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Trudeau goes bold on emissions; Sheer attacks, but has no plan

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The Trudeau government has taken the bull by the horns and imposed a carbon-pricing scheme on four provinces — Manitoba, Saskatchewan, New Brunswick and Ontario — which account for nearly half of Canada’s population.

Other provinces have their own mechanisms consistent with federal carbon-pricing targets. Ontario was one of those others until Doug Ford became premier and cancelled all measures designed to combat climate change. The result for Canada’s most populous province is a projected increase in carbon pollution, by the year 2030, equal to the emissions of 30 coal-fired electricity plants.

As Justin Trudeau’s Liberals promote their greenhouse-gas reduction plan, they point out that three of the cooperating provinces — Quebec, Alberta and British Columbia — are among the top economic performers in Canada. The Liberal message: putting a price on pollution does not kill jobs and growth. To the contrary, they say, taxing pollution actually creates good jobs.

This is a government that was elected on a pledge to focus like a laser on the economic well being of the middle class. And so, even as it takes steps to head off the global catastrophe a United Nations’ climate change panel so recently warned is imminent, the Trudeau government goes to great pains to emphasize its concern for ordinary families and their pocketbooks.

Government documents promoting its carbon-pricing measures offer few figures as to how much tax anyone will pay. What they emphasize is the need to prevent the huge and devastating damage climate change will bring, of which recent events like forest fires in B.C. and heat waves in Ontario and Quebec are mere harbingers.

The government does, on the other hand, go into great detail about the carbon-pricing rebates average families will receive, starting in the spring of 2019. Nearly three-quarters of Canadians, they say, will receive more money back than they will pay in increased fuel costs.

A two-tiered carbon-pricing system

The official opposition Conservatives claim to accept the science that tells us climate change is caused by humans. They even say they will, someday, tell Canadians their plan to reduce greenhouse gases. They are just not quite ready to make that announcement yet.

Instead of telling Canadians what they will do, Conservatives put all their energy into picking holes in the Liberal plan.

Their main line of attack is based on the fact that the government is imposing two types of carbon tax.

There is the levy of $20 per tonne of greenhouse gas, eventually rising to $50, on distributors of fossil fuels. Those distributors will, presumably, pass their increased costs on to consumers.

For large industrial emitters, there is a different mechanism, what they call an output-based carbon-pricing system.

What happens here is that the government sets an emissions limit for each industry. Companies that produce less than the limit pay no tax. Instead, they receive credits based on the difference between the limit and their emissions, which they can trade for cash with companies that produce more than their limit. Those latter companies will have a choice of paying $20 per tonne of emissions to the federal government, buying credits from other companies, implementing carbon offset measures (such as planting trees) – or undertaking a combination of all three.

The Liberals add the important caveat that the entire package of measures aimed at industry is calibrated, in their words, to “minimize competitiveness risks for emissions-intensive, trade-exposed industrial facilities.”

Conservative leader Andrew Sheer and his opposition colleagues have seized on that “minimize risks” part. They argue that the Liberals are giving an unfair special deal to large industrial polluters, while small businesses and ordinary Canadians will have to absorb the full brunt of increased fuel costs.

Conservatives hammers this message daily in the House.

On Wednesday, October 24, Sheer accused Trudeau of protecting “large corporate emitters by giving them a massive exemption from the costs that they will have to pay.” At the same time, he said, “small businesses who will face rising fuel and home-heating costs will have to bear the brunt of his new carbon tax plan.”

The Liberals do not bother answering this argument, which simplifies their complex carbon-pricing regime beyond recognition. Instead, they pillory the Conservatives for their refusal, since the time of the previous Harper government, to commit to any sort of climate-change measure.

As Trudeau put it on Wednesday:

“We are moving forward with putting a price on pollution … something the Conservatives were unwilling and unable to do for 10 years while in government…. They have no plan to approach the fight against climate.… They want to make pollution free again.”

A polarized campaign in 2019 could help Trudeau

The NDP and Greens both offer at least qualified support for the government’s most recent move.

The NDP successfully pushed for an emergency debate on the UN report on climate change, but has held its fire in the House on the most recent developments in the government’s carbon-pricing scheme.

When asked to comment, NDP leader Jagmeet Singh expressed concern over the more than $4 billion the Liberals paid for the Trans Mountain pipeline, suggesting that money could be better invested in alternative energy solutions. He also worried, in a general way, about the impact of carbon taxes on those least able to absorb the increased costs. He did not take issue with the principle of what the government is doing.

