By Walter Borden

Science and Sustainability

We at Fund Balance are concerned that the only mention of climate change in President Barack Obama’s 2012 State of the Union address was “The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change.”

President Obama, State of the Union address 2012.

The U.S. National Academy of Sciences states, “The world is heating up and humans are primarily responsible. Impacts are already apparent and will increase.” Greenhouse gas (GHG) induced climate change is a clear and present threat to our civilization and way of life. Its continued politicization is dangerous. We accept the consensus of the world’s scientific community which is summarized well by the American Chemical Society:

Careful and comprehensive scientific assessments have clearly demonstrated that the Earth’s climate system is changing in response to growing atmospheric burdens of greenhouse gases (GHGs) and absorbing aerosol particles. (IPCC, 2007) Climate change is occurring, is caused largely by human activities, and poses significant risks for—and in many cases is already affecting—a broad range of human and natural systems. (NRC, 2010a) The potential threats are serious and actions are required to mitigate climate change risks and to adapt to deleterious climate change impacts that probably cannot be avoided. (NRC, 2010b, c).

We further acknowledge and accept the conclusions of our medical community. The American Medical Association (AMA) urges that we as a society confront the health issues of climate change now.

Scientific evidence shows that the world’s climate is changing and that the results have public health consequences. The AMA is working to ensure that physicians and others in health care understand the rise in climate-related illnesses and injuries so they can prepare and respond to them. The Association also is promoting environmentally responsible practices that would reduce waste and energy consumption.

We see that escalating carbon emissions are seriously damaging our oceans depleting them of oxygen and acidification. Carbon dioxide emissions caused by human activities over the last century have increased the acidity of the world’s oceans far beyond the range of natural variations, which may significantly impair the ability of marine organisms to live. We realize that rapid deforestation increasingly impedes nature’s ability to buffer carbon dioxide concentrations in our atmosphere and thus keep our air suitable for breathing.

The time is now for President Obama and Congress to heed science and pursue evidence based policy formation in addressing the real and gathering dangers of Climate Change. Putting a price on carbon is a critical first step.

Economics and Energy
We concur that our nation must responsibly transition away from fossil fuels. We reject the notion that all forms of potential energy are equal in a world confronted with destabilizing weather patterns driven in many instances by atmospheric warming from accumulated GHGs. Oil supply likely has peaked at 75 million barrels per day in spite of price increases of 15 percent each year. The externalities, or outside costs, of coal are a major problem with this energy source and they are not reflected in its market price. While we seemingly purchase and burn coal cheaply, in reality society pays a much higher cost from the perspective of the present and the next generation. Those who benefit from this relatively lower costs of electricity don’t pay for these externalities directly, but the public eventually has to pay in the form of medical bills, real estate depreciation, as well as water and soil detoxification. We call on the President to commission a full cost accounting assessment for the life cycle of coal and all energy sources that incorporates these externalities.

With these principles in mind, we also challenge the conventional wisdom that Natural Gas is a cheaper and cleaner alternative to coal given its requirements for large amounts of fresh water and currently dangerous engineering requirements for extraction from U.S. shale formations. We challenge industry to meet head on the impacts of existing hydroelectric and nuclear baseload sources on fresh water and food supplies.  Safe nuclear still requires a massive uptake of fresh water and the limits of hydroelectric are evident in an overtaxed watershed. Solar technologies must reduce the toxicity of manufacturing and waste, and wind sources must be continually improved. Energy requirements underpin every of sector the economy that sustains our civilization. Only technological breakthroughs combined with carbon pricing can deliver the advances required for our common good.

We see that choosing strategic renewable energy development does not mean impeding job formation or damaging labor markets. We subscribe to the conclusions of Google.org in its report utilizing the McKinsey & Company’s US Low Carbon Economics Tool:

1. Renewable Energy Innovation Benefits Jobs, GDP, Emissions, and Security
2. Delaying Innovation = Delaying Benefits
3. Innovation and Policy Enhance Each Other

Breakthroughs in clean energy technology will reduce the cost associated with clean energy policies implementation, effectively growing the economy while decarbonizing our energy use. These challenges can be met by our public and private sectors. Such efforts will doubtless yield additional benefits just as the internet emerged from the space age.

Policy Making
We further acknowledge the world’s policy making community as codified by the Kyoto Protocol and the United States Department of Defense that has concluded that Climate Change should be elevated to a U.S. national security concern. We contend that since the United States only has ~2% of the world’s oil reserves that pursuing policies of further subsidizing their extraction is a waste of resources.

