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Dear Paul Krugman: Is GDP Growth Making Us Richer or Poorer? |
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Saturday, 10 May 2014 14:52 |
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Daly writes: "Paul Krugman often writes sensibly and cogently about economic policy. But like many economists, he can become incoherent on the subject of growth."
Paul Krugman believes the US can solve economic problems. (photo: public domain)
Dear Paul Krugman: Is GDP Growth Making Us Richer or Poorer?
By Herman Daly, The Daly News
10 May 14
 aul Krugman often writes sensibly and cogently about economic policy. But like many economists, he can become incoherent on the subject of growth. Consider his New York Times piece, published earlier this month:
… let’s talk for a minute about the overall relationship between economic growth and the environment.
Other things equal, more G.D.P. tends to mean more pollution. What transformed China into the world’s largest emitter of greenhouse gases? Explosive economic growth. But other things don’t have to be equal. There’s no necessary one-to-one relationship between growth and pollution.
People on both the left and the right often fail to understand this point … On the left, you sometimes find environmentalists asserting that to save the planet we must give up on the idea of an ever-growing economy; on the right, you often find assertions that any attempt to limit pollution will have devastating impacts on growth … [Krugman says both are wrong] … But there’s no reason we can’t become richer while reducing our impact on the environment.
Krugman distances himself from “leftist” environmentalists who say we must give up the idea of an ever-growing economy, and is himself apparently unwilling to give it up. But he thinks the “right-wingers” are wrong to believe that protecting the environment will devastate growth. Krugman then advocates the more sensible goal of “becoming richer,” but fails to ask if growth in GDP is any longer really making us richer. He seems to equate, or at least fails to distinguish, “growing GDP” from “becoming richer.” Does he assume that because GDP growth did make us richer in yesterday’s empty world it must still do so in today’s full world? The usual but unjustified assumption of many economists is that a growing GDP increases measured wealth by more than it increases unmeasured “illth” (a word coined by [nineteenth-century English art critic] John Ruskin to designate the opposite of wealth).
To elaborate, illth is a joint product with wealth. At the current margin, it is likely that the GDP flow component of “bads” adds to the stock of illth faster than the GDP flow of goods adds to the stock of wealth.
We fail to measure bads and illth because there is no demand for them, consequently no market and no price, so there is no easy measure of negative value. However, what is unmeasured does not for that reason become unreal. It continues to exist and even grow. Since we do not measure illth, I cannot prove that growth is currently making us poorer, any more than Krugman can prove that it is making us richer. I am just pointing out that his GDP growthism assumes a proposition that, while true in the past, is very doubtful today in the United States.
To see why it is doubtful, just consider a catalog of negative joint products whose value should be measured under the rubric of illth: climate change from excess carbon in the atmosphere; radioactive wastes and risks of nuclear power plants; biodiversity loss; depleted mines; deforestation; eroded topsoil; dry wells, rivers, and aquifers; the dead zone in the Gulf of Mexico; gyres of plastic trash in the oceans; the ozone hole; exhausting and dangerous labor; and the un-repayable debt from trying to push growth in the symbolic financial sector beyond what is possible in the real sector (not to mention military expenditures to maintain access to global resources).
These negative joint products of GDP growth go far beyond Krugman’s minimal and nondescript category of “pollution.” Not only are these public bads not subtracted, but the private anti-bads they make necessary are added to GDP! For example, the bad of eroded topsoil is not subtracted, but the anti-bad of fertilizer is added. The bad of Gulf and Arctic oil spills is not subtracted, but the anti-bad of clean-up is added. The natural capital depletion of mines, wells, forests, and fisheries is falsely accounted as income rather than capital drawdown.
Such asymmetric accounting alone is sufficient to refute growthism, but for good measure note that the growthists also neglect the most basic laws of economics: namely, the diminishing marginal benefit of income and increasing marginal cost of production. Why do they think these two curves will never intersect?
