Time to rethink monetary policy

15 02 2019

How this great article went under my radar, I do not know……. another classic from the Consciousness of Sheep.

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When the first stuffed platypus was presented to European scientists, they dismissed it.  “What we have here,” they opined, “is some unfortunate lutrinae onto which some scoundrel has attached various anatidae parts.”  And so the innocent little platypus, which had been minding its own business until the European explorers arrived, was placed on the same zoological shelf as the Yeti.

The European scientists, you see, had a model.  A map of how the world’s animal species were ordered.  At the apex, predictably, were humans themselves.  Beneath them were anatomically similar apes and monkeys; followed by cats, dogs, pigs, etc.  What all of these “higher” species had in common, however, was that they were all mammals – creatures that carry their young in an internal womb, and that suckle them with milk.  This distinguished them from other, dissimilar species like birds, reptiles, amphibians and insects.

Then along comes this upstart platypus, not just looking like it possesses bird parts, but having the audacity to lay eggs!  For several decades, despite growing evidence that platypuses were real, European scientists continued to dismiss these reported sightings as fake news.  The platypus was an unfortunate intrusion into the scientists’ neatly ordered model of how the world worked.  Despite the philosophy of science demanding that a fact – like the existence of a platypus – that disproves a model is the very essence of falsifiability, the scientists chose to reject the fact rather than deconstruct and rebuild their model.

The same European scientists later – and infamously – rejected evidence for the existence of one of the platypus’s neighbours… the black swan… which brings us to a modern pseudoscience that also famously rejects reality in order to preserve the models that it has spent decades finessing.

Economic models have already proved their – very negative – worth in the worst possible way in the shape of the 2008 financial crash and the ensuing global depression.  This ought to have been enough for the entire economics profession to be given their marching orders and afforded their true place alongside aromatherapists, astrologers and homeopaths.  However, in 2008, governments lacked any acceptable alternative.  So despite knowing that an economic forecast was of equal value to flipping a coin, they put the same economists who had broken the system in charge of fixing it.

The economists did no such thing, of course.  The financial crisis of 2008 was the platypus of our age; something so out of step with the models that it could not reasonably be incorporated into them.  They even used the term “black swan” to describe it.

Any examination of the real economy over centuries, however, demonstrates that cyclical period of boom and bust – frequently punctuated by major financial crashes – are in fact the norm.  It is the so-called “Great Moderation” in the economists’ model that is the aberration… the thing so out of step with reality that it can reasonably be dismissed as fake news.

This, however, is merely the most obvious flaw in an economic model that is based on anomalies.  Most importantly, almost everything that economists are taught about how the economy works is based on what happened in the course of the two decade long mother of all anomalies; the post war boom 1953-1973.  As historian Paul Kennedy explains:

“The accumulated world industrial output between 1953 and 1973 was comparable in volume to that of the entire century and a half which separated 1953 from 1800.  The recovery of war-damaged economies, the development of new technologies, the continued shift from agriculture to industry, the harnessing of national resources within ‘planned economies,’ and the spread of industrialization to the Third World all helped to effect this dramatic change.  In an even more emphatic way, and for much the same reasons, the volume of world trade also grew spectacularly after 1945…”

In other words, economic modelling based on how the economy operated in the decades prior to the First World War might provide a closer fit to the real world in 2018.  The same is true for interest rates. As political economist Mark Blyth has shown, economists have modelled interest rates on the two decades around the historical high point in 1981.  However, for the entire period following the introduction of derivatives by the Dutch in the sixteenth century, the average interest rate is below four percent.

This is no trifling academic issue.  Interest rates have become the primary means by which economists – to whom our politicians have handed the leavers [I can’t make up my mind whether this is a typo, a Freudian slip, or a very clever pun!] of power – seek to manage the economy.  The aim of “monetary policy” being to raise interest rates sufficiently high to prevent a recurrence of the inflation of the 1970s, while keeping them sufficiently low that they do not trigger or exacerbate a repeat of the 2008 crash.

The problem with this as of 2018 is that despite close to zero percent interest rates – and trillions of dollars, euros, pounds and yen in stimulus packages – the rate of inflation has barely moved.  Indeed, with growth rates stalling in the USUK and Eurozonedeflation is more likely than inflation.  Despite this, the Federal Reserve, Bank of England and European Central Bank remain committed to raising interest rates and reversing quantitative easing… because that is what their model tells them that they should do.

