The productivity dividend for dummies: Raising pay while working less

from David Rosnick

I am greatly pleased to see such interest in CEPR’s recent report on work hours and climate change.  All evidence points to the idea that gradually reducing annual labor hours per worker will reduce the amount of climate change with which the world will have to cope.  But this does not mean that ordinary workers will have to make a sacrifice.  Rather, this is about how workers may choose to enjoy the fruits of increased productivity—if only they are given the chance to share fully in economic progress.

Throughout the 1950s, workers in the United States enjoyed fewer hours of labor than almost every country in Western Europe.  On average, an employed American worked 1,909 hours in 1950.  Only Sweden—at 1,871 hours—worked less.  By contrast, Greeks averaged 2,712 hours that year; the Irish put in 2,753.

Today, workers in Greece are second only to Poland for the longest working hours in all Europe and labored 330 hours longer in 2012 than their American counterparts.  However, productivities of these countries have climbed dramatically since 1950 as hours have fallen.  In each hour of work in 2012, each American produced 3.2 times as much as in 1950.  This allowed workers to build 2.9 times as much in each year— and do so in 200 fewer hours than in 1950.  In this way, American workers labored a bit less and still prospered materially.

These same Americans might have enjoyed a little more time off and still produced far more than did workers in 1950.  Over those same 62 years, the average French work-year fell by 684 hours and still workers produce 4.7 times as much in a year.

The D.C. Blackouts and Global Warming

from Dean Baker

Millions of people across the East Coast are sweltering in near-record temperatures. In the Washington area, tens of thousands are dealing with the heat without air conditioning or power due to a storm the prior weekend. The remarkable part of this story is that almost no one is talking about global warming.

Of course no specific weather event can be directly tied to global warming, just as any individual person’s heart attack cannot be directly attributed to the fact that they don’t exercise and are 50 pounds overweight. In both cases it is a question of probabilities. And the fact that greenhouse gas emissions are raising the planet’s temperature substantially increases the probability that we will get long stretches of extraordinary heat like the one that hit the Midwest and Northeast over the last 10 days.

In short, this is what global warming looks like, or least what it looks like in the United States. If there were an environmental movement in the United States, they would be screaming at the top of their lungs about the harm to life and property from this heat wave and power outage.

These costs are likely to be considerable. Hundreds of thousands of people had to discard food in their refrigerators and freezers as a result of the power outages. Many gathered their family together and went to stay with friends or spend time in a hotel. There were likely hundreds of thousands of days of lost work. 

Proletarianisation under neoliberalism in the Arab world*

from Ali Kadri

Between 1980 and 2010 the share of the rural to total population in the Arab world dropped significantly from about 60 percent to around 40 percent. In absolute terms, an estimated seventy million people left the countryside to urban centres at home.[1] This conservative estimate is nearly equivalent to the total number of rural-urban migrants since the beginning of the twentieth century until 1980. While this exodus was occurring, the regional rate of unemployment was rising and the share of labour in the form of wages fell to around a quarter of national income.[2] By 2007, the Arab League declared that more than half the Arab population was living at less than the two-dollar per day benchmark.[3] Basic food production was decreasing and food imports were rising in this high per capita food dependent and scarcest-water area globally. Around half the population in the Arab world was spending more than half of its income on purchasing food.[4] When speculation reached the commodity market and basic food prices rose, scuffles before bakeries in Egypt resulted in several fatalities.[5] The agricultural sector was shrinking relative to the economy. The productive economy, in turn, was de-industrialising and retreating relative to oil and geopolitical rents.[6] The deconstruction sustained by the agricultural sector, in particular, led to massive dislocation throughout the neoliberal age.

The explanation of this phenomenon afforded by the class of neoclassical economy models known as dual-economy models are unfitting tools for understanding why and how this process could undergo unchecked for three decades.

Australian Government Agency Admits Ban on Heterodox Economic Analysis

from Peter Earl

In some of the first posts on this blog I reported on  how Australia’s Commonwealth Scientific Research Organization (CSIRO) was attempting to censor and ban from publication Clive Spash’s peer-reviewed paper ‘The Brave New World of Carbon Trading”. Though Spash eventually resigned from CSIRO and the paper was published in New Political Economy in 2010 (vol. 15, no. 2), CSIRO’s attitude towards dissenting views has recently become even clearer and more disturbing.

