A Reference of the Future

The focus of Julia M. Puaschunder’s book, Global Responsible Intergenerational Leadership, is the conflict between the present and the future.  Those alive now, are taking away resources of the future, degrading the environment, and leaving the future with more debt.  The future will not be able to sue the past (the current present) for the mess that the past left, creating an intergenerational problem.  The problem is expressed in the understanding the future will have lower living standards than the present.  Puaschunder makes the case that incentives can be changed to provide for a better future.  That the future and present can create intergenerational policies that ensure at least the same standard of living for all the generations that do and will inherit this planet.

History shows that major events changed the trajectory of future events.  Although events are not inevitable, the past does sets up opportunities for the future; but the future is not obligated to follow in the footsteps of the past.  It is the responsibility of the past to help provide opportunities for the future, as Puashunder indicates that many cultures have a social structure that incentivizes the community to consider their impact on the future.  Transferring knowledge is the ne plus ultra of how the present helps the future, the issue is that to utilize the knowledge requires more than just the procession of the knowledge.  Inequality plays a role in exacerbating who has access to the uses of knowledge.  With inequality, ability and skill are trivialized.  Should ancestral outcomes eclipse merit based results, future knowledge and productivity will become more difficult to maintain.

With the current deeply globalized and dependent on international policy world, who can best aid the future?  Puashunder claims that those are the corporations.  Corporations that currently reduce future opportunities with a disproportioned energy consumption, are actually in the best position to help protect future opportunities.  Corporations have a social status in every society.  Positive social status allows for customer to trust their products, while negative social status makes any corporate endeavor difficult to reach.  That social status, that reputation carries over for the long term, meaning corporations have the most to lose by taking away from the future.  Utilizing prospect theory, were the sensitivity of a loss is far greater in value terms than the same absolute gain, Puashunder shows that corporation have an incentive to provide intergenerational support.  Corporate decision makers usually last longer in their position than most government officials, which implies that corporations can maintain intergenerational policies more consistently and have a much more reputational risk than governments.

Another reason why corporations have to be in the lead of intergenerational implementation, is due their consumption.  Much of the energy in production is used in corporate consumption.  This creates a tax initiative.  The corporations which emit more waste, should pay to clean it up; or rather, the corporations should be taxed based on their waste production.  This would disincentives waste, and promote sustainable production.  Based on Puashunder’s research of how governments tax waste, taxing waste means that governments can clean up corporate messes.  With the tax, corporations can spend more time utilizing their creative capacity rather than the waste management.  Moving waste management to governments via a tax on waste (energy consumption), has multiple benefits.

Corporations may take a leading role in Puaschunder’s book, but governments also have a role to play.  The two major roles that governments have are to establish intergenerational policies and provide a determining factor in tax compliance.  In regards to the decisions involved in picking policies, Puashunder uses behavior economics to show that having alternatives directly comparable provides for a direct opportunity cost understanding which aids in the selection of the better policy.  Policies are meant to impact a future, the intertemporal decision bias favoring the current impact can be overcome by the direct comparison.

As taxes are important, Puaschunder does not leave out a story of tax systems.  Some tax systems create a social environment were people want to evade taxes, while others systems have communities seeing a tax as an imperative to be a good citizen.  Tax compliance is needed to bring about the policies needed, and Puaschunder shows how governments can facilitate greater tax compliance.  Perception of how the government treats its citizens is a determinant of tax compliance.  There is more tax compliance when citizens are treated with respect and the tax collected are allocated to the public good.  By supporting the people, people will adhere to the social contract with government.

The need for intergenerational policies to provide intertemporal equality is the focus, and the players are well described.  But, two parts are missing from this story, the reason for the debt and the adjusting of the status quo.  Many policies that help the future are described.  To create those policies benefiting the future, many current policies also tax the future with debt and an actual tax.  As the future benefits from the policies, the future should pay for it, is the usual policy standard.  This is not discussed in the book.  The future is now laden with debts that are difficult to repay, which is a part of this book, but there is a need to separate out the various reasons for the debt.

