Friday, 28 March 2014

Start-ups challenge big banks' technology

Small guys on calculator The small guys are taking the challenge to the big banks

Big banks beware - innovative technology challengers are coming to eat your lunch.That was the key message emerging last week from FinTech City London, a series of events for financial services technology professionals organised by the CEO Agenda and Icon Corporate Finance.

Fintech, as financial services technology is modishly called, is enabling nimbler, hi-tech companies to re-engineer most financial activities, from payments processing to personal loan applications, and cut out the middleman.

It's what Clayton Christensen, professor of business administration at Harvard Business School, calls "disruptive innovation".

While the things we do with money - save, borrow, invest, spend - have not changed much over the centuries, the way we interact with financial institutions is "drastically changing", said Alex Scandurra, director of innovation strategy and business development at Barclays.
'The micro multinational'
And that's largely to do with mobile, open-source databases and cloud computing. About three-quarters of the UK population owns a smartphone, and there are more than five billion mobile phones globally.

Funding circle diagram

Funding Circle provides a direct link between investors and small firms

"As a result of the proliferation of technology, digital, and now mobile with it, the barriers to entry have significantly decreased," said Mr Scandurra. "Now we're seeing that teams of 10 to 15 people can actually take on the large incumbents all around the world."

Whereas big financial institutions have to cater for a mass market and try to please everybody, small fintech companies can focus on niche markets, globally spread. They can form what futurist and writer Alvin Toffler called "the micro multinational".

One such company is Funding Circle, the peer-to-peer (P2P) lending service launched in 2010, which aims to provide businesses with access to loan funding while providing investors with a decent return on their money. Its 65,000-plus investors have lent over £208m to UK businesses so far.

In March 2013, the UK government began lending £20m to British businesses through Funding Circle as part of its Business Finance Partnership scheme.

Co-founder and chief executive Samir Desai said that while his company had certainly benefited from the 2008-13 banking crisis and the consequent collapse of trust in High Street banks, it is new open-source technologies and databases that have enabled P2P lending companies to grow.

"Every loan that goes through Funding Circle is funded on average by 700 different people," he said "Those loans can then be bought and sold by other investors through a secondary market. So we have as many mini-loans going through our system as any bank, and thousands of secondary market transactions going through each day.

"We couldn't have done that without these new open-source technologies."
New credit scoring system?
Open-source databases that anyone can access and adapt, such as Hadoop and Cassandra, can process and structure vast amounts of data from a wide and growing range of sources, including social media, helping P2P lenders and other financial companies assess creditworthiness to much higher degrees of accuracy than before.

Square technology Mobile payment companies like Square offer new technology to merchants

"Banks haven't started to embrace these new types of technology," said Mr Desai. "So we can lend to businesses they wouldn't even consider."

So now even your Twitter comments could affect whether or not you're granted a loan, and companies like Facebook could end up displacing old-fashioned credit reference agencies.

Giles Andrews, chief executive and co-founder of Zopa, a more established P2P lender founded in 2005 that has lent more than £455m to individuals and sole traders, agrees that customer data - its efficient collection and analysis - is key to success these days.

"The business is not a bank and I'm not a banker," he added. "We're more of a data company."

"Corporates and small businesses are going to be able to pick and choose their niche service providers”

Alex McCracken Silicon Valley Bank UK

This is why Zopa has just hired its first ever chief data scientist, he said, who comes not from a bank, but from Amazon, the online retailer.
Legacy issue
Newer fintech companies are not encumbered by old technology, the so-called legacy systems that traditional banks struggle to integrate with newer software and hardware.

The Lloyds Banking Group IT glitch, which affected debit card and cash machine transactions at the weekend, is the latest in a long line of big bank technology problems.

"It's an opportunity for the new challengers who don't have that legacy issue," said Sue Langley, chief executive of UK Trade & Investment's Financial Services Organisation, "because it's much easier with a blank sheet of paper to.... come up with something new."

Currency Cloud graphic

The Currency Cloud provides technology to international payments companies

"The banks have an increasing need for technology," said Mark Boleat, chair of the City of London's policy and resources committee. "Some of that comes from their huge IT departments, but an awful lot of it is coming from new and start-up businesses."

Alex McCracken, director of ventures groups at Silicon Valley Bank's UK arm, believes we will see a polarisation in financial services, with global all-you-can-eat banks serving multinationals at one end, and small, technology-driven niche players serving local needs at the other.

"Corporates and small businesses are going to be able to pick and choose their niche service providers," he said.
The mouse that roared
Mobile payment companies like Square, simpler direct debit providers like GoCardless, and foreign currency specialists like The Currency Cloud, all are offering financial services at lower cost and greater convenience through clever use of the latest technologies.

Are the big banks running scared?

Last week, US banking giant Wells Fargo banned some of its staff from investing in for-profit P2P lending companies, such as Lending Club and Prosper, admitting that they were competitors.

That is the wrong approach, argues Barclays' Alex Scandurra. His bank is collaborating more with tech entrepreneurs and start-ups, as well as offering non-banking products such as Cloud It, an online data storage service.

He calls the approach "amplification through collaboration".

Labour leader Ed Miliband may want to increase competition by forcing big UK banks to offload High Street branches, but to many observers, this is a red herring.

It is technology that is helping the fintech mouse take on the giants and roar.

Universal Currency Could Hold Key To Stability And Growth


The success of the euro has fueled interest in a plan for global monetary union that could end currency crises and boost world trade.

For decades there has been a groundswell of opinion developing in support of a single global currency. With the success of the euro, a project that many observers expected to end in embarrassing and costly failure, the pressure to create a global currency is only increasing.

The benefits from a universal currency would be enormous, its proponents say. An estimated $400 billion a year in foreign-exchange transaction costs would be eliminated. There would be no currency fluctuations or currency crises. There would be no need for central banks to hold foreign currency reserves, which hang like a sword of Damocles over the markets as central banks and sovereign wealth funds shift their massive holdings.

With a single global currency, prices worldwide would be denominated in the same unit and could be easily compared. Trade between countries would be as simple as interstate commerce in the United States. Global travelers would not have to worry about changing their money and paying fees for this inconvenience.

A world currency would lead to an enormous increase in the gains from trade and real incomes of all countries, including the US, says Robert Mundell, a Columbia University economist who won the Nobel Prize in Economics in 1999 for his work on optimum currency areas and his analysis of monetary and fiscal policy under different exchange-rate regimes. “The benefits to each country from a stable currency that is also a universal currency would be enormous,” Mundell says in a posting on his web page. “If the whole world were dollarized, there would be a common inflation rate and similar interest rates, a considerable increase in trade, productivity and financial integration, all of which would produce a considerable increase in economic growth and well-being,” he says.

Whether or not a world currency can be achieved in the near future will depend as much on politics as economics, according to Mundell. To avoid the parochial national connotation of the “dollar,” he suggests calling the world unit the “intor,” a contraction of the words “international” and “or,” French for gold.

“My ideal and equilibrium solution would be a world currency (but not a single world currency) in which each country would produce its own unit that exchanges at par with the world unit,” Mundell says. A Group of Three open-market committee designated by the board of the International Monetary Fund would determine how many intors produced each year would be consistent with price stability, he says.
Virtual World Leads the Way
A somewhat similar currency, the Linden dollar, already exists in a 3-D virtual world on the Internet, known as Second Life, which has its own economy. In September fashion designer Giorgio Armani opened a clothing shop in Second Life. It is a replica of Armani’s flagship store in Milan. The designer sent an avatar, a virtual replica of himself, to open the virtual store in the online world. Residents of Second Life can use Linden dollars to purchase Armani outfits for their own avatars, or they can get connected to Armani’s new online store if they want to buy clothing to wear in real life, for which they will be billed in real money.

