Regulation is the exercise of power

Comment at TRNN:

Regulation is a tool and exercise of power. There will always be winners and losers whenever something is regulated... so regulation tends to further empower the already powerful. Much of regulation is related to control of information - this video is about information pertaining to drug safety. Safety regulations also involve information in that public knowledge (information) would be a source of public pressure to correct violations or improved consumer confidence in a service or product. To resolve the constant calls for regulation & deregulation (there's no difference if government is involved), transparency gives power to individuals (worker & consumers choose their employers & consumption with full knowledge).  

BTW, regulation & deregulation is not bad in itself. It's bad because they concentrate power and power is the root of much evil.

Similar comment at Truthout:

Regulation are tools of the powerful. In the rare occasions the larger public has more power, they are written to benefit the public. Unfortunately, more often than not, the rich have more power and they both rewrite regulation *and* change the rules of enforcement to benefit themselves. A major tactic is secrecy and control of information, both enemies of democracy. Transparency and informed choice gives power to the voter/buyer, not the candidate/seller.

Energy is labor

Controlling/containing climate change is all about energy; all major greenhouse gasses are products of burning fossil fuels. Because economic activity is so dependent on fossil fuels, it has been claimed to keep the planet habitable, we need to shrink the economy. Whether this is true or not depends on the definition of economic activity...

Energy is a form of labor (or labor is a form of energy). Automation + energy = human labor. Easy examples are household appliances: vacuum + electricity = person sweeping with broom; automobile + fuel = human walking. So if energy becomes inaccessible due to climate issues, automation (or other powered machinery) is less available. For producers, the choice is to produce less (less energy) or produce the same or more by employing human labor. Although absolute productivity per worker drops, more people are employed which means more people have money to spend. in other words, economic productivity declines in the face of more economic trade - is that a growth or decline of economic activity?

Regardless, the way we currently consume fossil fuels is unsustainable. It's bad for the climate; it damages the environment when extracted, transported, and consumed.

Unifying Resistance

A comment I posted at Truthout. It pulls together several themes I've written about here:

"Trump is upping his game, and we, as resisters, aren't ready." 

Yes. It's also time to be proactive as opposed to reactive. But we need to understand the reflex to react and how to step back and see the forest to respond proactively. It's important to understand how politics divides people in both obvious and subtle ways. DJT is a practitioner of confrontational divisiveness; he outright declares his rejection of immigrants, Mexicans, unattractive women, prisoners of war, disabled people, etc. Divide and conquer can also be achieved by more subtle tactics, such as when Republicans and Democrats specifically void the needs of the poor by leaving them out of the debate (or DJT spotlighting the educated with his 'I love the poorly educated').  

The modus operandi of the body politic is to act on the interests of the elite at the expense of the larger population by dividing the larger group. Successful opposition would require some degree of unified resistance which is not the case with single issue movements. I would suggest single issue movements make their case under the umbrella of a larger 'meta' theme for the benefit of the larger overall. For instance, demanding that all policy be based on objective evidence would mean the numbers of gun injuries and deaths factors into gun policy and definitions of corporate personhood would correct for the differential influence such policy would confer on owners. Another useful theme would be to define economies as 'production, consumption and exchange of capital for the sustained wellbeing of humanity'. 'Sustained' would entail policy makers incorporate a long view of policy outcomes - think climate change; 'wellbeing' would require some degree of universal healthcare; and the 'economics' of warfare would be completely invalidated. A final theme would be maximize information transparency. The only way a small group (elites) can concentrate power to any extent is through the control of information. They use propaganda (selective/deceptive use of information) to create divides in the larger population and amplify infighting. Information transparency inoculates against propaganda.  

The resistance movement needs to recognize that although Trump is personally repugnant and vulgar, he is only a figurehead. The real adversaries in the long fight are the power elites.

No Principles of Economics?

