The Warming World: Is Capitalism Destroying Our Planet?

By Alexander Jung, Horand Knaup, Samiha Shafy and Bernhard Zand

 World leaders decided in Copenhagen that global warming should be limited to 2 degrees Celsius. Achieving that target, though, would take nothing less than a miracle. With another round of climate negotiations approaching, it is becoming increasingly clear that mankind has failed to address its most daunting problem.

 Humans are full of contradictions, including the urge to destroy things they love. Like our planet. Take Australian Prime Minister Tony Abbott. Like everyone living Down Under, he's extremely proud of his country's wonder of the world, the Great Barrier Reef. At the same time, though, Abbott believes that burning coal is "good for humanity," even though it produces greenhouse gases that ultimately make our world's oceans warmer, stormier and more acidic. In recent years, Australia has exported more coal than any other country in the world. And the reef, the largest living organism on the planet, is dying. Half of the corals that make up the reef are, in fact, already dead.

Indian Prime Minister Narendra Modi also wants the best for his country and is loathe to see it damaged by droughts, cyclones and storm surges. Nevertheless, he is planning on doubling India's coal production by 2019 in addition to importing more coal from Australia. It is necessary to do so, he says, to help his country's poor. India is already the third largest producer of greenhouse gases, behind China and the United States. But climate change is altering the monsoon season, with both flooding and drought becoming more common.

And who would accuse the majority of US Senators of being insensitive to the extreme shortage of water afflicting California? Yet the law-making body recently brushed aside everything science has learned about global warming and voted down two measures that attributed the phenomenon to human activity. For Americans and foreign tourists alike, California is a magical place, famous for Yosemite National Park, its Pacific coastline, its golden light. The state also grows around a third of all US produce. For now. An historic drought that has been ongoing for over three years has forced farmers to abandon their fields and to slaughter their animals.

Since 1880, when global temperatures began to be systematically collected, no year has been warmer than 2014. The 15 warmest years, with one single exception, have come during the first 15 years of the new millennium. Indeed, it has become an open question as to whether global warming can be stopped anymore -- or at least limited as policymakers have called for. Is capitalism ultimately responsible for the problem, or could it actually help to solve it?

At the end of November, political leaders from around the world will gather in Paris to once again address the problem of global warming, just as they did five years ago in Copenhagen. Back then, a deep chasm opened up between the rich countries that want to protect the climate and the poor countries who are demanding that the rich countries pay for measures to combat climate change. Participants were hopelessly at loggerheads and proved unable to reach an agreement. The only product of the long days and nights of negotiation was a single number: 2 degrees Celsius.

Since then, politicians around the world have repeated the number like a mantra: Average global temperatures should not be allowed to increase by more than 2 degrees Celsius (3.6 degrees Fahrenheit) relative to pre-industrial times. A "dangerous anthropogenic interference with the climate system" is to be prevented, reads the United Nations Framework Convention on Climate Change.

The choice of 2 degrees Celsius as the maximum limit was largely an arbitrary one. Indeed, the 44 members of the Alliance of Small Island States (AOSIS) believe that, in a world that is 2 degrees warmer, many of their islands would disappear. They are demanding that the upper target limit be reduced to 1.5 degrees Celsius. But as things currently look, the 2-degree target is hopelessly utopian. It is supposed to sound reassuring, but it is little more than hot air. Since 1880, average global temperatures have already increased by 0.8 degrees Celsius, and the consequences have become widely evident.

At the Paris climate summit, leaders will have to reach agreement on questions that led to bitter disagreement five years ago in Copenhagen. Which countries have to reduce greenhouse gas emissions and by how much? What does it cost? And most importantly: Who pays? The goal is that of coming up with a successor treaty to the 1997 Kyoto Protocol, the first international agreement aimed at protecting the climate.

Should greenhouse gas emissions continue as they are today, the world will likely reach the 2 degree Celsius maximum within 30 years. Indeed, in order to have any chance at all of stopping global warming at 2 degrees Celsius, emissions would have to fall by 10 percent per year starting in 2017 at the latest, says Fatih Birol, head of the International Energy Agency.

But is that even possible? In 2014, around 60 percent more greenhouse gases were pumped into the atmosphere than in 1990, the year against which most reduction targets are measured. There is little to indicate that the trend might soon change. And if it doesn't, if emissions continue at today's rate, the World Bank calculates that average global temperatures will increase by 4 degrees Celsius by the end of the century. The consequences of so much warming, the World Bank says, would be "extreme heat-waves, declining global food stocks, loss of ecosystems and biodiversity, and life-threatening sea level rise."

The sheer scope of the destructive effect the production of fossil fuels already has today is visible when you visit places that provide the world with its supplies of coal, oil and natural gas. Louisiana, for example, an oil-rich US state whose coast is sinking into the sea and which is threatened by hurricanes. Or the Chinese coal province Hebei, whose 70 million inhabitants would be better advised not to leave their homes on many days of the year because levels of fine particulate matter go far beyond those considered to be safe.