Central to the model is a belief – based on those anomalous decades when we had growth on steroids and interest rates to match – that employment causes inflation.  So with the official rate of unemployment in the USA standing at 4.1 percent and the UK at 4.2 percent, the model is telling the economists at the central banks that inflation is already running out of control… even though it isn’t.  As Constance Bevitt, quoted in the New York Times puts it:

“When they talk about full employment, that ignores almost all of the people who have dropped out of the economy entirely. I think that they are examining the problem with assumptions from a different economic era. And they don’t know how to assess where we are now.” [It’s occurred to me that lots of baby boomers, such as myself, have now retired and dropped out of ‘the workforce’, and none of this is taken into account…]

Larry Elliott at the Guardian draws a similar conclusion about the UK:

“Britain’s flexible labour market has resulted in the development of a particular sort of economy over the past decade: low productivity, low investment and low wage. Since the turn of the millennium, business investment has grown by about 1% a year on average because companies have substituted cheap workers for capital. Labour has become a commodity to be bought as cheaply as possible, which might be good for individual firms, but means people have less money to buy goods and services – a shortfall in demand only partly filled by rising levels of debt. The idea that everyone is happy with a zero-hour contract is for the birds.

“Workers are cowed to an extent that has surprised the Bank of England. For years, the members of Threadneedle Street’s monetary policy committee (MPC) have been expecting falling unemployment to lead to rising wage pressure, but it hasn’t happened. When the financial crisis erupted in August 2007, the unemployment rate was 5.3% and annual wage growth was running at 4.7%. Today unemployment is 4.2% and earnings are growing at 2.8%.”

This is a very different economy to the one that operated between 1953 and 1973; a time when the workers’ share of productivity rose consistently.  In those days a semi-skilled manual worker had a sufficient wage to buy a home, support a family, run a car and afford a holiday.  In 2018, a semi-skilled manual worker living in the UK depends upon foodbanks and tax credits to remain solvent.

In short, despite mountains of evidence that the economists’ model bears no relation to the real world, like their nineteenth century zoological counter parts, they continue to reject any evidence that disproves the model as fake news.  One obvious reason for this is that all of us – whatever our specialisms – get a sinking feeling of despondency when some inconvenient fact comes along to tell us that it is time to go back to the drawing board.  Understandably, we test the inconvenient fact to destruction before deconstructing our models.  But even when the fact proves sufficiently resilient to be considered to be true, there remains the temptation to sweep it under the proverbial carpet and pretend that nothing is amiss.

There is, however, another reason why so many economists spend so many of their waking hours studiously ignoring reality when it whacks them over the head with the force of a steam hammer.  They simply do not see it.  That is, if you are on the kind of salary enjoyed by a member of one or other monetary policy committee, your lived experience will be so removed from the experience of ordinary working (and not working) people that you simply refuse to believe them when – either by anecdote or statistic – they inform you of just how bad things are down on Main Street.

The two proposed solutions to this latter problem involve the question of diversity.  Among its other work, the campaign group Positive Money has highlighted the race and gender disparity at the Bank of England.  However, were we to just swap some white male mainstream economists for some equivalent BME and female mainstream economists, this is unlikely to have much impact.  A second approach to diversity from radical economists such as Ann Pettifor is to break up the neoclassical economists’ monopoly by bringing in economists from different schools of economics.

Arguably, however, neither of these proposed solutions would be sufficient to solve the problem of economists refusal to allow facts to stand in the way of their models.  For this, something even more radical is required – a complete rethink of the way monetary policy is made.  The 2008 crash and the decade of near stagnation for 80 percent of us that followed has demonstrated that the approach of handing economic policy to technocrats has failed.  The unelected Bank of England or Federal Reserve Chairman can no longer be allowed to be the final authority.  Policy must ultimately reside with elected representatives  whose jobs are on the line if they mess up.

Of course it is entirely reasonable that our representatives base their decisions on the advice and recommendations of experts.  It is here that real diversity is required.  Not merely swapping white male economists for black female ones, or opening the door just wide enough for some token contrarian economists.  Rather, what is needed is for monetary policy committees to encompass a range of specialisms far beyond economics and the social sciences, together with representatives from trades unions, charities and business organisations that are more in touch with the realities of life in the real economy.

None of this is about to happen any time soon; not least because nobody voluntarily relinquishes power and privilege.  But another crisis is brewing; and there are signs that it will be bigger than 2008.  And when that crisis bursts over us, this time around we need to put these changes in place before the economists rally round and persuade our craven politicians that there is no alternative… because there is.





