1651. Social divide

The world seems to be divided between those who want to preserve the economy and thse who want to break it.

Th preservers, business as normal, because it is paying off for them and there are  more children to put in college, more vacations to take, more adventures scheduled, a Tesla, a boat. These are mostly

  • the one  percent
  • the rich
  • the takers
  • the inheritors


those who want to break the economy in order to change it, to find an income, a place to live, children to care for, old people to care for, a bit of education, a bit of health care, some respect.These are mostly

  • the poor
  • the 99%
  • those losing out

The problem for politicians is they need some of both to add up to a majority in order to win. If they are identified with one group or the other, they lose the other’s  support, so they have to keep real alliances hidden and work  off of righteous indignation.

Getting any really useful public policy or even discussion is just about impossible. The issues that are destroying society get worse and are not identified well, nor addressed.



1650.Writers of fiction compared with economists.

I am at a writer’s conference. Very struck by the amount of conversation about economics, but a bit different. These are people looking for plot lines and settings. As a result they read economic news, not for generalities so much as for details, the interstices, the little places of human stories smoothed over by normal economic research.

These people have a deep need to know and they have lots of curiosity. They seem less trapped by group think memes than in the business/finance community where there is also a need to know, but less intense. The result for the writers is an amplification of the more difficult parts of economic life. Moreover many are vets, either of the military or various bureaucracies, some financial and many not. They know stories of corruption, brutality, rip offs and collusions. So they have lots of first hand experience, often driven by what they saw, to write. Many are retired and are deep into remaking themselves consistent with their experience and a need to tell their stories.

They read things like zero hedge and study the comments, and are good readers of small foreign newspapers. The result is a different picture of the world. More real?

1649. More on growth.

Provocation #12.Interesting Ted Talk video posted monday. By Dambisa Moyo

I don’t go into this to criticize her but this is a symptom of a failure on the part of economics to teach systems thinking. Here are parts of the transcript. Many economists could give a talk like this in content and logic. Her original in bold

Our ability to create and sustain economic growth is the defining challenge of our time.

Increasing growth has a high chance of harming the environment and driving towards the intolerable 4°. It also fuels the machine of income inequality

Of course there are other challenges — health care, disease burdens and pandemics, environmental challenges and, of course, radicalized terrorism. However, to the extent that we can actually solve the economic growth challenge, it will take us a long way to solving the challenges that I’ve just elucidated.

Strong strong assertion but there is no solid analysis that showsincreased growth will help solve those problems.

More importantly, unless and until we solve economic growth and create sustainable, long-term economic growth, we’ll be unable to address the seemingly intractable challenges that continue to pervade the globe today, whether it’s health care, education or economic development.

Interersting shift in logic, making economic development one of the intractable challenges.  That begs the question:is development and or growth good for the species and hte planet?

The fundamental question is this: How are we going to create economic growth in advanced and developed economies like the United States and across Europe at a time when they continue to struggle to create economic growth after the financial crisis?

She said that growth was the defining challlenge but insead of any analsis growth is just asserted.

They continue to underperform and to see an erosion in the three key drivers of economic growth: capital, labor and productivity. In particular, these developed economies continue to see debts and deficits, the decline and erosion of both the quality and quantity of labor and they also see productivity stalling.

Capial gains from growth, labor is replaced, and productivity – output per worker – is the logic that replaces workers with robots (se the Finacial Time yeseterday on the robotic tgroeat to white collar jobs)

In a similar vein, how are we going to create economic growth in the emerging markets, where 90 percent of the world’s population lives and where, on average, 70 percent of the population is under the age of 25? In these countries, it is essential that they grow at a minimum of seven percent a year in order to put a dent in poverty and to double per capita incomes in one generation. 

Economic growth in the “emerging markets”(I put in “”‘s because the social structure of development tends to reward elites and push people off the land.) The seven percent really has to do with return to capital, not to the good of the country. As we know, inthe current regime most increase goes to the one percent.

Her heart is in the right place but the economic mind, following the actual course structre in most universites, is filled with memes that get in the way of analysis

Economic growth matters. With economic growth, countries and societies enter into a virtuous cycle of upward mobility, opportunity and improved living standards. 

Pure assertion. Sure, some move up, bu the number is small. Wages might even increase, but less than prices.

