contingency fees from consultancies and lawyers may not be honoured by investors;
- even if one thinks that the idea is original, it is not. Someone else is working on it simultaneously and they may be competing for finance with you;
- scalability will be important – can the business be expanded/grow without adding costs? (p33);
- build a network full of goodwill (being 50-something can help, providing one has not hacked people down on the way up in a previous life) – (p63)
- if the business is a disruptor, the incumbents will not sit back and watch (p66); but in mature industries – like banking – they might not know how to respond (p251-2);
- watch out for a coup attempt – those brought in to develop the business may see themselves as better able to build the business and launch. The leader of the coup will require the rest of the team to choose between you and them (pp125-6);
- the media will pounce on stories about a coup/disagreements. PR needs management;
- failure is normal for entrepreneurs. Investors value experience. In Silicon Valley, recording failure is part of the culture. The place where this is done is medium.com (p138);
- it is possible to lose a whole team, be close to ruin, but start again and learn from the mistakes – primarily, getting the right people. The signs are there if one cares to look;
- it is staggering how much can be done just using email;
- so-called Real Options are revealed sooner than expected, but must be embraced. Setting up the businesses is only the start;
- the team that launched the product is not necessarily the team to see it in to the future;
- potential stakeholders/investors are watching – keep an eye on the email. Unfamiliar names may not be all bad.
Talking of bad. The bank got approval from the UK banking regulator to trade. I’m not quite sure how this works, but it does involve a lot of meetings, paperwork, disappointment and finance. It may not matter where the finance comes from. In Starling Bank’s case, Boden got an email from a mysterious investor, Harald McPike. Austrian, apparently. The eventual deal was done in the Bahamas on board a 92 metre yacht. £48m was pledged in exchange for 2/3 of the equity. So, essentially, Starling Bank is owned by a secretive financier based in the Bahamas.
That led me to a wider question about motives. Boden sees her core customers as younger types who live largely from their mobile phones. I get that. But why did the bank need to ape existing ownership models; namely venture capital based in the Bahamas? In these post-financial-crisis days, surely more of the same, albeit on a mobile, is falling short of truly disrupting? Why not a co-operative or other mutual model? Democratise banking and roll back the bank-as-an-end-in-itself principle.
There is absolutely no sense that Boden (left) might have had any reservations about the source of her capital, and that the profits would be offshored. It is not only McPike, she also sounded out Jared Kushner’s brother, Josh, in New York and John Thain famous seemingly for spending $141k on rugs for his office whilst he was at Merrill Lynch.
And what about ethical standards? The only mention of ethics was in a discussion as to whether it was ok to buy a competitor’s domain name (p197)! The website does have an ethics statement which explicitly excludes certain business customers such as arms traders. There is a commitment to planting trees, some reference to energy and supply chains. Nothing, though, that says, “this is the bank for me”.
Pic: Anne Boden, Charlottelorimer
Book Review – Jason Hickel, Less is More: How Degrowth will Save the World
Filed under: Book reviews, Business, Environment, Finance and Economics | Tags: Degrowth, Jason Hickel
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“Degrowth the economy” has a ring of “defund the police” about it. It sounds bad, counter-intuitive and a threat to security. Surely, if we degrow, we become poorer and less able to provide services that society needs?
These are obvious questions, the answer probably starts with the issue of notions of rich and poor. As much of my most recent reading has highlighted, for as long as wealth is measured in terms of money and its exchange value; i.e. the amount of stuff we can buy with it, the poorer we become as a species. But that is largely what GDP is, a measure of value in terms of the quantified and expressed in units, usually a currency, that are convertible and comparable with other currencies.
Hickel’s final chapter is thought provoking. He’s an anthropologist, not an economist; it is that multi-disciplinarity that is so helpful in debates about economies and climate change. Hickel takes us into the disappearing world of indigenous peoples living in the forests of South America and Asia. These people live in very close proximity to nature, are reliant on it and are deeply conscious that over-exploitation will lead to shortages. Take too many fish and they will not reproduce in sustainable numbers. Sustainable here means the same for the fish as those who rely on them for food.
