This is a measure of where inflation "goes", not what fuels inflation. The narrative that profits are "fueling" inflation is completely made up and the people pushing it are lying to everyone for political reasons.
Inflation is caused - in most countries - by excessively loose monetary policy (sometimes fiscal policy, sometimes both). If government policy creates inflation (average prices go up) that money can flow to a domestic labor or domestic investors or leave the country. This depends on supply-side factors that are basically orthogonal to the inflation question. It is true that in the most recent round of inflation it primarily led to increased corporate profits.
There is a theory from the 80s called the wage-price spiral [Blanchard] that talks about how inflation (which is initially caused by fiscal or monetary policy) can become self-sustaining if wages and prices are set in a staggered back-and-forth kind of way, as workers react to higher prices by demanding raises, and firms react to higher labor costs by raising prices. However, there is no serious theory that such a process would happen with profits. That makes no sense at all! The exact opposite would be true, if anything. High profits in some time period would likely regress to the mean as price competition sets in. In fact, this is exactly what is happening right now, as corporate profits after spiking over the past 12 months are shrinking.
The "profit-price spiral" narrative is being pushed by the same disingenous idiots pushing the "greedflation" narrative - it is not a serious attempt to explain inflation, it is an attempt to use reasonable-sounding economics words to blame inflation on companies instead of the actual culprit: governments that overstimulated their economies to such a degree that they caused both inflation and profits to spike.
> This is a measure of where inflation "goes", not what fuels inflation. The narrative that profits are "fueling" inflation is completely made up and the people pushing it are lying to everyone for political reasons.
Inflation is an increase in price level. When prices go up, one might consider that the price of inputs has gone up, or that profits has gone up, or both.
If the inputs go up, and the price stays the same, profits would go down, and there would be no change in price level. If companies are unable to be profitable in the face of rising inputs, they will collapse.
If inputs go up, and profits stay the same, prices would increase in line with the increase in inputs, ie. an increase in price level, ie. inflation.
If inputs go up, and profits increase, then prices will increase more than the cost of inputs would dictate, ie. inflation.
You can't say that the price increase in things like fuel and food were the result of profligate government spending, because that would suggest people are taking money they received from the government as covid stimulus and increasing their consumption of food and fuel.
You can't say that price levels have increased because of increased labour costs, because real wages have declined.
You can't say that companies have increased prices only sufficiently to offset the increase in inputs, because then profits would not have increased.
What you can say, though, is that the cost of inputs went up, there was a fiscal stimulus due to covid, people had increased spending power, and companies that sell "must haves" increased their prices to absorb that increased spending power, over and above what was required to satisfy increased input costs.
Then, because price levels went up (due to increased profits absorbing additional spending power) governments increased interest rates, making things more expensive for the very people whose increased spending power had just been absorbed by said companies.
If a company has for sake of argument a 10% profit margin on an item and seeks to maintain that 10% profit margin after an increase in its input costs then is that unreasonable?
In dollar terms its profits have gone up but as a percentage they haven't.
I think it's reasonable for companies to want to have infinite profits and $0 in costs to produce. That's what they're supposed to do.
My point is that when the OP says "inflation is the result of monetary/fiscal policy" (EDIT: paraphrased, not quoted, improved accuracy of paraphrase) it's inaccurate: people did not spontaneously choose to consume more food and fuel because they had increased spending power, but those prices went up and so did profits
So some companies are able to increase prices disproportionately because of their unique position as price setters and lack of competition. They absorb any increase in spending power and/or fiscal stimulus. Increase in interest rates absorbs whatever is left over.
As those price increases filter through the economy, price levels increase further and so on.
If there was more diversity in the food and energy sectors, then prices would not have increased as much as they did, and the increased fiscal stimulus would have dissipated throughout the economy, making its way into the pockets of more small businesses.
Now: should the government not stimulate the economy? Well, I doubt it, then people would have been really in the shit.
Should the govdernment better target their stimulus? Absolutely, I know in Australia it was very inequitably distributed.
Should the government implement policies to prevent those sectors with the least competition from hiking prices to absorb fiscal stimulus meant to avoid recession, thus keeping a cap on price level increases? I think so.
And I think the linked article does a good job of demonstrating the way in which "profit-price" interactions are a better way to think about inflation rather than "wage-price" interactions, and thus why it's unreasonable to expect labour to shoulder the burden of suppressing inflation, rather than capital.
I don't think op did say "inflation is the result of government spending" he said it was the result of excessive monetary stimulus. In other words the action of the federal reserve.
Although it's also clear that monetary policy alone cannot stimulate the economy, otherwise there would have been a correlation between ZIRP and economic growth, and there wasn't.
Fiscal policy does stimulate the economy, and if properly targeted this can be done without inflation risk.
OPs main claim here is that the article is "fake news" because government monetary and/or fiscal policy is the main driver of inflation. While it may be the case that governments did stimulate the economy, the bulk of price level increases are not increased caused by demand (ie. people deciding to buy more stuff) but a combination of increase in inputs (supply problems) and monpolistic price setting by poorly regulated companies.
