Could a pact for growth actually avert world depression?

Could a pact for growth actually avert world depression? How?
It was a great relief for me this past week or two to see that Europe is finally displaying some higher-level consciousness of its real urgent needs. The new President of France, Hollande, and the Financial Times (FT) have both talked about the need for a new "pact for growth" to prevent and even reverse the rise of unemployment in Europe, which otherwise seriously threatens a 1930's style depression spreading to the entire world.

The key question: do they have any hope of actually pulling it off? With a very complex systems issue like this, ordinary reactive thinking just won't work. NO ONE can write about all the key issues here while being explicit about ALL the important details, but
I can begin to see more of the glimmerings of how they COULD cut the Gordian knot, if they chose to do so. But there is a whole lot of tunnel vision among the official great experts working on this, and I don;t know what their chances of finding these glimmering for themselves.

There are two especially interesting core principles which could provide a way out:

(1) As FT notes, the EU could start to try to think about the problem of growth in Europe AS IF they already had a United States of Europe, and could use all the best techniques we have used here (which are in need of improvement but have been working out a whole lot better than Greece, Spain, Italy, France, UK and eurozone as a whole...). We have a lot of very substantive prior thought that could be transferred.
I am not proposing starting by actually creating a United States of Europe (though my PhD thesis advisor, Karl Deutsch, would have been delighted about that); rather I am proposing that we/they analyze what could be done, and then try to work out the smoothest way to get the same effect.

(2) Given that EU, the US and the provinces of China all have similar levels of debt problem, we are all limited in how fast we can return to growth, because we need to protect ourselves from the world financial community (us!). It's a classic prisoner's dilemma situation. To get to a Pareto optimum (growth as fast as we could get if we were all one nation, without the bad politics that would mean in practice)... we need something like a "G4 pact," a kind of economic nonaggression treaty, built on a foundation of very close intense and deep discussions of at least US, EU, China and Brazil. Brazil is not in the same debt position, and makes the discusison more complex -- and that's precisely why they need to be there, just as new web pages needed to be tested against different kinds of browsers before going public.

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I don't have this nailed even at the intellectual level, but some themes seem to emerge...

BOTH for the new G4 pact, AND for the EU, there is a kind of "Greece problem."

Common sense suggests -- the pact should be to cut each other some slack, ESPECIALLY
on interest rates for sovereign debt, BUT ALL TO AN EQUAL EXTENT. The idea is to tune up world demand, not to subsidize governments which do not live beyond their means.
Of course, it is interesting to compare states of the US versus provinces of China in this regard... but let me stay with the big picture for now.

To balance this out, things like the Greek problem (and potential imbalances within the G4, where Brazil acts to some extent as a surrogate or leader for more nations)..
would be dealt with by raising demand, to prevent waste, IN THE AFFECTED region BUT NOT BY THE GOVERNMENT of that region. I think a little of things like the Appalachian
Commission and the Epscor program in the US. These things may be public or private or a mix of both, but they must be transnational kinds of activity which channel demand to areas where there is a certain kind of imbalance, a kind of waste of human or economic resources. Of course, people have talked about development funds for many decades at least, but it seems that maybe a new context could let us re-examine such issues with fresh eyes.

Of course, the idea that such transnational programs might build giant solar farms
in Southern Europe using the new 7 cents per kwh solar thermal technology I happen to know about (thanks to excellent sources of information on technology and on what to believe) still makes sense... if a transnational fund could be set up which is capable
of occasional flashes of competence that way. (The US and China themselves have not reached that stage of competence yet itself... but it's important that we keep trying; a lot is at stake.)

That can apply, in fact, at national, regional, and provincial levels...

and the challenge is how to do it more by reliable types of formulas rather than corrupt stakeholder stuff (the bane of many development funds). Even with NSF's Epscor program, I have often thought about how the present information channels are useful, but actual funding decisions by automatic immediate 50% matching without side criteria
could result in much greater efficiency overall, whatever the apparent levels of overall funding.

But there is still more to be said about risk management and representation systems (or "plays") to better factor risk in this kind of complex world. The discussion above
needs to be integrated somehow with more of that.

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As for what we have learned WITHIN the US....

1. In a Nash equilibrium, maybe the Tea Party solution would be best, even though it would help us join Europe in approaching a rerun of the 1930's. With a G4 pact, we can avoid that rerun, if we have the will to do so. and are rational enough to make full use of the breathing space and slack that buys us. (But as we waste the slack we get from fracking, and use it just to dig ourselves into a deeper hole, there is reason to worry.)