In Second Life, residents can buy and sell virtual products and services, as well as “real estate,” using Linden dollars, which are exchangeable for US dollars and other currencies on market-based currency exchanges. Originally, all “land” comes from San Francisco-based Linden Lab, the owner of the software and the server that make up Second Life.

Morrison Bonpasse, president of the Single Global Currency Association, based in Newcastle, Maine, and one of the leading proponents of a universal currency, says he is aware of Second Life but has not publicized the Linden dollar for fear people will think the idea of a world currency is a fantasy. Instead, his letterhead and the association’s website use a prominently displayed quote from former Federal Reserve chairman Paul Volcker (with his permission), which reads, “A global economy requires a global currency.”

Bonpasse says that globalization and monetary nationalism are a dangerous combination. “The benefits of a single global currency far outweigh the costs, so we should start planning now and avoid further risk and crises,” he says.

The International Monetary Fund, which has a staff of about 2,635 people from 143 countries, should assign 10 economists to begin the long-term project of moving to a single global currency, Bonpasse says. His association’s goal is to have the single currency adopted by 2024, the 80-year anniversary of a United Nations conference convened in Bretton Woods, New Hampshire, in July 1944. The IMF, an organization of 185 countries, was conceived at the conference, which sought to build a framework for economic cooperation to avoid the disastrous beggar-thy-neighbor economic policies that led to the Great Depression of the 1930s.

“The world’s existing multi-currency system must be replaced, and the IMF should explore this idea,” Bonpasse says. “The only reason the IMF exists is to help the world cope with floating exchange rates.” He says the $3.2 trillion-a-day market for trading national currencies has become hazardous and can bring down even large economies as these currencies lurch up and down with large, unpredictable variations.

The IMF is responsible for ensuring the stability of the international monetary and financial system. It seeks to prevent crises and to help resolve crises when they do occur. “We should not have to wait for the next major currency crisis to begin researching and planning for the single global currency,” Bonpasse says. “With the creation and continued expansion of the eurozone, we now know how to solve the multi-currency problem.”

The single global currency doesn’t have to wait until all 192 countries in the world want to join, Bonpasse says. “Once about half of the countries sign on, the rest would seek to join very quickly,” he predicts. “Everyone would follow the leader. A universal goal of central banks and the people of the world is to have stable money,” he says.

There are several possible routes to the single global currency, according to Bonpasse, including the enlargement of existing monetary unions and the creation of new ones. It is possible that the development of regional currencies similar to the euro in other areas, such as the Association of Southeast Asian Nations (ASEAN) and the Gulf Cooperation Council (GCC), will result in a patchwork of blocs that could link together in the future in a sort of monetary Pangaea, he says. “While regional currencies are preferable to each country having its own currency, the problem is that these regional currencies still have to exist in a multi-currency world,” he explains.

Another route would be a global big bang to introduce the new money everywhere on a pre-announced date. The single world currency would require a global central bank to ensure that the global money supply is carefully managed to control inflation, Bonpasse says.

“We are now much further down the trip to the single global currency than humans were to the moon in 1962, when President John F. Kennedy proclaimed the goal of the United States to land a human being on the moon by the end of that decade,” Bonpasse says. The euro took nine years and 11 months to implement from the February 1992 signing of the Maastricht Treaty to the January 1, 2002, distribution of the new currency among the people of the eurozone, he says.
A Utopian Fantasy?

A huge industry composed of currency traders and analysts, backed up by support staff and technology, has developed since the introduction of floating exchange rates in 1973 under the Basel Accord. “I have a personal interest in having as many currencies as possible,” says David Gilmore, partner and economist at Essex, Connecticut-based Foreign Exchange Analytics. “The notion of a single global currency is seemingly a pipedream. I don’t see it happening,” he says.

Today there are at least 147 currencies among the 192 UN member countries. “It is important for national self-interest to have some form of shock absorber to cushion turns in the business cycle,” Gilmore says. “Nations need maximum flexibility.” The lower dollar, for example, helps to offset weakness in the housing market by making US exports more competitive, he says.

The Group of Seven, or G-7, industrialized countries offers a microcosm of what a globally coordinated economy might be like, according to Gilmore. The G-7 was established in 1985 and was successful in its early years with the Plaza Accord and the Louvre Accord to coordinate currency movements. “In the last 15 years, however, it has been little more than a photo opportunity, with very little action in terms of currency initiatives,” Gilmore says. “This reflects the fact that markets don’t have to be told what to do,” he says. “The downside, however, is that they tend to overshoot.”

The single global currency reflects a utopian view of the world, Gilmore says. “In a perfect world, a single currency would make sense, but the political will to create it would have to be enormous,” he says. Meanwhile, it is debatable whether or not the euro has been such a big success, he adds. “The liberalization of economic policies is more a function of politics,” he says. “France, which is running a big trade deficit, can’t get relief on the currency side. There is as much absence of convergence today as in 1999, and the euro faces serious challenges in the future,” he asserts.

Marc Chandler, global head of currency strategy at New York-based Brown Brothers Harriman, says that while the current system of floating exchange rates is not perfect, it is better than a fixed-rate system. He cites Winston Churchill’s famous dictum, “Democracy is the worst form of government, except for all those other forms that have been tried from time to time.”

A single currency would require an optimal currency zone, which the world is not, according to Chandler. “It would require a world government or central authority,” he says. “You can’t get there from here. We are moving in the opposite direction since the Asian financial crisis of 1997 and 1998, with more currencies being decoupled from the dollar and the introduction of greater flexibility,” he explains. Meanwhile, Central European countries such as Slovakia and Hungary are delaying joining the euro, and the United Kingdom is as far away as it has ever been to introducing the continental currency, he says.

A gold standard or a commodity standard would be too rigid for a single global currency, Chandler says. It would have to be a fiat currency based on the faith placed in it by the people who use it. A global central bank could provide a well-managed and stable currency that could benefit the people of the world, according to Bonpasse. “Most poor people live in countries with poorly managed currencies,” he says. Once they realize the benefits of a global currency, he says, they will demand it.

Gordon Platt


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Source Reference for the above article is GLOBAL FINANCE. See below for more details of this journal

Klink on Social Credit

Wallace Klinck says:

