Three Distinct Crises now Point to the Urgent Need for a New Economic System

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The current economic system, where money is created as interest bearing debt by banks, is coming to the end of its useful life. Three distinct movements all tell us this – those concerned about climate change, those concerned about global declining economic growth (the ones who understand its connection with peak oil), and those who know that rising private debt is dangerous and sure to end in tears.

1. The Demand for Economic Growth means Climate Change is not tackled properly.

In 1972 the world’s first whole-country environmental party, the New Zealand Values Party, questioned whether economic growth was making us better and happier. Economist Richard Douthwaite in his book The Growth Illusion wrote about the need for economic growth to be at least as high as the interest rate banks charged on money. Charles Eisenstein eloquently outlined the way the growth imperative financialises and thus depletes both our natural and our social capital. “The financial crisis we are facing today arises from the fact that there is almost no more social, cultural, natural, and spiritual capital left to convert into money.”

The politics of climate change has highlighted the unfortunate situation where, given the choice between doing something meaningful about climate change and championing economic growth, governments will always opt for the latter and claim it is a matter of “balance”. The need for economic growth always trumps the need for climate action. As a result, according to the former United Nations climate chief Christiana Figueres we now only have three more years to turn around emissions or we will not reach the targets of the Paris Climate Accord. Carbon dioxide levels are flat at the moment, but an unprecedented effort is needed from all parties in the next three years.

Naomi Klein in her ground breaking book This Changes Everything says:

“Our economic system and our planetary system are now at war. Or, more accurately, our economy is at war with many forms of life on earth, including human life. What the climate needs to avoid collapse is a contraction in humanity’s use of resources; what our economic model demands to avoid collapse is unfettered expansion. Only one of these sets of rules can be changed, and it’s not the laws of nature.”

2. We have reached peak efficiency in getting energy from using energy

We seem to have forgotten peak oil issues. Globally conventional oil production peaked in 2005 and unconventional oil peaked in 2015. But peak oil didn’t play out as we expected. We had omitted to factor in debt; because they had to spend more energy to get energy, fossil fuel firms had to go into debt and this kept growing. Two authors worth reading on this topic are Nafeez Ahmed and actuary Gail Tverberg. The former writes articles like this. It says we need a new economic system because we can no longer get the required economic growth. This is because the energy return on energy invested (EROI) has been on the decline since the 1940s. We used to get 50 times the amount of energy out of using 1 barrel full of oil to extract it. We now get only about 15 times that amount. This number will continue to decline. And it’s the same for gas and for coal. The decline is irreversible. The consequences for the global economy are profound and widespread.

Because we need more and more energy to keep the system going, less is left for the real economy. Tverberg carefully concludes that declining productivity growth is a result and also stagnant wages. Ahmed says James D Ward of South Australia argues that, although it was widely believed we could, GDP growth cannot really be decoupled from environmental impacts. Ward says what has happened is that we have financialised the GDP through the creation of new debt without increasing material or energy throughput. (That was done by Quantitative Easing. CNBC said it was a total of $12 trillion, and you can expect that to have a huge effect on the global economy. It did.) He also notes growing inequality of income and wealth. He demonstrates that GDP cannot be sustained indefinitely.

As far as growing inequality of wealth is concerned, Ward hasn’t yet spelt out that this is caused when we have a huge blowout of credit from QE at the same time as we fail to collect the land rent on rising land prices. The huge asset bubble created by QE has blown up house prices and the sharemarket. With a tax system that fails to tax assets (or at least land and natural resources) the wealth gap continues to rise.

Those without access to land and natural resources and natural monopolies fall into poverty and homelessness. Add the fact that wages remain low, jobs precarious and a punitive benefit system, many are in abject poverty.

All these factors combine for political instability resulting in the election of Trump and in Brexit. The growing section of population with casual work or precarious work are called the Precariat. Those with low wages with house buying beyond their wildest dreams are desperate. During elections they will now be clutching at straws, as there seems no hope for progress.

So we are now getting scholars who understand the fossil fuel energy issue and its effect on global growth saying we need a new economic model. This is new.

3. The third movement is those who know about the consequences of creating money as interest bearing debt. It produces instability as outlined by economists who follow the late Hyman Minsky. The Minsky moment is the point at which excess private debt sparks a financial crisis. Minsky said that such moments arise naturally when a long period of stability and complacency eventually leads to the build up of excess private debt and overleveraging. At some point the system collapses and it can happen quickly.