Kevin Anderson & Hugh Hunt – A Rule Book for the Climate Casino

14 12 2018

https://ScientistsWarning.TV – Kevin and Hugh are back with us this year discussing the new ‘climate glitterati’ that come annually to Davos to feign concern about the climate while they discuss techno-fixes that might allow the (in their minds at least) to continue their excessive lifestyle that is heading us directly for runaway climate change and collapse.

Hat Tip to Chris Harries for this COPOUT chart…..




Extinction vs. Collapse: Does it matter?

9 05 2018

Hot on the heels of the Mayer Hillman “we’re doomed” article, and the “collapse or not to collapse” video posted here, along comes this piece with links to a remarkable number of articles posted here over the past few months……. It’s hard to not start feeling that there’s a growing awareness everything’s going pear shaped. Lots of links here to follow up, if you haven’t slashed your wrists.

By 

sam millerClimate twitter – the most fun twitter – has recently been relitigating the debate between human extinction and mere civilizational collapse, between doom and gloom, despair and (kind of) hope. It was sparked by an interview in The Guardian with acclaimed scientist Mayer Hillman. He argues that we’re probably doomed, and confronting the likelihood that we’re rushing toward collective death may be necessary to save us.

The headline alone provoked a lot of reactions, many angered by the ostensible defeatism embedded in Hillman’s comments. His stated view represents one defined camp that is mostly convinced of looming human extinction. It stands in contrast to another group that believes human extinction is highly unlikely, maybe impossible, and certainly will not occur due to climate change in our lifetimes. Collapse maybe, but not extinction.

Who’s more right? Let’s take a closer look.

First, the question of human extinction is totally bounded by uncertainty. There’s uncertainty in climate data, uncertainty in models and projections, and even more uncertainty in the behavior of human systems. We don’t know how we’ll respond to the myriad impacts climate change is beginning to spark, and we don’t know how sensitive industrial civilization will be to those impacts.

We don’t really know if humans are like other apex predators highly sensitive to ecological collapse, or are among the most adaptable mammals to ever walk the earth. One may be inclined to lean toward the latter given that humans have colonized every ecological niche on the planet except Antarctica. That bands of people can survive in and around deserts as well as the Arctic as well as equatorial rainforests speaks to the resilience of small social groups. It’s why The Road is so disturbingly plausible; there could be a scenario in which basically everything is dead but people, lingering in the last grey waste of the world. On the other hand, we’ve never lived outside of the very favorable conditions of the Holocene, and past civilizational and population collapses suggest humans are in fact quite sensitive to climatic shifts.

Famed climate scientist James Hansen has discussed the possibility of “Venus syndrome,” for instance, which sits at the far end of worst case scenarios. While a frightening thought experiment, it is easily dismissed as it’s based on so many uncertainties and doesn’t carry the weight of anything near consensus.

What’s more frightening than potentially implausible uncertainties are the currently existing certainties.

For example:

Ecology

+ The atmosphere has proven more sensitive to GHG emissions than predicted by mainstream science, and we have a high chance of hitting 2°C of warming this century. Could hit 1.5°C in the 2020s. Worst-case warming scenarios are probably the most likely.

+ Massive marine death is happening far faster than anyone predicted and we could be on the edge of an anoxic event.

+ Ice melt is happening far faster than mainstream predictions. Greenland’s ice sheet is threatening to collapse and already slowing ocean currents, which too could collapse.

+ Which also means predictions of sea level rise have doubled for this century.

+ Industrial agriculture is driving massive habitat loss and extinction. The insect collapse – population declines of 75% to 80% have been seen in some areas – is something no one predicted would happen so fast, and portends an ecological sensitivity beyond our fears. This is causing an unexpected and unprecedented bird collapse (1/8 of bird species are threatened) in Europe.

+ Forests, vital carbon sinks, are proving sensitive to climate impacts.

+ We’re living in the 6th mass extinction event, losing potentially dozens of species per day. We don’t know how this will impact us and our ability to feed ourselves.

Energy

+ Energy transition is essential to mitigating 1.5+°C warming. Energy is the single greatest contributor to anthro-GHG. And, by some estimates, transition is happening 400 years too slowly to avoid catastrophic warming.

+ Incumbent energy industries (that is, oil & gas) dominate governments all over the world. We live in an oil oligarchy – a petrostate, but for the globe. Every facet of the global economy is dependent on fossil fuels, and every sector – from construction to supply chains to transport to electricity to extraction to agriculture and on and on – is built around FF consumption. There’s good reason to believe FF will remain subsidized by governments beholden to their interests even if they become less economically viable than renewables, and so will maintain their dominance.

