Balancing Economics and Ethics

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Balancing Free Market Capitalism with Laws and Constraints Maximizing GDP while maintaining economic equality. Piety's Inequality of Capital

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Balancing Economics & Ethics 1. Complexity’s Invisible Hand vs. Tragedy of the Commons 2 .Maximizing GDP vs. Piketty ’ s Inequality of Capital Paul H. Carr www.MirrorOfNature.org

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Principles of Complex Systems http://www.clexchange.org/curriculum/complexsystems/default.asp By MIT Prof. JAY W. FORRESTER (1971) System Dynamics Pioneer, author of World Dynamics Simplistic "solutions" to complex problems are wrong (apt to fall into one of several traps set by the character of complex systems.) Conflicts arise between short-term and long-term goals.

ETHICS GOLDEN RULE: Do unto others as you would have them do unto you. ECONOMICS GOLDEN RULE: :

ETHICS GOLDEN RULE: Do unto others as you would have them do unto you. ECONOMICS GOLDEN RULE: Whoever has the gold makes the rules .

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Prophetic Pope Francis Market capitalism drives our global economy. Pope Francis ’ June encyclical questions the ethics of this system, whose symptoms are: (1) climate change and (2) an increasing gap between the rich and the poor. DOES ECONOMICS TRUMP ETHICS ? 200 Page Encyclical Laudato Si: On Care for our Common Home. June 2015

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ECONOMIC IMBALNCE Belief in: “ Invisible Hand, ” Adam Smith (1776), which guided the pursuit of individual gain towards the public interest. “ The self-correcting power of the free market. ” ( Alan Greenspan ’ s Laissez Faire Economics ) Ignoring: “ Tragedy of the Commons , ” William Forster Lloyd (1833), in which the pursuit of individual gain leads to abrogation of the common good.

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Tragedy of the Commons William Forster Lloyd (1833), Garrett Hardin (1968) The pursuit of individual gain leads to abrogation of the common good . Lloyd was familiar with herdsmen who all grazed their cattle on a commons . Each individual gained by adding more cows to his own herd. As each pursued his individual gain, the commons became overgrazed, resulting in the tragedy malnourished cows.

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Coal burning pollutes our common atmosphere for free. This is short term economic benefit for utility companies and customers. The negative effects of pollution are shared by all. THE LONG-TERM TOTAL COST OF BURING FOSSIL FUELS IS NOT INCLUDED IN WHAT WE NOW PAY. THE CO2 EMISSIONS WILL BE IN OUR ATOMPHERE FOR 100 YEARS.

Injustice of Coal Burning :

Injustice of Coal Burning 1. Fine particle pollution from U.S. power plants cuts short the lives of over 30,000 people/ year. - Asthma attacks, cardiac problems and upper and lower respiratory problems associated with fine particles from power plants. 2. Deaths of many c oal miners - None from nuclear reactors in the US. 3. In Beijing, schools sometimes have to be closed due to high air pollution from coal burning .

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Why Free Inhalers? Because COAL CARES. http:// www.coalcares.org/index.html Coal Cares ™ is a brand-new initiative from  Peabody Energy , the world's largest private-sector coal company, to reach out to American youngsters with asthma and to help them keep their heads high in the face of those who would treat them with less than full dignity. For kids who have no choice but to use an inhaler,  Coal Cares ™ lets them inhale with pride. Puff-Puff™ inhalers  are available free to any family living within 200 miles of a coal plant, and each inhaler comes with a  $10 coupon  towards the cost of the asthma medication itself.

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IMBALANCE FOSSIL FUEL SUBSIDIES ARE 4 TIMES RENEWABLES Fossil fuels are reaping $550 billion a year in subsidies (International Energy Agency 2014) This is 4 times the $120 billion paid out in incentives for renewables including wind, solar and biofuels. Oil Change International estimates U.S. fossil fuel subsidies at $37.5 billion annually, including $21 billion in production and exploration subsidies.

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NEED TO BALANCE LIBERTY & LAW “ Invisible Hand, ” Adam Smith (1776), which guided the pursuit of individual gain towards the public interest. “ The self-correcting power of the free market. ” ( Alan Greenspan ’ s Laissez Faire Economics ) “ Tragedy of the Commons , ” William Forster Lloyd (1833), in which the pursuit of individual gain leads to abrogation of the common good. Liberty - Laissez Faire Economics, Balanced by Law - Regulation, Constraint = JUSTICE “ Justice Kennedy ’ s jurisprudence is a constant struggle to find the right balance between liberty and responsibility. ”

The 2009 Democratic Congress:

T he 2009 Democratic Congress In 2009, the House of Representatives Passed the Markey-Waxman Bill , “ Clean Energy & Security Act ” -Cap-and-Trade: Price on carbon emissions to economically favor wind, solar, and nuclear energy Environmental Tragedy: Senate did not pass it. -Sen. Kerry (D) lost Republican Support - Peabody Energy lobbied against against it.. “ We can not afford it ” “ It will wreck our economy. ”

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Sweden , one of the few countries that tax carbon, has reduced its emissions by about twenty-three per cent in the past twenty-five years. During that same period, its economy has grown by more than fifty-five per cent.

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GDP Emissions

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10/9/15 www. CitizensClimateLobby.org - Revenue neutral carbon fee with dividend. -Dividend would be returned to everyone. -Stimulating economy & creating 2 million jobs.

