There's a problem. If, as Ian says, his proposed approach would also require that 6% annual 'return' on the money held in pensions, this system would be coupled to a growth economy -- to perpetual economic growth. That would not be such a problem if the economy could continue to grow indefinitely, or even over the next decade or two. But the economy cannot continue to grow indefinitely, nor is it likely to be able to grow over the next decade and two, as we phase out fossil fuels -- which are approximately presently 84% of world energy consumption. (My analysis has it that economic growth -- GDP/GNP -- necessarily ends with any rapid and dramatic decline in fossil fuels consumption.)
Tie this observation to something Nate Hagens recently said quite publicly, and which many others others generally understand, if these others understand the economy in biophysical terms. What Hagens said was (to paraphrase) "No industry on Earth could be profitable if negative economic externalities were to be internalized." The point of my mentioning this is to point out that economic growth in today's world can ONLY occur through a process of continuing and perpetuating a mode of economy which utterly depends upon negative economic externalities of myriad kinds, social and ecologica/environmental.
That 6% annual 'return' on investment, then, is inevitably tied to ecological destruction. There is no other way. It's all one great big accounting trick.
HOWEVER! Ian's proposed restructuring of the pension system may very well be necessary, good, and a step in the right direction -- in the short run. We do need plenty of stopgap measures in the short run to begin to restructure the entire economy so that it doesn't depend on ecocide and the destrruction of "social capital", etc. So I support Ian's proposal as a stopgap measure.
The unstated assumption in your comment is that "return" requires "growth". This assumption is valid in the case where "return" means "return on investment" and "investment" means buying shares of equity ownership at one price, to sell at another, extracting a profit from growth in share price as the source of "return on investment".
In fiduciary finance the Bank of Nature way, return is cash flow plus return of capital from equity splits in enterprise cash flows that are prioritized by contracted agreement for: Suitability (of technology to the times); Longevity (of the social contract between the enterprise and popular choice in the price-for-performance, based on availability and ability to pay, commercial markets for "stuff"; Sufficiency (of cash flows to fiduciary minimums, plus the other needs of the business); and the Six Fairnesses: Fair Trade (in supply chains); Fair Engagement (with law, government, regulation and community); Fair Reckoning (with future consequences of presence choices in how the business does business): Fair Working (conditions and compensation); Fair Dealing (with customers and competitors in all distribution channels); and Fair Sharing (between the enterprise and its financiers, fiduciary or otherwise). We call this stewardship equity. You might also think of it as Private Equity 2.0.
Depending on a number of factors, enterprise cash flows may have to increase over time, for a time, to deliver fiduciary minimum cash flows to fiduciary financiers, but that growth is not an overarching imperative that depend on negative externalities and that drives all other considerations out, severing all connections between quantities of money. (which must increase) and quality of life (which will, in consequence, diminish, at least for most).
Once the minimums are met, however, any requirement to continue increasing cash flows ends. The connections between quantities of money and quality of life are at all times respected and supported.
It seems to me that for a very long time many people have been hard at work in the salt mines, trying to establish the political bases for what you call "The Six Fairnesses," and haven't achieved very much progress in the actual, on the ground situation within the political milieu. Is this not so?
If it is so, how would these fairnesses be established in actual practice within political praxis?
I'm VERY much interested in how we who favor these Fairnesses as praxis may engage with real world politics to make these more achievable than so far they have been!
At the surface of social choosing, social activism zooms in on the place where society is coming up short on one or another of the fairnesses, as it should.
But underneath the dynamism of adapting to change is the steady progress towards better across the fairnesses. The workhouses of the 19th Century have been replaced with the welfare state in the 20th Century. The sweatshops of the 19th Century have become the unionized workplaces of the 20th Century. Mid-Century environmental depredations have been remedied in no small part by environmental protections in the law during the last quarter of the 20th Century.
But we are in crisis today. Across all of the fairnesses we are teetering towards regression. This is because in the 1970s we began the process of financialization of fiduciary money that has turned Pensions & Endowments into asset owners allocating assets across asset classes by financing asset managers in executing specific trading strategies for trading specified asset classes in specified asset trading markets to maximize purely pecuniary risk-adjusted returns by extracting profits from other market participants, solely in the interest of their beneficiaries (which is really the sole interest of the asset managers). Through this financialization, we have severed the connection between quantities of money and quality of life. In consequence of that severance, quality of life is diminishing, even as quantities of money increase.
That is a problem. De-financialization is the solution.
You and Ian (with Rachel's much appreciated help) have persuaded me that what you want to do with regard to pensions makes good, solid, sound sense. And I support your work entirely. And I think I now understand that work much better after our dialogue here.
As one who studies energy, economy and ecology in their complex relations with one another, I remain convinced that the world is in a deep trouble that can benefit from the work you're doing, but not by a huge amount, unfortunately. So long as the world's economy depends upon perpetual economic growth to keep from collapsing altogether, it seems to me, work such as that which you and Ian are doing won't likely address the deep systemic failings of our economy, generally. But it's good and important work which I support.
Meanwhile, in my opinion, we (all of us together) need to make much larger strides in re-shaping the larger economic system in which pensions and the rest are fitted in. In my view, this means going ahead with trying to replace some of the energy we use with renewables (and as much as possible within our real GHG emissions / carbon budget.). But, as Richard Heinberg and others have pointed out, the steep increase in "renewable energy" infrastructure expansion which is on plan by the political majority would result in a "pulse" (Heinberg's word for it) of emissions increases, which, in my assessment, would far exceed what is in our emissions budget. So saving pensions is a good aim, but it's not enough to save an inhabitable planet. For that, we need to revise the energy transition narrative to include solid, science-based reductions in energy use worldwide, since 'renewables' cannot replace fossil energy at the pace and scale necessary to avert worst case climate scenarios.
I hope the three of you, Tim, Ian and Rachel .... and everyone reading here, will consider helping with that task as well, as best you can within the existing constraints on your time and focus.
In my view, the work of climate scientists Kevin Anderson is of crucial importance to evaluating how much energy we can spend on creating, transporting and installing 'renewable' energy technology applications. He's one of a few driving the point home that we need to be reducing GHG emissions IMMEDIATELY, and each year for the remaining years of our lives. Unfortunately, the standard issue, popular, mainstream story on "energy transition" focuses almost entirely upon building 'renewable' energy systems and infrastructure, and almost completely disregards our need to immediately begin to reduce world net energy use very significantly as well.
The Degrowth literature is a good avenue for exploring this direction of response.
I'm not an economist. Not by a long shot. But ecological economics is a necessary piece of what I work with, though I work with it as an interested outsider to economics, per se. And I'm not an ecologist, per se. But I work with ecological thinking. Same with biology, systems theory, sociology, anthropology, history and philosophy. I'm a generalist who knows I must engage as an outsider to any of these disciplines while trying to work with all of them and more--including physics and chemistry. It's not possible to learn all of these disciplines in full depth. I'm human after all! We're limited beings!