+ We are living in history’s largest oil & gas boom.

+ Kilocalorie to kilocalorie, FF is extremely dense and extremely cheap. Despite reports about solar getting cheaper than FF in some places, non-hydro/-carbon renewables are still a tiny minority (~2%) of global energy consumption and will simply always, by their nature, be less dense kcal to kcal than FF, and so will always be calorically more expensive.

+ Energy demand probably has to decrease globally to avoid 1.5°C, and it’s projected to dramatically increase. Getting people to consume less is practically impossible, and efficiency measures have almost always resulted in increased consumption.

+ We’re still setting FF emissions records.

Politics

+ Conditions today resemble those prior to the 20th century’s world wars: extreme wealth inequality, rampant economic insecurity, growing fascist parties/sentiment, and precarious geopolitical relations, and the Thucydides trap suggests war between Western hegemons and a rising China could be likely. These two factors could disrupt any kind of global cooperation on decarbonization and, to the contrary, will probably mean increased emissions (the US military is one of the world’s single largest consumers/emitters of FF).

+ Neoliberal ideology is so thoroughly embedded in our academic, political, and cultural institutions, and so endemic to discourse today, that the idea of degrowth – probably necessary to avoid collapse – and solidarity economics isn’t even close to discussion, much less realization, and, for self-evident reasons, probably never will be.

+ Living in a neoliberal culture also means we’ve all been trained not to sacrifice for the common good. But solving climate change, like paying more to achieve energy transition or voluntarily consuming less, will all entail sacrificing for the greater good. Humans sometimes are great at that; but the market fundamentalist ideology that pervades all social, commercial, and even self relations today stands against acting for the common good or in collective action.

+ There’s basically no government in the world today taking climate change seriously. There are many governments posturing and pretending to take it seriously, but none have substantially committed to a full decarbonization of their economies. (Iceland may be an exception, but Iceland is about 24 times smaller than NYC, so…)

+ Twenty-five years of governments knowing about climate change has resulted in essentially nothing being done about it, no emissions reductions, no substantive moves to decarbonize the economy. Politics have proven too strong for common sense, and there’s no good reason to suspect this will change anytime soon.

+ Wealth inequality is embedded in our economy so thoroughly – and so indigenously to FF economies – that it will probably continue either causing perpetual strife, as it has so far, or eventually cement a permanent underclass ruled by a small elite, similar to agrarian serfdom. There is a prominent view in left politics that greater wealth equality, some kind of ecosocialism, is a necessary ingredient in averting the kind of ecological collapse the economy is currently driving, given that global FF capitalism by its nature consumes beyond carrying capacities. At least according to one Nasa-funded study, the combination of inequality and ecological collapse is a likely cause for civilizational collapse.

Even with this perfect storm of issues, it’s impossible to know how likely extinction is, and it’s impossible to judge how likely or extensive civilizational collapse may be. We just can’t predict how human beings and human systems will respond to the shocks that are already underway. We can make some good guesses based on history, but they’re no more than guesses. Maybe there’s a miracle energy source lurking in a hangar somewhere waiting to accelerate non-carbon transition. Maybe there’s a swelling political movement brewing under the surface that will soon build a more just, ecologically sane order into the world. Community energy programs are one reason to retain a shred of optimism; but also they’re still a tiny fraction of energy production and they are not growing fast, but they could accelerate any moment. We just don’t know how fast energy transition can happen, and we just don’t know how fast the world could descend into climate-driven chaos – either by human strife or physical storms.

What we do know is that, given everything above, we are living through a confluence of events that will shake the foundations of civilization, and jeopardize our capacity to sustain large populations of humans. There is enough certainty around these issues to justify being existentially alarmed. At this point, whether we go extinct or all but a thousand of us go extinct (again), maybe that shouldn’t make much difference. Maybe the destruction of a few billion or 5 billion people is morally equivalent to the destruction of all 7 billion of us, and so should provoke equal degrees of urgency. Maybe this debate about whether we’ll go completely extinct rather than just mostly extinct is absurd. Or maybe not. I don’t know. What I do know is that, regardless of the answer, there’s no excuse to stop fighting for a world that sustains life.


Samuel Miller McDonald: Born and raised in Northern Michigan, Sam is currently pursuing a PhD at University of Oxford in political geography and energy. His background can be found here. Tweet here.





Time to rethink monetary policy

3 05 2018

“But another crisis is brewing; and there are signs that it will be bigger than 2008.  And when that crisis bursts over us, this time around we need to put these changes in place before the economists rally round and persuade our craven politicians that there is no alternative… because there is.”

