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Actions after election make history

by | 26 Nov 2011 | Climate action economics | 0 comments

Professor Stephen Keen Capital Account interview

Prime Ministerial Intervention: Professor Stephen Keen is uniquely positioned to disabuse Aotearoa’s leaders of their faith in economics. Here Professor Keen is interviewed by the incisive Lauren Lyster. image Capital Account

It should probably start with the less-important issue.

In this hypothetical ‘operation hymn sheet’, the leadership of the National and Green parties have been whisked away, their respective election celebrations still ringing in their ears, to a nice quiet place in the Mahurangi. The retreat focuses first on the global financial crisis, because preoccupation with it is obscuring the equally immediate but far greater threat to humanity.

Lord Nicholas Stern would have been the predictable heavyweight to wheel up to the gig, with his courageous and prodigious work on the economic advantage of prompt climate action. But with world leaders blinded by what they primarily see as a government debt crisis, there is a luminary much more likely to get Prime Minister John Key’s attention, precisely because that person is so apparently unconcerned about global warming. And because he works nearby, at the University of Western Sydney, he is giving his tutorial in person, rather than via video link. Besides, Professor Stephen Keen is being consulted by Massey University, Albany, on its plans to become the world’s preeminent centre of behavioural economics, and will be in Aotearoa until Christmas. This follows a chance meeting with Dr Simona Fabrizi at the Western Economic Association International’s ninth biennial Pacific Rim conference.

Professor Stephen Keen’s work to warn the world of its imminence in 2005 could have averted the global economic downturn. Only a dozen economists saw it coming, beyond predicting the real estate crisis. But Professor Keen’s explanation of the prime role that ratios of debt to gross national product played in causing the Great Depression, and the current one, was arguably most complete.

The Prime Minister’s need to hear Professor Keen is not simply to be told that the downturn was predictable, so as to avoid the next one—if the lessons from a second depression go unlearned, John Key will have long-since retired from politics. Rather, the reason the future Sir John needs to listen closely to Keen now, is to understand why this ‘downturn’ will be so protracted: A decade-long high-unemployment depression lies ahead. Competing election promises of just how soon the deficit will be cut are asinine; radical action is required, such as that which Professor Keen put breathtakingly bluntly to an Occupy Sydney assembly:

We should write the debt off, bankrupt the banks, nationalize the financial system, and start all over again. We need a twenty-first century jubilee. We’re going into a never-ending depression unless we repudiate the debt, which never should have been extended in the first place. If we keep the parasitic banking sector alive, the economy dies. We have to kill the parasites and give a chance to the real economy to thrive once more and stop the financial [crooks] doing what they did this time around ever again.

With his faith in neoclassical economists severely undermined—these unrepentant ideologues still insist that the onset of the Second Great Depression couldn’t have been seen coming—Professor Keen would then deliver the coup de grace to the dismal science.

Professor Keen has proved that neoclassical economics is an inconsistent, unscientific and empirically unsupported house of cards. His magnum opus may establish Keen as the Darwin of economics, but its completion has been much delayed by the urgency of his intervening mission to alert the economics community and world leaders of the impending depression, which included the publication of a popular volume in 2001 that systematically demolishes the superficially appealing but fundamentally flawed foundation stones of modern economics. Reading the revised edition of Debunking Economics, published just two months ago, it is impossible to not be outraged at the avoidability of the ruin of billions of households by the scourge of unemployment.

The debunking of economics is important work, because as long as the Western world remains in the thrall of Adam Smith’s notion that self-centred behaviour by individuals necessarily leads to the highest possible level of welfare for society as a whole, economists will continue to lead mankind into oblivion, driving most species into extinction ahead of it.

The wealth enjoyed by Western nations is not down to the brilliance of the capitalist system, nor the sweat of the workers, as the Marxist economics would have us believe. Rather it is the determination of present and recent generations to regard the 60–300 million-year accumulation of fossil fuels as solely their inheritance. But even more preposterously, economists have determined that because successive generations have been progressively richer materially, future generations will have it increasingly easy, therefore they will gratefully pay off the debts currently being run up by governments worldwide. Whether it’s a wastewater treatment plant or more eye-wateringly expensive motorway, simply borrow and build. But the consequences of the West helping itself to the best of the planet’s minerals booty—it was stolen South American gold that effectively bankrolled the industrial revolution—is not simply a matter of fiscal unfairness to future civilisations. Totally overshadowing that consideration is that the carbon dioxide vented to the atmosphere as a result of all that easy energy is rapidly compromising the planet’s ability to support life itself.

But while the Green Party leadership will be happy to witness the Prime Minister’s discomfort at learning that the financial sector must be privatised, their vision of a richer, renewables-powered future is set to be dashed in the afternoon’s tutorial. The Green Party leaders might find the afternoon heavy going, particularly as one of them found herself powerless to resist a second bowl of Mahurangi oyster chowder. The Prime Minister is just happy that what little remains of his economic worldview stays reasonably intact—he had intuitive reservations about wind and solar.

Again, the person with the impeccable credentials in this area is British. In Sustainable Energy – Without the Hot Air, Professor David MacKay’s demolishes the comfortable notion that every little bit helps and that renewables are an adequate response to the now desperately urgent need to cease mining, drilling and burning fossil fuels. But rather than drag Professor MacKay halfway round the world by air—although MacKay’s analysis shows that a single occupant in a car which is nearly twice as energy inefficient as the average air traveller—Professor Brook could be enticed across the Tasman. Professor Brook’s specialty area would impress even the most politically correct Green Party member: Species extinctions. And he holds the University of Adelaide’s Sir Hubert Wilkins Chair of Climate Change at the School of Earth and Environmental Sciences, and is also director of Climate Science at the universities Environment Institute. And to justify his air travel, he is staying to study early global warming impacts on Aotearoa’s famously at-risk indigenous species.

That he is a strong proponent of the integral fast reactor—of nuclear power—should be instructive to Green adherents. In common with that of Stewart Brand of the Whole Earth Catalogue, Dr James Hansen of Storms of My Grandchildren and James Lovelock of the Gaia hypothesis, Professor Brook’s studies of alternatives to fossil fuels highlight the stark choices that humanity faces:

…China’s ambition in both Generation III and Generation IV reactors is substantial (as is India’s). Let’s hope, for the sake of a stable climate system and long-term environmental sustainability of the human enterprise, that the economic rise of these two 21st Century superpowers is fueled by advanced nuclear (uranium- and thorium-based) and renewable energy (where competitive), and not built on the same fossil-fueled 19st century technology that underpinned the development of the West. Frankly, either this works out, with China and India as clean energy leaders, or our goose is cooked.

Aotearoa’s courageous antinuclear stance gained international respect. If the leaders of a blue–green coalition could find comparable courage and make history by repudiating debt and moving swiftly the replace coal and oil with fourth-generation nuclear power and electric vehicles, heads would be turned worldwide.

Meantime, a trip on the harbour to inspect the fattening oysters and to view indigenous plants raised by forestry methods allows some rehabilitation, after the retreat’s first two taxing tutorials. On the leaders’ return to their salubrious accommodations in the Pukapuka, the Prime Minister, after a brief huddle with his advisors, suddenly announces that affairs of state must curtail his further involvement in the retreat. He abruptly departs—to enjoy a richly earned, if not well deserved, holiday in Honolulu.

Undeterred, the retreat’s organisers ponder the prospects for a blue–green coalition making real history.

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