The Climate Casino by William D Nordhaus,Sterling Professor of Economics ,Yale University,USA

(Disclaimer: The contents of this post are my expressions of what I have understood of the main ideas expressed and issues raised in the book.)

Professor Nordhaus, along with Paul Romer,  won  the 2018 Nobel Memorial Prize in Economic Sciences)

Issues relating to climate change post the Industrial Revolution can perhaps be presented as The Four Ignoble and Fearsome Truths:

·        There is measurable global warming since the Industrial Revolution

·        Global warming is due to human actions -- the increasing use (ie: burning)  of fossil fuels to generate energy to power the growing production of goods and services to meet the consumption needs of a growing population

·        The consequences of continuing global warming are likely to be catastrophic for the earth and its inhabitants, especially the poorer ones

·        There is a way to avert these dangers but it requires concerted action and political commitment by nation states that is not much in evidence.

These truths need some elaboration.

The growth of population due to progress in medical science and the growth of production possibilities due to revolutions in technology has led to huge increases in the use -- by burning -- of fossil fuels (coal, oil and natural gas) for energy generation. This in turn has released -- and continues to do so -- growing amounts of Carbon di-oxide into the atmosphere. Some of this CO2 is absorbed in the earth and in vegetation and some in the oceans but there are large volumes that persist in the atmosphere. This causes global warming and the science here is devastatingly simple. The energy from the sun comes in through this CO2 layer without any problem, but when the earth tries to balance matters by radiating energy back into space -- as it does regularly -- the CO2 layer stops a significant portion of it because the energy that the earth radiates has a frequency different from the incoming radiation and the CO2 layer acts as a blanket for this outgoing type of radiation. Thus balance cannot be maintained and there is global warming.

The slow but steady increase in average global temperature over an extended period of time has been measured by scientists, as has been the dramatic increase in CO2 concentration in the atmosphere. The consequences of global warming will increasingly be seen in rising sea levels due to melting of polar ice sheets, changes in ocean currents and consequent changes in weather patterns, changes in precipitation levels and water availability in rivers due to glaciers’ melting, changing occurrences and intensity of hurricanes, droughts, increasing acidification of oceans and adverse consequences for coral and other marine life. If any of the major climatic consequences of global warming go beyond a ‘tipping point’ the impact on life on earth may well be catastrophic.

Powering economic growth by fossil fuel based energy systems has led to global warming but the ‘invisible hand’ so beloved of economists does not automatically make any corrections to fix this monumental problem .The reason for this is that the ‘cost’ of CO2 emissions -- the damage done by them -- is not factored into any economic transaction. Those who create CO2 emissions do not pay for the damage done and those who suffer are not compensated. The consequences of global warming are thus ‘external’ to the market transactions that create it. And because the market does not take account of and therefore handle such negative ‘externalities’, state intervention becomes essential to tackle them.

Fundamentally, the carbon intensity of production has to be drastically reduced so that carbon emissions are cut down such that the rising trend of average global temperature is checked. Essentially, technology has to be leveraged to reduce the burning of fossil fuels and still maintain production to meet the needs of global populations. There are obvious issues here, especially those relating to global inequalities and coordination of national efforts, and the issue of ‘free riders’, who may stand to benefit from international efforts without participating in and paying for such efforts. The gravity of the situation, however, necessitates concerted global action, howsoever difficult it may be; the consequences of not taking action are far too serious.

The political consequences of action to control and reduce global warming are likely to be difficult to manage. Energy sources that are safer are, for now, more expensive and people will have to suffer higher costs of consumption if such sources are used to replace fossil fuels. And if production of goods and services is to be in any way controlled who will get less and who more? The poor of this earth already have very little and need and want more, but will the rich agree to reduce their consumption and allow the poor to consume more? Will the rich nations pay for the poor to switch to expensive energy systems? The rich nations use and waste the most energy to power their luxury lifestyles and most of this energy comes from fossil fuel burning. How will these manifestations of ‘development’ be regulated?

