Climate Change: “It Depends on How We They Value Time”

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Yves here. This short post makes a point that can’t be stated strongly enough: the way that economic concepts and methodologies are applied to situations where they are inappropriate, producing garbage-in, garbage out results.

Sandwichman discusses the use of the finance concept, the time value of money, to climate change. The basic idea of the time value of money is that someone who has money expects to get a return if they give the money to another party with a promise to get it back in the future. That line of thinking undergrids financial analysis and capital budgeting.

Michael Hudson has described how unworkable this becomes when indebtedness becomes significant on a societal level. The interest payments eat into productive activity, which in ancient times led to periodic debt jubilees. The modern solution was bankruptcy, where the debt is written down to some level the borrower can pay (or forgiven if the borrower has nothing left, such as in Chapter 7 bankruptcies).

However, no one goes into a cost of capital analysis when their teen daughter gets pregnant, wants an abortion, and needs the Bank of Parents to pay for it, or when someone had a heart attack and needs a bypass to survive. Nor do we do cost of capital analyses when giving time and money to community and charitable activities.

Let me excerpt a 2007 post at some length to demonstrate this problem:

By way of background, the Stern Report was prepared by Sir Nicholas Stern for the UK government, and was the first attempt by an economist to assess the economic consequences of global warming. He concluded that failing to take corrective measures would lead to a reduction in world GDP of 5% to 20% (this is not one time, but ongoing) while taking action now would cost 1% of GDP.

Seems like a no-brainer, right? The problem is that to reach his conclusion, Stern used what most finance types would consider to be an absurdly low discount rate (0.1%, a truly unheard of figure). The reason he did that (there was a whole philosophical gloss in the paper) was that if you used a more typical discount rate (say the 30 year Treasury bond rate, which is about 5%), anything that happens more than 50 out is just plain irrelevant. It’s worth spending only $87 to avoid a $1000 cost in 50 years. If you use a 7.5% interest rate, you’d only spend $27 today to avoid that $1000 future cost. If you extend the time frame to 100 years, you’d spend only $8 if you assumed a 5% discount rate and 72 cents with 7.5%. And it’s not hard to make a case for higher discount rates.

In effect, Stern changed the prevailing approach to make the fact that our actions now could put an end to advanced civilization show up in his calculus.

As we reported earlier, Samuel Brittan of the Financial Times jiggered with Stern’s assumptions and used a higher (but still pretty low in conventional terms) discount rate and concluded that it still made sense to invest now to combat climate change.

The group at Yale that dissected Stern’s paper included famous names such as William Nordhaus and Jeffrey Sachs. They clearly took a dim view of Stern’s procedure, but after a great deal of hemming and hawing, didn’t dispute his conclusion. Even if you can’t make a compelling case quantitatively, the downside scenarios of global warming are so awful that even economics luminaries agree that it’s best to forestall it.

But the way the discussion was framed is revealing:

….In the minds of a lot of American economists, however, the review is a badly flawed piece of work. These economists don’t doubt that earth is getting hotter, that human activity is the cause and that the results could be bad. But they think that Sir Nicholas may have exaggerated the likely speed of warming, among other things, and overstated the case for big, quick action.

The epicenter of the opposition has been here at Yale, and so last week, after stopping in Washington to testify before Congress, Sir Nicholas came to New Haven for a public debate with his critics….

The Stern Review’s most influential critic has probably been William Nordhaus, a 65-year-old Yale professor who is as mainstream as economists come….Mr. Nordhaus wondered if carbon emissions and temperatures would rise as quickly as the report suggests, and Mr. Mendelsohn predicted that people would learn to adapt to climate change, reducing its ultimate cost.

But their main objection revolved around something called the discount rate. The Stern Review assumed that a dollar of economic damage prevented a century from now (adjusted for inflation) is roughly as valuable as a dollar spent reducing emissions today. In effect, the report argues for spending the money to cut emissions because future generations have as much claim on resources as current generations. “I’ve still not heard a decent ethical argument” for believing otherwise, Sir Nicholas said at the debate….