There are many corporations now that have changed policies to reflect more the intergenerational sustainable goals, but it does not seem enough to alter the others’ behavior.  The loss of social status carries a huge penalty for any future corporation, as Puaschunder expressed using prospect theory, the problem is the status quo.  To change the norm, to make shaming enough, might take a very long time.  As more corporations change their policies, it does shame the other corporations who do not provide the competitive service which includes the sustainable goals, but this itself does not seem enough.  Puaschunder explains that a tax can aid in the decision to provide better corporate strategies, but its implementation remains difficult.  Altering the status quo to reflect shaming of bad policies and the honoring of the good policies is a challenge for all parties.

With empirical studies utilizing statistics and behavior economics, this book provides a holistic view of intergenerational decisions.  The future generations are currently on a trajectory of having lower living standards due to the policies of the present.  To create a better future, we need intergenerational equity.  This book is a guide for policy makers, corporate strategist, and those who those policies impact.

Is ‘Imperialism’ a Relevant Concept Today? A Debate Among Marxists

This month, four prominent Marxists met at The New School in New York to debate the relevance of imperialism. The debate was related to the publication of Prabhat Patnaik’s (Jawaharlal Nehru University) new book A Theory of Imperialism (written with Utsa Patnaik). With him in the panel were geographer David Harvey (CUNY), political scientist Nancy Fraser (The New School), and economist Duncan Foley (The New School). Economics Professor Sanjay Reddy (The New School) moderated the debate. The main question for the panelists was: Is ‘Imperialism’ a relevant concept today? A fruitful debate followed, suggesting that contemporary imperialism is crying out for analysis and critique.

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This Econ Department Sure Has A Lot of White Dudes

Over on the INET blog, NSSR PhD student Alexandria Eisenbarth co-wrote a reflection on new research demonstrating little change in the overwhelmingly white and male makeup of the economics profession.

Responding to the wider social turmoil surrounding the Civil Rights struggle, the American Economics Association (AEA) in 1968 created its “Committee on the Status of Minority Groups in the Economics Profession” (CSMGEP), tasking it with “increas[ing] the representation of minorities in the economics profession.” Three years later, the AEA formed its “Committee on the Status of Women in the Economics Profession”(CSWEP) to promote “the principle that economics is a woman’s field as much as it is a man’s field.”

Both committees have included very senior economists and have received a good deal of attention within the AEA. It should be both notable and of great concern, then, that a new study some 45 years later confirms that “the economics profession includes disproportionately few women and members of historically underrepresented racial and ethnic minority groups,” even when compared to other disciplines. Researchers Amanda Bayer and Cecilia Rouse find that, “this underrepresentation…is barely improving over time.”

Their report, titled “Diversity in the Economics Profession: A New Attack on an Old Problem,” is a collection of statistics that reveal significant ongoing disparities across the United States. For instance, women receive only 30% of the bachelor’s degrees awarded in economics — a proportion unchanged for the past 20 years. Economics lies far below all other disciplines. In the case of the humanities, social sciences and STEM, women now account for nearly 60% of the bachelor’s degrees awarded. Though racial and ethnic minority students were awarded 22% of all bachelor’s degrees in 2014, the proportion in economics is only 14.7%. While all of the sampled discipline categories are struggling to maintain representative numbers of racial and ethnic minorities equivalent to population ratios, economics consistently trails behind.

Read the full post on INET

Facebook Isn’t Responsible for the Price of Information

Many keystrokes have been spent on the next of the succession of scourges meant to counter-explain the collapse of establishment politics and the loss of Hillary Clinton: Facebook hoaxes! Not to be outdone by the Alex Jones crowd, liberals, in their evergreen smugness, have decided that they too are victim to a political climate where everyone is falling prey to false reporting. The furor has gotten so deafening that Mark Zuckerberg himself has vowed to renew the fight against fake news after abandoning the project when in testing the algorithm, the company reportedly feared conservative backlash.

