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Bookmark and ShareDr Victoria Johnson is lead researcher on climate and energy at nef.

I can’t recall the last time I’ve seen a pure blue sky without the tapestry of contrails that sketch out the invisible highways of the global aviation network.

The reality of the closed airspace due to the volcanic plume from an eruption near the Icelandic glacier Eyjafjallajoekull (pronounced aya-feeyapla-yurkul) hit me whilst strolling back along the Southbank on a warm spring Sunday afternoon. As I walked along the river, the world seemed strangely calm. The overhead roar of jet engines from aircraft as they march with military precession along the flight path to Heathrow, were conspicuous by their absence.

Eruption of Eyjafjallajökull Volcano, Iceland, 17th of April, 2010 (NASA, MODIS Satellite)

But, such events also reveal that we are hugely dependent on what often seems like hidden infrastructure, woven together to create an intricate web of interdependence across the globe.

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Bookmark and ShareAndrew Simms is nef‘s Policy Director and head of nef’s Climate Change programme.

If economics was subject to the same evidence-based scrutiny as climate change, our world would be run very differently. Photo by genericface via Flickr.

The world is not run according to climate science. Amid the almost hysterical jeering since the Copenhagen climate summit, it’s a fact worth remembering. If things were done with one eye carefully checking the planet’s ecological engines and the resource levels in its fuel tank, it would look very different The largest indoor snow park in the world would not, for example, be in the roasting Middle Eastern emirate of Dubai. Public transport would be quick and cheap, and Richard Branson would be an unknown gardener, quietly cycling back and forth to his organically-run allotment.

Yet fear of the likely adjustments needed to halt dangerous climate change seems to fuel the vitriol of the vociferous minority attacking climate science. It’s odd when you think what those changes might be. A cartoon currently going around sums it up. An academic-type gives a lecture, listing the outcomes of climate action: energy independence, clean water, clean air, green jobs, liveable cities, healthy children etc etc, while a man in the audience blusters, “But what if it’s a big hoax and we create a better world for nothing?”

And, it’s not, of course, a hoax. The basic chemistry of global warming has been understood and remained unchanged for around 200 years. Stories concerning the science in recent weeks have been of the type, “how long can you hold your breath?” Not “can we actually breathe underwater?” At the same time, observed trends on greenhouse gas emissions, measured since the last major report by the Intergovernmental Panel on Climate Change (IPCC), reveal the opposite of scaremongering.

If anything, the IPCC has been too conservative, having underestimated how quickly we would be pushed toward dangerous change. Actual carbon emissions have been beyond even their “most fossil-fuel-intensive scenario”. Crowing over the inclusion in its last report of an erroneous date for the melting of Himalayan glaciers drowned out a new report from the World Glacier Monitoring Service, that detailed an “unbroken acceleration in melting” of glaciers around the world.

Sadly, right now, the climate change deniers have little to fear. We have no policies or actions remotely equal to the threat. Why is that? It is partly because the world is not run in respect of basic, well-understood physical laws. It is run according to the dictates of an altogether more variable discipline, economics, whose insights and proposals are subject to a weaker scrutiny. The real world ticks reliably according to the laws on thermodynamics and the conservation of energy. Such consistency cannot be claimed for the notion that a deregulated, greed-driven approach is the most efficient way to organise banking. But what if economic policy was subject to the same standard of evidence and review as climate science?

What would natural science make of the assumptions underlying mainstream economic models? They include the classic assertions that we are all perfectly rational, make choices that are unaffected by the behaviour of others, and that we have “perfect information”, knowing everything important there is to know. Or there’s the one in which an infinite number of small firms compete in open markets with no barriers to entry (think Walmart, Microsoft, Amazon, Tesco, Google). And the idea that consumption can grow infinitely on a finite planet.

Orthodox economics is based on simplifications that so distort the real world as to make it unrecognisable, yet its basic tenets are credulously repeated on an almost daily basis in national newspapers and on television news. A genuinely evidence-based approach to economic policymaking would not produce a system remotely like the one we have, the business-as-usual version that many climate sceptics seem so eager to defend. Given its task, the vast range of subjects covered, the thousands of scientists involved, and the sheer size of its reports, what’s stunning about the IPCC’s work is that comparing it to any economic analysis used to actually run the world is like comparing the complete Oxford English Dictionary to a guide to slang published by the Sunday Sport.

