Posts Tagged ‘climate change’

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Mainstream economists have been taking quite a beating in recent years. They failed, in the first instance, with respect to the spectacular crash of 2007-08. Not only did they not predict the crash, they didn’t even include the possibility of such an event in their models. Nor, of course, did they have much to offer in terms of explanations of why it occurred or appropriate policies once it did happen.

More recently, the advice of mainstream economists has been questioned and subsequently ignored—for example, in the Brexit vote and the support for Donald Trump’s attacks on free trade during the U.S. presidential campaign. And, of course, mainstream economists’ commitment to free markets has been held responsible for delaying effective solutions to a wide variety of other economic and social problems, from climate change and healthcare to minimum wages and inequality.

All of those criticisms—and more—are richly deserved.

So, I am generally sympathetic to John Rapley’s attack on the “economic priesthood.”

Although Britain has an established church, few of us today pay it much mind. We follow an even more powerful religion, around which we have oriented our lives: economics. Think about it. Economics offers a comprehensive doctrine with a moral code promising adherents salvation in this world; an ideology so compelling that the faithful remake whole societies to conform to its demands. It has its gnostics, mystics and magicians who conjure money out of thin air, using spells such as “derivative” or “structured investment vehicle”. And, like the old religions it has displaced, it has its prophets, reformists, moralists and above all, its high priests who uphold orthodoxy in the face of heresy.

Over time, successive economists slid into the role we had removed from the churchmen: giving us guidance on how to reach a promised land of material abundance and endless contentment.

However, in my view, there are three problems in Rapley’s discussion of contemporary economics.

First, Rapley refers to economics as if there were only one approach. Much of what he writes does in fact pertain to mainstream economics. But there are many other approaches and theories within economics that cannot be accused of the same problems and mistakes.

Rapley’s not alone in this. Many commentators, both inside and outside the discipline of economics, refer to economics in the singular—as if it comprised only one set of approaches and theories. What they overlook or forget it about are all the ways of doing and thinking about economics—Marxian, radical, feminist, post Keynesian, ecological, institutionalist, and so on—that represent significant criticisms of and departures from mainstream economics.

In Rapley’s language, mainstream neoclassical and Keynesian economists have long served as the high priests of economists but there are many others—heretics of one sort or another—who have degrees in economics and work as economists but whose views, methods, and policies diverge substantially from the teachings of mainstream economics.

Second, Rapley counterposes the religion of mainstream economics from what he considers to be “real” science—of the sort practiced in physics, chemistry, biology, and so on. But here we encounter a second problem: a fantasy of how those other sciences work.

The progress of science is generally linear. As new research confirms or replaces existing theories, one generation builds upon the next.

That’s certainly the positivist view of science, perhaps best represented in Paul Samuelson’s declaration that “Funeral by funeral, economics does make progress.” But in recent decades, the history and philosophy of science have moved on—both challenging the linear view of science and providing alternative narratives. I’m thinking, for example, of Thomas Kuhn’s “scientific revolutions,” Paul Feyerabend’s critique of falsificationism, Michel Foucault’s “epistemes,” and Richard Rorty’s antifoundationalism. All of them, in different ways, disrupt the idea that the natural sciences develop in a smooth, linear manner.

So, it’s not that science is science and economics falls short. It’s that science itself does not fit the mold that traditionally had been cast for it.

My third and final point is that Rapley, with a powerful metaphor of a priesthood, doesn’t do enough with it. Yes, he correctly understands that mainstream economists often behave like priests, by “deducing laws from premises deemed eternal and beyond question” and so on. But historically priests served another role—by celebrating and sanctifying the existing social order.

Religious priests occupied exactly that role under feudalism: they developed and disseminated a discourse according to which the natural order consisted of lords at the top and serfs at the bottom, each of whom received their just deserts. Much the same was true under slavery, which was deemed acceptable within church teachings and perhaps even an opportunity to liberate slaves from their savage-like ways. (And, in both cases, if those at the bottom were dissatisfied with their lot in life, they would have to exercise patience and await the afterlife.)

Economic priests operate in which the same way today, celebrating an economic system based on private property and free markets as the natural order, in which everyone benefits when the masses of people are forced to have the freedom to sell their ability to work to a small group of employers at the top. And there simply is no alternative, at least in this world.

So, on that score, contemporary mainstream economists do operate like a priesthood, producing and disseminating a narrative—in the classroom, research journals, and the public sphere—according to which the existing economic system is the only effective way of solving the problem of scarcity. The continued existence of that economic system then serves to justify the priesthood and its teachings.

However, just as with other priesthoods and economic systems, today there are plenty of economic heretics, who hold beliefs that run counter to established dogma. Their goal is not to take over the existing religion, or even set up an alternative religion, but to create the economic and social conditions within which their own preferred theories no longer have any relevance.

Today’s economic heretics are thus the ultimate grave-diggers.

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The effects of climate change are, as we know, distributed unequally across locations. Therefore, the damages from climate change—in terms of agriculture, crime, coastal storms, energy, human mortality, and labor—are expected to increase world inequality, by generating a large transfer of value northward and westward from poor to rich countries.

What about within countries—specifically, the United States?

A new report, published in Science, predicts the United States will see its levels of economic inequality increase due to the uneven geographical effects of climate change—resulting in “the largest transfer of wealth from the poor to the rich in the country’s history,” according to Solomon Hsiang, the study’s lead author.

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What is new in the study is that, instead of following the usual climate-change modeling approaches (which describe average impacts for large regions or the entire globe), the authors examine sub-regional, county-level effects.

The results are downright scary:

In general (except for crime and some coastal damages), Southern and Midwestern populations suffer the largest losses, while Northern and Western populations have smaller or even negative damages, the latter amounting to net gains from projected climate changes.

Combining impacts across sectors reveals that warming causes a net transfer of value from Southern, Central, and Mid-Atlantic regions toward the Pacific Northwest, the Great Lakes region, and New England. In some counties, median losses exceed 20% of gross county product (GCP), while median gains sometimes exceed 10% of GCP. Because losses are largest in regions that are already poorer on average, climate change tends to increase preexisting inequality in the United States. Nationally averaged effects, used in previous assessments, do not capture this subnational restructuring of the U.S. economy.

For example, counties in South Carolina, Louisiana, and Florida will be plagued by rising sea levels and more intense hurricanes, while the South and the Midwest will be threatened by increasingly rising temperatures—a trend the researchers warn can slow productivity, increase violent crime, disturb agricultural patterns, and increase energy demands and costs.

Of course, we’re still referring to regions here—not to classes. Some of the counties are poorer, others richer but there is also a great deal of inequality within them. What we’d want to know, then, is what happens to the income and wealth—as well as health, habitat, and much else—of rich and poor classes in the United States.

We don’t have that kind of information or analysis yet.

What we do know is, not everyone is going to be affected in the same way by climate change. Not across countries and certainly not within countries. That’s the problem with averages—with respect to national income, health, or climate change: they obscure or hide the different class effects of large economic and social phenomena.

What we need to remember is, global temperatures are rising as a result of the existing set of economic and social institutions. And, unless they’re changed, those same institutions are going to serve to distribute the damages caused by climate change unequally between regions and classes.

Clearly, it is time to reimagine and radically transform the way the economy is currently organized. And there’s no place better to begin that project than in the United States, where inequality is obscene and social progress has flatlined.

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