Climate Policy as Wealth Creation, Part 1

James K. Boyce

This is the first installment of a five-part series on climate policy by regular Triple Crisis contributor James K. Boyce, professor of economics at the University of Massachusetts-Amherst and director of the Program on Development, Peacebuilding, and the Environment at the Political Economy Research Institute (PERI).

The series is adapted from Prof. Boyce’s March 31 lecture, part of the Climate Change Series at the Honors College of the University of Pittsburgh. The lecture explores how to turn the atmosphere (heretofore treated as an “open access” resource, into which greenhouse gases can be dumped at no cost to the emitter) into a common-property resource. This requires the establishment of a set of public property rights over the atmosphere’s capacity to absorb and recycle carbon, the imposition of costs (as through a carbon tax or sale of carbon permits) on those who use this finite resource, and a determination of how the rents will be distributed.

The remaining parts of the series will appear once a week for the next four weeks. The full lecture and subsequent discussion are available, as streaming video, through the University of Pittsburgh website. Click here or on the image below.


Demand and Supply

Broadly speaking, there are two types of policies to reduce carbon emissions from fossil-fuel combustion. One set of policies operates on the demand side of the picture, on the need for fossil fuels. These are policies that include investments in energy efficiency, investments in alternative sources of energy, public investment in mass transit, etc.—investments that reduce our demand for fossil fuels at any given price. Even if the prices of fossil fuels were to remain unchanged, people would consume less of them, thanks to these investments in efficiency, alternative energy, alternative modes of transportation, etc. That’s an important set of policies, but it’s not the only one that is relevant.

I’m going to focus on the complementary set of policies that operate not on the demand side of the equation, but the supply side—policies that raise the price of fossil fuels at any given level of demand. Those policies operate by raising the price in either of two ways which are more or less equivalent, either by instituting a tax on carbon emissions or, alternatively, by putting a cap on emissions and thereby restricting supply. In the same way, OPEC restricts supply when it wishes to increase the price of oil and increase profits—it raises the price. Well, that’s how a cap works to raise the price, too.

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Real Wage Growth Around the World

Matías Vernengo

The new edition of the International Labour Organization’s Global Wage Report (2012/13) has been published. The figure below shows the rates of growth in real wages by region.

Note that real wages have basically stagnated in the developed world, and have fallen in the Middle East, while they have grown in the rest of the world. One should take with a grain of salt the incredible increase in Eastern Europe. For example, the graph below, showing Russia’s real wages, gives a more accurate picture.


Real wages are now slightly above the levels associated with the pre-liberalization, and market reform period. In other words, the commodity boom and the Natural Resource Nationalism have allowed a significant recovery in real wages. Not dissimilar to the Latin American story, by the way.

In Asia a lot of the growth in real wages is explained by the vast migration of rural workers to urban areas in China.


Note that without China the rate of growth in real wages has been considerably less impressive. At any rate, as always, the ILO report provides a wealth of data, which is worth to take into consideration.

Originally posted at Naked Keynesianism.

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Confronting Financialization on Steroids

Costas Lapavitsas, Guest Blogger

The interview below is from a series on The Real News Network’s Reality Asserts Itself, with Paul Jay. Jay interviews Costas Lapavitsas, professor of economics at the School of Asian and Oriental Studies, University of London, and author of the book Profiting Without Producing: How Finance Exploits Us All (Verso). Lapavitsas recently did an interview with Triple Crisis blog and Dollars & Sense magazine, serialized here (part 1, part 2, part 3, part 4).

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State of the World's Health

Martin Khor

The premier international conference on public health policy is the World Health Assembly, organised by the World Health Organisation, which attracts Ministers of Health and other top health officials as well as non-governmental organisations to Geneva every year. This is where the latest trends in public health problems are presented and debated, and action plans for solutions are adopted. This year’s Assembly, which closed on May 24, had 3,500 participants and saw a record number of issues debated and resolutions adopted.

One of the key buzzwords during the Assembly was “universal health coverage” (UHC). This is being promoted by the WHO and several governments as one of the goals for the United Nations’ post-2015 Development Agenda. There is no precise definition for the term, but it is widely taken to mean that everyone should have access to medical treatment and other health services. Inability to pay should not prevent someone from being “covered” by the health system, and people should not become financially burdened in order to receive treatment.

The UHC concept is a great one, similar to the “health for all by the year 2000” slogan that the WHO adopted in the 1980s. The “right to health” is one of the human rights recognised by the United Nations.

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State of the World’s Health

Martin Khor

The premier international conference on public health policy is the World Health Assembly, organised by the World Health Organisation, which attracts Ministers of Health and other top health officials as well as non-governmental organisations to Geneva every year. This is where the latest trends in public health problems are presented and debated, and action plans for solutions are adopted. This year’s Assembly, which closed on May 24, had 3,500 participants and saw a record number of issues debated and resolutions adopted.

One of the key buzzwords during the Assembly was “universal health coverage” (UHC). This is being promoted by the WHO and several governments as one of the goals for the United Nations’ post-2015 Development Agenda. There is no precise definition for the term, but it is widely taken to mean that everyone should have access to medical treatment and other health services. Inability to pay should not prevent someone from being “covered” by the health system, and people should not become financially burdened in order to receive treatment.

The UHC concept is a great one, similar to the “health for all by the year 2000” slogan that the WHO adopted in the 1980s. The “right to health” is one of the human rights recognised by the United Nations.