What I really want to know right now, from you, is whether you believe industrial civilization, roughly as we know it, can be made to run on renewable energy in a time frame necessary to avert some of the worst case climate scenarios without a dramatic, steep and rapid energy descent?
My answer to this question is ... no. I don't think it can be achieved or accomplished. I think, therefore, that the "energy transition" concept needs to be wildly modified from the version which assumes economic modernity in its present form can be maintained by simply switching over to "renewable energy" sources. I think we must adopt a very potent form of deliberate energy descent as part and parcel to "energy transition".
This, of course, makes my viewpoint very much not in the current mainstream. But that's what I have concluded through many years of serious secondary research on the question.
I am a technician with a technical answer to a technical question about the powers and purposes of Pensions & Endowments, and their accountability in the law for the prudent exercise of power true to purpose.
I don't feel qualified to answer your question about modern civilization continuing with a new energy technology swap-out. I am hopeful that we can, but I do suspect there will need to be adjustments to our way of living. Some of those adjustments might be perceived by some as a descent from unsustainable heights. I hope it will prove to be an evolutionary adaptation to better fit the changing times in our changing times in the 21st Century.
I think we all hear Nate Hagens. In short, this is "energy blind."
The 6% growth commitment, the details of which are left to "people smarter than [him]," requires more oil and gas, contradicting his premise.
If we're extending fiduciary responsibility to the conditions of the next couple centuries, which would be great, we can't do it at the expense of right now. The first step outlined after acquiring Big Oil- "what we would do, in that theoretical situation, is... allow him the space to go off and become an integrated oil company- however that is met- ... and he stops oil production, he stops drilling..."
*record scratch*
Again, we're waving hands at some pretty significant details with "however that is met." But, larger, step one is stop oil production? So we make a better future by crashing gIobal civilization now?
There is no "growth commitment". There is a duty to realize fiduciary minimum cash flows sufficient to sustain The Pension Promise of contracted payments to qualifying recipients "every month, forever".
Cash flow is not growth. Growth is a process of increasing in size. Cash flow is repetition. The same size keeps going. "Every month. Forever."
We are not extending fiduciary duty anywhere. It already extends there. We are just calling on that reality in the law to be recognized and respected in practice.
The space Bank of Nature would create for Bernard Looney, and other executives at other super-majors and majors and not-so majors, as needed to achieve critical mass for driving what Exxon called in a 1978 internal memorandum, "hard decisions about energy strategies", globally, at the scale of climate and in the time of climate. This involves the design and execution of a REPLACE to RETIRE strategy for reconfiguring our global energy technologies portfolio by adding new energy technologies that will not geoengineer habitats on earth that humans cannot inhabit, so that we can then delete energy extraction from hydrocarbons that is geoengineering habitats on earth that we cannot inhabit, for energy parity, habitat longevity and social equity while delivering fiduciary minimum cash flows sufficient to sustain The Pension Promise of contracted payments to qualifying recipients. Every month. Forever.
Yes. There are lots of details that need to be worked out. But that is not a predicament. It is a challenge for human creativity to meet. It is hope for a dignified future. For all.
Our only predicament is objections that make the perfect the enemy of the pragmatic.
Ian's proposal -- with regard to pensions -- may in fact be an important STOPGAP measure, but its utility would be for a very brief moment in history, as we use stopgap measures to transition from one mode of growth-dependent economy to a much smaller and slower (per capita) economy -- a much smaller GDP/GWP. A cast on a broken leg, a tourniquet, a blood infusion... these are stopgap measures. We need them! They are useful in case of fire, flood or famine. But we need to design our stopgap measures with the long term in mind, whenever possible. There is a longer game, in other words. We're going to be trying to eliminate "negative externalities" from "the economy". The economy we presently have utterly depends upon these negative externalities to function. Gawd help us all, this is going to be tough!
Is the gap crossable, and how? All of these plan are short on implementation details. It seems there is a significant discontinuity at the point where today's world meets the next. They diverge to opposite infinities. The first step to a world with less fossil energy is go get more fossil energy. While getting more energy (to support status quo and build a bridge at the same time) civilization grows. The effort to change the world makes more of the world we already have. So now, go get more more-fossil-energy. Where does this magically snap to the other side of the discontinuity? When does more suddenly become less?
This dynamic is born out in "renewable" energy growth. Yes it's an ever bigger piece of the pie, but the pie is growing faster than the piece.
I don't believe it is possible to seriously address these excellent and important questions within "modern economics theory," which is at the core of the theoretics which the whole world is now attempting to utilize in trying to contemplate and work with these questions. What is required, in my opinion, is a consilience-rooted approach to economic theory, which would result in an overturning of modern economic theory.
Modern economics was (has been, is) "shallow". What is needed is deep economic theory -- or a richly conceived re-evalutation, rejection and replacement with a new economics paradigm.
The ultimate problem is a political one, in my view -- at core and root. And I'm defining politics as all which has to do with decison-making in groups. That's why we call "the economy" a political-economy topic. But modern political theory and practice is rooted into a now obsolete modern economics theory, which fails the test of trans- and inter-disciplinary theory evaluation.
The emerging, contemporary economics theory should be rooted in wealth defined as well-being (wele, in middle English, is the root word for "wealth"). Well-being is measurable in many ways -- social well-being, ecological well being (health), biospheric well-being.... These are the root concept applied in the Planetary Boundaries approach to biospheric health evaluation.
Modern economics theory has no strong rootedness into a well-being paradigm for wealth, and so it utterly and completley fails the test of theoretical adequacy as a theory of economics -- because it will not learn from what ecologists and social scientists (etc.) KNOW about well-being. It therefore cannot function as a measure of well-being, and thus of "wealth".
Without a paradigm shift in economic theory which grounds well-being in a concilience theory of wealth as well-being, there is (in my view) no possibility of theorizing a systemic transformation of the economy, and thus of political application of that theory.
So we need to develop a General Theory of Well Being which is a concilience theory with which to evaluate Modern Economic Theory, find it wanting, and then ... replacing the theory with a well-being approach.
Of course, the powers that be will try to co-opt this model and lie about it, because what I just said is a danger to the political system as it now stands. We must understand that modern economics theory has been in service to what I call "centripetal" politics. Centripetal politics is a system of concentrating economic and decison-making power into a few hands, rather than distributing it throughout the whole system diffusely. Shared, diffuse "power" of this kind which is at once both political and economic, I'd call "democratic". But then it would not be "democratic" in the usual, modern sense of what that means, since modern political theory is a co-option of the egalitarian ethos.