Without growth, countries contract and atrophy, not just in the annals of economic statistics but also in the meaning of life and how lives are lived. Economic growth matters powerfully for the individual. If growth wanes, the risk to human progress and the risk of political and social instability rises, and societies become dimmer, coarser and smaller.

The assertion is that without growth things get worse (why?) and with it they get better. Pure assertion to which there is very significant counter evidence.

The context matters. And countries in emerging markets do not need to grow at the same rates as developed countries.

So we want a regime that lets the developed countries continue to outpace the eemerging. What is the real narrative there?

Sensing resistance she adds,

Now, I know some of you in this room find this to be a risky proposition. There are some people here who will turn around and be quite disillusioned by what’s happened around the world and basically ascribe that to economic growth. You worry about the overpopulation of the planet. And looking at the UN’s recent statistics and projections that the world will have 11 billion people on the planet before it plateaus in 2100, you’re concerned about what that does to natural resources — arable land, potable water, energy and minerals. You are also concerned about the degradation of the environment. And you worry about how man, embodied in the corporate globalist, has become greedy and corrupt.

But I’m here to tell you today that economic growth has been the backbone of changes in living standards of millions of people around the world. 

Increasing migrations, policee state, land stealing, and high rise living in actually pretty bad conditions. Raising children and caring for old when there is no longer any comunity is a real deprivation.  Sure incomes have goe up for many, but prices rise and what  can bought has shifted from rural agricultue markets with variety to reduced varities of much less freshness.

The definition of capitalism, very simply put, is that the factors of production, such as trade and industry, capital and labor, are left in the hands of the private sector and not the state.

Amazing to me that such awkward thinking can so often be passed off and acccepted. (Wait till we see the moderator join in.) This just a few memes strung together. Neoliberal ideology, and misses that the current trend of capitalism to create unity with the state to control populations and institutions for the good of corporations and local elites.

It’s really essential here that we understand that fundamentally the critique is not for economic growth per se but what has happened to capitalism. And to the extent that we need to create economic growth over the long term, we’re going to have to pursue it with a better form of economic stance.

I read this as syaing to increase profit we need more discipine and to get rid of the negatives that “are what happened to capitalism.”

The next paragraphs cry outfor analysis but it is missing. Only the memes are left.

Economic growth needs capitalism, but it needs it to work properly. And as I mentioned a moment ago, the core of the capitalist system has been defined by private actors. And even this, however, is a very simplistic dichotomy. Capitalism: good; non-capitalism: bad. When in practical experience, capitalism is much more of a spectrum. And we have countries such as China, which have practiced more state capitalism, and we have countries like the Unites States which are more market capitalist.

Our efforts to critique the capitalist system, however, have tended to focus on countries like China that are in fact not blatantly market capitalism.

However, there is a real reason and real concern for us to now focus our attentions on purer forms of capitalism, particularly those embodied by the United States. This is really important because this type of capitalism has increasingly been afforded the critique that it is now fostering corruption and, worse still, it’s increasing income inequality — the idea that the few are benefiting at the expense of the many.

The two really critical questions that we need to address is how can we fix capitalism so that it can help create economic growth but at the same time can help to address social ills.

In order to think about that framing, we have to ask ourselves, how does capitalism work today? Very simplistically, capitalism is set on the basis of an individual utility maximizer — a selfish individual who goes after what he or she wants. And only after they’ve maximized their utility do they then decide it’s important to provide support to other social contracts. Of course, in this system governments do tax, and they use part of their revenues to fund social programs, recognizing that government’s role is not just regulation but also to be arbiter of social goods. But nevertheless, this framework — this two-stage framework — is the basis from which we must now start to think about how we can improve the capitalist model.

But she had said earlier that the state should stay out. I leve the rest of her talk as self evident. But do see the interaction by the moderator.

I would argue that there are two sides to this challenge. First of all, we can draw on the right-wing policies to see what could be beneficial for us to think about how we can improve capitalism.

In particular, right-leaning policies have tended to focus on things like conditional transfers, where we pay and reward people for doing the things that we actually think can help enhance economic growth. For example, sending children to school, parents could earn money for that, or getting their children inoculated or immunized, parents could get paid for doing that.

