What’s rent got to do with climate change? More than you might think.
Rent isn’t just the monthly check that tenants write to landlords. Economists use the term “rent seeking” to mean “using political and economic power to get a larger share of the national pie, rather than to grow the national pie,” in the words of Nobel laureate Joseph Stiglitz, who maintains that such dysfunctional activity has metastasized in the United States alongside deepening inequality.
When rent inspires investment in useful things like housing, it’s productive. The economic pie grows, and the people who pay rent get something in return. When rent leads to investment in unproductive activities, like lobbying to capture wealth without creating it, it’s parasitic. Those who pay get nothing in return.
Two other types of rent originate in nature rather than in human investment. Extractive rent comes from nature as a source of raw materials. The difference between the selling price of crude oil and the cost of pumping it from the ground is an example.
Protective rent comes from nature as a sink for our wastes. In the northeastern states of the U.S., for example, the Regional Greenhouse Gas Initiative requires power plants to buy carbon permits at quarterly auctions. In this way, power companies pay rent to park CO2 emissions in the atmosphere. Similarly, green taxes on pollution now account for more than 5% of government revenue in a number of European countries. When polluters pay to use nature’s sinks, they use them less than when they’re free. Read the rest of this entry »
As the Obama administration negotiates new trade agreements with European and Pacific nations, a battle has emerged over the agreements’ egregious rules that grant giant corporations unreasonable powers to subvert democracy. These rules, dubbed “investor rights” by the corporations, allow firms to sue governments over actions—including public interest regulations—that reduce the value of their investments.
Oxfam, the Institute for Policy Studies, and four other non-profits are releasing a new study that explains why these rules are so dangerous to democracy and the environment. We are among the co-authors of this study, titled “Debunking Eight Falsehoods by Pacific Rim Mining/OceanaGold in El Salvador.” The report offers a powerful case study of everything that is wrong with this corporate assault on democracy.
Madhav Gadgil and K Kasturirangan are both scientists of great repute. But both are caught up in a controversy on how the Western Ghats—the vast biological treasure trove spread over the states of Gujarat, Maharashtra, Goa, Karnataka, Kerala and Tamil Nadu—should be protected. First the Ministry of Environment and Forests asked Gadgil to submit a plan for protection of the Ghats. When this was done in mid-2011, the ministry sat on the document for months, refusing to release it even for public discussion. Finally, court directed the government to take action on the recommendations. The Kasturirangan committee was then set up to advise on the next steps.
In April 2013, the Kasturirangan committee (I was a member of it) submitted its report, evoking angry reactions. Ecologists say it is a dilution of the Gadgil report and, therefore, unacceptable. Political leaders and mining companies have joined hands to fight against the report. A virulent political agitation, led by the church and communist party leaders, was launched in Kerala.
The debate on the two reports has been personal, messy and uninformed. Instead, we need to understand the differences and deliberate what has been done and why. As I see it, there are three key differences between the Gadgil and the Kasturirangan report. First is on the extent of the area that should be awarded protection as an eco-sensitive zone (ESZ). The Gadgil panel identified the entire Ghats as ESZ. But it created three categories of protection regimes and listed activities that would be allowed in each based on the level of ecological richness and land use.
Over a year ago, in March 2013, the U.S. Bureau of Labor Statistics (BLS) released its 2011 Green Goods and Services (GGS) Survey. Its purpose was to describe employment and development trends in five key categories of the burgeoning U.S. green economy: energy from renewable sources (aka “clean energy”), energy efficiency, pollution abatement and materials recycling, natural resources conservation and environmental compliance, education, training and public awareness.
Some good news emerged from the GGS Survey: In 2011, there were 3.4 million green goods and services jobs, accounting for 2.6 percent of U.S. employment.
However, there was also bad news to report. In March 2013, the BLS announced that, as part of the cross-the-board spending cuts authorized through the federal budget “sequestration,” it would no longer be producing any more GGS Surveys after the 2011 report.
In short, the U.S. green economy and employment may or may not be growing, but since 2011 we have had no national survey reporting on these trends.
The Economist had a few weeks ago an issue on Argentina (here; subscription required), which I wanted to address, but had no time before today. The argument implies that the current Argentine woes (discussed here before) are part of a pattern which is associated to the long decline in income per capita from the late 19th century and early 20th century until now.
