Are our institutions and governance structures ready for the close of the Holocene?!

I thought I would share this article with you, from the LSE blog.

I must admit that I find it both ironic and deeply frustrating that we are about to destabilise, through our own acts and omissions (should that be emissions?!!), one of the most stable climatic periods of many millennia!

Our actions in burning fossil fuels, built up under our feet over hundreds of thousands of years, allied to profligate use of resources, for nothing more than a tenuous profit, is about to destabilise this harmonious epoch.

The burning of so much fossil fuel in such a short space of time, has released the locked up carbon and set in train dramatic changes that are staring to manifest themselves now in changes to our climate. But temperatures are running behind the curve of CO2 emissions and there will be an acceleration, leading to changes that we probably aren’t prepared for.

The blog realises our shortcomings at a social, institutional and economic level and discusses the profound impacts that they are totally unprepared to face!

Foresight on these issues, would predicate toward some form of global governance and a culture change toward a much less hierarchical and more cooperative structure.

Adaptation may well not be a case of cost benefit, but instead could be blind panic in the face of adversity and necessity. So many of the governance systems and ways of life that we take for granted are but the tiniest dot in geological terms. We would do well to think of these things as being very ephemeral, paper thin veils behind which we live and which, will be exposed by such profound change!

A trilogy of economic tales!

Friends,

There has been a rich vein of material published recently, all of which is worth sharing, I hope that you find this informative.

I have three articles to share that feel as if they cascade down in scale, so that is how I have introduced them.

Firstly at the international level, is a report from a EU think tank, highlighting the challenges to the current capitalist model, but also focusing on social cohesion and the potentially severe impacts from inaction or weak policy around these issues.

What is really interesting about this, is that it comes to a similar conclusion about ‘Keynesian economics’ as did the MIT model run in the mid seventies on the old IBM mainframe. Whilst they use slightly different criteria (one being based on more quantitative data and the other analysis of evidence), it is remarkable that they both draw a similar conclusion!

The EU report clearly states that a business as usual approach to capitalism could effectively see it replaced by another model. Obviously the report is taking the view that some form of capitalist growth model could be maintained, I don’t really believe that so much, but the message is the same.

It also puts a clear focus on social cohesion, which is something that governments and trades unions alike need to consider. In a more individual World, governance will become much more tenuous, it is important that collectivism can still function effectively!

Second up and at the national scale is an article from The Economist, featuring areport from Adair Turner a former banking regulator.

He sets out in very clear terms why regulation is required and how free markets failed when he came into office and how they are likely to fail again!

He outlines how the flaky recovery has been founded upon past boom and bust practices and how the current recovery is fuelling the housing asset bubble.

Given that he has headed up the British Retail Consortium, amongst his roles, it is quite a refreshing surprise to find that he aligns with some of the current left wing economic policies proposed by Corbyn and his advisors. He is clearly in favour of regulatory control on debt creation and he is also an advocate for ‘peoples quantitative easing’!

Lastly and by no means least, is great local example of ‘playing by the rules’, in this instance also with esoteric objective!

Crickhowell a picturesque market town nestling at the foot of the Brecon’s has become the latest player in a game of Avoid the Tax Man!

Fed up with hearing about large corporations not paying tax in the UK, the towns independent traders got together with the local council to do something about it! They employed the same tax advisors as the likes of Starbucks and Google and went off-shore!!! Yes, they are now also depriving the Treasury/HMRC of income in the same way that large corporations do. They aren’t doing this in a spiteful way, they are doing it to try and get the loophole closed. A number of other authorities have now shown an interest, so there could become an obvious imperative to stem the offs-shore flow!!

It will be interesting to see how this pans out, but it is great to know that innovation and alternatives are gaining ground, even amongst those you might not suspect, hope lives eternal!!

Links to published articles provide additional and interesting information published by the journalists as credited.

2015 preview.

Hello,

A very warm welcome and best wishes for the New Year!