While Facebook is certainly capable of building an algorithm that perhaps begins to shadow ban users proliferating misleading content, it isn’t as if Facebook put that information there in the first place. There are entire industries dedicated to the production and proliferation of information, and as with any product in capitalism, it comes with a price.

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Philanthropy in Development: Undermining Democracy?

The word philanthropy dates back to the Greek word φιλανθρωπία, which means the love of humanity. Today the OECD defines private philanthropy as non-official development assistance (ODA) to developing countries. Such assistance can be through large philanthropic foundations such as the Rockefeller or Clinton Foundation, or through ‘direct giving’ platforms such as Global Giving or Kiva. But does what we call philanthropy today deserve its name? Rather than focusing on the actions of specific philanthropic organizations, this piece will assess the impact the rise of philanthropy has on global governance and democracy.

Figure 1: Grants by private agencies and NGOs


Source: OECD data

As Figure 1 illustrates, there has been a drastic increase in private funding for development over the past four decades, with the growth really picking up in the 2000s. However, these numbers from the OECD are incomplete in many ways, as much philanthropic funding is not reported as such. The Center for Global Prosperity has done more in-depth data collection on philanthropic funding for global development projects, and found that while OECD estimated private grants to be at $31.5 billion in 2011, CGP estimates the amount to be $58.9 billion. In the same year, OECD ODA was approximately $134 billion. Thus, according to the CGP estimates, philanthropy is now equivalent to 44% of ODA.

What is the effect of this rise? While some see philanthrocapitalism as a way for the rich to save the world, others criticize it for being a way for corporations and rich individuals to divert attention from the unequal outcomes that the current global economic system generates. Before assessing the effects of philanthropy on global democracy and development discourse, let me briefly touch on some of the main issues philanthropic foundations deal with in practice.

Read more at Developing Economics.

Tragedy of the Internetz

On Friday, huge chunks of the internet were taken offline in an apparent distributed denial-of-service (DDoS) attack. From what we know so far, thousands of internet-enabled devices ranging from cameras to thermostats were marshalled to attack the servers of Dyn which provides domain name services (DNS) to connect the addresses of websites to their location on the web. While DNS has been described as an internet phonebook, it’s closer to your phone carrier providing cell service to your phone number allowing people to call it. This is less like someone ripping up a phonebook than it is them shutting down AT&T by programming your printer to make hundreds of calls per minute.

The immediate reaction has been a pessimism at the future of cyber warfare. Already in this presidential campaign, the candidates have extolled the pitfalls and promise of “cyber,” especially as it pertains to national security. Further, a joint committee of 17 intelligence agencies is insisting that Russia is behind the hacking of emails from the DNC that are currently being released by WikiLeaks. While the prospect that you can get an ageing political functionary to fall for a spear-phishing email scam is nothing knew, shutting down the ability for people to access hundreds of websites using their televisions is quite another.

In spite of the prospect that our civilization can be thrown into a new dark age if intelligence agencies or hostile non-state actors competitively shut down portions of the internet, I remain optimistic. What this attack highlights for me, above all, is the fundamental contradiction between cyber-security and data-capitalism. These internet-enabled devices – the so-called “internet of things” – are designed with security flaws built in.

In addition to the discrete tasks the user seeks to accomplish without having to go through the trouble of walking to push a button or plug in a cable, these devices also enable manufacturers to access usage data and apply patches and updates remotely. While businesses are interested in providing a product that consumers want to buy and use, they have more recently become interested in capitalizing on their products’ use data. In order to do this, companies making these products have built in the capability for these machines to routinely send data to the manufacturer through the internet without user initiation. That functionality, as we have seen, can be coopted by anyone.

