Category: Economics

Matters of money

The Northern Gateway pipeline

With the commencement of hearings, the political fight over the Enbridge Northern Gateway pipeline is now beginning in earnest. The proposed pipeline would carry bitumen from the oil sands to the Pacific coast for export. It would encourage the development of the oil sands and contribute to the fastest-growing category of emissions of greenhouse gas pollution in Canada. It would increase the total fraction of the world’s fossil fuels that will be burned, affecting how much climate change the world will experience. Having walked away from the Kyoto Protocol – and with no effective mechanism for curbing emissions in place – it is difficult to argue that Canada is doing its part to respond to this serious global problem.

In addition to the climate arguments, there is always some risk of a spill, either along the pipeline or with tankers off the B.C. coast. If what I read in John Vaillant‘s The Golden Spruce is at all accurate, the Hecate Strait is a particularly treacherous waterway. As anyone who has visited the coast of British Columbia knows, it’s also a beautiful and environmentally rich part of the world, both on land and in the sea. It would be a really awful place for another Deepwater Horizon-type disaster.

At present, the hearings on the pipeline are expected to last for 18 months. As we have seen from the Keystone XL pipeline, however, timetables are clearly subject to change as the debate progresses.

Where Macs come from

This week’s episode of This American Life is powerful and thought- provoking. It’s about manufacturing in China, the ten million person city of Shenzhen, and how most of our computers and phones and miscellaneous gadgets are made by hand by millions of workers working at least twelve hours a day.

Apple has been conducting its own investigations of labour practices among its suppliers and has been publishing annual reports about them since 2007.

—
Posted from my iPhone

[Update: 25 March 2012] This American Life discovered that the episode they broadcast on Apple factories contained a number of fabrications. They have retracted the episode and released another detailing what went wrong in their fact checking process: “We’ve discovered that one of our most popular episodes contained numerous fabrications. This week, we detail the errors in Mike Daisey’s story about visiting Foxconn, which makes iPads and other products for Apple in China. Marketplace’s China correspondent Rob Schmitz discovered the fabrications.”

Nuclear power and passive safety

One thing all the world’s nuclear reactors have in common is that – unless they are constantly cooled with large volumes of water – they will eventually explode. This is because even after nuclear fission has been stopped, the decay heat from the fuel rods is sufficient to melt them and prompt dangerous interactions between water and their zircaloy cladding.

It seems highly likely that many more nuclear reactors will be built around the world, prompted by factors including concern about climate change, worries about fossil fuel availability, and the enthusiasm of states for nuclear technology. Today’s reactor designs suffer from the risks mentioned above. I don’t know how feasible it would be to design reactors which are passively safe (and which will automatically enter a safe state, without human action, after a major accident), but it seems worth investigating seriously. It seems much more prudent to build machines that slow down and cool off when left alone, rather than those that heat up unstoppably until their liquified contents melt through the containment around them and poison the nearby environment.

Stratfor hacked

A few times before, I have mentioned the website Stratfor. They normally provide a very ‘realist‘ take on global politics. They have interesting sources of information and arguments, and I have found them to be worth reading.

Unfortunately, their entire database of past and present subscribers has been stolen by hackers and released online. If you have ever given them your credit card number, you should probably contact your credit card company immediately to cancel it and have a new card issued with an updated number.

It’s probably a good idea to change your credit card number every few years, regardless. The people at MasterCard said that website hacks like this happen all the time. So often, in fact, that they didn’t want to hear any details about it at all. There are probably a lot of websites that would not notify their users in the event of a breach like the one Stratfor has suffered.

As a side note, this hack demonstrates a couple of things about security. First, the more you hold yourself up as being an expert about security, the more alluring a target you risk making yourself for hackers driven by prestige. This is why the websites of people like the CIA are targeted so often (though such hacks probably aren’t indicative of significant security breaches). Second, there are reputational risks associated with having lax security, especially if you represent yourself as a security expert. I have no doubt that Stratfor’s business will suffer at least a bit because of this.

