Category Archives: Economics

Citizen’s Income

De Koffie Pot

De Koffie Pot, home to the excellent ‘Politics, Environment & Ethics’ weekly workshops, every Wednesday

Last night in Hereford we had an excellent evening discussing Citizen’s Income. Perry Walker of Talk Shop chaired the session and Dr Malcolm Torry from the Citizens Income Trust led a fascinating talk and discussion. To quote from the Citizen’s Income Trust introductory pamphlet ‘A Citizen’s Basic Income is an unconditional, automatic and nonwithdrawable payment to each individual as a right of citizenship.’ The Trust’s work focuses on the practical possibilities of implementing such a scheme in the UK. Related organisations exist to promote the concept in other countries, and indeed on a global scale. I’d long supported some kind of global scheme, but in the current political climate this seems unlikely to happen any time soon. Some interesting short term (usually 2 years) and local (just covering a few villages) experiments in Citizen’s Income have been tried in Namibia, India, Canada, Finland and elsewhere over the years. The Namibian example in particular looked to be a very successful way of improving the lives of the some very poor people. In an analysis of the scheme the Basic Income Earth Network make clear that the scheme was not extended due to corporations who want to keep labour cheap and people disempowered. To some extent this may be the case everywhere, but possibly things are beginning to change for a number of reasons.

In UK and elsewhere as more people juggle multiple very short term and insecure jobs with means tested benefits this becomes ever more costly and complex to administer. The system’s complexity disincentivises claimants from telling the truth and keeps them stuck in welfare dependency. Couple this with the rapid expansion of automation, artificial intelligence and robotics and the number of jobs available is liable to plummet. The right wing Putin/Trump/May/Global Corporate line seems to be to create a new class of serfs or insecure day labourers harking back to early 19th Century work patterns. The emerging alternative supported by Green and left leaning parties around the world seeks to promote equality and develop the possibilities for personal growth in a more leisured society, by shortening the normal working week and a host of other measures, a key part of which is the implementation of Citizen’s Basic Income. Many on the right now see a Citizen’s Income as increasingly necessary and the only way to tackle welfare dependency. Last night’s talk convinced me of the importance of more people joining the Citizen’s Income Trust and helping in whatever way they can to get this sensible and practical policy implemented as soon as possible.

Last night’s session was part of the ‘Politics, Environment & Ethics’ sessions at De Koffie Pot. Every Wednesday: highly recommended, free admittance, very friendly and empowering. If you’re in the area why not join us? Check-out the website to see what’s on.

Solar pv: Exponential Growth!

Freiburg, Germany. An early solar pioneer

Freiburg, Germany. An early solar pioneer

I’ve just finished reading ‘The Switch’ by Chris Goodall about how solar photovoltaics will become the dominant source of global electricity production. The key point Goodall stresses throughout the book is the effect of the learning curve and how this has been bringing down prices by about 20% every two years and how total installed capacity has doubled every two years. This exponential trend has been going on for decades, but back in the 1970s and 1980s the biannual doubling was from a few kilowatts to a few more kilowatts, then a few megawatts to a few more, so generally photovoltaics were considered insignificant by mainstream commentators. Solar enthusiasts were an easily dismissed fringe group.

This exponential rate of growth has continued. In the last few weeks the global installed capacity of photovoltaic panels passed the 300 GigaWatt milestone. A couple more doublings and we will pass the TeraWatt level. Of course exponential growth on a finite planet cannot go on forever. However it does look as if solar power will keep expanding extremely rapidly for the foreseeable future, whatever politicians like Trump and Putin might do to try and stop it. There are a number of technical innovations in the pipeline that make continuing falls in production costs inevitable, and then simple economics means that rates of deployment will continue to increase.

Over the last two years China and Japan have lead the world. Globally about 1.2 billion people are not connected to mains electricity and at least another billion experience frequent power cuts due to poor grid infrastructure. Most of these people live in Africa and South Asia and it is in these regions that I would expect solar to grow most quickly over the coming decade. For the rural off grid tropics solar plus batteries is already cheaper than either diesel generators or connecting up to distant electricity grids. They will leapfrog the need for grids.

This week I was talking to someone in Herefordshire who is renovating a cottage and putting sufficient solar panels to run his air source heat pump and all his family’s electricity needs for most of the year. Smart technology will determine when appliances operate and when to store electricity for later use. An electric car could easily be added to the mix. Although still connected to the grid he envisages buying and selling as little electricity as possible. If half hourly metering comes in it will become profitable for him and useful for the grid managers, for him to buy electricity at times of weak demand and sell it at times of peak demand. In his renovation insulation and air tightness have been improved to minimize winter heating requirements. Globally such possibilities are opening up as the technology evolves. Within a decade I think it probable that hundreds of millions, or indeed billions, of households will operate in this manner. In the process they will make coal, gas, oil and nuclear power obsolete.

