Economics and Economic Recovery

Small Steps Toward Building a Brighter Future

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[U]nceasingly we are bombarded with pseudo-realities manufactured by very sophisticated people using very sophisticated electronic mechanisms. I do not distrust their motives; I distrust their power. They have a lot of it. And it is an astonishing power: that of creating whole universes, universes of the mind. — Phillip K Dick

On Earth Day Sharon tried to spread a message of optimism in a feed from PERC’s Executive Director Brian Yablonski. A couple of us failed to find any optimism there. Here is why: Yablonski and others who call themselves “Free Market Environmentalists” adhere to what many economists view as a particularly narrow field of economic thought labeled the Austrian School.
(See also My Wars Against Economic Fundamentalism (Iverson, 2011)) (See also: neoliberalism: Wikipedia, Guardian)

Main tenets of the Austrian School are: free markets, individualism, and “curbing the size of the state”.

Economists who frame the subject more broadly—as political economy—don’t view markets as necessarily “free,” neither government as necessarily “bad.” Most economists allow for government action as a legitimate part of broader workings of democratic politics (including wealth redistribution). Austrian School economists do allow for altruistic behaviors on the part of individuals, e.g. community or sectarian service and contributions, but believe government to be an ineffective or perverse tool for such. Austrians usually allow for government provision of national defense, but not much more from government. It is the disallowance of space for broader democratic governance I find most off-putting in the practice and politics of the Austrian School. For more on that, see Democracy in Chains: The deep history of the radical right’s stealth plan for America, by Nancy MacLean, 2017. (reviewed here (The Atlantic, 2017), reviled here (Critical Inquiry, 2017).

A World of Three Zeros

Recently I stumbled onto an interesting, uplifting book titled A World of Three Zeros: The new economics of zero poverty, zero unemployment, and zero net carbon emissions, 2017 by Muhammad Yunus. (reviewed here (New York Times, 2017).

I haven’t read the book yet so I don’t know how the author attempts to solve the “zero net carbon emissions” problem, but the other two resolutions come about largely by people rethinking both the nature of business and human nature.

Business is recast in part as “social business” where the goal is to solve problems not just to make money. Yunus allows for conventional businesses, but suggests the need for many more “social business” enterprises that focus more broadly than simple profit—to solve social problems.

“Human nature,” says Yunus in the New York Times book review (2017), has been misinterpreted by the Capitalist System. Yunus argues, “In capitalist theory, it is assumed that man is entirely driven by self-interest. That’s definitely not the description of a real human being. Human beings are selfish, and at the same time they are equally selfless, if not more.” Hence his focus on “social business.” My guess is that Yunus also believes in democratic governance to help in this effort as well. But that can not happen until and unless we rid our culture of the serious misinterpretation of human nature he notes.

For the Common Good

Yunus is not the first to point out these problems. Almost 30 years ago, I used to champion Herman Daly and John Cobb’s book For the Common Good: Redirecting the economy toward community, the environment, and a sustainable future, 1989. (reviewed here (Scott London, 1995)).

Daly and Cobb’s message was similar to that of Yunus, but just gave general recommendations without many of the specifics Yunus now adds after successfully testing them in real-world settings.

Daly and Cobb were largely ignored, and shunned and derided by many in the economics profession. But that was way before pretty much all the wealth began to increasingly find its way into fewer and fewer hands (New York Times, 2017). Let’s hope Yunus’ message is afforded a more cordial hearing.

Here is how Yunus sums up our current plight (from NY Times article, but likely from his book):

“We need to abandon our unquestioning faith in the power of personal-profit-centered markets to solve all problems and confess that the problems of inequality are not going to be solved by the natural working of the economy as it is currently structured,” Yunus writes.

“This is not a comfortable situation for anyone, including those who are on top of the social heap at any given time. Do the wealthy and powerful … like having to avert their eyes from the homeless and hungry people they pass on the street? Do they enjoy using the tools of the state — including its police powers and other forms of coercion — to suppress the inevitable protests mounted by those on the bottom? Do they really want their own children and grandchildren to inherit this kind of world?”

