Most businesses fail; high failure rate correlates to high innovation; attacking green investment failure dumb.

Via this Gruaniad comment, this article listing `faltering or bankrupt' US green companies that have received government money.

Krugman provides the basic riposte: "because the private sector never ever puts money into ventures that end up failing." But I thought it worth throwing in a couple of things from here - from Albert Bravo Biosca's `growth dynamics' presentation. The data is from a UK pespective but compares to the US and Europe.

1. Of UK businesses that started in 1998, ten years later only 37.5% survived. Only a very small percentage had anything like strong growth in that ten years.

2. A "5% increase in share of static firms = 1% lower annual TFP [technological frontier of production] growth" . So more stable firms in aggregate means less innovation overall.

So: businesses fail - the majority, in fact. And high failure rates actually correlate to higher innovation overall. The presentation also has data showing Europe to be more static than the US too - there is thus both higher churn and higher innovation overall. Creative destruction indeed.

Of course, people citing failure of government-supported firms generally oppose government intervention of any kind. But in order to make the case they want to make, they'd have to demonstrate those investments are always worse than comparable private sector support. They'd also need to show some statistically significant difference of failure rate between green tech and other business investment. Given how many firms fail, though, a strategy of "listing failed firms" is pure cherrypicking. Shock.

As Ha Joon Chang's Bad Samaritans explains in some detail (echoing List) governments have often provided support and a degree of protection to fledgling industries. The trick is to strike a balance between that and propping up unsustainable organisations (or deciding that some service isn't suitable for the private sector. I know, some people don't really understand those last six words...)

The rest of the presentation is well worth looking through for US/Europe comparisons and some great data-driven contradictions of common business memes (e.g. there are no `high growth sectors'; high growth is a stage some businesses go through; most high growth is from firms over 5 years old...)

Hope is an axe you break down doors with

A quote from Rebecca Solnit via Caroline Lucas talking at the closing session of the Tyndall Centre's radical emissions reduction conference:

Hope is not a lottery ticket you can sit on the sofa and clutch, feeling lucky. It is an axe you break down doors with in an emergency. Hope should shove you out the door, because it will take everything you have to steer the future away from endless war, from the annihilation of the earth's treasures and the grinding down of the poor and marginal... To hope is to give yourself to the future - and that commitment to the future is what makes the present inhabitable.

Decoupling growth from resources: scary numbers via Jorg Friedrichs

From Jorg Friedrichs' The Future is Not What it Used to Be (p.3-4):

For the sake of the argument, assume that world economic output continues to grow by 3 percent per annum. This implies that global GDP will double within twenty-three years, and quadruple within forty-six years. It also implies that, a century from now and other things being equal resources consumed and pollutants emitted will have increased by a factor of more than sixteen. It is easy to see that such enormous growth would not be sustainable. The obvious objection is that resources consumed and pollutants emitted can be reduced by efficiency gains and other forms of technological progress. So let us assume, again for the sake of the argument, that resource intensity and thus pollution can be reduced by a fairly ambitious 50 percent. Even so, under the above scenario, a century from now the world economy would consume eight times as many resources and emit eight times as many pollutants as today.

To continue the thought experiment, let us demand that the world economy should grow for a century by 3 percent per annum, but without any increase of resource consumption and pollutant emissions. By how much would it be necessary to abate the resource and emission intensity of the world economy (resources consumed and pollutants emitted per unit of GDP)? The answer: by a staggering 94.8 percent. To reconcile a century of 3 percent growth with the more ambitious goal of reducing resource consumption and pollutant emissions, the abatement of resource and emissions intensity would have to be even more drastic.

New feudalism?

Way back in the grimey fog of history (2001, I think), a lecturer of mine mentioned new feudalism. It's an idea reflected in the neon-drenched sci-fi of Gibson and cyberpunk before that. It meshed well with dystopic futures (and presents) like those described in Monbiot's Captive State, as well as my old discipline's natural focus on the nature of the state and sovereignty.

An anecdote in this piece by David Simon reminded me of those arguments, and of the occasional old flicker of dystopic visions I get (or possibly utopian, depending on one's particular view of corporations). He's talking about how US health care politics plays out in people's minds:

"The argument comes down to: `Goddamn this socialist president. Does he think I'm going to pay to keep other people healthy? It's socialism, motherfucker.' What do you think group health insurance is? // The treatment comes because you have enough people in your law firm so you're able to get health insurance enough for them to stay healthy. So the actuarial tables work and all of you, when you do get sick, are able to have the resources there to get better because you're relying on the idea of the group.

"When you say, OK, we're going to do what we're doing for your law firm but we're going to do it for 300 million Americans and we're going to make it affordable for everybody that way. And yes, it means that you're going to be paying for the other guys in the society, the same way you pay for the other guys in the law firm... Their eyes glaze. You know they don't want to hear it. It's too much. Too much to contemplate the idea that the whole country might be actually connected."

