The Money Myth

As the party election policy machinations gather pace the media headlines become more and more hyperbolic. One party blames the other that their respective spending plans will bankrupt the country. What do these pontifications mean to us ordinary individuals who know little about the economy? Today’s Daily Mail (10 November) will strike fear into many households, as its headline claims that Labours plans will amount to a spend of £1.2 trillion, costing every UK household 43,000 pounds. Who’s right?

The New Economics Foundation (NEF) offers some sanity and wiser commentary.  They claim that our economic model is failing us. From flat lining wages, precarious work and the threat of environmental and climate breakdown, it’s clear that the way the economy is being run is serving only a few people at the top and leaving the rest of us and the places where we live in its wake. It seems undeniably true that for the last 40 years, the economy has been run according to a misplaced faith in free markets and competition. It’s the myth of neoliberalism, which makes us all believe that the market is king. NEF argue persuasively that after 4 decades it’s time for a change. The big difference between the economics of the last 40 years and current thinking is that there is a mistaken belief that the size of the government’s budget is the same as a householder’s budget. But the government’s job is not to balance its budget but to balance the economy. Herein lies the big mistake as we listen to the politicians make their electoral spending pledges.

Modern monetary theory describes how money works in a modern economy. It starts with the simple recognition that in most countries the currency itself is a public monopoly, which means the currency is only issued by the state. That’s what is meant by a “sovereign currency”. Because the state issues the currency it doesn’t face the same constraints as households and businesses. Countries that operate their own sovereign currency like the UK, US, Japan and Canada spend tax and provide savings with a currency it and only it can create. This means that a sovereign currency issuing government is free to determine its own key economic decisions. It’s interesting that all governments (whatever their political persuasions) have maintained the so-called national debt, which is the accumulation of annual deficits, without default, for more than 3 centuries. So why do politicians currently beat us to death with their dire warnings about how the other political party’s spend money? And why have they persuaded us that austerity is a good thing? The fact is a currency issuing sovereign government like ours which does not borrow in foreign currencies can never be forced to default. Hence its spending decision’s in terms of output and employment, social inclusion, ecological repair and prevention of excessive household debt, which are crucial to the health of the economy and well-being of citizens are not dependent on a balanced budget. It is the role of government to manage its financial flows by monitoring and matching the demand for money with the productive capacity of the nation. Herein lies the answer to the myths that pervade both our media and our political class based on a 40-year-old ill-informed and mythological concept of the economy. 

The Hypocrisy of Academia?

Jonathan Wolff opines that University staff’s carbon use is huge and growing from their international conference travel to almost all parts of the Globe (Guardian What hypocrisy, academics think guiltily.29 October). True, but there is a bigger and more intensely worrying form of hypocrisy because the carbon footprint of the many university campuses here and overseas has grown exponentially over the past 20 years and their contribution to carbon emissions along with that of the thousands of students who travel to and from campus is a major issue and shows no signs of diminishing in the short term. Some years ago, a paper published by staff from the Open University showed that distance learning university courses involve 87% less energy and 85% lower CO2 emissions than the full-time campus-based courses. Part-time campus courses reduce energy and CO2 emissions by 65% and 61% respectively compared to full-time campus courses. But are universities worldwide sufficiently reading the signs of the times? And how far are they addressing the concomitant call from growing numbers of students who want their institutions to take sustainable development seriously in everything they do, and to ensure that what they are taught has an appropriate sustainability focus? Maybe, those faculty who feel the guilt of flying to international conferences might give more serious thought to realigning their teaching to reflect these concerns of their students-perhaps as a form of “cognitive offsetting?”

Storytelling and Climate Change

I am increasingly thinking and indeed currently reading about the myths we are telling ourselves about climate change and the Anthropocene.  It’s strange that the word myth is nowadays used to convey a false belief or idea which is somewhat different today than in former times. It used to mean more weighty matters such as the purpose and meaning of life and how we might guide our planetary existence. Indeed, the myth of more- is the myth of human progress, which has underpinned our unsustainable lifestyles of excessive consumption and waste and in this sense is a linear trajectory towards another myth: our perceived mastery of the planet. The planetary crisis has not been a good story to tell according to one recent and highly readable book entitled We are the Weather: Saving the Planet Begins with Breakfast. Its author Jonathan Safran Foer argues that the story of climate change often does not captivate or transfer and hence fails to convert us and above all fails to interest us.  He goes further and suggests that the fate of our planet has a similar place in literature and is vastly different from that exhibited in the broader cultural and social conversation which is dominating the likes of XR and Greta Thunberg. He suggests that writers are sensitive to what kind of stories that work- ones that stick in a durable sense in our culture like religious texts, pages and passages from history, sensational actions and moral conclusions. How we frame the story often determines how we relate to it and how it may or may not motivate us to act.

Changing how you look at things changes how you see them!

Put another way, it is crucial that we retain and facilitate the ability to think outside the box and the frame.  We need to challenge the way we think about the way we frame questions and possibilities so that we avoid the risks of diminishing our ability to understand and be creative-two key attributes which distinguish people from robots.  With the rise of fake news and the surge in populist politics, the framing of an issue becomes increasingly problematic to all of us and for education in particular.  I was struck by two recent pieces in the Guardian newspaper which reflects this dilemma.

The first was the editorial on education, entitled: It’s not what you know it’s how you know it sketched out a theme which has been etched on the minds of those who promote competencies and key skills in education for sustainable development, notably the teaching of critical thinking.  The author of a recent OECD report it claimed is advocating that all children should be taught to think critically about what they read on the internet, making the case that better evaluation of “what they read on the internet might make fake news less persuasive?”  Nor, as the piece argues is “critical thinking a solution to the closed worlds of social media”.  Indeed, it applies also to our values and belief systems about sustainability.  And, I also agree with the author that simply raising awareness of different points of view is not necessarily the way to shift the deniers especially those climate change deniers.

This leads me to the other article: “There’s another story about climate change. It starts with water” which eloquently sets out the case that the issue of climate change cannot be framed as a single story; to whit, that global warming is caused by too much CO2 in the atmosphere, due to the burning of fossil fuels.  The author correctly asserts that climate change is not the function of a “sole metric” because the blanket of water vapour which envelops the planet acts as a thermal buffer and governs 95% of the earth’s heat dynamics.  And, this is where my research background in plant physiology comes into play because it is plants that manage water, through transpiration.  So, if we want to bring the earth’s temperature back from the brink we need to bring its heat and water dynamics into balance.  The Intergovernmental Panel on Climate Change estimate that every square metre of the earth’s surface receives on average 342 watts of energy from the sun each day.  But, because of human activity we radiate back 339 Watts, a difference of less than 1%.  The remedy?  Better management of our ecosystems with more plant cover.  Music to my ears!

Perhaps understanding why issues are framed should be a key educational objective, in order to help our students enhance their critical thinking? And, like any good teacher, I recommend a readable and insightful book called FRAMESPOTTING by Laurence and Alison Mathews.  It illuminates how frames influence your thinking.