Is Krugman just advocating temporary growth up to some level of optimality or sufficiency, or an ever-growing economy? If the latter, then either the surface of the Earth must grow at a rate approximating the rate of interest, or real GDP must become “angel GDP” with no physical dimension.
Krugman is correct that that there is no necessary “one-to-one relationship between growth and pollution.” But there certainly is a strong positive correlation between real GDP growth and resource throughput (the entropic physical flow that begins with depletion and ends with pollution). Since when do economists dismiss significant correlations just because they are not “one-to-one”?
Probably we could indeed become richer (that is, increase net wealth) while reducing our impact on the environment, as Krugman hopes. But it will be by reducing uneconomic growth (in throughput and its close correlate, GDP) rather than by increasing it. I would be glad if this were what Krugman has in mind, but I doubt that it is.
In any case, it would be good if he would specify whether he thinks current growth in real GDP is still economic in the literal sense that its benefits exceed its costs at the margin. What specifically makes him think this is so? In other words, is GDP growth currently making us richer or poorer, and how do we know?
Since GDP is a conflation of both costly and beneficial activity, should we not separate the cost and benefit items into separate accounts and compare them at the margin, instead of adding them together? How do we know that growth in GDP is a sensible goal if we do not know if the associated benefits are growing more or less rapidly than the associated costs?
Mainstream economists, including Krugman, need to free their thinking from dogmatic GDP growthism.
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The Battle to Retake Our Privacy Can Be Won |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=29990"><span class="small">Trevor Timm, Guardian UK</span></a>
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Saturday, 10 May 2014 14:49 |
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Timm writes: "What would the legislation actually do? Well, for one, it would take the giant phone records database out of the NSA's hands and put it into those of the telecom companies, and force judicial review."
The bill's architect, Republican James Sensenbrenner, said the bill 'makes it crystal clear that Congress does not support bulk collection.' (photo: Chip Somodevilla /Getty Images)
The Battle to Retake Our Privacy Can Be Won
By Trevor Timm, Guardian UK
10 May 14
A close look at the new NSA reform bill – and court cases that may be just as important – reveals that, one year after Snowden's breakthrough, we're finally getting somewhere
 fter months of inaction – and worries that real change at the National Security Agency was indefinitely stalled – there was a flurry of action in Congress this week on the most promising NSA reform bill, as the USA Freedom Act unanimously passed out of the House Judiciary Committee and then, surprisingly, out of the Intelligence Committee, too. Only its movement came at a price: the bill is now much weaker than it was before.
What would the legislation actually do? Well, for one, it would take the giant phone records database out of the NSA's hands and put it into those of the telecom companies, and force judicial review. Importantly, it doesn't categorically make anything worse – like the House Intel bill pushed by Rep Mike Rogers would have – and it would at least end the phone records program as it exists today, while making things a little bit better for transparency.
However, anytime Rogers calls a bill "a great improvement", anyone who values privacy should be worries. The transparency section of the bill doesn't require nearly as much disclosure as it did previously, and there's no longer a full-time privacy advocate for the Fisa court in there – only the chance for outsiders to submit legal briefs. Plus, the "mandatory" declassification of Fisa court opinions now only "encourages" the executive branch to be forthcoming – a policy which the ace surveillance-law analyst Marcy Wheeler described as follows: "it only releases opinions if Edward Snowden comes along and leaks them."
Reactions to the new bill from NSA reform supporters have been mixed. Both the Electronic Frontier Foundation (EFF) and American Civil Liberties Union called it a positive step, but emphasized how much still needs to be fixed. Wheeler was more cynical in her analysis, suggesting it may be just as bad as the Intel bill that was so universally panned by national security watchers. But Kevin Bankston, the longtime surveillance reform crusader and policy director at the Open Tech Institute, explained the predicament well:
The bill is also far from a done deal; it can still get improved on the floor. If tech companies are serious about forcing NSA reform, then now is the time for them to step up lobbying efforts and prove that their public comments about changing surveillance laws amount to something more than a well orchestrated PR campaign.