In colder cloudier climates wind, tidal and geothermal energy will undoubtedly have a major role to play. Batteries will be important for short term energy storage. There are an increasing number of emergent technologies focusing on interseasonal energy storage, such as renewable liquid fuels and gases, many of which will be created with surplus summer solar energy.

Solar still has a long way to go to become the dominant energy source, but if exponential rates of growth continue this might become the reality far faster than most people expect. Last year China more than doubled its solar capacity in a single year. Many other countries will more than double their solar capacity over the next year or two, and I’ll write about the most exciting examples on this blog. The Solar Age is coming.

Saudi Solar?

Ouarzazate phase one

Ouarzazate solar plant, phase one, recently opened in Morocco.

Saudi Arabia has recently announced plans to set up a $2 trillion fund to help it make the transition into a post fossil fuel economy. I find this is very welcome news. (Some commentators are sceptical about how serious they are.) In January I mentioned the possibility of Saudi bankruptcy if they kept pumping vast quantities of oil at a loss. They have enormous solar energy potential, the accumulated capital to invest and with ACWA an engineering company with growing expertise in building concentrating solar power stations.

The Moroccans have recently switched on the first phase (160 MW) of the Ouarzazate solar power station, which when completed in 2018 will be 580 MW, cost $9billion and be the largest solar power station in the World. The consortium building the whole plant is made up of the Moroccan solar agency MASAN, the Saudi engineering company ACWA and several Spanish specialist solar companies like TSK, Sener, Acciona and Aries.

Per capita carbon emissions in Saudi Arabia are a whopping 18.1 tonnes; they have high youth unemployment and currently an economy that is hugely over dependent on a fuel that is rapidly becoming obsolete. Until now they’ve hardly begun to tap their solar potential.

If I was advising the Saudi government I’d be arguing that they should start building concentrating solar power stations just like the one at Ouarzazate. They should collaborate with the many international centres of research and development and set up such centres in Saudi Arabia. They could invest in shares in many of the small solar start up companies and bring their technologies to Saudi Arabia. They could bring in Sundrop Farms to do solar desalination and hydroponic agriculture as is currently being developed at Port Augusta in Australia, and transport the produce in Dearman nitrogen powered refrigerated trucks.

Doing all this could help create many new opportunities for Saudi people, put the economy on a more sustainable footing and massively reduce pollution and carbon emissions. With $2 trillion to play with they could utterly transform their economy. Time will tell if they are serious.

Tax Justice Now!

Richard Murphy of Tax Research UK

Richard Murphy of Tax Research UK

The Panama Papers are, in the words of the EU Commissioner for Competition Margrethe Vestager, ‘just the tip of the iceberg’. This is hardly surprising to those of us concerned about social justice. But this story is hugely significant. It is drawing into focus the unfairness of the global system. This could grow into something truly epoch shifting. Iceland’s Sigmundur Gunnlaugsson has been forced to step down. He will probably not be the last. Globally many politicians, celebrities and other wealthy individuals have been revealed to be implicated. They will fight to maintain their privilege. This struggle for justice will be global, long and hard fought.

In China at least seven current and former senior politicians, including President Xi, are implicated. Mossack Fonseca’s Hong Kong office was its busiest branch, shifting about $1 trillion into tax dodging offshore shell companies last year alone, and thus destabilizing the entire Chinese economy. President Xi had made tackling corruption a theme of his presidency, yet now appears implicated himself. This could have huge ramifications. Unsurprisingly in Russia the Mossack Fonseca leak shows Putin and his inner circle enriching themselves at the expense of the Russian people.

Meanwhile in the USA Hilary Clinton is seen as closely associated with the global financial elite while Bernie Sanders is the antithesis. In terms of the Democratic nomination Sanders has a lot of catching up to do, but over recent weeks his momentum has been building with wins in Idaho, Utah, Alaska, Hawaii, Washington State and Wisconsin. This issue could be pivotal in bringing him success in the big upcoming primaries in New York, Pennsylvania and California. It could also knock Donald Trump out of the picture. A Sanders victory could be the best thing to happen in American politics since Roosevelt’s New Deal.

In the UK David Cameron claims ‘no prime minister or UK government has done more to tackle tax avoidance and evasion’, yet his own father is implicated in the Panama Papers. His claim looks pretty risible. Corbyn is making the right noises, but as the Blair-Brown era was a time of rapid increase in these dodgy financial practices the Labour Party have a lot to prove to show they are really up to the job. What is needed is an independent public inquiry, ideally chaired by someone such as Richard Murphy of Tax Research UK.