I just read your article on the fraudulent nature of modern banking policy. If the world had heeded the works and advice of Clifford Hugh Douglas rather than J. M. Keynes we would have been enjoying falling prices, increasing individual disposable financial income and increasing leisure with personal freedom in the midst of abundance. Douglas’s Social Credit proposals would have resulted in a system of national accountancy reflecting the realities of production and consumption whereas Keynes’s social debt policies have brought us to ruin. The critical misunderstanding is the erroneous assumption that the price-system is intrinsically financially self-liquidating whereas the reality is that it is increasingly non-self-liquidating due to an increasing expansion of the volume of price-values relative to that of unencumbered financial incomes. The only option we are offered to carry on with producing and consuming is resort to a vast and exponentially growing volume of credit issued as consumer loans. Consumption is the final stage of the economic process and consumers should be able with total incomes not only to access dynamically the entire volume of finalized goods flowing from the production line–but they should be able to do so without any overall or “global” debt whatsoever. They do not of course earn sufficient money to obtain these goods because retailers must of necessity include in retail prices additional allocated charges in respect of physical capital, charges which in the same cycle of production do not distribute incomes although they generate price values. Unfortunately, retail prices are not credited on a macroeconomic level, as they should be credited, with capital appreciation which far exceeds capital depreciation. Consequently the consumer falls ever more into a quagmire of unsustainable financial debt with periodic deflationary collapses of the economy followed by inflationary upturns with all the instability and unjust transfers of wealth that this process entails.
Banks create billions of dollars of money as consumer loan debt and this debt is all an inflationary charge against future cycles of production with which they have physically no relationship whatsoever. The banks do not give this additional credit-money to consumers. It is all repayable from future earnings. The fact of the matter is that physically the real cost of production (the human and non-human energy and the materials) is met as production proceeds and has been fully met when any final consumer good has been completed and is ready for consumer use on the retail market. If this were not true the good could not exist. That is axiomatic. The financial system should reflect this irrefutable fact.
The vast amount of pseudo-buying power created by banking institutions as consumer debt should not be issued as debt but should be issued without obligation of repayment (i.e., “debt-free”) as a universal National (Consumer) Dividend to each citizen as a Birthright and inalienable beneficial (not direct) share in the communal capital to be realized by added automatic access to the outflow of finalized consumer goods from the production line. A portion of this new consumer credit (non-debt) should be issued to retailers at point of sale on condition that they lower their prices, the amount of Price Compensation to be determined by the national mean rate of total consumption (wealth depletion) divided by the mean rate of total production (wealth appreciation), a ratio that is always diminishing because our total production is vastly outstripping our total consumption. In this manner the new consumer purchasing power would be genuine because it would allow consumers full and immediate access to final production while providing consumer “approved” producers with a stable market and a means of recovering their costs of production. The new credits would pass back through the system for liquidation of producer loans and/or placement to capital reserve as they currently do but they would not leave an exponentially expanding trail of financial debt which ultimately, if the system, is to continue functioning must be institutionalized in permanent State Debt. Look at properly this State Debt should realistically be regarded as a National Credit from which universal National Dividends can be paid. The Real Credit of society is the ability to create goods and services as, when and where required or desired. Financial Credit is the ability to create money as, when and where required and the two should always balance.
Because the true reduction of real, i.e., physical, cost is consequent to replacement of human effort by technology, failure of the financial price system to credit consumers with this efficiency by not crediting them with capital appreciation in retail prices of final consumer goods constitutes a glaring and fatal flaw in the price system. Correction of the later omission would provide increasing opportunity for leisure. Instead of believing, pathetically, in the need for society to employ ninety or more per cent. of employable people merely to provide for its economic needs, we would then consider the reduction of the need for direct employment in the state of wage-slavery we call “jobs” to be a magnificent achievement. This happy state of affairs can never happen so long as we are evermore under necessity of treading an ascending treadmill merely to serve a rising tide of bogus and increasingly un-repayable financial debt. Nor can we ever be freed from the false need for a crescendo of phrenetic psuedo-economic activity of waste, culminating in wars of destruction, so long as nations, all suffering from a growing internal deficiency of consumer purchasing power, are driven by intensifying compulsion to attempt to export more than they import of their real wealth in a desperate attempt to capture financial credits with which to compensate their own internal deficiency of effective, cost-liquidating purchasing power.
For your possible interest, I attach several websites of relevance to this discussion.
Yours sincerely
Wallace Klinck (Major Clifford Hugh Douglas on “The Causes of War” (B.B.C., 1934)

The Productive Way to Address Global Warming

By Geoff Davies from the Better Nature Blog.

Most of the discussion of global warming is about the wrong questions. Much of the argument is about the scientific evidence that global warming is occurring (overwhelming) and the scientific evidence that human activities are the dominant cause (very strong evidence).  The latter is sometimes termed Anthropogenic Global Warming (AGW).  The “sceptic” arguments are about the remaining scientific uncertainty, but this confuses the scientific debate with the policy debate.  The policy implications can be clear even while the (legitimate) scientific debate continues.
In my view the “sceptic” debate is not really about the science, it is about defending a world view.  This was well explained by Stephan Lewandowski on the ABC’s Drum.  The text is reproduced here.
Even our perception of what other Australians think is quite distorted.  Iain Walker of CSIRO reports some revealing surveys at The Conversation.  The article is reproduced under the AGW tab here.
Anyway the productive debate is about the level of risk, the consequences of inaction and the cost of action.  So as to minimise the continuing spurious discussions here and elsewhere, I’ll set it out as I see it.
There is always uncertainty in science.  There is uncertainty in the accuracy of measurements, in the completeness of measurements and in the adequacy of our understanding.  For a system as complex as the climate system there will always be uncertainty.  Nevertheless climate science is a lot stronger than is claimed by sceptics.  The main conclusions are supported by multiple independent lines of evidence, so nit-picking one line like “models” does not invalidate it.
Uncertainty cuts both ways