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A Reflection on Capital in the 21st Century

Philip Arestis and Malcolm Sawyer

The recent book Capital in the 21st Century by Thomas Piketty (2014) has attracted an enviable amount of attention with its detailed history of income and wealth inequality. A central idea in this book comes from (r > g); that is, the idea that the rate of return on wealth (r) exceeds by a considerable margin the rate of economic growth (g) so far as Western industrialised countries are concerned. This, Piketty argues, has implications for rising inequality especially of wealth and of rentier income.

The basic mechanism is that when the rate of return is greater than the income growth rate, then savings made out of the return on wealth received in the form of dividends, rents, interest and capital gains adds to wealth, which then rises at a rate determined by these savings (and equal to savings propensity out of wealth (s), multiplied by the rate of return (r), (i.e., s∙r), and then the stock of wealth rises faster than income. The wealth to income ratio then rises, and the gains from wealth rise faster than other incomes. Wealth inequality also rises on the basis that rich wealth owners can achieve higher returns on their wealth than the poorer wealth owners. This is a substantial, though not complete, part of the general rises in inequality over the past three or more decades (and a large part of his book is concerned with documenting those rises in inequality).

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Change of Climate in the U.S.

Sunita Narain

Climate change has a surprising new follower: the U.S. president. The U.S. government has been the biggest bugbear in climate change negotiations. Since discussions began on this issue in the early 1990s, the United States has stymied all efforts for an effective and fair deal. It has blocked action by arguing that countries like China and India must first do more. Worse, successive governments have even denied that the threat from a changing climate is real, let alone urgent. President Barack Obama, who came to power in the first term with the promise of change in dealing with climate change, was noticeably coy about the issue in the recent years.

But in May this year, the U.S. government released its National Climate Assessment, which puts together carefully peer reviewed scientific information on the impacts in the United States. It makes clear that even the United States is not immune to the dangers of climate change. In fact, many trends are visible and the country is already hurting.

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Big Food, Big Pharma, Big Tobacco, Big Finance, and Little Marijuana

Sasha Breger Bush, Guest Blogger

Passed in 2012, Colorado’s Amendment 64 legalized the growing and selling of marijuana on a recreational basis. With medical marijuana, recreational marijuana has helped lift the people of Denver out of the Great Recession by inspiring leagues of new small businesses, creating new jobs, boosting commercial real estate values, and increasing state and local tax revenues. It turns out that the local marijuana market is fairly recession-proof and is actually bolstering local resilience to global crisis.

As I’ve watched this novelty unfold over the past couple of years (with considerable delight, to be frank) and witnessed first hand the important benefits for our local economy, I’ve grown increasingly concerned about the possibility of legalization on the federal level. While state level legalization has—for all of its still considerable problems—motivated economic recovery and helped working and middle class folks earn more income, get better jobs and enjoy more robust public services, federal legalization risks these benefits leaking out of local economies into the pockets of Big Business.

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High Risks, Few Rewards for Mexico with Monsanto's Maize

Timothy A. Wise

Triple Crisis contributor Timothy A. Wise’s analysis of genetically modified maize and the risks to Mexico, the world’s cradle of maize cultivation, continues. His previous posts on the topic can be read here and here.

I had come to Mexico to investigate the ongoing controversy over the proposed introduction of genetically modified (GM) maize into the birthplace of this important global food crop. The issue was hot, because last October a Mexican judge had issued an injunction halting all experimental and commercial planting of GM maize, a process that was well underway in six northern states. The ruling cited the need for precaution to ensure that Mexico’s rich diversity of maize varieties were protected from inadvertent “gene flow” from GM maize.

As I began to investigate this most controversial of biotech initiatives, the question that most puzzled me was: why anyone in Mexico thinks the country needs anything that transgenic maize has to offer?

Monsanto, of course, had an answer to that question. I met with a group of company officials in their high-rise offices in Mexico City’s transnational business district of Santa Fe. They offered their “Vision 2020,” in which transgenic maize is key to feeding the world. In Mexico, they argued, it would help double Mexican maize production, reduce persistent rural poverty among the country’s small-scale maize farmers, restore the country’s self-sufficiency in its key food staple and reduce the negative environmental impacts of maize farming. They even used the term “food sovereignty” to describe their goal for Mexico. This was more than a vision; this was a hallucination.

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High Risks, Few Rewards for Mexico with Monsanto’s Maize

Timothy A. Wise

Triple Crisis contributor Timothy A. Wise’s analysis of genetically modified maize and the risks to Mexico, the world’s cradle of maize cultivation, continues. His previous posts on the topic can be read here and here.

I had come to Mexico to investigate the ongoing controversy over the proposed introduction of genetically modified (GM) maize into the birthplace of this important global food crop. The issue was hot, because last October a Mexican judge had issued an injunction halting all experimental and commercial planting of GM maize, a process that was well underway in six northern states. The ruling cited the need for precaution to ensure that Mexico’s rich diversity of maize varieties were protected from inadvertent “gene flow” from GM maize.

As I began to investigate this most controversial of biotech initiatives, the question that most puzzled me was: why anyone in Mexico thinks the country needs anything that transgenic maize has to offer?

Monsanto, of course, had an answer to that question. I met with a group of company officials in their high-rise offices in Mexico City’s transnational business district of Santa Fe. They offered their “Vision 2020,” in which transgenic maize is key to feeding the world. In Mexico, they argued, it would help double Mexican maize production, reduce persistent rural poverty among the country’s small-scale maize farmers, restore the country’s self-sufficiency in its key food staple and reduce the negative environmental impacts of maize farming. They even used the term “food sovereignty” to describe their goal for Mexico. This was more than a vision; this was a hallucination.

Read the rest of this entry »