These indigenous people do this by viewing the natural world not as “other”; in our “developed-world terms, as objects to be exploited. Rather, the natural world is full of subjects that, for some indigenous peoples, have souls. Having a soul (note that is not humans granting other living things a soul, rather other things having immanent souls). Hickel (below right) is not just talking about higher mammals; this stretches to plants (way more sophisticated than we give them credit for) and (even the) micro-organisms that digest our food and manufacture the nutrients that make us work.
Of course, if we have a view of the world where other living things have
souls – though that does not make them the same as us – then it necessitates a less exploitative relationship with “other”. As we have seen so often in the developed human world, if we ascribe other living things object status rather than subject status, they become eminently exploitable. And in any way that the exploiter sees fit. We do this to the indigenous people (Jair Bolsonaro in Brazil seeks to exterminate indigenous Amazonian people to exploit their lands); but our favourite economic system – capitalism – was based on subject-object distinctions. Colonialisation is a case in point. Indigenous people find themselves objects even if they themselves had seen the colonialists as subjects (albeit with weapons).
If anyone thinks that it is not possible to ascribe subject status to things that are not human, one does not have to go much further than the US Supreme Court that interpreted the Constitution to include corporations as having the same liberties as individuals – at the time, of course, white males with property. That said, that decision was much to the chagrin of the founding fathers, Thomas Jefferson and Abraham Lincoln, who could see the dangers (Mintzberg, 2015).
And so to capitalism. Capitalism is a system dependent on unsustainable exploitation of resources. Our measure of GDP does this for us. It is the measure that tells us that we are in growth, recession or depression; but perversely, we can increase it by wrecking a ship full of oil because GDP measures the “clean-up” operation but not the damage done by the oil on the landscape, the wildlife and the eco-system more generally.
Governments revel at levels of 3 per cent growth and we are amazed and envious when countries achieve 8 per cent and more. We must process what that means. At a rate of 3 per cent per year, an economy will effectively double in 30 years. That is double the resource extraction, too. As we now know, this is unsustainable. We need, argues, Hickel, to degrow.
Capitalism extracts from us more and more work. We once thought that technology would enable us to spend less time working. But it has not proved to be the case. The machines, like the one I am using now, makes it possible for me to do things that my predecessors would have given to others to do. In my work at a university, I am an imperfect IT technician as well as a lecturer. I do administration, too, all facilitated by technology and all displacing work from – and for – others who are not rewarded with more leisure time, but rather with unemployment and poverty. The excess goes to owners and executives.
Hickel reports that if we have more time, we use it not to consume more, but to spend time with family and friends. We also volunteer more. We are healthier. And we emit less greenhouse gas. Actually, we take more short flights when we work long hours as we seek, through the logic of capitalism, to “make the most” of the free time that we have. That has become synonymous with consumption. And what’s more “…nearly a third of all labour we’ve rendered, all the resources we’ve extracted, all the CO2 we’ve emitted over the past half century has been done to make rich people richer.” (p29) That stays with me as a thought.
This is what degrowth means that:
- we work less but are more productive in the process; remove the scarcity of jobs that leads to people working longer and for lower wages. There is actually no scarcity of work in modern economies;
- we should advertise less and reduce the creation of wants over needs;
- built-in obsolescence in products is ended – everything is repairable;
- we share more (shift from ownership to usership). Equally, expand the commons – land, in particular.
- ecologically damaging industries are scaled back (e.g. red meat production);
- we invest in meaningful jobs and guarantee them (in line with Stephanie Kelton’s thinking)
- we reduce inequality – more equal societies consume less and are less wasteful. The people are happier;
- debt is cancelled for poor countries (so-called Jubilee). In order to pay the debt, countries exploit natural resources unsustainably;
- we end debt-based currency – banks create currency from every loan they make. Compound interest is also ended;
- we broaden democracy and participation, end lobbying/political advertising. Elite control of news media is ended. Industrial democracy becomes the norm in firms. Monopolies are broken up;
- the power structures in key global institutions such as the World Bank and the International Monetary Fund are flattened.