I concede that one might say that, in the absence of any government stimulus, there would also have been no price level increase, but I would also contend that in the absence of such a stimulus there would have been a depression and that a price level increase could have been avoided through better targeted stimulus and better regulation of companies.
I can't say whether that's actually happening or not, all I can say is it's a reasonable explanation as to why profits would be going up for many companies.
Who had increased spending power exactly? I was under the impression the stimulus was mainly directed towards people who had suffered wage loss due to covid.
Some of the money went to folks who lost jobs. A lot of money also went to business owners who were supposed to use it "to not lay people off". Many probably didn't even need the money but took it because "free money". The number of business owners who bought new "toys" (i.e. cars, boats, etc.) or second and vacation homes during a time of supposedly difficult financial times is daunting...
Think about this: the cost to write off outstanding college loans is ~$350 billion. This amount was accumulated over a few decades. ~$700 billion was given to business owners in under a year...
One of the powerful things about the stimulus is that it was undirected—that money (I no longer recall the precise amount per household—$1200? $2000? somewhere in there) was just given to every household in the US.
Well ... if you think about it the additional spending power was sitting somewhere right? People lost their jobs because other people weren't spending. The people who didn't spend, kept their money. Then the people who laid off workers, kept their money. The government added money to close the spending gap. It's a perfectly reasonable policy, HOWEVER I know that in Australia definitely (and probably in the US) it was very poorly allocated, so people and firms who really shouldn't have had any extra income were granted it and some others who really needed it, didn't get it.
On balance, increased government spending adds net financial assets to the private sector and increased taxation removes it.
So did the government need to just "tax back" the money it spent into the economy? Maybe in some ways, but certainly not from the people it gave it to and maybe not at all. BECAUSE during the time when there was a recession avoided by stimulus, the population also grew so there should have been some economic growth during that time anyway.
As such, probably, what should have happened is that the government should have done things to ensure that the (very few) parts of the economy that benefit wildly from lack of competition and dysfunctional markets (like food, energy and housing) didn't accumulate all of the growth that should have been more evenly spread around.
In Australia, we need the government to build roughly 100,000 public houses per year, and we need to dramatically increase net migration to achieve that; but since we're an economy dominated by religion, mining, finance, real estate and insurance that's unlikely to happen. We actually have a horrible housing crisis in this country because of the dramatic increase in single person households as a result of relationship breakdowns over covid and the tendency away from share housing in young people (who can afford it!), as well as an explosion in dwellings used only as short term rentals.
In the US you probably have many of the same problems. The inflation reduction act did some of the work to improve things but it took a while to get it through because Manchin and Sinema fucked the recovery for everyone (as Bernie said: "give us more democrats").
This is the best discussion on inflation I've seen:
Wouldn't they be? These days, most people and institutions who own shares of a company tend to own a similar fraction of the shares of the competitors, too.
That's the basic premise of index funds.
Presumably when they vote, their interest will be in seeing the entire index go up, not one company stealing the market share of another.
It doesn't require active collusion. This is one of the things that many people fail to understand about this, and many other aspects of our current systems.
When supply chain disruptions during COVID caused significant supply shortages, companies raised prices as one would expect due to the classical law of supply and demand.
By the time those shortages ended, there was so much media buzz about inflation that those companies realized, independently, that they could probably keep prices high and no one would notice.
They did this. It worked. The media still kept talking about inflation. Wages started to recover a little bit from the beating they took during the pandemic, and the Fed started talking about forcing wages down to fight inflation.
Those companies, independently, saw this and broke out in the biggest shit-eating grins ever. They raised prices again, purely to juice their profits, and still the media and Fed were only talking about inflation as if it was caused by wages.
Only now, months/years later (depending on where you start counting), is the media starting to catch up to what's actually been happening.
(And I'm sure that it's also something of an oversimplification—that the inflation hasn't been caused solely by this corporate greed. But I'm pretty damn sure that in this instance, it has been caused primarily by corporate greed.)
TL;DR: Active collusion is not necessary in a situation where multiple actors within the system can independently recognize actions that will benefit them at others' expense, and engage in them simultaneously. It is a zeitgeist, or possibly a bellwether and then flock movement, not conspiracy.
> It doesn't require active collusion. This is one of the things that many people fail to understand
Exactly. Interested people should look up Keen & Standish critique of the theory of the firm (e.g. http://www.paecon.net/PAEReview/issue53/KeenStandish53.pdf), they have a really nice and simple computer simulation where competing firms collude only on the basis of knowing the current price, without even being aware of each other's existence.
Landlords especially. Land value (whether you're measuring by sale price or rental value) is largely a function of economic activity or the potential thereof; landlords - even when they ain't colluding with one another - are well-positioned to respond to any growth in wages or profits by jacking up rents accordingly.
Land value taxation paired with a citizens' dividend would close that hole - alongside myriad other socioeconomic benefits.