The Economist suggests that:
“In 1914 Argentina stood out as the country of the future. Its economy had grown faster than America’s over the previous four decades. Its GDP per head was higher than Germany’s, France’s or Italy’s. It boasted wonderfully fertile agricultural land, a sunny climate, a new democracy (universal male suffrage was introduced in 1912), an educated population and the world’s most erotic dance. Immigrants tangoed in from everywhere. For the young and ambitious, the choice between Argentina and California was a hard one.”
In a sense that’s true. According to Maddison’s data in 1913 Argentina per capita GDP (in 1990s dollars) was 3,797 while France and Germany had respectively 3,485 and 3,648 (data available here). However, the reasons for the decline in the 20th century are based on simplistic notions, typical of the so-called New Institutionalism of North and more recently Acemoglu and Robinson (for a critique go here). In their words:
“Building institutions is a dull, slow business. Argentine leaders prefer the quick fix—of charismatic leaders, miracle tariffs and currency pegs, rather than, say, a thorough reform of the country’s schools.”
A vague panic has overcome many analysts when discussing China’s shadow banking sector. The sector has even been referred to as a “ticking time bomb” by some. Other analysts say there is nothing to fear in the shadow banking sector. So which is it? Is the risk so high that a shock in this sector might result in a financial crisis? Or is the risk so low that growth will be entirely unaffected?
Looking at the sector from several angles, we try to rate the level of risk in various shadow banking sectors to determine whether this fear is justified. We look at liquidity risk, or whether shadow banking institutions have sufficient cash to repay asset holders in the short run; solvency risk, whether shadow banking institutions can muster up repayments in the long run; and market risk, whether shadow banking institutions are exposed to an overall decline in asset prices
If you or some family members or friends suffer from cancer, hepatitis, AIDS, asthma or other serious ailments, it’s worth your while to follow the Trans Pacific Partnership Agreement (TPPA) negotiations, now going on in Singapore.
It’s really a matter of life and death. For the TPPA can cut off the potential supply of cheaper generic life-saving medicines, especially when the branded products are priced so sky-high that very few can afford them.
A week in Beijing in mid-February confirmed what many people have been saying for a while now: if you can somehow avoid it, it is better not to breathe the air outside. With one exception, every day was grey and hazy, the sky not so much overcast as simply limp, heavy and fatigued. The grand buildings and enormous skyscrapers that line the streets of the city loomed as hazy shadows, barely visible in the all-encompassing smog. The generalised greyness made it hard to distinguish between dawn, midday and dusk. The days were shrouded in dullness, while the nights made stargazing seem like a thing of the past.
The exception was one unexpectedly delightful day when the sky suddenly cleared to reveal a sun that actually shone brightly down on the cold city, on buildings and streets that seemed to sparkle in sheer exuberance in the sudden brightness. This was a gift, residents said, of dry winds that had temporarily swept away the smog. But it was a short-lived, ephemeral present, serving as an almost painful reminder of how much was being missed all the rest of the time.
It is true that this particular week may have been exceptionally bad even by Beijing standards. The city’s authorities raised the four-tier air pollution alert system to the second highest level (orange, just below red) for the first time in the year, as atmospheric pollution readings measuring six major pollutants at monitoring stations in the downtown area suggested an Air Quality Index of more than 300, more than 10 times the level considered “safe” by the World Health Organisation.
The Shanghai Free Trade Zone was incorporated on September 29, 2013, with the aim of testing some liberalization measures, including financial liberalization. Although the zone is currently moving at a glacially slow pace in terms of liberalizing interest rates and financial flows, there are plans to allow funds to be transferred offshore. If and when this occurs, some financial flows moving offshore may be legitimate—going to real investment in countries like the United States, Japan, and Australia—while others may move truly offshore to known tax havens.
China has already been in the news recently, due to an exposé on offshore accounts held by members of the Chinese leadership. About 22,000 mainland Chinese and Hong Kong citizens were revealed to have accounts in tax havens in the Caribbean and South Pacific. The money is associated with hidden wealth. Some of this is suspected to stem from transactions that may not have been entirely above board. A current anticorruption campaign is attempting to eliminate some of the worst abuses.