Saturday, December 27, 2014

On Lost Causes, Climate Change, and Possibilities

To be honest, I really like Naomi Klein’s work – her crisp analysis of complex issues and her manner of conveying those insights.

Naomi Klein
I’ve read “Shock Doctrine” and other shorter pieces and saw her give an astonishing lecture a few years back based on only a few notes that wove a complex set of issues into a coherent whole.

 That being said I was not sure I was up for reading her 500pp+ new book “This Changes Everything”.

I assumed I knew everything she was going to say. But I had put a notify request on the title at the library when it was ordered, so when it came in a couple weeks back I thought I should at least give it a short whirl. I’m on page 370 of 466 pages of prose followed by 60 pages of notes. It’s been a good read. And while I know most of what she has laid out here, there are both new nuggets and a distinctive whole to her well written analysis that I’ve have enjoyed and been inspired by. In short – I highly recommend the read….

Today I read another fervent piece on climate change by another favorite author of mine, Rebecca Solnit. "Let's leave behind the age of fossil fuel. Welcome to Year One of the climate revolution" was published this past week with yet a bit different twist.

Like Klein she is a keen analyst of the human condition, and arguably a more  prolific writer on our condition. Her insights are fresh, as you'll see.  I won’t summarize this, as it is short enough to read as printed in The Guardian

Then this evening I read this very interesting piece by the international relations scholar, Richard Falk, entitled “ On Lost Causes and the Future of Palestine”. 

 Richard Falk (YouTube screenshot)
While unlike the other two pieces it doesn’t deal with climate change. His jumping off point is a reflection on the late Palestinian scholar Edward Said’s concept of “Lost Causes”. This is what links so closely with the pieces by Klein and Solnit.  Read separately, they will have some impact on the reader. Read together, they may transform us. And that's the possibility worth sharing….

Monday, December 15, 2014

Linking Economics and Climate Change

Joseph Stiglitz, former World Bank economist, member of the Council of Economic Advisers was awarded the Nobel Prize in Economics in 2001, just months after the September 11th attack of the twin towers in NYC. The following are his concluding remarks in his acceptance speech (December 8, 2001).


     I entered economics with the hope that it might enable me to do something about unemployment, poverty and discrimination. As an economic researcher, I have been lucky enough to hit upon some ideas that i think do enhance our understanding of these phenomena. As an educator, I have been lucky enough to have had the opportunity to reduce some of the asymmetries of information, especially concerning what the new information paradigm and other developments in modern economic science have to say about these phenomena, and to have had some first rate students who themselves pushed the research agenda forward.
     As an individual, I have however not been content just to let others translate those ideas into practice. I have had the good fortune to be able to do so myself, as a public servant both in the American government and at the World Bank. We have the good fortune to live in democracies, in which individuals can fight for their perception of what a better world might be like. We as academics have the good fortune to be further protected by our academic freedom. With freedom comes responsibility: the responsibility to use that freedom to do what we can to ensure that the world of the future be one in which there is not only greater economic prosperity, but also more social justice.

Stiglitz has been busy since receiving his Nobel and is currently University Professor of economics at Columbia University. He has been outspoken in his critique of inequality and neoliberal economics including our narrow concept of   development.Increasing inequality and climate change are perhaps two alarm bells that have helped more economists join with Stiglitz and others to note the ills that the neoliberal economic policies have wrought.

Maybe no one makes this more clear than Naomi Klein in her just released This Changes Everything.

Klein, who has spent most of her time focusing on the neoliberal economic impacts of globalized trade, has come to see how the worldview associated with climate change denial is fundamentally tied to neoliberal economic worldviews.