Lifted from the excellent Consciousness of Sheep blog….

When the first stuffed platypus was presented to European scientists, they dismissed it.  “What we have here,” they opined, “is some unfortunate lutrinae onto which some scoundrel has attached various anatidae parts.”  And so the innocent little platypus, which had been minding its own business until the European explorers arrived, was placed on the same zoological shelf as the Yeti.

The European scientists, you see, had a model.  A map of how the world’s animal species were ordered.  At the apex, predictably, were humans themselves.  Beneath them were anatomically similar apes and monkeys; followed by cats, dogs, pigs, etc.  What all of these “higher” species had in common, however, was that they were all mammals – creatures that carry their young in an internal womb, and that suckle them with milk.  This distinguished them from other, dissimilar species like birds, reptiles, amphibians and insects.

Then along comes this upstart platypus, not just looking like it possesses bird parts, but having the audacity to lay eggs!  For several decades, despite growing evidence that platypuses were real, European scientists continued to dismiss these reported sightings as fake news.  The platypus was an unfortunate intrusion into the scientists’ neatly ordered model of how the world worked.  Despite the philosophy of science demanding that a fact – like the existence of a platypus – that disproves a model is the very essence of falsifiability, the scientists chose to reject the fact rather than deconstruct and rebuild their model.

The same European scientists later – and infamously – rejected evidence for the existence of one of the platypus’s neighbours… the black swan… which brings us to a modern pseudoscience that also famously rejects reality in order to preserve the models that it has spent decades finessing.

Economic models have already proved their – very negative – worth in the worst possible way in the shape of the 2008 financial crash and the ensuing global depression.  This ought to have been enough for the entire economics profession to be given their marching orders and afforded their true place alongside aromatherapists, astrologers and homeopaths.  However, in 2008, governments lacked any acceptable alternative.  So despite knowing that an economic forecast was of equal value to flipping a coin, they put the same economists who had broken the system in charge of fixing it.

The economists did no such thing, of course.  The financial crisis of 2008 was the platypus of our age; something so out of step with the models that it could not reasonably be incorporated into them.  They even used the term “black swan” to describe it.

Any examination of the real economy over centuries, however, demonstrates that cyclical period of boom and bust – frequently punctuated by major financial crashes – are in fact the norm.  It is the so-called “Great Moderation” in the economists’ model that is the aberration… the thing so out of step with reality that it can reasonably be dismissed as fake news.

This, however, is merely the most obvious flaw in an economic model that is based on anomalies.  Most importantly, almost everything that economists are taught about how the economy works is based on what happened in the course of the two decade long mother of all anomalies; the post war boom 1953-1973.  As historian Paul Kennedy explains:

“The accumulated world industrial output between 1953 and 1973 was comparable in volume to that of the entire century and a half which separated 1953 from 1800.  The recovery of war-damaged economies, the development of new technologies, the continued shift from agriculture to industry, the harnessing of national resources within ‘planned economies,’ and the spread of industrialization to the Third World all helped to effect this dramatic change.  In an even more emphatic way, and for much the same reasons, the volume of world trade also grew spectacularly after 1945…”

In other words, economic modelling based on how the economy operated in the decades prior to the First World War might provide a closer fit to the real world in 2018.  The same is true for interest rates. As political economist Mark Blyth has shown, economists have modelled interest rates on the two decades around the historical high point in 1981.  However, for the entire period following the introduction of derivatives by the Dutch in the sixteenth century, the average interest rate is below four percent.

This is no trifling academic issue.  Interest rates have become the primary means by which economists – to whom our politicians have handed the leavers of power – seek to manage the economy.  The aim of “monetary policy” being to raise interest rates sufficiently high to prevent a recurrence of the inflation of the 1970s, while keeping them sufficiently low that they do not trigger or exacerbate a repeat of the 2008 crash.

The problem with this as of 2018 is that despite close to zero percent interest rates – and trillions of dollars, euros, pounds and yen in stimulus packages – the rate of inflation has barely moved.  Indeed, with growth rates stalling in the USUK and Eurozonedeflation is more likely than inflation.  Despite this, the Federal Reserve, Bank of England and European Central Bank remain committed to raising interest rates and reversing quantitative easing… because that is what their model tells them that they should do.