Corruption is a dominant theme in the politics of many countries. For change to happen we need the continued efforts of organisations such as The International Consortium of Investigative Journalists (ICIJ), the expertise of individuals such as Richard Murphy, the emergence of politicians like Bernie Sanders in USA, Uruguay’s Jose Mujica and Delhi’s Arvind Kejriwal who do give a real alternative to the status quo. Most of all we need the global populace to get active in pressing for change, and supportive of those capable of bringing it about!

References :- BBC here and here and here, Sanders here Tax Research UK here and ICIJ here

UK Referendum on the EU

Margrethe Vestager

Margrethe Vestager leading the struggle to get corporations to pay their fair share of tax

On Thursday 23rd June there will be a simple in or out referendum on Britain remaining a member of the European Union. I shall be voting to stay in, but it’s not at all for the same reasons as David Cameron.

The last 70 years have been the most peaceful in Europe’s history. Of course this modern era has not been perfect, but compared say to the preceding 75 years of carnage, from the Franco-Prussian War through to the First and Second World Wars; this has been a blessed time to be alive. These recent decades of peace were achieved largely due to the vision of the founding fathers of the European Union: so thank-you Robert Schuman, Winston Churchill, Konrad Adenauer and the rest.

One of the faults of the EU is that it is too close to the big corporations. However the UK outside the EU would probably be like the USA, considerably worse in this regard. If we want to hold the big corporations to account and make sure they actually pay their taxes it is to European politicians like the Dane Margrethe Vestager and British Molly Scott Cato that we need to be supportive and to give thanks.

Most of the best practice about how to live in a sustainable and socially just manner is being pioneered within the European Union. 2700 cities and regions have signed up to the Aalborg Commitments, which pledges them to strive toward ever greater sustainability, social justice and democratic accountability. Of course not all the institutions within the EU are anywhere near as good as they should be and some of the policies are bonkers, but then so too are many of the policies that our government is solely responsible for.

Of course we need more democratic accountability within the EU, as we do within the UK, the USA and in pretty much any level of governance from Herefordshire Council to the United Nations. Abolishing or leaving these organisations is not the answer: reforming them from within is. Let’s vote to stay in the EU, and to work with our many friends across Europe to continually improve how it functions.

When we in the UK discover incidents of pollution of our watercourses or of local air quality it is to European law that we can appeal. That for me, but probably not for David Cameron, is evidence enough to stay in Europe.

Yanis Varoufakis in the Guardian

Molly Scott Cato and Margrethe Vestager on corporations and tax

Uruguay: Well done!

Ramon Mendez

Ramon Mendez, until recently climate and energy minister of Uruguay and responsible for excellent policies.

Last week I blogged about who was showing leadership in reducing carbon emissions and mentioned that several small countries were well ahead of any of the larger countries. This week let’s just look one of them: Uruguay. Uruguay has a small population of only 3.4 million people whose per capita carbon emissions are a very modest 2.3 tonnes. Uruguay can hardly be said to be responsible for much in the way of climate change yet is certainly leading the world in helping solve it.

In Paris this week the Uruguayan minister of energy and climate, Ramon Mendez, pledged Uruguay would reduce its emissions by 88% by 2017 compared with a baseline average for 2009-13. An 88% reduction is something a few countries are contemplating by 2050 or thereabouts. To achieve it by 2017 will be an extraordinary achievement. However Uruguay is well on track to achieve this and to do so while reducing power cuts, bringing down the cost of energy and creating many economic and employment benefits. How are they doing it?

Uruguay has long had hydropower providing about half of its electricity, more in wet years, less in dry years. Formally the rest came from coal, oil and gas. About 7 years ago they brought in auction contracts, rather than feed-in-tariffs, for renewables and are getting very good value for money, meaning both carbon emissions and energy bills can fall simultaneously. The speed and scale of wind deployment has been dramatic, rising from 50 to 500MW installed capacity during 2014 alone. By early 2016 they expect to have 1.4GW installed: enough that during windy weather 100% of their electricity will come from the wind and that the hydro can be just used in less windy weather. Together the wind and hydro combination will provide the vast bulk of Uruguay’s electricity. They are also adding significant solar and biomass to the mix. Uruguay used to be a net electricity importer from both Brazil and Argentina: now they earn good money from exporting renewable electricity to their neighbours. As Uruguay decarbonises and modernises its energy system it is not surprising that it has hired in expertise from the Danish grid company Energinet, as the Danes have long been pioneering efficient, reliable, renewables based energy infrastructure.

