The Free Market Religion

Phil Rockstroh, h/t mathman in the Big Picture comments:

One's sense of self and one's beliefs, as well as, the mythos and traditions of a people are inextricably bound with place, landscape, and social situation. When I was a child, growing up in Alabama and Georgia, on occasions such as backcountry fishing expeditions, I would, at times, come in contact with rural African American farmers who still lived by the agrarian rhythms of the nineteenth century.
Occasionally, taking refuge from the afternoon heat of high summer, we would lounge on wooden porches and snap green beans, and I would listen as they quoted scripture.
The Jesus of their belief system was born of humble beginnings (a mere seed) and grew beneath the hot sun, but, at the height of maturity, was cut down, sacrificed so they may live, then, like their life-sustaining crops, was resurrected as next year's seed crop. Suffused with a metaphoric analog of the criteria they lived day to day, these tales held resonance for these rural, farming people; the metaphors resounded with the verities of place and circumstance. The figure of Christ was as real to them as the snap beans beneath their fingertips.
Now, in an era in which the destination of most all of our objects and accoutrement is the landfill, Deep South mega-churches espouse a cosmology that resonates from a junk food paradigm: a Gospel of The Drive Thru Jesus…when The Rapture comes our corporeal bodies will be cast aside like fast food wrappers.
All in all, for both Christians and for secular-minded, market economy true believers, a belief in economic providence has proven our undoing -- an insistence on its miraculous influence left us mistaking ad-hoc, bubble-borne affluence for a soul-vivifying portion of divine grace. The corporate/consumer state's trickster gods of fast buck commerce offer drive-thru-window epiphanies. Members of the congregation of the Church of Free Market miracles believe their prayers will always be answered: Instantly, the consumer state's homilies of perpetual gratification arrive -- their voices crackling like a burning bush from drive-thru order-boxes.

It really blasts on working class hicks from Georgia and Alabama desperately clinging to their guns, religion and big trucks and SUVs, but it makes some interesting points, the veracity of which we will soon discover.  Actually, for me it was worth reading to find someone more pessimistic than I.

Naked Capitalism Link of the Day

Today's link: Climate Shifts 'hit global wheat yields,' at the BBC.  This is a recap of the posts here and here.  From the BBC story:

The team carried out a large statistical analysis that tried to isolate the effects of temperature and precipitation on crops, independent of all other factors such as changes in technology and land management.

Wheat and corn are the staple crops that are most affected by changes in temperature

"We can see how much these variables affect crops... for example, for a crop like wheat, a degree (Celsius) of warming on a global average translates to about a 5% loss in production."
Professor Lobell said the study only referred to past relationships, as extrapolating the findings to predict future trends would require a number of assumptions to be made.
"In particular, you have to assume how non-linear the response will be and how different the crops of tomorrow will be from the crops of today," he said.

Population growth and energy consumption is straining agricultural resources, adding increasing global temperatures to the mix could very easily lead to catastrophe.

Other links of note include a story on the right-wing campaign to destroy the public schools, and a solar device to sterilize medical equipment.  A daily visit to Yves Smith's naked capitalism site is highly recommended.

Limited Resources

Ryan Avent looks at the commodity price boom and the rapid development in emerging markets, and comes away with this observation:

The ADB is saying that 3 billion Asians could reach European income levels by 2050, on top of the billion affluent Europeans and North Americans, not to mention the contemporary ranks of rich Latin Americans and Africans.
I don't think it's impossible to imagine a world in which four times as many people enjoy rich-world living standards as is currently the case. But for it to be possible, humanity must either start discovering and exploiting new earthlike planets, or come up with revolutionary new ways to increase terrestrial supplies of critical resources, or dramatically decrease the resource-intensity of wealth. The mechanism that will encourage one or some (or, I suppose, all) of these developments is high resource prices. And until those developments materialise, high prices will act, instead, to check growth. Or so it seems to me.

Dramatically decrease the resource-intensity of wealth.  In other words, the world must make improvements in standard-of-living without being as wasteful as America has.  Our first step has to be increasing efficiency in transportation and electrical distribution, as both are tremendously wasteful.  If we don't, our standard-of-living will decrease dramatically.