I am not an expert in this field by any means but, Planet Money did a piece recently that suggested some people are putting forward a serious theory for how a profit-price spiral would work. Again, not an expert, but the reasoning ng seemed sound. Link here:
> This is a measure of where inflation "goes", not what fuels inflation. The narrative that profits are "fueling" inflation is completely made up and the people pushing it are lying to everyone for political reasons.
Inflation is caused by rising prices. In the b2c markets, the prices at set by the companies. It is believed that in presence of sufficient competition, the companies aren't really free to set the price, and are only following the “market price” (they are said to be “price-takers”).
Here we see profit rising, which means that the competition isn't high enough, companies have become “price setters”, and they are setting the rising price. Hence they and their profits are responsible for inflation.
QED.
I don't understand the nuances of global economics, but makes you think how and why so many governments made the same monetary policy mistakes in lockstep.
Interesting point. I could agree with this analogy if different countries had "bought IBM" at different times and thus made the same mistake. But what has happened here is that many countries have bought IBM together at the same time.
Any book about history of inflation shows the same pattern repeated over and over again, for the last 10,000 years: the government debases the money, e.g. the one ounce pure gold coin now is half gold half copper. They start to pay with those coins, at first at the same prices, but with the new demand rising prices go up. The government always try to put the blame on the greedy merchants, and always try to put price caps, to pass laws forbidding price rises, etc.
The dynamic of inflation makes this narrative plausible: when the government spends their new debased money, the first to get them are their providers, and their volume rises. As with every demand spike, prices go up, but the closer you are to the money printing, the best deal you get being able to spend new debased money as it was the old money. Wages are usually the last to get the rise, so the worker see how the bussiness raise their prices "greedily" while they don't get wage raises.
Precious metal coins is a concept that the ancient Greeks introduced and the Romans spread across their empire.
Ancient Egyptians didn't use precious metals. They used something far more mundane. You are a farmer? You bring your harvest of corn to a storage house and receive a receipt of your deposit on a clay tablet.
But here is the thing. Storing grains is expensive and they don't last forever, so the depositors are charged the cost of storage if they keep their receipts for longer than a year.
Now imagine you do the same thing except your receipt is gold. The concept of an eternally lasting receipt should raise an eyebrow. Who is going to pay for the storage costs? If nobody, then congratulations you just invented a Ponzi scheme! Early depositors get bailed out by future depositors!
Alternatively, the value of the coins must shrink to accommodate the loss of grains, but here is the thing. You are in a deflationary boom, you don't care about reality.
But at some point you will try to spend your deflated money, right? Well, you will come crashing down to reality. The sudden price adjustment towards reality will cause a lot of inflation all at once.
Ok, so now that we know the dynamics of precious metal money even in the absence of government intervention, aka cycles of booms and busts.
We can now think about the motivation of the Roman Empire which is the most famous historic example of "debasement" because they were the first ones to do it on a large scale. Well, you see, the Roman empire was constantly expanding its borders to acquire new precious metal mines. This works until you run out of mines. In other words, it was a pyramid scheme that needs a constantly expanding territory.
So instead of thinking as precious metal money to be something aspirational, it would be smarter to realize that it doesn't work. I mean the easiest way to prove the idiocy of a gold standard is to point at all the fiat currencies that originated from a failed gold standard, which is basically all of them. In other words, fiat currencies aren't some kind of perversion of money, they are the late stage of a failed precious metal currency! It is easy to see why. Precious metal currencies don't circulate fast enough to clear the market because of their deflationary tendencies aka hoarding. So banks create a money substitute that is as good as the real thing but the problem is that the substitute can be hoarded as well so the problem can never be solved other than by substituting existing money with even more of the same hoardable money. In other words, the money supply has to rise all the time to accommodate uncoordinated/speculative saving decisions that have not been properly communicated to the market.
What I think is either sad or amusing, is that people think that these dynamics can somehow be avoided just by the government being tough enough on the economy to make all forms of money substitutes illegal, as if that wasn't some kind of massively disruptive government intervention.
Now let's go back to Ancient Egypt. If people hoarded the grain money, then the same dynamic would apply to that money right? The grain banks would have to create fake deposits for grains that don't exist and there would be constant runs on the banks, right? Except there is no historical evidence that this ever happened because people didn't want to pay the storage fee. Isn't it strange that this ancient civilization never recovered, even after thousands of years of Roman currency? Maybe the whole idea was a scam from the start. Permanence in our world is a meaningless concept. Your gold money will remain on earth billions of years after humanity has gone extinct, how exactly is it supposed to maintain its value?
I love how one can make an example (gold coin) to illustrate an issue (debasement) to receive a long lesson about the example being incorrect instead of discussing the issue. I never said "gold is the solution", and in fact my example is about how governments historically debased gold coins.
An egyptian government can also "debase" grain. Just issue fake receipts for unexistent grain, and buy things with them at current prices. Suddenly, there are a lot of grain receipts circulating, so you expect prices to rise. The government can now blame the price rise to the merchants! They are the ones that are rising the prices, and that's all you can see.