Is Capitalism the Problem?
 
Following the Copenhagen fiasco, the executive secretary of the United Nations Framework Convention on Climate Change, Yvo de Boer of the Netherlands, resigned in frustration. He had, he said in a 2013 interview with Bloomberg Business, lost his faith in climate diplomacy. "The only way that a 2015 agreement can achieve a 2-degree goal is to shut down the whole global economy," he said.

Might it be enough, though, to fundamentally change the rules by which the global economy functions? That is what Canadian bestselling author Naomi Klein is demanding. (Editors note: SPIEGEL International has also published an accompanying interview with Klein.) The leftist icon's controversial new book, which will be published in Germany next week, is a carefully researched polemic about mankind's collective failure in the face of the greatest challenge it has ever faced. Klein spells out her thesis in the introduction to her book "This Changes Everything": "We have not done the things that are necessary to lower emissions because those things fundamentally conflict with deregulated capitalism, the reigning ideology for the entire period we have been struggling to find a way out of this crisis."

In other words, climate protection and capitalism are mutually exclusive. In order to stop global warming, Klein argues, we have to use fewer resources. But in order to prevent the collapse of our capitalist economic system, unlimited growth is necessary. "Only one of these sets of rules can be changed," Klein writes. "And it's not the laws of nature."

Regardless of whether one finds her standpoint to be plausible, radical or beyond the pale, it is difficult to disagree with one of her points: Our reaction to climate change is inversely proportional to the dimension of the problem it presents.

For over two decades, more than 20,000 delegates from countries around the world have been traveling from conference to conference to negotiate a treaty to save the world. It is an historic challenge they are facing -- a heroic assignment they are failing to master. A miracle is necessary to put the brakes on climate change -- or a revolution, a global mass movement. Were such a thing to materialize, that too would be a miracle. The slow pace of climate change stands in fatal contrast to the speed of our times, an era characterized by distraction, consumption and shrinking attention spans.

When did global warming cease being merely a computer simulation? It must have been at some point between the 1970s, when the world experienced 660 natural catastrophes, and the last decade, with its 3,322 storms, heat waves and flooding. It came quietly, as most of us were looking away.

Since then, the ice cap at the North Pole is melting, glaciers in the Alps are disappearing and dikes on the North Sea have had to be heightened. Rainfall has become even more intense in Western Europe whereas precipitation has fallen in the southern part of the Continent. Extreme weather phenomena such as violent storms, torrential downpours and hail storms have become much more frequent in Germany since 1970. Back then, the country experienced an average of 10 such phenomena annually, says Peter Hoeppe, head of climate risk research for Munich RE, the world's largest re-insurance company. "Now, there are 35." In 2013, a July hailstorm in Germany cost insurance companies €3.6 billion, making it the most expensive catastrophe in the world that year.

On the Arabian Peninsula, which is almost entirely covered in desert, ground water levels are falling dangerously. In Africa and Central Asia, deserts are expanding. In Israel, Australia and Brazil, lakes and rivers are drying up. Soon, climate change could result in shortages of such goods as coffee, chocolate and wine from southern France.

Disappearing Land
 
In the American South, on the coast of Louisiana, a piece of land the size of a soccer field disappears into the sea every hour. At such a rate, the New York Times Magazine recently calculated, Central Park would vanish within a month. The Principality of Monaco would be history after just 15 days.

Had Naomi Klein sought to find a place to illustrate her theory of the destructive effects capitalism has on our climate, she couldn't have found a better one than Louisiana. It is the second poorest state in the US, but it is also an important hub of the oil and natural gas industries. It is a place that shows in all its grotesqueness what can happen when desire for fossil fuels trumps common sense.

The Pointe-au-Chien Indian tribe has lived on Louisiana's coast for generations, 50 miles southwest of New Orleans. The tribe today counts some 45 families, and they have had to move several times in recent years. Following Hurricane Lili in 2002, they built wooden houses on high stilts to avoid the storm surges, a strategy that helped them survive hurricanes Rita, Gustav, Cindy, Isodore and Katrina, the most expensive natural catastrophe in US history. Almost 2,000 people died in Hurricane Katrina, which slammed into Louisiana in August of 2005, and hundreds of thousands lost their homes. The storm caused more than $125 billion in damage.

"When the wind blows, the water rises," says Donald Dardar, 59. Dardar is the second chairman of the Point-au-Chien tribe, a compactly built man with tousled gray hair and the raw hands of a fisherman. After a storm, Dardar says nonchalantly, you clean up, just as it has always been. Lately, though, the wind has been blowing harder and the storms have become more frequent. And sea levels are rising. It's not a good combination.

Dardar's brother Russell steers the boat to the south, through a mosaic of land and water. He advances slowly and carefully, over black oil lines. A dolphin appears next to the small vessel; drilling rigs can be seen in the distance.