Space tourism is pointless and damaging

Henry Shue has written convincingly about the moral importance of the rich giving up luxuries for the sake of fighting climate change, before the poor are asked to give up necessities. As he explains it, even in an emergency you sell the jewelry before you sell the blankets.

The ultimate example of luxury emissions is probably private spaceflight, as described in Nature recently. All that fuel gets burned so that a few really rich people can get to a high altitude and gawk for a while before returning to Earth.

Surely, our climate policies should curb such behaviours.

Beacon op-ed on climate

Cheryl McNamara wrote a good op-ed on climate change for The Calgary Beacon. She does a good job of making the economic case for action:

Either lock into an insecure high-carbon system, or legislate a mechanism that sends a clear market signal to nourish an industry poised to surge, bring new life back to our ailing manufacturing sector, create an abundance of quality jobs, and create healthier communities.

Change is difficult. But not when it generates great benefits. By putting a price on carbon that increases annually and giving the proceeds back to citizens to stimulate the economy we can develop a sustainable society for our kids and grandkids. Isn’t that what true conservatism is all about?

Carbon pricing is a policy that we should have implemented decades ago to kick off a smooth transition to a low-carbon economy. The earlier we get started, the less chance that transition will cost, the less infrastructure we will need to scrap prematurely, and the lower the odds that the world will suffer from dangerous climate change.

McNamara is the leader of the Toronto chapter of the Citizens Climate Lobby. It’s a group that has sound strategies and seems to be making a difference through political advocacy, intelligent interaction with the media, and direct communication with politicians.

If you have some time to spare and a desire to be part of the solution on climate change, CCL is a good group to get involved with. They have introductory conference calls frequently.

Unproductive investments that harm the world

Since the 2008 credit crunch, the governments of the world have been obsessed with economic conditions: trying to find ways to increase growth, improve the stability of the financial system, and cut unemployment. All other societal projects have taken a back seat. Given reasonable concerns about the economic future of the world, it seems like common sense to say that governments and societies should be investing their wealth and effort into things that will yield a beneficial return in the future. Unfortunately, that does not seem to be the course Canada is following. We are making big investments in things that are bad for our own economic health, and even worse for the world at large.

Take the F-35 stealth fighter jets. They have no conceivable use. Canada is not going to war with any country that is capable of shooting down lesser jets, at least at any time in the foreseeable future. In the longer term, the jets still look useless, as it is increasingly clear that the age of manned combat aircraft is ending. Canada is spending tens of billions of dollars on weapons we do not need now, and which will probably be obsolete long before they go out of service. We should just skip this generation of killing machines, and perhaps invest later if some credible threat to Canadian security actually emerges.

The new crime bill is an even worse example of putting good money to counterproductive uses. There is no crime epidemic that requires a government response. There is no evidence that imprisoning more people will reduce crime below the already-low level where it is now. Indeed, the only things we can be sure about is that imprisoning people for longer will do more to wreck their chances of living a productive life, while harming their families and communities.

The oil sands may be the biggest example of Canada’s misplaced priorities. Look at the big picture. There are two possible futures for the world:

  • A world where we do nothing about climate change, and warming of well over 4˚C takes place
  • A world where we wake up and begin the process of aggressively phasing out fossil fuels

The first possibility is a suicide pact. We would probably be condemning the world to radically destabilizing climate change, with sea level rise of many metres, dramatic changes in precipitation patterns, and enormous human suffering as a consequence. In the second possibility, there is no place for an industry like the oil sands. Indeed, unconventional oil and gas production serves only to lengthen humanity’s dependence on fossil fuels. The smart investment is figuring out how to live on carbon-neutral sources of energy. Spending billions of dollars on an industry that will either be dismantled soon or will persist as a witness to a burning planet doesn’t make either economic or moral sense.