In time honoured fashion, I would like to take an early opportunity to look forward into next year. To avoid this becoming a rambling diatribe, I intend to cover a few topic headings of interest to me and see what turns out to be correct, or not!

Energy
The current price war taking place in the oil supply market has been a bonus for big users of oil and has certainly helped to stave off a slow down in a number of developed countries! The flip side of this, is that oil producing states are now seriously starting to feel the squeeze, with many only breaking even or worse on the more difficult oil fields..

 This has numerous impacts, not least the black hole created in tax revenues (UK Exchequer is likely to face a shortfall of around £6bn), which are likely to add to the current woes of austerity. It has also impacted on share prices, a worrying trend for investors and pension funds (is this a sign of the carbon bubble about to burst?).

One doubled edged consequence could be that investment will dry up for exploration and development of smaller fields and unconventional oil and gas? This could be a great opportunity for a switch to investment in renewables!  If this were the case, it might be that new oil will fail to come on line, creating both a shortfall in supply and a gap that can be filled by renewable energy. In reality, this could indicate 'peak oil' as investment declines and carbon pricing could also play a part in an overall decline.

My predictions are as follows:

• Oil prices will remain low into 2015,' but lack of investment could create future shortages, so prices will go back up. This may not be soon enough or high enough however,  to return to current levels of supply. In which case, renewables are likely to fill the gap (possible hydrogen economy)!
• I think carbon pricing on a global scale will become more likely, Paris could be a turning point for this, if the true cost of adaptation is to be realised.
• The divestment movement will gain more traction and place the carbon bubble under greater strain! Expect to see major investors sit up and move towards renewables.

Climate change

To date science has made great progress in computing and modelling our impacts on our climate. This has not been matched by progress in conveying that message to our leaders, politicians and the skeptical public! Dealing with issues of uncertainty around a more certain trend, has proven a difficult task for scientists, one that needs to be addressed for 2015!

Globally the evidence is mounting, we seem to be experiencing more extreme weather events, with droughts, floods and stronger winds! The problem is however, that there is always something more important; recession, war, famine, planes going missing (no disrespect to those who have lost their lives) etc. Climate change continues to tick away in the background.

2014 is going to be the warmest year on record, one of numerous recent record breaking years! It is possible, perhaps even likely, that 2015 will put them all in the shade! With an albeit, weak El Niño, and evidence the Decade  Oscillation in the N. Pacific, has switched and is now returning heat to the   upper ocean, anything is possible (it's a lot of energy!).

Maybe some freak events will serve to get proper coverage and focus the minds for Paris! Our ultimate survival may depend upon a really positive outcome. Global carbon pricing and a focus on new economics would be my wish, as this would serve to continue the pressure on fossil fuels and help us move away from a carbon based economy.

So my predictions for 2015 are:

• It could be a roller coaster year with extreme events and a clear sign that our climate is on the move again!
• Science and the more informed society may finally get their act together and start to win the politicians and skeptical public over on the important issues of climate change and the need to act now.
• Youth will start to have a greater involvement and influence in our democracies, bringing a more open mind to many issues, including climate change. They will break the mould of traditional politics in 2015', flocking to the newer parties, like the Greens, where they will find a voice.

Waste & resource

Waste and resource are opposite ends of the same sustainability paradigm, the resources that we use to consume and generate growth are finite. Waste is an indicator of how efficiently or not we use them, but with waste comes the potential for pollution and illegal activity.

Whilst much effort and focus has been placed on tackling pollution and crime (maybe with the correct intention), primarily improving resource efficiency should reduce both pollution and opportunity for crime. 2014 saw the emergence of  the term 'circular economy', an element of resource efficiency and one that can be grasped by industry and politicians alike. It is however a double edged sword and will require strong picky leads, in order to operate effectively.

I believe that 2015 will be a difficult but crucial year for the circular economy, with prevarication in the EU and obfuscation at home! Only clear policies, smart regulation and a sensible time line will bring all the threads that are needed together in a way that will deliver a working model. 