Followers of the new economics movement are generally aware that there has to be a big system change and have been saying this for decades now. However with the demand coming from three different directions, it is just a guess as to which will prevail. Maybe with the rise of the basic income movement something may change. Those who recognise the irony of politicians who turn a blind eye to $12 trillion dollars appearing from nowhere to rescue banks yet say we can’t afford a basic income will push this thing forward. Maybe environmentalists will stick to their environmentalism and monetary reformers will continue on recommending the same thing decade after decade while the planet burns and fascism threatens. .

Summary

The New Economics Movement people who met between 2011 and 2015 to discuss a new economic system have produced ideas. These are crystallised to the best of my ability in my book The Big Shift: Rethinking Money, Tax, Welfare and Governance for the Next Economic System whose website is deirdrekent.com It can be bought here

Adapting to Geophysical Reality

Posted on October 23, 2016 by Deirdre

No species survives unless it is good at adapting to its environment. And environments can change very fast. This article addresses the adaptations we must make to a rapidly warming world, to living with a low carbon economy and to major collapse of the global economy.

Getting to a low fossil fuel economy fast
Climate change has been humanity’s wake up call. Energy is at the heart of everything we do. For centuries we have used the energy of the sun in one form or another. It was only when we discovered oil, a form of stored sunlight compacted for millions of years, that economic growth really took off.

How dense is oil? Richard Heinberg explains that to push your car for 30 miles would take 6-8 weeks of hard labour, but you can put a gallon of petrol in your car and get there quickly for a few dollars .

We use fossil fuel energy not just to power our cars and tractors, but power our assembly lines, make our cement, plastic, pharmaceuticals and paints. As the low hanging fruit becomes exhausted, the cost of digging out fossil fuels rises and the unconventional oil, gas and coal is of not such high quality. Despite the financial challenges, oil companies continue to forecast increases in extraction.

When climate scientist Bill McKibben first wrote in 1989 on the coming climate challenge, he didn’t foresee the pace of change. He continues to be astonished at the rapidity of loss of Arctic ice, increasingly devastation cyclones and other extreme weather events. In a talk to the Oberlin College and Conservatory conference in Ohio, After Fossil Fuels: the Next Economy, he said we now have a very limited timeframe.

Founder of the Carbon Tracker, Mark Campanale, reminded listeners that economist Nicholas Stern had estimated that to get to two degrees of warming the world needed to spend $90 trillion in infrastructure for a low carbon economy. Campanale had calculated that there is only a 50% chance of getting there in the time estimated by major governments signing the Paris Agreement using their scenarios. There is so much unburnable carbon in the reserves of oil, gas and coal companies, that even if there was no further digging or mining activity than there is now, we would still overshoot the 2 degrees.

To put this $90 trillion in investment needed in perspective, the world GDP is $70 trillion and the total value of the stock of all the companies in the world is only $60 trillion. Campanale, a sustainable investment analyst, noted that some investors are saying it will all blow over and it is cyclical. So they keep their shares in fossil fuel companies until this happens. All the oil companies and OPEC forecast continual growth of fossil fuel extraction.

Two weeks before this conference Bill McKibben had post an article Recalculating the Climate Math, in which he wrote that scientists now think that 2 degrees is too much; moreover, the amount of fossil fuels in the currently operating plants worldwide would actually bring us above 2 degrees. So the amount of CO2 we can burn has to be reduced from 943 to 800 gigatons. And if we are going to get to 1.5 degrees, a goal set in Paris, we will need to close all the coal mines and some of the gas fields we’re currency operating long before they are exhausted. He finishes by saying ‘And if we don’t get it right, then all of us—along with our 10,000-year-old experiment in human civilization—will fail.’

And as for living with less oil, gas and coal, that is huge too. There are so many challenges, from how to power industrial machinery to how to transition from kerosene as aviation fuel, it hardly bears thinking about. There is no doubt however that we will have to grow our food more locally, to travel less and to have more localised economies. The permaculture movement can teach us how to build houses with less cement. There will be stranded assets like oil tankers and bankruptcies galore in the huge fossil fuel industry, let alone the huge losses on high-risk energy bonds in the fracking industry.

All the more reason why we have to think up the new economic system fast. Innovation to transition to a low carbon economy can only happen if investment is directed there and new companies have no deadweight taxes, only resource taxes.