CSIRO, a government funded public research agency that employs about 6,500 people, was required to answer a series of questions

The re-colonisation of the Arab world

from Ali Kadri

Despite vast financial wealth, natural and human resources, the Arab World remains underdeveloped and more than half the population is condemned to a life of poverty. Instead of underdevelopment, a more fitting concept that would capture the recent historical phase would be that of reverse development or de-development. De-development represents a combination of retrogression in the build-up of physical capital and a denial of the right of people to struggle to build a better life by repression and absolute authoritarianism. Although capital accumulation entails a blend of expansion of market driven forces (commodity realisation) and development by encroachment and dispossession (control by violent means including imperial plunder of third world resources), in the Arab world, the latter pattern of accumulation held primacy, hence, determining the pace of development altogether.

Chart of the week: Peak oil in 2005?

Global average annunal crude oil production 2001 – 2010 

Cancún and the new economics of climate change

from Frank Ackerman and Kevin P. Gallagher

The failure of US climate legislation, following last year’s disappointing negotiations at Copenhagen, casts a pall over the round of climate talks in Cancún this week. And the global recession and budget-cutting crisis makes this seem like the worst time for new climate initiatives. Unfortunately, we don’t have the luxury of delaying action: the laws of physics don’t need 60 votes in the US Senate to continue making the world’s climate less and less liveable.

There are two battles over climate change.

Dear National Science Foundation . . .

from Julie Nelson

The Directorate for the Social, Behavioral, and Economic Sciences of the National Science Foundation recently issued a call for white papers about “next-generation research challenges.” They invited submitters to outline “grand challenge questions” that “reflect deep issues that engage fundamental assumptions behind disciplinary research traditions and are transformative.” The following are lightly edited excerpts from the white paper I submitted along with Dr. Evelyn Fox Keller of the Program in Science, Technology and Society at MIT.

            How can we integrate the role of values and ethics in economic analysis of climate change without sacrificing the positive aspirations of that science? 

The relation between oil prices and economic activity

From Lewis L Smith

Recently a longtime Internet correspondent of international repute requested my opinion on the relation between oil prices and economic activity. I was both honored [since he is better known than I am] and somewhat take aback, since the subject is neither an easy one nor one on which I have done any research.

Fortunately I have tried to keep up with the work done by others and also have written quite a bit on closely related matters such as peak oil, “wild cards in the oil deck” and such like. So I was able to piece together the answer which follows, with a few revisions here and there.

Is Malthus relevant post-Copenhagen?

Is Malthus relevant post-Copenhagen?

Thomas Malthus died on December 23rd 1834. The work of Malthus raises two important questions. First, are there now too many of us? Second, are there now too many of us doing things we shouldn’t be doing? These are problems of fact and value. The problem for economics has always been how to conjoin the two. The positive-normative distinction has always been a curious one for a social science since its ultimate unit of analysis is an evaluating being that lives immersed in systems of values.

The positive-normative distinction derives much of its authority from Hume’s guillotine. The guillotine is:

One act of censorship overcome

Clive Spash’s paper “The Brave New World of Carbon Trading”, which the Australian authorities suppressed, is now available at:
http://mpra.ub.uni-muenchen.de/19114/1/MPRA_paper_19114.pdf 
For background see:
Censorship of Critique of Emissions Trading and Carbon-Offsets Schemes
Update on Censorship of Critique of Emssions Trading Schemes

A new framework to address overshoot

As an independent economic thinker rather than an affiliated academic, I can perhaps offer a fresh approach to our ecological predicament.

The current approach is typified by recent posts regarding cap-and-trade, including Edward Fullbrook’s request that economists evaluate James Hansen’s “fee and dividend” proposal.  These posts are attempts to reform the current system – that is, to improve on business-as-usual.  Such reforms are worthwhile, but strikingly inadequate to prevent the collapse that Fullbrook and many others rightly fear.

Climate change is clearly a major threat to ecosystems, but it is only a symptom of the underlying problem we face – ecological overshoot.  For the first time in history, humankind has violated environmental limits on a global basis.  This situation is unprecedented, and therefore requires an unprecedented solution.

Carbon credits: Britain’s richest man cleans up

The climatologist James Hansen opposes the cap and trade scenario being considered at Copenhagen on two grounds: one, at the real-world level it is essentially a programme for fraud and corruption, and two, it is essentially greenwash and thus serves to postpone, yet again, serious attempts at carbon reduction. Yesterday’s Sunday Times provides supporting evidence for Hansen assertion that cap and trade is a system for “paying off numerous special interests”. 

