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The Enticements of Green Carrots

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We Canadians like to think we are green, but when it comes to protecting the environment, we are among the world’s worst actors. Whether the metric is carbon output per capita, toxic waste emissions or protection of endangered species, Canada regularly ranks near the bottom of the list of similarly wealthy countries.

If our economy’s incentives start pulling in the same direction as our ethical impulses, Canadians can do better. At present, they are pulling in opposite directions.

Clean Coal? Go Underground, Alberta

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Alberta appears to be in a box – an energy box – that constrains policy options in every direction. The province’s wealth is critically tied to exploitation of its vast hydrocarbon resources.

Fear is Good

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Fear is bad, according to conventional wisdom. Our economy is in trouble, we hear, because banks are too afraid to lend and consumers and companies too afraid to spend. Less lending and spending further depresses the economy, which begets more fear. And to top it all off, some analysts irresponsibly exploit these fears for their own ends, by arguing that the crisis may get far worse before it gets better, and in the process sensationalize and exaggerate the problem.

But, in this case, conventional wisdom is wrong. The truth is that fear is good. The economic crisis we’re facing is not at root the result of too much fear but of too little.

When Wise Words Are Not Enough

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In two books that offer erudite assessments of the dangers facing humankind this century, Vaclav Smil and Chris Patten address these matters in sharply different ways.

Straw Man in the Wind

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An exchange with David Victor in The National Interest on the links between resource and environmental stress and violent conflict.

The Stag Hunt: Deflation as a Collective Action Problem

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In the worst case, deflation becomes its own cause. People become afraid their incomes might fall in the future. Or they see their savings being ravaged by the stock market collapse. So they stop spending and instead hoard their money. As demand for goods and services drops, companies’ profits plummet, leading to layoffs, reduced working hours, and yet more declines in stock prices. The fear of lost income becomes a self-fulfilling prophecy, and people cut their spending further. Once the downward spiral starts, it’s maddeningly hard to stop. People expect prices will keep falling, so they decide to put off their spending, because they think things will be cheaper in the future.

Unbounded Uncertainty #2

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Most of us want to believe that our institutions are rational, durable and fair, directed by experts who have a grip on bedrock reality and understand how things work, who will take care of severe problems when they arise. The possibility that no one knows enough to protect us is terrifying, almost unthinkable.Now, as we’ve watched the deal-making in Washington, we’ve looked into the abyss of the unthinkable.

Blocking the Sky to Save the Earth

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To the relief of climate scientists around the world, it appears that the polar ice cap hasn’t shrunk as much this summer as it did last summer.

Everything is not Peachy

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with Sarah Wolfe | Self-sufficiency isn’t a sexy idea. At best, people who say they’re interested in being self-sufficient are stereotyped as dour, old-fashioned rural-types. At worst, they’re seen as fanatical survivalists planning for an apocalypse. Economists also tell us that self-sufficiency is an anachronism. Instead, it’s specialization that produces wealth, and economies – including the world economy – produce the most wealth when everyone, including countries, specializes in what they do best and then trades their products for the other things they need. The more specialization, the more connectivity among specialists, and the more trade along those connections, the better.
But there are problems with this model.