Peter Cooper — Government Spending and Financially Sustainable Growth [wonkish]

Private and public exogenous expenditures have opposite impacts on the sectoral balances. The same rate of growth in income has different implications for the domestic private sector’s financial balance (saving minus investment or, equivalently, income minus private spending) depending on the composition of the demand driving that growth. An increase in private investment pushes the private sector toward deficit. Even though the investment boosts income, saving will not rise as much as investment because of leakage to taxes and imports. In contrast, government spending adds income and saving for a given level of investment. An implication is that growth driven by private expenditure that occurs without compensating growth in government spending pushes the private sector into deficit except to the extent that net exports counter the effect. 

A growth regime reliant on private sector deficits is likely to come unstuck sooner or later. It implies depletion of net financial wealth and a likelihood of growing private indebtedness. Since households and firms, unlike a currency-issuing government, are financially constrained, this process has financial limits. Recent history culminating in the global financial crisis reflects this. Eventually, households and firms are compelled by circumstances to restore balance sheets to more normal levels. For growth to be sustained without exacerbating the tendencies to financial fragility already inherent in the present economic system, demand, and government spending in particular, would have to grow in a way that is compatible with ongoing domestic private sector surpluses.

Needless to say, government spending growth of this nature is not the only condition for financial stability under capitalism. Most notably, far-ranging financial reform and tight regulatory oversight are imperative if there is to be any hope of somewhat stable capitalist growth. Although the present focus is on the role of government expenditure, this is not to downplay other requirements of a stable growth regime. Nor is it to defend capitalism. It could be argued that what follows underscores the unlikelihood of stable growth in the present system given the powerful political opposition currently standing in the way of sound macroeconomic policy. But, by the same token, invoking “politics” in response to macroeconomic analysis on the grounds that progressive policy will not be pursued in the absence of mass mobilization from below doesn’t really solve anything either. That same radical mobilization, and then some, will be required if we are to put in place an alternative system to capitalism. In the meantime, understanding the sectoral balance effects of different growth regimes offers some insight into the workings of the current system.…

Heteconomist
Government Spending and Financially Sustainable Growth

Peter Cooper

Herman Daly — The Dualist Economics of Fredrick Soddy

Herman Daly gives a brief account of the philosophical basis of Fredrick Soddy's Cartesian (dualistic) approach to economics. 

Soddy, a (real) Nobel prize winner in chemistry, held that entropy is a chief limitation and that credit is not capable of creating perpetual motion, given finite real resources and the mathematics of compound interest. He was an opponent of economists' unlimited growth model and an advocate of 100% reserve banking under the gold standard of his day. Today he is better known as the founder of steady state economics, the forerunner of the economics of sustainability.

Center for the Advancement of the Steady State Economy
Dualist Economics
Herman Daly

Jonathan Larson — Ikea to start selling solar panels at UK stores

This is a solar story with all the great elements. It is proof positive that solar has moved out of the experimental stage. For years I have advised people to follow the Home Depot rule "Don't buy any technology until they start selling it in places—like Home Depot—used to dealing with the problems of the general public." Well, Ikea certainly qualifies. This is really a big deal because MOST Ikea customers are barely qualified to assemble a desk much less install solar panels on a roof and hooking them into the electrical systems—no matter how reliable or cost effective the panels themselves may be. After all, I once heard someone describe assembling a couple of Ikea kitchen cabinets as an "ordeal."

My guess is that Ikea will be providing more detailed installation manuals than their typical pictograph instructions. In fact, they will probably recommend professional installers. Even so, solar is well on its way towards being a normal player in the energy mix. I have been waiting a very long time for this day.

real economics
Ikea to start selling solar panels at UK stores
Jonathan Larson

Fusing Evolution of Nations and Cultures With the Crudity Called "Economics"

Commentary by Roger Erickson

Quantifying sustainability: Implications for [capitalism]

If we can't fuse the management of crude, static-asset markets back into a small subset of all the dynamic values that have driven 3.5 billion years of evolution on planet earth .... we deserve to die out.

Economists as naval-gazing dinousaurs? Only one of THOUSANDS of NAICS feedback channels? There's nothing essentially wrong with orthodox economists existing. There are complete fools & irrelevant Luddites in EVERY profession.

The problem is the weighting of the feedback!

Why on earth do electorates elect policy-staff fools who listen PRIMARILY to theoretical-economist Luddites? Why not just maximize our REAL operations, as we've always done? And in the process, improve the quality of our own, distributed decision-making?

There's little theory needed for catching mice. Just assign many people to catch mice, and review what actually works best. Note to electorate: It's ALWAYS a complete surprise. So please quit trying to make our policy operations into a durned religion! There's a reason to separate Church & State. Religion applies to the things we DON'T understand, NOT to the little stuff we can discover through trial and error. We have ZERO predictive power! Luckily, however, we seem to have near infinite ADAPTIVE power - but only if we actually use it. It's called accelerated trial and error, and it's quite easy.

