Saturday, 15 February 2020

Global carbon emissions stop rising (again)

According to the Financial Times, the head of the International Energy Agency (IEA), Fatih Birol, is “hopeful” that global CO2 emissions have finally peaked after news that they were flat in 2019.

Emissions have been downgraded after preliminary predictions in December last year that they rose by 0.6% in 2019. Now, however, it’s been revealed that emissions from energy use were unchanged from 2018, at 33 gigatonnes.

Birol was optimistic what the “clean energy transition” was rapidly accelerating and that emissions will now start to decline. “2019 is a year that gives me hope that the 2020s will be a decade of relief,” he said.

The trouble is that we’ve been here before.  For three years in the middle of the last decade – 2014-2016 – emissions were flat. Many, including the IEA, celebrated the fact that carbon emissions were finally decoupling from economic growth, as global GDP showed a steady, if unspectacular, rise.

According to the IEA, 2014-16 saw “strong energy improvements” and “low-carbon technology deployment”.  Strangely, however, this was a false dawn as the “dynamics changed” and demand for clean technology was not sustained. Emissions resumed their upward path in 2017 and 2018.

As previously noted in this blog, this mystery – why there were “strong energy improvements” in 2014-16 and again in 2019, but not in 2017-18 – becomes a lot less impenetrable if world trade is taken into account. According to the United Nations Conference on Trade and Development (UNCTAD) Status of World Trade 2017 report, world trade grew at less than 2 per cent a year from 2011-14, declined by 10 per cent in 2015 – during which time the profitability of global shipping companies sank like a stone – and dropped by a further 3 per cent in 2016. But trade rebounded strongly in 2017 and 2018.

Likewise in 2019 world trade hit the buffers. “World commerce is deteriorating rapidly”, noted the New York Times in October last year, reporting on the slashing of the World Trade Organization’s forecast of world merchandise trade levels – from a 2.6% increase in April to 1.2% in the autumn. Just last week, it was revealed that US imports and exports both fell in 2019. In the context of the trade war with China, US exports to, and imports from, that country, both dropped.

This is the background to the flatlining of carbon emissions in 2019.

To put things another way, the only occasions when global carbon emissions have not risen this century have been when world trade has also been depressed. The same is not true of economic growth per se which has seen significant, although below average, rises when emissions have been static.

What we have never seen is the combination of robust world trade and stagnant, or falling, CO2 emissions. Given the unerring commitment of the world’s liberal-capitalist establishment to both ‘open trade’ and the ‘clean energy transition’, this is what needs to happen if the IPCC’s scenario of droughts, inundation of coastal areas, crop failures and massive refugees flow is not to come to pass. In fact, what is necessary is a huge and sustained drop in CO2 emissions – of about 15% a year from now until 2040 (15th para).

My guess is that this is because the two things are mutually contradictory.

Friday, 3 January 2020

Hyper-globalised Capitalism is Slowly Killing Civilisation

It is easier, according to the adage, to imagine the end of the world than the end of capitalism. Judging by the muted reaction to the raging Australian bush fires, the truth of that observation is being borne out. But actually it may be worse than that – it is easier to imagine the end of the world than the end of the particular version of hyper-globalized capitalism we live under.

Over the previous decade – in spite of calamitous warnings of what lies in store if massive cuts are not instituted – carbon emissions have continue to rise. Except that is for three years (2014-2016) when coincidentally world trade – but not, strangely, global economic growth – shrank.

Look closely and 2019 follows a similar pattern. According to first estimates, carbon emissions continued to increase last year, but the rate of increase – at 0.6% – was smaller than before. It compares to 1.4% in 2017 and 1.7% in 2018, according to one means of calculation, and 1.5% and 2.1% according to another. It should also be noted that the 0.6% estimate is based solely on the first 9-10 months of last years and could be revised downwards.