It’s true that global warming might not turn out as bad as we thought.  It’s also true that it might turn out worse than we thought.  In significant ways it is turning out worse than projections from 5 or 10 years ago.
Given the uncertainty combined with the indications of human-caused warming, we need to estimate risks.
• What is the risk that global warming will continue?
• What is the risk that we are causing global warming?
• What is the risk that global warming will have bad or catastrophic consequences?
How do we evaluate the risks?
These risks are not quantifiable.  The best we can hope for is to make well-informed judgements.
Who is best-place to make these judgements?
The judgements obviously require a good grasp of the evidence and a good grasp of our current understanding of how the climate system works.  The people who know these things best are climate scientists.
Who else might make such judgements?  Certainly not politicians, attack-dog journalists and shock jocks, who don’t have the beginning of an understanding of the subject.  Certainly not those whose vested interest is to deny any human-caused global warming.  If you would trust any of them ahead of the scientists who spend their lives working to understand the climate system, then you subscribe to a highly implausible conspiracy theory and ignore a very obvious conspiracy (to spread confusion), and I have nothing more to say to you.
Have such judgements been made?
Yes, and they have been stated clearly.  The most comprehensive have been by the IPCC (Inter-governmental Panel on Climate Change).
The IPCC in 2007 stated that global warming is occurring, and it is highly likely (90% probability) that humans are causing it.  (Here I will not go into the science behind these judgements, because this is precisely where the debate gets deflected from the one we should be having.)
Can the IPCC judgements be trusted?
Not entirely.  Their conclusions were vetted by politicians and some of the more challenging conclusions were removed at the insistence of China, the US and other countries with big vested interests in fossil fuels – that’s why it’s called an inter-governmental panel.  Their process was also rather slow and conservative, so even the un-vetted conclusions may have been dated and too conservative.
Many climate scientists soon pointed out that the situation is likely to be worse than portrayed in the 2007 IPCC report, though that is not the bias climate sceptics usually mention.  Also some sceptics challenge the IPCC’s use of probabilities, without making clear that they are an attempt to clarify the meaning of qualitative terms like “likely” and “highly likely”.  They are attempts to convey the reliability of the judgements, not the science.
Nevertheless the IPCC message is clear and alarming (the news is alarming, not the messengers).
How certain should we be before we act?
The response of the climate system to greenhouse gas emissions is delayed by two or three decades.  By the time we agree the uncertainty is acceptably low, it will be too late.  We must, if we are to avoid disaster, act before we have reasonably complete knowledge.
Our politicians do that all the time, and with far less evidence, on many important topics.
What are the costs of reducing greenhouse gas emissions?
If we are causing global warming through our emissions of greenhouse gases, which of the following options best conveys the cost of reducing and eventually eliminating those emissions?
a) it would wreck most countries’ economies
b) it would be a substantial but bearable cost
c) it would be a minor cost
d) it would save more money than it would cost
You may be surprised to learn that many economists these days would say (c), though  some diehards cling to (b).  Many environmentalists say (b), and point to the moral imperative to sacrifice, but they could be better informed.  Many fossil fuel companies and other vested interests promote the myth of (a).  (Well, you could wreck economies by going about it the wrong way, like relying on “clean coal” and other such distant, expensive, risky and uncertain fantasies.)
However most economists are not actually very knowledgable about technology or business (or many other things you’d think they ought to know about).
A minority of economists, business people, technologists, town planners, etc. point out that many better designs, technologies and ways of organising our societies already exist that dramatically cut greenhouse gas emissions while saving money, or at a cost that is a very sensible investment.  People who assess the prospects of this approach argue that emissions could be reduced to near zero by 2050 at small or negative cost (eg. RMICircular, and many other studies).  They assume only present technology or modest and plausible developments of it – technology is not the limitation.
So the best answer is
no more than (c, a minor cost), but (d, a saving), if we do it right.
What if we do nothing, or not enough?
At some point global warming is likely to run out of control and ramp up to 4, 6 or more degrees Celsius (at present it is about 0.8°C), because natural processes like release of gases from warming tundra kick in and tip it into runaway warming.
We don’t really know where the tipping point might be.  New science is suggesting it might be below 2°C of warming.  It could conceivably be happening now, for all we know (those uncertainties again).  James Hanson thinks we should limit warming to no more than 1°C, and bring it down quickly even from that.  That would, by now, be a big but not impossible challenge.
What are the consequences of doing nothing, or not enough?
I did not ask what are the costs, because the consequences go far beyond any meaningful dollar values.  The consequences go far beyond a few extra heat waves, fires, storms and floods.  The Earth would become an unfamiliar place, unlike anything since our fragile civilisation began around 10,000 years ago.  Here are a few plausible possibilities.
The Great Barrier Reef an early casualty (it may already be too late).
The present global industrial system another early casualty (victim of severe weather, disrupted supply lines, peak oil, political disruptions, and its own internal fragility among other factors).  Real hardship for many people, with rising death rates.
Half the world’s cities flooded within 100-200 years, and continuing sea level rise for centuries.
Food production dramatically disrupted, resulting in millions, possibly hundreds of millions, conceivably billions of deaths.
Up to half of the world’s species extinct.
On the way to those extinctions, severe disruption of ecosystems resulting in plagues and pandemics.
Wars over territory and dwindling resources.
A dark time for humanity.
What would be left?
Life on Earth would certainly survive, though diminished by a significant mass extinction.  Humans would survive, though in an impoverished world.  Settled communities would be challenged by continuing climate instability, probably for thousands of years.  A much diminished form of civilisation might survive, though not with certainty.  Global inter-dependence would be severely weakened, local economies would be necessary.  Of the current richness of human culture and knowledge, who knows?
So, the risk is high and the consequences potentially catastrophic or apocalyptic.  That is the best judgement of those best-placed to know.
The cost of avoiding disaster is not large, but we have to act soon.  We just have to be willing to change many of our current habits.  The good news is that we can solve all the other global crises at the same time (peak oil, peak water, depleting soil, depleting forests etc.) if we do it right.  The further good news is that our health would improve, and we can focus on living more satisfying lives than just accumulating stuff.
The best news is we would avoid catastrophe and pass a still-rich and wondrous world to our grandchildren.