California national monuments pay off, and are intact so far, but not DRECP

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Here’s some anecdotal evidence supporting the economic arguments for national monument designation.

Two years ago today, President Barack Obama created three new national monuments in the California desert: called Mojave Trails, Sand to Snow and Castle Mountains. Supporters held a community event to celebrate, noting that tourism to the area has increased significantly, as people come to see Joshua Tree National Park and then, go on to explore the new monuments.

Then there’s the Desert Renewable Energy Conservation Plan.

Under Zinke, the Bureau of Land Management recently filed a notice of intent to reopen the Desert Renewable Energy Conservation Plan, which sets aside land for conservation, recreation and energy development.  “Lands that were set aside for conservation may now be open to inappropriate uses like mining and renewable-energy development, when there was already a consensus on areas where those sorts of uses would be appropriate,”

Another example of Trumpling the interests of locals in favor of reducing the “burdens on all domestic energy development.”  Another case where the recreation industry (and others) will have to battle the resources of the energy industry (instead of working with the industry as they did in DRECP).  Who is your money on?

Headwaters: Lessons from the Timber Transition

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Lessons from the Timber Transition

“Performance is shaped more by current challenges and opportunities in the regional economy affecting all types of communities than it is by changes in the timber industry alone.”

“Counties doing better than average leveraged natural amenities; took an active, collaborative approach to planning; embraced adaptability; and took advantage of access to metropolitan markets.”

Plan for logging in Daniel Boone National Forest threatens rare flowers

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This is about a formal objection to a logging project.  I think it illustrates one of the major issues we see in a lot of conflicts about logging (and an eastern example to boot):  what role should timber sale economics play in project selection and decision-making?

From the objectors:

Instead of focusing restoration efforts where they’re most needed, the Forest Service is going where the timber is,” Scheff said.  Scheff said there is a genuine need for appropriate measures to improve the health of the area, which is home to unusual or rare features including sandstone glades, Appalachian seeps and spots of native grassland. But the Forest Service could use methods other than commercial logging at many sites to achieve the goals of the project, Scheff said.

From the Forest Service:

The Forest Service said logging as part of the Greenwood project would help the local economy.  Reed said commercial logging is a tool to help improve the national forest, bringing in money for work the Forest Service would otherwise have to pay to get done.  “It’s an efficiency and it’s common sense,” Reed said.

I at least hope the NEPA process clearly laid out the differences in effects between these alternatives, and the reasons for the choices made.

What is Beyond the “Fog of War”?

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There are scary and uncertain times ahead for our forests. There is just too much “Fog of War” going on for the public to sort out and fact-check for themselves. Even the ‘fact-checkers’ should be suspect, until proven reliable and bias-free. The rise of ‘fake news’ has blurred multiple lines, and many people, even in mass media, fall for the hoaxes, satire or misinformation. (Example: An article appeared on the Grist website, showing concern about a recall of “Dog Condoms”, presenting the link to www.dogcondoms.com )

Conservation Triage – How a Math Formula Could Decide Fate of Endangered U.S. Species

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The title says it all. Considering that US citizens pay more in taxes than they do for food and clothing, is it any surprise that a lot of us want lower taxes. Here are some selected quotes from an article titled “How a Math Formula Could Decide Fate of Endangered U.S. Species“

It’s all about the 80/20 rule or, to put it another way, picking the low hanging fruit.

1) “Arizona State University ecologist Leah Gerber presented a plan to U.S. Fish and Wildlife Service officials that would use a mathematical formula to direct government money away from endangered and threatened species she calls “over-funded failures” and toward plants and animals that can more easily be saved.”

2) “Gavin Shire, a spokesman for the U.S. Fish and Wildlife Service, said in an email to Reuters that the agency is examining the controversial proposal.

“We have worked closely with this group of scientists as they developed this new conservation tool, and while we have not made any determinations yet, are impressed with its potential,” Shire said. “We will be exploring further if and how we may best use it to improve the effectiveness of our recovery efforts.””

3) “The Endangered Species Act bars the government from deciding which animals and plants become extinct. But funding one species over another could let some decline or die out.