It's a corruption of the egalitarian ethos.
There is no way forward, I think, which doesn't lead us through a pathway which involves challenging the key theoretical orientation of modernity's "social contract theory," which is an expression of "obligation ethics". What must replace obligation ethics, in my view, is a particular kind of political ethics which is a blend of "virtue ethics" with "care ethics" designed with the present metacrisis / polycrisis in mind. That's a political ethics statement, not an economics one as defined by modern political theory and social contract theory in its degenerated form, which is what runs the modern political discourse.
In other words, I do not believe we can shift our paradigms in economics and politics without going to the root, which is social contract theory and how it co-opts the practice of "Commoning". Only the practice of commoning, I think, could provide us with a political and economic route out of this mess. So the paradigm in need of shifting is a fully consillient one. A meta-thory of theories, in integration, will be needed.
A "consillience theory" of economics grounded in well-being, rather than living on the illusion that "wealth" is tradable stuff in a monetarily based economy, would ground in a consillience theory of well-being as health. We have roughly half of the basis of such a consillience theory of well-being, but prior to the present polycrisis / metacrisis / anthropocene we didn't really understand that such a paradigmatic shift in general -- inter- and trans- disciplinary approach was going to be necessary.
Now, most of the thinking people I know who are somewhat grounded in the EEE (energy, economy, ecology) transdisciplinary (integrated) "discipline" understand that we cannot go on evaluating "wealth" as so much tradable stuff in "the economy". Ecological economics is obviously a huge step forward, but even it goes only part of the way toward a maturity of theory evaluation. Sadly.
A General Theory of Well-being would examine all of the very many ways the various "disciplines" (academic disciplines, if you will) understand complex -- and especially complex adaptive systems -- maintain health and well-being within their disciplinary boundaries, integrate this understanding across disciplines, and formulate means and method of inter- trans- and intra- disciplinary shared wisdom about well-being as health, well-being and even "wealth".
We're halfway to such a General Theory of Well Being right now, but there are obstacles... such as what I call "the incommensurability problem" -- which amounts to difficulty using common evaluative and measuring criteria for "health" (well-being) across multiple disciplines of very diverse kinds -- psychology, biology, medicine, ecology, economics....
With a General Theory of Well Being across disciplines at hand, we'd be able to speak to one another across disciplines in such a way as to evaluate ANY theory which has health or well-being as a focus of attention and intention.
At the moment, the world lacks such a richly transdisciplinary theory of well-being (health) and so this complicates the challenge before us in overthrowing Modern Economic Theory, as well as Modern Political Theory.
This, in short, is the very definition of the root of our polycrisis / metacrisis ...and of the symptom which we sometimes call the anthropocene.
This hints toward what we must contemplate with regard to political ethics. If my intuition is right, and I suspect it is, a huge obstacle to progress in political ethics is that Modern Political Ethics assumes that "obligation" is best and most plausible motivator for ethical "action". Modern Political Ethics has assumed this for the entire period of "modernity," and has run a global experiment on this premise. I think the experiment has failed, and reveals that Modern Political Ethics is a failure. It assumed that people will be motivated by duty and obligation, and so loving our neighbors will not be necessary. Law would fill in where care failed, according to that theory. I think it is nonsense, that theory. The truth is that people are more likely to be motivated by caring for one another (including the 'more then human' others) by care and love, rather than obligation.
Okay, Dohn Joe, let me add one more thought to the mix here.
There is a spectrum which is rarely talked about, which I am now imagining. At the far end (on the left side of the spectrum) is the phrase "shallow contextualization". And at the far right end of the spectrum is the phrase "deep contextualization". What is being addressed in this spectrum is decision-making with regard to the operation of "the economy".
At the furthest point of the spectrum on the right end side (with right and left here having nothing to do with their conventional political usages), there is what I would call "deep time" contextualization. On the far left end of the spectrum is "very near term" contexutalization.
Well, the modern economy has functioned almost entirely on the far left end of this spectrum. But the spectrum isn't just about time scales for evaluating economic policy or decision-making. Time scales for considerations of policy and decision-making are important on this spectrum, but so are things like the health of ecosystems and the biosphere at all time scales -- present and future. Indeed, the spectrum is one which uses well-being as its basis of concept generation.
In Middle English, the word we now call "wealth" was wele, which meant well-being. It didn't mean tradable value in a market system as it does in modern economics. It meant well-being -- or health. So what I'm proposing is a paradigm shift in economic theory from evaluation of "wealth" sans evaluation of well-being, to a theory of economics rooted in well-being (health) as its theoretical basis, root, and deep contextualization. This means, of course, that we could no longer count negative externalities, in the form of GDP / GWP "growth" as wealth production. The problem really does run this deep! The problem is in the source code of modern economics!
For this emergent paradigm shift in economics to occur fully, we'd have to develop what I want to call a "general theory of well-being" -- a.k.a., a general theory of health. Ecosystems and the biosphere are presently largely understood in precisely these terms. Indeed, the entire basis of the Planetary Boundaries model is rooted in precisely such terms and concepts.
When we evaluate the popular/dominant modern economics theory in relation to this "Wealth = Health" paradigmatic model, it utterly and completely fails as a theory of economics.
In other words, modern economic theory is rooted in shallow contextualization.
But ecology, psychology, sociology, anthropology ... and myriad other systems theory rooted conceptual models for theorizing all have well-being models at or near the heart of their theorizing. What this suggests is that modern economics theory is simply NOT a valid scientific theory of economics if economics were evaluated theoretically within a consilence model for theory evaluation. It's a total forking failure as a theory evaluated through a consilience methodology for theory evaluation.
In other words, modern economics theory has not one leg to stand on!
The idea of buying out FF companies to shut them down does not consider, that fossil fuels are a necessary requirement for a modern military and that the US military alone, would it be a country, would be the largest carbon hydrated using country on the planet. In other terms, when a country ever dared to sell it's oil and gas in different than US currency, it has been invaded by the US military or it's government has been overthrown by US foreign agencies. If we the people would by out the military and fossil-fuel industries, we would have the US military against us.
Generating 6% annual cash flow is only possible in a natural environment that supports life (I. e. stable climate conditions) and with plenty of free (that's fossil fuels) energy.
We need to combine the research of Simon Michaux, Steve Keen, William Mitchell and yes, Alan Greenspan. He said correctly: "funding the money to pay the pensions is never a problem (in a fiat currency system). The problem is to create the real resources at the time the pensioners need them."
On fiduciary duty and pension fund advisors: see Steve Keen's research published on Carbontracker:
Until today, I really didn't know a lot about pension plans -- partly because I'm not on any such plan.
While ChatGPT is of only limited accuracy and utility, I sometimes ask it questions as part of my research process on various topics.
