Political Compass (2011 edition)

In November 2003 I posted about a little online test I did called the Political Compass, which I thought was interesting. Last night in conversation with a friend the topic came up again, and I thought it might be interesting to have another crack at the test, to see how my views had shifted (or not) in the 7+ years since I last did it. Seems I’m growing in my lefty tendencies — in 2003 my figures were:
Economic Left/Right: -5.50
Libertarian/Authoritarian: -4.51

Today, I sit in roughly the same position in terms of economic views, but I’ve shifted significantly closer to the libertarian end of the spectrum:
Economic Left/Right: -5.90
Libertarian/Authoritarian: -7.38

My political compass values as at 20 Mar 2011

I have to admit, I was surprised to see such a significant shift, even if only in one dimension. Will be interesting to try again in a few years time…

Sylvia Earle’s TED wish

In this TED video, Sylvia Earle talks about her TED wish – to protect the oceans. It’s a pretty amazing video, and an important statement about the damage we’re collectively doing to our oceans and how it’s going to affect us before long.

I can’t help but think that while our “political reality” is centered around an unsustainable concept of growth, the required changes to behaviour simply won’t come about.

In a similar vein to framing sustainability around aspiration, perhaps we need to reframe our concept of growth to something that is more akin to the growth we see in natural ecologies (the very ones we are destroying).

So rather than saying “we have to stop growing”, we could instead change how we view growth so that our human tendency to pursue it can be satiated, but not at the expense of the planet.

Further thoughts on “Reboot economics”

A couple of other thoughts popped into my head after writing that last post.

In no particular order:

  • I wonder if the lack of credit available is a result of foreign governments, such as China, basically decided to stop propping up the US spending spree? If so, this looks a lot like the scenario George Monbiot outlined in his book Age of Consent.
  • Given that the market has decided that these loans are too risky, why on Earth does it make sense for the public to underwrite risky investments like this?
  • I wonder if now is the time for the public (and US politicians) to get behind the Code of Corporate Citizenship – does this crisis open a window of opportunity to push this through?

Reboot economics

I was chatting to Ang the other night about the economic crisis, and I can’t help but think this is just a big “reboot” – the market correcting itself after years of abuse.

And if you’re a true believer in market economics, now is the time you should be arguing that we need to let this happen, as it is “the way of the market”.

What’s interesting is that’s not what’s happening. Instead we’re seeing what amounts to the biggest nationalisation project the western world has seen in a long, long time. (As Wade says: “So the AU govn’t is assuring all credit. Now all these private companies are publically funded. Remind me again why privatization is good?”)

We need this correction – to stem the tide of greed that has flooded the economic system over the past few decades (in this sense I agree somewhat with what Marc says on the matter – it’s not just the CEOs and banks at fault).

I’m actually fairly liberal (note the small “l”) when it comes to markets. Testament is the fact I’m starting a business as my method of achieving social change. With that in mind I say let the market do what it does best – let it balance itself.

Maybe I’m naive, but I think that such a correction would see a blossoming of sustainable businesses to fill the voids left by the unsustainable ones that toppled the market. In “sustainable self reliance as David Ransom puts it [via Wade]). Perhaps that’s part of the “balancing” process – a recognition that business does not operate in a vacuum with infinite resources and growth.

Yes there will be significant fallout that will affect a lot of people – some who can afford to “ride it out” and others who can’t. But instead of investing billions in banks (essentially supporting those who can afford it) why not funnel those dollars into support mechanisms for the people that are most directly affected, in their day to day lives, by the crisis. i.e. the ones who will need assistance with their rent and food bills, not bolstering their spouse’s trust fund.

That could take the form of state-run services – which, after all, is what the state is meant to be for (to pick up the pieces where/when the market fails). But could mean many things – I suspect many of them better than propping up corrupt executives.

China’s economic control

I was chatting to a friend the other day and he mentioned this concept, but Andrew Charlton has written a great opinion piece explaining why our economy is Made in China.

Some key quotes that resonated with me:

The former prime minister John Howard claimed during the election that his fiscal discipline was keeping inflation and thereby interest rates down.

This was hogwash. Average inflation was relatively low, but this hid the bipolar nature of our economy. Non-traded goods suffered endemic inflation during the Howard years, but the problem was concealed by disinflation in the traded economy. It is easy to keep inflation low when every year China keeps shipping us more goods at cheaper prices.

I’d not really seen this before, but it makes sense to me. Especially the bit about Howard’s claims being hogwash 😉

He continues:

There are two ways to solve this problem. One is to passively sit back and let the Reserve Bank reduce demand by bludgeoning shoppers with repeated interest rate rises.