With this in mind we call on the President and our elected representatives to address the real and gathering threats posed by the climate change with the same sense of urgency as the national debt. Climate change equally threatens the safety and security of our grandchildren and future generations. The world’s food supply and its stability is how we generate and create capital in the first place. And it is thus a moral responsibility of our leadership to take action to address climate change.

To this end we call for all elected officials to cease the politicization of the consensus of the world’s scientific community. In 2007 senators for both major parities in the United States were working together to implement policy to address the dangers posed by man made climate change and the coming Storm Age. Since that time Scientists have re-confirmed the IPCC’s assessment and moved on beyond the basic result that GHGs are warming Earth rapidly. The Republican Party however, once the party of Theodore Roosevelt, a party of Richard Nixon that ushered in the EPA, has moved in the opposite direction. As the scientific evidence has mounted and been re-confirmed by major studies such as BEST the contemporary leadership of this important American political institution has moved away from it.

Lastly, we at Fund Balance acknowledge that philosophical differences about the appropriate response exist. We are committed to rejecting ad hominem in dialogue with those we seek to convince. Some question if anything can be done. Others argue that warming will be better for human civilization. Still others say whatever the consequences, the world’s economic stability is too dependent on carbon emissions so transition away from fossil fuels can only bring wide scale food insecurity and disaster. We peacefully disagree and seek to forge a way forward utilizing a blend of measured transition to renewable energy sources, with research and development of clean alternatives, in concert with sustainable policy innovation. Such approaches do not hold a priori that economic growth in any form constitutes an overall good for humanity.

By Walter Borden

“The conservation of natural resources is the fundamental problem. Unless we solve that problem it will avail us little to solve all others.”  Theodore Roosevelt

What’s In a Petrodollar?
Fossil Fuel producing nations should extract their resources consistent with the health needs of their people, air, land, and water.  History shows us that regulation plays an essential role in this mandate. Energy marketers insist regulations are counterproductive. Implied though not often stated, nations like Russia and China can more easily form capital and drive labor demand from fossil fuel exploitation because they can act largely unencumbered by regulation. This unproven assumption ignores the escalating costs of unconstrained fossil fuel extraction to present and future generations. Should we be more concerned about poisoning our planet for future generations than leaving large amounts of debt for them? I argue yes. Does the regulation of fossil fuel extraction impede aggregate labor demand? The evidence indicates no. The earth is the source of all money so worrying about debt instead of planetary health puts the cart before the horse. A sick, weakened planet will create less value, profit, and wealth.  Concurrently, as oil supplies wane, systemic risk will form around basing currencies on fossil fuels, oil in particular. Searches for fossil fuel resources will grow into fierce and destabilizing conflicts. Increasingly scarce tracts of clean, fertile land can only deepen them.

Unregulated Nations and Quality of Air, Water, Land and Life
Russia and its oil country exemplify the realities of unregulated, petrodollar capitalism. Its oil producing areas constitute what experts describe as our planet’s worst ecological oil catastrophe. Based on reporting from the Associated Press, estimates are that roughly one Deepwater Horizon-scale leakage occurs about every two months. Outdated infrastructure, minimal and unenforced regulation allow for oil to contaminate soil, kill plant life, and damage habitats for mammals and birds. State-funded research shows 10-15 percent of Russian oil leakage enters rivers with nearly 500,000 tons flowing into the Arctic.

Source: Bureau of Labor Statistics

From Chernobyl to more recent paper mill pollution seeping into Siberia’s Lake Baikal, which holds one-fifth of the world’s supply of fresh water, Russia’s lax regulatory posture renders great swaths of territory uninhabitable and fallow. Russian oil spills are more numerous than in any other oil-producing nation. “Oil gets spilled literally every day,” said Dr. Grigory Barenboim, senior researcher at the Russian Academy of Sciences’ Institute of Water Problems. His is not alone. And by all accounts the estimate is conservative since under Russian law, leaks less than 8 tons rate as “incidents” and can thus go unreported. By contrast, the U.S., the world’s third-largest oil producer, logged 341 pipeline ruptures in 2010 — compared to Russia’s 18,000 — according to the U.S. Department of Transportation.

The republic of Komi, just south of the Arctic Circle, is the scene of Russia’s largest oil spill. Up to 40 kilometers of two local rivers were polluted, killing thousands of fish. Respiratory diseases rose by over 28 percent in the year following the leak. Komi’s officials blamed neglected infrastructure and oil companies reporting that “companies that extract hydrocarbons focus on making profits rather than how to use the resources rationally.”

