Hansen v. Krugman: Are You Serious?

[Portions of this post are taken from my work in progress, with the working title “Driven.” Copyright and all rights reserved.]

The contrast could not have been more stark in the side-by-side Op-Ed pieces in today’s (December 7, 2009) New York Times. James Hansen, head of the NASA Goddard Institute for Space Studies (but writing only for himself) writes eloquently of the folly of the proposed “Cap and Trade” (Hansen terms it “Cap and Fade”) rules for supposed reduction of greenhouse gas emissions. Sitting cheek-to-jowl, as it were, to Hansen’s piece is Nobel Prize winner Paul Krugman’s diametrically opposed opinion on the same subject. Krugman asserts that Cap and Trade is a market-based solution to the ills of excessive atmospheric carbon emissions.

Hansen, whom one might term a realist, points out what should be obvious. Cap and Trade is at best, at best, a zero-sum game. He does not use this terminology, but he rightly writes that Cap and Trade will at best perpetuate the pollution it supposedly will eliminate, and may well make it worse. Hansen uses the failure of the 1990 Clean Air Act to do much to ameliorate sulfur dioxide emissions from power plants. Cap and Trade for carbon emissions will just be one more bonanza for Wall Street. Hansen does not say so himself, but to my mind, providing profits, not only for the Wall Street kleptocracy, but for Capitalism in general, is the real purpose and objective of the Cap and Trade scheme.

The inestimable Dr. Krugman, liberal that he is, doesn’t miss a chance to excoriate the right, as usual, and with irony he surely does not perceive, by trumpeting the glories of markets. Krugman’s claim is that Cap and Trade is a wonderful tool for saving the planet, precisely because of the financial incentives offered thereby. Hansen, no economist he, a big plus from my point of view, shows how those “financial incentives” are illusory. The good Professor Krugman, on the other hand, writes “(M)aybe I’m naive, but I’m feeling optimistic about the climate talks starting in Copenhagen on Monday.” Well, yes, most decidedly. Well, that’s so if his motives are what they seem. To believe that a corporate plutocracy will give up its prerogatives without being forced to do so is as naive as one can get. Krugman uses what he terms the success of the same efforts to reduce sulfur dioxide emissions Hansen says were a failure as evidence that Cap and Trade, thanks to the magic of the market, works. Krugman concludes with “So let’s hope my optimism about Copenhagen is justified. A deal there (emphasis mine) would save the planet (sic!) at a price we can easily afford (again emphasis mine) – and it would actually help us in our current economic predicament.”

In modern economic thinking, human values are not of any value, so to speak. Productivity increases are prima facie good. The idea that productivity increases engendered by layoffs of non-managerial workers might be hard on those laid off is simply not worthy of consideration. It is an “externality,” as the late Professor Friedman assured us with monotonous regularity. Worse than any mere externality is any idea that just perhaps we might get along with less stuff while maintaining a good quality of life. Why? Simple. It would interfere with profits, the be-all and end-all of the American Way. Lost in both Dr. Hansen’s piece and Prof. Krugman’s is the revolutionary idea that less is more and that “small is beautiful,” as E. F. Schumacher asserted so long ago in his ground-breaking book of the same name.

Today’s “economy” is essentially about using money to make more money, which is all finance capitalism really is, and has less and less to do about actually making a tangible product, which industrial capitalism does to a fare-thee-well. When a product is made, it’s done more and more using slave labor in other countries, of which apologists such as Nobel Prize winner Paul Krugman approve (1) , because the house slaves should be grateful as they are better off than the field slaves (2) . In his very first column for the New York Times (3) Krugman, a persistent advocate of globalization (though admittedly a little less so recently) wrote “ … it is a sad irony that the cause that has finally awakened the long-dormant American left is that of – yes! – denying opportunity to third world workers.” This was in 2000, the same year Naomi Klein published her ground-breaking polemic against corporate branding that also revealed in disturbing detail the unconscionable actions of U.S. multinationals against local cultures and populations resulting from globalization and the infamous Export Processing Zones (4). It was five years after publication of David C. Korten’s marvelous work “When Corporations Rule the World” (5).

The function of government has become to take money from the poor and the middle class and transfer it to corporations, financial institutions, and even individuals with no questions asked. This can take the form of direct subsidies, such as the corn subsidy that along with NAFTA allows U.S. producers to sell genetically modified corn to Mexico below cost, thereby contaminating the birthplace of maize with GMOs with unknown consequences, and bankrupting peasant farmers for their own good. Or it can comprise taking our money and giving it to the professional thieves on Wall Street. As usual, the government “spreads the wealth” all right, but from the poor and middle class to the wealthy. Were the money to flow in the opposite direction, the capitalists would label it socialism. There are many other ways government can move money from you and me to the corporate and banking pickpockets.

Pundits such as Prof. Krugman deliver pearls of wisdom to the great unwashed (such as yours truly), but it is all about how wonderful capitalism is and at most how to make the capitalist system work more smoothly. But it doesn’t work, and never will, except in the short run. A way must be found to build a system that works for all people such that the planet has a chance of survival. The way things are going now chances are slim to nonexistent.

1. Krugman, Paul, “The Great Unraveling,” W. W. Norton & Company, New York, 2003, pp.367-37. originally published in Slate November 24, 1999 as, believe it or not, “In Praise of Cheap Labor. ”
2. With apologies to Brother Malcolm.
3. Krugman, Paul, “Reckonings; Once and Again,” New York Times, January 2, 2000.
4. Klein, Naomi, “No Logo,” Picador USA, New York, 2000. See esp. chapters 9 – 11 and 14, 15, 18 and the Conclusion.
5. Korten, David C. “When Corporations Rule the World,” co-published by Berrett-Koehler Publishers, San Francisco and Kumarian Press, Bloomfield, Connecticut, 2000. The first hardcover edition was published in 1995. See also the expanded 2nd edition of 2001.