The better solution is to improve productivity in non-traded sectors so that our domestic production can grow to meet demand. A wave of competition policy in the early 1990s dramatically improved the efficiency of Australia’s traded economy, stripping away tariffs and opening up the sector to competition. The new Labor Government must now do the same for the non-traded economy. That means improving productivity in formerly neglected sectors like transport and logistics, education, utilities, health and many other services.

I would also add that perhaps we should turn around our long-neglected R&D-related activity, so that we can increase high-value technology-based exports in growth sectors too – like renewable energy and highly-efficient transport (hybrid cars etc.). The investment in education that Andrew mentions is part of this shift.

How often do we hear about bright ideas (and the people behind them) being picked up overseas when their attempts to get funding and support locally had run their course. It’s these ideas and developments that would increase the value of our exports – we have for too long been focused solely on the “resources boom”. Time to start moving eggs into other baskets methinks…

Sustainable = cheaper?

Well… sometimes.

David highlights some Economist stats that demonstrate that sustainability doesn’t necessarily cost more. In fact, sometimes it can save money.

David makes the point that although overall these measures are cheaper, often the decision makers are not the ones who benefit from the reduced costs. And as a result they don’t actually implement these simple measures that have a societal benefit, because they don’t get to see that benefit on their bottom line.

I’ve kind of had this thought before, but never fully put two and two together. In buying our unit in Newtown we were really aware of the poor water management and lack of sustainability features like water recycling, rain-water tanks, solar panels or motion sensor lighting (the body corporate did look into installing a motion sensor lighting system after the fact but the cost was too high to install then – no doubt it would have been significantly cheaper if it had been incorporated at build time). We had limited options due to our financial situation – but mostly it was a case of the “green” options simply not existing.

Virtually every place we looked at neglected the simple measures – which was immensely frustrating for us as buyers. We did end up in a place that was north facing and has good insulation, but had to forgo some of the other things we were aware would have saved us money and been better for the environment.

My view, much as I hate to admit it, is that the buyer has no influence on this – we can ask about it, but in the end we kinda have to accept what’s available (“no influence” is probably too strong – but it certainly is negligible in the grand scheme of things). Even if we chose not to buy, waiting for an enviro-friendly place to come on the market – the market (i.e. developers) don’t know this, and aren’t incentivised to do so. A market failure caused by lack of information perhaps…

I wish there was a way for us all to flag what we were looking for so developers could take heed (assuming we could get sufficient numbers interested in sustainability measures). But there is no such mechanism as far as I can see. So ultimately I feel that government intervention is the only way.

If I were building or buying a house it would be a different story – I’d have a lot more options and choices and my dollar could be focused more effectively. But living in Sydney I can’t see any way that I can afford a house, let alone build one – so I’m stuck relying on developers of apartments and other urban housing. I think the situation is even worse in high density buildings.

But I’m not holding my breath – as I understand it the BASIX laws have actually been clawed back to support developers who claim that it’s too expensive (i.e. too much of a hit on their profits) to do some of these things. It’s really so short sighted and neglects the state of the environment in the name of profit – two steps forward, one step back.

Cost/opportunity – the sustainability equation

I’m a believer in the idea that sustainability doesn’t have to mean increased costs. Particularly in business “extra cost” is raised as a roadblock to making sustainable choices.

If we focus on the costs of doing what we currently do, but more sustainably, often this is the case. But if we instead focus on the opportunities that being more sustainable presents, then perhaps we can turn that equation around.

Treehugger has a brief article on Bags from Keen Shoes which is a great example/case study.

They have managed to recycle much of their excess material – which previously would have been considered waste – into bags. And they’re looking to raise the amount of recycled material in the bags from 40% to 100%.

Incandescent ban

Ban the bulb

Seems like Malcolm Turnbull is considering banning incandescent light bulbs (more at news.com.au).

I think this is a great move that will not only benefit the environment, but will also reduce the cost of the bulbs as sales volume increases. (I also love the fact it’s front page news, and the top news item on Google News today. Brilliant!)

The Sydney Morning Herald has a great image that compares the two types of bulbs. What I love about the picture is that it compares the cost of 6 incandescent bulbs with one CFL – which is a much fairer cost comparison as the life of a CFL is much longer.

At a total cost of more than 6 times, and CO2 emissions of roughly the same proportion, the incandescents simply don’t stack up.

Of course, there’s no need to wait for government intervention – you can get CFLs on the shelf today.

(I also hope that CFL manufacturers ditch the plastic blister packs (which are annoying to open) and replace them with more conventional and easier to handle packaging…)

A couple of further thoughts – I agree with some of the comments I’ve read that it doesn’t take a lot of political will to do what Turnbull is suggesting. And that a lot more is needed. But it’s a great first step.