So just explore our options, see what works, and go with the distributed sum of all the things that make our whole greater than the sum of our parts? That makes everything easy. It's called auto-catalysis. Catalyzing national, not just personal, success yields the highest return by far. If you don't think so, move to Russia, or China, or Zimbabwe, were it's every person for themselves.

We have to work hard to fail at operations. That only occurs when religion runs amok into micromanagement of the operations were supposed to render unto Caesar - or our own initiative. We have constant reminders NOT to do that, but we don't weight that advice highly enough to follow it?


Please, weight your vote where your mouth is.

Graham Barnes — Money and Sustainability – The Missing Link: Review

Graham Barnes reviews Money and Sustainability: The Missing Link by Bernard Lietaer, Christian Arnsperger, Sally Goerner and Stefan Brunnhuber. Opposes public or private monopoly of currency, similar to free banking in order to increase resilience by adding redundancy which admittedly is accomplished by trading off efficiency.

Feasta
Money and Sustainability – The Missing Link: Review
Graham Barnes

Bill Mitchell — Modern Monetary Theory and environmental sustainability – Part 1

There is regular commentary here that seeks to argue that Modern Monetary Theory (MMT) is flawed, bereft or worse because apparently it avoids any discussion of the natural environment. This apparently arises from the inherent conclusion in MMT that growth in aggregate demand (and real GDP) is required to maintain high levels of employment, which are considered both economically and socially desirable. This is the first part of a two-part blog on this topic. We will see that MMT is highly sympathetic to the challenges posed by anthropogenic global warming (a catch-all term) and central policy indications that follow from an understanding of MMT (for example, the superiority of employment buffer stocks) lead to an understanding of how MMT is a green paradigm as opposed to mainstream (neo-liberal) economics and much of Post Keynesian thinking, the latter which relies on generalised expansion as the solution to entrenched unemployment. We conclude that those who seek to dismiss MMT because it doesn’t satisfy their particular pet solution to climate change issues have probably not read some of the earlier MMT literature nor understood fully what is required to develop and disseminate a new way of thinking about the economy. Further, MMT is not a theory about everything! What we will see is that when MMT advocates economic growth it does so with a very different view of what that economic growth might be comprised of and driven.

Bill Mitchell — billy blog
Modern Monetary Theory and environmental sustainability – Part 1
Bill Mitchell

Presidio Graduate School — Free Online Course in Sustainable Leadership

MOOC 1: One Planet Sustainable Leadership

A MOOC is a “Massive Open Online Course” offered free to anyone, anywhere in the world.

Presidio Graduate School is offering this four-part MOOC in support of our mission to provide access to cutting edge theory and practice in the field of Sustainable Leadership. Each session will provide a one-hour highly interactive learning experience—including quizzes, break-out discussions, and videos—in addition to post-session follow-up resources, tools, and models.

This One Planet Sustainable Leadership MOOC is designed to provide an open version of the Sustainable Leadership curriculum in the pioneering courses offered at Presidio Graduate School. Presidio has prepared over 700 MBA/MPA students to take on the challenges that come with building sustainable businesses and organizations.

Professors Cynthia Scott Ph.D. M.P.H. and Tammy Esteves Ph.D. will facilitate this course. They teach and guide student projects in Presidio’s MBA/MPA programs. Both are pioneers in applying behavioral science and collaborative leadership approaches to sustainability challenges. They draw upon a broad background of innovative consulting and thought leadership built from years of teaching in cutting-edge programs.

The course will have four one-week sessions:

• Week 1 Sustainability Leadership-session on 9/25, 1 PM PST; 


• Week 2 Systemic Leadership-session on 10/2, 1 PM PST 


• Week 3 Creating Sustainable Change-session on 10/9, 1 PM PST 
• Week 4 Leaders as Change Makers-session on 10/16, 1 PM PST

This course will provide you with tools and resources to:

• Think Like A Sustainability Leader: Apply sustainability thinking to strategy, brand positioning, product innovation and employee engagement.

• Provide Systemic Leadership: Discover leverage points for change, inside and outside your organization.

• Create Sustainable Change: Predict the stages of individual and organizational change so you can decrease resistance and increase commitment.

• Build Leadership Resilience: Attain personal and organizational resilience to maintain change and harvest innovation.

Download detailed course overview

For more information, contact Ryan Cabinte, Faculty Director, atryan.cabinte@presidioedu.org or 415-655-8956.

Presideo Graduate School — Programs

(h/t Scott Fullwiler via Twitter) 

Emanuele Campiglio — Towards an Ecological Macroeconomics

A couple of weeks ago I attended the International conference on Ecological Economics, held in Rio de Janeiro just a few days before the Rio+20 UN Summit, where a few hundreds researchers have been presenting their work together with some high-level keynote speakers (Peter Victor, Mathis Wackernagel, William Rees, the Prime Minister of Bhutan, Ignacy Sachs and others).