On the example of the grain deflation, you don't have a "receipt in gold". You buy or sell grain, and that's it. Lets suppose a simple market that stores grain at a cost of 10% in a year. You sell grain on January for 100 ounces of gold, but if you try to re-buy the same amount of grain in December, it costs 110 ounces, or receive a 10% less grain for 100 ounces. As simple as that. Your 100 ounces of January didn't guarantee you the same amount of grain in December, because they are not a "receipt in gold for X amount of grain". Prices are a dynamic way of economic coordination to reflect whatever reality it may come. E.g. if half the silos burn through the year, grain prices will double to reflect that, and that's not inflation. But good luck reclaiming your clay receipt amount of grain.
The problem here is not the gold. The problem is issuing more money than people are demanding. There is nothing wrong with issuing money (e.g. in form of new credit) if people demands credit that they are paying sooner or later. The problem is the government creating new money with zero intention of paying it back, because that fuels inflation.
Deflation is not bad _per se_. We have deflation in computer or mobiles prices since forever: we know we can buy a cheaper computer in the future with the same specs than today, yet we don't hoard money instead of buying computers. We buy them when we really need them. Inflation creates an artificial urge to spend sooner than you want/need, because we know our today money won't buy the same in the future but less. That looks like a good thing on the surface ("the economy moves" they say), but it has a lot of bad consequences: erodes savings, consumption rises above our real needs, investment is more difficult because economic calculations are uncertain.
Historic inflations are well explained here: https://www.amazon.com/Forty-Centuries-Wage-Price-Controls/d..., where the authors collect a large number of inflation events in the last 4,000 years and show how every single government followed the same route: 1) debase the money, 2) expend their newly created money, 3) prices raise, 4) people complain, 5) government blames the merchants and creates laws to control prices and punish price raises 6) inflation persists.
> The problem here is not the gold. The problem is issuing more money than people are demanding. There is nothing wrong with issuing money (e.g. in form of new credit) if people demands credit that they are paying sooner or later. The problem is the government creating new money with zero intention of paying it back, because that fuels inflation.
I don’t see the problem here. Does the government have any intention of paying it back? What would happen if all created money was payed back?
Seems more like created money/governmental debt needs to stay so people have something in their pockets to actually pay for something.
Honestly you would think Lyft would be more explicit about contributing back in their article.
This isn't the first time I've seen a company contributing back to open source but completely neglecting to mention it in their post about it. It's weird, usually companies love to virtue signal about any tiny thing they do for society.
Yes - Lyft contributed the overwhelming majority of the new data back into OSM. The only exceptions were layers that didn't meet OSM community standards for various technical reasons.
They're saying "we contributed the overwhelming majority of the data we collected and corrected, except for that which wasn't eligible for contribution." It really seems like Lyft operated in good faith here, they just didn't mention it in the blog post.
Article is half correct. It’s true that major consumption purchases (nice house, nice car) are better thought of as liabilities not assets. But the investment story here suffers from what I’ve heard someone call the “my portfolio is 3 car washes in downtown Omaha” problem.
Long story short: this is actually not the best way to accumulate investment returns. The numbers in the post are not just realistic. Small $ private equity investments (that’s what this is) often lose money when costs are properly accounted for, especially if you include the value of time. And if you pay someone to manage the asset (rental property manager for example) it eats your return.
My dad once came into possession of a coin operated laundromat. It was exciting for a while. I’d go with him down to the laundromat and we’d pick up the quarters and do inventory. We bought a coin counter on eBay to make it go faster. Eventually we did the math and realized the business barely broke even, and was occupying 20% of his professional attention. He shut it down after 3 months and sold off the equipment.
Anyway you can make these kinds of businesses work but it’s a grind, not a free lunch. You’re better off with ETFs or a good dividend stock.
When I was young my parents bought real estate to rent out for cash flow. One pair of renters just left without notice and did a lot of damage on the way out. They sold the property shortly after that.
> Anyway you can make these kinds of businesses work but it’s a grind, not a free lunch. You’re better off with ETFs or a good dividend stock.
Not to say I disagree, but one wonders if there's broader macroeconomic implications when it's widely accepted that the best use of capital is to buy ETFs and stocks, or maybe real estate.
I say widely accepted because, as an upper middle class professional, it seems to be common sense retirement planning revolves around dumping a large amount of money into the S&P500, maybe with a side of small-time rental management.
I can't speak for COPD but I'm very familiar with a different chronic pulmonary disease (Cystic Fibrosis), and it seems to _strangely_ not be a huge risk factor for poor COVID outcomes.
No one really has a good story for why (and it may not hold) but it seems to be consistent with the idea that the most important variable is truly just age.
Last study I read put a 99% correlation on vitamin d deficiency and getting a severe case of covid19. Which was significantly more than age correlated on the same dataset.
Vitamin-D deficiency may cause severe covid-19, or severe covid-19 may cause vitamin-D deficiency (covid-19 affects the kidneys second worst after lungs it seems, and you need kidneys for vitamin-D processing), or a little bit of both.