But maybe it's not about anyone's view of a whole country being connected. It might well just be what people view as acceptable collectives. Here in the UK, the European Union abjectly fails to garner that kind of sense of collective purpose, but we are generally more favourable to viewing the country as connected (and, generally, value the NHS as a reflection of that connection).

Perhaps the idea that healthcare and other life benefits should be provided by the firms we work for is simply more politically acceptable to many than expecting the US government to do it. One might speculate on reasons. What makes a certain kind of collective sovereignty, felt rather than theorised, more-or-less function in the UK, in a bimbling fashion? (Or, England, or... um.) Would an EU-wide health insurance scheme face the same problems Obama has? On the face of it, America clearly has a massively more developed collective sense of itself than Europe does - so what's going on?

At any rate, any new feudalism of corporate fiefdoms would miss most: the majority of businesses are still SMEs, much less able to provide large-scale cover. That still looks a fair bit like both David Simon's vision of two Americas, as well as Gibson's worlds of towering corporate castles hugged at ground level by an excluded underclass.

Osborne vs OBR

Osborne: "thanks to the sacrifice and endeavour of the British people, I can today report the hard evidence that shows our economic plan is working."

Office for Budget Responsibility (PDF), from first two paras: "we judge the positive growth surprise to have been cyclical, reducing the amount of spare capacity in the economy, rather than indicating stronger underlying growth potential. We do not expect the quarterly growth rates seen during 2013 to be sustained in 2014."

Osborne sets up OBR. Osborne ignores it, picks own message.

Note also: mainlymacro picks up on the OBR deducing Osborne's current plans imply "government consumption of goods and services falls from 23.2 per cent of nominal GDP in 2009 to 16.1 per cent by the end of the forecast period [2019], its lowest on record in data back to 1948."

The next five years

Kevin Anderson via the Tyndall Centre's radical emissions reduction conference page:

"The next five years for the principle emitting countries of the world - in that I also include the 300 million people in China who live lives like those of us relatively wealthy ones within the EU - if the high-emitting people on the planet have not radically reduced emissions [within 5 year's time] we will have effectively locked ourselves into a high carbon future. We will have locked the poor people around the planet, our own children and most other species into a future that will be somewhere between detrimental and disastrous. It's hard to know exactly how that's going to play out, but it's not a future you'd want to bequeath to your own children, let alone other people's children, let alone the planet itself. I think we're on that cusp. The rate of emissions growth is so rapid, if we don't come off that curve in 5 years from now, the emissions will be so high that we're talking about 3 to 4 degree type futures."

Wind: £3.33 billion per GW (cancelled) vs nuclear: £5 billion per GW

We just lost a proposed £4 billion, 1.2 GW offshore wind installation. RWE cite `technological challenges and market conditions'. We're spending £16 billion for 3.2 GW of nuclear and a whole load of uncertainty about waste the taxpayer appears to be responsible for.

Offshore windfarm: £3.33 billion per GW vs nuclear: £5 billion per GW. Oh good. (Looking here the windfarm output figure is an annual average output based on meteorological models/data, not peak output, so should be comparable.)

Let's hope this was more `technological challenges' than `market conditions' and that the market conditions didn't include mixed signals from government. Losing 1.2 GW of carbon-free generation right now? Madness. (Yeah, I know there's carbon in the production of wind turbines...)

I'm for nuclear too: despite the issues involved, Hinkley Point is still 3.2 GW, whatever the per-watt price. But it's awful to see projects like the Atlantic Array get so close to reality and then fail.

Don't know enough about fires

"You have millions of people here in the affluent part of the planet who turn their heads. They see the house on fire; they see the child screaming from the upstairs window, and they say: I’ve got to go to the library and read a book about combustion because I don’t know enough about fires."

Danaher, K., ‘Changing Culture: Choosing Life over Money’, in Welton & Wolf, (Eds.), Global Uprising, (2001, Canada, New Society Publishers), p.28

Cars shape places. So what will places look like in a hundred years' time?

A quote from Ed Glaeser:

"The internal combustion engine was more than just another, faster commuting technology. The car is a point-to-point transit method while all of the older technologies were essentially hub-and-spoke, where people walked to a stop and then took the bus or train. The car made it possible to live at lower densities since it was unnecessary to walk to any bus stop or to walk to get groceries or perform any other function. The second impact of the internal combustion engine was to break down the traditional monocentric city. These cities were generally built around a port or a rail yard but that transportation infrastructure became increasingly irrelevant over the twentieth century. Trucks don't require central stops and as a result, factories could be decentralized. The decentralization of employment has led to much flatter cities that look and feel completely different from the monocentric cities of the past." (Glaeser, `Cities, Agglomeration & Spatial Equilibrium' 2008 p.46)

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