It is no surprise therefore, that there are powerful nay-sayers in the developed world who are vociferous in their rejection of scientific research that establishes global warming and highlights its dangers. And the rejections are primarily on ideological grounds -- political expediency rather than scientific reasoning.

It can be argued that this book was published about seven years ago -- in 2013 -- and its dire conclusions may not be valid today. A look at the data available to the author and that available today from the World Meteorological Organization’s report on the Global Climate in 2019 dispels any such doubts.

The author had, from established research, indicated that CO2 concentrations were 280ppm in 1750 and 390 ppm in 2013 and would probably reach 700-900ppm by 2100 if serious measures to control this were not taken. This would in turn lead to a rise in average temperatures of 3-5 degree Celsius.

The World Meteorological Organization’s Statement of the Global Climate in 2019 records that CO2 concentrations in 2018 were 407.8 ppm. In addition, other green-house gases, methane and nitrous oxide, also recorded very high concentrations which were 259% and 123% of their pre industrial levels. The Statement further indicates that the global mean temperature for 2019 was 1.1 degree Celsius above pre industrial levels.

In sum, global warming cannot be denied; its cause, burning of fossil fuel for cheap energy, is categorically established and the negative impact of warming on a large number of critical environmental parameters is visible. If unchecked, global warming will severely impact earth’s weather patterns and environment, and this will have severely negative consequences for the quality of human life and the survival of many other species on planet earth.

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Masters of thriller writing_Thomas Perry

Thomas Perry published his first thriller titled The Butcher’s Boy in 1982 and it won for him the Edgar Allen Poe Award for the Best First Novel in 1983. Perry has been a prolific writer of classy thrillers ever since but The Butcher’s Boy remains one of his best works.

The principal protagonist in this book is a freelance assassin whose name we never come to know-we only know of his aliases. He was taught his trade-the killing trade- by one Eddie Mastrewesky, ostensibly a butcher, hence the sobriquet.

The story begins with the boy completing a hit contracted by a Mafia Family and then proceeding to Vegas where he is supposed to receive payment. At that point somebody makes a serious error of judgement. They decide to kill off The Boy instead of paying him off and that sets the killing machine in motion.

The story proceeds at breakneck pace, the characters are compelling and the plot gripping. It’s close to impossible to put the book down once you have begun reading it.

Perry is one of the very few thriller writers who gets everything right-characters, plot and pace- in almost every book he produces. The characters are often quirky but convincing, the plots quirkier and the pace violent.

Perry has also created the best female protagonist in the thriller space, ever. Jane Whitefield lives, to all intents and purposes, the quiet, rather dull, life of a homemaker married to a successful doctor in a town in upper New York state. All she does is keep house, volunteer for fund raisers and other good works and run long distance to keep fit. But Jane has another, far more interesting and dangerous, dimension to her life. She helps people, trapped in exploitative and dangerous life situations, escape from their very difficult circumstances and begin  new lives secure and distant from their troubled pasts .

If, for example, you are a young woman trapped in a destructive relationship with a violent criminal who will not let you go and you learn about Jane and approach her for help she will get you away from the goons surrounding you regardless of the dangers.

 Jane became a ‘guide’ for troubled people by accident in college and continued because her reputation spread by word of mouth and she cannot turn down a person in serious trouble .There are about eight books in the Whitefield series and each is  un-put-down-able.

Perry has, in addition, written a number of stand- alone thrillers that stand out for their originality of plot and protagonist and their ability to entertain.

Novels by Thomas Perry are not often found in Indian bookshops but most are  available online .If you haven’t started on Perry yet , begin with The Butcher’s Boy; you will not stop till you’ve read them all and then ,like me, you will eagerly wait for more.

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Verse and Worse

 In this edition of Book Talk  I propose to share some of the absolutely superb content to be found in the book of poetry shown below.

VERSE and WORSE—A private collection By Arnold Silcock

A delightful anthology of humorous verse, first published in 1952, this book is a treasure-trove of fun stuff; as a reviewer put it back in the day, ‘It includes the witty, the sombre, the lewd, the sweet, and the tasteless.’