Green leader Elizabeth May was all for the most thorough solutions during the recent emergency debate in the House. Among other measures, she called for completely getting rid of internal combustion engines and ensuring energy efficiency and retrofits for every building. The carbon-pricing measures imposed on the four provinces might not be quite so radical, but May was still happy to give the Liberals at least a passing grade, while adding that there is “much more to be done.”

“Adequate carbon pricing is a start,” she said, “but we need to eliminate the use of fossil fuels altogether, especially in the production of electricity.”

When the Liberals last adopted a carbon-tax policy, they called it a “Green Shift.” That was a bit more than a decade ago when Stéphane Dion was leader. It did not work out at that time. The Harper Conservatives lambasted the Liberals for their “tax on everything” and won the 2008 election with an increased seat count.

This time, the Liberals hope public attitudes have changed.

Since they made a point of not changing the first-past-the-post electoral system, having solemnly promised to do so multiple times, Trudeau’s party also hopes a polarized campaign between those who want to save the planet and those who deny science will drive NDP and Green voters into their arms. The next election is a year away.

Karl Nerenberg has been a journalist and filmmaker for more than 25 years. He is rabble’s politics reporter.

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Capitalism Is Broken

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The announcement came rolling from the Eccles Building at 2 p.m. Eastern…

No rate hike today.

Jerome Powell has decided to sit on his hands — for now.

In his very words:

It’s important that monetary policy not overreact to any one data point… The FOMC will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion.

That is precisely why the next move will be a rate cut.

We have reckoned lots lately about the inverted yield curve… and the recessionary menace it represents.

The 10-year versus 3-month yield curve recently inverted to its lowest level since April 2007.

Meantime, 10-year Treasury yields hover at two-year lows — 2.04%. One Bloomberg opinion piece instructs us to prepare for 1% yields.

As the old-timers know… the bond market gives a truer economic forecast than the chronically dizzied stock market.

Meantime, the New York Fed’s recession model reveals a 30% probability of recession within the next year.

It last gave those same odds in July 2007 — merely five months before the Great Recession was underway.

JP Morgan places the odds of recession in the second half of this year at 40%.

And Morgan Stanley gives a 60% likelihood of recession within the next year — the highest since the financial crisis.

Yes, the Federal Reserve will soon be cutting rates.

One clue?

Conspicuously absent from today’s statement was the word “patient.” Thus Mr. Powell telegraphs that he is ready to move.

Federal funds futures presently give nearly 90% odds of a July rate cut.

The market further expects as many as three rate cuts by this time next year — perhaps four.

We are compelled to restate the blindingly obvious:

The Federal Reserve has lost its race with Old Man Time.

The opening whistle blew in December 2015… when Janet Yellen came off the blocks with a 0.25% rate hike.

If the Federal Reserve could cross the 4% finishing line in time, it could tackle the next recession with a full barrel of steam.

Alas… it never made it past 2.50%.

The Federal Reserve cannot return to “normal.”

The stock market will yell blue murder and take to violent rebellion if it tried — as happened last December.

No, Wall Street has Mr. Powell in its hip pocket — as it had Janet Yellen, as it had Ben Bernanke, as it had Alan Greenspan before him.

But it is not only the Federal Reserve…

Last year the world’s major central banks were pledging to “normalize.”

But now they are in panicked retreat…

All have taken to their heels, hoofing 180 degrees the other way.

For example:

Both the Bank of Japan and European Central Bank are now gabbling openly about rate cuts and/or additional quantitative easing.

“It’s all in the open now. Front and center. The new global easing cycle has begun before the last one ended.”

This is the considered judgment of Sven Henrich, he of NorthmanTrader.

We must agree.

Yet the central banks have only themselves to blame…

They grabbed hold of the poisoned apple during the financial crisis.

They gulped… and took the first fateful nibble. It proved nectar to the stock market.

Encouraged by the results, they soon munched the full dose… and later went plowing through the entire tainted orchard:

Zero interest rates, QE 1, 2 and 3 — Operation Twist — the lot of it.

Even with trade war raging and recession hovering, stocks are within 1% of record heights.

And so the banks are too far gone in sin to turn back now.

Their greatest casualty?

Capitalism itself.

