Concluding talk, Energy Pact Conference, Geneva, March 16-17 2009
By Johan Galtung 23-Mar-09
A very felicitous idea to bring together three major concerns in what could become a political, economic and intellectual pact. Like a poor, creative family in Kerala wanting to boil their rice, having neither electricity nor kerosene nor wood nor matches but a sheet of black paper, a used tire, a piece of window glass and noon sunshine. With the sheet on the ground, the pot with water and rice on it, the used tire around the pot and the glass on top of that for isolation, the rice is boiled in half an hour's time.
Renewable energy from that inexhaustible source, reusing rather than recycling waste, meeting basic needs (for a single person use a bicycle tire, for a nuclear family a car tire, for the extended family a truck tire, for more a bulldozer tire). Triadic thinking. Ugly? Put it all in a nicely decorated box. Primitive-traditional-modern-postmodern? Irrelevant problem.
The basic point is to integrate the three, looking for synergies; all the time mindful of the old Hindu wisdom that if we pursue only one we may not even get that one (for an example read that primer on political economics, John Perkins, Confessions of an Economic Hitman). There is holism at work. Sectorial-global approaches--one at the time--are needed, but we have many huge bureaucracies and single-minded academic disciplines. We also need integrated approaches focused on communities, rural and urban, where people live and feel where the shoes are pinching when only one is pursued, and can put their ingenuity to work.
As a matter of fact, "development ministries" might be wise to bring communities from all over the world--no region, no country has any monopoly on wisdom--together for exchange of positive experiences. There are, say, two million of them and more wisdom to draw upon than from 200 states or 2,000 nations.
Energy impacts on environment impacts on development, with conflicts all over. How to create cooperative, harmonious peace?
Take the major CO2 excess (and N2O, CH4). Years ago Japan piped CO2 from factories into greenhouses designed for agriculture next to the factory, speeding up the synthesis, producing oxygen, privileging communities mixing industry and agricultures. Putting CO2 to giant use, serving the whole triad, should be possible.
How much global warming is part of a mega-process after the ice age peaked, say, 10-15,000 years ago, and how much is human-made, is a major controversy. Whatever the percentage we should do our best, but quota-trading is not the approach. It smacks of somebody practicing slavery buying some quotas from those with a slavery deficit. The task is to reduce slavery and carbon emission, not to legitimize with fake markets. Much may be irreversible.
But that works both ways, flooding lowlands here, thawing icecaps and permafrost there (with its problems), liberating land in Alaska, Canada, Greenland, Russia. Who will pay for the move? If the polluter pays then he who pollutes most will pay most, pointing at USA-China. Or we all share. Cooperation.
We have had development with less developed countries (LDCs) now having things found in the more developed countries (MDCs), electricity, computers, highways, etc., but still with huge masses suffering at the bottom of countries at the bottom, exposed to capitalist machines pumping wealth from bottom to top, producing misery at the bottom (125,000 daily deaths, 25,000 from hunger, 100,000 from preventable-curable diseases), and excess liquidity, trading absurd products, at the top.
Result: a double crisis, one permanent another conjunctural, synergizing, feeding each other. Less so, however, in Islamic banks limiting loans to 30 percent of the capital (sharia). The eco-quake crisis hits those financially closer to Ground Zero, Wall street, more than others.
There are remedies for the permanent crisis. Labor-intensive agriculture and small farms are more efficient and softer on the environment. Water can be distilled using parabolic mirrors on sunshine, pumped from oceans to deserts in oil pipelines drying up as the oil madness subsides; and, Khosla's proposal, in cubic containers that can be used LEGO like to build houses. Plants Israel-Palestine, and Israel-Lebanon, might be peace-building.
Health can be served through dense networks of polyclinics and health workers who know enough to know what they do not know, top rate hospitals accessible by fleets of helicopters, generic medicines, hygiene everywhere. Education by internet run by solar energy, monopolized by no region, and alphabetization by students (Castro), and army officers (Saddam), living with the illiterate.
