Joseph Stiglitz on the Euro

Joseph Stiglitz has written a new book about the Euro. Here’s an interview in the New York Times.

It is difficult to overstate the economic trauma Europe has suffered in recent years — veritable depressions in Greece and Spain, alarming levels of unemployment across much of the continent. You place much of the blame on the euro. What happened?

The euro was an attempt to advance the economic integration of Europe by having the countries of the eurozone share a common currency. They looked across the Atlantic and they said: “The United States, big economy, very successful, single currency. We should imitate.”

But they didn’t have the political integration. They didn’t have the conditions that would make a single currency work. The creation of the euro is the single most important explanation for the extraordinarily poor performance of the eurozone economies since the crisis of 2008…

You conclude that the best-case scenario from here is to reform and save the euro. But absent that, you contend that it is better to just scrap it as a failed experiment. What needs to happen to make the euro viable?

A banking union with deposit insurance. Something like a euro bond. An E.C.B. that doesn’t just focus on inflation — you want it to focus on employment. A tax policy that deals with the inequalities. And you have to get rid of limits on government deficits.

If I understand this correctly, he is suggesting that the problem is that the Euro is not issued by a true central bank, but instead by individual countries with varying levels of wealth and power.

I was debating with a friend the other day about whether the average citizen is capable of understanding current events and issues well enough to support good policies. I think the average human being certainly has the raw intelligence to do so, but even the well educated mostly have not been provided with the mental tools they would need to understand the complexity of the world around us. Central banking is a good example of something an intelligent human being is capable of understanding, but almost none do. I never learned anything about it in elementary or high school. I learned some basic concepts about the money supply and interest rates in college economics courses, but I didn’t really get it the first time around. Part of it is that algebraic equations are just not the right way to introduce big picture concepts to most people including me (and I was doing just fine in engineering school at the time). Simulations or even physical models would work better to gain an intuitive understanding, backed up by symbolic algebra and calculus later.

I’m not really suggesting that the answer is to turn over public policy to the economists. They understand the theory behind the central banking system, sure, but they may neglect the larger social and environmental context it is embedded in, may neglect to consider complex, dynamic, nonlinear behavior that does not fit neatly into their elegant steady-state algebraic theories, and are often terrible at communication with decision makers and the public. We need experts and respect for experts, but we also need a broad base of intuitive understanding of systems among politicians, bureaucrats, and the public. It could be done.

State of the Climate 2015

The American Meterological Society has released State of the Climate 2015. I would love to take a week and scrutinize each and every map and figure, but alas…

One thing that caught my eye was by far the coolest cover art I have ever seen on a scientific report! Seriously, have a look if you look at nothing else!

Another thing that caught my eye is the idea of an “accelerating hydrologic cycle”. I hadn’t heard that before, but I suppose it makes sense if there is more energy/heat being added to the Earth on balance.

Overlaying a general increase in the hydrologic cycle, the strong El Niño enhanced precipitation variability around the world. An above-normal rainy season led to major floods in Paraguay, Bolivia, and southern Brazil. In May, the United States recorded its all-time wettest month in its 121-year national record. Denmark and Norway reported their second and third wettest year on record, respectively, but globally soil moisture was below average, terrestrial groundwater storage was the lowest in the 14-year record, and areas in “severe” drought rose from 8% in 2014 to 14% in 2015. Drought conditions prevailed across many Caribbean island nations, Colombia, Venezuela, and northeast Brazil for most of the year. Several South Pacific countries also experienced drought. Lack of rainfall across Ethiopia led to its worst drought in decades and affected millions of people, while prolonged drought in South Africa severely affected agricultural production. Indian summer monsoon rainfall was just 86% of average. Extremely dry conditions in Indonesia resulted in intense and widespread fires during August–November that produced abundant carbonaceous aerosols, carbon monoxide, and ozone. Overall, emissions from tropical Asian biomass burning in 2015 were almost three times the 2001–14 average…