Like all of the books I review, there is much more to them than the contents of this blog post. Hickel has a style that is satisfying. As an academic, he eschews too much anecdote and comprehensively gives citations and endnotes. This contrasts with Rutger Bergmann who is equally erudite, but less academically rigorous. However, it is annoying that Hickel’s book does not have an index, but that is labour-intensive, I know. My next task is to backtrack a little on degrowth with D’Alisa et al (left).
Hickel photo – Goldsmiths College
Mintzberg, H (2015), Rebalancing Society.
Book review: Stephanie Kelton, the Deficit Myth
Filed under: Book reviews, Business, Co-operatives, Environment, Finance and Economics, Politics, Reviews | Tags: Stephanie Kelton
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Without my reliable book seller, I would probably not have read this book. It arrived one day through my Covid-barrier letterbox. Once I had started reading, it completely changed my way of thinking and boosted my mood amidst the gloom that is modern politics and economics. Kelton demonstrates that, contrary to the British Prime Minister’s assertion, there actually is a magic money tree. I am going to resort to bullet points here. Here’s what Kelton tells us:
- we do not pay tax to pay for services, we pay tax to “provision” the economy
- governments do not tax and spend, they spend and tax
- governments’ budgets do not work like household budgets
- countries that have currency sovereignty (i.e. “issue” their own currency), cannot run out of money
- the role of fiscal policy is to manage inflation, not the deficit.
- austerity is both unnecessary and damaging economically and socially
- deficits are a sign of a healthy economy – economies that are balanced are not innovative
- a negative balance of payments does not mean that foreign powers have power over countries whose currencies they keep
- currency “holders” convert their cash into interest-bearing bonds
- countries with currency sovereignty can, and should, have full employment
- the resources are there for countries with currency sovereignty to transform to carbon-zero economies.
That is almost enough for one book. There are plenty of reviews of this book for my readers can draw on, for example, Despan, 2020. As ever, there is no substitute for reading the book oneself. But let me take just a few of these bullet points and metabolise them.
Take Covid-19, the British Government has found £30bn to fund the furlough/job retention scheme to enable employers to retain staff when revenues are hard to generate. The Government found money to build emergency hospitals; purchase PPE (albeit inefficiently); and even pay us to eat out. The government has not disclosed how these initiatives will be paid for. The Conservative Government has spent millions of pounds on Brexit, most notoriously a £13.8m contract to a ferry firm without ferries. Oh, and those expensive nuclear weapons. Essentially, the Treasury is paying by creating money. Though by contrast, it would seem that Government spending on welfare payments to poorer people, on education, social care, etc., have to be justified and balanced by tax revenue.
Tax, more generally, is not as it seems. Kelton makes the argument that the reason that we pay tax is not to fund spending, but rather for provisioning. Governments need people to be economically active, to make things, to provide services, for progress. Tax, therefore, is the incentive for people to be economically active by ensuring that people have to give their labour and time in exchange for currency (money). There is a secondary purpose to tax, that of wealth redistribution. The obscene wealth concentration in the hands of a few known-individuals – Jeff Bezos, Bill Gates, Warren Buffet, Elon Musk, Peter Thiel – does not serve society at all. The rich who get more money tend to save it rather than spend it. Give poor people money and they will spend it in the real economy. Take a $1bn off Jeff Bezos in tax and he is left with $109bn. Would he really notice? Plus, how much has Bezos increased his wealth during the pandemic which has necessitated large-scale public spending commitments? What can civil society do with $1bn? Rather a lot, I think.