One of the European commentators recently said: "Hey, we agreed with Hollande that we will do as much as we can for growth, within the limits of the austerity agreemnet which even he says he will uphold. Hey, OK, he will get all the empty sound bites he needs, but let's be real. How can you get growth in the face of austerity?"

But in fact, we got very deep into that here a year or two ago. Obama may have only a 50% grade or so on that kind of sophisticated juggling act... but 50% is ever so much more than anyone else. (I suppose China is also running at about 50% efficiency, not because they understand this juggling act, but because of the inertia of a highly efficient starting point.) ONE PART of Japan's economic recovery plan in 2009 was
much more efficient... but there were other parts, and there has been an earthquake...

One key point... which the old school idiots need to really understand... it is simply not true that X dollars in government deficit in one sector yields the same stimulus as X dollars in another sector. Simply by shifting commitments from one sector to another, one can substantially increase stimulus without increasing government dollar commitment. Merkel's own cash for clunkers program is a great example of this, yielding
about three times the stimulus per dollar as normal government spending, which in turn does about twice what the more dubious tax breaks would provide, which the "job creators" (i.e. PAC fat cats) have been pushing for. Japan's "three pillars of eco..."
are like Merkel's cash for clunkers that way. An EU-wide program based on those three pillars (e.g. the stimulative parts of the 18-page bill posted at www.werbos.com/oil.htm) could go a very long way that way, as would relative incentives
for utility solar farms. And of course to talk about growth without supporting education would be a gross nonsequitur.

But... in a world of legal corruption... I often think about Syn Rand, where the DC (and Brussels) lobbyists who represent certain big companies may be very effectively digging their own graves, as well as ours.

Would Romney be any better than Obama in resisting those negative forces threatening to pull us apart, or would he a gleeful uninhibited gateway to expanded corporate welfare for the PACmen? Will he streamline the financial system, or will he just give the federal reserve as a kind of election spoils to a drunken arsonist from his base? His choice of VP will tell us a lot. If he picks any of the Washington insiders which the press has been talking about, he could be a threat to our very existence, at this delicate time. (Of course the woman they fired from HP would not be any better.) But
there is hope...

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As I post this, two more thoughts come to mind:

1. For US or EU:

Why not "incentive pay for the top 1%?"

Obama has rightly argued that it would be better to sacrifice new optional tax breaks introduced by Bush, rather than sacrifice public education, which Thomas Jefferson rightly promoted as a sacred bedrock of our nation. The tax breaks for the rich do not help aggregate demand so much as most other ways of using the money. But if we DO
ever get out of high unemployment and deep debt, then we will be able to afford it again.

So instead of fighting over this stuff every year, to adapt to changing conditions..why not make it into a FORMULA? After all, we have CPI formulas in the law.
Why not have a formula which adjusts the tax rates for the rich, as function of the basic economic strength of the nation (rates of employment, growth and debt)?
We could use one more automatic stabilizer...

2. As part of this, of course, using housing as a kind of yoyo regulator ..
may not be the best stabilizer...

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Byeond that,

Could the Navy help warn us of possible human extinction?

Sent to a list which include some folks high up in making policy for the military:

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Since some of you have good contacts with the Navy --

A long-term friend of mine, deeply concerned about global climate change,
has suggested that the Navy might have a role to play in reducing our woeful ignorance
about ocean phenomena which might threaten our lives more seriously than warming or ocean acidification do.

I would be interested in your thoughts about how one should follow up.

By way of introduction -- Rod was formerly one of the most important partners in Arthur Anderson,
in the good part of the company, training people in how to use systems thinking and systems methods
in managing Fortune 500 companies, and also providing these companies with in-depth unbiased information about climate change.

Rod's current idea, at the top of the trail below, builds on previous discussion. In essence,
the email trail makes sense if you read from bottom to top. (From item 1, to 2, to 3, to 4).

Best regards,

Paul



4 ==================================================

From: Rod
To: 'Paul Werbos'

Paul,

When I was focusing on the NAO THC issue based largely on work out of the
Potsdam Institute George Klir referred to me a former systems science PhD
student of his who is an expert on thermohaline. At that time he worked at
the Naval Warfare Research Center and no doubt they have an interest in
hiding (or finding) submarines within thermohaline layers.

Maybe it is time to turn "swords into plowshares".

Any ideas?
Rod



3 ======================================

-----Original Message-----
From: Paul

Hi, Rod!


On Apr 30, 2012, at 6:23 PM, Rod wrote:

Paul,
Here is the link to the Nature abstract:
http://www.nature.com/ngeo/journal/v5/n5/full/ngeo1452.html

I do not enjoy a subscription at the moment but perhaps your
organization does. There are some informative charts in the abstract.