Representatives of Lukoil denied claims that they try to conceal spills and leaks saying that no more than 2.7 tons leaked last year from its production areas in Komi. Government officials and environmentalists agree however that such spills and mismanagement typify most any oil field in Russia. They point to outdated systems used by oil companies, but also add that large scale oil spills are not confined to abandoned or aging fields. Major accidents happen at brand new pipelines.

At least 400 tons leaked from a new Transneft pipeline in two separate accidents in Russia’s Far East last year. It brings Russian oil from Eastern Siberia to China and went operational just months before the spills. Oil executives complain that oil spills that routinely happen in plain sight cost too much money to repair. Officials and citizens alike find it hard if not impossible to hold authorities accountable. In the Komi area for example, some 90 percent of the local population comprises oil workers and their families. They point out how they have relocated from other regions of Russian and depend on the industry for their livelihood.

Oil Spill. Eleanor Bay, Alaska

Is there any reason to believe that reduced regulation in the U.S. would lead to different outcomes than seen in Russia? Does there have to be a trade off between employment and keeping ecosystems healthy in Russia, the US, or any other oil bearing nation?

Ruth Greenspan Bell of the World Resources Institute recently pointed out, “Looking only at job losses inevitably ignores a larger truth: environmental spending creates jobs that offset losses.”  She notes that compared to overall spending in the economy, on a per dollar basis, spending on environmental protection and clean-up employs:

• Over twice as many workers in construction
• 25 percent more in manufacturing
• Plant closings and layoffs comprise only one tenth of 1 percent of all layoffs nationwide.
• From 1990-1997 period, 10 million U.S. workers were laid off for non-environmental reasons.

Bell cites a recent report to Congress compiled by the White House Office of Management and Budget, which examined the costs and benefits of environmental regulations. Looking at federal regulations between 1999 and 2009 in which the relevant agencies both estimated and monetized the benefits and costs of those rules, the OMB analysis estimated that the annual benefits of regulation totaled between $128 billion and $616 billion. The annual costs: between $43 billion and $55 billion.

Nonetheless it is held as orthodoxy by many that environmental protection laws i.e. regulations regardless of application are bad for everyone in the economy.

Regulations do not impede labor demand in the ways claimed by polluters and their publicists. But do renewable technologies that mitigate the costs of oil to our society actually increase labor supply and stifle aggregate demand for it, or is renewable energy poised to help tighten labor markets in the long run and thus help families secure their futures? Bloomberg New Energy Finance recently reported that for the first time, global investments in renewable electricity have exceeded investments in fossil fuel power plants. Some of the facts laid out in their reporting:

• The number of solar jobs in America has doubled since 2009
• Today more than 100,000 Americans work in the solar industry at more than 5,000 companies in every single state.
• These include manufacturing, installation, and supply chain jobs.
• The installed base of solar power in the United States doubled
• The solar industry is growing at a rate of 69 percent annually
• The cost of solar panels has fallen 30 percent over just the last two years, continuing a long-term downward trend in the price of solar.

Solar is becoming more cost-competitive with conventional fossil fuels and some estimate photovoltaic solar will achieve price parity by 2020. Two of the world’s three largest employers, the United States Department of Defense and Walmart are looking to solar. Walmart is installing solar panels at 130 stores in California because its solar program has significantly reduced its energy expenses. The United States Marine Corps utilizes solar energy with battery storage to fully power forward operating bases in Afghanistan. Marine Colonel Bob Charette says renewable energy is “about saving lives” by reducing the number of dangerous fuel convoys needed for resupply. The People’s Liberation Army of China is the third, and China is well known for its aggressive push towards renewables as well as towards securing fossil fuels and mineral resources from the Americas to Africa.

There are encouraging signs that the private sector is beginning to understand the urgency of carbon pollution rates and take action. Fund Balance associate South Pole Carbon recently performed a Carbon Scan of S&P 500. It provided a carbon footprint of a USD 1 million investment into the S&P 500:

• Total Emissions for a USD 1 million investment amount to 188 tons of CO2.
• Offsetting those emissions with high quality emission reduction projects costs an investor USD 2,632 (26 basis points in relative terms).
• Roughly 60% of the overall emissions come from just 3.7% utilities exposure meaning just 5 out of the 500 companies are responsible for over a quarter of the emissions.

The private sector has a role to play as well. This analysis shows that News Corp and Google are already climate neutral due to their own offsetting. Rupert Murdoch stated that News Corporation is carbon neutral: “But achieving net zero carbon emissions was never our only goal…Today, I’m pleased to share some of our successes across the Company, as well as our long-term commitment to environmental sustainability.” Quite a statement from the Chairman of a Corporation that counts Saudi Royalty as its second largest shareholder.