The latest episode of Economic Update, Where Economic Theories Clash, strongly implies something I feared regarding the field of Economics. In it, Richard Wolff called Neo-classical economics, Keynesian economics and Marxian economics 'theories' of economics which implies they have undergone some form of validation or testing (scientific theories are vigorously tested before they are called 'theories'). But in real economies, each of these 'theories' has failed in one permutation or other. This suggests that Economics has no unifying principles. [To use the physical sciences as an example (again): the Theory of Evolution is a unifying principle in biology - it connects all living organisms and justifies the study of model organisms to better understand life; Atomic Theory is a unifying principle of chemistry - it predicts the behavior of all matter.] An example of a possible unifying economic principle is the presumption that functional economies must yield profit; this would have strong implications for capitalism.

This is particularly troubling when it comes to policy. All public policy is economic policy and it is argued and made on the basis of Economic theory. If Economic theory is as poorly developed as implied above, then for all intents and purposes, Economic theory is ideology without basis in empirical principle. As it stands now, the science of climate change has very strong physical evidence backing it and thus should drive energy policy. In its stead, we have nonsense 'economic' arguments that the cost of protecting the biosphere is 'too expensive'. Policy makers are balancing the future of humanity against the profiteering of capitalists at our ignorance. If science can detangle systems as complex as climate to predicted global climate change, it should be able to apply similar methods to answer the question of how to best structure economies for the sake of mankind. Economies should serve humanity not the other way around.

Carbon free renewable energy…revisited...

The Intergovernmental Panel on Climate Change (IPCC) now says we must actively remove carbon from the atmosphere to mitigate the full climate effects of the carbon we've already put out. In other words, there's enough carbon in the air now to warm the planet from 2.5 to 8 degrees Fahrenheit. To not exceed those temperatures, we must have a net carbon emission of zero. To mitigate the damage of those temperatures, we must pull carbon out of the air.

I had previously suggested that offshore energy collectors (any combination of solar/ wind/ wave collectors) could generate hydrogen by electrolysis from sea water. But Elon Musk has said hydrogen is a terrible and inefficient way to store energy. Taking him at his word (knowing very little about the topic), this means we need a better storage mechanism for our putative offshore energy collectors... and it happens that the US Navy has developed a way to synthesize hydrocarbons from carbon in sea water. This means it might be possible to convert the energy collected by floating ocean based energy collectors into hydrocarbon fuels for use on land. Because the ocean is such an efficient carbon sink, this would be a very good indirect method to extract carbon from the atmosphere.

To be clear: synthetic hydrocarbon fuels are net neutral in terms of atmospheric carbon because they release carbon back into the air when used. To get a net negative atmospheric carbon reduction, carbon needs to be sequestered in biomass (grow lots of vegetation in native ecosystems).

Economies are fabricated ecosystems

Recent events have brought the common issues of environmental preservation and economics to the fore: the release of Naomi Klein’s new book, This Changes Everything (which I have not read); The People’s Climate March, Flood Wall Street and the U.N. climate summit. To take advantage of the spotlight and keep it focused on these issues, this is an introduction the link between the economy and the environment and why a complete reworking of the economy is necessary for a sustainable future.

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The dictionary defines an economy as ‘the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services’. Wealth and resources covers everything which can be priced. This includes everything that can be purchased with money: houses, buildings, land, personal property, etc. and every service a person can be paid to perform. So the economy is the manufactured environment we live in. Seeing as human activity builds towns, cities, suburbs, roads, farms, fields and provides services and experiences like legal advice or wilderness adventures, there are no places within human boundaries which can be outside of its economy.

Then there’s money; it’s a medium of exchange - meaning what? People work for money so it is, effectively, a means to store labor so it can be later traded for other people’s labor (in services or products). So a shortcut to measure economic productivity is to look at the movement of money. [For this discussion, money equals labor which equals all capital goods and services.]

