How to Avoid and Economic Crisis while Addressing the Climate Crisis

The impacts of the climate crisis increase in reach and damage every year with more people feeling the consequences. People have finally woken up to the fact that we need to act now to curb more climate chaos, the problem is that economists might figure that out too. Properties built on flood plains or other vulnerable areas are going to lose their value as global warming increases and that can spiral countries into recessions. In some parts of the USA politicians are planning ahead to navigate the troubled waters of the combined effects of climate and economic chaos.

If you want to address this today: ask the company you work for what their business plan is for a planet two degrees warmer than it is today.

A 2014 report from Arizona State University estimated that one year without water from the river could cause US$1.4 trillion in economic losses and impact 16 million jobs across the region. If calculations were done again today, those estimates of damage “would definitely be bigger,” says Timothy James, a co-author of the report.

The technical fixes are easiest to predict: more water-efficient technologies and policies like higher prices on water to encourage their adoption. But adapting to climate change also requires hard decisions about the pace and scale of development. It could mean refraining from building new communities in the desert altogether. At the moment, however, Phoenix is growing rapidly.

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A High Minimum Wage is Good for Everybody

happy workers in a factory

Raising the minimum wage helps you no matter how much you earn. The next time the debate about whether or not your region of the world should raise wages you ought to argue for rating wages. The only downside of getting paid more is that…well, nothing really. Don’t believe the lies that raising minimum wage increases leads to job losses because there’s no evidence that that is the case.

Economist Arindrajit Dube of the University of Massachusetts at Amherst, who is perhaps the leading expert on the economic impact of the minimum wage, and his co-authors Doruk Cengiz (also at UMass), Attila Lindner of University College London, and Ben Zipperer of the Economic Policy Institute conducted the study. They used detailed data and advanced statistical methods to parse the effects of minimum-wage increases on low-skilled workers—including those making at or around the minimum wage—as well as on high-skilled workers and the economy as a whole.

The study finds that minimum-wage increases occurring over more than three-and-a-half decades resulted in higher wages for low-skilled workers, with no reduction in low-wage employment five years out. This was true overall, and separately for younger workers, less educated workers, and minorities. Low-wage workers saw a wage gain of 7 percent after an increase in the minimum wage.

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Piracy is Good for Companies

Copyright holders of multi-million dollar franchises decry piracy and proclaim it to be a threat to their business. The reality is different. Piracy can spur competition and keep prices lower as a result. Additionally, the amount of piracy isn’t as high as large mega-corporations will have you believe. Meaning that the concerns around piracy are overblown and that piracy is counter intuitively good for the economy.

“When information goods are sold to consumers via a retailer, in certain situations, a moderate level of piracy seems to have a surprisingly positive impact on the profits of the manufacturer and the retailer while, at the same time, enhancing consumer welfare,” wrote Antino Kim, assistant professor of operations and decision technologies at Kelley, and his co-authors.

“Such a win-win-win situation is not only good for the supply chain but is also beneficial for the overall economy.”

While not condoning piracy, Kim and his colleagues were surprised to find that it can actually reduce, or completely eliminate at times, the adverse effect of double marginalization, an economic concept where both manufacturers and retailers in the same supply chain add to the price of a product, passing these markups along to consumers.

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Planning for a Zero-Growth Economy

conversation

The economy is sometimes referred to as an entity outside of human control – it isn’t. We control the economy through policies and practices in each nation. The last half century focussed on growing the economy at the expense of all else from social care to the environment. We’ve seen massive growth in inequality alongside easier access to consumer growth. Given the state of the planet we know this won’t work for much longer. Accordingly, it’s time to rethink what we do to support economic growth and what kind of world we want to live in.

Meanwhile we could begin to boost quality of life simply by tracking it more explicitly: instead of focusing government policy on boosting GDP (the total dollar value of all goods and services produced domestically), why not aim to increase Gross National Happiness — as measured by a selected group of social indicators?
These are ways to make economic shrinkage palatable; but how would policymakers actually go about putting the brakes on growth?
One tactic would be to implement a shorter workweek. If people are working less, the economy will slow down — and meanwhile, everyone will have more time for family, rest, and cultural activities.
We could also de-financialize the economy, discouraging wasteful speculation with a financial transaction tax and a 100 percent reserve requirement for banks.

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These CEOs Want Basic Income

Ontario Premier Doug Ford was elected earlier this year and already started implementing his plan to increase inequality in the province. Obviously, this is a bad a plan. One of the things Ford cancelled thus far was the basic income pilot program which was praised around the world, and before the study showed results Ford axed. As a response to this stupidity, CEOs have responded by demanding that the basic income pilot continue and that the concept of basic income needs support. The good thing here is that CEOs are openly supporting basic income despite the “pro-business” Ontario government stopping the basic income test.

Here’s part of the open letter from CEOs to Doug Ford:

As Canadian business leaders, we urge the Ontario government to continue the Ontario basic income pilot. We see a guaranteed basic income as a business-friendly approach to address the increasing financial precarity of our citizens and revitalize the economy.

It is urgent that we let this pilot run because we see basic income as part of a solution that could help Canadians stay competitive in the face of:

Accelerating technological job displacement due to advances in automation, software, and AI1
Globalization of jobs which has gone beyond manufacturing and textiles to entry and mid-level information work2
The ongoing transition of work to part time, contract, and gig-work3
Winner takes all markets where companies such as Amazon are absorbing greater shares of economic activity4
These global trends are causing structural changes to the economy that are depressing wages,5 reducing the number of middle class jobs available to Canadians, and affecting a decline in entrepreneurship.6

Read more (and see the citations).

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