But a dollar today truly is more valuable than a dollar a century from now…. So spending a dollar on carbon reduction today to avoid a dollar’s worth of economic damage in 2107 doesn’t make sense. We would be better off putting the money toward something likely to have a higher return than alternative energy, like education.

Technically, then, Sir Nicholas’s opponents win the debate. But in practical terms, their argument has a weak link. They are assuming that the economic gains from, say, education will make future generations rich enough to make up for any damage caused by climate change. Sea walls will be able to protect cities; technology can allow crops to grow in new ways; better medicines can stop the spread of disease.

No one knows whether this is true, let alone desirable, because no one knows what life will be like on a planet that is five degrees hotter. “If ever there was an example where there was uncertainty, this is it,” said Martin L. Weitzman, a Harvard economist who attended the debate…

As Mr. Weitzman puts it, the Stern Review is “right for the wrong reasons.”….

In other words, it’s time for a tax on carbon emissions.

I’m as fond of math as the next person, but economics as a discipline has migrated over the years such that any really serious, top level work has to be stated in mathematical terms. It may help in terms of apparent rigor, but one can readily find well argued papers that run afoul of common sense. Here at least the critique of the work did not lose sight of what’s at stake.

But don’t be surprised when you see the various criticisms of the Stern Report picked up on the Wall Street Journal editorial pages, sans the acknowledgment that the conclusions are still likely to be valid.

By Sandwichman. Originally published at Angry Bear

Peter Dorman calls attention to a NYT Upshot column by Neil Irwin about the cost of climate change. For Irwin, the question can be framed as a matter of discounting, “A dollar today is worth more than a dollar tomorrow and a lot more than a dollar in 100 years. But what discount rate you set determines how much more.”

As Irwin admits, the discount rate is a “business concept.” His conclusion, then, follows exclusively from a business concept of “how, as a society, we count the value of time.” Why are we compelled, as a society, to count the value of time in accordance with the business concept of discounting? Because there is no other concept of time? No, there are other concepts of time. More specifically, there is a concept of time directly opposed to and critical of the business concept of time. Labor time.

What discounting is to the business concept of time, alienation is to the labor concept of time. Alienation refers not to “feelings” of alienation but to the sale of one’s own time — and consequently autonomy — to another.

For every human being — as for the wage worker — there are 24 hours in a day,  168 hours in a week, 8760 or 8784 hours in a year. These are fixed amounts. You can’t put it in a bank and get it back in 20 years with interest. You can’t take it with you and you can’t convey it to your heirs in a will. Today is here today and gone tomorrow.

The discount rate concept has nothing to do with the qualitative experience of time by humans and everything to do with the quantitative accumulation of money by property owners. Framing the cost of climate change as a contest between different discount rates is totalitarian. We live in a totalitarian society in which the non-business concept of time is invisible. Neil Irwin sounds like a thoughtful person. It simply didn’t occur to him that there was any other relevant concept of time than the business concept.

That is why the climate is changing. And that is why not enough will be done about it. Because it all depends on how capital values time.

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  1. Terry

    the way that economic concepts and methodologies are applied to situations where they are inappropriate, producing garbage-in, garbage out results

    Indeed. The first thing that sprung to mind was MMT. What role does discounting have when it is recognised that it’s not money but real resources that are the constraint?

    The second thing is the debate in my original field of health economics concerning the discounting of money vis-a-vis that of health benefits for cost-effectiveness analysis and cost-benefit analysis. It wasn’t an issue relevant to me and got silly in places so I avoided it. However, the “big names” (!) seemed to agree that to avoid problems costs and benefits must use the same rate. But when they also berate the poor/ill for “using sky-high discount rates” (as “evidenced” by smoking, eating the wrong things etc) they found themselves in trouble in a world where financial discount rates have gone far below the traditional rates used in economic evaluation. It all got too esoteric for me to understand but I instinctively disliked the arguments revolving around what the public do now dictating the rate. Like climate change, people’s behaviour is constrained by political decisions and the economists have (intentionally?) blurred the crucial distinction between positive economics and normative economics.