Economics is a social science. Social sciences study ‘society and the relationships among individuals within a society’. There are primarily two classes of economic relationships (a relationship which involves an exchange of labor) - producer and consumer. Of the two, consumer transactions tend to be transient so the more significant economic relationship is that of producer, or the relationships among individuals we work with.


Part 1: Economics as social science

So how do economic relationships drive and sustain the flow of capital for a functional economy? The short answer: Money in economies is like water in land based ecosystems (Figure 1). In other words, the money economy of people is like the water economy of ecosystems.

There are several currencies in the economy of ecosystems including carbon, nitrogen, energy and water. Of these, water is most comprehensively similar to money in that it is fungible (dew water, rain water and snow melt are treated the same by plants just like fruit flies don’t distinguish between water from an apple or a grape) and the water cycle is a part of everyone’s normal experience.

Water enters the biota of an ecosystem when rainfall is taken up by soil microbes (which fix nutrients) and plants. The plants absorb water and other nutrients from the soil to make more plants (by growth and reproduction) (Figure 1A). The water in plants is taken up by herbivores when they eat and used to grow more herbivores (growth and reproduction). The water in herbivores is taken in by carnivores when they prey on herbivores and used to grow more carnivores and this cycle repeats up the food chain to the apex predators.

Likewise, in economies, supervisors ‘prey’ on workers by claiming the products they make (Figure 1B). And just as the primary producers of a food chain supports the entire food chain, workers are the primary generator of capital for businesses.

But in an ecosystem, water is not lost solely through predation. It is also lost to the atmosphere through respiration; the biochemical reactions necessary for life. The water vapor in the atmosphere from organic respiration and geophysical evaporation then coalesces into clouds which rain water down to waiting vegetation, repeating the cycle of water through the food chain (Figure 1A). Each rainfall is an opportunity for the food chain to capture and retain water to support their growth so ecosystems have evolved to retain and promote the local cycling of water. The pattern of regular circulation of water through the ecosystem determines its ultimate productivity; low-rainfall deserts are not very productive, mid-rainfall forests are moderately productive and high-rainfall biomes are very productive capable of generating enormous biomass.

In contrast to natural ecosystems where rain precedes production, in businesses, wages succeed production. Unlike predators which do not devour the total productive output of prey, in a business relationship, the total output of workers is claimed by the higher ups. This output is converted into money in the marketplace and a fraction of it is returned to workers as income. Workers ‘respire’ or consume their income by spending it in the marketplace or save it for later consumption. And similar to the condensation of water into clouds, monies spent at the marketplace is concentrated by corporations and banking institutions to be distributed as wages, taxes or other forms of dividends. (In keeping with the common economic assertion that market forces are beyond the ken and control of the business community, this metaphor equates the marketplace with the atmosphere which is subject to a combination of predictable and unpredictable geological and physical forces.) And just like water circulation in ecosystems, consumer spending generates the capital movement essential for a robust and functioning economy.

Ecosystems in different biomes are variable resistant to environmental perturbation. Of these, semi-arid ecosystems are particularly fragile. But overpopulation and trade pressure have forced many communities to over utilize these desertification susceptible biomes. Deforestation (harvesting of wood for fuel or clear-cutting for other purposes), over-grazing (more animals than a range can support due to high demand for meat) and conventional farming effectively strip away native vegetation, the foundation of the food chain. The loss of water vapor contributed by an intact food chain in a semi-arid environment reduces overall local rainfall. In the absence of vegetation, soil is readily lost to wind erosion. Without viable soil, the land can neither be farmed nor can native plants regenerate their prior presence. The result is that moderately productive ecosystems are degraded to marginally productive ones with no economic value. The Dust Bowl period of the 1930s in the U.S. was an early indicator of this phenomenon.

