Sunday, January 24, 2010

NCSE Conference : Wednesday

On Wednesday, I went to an all-day workshop at the Potomac Institute for Policy Studies on Alternatives to Neoclassical Economics. It was pretty interesting, but it wasn't as rigorous about the economics as I hoped.

The Potomac Institute for Policy Studies (PIPS) is a science and technology think tank. They work for a variety of people including defense. They just started a new research group called the Center for Environmental Economics and Ethics headed by James Tate. The workshop was hosted by Jim Giordano, who is the head of all the Academic Programs at PIPS. He introduced the speakers and also summarized their points pretty well although he has a pretty erudite way of speaking that was sometimes hard to follow. But he did tend to be precise in what he said.

I. James Tate give an introductory talk on the New Green Economy, kind of a historical overview.

CP Snow - thinker who talked about the cultural dichotomy of science and the humanities. -> there is currently a dichotomy between neoclassical economics and "value economics."

In Wealth of Nations, Adam Smith took laws of physics and applied them to economics, focusing on markets and pricing. However, constraints on renewable and nonrenewable resources are not taken into account. At that time, when resources were much more abundant, the assumption was that there would always be much more resources to accommodate human activity.

James W. Boyd wrote about how non-commodity resources are not factored into the GDP.

Robin O'Malley, a scientist at the Heintz Center wrote the 2008 Heinz State of the Nation's Ecosystems Report. He tried to implement some metrics, but it's hard to establish any monitoring system in the US politically.

Two growing fields are 1. Conservation biology and 2. behavioral economics to explain market inefficiencies.

Herman Daly is the grandfather of ecological economics.

In order to transition to ecological economics
1. teach critical thinking and scientific method
2. understand mankind is subject to laws of nature
3. spread the word and facts
4. fund research into natural sciences
5. manage population levels of organisms, especially humans
6. develop and implement sustainable strategies for agriculture, energy use, and natural resource management

Giordano mentions the concept of "tripping points." I'm not exactly clear on what he's talking about, actually.

II. Dr. Richard Margrave, Global Economics for Growth and Survival

Dr. Margrave is a British consultant in policy, politics, and media. He actually gave a talk through Skype. He talked about G20 and how they had declared commitment to sustainable development at some point. They said they were interested in a "resilient, sustainable, green recovery." He says that financial institutions are shaken right now, although they seem to be doing better than many other sectors right now.

He offered 12 steps to sustainable development
1. develop macroeconomic capability (I'm not that sure about that wording).
2. invest in public access and infrastructure
3. increase financial and fiscal prudence, increase public control of investment, outlaw short selling
4. reform macroeconomic accounting, less emphasis on consumption
5. sharing work and work-life balance, reduce working hours, don't discriminate against part time work
6. tackling systemic inequality because income inequality drives consumption (question: is high pay for GM workers consistent with this policy)
7. measuring capabilities, include health and social indicators
8. protect public things such as museums, public broadcasting
9. reverse culture of consumerism, regulate commercial media, fair trade
10. respect ecological limits, emission caps, declining caps on throughput, limits for per capita waste and emissions
11. fiscal reform for sustainability, green taxation - shift from income tax like Denmark and Germany
12. support technology transfer, set up global technology fund

These suggestions were put forth in a Report by the Sustainability Commission in the UK. richard -at- margrave -dot- co -dot- uk

He mentioned "Our Common Future," which is also known as the Brundland Report put out by the UN World Commission on Environment and Development

However, Iceland recently voted down reining in the banks, which is a setback.

III. Warren Flint on A Systems Approach to Sustainable Development.

He's a consultant in Seattle at 5E's Unlimited. He mentioned McDonough's "Fractal Triangle of Sustainability." His systems approach is not the same as system dynamics, though. It's more about the triple bottom line and community development.

He talks about how governments are attempting to increase liquidity to get out of the recession and he showed a graph of the credit market debt as a percentage of GDP. There was a spike in the 30's and it has been ramping up recently. Getting goods needs to depend on availability of resources not money, which depends on the continuance of economic growth.