I asked:
Are modern pensions partly maintained through stock market investments of pension funds?
ChatGPT
Yes, modern pensions are often maintained and funded in part through stock market investments made by pension funds. Pension funds are large pools of money that are set up to provide retirement income for employees or individuals when they retire. These funds typically invest in a diversified portfolio of assets, including stocks, bonds, real estate, and other financial instruments, with the goal of generating returns over time.
Stock market investments are a common component of pension fund portfolios because they have the potential to offer significant long-term returns. By investing in stocks, pension funds aim to grow their assets over the years, which can help ensure there are enough funds available to meet the pension obligations to retirees. The returns generated from stock market investments can help offset the costs of providing pension benefits, especially in a low-interest-rate environment where traditional fixed-income investments may not provide sufficient returns to meet pension obligations.
However, it's important to note that pension funds typically have investment strategies tailored to their specific goals and risk tolerance. The allocation to stocks versus other asset classes can vary from one pension fund to another based on factors such as the fund's funding status, the age and risk tolerance of the plan participants, and the fund's long-term financial objectives.
While investing in the stock market can potentially yield higher returns, it also comes with risks, including market volatility. Pension fund managers must carefully manage these risks to ensure that there are sufficient assets to pay retirement benefits to plan participants. As a result, pension funds often employ professional investment managers who make decisions on asset allocation and portfolio management to balance risk and return.
In summary, stock market investments are indeed a significant component of many modern pension funds' portfolios, helping to grow and maintain the funds needed to meet retirement benefit obligations. However, the specific investment strategies and allocations can vary among pension funds based on their unique circumstances and objectives.
User
Do those who expect to have a pension have the option of opting out of risking their pension funds on the stock market?
ChatGPT
Whether individuals have the option to opt out of risking their pension funds on the stock market depends on the type of pension plan they have and the choices provided by their employer or pension plan administrator. There are typically two main types of pension plans:
Defined Benefit (DB) Plans:
In a defined benefit plan, retirement benefits are usually based on a predetermined formula that takes into account factors like years of service, salary history, and other factors.
Investment decisions and risks are typically managed by the pension plan itself. The plan sponsor (usually the employer) is responsible for funding the plan to ensure it can meet its benefit obligations.
Plan participants (employees or retirees) do not usually have direct control over the plan's investments or the option to opt out of stock market investments. They receive a promised benefit based on the plan's formula.
Defined Contribution (DC) Plans:
In a defined contribution plan, such as a 401(k) in the United States or a similar plan in other countries, individuals typically contribute a portion of their salary to their retirement account, and in some cases, employers may also contribute.
In DC plans, participants have more control over their investments and can often choose from a range of investment options, including stock market investments, bonds, and other asset classes.
Participants can typically decide how they want to allocate their contributions among these investment options, allowing them to have some influence over their exposure to stock market risk.
Some DC plans may also offer a default investment option, such as a target-date fund, for individuals who do not want to make specific investment choices.
It's important for individuals to understand the type of pension plan they have and the options available to them. If someone has a defined contribution plan, they may have the flexibility to adjust their investment allocations to reduce their exposure to the stock market if they wish. However, in a defined benefit plan, where the retirement benefit is predetermined and not tied to specific investment choices, participants generally do not have the option to opt out of stock market risk because the investment decisions are made by the plan sponsor.
Individuals should consult with their plan administrator or financial advisor to better understand their specific pension plan and the options available to them for managing investment risk within the plan.
Advisors like e. g. Mercer do usually suggest an about 25% share of government bonds of total assets. Government bonds denominated in a government's own currency (which it has control over and can create by itself / this does exclude Euro currency countries) are the safest assets because a monetary sovereign country can by definition never go broke!
However, often larger than 70% are invested in company shares or company bonds. The climate risk to the asset value (let alone considering the other 8 planetary boundaries) is highly underestimated by economists and pension advisors as they follow self proclaimed 'environmental economists', downplaying climate exposure of our economies.
According to a 2011 Mercer report, their worst case climate breakdown scenario will have a 0,0% effect on US GDP by 2050. While in 30 years the economic output (at 2.3% growth) will have doubled. Their fazit: By then we will all be richer.
In the real world, their will be no pruductive capacity left and nothing left to buy.
Thanks Alexander! That Climate Tracker article caused peels of laughter for me this morning, just for the sheer, stark absurdity which so-called "economists" get away with.
"The economics papers informing the models used by investment consultants are at odds with the scientific literature on the impact of these levels of warming." (quoted from Carbon Tracker)
This pertains to what I wrote about here in Planet: Critical comments (this thread) yesterday, which is my belief that modern economics has an utterly failed, broken theoretical basis at its heart and core, and the only way to address this fundamental flaw in modern economics theory is to subject fundamental economics theory to a trans- and inter- disiplinary (consilience) critique -- in which ecologists, sociologists, anthropologists, systems scientists..., etc., reveal modern economic theory as standing on less than one leg.
The fundamental flaw in modern economics is that it deals in the subject of "wealth," without understanding in the least what wealth is. If physicists dealt in matter and energy and knew nothing at all about matter and energy, and chemists did the same with chemicals, we'd all say that their theory was fundamentally flawed and in need of replacement. But economics is in precisely this situation! Modern economics departments are teaching students a completely inadequate theory of economics. It's ideology, not science. It's nothing other than ideology. And that's why a group of economists do their own internal peer review process, isolated and insulated from the other disciplines which could weigh in on how their work is nothing other than ideological propaganda.
"Unlike other funds, pensions have a fiduciary duty to their beneficiaries, a guarantee to act in the best interest of those who depend on these funds for their retirement."
Were I in line to receive a pension, I'd want my pension fund to be 100% free of speculative risk. Period, full stop. And I would consider it immoral, if not illegal (I honestly don't know if it is illegal!) to put my pension fund at risk in a speculative market approach to such funds. Pensions are in the contract with employers, are they not? So what right does anyone have to risk these funds (whatever the scale of risk may be)?
I'm no expert in jurisprudence, but from a jurisprudential standpoint, it makes no sense for folks to have their pensions put at risk by financial wizards who want to bet on the stock market, or anything of the sort.
Ian and Rachel -
There's a problem. If, as Ian says, his proposed approach would also require that 6% annual 'return' on the money held in pensions, this system would be coupled to a growth economy -- to perpetual economic growth. That would not be such a problem if the economy could continue to grow indefinitely, or even over the next decade or two. But the economy cannot continue to grow indefinitely, nor is it likely to be able to grow over the next decade and two, as we phase out fossil fuels -- which are approximately presently 84% of world energy consumption. (My analysis has it that economic growth -- GDP/GNP -- necessarily ends with any rapid and dramatic decline in fossil fuels consumption.)