Coincidentally, 2019 was also a decidedly rough year for world trade – when it faced the headwinds of a trade war between Trump’s America and China. The imposition of unilateral tariffs on goods by both countries undoubtedly had a dampening effect on trade levels. After the strong rebound of 2017 and 2018, trade suffered. In October, the World Trade Organisation revised its April estimate of a 2.6% increase in world merchandise trade downwards to just 1.2%.  But given that a – possibly temporary – truce has been called in the trade war, rates may return to more ‘normal’ levels in 2020 – unless of course a global recession, or war, intervenes.

The conventional perception of world trade is that it involves the one-time transport of finished goods – clothes, cars or refrigerators for example – to the consumer. Undoubtedly that’s part of it but not all, or even most, of the story. Most world trade now occurs within firms during the production process. It is part of what are called ‘global value chains’ – where multi-national corporations scour the world for the most cost-effective and appropriate venue for making one part of a commodity – the engineering of components in one country, assembly in another (poorer) one and branding in yet another. The sinews of intra-firm trade between numerous countries involved in the construction of an iPhone illustrate the ‘new nomadism.’

But Apple is far from unique. Global value chains make up, it is estimated, 2/3rds of world trade. The ‘value chain’ of US vehicle manufacturer, General Motors, comprises 20,000 businesses worldwide, while the imported parts can make up 50% of cars ostensibly ‘made in the USA’. The World Bank defines global value chains in the following way:

Companies used to make things primarily in one country. That has all changed. Today, a single finished product often results from manufacturing and assembly in multiple countries, with each step in the process adding value to the end product.

There is a glaring contradiction between, on the one hand, wanting to reduce the world’s carbon emissions and, on the other, aiming to increase, or shore up, the volume of global free trade. Yet any number of conservative, centrist, liberal and social-democratic politicians happily exist in such a state of cognitive dissonance.

Just as it makes no sense for a consumer to proclaim a commitment to the environment while simultaneously seeking out the cheapest products regardless of how they were made, it makes no sense for corporations – and their backers in the media and politics – to say arresting global warming is their overwhelmingly priority whilst, at the same time, pursuing a production strategy whose fundamental amoral, profit-maximising purpose ensures that it won’t happen. Yet the latter is precisely what our political and economic system has reified as sacrosanct and non-negotiable.

And we are talking about maximising profit here, not the difference between profit and no profit at all. Apple, for example, would still have an ample profit margin if its iPhones were assembled in the US, not China. Just not quite as big.

But it is not, sadly, a question of corporations simply pursuing their institutionally selfish aims without the public in their domestic countries knowing or approving. They also enable us to physically and mentally outsource the problem of global warming to other countries. They are the ones burning coal to produce commodities flooding the global market, while we are ‘doing our bit’ by reducing our territorial emissions (ironically largely because we have off-shored dirty production to those very countries). It becomes a matter of out of sight, out of mind. And that suits a lot of people just fine.

Sunday, 1 December 2019

So let us not talk falsely now, the hour is getting late

I haven’t posted much about Brexit on this blog. Partly this is because other people are more than happy to do so I’d just be repeating what someone else has said. But it’s also because I’m convinced that in future years, in the aftermath of a future economic crash, the level of attention devoted to something that really doesn’t change the economic fundamentals much will seem bizarre.

However, I think the leaked US-UK free trade negotiations are very interesting and do merit comment because they indicate that the form of Brexit matters. Johnson’s regulatory disalignment with the EU and liberalisation-based free trade agreements represents a definite fork in the road compared with continue customs unions membership and single market alignment (the Labour party plan) or remaining.

To recap, the leaked documents reveal that US negotiators are pushing for “total market access” to be “the baseline assumption” of the talks. This primarily means services because services are the dominant part of the British economy. And this definition includes the NHS because the NHS is considered a service.

British officials have promised to “fly the good for flag for services liberalisation”. The NHS could only be excluded if, as is the custom with trade negotiations, it is specifically exempted. And the British side has declined to exempt the NHS, just as David Cameron refused to do in the doomed TTIP negotiations between the European Union and the US a few years ago. That is extremely revealing.

