I was asked recently to give a talk to a small but distinguished group on “how to survive the global financial and ecological crises”. Easy uh! Well you have to start somewhere and have a rough idea of where you’re headed. For me, the more difficult the situation gets, the simpler the solution becomes. Essentially, changes that once would have been rejected flat out as unworkable, implausible and idealistic, are suddenly deemed more acceptable.

We are all conditioned to think and live within a certain paradigm or system. For many of us (especially readers of this blog), it’s considered to be democratic, liberal capitalism. More realistically it’s a neo-liberal system where free markets dominate at the expense of any concept of the public good. Markets will solve any problem. Actually that’s a truism. It’s the outcome that is often of dubious merit.

When I look at the Occupy Movement, I see a protest against this system, a system where people are secondary to profit, and the public is considered to be a wasteful and unnecessary construct. As John Key noted of the Christchurch post-EQNZ insurance problem, eventually the markets will sort it out. Again they will but there may not be any insurance for anyone for a while. This mirrors the government’s approach to managing our prisons: simply contract it out to private operators, who will manage it more “efficiently”. The belief in the idea of the “public” is slowly being eaten away by this neo-liberal fantasy that for profit organisations will always achieve the best outcome.

It will be interesting to see how this protest develops but it feels like it has legs. The outrage is fair and justified: the corruption at the heart of the political-financial system; the gaping inequalities; the disenfranchisement and the feeling that the whole system is built on sand. Over time the picture will be clearer and the protests may coalesce around a series of concrete demand but the consultative and participatory process is a fascinating starting point. Participatory, as opposed to representative, democracy is messy, frustrating, turgid, slow, tedious and annoying but that’s the whole point. It is built on allowing all people a voice and on allowing a process to develop. It is a far cry from the many bills rammed through under “urgency” in the NZ Parliament, with little debate or scrutiny for even our partially elected representatives.

I wish them well in their endeavour. In the meantime, I have three simple proposals to offer, as a starting point:

1) Monetary Dialysis - No more public debt; new public money; raise limits on bank credit.

2) Trucost pricing - Start pricing ecosystem goods and services.

3) Participatory Universal Income - Basic Income for all those participating in society; rebalanced tax system; provision of key public goods.

I focused on the first 2 ideas in my presentation, the outline of which is below. By repricing our economic system, both in the cost of goods and services, as well as the creation and volume of money, we will immediately realign it towards a path of lower volume but higher quality consumption. We will reduce the burden of compound interest, this alleviating the constant pressure to produce and consume. The UPI will restore the public good in reflecting all contributions to society and laying the foundations for a more stable, harmonious and prosperous world. Far fetched? Not really, when you think about it for a bit. My turn is over for now. Who is next in the stack?

My last post on rebuilding Christchurch produced some interesting feedback. Most were excited, the odd one horrified and a few came through with some alternative thoughts and modern examples. The videos I put up were meant to provoke people into thinking and questioning: what is a city, what do we need from it and how can we make it work for each other? I wanted people to release themselves from previously held beliefs and challenge them, test them out: does it really make sense, does that really work, does it enable, does it support?

It’s one thing to have fantastic futuristic designs but are they practicable? maybe, maybe not. They are certainly buildable. We should not forget that we are moving into a resource challenged time. By 2050 we could have 9 billion people living on this planet. So we do need to build smart, we do need to think about the nature of the built environment as well as the type of city people want Christchurch to be. We have a wonderful brand being well known as the Garden City, as well as being a city with a strong record in technology, manufacturing and the arts. It has a strong farming hinterland and wonderful natural assets reaching from the sea to the snow.

It can easily build on all of those strengths. Here’s a recent example of a city flattened by an earthquake.

On January 17th 1995, Kobe, a city slightly larger in population to Auckland, was hit by a massive 6.8 earthquake, which shattered the city and killed nearly 6,500 people. The total cost was $102 billion. The rebuild process was difficult but according to this 2005 report, the economy eventually recovered to about 75-90% but with the loss of much of its port business. The government was the major funder of the rebuild and tried to focus on specific industries such as biotechnology. Whilst it’s not particularly known as an eco-city or rebuilt along sustainable principles, Kobe was ranked no 9 in the list of world eco cities in a 2010 Mercer report (Wellington was no 5). The lesson Kobe offers are that rebuilding takes time, the economic impact is major and recovery is a long term process.