Records of observation-based global evaporation only span the satellite era. This has not prevented a handful of studies from attempting to disentangle the impact of climate change on trends in evaporation. Jung et al. (2010) suggested a reversal in the rise of evaporation since the late 1990s, which was later shown to be a temporary anomaly caused by ENSO (Miralles et al. 2014b). Nonetheless, these studies, together with more recent contributions (Zhang et al. 2015, 2016), have indicated the existence of a slight positive trend over the last few decades, in agreement with expectations derived from temperature trends and global greening, and the theory of an accelerating hydrological cycle…

The discussion of “biomass burning in Indonesia” caught my eye because it is one thing to read about it, and another to get a lungfull of it as my family did when living in Singapore in 2013. It was shocking – you looked out the window and could barely see the next high rise maybe 50 feet away. We had a newborn baby at the time and decided to go to the trouble of traveling interanationally with him to get him out of there. And it sounds like this year’s pollution was worse than what we experienced.

The tendency for increased drought in the tropics during El Niño leads to increased release of CO2 from increased tropical wildfires. In 2015, out-of-control agricultural biomass burning was exacerbated in Indonesia (see Sidebar 2.2) by ignition of the subsurface peat. These changes in terrestrial carbon storage likely contributed to the record 3.1 ppm increase in atmospheric CO2 at Mauna Loa Observatory from 1 January 2015 to 1 January 2016. The previous highest annual increase of 2.9 ppm occurred in 1998. Biomass burning in Indonesia also led to regional increases in atmospheric carbon monoxide, aerosols, and tropospheric ozone in 2015 (Sidebar 2.2). Huijnen et al. 2016 suggest that the 2015 carbon emissions from the Indonesian fires were the largest since those during the El Niño year of 1997 (section 2g7; Fig. 2.60), although still only 25% of the 1997 emissions…

The 2015 Indonesia fire season began in August, and by September much of Sumatra, Kalimantan, Singapore, and parts of Malaysia and Thailand were covered in thick smoke, affecting the respiratory health of millions of people. Visibility was also reduced to less than 10% of normal over Borneo, and large parts of the region could not be seen from space, as was documented for previous fire events in that region (Marlier et al. 2013; Wang et al. 2004). Preliminary estimates suggest that greenhouse gas emissions from the burning (in CO2 equivalent) exceeded Japan’s 2013 emissions from fossil fuel combustion (Van der Werf 2015). Even after the worst of the 2015 Indonesian fires were no longer burning, the remaining pollution stretched halfway around the globe.

Comparing the emissions to those from a major industrial economy like Japan puts the staggering scale in perspective. Beyond the effect on human health and the climate, this is also a loss of diverse tropical ecosystems and fertile soils.

Shrinking the Earth: The Rise and Decline of American Abundance

Here is the Amazon description of a new(ish) book by Donald Worster called Shrinking the Earth: The Rise and Decline of American Abundance.

The discovery of the Americas around 1500 AD was an extraordinary watershed in human experience. It gave rise to the modern period of human ecology, a phenomenon global in scope that set in motion profound changes in almost every society on earth. This new period, which saw the depletion of the lands of the New World, proved tragic for some, triumphant for others, and powerfully affecting for all.

In this work, acclaimed environmental historian Donald Worster takes a global view in his examination of the ways in which complex issues of worldwide abundance and scarcity have shaped American society and behavior over three centuries. Looking at the limits nature imposes on human ambitions, he questions whether America today is in the midst of a shift from a culture of abundance to a culture of limits-and whether American consumption has become reliant on the global South. Worster engages with key political, economic, and environmental thinkers while presenting his own interpretation of the role of capitalism and government in issues of wealth, abundance, and scarcity. Acknowledging the earth’s agency throughout human history, Shrinking the Earth offers a compelling explanation of how we have arrived where we are and a hopeful way forward on a planet that is no longer as large as it once was.

It’s interesting to think that humanity took a few thousand years to “deplete” Europe and Asia, and now we have depleted North and South America in just a few hundred years. If there were another sizable continent out there, we could probably deplete it in a few decades, and the one after that in a few years, then months, etc.

But there aren’t any more out there, unless and until we are talking about going into space. This reminds me of a couple plausible near-future science fiction series on exactly this theme: Red Mars by Kim Stanley Robinson and Coyote by Allen Steele. Both worth reading, although I found the latter a bit more entertaining.