Dubai Under Cloud Cover

What Does All This Mean?
The information above is indicative of a great many other studies: nations with sufficient and adequately funded regulatory law compared to those with little to no regulatory law and enforcement have less carbon pollution and higher standards of living. It points to two other policy imperatives.

First, nations such as the US and Norway that strictly regulate pollution maintain healthier environments and have higher living standards than those that do not. They are also better positioned to thrive in an era of constrained access to fossil fuels as the health of their aquifers and atmospheres renders them more productive.

Second, there can be no doubt of the continued need for fossil fuel energy resources for the immediate future. During this process what can we do to protect our food and water supply and its viability for future generations and their ability to live and create wealth? History provides few examples of mining and energy concerns protecting resources if not required. Society can and should incrementally redirect the funding and effort to extract fossil fuels towards renewables. This includes those resources utilized for lobbying,  deregulation, and publicity campaigns designed to produce the misconception of legitimate scientific debate that Global Warming is primarily man made. Society must honestly and rigorously assess regulations that may interfere with short term job creation and adapt job training, industrial, and agricultural programs accordingly. Policy must encourage steady elimination of the linkage between our currencies and oil. Cultivate Heliodollars.

Such redirection should include subsidies. As energy concerns move to the Arctic and other remote ecosystems to exploit hard-to-get oil and gas reserves, let’s listen to scientists and policy makers as they register concern for potential environmental calamities. These will just as surely affect the entire planet’s ability to support life and create wealth in future generations as inherited balance sheet debt among nation states.

What Can We Conclude?
When our air and water are protected from exposure to excessive carbon dioxide or mercury the entire Earth profits. 20th century notions of wealth and productivity should adapt as they did when the great nation states abandoned slavery as an economic system within the rule of law. All of this means that moving forward even GDP as a measure of value will necessarily serve a limited role in climate and economic scenarios. Petrodollars may no longer serve as the best store of wealth.

We need policies that address preservation of the resources that provide us with food and water. This requires the will and action to regulate polluters, building on the successes these regulations bring  to the United Sates, and remaining mindful of current and future realities for “pollutacracies” like Russia. This requires new thinking and refinement of money and debt. A  recent economic analysis found coal-generated electricity imposing more in public health costs than the electricity is worth on the market. In short our current approach to resource extraction, sustenance cultivation, and wealth preservation “reduces the Earth Herself and Her People to a form of slavery via economic vampirism” as Fund Balance partner Leland Lehrman recently wrote.

The urgency of this matter does not reduce well to comfortable partisan positioning. President Obama has dismissed environmentalists as “pointy headed greens.” His Commerce Secretary William Daley actively works to prevent new EPA regulations. As recently as 2007, GOP stalwarts such as Lindsay Graham and Newt Gingrich acknowledged the urgency of Global Warming only to totally reverse their positions even as the science solidified around a consensus that Global Warming is real and manmade. And contrary to popular belief, the Obama administration is on track to approve fewer regulations than their predecessor.

This isn’t to say all regulations are useful only that the characteristics of nations whose energy industries are well regulated help define their economic opportunity and public health.

Regulations and the rule of law are at the heart of what has protected America’s resources from over-exploitation. Abraham Lincoln moved to protect California’s Yosemite Valley in 1864 laying the groundwork for Yosemite National Park.  Theodore Roosevelt later created hundreds of national forests and bird sanctuaries as well as  reclamation projects during his tenure. Dwight D. Eisenhower established the Arctic National Wildlife Refuge. Richard Nixon signed almost every major piece of environmental legislation that we know of today.

Sunset at North Pole. Photo/composite by Brian Krassenstein

While campaigning, President Obama proclaimed his “intergenerational” perspective and recognition that “we are borrowing this planet from our children and our grandchildren.” After years of supporting the coal industry in Illinois, he supported cutting carbon emissions 80 percent by 2050. There was to be a much greater commitment to conservation. So far little has been done. While Congressional intransigence, well funded lobbying, and PR campaigns often broadcast on News Corporation’s Fox News network matter, there has also been scarce leadership from the Obama administration.

Weakening environmental regulations does little to create jobs and and makes us both poorer and sicker. Enforceable and enforced regulations protect future generations’ wealth and health. We need to transition away from reliance on petrodollars as a medium of exchange. The oil industry in Komi, Russia has been sapping nature for decades, killing or forcing out reindeer and fish. Locals like 63-year-old Yuri Bratenkov recount that when big oil leaves, only poisoned terrain is left in its wake. “Fishing, hunting — it’s all gone”.

