Thou shall not sell environmental crimes indulgences

Sir, albeit a bit late, I refer to David Sheppard’s Big Read “Carbon trading: the ‘one-way’ bet for hedge funds” FT August 23.In his Encyclical Letter 'Laudato Si’ of 2015, Pope Francis wrote:

"171. The strategy of buying and selling “carbon credits” can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors."

With “permits” Pope Francis was here de facto referring to some type of “indulgences”, which help pardon environmental sins. 

It was Martin Luther’s attacks on the Catholic Church’s sale of indulgences for the remission of temporal punishment for forgiven sins, which caused the rift that led to the creation of the Protestant Church. Therefore, more than 500 years since Luther in 1517 (supposedly) nailed his “Ninety-five Thesis” on the door of Old Saints' Church in Wittenberg, I found it curious (and equally correct) to read a Catholic Pope accusing many protestants who favor carbon trading, for sort of a similar procedure.

As a protestant belonging to the Swedish church, ser wife and catholic children, I do not like carbon trading, as I previously explained in a letter you published, I much prefer high carbon taxes shared out equally to all, as that would align the incentives in the fight against climate change and the fight against poverty. 

http://ourpiedaterre.blogspot.com

@PerKurowski

What causes more inequality, or feelings of poverty, some CEOs’ obscene high salaries, or some prices, like those of Viagra?

Sir, I refer to David Crow’s “Cost of Viagra increases 27% as Pfizer raises US drug prices” June 3.

I have no idea why but my doctor has ordered me a different brand, so I am not a user of Viagra. That said it was astonishing to read that one single Viagra pill is now $73.85. That price must surely only be possible because of the official protection of intellectual property rights.

There should be a difference between the protections of a pharmaceutical industry, so that it can afford develop new medicines, and the protection of an extortion racket. As is, 10 Viagra pills would, at this price, represent a fairly decent monthly Universal Basic Income.

In a world in which so many prices are going down-down-down, among others because of automation and robots, can we afford to impact this way those who have to earn less and less and less income, or stay more at home, only because of automation and robots?

Perhaps Trump, instead of thinking of building up Mexican walls, should be thinking about tearing down some intellectual property protection walls. Open ended ones, like those that allowed “Martin Shkreli to raise the price of an Aids medicine from $13.50 to $750 a pill, reflects very badly on the state and governance of our society.

About a decade ago I wrote an Op-Ed in which I held that it was not logical that profits earned by means of protected intellectual property, were taxed at the same rate than those profits obtained from competing naked in the market. That argument is still valid, especially if those extra tax revenues become tax neutral, by feeding monthly UBIs.

PS. In the same vein, now we perhaps have to add a proposal on that profits generated with the use of robots, should be taxed higher than profits generated with the help of humans.

PS. Some years ago a friend, wanting to launch little-known-me as a candidate for the presidency of Venezuela, what a "friend", suggested a populist campaign based mostly on “Free Viagra for everyone”. He argued that would have more impact that my promises of sharing out all net oil revenues directly to all Venezuelans. He might have a point.

@PerKurowski

Universal Basic Income panics redistribution profiteers. OECD’s model insists on these targeting better the poor.

Sir, Chris Giles writes: “The modeling exercise by the OECD, the Paris-based organization of mainly rich nations that specializes in cross-national comparisons of policy ideas… shows the simplicity of basic income schemes would come at the cost of a need for increases in taxation, less effective targeting of support on the poorest and large numbers of gainers and losers.” “Basic income ‘would fail to reduce poverty’” May 29.

What can I say? The study is full of self-serving premises like “the right to a basic income would undermine the incentives to work because it would ‘sever links between carefully balanced rights and responsibilities of job seekers’”. There it completely ignores the role of UBI in helping the unemployed, without creating any stigma, to get out of bed in order to capture whatever temp opportunities there might exist in a job market characterized by more and more structural unemployment.

Also when the report concludes, “Large tax-revenue changes are needed to finance a basic income at meaningful levels,” any savings of redistribution costs are clearly ignored, and the “meaningful level for a basic income” is undefined.

Sir, this is clearly a case of redistribution profiteers defending the value of their franchise. That is only to be expected.

@PerKurowski

http://myubi.blogspot.com

The Basel Committee’s instructions: Banks, ignore poverty, jobs, sustainability and inequality and just focus on credit risk

Sir, Andrew McAfee, gives us his take on the tragedy that “Lots of the traditional jobs for these people are disappearing in the rich world, and wages for remaining workers are pretty stagnant… and the middle class is being hollowed out in country after country” “Boredom and vice can be deadly in a life without work” November 6

And I hold that is in much the result of bank regulators giving an overriding importance to banks avoiding credit risk and not caring one iota about any other purpose of our banks.

And Sir, by silencing me, you fully support those absolutely inept regulators. The truth will catch up on you… on the web I have already over 2.000 letters to you on that subject and which you have ignored, because you so mono-thematically cannot accept the idea of technocrats having been so mistaken.

Not long ago, one of your famous columnist replied to one of my letters with the following:

“IT IS NOT TRUE that risk-weighting is the only reason for the crisis… To argue that it is implies, as I have told you, that allowing banks to make certain loans compels them to do so. But there is no such coercion: if the risks are high, they should not, in their own interest, make the loans. Nor is it the case that risk-weighting prevented banks from lending to small enterprises. The reason that they did not (and do not) do so is that it IS ACTUALLY risky to do so, relative to the perceived return.”

You see, evidently your columnist does not understand that if you can leverage your risk adjusted return much more when lending to the safe, and thereby obtain a much higher relative risk adjusted return on equity when lending to the safe, you will simply not lend to the risky, like to the SMEs and entrepreneurs.

Or let's put it this way. Two borrowers with exactly the same risk profile. To one the bank is allowed to lend leveraging 12 to 1, to the other 30 to 1. Who do you think the bank is going to lend to the most and the cheapest?

Or let's put it this way. Two borrowers with different risk profiles, but offering the same risk and cost adjusted margins. To one the bank is allowed to lend leveraging 12 to 1, to the other 30 to 1. Who do you think the bank is going to lend to the most and the cheapest?

Sir, do you want me to arrange a Finance 101 for your columnists and reporters?

PS. I was thinking a lot of that boredom and vice that McAfee refers to when I wrote "We need worthy and decent unemployments" 

@PerKurowski ©