Central to the model is a belief – based on those anomalous decades when we had growth on steroids and interest rates to match – that employment causes inflation.  So with the official rate of unemployment in the USA standing at 4.1 percent and the UK at 4.2 percent, the model is telling the economists at the central banks that inflation is already running out of control… even though it isn’t.  As Constance Bevitt, quoted in the New York Times puts it:

“When they talk about full employment, that ignores almost all of the people who have dropped out of the economy entirely. I think that they are examining the problem with assumptions from a different economic era. And they don’t know how to assess where we are now.”

Larry Elliott at the Guardian draws a similar conclusion about the UK:

“Britain’s flexible labour market has resulted in the development of a particular sort of economy over the past decade: low productivity, low investment and low wage. Since the turn of the millennium, business investment has grown by about 1% a year on average because companies have substituted cheap workers for capital. Labour has become a commodity to be bought as cheaply as possible, which might be good for individual firms, but means people have less money to buy goods and services – a shortfall in demand only partly filled by rising levels of debt. The idea that everyone is happy with a zero-hour contract is for the birds.

“Workers are cowed to an extent that has surprised the Bank of England. For years, the members of Threadneedle Street’s monetary policy committee (MPC) have been expecting falling unemployment to lead to rising wage pressure, but it hasn’t happened. When the financial crisis erupted in August 2007, the unemployment rate was 5.3% and annual wage growth was running at 4.7%. Today unemployment is 4.2% and earnings are growing at 2.8%.”

This is a very different economy to the one that operated between 1953 and 1973; a time when the workers’ share of productivity rose consistently.  In those days a semi-skilled manual worker had a sufficient wage to buy a home, support a family, run a car and afford a holiday.  In 2018, a semi-skilled manual worker living in the UK depends upon foodbanks and tax credits to remain solvent.

In short, despite mountains of evidence that the economists’ model bears no relation to the real world, like their nineteenth century zoological counter parts, they continue to reject any evidence that disproves the model as fake news.  One obvious reason for this is that all of us – whatever our specialisms – get a sinking feeling of despondency when some inconvenient fact comes along to tell us that it is time to go back to the drawing board.  Understandably, we test the inconvenient fact to destruction before deconstructing our models.  But even when the fact proves sufficiently resilient to be considered to be true, there remains the temptation to sweep it under the proverbial carpet and pretend that nothing is amiss.

There is, however, another reason why so many economists spend so many of their waking hours studiously ignoring reality when it whacks them over the head with the force of a steam hammer.  They simply do not see it.  That is, if you are on the kind of salary enjoyed by a member of one or other monetary policy committee, your lived experience will be so removed from the experience of ordinary working (and not working) people that you simply refuse to believe them when – either by anecdote or statistic – they inform you of just how bad things are down on Main Street.

The two proposed solutions to this latter problem involve the question of diversity.  Among its other work, the campaign group Positive Money has highlighted the race and gender disparity at the Bank of England.  However, were we to just swap some white male mainstream economists for some equivalent BME and female mainstream economists, this is unlikely to have much impact.  A second approach to diversity from radical economists such as Ann Pettifor is to break up the neoclassical economists’ monopoly by bringing in economists from different schools of economics.

Arguably, however, neither of these proposed solutions would be sufficient to solve the problem of economists refusal to allow facts to stand in the way of their models.  For this, something even more radical is required – a complete rethink of the way monetary policy is made.  The 2008 crash and the decade of near stagnation for 80 percent of us that followed has demonstrated that the approach of handing economic policy to technocrats has failed.  The unelected Bank of England or Federal Reserve Chairman can no longer be allowed to be the final authority.  Policy must ultimately reside with elected representatives  whose jobs are on the line if they mess up.

Of course it is entirely reasonable that our representatives base their decisions on the advice and recommendations of experts.  It is here that real diversity is required.  Not merely swapping white male economists for black female ones, or opening the door just wide enough for some token contrarian economists.  Rather, what is needed is for monetary policy committees to encompass a range of specialisms far beyond economics and the social sciences, together with representatives from trades unions, charities and business organisations that are more in touch with the realities of life in the real economy.

None of this is about to happen any time soon; not least because nobody voluntarily relinquishes power and privilege.  But another crisis is brewing; and there are signs that it will be bigger than 2008.  And when that crisis bursts over us, this time around we need to put these changes in place before the economists rally round and persuade our craven politicians that there is no alternative… because there is.





Another silver bullet bites the dust….

10 10 2016

A recent article in the Guardian explains why scientists now believe that soil’s potential to soak up climate changing carbon dioxide has been overestimated by as much as 40%….

Hopes that large amounts of planet-warming carbon dioxide could be buried in soils appear to be grossly misplaced, with new research finding that the ground will soak up far less carbon over the coming century than previously thought.