But Christchurch is very different to Kobe. It is really a very low rise city and should no doubt remain that way. We don’t need some gargantuan high rise marquee building though there is certainly room for some interesting design structures. The human-building interface is very important to the people of Christchurch and that is probably were the focus should be. I agree to some extent with Gerry Brownlee, the Earthquake Minister, that we should only keep the very best of our heritage buildings (The Cathedral, the Arts Centre, the Provincial Buildings and other key sites) and build around them. How we define the best of them and which ones to invest in will no doubt be a heated topic. It’s important to keep the fabric of the city in place whilst recognising that a new layer will emerge.

How we execute this is the tricky bit. There needs to be representation and there needs to be leadership. We will need input from outside especially from people with expertise in sustainable design, both buildings and urban planning. The demolition bit is easy. As Gerry says

“As I’ve said repeatedly, heritage is both forward and back and from this point on, we decide what the heritage of this city will be“.

That’s a good start as long as we know who the “we” will be. Perhaps a good place to start is to set out a wish list and work from that. So here’s some of my wishes for how we approach this:

- People first: This must be a people centered process both in design, form and function. We want a living, breathing, vibrant and safe place to live and work with buildings and green spaces that sing to us.

- The Garden City: This is a wonderful brand but needs updating. We can incorporate ideas related to the Garden: permaculture, hydroponics, leisure, tranquility, beauty, shelter.

- Zero waste: We can make Christchurch the greenest city in the world. Recycling is great but true efficiency is in designing wasteless products and systems.

- Ecological clustering: We can create business clusters where organisations can leverage off each other. We can focus on our core strengths and build around that expertise as well as minimising waste streams

- Hagley Park: This could become our Central Park. Surrounded East, North, West and South by business and residential areas. This could help the CBD spread but keep itself anchored at the same time.

- Trains: This is a bit of a long shot. But we have train tracks going through key areas in the city and a train station in a potentially key area. With the current rebuilding we could look at a city loop to connect into the north south line from the central station. If there was ever a time to look at light passenger rail then this is it. We could also fit cycling into this work as well.

- Energy: All new buildings to be fully fitted for solar and small scale wind and then be connected to an integrated grid for feed in tariffs.

As people start to put their wish list together, we will start to see common themes appearing. That may be the best way to get a bottom up blueprint for rebuilding and redevelopment. So I invite readers to list their 5 top wishes below.

Then we can bring in the experts to make it all happen

We live in interesting times. Interesting in that we are slowly realising that we have spent way beyond our budget: in monetary terms of course but also ecological. We are consuming ecological resources at an increasingly rapid rate (see Al Bartlett’s fabulous work on Arithmetic, Population and Energy) and using ecosystem services well in advance of their ability to provide.

But it’s useful to sit back and consider the element of contract here. When we borrow we commit to a contract that is so ancient so as to be part of our very soul. From Faustus to Scrooge, the spiritual nature of this bargain is ever present. I must mention here the fabulous work by Margaret Attwood titled “Payback: Debt and the Shadow Side of Wealth“. It reminds me somewhat of Arundhati Roy’s venture into non-fiction in “The Cost of Living“. I like brilliant writers who veer off into interesting worldly issues and Attwood’s book has certainly inspired this post and much thought on the nature of debt itself.

It’s not the type of book I would expect from an author of fiction but it’s really a masterpiece on the understanding of debt and our long relationship with it. When we look at debt and debt slavery we realise it has been around since the beginning of time. The ability to hock one’s wife and child into servitude is not a recent phenomenon. The Faustian bargain is long known even if these days it’s for a consumer good (take your pick) on a 5 year no interest deal: no interest? do people actually believe that? Yes they do.

The focus is always on the weekly amount…..’oh that’s $15 a week. yes i can fit that into my budget”….shame it’s $15 a week forever!! and that television or sofa has cost you double, treble of even more than the advertised price…..oh and it’s worth sod all to sell.

Anyone remember Polonius? The father of Ophelia and general rambling windbag in the Kingdom of Denmark (That’s Hamlet for you who didn’t have the joys of Shakespeare at school).

“Neither a borrower nor a lender be”.

Famous words reprised many years later by Keynes at Bretton Woods when he proposed that countries should keep their trade accounts balanced as much as possible…..that applied to those in credit as well a debit.

And look where we are now……we’re at Payback time. But where is Mephistopheles? Who is going to do the collecting? To pay or not to pay? That is the question said Hamlet…perhaps.

The imbalances in the system are so great that there is no amount of money available to repay the debts. Perhaps they should all be written off as a bad idea and we should start again from scratch….but hark I hear Shylock coming…is there a pound of flesh available? Land…not transportable…but commodities from the land…maybe.

At some point the contract must be addressed; At some point a bargain must be made; At some point there will be the mother of all restructuring. Who will pay…now that really is the question.