The boat has been chugging along for half an hour before Donald Dardar points ahead: "This is where we lived when I was a child." On the right side of the canal, a white cross can be seen among dead oak trees. "The gravestones have washed away," Dardar says. "But the dead haven't been forgotten."

Over the last several decades, energy companies have drilled over 50,000 holes into this section of Louisiana coast in order to suck oil and natural gas out of the ground. A 10,000-mile-long web of channels and pipelines criss-crosses the Mississippi Delta marshland, bringing the oil to refineries on the mainland.

Back when the river was still allowed to flow untamed into the Gulf of Mexico, the land at its mouth was constantly renewed by the sediment carried by the Mississippi. But today, the tamed river carries hardly any sediment at all and the land is sinking into the sea, bit by bit. The canals dug by the oil and gas industry have exacerbated the problem by allowing salt water from the sea to penetrate deep into the delta wetlands, killing the vegetation and causing the fragile land to sink. Thus, the industry whose products help cause global warming is also making the coast more vulnerable to one of its consequences: rising ocean levels.

Dardar and his brother live from oyster and shrimp fishing, as do most in their tribe. But in 2010, just five years after Hurricane Katrina, they experienced the next horrific disaster in the form of the largest oil spill ever seen off the US coast. In the Gulf of Mexico, the oil platform Deepwater Horizon exploded, and it took its operator BP fully 87 days to stop the oil from gushing out of the sea floor.

In the first years following the disaster, Dardar says, they hardly caught anything. Now, business is improving again and 2014 was a year free of bad storms. "We don't want to leave," he says. "We're going to stay until ..." He stops talking in the middle of his sentence.

The Green General
 
Native Americans don't have much of a lobby in Louisiana, but they do have a three-star general on their side: Russell Honoré, who led the army's relief mission following Hurricane Katrina. Since then, Honoré -- a broad-shouldered, mustachioed man of 67 who is fond of wearing cowboy boots -- is considered a hero around these parts. "You know who gets rich in Louisiana?" he asks with a dismissive laugh. "Oil and gas companies. And the lawyers who sue oil and gas companies."

Environmentalists, by contrast, had a tough time of it prior to Honoré's arrival. In 2013, he formed an alliance of environmental groups, dubbed it the Green Army, and began recruiting supporters. People took notice, in part because of Honoré's military past. He was a tank commander in the 1980s on the West German border with East Germany and later, as general of the First Army, he had 500,000 soldiers under his command. He drives a Cadillac Escalade and likes to eat blood sausage and pork rinds.

Honoré is sitting on a veranda in front of a horse stall in Baton Rouge, where his stallion Big Red is kept. Big Red used to be named Pie, but the general thought the name didn't suit the animal. "I spent 37 years, three months and three days in the army," Honoré says. "I didn't come back to my home state to see it run by oil and gas companies."

The companies, he says, pollute the air and water and destroy the land while politicians who depend on their donations allow them to do as they please. In frequent public appearances, Honoré encourages people to protest against the destruction of their environment. He also threw his support behind a lawsuit filed against 97 oil, gas and pipeline companies that, should it be successful, will overshadow even the multi-billion dollar proceedings against BP following the Deepwater Horizon catastrophe.

The lawsuit was filed by the Southeast Louisiana Flood Protection Authority-East (SLFPA-E), a local flood protection authority that was founded in the aftermath of Hurricane Katrina. SLFPA-E came to the conclusion that oil and gas exploitation in the region is the primary cause of the coastlands sinking into the sea and that the companies involved should pay to protect the coast to the degree possible. The plan to provide that protection is called the Coastal Master Plan, but between $50 billion and $100 billion dollars are necessary to implement it, depending on which calculation you go by.

Earlier this month, a federal district court dismissed the lawsuit and the governor of Louisiana, Bobby Jindal, has been doing all he can to prevent it as well. Those who publicly support it have earned themselves powerful enemies. But the general of the Green Army isn't concerned. "The governor is a smart guy," Honoré says. "But he sold his brain to the oil and gas industry. He goes with the dollar."

Governor Bobby Jindal said last September that climate change is nothing more than a "Trojan horse" for the left: "a way for them to come in and make changes to our economy that they would otherwise want to make." Jindal is considering a presidential run in 2016 and statements like that tend to be well received by the Republican grassroots.

Not long ago, the Senate -- which has been in Republican hands since last November -- backed Jindal's viewpoint by rejecting the notion that humankind has anything to do with global warming. "God is still up there," Jim Inhofe, the new Republican chairman of the Environment and Public Works Committee, has said. "The arrogance of people to think that we human beings would be able to change what He is doing in the climate is to me outrageous."

In the US, in the year 2015, the issue of climate change continues to trigger a culture war between two adversarial political camps. On the one side are the Republicans who, following last November's midterm elections, now control both houses of Congress. On the other are the weakened Democrats, led by President Barack Obama, who at least seems to take the warnings of climate scientists seriously.