Why does it not happen? The energy costs serving the poor are small, the impact on the environment soft. Simply because:
- it is convenient to have poor people who can be paid poorly; and
- lest they treat us as badly moving upwards as we treated them.
This can best be handled in communities with rich and poor working together, like men and women, and older, middle-aged and children, so important as their habits are shaped for the future. China today uses much public-private-people community cooperation.
But there is another side to this issue: we should learn to lift the bottom without threatening the top, preparing them for the inevitable. Like men in patriarchic Spain when women rise. A winning argument in that case might be that with more ability to enjoy the joy of you partner sex becomes better. Equity = peace.
Renewable energy resources for conversion and storage is not good enough. We need local conversion to cut down transportation pollution. And we need energy equality, exploring a variety of profiles among, say, ten energy resources. High-low on all gives us 1024 profiles for all kinds of local resource endowment.
Military force to control resources creates huge suffering; equality helps. Like cooperation between the biggest consumer, USA, and the potentially biggest producer, Iran, on renewables (hydro: gravity and waves; bio: mass and genetic; thermic: geo and hydro; solar: heat and electric; wind, some carbon, some nuclear).
Make energy--underlying all basic needs--free, like streets and parks, health and education in decent countries, up to a point when the user pays for high speed motor highways etc. From tubes, sockets, free panels, like the Internet should be freely available all over. Give each household a 1m3 contraption on four wheels to roll into the sunshine for heating, then tapping for all purposes.
This would help people overcoming misery considerably. As would a labor-based economy next to the money-based one. If an Euro equals an Euro, why should not an hour lecture on mediation by a professor equal an hour cleaning by a cleaning man or woman? If we all have equal value so do hours of our lives. Easily done on a community basis; like local currencies to stimulate using local nature-production-consumption economic cycles. As would a basic needs-oriented economy like health for oil (Cuba-Venezuela).
Markets can make miracles, but a cure-all they are not, nor are them self-regulating. The three classical production factors land-labor-capital can also read nature-humans-capital. Economists have canonized capital equating economic growth with capital growth. How about Nature growth - meaning increased complexity based on diversity and symbiosis? How about Human growth beyond basic needs for survival-wellness-freedom-identity? The spiritual dimension, creating, transcending, not limited to optimization by those prisoners of prisoner's games, the economists. Thinking New!
We need a Capital-ism not going amok. But we also need a broader economics, with Nature-ism and Human-ism. As we see today.
__________________________
Concluding talk, Energy Pact Conference, Geneva, March 16-17 2009.
http://www.transcend.org/tms/article_detail.php?article_id=995
Showing posts with label energy technology. Show all posts
Showing posts with label energy technology. Show all posts
Saturday, October 17, 2009
Saturday, October 4, 2008
Green the Bailout from the Bottom Up
Green the Bailout
September 28, 2008
Op-Ed Columnist
New York Times Online
By THOMAS L. FRIEDMAN
Many things make me weep about the current economic crisis, but none more than this brief economic history: In the 19th century, America had a railroad boom, bubble and bust. Some people made money; many lost money. But even when that bubble burst, it left America with an infrastructure of railroads that made transcontinental travel and shipping dramatically easier and cheaper.
The late 20th century saw an Internet boom, bubble and bust. Some people made money; many people lost money, but that dot-com bubble left us with an Internet highway system that helped Microsoft, I.B.M. and Google to spearhead the I.T. revolution.
The early 21st century saw a boom, bubble and now a bust around financial services. But I fear all it will leave behind are a bunch of empty Florida condos that never should have been built, used private jets that the wealthy can no longer afford and dead derivative contracts that no one can understand.
Worse, we borrowed the money for this bubble from China, and now we have to pay it back — with interest and without any lasting benefit.