But the battle to retake our privacy can't be won in the halls of Congress alone. Even the original version of the USA Freedom Act didn't do anything about the NSA's subversion of common encryption. It didn't address the stockpiling of zero-day vulnerabilities that puts internet security at risk. It didn't offer any privacy protections to 95% of the world that doesn't live in the United States. And given the NSA's unique talent for distorting the plain meaning of the English language (in fact, they seem to have created an entirely secret, bizarro dictionary of its own), it's always possible the agency will find a way to subvert the will of the people it allegedly serves.
This is the primary reason why a host of public-interest groups launched something called Reset the Net last week. The campaign calls for major websites and the general public to widely adopt end-to-end encryption tools to stem the ability of the NSA – or any other intelligence agency – to conduct mass surveillance, regardless of what our laws look like. The campaign will culminate on 5 June – the one-year anniversary of the Snowden disclosures – with a giant online push to get ordinary internet users signed up and using the tools that are so critical to keeping our information private online.
The chance to challenge the government's secret surveillance tactics has never been stronger on the judicial front either. Two cases brought by the EFF (my former employer) have been flying under the radar – at least compared to the more high-profile cases challenging the NSA's phone records program – and will soon take on added significance.
First, and important appeal is set to be heard this summer over the government's use of National Security Letters, and oversight-free mechanism which the FBI has used to force internet service providers with no judicial review whatsoever. Last March, in an enormous win for privacy and free speech advocates, a federal judge ruled the entire National Security Letters statute unconstitutional. Given there are thousands of oversight-free letters issued for personal information every year with a gag order attached (the ruling is on hold until the Court of Appeals rules on the case), winning this fight would appear to be at least as crucial for our privacy as passing the USA Freedom Act.
EFF's long running case challenging dragnet spying, Jewel v NSA, which deals with the larger issue of the NSA accessing entire internet streams of telecommunications companies like AT&T without a warrant, is also set to heat up this summer. This is the crux of the NSA's mass surveillance program directed at the internet, which the government refused to acknowledge even existed until Snowden's revelations confirmed "upstream" surveillance last year.
Plus, since the Snowden disclosures forced the government to admit to criminal defendants when they have been wiretapped without a warrant, the constitutionality of the Fisa Amendments Act may finally have its day in court. The strengthening of international treaties and surveillance laws could also eventually bear real fruit for those outside the US.
Of course, none of this kind of reform was ever going to get decided in a day, or even a year. At the recent premiere of the new documentary 1971, which examines the formerly anonymous burglars who uncovered J Edgar Hoover's illegal surveillance campaign, and whose actions led to the Church Committee, its subjects reminded the audience that their disclosures didn't result in significant change ... for five years. But thanks to the relentlessness of reform advocates, we all got reform that lasted decades. It is, they said, now up to the public to persevere once more.
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FOCUS | Why the GOP Still Denies Climate Change |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=6853"><span class="small">Frank Rich, New York Magazine</span></a>
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Saturday, 10 May 2014 13:05 |
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Rich writes: "Of all the crazy things in our politics, few are more self-immolating than the persistence of climate change as a partisan issue. A founding father of modern environmental activism was a Republican, Teddy Roosevelt, but his legacy is no more honored in today's GOP than Lincoln's."
Scientists continue to warn us about global warming but some of us have a vested interest in not wanting to think about it. (photo: Shutterstock)
Why the GOP Still Denies Climate Change
By Frank Rich, New York Magazine
10 May 14
Every week, New York Magazine writer-at-large Frank Rich talks with contributor Eric Benson about the biggest stories in politics and culture. This week: the GOP continues to deny climate change, White House report be damned; and Monica Lewinsky writes about her infamous affair with Bill Clinton.
 he White House released an exhaustive and ominous report on climate change this week that attributed a host of destructive weather patterns to rising temperatures and stated “climate change, once considered an issue for a distant future, has moved firmly into the present." Meanwhile, House Science Committee Chair Lamar Smith dubbed the report "a political document intended to frighten Americans.” What do you make of the report? And what would it take for most in the Republican Party to accept the reality and urgency of climate change?