One of the most debated topics during sessions and informal discussions seemed to be the one nef has been intensively working on lately, that is Ecological Macroeconomics (otherwise termed Macroeconomics of sustainability). The aim of this line of research is to give sound macroeconomic foundations to ecological/environmental issues, and more in general to include sustainability (including financial sustainability) into the macro picture.

Read it at nef | new economics foundation
Towards an Ecological Macroeconomics
Emanuele Campiglio | 
Economics researcher

Steve Keen gets a shout out.

"Sustainability" is the new buzz word. MMT is ahead of the curve on financial sustainability.

To budding economists — integrating financial and non-financial sustainability is the cutting edge field in economics.

David Korowicz — Trade Off: Financial system supply-chain cross contagion – a study in global systemic collapse

This new study explores the implications of a major financial crisis for the supply-chains that feed us, keep production running and maintain our critical infrastructure. I use a scenario involving the collapse of the Eurozone to show that increasing socio-economic complexity could rapidly spread irretrievable supply-chain failure across the world.

Read it at Feasta — Foundation for the Economics of Sustainability
Trade Off: Financial system supply-chain cross contagion – a study in global systemic collapse

by David Korowicz

Download PDF of paper

Jon Joplin — Occupy World Street – a global roadmap for radical economic and political reform: review

This book by Ross Jackson, published in March 2012 byGreen Books, asks a good question: what can we do about the fact that we live in an unacceptably unjust and hopelessly unsustainable world? We know there are many useful things that can be done at home or locally, and by corporations or governments. Lots of examples were suggested by contributors to Fleeing Vesuvius.

The trouble is that not nearly enough individuals, local communities, corporations or governments do these things. To reverse current trends the system as a whole has to change. But how? It’s such a huge question that few, if any, other writers have tackled it head on, which is what this book does.

The book addresses the question in six stages: one, what are the problems we face today? Two, what are the drivers of the current system that have created these problems? Three, who is in charge and what are they about? That’s half the book. The other half: four, what will a just and sustainable system look like? Five, how might it be organised? Six, how could we get there? The format makes sense and is easy to follow.

Read it at FEASTA | The Foundation for the Economics of Sustainability

Occupy World Street – a global roadmap for radical economic and political reform: review
by John Joplin

Richard Heinberg — What Is Sustainability?

The essence of the term sustainable is “that which can be maintained over time.” By implication, this means that any society that is unsustainable cannot be maintained for long and will cease to function at some point.

Unfortunately, in recent years the word sustainable has become widely used to refer merely to practices that are reputed to be more environmentally sound than others. Often the word is used so carelessly as to lead some environmentalists to advise abandoning its use.

Nevertheless, the concept is indispensable and should be the cornerstone for all long-range planning.

The Post Carbon Reader Series: Foundation Concepts
What Is Sustainability?
By Richard Heinberg

Thomas Edison on energy sources

“We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature’s inexhaustible sources of energy--sun, wind and tide. I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.” — Thomas A. Edison

(Although this is widely quoted, I have not been able to find a citation of the original)

Herman Daly — Uneconomic growth deepens depression

The US and Western Europe are in a recession threatening to become a depression as bad as that of the 1930s. Therefore we look to Keynesian policies as the cure, namely stimulate consumption and investment—that is, stimulate growth of the economy. It seemed to work in the past, so why not now? Should not ecological economics and steady-state ideas give way to Keynesian growth economics in view of the present crisis?

Certainly not! Why? Because we no longer live in the empty world of the 1930s — we live in a full world. Furthermore, in the 1930s the goal was full employment and growth was the means to it. Nowadays growth itself has become the goal and the means to it are off-shoring of jobs, automation, mergers, union busting, importing cheap labor, and other employment-cutting policies. The former goal of full employment has been sacrificed to the modern ideology of “growth in share holder value.”

Read it at Energy Bulletin

Uneconomic growth deepens depression

by Herman Daly

Monetizing the informal economy in developing countries

The challenge is integrating the informal economy with the formal economy without disrupting the sustainability that the informal economy has attained. This conflicts, however, with monetizing the informal economy, which is how the formal economy has consistently grown since tribal times by privatizing the commons and monetizing relationships by converting them to monetary exchanges.

Read it at IPS
Informal Economy Ensures Equitable Development
By Catherine Wilson

Electric cars "in"

Lusting for a Lamborghini or Bentley? Not if you grew up listening to the Backstreet Boys and winning trophies for, umm, everything. A new survey finds that most Gen Y consumers (a k a “Millennials”) have a high affinity for green, eco-friendly vehicles versus any other type of car.