When I go to the web site, I see all three pages, which seems to have
everything.
To be sure, I clicked on "pdf," and then downloaded the article. But It was
still just the same three pages.


What troubles me about this finding is the vastness of the
(diminishing) Arctic Sea ice. I remember reading (maybe Arctic Dreams
by Barry Lopez) years ago that there are many microorganisms living
under the sea ice that are not normally living in the open sea (archaea?).

It's amazing how little science really understands even now about some of
the basics of life on earth.

When I started this job, circa 1990, I remember a guy from Wood's Hole who
reported a success story with neural networks:
"Thanks to neural networks, we were able to detect two new types of microbe
in the ocean this year. By the way, these two types account for about 90% of
the biomass of the ocean." Quite a zinger.

He explained a bit more (about how hard it had been to do this kind of
study), but still I wondered.

In 2009, when working on climate stuff, I read up a bit more on archaea.
People had recently believed they were relatively rare, mainly in deep open
trenches and such. "Extremophiles." But it seems they may be about half of
the biomass of the ordinary ocean, in modern up-to-date work (though of
course there is a lot of textbook lag, not as bad as what we have in my
field, but still noticeable.) And maybe they are 90% of the biomass below the sea bed, where the
amount of biomass is far greater than people used to think. These are
general impressions from the current literature, but are of course not a
mature equilibrium of analysis. (Others would know more .. but many know less
who depend on older information.)

Archaea as a group are amazingly adaptable. And what they do to us depends a
lot on what we do to them. They certainly were implicated in all the
extinctions (except perhaps the one based on a comet) in Ward's history of
the earth. They are the main source of H2S and of methane.

For mass extinction purposes, both via methane or via H2S (direct or via
ozone depletion), there are two key drivers: (1) how much do the archaea
produce; and
(2) how much escapes to the atmosphere. Low levels of oxygen and nutrients
in the water seem to be the main drivers of (1), and those in turn are
heavily influenced by ocean currents and nutrient runoff from the land.

It does worry me that we don't seem to have a basic handle on the basics of
where we might be going in the fluxes of this system.
As Ward says, the study of thermohaline currents seems to be relatively
static, from what I have seen, without the kind of generalization and data
which would give us early warning of possible disasters.

The political advocacy types seem to view Ward as "just another footnote to
support our concern about ocean acidification," which may be worse in its
way than the fundamentalist climate deniers who at least know that they are
shutting their eyes and putting their heads in the sand.

Best of luck... to us all... we need it...

Paul

It is important to remember that as recently as the 16th century (and
maybe
later) sea ice completely surrounded Iceland, and "Eskimos" were
spotted in kayaks in Scotland. So the total sea ice cover diminished
greatly from its 16th century peak, and is diminishing greatly again now.

In any event I can only hope the methane studies continue to be funded
as this may be very high on the list of planetary challenges.
Rod




2 ==================================================================

From: Paul
Subject: Re: NASA finds new potential source of CH4

Thanks, Rod!

I literally felt a chill up my spine as I read your email, and clicked
on the link.

My immediate thought as I read what you said: "If it's from open ocean
and not from permafrost or clathrates... that leaves just one
possibility..."

And on a very quick glance the story says what seems obvious: what
else could it be but living things in the ocean?

Of course, I certainly don't know at this point... but the words which
popped into my mind immediately were:
methanogen archaea.

If we are already seeing a big expansion of archaea ... that's the key
final stage leading to the death-by-H2S and
death-by-renewed-ozone-depletion scenarios.

But certainly it is 'way premature to say we know what is going on.
For example, I didn't see a time-series in this story.
But if the kind of mechanisms that Kemp and Ward talk about are
actually getting started in the Arctic Ocean..
I guess I shouldn't have just limited the discussion to the North
Atlantic and North Pacific as I did in my posting to Jerry.
(Also, I hope that the obvious issue with the Black Sea is not large
enough to be relevant to the ozone issue.) Yet Ward's book suggests
that the North Atlantic by itself was already enough to explain the
massive extinctions at the end of the eocene.

Who knows? I guess we really ought to keep our eyes open here....

Best regards,

Paul


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On Thu, Apr 26, 2012 at 10:37 PM, Rod wrote:
Data collection over open water of the Arctic Ocean shows elevated
levels of
CH4 that NASA believes may be from the ocean water and not from
melting permafrost or methane clathrate deposits on the sea floor.
This source of
CH4 could potentially be large and bears further study.

http://www.nasa.gov/topics/earth/features/earth20120422.html