     More fundamentally... is their deep fear that if the free market system really has set in motion physical and chemical processes that, if allowed to continue unchecked, threaten large parts of humanity at an existential level, then their entire crusade to morally redeem capitalism has been for naught. With stakes like these, clearly greed is not so very good after all. And that is what is behind the the abrupt rise in climate change denial among hardcore conservatives: they have come to understand that as soon as they admit that climate change is real, they will lose the central ideological battle of our time -- whether we need to plan and manage our societies to reflect our goals and values, or whether the task can be left to the magic of the market. (p.40)

...for more than two decades, we kicked the can down the road. During that time, we also expanded the road from a two-lane carbon-spewing highway to a six lane superhighway. Thar feat was accomplished in large part thanks to the radical and aggressive vision that called for the creation of a single global economy based on the rules of free market fundamentalism, the very rules incubated in the right-wing think tanks now at the forefront of climate change denial. There is a certain irony at work: it is the success of their own revolution that make revolutionary levels of transformation to the market system now our best hope of avoiding climate chaos. (p.56)

Klein allows that
     It's not that the companies moving their production to China wanted to drive up emissions: they were after the cheap labor, but exploited labor and an exploited planet are, it turns out, a package deal. A destabilized climate is the cost of deregulated, global capitalism, its unintended, yet unavoidable consequence.

Political scientists, John Dryzek and Hayley Stevenson, try to see how we might come to some global agreement on how to address climate change in their new book, Democratizing Global Climate Governance (2014).

Democratizing Global Climate Governance
They are less concerned about the climate deniers, since they are a tiny minority, especially of those who attend the global climate meetings they have studied. Dryzek and Stevenson instead look at the variance among those trying to wrestle with finding some sort of global agreement at four recent international meetings. Their findings lead them to identify four different frames (they call discourses) of orientation to addressing climate change.

1) Mainstream Sustainability - which assume that natural relationships are both competitive; partnerships; and win-win and in which economy is related to conservation. Business is seen as seeking profit with a conscience, governments believe in ecologically benign economic growth. They believe in the market's ability to manage climate response.

2) Expansive Sustainability - which assumes the possibility of international equity, a sense of responsibility, and that competition could be fair. They believe that civil society is a major player looking for the common good and that states have material motives but are share common but differentiated responsibilities.

3) Limits - assumes humans are dependent on the non-human world, rejects GDP, sees ecological limits, and development that is not growth. States are self-interested with unsustainable policy goals, but they are potentially capable of enlightened self-interest.

4) Green Radicalism - assumes that there is an inter-connectedness between humans and non-human worlds, that humans are capable of cooperation and solidarity. They see states and corporations are irresponsible, that mainstream environmental groups are ineffective.

These four views clash at the global meetings around climate with the bulk situated between expansive sustainability and limits. These findings seem to dovetail with recent published research showing that facts don't matter as much as the orientation one brings to the table. Perhaps the follow-up question is one that examines what leads anyone to question their basic assumptions about how the world works? Meanwhile the evidence mounts that the climate and our economy are linked. Will our elected and other leaders figure this out in time.

Wednesday, December 3, 2014

Looking for a Deal

The Raw Deal or Some May Call the Real Deal

As my fingers hunt for the right keys on this laptop, millions of my fellow citizens, are out hunting for a 'deal', a 'bargain'. Black Friday is the penultimate holiday for consumerism in the U.S. And for a large majority of those bargain hunters, price is the lone distinguishing factor for the item sought. Now it could well be that the consumer's 'deal' is based upon low wages and compensation at the retail outlet or anywhere along the supply chain. Or it might be arrived at by a firm not paying its fair share of taxes or by cheating on regulations. But the bulk of consumers are either not aware or are not concerned with those costs born by others.

Let me confess, I am not totally exempt from this cultural focus. I was taught by my Depression surviving parents to shop for price, to be thrifty, to wait for the sale price. But part of that thrifty orientation was also getting by with what you had, making do, or repairing rather than replacing. At heart I think we are led to believe via marketing and advertising, that even if we may never make it to enjoy the income of the 1%, if we are shrewd enough, we can enjoy many of the same accoutrements they enjoy.

While we're busy hunting bargains, the extreme wealth and associated power that goes with it, continues to concentrate into fewer and fewer hands. And those hands are better able to shape what we know and think about the world. One recent example is the $100,000,000 spent by the Koch brothers to bombard the public with messages during the election about candidates and causes they believe in. You or I can't do that. And, of course, the Koch brothers are perhaps only the most extreme example.