It is extraordinary to think that just over 30 years ago Uruguay was a military dictatorship. Now it is one of the best governed countries on Earth. It scores very well on all the indexes of corruption, equality, literacy, social progress and tolerance. Under the sensible yet inspirational political leadership of Tabare Vazquez and Jose Mujica it is setting the standard for other countries to aspire to.





Lack of corruption

Per capita Co2 emissions

Municipalization: Localization made real

Trianel Windfarm: The worlds largest wind farm in community ownership.

Trianel Windfarm: The worlds largest community owned wind farm.

In Britain we are caught up in an outdated debate about whether services, from the health service, to banks, railways or the energy infrastructure, should be nationalized or privatized. Neither of these models seem ideal to me. We in UK have much to learn from our European neighbours who have a much more pluralistic, localized and democratically controlled mix, with a huge ‘not for profit’ sector. Germany and Sweden both, at least to some extent, followed Britain in the 1980’s fashion of privatization. Now they are both undergoing a process of ‘re-communalization’.

When I was working in Frankfurt last year I was impressed by Mainova, the local municipally controlled provider of electricity, heat, gas and water. Many German cities and some smaller places have their local Stadtwerke, municipal organisations that run a huge range of local services and feed any profits back into long term local investments usually with a range of social, economic, ecological objectives. In Britain we’ve been hampered by a short term profit maximizing privatized industry since the 1990’s and before from 1946 to the 1990’s by an over-centralized and remote nationalized industry. In the 1930’s we had a greater municipal sector, which it might be time to revive, along with a whole raft of new coops and international joint projects. A recent academic study comparing the German and British systems of finance and ownership of energy infrastructure by Hall, Foxon and Bolton is well worth reading. It shows the extraordinary range of difference between the German and British systems. A vast range of local ‘not for profit’ banks and energy organisations are at the heart of the German Energiewende. Here is one example.

The first phase of the Trianel wind farm Borkum has just opened. This is a 200MW plant, with another 200 MW due to follow soon in phase 2, making it by far the biggest community owned wind farm in the world, with an estimated total cost of 1.3 billion Euros. The ownership and financing are utterly unlike anything we are used to in Britain. It is owned by 33 local municipal utilities, mainly owned and controlled by local city and town councils spread all across Germany, Holland, Switzerland and Austria. Collectively they formed Trianel to develop a rapidly expanding portfolio of energy infrastructure. They are supported by a huge range of banks, many themselves locally controlled, democratically accountable and in the not for profit sector. Trianel’s membership is expanding so in future many more than the current 33 cities might be stakeholders in ever more ambitious energy projects, which increasingly will be low carbon. Can we imagine British cities having the organisational capacity and ambition to join-in? Let’s hope so!

Hall, Foxon and Bolton’s paper ‘The new ‘civic’ energy sector: implications for ownership, governance and financing of low carbon energy infrastructure.’

Trianel, structure and membership

Trianel wind farm Borkum

Many other places all over the world are looking at the benefits of municipal energy; here is one example, Davis, California.


Glasspoint: concentrating solar power for enhanced oil recovery

Glasspoint: concentrating solar power for enhanced oil recovery

Lots of people I meet in the Transition Towns movement and elsewhere talk a lot about Peak Oil. The argument goes that as geological reserves become exhausted oil demand will exceed supply and prices will go up, causing economic chaos and even wars. There has been much speculation whether oil addiction was a determining cause of the American led invasion of Iraq.

To me climate change was always the main reason why we needed to quit fossil fuels. Proven reserves have long been known to be five times more than enough to cause climatic catastrophe. However the Peak Oil people would respond by saying that the easy to reach resource had been used up and the cost of newer sources would be very much higher. With oil rising to $146 per barrel back in the summer of 2008, and seeming to be on an upward trend, this looked like it might be the case. Today the oil price is at $42 per barrel, and talk is of it falling to below $40. Why has this happened?

There are many factors. Political factors like a downward bidding war amongst OPEC producers, and the imminent re-emergence of Iran as a major oil exporter as sanctions are lifted, are important. Technological factors are also playing a part. Fracking has, in the short term brought down the price of gas, and renewables are beginning to bring down the cost of electricity, and enhanced oil recovery is bringing down the price of oil.

Miraah, the world’s first large scale solar powered enhanced oil recovery project is just being built in the Amal oilfield in the deserts of Oman. Glasspoint, a Californian start-up has designed a super light weight aluminium parabolic trough system that operates within a protective greenhouse. It will supply solar generated steam to force oil out of the ground, effectively increasing the oilfields economically recoverable reserves.