There have been forces acting on the American economy in the past three decades to similar effect (Figure 2). With declining union membership, workers have little bargaining power over wages. In addition, policies which prioritize profit over people engender corporations to maximize ‘return’ from workers in productivity to maximize business income which is then apportion to CEO/executive pay and shareholder dividends at the expense of worker wages. Workers have adapted as best they could by committing to two income families, refinancing their homes, delayed saving for or eliminating higher education and/or retirement and multiple jobs when possible. Despite these efforts, worker incomes have declined to the point where their lack of consumption has reduced monies entering the marketplace, thereby reducing total capital flow. On the short term, businesses lose sales opportunities and market shares; the long term cost to workers is food and housing security, poor health (due to unaffordable healthcare, poor diet and stress), lack of opportunity to advance their careers (high education costs), and lack of retirement security (no savings).

In the same period, the consumption by top earners has not significantly changed so increasing the income of this class does not increase the rate or volume of capital flow in the marketplace. Instead, the monies they have siphoned off is sequestered offshore or reinvested in corporations, effectively creating a financial whirlpool - rich in hustle and bustle but poor in productivity (consistent with recent reports of economic growth absent increase in most household incomes -see here and here).

To date, these trends have not abated; if anything, they have intensified and shifted to target the wages of higher wage tier employees. In the private sector, profit taking has normalized conspiracies amongst prominent technology firms to depress wages (see here and here) and caused insurers to undermine the practice of medicine by requiring pre-approval for medical procedures and tests, often in opposition to physicians’ professional judgment. Privatization of public sector functions (military support operations, prisons, charter schools and attempts to privatize Social Security, for example) offer more opportunities to retrofit non-profit organizations into for-profit capitalist business concerns. As per capitalism, the goal is to identify a large pool of spending, public or private; use all available financial and political machinations to bring it under private contract by corporate capitalists. So long as this business model generates a good return on investment, capitalism demands followers.


Part 2: Economy beyond social science

Beyond the social science of economics, materials economies presume the unlimited availability of raw materials… and thereby build in the seeds of unsustainability. Modern economies are driven by the non-stop consumption of disposable goods; a model which circulates human labor but does not cycle materials. Economics is a social science because it assumes the environment can and will provide all the materials cycling services necessary to sustain an economy (Figure 3A). On this premise, economies are designed to generate a positive return at each processing step needed to transform raw materials extracted from the environment to finished product. The do this by profiting off the labor added at each step. Environmental damage is not factored in as a cost of doing business because  environmental damage has no financial cost. So it is a good business practice to extract maximum investment return from the environment without regard to consequences.

This is where materials economics comes into conflict with ecology and geology. It is clear from part 1 that ecosystems cycle. And though not as obvious, there are also cycles in planetary geology (examples include formation/erosion of mountains and fossilization - think fossil fuels). These natural cycles are how raw materials are replenished. But just as over-grazing can irreversibly damage fragile ecosystems, materials economies over ‘harvest’ the bounty of the environment. And as harmful as rapid resource depletion can be, given sufficient time, ecosystems (and sometimes geography) can recover. But in addition to over-drawing resources, materials economies discharge vast amounts of toxins which devastate ecosystems beyond recovery. Just consider, aquifers all over the world are being depleted faster than they can recharge to irrigate crops in conventional agriculture. Then the burning of fossil fuels depletes the global supply of fossil fuels and pollutes the atmosphere with excess carbon dioxide. Carbon dioxide is particularly damaging because it traps heat and both heat and high carbon dioxide levels inhibit plant growth which is an important component of the geological hydrocarbon cycle, consuming crop and seed, resource and generator. This is happening now (Figure 3B) and the consequences of not changing this trajectory is the loss of an environment capable of sustaining a functional economy (Figure 3C). But a devastated environment is not inevitable; it may still be possible to alter the course of the economy and develop a sustainable future (Figure 3D).

Part 3: Sustainability

Economies, like ecosystems, exist to promote the growth and well-being of its members. This is why workers engage in economic relationships. But today’s economies selective benefit top earners at the expense of other workers and deplete environmental resources at higher than replacement rates (Figure 3B). If this trend continues, either workers will revolt and take what they need by force - even one-percenters understand this - or the economy eventually ceases to operate due to environmental failure (take your pick: climate change, industrial pollution, dropping water tables, habitat loss…). At that point, science deniers be damned, natural selection will cull populations without regard to humanity (Figure 3C). And though the natural environment is, in physical terms, substantively larger than the economy, the solution must be economic because that is the source of the problem.