Yes, this bailout is necessary. This is a credit crisis, and credit crises involve a breakdown in confidence that leads to no one lending to anyone. You don’t fool around with a credit crisis. You have to overwhelm it with capital. Unfortunately, some people who don’t deserve it will be rescued. But, more importantly, those who had nothing to do with it will be spared devastation. You have to save the system.
But that is not the point of this column. The point is, we don’t just need a bailout. We need a buildup. We need to get back to making stuff, based on real engineering not just financial engineering. We need to get back to a world where people are able to realize the American Dream — a house with a yard — because they have built something with their hands, not because they got a “liar loan” from an underregulated bank with no money down and nothing to pay for two years. The American Dream is an aspiration, not an entitlement.
When I need reminding of the real foundations of the American Dream, I talk to my Indian-American immigrant friends who have come here to start new companies — friends like K.R. Sridhar, the founder of Bloom Energy. He e-mailed me a pep talk in the midst of this financial crisis — a note about the difference between surviving and thriving.
“Infants and the elderly who are disabled obsess about survival,” said Sridhar. “As a nation, if we just focus on survival, the demise of our leadership is imminent. We are thrivers. Thrivers are constantly looking for new opportunities to seize and lead and be No. 1.” That is what America is about.
But we have lost focus on that. Our economy is like a car, added Sridhar, and the financial institutions are the transmission system that keeps the wheels turning and the car moving forward. Real production of goods that create absolute value and jobs, though, are the engine.
“I cannot help but ponder about how quickly we are ready to act on fixing the transmission, by pumping in almost one trillion dollars in a fortnight,” said Sridhar. “On the other hand, the engine, which is slowly dying, is not even getting an oil change or a tuneup with the same urgency, let alone a trillion dollars to get ourselves a new engine. Just imagine what a trillion-dollar investment would return to the economy, including the ‘transmission,’ if we committed at that level to green jobs and technologies.”
Indeed, when this bailout is over, we need the next president — this one is wasted — to launch an E.T., energy technology, revolution with the same urgency as this bailout. Otherwise, all we will have done is bought ourselves a respite, but not a future. The exciting thing about the energy technology revolution is that it spans the whole economy — from green-collar construction jobs to high-tech solar panel designing jobs. It could lift so many boats.
In a green economy, we would rely less on credit from foreigners “and more on creativity from Americans,” argued Van Jones, president of Green for All, and author of the forthcoming “The Green Collar Economy.” “It’s time to stop borrowing and start building. America’s No. 1 resource is not oil or mortgages. Our No. 1 resource is our people. Let’s put people back to work — retrofitting and repowering America. ... You can’t base a national economy on credit cards. But you can base it on solar panels, wind turbines, smart biofuels and a massive program to weatherize every building and home in America.”
The Bush team says that if this bailout is done right, it should make the government money. Great. Let’s hope so, and let’s commit right now that any bailout profits will be invested in infrastructure — smart transmission grids or mass transit — for a green revolution. Let’s “green the bailout,” as Jones says, and help ensure that the American Dream doesn’t ever shrink back to just that — a dream.
http://www.nytimes.com/2008/09/28/opinion/28friedman.html?hp
The bottom-up bailout: Pay off all delinquent mortgages Helping average Americans fixes fundamental problem
Oct. 1, 2008, 10:02PM
Washington Post
By JONATHAN G.S. KOPPELL and WILLIAM N. GOETZMANN
The theory underlying the bailout plan stalled in Congress is that rescuing the finance industry will restore market stability and that the benefits will eventually trickle down to average Americans. Thus, solving the subprime mortgage crisis has morphed into a much larger challenge: reassembling the architecture of the financial markets, which seemingly requires giving the Treasury secretary nearly a trillion dollars and extraordinary latitude to pick winners and losers.
There is an easier and more politically palatable fix: Pay off all the delinquent mortgages.