People will argue – particularly in the USA – that rich people are serious philanthropists. Bill Gates’ foundation gives billions to the fight against malaria. Warren Buffet has endorsed Gates and will donate his fortune to Gates’ foundation upon his death. There are two problems – at least – with that argument. Many billionaires have become so rich by exploiting workers, communities and natural resources. Suddenly to give excess money “away” to causes that they decide are worthy seems wrong. They distribute excess money (they do not become St Francis of Asissi). They live well and maintain their political influence. And who is to say the causes selected by philanthropists are worthy and the most efficacious? Where is the transparency, the democracy, the accountability?
Back to Kelton’s main arguments, government deficits are, by definition, surpluses or credits to others. I buy something (debit) and give money to someone else (credit) in return for something that I actually want. But unlike governments, my debit does have to be covered either by savings or borrowing. Governments only get into trouble when they borrow in currencies that are not their own. Cases such as Argentina are often floated as examples of how deficits are bad. Notwithstanding the fact that Argentina’s 2001 inflation-led crisis caused a default on foreign debt, it did reconfigure its economy to one that focused on domestic growth and full employment. Its government moved away from US dollars both in cash terms and also uncoupling interest rates to a foreign currency.
Inflation, unemployment and climate change
Inflation is a problem for economies. In my lifetime I have seen high inflation; though nothing compared to the hyper-inflation suffered by Germany in the 1930s which still scars the landscape and leads to economic conservativism within the country and forces austerity on countries such as Greece that share the currency (the Euro). Inflation is usually controlled by notionally-independent central banks. They increase interest rates to dampen down demand. 2 per cent inflation seems to be a common target in modern economies. Overshoot and the central bank will raise interest rates. That will also impact on the unemployment rate – but modern economy managers trade off inflation and employment. Higher unemployment is a price worth paying for keeping down inflation, unless you are, of course, someone being made unemployed. This trade-off can be seen at work in a recent article by Gordon Brown, UK PM during the financial crisis of 2008. In response to the Covid-19 crisis, he writes: “Now I am the first to say that the Bank needs a more demanding constitution, one that imposes a dual mandate: to take unemployment as seriously as inflation. This should be matched by an operational target stating that interest rates will not rise or stimulus end until unemployment falls to pre-crisis levels.” (Guardian, 15 September 2020).
Kelton argues convincingly that countries with sovereign currencies can run their economies with a “good jobs guarantee”. Monetary policy has it that there is a natural level of unemployment – NAIRU. The Economist Martin Goodfried puts a figure on it: 7 per cent! In the USA, that might be as many as 12 million Americans “naturally” without work and a whole lot more who are under-employed. To keep that number of people unemployed is not some law of economics (there are no laws of real economics), it is purely a political decision predicated on a non-existent law of rising wages caused by too much employment and hence bargaining power of labour leading to inflation. When wages rise, interest rates should increase to prevent inflation from occurring.
Mainstream economics has it that unemployment benefit is sufficient to provide for the needs of people without work. Critically for the neo-liberal economists, the rate needs to be set sufficiently low so as to provide the incentive for the unemployed to take any paid work rather than be idle. The gig economy is, arguably, the result of this mentality; that is insecure and sporadic work. However, this argument is pretty phoney – most people are motivated by a sense of purpose, much of which comes from engaging in meaningful work. But the rich – for example, those who earn six-figure sums – do not work harder the more they receive in salary and bonuses. They merely accumulate believing themselves to be worth the money they are paid. Moreover, they bias the policy of their firms in order to maximise the benefits they receive. For example, if remuneration is linked to share price, CEOs may engage in share buy-backs rather than invest in innovation and new products.