Tie this observation to something Nate Hagens recently said quite publicly, and which many others others generally understand, if these others understand the economy in biophysical terms. What Hagens said was (to paraphrase) "No industry on Earth could be profitable if negative economic externalities were to be internalized." The point of my mentioning this is to point out that economic growth in today's world can ONLY occur through a process of continuing and perpetuating a mode of economy which utterly depends upon negative economic externalities of myriad kinds, social and ecologica/environmental.
That 6% annual 'return' on investment, then, is inevitably tied to ecological destruction. There is no other way. It's all one great big accounting trick.
PS -
HOWEVER! Ian's proposed restructuring of the pension system may very well be necessary, good, and a step in the right direction -- in the short run. We do need plenty of stopgap measures in the short run to begin to restructure the entire economy so that it doesn't depend on ecocide and the destrruction of "social capital", etc. So I support Ian's proposal as a stopgap measure.
The unstated assumption in your comment is that "return" requires "growth". This assumption is valid in the case where "return" means "return on investment" and "investment" means buying shares of equity ownership at one price, to sell at another, extracting a profit from growth in share price as the source of "return on investment".
In fiduciary finance the Bank of Nature way, return is cash flow plus return of capital from equity splits in enterprise cash flows that are prioritized by contracted agreement for: Suitability (of technology to the times); Longevity (of the social contract between the enterprise and popular choice in the price-for-performance, based on availability and ability to pay, commercial markets for "stuff"; Sufficiency (of cash flows to fiduciary minimums, plus the other needs of the business); and the Six Fairnesses: Fair Trade (in supply chains); Fair Engagement (with law, government, regulation and community); Fair Reckoning (with future consequences of presence choices in how the business does business): Fair Working (conditions and compensation); Fair Dealing (with customers and competitors in all distribution channels); and Fair Sharing (between the enterprise and its financiers, fiduciary or otherwise). We call this stewardship equity. You might also think of it as Private Equity 2.0.
Depending on a number of factors, enterprise cash flows may have to increase over time, for a time, to deliver fiduciary minimum cash flows to fiduciary financiers, but that growth is not an overarching imperative that depend on negative externalities and that drives all other considerations out, severing all connections between quantities of money. (which must increase) and quality of life (which will, in consequence, diminish, at least for most).
Once the minimums are met, however, any requirement to continue increasing cash flows ends. The connections between quantities of money and quality of life are at all times respected and supported.
Thanks Tim MacDonald.
That's a lot to chew upon!
It seems to me that for a very long time many people have been hard at work in the salt mines, trying to establish the political bases for what you call "The Six Fairnesses," and haven't achieved very much progress in the actual, on the ground situation within the political milieu. Is this not so?
If it is so, how would these fairnesses be established in actual practice within political praxis?
I'm VERY much interested in how we who favor these Fairnesses as praxis may engage with real world politics to make these more achievable than so far they have been!
"Is this not so?"
Yes. And also, no.
At the surface of social choosing, social activism zooms in on the place where society is coming up short on one or another of the fairnesses, as it should.
But underneath the dynamism of adapting to change is the steady progress towards better across the fairnesses. The workhouses of the 19th Century have been replaced with the welfare state in the 20th Century. The sweatshops of the 19th Century have become the unionized workplaces of the 20th Century. Mid-Century environmental depredations have been remedied in no small part by environmental protections in the law during the last quarter of the 20th Century.
But we are in crisis today. Across all of the fairnesses we are teetering towards regression. This is because in the 1970s we began the process of financialization of fiduciary money that has turned Pensions & Endowments into asset owners allocating assets across asset classes by financing asset managers in executing specific trading strategies for trading specified asset classes in specified asset trading markets to maximize purely pecuniary risk-adjusted returns by extracting profits from other market participants, solely in the interest of their beneficiaries (which is really the sole interest of the asset managers). Through this financialization, we have severed the connection between quantities of money and quality of life. In consequence of that severance, quality of life is diminishing, even as quantities of money increase.
That is a problem. De-financialization is the solution.
Tim -
You and Ian (with Rachel's much appreciated help) have persuaded me that what you want to do with regard to pensions makes good, solid, sound sense. And I support your work entirely. And I think I now understand that work much better after our dialogue here.
As one who studies energy, economy and ecology in their complex relations with one another, I remain convinced that the world is in a deep trouble that can benefit from the work you're doing, but not by a huge amount, unfortunately. So long as the world's economy depends upon perpetual economic growth to keep from collapsing altogether, it seems to me, work such as that which you and Ian are doing won't likely address the deep systemic failings of our economy, generally. But it's good and important work which I support.
Meanwhile, in my opinion, we (all of us together) need to make much larger strides in re-shaping the larger economic system in which pensions and the rest are fitted in. In my view, this means going ahead with trying to replace some of the energy we use with renewables (and as much as possible within our real GHG emissions / carbon budget.). But, as Richard Heinberg and others have pointed out, the steep increase in "renewable energy" infrastructure expansion which is on plan by the political majority would result in a "pulse" (Heinberg's word for it) of emissions increases, which, in my assessment, would far exceed what is in our emissions budget. So saving pensions is a good aim, but it's not enough to save an inhabitable planet. For that, we need to revise the energy transition narrative to include solid, science-based reductions in energy use worldwide, since 'renewables' cannot replace fossil energy at the pace and scale necessary to avert worst case climate scenarios.
I hope the three of you, Tim, Ian and Rachel .... and everyone reading here, will consider helping with that task as well, as best you can within the existing constraints on your time and focus.
In my view, the work of climate scientists Kevin Anderson is of crucial importance to evaluating how much energy we can spend on creating, transporting and installing 'renewable' energy technology applications. He's one of a few driving the point home that we need to be reducing GHG emissions IMMEDIATELY, and each year for the remaining years of our lives. Unfortunately, the standard issue, popular, mainstream story on "energy transition" focuses almost entirely upon building 'renewable' energy systems and infrastructure, and almost completely disregards our need to immediately begin to reduce world net energy use very significantly as well.
The Degrowth literature is a good avenue for exploring this direction of response.
Tim MacDonald -
I'm not an economist. Not by a long shot. But ecological economics is a necessary piece of what I work with, though I work with it as an interested outsider to economics, per se. And I'm not an ecologist, per se. But I work with ecological thinking. Same with biology, systems theory, sociology, anthropology, history and philosophy. I'm a generalist who knows I must engage as an outsider to any of these disciplines while trying to work with all of them and more--including physics and chemistry. It's not possible to learn all of these disciplines in full depth. I'm human after all! We're limited beings!
