15/03/2021

(UK) ‘We Are Seeing A Crisis In Values’ – An Exclusive Extract From Mark Carney’s Book

The Guardian - 

The former head of the Bank of England looks at the danger of putting a price on everything

Mark Carney at the Bank of England. Photograph: Reuters

Author
Mark Carney is a Canadian economist and banker. He is Vice Chairman and Head of Impact Investing at Brookfield Asset Management as of October 2020.
Mark Carney served as the Governor of the Bank of Canada from 2008 until 2013 and the Governor of the Bank of England from 2013 to 2020. 
Value(s): Building A Better World For All, by Mark Carney, is published by HarperCollins.
A few summers ago when a range of policymakers, business people, academics, labour leaders and charity workers gathered at the Vatican to discuss the future of the market system, Pope Francis surprised us by joining the lunch and sharing a parable. He observed that:

Our meal will be accompanied by wine. Now, wine is many things. It has a bouquet, colour and richness of taste that all complement the food. It has alcohol that can enliven the mind. Wine enriches all our senses.

At the end of our feast, we will have grappa. Grappa is one thing: alcohol. Grappa is wine distilled.

He continued:

Humanity is many things – passionate, curious, rational, altruistic, creative, self-interested. But the market is one thing: self-interest. The market is humanity distilled.

And then he challenged us:

Your job is to turn the grappa back into wine, to turn the market back into humanity. This isn’t theology. This is reality. This is the truth.

In my experience, the upheaval the world has been experiencing demonstrates that it is vital to rebalance the essential dynamism of capitalism with our broader social goals. This is not an abstract issue or a naive aspiration.

For over 12 years, I had the privilege and challenge of being a G7 governor, first in Canada and latterly in the UK.

During this time I saw kingdoms of gold rise and fall. I led global reforms to fix the faultlines that caused the financial crisis, worked to heal the malignant culture at the heart of financial capitalism and began to address both the fundamental challenges of the fourth industrial revolution and the existential risks from climate change.

I felt the collapse in public trust in elites, globalisation and technology. And I became convinced that these challenges reflect a common crisis in values and that radical changes are required to build an economy that works for all.

Whenever I could step back from what felt like daily crisis management, the same deeper issues loomed. Can the very act of valuation shape our values and constrain our choices? How do the valuations of markets affect the values of our society?

Mark Carney: ‘We are living Oscar Wilde’s aphorism – knowing the price of everything but the value of nothing – at incalculable costs to our society.’ Photograph: Toby Madden
As we move from a market economy to a market society, both value and values change.

Increasingly, the value of something, of some act or of someone is equated with their monetary value, a monetary value that is determined by the market.

The logic of buying and selling no longer applies only to material goods, but increasingly governs the whole of life from the allocation of healthcare to education, public safety and environmental protection.

Commodification, putting a good up for sale, can corrode the value of what is being priced.

As the political philosopher Michael Sandel argues, “When we decide that certain goods and services can be bought and sold, we decide, at least implicitly, that it is appropriate to treat them as commodities, as instruments of profit and use.”

Putting a price on every human activity erodes certain moral and civic goods. It is a moral question how far we should take mutually advantageous exchanges for efficiency gains. Should sex be up for sale? Should there be a market in the right to have children? Why not auction the right to opt out of military service?

There is extensive evidence that, when markets extend into human relationships and civic practices (from child-rearing to teaching), being in a market can change the character of the goods and the social practices they govern.

One of the best-known examples was documented by Richard Titmuss in his comparative study of blood-donation systems in the US and the UK, The Gift Relationship. Titmuss demonstrated that in economic and practical terms, the UK system of voluntary donations was superior to the US system, which paid for donations.

He added an ethical argument that turning blood into a commodity diminished the spirit of altruism and eroded people’s sense of obligation to donate blood to support others in their community.

These observations are familiar from the civic response to Covid. None of the voluntary groups that spontaneously formed were paid for the makeshift PPE and protective masks they created and donated. A call for volunteers to help those in the NHS was met with over a million people within days. No citizen drew on a government payment to help elderly neighbours or the homeless in their communities.

This underscores the moral error of many mainstream economists, which is to treat civic and social virtues as scarce commodities, despite there being extensive evidence that public-spiritedness increases with its practice.

My experience in the private and public sectors accords with Pope Francis’s parable. Value in the market is increasingly determining the values of society. We are living Oscar Wilde’s aphorism – knowing the price of everything but the value of nothing – at incalculable costs to our society, to future generations and to our planet.

Once we recognise these dynamics, we can turn grappa back into wine, and channel the value of the market back into the service of the values of humanity.

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Without Changes To Mitigate Global Warming, Summer Could Last Nearly Six Months, Study Finds

Washington Post - Erin Blakemore

Filipino families flock to a makeshift beach in the polluted waters of Manila Bay to escape the summer heat on March 7 in Manila. (Jes Aznar/Getty Images)
If you’ve noticed summers getting hotter and longer, you’re not alone: Climate scientists have had their eyes on an uncomfortable warming trend for decades.