Mayor Bloomberg, Chair C40

Is Michael Bloomberg really getting serious about sustainability and the climate?

Is the upcoming free and now completely full ESG 2011 USA event a huddle of the region’s best sustainability practitioners? We’ll be getting the scoop from Bloomberg CEO Daniel Doctoroff, and Thomas DiNapoli, Comptroller of the State of NY, the top official of the massive $150B New York Common Retirement Fund.

Talks leading up to the C40 (top 40 cities) conference just prior to Rio+20 are starting to raise the bar on fixing the problem of urban emissions (60-80% of the total).

Mayor Bloomberg is the Chair of the C40.

Here’s his welcome message to C40 Sao Paulo attendees:

Former London Mayor Nicky Gavron: “Every single financial centre is at sea level.”

“Over the past six years, C40 Summits have brought together mayors of the world’s largest cities to share information on their respective experiences in dealing with climate change. This is our fourth Summit, the first to be hosted in the Southern Hemisphere, and my first as Chair of the C40.

For the first time in history, cities are home to more than half of the world’s population, and together account for more than 80% of the world’s greenhouse gas emissions. The Summit in São Paulo will provide us with an excellent opportunity to explore and exchange new ideas and initiatives, and to discuss new partnerships among mayors and governors that can address climate change and promote sustainability. ”

The race is on.

London’s former mayor Nicky Gavron tipped everyone’s hand with a pointed comment about the geographical location of the world’s financial centers:

“Big cities need to raise the game because they’re so responsible for such a high proportion of greenhouse gas [GHG] emissions and they’re very vulnerable to [climate change],” Gavron told Environmental Finance. Around 60% of global GHGs come from cities. “Every single financial centre is at sea level.”

Simultaneously it seems, Bloomberg’s home page just created a new top level tab, “Sustainability”, featuring some of the excellent work of Bloomberg New Energy Finance.

Having recently investigated the ESG features of a BNEF equipped Bloomberg terminal, I can tell you: it rocks.

Mayor Bloomberg also passed legislation improving the buy local profile of his NYC Administration:

Buy Local, the Mayor Says

So screamed the headline from Matt Flegenheimer’s NY Times blog:

By Walter Borden

Energy and pollution salesmen extol the market value of fossil fuels underneath our land and sea based on a certain doctrine. It asserts that job creation requires prolific fossil fuel extraction, and consequently, such operations deserve taxpayer entitlements and subsidies. These operators argue further that vast sums of wealth go unformed if we do not extract and sell fossil fuels. To restrain their immediate extraction will impoverish laborers, immiserate business owners, and impede capital creation. I have addressed how renewable energy and cleantech create jobs. This post primarily concerns the morality of continuing to structure economies around climate destroying carbon emissions.

The consensus of the world’s scientists and a plurality of its policy makers is that fossil fuel dependency will extract a terrible and deadly price from future generations. Yet we are told that questions of ecology must always defer to classical economic ones. Very little mainstream thinking addresses why and how this doctrine is prerequisite for thriving labor markets.

But this doctrine in question has nonetheless been extremely influential.

Historical precedents do exist for civilizations abandoning a specific market and writing down large sums of perceived value based on moral reasoning. At the end of the Civil War the value of slaves held in the U.S. was estimated to be approximately $2 Billion USD, approximately $70 Billion in 2011 USD. Yet, at the end of the Civil War this value was entirely written down. Abolition of chattel slavery meant morality superseding profit. Recently publicized results from BEST confirm earth is warming rapidly.  Adding to the scientific consensus that global warming is man made, should we not apply similar moral reasoning to our fossil fueled society?

Clearly then continued extraction and consumption of fossil fuels has a definite moral component. Oil, coal, and natural gas might be there and possess an imputed market value, but does this constitute a prima facie argument for their extraction or rationalize the pollution created? An instructive case in point is the XL pipeline. We are told that building it will help free the US from dependency on foreign oil. Leaving aside for a second this dubious assumption, let us look at Nebraska. Many of XL’s would-be owners sell on the open international market and no covenants exist for any portion of the crude to be reserved for the U.S and Canada, though some Canadian officials are threatening to selectively provide the oil to other nations should the U.S. decline to participate.

The proposed XL Pipeline would cut over and across the Ogallala Aquifer. Ogallala emanates from Nebraska to roughly 27% of the irrigated land in the United States according to the United States Geological Survey. It yields about 30% of the nation’s ground water used for irrigation. The aquifer system provides drinking water to 82% of the people who live within its boundary. Regardless of how small the chances for a major spill might be in the estimation of industry funded analyses, after a year of operation, the project’s forerunner, Keystone 1, had leaked 13 times and was shut down temporarily by regulators. But is any chance at all too much of a risk? This is, as financial engineers might say, an awful lot of Value at Risk (VAR). And in a financial context, while current models for VAR don’t value systems like aquifers, isn’t it time they do so?

