Tropic of Chaos_ Climate Change and the New Geography of Violence - Christian Parenti [110]
Economics
Is there enough money for mitigation and adaptation? Actually, yes: there are enormous pools of capital sloshing around the international financial system looking for profitable outlets and in the process creating dangerous destabilizing speculative bubbles.
In May 2010, the Washington Post reported that “Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession.”5 But, as the article went on to point out, they were not investing in creating new jobs. According to Federal Reserve data from late 2010, American companies had not sat on so much uninvested cash since 1956.6 Many of the large banks spent the first years of the great recession engaged in an international “carry trade,” borrowing money from the US Federal Reserve at very low interest rates, then lending it back to the US government—that is, buying Treasury Bonds. This largely passive and parasitic style of speculation, rather than investment in real capital stock, was the basis for two years of record bonuses on Wall Street. In 2010, the top twenty-five Wall Street firms paid out $135 billion in compensation to their traders and analysts.7 Meanwhile, the real economy stagnated. Coal and natural gas remain the dominant fuel sources, and there was no government policy in place to help structure, guide, encourage, mandate, or in anyway bring about a new wave of private investment in clean-technology-based industrialization.
As I write, those pools of liquidity are bidding up a speculative bubble in primary commodities like grains and metal ores. “Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent.”8 The Commodity Food Price Index rose by almost 75 percent between 2006 and the end of 2010.9 Wheat prices surged 56 percent in just the second half of 2010. This was also due in part to climate crises—floods in Pakistan and Australia and forest fires in Russia—led to a decrease in supply and a spike in demand. Once the price was moving up, speculators awash in cash and cheap credit started driving it up further.10
Not only is government failing to push private capital to invest in clean technology, but it is itself failing to invest. We suffer an appalling dearth of public money being directly invested in clean technology; nor is there a robust program of subsidies. At the same time, federal tax policy did almost nothing to penalize or prohibit speculation. The US government has resources available for the transition, even without raising taxes on speculators. Consider the military budget. When the 2010 federal budget was signed into law on October 28, 2009, the final size of the Department of Defense’s budget was $680 billion. Defense-related expenditures by other parts of the federal government—such as weapons testing and storage by the DOE, security for the State Department in combat zones, health care for wounded veterans, the antiterrorism functions of the Department of Homeland Security, military aspects of NASA’s work, etc.—constitute between $300 and $600 billion more, according to various estimates, which would bring the total for defense spending to between $1 and $1.3 trillion in fiscal year 2010. To play it safe, we can say that direct military spending, plus supplemental war-fighting costs, plus the DOE’s atomic weapons program totaled $722 billion in 2010.11 In short, there’s money to be found—if we want to find it.
Nor should we allow the issue of government debt to trick us into thinking the economy lacks the wealth to invest in both mitigation