We also need to adapt to an economy that will collapse.
Actuary Gail Tverberg, who through the years has predicted many changes that have come to pass, says the global economy can’t grow fast because the cheap-to-extract energy is depleting. She describes a situation where growth is slowing, global trade isn’t growing and central bankers can’t solve it even with historically low interest rates. More energy is needed now to extract energy, it takes energy to make and transport goods, and it takes an increasing amount of energy to create a growing amount of goods and services. Less cheap to extract energy produces less productivity growth and this translates into stagnant wages which no longer allow non elite workers to buy big ticket items like cars and houses. So the economy declines further.

She maintains this means commodity prices can’t hold up, so producing them eventually becomes uneconomical. And we are on a downward spiral. ‘This situation could lead to catastrophe because metals, agriculture and energy are all essential to the economy’. The rate of return on investment falls, new debt goes into buying assets and eventually, when commodity prices fall, asset prices fall. The price of agricultural land will fall. This leads to debt defaults and bank failures, affecting banks, insurance companies and pension plans. The lack of new loans will depress demand further. She predicts oil may fall below $20 a barrel.

Most investors and financial advisors are unaware that the price of commodities (in New Zealand it has largely been about the price of whole milk powder) is cyclical so it will turn around. But they haven’t factored in energy.

At the end of this long article in October, 2016 she concludes there is no way out of the problem over the long term. We will have reached our ‘Minsky Moment’.

Adapting to sudden financial collapse will be humanity’s biggest challenge.

Continuing War
While most societies have lived with war, we now have the added factor that there is a scramble for the last remaining fossil fuel reserves. Investigative journalist and international security scholar Nafeez Ahmed has explained the conflict in Syria in those terms, saying that there is competition for the offshore oil and natural gas reserves between the world’s biggest oil companies and that is why they court Assad. When civil war broke out the plans of Shell and oil majors were unexpectedly suspended. When it is resolved they will be able to continue. American firm, Genie Oil and Gas has been granted exploration rights in the Golan Heights. Among Genie’s board members are Rupert Murdoch, Larry Summers, Dick Cheney.

American Shale Oil, a subsidiary of Genie candidly admits on its website: ‘The peaking of world oil production presents the US and the world with an enormous challenge, Aggressive action must be taken to avoid unprecedented economic, social and political costs.’

In addition there are two proposed gas pipelines to get gas for Europe that are on hold. One is from Iran through Iraq, Syria and Lebanon to Europe. This was signed by Assad and backed by Russia. The other is from Qatar’s North Field through Saudi Arabia, Syria and Turkey.

A Russian oil and gas company began oil prospecting operations in September 2015, the same area scoped by French firm CGGVeritas.

Climate change do the math

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Portrait of Bill McKibben, author and activist. photo ©Nancie Battaglia

No species survives unless it is good at adapting to its environment. And environments can change very fast.

Climate change has been humanity’s wake up call. Energy is at the heart of everything we do. For centuries we have used the energy of the sun in one form or another. It was only when oil was discovered, a form of stored sunlight energy compacted for millions of years, economic growth really took off.

We use fossil fuel energy not just to power our cars and tractors, but power our assembly lines, make our cement, plastic, pharmaceuticals and paints. As the low hanging fruit becomes exhausted, the cost of digging out fossil fuels rises and the unconventional oil, gas and coal is of not such high quality. Despite massive financial challenges, oil companies continue to forecast increases in extraction.

Two weeks before this particular conference Bill McKibben had posted an article Recalculating the Climate Math, in which he wrote that scientists now think that 2 degrees is too much warming. Moreover burning the fossil fuels in the currently operating plants worldwide would actually bring us above 2 degrees. So the amount we can burn has to be reduced from 943 to 800 gigatons of CO2. And if we are going to get to 1.5 degrees, a goal set in Paris, we will need to close all the coal mines and some of the gas fields we’re currency operating long before they are exhausted. He finishes by saying ‘And if we don’t get it right, then all of us—along with our 10,000-year-old experiment in human civilization—will fail.’

The conference also had wonderful contributions from those involved with the divestment movement.