Kelton identifies seven deficits that do matter. These are: employment, infrastructure, education, climate, democracy, health and savings. Let me take a couple of those deficits, starting with employment. Kelton argues that progressive governments would use the state apparatus to employ all unemployed labour on a wage that sustains individuals and families until full employment returns in the natural economic and business cycles. A good job guarantee (the good is important here) can maintain aggregate demand even in a downturn because everyone who wants to work can do so. This potentially makes the downturn of shorter duration. All citizens would be covered (not everyone is eligible for unemployment benefits either because they have not paid-in to the insurance system, or they have exhausted their “entitlement”) and purposeful work is at the heart of such a programme. Moreover, skills are retained and/or enhanced. Kelton argues further that these public works should be based in communities and the work itself should focus on developing communities – whether it be public service, caring (for elderly and children alike) or business development/entrepreneurship. It is also clear that such a job-guarantee programme could be beneficial as societies pursue environmental sustainability. It is also feasible for people to change their own direction from accumulation to sharing and “de-growth”.
That leads to the second deficit that matters, climate change. Kelton rehearses many of the arguments made by key writers in this field such as Mike Berners-Lee, David Wallace-Wells, Tim Lang, Bruno Latour, etc. If governments persist with a neo-liberal, deficit-avoidance economic mindset, then climate change will impact human society at the upper, catastrophic-end of the climate-modelled scenarios. There is no financial block on investment in green technologies. It is political. Sovereign currency issuers such as the USA and the UK can generate the financial resources needed to eliminate carbon as the source of all energy and limit warming to below 2 degrees Celsius.
In conclusion, Kelton is a credible critic of existing monetary policy. She demonstrates how we can as a society have the things we need. Society has never been provided for by taxation. It has always been spend and tax, not tax and spend. Tax does not provide the resources for public spending, it is primarily a tool of redistribution. Some rich people are not keen on that, for some reason.
Updated, 15 September 2020 to incorporate quote by Gordon Brown
Why solar power is the answer
Demonstrations against nuclear power, Hull, 1983
Again, showing my age, there was a time before chiller vending machines. I had just started at college and one arrived on campus. There seemed to me to be two things instantly wrong with them. First, the drinks – sticky water really – were packaged in aluminium cans. Giving back aluminium cans to supermarkets had been one of my earliest experience of environmental activism. I’ve never liked them because of the energy required to make single-use containers. Second, chillers used energy to chill something that really did not need chilling. It was purely an aesthetic, especially in the middle of winter. Chillers just multiplied from that point onward. It seemed to me throughout my formative years that we used energy for things that did not need energy. Shop windows at night. What was that all about?
It kind of didn’t matter in those days. Aluminium smelters were located near to hydro-electricity stations and there was plenty of coal 
and generating capacity to burn it. Plus, chillers and lit shop windows made life better. Apparently. It is true, it was a piffling amount of energy relative to the big users: iron and steel producers, paper mills, bitumen manufacturers, water-treatment works, industrial-scale refrigeration. What I did not know before reading Chris Goodall’s book, The Switch, was that some smart people run businesses that sign up some of these large energy users and gain permission to turn off their equipment when the grid is under pressure at peak times. One Belgian company, REstore (now part of Centrica), operates a platform that monitors the real-time use of electricity of its clients and gauges whether they can be taken off-grid for a certain amount of time to level out demand. The platform is clever – or at least the people behind it are – in that it works out just how much energy can be taken from a big customer without affecting production. For example, molten steel stays that way for some time. Even 5 minutes off-grid can provide enough capacity to keep everyone else secure in supply. The company receives money from the grid in exchange for its clients coming off grid when requested to do so.
Hastings Railway Station: why no solar panels?
Why is this important? it is important because despite the startling fact supported by a logic that I am not going to argue with, photovoltaics (PVs) can supply humanity with all of the electrical energy that it needs more cheaply than by any other renewable mode. Contrary to what I had thought about chillers and well-lit shop windows, actually energy consumption is declining in developed countries. In the UK, apparently, we are back down to levels of consumption as of 1970 driven by two things. First, it is actually difficult for those in the rich west to consume much more. There is unlikely to be more chillers because – probably – there is nowhere to put them and we cannot realistically drink more sugared water. Second, many of the things we still consume are getting more efficient, in particular lighting (see below). Semi-conductors, too, are becoming energy efficient, exponentially so.