    1. PlutoniumKun

      Another issue of course with using cost-benefit analysis for any societal aim of course is the inbuilt assumption of a high commensurability of variables – i.e. assuming it all comes down to money. There is plenty of psychological research out there showing that commensurability is very weak, which undermines the entire case for using CBA for anything but very limited and precisely defined issues.

      If people thought the way economists think they do, nobody would ever plant an oak tree.

        1. diptherio

          Not familiar with that one, but incomensurability of values is a very real (and very ignored) issue with CBA. If you don’t understand why, do this thought experiment: 1) place a monetary value on your life, with the knowledge that once you’ve done so you will immediately be given that amount of money and then summarily executed….that’s the whole thing — it’s a one step experiment.

          Some values are obviously not reducible in any meaningful way to monetary values. The mindset that thinks they are, probably also thinks you might be able to rank the relative value of the plays of Shakespeare and the plays of John Madden on a single metric…like overall weight, for instance. Makes perfect sense, no? [/sarc]

          1. PlutoniumKun

            My favourite example is to ask people to answer honestly the following questions:

            1. How much would you pay for the latest iPhone?
            2. How much money would persuade you to live without a smart phone for a year?
            3. How much would you pay for each individual function of a smart phone?

            If asked separately, you will get widely different answers, demonstrating that even for something with a well established market price, the actual ‘value’ is very different.

          1. Oregoncharles

            Whole Earth Review, Brand’s publication, put that story, among others, on a T-shirt (it’s the only one I can remember). That led to another story: eventually, they heard from a rather well-developed woman, who told them that she loved the story but stopped wearing the shirt because it amounted to inviting people to stare at her chest for rather a long time.

            Brand was so interested in the value of time that he founded the Long Now institute, which, among other things, was building a clock to measure millennia. I don’t know what became of that project. He also raised the issue of the information lost when technologies become obsolete; eg, will there be any way to read all those CD’s and DVD’s in a hundred years? Worse yet, magnetic storage decays over time.

            The value of time is a big issue.

      1. Terry

        Oh indeed! My academic career revolved around the Random Utility Model – invented 90 years ago and still going strong, because it explicitly rejects deterministic choices. Of course, because I have largely stuck with the implementation/interpretation that the math psych people have had, I became persona non grata to many economists (hahaha).

        1. skippy

          Rational agent model vs not everything is cookie cutter economics in a dynamic enviroment.

          That’s not even getting in to determinate behavior owing more to environmental indoctrination – group dynamics than rational anything…

          disheveled…. Blacks theoclassical missive vs robust methodology and consideration thingy….

  2. Ignacio

    This is both obvious and important. Humans are ill-equiped to cope with problems like climate change. Not to mention economists!!!

    Nevertheless, economists dare to use their useless models to lecture the rest of humans no matter how wrong they have been even when predicting much simpler outcomes, like the financial crisis and great recession.

    Moreover, people like Mr. Nordhaus even feel the need to cast doubts on climate experts conclusions. Somehow economists, at least mainstream economists, play the same role as priests and friars in the Middle Age: they try to impose their religious beliefs on the rest of humans, control our behaviour, determine what is morally good or wrong in economical terms.

    Unfortunately my english is not good enough to express the frustration that these quasi-religious economists cause to me.

    Pretty much like the Santa Inquisición.

  3. Newtownian

    People interested in this topic might like to read this – it goes into much further detail on this problem Ackerman, F. (2009). Can We Afford the Future? The Economics of a Warming World: Zed Books Ltd, Cynthia Street, London.

    It can be found as an e-book.

  4. David Barrera

    These Yale economists start on the wrong foot. We might be time-as some of the philosophical existentialist tradition would have it-, but we are definitely “not capital unfolding in (through) time”. Assuming their speculative rosy-if-scenario, we could all merrily live in the future under a relatively larger GDP (than otherwise), breathing in and out high-tech extreme weather masks and eating drastic climate resistance GMOs. And do not forget that even their theorizing about time as business of the established big capital has got the concept of time for capital itself wrong before. MMT lovers can understand this easily. Banks lend money because large amounts of deposits and savings by many individuals are not significantly withdrawn in a short period of time???. The latter makes a true possible logic abstraction based on quantity and time; this might tell a lot about bank run fears, yet does not explain how in reality lending or creation of money by banks works ..