Elsewhere, some voices have called for there to be a separate climate sceptics’ report. On one hand, this misses the point. If the sceptics’ science was good enough to be published in decent, peer-reviewed journals, it would be considered alongside everything else by the IPCC. But on the other hand, subjecting the deniers to the same degree of rigorous review as everyone else is a rather delicious prospect. If that was done, the final report would likely be short indeed.

And, on current trends, it is still the case that by the end of the year 2016, the amount of greenhouse gases in the atmosphere will make it unlikely that we’ll stay below the critical 2°C temperature rise. It’s 82 months and counting

Bookmark and ShareAleksi Knuutila is a researcher in the Valuing What Matters programme at nef

If you are behind in your Christmas shopping, this is the perfect intellectual excuse for your shortcomings. In his new book Scroogenomics, Joel Waldfogel claims that Christmas is an economic calamity of the order of the worst natural disasters. The professor from the University of Pennsylvania blames the winter celebrations for the destruction of a full $12 billion of wealth.

What is so seriously wrong with Christmas? Waldfogel believes that it is festival of inefficiency, where people give each other things of little use. The reason is simply that people don’t understand one another and are poor judges of other people’s preferences. Your close ones may display delight from your gifts, but this is only polite deceit; in truth they would have found something better with the money you used.

Waldfogel’s claims are based on a survey he has done with potential victims of Christmas. He asked a range of people how much they would be willing to pay for the things they had been given. It showed that, as a rule, gifts were worth one fifth less to their recipients than their actual price. That new jumper that your aunt bought you for £50? You may find that it is not worth a pence over £40. This means that economic value of £10 has disappeared into thin air.

Waldfogel is right to question how much just producing precious commodities adds to social welfare. In trying to adjust measures of exchange value to better reflect the worth of things he comes close to much of the work that nef has been pioneering.

At the same time, Waldfogel suffers from a bias that is not untypical to people of his profession. In his view the only good that can result from gifts is the utility that the recipient gets from the commodities exchanging hands. If the object does not match the wishes of its receiver, the whole ordeal has been a waste. Does this view not miss many important sides of our habits of giving? Some examples can show what Waldfogel forgets to take into account.

There are times when the usefulness of the goods being given is completely secondary. One extreme example of this is the tradition of potlach, observed by some natives of North America. In its most extravagant form, potlach involved chiefs giving away valuable pots, blankets and food, which were promptly destroyed and burned after being received. Potlach is a case where gifts are used to maintain certain types of social relations: The group that gives more lavishly is able to express and reassert their superior power. In less competitive settings, giving gifts can also support equal and communal relationships.

Modern societies have some practices more bizarre than potlach. One recent innovation are so-called charity gifts. By donating the right amount you can purchase, for instance, a goat for someone in a developing country, then give your donation as a present to someone else. It is unlike regular gifts because when the present exchanges hands, the owner of the goat stays the same. The point of the present is not to allow its receiver to get something new, but to let them assume the role of a benefactor. It is, to use an obscure term, a meta-gift: a gift of giving. What better proof could there be of the fact that people place value on giving things in itself?

Even when a gift is meant to be useful, it is not always given with the preferences of the other in mind. Some presents are aim to have an educative function. Here the point is not to match the recipient’s preferences. On the contrary, it is to actively shape them. For instance, I have been at times pretentious enough to give complicated books or fringe films with the hope of kindly nudging someone’s cultural tastes. To the credit Waldfogel and his approach to gifts, such attempts have never been met with much enthusiasm.

All the same, I would not recommend buying Scroogenomics as a gift. It seems like a guaranteed failure. If the premonition of the book is correct and you did not predict your friend’s preferences, they will be unhappy with the present. In case they enjoy your book and accept its message, they may berate you for so lavishly investing in a present.

Bookmark and ShareSam Thompson is a researcher and a consultant at nef‘s centre for well-being.

.. there is joy in the presence of the angels of God over one sinner that repenteth (Luke 15:10).

“Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall – when Mother Nature and the market both said: “No more.”