How much electrical energy does humanity need? Goodall thinks that a decent standard of living can be achieved by a total running energy demand of 3kw per person (one-third more than the running demand in 2015). Scale that up, that is about 30 terawatts of power (twice the level in 2015). Goodall notes, too, that the amount of available solar energy is: ten times that of the nearest renewable alternative, wind; one-hundred times that of biomass; wave and hydro are some 13 times less than biomass. All we have to do is collect the solar energy and covert it. Well, not quite.
Roofs in Hastings. Spot the solar panels
PV cells are getting cheaper. Goodall uses the concept of the learning curve to explain this. Essentially, the more units manufactured, the more learning about how to manufacture them quicker and more efficiently. The decline in the costs of manufacture has a name, Swanson’s law (Like Moore’s law in semi-conductors, but bigger).
And maybe my chiller and shop window lighting gripes are actually valid? In a solar-dominated world – and especially in the temperate North – energy use peaks between 1600 and 2000 daily. There is an overlap between businesses shutting down and people arriving home, turning on lights and cooking dinner. Goodall reminds us how crazy it is that we do not have demand pricing for energy at these peak times. In the zero carbon world, we are going to have to turn off our lights and appliances at peak times. Ensuring that all light fittings are LEDs, seemingly would make a huge difference – demand can be reduced by one-third by this very simple change. Goodall goes further and advocates we all sign-up for smart meters on the basis that, in the 
end, suppliers will be able to shut off energy-hungry appliances at times of stress for the grid. He’s thinking particularly of our washing machines, tumble driers and dishwashers. My supplier invites me weekly to install a smart meter; I have been reluctant to let them into my house, but maybe there is a utilitarian case for it?
So, controlling demand at peak times is one element of the solution. Another element is alternative sources. As noted above, wind is the second-best option here; conveniently there is an inverse relationship between solar and wind – when it is not sunny, it is often windy. Wind turbines, however, cannot compete on price with solar. At the time of Goodall’s writing, the best solar conversions were coming in at US$0.06 per Kwh. Swanson’s law suggests that this conversion can go down further. However, such prices are half that of the best performing fossil fuel sources (p47). Wind can do about US$0.07 in its best places (Texas, for example), so it is a good complementer, and works at night and when the sun does not shine so brightly. Wind’s experience curve, however, is much less steep and sustained. It is also more expensive to site turbines (rental charges can be quite high; offshore has quite high maintenance costs).
There is also room for public policy – a south-facing roof in a city should have solar cells mounted on it. Equally, dwellings need to be made energy-efficient. A bit of insulation is insufficient. Rendering UK housing stock energy-efficient, in particular, is a major task. It is going to take central government support to transform regular houses, but companies like Energie Sprong (right) in the Netherlands (operating in the UK) show the way; though at £30k, it is quite a commitment. One house in a block seems a little pointless. We may need to do a bit of getting together to make this happen. Though disappointingly, there was no sign of money for these kinds of developments in UK budget statement of 8 July 2020.
Then there is the battery solution which has been driven by a rapid diffusion of electric cars. Elon Musk’s Tesla vehicles’ high performance depends on high capacity battery storage – in his case based on lithium ion technology (fast discharge). Seemingly there is enough lithium on the planet to build the necessary batteries. The United States Geological Service estimates that there is 13.5m tonnes available, which is more than enough and is recyclable. What Goodall doesn’t tell us, however, is whether this lithium is accessible, subject to geopolitics and/or would have environmental implications if it was exploited. There are other battery technologies – flow batteries are slow discharge, so not much use for cars, but work for other less dynamic applications such as mobile phone masts.
Then there is pumped hydro – excess daytime electricity is used to pump water up for hydro-release when the sun does not shine. There is one in the UK at Dinorwig in Snowdonia (left). It can react quite quickly at peak times. But scaling up is not easy; there would be more damning needed and lots of power lines. Effectively, we are still short.