Ultimately, businesses will have to rethink the degree to which they breach their customers’ privacy. A machine that can be used as a drone by a manufacturer is necessarily able to be used as a drone for a nefarious actor. In spite of domestic and international law, the power of individuals on the internet is only limited by what you are able to code. As far as a machine is concerned, an FBI agent has no more authority to use it than a hacker. If tech companies don’t want users to lose control of their devices to malicious coders, they will likely have to give up much of the control they currently have back to the consumers using their products.

Distributing the Costs of Climate Change

In an event sponsored by the Schwartz Center for Economic Policy Analysis (SCEPA) and the student group oikos, Professor Randall S. Abate of Florida A&M University College of Law lectured and led a discussion on the issue of climate refugees.  

As broadening swaths of earth are rendered uninhabitable by— let’s not mince words— capitalism, villages currently, subsequently nations, will be forced to seek relocation.  Climate refugees—those who are forced to emigrate as the land they’ve lived on is transformed to either desert or ocean—must appeal for clemency from the very countries that have disproportionately contributed to their problem.  In the midst of these slow-burning kinds of genocides are numerous legal imbroglios, petty feuds, impolitic discourses, and opportunities for redistribution from poor to rich.

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Climate Change & Class War

This Thursday NSSR PhD student Julia Puaschunder gave the oikos lunch presentation with a talk called “Intergenerational Justice: Climate Change Burden Sharing,” which suggested the possibility of using bonds to fund mitigation and adaptation costs of climate change.

If we take as a given a trade-off between sustainability and growth, the problem of climate change can be presented as a zero-sum game to be played with our children: We may expend the earth now and leave our children with nothing, or we may bolt for asceticism and leave our children a plenitude.

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Polanyi and Mattei’s “Market Fundamentalism and Fascist Politics in Europe”

In this blog post I would like to address the presentation on “Market Fundamentalism and Fascist Politics in Europe”, delivered by Clara Mattei (NSSR Visiting Scholar and PhD Candidate, Scuola Superiore Sant’Anna, Pisa) at the Economics Department Seminar of the past October 20, in conversation with some thoughts after the talk “Polanyi’s Vision of a Socialist Transformation” by Karl Polanyi’s daughter, Kari Polanyi-Levitt, and Nancy Fraser.

Clara Mattei’s work follows perfectly from Polanyi’s well-known dictum, “laissez-faire was planned – planning was not”, which underlies his 1942 masterpiece The Great Transformation, a seminal book of economic history that practically founded the entire discipline of economic anthropology. In that work, Polanyi set a historical puzzle for neoclassical economists: “Why did a prolonged period of relative peace and prosperity in Europe, lasting from 1815 to 1914, suddenly give way to a world war followed by an economic collapse?”. Polanyi argued persuasively against the 19th-century ideology of market liberalism, founded on the utopian belief that human society should exclusively be subordinated to the laissez-faire forces of the self-regulating free market: he noted, by comparing the eroding effects of laissez-faire capitalism on the European social fabric both in the Great Depression and during the 19th century, that the relentless expansion of the free market would always inevitably unleash destructive forces upon the bare fabric of society in a way that society would inevitably respond back in order to protect itself, either in the form of fascism (Mussolini, Hitler, Franco) or socialism (Stalin). This constitutes the core Polanyian argument of the “double movement”.

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Free Capital as Anti-Democracy

That deterministic herald of creative destruction, globalization, was held in check by political barriers, namely capital controls, for the better part of the twentieth century.  Incidentally, this age of capital controls aligned more or less exactly with the age of shared growth we now call the Golden Age of Capitalism.  (an aside: it’s a sad irony of history that much of what is remembered as the achievements of capitalism are actually the achievements of not-capitalism).

But now this mainstay of globalization has resumed its inexorable march, except in India and China and a few other countries that have managed to rapidly develop, and capital controls have mostly given way to unrestricted short-term capital flows.  And just as political conditions once allowed for control of capital, now capital controls political conditions.

Take the following story:

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