Sunday, March 08, 2015

Making the Green Economy work

The following consists of my Powerpoint presentation last Friday in Congresbury. Thery are just lecture notes really, but some may find them of interest, as an early, simple attempt to show first that real economics is Green economics, and second, that the green programme can be costed. 

Making the Ecological Economy Work
Dr Richard Lawson
Green Prospective Parliamentary Candidate 
Weston super Mare Constituency
May 7th General Election

Environment, Equality, and Economics
Greens are seen as
Good on Environment
Good on Social Justice

The aim here is to show that we have a distinctive and accurate understanding of Economics

The Clue is in the Name
Eco = home

Eco-logy: study of our actions in relation to our environment

Eco-nomics: administration of our environment

The Real Economy
  1. Water, Food, Energy, Shelter, Waste Recycling – the foundation
  2. Tool manufacture, Transport, Trade (Guided Market), Communication, Conviviality
  3. Administration, Justice, Services
  4. Finance – to serve the above

Green priorities  are the exact opposite of those of conventional economics

The Unreal Economy
Banks make profit by lending and playing in the derivatives market

Derivatives are a Ponzi scheme, and are “valued” at 10 times the global GDP

“The Market” is not infallible

Guided Market
Social Market – Public and Private co-exist
Regulation, with more ecological emphasis: Precautionary Principle, Polluter Pays
Ideologically, ecology encompasses and supercedes individualism and socialism

Market failures - environmental
  1. Climate change
  2. Species loss
  3. Pollution – air, water, soil 
  4. Depletion of finite resources – oil &c
  5. Depletion of renewable resources – fish, forests, soil (!)

Market Failures - social
Empty Housing alongside Homelessness
Extreme wealth alongside food banks
Unemployment alongside so much good work that needs doing

It's easy to become a Green Economy
Change from Linear to Cyclical
From Mine-Manufacture-Use-Dispose (Linear or Throughput Model)
Manufacture-Use-Reuse-Recycle (Cyclical or Sustainable model)

It Just Creates a Lot of Jobs
Lots of jobs

A big stimulus to the economy

An end to throughput

Extraction industries will suffer

Four Green Axioms

It is impossible to take forever from a finite resource
It is impossible to expand forever into a finite space
Everything on earth is interconnected
If it is ecologically advantageous, it must be financially possible

Our Modest Proposals
  1. Oppose Austerity
  2. Fund NHS properly
  3. Pay Living Wage
  4. Create Real Jobs
  5. Create Citizens Income
  6. Promote Equality
  7. Lower Energy bills for the poor
  8. Protect the Environment

How will it all be paid for?
Cannot borrow – that just digs a deeper hole – and why should we borrow from banks that we have saved with £475bn in emergency loans and QE?
  1. Cull the White Elephants
  2. Stop the Tax Haemorrhage
  3. Stimulate the green sector of the economy

Take the monopoly on money creation away from the banks and return it to the nation

The Dreaded Deficit
Deficit = gap between Govt income and expenditure
Deficits are pretty normal ~3/4 nations  have them
UK was average before 2009
We are now 2nd worst in developed world – 190/210
Deficit been a worsening feature since WW2

Structure of our Deficit
UK deficit 2013 = £105bn, 6.5% of GDP

Debt interest = £42bn

Investment (spending that saves money later) may reasonably be covered by borrowing (e.g. Mortgage)

Dealing with the Deficit
Increase tax take by stimulating meaningful economic activity


Reduce Govt spending with Austerity. Osborne has missed targets, and slowed recovery: his aim is ideological, a small-state notion; may well involve corruption.