Sitting amidships in the waste hierarchy, recycling is currently the largest section, in terms of growth and turnover. It is however, facing a degree of uncertainty going into the New Year, with new regulations, a stalled English recycling rate and low commodity prices! I believe we need to see the same levels of investment in reuse and Eco-design, if we are to archive higher resource efficiency!

What do I think will happen in 2015?

• I think recycling (especially in England, but not exclusively), will face a torrid start to the New Year, with oil prices at a low, transport, conversion and processing of raw materials is comparatively cheap right now! This could lead to over supply and a fall (or crash) in commodity prices, which will impact recycling!
• If we are to be more resource efficient, then low prices may be a blessing, if it helps to drive out low grade material. Whilst new requirements to separate waste for collection, may add initially to this burden, we need high quality recyclate if we are to be resource efficient!
• I also think that 2015 will start to see changes from the traditional industry model of collecting waste mixed and then processing, towards a more bespoke service for producers. Waste will be collected separately and returned for reprocessing and rremanufacture, opening the way for small enterprise and reverse logistics.

This is a small insight into my thinking for the coming year, it will be nothing less than exciting and challenging! I hope that you all find something positive from it and that at the end of the year, we will all be one step closer to a sustainable future!

Best wishes for a happy and safe New Year!

Video blog - Welcome back!

Hi everyone!

I must apologise that I have not posted much recently, it has not been for lack of enthusiasm of topics, so much has happened!

It has been a busy period however, I have found it difficult to find time to write much! Hence my new approach, to venture into the world of the video blog (vlog), in the hope that it will make blogging more efficient and flexible.

To this end, I have created a short welcome video, explaining the subjects that I would like to cover by way of a test. Suggestions are welcome, as I become more confident I hope the quality will improve!

See the video blog here:  http://youtu.be/O3BYi

Mike.

Is hope preventing us from glimpsing a brave new World?

I have been looking at relationships, not the personal kind, but those that can be found between social, economic and environmental theories. This is the stuff of which sustainability is made, in much the same way as sub atomic particles are the building blocks of our universe!

Scanning through my feeds recently, I read two different articles ;one about the failure of capitalism and the other about the perverse nature of hope. I enjoyed both of them, in their own right, it was only later that the connections between them dawned on me and their potential relevance to the raft of issues that face collectively! 

I will briefly summarise what each article was about, to provide background for my thinking. I will also provide links (for as long as they remain live), so that you can also enjoy them in their own right.

The article about the failure of capitalism is by Thomas Pikety a new left of centre economist, who has a book out entitled  Capital in the Twenty-First Century. It has found a wide audience at recent gatherings of economists around the World. In essence he is saying that using data from the last 200 years, he can clearly prove that wealth generation exceeds productive capacity and that this inevitably results in wider and wider inequality of wealth. He posits that this results in an unfair burden to the middle income taxpayers, which in turn leads to degradation of public services,  working conditions and well-being. Left unchecked this could escalate to protectionism and ultimately conflict. More on this can be read here.

The second topic that I wanted to mention was also published in the Economic Journal, but is more about behavioural trends. Following the sad disappearance of flight MH370, there was an awful lot of uncertainty around what happened and where. These voids were filled with messages of hope, both by the media and by the governments involved in the search. Twenty five years of German research suggest that the link between hope and expectation is one that delivers social pressure and that freedom from this repressive fear factor, brings about a release. Hope, if you like, is a major factor in maintaining the status quo or following a business as usual scenario! More on this can be seen here.

I kept coming back to the same point in my head, whichever problem that you look at, whether it be climate change, resource depletion or wealth disparity, hope appears to be the enemy of radical change!

Each issue taken in isolation, comes with its own profession, media perceptions and political baggage. Problems are analysed, debated and reports written , but the clock ticks on and in effect, nothing changes (the rich get richer, the climate warmer and finite resources, ever more stretched). The problem with this cycle of events is that hope is refreshed with each iteration, which in turn maintains the status quo!