Do questions like this point to a critical qualitative difference between dirty energy and clean energy jobs? In the New York Times recently:

“But the energy industries eat one another’s lunch. Jay Apt, executive director of the Energy Industry Center at Carnegie Mellon University in Pittsburgh, said it was possible to calculate the amount of electricity produced at a coal plant per person who works there…Build enough solar plants and some coal plants will shut down; that would amount to firing Peter to hire Paul.”

This is specious logic. A fossil fuel energy job definitionally is not a clean energy job. The price the public pays in polluted water and a toxified atmosphere for dirty energy jobs is a clear and present danger and all the more so for future generations. As much so as our public debt since the earth is the source of all money, and all the riches in the world cannot replace a poisoned planet.

Clearly there are some uses for petroleum for which no immediate replacement options exist yet: medicine and agriculture. Medicine needs large amounts of petroleum for plastic and agriculture for fertilizers. We must preserve carbon resources for our health and food supply and work to deploy renewable energy resource for our civilization’s energy needs. This must happen in concert with adopting new policies for the storage and transfer of value. We need to plan increasingly for energy consumption in terms of “negawatts” — the unit of energy that can be saved and not used. Not only are most conservati­on solutions cheaper to implement than new power plants or exploiting new and farther-to­-get-to oil fields, they will leave healthy climates and sustainable economies for future generations.

Humans Impact the Ocean. Courtesy of NOAA

What will the price for future generations be for our failure to realize rapid and concentrated deployment of renewable energy infrastructure? The rest of the world has figured this out, making the US less efficient than other nations with each passing year. Many strong and mature technologies for the US to utilize exist. Yet massive subsidies doled out to oil, gas, coal and nuclear power suppliers further drive degradation of our climate systems.

The more America makes fossil fuels artificial­ly cheap the greater the burden we create for future generations. This is because in the US nearly all “external costs” are associated with energy usage side effects (pollution­, risk of a meltdown, massive military costs) and are borne by the taxpayer. The suppliers as well as the direct purchasers­ of energy are allowed to pretend that pollution has no societal cost, i.e impact on their neighbors irrespective of participation in the market. Naturally then they strongly resist conservati­on efforts. Energy producers like any marketer will resist attempts to reduce demand for their products and to hold them in abeyance since such efforts impact both the amount sold as well as the price. Just as the Confederacy did with respect to the holding slaves. It’s worth noting that by the outbreak of the US Civil War many nations had abolished slavery yet the Confederacy continued to promote slavery markets.

The legacy of the W.P.A. further points to the moral imperatives for a nationwide effort to deploy clean energy for the security and sustainability of future generations as well as to address the unemployment crisis in the US. According to historian Nick Taylor the W.P.A.:

“….employed 8.5 million people in its eight years, and there were always eligible people on the waiting list for jobs….brought America’s infrastructure into the twentieth century, adding 650,000 miles of roads and 78,000 bridges to the country’s transportation network. It improved the nation’s health with water and sewer treatment systems and new hospitals that were among 125,000 new WPA-built civilian and military buildings. “

Recent studies such as BEST reinforce the position of US National Academy of Sciences that anthropogenic global warming should be “regarded as settled facts”. Our economic competitors like Germany and China regularly surpass the U.S in renewable energy investments. The argument that oil, gas, and coal possess market value is not a sufficient condition to pollute air, poison aquifers, and degrade our climate. History also shows that often writing down one asset allows for new benefits to emerge. As chemists, engineers, and farmers focus more tightly on renewable and clean technology innovation humanity can progress to more rational economic and ecologic modes for utilizing our shared resources. By some estimates, the EU gets about 60% more GDP out of its total energy use than America. As a moral imperative we owe it to future generations to catch-up.

We do indeed have a great deal of value at risk when we threaten the capacity of aquifers and oceans to produce food and of forests to clean air. Now then is the time to apply much greater moral and ethical scrutiny to fossil fuel extraction even if it indicates that some profit must be sacrificed and entire asset classes written down for a certain gilded few.

The Context and Implications of American International Group vs. Bank of America
by Leland Lehrman

AIG vs Bank of America

Like Godzilla and King Kong in the Japanese movies, the lawsuit between AIG and Bank of America appears set in a kind of apocalyptic timeframe with cliffhanger debt ceiling negotiations happening during record heat waves, climate disruption and collapsing stock markets. Top corporate leaders, socially close and invested in the same system, nevertheless fight over the bones of a resource constrained “economy.”