Why the Slowdown in Agricultural Productivity?

From Greed, Green and Grains, via Mark Thoma:

Two words:

Climate Change  Global Warming.

Well, there may be more to it.  Like reduced public research and pathogens like wheat stem rust.

But new research by my colleagues David Lobell and Wolfram Schlenker, along with Justin Costa-Roberts shows that warming has hurt corn and wheat yields on all continents except North America:

Farms across the planet produced 3.8 percent less corn and 5.5 percent less wheat than they could have between 1980 and 2008 thanks to rising temperatures, a new analysis estimates. These wilting yields may have contributed to the current sky-high price of food, a team of U.S. researchers reports online May 5 in Science. Climate-induced losses could have driven up prices of corn by 6.4 percent and wheat by 18.9 percent since 1980.

The article was embargoed until 2pm today, but it's already circulating.

Why not North America, or why not yet in North America?  I think any climatological change in the Corn Belt could be disastrous. Don't fear, if you say nothing is happening, nothing is happening, right Republicans?

Charity Combined With Carbon Credits for Profit

This also via Ritholtz:

Swiss-based Vestergaard Frandsen--makers of mosquito nets and the LifeStraw--has figured out a solution to turning a profit while saving the world.
The company is launching a campaign today that could change the plight of water-borne illnesses in Kenya, while making the company a tidy sum of money. Over the next five weeks, 4,000 temporary employees will distribute the company's LifeStraw water filters to 900,000 households in Western Province--nearly 90% of the entire population--providing 4 million people with clean, safe drinking water. The filters will be provided to the end users for free, and company founder and CEO Mikkel Vestergaard Frandsen has invested $30 million of his own money into the project. But he's not worried about losing out--because for each LifeStraw he donates, he's going to be making money.
The campaign is called Carbon for Water. Kenyans boil their water to eliminate waterborne diseases, using wood fires. Those fires generate a large amount of carbon, and eliminating the need to boil water means fewer emissions from Kenya. Because they're providing the means to reduce emissions, Vestergaard Frandsen earns carbon credits for each LifeStraw donated. He will then turn around and sell those credits to companies in countries that have carbon caps and exchanges. "We are using international agreements about climate change to finance the mitigation of CO2 in the least developed countries," he says.
Vestergaard Frandsen estimates that the campaign will offset about two million tons of carbon every year—that means the company will earn two million carbon credits. Carbon trades on the commodities market at between $6 to $12 a unit and, he says: "because the project is based in Kenya and has significant humanitarian and health co-benefits, these credits can be sold for a premium." Vestergaard Frandsen has made a 10-year commitment to Carbon for Water, which means that the project could potentially offset 20 million tons of carbon. Even at the lowest estimates, that means Vestergaard Frandsen will make his $30 million investment back many times over. Which is important, because Vestergaard Frandsen doesn't sell its units retail--at $25, the LifeStraw Family is prohibitively expensive for most end users to purchase. Instead, the company formerly relied on partner nonprofits to fundraise, purchase LifeStraws, and donate them in bulk. It was a succesful plan--in 2010, the company had a profitable bottom line with revenue of about $500 million--but now, he doesn't have to rely on the fickle kindness of philanthropists.
The model isn't the perfect solution the issues plaguing water in the developing world: while not having to collect firewood to boil water helps preserve safety and time of the women and children who typically bear the burden of these tasks, they still have to make trips to the water source. And carbon trade is inherently controversial, and as of now no plans have been announced for what happens to carbon offsets after the Kyoto agreement expires in 2012.

That is interesting.  It all seems like a bunch of hocus-pocus, but it solves a simple problem in a more primitive society.  The problem is that it also puts off dealing with a much more complex problem in a more complex society.  It also highlights the fact that the worst polluters, the U.S., China and India are doing nothing whatsoever to deal with CO2.