McKinsey on Income Stagnation

The McKinsey Global Institute has noticed inequality in the world, and is concerned about automation making it worse. Part of their solution is – this is a bit shocking – “government taxes and transfers”. It appears they are talking about lower taxes and higher transfers, which they acknowledge might not be “sustainable”.

If the low economic growth of the past decade continues, the proportion of households in income segments with flat or falling incomes could rise as high as 70 to 80 percent over the next decade. Even if economic growth accelerates, the issue will not go away: the proportion of households affected would decrease, to between about 10 and 20 percent—but that share could double if the growth is accompanied by a rapid uptake of workplace automation.

The encouraging news is that it is possible to reduce the number of people not advancing. Labor-market practices can make a difference, as can government taxes and transfers—although the latter may not be sustainable at a time when many governments have high debt levels. For example, in Sweden, where the government intervened to preserve jobs during the global downturn, market incomes fell or were flat for only 20 percent of households, while disposable income advanced for almost everyone. In the United States, lower tax rates and higher transfers turned a decline in market incomes for four-fifths of income segments into an increase in disposable income for nearly all households. Efforts such as these—along with additional measures such as encouraging business leaders to adopt long-term thinking—can make a real difference. The trend of flat and falling real incomes merits bold measures on the part of government and business alike.

Dwight D. Eisenhower

Andrew Bacevich on BillMoyers.com shows how decisions that happen on a President’s watch, even an almost universally respected and even revered one like Eisenhower, can have consequences decades later.

As for Eisenhower, although there is much in his presidency to admire, his errors of omission and commission were legion. During his two terms, from Guatemala to Iran, the CIA overthrew governments, plotted assassinations and embraced unsavory right-wing dictators — in effect, planting a series of IEDs destined eventually to blow up in the face of Ike’s various successors. Meanwhile, binging on nuclear weapons, the Pentagon accumulated an arsenal far beyond what even Eisenhower as commander-in-chief considered prudent or necessary.

In addition, during his tenure in office, the military-industrial complex became a rapacious juggernaut, an entity unto itself as Ike himself belatedly acknowledged. By no means least of all, Eisenhower fecklessly committed the United States to an ill-fated project of nation building in a country that just about no American had heard of at the time: South Vietnam. Ike did give the nation eight years of relative peace and prosperity, but at a high price — most of the bills coming due long after he left office.

This caught my eye during a week when events during the Iranian Revolution (1979) are influencing the 2016 election. And the revolution was in turn caused CIA participation in destabilization of a democratically elected Iranian government in 1953. And the destabilization of Iran had begun far earlier under the British, who openly sought to control the natural resources of the region.

Bill Clinton’s decisions in the 1990s on trade, drugs, and financial deregulation are also being discussed in this election. I think we are already suspecting that George W. Bush’s invasions of Iraq and even Afghanistan in the early 2000s will go down as our country’s greatest blunders of modern times. I wonder how some of Obama’s decisions on intervention in the Middle East, relations with Russia and China, and financial regulation (or lack thereof) will turn out in the long run.

modeling the Maya collapse

This interesting study included a computer model of how drought and agricultural practices could have combined to destroy the ancient Mayan civilization.

Conceptualizing sociohydrological drought processes: The case of the Maya collapse

With population growth, increasing water demands and climate change the need to understand the current and future pathways to water security is becoming more pressing. To contribute to addressing this challenge, we examine the link between water stress and society through socio-hydrological modeling. We conceptualize the interactions between an agricultural society with its environment in a stylized way. We apply the model to the case of the ancient Maya, a population that experienced a peak during the Classic Period (AD 600-830) and then declined during the ninth century. The hypothesis that modest drought periods played a major role in the society’s collapse is explored. Simulating plausible feedbacks between water and society we show that a modest reduction in rainfall may lead to an 80% population collapse.Population density and crop sensitivity to droughts, however, may play an equally important role. The simulations indicate that construction of reservoirs results in less frequent drought impacts, but if the reservoirs run dry, drought impact may be more severe and the population drop may be larger.

