Precautionary Principle

The Precautionary Principle must guide investments and innovation to avoid unnecessary and potentially calamitous risks magnified in an age of sustainability and accelerating technology.

The current March 20, 2019, edition of the New York Times provides two cases of misguided decisions by large, regulated corporations that ignored the precautionary principle at their peril.

The crashes of the Boeing 737 Max

Consider this paragraph from the New York Times article:

That same software is suspected of playing a role in two deadly crashes involving the same jet, the Boeing 737 Max. Authorities around the world are now taking a closer look at the jet’s approval by the F.A.A., a process that relies heavily on Boeing employees to certify the safety of the plane.

If shortcuts were taken or attention diverted to other concerns, the potential loss of trust and orders could magnify greatly the damages of a poorly considered decision. Certainly, Boeing and its shareholders could take a hit:

The scrutiny adds to the pressure at Boeing, an aerospace giant with a strong safety record. The 737 Max, its best-selling jet, has more than 4,600 pending orders, which are expected to bring in hundreds of billions of dollars in the coming years.

“Boeing and the F.A.A. have had an almost symbiotic relationship,” said Michael Dreikorn, an aviation safety expert who previously worked in a safety oversight role at the F.A.A. “The relationship is too cozy.

Update, June 15, 2019

The New York Times followed the article above with an update on the deficiencies in the decision-making process within Boeing and the corporation’s cooperation with the FAA regulators: “Boeing Built Deadly Assumptions Into 737 Max , Blind to Late Design Changes.”

This remarkable journalism contains many accounts of what goes wrong when complex systems are designed within institutional settings where decisions are partial and compartmentalized, cost control and time constraints dominate mission safety,  when engineering is overridden by profit goals, and the regulators sit on their hands — all as I interpret this story.

Innocent people died here. The preventable crashes were disastrous for Boeing and its profits, its reputation, and its stockholders. Due precautions must come first. Profit-seeking quick decisions without a comprehensive review by all participants must become essential for a sustainable and just corporate culture.

Pacific Gas & Electric

As a stockholder or executive, consider this headline in the New York Times: How PG&E Ignored California Fire Risks in Favor of Profits. Then consider the consequences on the residents, the firefighters, and the region:

What followed destroyed nearly 14,000 homes and killed 85 people. It was the most destructive wildfire in California history.

Further:

“There is a climate change component to this,” said Michael W. Wara, director of the climate and energy policy program at Stanford University and a member of a state commission examining the cost of wildfires. “But there’s also a failure of management and a failure of vision.”

PG&E is now in bankruptcy proceedings. The damage to people and a region is catastrophic.

Discussion

Both of these cases obviate the significance of the Precautionary Principle but note that, in both cases, heavily regulated companies were involved, so the failure is systemic.

See the follow-up editorial on risk by the New York Times. More thoroughly, see David Vogel, The Politics of Precaution. Be safe, not sorry.

Degrowth #1

Degrowth? Challenge Capitalism

Demographic and economic growth, hallmarks of the Anthropocene over the last century, must ease in the face of climate change, ecocide, and future climate-related calamities.

I start with a critical distinction between two distnict trends

  1. Population growth has already slowed and will continue to do so with the advent of middle-class high-consumption life-styles, urbanization, and perhaps regional overshoots as population exceeds carrying capacity.
  2. Material/monetized (capitalist) growth has already slowed but will continue as a secular trend — which requires close attention in this blog.

Further, Gross Domestic Product (GDP) provides a poor metric, except perhaps to indicate the deepening penetration of capitalist, market-driven societies into the metabolism of the Anthropocene. This specific form of growth, a measure of capitalism on its own terms, must relinquish its central role in making the future: Capitalism must be severely curtailed and modified, soon. This is the challenge of Degrowth. But how? When? By whom? Where?

Conventional capitalism cannot and will not deliver shared prosperity, nor restore ecological damage, nor axiomatically improve human well-being. A legitimate role for capitalism to foster targeted and defined improvement in standards of living can be defined. Thus an enveloped capitalism might provide a powerful toolkit to be wielded democratically, transparently, locally, and deliberately. Might capitalism be reinvented to provide a path to outcomes resembling Degrowth? Time is short.

Capitalism will, and must, substantially fall short of its historical growth performance, far short. Capitalism will not generate substantial increase in GWP (Gross World Product), except perhaps in the regions where shared prosperity has lagged — where material development, as qualitative improvement,  must be done right. (Note, GWP is itself a measure of capitalism on its own terms, not of its benefits to humankind. Learn to distrust GWP and GDP. I have.)

Economic growth, the principle material benefit of capitalism, will fade. Thus the concern over Degrowth partially dissolves, becoming manageable.  If so, the popular support for capitalism wanes but capitalist profit deflates, creating a deadlock — if not a nightmare scenario of capitalism going cannibalistic (Klein).