Naked Capitalism Link of the Day

Today's link: Pacific salmon may be dying from leukemia-type virus, at McClatchy:

In Canada's Fraser River, a mysterious illness has killed millions of Pacific salmon, and scientists have a new hypothesis about why: The wild salmon are suffering from viral infections similar to those linked to some forms of leukemia and lymphoma.
For 60 years before the early 1990s, an average of nearly 8 million wild salmon returned from the Pacific Ocean to the Fraser River each year to spawn.
Now the salmon industry is in a state of collapse, with mortality rates ranging from 40 percent to 95 percent.
The salmon run has been highly variable: The worst year came in 2009, with 1.5 million salmon, followed by the best year in 2010, with 30 million salmon. But the overall trend is downward.
Losses were particularly high in elevated river temperatures; warmer water makes it more difficult to deliver oxygen to the tissues of salmon.
Seven of the  last 10 summers have been the hottest on record for the Fraser River. But experts say it's too soon to pin the blame on global warming.
"Clearly, a warming climate is going to produce some new stresses for Pacific salmon," said Daniel Schindler, a professor of aquatic and fishery sciences at the University of Washington in Seattle. "Some of those stresses will certainly be expressed through increased susceptibility to disease, including something like this."
But he added: "The reality is we have very poor understanding of how climate and disease dynamics interact with each other in salmon. We know they're going to be important, but we can't say a lot in detail."

Fisheries are interesting to me, but the future is pretty bleak.

Obama vs. Ryan

Andrew Sullivan quotes from the news that Obama will be releasing his own budget plan soon, focusing on raising taxes on the rich and making smaller changes to Medicare and education programs, and follows with this analysis:

And so Obama starts off this critical part of his first term by appearing to be above the fray and yet committed to compromise. Via Biden, he calls the GOP's bluff, draws a line in spending cuts for 2011, and exposes the draconian spending reductions that the GOP's no tax increase pledge requires. He comes back with a bid to tax millionaires, offers spending cuts that would be far more sophisticated and targeted away from investment than the GOP, and pledges to put his own proposals forward as early as this week.
Of course, for a blogger like me, you face a choice. Simply trust the guy and spin for him, or voice skepticism, outrage and disappointment and get played along with the GOP. But, of course, I don't mind getting played. Because I want this president to succeed - and such success requires root-and-branch spending and tax reform.
He seems to be getting there - in that highly unsatisfying but politically shrewd way of his. So now we will have the Ryan plan and the Obama plan. Guess which one independent voters will like more?

Even though I didn't share Sullivan's admiration for the "courage" of Paul Ryan's budget plan, I do agree with him here.  Obama appears to have gotten rolled on every issue since the November elections, giving in to the Republicans on the Bush tax cuts, on payroll tax cuts and on the recent 2011 budget negotiations/hostage crisis.  But he let Paul Ryan roll out his absolutely awful, Bizarro World Robin Hood (screw the poor and give to the rich) 2012 budget last week, sat back while all the sociopaths in D.C. talked about how bold it was, let the analysts dig into the numbers and find out it doesn't add up, then he'll roll out his own plan with valid numbers and a return to Clinton-era tax rates.  This will once again show the President as much more reasonable than the Republicans, even though most of the people in Western Ohio will believe it shows how ignorant he is.  You'll get that.  It will help the president with more reasonable people in the more-populated areas, which is where it counts.

Yet I have my reservations about the future.

A lot of people will point to the late 90's and say that the we'll return to some golden economic era.  I disagree.  I think the 90's, like all "prosperity" we've seen since the end of the Carter presidency, was fueled by borrowed money and productivity gains from the integration of technology, along with lower oil prices after the end of the embargo.  Since the tech bubble burst and China roared back from the 1998 Asian crisis, we have seen the limitations of our ability to sustain economic growth, especially with the addition of the "War on Terror" and actual wars in Iraq and Afghanistan, and a partial war now in Libya.  We've positioned ourselves into a spot where we will face a real decrease in standard of living, barring a technological miracle.  Yet, we still can't prepare ourselves for actual sacrifice.  Obama will most likely take a step in the right direction, but it still won't be large enough.  The nice thing is that it actually is in the right direction.  Republicans, meanwhile, always direct us the wrong way.