Now, quite apart from the debate on whether or not we should be paying people to do what we think they should do anyway, the fact of the matter is that pay for performance has actually yielded some positive results in places like Mexico, in Brazil and also in pilot programs in New York.

But there are also benefits and significant changes underway on left-leaning policies. Arguments that government should expand its role and responsibility so that it’s not so narrowly defined and that government should be much more of an arbiter of the factors of production have become commonplace with the success of China. But also we’ve started to have debates about how the role of the private sector should move away from just being a profit motive and really be more engaged in the delivery of social programs. Things like the corporate social responsibility programs, albeit small in scale, are moving in that right direction. Of course, left-leaning policies have also tended to blur the lines between government, NGOs and private sector.

Two very good examples of this are the 19th-century United States, when the infrastructure rollout was really about public-private partnerships. More recently, of course, the advent of the Internet has also proven to the world that public and private can work together for the betterment of society.

My fundamental message to you is this: We cannot continue to try and solve the world economic growth challenges by being dogmatic and being unnecessarily ideological. In order to create sustainable, long-term economic growth and solve the challenges and social ills that continue to plague the world today, we’re going to have to be more broad-minded about what might work.

10:01 Ultimately, we have to recognize that ideology is the enemy of growth.

10:07 Thank you.

10:08 (Applause)

Enter Bruno the moderator. (Times are in the orignal ted talk)

10:14 Bruno Giussani: I want to ask a couple of questions, Dambisa, because one could react to your last sentence by saying growth is also an ideology, it’s possibly the dominant ideology of our times. What do you say to those who react that way?

10:25 DM: Well, I think that that’s completely legitimate, and I think that we’re already having that discussion. There’s a lot of work going on around happiness and other metrics being used for measuring people’s success and improvements in living standards. And so I think that we should be open to what could deliver improvements in people’s living standards and continue to reduce poverty around the world.

10:45 BG: So you’re basically pleading for rehabilitating growth, but the only way for that happen without compromising the capacity of the earth, to take us on a long journey, is for economic growth somehow to decouple from the underlying use of resources. Do you see that happening?

10:59 DM: Well, I think that I’m more optimistic about human ability and ingenuity. I think if we start to constrain ourselves using the finite, scarce and depleting resources that we know today, we could get quite negative and quite concerned about the way the world is.

11:14 However, we’ve seen the Club of Rome, we’ve seen previous claims that the world would be running out of resources, and it’s not to argue that those things are not valid. But I think, with ingenuity we could see desalination, I think we could reinvest in energy, so that we can actually get better outcomes. And so in that sense, I’m much more optimistic about what humans can do.

11:34 BG: The thing that strikes me about your proposals for rehabilitating growth and taking a different direction is that you’re kind of suggesting to fix capitalism with more capitalism — with putting a price tag on good behavior as incentive or developing a bigger role for business in social issues. Is that what you’re suggesting?

11:55 DM: I’m suggesting we have to be open-minded. I think it is absolutely the case that traditional models of economic growth are not working the way we would like them to. And I think it’s no accident that today the largest economy in the world, the United States, has democracy, liberal democracy, as it’s core political stance and it has free market capitalism — to the extent that it is free — free market capitalism as its economic stance. The second largest economy is China. It has deprioritized democracy and it has state capitalism, which is a completely different model. These two countries, completely different political models and completely different economic models, and yet they have the same income inequality number measured as a Gini coefficient.

12:36 I think those are the debates we should have, because it’s not clear at all what model we should be adopting, and I think there needs to be much more discourse and much more humility about what we know and what we don’t know.

For an alternative critique see the interview with Frithof Capra,
What s so striking is the different tone and vocabulary

FC: Like “growth,” “development” is used today in two quite different senses, one qualitative and the other quantitative. For biologists, development is a fundamental property of life. All living systems develop; life continually reaches out to create novelty. The biological concept of development implies a sense of multi-faceted unfolding, of living organisms, ecosystems, or human communities reaching their potential. Most economists, by contrast, restrict the use of “development” to a single economic dimension, usually measured in terms of per capita GDP. Economists recognize only money and cash flows, ignoring all other forms of fundamental wealth — all ecological, social, and cultural assets. Now, when we speak about “sustainable development,“ we need to specify which kind of development we have in mind. If “development” is used in the current narrow economic sense, such economic development can never be sustainable, and the term “sustainable development” would be an oxymoron. If, however, the process of development is understood as more than a purely economic process, including social, ecological, and spiritual dimensions, and if it is associated with qualitative economic growth, then such a multidimensional systemic process can indeed be sustainable.