The financial crisis is a liquidity crisis, yes, but it is ultimately a product of homeowner failures to pay. Unless this fundamental problem is fixed, we will continue to see — and need to treat — the symptoms. The proposed bailout ignores this. Yet the sum being demanded from taxpayers is almost certainly more than sufficient to pay off all currently delinquent mortgages.
If the government did this, all the complex derivatives based on these mortgages would be as good as U.S. Treasuries. Their fair value would jump to 100 cents on the dollar, rescuing teetering financial institutions. The credit markets would be resuscitated overnight. Foreclosures would stop.
Some will argue that it is grossly unfair to pay off the mortgages of borrowers who took risks and lost. In other words, why should my profligate neighbor be rewarded for overleveraging himself?
Because such unfairness is a small price to pay to avoid a rapid transition to a socialist economy, the collapse of our financial system (and its related global implications) and a frightening shift of economic power toward the executive branch. Why shell out $700 billion to Wall Street deal makers and the companies they managed into this mess? Wouldn't it be preferable for individual homeowners to benefit directly?
Implementation could follow the example of the Home Owners' Loan Corp., which in the 1930s issued new mortgages to a quarter of American homeowners. The government could offer to refinance all mortgages issued in the past five years with a fixed-rate, 30-year mortgage at 6 percent. No credit scores, no questions asked; just pay off the principal of the existing mortgage with a government check. If monthly payments are still too high, homeowners could reduce their indebtedness in exchange for a share of the future price appreciation of the house. That is, the government would take an ownership interest in the house just as it would take an ownership interest in the financial institutions that would be bailed out under the Treasury's plan.
All this could be done through the Federal Housing Administration, with the help of Fannie Mae and Freddie Mac, which have the infrastructure to implement this plan rapidly. An equity participation structure would prevent thousands of foreclosed homes from being dumped on a strained housing market and would allow prices to reach a new equilibrium that is based on realistic demand for houses rather than on easy money or impending foreclosures.
Like the administration's proposal, this plan would result in the government owning assets. But these assets would be real estate, not complex derivatives whose true value would take weeks to discern. Homeowners would become partners with the government in resolving the crisis.
When Congress returns today, lawmakers are likely to modify and then pass the administration's bailout proposal. They should consider ways to implement this bottom-up solution. Combining this approach with the government's proposal could greatly benefit taxpayers. Yes, the government's swift purchase of illiquid securities would stabilize compromised financial institutions and the credit markets. But the notion that taxpayers would benefit in the long run is pure speculation, particularly if the government overpaid for the securities. On the other hand, once a government-sponsored refinancing wave kicked in, the full value of the securities in the government's portfolio would be restored, and they could be sold off in an orderly manner, with Uncle Sam taking profits that would cover the cost of the bailout.
The public is rightly concerned that the administration's bailout would benefit only powerful financial institutions. No matter how it's done, rescuing the financial system is a large, complex gamble.
This solution would start by helping ordinary Americans and would quickly spill over to revive the financial markets. Directly addressing the underlying cause of the crisis would help ensure that we would not be facing the same crisis again down the road.
While Wall Street has only recently felt the bite of foreclosures and delinquencies, communities across the nation will face greater financial and social fallout if the foreclosure crisis continues.
Koppell and Goetzmann are professors at the Yale School of Management. Koppell is director of the Milstein Center for Corporate Governance and Performance and Goetzmann directs the International Center for Finance. This article originally appeared in The Washington Post.
http://www.chron.com/disp/story.mpl/editorial/outlook/6034929.html
September 28, 2008
Op-Ed Columnist
New York Times Online
By THOMAS L. FRIEDMAN
Many things make me weep about the current economic crisis, but none more than this brief economic history: In the 19th century, America had a railroad boom, bubble and bust. Some people made money; many lost money. But even when that bubble burst, it left America with an infrastructure of railroads that made transcontinental travel and shipping dramatically easier and cheaper.
The late 20th century saw an Internet boom, bubble and bust. Some people made money; many people lost money, but that dot-com bubble left us with an Internet highway system that helped Microsoft, I.B.M. and Google to spearhead the I.T. revolution.
