Category Archives: Manifesto

Party policy

Intractable BIG PROBLEMS need to be tackled as a living system

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Over the last two years I have been increasingly puzzled about my own response to others.  Let me explain. I have a huge respect for several people who know a lot about the faulty money system and how its flaws cause so much pain, misery and environmental devastation. I also have a huge respect for those who have led the movement for tax reform so we tax what we hold or take rather than what we do or make. Nowadays in New Zealand income tax, sales tax and company tax comprise more than 80% of our government revenue and our local authority’s funding system is more and more regressive.

There are a growing number who know about both the shortcomings of the privately created money system AND the flaws of the tax system.

To save myself pain, I have focused my attention on only those who see the shortcomings of both systems. Yet when I broached the topic of tackling both issues together I received the reply “Of once we have done monetary reform we can get into land tax issues” or “Land tax will deal also to the faulty money system” or “Monetary reform will stop housing bubbles”. And these answers from people I respect.  Why did my hunch say NO?

So it was a relief the other day when researching systems thinking to watch a 20 minute interview of  the brilliant Frijtof Capra by Hazel Henderson. Capra was talking about living systems. He talked of the need to educate people eco-literacy and said there are multiple reasons why we are destroying our natural environment. A major one is that we are thinking linearly and not holistically. It is all too mechanical and Cartesian. He asked why do we want to save the spotted owl? The answer is because of the relationship of the spotted owl to humans. It is actually the relationships that we want to preserve.

Ecosystems are communities that have organised themselves over billions of years. There is true wisdom in them. Capra says we are thinking in fragments and we need to connect the fragments. We need to think in terms of relationships not objects.  And in Nature each living system is self-organising. We need to move from thinking about content to thinking about patterns, from content to context, says Capra. He says we can’t divide up a living system because it breaks those relationships and destroys the patterns.

So I have been thinking about the relationships between the various BIG PROBLEMS we face in the global economic system and the global environmental system. Though there are points of difference or scale, on the whole the big problems we in New Zealand face as a nation are similar to those faced by other nations.

If we focus on just one issue, say affordable housing, and forget about its relationship to bank created credit and a tax system which favours real estate investment, we will miss the target. Spain built more houses and it didn’t solve their affordable housing problem. If we think about the big problem of low wages for the working poor and just ignore its relationship to the tax system, the lack of investment capital for jobs and growing debt, we can come up with a temporary solution of a higher minimum wage. But it won’t solve the problem of  the declining affordability of food and housing. You see if you ignore the living system in which the problem is embedded, the problem persists. If we focus on climate change only and forget the flawed money system which demands economic growth, we won’t get very far at all. The next international conference will deliver exactly the same result where politicians favour economic growth over habitat protection. If you focus on getting a Universal Basic Income and forget about the fundamental reasons for tax havens (a faulty tax system) and the growing private debt issue, you won’t get very far.

So I believe my instinctual response to those monetary reformers who insist we tackle one problem at at time is actually well founded. It is time we all looked at the system as a whole and then worked out where to change it, where to tweak it. Family therapists do this every day. They don’t just focus on the difficult adolescent, they look at the family as a whole. Systems thinking works!

I have done a rough sketch of the what I see as the BIG PROBLEMS and the relationships between them. It gets really complicated and someone may do a better sketch. But here goes. Let’s look at this picture of a broken economic system and ask what small changes we can make that have the biggest effect on the whole system to restore it to health. The answers may be surprisingly simple. Here is my sketch:-

The economic system network

 

A systems approach to Universal Basic Income, monetary reform and tax reform

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One of the biggest political challenges is to clean up the welfare mess. So many people have known for so long that means tested welfare is not working. We have seen good people not able to earn more than $80 a week or their benefit would be docked. We have seen de facto couples split up so they can get more combined income, a terrible situation if we want to foster intimacy and honesty.

The movement for a Universal Basic Income – a proposed system of social security that regularly provides each citizen with a sum of money unconditionally – has been going for many decades now. Advocated by both socialists and libertarians, to my knowledge there is still no sign that any political party is taking it seriously. The long list of benefits can be found on Wikipedia.

I couldn’t help reflecting on the absence of a UBI when Parliament recently debated the Bill to pay those who care for highly dependent adult children the minimum income. All sorts of other questions arose from that debate. The government was clearly terrified that this precedent, forced on them by a Court of Appeal decision, was going to lead to an uncontrollable blowout of claims for government support for those who care for dependents.

