Enlightened Economics

Economics for an Enlightened Age

Archive for the ‘Environment’ Category

•Ben Bernanke and Milton Friedman Were Right: Helicopter Money or Qualitative Easing?

Posted by Ron Robins on June 21, 2016

“Central banks are forced into more attempts to push money into their real economies to stimulate aggregate demand.  While conventional QE efforts create asset bubbles and over-valued currency, Qualitative Easing could be directed to future needs: revitalizing infrastructure, education and growing greener, more efficient renewable energy deployment.”
Ben Bernanke and Milton Friedman Were Right: Helicopter Money or Qualitative Easing? June 8, 2016, Ethical Markets, USA.

Commentary: Ron Robins
The funds required to deal with climate change are immense! The idea to use Quantitative Easing (QE) as an ‘easy’ source of funds for that purpose (re ‘Qualitative’ Easing) is highly attractive. However, I believe that government incentives and actions such as carbon taxes, depletion costing of resources, regulations favouring environmental business activities, and massive investment in environmentally supportive infrastructure and other projects at these ultra low rates (while available), are better ways to go.

The facts are that QE of any nature is highly market distorting both in the short and the long-term and does not fit with my belief that ‘nature’ (i.e. the ‘invisible hand’ of Adam Smith) ultimately knows best with regard to optimal market and economic efficiency and effectiveness.

It’ll probably be many years before we know the real outcomes of today’s central bank behaviors. What many market observers are saying now is that at the beginning of the financial crises, such actions were necessary. However, now, some eight years after the crises, central bank policies are continuing or even enlarging the scope of such measures. And almost everyone is beginning to question their efficacy in improving economic conditions. My guess is that we’ll soon see these policies backfiring and possible market chaos ensue.

Though I have much sympathy with the concept of Qualitative Easing, fiddling with the ‘invisible hand’ of markets — or the way nature functions — is not the way forward. It is not enlightened economics.

Posted in Economics, Environment, Monetary Policy | Tagged: , , , , , | Leave a Comment »

• 2015 Sustainable Competitiveness Index

Posted by Ron Robins on December 10, 2015

“The Global Sustainable Competitiveness Ranking 2015 is topped by Iceland for a second year running, followed by the Scandinavian nations.

The Sustainable Competitiveness Index is based on a competitiveness model that tries to evaluate exactly this – the ability to sustain wealth creation by incorporating all relevant pillars of sustained growth and wealth creation: natural capital availability, resource efficiency, social cohesion, innovation and business capabilities, and government-led development direction. The Sustainable Competitiveness Index also integrates data trends over time to allow for a better expression of future development potential.

The results aim at serving as an alternative to the GDP, for academic, policy or investment decisions, based on current and future development prospects and risks of nations.”
Global Sustainable Competitiveness Index 2015  (PDF), November 2015, SOLABILITY, Switzerland.

Commentary: Ron Robins
This is a terrific index concept. It needs to get more exposure to encourage governments, corporations and others further engaged in the sustainable competitiveness of their economies.

It’s interesting that the U.S.A. and the U.K. rank 41st and 48th respectively on this index while the Scandinavian countries dominate the top spots. The Scandinavian countries lead most alternative GDP indices as they are not only exceedingly high-income countries — but are top-tier performers on most other component measures as well.

The unique contribution that this index makes is the combination and weighting of its various components in endeavoring to predict the future direction of countries with respect to their total sustainability. Many countries might perform well on income measures but the sustainability and potential growth of those incomes with respect to the depletion and replenishment of their natural resources, social cohesion, etc., is wanting.

Also, countries like the U.K. and U.S.A. do relatively badly on this index because there’s a belief by its designers that governments should lead in all areas related to sustainability. Something that is politically difficult and unacceptable to many in the U.K. and America. Hence, China and Japan lead on this measure. Even Russia is ahead of the U.S.A. and U.K. on this measure — which probably raises some questions.

Nonetheless, this index is a valuable addition to alternate GDP indices.

Posted in Economic Measurement, Economics, Environment, GDP Alternatives, News, Commentary | Tagged: , , , , , , | Leave a Comment »

• The Social Progress Index Seeks To Redefine Economic Success Measures

Posted by Ron Robins on April 30, 2015

“According to Deloitte Touche Tohmatsu Limited’s (Deloitte Global) Chairman, Steve Almond, the world is overly obsessed by GDP statistics as a defining measure of national progress or local progress.  And while the research behind the  Social Progress Index  has shown that there is a very strong correlation between growth in GDP per capita and enhancement in social progress at an early stage along the development line, the further you look at the richer a country gets, the greater there are diversions between GDP growth and social progress.”
The Social Progress Index Seeks To Redefine Economic Success Measures, by Bruce Rogers, April 28, 2015, Forbes, U.S.A.

Commentary: Ron Robins
The diversions in growth between GDP and alternative social progress measures are present in most developed countries. In part, it is due to greatly increased goods and service volumes in developed countries with a corresponding decrease in, most particularly, costs associated with environmental degradation, resource depletion and climate change. Furthermore, there comes a point — such as in public health where once good basic sanitation and clean water are universally available, only incremental gains in health might be had even with greatly increased public expenditures related to sanitation and water. Thus, significant gains in GDP may have only small benefits in many areas of society and perhaps benefiting a relative few.

However, as inferred in the Forbes article, public health measures focused on such issues as obesity and poor lifestyles that lead to considerable human suffering and hugely increased health care costs, could be very cost effective. And this is where indices such as the Social Progress Index are of tremendous value. They re-focus society’s attention on social, environmental and other areas where cost benefit gains can be huge, measurable — while greatly improving our quality of life. Furthermore, such measures help define our progress towards an enlightened era and economy.

Posted in Economic Measurement, Economics, Environment, GDP Alternatives, News, Commentary | Tagged: , , , , , , | Leave a Comment »

 
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