Stimulate Economic Activity, increase tax take
Invest in necessary infrastructure projects:
  1. Green New Deal (energy saving, renewables)
  2. Flood prevention work
  3. 500K social housing

Social Investment –Increase  Equality  with Living Wage and BI
Greater economic equality means more: 
Physical and mental health 
child welfare and educational attainment 
social mobility
care for environment and peace  
and less
drug addiction, obesity, teen pregnancy, prison population, violence, homicide

Cull the White Elephants

Trident £100 bn (£3.3bn/yr for 30 years)
(Trident Hour TH = £382,000; £1m=3TH)
Roads Programme £15bn(say £2bn/y x7 y)
HS2 £50bn         (£5bn/yr for 10 yrs)

Total                        £10.3bn/y

White Elephants that Got Away

Iraq and Afghanistan wars £12+37= 49bn

NHS reforms      £3bn

Battleships         £6bn (obsolete – due to missiles)

Universal Credit £3bn

Eurofighter       £15bn 
Total                 £76bn

Stop the Tax Haemorrhage
Increase HMRC establishment,
pursue tax claims on corporations                                                           £120bn/y
Tobin (Robin Hood) Tax on casino transactions                          £20bn/y
Wealth Tax                         ? £4bn/y                
Close down Tax Havens worldwide – help all nations

Close the Tax Gap
Govt admits £35bn/y lost in evasion, avoidance and late payments.
World Bank and Tax Justice Network put this figure closer to £120bn
Deficit in 2012/13 = £105bn

Ecological QE
Remember £375bn QE > Banks

Therefore we can issue grants or loans for ecological stabilisation 

Global Money Supply is growing
Banks Create money
You ask for loan of £10,000 at 5% over 20y
Bank judges that you can repay
Bank puts asset £10,000 in its account, liability of £10,000 in your account
You pay ~£3,000 interest+£10,000 capital
The £3,000 must come from others in the economy taking out loans
Therefore debt must grow as money grows 

Recall the Banks' 
Monopoly on  Money Creation
"Most of the money the economy is in the form of bank deposits which are created by commercial banks" 
‘Money in the modern economy: an introduction’ - Bank of England
This means we can do Green QE investment

Balance Sheet
Deficit                 (100)
- White Elephants  10
- Robin Hood Tax  20
- Wealth Tax          10
- Close Tax Gap   100 
- Stimulus               10
Total                         150
Bottom line: £50 bn/y better off
The Green New Deal
£50bn/yr for 

Intensive energy conservation

Renewable energy programme

Effects of GND
Conserve resources
Address climate change
Reduce fuel poverty
Reduce Trade Gap (gas imports)

(Hurts coal and gas corporations)

Basic Income
Unconditional £72pw to citizens 
Cost £233bn/y
Saves £239bn/y
Profit £6bn/y
Transitional payment needed for people on Working Tax credit

Advantages of BI
Easier to move into and out of work
No more Unemployment Trap
Employers make pay and conditions more attractive
Simpler to administer (saves ~£6bn/y)
Helps people to work their way out of Poverty Trap, so promotes equality

A Gradual Approach to Basic Income
Basic Income has been set back as “long term aspiration” 
Since big-bang BI is on the back burner,we should consider gradualist Green Wage Subsidy:
Seek permission from DWP
Give accreditation to green enterprises
Accredited can take on new hands, who can bring JSA in to work with them
This can be piloted in North Somerset

The Green Sector of the Economy
    1 energy conservation
2 renewable energy technologies
3 energy efficient goods manufacture
4 pollution control technology
5 public transport
    6 waste minimisation
7 repair 
8 recycling
9 water management
10 sustainable agriculture
11 forestry and timber use
12 countryside management
13 housing - new building and refurbishment
14 improvements to visual environment
15 education and training
16 counselling, caring and healing
17 community work
18 leisure and tourism
19 innovation, research and development
20 High quality manufacturing of necessary tools

Building 500,000 Social Housing units
Household Roof Year: (HRY)
£10,000  in Temporary Accommodation
£1,500 if we build houses
Every £1bn on housing saves £9bn over next 100y
£1 spent on house building puts £2.4 into local economy

Costing the 500k
£60k grant per unit 
Need extra £1.5bn/y
Take from landlords’ MITR
LA’s are allowed to borrow
Crowdfunding a possibility
Housing Benefit savings come in later

Green economics is based on the real economy, on our life support systems.
Green economics invests in things that heal the environment and society, thus making things easier for future generations.
This investment makes financial sense today

By voting Green on May7th, you will be boosting this view

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