To put the announcement into perspective. From what I understand, lighting accounts for between 5% and 10% of all household emissions. That means that more than 90% of a households emissions still need to be addressed. Still a 5-7% gain in efficiency in a household is a big step forward and should be supported.

Hot water, which Turnbull is reportedly also targeting for efficiency measures, accounts for around 25-30%, which will have an even bigger impact.

Ultimately, however, the energy industry needs an overhaul to make the big difference required. As I’ve stated before, energy efficiency will play a big part in allowing that to happen.

(Image thanks to Lighter Footstep)

Sustainable energy

This morning The Australian has front page: Climate target to cost $75bn.

AUSTRALIA’S best hope of making affordable but deep cuts in greenhouse gas emissions by 2030 to reach global targets is by using clean coal, nuclear and gas technologies rather than renewable energy sources.

It’s interesting to note that first paragraph includes clean coal and nuclear as solutions to reach that target. Neither of these technologies are available today. Clean coal is still just a dream (as the article says further down “Capturing and storing emissions from coal-fired power stations, if viable” – emphasis mine).

Nuclear will take at least 10 years to be introduced, even if the decision was made today to start down that path. That means that it will be 2015 at least before we’ll see the benefits. In fact the report suggests 2020 as the year.

The Australian goes on to report that the infrastructure cost for these technologies “could double the cost of electricity generation”. I’m sure that’s the high-end figure (thus the “could”). I’d like to know how they came to that conclusion – but it’s fairly well understood and accepted, by both the government, business and the public, that the cost of shifting our energy infrastructure is going to cost more.

Higher infrastructure costs present a two pronged problem: 1) it’s more expensive to create clean energy infrastructure than existing coal technologies, so the market is reluctant to invest unless there is clear incentives to do so; and 2) it’s going to cost more at the point of use (i.e. our bills will be higher.

Point 1 can be addressed by the introduction of a carbon tax, which is being considered by the government at the moment (I suspect as a result of the nuclear energy inquiry). This brings the cost of coal into line with competing clean technologies, by taking into consideration the environmental cost of burning coal.

Tim Flannery presents an interesting solution to point 2. He suggests that with though prices increase with the introduction of a carbon tax, the government can reduce PAYG tax by roughly the same amount. The government continues to receive the same revenue through the carbon tax. Tax the bad, not the good is the basic principle. The net result, he suggests, is that we, as consumers, will not notice the difference. Our bills will be higher, but the tax breaks would ease, if not neutralise the pain.

But there’s another measure that can be taken, one that often seems to be ignored: efficiency. If we use less, the overall cost to us is less.

When I started reading the article, the main question I had was who produced the report? The Energy Supply Association of Australia. From their homepage: “The Energy Supply Association of Australia represents Australia’s electricity and downstream gas businesses.” So in other words, the electricity industry. The industry has a vested interest in protecting their existing practices, which I suspect is why clean coal features prominently.

The article goes on to point out this interesting tid-bit: “The report uses lower cost estimates for clean-coal technology than the Switkowski review of nuclear energy in Australia and also assumes that nuclear technology is not available until 2020.”

Perhaps the Switkowski review used an inflated figure (which is plausible); or the electricity industry is citing deflated figures (which is also plausible). So, if clean coal technology does become possible, the actual cost is probably some where in between those two reports.

I think the chief of the ESAA hit the nail on the head with this quote:

ESAA chief executive Brad Page said the report, based on best available estimates of costs and technology changes, demonstrated the need to develop the widest portfolio of technologies possible to minimise the cost of greenhouse emissions cuts.

He also said that “Over the next 25 years, if you are seeking to achieve fairly deep cuts in emissions, then polices that favour a particular renewable technology are probably poor choices,” which I also agree with.

This is where a carbon tax can be effective – let the market decide the best solution. The government is pushing nuclear, but it shouldn’t push any one technology. However, where there is a significant public interest in not pursuing a particular technology (like dirty coal, or I would argue nuclear) the government should intervene, in my view.

WWF CEO Greg Bourne was quoted saying much the same thing: “WWF chief executive Greg Bourne remained opposed to nuclear energy and called for market mechanisms to accelerate the development of lower-emissions technologies.”

At least the Oz got WWF’s and Greg’s position on nuclear right this time 😉

As an aside, I wonder if a report was released showing that renewable energy could meet that need, would it be front page? Or do only controversial findings make the cut?

Reason I ask is that the Clean Energy Future reports, released a few years back by WWF, show how our energy requirements can be met with renewable energy and gas-fired power (for base load – not renewable, but with much lower CO2 emissions than coal-fired power). Is that not newsworthy?

Polls show that the public wants renewable energy, and believes that they are the way forward. Yet it seems practical solutions that exist today are ignored. Sigh…

Disclosure: I am an employee of WWF-Australia. The views expressed here are my own, and not necessarily those of my employer.