"No challenge poses a greater threat to future generations than climate change," Obama said in January during his State of the Union address. "I will not let this Congress endanger the health of our children." His government, he said, has done more than any before it to protect the climate.

It was a strong, courageous speech by a president who is famous for his public speaking abilities. More, even, than for his deeds. It is, after all, also true that the US under Obama has become one of the world's largest producers of oil and natural gas. When he steps down in 2016, his country will likely produce more fossil fuels than even Saudi Arabia. And that's a development Obama is indeed proud of. During a campaign appearance in Oklahoma in 2012, he said: "We've added enough new oil and gas pipelines to encircle the Earth and then some."

India and China Blockade Efforts
 
Last December, the United Nations' climate diplomats converged once again, bringing together hundreds of politicians and negotiators as well as thousands of experts and lobbyists. This time they met in a tent city the Peruvian government had erected in central Lima. Their aim was to prepare for the Paris summit and take initial steps toward a new climate treaty.

The atmosphere was once again one of hope -- despite the resolution taken by many delegates to lower their expectations following the disastrous Copenhagen summit. Shortly before the Lima conference, the American and Chinese presidents had actually made some progress, agreeing for the first time to concrete annual figures for emissions reduction targets, even if they remain modest.

For one week, attendees met in mobile units and tents, discussing, arguing and sometimes actually making a serious effort to save the planet. But the important questions didn't get answered in Lima. Like the speed at which emissions cuts should be made and what they might cost.

On the surface, the talks focused on commitments, obligations and controls. Behind the scenes, however, delegates forged new alliances. The industrialized nations, including Germany, wanted to leave behind the old world order -- with rich countries on one side and poor ones on the other -- and hold emerging economies like China, Brazil and Indonesia more accountable for their emissions.

As in Copenhagen, however, envoys representing those countries wanted to hear nothing of it. Instead the Chinese acted as the voice of the developing nations and as the chief blockader among them. "We were astounded by the extent to which the African countries aligned themselves with China," an EU negotiator would later confess.

An additional emerging economy, one which has now become the world's third-largest emitter of greenhouse gases, likewise showed little willingness to budge: India. Even as growth in China has begun to level off, India's big growth spurt still lives in the future. Indeed, analysts expect economic growth in India to exceed that seen in China within just a few years. In a related forecast, India's consumption of coal is expected to increase from just under 600 million tons to over 1 billion.

When Barack Obama arrived for his state visit in New Delhi at the end of January, Indian Prime Minister Modi announced his contribution to improving the global climate: India plans to expand its solar energy capacity from today's modest 3 gigawatts to 100 gigawatts by 2022. The US, meanwhile, promised to provide a large share of the investments necessary to make that happen in exchange for the opportunity for US companies to invest in the development of India's civilian nuclear energy sector.

Modi, who addressed environmental issues during his campaign, now has other priorities. By 2022, he plans to ensure that all Indians have access to electricity, 24 hours a day. It's a goal that China achieved long ago, not to mention the West. But the price has been large, measured in the mega- and gigatons of greenhouse gas emissions now polluting the atmosphere.

The scale of China's coal consumption is historic in its dimensions: The country is the world's largest producer and consumer of coal and it emits more greenhouse gases than the United States and Europe combined. The cities of Beijing and Tianjin as well as the Hebei and Shandong provinces alone burn more coal than all of Europe.

Hebei is to China what China is to the world: a coal-consuming monster. The province surrounding Beijing has more than 70 million inhabitants and is half as big as Germany. It produces more than double the amount of steel created in the US each year. Seven of China's 10 most-polluted cities are located in Hebei. Among the most polluted is Xingtai, a city two hours away by high-speed train from Beijing. In 2013, Xingtai had a daily average level of 150 micrograms per cubic meter of fine particulate matter, six times the maximum amount suggested by the World Health Organization. Visitors arriving at the city's train station are greeted by an acrid burning smell and the other side of the station is blurred by a gray haze.

One of the biggest polluters is Kingboard Cokechem, a coking plant in the northeastern part of the city. It's a subsidiary of Hong Kong-based, publicly traded Kingboard Chemical Holding, whose shareholders also include major international investors like JPMorgan Chase & Co.

Farmer Zhao Chunhe, 60, stands at the edge of her wheat field located next to the coking facility. Every few minutes, a massive cloud puffs out of its quenching tower. Although the field's yield hasn't changed much since the arrival of the coking plant, she says the color definitely has. "Earlier, the wheat was white," she says. "Now it's black and we have to wash it before we can sell it."

On the street that leads from Zhao Chunhe's village to Kingboard, heavy trucks loaded with coal from the surrounding mines are lined up for kilometers. Empty trucks wait to load the refined coke.