Henrich on the wages of central bank sin:

Let’s call a spade a spade: Equity markets and capitalism are broken. Neither can function on any sort of growth trajectory without the helping hand of monetary stimulus. Global growth figures, expectations and projections are collapsing all around us and markets are held up with promises of more easy money, in fact are jumping from central bank speech to central bank speech while bond markets scream slowdown.

We fear Mr. Henrich is correct.

We further fear capitalism will get another good round pummeling in the years to come…

The Federal Reserve’s false fireworks will land as duds against the next recession.

Cries will then go out for the artificial savior of government spending — Modern Monetary Theory (MMT).

Free college tuition… universal Medicare… jobs for all… a $15 minimum wage…a possible Green New Deal…

These and more will be in prospect.

Politicians will go running through the Treasury as a bull runs through a china shop… and leave the nation’s finances a shambles.

Only then — too late — will they discover that debt and deficits matter after all…

Regards,

Brian Maher
Managing editor, The Daily Reckoning

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The Secrets of Surveillance Capitalism

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Google surpassed Apple as the world’s most highly valued company in January for the first time since 2010.  (Back then each company was worth less than 200 billion. Now each is valued at well over 500 billion.)  While Google’s new lead lasted only a few days, the company’s success has implications for everyone who lives within the reach of the Internet. Why? Because Google is ground zero for a wholly new subspecies of capitalism in which profits derive from the unilateral surveillance and modification of human behavior.  This is a new surveillance capitalism that is unimaginable outside the inscrutable high velocity circuits of Google’s digital universe, whose signature feature is the Internet and its successors.  While the world is riveted by the showdown between Apple and the FBI, the real truth is that the surveillance capabilities being developed by surveillance capitalists are the envy of every state security agency.  What are the secrets of this new capitalism, how do they produce such staggering wealth, and how can we protect ourselves from its invasive power?

“Most Americans realize that there are two groups of people who are monitored regularly as they move about the country.  The first group is monitored involuntarily by a court order requiring that a tracking device be attached to their ankle. The second group includes everyone else…”

Some will think that this statement is certainly true. Others will worry that it could become true. Perhaps some think it’s ridiculous.  It’s not a quote from a dystopian novel, a Silicon Valley executive, or even an NSA official. These are the words of an auto insurance industry consultant intended as a defense of  “automotive telematics” and the astonishingly intrusive surveillance capabilities of the allegedly benign systems that are already in use or under development. It’s an industry that has been notoriously exploitative toward customers and has had obvious cause to be anxious about the implications of self-driving cars for its business model. Now, data about where we are, where we’re going, how we’re feeling, what we’re saying, the details of our driving, and the conditions of our vehicle are turning into beacons of revenue that illuminate a new commercial prospect. According to the industry literature, these data can be used for dynamic real-time driver behavior modification triggering punishments  (real-time rate hikes, financial penalties, curfews, engine lock-downs) or rewards (rate discounts, coupons, gold stars to redeem for future benefits).

Bloomberg Business Week notes that these automotive systems will give insurers a chance to boost revenue by selling customer driving data in the same way that Google profits by collecting information on those who use its search engine. The CEO of Allstate Insurance wants to be like Google. He says, “There are lots of people who are monetizing data today. You get on Google, and it seems like it’s free. It’s not free. You’re giving them information; they sell your information.  Could we, should we, sell this information we get from people driving around to various people and capture some additional profit source…? It’s a long-term game.”

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Capitalism Versus Democracy

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It was always just a matter of time before the reemergence of establishment Democrats reminded people why they were booted from power in 2016. As ugly as Donald Trump is and as not constructive as his tenure in the White House has been, the Democratic establishment would rather lose with establishment candidates and retrograde policies than loosen its grip on its service to the oligarchs.

Phrased differently, if Democrats cared about ‘defeating Trump,’ they would offer programs that people want. But they are so firmly in the grip of corporate interests and the oligarchs that they won’t do so. The Republicans are just as beholden, but they offer fewer (manufactured) illusions. They represent the interests of capital. This transparency provides political clarity for those who oppose their policies.

Graph: American politicians act as if the rich minority should control our politics. Policies in the public interest are invariably corrupted through the legislative process to serve them. This is a near perfect inversion of democratic control where the richest 1% + 9% would only exist at the behest of the polity. Because it concentrates wealth, capitalism is antithetical to democracy. American elections will remain a farce until democratic control is put in place.

