Category: Economics

Matters of money

Climate change policy durability

One of the main points in my PhD dissertation on climate change and activism is that, in order for them to improve outcomes, policies to control climate change and abolish fossil fuels need to be sustained for decade after decade (§5.7, p. 201).

Only when there is confidence about the future direction of policy can individuals and firms make sufficient investments in post-fossil fuel infrastructure.

Likewise, if people think that policies to get off fossil fuels are changeable, they will exert their efforts to lobby the government to make those changes, instead of working to decarbonize.

Right now, UK Prime Minister Rishi Sunak is demonstrating the dangers of policy instability: Rishi Sunak announces U-turn on key green targets. Also:

The backtracking on electric vehicles was most surprising. Just two months ago, the government promised a £500m ($643m) subsidy to Tata, an Indian conglomerate, for a new battery plant in Somerset. (And in July Michael Gove, a cabinet minister, had agreed the 2030 deadline was immovable.) Other carmakers immediately reacted angrily. Ford said the industry needed “ambition, commitment and consistency” from government, all of which had been undermined. Sir Simon Clarke, a former Conservative cabinet minister, asked how businesses should plan “if we respond to one by-election…by tearing up key planks of government policy.”

As always, it is vexatious and painful to see that our leaders don’t have a serious plan to avoid climate change catastrophe. The fact that they don’t shows how they see it as someone else’s problem: just a legacy of ruin that other people will need to endure.

I feel like I have been seeing increasing journalistic coverage about young people not wanting to bring new children into this world. Often the focus of these stories is economic, but I feel like there must be deeper climate-related motives too. The message older generations have sent is that they are quite happy to ruin the Earth for future generations if doing so will protect their personal interests. When their elders have made that choice — and keep voting consistently with it — perhaps the young deserve praise for not wanting to keep this species going.

China’s despondent youth

From The Economist:

Unemployment among urban Chinese aged 16 to 24 has been running at over 20% for months, about double the age group’s pre-pandemic level. The official job numbers for this group are so stubbornly awful that China recently stopped publishing them altogether. Higher education is no longer a reliable ladder to a solid career. Our calculations show that in 2021 over 70% of those unemployed youngsters were graduates. Along with scarce jobs, they face sky-high property prices. Their modest dreams of finding work, buying a house and supporting a family seem increasingly out of reach.

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Yet there is a growing feeling among young people that no matter how hard they study or work, they will not be rewarded with a better quality of life. They speak of neijuan, or “involution”, an academic word used to describe a situation in which extra input no longer yields more output. The idea was captured in “A Love for Dilemma”, a popular tv drama released in 2021. In the show, two characters liken the competition in educational attainment to an unruly audience at a cinema: someone stands up to get a clearer view, which obliges everyone behind them to stand. Then people climb on seats and ladders. But in the end, despite all of their effort, no one is able to see the screen any better.

People commonly assume that China’s wealth and power will rise and rise, eventually eclipsing that of rich western democracies. I am personally far more skeptical. An authoritarian and conformist society, led by a Communist Party that holds its own grip on power as the greatest good, has fundamental limits in innovating, productively managing societal tensions, and excelling. I think when your education system has systematically misled the country’s youth about their own history, you will end up with a society that struggles to understand itself well enough to cope in an area of disruptive environmental change.

Furthermore, China has copied many of the worst lessons from the capitalist west, and is building a car-based consumerist society of endless suburbs and shopping malls. That is not well suited to the harsh and destabilizing future which we all all building through our profligate fossil fuel use.

China’s demographics are also a major challenge to its ability to keep growing in wealth and power. Especially in a society that rejects immigration, having a huge bulge of retirees being supported by fewer and fewer working people may be even more of a challenge for China than for the west, given that the CCP’s claims to legitimacy now centre on maintaining order and sustaining growth, rather than any recognizable communist ideology.

Many Americans have paltry retirement savings

CBS News reports that many Americans (including members of “Generation X” born between 1965 and 1980) have paltry retirement savings:

The typical Gen-X household with a private retirement plan has $40,000 in savings, according to a report this week from the National Institute on Retirement Security (NIRS). The figures are even more more alarming for low-income Gen-Xers, who have managed to stash away no more than about $4,300, and often even less, the group found. Across all members of the generation, some 40% don’t have a penny saved for retirement.

“Gen-Xers are fast approaching retirement age, but the data indicate that the vast majority are not even close to having enough savings to retire,” NIRS Executive Director Dan Doonan said in a statement. “Most Gen-Xers don’t have a pension plan, they’ve lived through multiple economic crises, wages aren’t keeping up with inflation and costs are rising. The American Dream of retirement is going to be a nightmare for too many Gen-Xers.”

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Members of Generation X — the roughly 64 million Americans sandwiched between Baby Boomers and Millennials — aren’t the only ones struggling to meet retirement goals. Although boomers say they need $1.1 million for retirement, the median retirement savings is $120,000 for that generation, according to a recent study from Natixis Investment Managers.

The implications are worrisome. Will these people end up in severe poverty without government or family support? Or will governments need to increase taxation to provide universal benefits to people who haven’t saved? What consequences will the stress of these unfunded retirement needs have for families and the social support net?

Related:

Open thread: The worldwide crisis for renters

When people hear about my miserable 4-month search for an afforadle, available, and non-awful room to rent in Toronto, the glib answer is often that I should leave the city. After all, Toronto’s housing market is notoriously punishing.

