Biologist123

Hoping for a cryptic answer?

Man, if Australia can’t work this one out, there’s not much hope for the rest of us.

I work in a sector where due to poor English and writing skills, OpenAI has been quite transformative in the quality of emails being sent - to me at least. But…I find my eyes glossing over when I notice ChatGPT’s telltale signs. Also on matters of substance, ChatGPT has a way of saying nothing at all - it writes in glittering generality and in a way that can feel devoid of context. I’m quite pro AI as an editing tool, but I think it would be a great loss for people to lose the capacity for writing.

I sent the essay to several people, and a few wrote back to say they thought the writing excellent. This is not to undermine your point of view. You’re perfectly entitled to it. Rather to wonder what it is that causes different tastes and preferences to form so deeply.

Hey, didn’t you respond on quite an insightful comment which subsequently disappeared? Any idea what happened to it?

The one thing we must do is somehow the one thing we cannot do. It’ll send you crazy if you think about it too much.

> You may not like FB, IG, TikTok, etc.. I certainly don't care for any of these products. But these are communications platforms. Restricting the right to free speech does have negative consequences

You’re conflating these tech platforms with freedom of speech. It might be helpful to the debate to separate out the addictive algorithm and user base from people’s right to think and speak freely.

Thank you for your thoughtful response.

> Would you at least agree with me that the IRA was a good law, and it is real progress towards our green goals?

I’m not American and whilst I’m aware of IRA and it’s broad objectives, I needed to look up some precise specifics. From McKinsey:

“Significant federal funding for climate efforts. The IRA directs nearly $400 billion in federal funding to clean energy, with the goal of substantially lowering the nation’s carbon emissions by the end of this decade.1 The funds will be delivered through a mix of tax incentives, grants, and loan guarantees”.

On the face of it, that sounds like good law and big bucks. Public money for public goods where there is market failure. You are right.

I also appreciated your point that lobbying to prevent new regulation is not hard.

I suspect you might also follow the logic that financing both sustainable business on the one hand, and unsustainable business on the other hand is plain and simple playing both sides.

The banking sector response to this is to say it is for governments to legislate which businesses are legal and which are not, and not to use banking regulation to suffocate unsustainable business by the back door. The head of the ECB has himself said as much.

This seems like a legitimate response until you realise that banks are powerful actors in many industry bodies lobbying against reduction in fossil fuel production, ie stopping unsustainable business in a more direct and transparent way.

As per the Bloomberg piece, after the Glasgow COP when the banks made big promises, they then went home and did their homework and realised they’d go bust if their unsustainable clients were cut loose.

Thanks again for participating in this discussion. It helped clarify my own thinking and I learned something new about the lobbying process. How to stop fossil fuel production has eluded everyone for decades. We probably won’t solve it today!

Thanks for your response. Reading it, and your references to ESG lending, it appears we are talking across terms.

If lack of clarity in my proposed problem statement was the reason for the confusion then my apologies. Let me state the problem less abstractly and point out that in particular the problem statement is not about ESG lending.

1. Bank credit policies allow continued investment in fossil fuel extraction projects, meaning those projects go ahead.

2. Regulation could force a change in those credit policies, but regulation has not happened as banks have lobbied against them.

You state conspiracy theory, but again this is layering in value judgement into an hypothesis that is either correct/incorrect. Incidentally, depending on your definition of lobbying, the parent Bloomberg article does provide evidence of bringing influence at a closed event (arguably lobbying) and my general assumption is that Bloomberg is a credible source.

That said, as mentioned before, the problem of climate change could be solved by stopping fossil fuel production. But powerful actors prevent this. This may be with good reason, eg national security concerns, lack of political support, etc.

> It’s simple. Tax the externality. In this case institute a carbon tax.

A currently popular idea is “a revenue neutral carbon tax” in which funds raised are paid back out to low emitters.

Maybe the progress of this idea will be a good benchmark for whether we’re a well functioning democracy. I appreciate this sounds cynical, but I mean it sincerely.

> One solution could be to try and identify what tools we have in our collective toolbox to taclke the problem at hand. Another solution is to blame the banks that they don’t have enough civic virtue. To me it looks like one of these two solutions is more likely to work than the other.