When announcing a congressional Medicare for All hearing recently, senior Democrats sought to control the admissible language to exclude the phrase ‘Medicare for All.’ They intend to focus instead on ‘access’ to healthcare which keeps health insurers as the extractive layer that has given the U.S. the most expensive healthcare system in the world with the worst outcomes.

What this signals, for those to whom it isn’t yet obvious, is that there are no circumstances short of revolution that will move the Democrats from service to their rich patrons. Given the stakes of environmental crisis, deaths of despair overtaking the hinterlands and military inclinations pushing the U.S. toward wars it can’t win, Democrats are signaling that they would rather go down with the U.S.A. Titanic than offer up the solutions being put forward by young socialists.

Lest the larger picture be missed here, American capitalism, for which claims of ‘efficiency’ have been used to shape and rebuild the world, has produced the least efficient healthcare system in the world in order to fill the pockets of a class that feeds on human misery. Thanks to Obamacare, health insurance executives are now the most overpaid in the entire insurance industry. This, as medical bankruptcies are undiminished since passage of the law.

The illusion of political competition facilitates the lie of democratic control. Republicans deny climate science while the Democrats place the interests of the businesses that are degrading the environment ahead of the popular will when they craft nominally public policies. Look again at the graph above: given the numbers in terms of citizens represented (executives + oligarchs), why would they have any say in the determination of public policies in a democracy?

As was the case in 2016 and for decades prior, the so-called political center is a radical outlier in terms of formulating policies in the public interest. Fifteen times as many people in the U.S. die every year from not being able to afford healthcare than have died in all of the terrorist attacks of the last century. The political ‘center’ is code for the interests of capital. It is killing the planet and bleeding the polity dry. It functioned as misdirection when the vestiges of the New Deal were intact— before ‘precariat’ described everyone who isn’t in the 1%.

The West is now four decades into a neoliberal ‘experiment’ that has failed on its own terms, but that shows no signs of either waning from its own contradictions or being dislodged politically. The political ossification that it has created comes through class control of the public sphere, domination of the political process via campaign contributions and the economic role that corporations have assumed at the heart of Western political economy.

Graph: CO2 emissions are both fact and metaphor for the seemingly unstoppable march toward environmental Armageddon. The capitalist version of a Green New Deal is premised on greatly increasing destructive environmental production in order to reduce it at some as-yet unspecified future date. As basic arithmetic has it, 5 + 1 = 6, not 4. An eco-socialist GND requires getting capitalists out of the way while the American political establishment exists to keep them in control. Source: c2es.org

While confusion has been sown around the meaning of ‘corporatism’ that stood at the center of (Benito) Mussolini’s vision of the good life, a defining characteristic of both Italian and German fascism was capitalist-state alliances where state power was used for the benefit of select capitalists and select state actors. Labor unions were systematically disempowered, and the interests of powerful economic and state actors were put forward as those of the polity.

An irony of the present is that with all the mechanisms of capitalist-state control— a capitalist media that places business interests ahead of civic accountability; corporate control that regulates the lives of citizens as surely as totalitarian regimes throughout history; and the systematic immiseration and debasement of the democratic core of the polity; a plurality is still able to look past its own interests to the public good.

A secondary irony is that as true as denunciations of Donald Trump and the Republican Party may be, the Democratic establishment has no history of challenging the substance of their programs in recent decades. Establishment Democrats want to preclude a Green New Deal and Medicare for All as surely as Republicans do. Differences between the Parties are over how to best do so— outright opposition versus killing them legislatively.

And in fact, this difference in strategy suggests the basis of bourgeois loathing of the ‘lesser’ classes. Republicans deny climate science (the ignorant heathens) while Democrats accept its conclusions while continuing to let their donor class dictate policy that perpetuates environmental degradation. Given the stakes, the Paris Accord was a fig leaf placed over a missing environmental policy when Barack Obama gave it rhetorical support.

Here is the IPCC (UN) report, released a mere two years after Mr. Obama left office, stating that far more radical action is needed to address climate change. Here is IPBES (UN) report, released a mere two years after Mr. Obama left office, stating that far more radical action is needed to address mass extinction. Environmentalists have been providing evidence that radical action is needed for five decades.