Researchers at Deloitte found 59% of Gen Y respondents preferred alternative power. Hybrid gasoline-electric vehicles won over 57% of respondents, and pure battery electric vehicles got 2% of the vote; by contrast, vehicles with a traditional gas-only power train were preferred by only 37%.

Contrary to stereotypes, this young generation seems to know a good value when it sees one: Fuel efficiency is the biggest appeal. In fact, close to half (49%) of Gen Y customers are willing to pay an extra $300 for each mile per gallon of improvement they can get out of a hybrid, according to Deloitte.

Read the rest at CBS MOneyWatch

Survey: Young drivers prefer electric cars

by Farnoosh Torabi

More generational change in the works. Get out of the ways, pops.

BTW, desktops are now called "grampa boxes," I'm told.

Disclosure: I am working on a laptop, a MacBook specifically (with an additional large screen) and haven't had a desktop in years. But an iPad? I couldn't wait until Apple came out with a Mac with a bigger screen than the old nine inch built-in. I should go back now?

MIT says natural gas could hurt renewables

A study by the Massachusetts Institute of Technology said that the glut of natural gas, coming from newly-developed shale fields in the U.S., has the potential to damage development of renewable energy.

MIT News quotes Dr. Henry Jacoby, co-director emeritus on MIT’s joint program on the science “people speak of [natural] gas as a bridge to the future, but there had better be something at the other end of the bridge. ”

Read the rest at Peak Oil

MIT says natural gas could hurt renewables

Mish — Population: The Elephant in the Room

Read it at MISH'S Global Economic Trend Analysis
Population: The Elephant in the Room; Peak Oil Implications on Population Growth; What Level of Human Population is Sustainable?

by Mike "Mish" Shedlock

Air car is not all hot air — Tata to release in '12

Tata Motors Mini CAT Air Car to debut in 2012 by Brett Davis at Car Advice

Tata says the Air Car stores enough compressed air to offer around 300km worth of motoring. Users will then be able to re-gas the car at certain filling stations that are equipped with special tanks of compressed air, in around three to four minutes for around $2. It will also come with its own generator pack which can be used at home capable of re-gassing the tanks in around four hours.... Tata is aiming to release the Mini CAT Air Car in India next year with prices starting at around $12,700.

(h/t Yves Smith at Naked Capitalism)

Climate Progress: Renewable Energy On The Rise

"In 2010, all forms of renewable energy provided 8.2 quadrillion BTUs of primary energy production in the United States, a little less than 11% of our total production of 74.9 quads. At the same time, nuclear power provided 8.4 quads, a little more than 11% of the total.

"This is data from the U.S. Energy Information Administration, Monthly Energy Review for March 2011. Given that renewable power continues to grow at a healthy clip, while nuclear power has stagnated in recent years, renewables may well deliver more total primary production than nuclear sometime this year."

Read full post at Climate Progress: EIA: Renewable resources delivered 11% of U.S. energy production in 2010, just like nuclear power

UPDATE: "Google Inc. is investing $168 million in an alternative power project that aims to produce enough solar energy to light 140,000 homes....

"Google has been dipping into its bank account to back various projects that promise to generate energy from other sources besides oil and coal. The company has emerged as a major consumer of electricity as it opens huge data centers to house the computers that run its Internet search engine, email and other online services

"Promoting energy that causes less pollution is one of several crusades championed by Google’s co-founders, Larry Page and Sergey Brin."

April 12 News: Google invests $168M in solar thermal electric project

Monsanto Sued To Invalidate GMO Patents

"A landmark lawsuit filed on March 29 in US federal court seeks to invalidate Monsanto’s patents on genetically modified seeds and to prohibit the company from suing those whose crops become genetically contaminated.

"The Public Patent Foundation filed suit on behalf of 270,000 people from sixty organic and sustainable businesses and trade associations, including thousands of certified-organic farmers. In Organic Seed Growers and Trade Association, et al. v. Monsanto, et al. (U.S. District Court, Southern District of New York, Case No. 11 CIV 2163), PUBPAT details the invalidity of any patent that poisons people and the environment, and that is not useful to society, two hallmarks of US patent law.

"'As Justice Story wrote in 1817, to be patentable, an invention must not be 'injurious to the well being, good policy, or sound morals of society,' notes the complaint in its opening paragraphs, citing Lowell v. Lewis.

"The suit points to studies citing harm caused by Monsanto’s Roundup herbicide, including human placental damage, lymphoma, myeloma, animal miscarriages, and other impacts on human health."

Lawsuit seeks to invalidate Monsanto’s GMO patents

A key issue in this suit is whether Monsanto has suppressed research into the public safety of its products.

An often overlooked feature of MMT is its primary focus on the availability of real resources as the true concern of economics and economic policy. This involves sustainability and negative externalities, in addition to production.