I have watched a considerable amount of this conference on youtube. While it is great as far as it goes, it would be even greater if this movement was linked to the very exciting currency design movement and the movement to reform the tax system so that taxes come from largely from ground rents. Imagine if they knew that dual currencies can lead to innovation and prosperity if the domestic currency is designed to decay naturally. Yes imagine them knowing that the design of the currency actually affects whether you think long term or short term. Imagine them realising that it is critical to neutralise those who oppose carbon taxes because they fear job losses and there is finally a way of getting a basic income through rent sharing and this gives them safety from redundancy. Imagine if they asked and really understood what caused the economic growth imperative and how to fix this. Imagine if they realised the political impossibility of centralised solutions to many issues. But insofar as it goes, it has contributed heaps. And it is very exciting that the critical topic is being discussed – how to design the next economy. This is what the New Economics Movement has been doing now for a considerable time.

Deirdre Kent
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The Simplicity Option

Posted on November 4, 2015 by Deirdre

“Simplicity is the ultimate sophistication.” – Leonardo da Vinci

Since the industrialization of society over the last two hundred years, humans have physically and mentally remained unchanged. We have, however, surrounded ourselves with accessories, added layers of complexity, and confusion in our lives. This urbanization has reduced humanity’s connection with nature.

Connection to the land and natural environment has been replaced by freeways, cities, concrete landscapes, and technological gadgetry that bring little solace and opportunity for reflection for individuals. Inner peace and happiness can be hard to find in a world of constant diversion and distraction. The ability to witness nature and live in harmony with the natural cycles provides unquantifiable experiences for those living a resilient life.

The 2010 Living Planet Report, based on the scientific research of the Global Footprint Network, reports humanity’s ecological footprint now exceeds the planet’s sustainable carrying capacity by 50 percent. In other words, human beings are now consuming ‘natural capital,’ which is diminishing the capacity of the planet to support life into the future. The propaganda and ideology that many economists, governments, and business people have been espousing in an effort to continue exploitation of resources is that developing countries can have similar standards of living to those in the West. The reality is that the West has been exploiting developing countries’ resources to fund our resource intensive lifestyles for many decades.

Think about this for a second. If the expected 9 billion people were to enjoy the “living standards” forecast for Western countries such as Australia, Canada, U.S., U.K, or Europe by 2050 (assuming 3% yearly economic growth), the world’s total consumption would be about 30 times as much as it is now. That would mean 30 times greater use of land, soils, trees, forests, minerals, fishing, energy, etc… With already stretched and depleted natural resources and ecosystems, this scenario would most likely end in ecological catastrophe.

Dr. Ted Trainer, senior Lecturer in the School of Social Sciences at the University of New South Wales in Australia, has been teaching about sustainability for many decades. He suggests:

It is difficult to see how anyone aware of these basic numbers could avoid accepting that people in developed countries should be trying to move to far simpler and less resource-intensive lifestyles and economies. The decreases might have to be around 90% – something that can only be achieved through dramatic reductions in production, consumption, and economic activity. To transition to a low energy society which resembles our current high energy model will be a significant challenge and highly unlikely. The enormity of the transition to alternative fuels and/or technologies will require a coordinated approach on an unprecedented scale. It would require vast amounts of resources and capital investment. (1)

Enter Voluntary Simplicity

As reported in the Melbourne Age, a growing number of people in the “voluntary simplicity” movement are choosing to reduce and restrain their consumption – not out of sacrifice or deprivation, but in order to be free, happy, and fulfilled in a way that consumer culture rarely permits. By limiting their working hours, spending their money frugally and conscientiously, growing their own vegetables, sharing skills and assets, riding bikes, rejecting high-fashion, and generally celebrating life outside the shopping mall, these people are new pioneers transitioning to a form of life beyond consumer culture. (2)

An Institute For Simplicity

There is even an Institute for Simplicity. The Simplicity Institute is an education and research centre seeking to:

seed a revolution in consciousness that highlights the urgent need to move beyond growth-orientated, consumerist forms of life.
envision and defend a ‘simpler way’ of life at a time when the old myths of progress, techno-optimism, and affluence are failing us.
transform the overlapping crises of civilisation into opportunities for ‘prosperous descent’

Goals of the Simplicity Institute

“To change something, build a new model that makes the existing model obsolete.” – Buckminster Fuller

SAMSUNG CAMERA PICTURES The global economy is undermining the ecological foundations of life, producing perverse inequalities of wealth and spreading a cultural malaise as ever-more people discover that consumerism cannot satisfy the human craving for meaning. While industrial civilization continues this inevitable descent, humankind is being challenged to reimagine the good life, tell new stories of prosperity, and get to work envisioning and building a new world within the shell of the old.