Tyler Durden, the pseudonymous editor of the hotly commented and rebellious financial blog zerohedge.com called the AIG lawsuit against Bank of America “ironic.” The fight club anti-establishment trader points out that “it is AIG which takes down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America.” As gory as the details are, they are less important than the larger themes.

The Phoenix, “penciled” in by the Economist for 2018 is slated to rise from the ashes of other currencies. Following the crash of 1987, the anonymous editors in London wrote

“Thirty years from now, Americans, Japanese, Europeans, and people in many other rich countries, and some relatively poor ones will probably be paying for their shopping with the same currency. Prices will be quoted not in dollars, yen or D-marks but in, let’s say, the phoenix. The phoenix will be favoured by companies and shoppers because it will be more convenient than today’s national currencies, which by then will seem a quaint cause of much

Economist Calls for Global Currency, 1988

disruption to economic life in the last twentieth century…Something will be, almost certainly in the course of 1988. And not long after the next currency agreement is signed it will go the same way as the last one. It will collapse. Governments are far from ready to subordinate their domestic objectives to the goal of international stability. Several more big exchange-rate upsets, a few more stockmarket crashes and probably a slump or two will be needed before politicians are willing to face squarely up to that choice. This points to a muddled sequence of emergency followed by a patch-up followed by emergency, stretching out far beyond 2018 – except for two things. As time passes, the damage caused by currency instability is gradually going to mount; and the very tends that will make it mount are making the utopia of monetary union feasible.”

There are other time-tested ways to handle currency instability using fixed exchange rates and asset backing for example. Were these “quaint” tools of Bretton Woods and earlier monetary regimes discarded in favor of inherently unstable hedging instruments known as derivatives because a period of systemic instability was useful to provide the appearance of the necessity of centralized global governance and currency?

Only a truly sovereign people can repudiate a debt yoke deceptively laid on its shoulders by a predatory financial class. Michael Lewis’ book Liar’s Poker offers example after example of the shark-like demeanor of bond traders and financial captains, endlessly feeding off pension funds around the world so arrogantly for so long that the eventual backlash they encounter is considered uppity.

So where can that sovereign people be found today? Increasingly in the street.

The Arab Spring, paralleled on May 25th by the rise of the European acampada culture in Spain, richly updates the flavor and genetic code of human evolution. Rather than a function of arms, evolution is now a function of the courage to assemble and live together physically and peacefully long enough to develop new, more representative social and governance forms. “Build a new model that makes the existing model obsolete,” as Buckminster Fuller once said. Manuel Castells beautifully illustrated the good news from Spain in a thought piece for Adbusters’ most recent issue, wherein he described one new model from a few angles: “Everything is worked out through functional theme-based autonomous multiple commissions, coordinated by an intercommission whose members rotated…What is transformative is the process more than the product.”

Ignoring youth is no longer an option

Those who have not been reading Adbusters or its constellation of authors may not be aware that the intellectual tradition of evolution, liberation and its political philosophy are alive and well. Even if not well enough informed of the historic manipulation of the revolutionary form by those it opposes, the modern evolution contains seeds of joy, primarily derived from its focus on biology, physical community, cooperation, and ecology. My heart soars as I read the words of Saul Newman on the latest iteration of the socio-political sphere:

“Democracy today consists in the invention or reinvention of spaces, movements, ways of life, economic exchanges and political practices that resist the imprint of the state and which foster relations of equal liberty. The struggles that take place today against capitalism and the state are democratic struggles. At the same time, however, we might sound a certain note of dissatisfaction with the term “democracy.” We can echo Bakunin, who finds the term democracy “not sufficient.” As Derrida himself said of democracy: “[A]s a term it’s not sacred. I can some day or other, say, ‘No, it’s not the right term. The situation allows or demands that we use another term …’” The situation is changing, and the new forms of autonomous politics that are currently emerging demand the use of another term: anarchism.”

There is a range of human political organization, from the indigenous, no-contact tribes to the power elite in their underground bunkers. I see a balance point in the networked ecovillage. Although the evolutionary discourse is sometimes scarred by the nihilistic intellectualism and desperate madness of the urban prisoner, there is a broader coalition here. Indigenous people, campesinos, environmentalists, libertarians, farmers and independent businesspeople are now coming to winnow the past together, separating that which we will take into our future, and that we will leave behind. This same process is at work in the well-known cooperation between liberal Representative and Presidential candidate Dennis Kucinich and his libertarian counterpart Ron Paul. Kucinich’s office once acknowledged to Tina Richards, campaign manager for Adam Kokesh in 2008 that Kucinich and Paul work more closely with each other than with those in their own party. Stitching together the legitimate philosophical, humanistic, and ecological impulses of both right and left will produce a populist coalition that finally overwhelms the influence of money, especially as the influence of money decays along with its value.