You’re layering in a value judgement here about the civic virtue of banks into a problem statement which I hope can be evaluated on factual accuracy rather than values. If the problem statement holds, the solutions can then be debated and the toolkit of solutions evaluated for the job.

1. Banks have a powerful ability to determine which projects happen and which don’t through the credit mechanism. Because often times no credit = no project.

2. When projects are evaluated on narrow financial criteria, wealth can be destroyed rather than made. The project will create free cashflow and the loan will be repaid, but the credit issuance process will not take into account whether the project is a net benefit to human wealth across other important metrics such as environmental and human heath.

3. Banks lobby to prevent the credit issuance mechanism being broadened to exclude projects which move costs onto third party balance sheets.

You’ve pointed out a possible problem with the democratic process, so maybe the above is really a symptom and not a true root cause, which in fact would be something along the lines of:

Powerful economic actors stymy reform of the economic system to favour financial profit at the expense of sustainability.

[Edit: for inclusion of final two paras]

Firstly, I entirely agree with your point about planned economies. I would go slightly further and say that any system where power is centralised to too small a range of actors ultimately fares poorly, and monopoly of any type of power, government, industrial, financial, tends to lead to abuse. I’ve been wondering recently whether western economies despite not being planned are increasingly de facto centralised due to a high degree of monopoly and control by a narrow interest group.

Secondly, financial incentives are very powerful if correctly designed. At the moment they are used for things like subsidising hydrogen or adaptation technologies. But they are not deployed - for example as penalties - to deter investment in stuff that is net damaging to human wellbeing. We have a situation where banks are both financing companies that create climate change and also companies that create climate change solutions. Aside from that being GREAT business, it’s also the type of problem that might arise in a centrally planned economy (to the first point).

Your (good) proposal is in fact formal G20 policy to meet the Sustainable Development Goals via the Hamburg Declaration. It is seen to have two problems: firstly, it is not politically viable to do it at scale as democratic countries won’t accept an arrangement where private profit is derisked with public money. Rightly or wrongly. Secondly, it solves the problem of creating an incentive for public goods. That’s great, but does not disincentivize public bads which I mentioned above.

That’s a comfort to know, as that is precisely the type of project I build. I arrange guarantees for working capital loans to farmers which include in their terms requirements for a transition to sustainable agricultural practice.

But this doesn’t get around the problem: how to stop financing of projects which damage the environment? And that’s also the problem raised in the parent Bloomberg article. The usual response is that government must legislate to stop these businesses. But the reality is that governments won’t do something banks don’t want. That’s the Catch22 I described in my first comment.

> But what exactly are you even asking the banks to do?

I don’t think I’m asking banks to do anything in that comment.

What I am trying to do is set out a problem statement, and given your knowledge (and handle), I’d greatly appreciate your input on it:

1. Banks have a powerful ability to determine which projects happen and which don’t through the credit mechanism. Because often times no credit = no project.

2. When projects are evaluated on narrow financial criteria, wealth can be destroyed rather than made. The project will create free cashflow and the loan will be repaid, but the credit issuance process will not take into account whether the project is a net benefit to human wealth across other important metrics such as environmental and human heath.

3. To avoid the competition issue, governments could regulate to change market rules, but banks themselves frustrate this by lobbying against change.

If we have agreement on a problem statement, then we are in a position to discuss responses. Your response might well be do nothing, but that should be justified to be credible.

Thank you for the opportunity to exchange views on this. I’m currently trying to write up my professional experience. I’m finding it challenging, but your response and the dialogue helps me sharpen my own understanding and thinking.

Most of my career has been spent building mechanisms to pay the private actor as you suggest. It works well at one level. But the problem is that there isn’t enough government money in the world to pay off all private actors needed to get to sustainability. The other thing to recognize is that banks create money far more than governments do, and they create it to finance projects which likely destroy more wealth than they create: just not wealth in a strict financial sense. Is blaming banks ineffective? The blame probably lies with the system which allows banks to determine the future, and to make that determination on the basis of what creates narrow financial value to a small group of insiders to the exclusion of other values such as environmental, good relations between people etc.

I don’t have any beef with the bank mandate per se, their social utility is the allocation of resources to what society finds most useful. But that valuable mechanism breaks down if non-financial values are excluded from credit-scoring systems.