However, about two billion humans lack basic Earth-hospitality, immiserated in conditions of abject poverty. I will refer to these good people as the Multitude, a diverse population inhabiting various corners of the Earth, mainly in the Global South, often in former colonies. Their pressing unmet needs must be addressed. Hence, the improvement in standards of living must entail targeted GDP growth. This will show up statistically as the convergence of GDP per capita, which Piketty forecasts. This, too, must be unpacked conceptually. However, under the normal dynamics of capitalism, the vast proportion of GDP growth will not benefit the Multitude, a fundamental flaw of capitalism.

Thus, my concern for Alternative Capitalisms:  Certainly, the system dynamics of capitalism exhibiting declining profits must be pondered (Shaikh). This approach to Degrowth will get complicated.

I anticipate that my discussion of Degrowth will extend to several blog posts:

  1. Population growth trends, slowing unevenly but lowering consumption and material stress on the Earth.
  2. Economic growth will also slow, but will introduce complex interactions that need to be gamed out. As investment diverts to armoring regions and as consumption stalls, profits will fall: Profit drives capitalism.
  3. Capitalism can take many historical and institutional forms, but all versions must cope with a changing planet and adjust to resource scarcities, shifts in investment and consumption patterns, and compete for capital with a warming world.
  4. As climate change approaches and as its impacts unravel civilization, capital accumulation of infrastructure and investment in clean energy must accelerate — itself a major challenge to capitalism and to capital markets. However, disaster-driven profit opportunities could subvert such efforts. The direction of needed capital accumulation will be contested.
  5. The interactions of all of these trends with climate change must be thought through around a critical systems perspective. Otherwise, militarized, wall-driven approaches supported by reactionary movements allied with disaster capitalism and the arms trade may prevail (Klein).

Degrowth #2: Population

Population trends

This post derives from the introduction to Degrowth.


A seminal source for this blog site, Fernand Braudel on civilization and capitalism, begins its long journey with population. So do we.

Population growth in the high-consumption nations and world-regions will approach ZPG, Zero Population Growth — or may even decline. Such a  fertility trend would greatly reduce the pressure on Earth’s carrying capacity for 2050. Among the rest of the world, growth rates will sharply decline, but Africa remains of great concern and must be specifically addressed.  (See U.N. forecast.

Population projections will likely approach the low end of the anticipated range. My expectation that the impacts of climate change of agricultural and industrial productivity will slow the stress on the carrying capacity of the Earth, already in Overshoot (Catton). Consider these basic trends:

Demographers are among the most careful and deliberate folks on the planet, but their established methods of projection, based on (past) data, may not adjust for a new paradigm that brings us to 2050. The major difference could be effects of the Earth’s changing climate.

Population and economic trends interconnect

As population slows down, so does economic growth, but not necessarily growth in per capital income. If an economy’s GDP increases by, say 3%, but its population increases by, say 3%, the net effect on per capita income is zero . If inflation proceeds at 3%, the real growth per capita declines 3%. Thus, stagnation.

However, consider a high-consumption country, the USA. The U.S. Congressional Budget Office forecasts that U.S. real (inflation adjusted) GDP growth will slow to 2%. But if the U.S. population grows by 1% per year, the rate of per capital growth is 1%, negligible. So, what if all the gains go to the very top 1% (or 0.1%) and expectations are disappointed? Read today’s news to find out: The USA is essentially there: stagnation. Capitalism does not work well under conditions of stagnation, especially if the population is aging. See Japan for two decades or so.

The next topic, economic growth, will pick up this theme.

New York City armors itself: $10 billion.

Climate change = capital

As I discover news events consistent with the mission of this site, I will reference, link, and explain the significance of the event.

New York City Mayor Bill DeBlasio just announced a $10 billion program to protect lower Manhattan from the rising waters of climate change. The article, Climate Change, How Can Manhattan be Protected? Make it Bigger by William Neuman and Jeffrey C. Mays, March 15, 2019. Catch this:

The plan is similar to a 2013 proposal by Mr. de Blasio’s predecessor, Michael R. Bloomberg, who called for creating a development, much like Battery Park City, along the East River, which would have been at least partly financed by developers interested in building residential or office towers on the new land. (Emphasis is mine.)

Get it? In effect, Manhattan expands but the deal includes the infrastructure to protect the vulnerable southern tip of Manhattan. Mayor DeBlasio’s last development scheme, Amazon’s second headquarters, blew up when the surrounding community protested.

Draw your own conclusions but notice that, in effect, a comprehensive plan will be required, the rest of the city may feel neglected, the price tax (likely to explode) = $1,250 per resident of NYC. Miami recently floated a  $450 million bond issue for flood control. The infrastructure costs in response to climate change will be a central theme of this blog.