Vitamin D is fat soluble and “buffered” in the body; all of which is to say that no one goes from good vitamin D levels to being vitamin D deficient in the time it takes to get infected and develop serious Covid-19 symptoms.
What is usually measured is the calcifediol - aka 25(OH)D - in the blood. It is the liver that produces calcifediol from cholecalciferol - aka vitamin-D3. The kidneys (mostly) then turn that in calcitriol, the actual hormon.
Vitamin-D2 aka ergocalciferol works similar in that is is eventually converted by liver and kidneys into calcitriol.
Ergocalciferol, calcifediol and it's various precursors can indeed be stored in fat tissue.
It is unclear however how severe covid-19 can affect the kidney and liver functions relating to this and release of substances from fat tissue.
Right now a lot of research seems to point in the direction that vitamin-D deficiency can indeed lead to more severe covid-19. At the same time there is different research suggesting that covid-19 itself messes with vitamin-D levels as well.
As someone who is severely Vitamin D deficient (I take 50,000IU a week via prescription and still have very low blood test results), both my GI doctor and PCP have indicated it as a risk factor if I was to get infected.
That seems very right. It doesn't matter if covid-19 causes/worsens deficiency or deficiency causes severe covid-19, or both. If you're already deficient the outcome will be that it gets even worse for a deficient person.
I was more making my initial comment thinking in the opposite direction: that people who are not deficient shouldn't feel overly secure (and take more risks) just because there is a correlation - with unclear causation.
You have to be careful in general whenever you are correlating two common features. If 80% of your deaths to a disease are among people who are overweight or obese, and 70% of your population is overweight or obese ... yes, there is a correlation. But it's a much weaker and less interesting correlation than if 20% of your population were overweight or obese, or if 97% of the people who died were obese or overweight.
So you made me curious and I googled. Not quite most everyone, it rather seems to be regional: under 20% in Northern Europe, 30-60% in rest of Europe, up to 80% in Middle East.
Huh, weird. I would have assumed deficiency would be inversely proportional to amount of sunshine. Do people in northern europe really experience so much more “sun on skin” time or is it wholly diet driven?
Melanin reduces the amount of vitamin D synthesized in the skin for the same reason it has protective effects against sunburns.
Historically this wasn't a problem since people with more melanin live in sunnier, more UV intense regions. In fact, pale skin may have been an adaptation as people moved north from the equator to combat the decrease in sun exposure/intensity. But people spend much less time outdoors today with AC and the internet, so vitamin D deficiency is especially prominent in dark skinned populations.
> The generally adequate vitamin D status in the Nordic countries is due to the use of cod liver oil and supplements (46) and vitamin D fortification, leading to a great improvement in Finland during the last decade (47).
Doesn't surprise me; here in the South we don't get deficient enough to cause obvious issues, so we don't pay attention to it.
At least in Sweden all children are given supplements, up to at least the age of 5, and just anecdotal, many of friends and grownups in my extended family do so too.
It's amazing and wonderful how much environmental damage seems to be recovering. Air pollution is down, carbon emissions are down as much as 17%, fish and sharks are repopulating shorelines and beaches - and to think, all it took was the most severe public health crisis in 100 years, a catastrophic global recession, and an overpowering wave of human misery and death
Another point to balance the "how much environmental damage seems to be recovering":
CO2 in the atmosphere has a long inertia. The (reduction of) emissions in the past few months will not have any effect on the global warming for a few decades.
Basically in the short/mid-term, CO2 emissions are accumulated to previous emissions, not replacing them
This only shows that, while CO₂ concentrations are the dominant control variable in the question of our long-term survival, the overall health of the environment is influenced by many, many more things, especially short-term. Now it is especially clear that protecting the environment and mitigating the climate crisis are two different, and only partially aligned efforts. Frequently, they're in opposition - which is why it's extra important not to confuse them.
The example I tend to use is plastic pollution. Interventions like switching from single-use plastic bags and bottles to reusable woven bags and glass bottles may very well help with the amount of plastics (and microplastics) present in the environment, but they're also a climate disaster, because plastic bags and bottles are ridiculously efficient to make at scale. And so here, I also worry that despite the environment taking a break from us during COVID-19, this will turn out to be a huge step back climate-wise - as soon we'll have to start rebuilding, and there will be less money and will around to fund R&D and deployment of less carbon-intensive solutions.
> protecting the environment and mitigating the climate crisis are two different, and only partially aligned efforts
I wish more people understood this. Too many times conversation are hijacked by the CO2 discussion when really in the short term we should be focusing 99% of our efforts on bio-diversity preservation.
I sort of meant the reverse. You make a good point about importance of biodiversity downthread, but wrt. things like plastic pollution vs. CO₂, I'd argue we should just ignore the former. The reasoning is:
- We know the ecosystem is thoroughly polluted by microplastics, but there is no evidence that it's in any way harmful. It may be, but we haven't seen it so far.