Genuine progress towards a just and sustainable world requires those who are over-consuming to move to far more materially ‘simple’ and less energy-intensive ways of living. This does not mean deprivation or hardship. It means focusing on what issufficient to live well, and creating new cultures of consumption, new systems of production, and new governance structures that promote a simpler way of life. Our basic needs can be met in highly localized and low-impact ways, while maintaining a high quality of life.

The Simplicity Institute seeks to provoke a broader social conversation about the need to transition away from growth-based, consumer societies toward more resilient, egalitarian, and rewarding societies based on material sufficiency and renewable energy. Rethinking growth, capitalism, and consumerism in an age of environmental limits and economic instability cannot be avoided. The only question is whether it will be by design or disaster. (3)

To find out more about the Simplicity Institute CLICK HERE

Article by Andrew Martin, author of Rethink…Your world, Your future. and One ~ A Survival Guide for the Future…

Sources: excerpts from Rethink…Your world, Your future.

(1) http://theconversation.com/the-simple-life-manifesto-and-how-it-could-save-us-33081

(2) http://www.theage.com.au/it-pro/the-simple-life-has-benefits-for-us-all-20120315-1v6f7.html#ixzz3jmqytmtA

(3) http://simplicityinstitute.org/

Combining resource (including land) taxes, monetary reform and basic income is the political challenge of our time

Posted on February 10, 2015 by Deirdre

My name is Deirdre Kent and I am the co-founder and co-leader of the New Economics Party New Zealand.

We have been working for three years to try and design a new economic system which is going to work for all life on our planet and in our country. We have decided we need to bring together three different movements – the monetary reform movement, (including reforming the national currency and having a whole range of complementary currencies), the tax reform movement to move towards land and other resource taxes and away from income tax and sales tax, and thirdly the movement for a basic income, giving an unconditional, basic income to all people where paid work may not be available for all people.

So – how do we do this? Well you can’t actually do one thing then do another and then do another because everything is interconnected. So we have to think about it as a whole system. A whole system hyperconnected globally. And we are saying that you have to look at the two things which change the system most, where you get the greatest “bang for your buck” by tweaking it just a little bit. We are saying you have to change the money system and the tax system. Those are the two paradigms we have to change. Secondly we have to change the goal of an economy. The goal of an economy is not just ‘to grow’, which is impossible on a finite planet and we all know that. And now we have got climate change because we have been so foolish.

So pulling those three things together we decided we would end up leaving the current system alone. We have got a very bad tax system. Over 80% of our taxes are on labour, enterprise or sales. Nonsense! Those are things we want to encourage as long as the goods are the right sort for a post fossil fuel age. So that is a major change in our tax system.

Secondly we want to change the money system. How on earth do you do that when we are so dependent on banks and banks are so powerful? So we are saying leave the current system alone. It is going to fall over, it is going to decay. It’s unstable, we have got deflation coming, huge debt. Goodness knows what is going to fall over next and what is going to trigger the next Global Financial Crisis.

We are saying you have to start a second national currency in parallel. But this one is designed differently. It is spent into existence at local level to buy land, and then the revenue stream from the land rental (which is quite significant) will be passed to higher levels of government and occasionally it is shared with the all citizens over a year old through a Citizens Dividend.

Right at the very start of this new currency we would pass a raft of new tax laws governing it. A full land tax, a full carbon tax and full mining tax. So it would be ruled by a different set of tax laws.

And this new economy would grow in an entirely different way. It would be a thriving dynamic economy for a post fossil fuel age.

Now we realise this is almost a preposterous proposal. And yet in Germany when they had a crisis in 1923 they set up a new national currency and it was backed by land. Ours is an improvement on theirs because we are putting it into existence without interest. It you allow the banks to create the money as interest bearing debt, then you are always going to have a growth imperative built in. It’s a mathematical certainty that you have to keep growing the money supply, and growing the economy and that causes a growth imperative leading to climate change.

And we have to stop it. We have to design an economy not dependent on a growth imperative and that is for the sake of our children.
So Germany successfully stalled their huge crisis in about a week. The farmers released their food for the towns and social unrest stopped.

Now we went through several stages and you can see that on our site. We went through the stages of covenants on land, we went through various names for the new currency. But on this site you will see plenty to read.

We ask you to join us in thinking and working to design a sustainable economic system.

We are going to have a conference on the last two days in May and the first day of June in New Zealand and we invite you to come. More information on the website soon.

So thank you very much and good luck!