EJ: Economists, especially those of the neoliberal mold, argue that the most important criteria to pay attention to are financial: quarterly profits, return on investments, number of jobs created, Gross Domestic Product, etc. In many cases, peoples’ salaries are based on these criteria. Non-financial criteria, such as impacts to the environment, are considered to be what are called “externalities” and not included in their assessments. What reason would people have to include non-financial criteria in their assessments and how could such a change in economic culture be achieved?

FC: This is really a variation on the basic theme we are discussing. The criteria used by neoliberal economists are criteria of quantitative growth, which is manifestly unsustainable. We urgently need to shift to criteria of qualitative growth and development, most of which are non-financial, to overcome our multi-faceted global crisis. The only way this change will come, in my view, is through pressure by grassroots movements.

EJ: Much of the modern economic order is generated from the top-down. International agreements such as the Trans Pacific Partnership and North American Free Trade Agreement or institutions such as the World Trade Organization and International Monetary Fund often set the rules for domestic economic policy. Ecology, on the other hand, is driven from the bottom up. How can such an inversion as you are suggesting be implemented without a fundamental restructuring of the economic system?

FC: To create an economic system that is in harmony with nature’s principles of ecology, we need to fundamentally restructure our global financial institutions. Several economists in academia and in the global civil society have been working on this issue; see, for example, the book The Case Against the Global Economy. 

1648. Our leaders are not ready

Listening to the debates and reading the press one has to conclude that  our leaders are not ready for the challenges of climate, population, migration, and resource wars, and they are not ready to lead a democratically trending governance in the context of a republic.

They are too busy. Too pushed. No time for history (maybe they read a bigraphy of Hamilton or a histroy of the Civil War). Bad on science, bad on the history of law or the great questions of the meaning of life. Little understanding of economic history. Mindlessly wedded to growth at all costs. No recent reading of great literature.

Not being ready they will improvise while trying to control. Not likely to be a pretty picture.

1645. Local example.

Here from this morning’s local newspapaer.The Post Democract

Sonoma County business leaders on Wednesday morning heard two different messages about the local economy, one from a UCLA economist and the other from protesters who briefly but raucously interrupted an annual breakfast meeting.

The economist, Jerry Nickelsburg, congratulated an estimated 500 business people “on a very vibrant economy” here that in the past few years has enjoyed record job growth. Meanwhile, the protesters, some of whom entered the Double Tree Hotel ballroom in Rohnert Park where the breakfast was held, lamented that working people in Sonoma County must contend with soaring rents and stagnant wages.
The protesters’ 10-minute interruption of the annual State of the County breakfast was punctuated by chants of “We do the work” and “No contract, no peace.” The latter was a reference to the ongoing labor contract dispute between the county and its largest union, Service Employees International Union Local 1021.

The program came to a halt until Rohnert Park police arrived and asked the more than 40 protesters in the room to leave. They were part of an estimated 300 demonstrators from SEIU and the North Bay Organizing Project who arrived before most of the breakfast guests Wednesday, causing many business people to search beyond the Double Tree for a place to park their cars.

Once they’d departed the room, both Nickelsburg and Board of Supervisors Chairman Efren Carrillo separately took to the podium to give presentations. Carrillo’s speech included the announcement that he won’t run for re-election this year.

Economist Nickelsburg told the guests that Wednesday’s demonstration was itself a sign of a strong labor market. “This wouldn’t have happened in 2009,” a year into the recession, said Nickelsburg. He is a regular speaker for the annual breakfast and an adjunct professor with UCLA’s Anderson School of Management.

California and the county are enjoying record levels of employment, he said, and the state also is benefiting from peak numbers of international travelers flying into Los Angeles and San Francisco.

The county’s job total was 205,200 last month, with an unemployment rate of 4.2 percent, according to state figures. In contrast, in December 2009 the county had 175,200 jobs, and unemployment was 10 percent. Nickelsburg predicted 3 percent growth for the nation’s gross domestic product this year, with the Bay Area continuing to outperform the United States.
While growth eventually will slow, he said, it will do so mostly because growing companies will find it increasingly difficult to hire more workers, a major ingredient for boosting business output.