Dick, Bush, and Johnson

Ronald Feinman proposes a scenario where Gary Johnson, the libertarian candidate, could be become U.S. President in the fall, with Mike Pence as his Vice President.

in theory, if neither major party candidate wins 270 electoral votes, the election would be thrown to the House of Representatives for the first time since 1824. In a Republican controlled House, Gary Johnson, in theory, could be elected President with the lowest percentage of popular votes in American history, far less than John Quincy Adams’ 30.9 percent in 1824 or Abraham Lincoln’s 39.8 percent of the vote in 1860…

So at least, there is a long range possibility that on January 20, 2017, we could have our third President Johnson, after Andrew Johnson in 1865 and Lyndon B. Johnson in 1963. And we would have a Libertarian President, the first third party candidate in history to be elected President, albeit by the House of Representatives.

But at the same time, under the 12th Amendment to the Constitution, either Mike Pence or Tim Kaine would become Vice President, as only the top two candidates for the Vice Presidency can be considered by the Senate, although the top three candidates can be considered by the House of Representatives for President. Since the Senate is majority Republican, that would likely make Mike Pence Vice President to serve with Libertarian Gary Johnson as President, which would make for a very interesting and weird situation, never having occurred before in American history.

And this does not even account for the popular theory that voters are subconsciously attracted to candidates named Bush, Dick, or Johnson.

Earth Overshoot Day

Today (I’m writing on August 8) has been named Earth Overshoot Day 2016.

Earth Overshoot Day marks the point where we have pulled more resources, like fish, fuel and water, out of the planet than can be replenished. It’s also the point where we have put more pollution into the air and water than Earth can successfully deal with. Humans have been doing that for a long time, but ever since 1971, Overshoot Day has crept disconcertingly earlier and earlier. This year, Overshoot Day is a full 5 days earlier than last year. That’s the earliest it has ever been.

This is another way of attempting to communicate the ecological footprint concept. It would take 1.5 Earths to produce the amount of ecosystem services we deplete in one year, so that means we have depleted them two thirds of the way through the year, or month 8 of 12. The footprint is growing every year, which doesn’t just mean things are getting worse, it means they are getting worse at a faster rate. We don’t know how much worse they can get before our civilization enters decline, or whether the decline would be a sudden catastrophic one or a long slow one (which could have already begun without our realizing it.) But we know logically that there is such a point of no return. Reducing our footprint would be good, but it would just mean things were getting worse at a slower rate. To actually reverse our path toward the tipping point, we would have to reduce our footprint all the way to 1 Earth or push Earth Overshoot Day all the way back to December 31.

new technology for mapping street trees

Philadelphia Parks and Rec has used a Google Street View-like technology to map street trees.

CycloMedia’s tool is “like Google Maps on steroids,” said Parks and Rec’s lead GIS Specialist Nora Dougherty, who spearheaded the project. It is a way of capturing all kinds of high-definition imagery that is geolocated, which means it can be used for a variety of projects. The tool is easy enough for non-experts to use, according to Mark Wheeler, Chief Geographic Information Officer for the Office of Innovation and Technology, plus the custom-captured imagery can be fully integrated with the city’s existing GIS software. CycloMedia’s tool captures an unprecedented level of detail in the images it records: You’re able to see features like address numbers and even deterioration of rooflines. Plus, every image is date and time stamped, so the user can verify that the images are consistent. This tool is also highly accurate for measuring distances and heights.

After all the streets in Philadelphia were captured using the technology, GIS technicians Tom McKeon and Stuart Olshevski virtually traveled down every street and dropped pins marking the location of each tree. The result is an inventory of nearly 112,000 street trees with geolocation data, which means street trees are now represented in a new layer of geographic information that can be mapped and analyzed. (Forest trees make up the other thousands of trees in Philadelphia, but it’s nearly impossible to accurately inventory them.) Information about the health and species of street trees is also being recorded…

The street tree inventory will be available on August 5 on Open Data Philly, and in an interactive map will be on the city’s website. Citizens can use that information to create their own maps and take action to monitor the trees in their neighborhood.