Review of Naomi Klein’s book This Changes Everything, Capitalism vs Climate

Posted on November 3, 2014 by Deirdre

Book Review by Peter Healy, Marist Priest of Otaki

This Changes Everything, Capitalism vs the Climate by Naomi Klein, 2014, $37

This is a comprehensive and timely book. Klein says in part one, “If there has ever been a moment to advance a plan to heal the planet that also heals our broken economies and our shattered communities, this is it.” In the introduction she says “this is the hardest book I have ever written because climate change puts us on such a tight and unforgiving deadline.”

This book is about our “climate moment” with all its challenges and opportunities. First, Klein says we have to stop looking away. We deny because we fear letting in the full reality of a crisis that changes everything. The need to change everything is not something we readily accept. If we are to curb emissions in the next decade we need a massive mobilisation larger than any in history. She quotes the Bolivian Navarro Llamos who suggests it is time for a “Marshall Plan for Earth”.

The question is posed: What is wrong with us? What is really preventing us from putting out the fire that’s threatening to burn down our collective house? The global economy always takes centre stage. Market fundamentalism has systematically sabotaged our collective responses. Our economic system and our planetary systems are at war. We are faced with a stark choice: “either we allow climate change to disrupt everything about our world or we change pretty much everything about our world to avoid that fate”. We need a radical rethink for these changes to be remotely possible.

Our “climate moment” is accompanied by what she calls a “fossil fuel frenzy”. A wild dig is going on in most nations on the planet. Aotearoa/NZ being no exception. With the “fossil fuel frenzy” Klein says, “We have become a society of grave robbers, we need to become a society of life amplifiers, deriving our energy directly from elements that sustain life. It’s time to let the dead rest.” Our most important task now is to keep carbon in the ground.

To do all this we need to be thinking differently. A new worldview is required, “a project of mutual reinvention” has to be entered into. The door to 2 degrees of warming will close in 2017. We are in the midst of a civilisational wake-up call. This call is coming to us in the language of fires, floods, droughts and extinctions. We are being called to evolve, and the thing about a crisis this big is that it changes everything.

Wealthy nations need to start cutting emissions by 8-10 percent per year. They have to begin this now. We need to consume less and get back to 1970’s levels. Low consumptions activities like gardening and home cooking are good. Changing everything means changing how we think about our economy. Large corporations dodge regulations, and they refuse to change behaviours. No company in the world wants to put itself out of business, their goal is to always expand their market share. Klein talks about addiction rather than innovation when it comes to new methods of extraction. We need to keep all the fossil fuel we can in the ground, at the same time more extreme and innovative methods are being invented to get at whats left. The madness of “extractivism” is a relationship of taking with little care being given to regeneration and the future of life. As Klein says the market economy and the fossil fuel economy emerged at about the same time. “Coal is the blank ink in which the story of modern capitalism is written.”

There are no messiahs. The green billionaires will not save us, we have to change our lifestyles. Our most intoxicating narrative is that technology will save us, and this is one of our forms of magical thinking. There are some fascinating passages about Klein going to a geo-engineering conference in the UK. She describes the attendees as, “a remarkably small and incestuous world of inventors and scientists and funders.” It is all very risky, untested and dangerous stuff that they are proposing. The solution to global warming is not to fix the world, rather we need to fix ourselves.

The book has inspiring things to say about “Blockadia”. This is a broadbased grassroots resistance movement intent on shaking the fossil fuel industry to the core. Indigenous peoples are key in the Blockadia movement, their rights can be a great gift for the revival and reinvention of the commons we all love. Bolivia and Ecuador have already put “the Rights of Mother Earth” into their national statutes. Blockadia asks the question, “How come that a big distant company can come to my land and put me and my kids at risk and never ask my permission?” The corporations come from far away and go everywhere because the fossil fuel industry is one of extreme rootlessness.

Followers of recent global climate talks are well aware of failure and deadlocks. A Greenhouse Development Framework from the Stockholm Environment Institute is an attempt to deal with disparities within and between countries claiming the rights to develop and pollute.

In chapter 13 of the book Klein talks about her attempts to have a child while researching this book. There are some lovely descriptions of Klein coming to realise that earth is facing fertility challenges of her own. Many species are now against “infertility walls” and finding it hard to reproduce. Fertility is one of the first functions to erode when animals are under stress.

The challenge for the climate movement hinges on pulling off a profound and radical economic transformation. In extraordinary historical moments “the usual category that divides “activists” and “regular people” become meaningless, the activists are quite simply everyone”.