We as a people face some stark choices.  We can start making some real sacrifices, or we can slowly (or much faster if we choose to follow the Republicans) march closer and closer to the precipice.  At this point in our public conscience, Jimmy Carter is looked on as a failure as President.  But as we face the challenges ahead of us, we will need to follow many of his recommendations from his "Malaise Speech," becoming more energy-efficient, more humble, and making some real sacrifices.  If these efforts were made when he recommended them, we would be a lot better off now. 

Instead, we avoided facing a more sustainable energy future, and made grave choices which will make things even more difficult.  The vast number of buildings constructed since 1980 have produced unprecedented sprawl, much greater dependence on automobile travel, much larger homes which we heat and cool, vast amounts of debt, and tremendous poverty and crime which we abandoned in our inner cities.

Now we face energy and climate challenges, enormous debt problems, a struggling economy, and have no real way to easily go forward to address them.  Along with that, we've fostered and developed an every man for himself attitude which will make addressing these problems even tougher.  The policy choices made since 1980 have weakened and indebted the middle class, built up resentments amongst the lower 80% of the income distribution, and enriched and strengthened those at the top. 

The size of the challenges we face will require that all people make some sacrifices, but those who have the most will have to give the most.  Unfortunately, they don't see it that way, and they have spent the last 30 years strengthening themselves at the expense of everyone else.  To peacefully convince them to participate in the sacrifice will take unity among everyone else, yet in the last 30 years, the people in charge have sown tremendous dissension and disunity amongst the lower and middle classes.  It is time to unite, face our real challenges and move forward.  It will be painful, but it will lead to real rewards.  Look in the mirror, ask yourself what you can do, and get involved.  It is not too late, but it is close.

US Energy Consumption

Ezra Klein:

Julio Friedman considers why it’s so hard to talk about energy:

Energy is the largest economic activity on earth (much larger than agriculture) and the industry with the highest capitalization (much higher than car manufacturing). Energy units are confusing (megawatts, kilowatt-hours, tons of carbon, CO2 equivalents, BTUs and Gigajoules), but the scale of the system makes these units even more remote (terawatt-hours, exajoules, gigatons, quadrillion BTUs). This makes it hard to bring the discussion home — the discussion starts in a rarified, almost other-worldly place.


Let’s talk gigatons — one billion tons. Every year, human activity emits about 35 gigatons of CO2 (the most important greenhouse gas). Of that, 85% comes from fossil fuel burning. To a lot of people, that doesn’t mean much — who goes to the store and buys a gigaton of carrots? For a sense of perspective, a gigaton is about twice the mass of all people on earth, so 35 gigatons is about 70 times the weight of humanity. Every year, humans put that in the atmosphere, and 85% of that is power. Large actions, across whole nations and whole economies, are required to move the needle.

Two things amaze me.  One is the 35 billion tons of CO2 in human activity, 85% which is fossil fuel burning.  That is why I think global warming is real and man-made.  The other is how inefficient the electric generation and transmission systems and the transportation system actually are.  42% overall efficiency.  Damn you, laws of thermodynamics.

Coffee Growers Face Climate Change

From the LA Times:

A mile above this rural mountain town, coffee trees have produced some of the world's best arabica beans for more than a century.
Now, farmers are planting even higher — at nearly 7,000 feet — thanks to warmer temperatures.
"We noticed about six years ago, the weather changed," said Ricardo Calderon Madrigal, whose family harvests ripe, red coffee cherries at the higher elevation. He sells beans to some of the most notable coffeehouses in the U.S., including Stumptown Coffee Roasters of Portland, Ore., and Ritual Coffee Roasters in San Francisco.
Standing among healthy coffee trees near the upper reaches of his farm, Calderon said he knows he is lucky.
Calderon is one of the few Costa Rican coffee farmers benefiting from the shifting weather pattern, while most of his fellow growers have found themselves on the losing end.
Yields in Costa Rica have dropped dramatically in the last decade, with farmers and scientists blaming climate change for a significant portion of the troubles.