An electronic display board is set up at the factory gate indicating the coking plant's emissions values. On this particular morning, there are 479 micrograms per cubic meter of fine particulate matter, 19 times the recommended amount. Officially, children are no longer allowed to go out onto the playground at this level of smog. During the winter, hundreds of millions of Chinese live in conditions of thick smog. A study by the Global Commission on the Economy and the Climate concluded that air pollution was linked in 2010 to the premature deaths of 1.23 million people in China. In other words, the very industry that is destabilizing the climate is also ruining the health of the people who live near these industrial sites.

In contrast to many countries in the West, the consequences of China's failed environmental policies are clearly palpable. In order to mollify an angry public, Beijing has spent the past three years tightening emissions laws and raising fines for violaters. Chinese Prime Minister Li Keqiang announced in March 2014 that China was "declaring war on pollution."

It's Time for a New Energy Policy
 
So does Naomi Klein have it right? Is climate protection doomed to failure so long as the world continues to pursue growth?

During that past two centuries, humanity has experienced something never before seen on this scale: a period of almost continuous growth. Earth's population has increased sevenfold since 1800. Per capita earnings have grown on average from $700 to $6,500 per year and economic output is 60 times bigger than it was 200 years ago.

That continual boom, though, was made possible fossil fuels, resources people long held to be inexhaustible. Coal, followed by oil and natural gas, made unprecedented economic growth in Europe, America, Australia and Asia possible.
Naomi Klein's argument sounds almost banal. She believes that growth is inevitably linked to destruction of nature and that the climate can only be protected by curbing economic activity. In other words, the only thing that can help the environment is giving up material things. "Less is more" is the mantra of the degrowth movement, which began more than four decades ago when a research group lead by the American Dennis Meadows was tasked by the Club of Rome to examine the frontiers of economic expansion in 1972. The resulting report was titled, "The Limits to Growth," and the theory that grew out of it has been finding great resonance ever since.

As proof of the irreconcilability of capitalism with environmental goals, economists like to cite the "rebound effect," which holds that all efforts to increase efficiency are negatively offset by increasing demand.

The first person to describe the rebound effect was William Stanley Jevons of Britain. His book, "The Coal Question," was published 150 years ago and described how steam engines required decreasing amounts of coal because of technological advances. Nevertheless, he noted, consumption of the fuel continued to rise because an increasing number of steam engines were being used. Jevons concluded that more efficient use of energy is not accompanied by sinking consumption. Instead the opposite is true.

Newer car engines use less fuel, heating becomes more efficient and yet the total consumption of oil, natural gas and fuels continues to increase because automobiles get heavier and apartments larger. In that way, what has been gained in efficiency has been lost again -- at least to a certain degree. But the extent of the effect is the subject of debate. A few studies have concluded that no more than 15 percent of the savings are lost. Others claim the loss to be as great as 30, 50 or even 80 percent.

In some cases, though, the rebound effect can also destroy all efficiency gains. Lighting provides a good example. With each level of development -- from the candle to the light bulb to today's LED lights -- less and less energy was required, with efficiency increasing within 200 years by 1,000 times. And yet per capita use of lights has grown at an even faster rate -- by more than 25,000 times.

A similar trend can be observed in crude oil. Thanks largely to improved extraction technologies, the global supply has grown so much that it has caused prices to collapse and triggered a renaissance of gas-guzzling SUVs.

Low energy prices should provide a natural opportunity to reform energy policies, at least in theory. Developing nations could pare back the subsidies they pay to make fuel cheaper for consumers. And industrialized nations should systematically invest the billions saved by consumers through cheap fuel into renewable energies. Unfortunately, though, that kind of farsightedness goes beyond the constraints of the current everyday political reality in which many governments are trapped.

That backdrop is the reason that proponents of degrowth like Naomi Klein consider the idea of green growth to be an illusion, indeed self-deception. But it's a view that Ottmar Edenhofer doesn't share. The researcher says there's a "fallacy" in that thinking.

Edenhofer is a professor for the economics of climate change at Berlin's Technical University, the only academic post of its kind in the world. His office is located on the second floor of a modernized brick building that was formerly part of a Berlin gas plant. The professor stares out at the steel frame of a gasometer, "an icon of the Industrial Revolution," he says almost awestruck. Today electric cars are parked in front of it charging their batteries, and energy for the campus is provided by solar and wind power, biogas and geothermal sources.

Is Germany a Model for the World?
 
For Edenhofer, the site is the perfect place to conduct his work: Although he's surrounded by physical evidence of the fossil past, it's the transition to renewable energies that dominates the thinking here. Edenhofer says he firmly believes that growth can be managed in ways that are not in conflict with the environment. For that to happen, it is essential that an important criterion be fulfilled: "We have to put the right price on CO2."

As societies, we haven't succeeded in doing that so far. The European Union has had emissions trading for 10 years now, but the system has never functioned as intended.

The idea is nevertheless a fascinating one. The EU places an upper limit on pollution rights, with just over 2 billion certificates allocated in 2014. Around 11,000 companies participate in emissions trading, purchasing the certificates and trading them amongst each other, thus setting a price for each ton of CO2 emitted.