The writing is on the wall for capitalism, the mathematics are suggesting that the sell by date is looming large! The political model is becoming ever more dysfunctional and arcane, bearing disproportionately more relevance to those with a vested interest in maintaining that status quo and accretion of wealth! The environment is becoming increasingly degraded and will serve to ramp up the existing social and economic pressures.

It is only when you take all of these things together and fire them at each other, do you realise they represent a perfect storm. I find it difficult to imagine that within in the confines of the current socio-political and economic environment, that we have any hope of finding a workable solution, or a means of transition to new more equitable and sustainable model.

The art of giving up hope here, is not to stop breathing, but instead to take a deep breath and to say OK what now? By giving up hope, you are giving up on continued support and trust for our failing systems and leaders. You will need to let go of concepts about the current norm. This can and will be both frightening and cathartic! Without  going through this barrier of perception however, I do not believe that any of us can find it within ourselves to innovate and be free enough to make the radical changes needed to design and implement a new model.

The evidence is mounting that the climate is warming and that the economic model is failing the vast majority. Beyond this lies a brave new World of connected localism, can we jump the hurdle of hope and land running on the other side?

2014 Are we out of the woods yet?

Over recent months we have heard a lot about our economic recovery and everyone seems to be talking up the rude health of our growth rate and future prospects. Now, I'm not someone who just likes to pour cold water on a god story, but I have to admit that I felt a bit sceptical about what I was seeing and hearing. Things don't seem be borne out by what I see around me, or by the words some economists have committed to print.

So I decided to see what I could find out and what it might tell me about what does or doesn't underpin our economic revolution. I'm no economist so I have borrowed from some friendly sites and used the graphic information available to try and build a coherent picture, allied to what I see and hear around me.

Rather than come to any clearly defined conclusion, I found that I wanted to know more. So as I travel through the graphs and the story they tell, I have highlighted what I think are some key questions that still need to be answered, if I am to be convinced that we are on the road to a sustainable recovery.



For me, this graph is all about the underlying trend (i.e. the blue line),which indicates that public sector debt is increasing steadily. This has continued to rise as a percentage of GDP, despite the fact that numerous cuts in the public sector budget have been made. So whilst it might be reasonable to say that we are paying down some of the debt due to the cost of intervening post 2008, this really only serves to mask the underlying trend.



What interested me here was the fact that our interest repayments on debt as a % of GDP, appear to be creeping back up again. Wouldn't you expect this to be decreasing when we are told that our economy is growing and interest rates (and hence bond yields etc.) remain low. And yet, there appears to be a steady move upwards!

I may be wrong here, but I would be very concerned if government borrowing rates returned to more normal levels (rates/yields of about 4 to 5%), as the graph above would be telling me, that this percentage would be likely to increase significantly without a proportionate increase in GDP.

The graph below demonstrates this even more graphically dealing only with the debt interest payments. Did you just say wow?!!! How much tax do we have to generate to pay all of this?



So, leaving the graphs behind, how do I now feel about the state of the UK economy? I think I can sum up these feelings under three simple headings; taxation, standard of living and personal debt.

On tax, the current government always wants to reduce levels of both personal and corporate tax, to encourage both individuals and business to grow and spend more as result of keeping more of the money that they earn. The flip side to this however, is that in order to lower taxes, public spending and borrowing have to be reduced. With borrowing still worryingly high, the balance has been at the expense of sizeable cuts to public services.

This has linked very much to the issue of standard of living and the perception of how wealthy we feel. Many jobs have been lost in the public sector, predominantly they have been well paid jobs that return good tax revenues and also encourage spending in the wider economy. The loss of these jobs must have a detrimental impact on tax receipts and spending. Many of these jobs have been replaced in the private sector, however a significant number of these jobs are much lower paid and do not have such a net positive benefit to the Exchequer! In fact many of them benefit off-shore share holders and pension funds through increased profits, rather than our own interests.