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Wednesday, 26 March 2014

Major Corporations Quietly Reducing Emissions—and Saving Money

While Congress has halted work on federal climate legislation, many U.S. business are stepping up to reduce emissions. What’s driving them?

A federal carbon cap-and-trade program is dead for the foreseeable future. So is a once promising national clean energy standard.
With climate policy paralyzed in Washington, a number of leading U.S. corporations are going it alone, squeezing big reductions of climate-changing emissions from their operations and supply chains. With stakeholder criticism and other pressures building, more and more are also releasing rigorous climate data in their financial reports and enlisting third-party firms to make sure it is accurate.
“We do it because it makes good business sense—whether it’s top of the fold [politically] or not,” said Wayne Balta, vice president of corporate environmental affairs and product safety at IBM [3].
The world’s biggest computer services provider is on track to slash its electricity use by 20 percent by the end of this year from 2008 levels. It will also cut its energy-related greenhouse gas emissions by 16 percent from 2005 levels—four percent above its original goal. Earlier this year, the firm won one of the U.S. Environmental Protection Agency’s first-ever Climate Leadership Awards [4].
Balta said that key to those reductions were efficiency upgrades in more than 360 buildings and data centers, which were achieved with the help of 40 full-time energy management professionals. He would not say how much the climate initiatives cost.
Balta emphasized that while IBM’s climate efforts have increased, putting efficiency measures into action is nothing new. Between 1990 and 2010, IBM avoided enough electricity to power 520,000 homes for a year; cut its energy bills by nearly half a billion dollars; and as a result prevented the release of 3.8 million tons of carbon dioxide, equivalent to the annual emissions of Cambodia.
FedEx [5], the world’s largest overnight delivery company, is on a similar path. This month, it announced tougher emissions reduction targets [6] for its fleet of nearly 700 aircraft. The firm is now targeting a 30 percent cut in aircraft emissions by 2020 from 2005 levels, up from its previous goal of 20 percent.
89% More Taking Action—but Why?
IBM and FedEx are hardly alone in recognizing the business potential of climate action—even as efforts in Congress stall.
Of the major U.S. corporations surveyed in 2011 by the Carbon Disclosure Project [7] (CDP), a London-based nonprofit, 89 percent more were taking action on climate change than in 2010.
Last year, 214 of the biggest public firms in the United States told the CDP they had set emissions targets, a nearly 30 percent rise from the previous year. Zoe Tcholak-Antitch, director of CDP’s North America office, said that’s a significant jump considering the number hasn’t really changed in the past few years.
“That’s a very positive indicator … that the U.S. corporate community is taking emissions reductions seriously,” she said.
David Rosenheim, executive director of the Climate Registry [8], the nation’s largest carbon reporting entity, said he sees the same increasing interest. Since 2007, its membership has grown from 243 founding members that work with the registry to report and reduce their emissions to about 400 today.
There are three main reasons why firms are voluntarily stepping up climate efforts, company representatives and advocates told InsideClimate News. The first is the tough economy, which has prompted businesses to rigorously track spending on fuel and electricity use—and to dramatically reduce it.
Shipping giant UPS, for instance, which has an annual vehicle fuel budget of over $1 billion, has made trimming its jet fuel footprint a key priority. “We look at fuel conservation programs as part of our economic picture,” said spokesperson Lynnette McIntire in an interview. Last year it avoided 8.4 million gallons of gasoline, enough to fill up the tanks in nearly a quarter million SUVs.
The second reason is worries about the rise in extreme weather and other climate impacts to their operations and assets. “In the past, there was a level of skepticism around the existence of climate change,” said Doug Kangos, a partner at PricewaterhouseCoopers [9], a global services firm that partners with the CDP on its annual U.S. report. “Now more companies are acknowledging its impact on their business.”
Kangos pointed as proof to this year’s record-breaking heat and drought—both linked to global warming by scientists. The extreme weather has made it tougher for cargo to travel by river, stalled construction of bridges and roads and crippled power and water supplies for manufacturers, affecting many companies’ bottom lines.
A third concern is pressure from the investment community to set greenhouse gas reduction goals. A growing number of climate resolutions are showing up on annual shareholder ballots. In 2012, nearly half of all resolutions concerned environmental and social sustainability initiatives, up from about a third in 2011, according to an analysis by Ernst & Young [10].
Ceres [11], a coalition of investors with $10 trillion in assets, tracked nearly 110 sustainability resolutions [12] that were submitted to U.S. companies in 2012. Forty percent resulted in firms committing to address climate and other environmental risks, it said.
Rob Berridge, senior manager of investor programs at Ceres, said the resolutions largely targeted oil and gas companies and electric utilities. Investors are “trying to create change across the economy to get everything aligned with a low-carbon future, because that will help protect the economy in the long run,” he said.
SEC Climate Guidance: Has It Worked?
Beyond the shareholder resolutions, companies are also feeling compelled to document and disclose the risks that global warming might pose to their businesses.
Driving that pressure is two-year-old guidance [13] by the U.S. Securities and Exchange Commission (SEC) requiring companies to consider climate risks on their annual 10-K financial forms.
Jackie Cook, the founder of Fund Votes [14], an independent project that tracks public disclosure data, said that in 2009, one year before the SEC ruling, 32 percent of the 543 public companies that filed 10-K reports that year mentioned climate change. That number rose to 49 percent in 2010, or 264 companies out of 533, likely because of the SEC guidance, she said.
Since 2010, though, the number of firms disclosing climate data on their 10-K forms has stayed flat. As of June 2012 only 53 percent of companies have done so, according to a computer tool developed by Cook that scours 10-K filings for climate data. The bulk of those companies are in the oil and gas, coal mining and utility sectors.
Cook said there is a silver lining, however. The depth of companies’ climate disclosures has grown since 2009, with a 20 percent increase in the amount and quality of 10-K content devoted to climate-related risks.
Climate Data Moves Out of Corporate Sustainability
Along with the 10-K filings, companies are providing more robust climate data in their annual reports to shareholders, said Kangos of PwC. Roughly a quarter of the country’s top public companies are now reporting emissions data and global warming risks as part of their overall financials, instead of in separate corporate sustainability reports, he said.
“That’s fairly dramatic. Five or six years ago, it was probably none of them. Now it’s some of them. That’s a trend we see continuing.”
Companies are hiring third-party consultants to audit their greenhouse gas emissions and verify the findings—just as they would with their financials. UPS, for instance, enlists firms such as Deloitte & Touche, Swiss-based SGS and The CarbonNeutral Company, a British firm that develops corporate strategies to reduce carbon emissions.
“It’s equivalent to having their financial data audited by an accounting firm, so that investors can trust it,” said Rosenheim of The Climate Registry. “It’s that same level of assurance.”
Businesses are also starting to apply the same level of scrutiny to their supply chains that they apply to their own operations, to both cut costs and to deepen corporation-wide emissions. Suppliers’ greenhouse emissions can account for as much as 86 percent of a company’s overall emissions, according to a study [15]by Carnegie Mellon University researchers.
At IBM, for instance, first-tier suppliers that directly provide products and services to the firm are now required to set and publicize goals on emissions reductions, energy conservation and waste management, and to measure their results regularly. Those companies must then require the same goals of their own suppliers that do work tied to IBM.
The Carbon Disclosure Project works with 50 global corporations—including IBM, Coca-Cola, Unilever and Nestle—to collect climate data on suppliers as part of its Supply Chain Program [16]. In February, the CDP reported that 45 of those firms now have a system in place to evaluate risks that climate change pose to their suppliers’ operations. About 25 of those say they already require, or soon will require, their suppliers to sign contracts pledging emissions reductions.
That trend means business for companies like Climate Earth [17], a Berkeley, Calif.-based startup that tracks and analyzes emissions across companies’ global supply chains. President and CEO Chris Erickson told InsideClimate News that the four-year-old firm has doubled its sales every year and is bringing on board bigger corporate customers, like industrial conglomerate 3M and Merck & Co., one of the world’s largest pharmaceutical companies.
Still, many of those interviewed for this story said U.S. firms reporting and reducing greenhouse gas emissions remain the exception in the business community. “There’s not enough action happening,” said Berridge of Ceres.
Nothing would help more to encourage climate action than federal carbon regulations, Kangos of PwC said.
“In the absence of policies, companies are left to fend for themselves,” he said. “The business community’s attitude has been [to] set the [climate] regulation so we know what the ground rules are. And we’ll deal with those ground rules.”