Other elements of the nascent US-UK negotiations include introducing lower food standards (chlorine-washed chickens), banning any mention of climate change and establishing the right of corporations to sue the British government, without any right of appeal, for practices they regard as unfair.

The EU and total market access

But before we rush to put our bodies on the line for the status quo, it’s necessary to recall what is already happening in the absence of a newly-minted trade agreement with the USA. Because it’s eerily similar. The afore-mentioned TTIP free trade agreement (FTA) between the EU and the US was considered to pose “real and serious risks to the NHS”. There were genuine worries it could also have undermined food safety, bank regulations and environmental standards. It was negotiated in secret (you had to go into a secure reading room to examine it) and it would have established exactly the same ‘corporate court’ system as the US-UK negotiations. In fact, as a result of EU FTAs with many different countries, and also within the EU, so-called investor-state dispute tribunals are extremely common. 

In Britain, the NHS is already being privatised with mental health services on the frontline. Moreover, under EU laws on fair competition, companies such as Richard Branson’s Virgin are able to sue the NHS on the grounds of putatively poorly-run tendering processes.

However, I think there is a difference between EU free trade and a future in the US orbit. That relates to public opinion. The TTIP, which was negotiated between 2013 and 2016, is dead in the water – in April 2019, the European Commission declared that TTIP was “obsolete and no longer relevant”. Partly that outcome is a result of mushrooming governmental and public opposition to TTIP provisions as they were gradually exposed. Doubtless the European Commission would have liked to proceed, without opposition and scrutiny. But it couldn’t. The same European public opinion will influence what a future Labour government can and cannot do and what is politically possible.

The same could theoretically be said of the British government. But if Johnson wins a majority on December 12 he will take that as permission to blithely ignore public opinion for five years, by which time a US-UK FTA could be negotiated and sealed.

Not all people’s votes are the same

There is also a question here about how Brexit is negotiated which has been overlooked. The leaked negotiations revealed that a no deal Brexit (still on the cards if the UK doesn’t reach an agreement on future trade arrangements with the EU by December next year) is the US’s preferred option. Conversely if the UK is still in the Customs Union and aligned to the single market – which is Labour party policy – a US-UK FTA is seen as a “non-starter”.

So if Labour wins the election and negotiates a deal in which Customs Union membership is maintained and organises a referendum with that deal going up against Remain – as is its stated policy – that will specifically rule out any future US-UK trade negotiations which lead to the privatisation of parts of the NHS or dilution of food standards. Regardless of which side wins, it won’t happen.

However, if there is a 2nd referendum between Johnson’s deal and Remain, a future US free trade agreement – with all that that entails – is eminently conceivable. Indeed, such a scenario – propping up a minority Conservative government to allow a ‘people’s vote’ – was put forward by Lib Dem deputy leader, Ed Davey, now that Lib Dem ‘Plan A’ – revoking Article 50 – has been conceded to be pie in the sky.

Ironically, a putatively principled opposition to Brexit could result in the worst kind of Brexit happening.

Thursday, 19 September 2019

Johnson and Cameron: A Tale of Two Extremes

We are, we are told, suffering under the yoke of one of the most right-wing governments Britain has ever had. Before coming to power, Boris Johnson chewed over tactics with white supremacist Steve Bannon. Upon achieving it, he has suspended Parliament, appointed a Home Secretary who has registered her support for capital punishment and wants criminals to “literally feel terror” and dog-whistled to racists, the far right and empire nostalgists that he is on their side.

Indeed, the person who first came up with the idea of proroguing Parliament is a former Conservative special adviser, now Brexit party supporter, who convinced himself that ex-PM David Cameron was leading a “homesexualist movement” and infecting Britain with ‘cultural Marxism’ lifted straight out of the Frankfurt School.

So it’s plausible – for those of us who inhabit Planet Earth – to believe that Britain is now led by a hard right nationalist party that has brutally severed its ties (by expelling 22 MPs for example) with the saner, moderate, liberal conservatism that preceded it. Plausible, indeed believed in by many people, but not correct.