To those who maintain that the official unemployment rate fails to account for those forced to take part-time work or to retire early, Nickelsburg suggested after his speech that it nonetheless remains a reasonable gauge for measuring those actually looking for work today.

He predicted the state’s annual unemployment rate for this year will decline to 5.2 percent from 6.2 percent in 2015.

“That’s real full employment,” Nickelsburg told the audience.
After the breakfast, Carrillo readily agreed with demonstrators that “a tale of two counties” can exist when it comes to the economy and its effects on local residents.
“Poverty is real in Sonoma County,”

There are a number of “lessons” here. Divergence of perspective, who does the economist represent?  what is the meaning of employment if prices increase and wages are flat for most and cut for many?

For the 1 percent and in many ways for the top 10 percent the economy is doing pretty well. But even then the stress within families as they contemplate the future of their children is painful to observe. There seems to be no place of security on the entire globe even for the wealthiest. And the middle-class is a game of musical chairs with shrinking Numbers of good jobs. The 10% in most of the world live in such a way as to avoid the 90%. They go from home in zoned if not gated communities to workplaces and shopping centers and occasionally fly to vacation spots. They never see much less interact with the conditions under which most people live and work.

1644. Provocations #11. Davos and hype for growth

I know we all watch Davos, the World Economic Forum, as if it is the super bowl  of economies. But what do we make of it? In my case, struck by how much the hype is around growth and the need for innovation, creating trillions of dollars of economic activity. Wow. Get in line to make your investment.   But why is the connection  not made between such growth and climate? The obvious logic,  that economic activity is likely to contribute to greenhouses gases and subsequent temperature rise, is not made.


Obviously trillions of dollars of new investment has several consequences.

  • Projects will be built using old technologies, mining raw materials, diesel trucks bringing materials to projects, and so on, increasing greenhouse gases.
  • Such investment is made in the search for profit,  and such profits will continue the trend of wealth concentration.
  • Such investment will be done with borrowed dollars and federal guarantees.


The announced title of this year’s WEF,  the 4th industrial revolution,  led speakers to drop lots of hints about lost jobs,  but the old meme, that such displaced people will be the source of new jobs in not yet predicted industries was the fig leaf on this meme. The argument that horse collars and buggy whips led to automobiles is true, but not necessarily going to repeat. The jobs lost now will lead to new economic activity, maybe even massive. Bu the very urgency of the new leads managers to seek for robots and algorithms to meet the new needs, and the more intense the need is, the stronger the incentive to digitalize production.  Worker costs more money but a robot is owned.


There is a system that includes at least



Jobs lost to tech

War as hidden Keynesian stimulus

The collapse of the welfare state



To speak of one of these  while ignoring some of the others is not good science nor a  public policy of an optimistic government. If we are truly pessimists, believing that there is no way climate goals can be met (staying under + 2 C) then pretending might be good public policy – keep the titanic going as long as we can, because  calling for an alternative will hasten the problems, not solve them.


So what do we do?

1643. Just to summarize

We have messed up democracy since the political system has no interest in whatthe great majority of us think about anything. Instead of justice, we have entrapment and plea-bargaining and too long a time till trial. Instead of a peace party we have a war party that uses our tax dollars to stimulate their economy.

We have messed up the economy because instead of building things we need or even want it makes only what the big corporations think they can  make. Lake only has moved the rich richer, ruined the environment and raise the temperature, put too many in jail and left too many of those outside with guns.

Instead of jobs we have gigs or nothing to do except watch TV.

OK. How do we get to change?

1642. Psychology of resistance to climate imperatives.

The psychologists miss the obvious. The great resistance people have to climate and other severe change is that they cannot imagine how they would make living. climate change implies losing your job. It is this issue, working at sanford with paul ehrlich, that got me interested in economics. It is not consumption that people are attached to, it is their income.

“You can’t ask a person to step out of a leaky canoe unless there is another canoe. Stung in a leaky canoe ss not crazy/“ I wrote eight years ago.

So yes, climate has lots of psych issues, but the real point is the reality of no job and the lack of imagination and trust to go with surprising changes. Young people as I experience them at Stanford are better at this since they have already adapted to student poverty in a crowded ambitious world and responded with the share economy..

In response to