It’s Wednesday and today, apart from presenting some great music, I am commenting on the ridiculous notion, that even progressive greenies propagate that we need to harness the financial resources of the markets (Wall street types) to help governments decarbonise their societies. The narrative that has emerged – that the financial CEOs with “trillions in assets” (all at COP26 because they could smell lucre) are a key to solving the climate challenge – is as ridiculous as progressives saying we need to tax them to fund schools and hospitals. Both narratives reflect the dominance of mainstream macroeconomics which has convinced us that currency-issuing governments are like big households and can ‘run out of money’. That is fiction but is part of the reason we have a climate crisis. Read on.
Don’t let the financial markets near this
A few years ago I was on a panel in Scotland with the leader of the Greens there. The topic was a Green Transition and when it was her turn to talk she spoke effusively about the need for ‘green bonds’ and to embrace the capacity of the financial markets to fund the decarbonisation.
That view is shared by many progressives.
Some years ago, they were also touting ‘Robin Hood’ taxes.
I wrote about that in these blog posts:
1. Robin Hood was a thief not a saviour (April 1, 2010).
2. Progressives should move on from a reliance on ‘Robin Hood’ taxes (September 4, 2017).
More recently, they are about ‘taxing the rich’ so we can have good schools and hospitals.
1. Governments do not need the savings of the rich, nor their taxes! (April 15, 2015).
2. The ‘tax the rich’ call bestows unwarranted importance on them (February 21, 2018).
3. Tax the rich to counter carbon emissions not to get their money (January 22, 2020).
Meanwhile, the financial markets – the casino which seeks massive profits irrespective of how it is gained and the short- and long-term fallout that results – are circling with their ambitious plans to save the world through so-called ‘green financing’.
The talk at COP26 was less about identifying and solving the problems of climate change and more about how the financial markets can get their claws into the picture and create even more speculative products upon which they can make profits from, and, basically, whiteant the whole effort.
And this is from a demographic (the beneficiaries of the profits) who in 2030 are estimated to have per capita emissions that are:
… 30 times higher than the global per capita level compatible with the 1.5⁰C goal of the Paris Agreement, while the footprints of the poorest half of the world population are set to remain several times below that level.
That conclusion came from a Briefing Note (November 5, 2021) – Carbon inequality in 2030: Per capita consumption emissions and the 1.5⁰C goal – which has been published by Oxfam in liaison with the Institute for European Environmental Policy.
The Report provides the link between income distribution (and inequality) and climate crisis.
The – English version of the Report – concludes that:
1. “between the first Intergovernmental Panel on Climate Change (IPCC) report in 1990 and the 2015 Paris Agreement, the consumption of the world’s richest 1% drove twice the carbon emissions of the poorest half of the global population combined.”
2. “around a third of the global carbon budget for limiting global heating to the Paris Agreement’s 1.50C goal was squandered just to expand the consumption of the richest 10% of the world population.”
3. “The share of total global emissions associated with the consumption of the richest 1% is set to continue to grow, from 13% in 1990, to 15% in 2015 and 16% in 2030.”
4. “By 2030, the richest 1% are on course for an even greater share of total global emissions than when the Paris Agreement was signed.”
5. “Carbon inequality is extreme, both globally and within most countries”.
The following graph is a reproduction of Figure 2 in the Report and is stunning in its starkness.
6. Even if the US cuts its per capital emissions by one half between 2015-2030, they will still be “5 times the global 1.5°C per capita level.”
The lesson from this research for the rest of us (not the top-end-of-town) is that:
Maintaining such high carbon footprints among the world’s richest people either requires far deeper emissions cuts by the rest of the world’s population, or it entails global heating in excess of 1.50C above pre-industrial levels. There is no other alternative.
For once I agree with the use of the TINA invocation.
It means that the “world’s richest, highest-emitting countries must finally commit to their fair share” – that includes Australia.
It means that reducing income and wealth inequality has to be a key part of this process.
It is not just about ‘technological’ solutions that the ‘market’ will come up with.
The Report says that:
… it is time for governments to raise major taxes on or to outright ban highly carbon-intensive luxury consumption, from SUVs to mega yachts, private jets and space tourism, that represent a morally unjustified depletion of the world’s scarce remaining carbon budget.
But … the emissions of the world’s richest people linked to their capital investments are likely even greater than those associated with their direct consumption …
… coordinated and substantial taxation of wealth is urgently required to reduce inequality and at the same time curb the emissions of the richest. It is time to use regulation and taxation to end extreme wealth altogether, to protect people and the planet.
So this sounds like a ‘tax the rich’ argument.
Which it is.
But it is not the same construction that the progressives usually think is appropriate.