In fact, we are confronted by two extremes – undoubtedly different in certain ways – but united by a dogmatic, ideological conviction that the damage they inflict is justified and necessary.

It’s hard for people not of the Conservative persuasion – and not under the age of 60 – to understand how David Cameron upset traditional conservatives. Commitments to equal marriage, to disowning Section 28 and to prioritising more female and ethnic minority candidates, which appeared to successfully‘detoxify’ the Conservative brand, were anathema to many Conservative members who think wearing ties should be de rigueur and that Christianity should lie at the heart of public policy. Such people are economically Thatcherite but culturally traditionalist, which might appear contradictory, although not to them. They are also invariably anti-EU. Cameron was tolerated while he won elections and referendums, which all came to juddering halt in June 2016.

But all the while, and despite protestations from esteemed academics that he was a one-nation Conservative at heart, Cameron deepened Thatcherism. Austerity took public sector cuts to places Thatcher could only dream about, privatisation was driven as far as it could go and the NHS was starved of funding like never before while being opened up to the private sector. Anti-trade union laws were extended, while protection against unfair dismissal was diluted. And for the poor and disabled, Cameroonian Conservatism made the Thatcher era look positively compassionate by comparison. The Con/Lib Dem coalition government – followed by a year of ‘pure’ brand Cameron – left a trail of ruined lives, deaths, suicides, destitution, homelessness even self-immolation.

This was, by any fair assessment, an extreme and intensely ideological government but its leading lights presented themselves as centrists, modernisers and “liberal internationalists”. That they were taken seriously by large swathes of the media can be explained in part by the fact that their amplifiers had no personal experience of the depredations the Tories and Lib Dems inflicted. Those that did – though they number in the millions – were largely silent in public debate. Hence, Brexit, which was rooted in deprived areas hardest hit by austerity, appeared to many commentators to come out of the wild blue.

This political mind-set has been described, by Tariq Ali for example, as emanating from the ‘extreme or far centre’. Its manifestation certainly wasn’t limited to Britain. The EU imposed savage austerity on countries such as Ireland, Portugal, Greece and Italy and in order to get its way was quite prepared to overthrow governments and override the will of national Parliaments – in fact proroguing the House of Commons seems almost quaint by comparison. But neither this, nor the pursuing of secretive trade deals with the United States, has dented its reputation as a bastion of enlightened liberalism surrounded by populist sharks.

In Britain, the transition from David Cameron to Boris Johnson – in which the failures of the first flow inexorably into the predominance of the second – reveals several things. One is that the liberal conservatism Johnson is determined to expunge from the Tory party is very selective in the principles it is willing to stand up for. It is pro-EU and against overt bigotry. But, as shown by the voting records of Tory dissidents such as Dominic Grieve and Anna Soubry, strangely unmoved by the social callousness of the Cameron-Lib Dem government. Hence, contemporary liberal conservatism should not be mistaken for a rebirth of the Tory Wets of the 1980s. They – Ian Gilmour for example – would have been outraged, primarily, by Cameron’s inherently Thatcherite approach to social and economic policy and the human damage it inflicted. Unfortunately, they no longer exist.

Another is the strange sight of strict austerians reneging on their previous iron commitments to reducing public spending and controlling the deficit, obsessions which have defined politics for the past eight years. The chancellor, Sajid Javid, noted The Economist, “is a fan of Ayn Rand and hangs pictures of Margaret Thatcher his office. Yet on Mr Johnson’s instructions he announced an extra £13.8bn in election-friendly giveaways, paid for with extra borrowing.”

However, as highlighted by this blog last year, such flexibility is simply what happens when the Right realises that patience with austerity is at breaking point and the consequences of persevering with it are worse than performing an intellectual volte-face.

Undoubtedly Britain now has a ‘hard Right’ government under Boris Johnson. But it has already experienced one for the past eight years, although one whose sheen was that of modernising conservatism. Now some of the elite are getting a taste of the ruthlessness that Cameron routinely meted out to ordinary citizens. But don’t worry too much – they won’t starve.