The early 21st century saw a boom, bubble and now a bust around financial services. But I fear all it will leave behind are a bunch of empty Florida condos that never should have been built, used private jets that the wealthy can no longer afford and dead derivative contracts that no one can understand.
Worse, we borrowed the money for this bubble from China, and now we have to pay it back — with interest and without any lasting benefit.
Yes, this bailout is necessary. This is a credit crisis, and credit crises involve a breakdown in confidence that leads to no one lending to anyone. You don’t fool around with a credit crisis. You have to overwhelm it with capital. Unfortunately, some people who don’t deserve it will be rescued. But, more importantly, those who had nothing to do with it will be spared devastation. You have to save the system.
But that is not the point of this column. The point is, we don’t just need a bailout. We need a buildup. We need to get back to making stuff, based on real engineering not just financial engineering. We need to get back to a world where people are able to realize the American Dream — a house with a yard — because they have built something with their hands, not because they got a “liar loan” from an underregulated bank with no money down and nothing to pay for two years. The American Dream is an aspiration, not an entitlement.
When I need reminding of the real foundations of the American Dream, I talk to my Indian-American immigrant friends who have come here to start new companies — friends like K.R. Sridhar, the founder of Bloom Energy. He e-mailed me a pep talk in the midst of this financial crisis — a note about the difference between surviving and thriving.
“Infants and the elderly who are disabled obsess about survival,” said Sridhar. “As a nation, if we just focus on survival, the demise of our leadership is imminent. We are thrivers. Thrivers are constantly looking for new opportunities to seize and lead and be No. 1.” That is what America is about.
But we have lost focus on that. Our economy is like a car, added Sridhar, and the financial institutions are the transmission system that keeps the wheels turning and the car moving forward. Real production of goods that create absolute value and jobs, though, are the engine.
“I cannot help but ponder about how quickly we are ready to act on fixing the transmission, by pumping in almost one trillion dollars in a fortnight,” said Sridhar. “On the other hand, the engine, which is slowly dying, is not even getting an oil change or a tuneup with the same urgency, let alone a trillion dollars to get ourselves a new engine. Just imagine what a trillion-dollar investment would return to the economy, including the ‘transmission,’ if we committed at that level to green jobs and technologies.”
Indeed, when this bailout is over, we need the next president — this one is wasted — to launch an E.T., energy technology, revolution with the same urgency as this bailout. Otherwise, all we will have done is bought ourselves a respite, but not a future. The exciting thing about the energy technology revolution is that it spans the whole economy — from green-collar construction jobs to high-tech solar panel designing jobs. It could lift so many boats.
In a green economy, we would rely less on credit from foreigners “and more on creativity from Americans,” argued Van Jones, president of Green for All, and author of the forthcoming “The Green Collar Economy.” “It’s time to stop borrowing and start building. America’s No. 1 resource is not oil or mortgages. Our No. 1 resource is our people. Let’s put people back to work — retrofitting and repowering America. ... You can’t base a national economy on credit cards. But you can base it on solar panels, wind turbines, smart biofuels and a massive program to weatherize every building and home in America.”
The Bush team says that if this bailout is done right, it should make the government money. Great. Let’s hope so, and let’s commit right now that any bailout profits will be invested in infrastructure — smart transmission grids or mass transit — for a green revolution. Let’s “green the bailout,” as Jones says, and help ensure that the American Dream doesn’t ever shrink back to just that — a dream.
http://www.nytimes.com/2008/09/28/opinion/28friedman.html?hp
The bottom-up bailout: Pay off all delinquent mortgages Helping average Americans fixes fundamental problem
Oct. 1, 2008, 10:02PM
Washington Post
By JONATHAN G.S. KOPPELL and WILLIAM N. GOETZMANN
The theory underlying the bailout plan stalled in Congress is that rescuing the finance industry will restore market stability and that the benefits will eventually trickle down to average Americans. Thus, solving the subprime mortgage crisis has morphed into a much larger challenge: reassembling the architecture of the financial markets, which seemingly requires giving the Treasury secretary nearly a trillion dollars and extraordinary latitude to pick winners and losers.