  5. loblolly

    Just about all the assumptions economists make are wrong. So regardless of what rate they apply to their assumptions to create the illusion of scientific rigor, they remain assumptions. I’m being polite of course, economists in general are charlatans and fools.

    When the oligarchy gets serious about prosperity for plebes, I might give the tiniest bit of credence to climate change. Until then I am unwilling to consider it in any political calculus. I’d us like to stop funding international NGOs who only appear to create phony advertising campaigns and investment opportunities for their pals.

    Have I mentioned that container ships are a huge contributor to green house gases? You know they burn Bunker C, an oil so foul and tar-like they switch to lighter fuel oil in sight of land? They do this so people wont realize that we are paying multiple times for unnecessary global trade. Once when our jobs go away, secondly when the ocean freight industry gums up the atmosphere burning industrial waste and thirdly when they pressure us to reduce our already minuscule consumer carbon footprints.

    1. HBE

      Thanks, I always wondered why I could see a massive thick plume of smoke coming from cargo ships when they are far out from harbor, but it mysteriously disappears as they approach the port.

    2. diptherio

      when they pressure us to reduce our already minuscule consumer carbon footprints.

      But…isn’t providing for/creating the consumer economy one of the main reasons for all those ships in the first place?

      1. Loblolly

        But…isn’t providing for/creating the consumer economy one of the main reasons for all those ships in the first place?

        Are saying we had no consumer economy before they invented container ships? Or did we have a consumer economy with a much shorter supply chain that provided us with jobs in manufacturing?

    3. Jeremy Grimm

      Very interesting choice of moniker. I haven’t heard that word since my mother died years ago.
      Loblolly — a fitting word for a discussion of climate.

    4. different clue

      I have mentioned about Free Trade causing global warming in past comments of mine. I don’t have the time or patience to look back over near-a-million words to find those comments but I am confident that they are still there.

      As to not giving credence to climate change as long as the oligarchs don’t see fit to permit plebes to recover prosperity, the oligarchs don’t care if you give climate change credence. Many of them hope that you don’t. That is why they have invested so much money in no-change-here propaganda and FUD-sowing. They expect you ( all of us non-oligarchs really) to die off preferentially to their oligarchical selves under the ongoing impact of rising weather-energy.

      In other words, you may not be interested in global warming; but global warming is very interested in you. And global warming does not care whether you feel like giving it credence or not. When you begin to experience megadeath heatwaves and volleyball-hailstones, then you will give it credence regardless of how poor the plebes still are.

  6. Moneta

    The first rule of economics: demand increases as prices go down…

    Then why does demand shoot up as house prices go to the moon?

    Demand is correlated to supply but instead they work with 2 independent curves intersecting at the optimal price.

    1. Moneta

      The scarcer things will become the more they’ll be desired and this will amplify the environmental problems.

    2. diptherio

      Oh no, they’ve got “Say’s Law” which purports to prove that “supply creates its own demand.”

      1. Moneta

        I know but that’s my point: The most basic rules don’t even hold up.

        In economics, everything is correlated so most statistical analysis is futile yet they keep on using the tools in the worse ways.

        You have all these economics students learning the formulas and applying them without understanding the underlying math.

        It’s called mathiness. And this mathiness is being used everywhere. It’s no wonder there is a growing movement against science.

          1. nowhere

            This is in response to the claim about science. Of which, economics, is not really a member.

            1. Oregoncharles

              Allowing fake scientists to call themselves that, with little or no protest, might be one reason science’s reputation suffers.

        1. different clue

          mathiness. If that isn’t an official word, it should be. mathiness. Right up there with truthiness.

          I plan to start using it wherever appropriate. Mathiness. mathiness.

    3. Art Eclectic

      The first rule of economics: demand increases as prices go down…
      Then why does demand shoot up as house prices go to the moon?

      Two different types of demand.