Radiocarbon dating of soils, when combined with previous models of carbon uptake, has shown the widely assumed potential for carbon sequestration to combat climate change has been overestimated by as much as 40%.

Scientists from the University of California, Irvine (UCI) found that models used by the UN’s Intergovernmental Panel on Climate Change (IPCC) assume a much faster cycling of carbon through soils than is actually the case. Data taken from 157 soil samples taken from around the world show the average age of soil carbon is more than six times older than previously thought.

markcochrane2

Mark Cochrane

Mark Cochrane, our resident climate scientist, recently picked up on this at Chris Martenson’s Peak prosperity blog and wrote the following……?

The article points again to the problems with global models of climate change. Those who generally complain about ‘models’ usually do so to try to imply that they are wrong and that this therefore means that they are overstating climate change. The fact of the matter is that although they are ‘wrong’, the errors, in principle, are just as likely to understate as overstate the situation. In reality, the science tends to be conservative, as scientists are usually constrained to using what is statistically defensible for many of the parameters within their models, so the likelihood of understating known issues (e.g. ice sheet collapses) is greater than substantially overstating them, which is why the vast majority of new findings point out that climate change is progressing faster than we have been estimating.

The famous quote by George Box “All models are wrong, but some are useful” nicely sums up the state of things. Much of what we do in this world is based on our internal modeling, some of which is of high accuracy, “the sun comes up every morning”, and other ideas somewhat less so,  “I’m a safe driver so driving is not risky”. Weather models are notoriously inaccurate but we find quite a lot of utility in consulting them anyway. They may not be absolutely ‘right’ but they are usually reasonably close to the ultimate conditions. Climate models have multitudinous components but their ultimate function basically boils down to calculating the balance between sources and sinks of carbon in the atmosphere, then estimating what the ramifications are of the net changes in type and amounts of the so-called greenhouse gases.

Sources are emissions from things like burning fossil fuels, and positive feedbacks like melting permafrost that releases a portion of the carbon stock, that has literally been frozen in place for millennia, to the atmosphere as the climate warms. Sinks are things like ocean uptake of carbon as higher atmospheric carbon dioxide concentrations force the gas into the water, like occurs in your soda bottle or beer can. Negative feedbacks are those that ultimately bring the system back into balance after excessive emissions and include things like plants soaking up carbon and ultimately depositing some of it for long term storage in soils, in addition to transformation of silicate rocks to carbonate rocks as mountains erode and deposit sediments into the sea, soaking up atmospheric carbon in the process.

As I have mentioned before, the existence of a positive or negative feedback is only part of the story, we also need to know the rate at which it proceeds and ultimately how long it might continue. If you put a match to a high concentration of an explosive gas (say hydrogen) the positive feedback of energy release from a few molecules transferring energy to the proximate molecules will proceed very rapidly but not for very long before the process runs its course in the explosion. On the other hand, eroding the Himalayan mountains down to sea level will soak up immense amounts of carbon dioxide from the atmosphere but will take millions of years to accomplish.

All of which is providing context for what the He et  al. (2016) paper is saying. Soil carbon is a catch all term for many chemical compounds in soils that have carbon as a component. This makes the ‘organic’ component of soils. If you are modeling the rate at which carbon can get soaked up by soils you need to know the processes involved and calibrate them using parameters that balance the rates at which carbon enters and leaves the soil. What the new research is showing is that the current Earth Systems Models (ESMs – components of Global Climate Models – GCMs) currently underestimate the age of organic materials (carbon) in existing soils which effectively means that they overestimate the rate at which carbon is likely to be sequestered through plant growth/soil formation in the future. The upshot being that the models are currently estimating that soils will soak up potentially twice as much carbon between now and 2100 as seems likely. If the carbon isn’t getting soaked up it means that it could pile up in the atmosphere for longer than presently estimated and act to warm the planet more than currently projected.

As in all scientific matters, these results will be tested by other scientists and either be verified, refuted or refined. So what does it signify if this is correct? The soil component is only one pool among many but the net fluxes are what matters in the climate situation. For example:

With a Net Terrestrial Uptake of 3.0, the findings could indicate that this should be better described as 1.5-2.0. This could conceivably move the net atmospheric increase from 4.0 to 5.0 or so, a 25% increase. Non trivial. That said, what it probably means is that existing errors in other components of the modeling are either partially overstating emissions or global photosynthesis or understating net oceanic uptake. Therefore, instead of a 25% increase in atmospheric carbon there would be a smaller compounding increase between now and 2100, how small is the question. Future studies will be aimed at teasing these interacting components apart.