Maybe those aren’t the strong examples I believed them to be. My understanding was that both Kodak and Nokia struggled to adapt to the requirements of a new age, which is the point I’m making about banks, that like many businesses, they are not wired for change.

This was very good. I’ve been working at the intersection of climate and finance for nearly 20 years, and I would add the following points to augment the story told in the podcast (article available on Apple Podcast).

1. Banks have enormous power to determine what the future looks like. This is exercised via licence to make loans (and issue money) from nothing more than a ledger entry. That loan or ledger entry often dictates the future as without credit projects don’t happen and business operations aren’t viable.

2. On a neutral reading, asking banks to change their practices is a bit like asking Kodak to make digital cameras. Banks are wired for issue of loans using their existing risk analysis tools. Adopting to a new world in which they must onboard new tools to assess climate risk is like asking Nokia to make a good smartphone.

3. On a less neutral reading, banks have a fiduciary duty to their shareholders over and above the well-being of a wider group of stakeholders. Add in that banks are staffed with employees very focused on material and financial gain, so the legal obligations are reinforced with internal cultural expectations. Banks are filled with people who don’t really want to undermine their very lucrative hustle.

4. Banks claim that they need government support and regulatory change to help them make an adjustment and level the playing field to make climate action viable. But they lobby against precisely those statutory changes that are needed. A climate catch 22.

Afrikaans is basically low German, spoken in much of northwest Europe. Although Afrikaans throws in a few peculiarities (eg piesang - also Bahasa Indonesian). I know school history likes to pretend Afrikaans is Flemish, but really Flemish is just another low German dialect. I’d also say I’ve liked most Afrikaners I’ve met, didn’t encounter much racism, and Jan Smuts is a fascinating character.

I’ve wondered if the democratic process is really a civilized form of scape-goating. Elections are a pressure valve, meaning incumbent parties are ejected from office and fresh faces brought in, albeit often with little change in the policies that caused pressures to build.

He’s right in the sense that people, in today’s set up, don’t want to pay. But can we imagine a different choice architecture where people don’t mind giving up the black stuff?

I hear what you’re saying, that children should be educated about the reality they find themselves in. If that is the case, and I would say their are exceptions until children are older, then strong guidelines are needed, partly because acting out of trauma is rarely a good idea. Secondly, because a full reality must be imparted including that projections are based on modeled outputs, and modeling complex systems is inherently problematic, there are many problems facing humanity, and resources must be rationally allocated between all.

The writer says: “[My children] are more viscerally worried about climate change”.

I’m not surprised.

I recently heard from a friend that her 7 year-old child had, as a class assignment, to create a timeline setting out the impact of climate change over their lifetime.

I was gobsmacked, and feel this amounts to a form of psychological child abuse. It’s a serious problem, don’t get me wrong, but having a small child labour to visualize modeled outputs is traumatizing. It’s really made me wonder about how reality morphs into millenarian thinking.

A doctor friend refers to them as the chlamydia apps. But still uses them frequently.

The job of corporate lawyer is so singularly awful, with awful colleagues, the firms have to pay the salaries as that is all there is.

That would seem a fair insight.

But then wonders what the drivers are.

I wonder if Rosling’s conclusions are confounded. The human and environmental systems in which we swim are complex, not simple. Education being the key driver of population numbers strikes me as overly simple.

Anecdata: investment in robot and 3D builders is ramping up in Germany in response to labour shortages and increasing costs. Source: a German friend in the sector.

I guess it’s good this issue is being openly discussed. Having a good problem statement is always a good start. By contrast in the UK, deindustrialisation of the 80s/90s/00s was not a massive political topic. And the ensuing enshittification of the economy caught many by surprise.

I really like this idea. There’s obviously a point where an idea crosses the membrane between individual human and human collective for the first time. And that is obviously not in universities anymore.

People he met at parties. That said, it was a popular essay, not academic research.

I’d also say, it is an important question to ask: do our economies deliver meaningful work? Does it matter? Is my job meaningful to me, and what does that mean?

The fishing project was not mine. It’s an example of one where the results were not expected and the organisation involved shelved the findings, which might be illegal under this new European directive.

Factory trawlers don’t fish inshore reefs where artisanal fishermen tend to be active. You’re conflating two different activities in two different marine resources.