So this book is for you and me and everyone. We are all implicated in everything this book is about, so get hold of it, read it and pass it around. As a slogan at the recent climate march in New York said, “To change everything we need everybody.”

I found myself saying to someone the other day, “If any book will push us through and beyond the Great Transition that we all have to make, then this is it!” Along with the film that Klein’s partner is making on the same subject, we can take some hope. We still have our brief window of time. We are inventive and creative. We can join with the tangata whenua as guardians of Mother Earth.

An open letter to Helen Clark UNDP re climate and the economy

Posted on June 27, 2014 by Deirdre

Late last night I engaged with you in 140 character tweets on the topic of climate and the economy. You were expressing the strong desire that we can have economic growth at the same time as halting climate change. And I pointed out that unless and until you reform the money system you are going to get a growth imperative built into the economy.

Helen, I believe the future of life on the earth depends on people like me pointing this out to people like you. There are a great many people wanting the same thing – a thriving economy AND a liveable climate. We need it desperately.

I see that your current meeting is another high powered one. Called The Global Commission on Climate and the Economy it has on it the Chairman of the Bank of America and the former chairman of the China Development Bank, the Vice Chairman of Deutsche Bank Group, as well as someone from the International Energy Agency with the UN Special Envoy on Climate Change. Nicholas Stern is there and so is a trade union representative as well as many ex Prime Ministers.

I see the purpose of this Commission is to “analyse and communicate the economic benefits and costs of acting on climate change.”

It looks as though the plan is to go down the path of green growth, to change towards sustainable energy sources. That is what economist Nicholas Stern and many others want. It is a good goal but not enough. It is just too limited.

But that is like mopping up a leaky pipe without stopping it leaking. It doesn’t get to the core of the problem.

What the bankers on your committee won’t tell you is that the function of banks is to create money and create it as interest bearing debt. You must know that having been Prime Minister of New Zealand for nine years. The country’s money supply comes into existence every time a bank makes a loan and disappears every time a loan is paid back. But it must keep on increasing. That’s the design of it.

What you have probably never had time to find out in your busy life is that when a bank creates the principle but not the interest, there is not enough total money in the system to pay off the debt and the interest. So someone has to get another loan. This increases the money supply and the money supply can’t be bigger than the number of trades in an economy. So the economy has to grow. See the Parable of the Eleventh Round for a story to illustrate this.

That is the growth imperative. It is built in to the current dysfunctional money system. You can’t have a thriving economy without growth in this system. All the time there is pressure to grow the total number of exchanges in the economy. And it can’t be done on a finite planet. Christchurch is helping our GDP grow because it had an earthquake. The economy grows when tobacco consumption or gambling rise. The economy grows when dairy farmers pollute the rivers with their runoff. Stupid.

This is not just debt money but it is interest bearing debt money. There is a world of difference. The latter has many other damaging and negative consequences like rising debt, instability and wealth concentration.

But let’s concentrate on the growth imperative.

Over the last couple of years there have been two excellent articles written by economists from the IMF and by economists from the Bank of England. Michael Kumhof of the IMF subsequently talks at a January 2013 seminar on Financial Reform for a Sustainable Economy here. Economist and former money trader Bernard Lietaer co-author of a Club of Rome book called Money the Missing Link in Sustainability speaks at the same seminar.

Gosh it is sad. Here you are at this high powered meeting of bankers, ex and current politicians, energy experts, CEOs of multinationals seeing if you can stop climate change without damaging economies. You are trying to find a way to get a thriving post fossil fuel economy and yet you are still working blindly. The paradigm of creating money is just not within your vision. The idea of radically reforming the tax system is probably far from member’s minds. Sad.

Look around the room and think “Who among you know that if we go on blindly allowing banks to create money as interest bearing debt we are never, never going to get sustainability?” Tragic.

And whatever decisions you make at this Commission, I hope you get on to the issue of tax policies. Can we in fact have a sustainable economy while we fail to tax the monopoly use of the commons – land, natural resources and the cultural commons.

So it won’t be any use having a series of indicators on green growth (as does the OECD). They want to monitor the natural asset base. Well if there aren’t tax policies that protect that asset base that base will just deteriorate. Measuring is good, but you might as well implement tax policies that are going to protect that natural asset base in the first place.

The New Economics Party

Let's fix the economic system that is killing our planet!

Category Archives: Climate change