The problem with the system is that the EU -- under pressure from countries like Poland, where 92 percent of electricity is generated from coal, and Germany, with its strong coal lobby -- issues far more certificates than the companies actually need. The result being that the price on CO2 emissions certificates is stagnating at under €7.

Additionally, the emissions trading system doesn't even cover half of the greenhouse gases that are being emitted. It excludes the transportation, real estate and agriculture sectors. All efforts to change the system are met with stiff resistance. Edenhofer argues that if the price of CO2 were considerably higher, there would be greater incentive to invest in low-carbon technologies. "The problem is not that we're short on fossil energy sources," he says, "it's that there's not enough storage space in the atmosphere. We need to apply a price to this scarcity. That's the whole point."

Of course, it would also be possible to reduce emissions by restricting growth the way Naomi Klein proposes. Edenhofer says it would be conceivable, but costly. Assuming a 1 percent reduction in both economic output and CO2 emissions in an environment of global gross domestic product of $70 trillion and emissions of 33 gigatons, he calculates it would cost $2,100 to cut a ton of CO2.

By comparison, he says it would only cost around $40 to reduce the same amount of CO2 by instead using wind power. Edenhofer believes that deliberately lowering growth is the most expensive option.

The climate economist argues that Earth's fate hinges largely on whether countries can agree to an appropriate price for CO2. Of course, the world is far from reaching any agreement, particularly given that Europe is comparatively more environmentally conscientious than other areas of the world and it still hasn't come up with a working model.

Therefore, at the climate conference in Paris, world leaders will once again be discussing who will have to foot the bill for a global shift to sustainable energies.
The wealthiest countries will have to bring a lot of money to the table. In 2010, they held out the prospect of spending $100 billion a year starting in 2020, with just under one-third of that money coming from governments. The rest was to be raised by private investors. Germany would be responsible for about 10 percent of the fund. "The developing nations are expecting us to provide reliable financing," says State Secretary Jochen Flasbarth, Germany's chief climate negotiator. "If we don't manage that in Paris, then there will be no treaty."

No real solution has been found at any of the other climate summits over the past 23 years. What if that happens again this time in Paris?

Two countries could prove decisive in the battle to improve the climate globally.

One is Germany. As controversial as it is domestically, the "German Energiewende," the shift away from nuclear power and fossil fuels to renewable energies, has become a term that has been picked up internationally. So far, the Germans have gone further than any other country in seeking to address the very existential question at hand: Can an industrialized nation succeed in entirely transforming its energy production within the scope of a few decades? And if so, at what price? Germany has begun this process, but the costs have proven enormous. German electricity customers are currently paying €23 billion a year in extra costs, billions that are the direct result of the expansion of alternative energies.

It is acknowledged globally that the Germans have led the pack in pushing ahead with the development of wind and solar energy. "You shouldered the development costs for everyone else with your Renewable Energies Act," an energy expert from the United States told a delegation from the German parliament attending the Lima conference.

Indeed, the rest of the world is directly profiting from Germany's shift. A study conducted by the Fraunhofer Institute for Wind Energy and Energy System Technology and the Berlin think tank Agora Energiewende found that wind and solar energy are becoming the "cheapest way of producing electricity in an increasing number of regions around the world."

Germany has also been more ambitious than all other countries in setting its goals for emissions reductions. The country is aiming to cut emissions of greenhouse gases by 40 percent compared to 1990 levels by 2020. It's an old target, set by the German government in 2007 and anchored anew in the coalition agreement for Chancellor Angela Merkel's current administration. Despite this, emissions grew considerably in Germany between 2008 and 2013.

This is largely due to the coal industry. In Germany, 80 percent of all energy consumed is still derived from coal, oil or gas. The country remains home to about 500 coal-fired power plants. Germany currently has plans to take 48 coal power stations offline by 2020, but it will need to shut down at least 50 additional plants in order to achieve its emissions target. As of today, there is still no law requiring such closures, and operators of power plans are firmly opposed.
And what about the other country that could provide a solution for climate change?

It turns out that there's an alternative narrative to China's coal-producing Hebei province and its oppressive pollution. In the western part of the country's Gansu province, the skies are upliftingly blue, and giant vehicles can be seen on the highway transporting the elegant white rotor blades of wind turbines.

The first wind park to be seen is located just outside of the city of Yumen and it stretches for as far as the eye can see. So far, around half of the planned 20,000 turbines at the Gansu Windfarm have been erected. Some 7,427 have already been connected to the grid, with a capacity of 8.1 gigawatts, or almost one-quarter of Germany's wind energy output.

A Bit of Hope
 
China's wind power capacity has quintupled over the past four years. Meanwhile, investments in coal, gas and oil power plants declined by 50 percent in China between 2008 and 2012, whereas those in non-fossil energies rose by 40 percent. In total, around one-third of the electricity produced in China today comes from renewable sources.