What I really want to know right now, from you, is whether you believe industrial civilization, roughly as we know it, can be made to run on renewable energy in a time frame necessary to avert some of the worst case climate scenarios without a dramatic, steep and rapid energy descent?
https://en.wikipedia.org/wiki/Energy_descent
My answer to this question is ... no. I don't think it can be achieved or accomplished. I think, therefore, that the "energy transition" concept needs to be wildly modified from the version which assumes economic modernity in its present form can be maintained by simply switching over to "renewable energy" sources. I think we must adopt a very potent form of deliberate energy descent as part and parcel to "energy transition".
This, of course, makes my viewpoint very much not in the current mainstream. But that's what I have concluded through many years of serious secondary research on the question.
I am a technician with a technical answer to a technical question about the powers and purposes of Pensions & Endowments, and their accountability in the law for the prudent exercise of power true to purpose.
I don't feel qualified to answer your question about modern civilization continuing with a new energy technology swap-out. I am hopeful that we can, but I do suspect there will need to be adjustments to our way of living. Some of those adjustments might be perceived by some as a descent from unsustainable heights. I hope it will prove to be an evolutionary adaptation to better fit the changing times in our changing times in the 21st Century.
I think we all hear Nate Hagens. In short, this is "energy blind."
The 6% growth commitment, the details of which are left to "people smarter than [him]," requires more oil and gas, contradicting his premise.
If we're extending fiduciary responsibility to the conditions of the next couple centuries, which would be great, we can't do it at the expense of right now. The first step outlined after acquiring Big Oil- "what we would do, in that theoretical situation, is... allow him the space to go off and become an integrated oil company- however that is met- ... and he stops oil production, he stops drilling..."
*record scratch*
Again, we're waving hands at some pretty significant details with "however that is met." But, larger, step one is stop oil production? So we make a better future by crashing gIobal civilization now?
The predicament distilled.
There is no "growth commitment". There is a duty to realize fiduciary minimum cash flows sufficient to sustain The Pension Promise of contracted payments to qualifying recipients "every month, forever".
Cash flow is not growth. Growth is a process of increasing in size. Cash flow is repetition. The same size keeps going. "Every month. Forever."
We are not extending fiduciary duty anywhere. It already extends there. We are just calling on that reality in the law to be recognized and respected in practice.
The space Bank of Nature would create for Bernard Looney, and other executives at other super-majors and majors and not-so majors, as needed to achieve critical mass for driving what Exxon called in a 1978 internal memorandum, "hard decisions about energy strategies", globally, at the scale of climate and in the time of climate. This involves the design and execution of a REPLACE to RETIRE strategy for reconfiguring our global energy technologies portfolio by adding new energy technologies that will not geoengineer habitats on earth that humans cannot inhabit, so that we can then delete energy extraction from hydrocarbons that is geoengineering habitats on earth that we cannot inhabit, for energy parity, habitat longevity and social equity while delivering fiduciary minimum cash flows sufficient to sustain The Pension Promise of contracted payments to qualifying recipients. Every month. Forever.
Yes. There are lots of details that need to be worked out. But that is not a predicament. It is a challenge for human creativity to meet. It is hope for a dignified future. For all.
Our only predicament is objections that make the perfect the enemy of the pragmatic.
Ian's proposal -- with regard to pensions -- may in fact be an important STOPGAP measure, but its utility would be for a very brief moment in history, as we use stopgap measures to transition from one mode of growth-dependent economy to a much smaller and slower (per capita) economy -- a much smaller GDP/GWP. A cast on a broken leg, a tourniquet, a blood infusion... these are stopgap measures. We need them! They are useful in case of fire, flood or famine. But we need to design our stopgap measures with the long term in mind, whenever possible. There is a longer game, in other words. We're going to be trying to eliminate "negative externalities" from "the economy". The economy we presently have utterly depends upon these negative externalities to function. Gawd help us all, this is going to be tough!
Is the gap crossable, and how? All of these plan are short on implementation details. It seems there is a significant discontinuity at the point where today's world meets the next. They diverge to opposite infinities. The first step to a world with less fossil energy is go get more fossil energy. While getting more energy (to support status quo and build a bridge at the same time) civilization grows. The effort to change the world makes more of the world we already have. So now, go get more more-fossil-energy. Where does this magically snap to the other side of the discontinuity? When does more suddenly become less?
This dynamic is born out in "renewable" energy growth. Yes it's an ever bigger piece of the pie, but the pie is growing faster than the piece.
I don't believe it is possible to seriously address these excellent and important questions within "modern economics theory," which is at the core of the theoretics which the whole world is now attempting to utilize in trying to contemplate and work with these questions. What is required, in my opinion, is a consilience-rooted approach to economic theory, which would result in an overturning of modern economic theory.
Modern economics was (has been, is) "shallow". What is needed is deep economic theory -- or a richly conceived re-evalutation, rejection and replacement with a new economics paradigm.
The ultimate problem is a political one, in my view -- at core and root. And I'm defining politics as all which has to do with decison-making in groups. That's why we call "the economy" a political-economy topic. But modern political theory and practice is rooted into a now obsolete modern economics theory, which fails the test of trans- and inter-disciplinary theory evaluation.
The emerging, contemporary economics theory should be rooted in wealth defined as well-being (wele, in middle English, is the root word for "wealth"). Well-being is measurable in many ways -- social well-being, ecological well being (health), biospheric well-being.... These are the root concept applied in the Planetary Boundaries approach to biospheric health evaluation.
Modern economics theory has no strong rootedness into a well-being paradigm for wealth, and so it utterly and completley fails the test of theoretical adequacy as a theory of economics -- because it will not learn from what ecologists and social scientists (etc.) KNOW about well-being. It therefore cannot function as a measure of well-being, and thus of "wealth".
Without a paradigm shift in economic theory which grounds well-being in a concilience theory of wealth as well-being, there is (in my view) no possibility of theorizing a systemic transformation of the economy, and thus of political application of that theory.
So we need to develop a General Theory of Well Being which is a concilience theory with which to evaluate Modern Economic Theory, find it wanting, and then ... replacing the theory with a well-being approach.
Of course, the powers that be will try to co-opt this model and lie about it, because what I just said is a danger to the political system as it now stands. We must understand that modern economics theory has been in service to what I call "centripetal" politics. Centripetal politics is a system of concentrating economic and decison-making power into a few hands, rather than distributing it throughout the whole system diffusely. Shared, diffuse "power" of this kind which is at once both political and economic, I'd call "democratic". But then it would not be "democratic" in the usual, modern sense of what that means, since modern political theory is a co-option of the egalitarian ethos.
It's a corruption of the egalitarian ethos.
There is no way forward, I think, which doesn't lead us through a pathway which involves challenging the key theoretical orientation of modernity's "social contract theory," which is an expression of "obligation ethics". What must replace obligation ethics, in my view, is a particular kind of political ethics which is a blend of "virtue ethics" with "care ethics" designed with the present metacrisis / polycrisis in mind. That's a political ethics statement, not an economics one as defined by modern political theory and social contract theory in its degenerated form, which is what runs the modern political discourse.