When you do the sums the cost of UBI is enormous. Bringing in a full basic income would shock the economy.

It is the same with changing from a system where income tax and sales tax and company tax dominate the sources of Government revenue to a tax system where you are taxing the use of the commons, in particular the use of the land.  It would be a massive shock the economy.

And then again there is another one. Carry out massive monetary reform of the national money system and whoosh, it is all too much of a shock to the economy.

imagesI was on a skype call the other day with a wonderful young permaculturist from the Canary Islands, Stella Strega Scoz. She was enthusing about the systems approach to big problems – look at the problem as a system and tackle it as a whole.  And during the online course that Stella ran (Eonova), I learnt that Hazel Henderson also enthuses, and that the wonderful Donnella Meadows (Limits to Growth) had written a book called Thinking in Systems: a Primer quite a while ago. Hazel told me that the influential economics professor Jeffery Sachs is also a now a convert to systems thinking.

The challenge to our political creativity is to face these three big problems together.

So let’s look at the permaculture teaching that new growth comes gradually from the decaying old system. Hazel says “Breakdown brings breakthrough”. Leave the old system to die and start up a lot of new initiatives. The Living Economies Educational Trust has been a pioneer in its support of complementary currencies like time banks, and now of a growing number of savings pools which leave out banks.

images-1I believe we (both in New Zealand and in the world) are capable together of finding a solution to all three of these big problems together, and in a way that doesn’t shock the economy. Our solution must introduce a scaled-up complementary system that creates a healthy interest free currency, puts a full ground rent on at least some land and which redistributes this income in the form of a small per person Citizens Dividend. Who said creativity is confined to artists and scientists? Political creativity seems to be underrecognised and undervalued.

 

 

The energy return cliff and the end of growth

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When we first started talking about peak oil (I heard about in 2004) we were worried about the price of oil going over $100 a barrel.

One of my sisters said “They will find something” and heard a radio item about shale gas so she was happy. Another sister dismissed it as a plot by the left. She and her husband laughed about my concern.

images-2Then we had the Global Financial Crisis in 2008 and all got busy worrying about housing bubbles, derivatives, debt bubbles, too big to fail banks and bailouts. This is all important stuff. The price of oil declined as the global economy declined and now keeps repeating these waves. Affordability oil became the issue.

In 2012 that same brother in law commented that my worry about oil was unfounded as the oil price hadn’t gone up as much as forecast and “they were always finding something”.

Now I realise what is happening and there is no better little book to explain it than the one former Green Party leader Jeanette Fitzsimons recommended in a recent talk run by the local Quakers. The book that blew her mind was The Perfect Storm – Energy, Finance and the End of Growth by Tim Morgan, Global Head of Research at finance broker Tullett Prebon. It is freely downloadable at http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf. I have printed it off and had it bound.

imagesMorgan says: There are four factors bringing down the curtain on growth. The economy as we know it is facing a lethal confluence of four critical factors – the fall-out from the biggest debt bubble in history; a disastrous experiment with globalisation; the massaging of data to the point where economic trends are obscured; and, most important of all, the approach of an energy returns cliff-edge.

When oil bubbled from the ground in Saudi Arabia a century ago, only one barrel of oil was required to extract 100 barrels of oil. The energy return on energy invested (EROEI) was 100:1. But for tar sands it is 20:1, North Sea oil today 5:1, shale oil 5:1 or less and biofuels 3:1. He says below an EROEI of 15 the profitability falls off a cliff. For decades EROEIs are declining. Few discoveries today offer much more than 10:1. So as time passes economies are spending a larger percentage on energy. At the household level when petrol and power costs rise we have less and less for other essentials. A nasty little graph  of oil’s dying EROEI is shown at http://deepresource.wordpress.com/2012/11/22/eroei-estimates-for-shale-oil/

The economy is a surplus energy equation not a monetary one. Too much energy has to be reinvested into energy extraction and too little energy is left for the essentials of food, government services, housing and investment.

The interesting thing is that Tim Morgan works for Tullett Prebon. It is the messenger which is unusual saying all these things. It isn’t Richard Heinberg or some sandal wearing, folk dancing greenie. In a way Tullett Prebon seems to be taking over where Matt Simmonds left off.

I think the most scary thing in his whole book is the graph of the energy returns cliff. While we blithely go into debt to build motorways and while we waive civil rights to protest at sea about deep sea oil drilling, it must be worthwhile paying attention to what this energy firm is saying.