- We know that without mitigation, climate change is an existential threat to civilization, that will materialize within the lifetime of many of us here.
Given that, we really can deal with microplastics later. Let's first stop the house from being on fire, and then focus on tyding it up.
Really interesting reasoning. I'm almost tempted to say "extremely unscientific".
1. "no evidence of microplastics being harmful" sounds very much like WHO's "no evidence of human transmission". Personally, I'd say that in both scenarios, the outcome we should be most worried about is tail risks - what if we suddenly realize the situation is much worse than we imagined, but it's already too late...
2. Is "climate change" so bad? I mean, would it be really so bad if the Earth warmed up a bit, and all of Siberia, Greenland and the Antartic became livable (and arable) land? More food, more space for new humans, ... all good! Except, obviously, 2 things - biodiversity (which you want to ignore) and tail risks - what if the Earth warms up too much, and we "trigger" some unexpected process (e.g. thawing of permafrost releases vast quantities of extremely potent greenhouse gases).
I think most people are simply really confused about their reasoning process. Microplastics? Ignore tail risks. Global warming? Tail risks! GMOs? Ignore tail risks. 5G? Tail risks! Vaccines? Ignore tail risks. Endocrine disruptors? Tail risks! (Of course, the exact configuration of positions is highly correlated with one's political orientation.)
2. Of course it's incredibly bad. It will displace entire populations and alter permanently entire ecosystems. The effects will be cascading all over the world and we have no idea what the consequences will be in the long term.
You've articulated perfectly something I've been struggling with on conversations here on hackernews in your last paragraph. People can be incredibly short termist when it suits their agenda but some things are dangerously irreversible if we get them wrong. I liken it to a child dismantling a toy to see how it works and then not being able to put it together again but on a civilisation impacting level.
I'd argue the two basic heuristics I apply in this and similar cases are pretty scientific:
1) Strong effects are obvious in the data; conversely, if you have to dig deep and play with statistical significance to prove there's a connection, the effect is very weak - it's a scientific curiosity, sure, but "to zeroth order of approximation" you may as well say it doesn't exit.
2) When ascertaining the possible impact of something in the future, your estimate will be more accurate if you have a clue about mechanisms of action involved.
Microplastics seem to fail both heuristics at the moment - there isn't any obvious impact that we've measured, and there isn't any obvious mechanism of action that could imply serious danger. There most likely are issues caused by them - however, we've been living with them for decades now, so if this was an emergency-level threat, we'd probably see something by now.
Compare that with worrying whether coffee/red meat/artificial sweetener/vaccine/5G will give you cancer - maybe it will, maybe it won't, but if the chance of it was remotely worth worrying about, it would be blindingly obvious in the data by now. Contrast that with "no evidence of human transmission" - not enough data to check heuristic 1, fails heuristic 2 due to similarity to other coronaviruses with known mechanisms of human-to-human transmission.
Climate change passes both #1 and #2. There is known, first-principles mechanism of action that you can dig into like into a fractal, if you want to explore consequences for various aspects of the ecology and society. There is a known mechanism of action that makes it into an actual threat - food shortages, mass migrations, political unrest, leading to wars, starvation, suffering and death. We know how fragile our civilization is (present COVID-19 situation makes a lot of weak points clearly visible). There's lot of historical data supporting the above and the threat evaluation - for instance, we're seeing how increasing average temperatures are impacting agriculture and habitability of some regions on Earth.
One more clarification: the reason climate change is dangerous is not because it threatens plants and animals. It's because it threatens human civilization. We care about nature not because it is, but primarily because we need it to live. Moreover, since almost no one would enjoy suddenly being thrown back to preindustrial age on a thoroughly broken planet, we can safely say that the concern is about survival of existing civilization, not survival of human species (not to mention, you can't fix the damage without technology, and you won't have technology when civilization collapses). Human civilization is very fragile.
Also: just saying "tail risks" isn't meaningful. You have to actually estimate the sum of the tail to determine whether it's even worth paying attention to. Which circles us back to heuristics #1 and #2, which - in my opinion - say that microplastics are a secondary issue to climate change.
What are the benefits of focusing on biodiversity preservation? I can think of some things like food security but would global warming not also impact on those?
>What are the benefits of focusing on biodiversity preservation?
They're not always aligned. There's many more issues that come out of low biodiveristy than just those affected by climate change. One important one that's unrelated would be high biodiversity environments have more rich soils that are better for farming. Similarly more biodiverse environments are more resistant to disease; Ash dieback disease that affects the Ash in Europe appears not be fatal to the tree in mixed diverse forest [1].
Diverse ecosystems are also more resistant to climate change [2], so there's that too.
>but would global warming not also impact on those
Other way around. By focusing on biodiversity preservation we increase the robustness of the ecosystem and stop the dominoes from falling. Removing biodiversity cascades through the whole ecosystem and accelerates climate change. Also once bio-diversity is gone it's impossible to get back but we can always invent technology to extract CO2 from the atmosphere. Remember most of the species we're losing we don't even know they exist.