Prominent economists have suggested policies or reforms to address the issues of income inequality, low/under employment and unstable financial institutions. Thomas Piketty, for one, has suggested income redistribution through selective taxation and others have called for the return of Glass-Steagall and/or promote union membership and/or enforce anti-trust laws… These proposals would all have a positive effect on the economy in so far as promoting the well-being of workers and consumers but they offer what is essentially a patch over the inherent flaws of capitalism, not a long term solution. For that matter, no economic system is free of income inequality. Just consider how economies work (Figure 1B). The business pyramid is a reflection of the variation inherent in any population. Individuals have different skills, interests, motivations, opportunities; on these alone, there is stratification. Capitalism enforces stratification and differentially distributes wages based on it thereby instituting income inequality. Communism seemingly discounts inherent variation yet still operates manufacturing concerns with more workers than managers. For social stability, we need an economy which encompasses the social science aspect of economics; for sustainability, we need an economy that interacts with the environment commensally and not antagonistically as current economies do.

The solution is not likely to be found in a single monolithic economic system; no major modern economy holds pure to a particular economic ideology. The place to look is the source metaphor of economies, ecosystems, specifically, the food web of ecosystems. Figure 1A depicts the food chain as a linear flow of calories along a defined series of trophic levels. This is not completely accurate; in reality, food webs are complex networks of interwoven inter- and intra-species interactions developed over millions or billions of years of evolution. These networks feedback onto themselves and often have redundant functionalities which keep the ecosystem in balance (Figure 4A). They include predator-prey (capitalism-like), symbiotic (socialism-like), parasitic, altruistic and mutualistic interactions among many others. Translated into economies, it would mean many small independent business concerns with various organizational structures resembling interactions between organisms (Figure 4B). A combination of competition and regulation would presumably prevent businesses from getting too large. (There are two reasons a business can be ‘too large’: in the sense that economies of scale are bad for the environment. Mountaintop removal or deepwater oil drilling need enormous capital input to initiate. Small business do not have such resources. The other being deepening inequality; larger businesses have more workers to produce capital which concentrates towards the peak of the pyramid.) And being small confers great flexibility on businesses to collaborate and form mutually beneficial relationships. The goal is a ‘living’ economy capable of evolving regulatory and other mechanisms to meet changing economic conditions.

Cultures have yet to design such an economy, so it would be worthwhile to consider how to evolve a sustainable economy. So a challenge to evolutionary biologists and economists: what constraints would permit the evolution of a sustainable economy geared towards the well-being of its members? (One of mine would be to ban profiting from weapons of war; they are necessary for defensive purposes but selling at cost eliminates incentives for producers to lobby for war. On the opposite end of the spectrum, profiting from medical services/products is acceptable.)

It may yet be possible to avert the worse outcomes of our current trajectory but much work lies ahead if we want to achieve a sustainable future for humanity (Figure 4D).

Part 4: Closing comments

This essay is a bare bones introduction to parallels I see between natural ecosystems and economies. It is not a treatise on how to unwind the economy out of its current spiral. Numerous critiques can justifiably be made against using the ecohydrology cycle as a metaphor for the economy. For one, I have completely neglected the role of monetary policy in influencing the flow of capital. Fact is, I am not an economist; I do not have an understanding of monetary policy. But I do think this metaphor resonates with some basic economic truths that beautifully counters the meme ‘the one percent are the job creators’. (Compare figures 1B and 2 to see that consumption by workers increases job demand.)

And two final points. Economics is based on goods gaining value through addition of labor. When fast food chains threaten replace workers with iPads or Bill Gates posits a workerless software and robot driven future, what value is added to the products they hawk? Those without money can barter amongst themselves but what would a robot take in trade?