Fuels are stores of energy. Fossil fuels are particularly good because they are concentrated stores which means you get a lot of energy per bundle rendering it possible to have meaningful fuel tanks in cars and aeroplanes. Goodall doesn’t hold out too much hope in the hydrogen economy – it is way too dangerous and difficult to store and is not particularly dense in its energy. Time to turn to microbes. Carbon neutral fuels are possible. Here’s the logic: take hydrogen and carbon dioxide, literally feed it to known microbes in return for energy-rich molecules containing hydrogen, carbon and oxygen. These can be stored in existing oil storage infrastructure – a bonus for what will need to be a rapid switch.
Goodall advises us to keep an eye on a couple of pioneering companies – Electrochaea and LanzaTech. Both use microbes to convert various elements and compounds – carbon dioxide, carbon monoxide oxygen and hydrogen – often taken from the environment, sewage installations or from industrial plants such as cement factories before emission, and converted into a liquid fuel – methane and ethanol – that can be stored and used when needed. Just like with hydro, excess summer electricity is used in the conversion process. The excess, argues Goodall, is actually worthless. PV generates more electricity than is needed in the summer, so putting it to good use is no bad thing.
Finally, there is air capture of carbon dioxide. This is inherently a good thing as it would actually remove carbon dioxide from the atmosphere. It does not require the burning of fossil fuels to capture it to then use it to make liquid fuels. A company called Climeworks in Switzerland leads the way here. Carbon dioxide is captured, combined with other elements to produce liquid fuels. It is expensive at the moment and would benefit immensely from the world adopting realistic carbon taxes as Climeworks’ carbon dioxide would be tradeable. Investment costs are equally important. Low interest rates help in the development of technology and installation, particularly of PVs for consumers.
I am still convinced that saving energy is still important and might contribute to reducing the deficit between what renewables can achieve in the winter and dark months. It does not seem to me just to be a case of our appliances becoming more energy efficient. Those drinks chillers and shop windows can still be turned off.
Pictures:
Energie Sprong – https://www.energiesprong.uk/
Dinorwig – https://www.fhc.co.uk/en/power-stations/
A very German approach to advertising
Filed under: Business, Cigarette advertising, Travel | Tags: Munich
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I love wandering around cities. In my younger days and earlier travels, I did it because it was always cheap and, largely, did not require communication. I have got myself into a bit of bother doing this. One can find oneself alone on an uncomfortable street with the sun going down. Athens springs to mind.
In Munich, where I spend quite a bit of my time, I have a “favourite” street. Actually it is a busy thoroughfare – a four-lane highway to-and-from the centre. What I like about it is that it seems to sum up the real city. I come from a wholly unattractive city, so I am used to finding beauty in things that are not generally regarded as beautiful. It is not an attractive street – it has more petrol stations on it than you can shake a stick at. It is dotted with mid-range hotels. There are more pharmacies on it than in the whole of the UK. And it has advertising hoardings in abundance. When I want to check out the latest cigarette advertising (one of the main draws to this blog, I have to say), this is the place to go.
In recent weeks, the cigarette companies have been keeping a low profile. They have been rolling out posters from
earlier campaigns; for example, JSP (right). Yesterday, we were walking along this street to a supermarket, something which we do often. I was keeping my eyes peeled for cigarette advertisements, but saw nothing. However, I did see the poster for…a sex toy (above left). My partner was oblivious. But it just hit me in the face. It is a clever one, too. It draws on football – the concept of “extra time” or “Nachspielzeit”. 15 per cent discount as well. Extraordinary.
