22 February 2022. Disasters | Bitcoin
Climate change gives politicians a free pass for policies that amplify disasters. Bitcoin’s trust problem.
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1: Climate change gives politicians a free pass for policies that amplify disasters.
We’re increasingly blaming disasters on climate change. And that might be regarded as progress—at least people are making those connections now. But as the science writer Fred Pearce points out in Yale 360, this means that many of the policy and planning decisions that contribute to disasters are getting a free pass.
There’s an important consequence to this. Changes that would reduce both the likelihood and severity of disasters, and which could be implemented far more quickly than fixing climate change, are overlooked.
His article starts with the flooding in Germany last summer, which killed 220 people. Climate scientists pointed out that global warming meant that such floods were nine times as likely as they had been.
(Flooding in Hagen, Germany. Photo by Klaus Bärwinkel via Wikipedia, CC BY-SA 4.0)
But there was a significant contributing factor:
Hydrologists monitoring the river flows say that the spread of farms in the once-boggy hills where the rainfall was most intense had destroyed the sponge-like ability of the land to absorb heavy rains. Field drains, roadways, and the removal of natural vegetation channeled the water into the rivers within seconds, rather than days. That suggested a way to prevent future floods here and elsewhere that would be much faster than fixing climate change. Unpublished analysis... had found that blocking drains and removing dykes to restore half of the former sponges could reduce peak river flows during floods by more than a third.
There’s another important corollary to this observation. Fighting against climate change can be profoundly disempowering. It requires governments to both agree and co-operate. We won’t know whether it will worked for decades. But local action has local benefits, and more quickly. Although Pearce doesn’t dwell on this, it therefore also has important psychological benefits.
The obverse of this is that climate change gives an undeserved alibi to those in power for their negligence. Friederike Otto, of Imperial College London, is a climatologist and a co-founder of World Weather Attribution. The organisation is an international collaboration between scientists who are dedicated to identifying the underlying causes of weather-related disasters:
She is determined to call out climate change where it contributes to disaster but cautions that “disasters occur when hazards (such as climate change) meet vulnerability.” And vulnerability has many causes, including bad water or forest management, unplanned urbanization, and social injustices that leave the poor and marginalized at risk. (K)nee-jerk attribution of disasters to climate change creates “a politically convenient crisis narrative … (that) paves a subtle exit path for those responsible for creating vulnerability.”
A paper published in January with Emmanuel Raju, a disaster researcher at the University of Copenhagen, and Emily Boyd of Lund University in Sweden, spells this out.
The article discusses other examples, such as the droughts in Madagascar and in Lake Chad. In Madagascar, for example, the current food shortages are being blamed by politicians on climate change. Researchers tell a different story:
(I)n December, Luke Harrington of the New Zealand Climate Research Institute concluded that climate change played at most a minor role in the drought, which was a reflection of past natural variability in rainfall, as evidenced by records dating back to the late 19th century. He instead pinned the blame for the crisis on poverty and poor infrastructure, such as inadequate water supplies to irrigate crops — issues that had gone unaddressed by Rajoelina’s government.
It’s a long article, and worth reading in full, but we also see a similar story about biodiversity. Climate change is blamed when habitat loss is actually being caused by, well, capitalism:
“Threats to biodiversity are increasingly seen through the single myopic lens of climate change,” complains Tim Caro, an evolutionary ecologist at the University of California Davis. That is hard to justify when his analysis of Red List extinction data shows that habitat loss is still three times more important than climate change in vertebrate extinctions. Ignoring this fact, he says, is undermining strategies needed to prevent deforestation and other threats to habitat.
Even our increasingly frequent and intense forest fires, which are certainly connected to global warming, are amplified by poor forestry management and, in some cases, deliberate deforestation.
Of course, this is difficult political territory. Turning the focus away from climate change runs the risk of giving space to climate deniers. But climate change needs to be seen instead as a ‘crisis multiplier,’ as UN Secretary-General Antonio Guterres said at a UN Security Council meeting last year. It’s ‘yes, and’, not ‘no, but.’
The article quotes, Jane Madgwick, who is the CEO of Wetlands International, who underlines this point.
“Yes, of course we need to fight climate change,” she says. But in the meanwhile, “extreme meteorological events don’t have to turn into extreme flooding events. As we work to fix the climate, we must fix the landscape too.”
2: Bitcoin’s trust problem
I don’t have strong views on crypto currency. It might represent a whole new currency model, or it might just be a speculative medium for people who don’t like gold. I’m happy to wait for more evidence on that.
But I understand the core principle behind bitcoin—that there is a limit to how many bitcoins can be mined, governed by the algorithm. So I was interested to read Adam Tooze on this subject, since he had clearly decided that he needed to read up on it.
The economic part of his note is that the idea of replacing fiat currency (as printed by central banks) with bitcoin would be a disaster, precisely because of the ceiling on the number of bitcoins. If you use this to underpin your economy, you are locking yourself in to a deflationary economy.
Of course, some of the claims that are made by advocates is that the printing of money by central banks debases the currency. Here’s Tooze quoting the founding blog post by bitcoin’s inventor Satoshi Nakamoto from 2008:
The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.
It’s part of a much deeper discourse about distrusting states and their agencies. The kindest thing that can be said about this is that it is a category error. It confuses money with its purpose—currency isn’t an end in itself, it’s a mechanism to ensure that our economies work effectively.
(B)itcoin, were it actually to enter widespread use as a stable currency, would be more or less guaranteed to appreciate over the longer term. And no, that is not a good thing. An appreciating currency is not better than a stable or mildly inflating currency. It is far worse. A growing economy denominated in bitcoin would deflate. That would be crippling for debtors and business. The macroeconomic costs would dwarf any conceivable efficiency gains from a decentralized crypto currency.
We learned this the hard way when we did the experiment about controlling money supply to manage the economy. It didn’t work so well. The other half of the Satoshi quote above goes like this:
Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.
It’s easy to agree with the sentiments about the banking system. But thinking that bitcoin will fix this problem, even at a technical level, is a basic misunderstanding of how banks create money.
(Schematic that shows one iteration of the SHA256 algorithm. Enrique Santos, via Wikipedia, CC BY-SA 4.0)
The second point Tooze makes is to note that the hash function—SHA-256–used to make bitcoin was originally developed by the National Security Agency (NSA). Clearly there is just a little bit of a clash here between the aggressive libertarianism of the bitcoin advocates and the use of a protocol built by one of the largest security agencies in the world.
It’s unlikely, that there is a security risk here—for example, an NSA ‘back door’ into applications that use SHA-256. Donald McKenzie, who writes on finance, has looked at this both technically and politically, and concluded that the chances are vanishingly small:
The algorithm was made public by the US National Institute of Standards and Technology, and the steps in it are simple enough that a ‘back door’ of this kind would be hard to conceal.
But Tooze is interested in this for different reasons. The first is that it undermines some of the trust rhetoric that gets pointed at central banks if you are happy, at the same time, to trust an algorithm developed by the NSA.
The second is that it’s another example of tech bros who are dismissive of, even hostile to, the state and all of its works. Yet they’re willing to use a technology that exists only because of public investment – the critique developed by Mariana Mazzucato that I discussed here last week. As Tooze notes:
The fact that this ultra-strong cryptographic software should have been generated by the NSA is no accident. It points to the unique computing resources and IT-expertise commanded by the state. So is crypto, like so much other digital innovation, in fact, the unacknowledged spin-off of publicly-funded investment?
No, you didn’t build that.
j2t#267
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