Everything is connected in nature, for example if we lose bees the effects will be devastating. Most seemingly "useless" animals actually have a very important role in their ecosystem. Without healthy ecosystems we are doomed.
I feel that most of cleantech work is still essentially a luxury, which will be hard to justify in a recession market. I also didn't mention the other aspect - how many of existing environmental protections and standards will have to be suspended because everyone will argue they can't afford to survive and recover if they have to stay clean?
Which means large corporations get to influence policies, even without any lobbying. "Dear senator, what do you mean those environmental protection regulations apply to us? The regulations of the neighbour country $x, that also invited us to build our 10 000 jobs worth plant on their soil, are nowhere near as onerous. We might need to take them up on their offer. Perhaps at least you can cut us a tax break?"
"Well, dear corporation, if you want to sell your products to our citizens, you have to play by our rules. We'll let you know that your direct competitor already agreed to these rules yesterday."
"I'm sorry Senator, you must be confused. Our products meet the health&safety standards prescribed by yours as well as international regulations in this region. You cannot, legally, stop stores from reselling our products, nor you can prevent customers from ordering them on-line. Meanwhile, if you're satisfied with the smaller plant of 2000 jobs of our competitor, we'll happily set up shop at your neighbour's.
It was nice dealing with you. I hope you don't mind if I mention your name at the press conference we'll call soon to announce signing of the deal for our new plant with your neighbour."
"We have and will use our authority to prevent the sale or re-sale of products that do not conform to the rule of law. Please be so kind to mention my name at your press conference, so that my citizens know their government stands up for their rights."
I know that the above response might seem like a pipe-dream to some, but let me assure you that there are governments and government officials that do stand up for the rule of law, and that are not easily bought by the highest bidder.
Yeah, but what I meant by my response is that, in this hypothetical scenario, the products themselves are fine. Nice, clean, safe, recyclable, whatnot. It's the manufacturing process that's polluting. You can't ban a product from being sold in your country on the grounds that manufacturing it in another country is an ecological disaster. Meanwhile, all those jobs are highly desirable (not just for your personal benefit as a politician, but also for the benefit of your constituents and your nation's economy). So there's an incentive to relax the environmental protection rules a little bit. A corporation can use this to play countries off each other - if you stand fast by your existing rules, and your neighbour does not, all the plants and all the jobs and all the economic boost will go to your neighbour, making your country weaker on the international scene.
There's no bribing involved in this scenario. Just plain market competition at nation-state level.
Well, it depends on the size of the country, does it? And on the mindset of the population.
If the EU tells you you can't produce anywhere in the EU because of how dirty your factory is, you can still produce it in the US or Russia and then ship it to the EU. However, your supply lines have just gotten more complicated, expensive, and error prone (because of distance) - so that's one part of the equation that a company has to take into consideration as well.
On top of that, I'm fairly sure there are quite a few Europeans who will applaud politicians who stand up against polluting or otherwise unethical companies, and who look down on (and not vote for) politicians who do shady deals with polluting companies.
So, as always - it's not so simple, and there's more than one dynamic at play.
> You can't ban a product from being sold in your country on the grounds that manufacturing it in another country is an ecological disaster.
Why not? Constituents like it because it brings back the jobs that left because moving them out allowed companies to avoid environmental regulations, which they can now not avoid either way if they want to sell in your country and so might as well bring the jobs back.
> Constituents like it because it brings back the jobs that left
If it succeeds.
I guess you could do that; a sovereign state can try whatever they like. But has that ever actually happened? I can't think of any case where a country banned import of a product on the grounds that its manufacturing isn't up to environmental standards, even though the manufacturing happens in a different sovereign nation, and is compliant with that other nation's standards. I imagine trying to do that would quickly escalate the issue from business to international politics.
There are already rules about things like labor standards of where the product was made. Like if a company uses slaves to manufacture a product, the purchasing company doesn't just through up their hands and say "What can we do? It is not our labor standards they have to comply with." No reason we couldn't add environmental standards to the list.
Edit: I am getting a lot of down votes so let me clarify: if external costs are not internalised, humans will ignore it.
Internalising the cost does not even need to mean tax. Many clothing brands in my country, even the budget brands (think Walmart), have been pressured by consumers into using more ethical factories. The same could be done by forcing companies to disclose what factories they use and the factory carbon footprint.
It could have been non-polluting, but instead of redesigning, it's easier now to get nations to compete against each other for the location of that plant - and as part of that competition, relax the environmental protections. The "freedom of movement" for corporations (freedom of movement of capital?) has plenty of benefits, but this is one of the negative side effects.
My solution is for all governments to take responsibility, tax pollution and for consumers to understand the environmental costs of products, possibly by forcing disclosure.
I don't understand what your solution is. Ban importing goods? Tax imported goods based on factory pollution and standards?
Knowing the solution is the easy part. The hard part is how to get there, and how to keep the solution working.