Appropriate Science

[I've wanted to write about this for a long time, and the September issue of Scientific American finally provoked me.  They talk about exceeding our evolutionary limits, living beyond 1oo, manipulating ourselves to be smarter (but no mention of wiser), and so on.  So, another long essay.]
The term appropriate technology was popularised after E. F. Schumacher’s pivotal work Small is Beautiful.  Schumacher argued against the modern economic pathology of endless physical growth, which of course cannot continue on our finite planet.  He argued further that some technology only promotes endless growth, or it distracts us from more important things in life, and is therefore not beneficial.  Technology that supports a fulfilling life and is compatible with a steady-state or slowly shrinking physical economy he called appropriate technology.
As for technology, so for science.  A common assumption by scientists is that if a challenge is there then it is fair game to address it.  In fact it is commonly presumed that freedom of enquiry, a central ingredient of an open democratic society, justifies such an attitude.  However we need to recognise that such freedom comes with responsibility.  This seems to be recognised regarding human cloning, for example, where strong legal and social restrictions have commonly been imposed.
The need for exercising responsibility is only emphasised by humanity’s current global predicament.  A broad assessment of our situation argues that some science is not beneficial, some ought to be low priority, and some is appropriate to stabilising humanity’s place within Earth’s biosphere.
Furthermore, it is reasonable to argue that our greatest challenges are not scientific, they are behavioural, and therefore also involve values, world views, and perhaps spirituality.  Indeed Schumacher’s view was that the important things in life are not material, they are found in relationships and spirituality.  This is a widely shared view, though it is not dominant at present.
Thus to evaluate the appropriateness or otherwise of a scientific topic we must develop the larger social and ethical context.  That context ought also to inform our political and economic choices, as will emerge.
First, some examples of scientific topics where serious questions arise.  It is one thing to work to cure diseases and thus to enhance the quality of life and life expectancy of many people.  It is quite another thing to seek to substantially extend lifespans, possibly beyond what seems to be a natural limit of a century or so.  At least while human numbers are stressing the planet, it would not be beneficial to increase the population further through artificial extensions of lifespan.
Even if human numbers were eventually to fall enough to remove this objection, there are more fundamental biological questions.  It seems that sex and finite lifespans may have evolved together so as to optimise evolutionary resilience.  Lifespans are specific to species and quite variable, so it seems they are programmed into our biology.  We don’t die just because we wear out.  Because sex is at least as old as multi-cellular organisms, perhaps one billion years old, sex and death are embedded deeply in our biology.
We are foolish to meddle at such deep levels in systems that not only are complex well beyond our present understanding, but arguably are intrinsically unpredictable.  In other words, there may be no way of foretelling the consequences of our meddling, even after many more decades of study.  Indeed this is already a concern with genetic modification of other species.
Another example is the burgeoning field of nanotechnology, which involves science as much as technology.  There may be some important benefits to be had from nanotechnology, though one might still wonder why it is thought necessary, or at least important, a point I will return to.  However there is clear potential for great harm, both unintentional and deliberate.
We can be quite sure that military scientists are busily working on nanotechnological weapons capable of who knows what horrors.  Because their smallness may make them insidious, one might think of them in the same way as chemical and biological weapons.  There are notional limits placed on chemical and biological weapons by international agreements.  The limits exist precisely because such weapons are perceived as a double-edged sword, as capable of harming the deployer as the target, or of harming civilian populations with no direct involvement in a conflict, or of potentially harming everyone on the planet.
Nuclear weapons are also perceived as being of dubious military and ethical validity, and we have made imperfect attempts to limit their deployment.  However once a technology is developed it is difficult to put the genie back in the bottle.
Even if nanotechnology is not intentionally harmful, there is great potential for unintentional harm.  Every technology has this potential, from stone axes and fire onwards, but the more novel and powerful the technology the higher the potential for harm.  Our experiences with radioactivity, nuclear weapons and nuclear power offer clear notice of the dangers of playing with exotic forms of fire.
A final example is the field of human-machine interactions, which includes the internet.  There are frequent projections of what will be possible within a few years or a few decades, and the potential is far from clearly benign.  We are already discovering that the internet has not ushered in an era of democratic communication, where freedom of information prevails and individual freedoms are promoted.  For every example of a popular movement being empowered by the internet there is another example of a powerful corporate or national entity enclosing a region of cyberspace and imposing rules that promote its self-interest, which is not at all assured to coincide with the interests of users.
However there are deeper concerns.  Our children are losing touch with the natural world.  Where once children routinely played outside, often in parks or natural woods, now they are much more housebound, through a combination of unreasonable fear of molestation and the pull of computer amusements.  This not only promotes problems such as obesity, it stunts brain development, which is stimulated by the complexity of natural environments.
Adults too are losing connection with the natural world, and thus losing understanding of the realities that underlie humanity’s presence within the biosphere.  This goes beyond setting good environmental policy, though that is already a critical concern.  Many people perceive a healing or spiritual benefit from being in nature, and there is good reason to expect this to be real, given how recently in human history our artificial urban environments have replaced the natural world as our place of living.  Scientists are appreciating more and more that we are co-creations of our genes and our environment, and this includes our brains and sensory environment.
Proposals for more intimate interactions of people and machines, including even hybrids, encounter some of the concerns of genetic interference, the concern of losing touch with biological reality (our own and the natural world’s) and an apparent obliviousness to the social, emotional and spiritual needs of people.
The issue here is still the issue so powerfully portrayed by Mary Shelley in her story of Frankenstein’s creation of a “monster” made of human parts.  His created creature, though human in general form and behaviour, is a wretched misfit who inspires horror and fear in others and ultimately dies in despair.  He has obvious abnormalities, he has no social context, no childhood, no family that has loved him into his present form.  There is far more subtlety and depth to being a human being than being a walking, talking, living doll.
Underlying the continuing drive to do science for science’s sake is a general lack of awareness of or concern for the deeper needs of human beings, and the role those needs must play in relieving humanity’s present predicament.  There is also a lack of appreciation of the scientific revolution flowing from our growing understanding of self-organising systems.  They require a new way of doing science, and the abandonment of the idea that we can control nature.
Human beings are social, pair-bonding mammals.  Our brains are so big they have developed a new kind of thinking, but our old thinking still often dominates our behaviour.  However our present scientific-industrial society acts as though none of these things is true.  Our economic system assumes we are competitive loners, rather like reptiles.  Our economics and many in the science community assume we are “rational”, in other words that we use the new “logical” kind of thinking that emerged only recently in our evolutionary history, what Daniel Kahneman calls “slow thinking”.  So a lot of our society is built around the assumption that we’re calculating reptiles.  This may have something to do with why we are making such a mess of the world, our only world, our miraculous living planet.
Rather obviously, we are not calculating reptiles.  As social mammals, being accepted in a social group is vitally important to us, otherwise, our old hominin brains tell us, we will soon be the prey of lions or hyenas.  As pair-bonding social mammals whose offspring develop very slowly we crave an intimate, long-lasting relationship.  To achieve and maintain these relationships we cooperate, give and receive, cede some of our individual autonomy to gain the greater security of a bonded social group.
We prize our “slow thinking”, for it is the basis of our intelligence, the thing that separates us from the dim-witted brutes around us.  The great celebration of our rational intelligence was the European Enlightenment, during which it was conceived that all things were subject to “laws”, and that we would soon understand all those laws and thus be able to predict anything and everything.  We would be masters of the universe and, incidentally, of ourselves.  An orderly, prosperous, secure, peaceful world, with ourselves in charge, hove into the view of our mind’s eye.
The reductionist science of the Enlightenment was brilliant for understanding macroscopic physical things.  Then the advent of relativity and quantum mechanics showed the world is not so simple.  The very large, the very fast and the very small became seriously counter-intuitive, and in some ways even unpredictable.  Nevertheless, after a few decades of confusion, we resumed the Enlightenment project, confident that we could understand, and control, all things.
Unfortunately that view is no longer tenable.  Although we have gained vast knowledge of living things, we have not adduced “laws” that allow us to predict and control them, at least not without the pervasive bane of what we choose to call “side effects”.  Worse, starting with Freud, psychologists have been telling us with increasing insistence that we, our slow-thinking rational selves, are not even in control of our own actions, at least not without cultivating something the touchy-feely set calls “awareness”.
Over the past half-century or so, a less-heralded scientific revolution has been developing around our growing understanding of nonlinear, self-organising systems.  It suggests why living systems are so, well, fickle, and why we had better start finding out about our inner awareness, and how to develop a bit of it.  It may even tell us that power over physical things is not our biggest challenge, and the acquisition of it not our most fulfilling life path.