“I just don’t think it’s possible to save all species even though I would like to,” said Gerber, a self-described Democrat and environmentalist. “That’s an uncomfortable thing to say and I don’t like it but that’s the reality.”

Gerber said as many as 200 additional species could be saved by directing funds away from species such as the iconic northern spotted owl – whose numbers have declined despite millions of dollars spent on conservation efforts – and toward those with a better chance of survival.”

4) “So-called conservation triage is already being used in New Zealand and the Australian state of New South Wales, but Gerber has developed a specific algorithm for the United States that considers the expense and needs of local species as well as rules laid out by the Endangered Species Act.”

5) “Gerber came up with the idea for a U.S. model while Democratic former President Barack Obama was in office, pitching the concept to U.S. Fish and Wildlife Service officials before her algorithm was developed. Given the proposed budget cuts, some proponents say it may have a better chance of adoption under the Trump administration.”

6) “Despite protected habitat and about $4.5 million, adjusted for inflation, that Gerber calculates has been spent annually between 1989 and 2011 to help the owl recover, federal statistics show its numbers have declined by about 4 percent per year. About 4,800 northern spotted owls are left in North America, according to the environmental group Defenders of Wildlife.”

7) “One proponent is Hugh Possingham, an Australian scientist and an architect of the policy in that country. Now the chief scientist for U.S. environmental group The Nature Conservancy, Possingham wants to see similar policies adopted in the United States.

“I’m always amazed that this is a contentious issue. I’ve had people discuss it with me and end up with a fit,” he said. “But the mathematics and the economics of doing the best you can with the resources you have – I don’t know why that’s contentious at all.”

The Australian state of New South Wales, which in 2013 adopted a strategic prioritization algorithm, decided to keep funding recovery efforts for some species that the model ranked as low priorities, said James Brazill-Boast, senior project officer with the New South Wales Office of Environment and Heritage.

For example, he said, the koala would be ranked low, but Australians would never support letting the beloved creatures, listed as vulnerable by law, become extinct.

Gerber said U.S. officials could similarly decide to continue supporting species that her algorithm might reject – or non-profits could step in to help.

“I don’t think the agency wants to let things go extinct,” Gerber said. “I don’t want to let things go extinct. … But we can actually achieve better outcomes by being strategic.””

Federal lands and transitional economies

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Headwaters Economics has released this update to a report discussed at length here last year:

 “Rural counties in the West with more federal lands performed better on average than their peers with less federal lands in four key economic measures.”

“This update of research from last year finds that from the early 1970s to the early 2010s, population, employment, and personal income on average all grew significantly faster—two times faster or more—in western rural counties with the highest share of federal lands compared to counties with the lowest share of federal lands. Per capita income growth was slightly higher in counties with more federal land.”

An article on “transitional communities” adds:

“Rural decline is a large and complex issue that appears to be accelerating. According to the Pew Charitable Trust, during the period between 1994–2010, 38.4 percent of U.S. rural counties lost population; since 2010, over two-thirds of rural counties lost population.  This level of decline has far-reaching national and international implications for food and energy production, tourism, and national culture and identity.”

Putting them together, it looks like public lands can be an important asset for minimizing or avoiding rural decline, if communities can get their act together to embrace this potential and plan for it.

“Particularly in declining communities where long-established residents remember the charm of life in simpler times, residents can have considerable resistance to change. This connection and preservation of the past, while a rural virtue, can impede its adaptation into the future. Resistance to any proposed solution that “hasn’t been done before” simply impedes innovation or positive transition.”

IN SEARCH OF COMMON GROUND

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It seems like an exercise in futility for the “New Century of Forest Planning” group to be discussing and cussing forest planning &/ policy when we haven’t even agreed to the scientific fundamentals that serve as the cornerstone and foundation for any such discussions.

Below, I have developed a tentative outline of the high level fundamentals which any Forest Plan or Policy must incorporate in order to have a reasonable chance of meeting the desired goals. Until we can come up with a version of these “Forestry Fundamentals” that we generally agree to, we are pushing on a rope and wasting each other’s time unless our objective here is simply to snap our suspenders and vent on each other.