      When house prices go down, demand for affordable living accommodations goes up.
      When house prices go up, demand for a investment vehicle in which value is rapidly increasing goes up.

      It’s two different sets of buyers with two different agendas.

  7. From Cold Mountain

    Ha, economics!

    They asked the wrong question. It is not how much it will cost to fix the effects of climate change in the future, but rather, how much the autoritarian capitalists will charge us to fix it.

    And maybe that is the real reason for the inaction.

  8. Larry

    This comes down to the cowardice of our collective media, per usual. They present everything as a debate and tap “experts” for all opinion and debate pieces. The status quo is that major capital interests have no reason to push for dramatic changes that might reduce the destructive impact of climate change. The media have no interest in pushing for change, just remaining the arbiters or acceptable discourse in the finer halls of America.

  9. diptherio

    Economists: contantly confusing their abstract concepts for the real world, and assuming that their logical leaps are applicable to reality:

    “A dollar today is worth more than a dollar tomorrow and a lot more than a dollar in 100 years. But what discount rate you set determines how much more.”

    This may be true, in some sense, but why would you assume that a lungful of clean air is going to be worth less in the future than it is today? Why would you assume that financial discounting can be applied to determining the value of having an un-flooded subway system in NYC 20 years hence? Because economists, like financiers, are convinced that everything can be solved by price. It’s not a matter of how much damage we’re causing today, it’s a matter of whether we’ll be able to pay to fix it tomorrow. That no amount of money may be able to fix the problems we’re causing doesn’t seem to occur to them.

    1. Moneta

      Knowing that governments and central banks dilute the value of money, there is no way I would ever lend 30 years at 1%.

      The only thing that would make me think of accepting a lower yield would be huge productivity increases over the next decade. Considering planned obsolescence which makes all assets physically depreciate faster requiring more energy and resources just to stay put and a lack of investment due to status quo and kick the can down the road policies, these low yields make me even more jittery.

      So to me, it is astounding to see so much money in 10 year plus at these low rates and I keep on asking myself: “What am I missing?”

      1. diptherio

        So to me, it is astounding to see so much money in 10 year plus at these low rates and I keep on asking myself: “What am I missing?”

        When risk-free assets are flying off the shelves, despite being very highly priced, I would assume that means that a lot of people are expecting a catastrophic collapse and are willing to pay for safety at any price. And if you think US Treasuries are low yield (2.31% on a 30 year note), I hear that across the pond they’re getting a negative yield. That’s my take, anyway…although I could be way off. Hard to know exactly what scams the Maf…er…Wall Street is playing these days.

        1. Moneta

          Then I’d stick to a duration of under 5 years!

          My take is that those buying:
          -Really believe yield will stay this low forever
          -Are forced to due to systemic rigidities. i.e. Asset/liability matching
          -Playing the capital gain game until it rolls over.
          -Don’t have skin in the game.

  10. diptherio

    Here’s my contrarian view on time discounting, that I first presented as an econ undergrad to looks of utter bafflement.

    Assume that everyone’s preferences have equal weight, regardless of when they are living. Assume an increasing population. Since there will be more people living in the future than are living now, an equal weighting of all preferences would mean that the preferences of future people should, by all rights, be given greater weight than the preferences of the people living today.

    Just as I and many others would have preferred that our ancestors had done a better job of cleaning up their messes, or not made them in the first place, so to it seems obvious that future generations will have a strong preference for the current generation to put the time and energy in to create a decent place to live. While we prefer people in the future to take care of it, future people would prefer that past people handle the problems. Since they outnumber us, their preferences should take precedence and we should bite the bullet and make whatever financial investments are necessary. The math proves it.

    1. linda a

      1000+ Morals, ethics and math agree! Also our time on the planet is so small what right do we have to steal from the time of others on this planet by making it uninhabitable.

    2. H. Alexander Ivey

      Yet another argument for population reduction! Yeah, fewer future people means the future people have less ‘say’ so we, the Me Generation, can continue with taking it with us. Love ya diptherio!

    3. Moneta

      Psychology also shows that our current selves are also really bad at knowing what our future selves will really want.