The report confirms in no uncertain terms what sentient Americans already knew, but that doesn’t mean it will break the political gridlock that has doomed any serious national mobilization to address the crisis. Of all the crazy things in our politics, few are more self-immolating than the persistence of climate change as a partisan issue. A founding father of modern environmental activism was a Republican, Teddy Roosevelt, but his legacy is no more honored in today’s GOP than Lincoln’s. You’d think that the speed and perils of global warming would be settled fact, given all the catastrophic signs that Americans can see with their own eyes. But on the right, climate-change denial has become a proxy for a whole smorgasbord of powerful ideological imperatives: opposition to governmental regulation; resistance to taxation (especially of such Republican sugar daddies as the coal, oil, and gas industries); class resentment of intellectual elites in academia and Prius-driving Hollywood; and, in some quarters, rejection of any kind of science that dares undermine the supremacy of God as the primary actor in all Earthly activity.
It’s a pipe dream to think the Republican Party is going to shift on this any time soon. This week there has been a lot of talk about how the establishment candidate in the GOP senatorial primary in North Carolina beat back more radical tea party opponents — but all four candidates in that race, including the more “moderate” victor, were climate-change deniers. As the Times reported today, few areas are more immediately endangered by coastal flooding than Florida, yet the state’s three most prominent Republicans, Senator Marco Rubio, Governor Rick Scott, and Jeb Bush — two of them possible 2016 presidential candidates — are too fearful of their party’s base to acknowledge the peril or call for action. Even the high end of conservative thought leaders are in denial. George Will thinks global warming is merely “weather” and that any alarms have been manufactured by conformist tenure-track professors and writers in The New Yorker. His own personal scientific research, based on observations from the home he owns on an island in South Carolina, tells him that hurricane activity is down post-Katrina, so what’s the problem? Charles Krauthammer has declared that “any scientific theory that explains everything explains nothing” — just the kind of argument that was made to resist the theories of Galileo, Newton, and Darwin. So what will change their thinking? A realization that the younger voters the GOP needs for survival feel as strongly about climate change as they do about gay marriage. Or perhaps further environmental catastrophe that hits red states across the southern half of the country.
Vanity Fair has published a first-person essay by Monica Lewinsky about her affair with Bill Clinton, inciting a predictable media firestorm. Lynne Cheney wondered on Fox News "if this isn’t an effort on the Clintons’ part to get that story out of the way, the New York Post's Andrea Peyser called the piece "exasperatingly tone-deaf," and the always-dependable Rush Limbaugh used it as an opportunity to declare that it was the left not the right who had long waged the War on Women. Does the Lewinsky piece — and the response to it — tell us anything we didn't know? And is Cheney right that this piece will help get the biggest of the old Clinton scandals out of the way before an expected Hillary Clinton presidential run?
If nothing else, we’ve learned the lengths to which Lynne Cheney will go to hawk her newly published book about James Madison. Unlike Cheney’s now sadly out-of-print lesbian novel of 1981, Sisters, her Madison biography lacks the commercial frisson of sex. Much of the rest of the reaction confirms what I wrote in my last piece in New York: The GOP will not be able to resist talking about the Bill Clinton sex scandals of the 1990s even though almost everyone (including some Republican strategists) believes it will backfire politically, just as it did the first time around. The more the likes of a Limbaugh spews about Lewinsky (and the other women sure to resurface if Hillary Clinton runs for president), the more misogynistic the talk inevitably becomes. It’s in their nature. As the Daily Beast has reported, even the announcement of Chelsea Clinton’s pregnancy provoked tasteless innuendos about the mother-to-be’s motives at Fox News and MSNBC’s Morning Joe. These people could turn Mother’s Day into another battle in the War on Women.
