The progress of humanity has been greatly enhanced by those who, after thoughtful analysis, expressed views that are contrary to popular thought. Persons like Voltaire, Galileo, Socrates, Nietzsche, and the father of both the American and French revolutions, the great Thomas Paine, whose "Rights of Man" and "Age of Reason" would make him the contrarian of all time in my book.

It is in the spirit of these polemicists that I create this blog. It is my intent to challenge popular suppositions. While it will become evident that I am generally a progressive liberal, hopefully I will have the courage to take opposing viewpoints to those of my own comrades when appropriate.

No comments will be deleted based solely on the political , social, economic or religious views you may have. In fact I encourage thoughtful discourse. I will however promptly remove any postings that contain overtly vulgar comments, racial slurs, hate speech of any kind, or multiple postings of "conspiracy theories". Though not required, please post links for references to the point you are trying to make, or at the least, give us an idea of where you found the information that supports your cause or claim.

Sunday, August 21, 2011

Trading on the Environment: A liberal argues against "cap & trade"

Well, by now it's fairly clear that Wall Street and its overpaid hucksters were the guilty party in the development and subsequent crash of the housing bubble. They, with government implied consent and minimal regulation or oversight, were able to create a myriad of slight of hand financial instruments that few could understand, sell them to banks and fund managers, and pocket huge fees in the process. All went well as long as the market was rising. But as was the case in the dotcom crash, ultimately the lack of value of the underlying asset comes back to haunt.

We allowed Wall Street be entrusted with our housing market and were burnt. Not only did we suffer direct losses to our pension plans and 401k's, we let the financial market shift the risk to taxpayers through government bailouts and loan guarantees. The failed housing market and its lack of recovery is the most likely culprit of our inability to solve the unemployment problem and pull ourselves out of recession. And the correlating drop in GDP growth and increasing evidence of stagflation only worsens our sovereign debt situation.

So now what? Not for us. In that regard the answer is painfully clear. We're in danger of seeing a "lost decade" the likes of which haven't been seen since the 1930's. But what's next for Wall Street?

How about carbon trading? Yes, the sacred cow of the liberal establishment. We have endeared ourselves to the notion proposed by figures like Al Gore that we can cut emissions of greenhouse gasses by essentially granting licenses to pollute, capping emission levels, and trading these new financial instruments called "carbon credits".

The custodians of Wall Street have been uncharacteristically quiet during the ongoing debate over "cap and trade". Carbon trading happens to meet many of the requirements for a highly profitable Wall Street model, and in some ways is even more attractive to traders than the aforementioned housing market. An asset of inherently subjective value, carbon credits would be a market of artificially created short supply, and by its very nature subject to market manipulation and government lobbies. Not unlike the housing and mortgage markets, few individual investors will understand the complexity of carbon markets or of the underlying asset, the definition of which will be contained in a maze of government regulations. Wall Street will waste no time in developing carbon "futures" trading and other exotic financial instrumentation. I'm thinking the speculators over at the NYMEX have probably already developed a sophisticated computer model to take advantage of the potential profits available to them in yet another fictitious market. Will any of us understand a "carbon default swap"?

Let me be clear to my liberal friends and associates. I am not a climate change denier. I concur that if our planet, or even our economy in the shorter term, is to survive there is an urgent requirement to reduce carbon emissions. I'll be the first to champion the idea that the costs to humanity associated with burning fossil fuels have not been accounted for by the free market. I just have trouble believing that "cap and trade" is the answer. Is this concept not playing right into the ideology of conservatives? Do we really want to monetize and marketize our environment, essentially selling it to the highest bidder? And do we turn our most precious commodity over to the same people who so nobly handled our housing market?

Sunday, August 7, 2011

Collective Denial: The Bane of Humanity

“Someone should have seen this coming.” A familiar refrain. Calamity and catastrophe initially engender fear, horror, and a sense of helplessness. We become all too cognizant of mans’ fragile existence on a small planet fraught with hazard and uncertainty. Initially, wether it’s a part of our genetic makeup to insure survival of the species or a moral propensity for human compassion, we come together in extraordinary displays of community to offer aid and comfort to the victims. But in the days, weeks and months that ensue, our initial response often turns into anger. The general sense is that the devastating event could have been avoided, that the response plans weren’t adequate, or that there was some sort of malfeasance, ineptitude or even fraud involved. Our unease cries for a scapegoat. We need someone to blame.

But in a large number of calamitous events, if blame is truly in order, we need only look at ourselves. In such cases there are normally a good number of experts who have in fact “seen it coming”. From climatological disasters like Katrina, droughts, tsunamis and floods, technological meltdowns like Fukushima and interruptions to the electrical grid, to breakdowns in financial markets and economies, the possibilities of disaster have been forewarned to us all.

Collective denial is a force more powerful than reason. It plays to our selfish egocentric sense of invincibility. Reason requires one to consider all information that may be available, even that which we find uncomfortable or displeasing. We all have the tendency to only accept information that reinforces a preconceived notion, one that falls in line with our own individual needs and desires. Therein lies the root of our inability to preempt or effectively deal with possible disasters.

We continue our love/hate relationship with science, maintaining an unrealistic faith that it will somehow save us from peril despite our own destructive behavior, while at the same time ignoring or dismissing its well defined warnings. Our on again, off again relationship with the stewards of education serves as a stark display of our need to learn only that which we find supportive of our current course and policies. Today’s heroes become tomorrow’s villains and vise versa. We only approve of solutions to complex problems that require no personal sacrifice or infringement on our lifestyle, much preferring a miracle in the eleventh hour to well-thought progress. What’s more, living in this culture of scarcity we have come to accept that there are the unfortunates who will not survive, a defacto admission on our part that we DO live on a planet with limited resource. This point is all too glaring in the face of the estimated 24,000 children who will not survive the famine in Somalia. It’s just much easier to change the channel than to face the predictions of scientists that there aren’t enough resources to go around and that almost half of human beings don’t have the basic necessities. We exonerate ourselves of responsibility for their plight by vilifying their governments, or worse yet, by laying the blame on the deity by saying that it must be “gods’ will”. We refuse to accept that the “haves” play any role in the condition of the “have nots”, nor have we seemed to draw the connection between most wars and poverty. The war on poverty has, for most of the world, been a dismal failure by any measure and the now global system of capital economies has proven it has no moral compass. While many moral individuals give charitably and deserve thanks, the much more difficult task of effecting long term positive change is remorsefully lacking.

Our globe faces a good number of crises. In the short run many will effect our way of life in fairly substantial ways, and in the longer term perhaps even our survival. But there is hope for us all if we can get past our denial and use reason as a basis for our choices rather than self serving ideas that only forestall the inevitable. A realization that we live on a finite planet with finite resources would be a good place to start. A crisis could and should be recognized as an opportunity in disguise. We should begin to realize that a world based on unbridled consumerism is very likely a broken model. Will more “stuff” really make us happier? Perhaps we should find better ways to quantify the progress of man than GDP growth figures.

To be clear, I’m not saying that we should abandon our economic model or the core principles of humanity and democracy. On the contrary it is time to assert them. Much of what we do does work and works well. But I think some adjustments are in order. We need to take a closer look and give a fair hearing to those knowledgeable persons who may have ideas with which we are uncomfortable. We need to stop alternately putting scientists, researchers and educators on pedestals and then demonizing them when their data disturbs us. A fair and honest measurement of our condition and our response to it can only improve the outcome for us all. Let’s do more of the things we do well, and less of the things that we don’t. And consider that we are all citizens of the same planet. The fate of one ultimately affects us all.