      1. diptherio

        Pretty sure I’ll want clean air and water and a relatively stable climate at all points in the future. Scratch that, I’m totally sure.

        1. Moneta

          How do we explain the large number of really rich still living in cities with high levels of smog?

          1. skippy

            Path dependency

            Association networks


            disheveled…. short list, tho, lest we forget, most have bugout locations around the planet…

  11. Craig Richards

    I’m a simple minded person. Math isn’t my forte. I know this however. If I would have installed a solar system on my roof 15 years ago, I would have paid exorbitant money, and I’d be stuck with my decision, possibly with a system that would now be broken down, and me unable to upgrade due to financial constraints. The technology wasn’t as good. I’d been better waiting until today. I will extrapolate that out and say that I’ll be better off waiting until tomorrow too, after all, don’t they tell us that our knowledge and technology is gaining steam like never before? No one seems to model our abilities when they do the math. The real argument here is who should fund advancement, Free Market Capitalism or Socially constructed Government? Did we need the government to fund the inventions of the 1800’s? Elon Musk thinks both, his business model would die without subsidies for the rich. Is it worth it? Are we not just paying someone off for votes?

  12. Susan the other

    Was Irwin just being a hack? His blablablah about the discount rate was so banal. Summarizing here: If we spend money today it might, gasp, inflate the currency because nobody knows if the money spent in a timely manner to save the planet will actually create jobs and an economy that is in dutiful balance with the half-baked idea of financial capital as a store of value… If it does create this ideal economy of the future then inflation is predictable and controllable; it it does not then inflation can get so high that the discount rate wipes out any capital gains and even creates impoverishment (of capital)… so prudent economists insist on controlling the discount rate by offsetting its increases by imposing higher interest rates which cause more human alienation… grief. There’s nothing new here. But Sandwichman gave us a profound sentence: “…for every human being … there are 24 hours in a day… You can’t put it in a bank and get it back in 20 years with interest. You can’t take it with you and you can’t convey it in a will. Today is here today and gone tomorrow.”

    1. susan the other

      Somebody should do a piece on how time itself becomes a stranded asset – and look at the illogic of a concept of a discount rate for money – when time slips away – as if it can be compensated.

  13. Sue

    “…there are 24 hours in a day…You can’t put it in a bank and get it back in 20 years with interest”
    The poor’s person time
    There are 24 hours in a day. Of these, 8 hours I work at hardly the minimum wage. 1 1/2 more hours I commute to work driving a car which payments, maintenance, gas and insurance equate 1 3/4 daily work hours of my daily work. I spend one more hour picking up my kid from after school. This time plus the after school fees equal 1 1/2 more hours of work. Housing, health care and foodstuffs eat up 7 hours of my paid time, which means that I daily run out of time to pay for my time. I take care of this with credit card debt whose high interest add more time deficit to the time I already do not have. Did I mention I work for an employer who has decided and decides everything for me in advance and I cannot quit my job because I need to feed my family and provide a roof for them to sleep under? If I were to quit my job, I luckily could find another one, which very much pays the same and whose employer has decided and decides everything for me in advance.

    1. Susan the other

      pretty interesting, Margit Kennedy is someone I’ve never heard about. And she wrote that stuff in 1995, based on a century of thinking of people who understood the contradictions in the use of money but failed to change the system. Today the tail that is wagging the dog is the famous 8% interest income needed to pay all those retirement “benefits” and nobody wants to crash that system. Of course that is money that has been invested so it is technically working money, but when the system has grown exponentially for 100 years there are fewer and fewer places to put money to work. It’s a mess.

  14. Eric L Anderson

    As an engineer who once solved problems with a slide rule let me remind all that in a half century we will look back upon today’s technology as medieval. Not only will climate warming effects have been optimized for good purposes in food production and livability in less habitable regions of today but pure manipulation of weather will verify the humor in our current weather forecasting on the nightly news. The degree to which our current unintended weather manipulation impacts warming will be well understood and appropriately guided in balance with investments in adjustments in infrastructure and climate generated opportunities. The current panic serves only politicians.

