“Our problem is not lack of growth but too much of it,” Sedláček said. An economy that uses debt to grow must continue to do so by taking on more and more debt or, alternatively, face a slowdown that will lead to bankruptcy. It is like owning a car that explodes when it stops, argued Sedláček." (Source: CFA Institute)
Brilliant presentation at the Fifth Annual European Investment Conference in Prague by Czech economist Tomáš Sedláček, who was an advisor to Vaclav Havel in the past.
The full presentation which question our political obsession with economic growth is available in livestream via the Conference website.
Sedláček’s speech at the European Investment Conference is not the only sign that some of the more daring economists are waking up to the reality of a post-growth society.
Last week, the Financial Times (the Church of Economic Growth?) published an interesting article by Satyajit Das addressing the same issue. Referring to the movie “A Few Good Men”, Das says that our “politicians and policy makers seem unable to handle the truth – the prospect of little or no economic growth for a prolonged period.”
Analysing how the financialisation of the economy used debt to create demand and growth, Das claims that “expansionary fiscal and monetary policies may only provide termporary palliative relief, but cannot restore the health of the real economy”.
His conclusion is so on the money: “A return to strong growth remains an article of political and economic belief. But as philosopher Michel de Montaigne asked: “How many things we regarded yesterday as articles of faith that seem to us only fables today?”
One week after IMF economist Michael Kumhof attracted attention with his remarkable ideas on debt redemption and money creation in the working paper "The Chicago Plan Revisited", here he is again with another remarkable study, on peak oil this time. One scenario in his modelling predicts an 800 percent increase in oil prices in two decades. Anyone for more doom-and-gloom?
Is the IMF becoming revolutionary? And will the media and policymakers read and understand the implications of these excellent papers? I guess at least the Queen will not have to ask questions why nobody warned of this clear and present danger.
Read The Washington Post’s “IMF study: Peak oil could do serious damage to the global economy” and the full working paper “Oil and the World Economy: some possible futures”.
"The Fiscal Pact mandates that all national governments in the European Union should achieve a “structural deficit” of no more than 0.5 percent of gross domestic product. I shall not again demonstrate that this concept is nonsense and, even were it not, 0.5 percent would be absurd, implying continuously deflationary fiscal policy. If the Pact is foolish, combining it with a “fiscal czar” (Merkel’s term, not mine) is authoritarian madness. It would abandon the pretense of electoral democracy within the European Union." (Source: Social Europe Journal)
Good critical analysis by John Weeks of recent developments in European governance structure. Pro-Europeans who welcome this as "more Europe" are either terribly naive or have a hidden agenda.
“As our global economic and ecological crises converge, neither neoliberalism nor Keynesianism can cure what ails us.” (Source: Foreign Policy in Focus)
Excellent analysis of the flawed remedies for the twin economy-ecology crises by Walden Bello in Foreign Policy in Focus.
“To analysts like Richard Heinberg, the intersection of the financial collapse, economic stagnation, global warming, the steady depletion of fossil fuel reserves, and agriculture reaching its limits is a fatal one. It represents a far more profound crisis than a temporary setback on the road to growth. It portends not simply the end of a paradigm of global growth driven by the demand of the center economies. It means the “end of growth” as we know it. It is, in short, the Malthusian trap, though Heinberg understandably avoids using the term.
The gyrations of the finance economy, he says, do not simply stem from the dynamics of capital accumulation but from an all-encompassing ecological disequilibrium. “Until now the dynamism of growth has enabled us to stay ahead of accumulating environmental costs,” he writes. But “as growth ends, the environmental bills for the last two centuries of manic expansion may come due just as our bank account empties."
“An IMF study has proposed a 1930s plan that would magic away government debt and end ‘boom and bust’ for good…” (Source: The Week)
Why does this IMF paper not get more media attention? Because it would increase the power of government and tame the banks?
“Low prices for consumers. Big profits for bankers. But the gas glut in the United States has meant much pain for gas exploration companies and their investors.” (Source: NY Times)
Brilliant article on America’s natural gas glut and the influence of financial capitalism on its boom and future bust. Must-read article for European policy-makers who dream of a Golden Age of Gas for Europe.
“Like the recent credit bubble, the boom and bust in gas were driven in large part by tens of billions of dollars in creative financing engineered by investment banks like Goldman Sachs, Barclays and Jefferies & Company.
After the financial crisis, the natural gas rush was one of the few major profit centers for Wall Street deal makers, who found willing takers among energy companies and foreign financial investors.“
“The concept of pricing ecosystem services and allowing them to be bought and sold has gained wide acceptance among conservationists in recent years. But does this approach merely obscure nature’s true value and put the natural world at even greater risk? “ (Source: Yale e360)
Excellent article in Yale’s Environment 360 on the important debate about pricing of natural capital. Is putting a price on externalities and services of nature the future of environmentalism or a new capitulation to the power of finance capitalism?
“Sian Sullivan, a University of London anthropologist, warns that past revolutions in capital investment, like the enclosure of common lands in eighteenth-century Britain, and the industrial revolution of the nineteenth century, resulted in “the shattering of peoples’ relationships with landscapes” and the conversion of rural folk into factory workers and service-providers for capital. In the ecosystem services movement, Sullivan warns, we are seeing “a major new wave of capture and enclosure of Nature by capital.” And it will come, she says, at the cost of profound cultural and psychological upheaval.
It may be, as some argue, that we have no better way to save the world. But the danger in the process is that we may lose our souls. “
“It is harder to organise a political movement to help young people than old people. Young people are less susceptible to being organised and they lack the patience for the hard graft of a long political campaign. They are more likely to be seduced by the weak ties of social networking and the false promise of slogans like ‘We are the 99 per cent.’ Nonetheless, these are the victims who need the most help and who lack the clout or visibility to be heard among the more pressing demands being made by the more militant elderly. They are the 5 per cent and we should do something for them.” (Source: London Review of Books)
London Review of Books has an excellent critical analysis by David Runciman of the Occupy movement and the 99% versus 1% narrative.
“The global financial crisis offers a big opportunity for progressive politicians to reenergise the green agenda.” (Source: Policy Network)
British energy expert Dieter Helm provides a good analysis of why EU climate policy has failed to make a difference but his plea for "green growth" suffers from technology optimism and belief in the overhyped gas eldorado.
“From the outset Kyoto made Europe look good¬—and hence could be presented as a political “success”. But much was “smoke and mirrors”. Europe has been exiting energy intensive industries, and these have moved to developing countries like China. … But sadly reducing carbon production in Europe does not — and has not — made much difference to global emissions. Europe just imports the carbon instead – so carbon consumption replaced carbon production.” …
“None of the existing technologies are likely to meet the decarbonisation challenge. There simply is not enough land and shallow water for wind or biofuels to make a difference. Current renewables just can’t do it. So we need future renewables, and the good news is that on the technology front there are lots and lots of opportunities. What Europe should do is take some of the hundreds of billions being spent on current expensive renewables and spend it on the future renewables and technologies — on things like the next generation of solar, on batteries, on smart information systems, electric cars and on a host of new concepts.”
"One question that stops conversations cold is, ‘What if our greatest societal challenge is not climate but growth?’
Climate change is really just an ambiguous term or understatement for the problem at the root of our energy production and consumption, which is growth in energy use, economic/population expansion, and environmental degradation resulting in overshoot that is vulnerable to collapse.” (Source: Energy Bulletin)
Interesting reflections on how all the energy spent on dealing with climate change distracts us from the real root cause of our "great disruption".