There is an easier and more politically palatable fix: Pay off all the delinquent mortgages.
The financial crisis is a liquidity crisis, yes, but it is ultimately a product of homeowner failures to pay. Unless this fundamental problem is fixed, we will continue to see — and need to treat — the symptoms. The proposed bailout ignores this. Yet the sum being demanded from taxpayers is almost certainly more than sufficient to pay off all currently delinquent mortgages.
If the government did this, all the complex derivatives based on these mortgages would be as good as U.S. Treasuries. Their fair value would jump to 100 cents on the dollar, rescuing teetering financial institutions. The credit markets would be resuscitated overnight. Foreclosures would stop.
Some will argue that it is grossly unfair to pay off the mortgages of borrowers who took risks and lost. In other words, why should my profligate neighbor be rewarded for overleveraging himself?
Because such unfairness is a small price to pay to avoid a rapid transition to a socialist economy, the collapse of our financial system (and its related global implications) and a frightening shift of economic power toward the executive branch. Why shell out $700 billion to Wall Street deal makers and the companies they managed into this mess? Wouldn't it be preferable for individual homeowners to benefit directly?
Implementation could follow the example of the Home Owners' Loan Corp., which in the 1930s issued new mortgages to a quarter of American homeowners. The government could offer to refinance all mortgages issued in the past five years with a fixed-rate, 30-year mortgage at 6 percent. No credit scores, no questions asked; just pay off the principal of the existing mortgage with a government check. If monthly payments are still too high, homeowners could reduce their indebtedness in exchange for a share of the future price appreciation of the house. That is, the government would take an ownership interest in the house just as it would take an ownership interest in the financial institutions that would be bailed out under the Treasury's plan.
All this could be done through the Federal Housing Administration, with the help of Fannie Mae and Freddie Mac, which have the infrastructure to implement this plan rapidly. An equity participation structure would prevent thousands of foreclosed homes from being dumped on a strained housing market and would allow prices to reach a new equilibrium that is based on realistic demand for houses rather than on easy money or impending foreclosures.
Like the administration's proposal, this plan would result in the government owning assets. But these assets would be real estate, not complex derivatives whose true value would take weeks to discern. Homeowners would become partners with the government in resolving the crisis.
When Congress returns today, lawmakers are likely to modify and then pass the administration's bailout proposal. They should consider ways to implement this bottom-up solution. Combining this approach with the government's proposal could greatly benefit taxpayers. Yes, the government's swift purchase of illiquid securities would stabilize compromised financial institutions and the credit markets. But the notion that taxpayers would benefit in the long run is pure speculation, particularly if the government overpaid for the securities. On the other hand, once a government-sponsored refinancing wave kicked in, the full value of the securities in the government's portfolio would be restored, and they could be sold off in an orderly manner, with Uncle Sam taking profits that would cover the cost of the bailout.
The public is rightly concerned that the administration's bailout would benefit only powerful financial institutions. No matter how it's done, rescuing the financial system is a large, complex gamble.
This solution would start by helping ordinary Americans and would quickly spill over to revive the financial markets. Directly addressing the underlying cause of the crisis would help ensure that we would not be facing the same crisis again down the road.
While Wall Street has only recently felt the bite of foreclosures and delinquencies, communities across the nation will face greater financial and social fallout if the foreclosure crisis continues.
Koppell and Goetzmann are professors at the Yale School of Management. Koppell is director of the Milstein Center for Corporate Governance and Performance and Goetzmann directs the International Center for Finance. This article originally appeared in The Washington Post.
http://www.chron.com/disp/story.mpl/editorial/outlook/6034929.html
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