I was fortunate enough to find a copy on sale in the Sunday book-market that used to spring up on the pavements of Daryganj  in Old Delhi, one Sunday afternoon many years ago; and I paid the princely sum of fifteen  rupees for it--or perhaps it was twenty five! When I checked on Amazon in June 2020, a used copy was offered for two thousand nine hundred and fifty- one rupees and sixty- six paise! Nuff said!

The best introduction to this book is to present to you a few of the absolutely delicious offerings it contains. So here goes.

CONSCIENCE

King David and King Solomon led merry merry lives

With many many lady friends and many many wives

But when old age crept over them, with many many qualms

King Solomon wrote Proverbs and King David wrote the Psalms

Dr James Ball Naylor : USA(born 1860)

Animal Spirits and the Indian Economy

Animal Spirits and the Indian economy

The phrase “Animal Spirits ‘appears occasionally in think pieces by economists but there is never any explanation or definition attached and most of us non economists view it as just another clever, emotive phrase with no specific or formal implication.

In fact, however, the phrase describes a formal, ‘behavioral economics’ approach to economic problems and economists George Akerlof and Robert Shiller have written the definitive book on the subject titled ‘Animal Spirits: How Human Psychology Drives the Economy, and why it Matters for Global Capitalism.’

Taking a lead from John M Keynes, the authors argue that economic decision making is not based on rational economic calculations and motivations alone. A great deal of economic activity is dependent on nonrational drivers which they define and give the label ’animal spirits.’

One conclusion from this acceptance of the existence and significance of ‘animal spirits’ is that the theoretical conclusion that free markets automatically determine the most optimal distribution of resources , based on the assumption of economic rationality alone driving economic behavior,  is incorrect. In the real world of ‘animal spirits’ Adam Smith’s ‘invisible hand’ will not ensure the best of all possible economic worlds and there is need for careful monitoring and regulation of the capitalist drive towards profit maximization. There have to be carefully and clearly defined  rules and an efficient ‘referee who enforces them’. This is the role of the state-to not only ‘give full rein to the creativity of capitalism’ but also ‘countervail the excesses that occur because of our animal spirits’.

The five different aspects of animal spirits that impact economic decision making are a sense of confidence, of fairness, the extent and degree of acceptance of corruption and bad faith, money illusion and stories.

Confidence in our society , its institutions and the future determine economic behavior and performance and is in turn impacted by them .Our sense of fairness determines economic behavior especially that relating to price setting and wage determination while corruption impacts almost every economic decision. The inability to see through the effects of inflation-the difference between nominal values and real values- has major consequences for wage flexibility and investment decisions and finally the need of the human mind to ‘think in terms of narratives, of sequences of events with an internal logic and dynamic that appear as a unified whole’-in short the need for ‘stories’ that in turn determine motivation-also impacts economic action.

 The authors examine several major economic phenomena to validate their theoretical framework. Among these are the Depressions of the 1890s  and the 1930s, the financial crisis in the early 21^st century engendered by the housing bubble and related  invention of ‘exotic’ and toxic derivatives,  the consequences of the infamous Enron corruption scandal and the enduring poverty of black people in the US. 

Their research leads the authors to conclude that  animal spirits are indeed significant drivers of economic decision making and must be taken into account for understanding  economic  behavior and for formulating  appropriate and effective economic policy.

In the Indian context the ‘theory’, if it can be so labelled, of animal spirits seems prima facie to be singularly useful in understanding economic events and behavior. Consider, for instance, the apparently endless crisis enveloping the public sector banking system. These banking entities have apparently disbursed enormous volumes of public funds in their care to dubious investors, or more accurately, investors with dubious intentions, who have defaulted on repayments and created a mountain-that appears to be growing steadily- of non- performing assets. Given the extent of the problem and that such banks are government owned and so cannot be allowed to fail, government has pumped in large sums to ‘recapitalize’ these banks and bring them back on their feet .The unanswered question of course is whether the banks were simply incompetent on a massive scale or complicit in what was a set of huge  scam operations wherein large sums of public moneys were misappropriated by clever fraudsters .More importantly, what prevents the banks from repeating their past performance.