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Prophetic Pope Francis Market capitalism drives our global economy. Pope Francis ’ June encyclical questions the ethics of this system, whose symptoms are to (1) climate change and an (2) increasing gap between the rich and the poor. ECONOMICS TRUMPS ETHICS ? JUSTICE? 200 Page Encyclical Laudato Si: On Care for our Common Home. June 2015

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GOOD NEWS: HIGH GDP in the US

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LAW……………………………………………….…LIBERTY………ANARCHY Optimum Balance US Canada Congo Niger UK France Germany, Japan S. Korea Cuba China Russia

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HERITAGE FOUNDATION INDEX OF ECONOMIC FREEDOM (2009) Ten Economic Freedoms for United States 91.9 Business Freedom 80.0 Investment Freedom 86.8 Trade Freedom 80.0 Financial Freedom 67.5 Fiscal Freedom 90.0 Property Rights 59.6 Government Size 72.0 Freedom from Corruption 84.0 Monetary Freedom 95.1 Labor Freedom 80.7 AVERAGE

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BAD NEWS: ECONOMIC INEQUALITY

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GINI INDEX IS A MEASURE OF ECONOMIC EQUALITY GINI = 00 Income completely equal GINI = 100 One person owns everything = INJUSTICE Germany, Scandinavia, Japan, etc. have more income equality than the US.

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Title of the presentation Inequality of capital Thomas Piketty , Professor of Economics, Paris School of Economics 19 December 2014 www.slideshare.net

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23 Data from Capital in the 21st century (Harvard University Press, March 2014) This book studies the global dynamics of income and wealth distribution since 18c in 20+ countries; I use historical data collected over the past 15 years with Atkinson, Saez, Postel-Vinay, Rosenthal, Alvaredo, Zucman, and 30+ others; I try to shift attention from rising income inequality to rising wealth inequality •The book includes four parts: Part 1. Income and capital Part 2. The dynamics of the capital/income ratio Part 3. The structure of inequalities Part 4. Regulating capital in the 21st century •In this presentation I will present some results from Parts 2 & 3, focusing upon the long-run evolution of capital/income ratios and wealth concentration (all graphs and series are available on line: see http://piketty.pse.ens.fr/capital21c )

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MIT Press Book, "Polarized America: The Dance of Ideology & Unequal Riches, "

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“ A RISING TIDE FLOATS ALL BOATS ? The objective of the tax cuts from 70% in 1980 to 28% in 1988 was to stimulate the economy, ie increase GDP. The was expected to result in an increase in the tax revenue to the government. 1. No GDP increase. 2. Increased income inequality. 3. Increased our national debt.

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After the top tax rate dropped from 70% in 1980 to 28% in 1988, GDP growth decreased from 3.5%/year in 1980 to 2% at present. Tax Cut

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Reagan Tax Cuts 70% to 28% OUR NATIONAL DEBT INCREASED IN 1980 WWII Ends Won Cold War Recession from deregulation of Banks

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WWII POSTER How we defeated Hitler Germany and Japan ’ s Rising Sun (1945). Paid off WWII, Korean and Vietnam Wars debt (1980), Landed Man on the Moon ( ‘ 69) Patriotism against enemies is the Social Capital that bound us together.

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33 Conclusions The history of income and wealth inequality is always political, chaotic and unpredictable; it involves national identities and sharp reversals; nobody can predict the reversals of the future The ideal solution: progressive wealth tax at the global scale, based upon automatic exchange of bank information Other solutions involve authoritarian political & capital controls (China, Russia..), or perpetual population growth (US), or inflation, or some mixture of all.

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PHILIP KOTLER hilip Kotler is the S. C. Distinguished Professor of International Marketing at the Kellogg School of Management. He has been honored as one of the world's leading marketing thinkers. He received his M.A. degree in economics (1953) from the University of Chicago and his Ph.D. degree in economics (1956) from the Massachusetts Institute of Technology (M.I.T.), and has received honorary degrees from twenty-one foreign universities. He is the author of over 57 books and over one hundred and fifty articles. He has been a consultant to IBM, General Electric, Sony, AT&T, Bank of America, Merck, Motorola, Ford, and others. The Financial Times included him in its list of the top 10 business thinkers. \

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10/9/15 Bill Gates Recommends this.

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BALANCE LIBERTY & LAW ECONOMICS & ETHICS “ Invisible Hand, ” Adam Smith (1776), which guided the pursuit of individual gain towards the public interest. “ The self-correcting power of the free market. ” ( Alan Greenspan ’ s Laissez Faire Economics ) “ Tragedy of the Commons , ” William Forster Lloyd (1833), in which the pursuit of individual gain leads to abrogation of the common good. Liberty - Laissez Faire Economics, Balanced by Laws – “ Progressive Wealth Tax ” to help economic equality “ Carbon surcharge with dividend for all ” to slow climate change “ Justice Kennedy ’ s jurisprudence is a constant struggle to find the right balance between liberty and responsibility. ”

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The 34th International Conference of the System Dynamics Society, Delft, Netherlands July 17 – July 21, 2016 Black Swans and Black Lies: System Dynamics in the Context of Randomness and Political Power-play System Dynamics has proven useful to analyze dynamically complex economic, social, and environmental issues. It is an effective methodology for designing robust systems and policies. Dynamics modeling can be used to understand resilience against shocks and to support implementation of policies, we address major epistemological and teleological questions.

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