We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …

We can’t do this anymore.”

Indeed we can’t, as nef and many others have been saying for ages.  Still, nice to hear it from Thomas Friedman, for years one of the most vocal champions of free-trade and deregulated globalisation. In fairness, it’s been coming for a while, but such a plain-speaking recognition of the real environmental limits to our current economic model is nonetheless very welcome.

Bookmark and ShareAndrew Simms is nef‘s Policy Director and head of nef’s Climate Change programme.

MammonThe financial druids are all a flutter. Their worst fears have come true. It’s not only that we can now see the other side of the reckless credit boom: a long legacy of high unemployment, bankruptcy and wrecked public finances. The darkest fear of the priests of high finance is that we will never again trust and follow their sermons. Any faith faces disaster when people stop believing.

The “call to prayer” of conventional economics has been the incantation of economic growth figures: the accumulated monetary value of all the exchanges that take place in the economy. When it heads south, the system knows it has a problem.

Now, it has a real problem. Global economic growth is at its lowest level since shortly after the second world war, and the UK economy is shrinking fastest.

But here’s the problem. The fact that so much went so wrong, so quickly says that the long period of preceding growth hid a deep malaise. Growth conceals more than it reveals. It is about as informative as saying that when it rains things get wet. Yet the indicator retains an unbreakable grip on the imaginations of politicians and policymakers. Over 30 years of critique from the few dissident economists and environmentalists have not shifted its privileged position.

Growth tells us if things are happening, but not whether they are good or bad. Growth can be boosted by war, pollution and all kinds of social breakdown, from divorce to ill health and vandalism. That’s because they all require money to be spent, which shows up in the growth figures. This matters right now because the government is spending money simply to reboot growth, rather than to achieve particular, desirable outcomes, like creating green jobs to rebuild energy security, and tackle fuel poverty and climate change. It needs to get smart.

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Bookmark and Share Dr Stephen Spratt is Director of nef‘s Centre for the Future Economy.

Before our eyes the financial crisis is accelerating into a downward spiral of nightmarish proportions. Today it was confirmed for the first time that the UK is officially in recession, as the effects begin to hit the real economy in earnest. Nobody expects things to get better before they get a lot, lot worse.

‘Decisive action’, we are told, is being taken to deal with the banks. The latest £50 billion guarantee package comes hard on the heels of the untold billions to ‘recapitalize’, or to provide ‘liquidity’, or just to keep the lights on a little longer in the hope that something turns up.

The government resembles a grimly optimistic hot air balloonist, spat out of a storm and crashing to earth while frantically pumping more and more hot air into the balloon, only to see it flow out of huge holes rent in the fabric of his craft. The pilot, lets call him Darling, will certainly delay the crash a little bit, but only at the cost of using up all of his gas. Once the basket hits the ground – in whatever battered shape – it will surely stay there.

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Bookmark and ShareAndrew Simms is nef‘s Policy Director and head of nef’s Climate Change programme.

October was a month that creaked and cracked. The insurance industry, already deeply implicated in the international financial crash, was battered by the fall-out from hurricanes Ike and Gustav. A bill in wreckage was left on their doorsteps estimated to be around $30bn (£18.2bn), far higher than predicted according to Lloyd’s of London. To show that God has a dark – you could call it “carbon black” – sense of humour, in the same month the oil giant BP’s quarterly profits of £6.4bn cracked another record high, representing a 148%, while Shell’s profits rose to £6.6bn.

The sky creaked in another way too. Relentless coverage of global warming, a deluge of green corporate claims, legislative flurries and a redesign of government departments should suggest progress on climate change. But the figures tell another, worrying tale. Far from going down, the global growth rate of carbon dioxide emissions is spiking upwards. Findings from the Global Carbon Project this month showed that the global average percentage rise since the year 2000 is now over three times higher than the previous decade, rising again significantly in the last year. These growth rates are now worse than the worse case scenario used by the UN’s Intergovernmental Panel on Climate Change (IPCC) to model potential global warming. Levels of carbon in the energy mix for both rich and poor countries are also going up.