The importance of the Arab Spring flies far beyond the national, racial, and religious issues of its particular geographic location. The style of the modern revolution, invented by Gandhi and popularized by Martin Luther King and the student movements of the Sixties, has now penetrated all the way to Tel Aviv, where a record 250,000 people camped on Rothschild Boulevard earlier this month to demand social justice, fair access to housing and regime change. Look at the video. These are not just peace rallies, but permanent gatherings to address systemic issues widely appreciated by a broad and diverse cross section of humanity. And they are coming to a city near you. Actions in September in New York and October in Washington, DC are brewing. These US events, as much as they have in common with those of our recent and distant past, will all be of the species Tunis – Egyptus Tahriri.

#occupywallstreet

And thus we come to the most important question of all. As Kalle Lasn puts it, what is our one demand? Let us not be bound by the soundbite and twitter feed. Our power to do good derives from our ability to slow down, and make time for the important things in life. Let us take the time to think on this question – ruminating upon it – as even the best answers are usually fleeting and temporary by contrast to the eternal questions.

Before imagining an answer today, let me describe my assumptions. If we are to accept, as I believe we can, that there is a place for the rational, technological civilization with its comforts and culture in brotherhood alongside the indigenous way, we must examine it carefully to determine the heredity of its inherent flaws, so manifestly apparent today. If I were to name the flaw in this civilization’s design from which so many other ills derive, I might point to the money issuance methodology by which collective decision-making is accomplished. No other intellectual tradition has served so effectively to ensnare more and more of the Earth in the compounding growth of its “interest.”

But interest in what?

The inherent mathematical impossibility of long term compound growth in a physical world was revealed by silverback asset manager Jeremy Grantham in his April 2011 newsletter:

Jeremy Grantham: Not exactly a radical

“Failure to Appreciate the Impossibility of Sustained Compound Growth:

I briefly referred to our lack of numeracy as a species, and I would like to look at one aspect of this in greater detail: our inability to understand and internalize the effects of compound growth. This incapacity has played a large role in our willingness to ignore the effects of our compounding growth in demand on limited resources. Four years ago I was talking to a group of super quants, mostly PhDs in mathematics, about finance and the environment. I used the growth rate of the global economy back then – 4.5% for two years, back to back – and I argued that it was the growth rate to which we now aspired. To point to the ludicrous unsustainability of this compound growth I suggested that we imagine the Ancient Egyptians (an example I had offered in my July 2008 Letter) whose gods, pharaohs, language, and general culture lasted for well over 3,000 years. Starting with only a cubic meter of physical possessions (to make calculations easy), I asked how much physical wealth they would have had 3,000 years later at 4.5% compounded growth. Now, these were trained mathematicians, so I teased them: “Come on, make a guess. Internalize the general idea. You know it’s a very big number.” And the answers came back: “Miles deep around the planet,” “No, it’s much bigger than that, from here to the moon.” Big quantities to be sure, but no one came close. In fact, not one of these potential experts came within one billionth of 1% of the actual number, which is approximately 1057, a number so vast that it could not be squeezed into a billion of our Solar Systems.”

Juxtaposing the logical impossibility of compound growth to the unfazed obsession with it by almost the entirety of the financial, business and political class reveals that the primary decision-making capacity of the originators of currency is faulty at best.

Money, like mathematics and music, is largely based on abstractions and assumptions, some of which bother to harmonize with Nature, some of which do not. Like a bad organist in a crumbling church playing the discordant music of the malcontent, today’s arbiters of issuance have succeeded even in raising doubt about the capacity of the global mind to deviate from an increasingly disastrous course, and thus have thrown doubt upon the value of mind itself.

Solar Rooftiles on Saint Silas Church, Central London

Abstraction falls into an even larger and older category: the tool. Some tools are associated more with creation, some with destruction. Can we say with certainty that money is a tool more like a spade than a sword? After years of reflection on the subject, I cannot say for certain. But if we can answer this fairly yes, then shall we not simply commission a new composer and organist? Perhaps we might rebuild the church and its garden, a LEED certified organic CSA, with solar panels and a biomass combined heat and power unit to keep it warm and well-lit for the needy citizens we welcome to sanctuary during the stormy months ahead – as Godzilla and King Kong fight over the bones of the “economy.”