This consolidation of power, whether by meglo-maniacs or nation states, is a poison on a finite planet with a growing human population. It's ironic that the day before Black Friday is perhaps this nation's most celebrated day of sharing, followed immediately by a day of addictive acquisition. Perhaps there is no better symbol of the irony than Walmart where millions are lined up to unwittingly line the pockets of four of the top eleven wealthiest people on the planet,  while their workers can't buy a living wage and where some of their own stores have collection boxes for shoppers to help their employees eat.

 Credit: Our Walmart

I am flabbergasted that the irony escapes, or is denied, by so many. But not by Dr. Peter Dreier, E.P. Clapp Distinguished Professor of Politics, and chair of the Urban & Environmental Policy Department, at Occidental College wrote on Black Friday,

      "Economists note that if Walmart paid its employees at least $25,000 a year, a million and a half workers would be lifted out of poverty. That would mean more money staying in communities to support local businesses, helping to create at least 100,000 new jobs.  Demos, a nonprofit research group, released a report finding that Walmart could easily pay every employee $14.89 without raising prices by simply not buying its own stock to further enrich the Walton family."(more here).

So What Are Some New Ideas or to Borrow from FDR, a New Deal?

Here are my suggestions for a New Deal to replace the Raw Deal that so many in our human family have been offered. The data is conclusive and near unanimous, that income inequality has skyrocketed. This has occurred most notably in the U.S. and the U.K. since the combined efforts of the Thatcher/Reagan policies that reduced taxes on the wealthiest and attempted to starve all the functions of government (save military spending). The wealthy can afford their private education, health care, transportation, etc. so they need not worry about the others. They get to hand down their wealth in greater and greater amounts to their children, who like George W. Bush was born on third base but thinks he hit a triple.

1) The New Deal would put a 10 times wage ratio in place. That's generously more than the 9 times rule in place at the very successful 85,000 employee owned Mondragon Co-operative in Spain. We will initially tie that ratio to a base equal to the median household income, currently approximately $50,000. This means that the highest income would be $500,000. All income above that is taxed at 100%.


The new IRS report for the 400 largest incomes (2010) was just released. The average income of the top 400 was reported as $265 million. Under my proposal  they would have to scrimp by on only $500,000 (of course they probably have enough wealth that that figure is meaningless). The tax revenues raised from these 400 tycoons alone under this policy would be $105 BILLION. 

2) Capital gains are taxed at the same rate as real income.

3) Selling of stock held for less than six months is penalized with a progressive tax. The tax increases correlated to the shortness of time the stock is held, e.g., if you hold for less than a day, you pay a penalty equal to the amount exchanged. If you hold for more than six months, no penalty! This reduces speculation, and specifically speculation driven by computer programs that add no real value to the economy.

The increased revenues to government from these three policy changes could provide for free K-16 education for all who are adequately prepared; universal health care; investments in renewable energy; energy, resource, and transportation efficiency; and stewardship of our natural resources. The government becomes the employer of last resort, so that everyone has a job, a livelihood and makes a contribution to the society.

4)  Institute participatory budgeting - give the citizens a direct voice in how those revenues are spent. In 2008 the American Political Science Association formed a task force to look at democracy, economic security and social justice as the economic convulsion was hitting. That task force completed its report in 2011 Democratic Imperatives: Innovations in Rights, Participation, and Economic Citizenship. The report recommends more public governance through mechanisms like public budgeting.

The Participatory Budgeting Project

In participatory budgeting citizens get to suggest programs and projects to spend some portion of tax revenues and then vote for their choices. Programs and projects receiving the most votes get funded. The benefits to the community and the democratic culture are many.

There are clearly more ideas we could test and try out that would move us away from exponential growth on a finite planet, where the benefits accrues mostly to a small minority. It is way past time we come together to discuss the possibilities for building a more sustainable future. To wait any longer to do so invites increasing struggle for many and will leave our children a world more badly broken.


Tuesday, November 25, 2014

Education and Hope

The following is by David Orr from a ‘Foreword’ in a new book by David Hicks, Educating for Hope in Troubled Times: Climate Change and the Transition to a Post-carbon Future (London: Institute of Education Press, 2014)

     Education is an essential function of civilization. Its essence is simple: to equip the young for the many tasks of preserving and advancing the hard-won gains of humankind in the arts, sciences, and humanities. To the extent that any generation succeeds in this aim, then the next is better able to meet its own needs and anchor itself in some larger mythos and system of values.