The  I&LFS story only serves to underline the problem of how corruption, bad faith and sleepy and sloppy regulators can create an economic crisis of enormous dimensions. Animal spirits are evidently real and significant and must be factored in every attempt to understand the Indian economic reality.

We have witnessed a transformation of the Indian economy since the growth spurt in the 1980s and the reforms-partial and gradual though they were- of the 1990s.The strength of ‘free and open markets’ has been amply demonstrated over the last thirty odd years. What we seem to have forgotten, however, in the euphoria of high nominal and not- quite- so- high real growth rates is the dark side of the force .The theory of Animal Spirits reminds us  to watch out for that very real dark side and put in place strong -efficient and effective-regulatory institutions.

As a natural reaction to the stifling economic environment created by an incompetent, corrupt and bureaucratized state dabbling in a strange version of socialism, we have now a swing towards untrammeled ‘capitalism’. While it is true that the business of government is not business, the state must not forget what its business really is- providing the conditions necessary for positive animal spirits to function freely and simultaneously regulating the more unruly and destructive manifestations of such animal spirits.

A study of the Indian economic experience within the framework provided by ‘Animal Spirits’ offers fascinating possibilities. What for instance explains the Indian fascination for hoarding gold? Why are we so reluctant to pay taxes and more generally why do we display little civic sense? What makes us so vulnerable to ‘us versus them’ stories? Is it the lack of confidence in the state engendered by a long and painful transition from a feudal to a colonial dispensation both of which were characterized by an extractive , exploitative and unjust state that did little towards alleviating either absolute poverty or stark inequality? Is the continuation at the grass roots - post Independence - of many colonial characteristics of the state machinery responsible for a lack of confidence in the institutions of state and related economic behavior?

A detailed study requires a larger canvas and a different platform but suffice it to say that Animal Spirits are important and their functioning in the Indian context merits study.

How Fascism Works By Jason Stanley

How Fascism Works-The Politics Of Us And Them

(Published 2018;  The author, Jason Stanley, an American philosopher,  is the Jacob Urowsky Professor of Philosophy at Yale University, USA)

The author begins by defining fascism as “ultra-nationalism of some variety-(ethnic, religious, cultural) with the nation represented in the person of an authoritarian leader who speaks on its behalf.”

The core characteristic of fascist politics, it is argued, is the division of the population into ‘Us’ and ‘Them’ and the dehumanizing, often demonizing, of ‘them’. This in turn justifies inhumane treatment of ‘them’.

The threat posed by ‘them’ is often sexualized—the purity of ‘our’ bloodlines’ is often portrayed as being threatened.

The process of dehumanization is facilitated by political propaganda, an important instrument of fascist politics. By way of illustration the author states that Hitler in Mein Kampf is ‘clear that the purpose of propaganda is to replace reasoned argument by irrational fears and passions in the public sphere.’

Fascist politics often invokes a glorious mythic past, lost by humiliation -cherry picking history for its purpose- and uses this to ‘weaponize the emotion of nostalgia’ to power the process of changing the present. A sense of ‘aggrieved loss and victimization’ amongst dominant groups is weaponized for political gain.

Propaganda serves to promote the irrational over the rational and fanatical emotion over the intellect. Language is ‘used to elicit emotion not convey information’. Fascism attempts to undermine the credibility of institutions of higher education that promote diversity of views and independent voices of dissent. Institutions that provide checks and balances to power are either subverted or discredited. Free speech, which facilitates public discourse about policy amongst citizens, is portrayed as violent and aggressive- ‘a protest becomes a riot.’

Fascist politics replaces truth by power and destroys the information space by regular and repeated lies. It replaces the ideal of equality by hierarchy and attempts to create amongst the dominant group a group identity opposed to the cosmopolitan ethos and individualism of liberal democracy.

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