While Japan, then North America and Europe repeatedly bailed out and held their banking cartel harmless the past 30 years, in 2008 Iceland took another path. The rest of the world must do likewise.
Concluding Remarks from Gudrun Johnsen of the University of Iceland at Finance & Society 2015, explains how and why they did it. Here is a direct video link.
Perverse financial incentives are undermining essential human progress in the energy revolution.
For sustainability of life on earth, we need to evolve out of the fossil fuels age and towards the cornucopia of renewable, clean, low cost and free energies that are ours for the using. The status quo meanwhile, remains heavily invested against this necessary renaissance and our own limited taxpayer funds, are being pledged against us.
The latest report from the Paris-based International Energy Agency — which provides independent energy analysis and has 29 member countries, including the United States, admits that present financial incentives are heavily favoring the use of fossil fuels over other more efficient energies. In simple math, it costs an average of $7 per ton to buy a certificate offsetting carbon emissions today, while total government subsidies and tax breaks favoring creation of carbon amount to an average $115 per ton. In this messed up dark ages-model, continuing to emit carbon is 16x more profitable than not, even while at the expense of literally everything else, see, Subsidies at 16 times carbon prices stymie pollution curbs:
Tax-breaks, subsidized fuel prices and other government support amount to an incentive to pollute worth $115 per metric ton of carbon-dioxide, the agency said Monday in its Energy and Climate Change report. That compares with an average $7 cost to buy emission permits in carbon markets, according to the Paris-based group.
In North America, carbon prices and subsidies each cover about 4 percent of emissions, the agency said. The subsidies amount to $36 a ton on average, while the carbon price is $9 a ton. Latin American subsidies are $208 a ton, compared with $173 a ton in the Middle East, $168 in Africa, $104 in India and $29 in China, the IEA said.
Primum non nocere is a Latin phrase that means “first, do no harm.” Its derivative is ‘non-maleficence’, which is a fundamental precept of bioethics that all healthcare students are taught in schools around the world. It reminds the health care provider that they must consider the possible harm that any intervention might do where intervention carries an obvious risk of harm and a less certain chance of benefit.
Further to this theme, a great article in the Wall Street Journal yesterday urges that Central Banks of the world be mandated with an similar oath before unleashing ‘monetary experiments’ on the lot of us. See: Memo to the Fed, first, do no harm. In truth the standard should be mandated not just on the US Fed, but on central bankers everywhere.
I have a simple proposition. Physicians practicing medicine are expected to “first, do no harm.” Our practitioners of monetary policy should be expected to do the same. Congress should add to its Fed mandates the following language: “The Federal Reserve should strive to limit or mitigate the collateral damage caused by monetary policy, wherever possible.”
This new language would create additional accountability for the FOMC by requiring it to consider both the desired results anticipated and the collateral damage expected before implementing policy, and to report on such deliberations in its minutes—thus permitting closer oversight of the FOMC without an audit or otherwise infringing on the Fed’s independence.
This was a principle alluded to by Economist Milton Friedman in the 1970’s, when he pointed out that monetary policy produces imprecise and dubious results with real ancillary costs to savers, conservative investors, sustainable growth and the real economy.
Putting personal accountability for downside risks squarely on the shoulders of the Fed and the finance sector is a critical step to sobering up its actors and reining in the reckless policies that have driven global financial risks to untenable levels for the rest of us.