     Beneath this simple description, however, is endless complexity and controversy. Who is qualified to teach? What should the young be taught? How should they learn? Should they be taught critical thinking or obedience to authority? What is the proper role of classroom learning relative to experiential learning? Should education be aimed for specific skills or breadth? What is the relationship between facts and values, or between information and wisdom? How do various disciplines relate to each other, or do they relate at all? Is education a proper public goal or should it be left to families and civic organizations? Is there a common core of factual knowledge? What does it mean to teach young people to think, or to think about the act of thinking? Is smartness overrated relative, say, to qualities of compassion, sociability, character and manual competence? And so we could go on.

Orr raises here the fundamental questions all of us involved in the education enterprise should be wrestling with as individuals and as members of institutions proclaiming to share the mission of education. He goes on to briefly note the stiff challenges facing us and the necessity of hope, not to be confused with optimism, that is required for education to meet the basic aim he begins with above.

Hicks, offers some answers to Orr’s questions, while using his 30+ years of immersion in educating for a better world to offer how this might be done. While aimed at primarily K-12 educators, much of Hick’s suggestions are, and should be, useful to all of us as we try to learn our way forward.

May you each find a bounty of reasons to feel Thankful this week. Please share as you see fit…

Monday, November 24, 2014

Fossil Fuels, Investments, and the Public Good

Perhaps the most significant consequence of neoliberalism’s capture of public higher education is its reduction of everything to finance and money. And much of that narrowed focus is on relatively short-term returns. This narrowing of purpose and emphasis has affected many of the functions of universities. One of the more obvious is in the category of investments.

Most universities have a growing pool of money called an endowment from which they take the interest earned to support programs of the institution. This is a good thing. But if an investor seeks only the highest possible short-term return on the investment without examining what those invested dollars are supporting in the world, they might well be undermining the society, the environment, or some other concern central to the mission of the institution.

Unfortunately, most public universities have been turning a blind eye to these investments other than to scrutinize the quarterly or annual financial report. Recently many institutional investors have come to recognize that aligning their investments with their mission can not only maintain their financial bottom line but also simultaneously support their mission to build a better world. This movement began earnestly during the Vietnam War when religious organizations wanted to make sure they were not profiting from firms manufacturing weapons. Following that we saw a global response to the harm of apartheid, with many investors divesting of stocks of firms profiting from business in South Africa. Michigan State University was the first public university to divest its holdings from firms profiting in South Africa.

In early 2005, then-UN Secretary General Kofi Annan invited a group of the world’s largest institutional investors to join a process to develop the Principles for Responsible Investment. A 20-person Investor Group drawn from institutions in 12 countries was supported by a 70-person group of experts from the investment industry, intergovernmental organizations and civil society. The Principles were launched in April 2006 at the New York Stock Exchange. To date, there are more than 1,400 institutional signatories with more than $40 trillion in assets under management. Sadly, the higher education sector is almost entirely absent.

Investments and Climate Change

There is a growing global consensus that climate change is becoming the human family’s most significant challenge, coupled with poverty and income inequality. The scientific community (International Panel on Climate Change, National Academy of Sciences, Royal Academy of Sciences, etc.) is overwhelmingly convinced that the threat is man-made and that the burning of fossil fuels is a prime cause. You might think, given this consensus, that institutions would not only be looking to reduce their own carbon footprint but also choosing to avoid profiting from an activity that is deemed detrimental to the human family. That logic is behind the recent and growing movement for divestment from fossil fuel companies. But this logic has been all but lost on those who look at investments as simply building their financial wealth. More recently the concern with fossil fuel stocks as being largely based on assets that might be stranded (unsellable) because of their harm is causing even those who look at investments through the narrow lens of financial profit to jettison some of their fossil fuel holdings. 