Lastly, the economic cycle depicted in Figure 1B has much broader implications than is described here. They can be used to model open economies where capital enters and exits the cycle through corporate institutions or closed economies where no external capital movement is possible. As open economies, the pyramid can be used to break down the spending priorities of individuals or households or time-to-task allocation of businesses of any size (micro-economics). It can be scaled up to local town, city or state economies; then there are national economies (macro-economics). And globally, the world economy is a closed economy where the world’s poorest form the base of the pyramid. (In case the discussion above was not clear, a quick reminder to business and political leader, stable structures require strong foundations so support the base for long term return.)

A final note for researchers: a good thought exercise would involve constructing larger economic pyramids as the sum of smaller pyramids… makes me wonder if computational ecohydrology models can predict economic trends. Can computational ecohydrology models be adapted for economic modeling?


Lots to think about...


Update: About the role of the war making/defense industry in an evolved economy... I'm beginning to think it should not be necessary to outright ban certain economic sectors or behaviors. The whole point of establishing a living economy is to evolve internal control mechanisms... perhaps to where there is no market for such products.

Update 2: More related thoughts - I will keep adding until I can them organized a coherent narrative structure and integrated into a new essay...

-More evidence of increasing imbalance in current economic system... here and here. Then there's the stress human population has on the ecosystem which threatens environmental collapse... here.

-I was wondering what factors determine optimal size, be it plant, animal, business or government. Don't get me wrong, I like living in a rich country with all its advantages and I am too selfish to give them away for the sake of equity... But if governments are examined as economic units which are responsible to both their workers, consumers and owners... is there a size at which all these goals are ideally balance?

-I just found an (informal?) organization of activists working on these issues... see here.


Update 3: Even when I update, I forget some of the points I want to cover :(...

 A small change with huge effects on the economy would be reform of intellectual property. Just consider how the value of drug companies would change if the length of patents were shortened or lengthened; what about the value of Disney if copyright rules were different? This may be a good target for legislative reform.

Not Carbon Tax, Extracted Materials Tax

With the upcoming People’s Climate March and the U.N. climate summit in New York City, more attention has been focused on the carbon tax in recent weeks. While the carbon tax addresses the most pressing environmental issue, climate change, there are many others including pollution of all sorts and land degradation. A number of instances of these stem directly from various extractive industries; think mountain top coal mining, drilling and transport of crude and refined oil products, hydraulic fracture mining of natural gas, mercury in gold mining and mining and refining other industrial minerals/metals. Some of these effects could be mitigated by switching to renewable energy and recycling. But current cost structure favors virgin extracted raw materials over renewable energy and recycled material. This is why expanding the carbon tax into an extracted materials tax would be a positive move. Considering that extractive industries consume immense amounts of energy, this would increase the cost of virgin materials and provide incentive for entrepreneurs to develop more efficient recycling capacity… renewable energy and material stream; reduction in landfill use; less extractive industry pollution… many positive outcomes for one tax.

How much extractive economic activity can the earth support?

Economic activity starts by extracting something from the environment…

To understand this conclusion, work backwards from any final consumer product, be it physical or intellectual: plastic toy <- molded from resin <- chemical transformation of petrochemicals <- drilled/extracted from environment; book <- printed on paper <- made from wood pulp <- from trees cut from environment; meal at a local restaurant <- made with ingredients from local supplier/distributor <- grown by farmers who extract their products directly (plants) or indirectly (animals) from their environment… this is true for all products in the economy.

So how much exists to be extracted and what happens when we reach the limits?

Carbon free renewable energy…

Float and tether energy collectors (any combination of solar/ wind/ wave collectors) onto offshore (and potentially out of sight) platforms: use the energy to generate hydrogen by electrolysis from sea water. The hydrogen gets stored in tanks on the platforms and harvesting would entail swapping empty tanks with charged tanks.