Self-organising systems have become fairly widely known, but their deeper implications do not seem to be as widely appreciated.  They suggest that living systems are intrinsically unpredictable.  They suggest that our brains are the most complex things in the known universe, so perhaps it is not so surprising if we don’t fully understand ourselves.  They require that scientists, and Westerners more generally, re-develop a neglected part of our character – humility.
Self-organisation is something that occurs in systems of many interacting parts.  The parts may be fairly simple and fairly similar.  The interactions among the parts can spontaneously generate patterns in space and time.  Loosely speaking, weak interactions may generate simple patterns.  Stronger interactions may generate increasingly complicated patterns.  Very strong interactions may generate chaos, the lack of any discernible pattern, even though the system is still deterministic (in other words the chaos is not due to probabilistic quantum interactions).
As has become well known, the future details of a chaotic system are not predictable.  Short of chaos is a less-sharply defined regime called complexity.  A complex self-organising system exhibits patterns, but the patterns are not fixed, they are always shifting in small ways, and sometimes there is a large shift.  They fall between the chaos of fire and the rigid stasis of ice.  When a complex system undergoes a large shift it is hypersensitive to small disturbances or uncertainties, so the state into which it shifts is not predictable.  Thus the future details of a complex system are also unpredictable.
The processes of living systems are clearly of the self-organising kind.  There are good arguments that natural selection favours complex systems, and vice versa, implying that living systems are complex self-organising systems and therefore unpredictable in detail.  Nevertheless a complex system can display what might be called a distinct character, a style of behaviour, even though its details are not predictable.
The fundamental lesson of complex systems is that their behaviour is not predictable from their detailed interactions.  Their overall behaviour emerges from their internal interactions.  The whole is greater than the sum of the parts.  Reductionism therefore does not work for complex systems.  They can only be fully understood by studying them as a whole, holistically, as well as in their parts.
This explains why reductionist studies of living systems have not yielded the simple underlying patterns or “laws” that have been found for non-living systems.  Although a great deal has been learned about the how the parts of living systems interact, the systems must still be studied as a whole, and in their normal context.
Evidently much of biological and medical science still has to learn this fundamental lesson.  A prime example is the extravagant claims made regarding the decoding of the human genome.  It was said cures for many diseases would soon be found, but this has not eventuated.  The claims were the more reprehensible because Stuart Kauffman proposed in the 1980s that gene switching renders genetic expression a complex process.
A similar lesson applies to genetic manipulation of organisms, and to their release into the environment.  It is unfortunate that this technology has become captive to commercial interests who regularly make unsustainable claims that the risks associated with releasing genetically modified organisms are negligible.  Given the intrinsic unpredictability of genetic expression, there can be no guarantee that genes will not migrate to related species with unexpected consequences.  The release of genetically-modified organisms is an open experiment being conducted in the global biosphere.
There is a long and sorry history of biological releases into new environments, even without genetic manipulation.  Australia’s experiences with rabbits and cane toads are only two of the better-known examples.  It might be argued that those examples involved ignorance and stupidity, but there seems never to be a lack of monumental stupidity, as evident among the operators of the Chernobyl power plant, those who placed six nuclear  power plants in a single site on a tsunami-prone coast, and indeed corporate spruikers for GMOs.
An ecosystem is a living system, just as unpredictable in detail as a cell or an organism.  Furthermore living systems are evolving systems.  This is simple lesson has yet to prevent the unnecessary use of antibiotics in livestock and their excessive use in medicine, which are selecting for “super bugs” that are increasingly beyond our means to control.  We are now witnessing the selection of “super weeds” in response to genetically-modified crops that involve extensive use of herbicides.  The efficacy of GMOs that produce their own pesticides is also found to decline because their insect targets evolve into greater resistance.
Meteorologists are of course well aware that the chaos of weather systems makes prediction impossible beyond a week or so.  They do not display the hubris evident in so many other disciplines.
Economics is still the most resistant preserve of nineteenth-century reductionist hubris, persisting with the characterisation of people as rational, with the “rational expectations theory” (really an assumption) that claims peoples’ guesses about the future are accurate in the aggregate, and with the expectation that economic models are predictive despite their spectacular failure to predict the recent financial collapse.
All of these examples demonstrate the need for scientific humility.  Especially when attempting to manipulate fundamental mechanisms of complex systems, we must be very cautious about the potential for “side effects”, which we will never be able to predict with confidence, nor eliminate.
This brings us back to technologies currently developing, such as nanotechnology, biotechnology, artificial “intelligence”, and interfacing physical technologies with human beings.  Our brains themselves are complex self-organising systems.  With trillions of highly-connected neurons, they must qualify as having the most complex behaviour in the known universe.  We must approach our brains, our thinking and indeed our whole physical, emotional, intellectual and, for many, spiritual being with humility.
Freud alerted us to the idea that much of our behaviour might be determined out of the range of our conscious awareness.  A century later there have been many developments in psychology, and they have connected with Eastern practices to yield deeper insights and a wide range of therapies and personal-development strategies.
It is now well-established that we exhibit many “non-rational” behaviours and choices.  These often result from “fast thinking”, in other words our older, pre-programmed intuitive and instinctive responses.  Though labelled non-rational, they usually have rather obvious relevance to the hunter-gather life we have recently emerged from, such as responding to a perceived immediate threat more readily than a potential future threat.
Many of our behaviours can also be recognised as originating in our infant and childhood years.  We begin life in total dependency on our carers.  All parents have their idiosyncrasies, and some have rather unhealthy behaviours, but as infants it is imperative that we adapt our behaviour to please them.  In this way we grow out of childhood with a suite of behaviours, either normal infantile behaviours or learned coping behaviours, that no longer serve us as we grow.  Growing up includes growing out of these behaviours.
Traditional societies generally have a more structured process for growing up than do modern industrial societies.  Traditional societies usually recognise a series of stages and transitions, with challenges, initiations and celebrations, that extend through childhood and sometimes through adult life as well.  These are designed to help us to leave behind youthful behaviours that are no longer useful and to learn behaviours more appropriate for the next stage of our lives.  They are, in other words, designed to promote our emotional development and maturing.
Industrial societies have lost many of these practices, so that many of us either have to muddle through our emotional maturation or fail to progress as we might.  Unfortunately our consumerist society actively promotes infantile behaviours such as instant gratification, reliance on conformity and reliance on fast-brain responses that the marketing industry exploits with sophisticated ease.
Much of the process of emotional maturation involves learning to recognise our old, fast urges and to consciously shift our behavioural response.  Childhood fear of the dark can be calmed as we feel more capable of detecting and responding to real threats.  We can learn to defer gratification.  We can overcome our fear of being thought different, and therefore potentially abandoned, and learn to express our own uniqueness.  We can learn to trust our ability to respond to circumstances and people, and so let go of urges to control, exclude or attack unfamiliar people.
There are many personal development processes now available that can help us to move on from old behaviours that are no longer appropriate and no longer serve us.  These are typically emotionally trying, because it is in re-living old “irrational” fears, some of them ferocious, that we learn we survive them and can learn, slowly, to respond more appropriately.  There is still a tendency to lampoon such “touchy-feely” processes, but many can attest to their benefits in greater maturity and a richer life, including me.
The point here is that many of our irrational or immature responses helped to cause our present predicament, or they greatly exacerbate it.  Our natural desire for material goods to satisfy our physical needs has, for many of the rich minority of humanity, been taken far beyond what is sufficient.  This is because, egged on by the marketing industry and a pseudo-scientific economics profession, we allow our old impulses to rule us – the desire for status, the desire for power over others, the futile quest for security (of the kind we felt as children, protected by parents) and so on.  With greater maturity we can ceased to be governed by these impulses, and can choose to live materially sufficient, trusting lives that ultimately are more fulfilling.
We are fearful of change, fearful of the uncertainty of doing things in new ways, so we deny the need to change.  We, collectively, deny that exponential material growth cannot continue forever.  We deny that the environment is suffering and declining on a daily basis.  We deny that there is no future in degrading the soil.  Above all of course, we deny that global warming is a problem, or that we are responsible for it.
Thus the resolution of our present crisis, and the creation of a more peaceable and fulfilling future for our descendants, does not lie with science and technology.  Some science and technologies can certainly help, but only those that are appropriate.