The method of the Democrat’s grift is to hand public policy to business interests just as Republicans do, but through abstract devices like trade agreements. ALEC (American Legislative Exchange Council) writes local, state and Federal policies that Republicans put forward as legislative proposals. Democrats push trade agreements that have Investor-State Dispute Settlement clauses to prevent governments from passing laws in the public interest.

As the graph of total CO2 emissions (above) suggests, the effect is a continuity in public policies hidden behind a veil of faux political competition. The American bourgeois congratulates itself on its clear understanding of climate change while earning its living in the service of the oligarchs and corporate chiefs who benefit from environmental degradation. Democratic politicians sooth psyches through language of ‘working toward’ and ‘access’ that gets its professional class constituents from one PowerPoint presentation to the next. The point: the bourgeois are an impediment to effective public policies, not its guardians.

With their growing use of loyalty oaths and exclusionary tactics, Democrats have adopted the logic of the radical right for the reasons of the radical right— to protect the business interests of their donor class from rising bolshevism (socialism) and market mishaps. But commies didn’t crap the environment. And market mishaps are an aspect of capitalism, not socialism. So, Democrats are joining Republicans to protect capitalists from the consequences of their own practices.

Those not directly benefitting from it want to be protected from capitalist predation. Medicare for All, a Green New Deal, raising taxes on the rich and having a political voice are popular with the little people. The political establishment also exists to protect the oligarchs and corporate executives from democratic accountability.

The self-aggrandizing ‘Art of War’ drivel of 1980s capitalist mythology posed capitalist warriors competing against one another in the rough and tumble marketplace. By 2000 or so this had given way to K Street lobbyists, congress and the Federal Reserve doing back alley deals to protect them from market failure. Payday loans, government granted monopolies and instigating wars to sell munitions all combine state with private power to extract economic rents— market competition has nothing to do with it.

Any honest assessment of American business— war, financial gamesmanship, environmental degradation and pillaging the polity, would make evident that some fair portion of the oligarch class 1) belongs in prison and 2) should be made to give up its ill-gotten gains. Some politely worded version of this political program would likely win any election hands down, suggesting that the actual political center is a few miles left of the political establishment.

Graph: Any environmental accounting based in history would place the U.S., and more precisely capitalism, front and center as both cause and beneficiary of environmental degradation. The U.S. + the E.U., really Germany and Britain, caused climate change through greenhouse gas emissions from the dawn of the industrial revolution to the present. China has become to major emitter only recently. But Chinese emissions built the export economy that flooded the West with cheap imports. In other words, Western emissions were outsourced. Source: c2es.org

A question to be answered sooner rather than later is: what configuration of political economy is needed to resolve the multiple crises that are underway? With political hopefuls offering policy proposals going into the 2020 elections, those that aren’t tied to workable political economy are likely to be little more than empty posturing.

A Green New Deal and Medicare for All would alter economic relationships. The establishment posture is: we need for ‘our’ political proposals to serve multiple economic interests. Not addressed is that it is these very interests who turned a livable environment and health care into political problems in need of resolution. So why would they be 1) left intact and 2) considered ‘partners’ in resolving the problems they have created?

The path of least resistance within the establishment frame is market-friendly proposals like carbon taxes and public-private partnerships to build renewable energy technologies. The logic is to increase the use of environmentally destructive technologies to reduce them at some future point. Again, 5 + 1 = 6, not 4. The only path to meeting IPCC and IPBES (above) goals will be to reduce cumulative environmental degradation, meaning 5 – 1 = 4.

All of the establishment plans, including those from socialists, are variations on 5 + 1 = 6, again meaning that environmental degradation must increase to reduce it at some future point. This is the same capitalist ‘growth’ logic that isn’t working. Any plan that isn’t at least cognizant of this paradox should be rejected out of hand. Moving from industrial to human-scale agriculture will require land redistribution. If people can reconnect with ‘the world,’ they might even be happier for it.

Through the concentration of economic power, capitalism is antithetical to democracy. Capitalist ‘freedom’ is the freedom of the oligarchs to exert political control through this power. This contradiction explains why the polity has little to no influence over government policies, causing growing antipathy toward the political establishment. Democrats aren’t going to voluntarily abandon their donors and Republicans wouldn’t even pretend to, suggesting that the preferred direction of the political establishment will continue to be hard right.

As Democrats are in the process of demonstrating, existing political economy must be gotten out of the way before there is any chance that solutions to current crises will be workable.

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