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FOCUS | Benghazi Investigation Is Shameful Political Theater |
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Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=7122"><span class="small">Elizabeth Warren, Reader Supported News</span></a>
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Saturday, 10 May 2014 11:33 |
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Warren writes: "House Republicans are doing whatever they can to distract the American people from what's really going on in Washington - a rigged system that works great for those who have armies of lobbyists and lawyers but that leaves everyone else behind."
Sen. Elizabeth Warren (D-Mass). (photo: AP)
Benghazi Investigation Is Shameful Political Theater
By Elizabeth Warren, Reader Supported News
10 May 14
 arlier this week, Speaker John Boehner announced the formation of a new select committee to investigate Benghazi led by Rep. Trey Gowdy.
All three of my brothers served in the military, and I know firsthand how much Americans serving abroad -- and their families -- sacrifice. What happened in Benghazi on Sept. 11, 2012 was a tragedy. Four Americans died putting themselves in harm's way in service to peace, diplomacy, and their country. I look at what happened in Benghazi with sadness, with seriousness, and as yet another call to honor the men and women who keep us safe.
So let me be blunt: that kind of seriousness is sorely missing from the no holds-barred political theater of the House Republicans.
I know a little bit about the way Trey Gowdy pursues oversight. I was on the other end of it when I was setting up the new Consumer Financial Protection Bureau and I was called to testify before the House. As the Huffington Post reported at the time, Gowdy's interrogation of me "seemed to lack the basic facts" about the agency he was attempting to oversee. I'd like you to read their reporting on one of these exchanges just so you know what this Benghazi "investigation" is likely to look like:
Rep. Trey Gowdy (R-S.C.) grilled Warren on whether the bureau would make public the complaints it gets. She answered that the complaint issue was a work in progress, but that at the very least, there was progress in creating a system for large credit card companies.
"Are any of the complaints public?" Gowdy demanded.
"Congressman, we don't have any complaints yet," Warren said of the still-nascent agency. "What we're trying to do is build the system."
Gowdy also seemed to think that Warren had written the Dodd-Frank law, and he was determined to know what Warren meant by defining "abusive" practices as something that "materially interferes" with the ability of a consumer to understand a term or a condition.
"That suggests to me that some interferences are immaterial. Is that what you meant by that?" he asked a momentarily perplexed-looking Warren.
"Congressman, I believe the language you are quoting is out of the Dodd-Frank act," she said. "This is the language that Congress has adopted."
Still, Gowdy insisted on her answer, although the definitions and regulations required by the law are still being written.
As a Senator, I take oversight seriously because it is powerfully important. But Trey Gowdy gives oversight a bad name. The House GOP is on a waste-of-time-and-resources witch hunt and fundraising sideshow, shamefully grasping for any straw to make President Obama, former Secretary Clinton, or Secretary Kerry look bad. This stunt does a disservice to those who serve our country abroad, and it distracts us from issues we should be taking up on behalf of the American people.
With millions of people still out of work and millions more working full time yet still living below the poverty line, with students drowning in debt, with roads and bridges crumbling, is this really what the House Republicans are choosing to spend their time on? Even for guys who have so few solutions to offer that they have voted 54 times to repeal Obamacare, this is a new low.
House Republicans are doing whatever they can to distract the American people from what's really going on in Washington – a rigged system that works great for those who have armies of lobbyists and lawyers but that leaves everyone else behind. A system in which Republicans protect tax breaks for billionaires while they block increases in the minimum wage for millions of people who work full time and live in poverty. A system in which Republicans give away billions of dollars in subsidies to Big Oil while making billions in profits off of our kids' student loans.
It's wrong, and it's shameful.
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