In your comments, please note the outline Item that you are responding to. Maybe we can revise my initial effort and come to some common ground. In doing so we would perform a service and make a step forward that would be useful outside of this circle instead of just chasing our tails. Coming to such an agreement would be a step towards developing a priority hierarchy and eliminating the internal conflicts which make current federal forest policy and law ambiguous and self-contradictory. Until we reach common ground, the current obviously unworkable policies will continue to doom our forests to poor health and consequentially increase the risk of catastrophic loss of those forests and the species that depend on them for survival.

– FORESTRY FUNDAMENTALS – 1st Draft 12/15/16

ESTABLISHED SCIENCE WHICH MUST BE INCORPORATED IN PLANNING FOR

THE SUSTAINABILITY OF FOREST DEPENDENT SPECIES

I) The Fundamental Laws of Forest Science which have been repeatedly validated over time, location, and species. They include:
— A) plant physiology dictating the impact of competition on plant health,
— B) fire science dictating the physics of ignition and spread of fire and
— C) insects and pathogens and their propensity to target based on proximity and their probability of success being inversely proportional to the health of the target.

— D) Species suitability for a specific site is based on the interaction between the following items, those listed above and others not mentioned:

— — 1) hydrology, the underlying geology and availability of nutrients in the soil.

— — 2) latitude, longitude, elevation, aspect and adjacent geography.

— — 3) weather including local &/ global pattern changes.

 

II) The Fundamental Laws controlling the success of endangered, threatened and other species dependent on niche forest types (ecosystems):

— A) Nesting habitat availability.

— B) Foraging habitat availability.

— C) Competition management.

— D) Sustainability depends on maintaining a fairly uniform continuum of the necessary niches which, in turn, requires a balanced mix of age classes within each forest type to avoid species extinguishing gaps.

— E) Risk of catastrophic loss must be reduced where possible in order to minimize the chance of creating species extinguishing gaps in the stages of succession.

 

III) The role of Economics:

— A) Growing existing markets and developing new markets in order to provide revenue to more efficiently maintain healthy forests and thence their dependent species.

— B) Wise investment in the resources necessary to accomplish the goals.

— C) Efficient allocation of existing resources.

 

IV) The role of Forest Management:

— A) Convert the desires/goals of the controlling parties into objectives and thence into the actionable plans necessary to achieve the desired objectives.

— B) Properly execute the plans in accordance with the intent of: governing laws/regulations and best management practices considering any economies.

— C) Acquire independent third party audits and make adjustments in management practices where dictated in order to provide continuous improvement in the means used to achieve goals.

— D) Adjust plans as required by changes: in the goals, as required by the forces of nature and as indicated by on the ground results.

— E) Use GIS software to maintain the spatial and associated temporal data necessary for Scheduling software to find and project feasible alternatives and recommend the “best” alternative to meet the goals set by the controlling parties.

What did I miss, what is wrong, what is right, what would improve this list of Forest Fundamentals?

Federal lands support diverse economies

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Recent research by Headwaters Economics asked whether federal lands are an economic liability or an asset to rural communities (summarized in this opinion piece).

On average, we find that from 1970-2014, rural counties with the most federal land grew much faster than similar counties with the least federal land: population grew four times faster, employment grew three times faster and personal income grew twice as fast. Per capita income grew slightly more in places with more federal lands.

This analysis suggests that, in general, federal lands do not inhibit a community’s economic growth. On the contrary, the research suggests these lands have the potential to contribute to a prosperous rural economy.

You can always pick on the details of economic analysis, but here is what this tells me about the big picture.  While there will always be winners and losers, it’s hard to argue that the presence of federal lands is a big reason for the losers.

Using national forests to combat Canadian timber subsidies

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The Missoulian reported today on the effects of the expiration of the Canadian trade agreement, which will make Canadian timber relatively cheaper than that from the U. S. because the industry is subsidized by the Canadian government.  The Montana Wood Products Association proposes, that until a new international trade agreement could be negotiated (whenever that may be):

“We need to ask what the Forest Service can do to bring down the cost of raw fiber.”

How would this be done?  (Voiding environmental laws anyone?)