Borrowed man and the Tildian Iteration (sp?).

IV. Jim Giordano and A Green Economy, Practical and Ethical Issues

This talk was more about framing the issues.
Business as Human Enterprise - technologic imperative "if I build it, they will come," but do we want them to come

ecology and security of "goods"
1. biopower - use/misuse of ecological resources to control, manipulate and/or manifest vulnerability of others or systems
2. biopolitics - socio-political activities of biopower of groups and/or nations

ethics : human ecology - care, sustainability, and stewardship

risk and ethical management paradigm
1. precautionary
2. personnel
3. predictions
4. policies

rationality agenda - confronting problems and issues
1. runaway effects of technology
2. biopower
3. Wexelblatt effects
4. tripping hazards

Arendtian Ethic - homo faber = intelligent person vs. animal laborens

V. Joan Michelson - Speaking to All Points of View

This talk is really about advertising and creating demand. Consumers drive 70% of the economy. Consumers make decisions based on emotions. "Do I love it?"

She recommends the book "Nudge" by Richard H. Thaler and Cass Sunstein.

behavioral economics - losing something makes people feel twice as bad as gaining feels good. people want feedback/compliments

choice architecture

Understand mappings
Give feedback
Expect error
Structure complex choices

key problem for reducing carbon footprint is that energy is Invisible!

part of why the Prius is successful is because they look different and are thus easily identifiable allowing the ownership to have social rewards

Things need to be easy, attractive, affordable, convenient, and popular or at least perceived popular

-create econometrics and incentives for energy

develop energy use standard to make it tangible by making an Energy label similar to Nutritional facts label.

she also recommends "Influence" by Robert Cialdini

another thing could be an Energy Efficiency Card like a membership card where people get discounts for things. It would also become a status symbol.

VI. Dr. Brian Czech on Moving Towards a Sustainable Steady State Economy

He is the president of CASSE, Center for the Advancement of a Steady State Economy.

Academics -

Henry George wrote "Progress and Poverty." Georgists became shunned because they recommend taxing land. In response, there was a Marginalist Revolution that established American economics and the tax code.

"The Corruption of Economics" by Mason Gaffney documents the rise of Marginalism and neoclassical economics and the anti-George backlash.

The Solow, Lucus, Romer production function Y = f(K,L) where output is a function of capital and labor. Land or other natural resources are not included. Perhaps they are nominally included in capital, but that's not usually how it's calculated.

ecological economics would incorporate the laws of thermodynamics. (This seems iffy to me).

The sigmoid curve shows that as time passes, the GDP, which represents human activity correlates to a greater percentage of available natural capital.

scale - Daly
Distribution - Martinez-Alier
Allocation - Costanza

conventional economic policy uses three tools -
1. fiscal - budgets and taxes
2. monetary - interest rates, money supplies
3. trade

Herman Daly's top ten suggestions for a sustainable economy
1. cap and trade systems
2. tax throughput not labor/capital
3. limit range of income inequality
4. flexible working hours - overemployment problem
5. use tariffs to protect cost-internalization
6. "downgrade" IMF-World Bank-WTO, prevent trade surpluses as well as deficits
7. adjust reserve requirements to 100% (that will never happen)
8. enclose remaining commons in public trust
9. stabilize population
10. reform national accounts

Optimum scale and marginal utility - we need to distinguish economic vs. uneconomic growth.

ISEW - Index of Sustainable Economic Welfare
GPI - Genuine Progress Indicator

De-growth movement is gaining traction in Europe
La Decroissance, Growth moratoria, Thaland's sufficiency economy, Bhutan's Gross Happiness

We have a pro-growth complex of economic policy authorities, corporations, and politicians. A coalition of professional societies can break through this complex.

Degrowth Economists - Herman Daly, Richard Douthwaite, Roefie Hueting, Tim Jackson, Joan Martinez-Alier, and Peter Victor

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