Personally I’d like to see humanity quit fossil fuels as quickly as possible. We need to anyway, of course, due to climate change: so no need to worry about Peak Oil. Then we could use the Glasspoint technology to generate steam for more useful things, like generating electricity, desalinating seawater or directly driving industrial processes.

Good chart on oil price


Economics: Theory & Action

Natalie Bennett of the Green party

Natalie Bennett of the Green party

A couple of days ago there was a Radio 4 programme that revealed how narrow the discipline of economics has become at universities around the world. This is tragic as these students go on to be the key decision makers. The Neo-Classical model is totally broken, yet stuck in their ivory towers, unable to see an alternative and divorced from reality; they continue to teach this planet destroying and socially destructive nonsense.

It reminds me of my travels in communist Eastern Europe in the 1970’s. Most of the critical thinking population could see Marxist theory didn’t fit with perceived reality, yet the tired old politicians kept spouting the same old mantras. I recall a conversation with a judge in East Berlin in 1977 who told me the whole system would come crashing down. It was twelve years before it did, but it was inevitable.

In the 1970’s I frequently discussed politics and economics with my grandfather, who’d been sympathetic to Marxist ideas in his youth, but had mellowed to be a Keynesian Labour party type socialist by the time I knew him. Keynesian economics hit the buffers of stagflation in 1978-79. As Thatcher promoted a revival of the Neo-Classical economics of the 1920’s my grandfather said it would inevitably end in crashes, crisis and chaos. It has. We lurch from crisis to crisis.

Neo-Classical, Marxist, Keynesian, economic grand theories have failed us. We need new economic models rooted in the real world that recognise our utter dependence on a functioning biosphere. Without clean air, unpolluted water, healthy soils, treasured biodiversity and a stable climate we will never have economic stability. Without life there is no economy. Without social justice, political and economic stability is both unlikely and undesirable. Many Green economists have been writing about this over the last forty or fifty years: it is time to bring them centre-stage into the teaching of economics.

Meanwhile we need to take practical steps right now to set the economy moving in the right direction. Here are two practical suggestions. Yesterday Natalie Bennett of the Green Party made the very sensible suggestion to cut rail and bus fares by 10% and to pay for this by scrapping the £15 billion road building programme. Now, with cheap oil and gas prices is the time to introduce a Carbon Tax. In a UK context this could raise £20 billion per year. This could be put into developing and implementing a serious energy demand reduction strategy: building efficient district heating networks, insulating houses and investing in a sophisticated mix of renewable energy infrastructure and legislating to improve energy efficiency of appliances and technologies from kettles to cars, power stations to houses. A huge number of jobs could be created, fuel poverty eliminated and carbon emissions massively reduced, and it might even help economics re-engage with the real world.

BBC Radio 4 on teaching economics

George Monbiot on economics

Natalie Bennett in the Guardian

Lawrence Summers writing in the Financial Times on why now is a good moment to bring in a Carbon Tax

Challenging Money and Growth

Today, Thursday 20th November, the House of Commons is having a debate titled ‘Money Creation and Society.’ This is long overdue: the last time such a debate was held was in 1844. The interesting Conservative rebel backbencher Steve Baker proposed the debate, with cross party support from Caroline Lucas (Green) Michael Meacher (Lab) and Douglas Carswell (UKIP). It will be an opportunity to discuss taking the power to create money as debt away from commercial banks, which is what the Positive Money organisation has been demanding for some years.

The headlines this week are of David Cameron saying the world is on the verge of another financial crisis. George Monbiot yesterday posted an excellent blog on the inevitability of another crisis and the damage that is being done to society and the planet by humanity’s headlong pursuit of growth at all costs.

My recommendations would be to follow the Positive Money line and take the power to create money as debt away from commercial banks. My take on growth is that we need to abandon it as a policy objective. We need to prioritize other goals: ecological survival, social justice, human wellbeing. Then we need to plan policy that will promote these goals. That will mean the growth of some areas of the economy and the contraction of other areas: whether this results in overall growth or contraction is of secondary importance. I find Stephen Harding’s distinction between suicidal growth and intelligent growth to be more useful than the growth/ no growth debate.

Humanity needs to leave 80% of known fossil fuel reserves in the ground to avert climate catastrophe. Managed contraction of the carbon generating industries must become a policy goal, and that is impossible given the political consensus to blindly follow headlong growth at all costs. Our survival may depend on changing the economic model, and I welcome today’s debate as a way to begin that necessary change of direction.


Parliamentary debate

Positive Money has excellent video clips and info

George Monbiot’s blog

Stephen Harding