Update on Censorship of Critique of Emssions Trading Schemes

There have been major developments in the story (Censorship of Critique of Emissions Trading and Carbon-Offsets Schemes) about the attempts of Australia’s CSIRO to prevent Dr Clive Spash from publishing his critical review paper on  emissions trading and carbon offset schemes.  On 2 December, as reported in Nature News, The Australian and ABC Radio National, Clive decided he had been through enough bullying and resigned from his professorial-level position as a Science Leader at CSIRO. That Clive should take such a brave public stand on this matter will probably come as no surprise to Real World Economists who know him as an ecological economist of the highest principles who is concerned about the potential catastrophic irreversibility of climate change if inappropriate polices are adopted. In resigning, Clive called for

Fee and dividend vs. cap and trade

James Hansen is not an economist.  But after Lovelock he is arguably the most eminent climatologist ever and currently director of Nasa’s Institute for Space Studies.  Like others of his profession, Hansen knows that the Earth’s climate is close to tipping points and that it “is a dead certainty that continued high emissions will create a chaotic dynamic situation for young people, with deteriorating climate conditions out of their control.”

But Hansen has what he thinks may be – if we are lucky – an eleventh hour escape.  It is economic in nature.  As economists we might want to do our part and develop and promote it further.  Hansen

Cleaning house at the WTO

(with Timothy A. Wise)

This week, the 10th anniversary of the infamous “Battle in Seattle,” ministers assembled in Geneva with renewed hopes of reviving world trade talks. To dampen expectations, World Trade Organisation chief Pascal Lamy bills the event as a mere “housekeeping session,” rather than full-fledged negotiations.

There is no question the WTO needs to clean house. The organisation charged with developing a fair and legitimate multilateral trading system has been left in the dust of world economic events.

Frank Ackerman considers “The Economic Case for Slashing Carbon Emissions”

In a recent article for Yale’s Environment 360, the frequent RWER contributor Frank Ackerman tells how leading climate scientists have come to realize that the current international policy goal of keeping the atmospheric concentration of CO2 below 450 parts per million puts us on course for an ice-free Earth and thereby a catastrophic rise in sea levels.  To avoid this, atmospheric concentrations of CO2 must be reduced to 350 ppm by the end of this century.   Ackerman’s article looks at what the economic costs will be.  He writes:

The Job Loss from Reducing Greenhouse Gas Emissions and the Job Loss from Defense Spending

There is a major national ad campaign, funded by the oil industry and other usual suspects, to convince the public that measures to reduce greenhouse gas emissions (GHG) and slow global warming will result in massive job loss. This ad campaign warns of slower growth and the loss of hundreds of thousands of jobs, possibly even millions of jobs, if some variation of the current proposals being debated by Congress get passed into law.  

Censorship of Critique of Emissions Trading and Carbon-Offsets Schemes

As the Copenhagen Climate Summit Approaches, heterodox economic analysis of climate change policies needs a bigger profile. The good news is that Edward Elgar Publishing is shortly to release Keynesian and Ecological Economics: Confronting Environmental Issues edited by Ric Holt, Steve Pressman and Clive Spash. The bad news, however, is that, as things currently stand, New Political Economy won’t be publishing an important paper in this area by Clive Spash, that the journal had accepted following normal refereeing processes. The paper is entitled ‘The Brave New World of Carbon Trading’, but Clive’s employer, Australia’s Commonwealth Scientific Industrial Research Organisation (CSIRO) wrote to New Political Economy demanding that it not be published.  

Climate change – why we can afford to stop it

I haven’t been writing much about the state of economics per se lately, but I am deep into the same issues in another venue: the economics of climate change. The same old mistaken theories are said to have “proved” that the optimal climate policy is to do very little, and do it very slowly.

For a recent round in the struggle against this nonsense, see the report co-authored by a group of 8 economists, “The Economics of 350.” (Yes, we can afford to save the planet; if not, what were saving all that money for?) A short summary with links to the main report can be found in my on-line article at Yale Environment 360, http://e360.yale.edu/content/feature.msp?id=2200 . The report is sponsored by “Economists for Equity and Environment,” a fairly new, growing organization which is one of the hopeful signs in the U.S. economics profession lately – see http://e3network.org/ . In addition to practical work aplenty that can be found there, be sure to read the group’s manifesto, “Real People, Real Environments, and Realistic Economics.”

– Frank Ackerman