Fracking as a metaphor
I was reading in the Guardian newspaper an article by comedy screenwriter Ian Martin (In the Thick of It) about how we are all being fracked as corporations find new ways of extracting more and more from us in pursuit of profit. Fracking, for those unfamiliar with the process, is the extraction of gas from rocks by using high pressure jets underground to break them up to the release the gas. Firms that are seeking licences to do this on a commercial scale are experiencing serious opposition from local people, not least because of the likelihood of toxic chemicals contaminating water courses and hence threatening human health (see graphic above left).
Moreover, the Murdoch newspapers take the position that that fracking is some sort of panacea – cheap, plentiful energy, produced locally and not subject to the whim of international diplomacy. Russia, for example.
I had not really thought of a metaphor of blasting rocks with high pressure jets. Fracketeering, as Martin calls it. So how are we being fracked? Here are a couple of examples from the article:
- estate agents’ “client progression fees”, where the buyer has to pay the estate agent to make the offer to the seller, even though the seller has already paid for this “service”;
- admin fees paid on online transactions – such as concert tickets – where the marginal cost is near to zero and where we, the customer, have already spent 20 minutes of our valuable time getting to the screen that tells us that we will have to pay for the privilege of paying (for our tickets).
Here are some that I am subject to, seemingly.
- In order to get online with my internet provider, I have to have a phone line that I do not need or want. The phone line costs the same as the broadband. No phone, no Broadband.
- paying to upload to this blog pictures of an illuminated Eiffel Tower that I took with my own camera;
- not being able to roll over digital credit from one month to the next on my dongle. Have I bought my 3Gb or not? Why can I not pay again when I have used it?
Graphic: “HydroFrac” by Mikenorton – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons – https://commons.wikimedia.org/wiki/File:HydroFrac.png#/media/File:HydroFrac.png
An outsource too far?
I was casually scanning the pages of the Guardian newspaper yesterday and came across a link to a story that suggested that John Lewis, the co-operatively-owned department store with a reputation for excellent customer service, has been outsourcing some of this activity to decidedly dubious third parties with potentially disastrous results.
Firms outsource, ultimately, to save money. Listed firms to this to maximise the return to their shareholders. It is the logic of capitalist business. But John Lewis is supposed to be different. Its owners are its employees, though its management is most certainly professionalised (in contrast with the Co-operative group which is now in some financial difficulties after gross mismanagement by amateurs).
So, to which outsourcing companies has John Lewis entrusted its reputation? When I discovered the identities of said firms, I needed a sharp intake of breath. Wait for it…Hermes couriers, who pay between 45 and 55 pence – PENCE – per delivery to self-employed delivery people, and Capita who seem to handle John Lewis’ complaints.
I have already ceased trading with firms that use Hermes. The service is appalling, for sure. But it is the business model that stinks. Whilst it is possible to avoid this by picking up ordered items at John Lewis and Waitrose stores, handing over any money to these charlatans is bad for society. It legitimises them.
Apple’s cash mountain
I am not an Apple fan. I do not like the design. I do not even like the font they use on their iOS interface. I hate the hype. But the results announced last week suggest I am in a minority. Apple reported profits of $18bn for the third quarter of 2014 generated by selling 34,000 iPhones per hour for the whole of that quarter. Mind boggling.
Apple now sits on a $180bn cash pile, a good amount of it is stashed in a bank account in Ireland selected so as to avoid paying tax on it in the United States of America. Good citizenship if ever I saw it.
So how does Apple reward its shareholders – ultimately the owners of the company? Well, apparently, according to the BBC’s Ian Jack (his explanation can be heard below), Apple is borrowing money in order to buy back its own shares so that shareholders pay a lower tax rate – capital gains tax rather than income tax.
It has been pointed out by the likes of Mariana Mazzucato in her book The Entrepreneurial State that, notwithstanding the immorality of avoiding paying tax, buying back shares also diverts money away from investment in new products, processes and technologies. Essentially, these companies not only avoid paying tax in the countries where they trade and/or are based, but they also get subsidised by the public sector through universities that make up the shortfall in basic research that should be done by the firms that utilise that research for new products and services. A double injustice.
Be informed 