It does not help to bring taxes down, when welfare has to be paid to help low earners make ends meet, in fact it is likely that this is an intractable element as to why government borrowing continues to rise! These facts probably contribute to an underlying uncertainty about the overall improvement in the economy, allied to rising prices compared to earnings and personal borrowing.

Personal borrowing in the UK is huge, about £1.4Tr, and represents a significant risk to recovery. When interest rates are low, it is not uncommon to see increased borrowing. Because however, interest rates are low to savers. it is also common for a lot of debt to be paid down. If interest rates were to start moving upwards again, there would be a risk of a lot of bad debt, which could be dangerous to the banking system.

So whilst on the face of it, there does seem to be a recovery (certainly in terms of growth and jobs), it does not have the hallmarks of being a sustainable recovery. It appears to be based upon debt and potential bubbles forming in the economy, which is a high risk strategy in my eyes.

Only time will tell, but it will be good to revisit this at a later date.

Preview 2014 - Land use and food production

It is good to make some predictions for the year ahead, and then to track them and see how you do!

Some of course are frivolous (as they should be)!

Others are more serious however, and whilst I may not wish them to come true, they are nonetheless well evidenced.

Some of this evidence is captured in the articles linked to below and to save time rewriting what has already been done. I wanted to start by taking a look at food production and land use in the year ahead and the impacts of population growth and climate change.

http://www.care2.com/causes/10-reasons-why-the-meat-and-dairy-industry-is-unsustainable.html

http://www.huffingtonpost.com/2013/12/30/chinese-farmland-polluted_n_4517601.html?

ir=Green&utm_campaign=123013&utm_medium=email&utm_source=Alert-green&utm_content=Title

Taking the two  articles above as an exemplification, my first prediction for 2014 is that we will start to see spiralling pressure on land use as nutrient prices become higher, water shortages start to bite, pollutant load and degradation start to combine.

These pressures will impact the industry, consumers and the communities in which the produce is grown. They will manifest in higher prices to both producers and to the consumer. It is also likely that as costs rise and prices start to spiral, a squeeze will be placed on supplies, many of whom already receive a very poor and socially unjust price for their produce. 

The expanding middle class in India, China and other BRIC’s will be the major driver of these problems, however the consequences will be felt in poorer countries, where land and water grabs are likely to become more common as suppliers try to satisfy growing demand. This could result in a social backlash in countries with a strong democracy and will result in feuds and conflict, in those which are less stable (South Sudan being a current and relevant case in point).

Pollutant load from mineral extraction is also becoming more prevalent as the easiest wins in terms of extraction are mined out and exhausted. From here on in, the winning of raw materials will become more energy intensive, more remote (which multiplies the risk in transport) and more polluting. These pressures will again be reflected in prices for raw materials and will increase public opposition to these operations. 

As case in point is the extraction of tar sands in Alberta, Canada, extraction and processing has created a 7 300 mile halo (could I have used a worse term!) of Mercury pollution around the whole area! More information can be found here:

http://thinkprogress.org/climate/2013/12/30/3107761/tar-sands-mercury/

Here in the UK, it is important to look at both how we can reduce our impact and what the threats might be to our own land. One of the stark facts from the Chinese example is that good regulation is essential and that also, it is obvious that the clean up costs far outweigh the burden of regulation,, including putting land out of production for some time. 

A huge quantity of waste is sent to land for recovery in almost every country, including here, thus it is essential to maintain vigilance as pressures (mainly economic in the case of the UK) , start to mount! PAS standards for compost and AD are in place, it is important that these are strictly observed to maintain soil quality, to ensure benefit from the recovery of recovered wastes.

So in summary, the main predictions are that prices for meat and dairy products will be driven up steadily and it is also probable that there will be a number of new food scares and scandals this year! We can reduce our impact by cutting back our consumption of meat and dairy products, we could also buy a lot more seasonal produce, grown locally and organically.

On a more frivolous note; I'm going to steer well clear of  Noodles for a bit!!!