    1. Moneta

      The myth of progress. While 50 years ago there were maybe 3 billion people living in poverty there are now what, still 3 billion or more living in poverty?

      And despite all this technology the planet is still worse off than it was 50 years ago.

    2. witters

      Nothing personal, just an empirical reflection. But I’ve never heard anything intelligent on any policy issue after I’ve heard this: “As an engineer…”

      1. Eric Anderson

        Thanks, this brings a chuckle, most who know me were surprised that I am an engineer.

    3. Rosario

      Technology is not a panacea. And it is important to realize that all that “progress” would be for naught without energy. This is where the problem becomes less about technology and more about society, politics, and ideology. If we cannot subsidize a transition to renewables using existing fossil fuels, right now, all that progress will be a blip on our evolutionary path.

  15. Oregoncharles

    ” Even if you can’t make a compelling case quantitatively, the downside scenarios of global warming are so awful that even economics luminaries agree that it’s best to forestall it.”

    This reflects a familiar ETHICAL calculus, which is basically that the more catastrophic the potential consequences, the lower the odds we can accept. The familiar application is to nuclear war, nuclear power plant meltdowns, or some possible scenarios with GMOs (I’ll append an example). In each case, the possible failures are so apocalyptic that, arguably, we can’t tolerate even the slightest chance of them happening. This is essentially the opposite of the “value of time” calculus: you set the time discount at zero.

    One reason is in the definition of “possible:” it actually means that given long enough, anything possible
    WILL HAPPEN; aka, Murphy’s Law (which also references entropy.) So how many trials do we allow?

    The GMO scenario: this was told to me as an actual event; now I’m not so sure, but it doesn’t matter; it’s a perfect example of unintended consequences. Someone very clever engineered a bacterium that had BOTH the termite culture’s ability to break down cellulose into sugars, AND yeast’s ability to ferment sugars into alcohol. Waste paper to biofuel, all in one tank. The plan was that the residue would be used as fertilizer.

    As it happened, a graduate student looking for something to do tried out the residue in experimental soil medium (that is, in pots). Nothing would grow. For convenience, they had used a soil bacterium; in the soil, it went right on converting plant residues to alcohol, thus sterilizing the soil. Since it was a common soil bacterium, it could and probably would have spread around the world, once released into a field. A truly apocalyptic scenario.

    1. different clue

      My memory is that the bacterium was a GMO’d form of Klebsiella. The grad student who discovered its deadly potential was Elaine Ingham. She forced it upon somebody-or-others’ attention and permissions to trial it in the Great Outdoors were cancelled. I believe she was persecuted out of academe for that and was luckily able to go into privately profitable bussiness for herself as a soil foodweb explainer and researcher and consultant.

      More recently she has taken a position with the Rodale Research Institute I believe. But that is just my memory.

  16. Mel

    There’s maybe an angle, too, in estimating the real rate of return. Isn’t that, the discount rate net of inflation, what you should be using instead of the discount rate? SO, when everybody realizes that there’s a year left to spend all the money they have before they’re gone, or there’s a year left before society breaks down and all money is worthless, THEN the rate of inflation will creep toward infinity, showing that the real rate of return we should have been using in the model was minus infinity. A singularity.

  17. Rosario

    “Because it all depends on how capital values time.”

    Very true, I’ll add also: and how capital values itself. If the socio-political institutions, which define the measure of capital through fiat in concert with human behavior, cannot define a value for livability (because that is “barely” immoral and impossible by its own standards) the problem lends itself to being unsolvable within the ideology of capital.

    To points more pragmatic WRT the socio-political, what politician in a capitalist country wants to be the first one to say that we are going to have to completely retool society in a largely centralized manner to maintain all of the spectacular technology we have come to rely upon each day (i.e. rational capital is bogus)? Alternatively, what politician wants to tell us that we will all need to revert to a living condition similar to what it was 200 years ago with a peppering of the modern here and there?

    At this point these are the two viable options I see. Capital will absolutely fail because it fundamentally cannot understand the problem it is attempting to solve.

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