Another case of yes, no, maybe, no. The recent G8 summit started with a resounding yes but soon slipped back into a rather tentative not on your nelly.

Simply put the developing or poorer nations have got pressing issues of poverty to deal with and they simply don’t see why they should have to pay for the ecological sins of the developed and richer nations, never mind the fact that they got rich on the back of an imperialist framework!

It just seems that no deal can ever be done without some form of equity payback. There has been some suggestion that revenue raised from either carbon taxes or auctioning of permits could be rebated on a per capita basis. This is simply redistributing the costs in a progressive manner and makes sense on the face of it.

However, can’t see the wealthy punters in the West going for that. What to do?

Maybe it’s time to look for the simplest solution and just get a carbon tax on the books. It’s quick and simple as you only need to tax, at source, basic fossil fuels: oil, gas and coal.

This is something i posted about in 2007 but it’s time to take another look.

Let’s say we have established a price for “carbon”,this being a proxy for externalities caused in the combustion of fossil fuels. The most efficient way to alert the market to this cost is to price it in at source ie where the fossil fuel is sold wholesale. This would be the global oil, gas or coal exchanges.

In my paper, Climate Control, i argued for the establishment of a World Energy Agency, where all fossil fuels were sold through. Simply add on the price of carbon and leave it at that. As a one point global process it would be very simple and then that price information would flow out across the world. End of story.

But there are two issues here:

One is that we are trying to stop carbon quantities breaching certain levels. The price elasticity of fossil fuel consumption may hinder this somewhat as consumers of oil products are slow to change demand in response to price. But there is no doubt that the price rises over the last few years certainly caused some pain in the wallet and made people think about ways of cutting back on petrol usage.

The second issue is interesting. What happens to that money? Who does it belong to? As a charge being levied by the WEA it has no soveriegn recipient. So i propose this “charge” goes into a Global Environmental Contingency Fund (GECF). I want to make clear this is not a tax, it is a cost. It is therefore directly related to an expense which is in this case the use or environmental services.

Let’s stop using the word tax. It’s incorrect and draws attention from the fact that we are simply paying for a service we are using.

So how could the GECF work? I have to give that some more thought but the rough idea is that it would hold those funds in bonds (sovereign) or could lend them out at low interest to fund projects that have a positive environmental benefit. This is the tricky bit. But let’s sit with the first piece. The money comes in and sits in bonds. That’s it. So it’s not being spent on projects of a dubious outcome. As the title implies its a Contingency Fund. We don’t know for sure what will happen in the future. The money can be repaid if required by discounting the price of fossil fuels if it turns out that the cost has turned out to be lower.

What could New Zealand do right now?

Implement a tax and use that revenue to reforest the whole country. This can link into a global emissions trading scheme at some point but the important point is to make sure that the tax collected does not go into the general pot.

People need to see the flow of money from them into pure offsetting activities. If we don’t restrict supply (the only accurate and long lasting solution) then we have to slowly change behaviour and do it in the most straightforward way. A ring fenced and targeted tax is probably the best option we have right now given the likelihood of any global agreement at Copenhagen.

Not wanting to bve left out of the party, China announced a huge stimulus package over the weekend. $600bln or thereabouts is not be to sneezed at. The Chinese are taking no chances with collapsing global trade and economic activity. They have an large domestic economy and plenty of headroom to generate homegrown action.

They also have the money to do it.

As Yves notes the sums involved are getting to the point where a trillion doesn’t raise eyebrows. The Fed’s balance sheet is expanding quicker than a fast food muncher’s waistline. $2trln or will it be 3? Who knows? Who cares anymore? It’s like the end of a Monopoly game where the deals come thick and fast and the rent for landing on Mayfair (or Park Avenue) breaks your bank.

At the same time one continues to hear, in the background, that ecosystem stress is alive and well. As I noted last week there are some major concerns about the level of ecological debt. In a report by the WWF, called The Living Planet, they estimate some $4-5trln worth of ecological damage is occuring on an annual basis.

Deflation, stagflation, hyperinflation, ecological breakdown and over population.

Your cash losing its value every day as the printing presses run wild.

Time for a pause and a lie down.

It’s taken a bit of time but someone decided to publish my climate change proposal. After being rejected by the Journal Of Climate Change for being too grand, the Environmentalist, the publication of the Institute of Environmental Management and Assessment in the UK, published an amended version last month.

You can read it here if you haven’t read the old version.

The key theme is that we must control what we take out of the earth rather trying to control emissions after use. It also stresses the need for a global carbon budget.

Nothing has happened in recent years to change my thoughts on it. It is a large canvas with many themes to explore. If anyone wants to take on some of those themes in a new piece of research just let me know.