It is a telling indicator of the country's enormous hunger for energy that the world's greatest climate polluter is also the biggest user of hydro, wind, solar and bioenergy. China's capacity for renewable energies is greater than that of the United States, Germany, India and Spain combined.

"What we're looking at here is a long-term project," says Li Maolin of the Goldwind wind turbine factory. Pictures mounted on the staircase to his office are of visits from high-ranking party officials right up to President Xi Jinping, who declared the use of clean energy to be part of his "Chinese dream".

It's not necessarily even environmental concerns that are driving China's leaders to green energies. It's also due to their worry that, in their years of economic boom, they have become overly dependent on fossil fuel suppliers. In 1993, China became a net importer of crude oil, natural gas followed in 2007 and coal in 2011.

Ironically, it is China's boundless pursuit of growth that is now contributing to its efforts to make green energy more affordable and thus competitive. In order to secure its energy supplies, China has increased manufacturing of solar panels one hundred fold in the past 10 years. That's one reason that prices for photovoltaic cells have fallen by 80 percent since 2008. A similar development is happening in the wind industry. Recently, Australian economists John Mathews and Hao Tan concluded in the science magazine Nature that, in this manner, China is "contributing more than any other country to a climate-change solution."

Whatever the reason or motive behind Beijing's move to reduce coal consumption and increase the share of renewable energies, the rest of the world should accept it because China is officially planning to double both economic output and the per-capita income during each of the next two decades.

Can China succeed, almost as a byproduct of its growth, in saving the climate? Or will it be the Germans, with their more deliberate efforts? Perhaps one should seek to think a bit more daringly here: Maybe humankind will pull off a miracle in the end. After all, destroying the things we love is by no means a law of nature.

President Barack Obama Weekly Address February 28, 2015 (Video/Trascript )

President Barack Obama
Weekly Address
The White House
February 28, 2015

 

Hi everybody.  In America, we believe that a lifetime of hard work and responsibility should be rewarded with a shot at a secure, dignified retirement.  It’s one of the critical components of middle-class life – and this week, I took new steps to protect it.

Six years after the crisis that shook a lot of people’s faith in a secure retirement, our economy is steadily growing.  Last year was the best year for job growth since the 1990s.  All told, over the past five years, the private sector has added nearly 12 million new jobs.  And since I took office, the stock market has more than doubled, replenishing the 401(k)s of millions of families.

But while we’ve come a long way, we’ve got more work to do to make sure that our recovery reaches more Americans, not just those at the top.  That’s what middle-class economics is all about—the idea that this country does best when everyone gets their fair shot, everybody does their fair share, and everyone plays by the same set of rules.

That last part—making sure everyone plays by the same set of rules—is why we passed historic Wall Street Reform and a Credit Card Bill of Rights.   It’s why we created a new consumer watchdog agency.  And it’s why we’re taking new action to protect hardworking families’ retirement security. If you’re working hard and putting away money, you should have the peace of mind that the financial advice you’re getting is sound and that your investments are protected.

But right now, there are no rules of the road.  Many financial advisers put their clients’ interest first – but some financial advisers get backdoor payments and hidden fees in exchange for steering people into bad investments.  All told, bad advice that results from these conflicts of interest costs middle-class and working families about $17 billion every year.

This week, I called on the Department of Labor to change that – to update the rules and require that retirement advisers put the best interests of their clients above their own financial interests.  Middle-class families cannot afford to lose their hard earned savings after a lifetime of work.  They deserve to be treated with fairness and respect.  And that’s what this rule would do.

While many financial advisers support these basic safeguards to prevent abuse, I know some special interests will fight this with everything they’ve got.  But while we welcome different perspectives and ideas on how to move forward, what I won’t accept is the notion that there’s nothing we can do to make sure that hard-working, responsible Americans who scrimp and save can retire with security and dignity.

We’re going to keep pushing for this rule, because it’s the right thing to do for our workers and for our country.  The strength of our economy rests on whether hard-working families can not only share in America’s success, but can also contribute to America’s success.  And that’s what I will never stop fighting for – an economy where everyone who works hard has the chance to get ahead.

Thanks, and have a great weekend.

President Barack Obama Weekly Address February 7, 2015 (Video/Trascript )

President Barack Obama
Weekly Address
Indianapolis, Indiana
February 7, 2015

Hi everybody. I’m talking with you today from Ivy Tech Community College in Indianapolis, where I just held a town hall and heard from everyday Americans about what we can do, together, to make their lives a little better.

This week, we got news that confirms what we already know -- that our businesses continue to create jobs for hardworking folks all across the country. Last month, America’s businesses added another 267,000 jobs. In 2014, our economy created more than 3.1 million jobs in all -- the best year for job growth since the late 1990s. All told, over the past 59 months, the private sector has added 11.8 million new jobs—the longest streak on record. And in the single most hopeful sign for middle class families, wages are rising again.

America is poised for another good year – as long as Washington works to keep this progress going. We have to choose -- will we accept an economy where only a few of us do spectacularly well, or will we build an economy where everyone who works hard can get ahead?