Government confusion here in Britain was captured by two stories reported literally side-by-side in the national press. In one, Ed Miliband, new minister at the shiny new Department for Energy and Climate Change, announced the government’s commitment to cutting emissions by 80% by 2050. In the other, the Evening Standard reported that “ministers are planning to water down EU pollution curbs in order to allow Heathrow airport to expand”. Attempts at satire prove redundant. And the heat on the government over Heathrow is rising.

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Bookmark and ShareEilís Lawlor is the acting head of the Valuing What Matters team at nef

Amid the economic gloom, it is taken as a given that the state of the economy will surpass all other priorities at the ballot box. But as the American election demonstrates, the relationship between a person’s economic position and their voting preferences is not nearly that straightforward.barack-obama1

The principle of representation is at the heart of the type of democracy which we in the UK share with the United States. In theory, it’s meant to prevent elites from acquiring and maintaining power: it ensures that the legislature mirrors the nation’s constituents.

In practice, however, it doesn’t always work that way. It’s not unusual for people to vote for candidates who are quite unlike themselves, but who they think will represent their interests. I doubt that many people who elect the current Conservative Party front bench would aspire to join their clubs or their social circle. At other times, we vote – in good faith – for candidates who subsequently let us down. When small shopkeepers voted for Margaret Thatcher in their droves, they probably didn’t expect her to unleash a wave of deregulation that would culminate in one of the most concentrated business sectors in the world.

But nowhere has the link between class and voting preferences been as successfully eroded as in the US. The unholy alliance between economic neoliberals and social conservatives means that people will regularly vote against their own material interests for cultural, religious and patriotic reasons. So while 63% of voters said that the economy was their top concern this did not necessarily translate into a vote for the person, or party most likely to represent their economic interests.

Democracy is problematic for elites when 60% of the electorate earn less than $70,000. It’s not that the relationship between income and voter preference is inverse, the very rich also veer towards the Republican Party. It was only amongst minorities – where race played a greater role – that this asymmetry was turned on its head

The Republican base of poor white Southerners stayed loyal to a party that has cut taxes for the rich and eroded their healthcare and benefits and shunned Obama’s more progressive tax plan.

As well as capturing the language of human dignity and freedom, the right claim a monopoly on morality and national pride however narrowly defined. Hence, guns, God and abortion trumped jobs, insurance and a mortgage even during a month in which another quarter of a million swelled the ranks of the unemployed. This is fiendishly clever because it undermines the saleability of a more equitable system to the very people it should benefit thereby shifting the goalposts further rightward. Whether Obama’s consensus approach can reach those that reject their own economic representation remains to be seen.

Bookmark and ShareSam Thompson is a researcher and a consultant at nef‘s centre for well-being.

The nef/Foresight Five Ways to Well-being seem to be generating plenty of discussion.

It was especially interesting to hear how John Humphrys went straight for the five ways when interviewing Professor John Beddington on Today this morning. Humphrys claimed that our suggestions were a bit obvious and Pollyannaish, and the fact that people weren’t already doing them meant that they had somehow “chosen” not to.

Well, possibly. But if they’re so obvious as to be truisms and are also supported by stacks of empirical evidence, then individual choice looks like an odd explanation. Don’t people want to be happy?

Maybe we should be looking elsewhere. Think about our five suggestions in the context of how most of us live our lives thesedays. Isn’t it striking that we seem to have engineered a socio-economic system that actively limits opportunities for doing the very things that both psychological research and homespun wisdom tells us are good for well-being?

For instance, because our economy systematically fails to value non-market activities like community work and volunteering, while making a fetish of paid employment, “giving back” becomes ever more difficult even though most people say they would like to. Because we are bombarded with advertising messages that trade on making us dissatisfied and telling us all the things we should be aspiring to, savouring the moment and “noticing” is implicitly discouraged and perhaps turns out to be a slightly discomforting experience. The emphasis on individual sovereignty and its attendant me-first model of social relationships crowds-out real “connecting”. And come on, with all the hours we have to work just to pay the mortgage and the credit card bills, who on earth has time to “be active” or “keep learning”?

In a nutshell, perhaps our failure to maximise our own well-being reflects systemic problems rather than revealed preferences.


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nef employees blog in their personal capacity. The opinions expressed here do not necessarily reflect those of the new economics foundation.