In proposing these taxes, the government doesn’t want their funds.
The objective is to deprive them of funds – to reduce their command on goods and services.
And, it is clear that the ‘market’ will not deliver what we need, so there is a role for ‘rules-based’ policy – outright bans on things – like, for example, Amazon boss having an enlightenment above the Earth in his ridiculous rocket trip.
But this feeds into the point about allowing the financial markets to be the main drivers of our response through their ‘funding’ vehicles.
The last thing the World needs is more financial products. There are more than enough gambling vehicles out there already and the challenge, as part of the process which will involve taxes and regulations, is to reduce those vehicles through legislative bans.
Eliminating most of the speculative products that feed the wealth accumulation in the financial markets has to be the goal.
Those transactions do nothing to advance the well-being of the majority of us.
They should be banned.
And the first place to start is to ban all derivative products associated with food and energy.
It is beyond criminal to buy up staple agricultural products like maize, to store them while the market is manipulated to create artificial shortages and price rises (and profits upon sale), while there is food poverty around the world.
Ban the lot of it.
But the embrace of the ‘green bonds’ narrative also reflects the ignorance about the capacities of our governments, which goes to the heart of the core Modern Monetary Theory (MMT) agenda.
And this ignorance is deliberately promoted by those in the top echelons of economic policy making in government because they know it will favour solutions that generate work and profits for the financial markets.
Why would they do that?
Well, because they gain benefits themselves from the financial markets.
Consider, for example, Janet Yellen, the current Secretary of the Treasury under the Biden Administration and formerly the Chair of the Federal Reserve (2014-2018).
As Federal Reserve boss she was paid around $US200,000 (2019 the amount was $US203,500).
As of January 2021, the Treasury boss gets $US221,400.
On top of that, her financial disclosures indicate that she made $US7.2 million in ‘corporate speeches’ in the last two years alone.
Citigroup paid her around $US1 million for nine speeches.
A hedge fund (Citadel) paid her $US800,000 for a speech.
And so on.
Her disclosed list is staggering.
You can see it HERE
Speeches to various groups that are lining up and tripping over each other to get their claws into the Green Transition along with lucrative government payouts.
At COP26, she made a speech – Keynote Remarks by Secretary of the Treasury Janet L. Yellen at COP26 in Glasgow, Scotland at the Finance Day Opening Event (November 3, 2021) – and said among other things:
… the United States also intends to fully support the Climate Investment Funds Capital Markets Mechanism. Through an innovative leveraging structure, this initiative will help attract significant new private climate finance and provide $500 million per year for the Clean Technology Funds’ programming, including the new Accelerating Coal Transition investment program.
The gap between what governments have and what the world needs is large, and the private sector needs to play a bigger role … The private sector is ready to supply the financing to set us on a course to avoid the worst effects of climate change. CEOs representing trillions in assets are here to show their commitment.
At which time, you know the World is in trouble.
The point is that:
1. The aspirations of the financial markets are to make profits from speculative ventures and only coincidentally will that ever be consistent with advancing the well-being of the rest of us.
2. History tells us that they are short of ethics and long on chicanery and incompetence.
3. The growth of such speculative activity has worsened income and wealth inequality – as per the Oxfam Report.
4. The US government has all the financial resources it needs to make the transition away from carbon.
5. It also has the legislative clout to regulate anything that moves.
6. As to most governments.
The narrative that has emerged – that the financial CEOs with “trillions in assets” (all at COP26 because they could smell lucre) are a key to solving the climate challenge – is as ridiculous as progressives saying we need to tax them to fund schools and hospitals.
Both narratives reflect the dominance of mainstream macroeconomics which has convinced us that currency-issuing governments are like big households and can ‘run out of money’.
It is time we learned.
Music – Bobby Hutcherson
This is what I have been listening to while working this morning.
It was issued by Blue Note in 1966 and I purchased it in 1970.
It is an album of two styles where side A is hard bop (all Hutcherson compositions) and melodic. It is conventional swing with lots of complex rhythm changes. Side B goes experimental and avante-garde.
All the great players are on this album:
1. James Spaulding – Alto Saxophone and FLute.
2. Herbie Hancock – Piano and Organ.
3. Ron Carter – Double bass.
4. Freddie Hubbard – Trumpet.
5. Joe Chambers – Drums.
The track chosen is called – Tranquility – a ballad which features trumpet of Freddie Hubbard, then Hutcherson, then a great solo from Herbie Hancock on piano.
This is a very thoughtful composition – gentle but very melodic.
My favourite from the album.
And great to have playing in the background while one thinks out things.
Bobby Hutcherson evolved into post bop later in his career but didn’t get better than this.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.