"All governments taking responsibility simultaneously" is not something that ever happens. And even if it did, in a moment of selfless reflection of all global leaders, weaker economies will still have a powerful incentive to relax the standards to compete better with stronger economies. I don't have a solution, I'm just saying how things are. Restricting the ability of multinationals to play countries against each other would help in this matter, but it would probably gum up the economy too hard to be worth the attempt (not to mention, it would have to be another thing most governments would have to agree on simultaneously, otherwise the ones to attempt it immediately lose).
The overall point is: it is a tragedy of the commons, just not a local one - an international one. The solution to tragedy of the commons is to have a higher authority unilaterally force participants to limit their use of the commons. But we don't have any higher authority above nation states, so we're ill-equipped to solve tragedies of the commons at international level.
Yes, What is difference between ie. CO2 and other thrash we already producing (as society). So far we didn't accepted that we need 'pay' or handle CO2 as rubbish (while PPM constantly growing). But take your dog poo in park or pay fine (Plastic anyone?). Again, What is difference ?
Even assuming they are capable of that (I am doubtful), reaching consensus on the idea seems quite a bit of a long shot. Something likely needs to be done though, somehow.
Imagine - what will happen when next big virus/bacteria pandemic hits the earth...Other species will stand a chance when human population makes some room ...it probably sounds bad but unfortunately the humans are the problem - not the CO2 or something else (they are just consequence) - proof is how nature thrives around Chernobyl
And the bad news is that, to reach our climate goals, we need to do much more. https://wedocs.unep.org/bitstream/handle/20.500.11822/30797/...: “the required cuts in emissions are now 2.7 per cent per year from 2020 to year- 2030 for the 2°C goal and 7.6 per cent per year on average for the 1.5°C goal.”
With the help of this year’s crisis, that 2°C goal seems in sight, but 1.027¹⁰ is about 1.3, so even if that “as much as” is globally, we would need about 10% more, so we still would have to find new ways to decrease emissions. I don’t even see us keep our current gains.
That 1.5°C goal certainly is way out of sight, IMO.
A month or so back I thought I was going crazy because I began to notice just how clear the NYC skyline appeared from where I live. It's always been visible, but the clarity is what struck me.
Well, the day that humans manage to wipe themselves off the face of the planet will be a day of rejoicing for all species other than rats, raccoons, and cockroaches.
Plus rodents survive in hiding. If they come back up to the surface to seek food, then they will become targets of owls, foxes, etc. But Thule they live in the sewers, that gives them protection.
Correct, the author is describing the effect of a competitive, liquid talent market. The other dynamic he correctly identified was asymmetry in switching costs (cheap for me to quit my job and go work at Google, expensive for Google if I quit and leave some project in the lurch). But he didn't call it this, and it's not a risk premium per se.
I don't buy the part about asymmetry of switching costs. It's possible to argue that asymmetry exists in the opposite direction: each employee has one job, so switching jobs is time-consuming and risky; Google has thousands of engineers who have had the same training/experience on internal tools/standards, so it's easy to replace a single engineer when they leave a project.
The other point I made is analogous to Baumol's cost disease except that, instead of applying to different types of job, it applies to different types of employer.
It doesn’t matter if corporations pay taxes because the money just flows to people who own equity in or work for those corporations, and they pay taxes.
Not only do they not pay taxes, they also enjoy absurd political power through lobbyists and through being able to pump huge sums of money into politics thanks to the Citizen's United decision.
There is simply too much power in the hands of the corporations. I mean, Amazon literally had dozens of city governments falling over themselves to give up enormous tax goodies and red carpet roll out all for the weak promise of 50000 jobs and an HQ2.
This is a measure of where inflation "goes", not what fuels inflation. The narrative that profits are "fueling" inflation is completely made up and the people pushing it are lying to everyone for political reasons.
Inflation is caused - in most countries - by excessively loose monetary policy (sometimes fiscal policy, sometimes both). If government policy creates inflation (average prices go up) that money can flow to a domestic labor or domestic investors or leave the country. This depends on supply-side factors that are basically orthogonal to the inflation question. It is true that in the most recent round of inflation it primarily led to increased corporate profits.
There is a theory from the 80s called the wage-price spiral [Blanchard] that talks about how inflation (which is initially caused by fiscal or monetary policy) can become self-sustaining if wages and prices are set in a staggered back-and-forth kind of way, as workers react to higher prices by demanding raises, and firms react to higher labor costs by raising prices. However, there is no serious theory that such a process would happen with profits. That makes no sense at all! The exact opposite would be true, if anything. High profits in some time period would likely regress to the mean as price competition sets in. In fact, this is exactly what is happening right now, as corporate profits after spiking over the past 12 months are shrinking.
The "profit-price spiral" narrative is being pushed by the same disingenous idiots pushing the "greedflation" narrative - it is not a serious attempt to explain inflation, it is an attempt to use reasonable-sounding economics words to blame inflation on companies instead of the actual culprit: governments that overstimulated their economies to such a degree that they caused both inflation and profits to spike.