Even if Canada never wakes up and takes the obligation to address climate change seriously, it is quite possible that the rest of the world will do so. The people who say that oil sands extraction are inevitable are the same people who said that the Keystone XL pipeline was a sure thing. As people become aware of the dangers of climate change and the ethical imperatives that flow from them, they will be less and less inclined to invest in the suicidal fossil fuel industry, and less and less willing to buy its lethal products. The billions Canada is investing in fossil fuel infrastructure may end up rusting unused. Leaving the Kyoto Protocol is just one indication that Canada is out of step with the international community, and risks becoming an international pariah based on its selfish focus on fossil fuel profits.

There are so many things we could be spending money more usefully on. We could be investing in the skills and training of the Canadian workforce. That would be a sensible recognition of how global patterns of trade and production continue to change. We could be investing in sustainable infrastructure: buildings, transport links, power generation and storage facilities, and an agricultural system that can function without fossil fuels. We could be investing in assistance to those who are suffering from extreme poverty, both in Canada and around the world, as well as those who struggle with serious mental illnesses.

Canada can make smarter choices, not to mention choices that cause less needless harm. We just need to think a bit more about what sort of world we want for our children and examine whether our current priorities are aligned well with those goals.

Encouraging re-gifting

I don’t think it is appropriate that our society has a general stigma against ‘re-gifting‘: the practice of giving away something that was itself received as a gift.

In many ways, re-gifting is a rational response to the fundamental problem of gift-giving, namely that gift-givers are not necessarily able to pick things that gift-recipients will want. Very often, the cost to the giver will substantially exceed the benefit to the recipient. For example, you might get an inferior version of something you already own, and which nobody needs more than one of. There are also clothes that don’t fit or do not fit your style, books you will never read, foods you do not enjoy, and so on.

Allowing the recipient to give the gift to somebody who may like it more reduces the odds that it will sit unused and unappreciated in a corner or a closet somewhere.

I wonder if there is any concrete way in which the tolerance for re-gifting within society can be increased. Perhaps there should be a designated day, sometime after Christmas, on which people are encouraged to re-gift. In particular, they should be encouraged to give away anything that has little or no value to them, but which they know will be valued by somebody else.

For the record, as a utilitarian I encourage people to re-gift unwanted things that I have given to them at various times. I can’t promise that I won’t be a bit disappointed to learn that I have chosen something for you that has no value, but I will be glad at least that it is going to somebody who will have a use for it.

Boycott Canada over climate?

As Canada’s statement at the UNFCCC conference in Durban demonstrates, Canada’s political system is currently working for those groups that want Canadian greenhouse gas pollution to remain unlimited, ignoring the costs it imposes on other people around the world. Contrary to the slogan of market-based liberal environmentalism, the slogan of the current approach could be interpreted as: “Keep externalities external”.

Dealing with climate change requires a more productive attitude.

How, then, can Canada’s position be changed so as to be compatible with avoiding dangerous or catastrophic climate change? Right now, the political debate is being dominated by groups that see reducing greenhouse gas pollution as harmful to their business interests – particularly the oil and gas industry. If the rest of the world wants to put pressure on Canada to stop being such an environmental laggard, they may need to convince the rest of Canadian business that it doesn’t pay to be an environmental pariah.

What sort of boycott, I wonder, might be able to achieve that outcome? Something that would catch the attention of the majority of Canadian businesses that do not depend fundamentally on increasing pollution for their continued growth. General economic sanctions might be reasonable: increased tariffs on all Canadian exports, along with a reduced willingness to do trade deals, for as long as Canada refuses to do its fair share in dealing with climate change. After all, the flaws in Kyoto are not a license for inaction.

It would be very reasonable for states with domestic carbon pricing schemes to impose carbon tariffs on states like Canada that do not. As long as the tariff level for emissions embedded in imports is set at the same level as the domestic carbon price, such a policy would be compatible with World Trade Organization rules.

What do other people think?