But how much have the seasons changed — and what could be ahead?

A new analysis by Chinese researchers has an unnerving prediction: If humans don’t make any effort to lessen climate change, summer could last nearly six months by 2100.

The study, published in Geophysical Research Letters, used temperature data to track seasonal changes in the Northern Hemisphere between 1952 and 2011. The researchers defined the start of winter as the onset of the coldest 25 percent of temperatures and summer as the onset of the hottest 25 percent.

On average, winter waned from 76 to 73 days, spring shrank from 124 to 115 days, and fall fell from 87 to 82 days.

People gather on Southern California’s Venice Beach in September 2020 as temperatures soar, sparking concerns that crowded beaches could allow for wider spread of the coronavirus. (Mario Tama/Getty Images)

But summer ballooned over the 59-year period, growing from 78 days to a whopping 95.

Then the researchers used the data to project what might be to come in scenarios with different climate change curbs. The worst-case scenario model saw winter shrinking down to less than two months a year and summer lasting nearly a half-year.

That could wreak ecological havoc, disrupting agriculture, causing species’ life cycles and migrations to fall out of sync, and increasing the risk of drought and severe fires.

Humans would suffer, too: Warming summers are already projected to cause additional deaths due to heat stress, malnutrition and malaria, and longer growing seasons mean more seasonal allergies because of pollen. 
  
Changes in average start dates and lengths of the four seasons in the Northern Hemisphere mid-latitudes for 1952, 2011 and 2100. Credit: Wang et al 2020/Geophysical Research Letters/AGU.

Fortunately, the worst-case projection isn’t inevitable. If humans continue to mitigate climate change and manage to curb carbon emissions, summer probably won’t get as long.

The data is sobering, however — and shows that the seasons have already shifted. “Even if the current warming rate does not accelerate, changes in seasons will still be exacerbated in the future,” the researchers write.

Human-caused climate change has already altered our world, pushing us closer to a seemingly endless summer.

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(AU) Disclosing Climate Change Risk In Bonds A Costly Challenge: RBA

AFR - Matthew Cranston

The Reserve Bank says the disclosure of climate change risks in the sale of government bonds would create significant challenges and costs for governments, but has welcomed the inclusion of any meaningful risks to better inform investors.

Activist investors have signalled that companies and governments face growing risks of litigation over their climate change disclosures and emissions-reduction policies.

CBA’s Martin Whetton says green bonds do not come at the detriment of existing debt. Louie Douvis
Late last year, the government’s debt manager – the Australian Office of Financial Management – faced legal action from an investor who claimed it should have disclosed climate change as a risk in the value of bonds. The AOFM has pushed back on such a suggestion. A court hearing date has not been confirmed.

In response to questions on notice from Greens leader Adam Bandt about the need for such disclosures, the RBA has highlighted the burden issuers would face if they had to outline such risks.

“From the perspective of the issuing entity, there is some cost to gathering and presenting additional information,” the bank said. “This is a particularly challenging exercise for sovereign bonds.”

The Reserve Bank, like the AOFM, emphasised that no other country discloses climate change risks in its sovereign bonds.

“Disclosure of climate change risks relating to sovereign bonds is not currently common practice,” the RBA said in its response.

Sovereign bonds do not even outline interest rate risk, considered a far more tangible factor in calculating the risk for bond investments.

A matter of government policy

The RBA did suggest, however, that investors would benefit from the knowledge of “meaningful” and “material” risks from climate change.

“For the financial system as a whole, meaningful and useful disclosure of material climate change-related risks allows investors and institutions to assess and price climate-related risks and opportunities,” the RBA said.

However, the bank said the need to disclose such risks would be solely a matter of government policy.

By financial year 2023, the federal government is expected to have $1 trillion in total debt on issue.

Mr Bandt said the RBA’s comments might not have shown support for such disclosures, but they were an admission of sorts that more could be more done to assess the risks of climate change.

“Although the RBA thinks the Morrison government won’t be owning up to the climate risks of its spending anytime soon, it is keeping an open mind about whether that’s the right approach,” Mr Bandt said.

“The RBA is giving the government a gentle prod on climate action, leaving the door open to factor in the climate risk of government spending.”

Commonwealth Bank head of fixed income and FX strategy Martin Whetton said trying to incorporate the risks of climate change into disclosures would be difficult for existing bonds.

“It would be impossible to rewire $930 billion of debt with tenors stretching out for 30 years so that they are ESG compatible, as bond proceeds would have to be for specific purposes,” Mr Whetton said.

He said investors were not demanding such disclosures on existing bonds and that those more conscious of risks to do with environmental, social and governance (ESG) were investing in new green bonds, at no detriment to existing debt.

“Investors are not showing any concerns about ESG compatibility on existing debt,” he said.

“There is a whole new market going up in green bonds which does not affect the pricing of existing government bonds. In fact, what we have seen is that it lowers the overall cost of funding for government, for example as has been seen in Germany.

“What could be looked at is a program of ESG debt into future years. The UK has recently announced a program of green debt alongside its existing debt.”

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