In other words, I do not believe we can shift our paradigms in economics and politics without going to the root, which is social contract theory and how it co-opts the practice of "Commoning". Only the practice of commoning, I think, could provide us with a political and economic route out of this mess. So the paradigm in need of shifting is a fully consillient one. A meta-thory of theories, in integration, will be needed.
A "consillience theory" of economics grounded in well-being, rather than living on the illusion that "wealth" is tradable stuff in a monetarily based economy, would ground in a consillience theory of well-being as health. We have roughly half of the basis of such a consillience theory of well-being, but prior to the present polycrisis / metacrisis / anthropocene we didn't really understand that such a paradigmatic shift in general -- inter- and trans- disciplinary approach was going to be necessary.
Now, most of the thinking people I know who are somewhat grounded in the EEE (energy, economy, ecology) transdisciplinary (integrated) "discipline" understand that we cannot go on evaluating "wealth" as so much tradable stuff in "the economy". Ecological economics is obviously a huge step forward, but even it goes only part of the way toward a maturity of theory evaluation. Sadly.
A General Theory of Well-being would examine all of the very many ways the various "disciplines" (academic disciplines, if you will) understand complex -- and especially complex adaptive systems -- maintain health and well-being within their disciplinary boundaries, integrate this understanding across disciplines, and formulate means and method of inter- trans- and intra- disciplinary shared wisdom about well-being as health, well-being and even "wealth".
We're halfway to such a General Theory of Well Being right now, but there are obstacles... such as what I call "the incommensurability problem" -- which amounts to difficulty using common evaluative and measuring criteria for "health" (well-being) across multiple disciplines of very diverse kinds -- psychology, biology, medicine, ecology, economics....
With a General Theory of Well Being across disciplines at hand, we'd be able to speak to one another across disciplines in such a way as to evaluate ANY theory which has health or well-being as a focus of attention and intention.
At the moment, the world lacks such a richly transdisciplinary theory of well-being (health) and so this complicates the challenge before us in overthrowing Modern Economic Theory, as well as Modern Political Theory.
This, in short, is the very definition of the root of our polycrisis / metacrisis ...and of the symptom which we sometimes call the anthropocene.
This hints toward what we must contemplate with regard to political ethics. If my intuition is right, and I suspect it is, a huge obstacle to progress in political ethics is that Modern Political Ethics assumes that "obligation" is best and most plausible motivator for ethical "action". Modern Political Ethics has assumed this for the entire period of "modernity," and has run a global experiment on this premise. I think the experiment has failed, and reveals that Modern Political Ethics is a failure. It assumed that people will be motivated by duty and obligation, and so loving our neighbors will not be necessary. Law would fill in where care failed, according to that theory. I think it is nonsense, that theory. The truth is that people are more likely to be motivated by caring for one another (including the 'more then human' others) by care and love, rather than obligation.
Okay, Dohn Joe, let me add one more thought to the mix here.
There is a spectrum which is rarely talked about, which I am now imagining. At the far end (on the left side of the spectrum) is the phrase "shallow contextualization". And at the far right end of the spectrum is the phrase "deep contextualization". What is being addressed in this spectrum is decision-making with regard to the operation of "the economy".
At the furthest point of the spectrum on the right end side (with right and left here having nothing to do with their conventional political usages), there is what I would call "deep time" contextualization. On the far left end of the spectrum is "very near term" contexutalization.
Well, the modern economy has functioned almost entirely on the far left end of this spectrum. But the spectrum isn't just about time scales for evaluating economic policy or decision-making. Time scales for considerations of policy and decision-making are important on this spectrum, but so are things like the health of ecosystems and the biosphere at all time scales -- present and future. Indeed, the spectrum is one which uses well-being as its basis of concept generation.
In Middle English, the word we now call "wealth" was wele, which meant well-being. It didn't mean tradable value in a market system as it does in modern economics. It meant well-being -- or health. So what I'm proposing is a paradigm shift in economic theory from evaluation of "wealth" sans evaluation of well-being, to a theory of economics rooted in well-being (health) as its theoretical basis, root, and deep contextualization. This means, of course, that we could no longer count negative externalities, in the form of GDP / GWP "growth" as wealth production. The problem really does run this deep! The problem is in the source code of modern economics!
https://www.etymonline.com/word/wealth#etymonline_v_4871
For this emergent paradigm shift in economics to occur fully, we'd have to develop what I want to call a "general theory of well-being" -- a.k.a., a general theory of health. Ecosystems and the biosphere are presently largely understood in precisely these terms. Indeed, the entire basis of the Planetary Boundaries model is rooted in precisely such terms and concepts.
When we evaluate the popular/dominant modern economics theory in relation to this "Wealth = Health" paradigmatic model, it utterly and completely fails as a theory of economics.
In other words, modern economic theory is rooted in shallow contextualization.
But ecology, psychology, sociology, anthropology ... and myriad other systems theory rooted conceptual models for theorizing all have well-being models at or near the heart of their theorizing. What this suggests is that modern economics theory is simply NOT a valid scientific theory of economics if economics were evaluated theoretically within a consilence model for theory evaluation. It's a total forking failure as a theory evaluated through a consilience methodology for theory evaluation.
In other words, modern economics theory has not one leg to stand on!
The idea of buying out FF companies to shut them down does not consider, that fossil fuels are a necessary requirement for a modern military and that the US military alone, would it be a country, would be the largest carbon hydrated using country on the planet. In other terms, when a country ever dared to sell it's oil and gas in different than US currency, it has been invaded by the US military or it's government has been overthrown by US foreign agencies. If we the people would by out the military and fossil-fuel industries, we would have the US military against us.
Generating 6% annual cash flow is only possible in a natural environment that supports life (I. e. stable climate conditions) and with plenty of free (that's fossil fuels) energy.
We need to combine the research of Simon Michaux, Steve Keen, William Mitchell and yes, Alan Greenspan. He said correctly: "funding the money to pay the pensions is never a problem (in a fiat currency system). The problem is to create the real resources at the time the pensioners need them."
On fiduciary duty and pension fund advisors: see Steve Keen's research published on Carbontracker:
https://carbontracker.org/reports/loading-the-dice-against-pensions/
It's about "how economists have destroyed our pensions by downplaying climate breakdown. "
Greenspan answering Paul Ryan on the security of pension funds:
https://youtu.be/98w8ojQDrTM?si=434WyS3Irob79jvb
Until today, I really didn't know a lot about pension plans -- partly because I'm not on any such plan.
While ChatGPT is of only limited accuracy and utility, I sometimes ask it questions as part of my research process on various topics.
