Category: CCIR

Climate Catastrophe Impacts and Responses

Davos WEF Update #1.4, 1/19/20

A lone Occupy Wall Street protester sits in front of Federal Hall, across the street from the New York Stock Exchange, in New York June 8, 2012. More than eight months after Occupy Wall Street stormed the global stage, decrying economic inequality and coining the phrase "We are the 99 percent," the movement appears to be losing steam. Donations to the flagship New York chapter have slowed to a trickle. Polls show that public support is rapidly waning. Media attention has dropped precipitously.

WEF claims to do good. Others doubt it.

As the World Economic Forum oligarchs convene in Davos, Switzerland, check out the heart-felt doubts of an Occupy Wall Stree activist invited to Davos, Micah White. The Anonymous guy above reading the China Daily might as well be me, but I am upfront, hardly anonymous.

Klaus Schwab, the WEF founder, would be held in vile contempt by neoliberal champion Milton Friedman. Here’s why:

  • Friedman and orthodox neoliberal ideologues regard unfettered capitalism as Pareto Optimal (best of all possible worlds), meaning that we can’t do any better than that! All this impressive theoretical effort derives from a grand-theory deduction (Tinbergen), not from induction based on data, such as today’s news. And tomorrow’s.
  • Schwab regards corporations as potentially, not yet actually, responsible and transparent social agents accountable to stakeholders. Costco provides a model mission and, yup, Walmart may be heading in that direction. Ray Dalio and even BlackRock, the largest investment corporation, have publicly declared such revision in their mission statements, with results. Corporate Social Responsibility does occasionally happen, so, as economist Kenneth Boulding states: “If it exists, it is possible.” Don’t go crazy yet: Profits provide the engine of capitalism (Shaikh).

Fossil fuels may provide the signal as to which of these models prevail. Divestment in coal is the litmus test for financial behemoths. Watch the coming Aramco IPO for insights about the future of these models of corporate behavior. The Aramco IPO will assess such variables as the adequacy of corporate governance, transparency and integrity, and, critically, the long-term price of a barrel of oil. The Saudi oil powerhouse appears to produce sweet product at the cost of $4/barrel. Their proven reserves appear to be 268 billion barrels and the sunk infrastructure investment is enormous, and vulnerable to sabotage. Do the math. As I write, the market price is about $65/barrel and the IPO has been valued at $1.85 trillion, to the chagrin of the Crown Prince who expected over $2 trillion to support his tottering feudal welfare state. See my notes. The worst event for Aramco: Petroleum reserves become stranded assets as climate destruction takes over.

Micah says:

At the heart of the World Economic Forum is the conviction that decisions are best made when the interests of all stakeholders are served. Explaining this concept in 1971, Schwab wrote:

Costs of Climate Catastrophe

CDP foresees $1T in next five years, but partial survey.

This calculation requires close attention:

  • Stern sees substantial underestimation of damage and out-of-pocket costs. Further, will hit sooner and harder.
  • Infrastructure SOC investment will be immense and unfair, exacerbating inequality and exclusion.
  • However, a Kondratieff Cycle may be forming as public-private coalitions form and as plutocrats segregate themselves in armored enclaves.
  • The fiscal burden cannot be sustained, will distort interest rates (must be permanently low to forestall bankruptcy of sovereigns), and triage sacrifice zones of poor multitudes, who will be forcefully prevented from migration.
  • Productive investments will be crowded out by the emergencies such as fires, floods, droughts, vast unimaginable inundations.
  • Food supplies, perhaps adequate in the aggregate, will fall short regionally, producing mass famine.
  • Mortality and population will fall sharply starting perhaps in 2025 Die Off — population forecasts will have been overly optimistic.
  • Consumption expenditures will be precluded but despite deep bias against the Multitudes, demand will fall short: other than Kondratieff Cycle, private monetized economy will sharply decline.