While I support divestment from fossil fuels for those very reasons, what is needed in higher education is not simply the phased divestment from this perilous industry but a transformation of how we think about investments and how we align our missions to those investment choices. Principles for Responsible Investment are a good starting place for all institutional investors. The six principles are quite basic:

     Principle 1: We will incorporate ESG [environmental, social, governance] issues into investment analysis and decision-making processes.

     Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.

     Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

     Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.

     Principle 5: We will work together to enhance our effectiveness in implementing the Principles.

     Principle 6: We will each report on our activities and progress towards implementing the Principles.

The red herring often thrown out to the gullible and uninformed is that investing with mission or social and environmental concerns will only decrease financial returns. Often coupled with this myth is the claim that fiduciary requirement by law requires seeking only the highest financial return. These claims have frequently been revealed to be empty of facts.  Most recently, studies looking at the impact on financial return of divesting from fossil fuel stocks, for example, identify essentially no difference in risk of returns. In fact, S. Prakash Sethi, professor of finance at CUNY, makes the case that Investing in Socially Responsible Companies is a Must for Public Pension Funds – Because There is No Better Alternative.” 

As Pax World Fund’s President and CEO, Joe Keefe, noted recently,

The flimsy rebuttal we sometimes hear, that an endowment's fiduciary duty means that its only obligation is to maximize return, regardless of the consequences or externalities, is utter nonsense. There is now a substantial body of research underscoring that companies with better environmental performance also tend to enjoy better financial performance. It is ignoring these issues, rather than integrating them, which most likely constitutes a breach of fiduciary duty [emphasis added].

Reinvesting for Our Common Future

Good investment practices should not simply be limited to avoiding perilous investments (like fossil fuels) but should include positive choices. For a public university like Michigan State University, which has been built up over more than 150 years largely by the people of the state of Michigan, one should expect that enterprises and communities that are based here, that provide quality products, services and livelihoods and are good neighbors in our communities, should receive a sizable portion of such investments. This is made all the more important given that 76 percent of our students are from Michigan families whose tax support helps make all the university does possible. Investments in those communities make them stronger and more prosperous and strengthens the tax base that supports much that we count as the public good, including schools, libraries, museums, infrastructure, etc. Public state universities should commit to a minimum percentage of this endowment going towards state and local investments that help sustain the communities they are reliant on for their students and tax support.

Public universities could therefore, at a minimum, endorse and follow the Principles of Responsible Investment. They could establish a committee representing the faculty, staff, and students that oversees the investments and insures they align with the mission of the institution. This would include making recommendations on how the university, as a shareholder, should vote on shareholder resolutions. The current practice nearly always defaults uncritically to supporting the management position on these resolutions. Given the incredible increases in CEO salaries, golden parachutes, and other management acts of self aggrandizement that have become so prevalent, the management of the firms we invest in should not receive our uncritical support. We have a responsibility as shareholders to see that our dollars are being used appropriately and in accordance with our mission.

A bit different approach is using some of the endowment money to create a "Green Revolving Fund" which could be used to invest in campus energy conservation, efficiency, and renewable energy projects where the return on investment (ROI), often in saved dollars, aligns well with financial investments. The savings are then plugged back into the fund to re-invest in more energy saving, carbon reducing projects. The recent cost decreases in photovoltaics (PV) can now see ROI's of 10-15 percent per year. Those are only the financial benefits. When coupled with the benefits of carbon reduction on the environment, and potential increase in local jobs, the triple bottom line makes these kinds of investments even more attractive

In Democratic Imperatives: Innovations in Rights, Participation, and Economic Citizenship, a 2011 task force report from the American Political Science Association that looked at strengthening democratic practices, one of the key recommendations was the implementation of participatory budgeting. I believe there is an adaptive possibility of that public budgeting process to shape the investment direction for a public entity like MSU. Just today I received an email from a colleague in California announcing that several of the recommendations I have offered in this brief paper have been agreed to by the University of California system, which has an endowment of more than $90 billion. Those recommendations came from a task force created by the president that was representative of the university community. That email also included the announcement of two new sustainability investor positions with the University of California to ensure the recommendations are put effectively into place!

We can only hope that MSU and other universities will soon establish a broadly represented task force like the University of California did this year to develop their own response to climate change, sustainability and investments. Time is a-wasting.