I asked:
Are modern pensions partly maintained through stock market investments of pension funds?
ChatGPT
Yes, modern pensions are often maintained and funded in part through stock market investments made by pension funds. Pension funds are large pools of money that are set up to provide retirement income for employees or individuals when they retire. These funds typically invest in a diversified portfolio of assets, including stocks, bonds, real estate, and other financial instruments, with the goal of generating returns over time.
Stock market investments are a common component of pension fund portfolios because they have the potential to offer significant long-term returns. By investing in stocks, pension funds aim to grow their assets over the years, which can help ensure there are enough funds available to meet the pension obligations to retirees. The returns generated from stock market investments can help offset the costs of providing pension benefits, especially in a low-interest-rate environment where traditional fixed-income investments may not provide sufficient returns to meet pension obligations.
However, it's important to note that pension funds typically have investment strategies tailored to their specific goals and risk tolerance. The allocation to stocks versus other asset classes can vary from one pension fund to another based on factors such as the fund's funding status, the age and risk tolerance of the plan participants, and the fund's long-term financial objectives.
While investing in the stock market can potentially yield higher returns, it also comes with risks, including market volatility. Pension fund managers must carefully manage these risks to ensure that there are sufficient assets to pay retirement benefits to plan participants. As a result, pension funds often employ professional investment managers who make decisions on asset allocation and portfolio management to balance risk and return.
In summary, stock market investments are indeed a significant component of many modern pension funds' portfolios, helping to grow and maintain the funds needed to meet retirement benefit obligations. However, the specific investment strategies and allocations can vary among pension funds based on their unique circumstances and objectives.
User
Do those who expect to have a pension have the option of opting out of risking their pension funds on the stock market?
ChatGPT
Whether individuals have the option to opt out of risking their pension funds on the stock market depends on the type of pension plan they have and the choices provided by their employer or pension plan administrator. There are typically two main types of pension plans:
Defined Benefit (DB) Plans:
In a defined benefit plan, retirement benefits are usually based on a predetermined formula that takes into account factors like years of service, salary history, and other factors.
Investment decisions and risks are typically managed by the pension plan itself. The plan sponsor (usually the employer) is responsible for funding the plan to ensure it can meet its benefit obligations.
Plan participants (employees or retirees) do not usually have direct control over the plan's investments or the option to opt out of stock market investments. They receive a promised benefit based on the plan's formula.
Defined Contribution (DC) Plans:
In a defined contribution plan, such as a 401(k) in the United States or a similar plan in other countries, individuals typically contribute a portion of their salary to their retirement account, and in some cases, employers may also contribute.
In DC plans, participants have more control over their investments and can often choose from a range of investment options, including stock market investments, bonds, and other asset classes.
Participants can typically decide how they want to allocate their contributions among these investment options, allowing them to have some influence over their exposure to stock market risk.
Some DC plans may also offer a default investment option, such as a target-date fund, for individuals who do not want to make specific investment choices.
It's important for individuals to understand the type of pension plan they have and the options available to them. If someone has a defined contribution plan, they may have the flexibility to adjust their investment allocations to reduce their exposure to the stock market if they wish. However, in a defined benefit plan, where the retirement benefit is predetermined and not tied to specific investment choices, participants generally do not have the option to opt out of stock market risk because the investment decisions are made by the plan sponsor.
Individuals should consult with their plan administrator or financial advisor to better understand their specific pension plan and the options available to them for managing investment risk within the plan.
Advisors like e. g. Mercer do usually suggest an about 25% share of government bonds of total assets. Government bonds denominated in a government's own currency (which it has control over and can create by itself / this does exclude Euro currency countries) are the safest assets because a monetary sovereign country can by definition never go broke!
However, often larger than 70% are invested in company shares or company bonds. The climate risk to the asset value (let alone considering the other 8 planetary boundaries) is highly underestimated by economists and pension advisors as they follow self proclaimed 'environmental economists', downplaying climate exposure of our economies.
According to a 2011 Mercer report, their worst case climate breakdown scenario will have a 0,0% effect on US GDP by 2050. While in 30 years the economic output (at 2.3% growth) will have doubled. Their fazit: By then we will all be richer.
In the real world, their will be no pruductive capacity left and nothing left to buy.
Read:
https://carbontracker.org/reports/loading-the-dice-against-pensions/
Thanks Alexander! That Climate Tracker article caused peels of laughter for me this morning, just for the sheer, stark absurdity which so-called "economists" get away with.
"The economics papers informing the models used by investment consultants are at odds with the scientific literature on the impact of these levels of warming." (quoted from Carbon Tracker)
This pertains to what I wrote about here in Planet: Critical comments (this thread) yesterday, which is my belief that modern economics has an utterly failed, broken theoretical basis at its heart and core, and the only way to address this fundamental flaw in modern economics theory is to subject fundamental economics theory to a trans- and inter- disiplinary (consilience) critique -- in which ecologists, sociologists, anthropologists, systems scientists..., etc., reveal modern economic theory as standing on less than one leg.
The fundamental flaw in modern economics is that it deals in the subject of "wealth," without understanding in the least what wealth is. If physicists dealt in matter and energy and knew nothing at all about matter and energy, and chemists did the same with chemicals, we'd all say that their theory was fundamentally flawed and in need of replacement. But economics is in precisely this situation! Modern economics departments are teaching students a completely inadequate theory of economics. It's ideology, not science. It's nothing other than ideology. And that's why a group of economists do their own internal peer review process, isolated and insulated from the other disciplines which could weigh in on how their work is nothing other than ideological propaganda.
You name it!
"Unlike other funds, pensions have a fiduciary duty to their beneficiaries, a guarantee to act in the best interest of those who depend on these funds for their retirement."
Were I in line to receive a pension, I'd want my pension fund to be 100% free of speculative risk. Period, full stop. And I would consider it immoral, if not illegal (I honestly don't know if it is illegal!) to put my pension fund at risk in a speculative market approach to such funds. Pensions are in the contract with employers, are they not? So what right does anyone have to risk these funds (whatever the scale of risk may be)?
I'm no expert in jurisprudence, but from a jurisprudential standpoint, it makes no sense for folks to have their pensions put at risk by financial wizards who want to bet on the stock market, or anything of the sort.
Hi Rachel!
When I click on Watch On YouTube it brings me to a page which says "Video unavailable
This video is private". This makes me sad, as I prefer to watch rather than to listen only.
Thanks for flagging! Link should work now.
Dear Rachel, I think you shall get Steve Keen back on your show on the pension and climate brakedown topic:
https://carbontracker.org/reports/loading-the-dice-against-pensions/
Best, Alexander
Thanks Rachel!
I love Planet: Critical by the way. And I have immense appreciation for you, as well!