I call the answer glib because it doesn’t reflect much awareness of what is also happening in potential alternative cities. Vancouver is about 10% more expensive, and cities with far fewer employment options like Guelph, Hamilton, and Barrie are only marginally cheaper. The crisis for renters is both multi-causal and global.

For instance: The UK housing crisis isn’t just about mortgages – private renters desperately need help too (“Three-fifths of private renters cannot afford a decent standard of living”)

We are sliding toward geoengineering

Geoengineering is a very dangerous and ethically questionable response to climate change, but it feels increasingly inevitable.

Governments are simply not willing to do what is necessary to avoid catastrophic climate change, which is unsurprising because voters refuse to elect anyone who even gestures at the scale of change required.

Furthermore, there is no evidence that worsening climatic conditions make people more willing to support fossil fuel abolition. Instead, it seems to drive people toward false solutions or just inchoate anger. Even the ‘serious’ governments are still using taxpayer money to subsidize brand-new fossil fuel production. Everyone has a story about why their industry is the one that doesn’t need to shut down.

It is hard to believe that when climate disruption continues to get worse every year (with El Nino, people are predicting next year will be the hottest in history) the worst-hit places won’t start modifying the atmosphere to try to cancel it out — side-effects, impacts on others, and long-term risks be damned. We are a species that has always preferred monthly life-long $1500 injections with a mystery drug to be thinner, rather than changing our diets.

Related:

A trend that apparently cannot be sustained

The timing of me getting pushed out of 611A Marlee Avenue seems to have been especially bad.

I have been room-hunting for months now, and what I have mostly seen has been individual rooms in shared apartments for around $1500 and up. That means paying more for a room than I ever have for a whole apartment, and so far none of the rooms I have seen have actually been desirable to live in.

Adult poverty in Canada

A report from Community Food Centres Canada found:

more than one in five single adults (22 per cent) live below the poverty line… Many working-age single adults rely on low-wage, part-time, temporary employment opportunities that lack benefits and stability. The social support programs in place are outdated and inadequate for the current labor market, contributing to the challenges these individuals face, the report cited.

According to the report, nearly one million working-age single adults are stuck in a cycle of “deep” poverty with an average annual income of $11,700, which is less than half of the $25,252 low-income threshold for a single-adult household.

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These working-age single adults make up to 38 per cent of all food-insecure households in the country with 61 per cent of them severely disabled living alone below the poverty line, the report said.

The report highlights that nearly half of single adults (47 per cent) live in unaffordable housing compared to 17 per cent in other household types and 81 per cent of shelter users are single adults with low income.

“The evidence is overwhelmingly clear – through woefully inadequate income support programs and a labour market that creates precarity because of low wages and few benefits, we are trapping people in poverty in this country,” Community Food Centres Canada CEO Nick Saul said in a news release published on Thursday.

Their website says: “Two things are very clear: a job is not a pathway out of poverty, and income support for this demographic lags far behind other groups.”

Things I am seeking

Life now chiefly consists of three tasks:

  1. Finding somewhere permanent to live as soon as possible, but ideally by August 1st and by necessity by August 28th when non-students must leave the co-op
  2. Finding any employment to help defer the costs of living
  3. Finding long-term employment in the fight against climate change, perhaps most plausibly in the clean energy sector

I don’t think life has ever been so open-ended and unanchored for me, which is disorienting and worrisome when there are so many problems in the world and among people who I know.

The most sustainable option for housing would be finding a 3 bedroom unit along with two other people and getting on a formal lease. That would finally free me from the uncertainty I had at 410 Markham and 611A Marlee, where I was only safe as a tenant as long as a prior flatmate who the landlords allowed on the lease was there.

Of course, finding two other people and a place all at the same time is quite a coordination problem. I am also open to an affordable 2 bedroom unit with a lease and a suitable flatmate. I also need to consider just taking over a room in an existing place, given how little time I have to search, but that would likely mean being put back in the precarious situation of an off-lease tenant which has made housing into the stress volcano that I live on top of since Pieter Basedow’s worst abuses began in February 2018.

Theoretically I could stretch to finding a cheap place on my own, but (a) every $100 per month matters in terms of retaining a low cost of living and sustaining resources for future troubles and (b) provided they are conscientious and respectful of privacy, I prefer having the unobtrusive company of flatmates to being alone.

DeSilva and Harvey-Sànchez divestment podcast series complete

The fifth and final episode in Amanda Harvey-Sànchez and Julia DeSilva’s series on the University of Toronto fossil fuel divestment campaign, successively organized by Toronto350.org, UofT 350.org, and then the Leap Manifesto and Divestment & Beyond groups.

The episode brings back guests from each prior era, and includes some interesting reflections on what organizers from different eras felt they learned, the value of protest as an empowerment space and venue for inter-activist networking, the origins of the Leap Manifesto group in the aftermath of the 2016 rejection, as well as how they explain President Gertler’s decision to reverse himself and divest five years after he rejected the Toronto350.org campus fossil fuel divestment campaign.

Threads on previous episodes:

Morneau linking economic growth to social stability

Asked about de-growth and related concepts as a response to the apparent unsustainability of quality of living improvement based on economic growth:

If we have declining GDP per capita, it is very hard to have social harmony against that challenge.

Former Canadian Minister of Finance Bill Morneau, at a 2023-04-28 Massey dialog