Humanity is in a precarious situation.  The central problem is that the materially extravagant lifestyle promoted by consumer capitalism is rapidly degrading the Earth’s living systems and physical environment.  Global warming is the most urgent symptom, but far from the only one.
The way to resolve this crisis is clear enough, but it is not much acknowledged in our politics, mainstream media and popular culture.  We must reduce the material throughput of our industrial societies and stop emitting poisons.  We must explicitly abandon the mirage of endless economic increase.  We must promote the gradual reduction of world population, which can be done without resort to drastic measures.  We must learn again to live with and within nature, and abandon the attempt, thousands of years old, to dominate and control nature.
There are obstacles at several levels to the resolution of the crisis.  Probably of first importance is our fear of change, fear of stepping onto a path not travelled before.  Then there is our addiction to material things.  Then the body of thought, habit and misconception known as mainstream economics, which promotes the present pathology.  Then the institutions that have grown up within the pathology, including a business culture that puts competition and profit above all else.  Then those within institutions, public and private, who feel more emotionally secure according to how much power they wield, and who therefore feel very threatened by talk of change.
Thus the means to the required resolution are not primarily technological.  The primary needs are the overcoming of fear and changes in habits, thoughts, and institutions.  Technologies can support this process, but technology alone cannot accomplish it.  Technologies must also be appropriate to the need.  Some technologies can certainly be helpful.  Others are clearly not helpful.  Yet others are of dubious value on balance or would be a distraction from the urgent challenge at hand.
Reducing the material throughput of our economies does not mean regressing to peasant or cave-man lifestyles.  It means being much smarter in how we do things, and especially learning to recycle materials.  A major obstacle to this change is the mainstream economics profession, which is beholden to a central theory that is blatantly irrelevant to modern economies, which continues many detrimental habits and practises, particularly around money and debt, and which has become so insular it seems to be incapable of admitting the evidence, new conceptions, knowledge and technologies that can move economics and our societies forward.
There are already many technologies and designs that can reduce the energy needs and material throughput of our economy.  The primary need is not so much new technology as good design, design that is carefully integrated to avoid waste and to promote re-use of materials.  Buildings have been built that require much less energy for a modest additional cost that has a short pay-back time from energy savings.  Material needs can be drastically reduced by designing from the start to recover and recycle materials, according to the Cradle-to-Cradle concept of McDonough and Braungart.  Germany already requires substantial recycling of its vehicles.  City layout can be changed to greatly reduced the need for commuting.
Interface Carpets has the ambition to be a benign presence on the planet, and has made major progress towards that goal through creative and persistent attention to all its processes.  Comparable examples are proliferating, and the path forward, including complete elimination of fossil fuels, is becoming rapidly more evident.
There is a clear need for more basic research to facilitate these changes, for example in energy storage and fuel cells.  New materials that have a benign life cycle are needed to replace the many materials that are in short supply or that deplete or pollute the natural world.
Currently there is a rush to extract fossil fuels from less accessible, more dangerous, lower yielding, more polluting sources such as tar sands, coal seam gas, shale oil and deep sea clathrates.  There could hardly be a less appropriate application of science and technology, virtually guaranteed to ensure drastic global warming, and to generate more destruction of the biosphere and many other problems along the way.
There are various proposals for geo-engineering to reduce the warming effects of greenhouse gases.  The climate system, the ocean system and the biosphere are all prone to rapid shifts of state, in the manner of complex systems, so any proposed large-scale interference must be regarded as risky and of highly debatable benefit.  The same can be said of nuclear power, for the reasons that it is unnecessary if we pursue efficiency and renewable technologies, it is prone to cover for the development of nuclear weapons, and the waste problem is arguably intractable given the riven state of the Earth’s crust.  Proposals to bury carbon dioxide emissions are highly speculative, require large supplies of scarce water, and are likely to be extremely expensive if they ever work at all.
What these dubious or unhelpful technologies have in common is a continuing reliance on big systems that are prone to continue the compounding of “side effects” and, more fundamentally, a continuation of the mentality of dominating and controlling nature rather than working with it.
By contrast, several of these problems can be addressed together and in a bio-friendly way by promoting agricultural methods that work with nature.  These are developing rapidly and in many parts of the world, rich and poor.  Such farming methods increase soil retention of carbon and water, improve the soil micro-ecology and general fertility, and are achieving yields comparable to those of monocultural industrial agriculture.  Highly mechanised and chemicalised agriculture depletes the soil of carbon and water and commonly pollutes rivers and oceans – it has no future.  On the other hand natural and organic methods address the current global problems of helping people to feed themselves, making more efficient use of water, avoiding destructive pollution and helping to draw down the atmospheric content of carbon dioxide.  Instead of compounding side effects, this approach yields compounding benefits.
The American agrarian Wendell Berry calls farming “a high and difficult art”.  He insists it can only be done well by people who are intimate with the local environment, and who are part of a strong, local human community.  This returns us to the essential needs of human beings – loving relationships, social bonds, material sufficiency delivered in a healthy way and a life that can be as challenging and fulfilling as we desire.
There is a simple, fundamental truth about our place on planet Earth.  We have emerged from the living biosphere, and we are still intricately and intimately a part of it.  All of our food, all of our fresh water and all of our breathable air comes from or exists because of the web of life.  None of our clever technologies has change those basic facts.  If the web of life weakens, we are weakened.  If it dies, we die.  Our health and thriving depend on having a healthy and thriving biosphere to live in.
All of our industries, not just agriculture, need to be examined for their compatibility with the biosphere.  That is why people are busily exploring how to redesign our products and processes so their materials can be recycled indefinitely, and so they can function on the natural energy flows of the Earth.  Our homes, our cities, the way we trade things near and far, all of our activities need to be adapted to our new reality on planet Earth.
Whether we like it or not, whether we meant to be or not, we are now so powerful that we are necessarily the custodians of the living planet that we are part of.
It is said by some that physicists lost their innocence when the first atomic bomb was exploded.  No longer could they explore the physical world just because it is there.  They had to consider the potential consequences of their explorations.  It may be that innocence was lost, but few so far seem to have appreciated the lesson, and the lesson applies now to all science.  Science will certainly play a key role in our future, but no longer can we presume to push blindly forward on all fronts.
No longer can we blithely presume to explore the depths of our genetic and biological makeup, no longer can we contemplate devices operating at the planetary scale or the nano scale, or devices that blur the boundary between the human and the physical.  We must become far more discriminating.  We must study the complexity, the subtlety, the interconnectedness, that comes with being a human being on this planet.  We must respect our fellow humans, and foster our fellow creatures.  We must re-learn the wisdom that has been passed down to us from millennia past.  If we proceed with explorations, we must do so with deep caution and with profound humility.
Will it be possible, ever, for humanity to live within the biosphere in mutual support into the indefinite future?  Well, every other species is required to live this way or it does not survive.  Furthermore we have learned recently that this condition seems already to have been achieved by one section of humanity, in an unexpected place and for a very long time.
When Europeans first encountered the more fertile regions of Australia, starting in 1770, they we struck, over and over again, by their beauty and their productivity.  Grasslands, scattered trees and woodlands were interspersed in pleasing harmony, and game abounded.  Much of the landscape, it was said repeatedly, had the park-like character of an English gentleman’s estate.  Historian Bill Gammage has recently argued persuasively that these landscapes were not natural.  They were the product of a system of human management that was pervasive subtle, intricate and intimate, and that extended over the entire continent, through many ecosystems and climates and across diverse language groups.  The same features existed in Tasmania, which was isolated at the end of the ice age about 11,000 years ago, suggesting that the system was well-established at least that long ago.
This system was disrupted by the European intrusion and the land rapidly lost its striking character and much of its fertility.  In many places that fertility has probably never been regained.  There are now people trying to develop forms of agriculture that work with the land and its nature.  It will be a very long process of learning and adapting.  The old Aboriginal system cannot be re-created because there have been many extinctions, many exotic species have been introduced, and much knowledge has been lost.  Nevertheless some of the knowledge remains, and the example is now revealed, to inspire us.
This story challenges the core assumptions of our modern industrial societies regarding the value of technology and material things, and the nature of that much-abused concept sustainability.  We need not and cannot abandon all of our knowledge and technology, but we can be far more discriminating in decided which knowledge and which technologies really serve us – and serve our grandchildren and our distant descendants into the indefinite future.

Bill Gates: “Economists don’t actually understand macroeconomics”

The only way to get a far more advanced understanding of Macroeconomics is to trace it in Real-Time via supercomputers, and indeed, qua...