Kevin Anderson on Climate Change and models

31 12 2015

Interview with Professor Kevin Anderson about the Paris Conference and what it will probably achieve, what is still possible, and the problems with the pledges and the assumptions underlying them





Big Antarctic Ice Melt Scenarios ‘Not Plausible’

13 12 2015

markcochrane2

Mark Cochrane

More on Climate Change from Mark Cochrane….

There, a title that should be red meat to those who want this issue of AGW to be minimized. What does it mean though?

In the last few years we have been treated to a series of alarming findings that basically indicate that the entire Western Antarctic ice sheet is now doomed to fall into the ocean and melt (Rignot et al. 2014, Joughlin et al. 2014). A recipe for 4.8m of sea level rise or so. The big question is, just how fast will this process occur, decades, centuries, millennia?

Scientists gravitate to such questions quickly and try to answer them. So, this month we get Ritz et al 2015 trying to do just that. To do so they basically took ice flow simulation models, running them many times and in many ways, to test the sensitivity of various parameters. In this case, they compiled 3,000 model simulations. That gave them a distribution of possible ice outflow rates. What they then did that was clever; they used 20 years of satellite data to try to constrain the model simulations to weight the ones that performed most realistically more highly than the ones that performed poorly. Models meet reality. The paper was in Nature so it got a lot of press and we got stories like this:

Big Antarctic ice melt scenarios ‘not plausible’

Scientists say the contribution of a melting Antarctica to sea-level rise this century will be significant and challenging, but that some nightmare scenarios are just not realistic.

Their new study models how the polar south will react if greenhouse gases rise at a medium to high rate.

The most likely outcome is an input of about 10cm to global waters by 2100.

But the prospect of a 30cm-or-more contribution – claimed by some previous research – has just a one-in-20 chance.

Ok, what most of the public sees is, ‘sea level rise of 10 cm by 2100’ and they infer that more than that is not likely to happen. Almost no one who reads the BBC article will ever bother to dig up and read Ritz et al 2015 (conveniently linked here for the second time…). Alas, many of those who do try to read it will either give up in frustration or misinterpret it. From the quote above, we see that the 30cm or more amount of potential sea level rise still has a 1 in 20 (aka 5%) chance of occurring. Not exactly trivial. Do you feel lucky? From figure 2 in the actual Nature paper you can learn that although 10cm is the most likely amount of sea level rise that there is a 50+% chance it will be exceeded. There is also a 20% chance that 20cm will be exceeded. Again I ask, do you feel lucky?

I don’t say these things to belittle what looks to be a nice piece of scientific work. I am simply showing you that science is a process in work and that it doesn’t lend itself to simple conclusions. From the BBC article above “The most likely outcome is an input of about 10cm to global waters by 2100” what they don’t provide is the qualifier that this is true only — IF(!) the last 20 years of observations are a good proxy for what the next 85 years of ice sheet movement are going to be like. Who is it that says that the next 20 years are not going to be like the last 20? [in case any DTM reader doesn’t know, it’s Chris Martenson] It is also dependent on the models getting the physics and processes right. There is also this little detail.

There would of course be separate and additional inputs from Greenland and other ice stores, and from the general expansion of waters in the warming oceans.

That is a BIG caveat. All of that additional melting will act to lift the ice sheets of Antarctica where they pour into the ocean, speeding up the decay process further. So ultimately that statement “The most likely outcome is an input of about 10cm to global waters by 2100” should probably be understood as saying ‘The most likely outcome is an input ofat least 10cm to global waters by 2100′. Please note that in the actual scientific paper that the authors do not try to spin their findings as being conclusive. In the conclusion of the Nature paper they say “But, given current understanding, our results indicate that plausible predictions of Antarctic ice-sheet instability leading to greater than around half a meter of sea level rise by 2100 or twice that by 2200 would require new physical mechanisms” Note the parts I emphasized.

In any case, you can rest assured that several other scientists are even now working up ways to test these findings. In science, publishing is only the start of the process. Your work has to stand up to every criticism and test that other scientists can devise. Only when exhaustion takes over will your ideas be accepted. It took about 100 years of this for Anthropogenic Global Warming (AGW aka Global Climate Change) to be accepted by just about every scientist in the field. The last serious attempt to test it was by Berkeley Earth (link) who despite great hopes and funding from Koch brothers and their ‘skeptical’ company ended up proving AGW to be all too real, yet again…