Because while we’ve come a long way, we’ve got more work to do to make sure that our recovery reaches more Americans, not just those at the top. That’s what middle-class economics is all about -- the idea that this country does best when everyone gets their fair shot, does their fair share, and everyone plays by the same set of rules.

This week, I sent Congress a budget built on middle-class economics. It helps families afford childcare, health care, college, paid leave at work, homeownership, and saving for retirement, and it could put thousands of dollars back into the pockets of a working family each year. It helps more Americans learn new skills to earn higher wages, including by making two years of community college free for responsible students all across the country. It invests in the research and infrastructure our businesses need to compete and create high-paying jobs. And it pays for this with smart spending cuts and by fixing a tax code that’s riddled with special-interest loopholes for folks who don’t need them, allowing us to offer tax breaks to students and families who do need them.
I believe this is where we need to go to give working families more security in a time of constant economic change. And I’ll work with anyone—Republican or Democrat—who wants to get to “yes” on these issues. We won’t agree on everything, and that’s natural -- but we should stop refighting old battles, and start working together to help you succeed in the new economy.

That’s what you elected us to do -- not to turn everything into another Washington food fight, but to have debates that are worthy of this country, and to build an economy not just where everyone can share in America’s success, but where everyone can contribute to America’s success.

Thanks, and have a great weekend.

President Barack Obama Speaks at the National Prayer Breakfast (Video/Transcript)

THE PRESIDENT:  Thank you.  Well, good morning. 

Giving all praise and honor to God.  It is wonderful to be back with you here.  I want to thank our co-chairs, Bob and Roger.  These two don’t always agree in the Senate, but in coming together and uniting us all in prayer, they embody the spirit of our gathering today.

I also want to thank everybody who helped organize this breakfast.  It’s wonderful to see so many friends and faith leaders and dignitaries.  And Michelle and I are truly honored to be joining you here today.

I want to offer a special welcome to a good friend, His Holiness the Dalai Lama -- who is a powerful example of what it means to practice compassion, who inspires us to speak up for the freedom and dignity of all human beings.  (Applause.)  I’ve been pleased to welcome him to the White House on many occasions, and we’re grateful that he’s able to join us here today.  (Applause.)

There aren’t that many occasions that bring His Holiness under the same roof as NASCAR.  (Laughter.)  This may be the first.  (Laughter.)  But God works in mysterious ways.  (Laughter.)   And so I want to thank Darrell for that wonderful presentation.  Darrell knows that when you’re going 200 miles an hour, a little prayer cannot hurt.  (Laughter.)  I suspect that more than once, Darrell has had the same thought as many of us have in our own lives -- Jesus, take the wheel.  (Laughter.) Although I hope that you kept your hands on the wheel when you were thinking that.  (Laughter.)

He and I obviously share something in having married up.  And we are so grateful to Stevie for the incredible work that they’ve done together to build a ministry where the fastest drivers can slow down a little bit, and spend some time in prayer and reflection and thanks.  And we certainly want to wish Darrell a happy birthday.  (Applause.)  Happy birthday.

I will note, though, Darrell, when you were reading that list of things folks were saying about you, I was thinking, well, you're a piker.  I mean, that -- (laughter.)

 I mean, if you really want a list, come talk to me.  (Laughter.)  Because that ain’t nothing.  (Laughter.)  That's the best they can do in NASCAR?  (Laughter.)
 
Slowing down and pausing for fellowship and prayer -- that's what this breakfast is about.  I think it's fair to say Washington moves a lot slower than NASCAR.  Certainly my agenda does sometimes.  (Laughter.)  But still, it’s easier to get caught up in the rush of our lives, and in the political back-and-forth that can take over this city.  We get sidetracked with distractions, large and small.  We can’t go 10 minutes without checking our smartphones -- and for my staff, that's every 10 seconds.  And so for 63 years, this prayer tradition has brought us together, giving us the opportunity to come together in humility before the Almighty and to be reminded of what it is that we share as children of God.

And certainly for me, this is always a chance to reflect on my own faith journey.  Many times as President, I’ve been reminded of a line of prayer that Eleanor Roosevelt was fond of. She said, “Keep us at tasks too hard for us that we may be driven to Thee for strength.”  Keep us at tasks too hard for us that we may be driven to Thee for strength.  I’ve wondered at times if maybe God was answering that prayer a little too literally.  But no matter the challenge, He has been there for all of us.  He’s certainly strengthened me “with the power through his Spirit,” as I’ve sought His guidance not just in my own life but in the life of our nation.

Now, over the last few months, we’ve seen a number of challenges -- certainly over the last six years.  But part of what I want to touch on today is the degree to which we've seen professions of faith used both as an instrument of great good, but also twisted and misused in the name of evil.

As we speak, around the world, we see faith inspiring people to lift up one another -- to feed the hungry and care for the poor, and comfort the afflicted and make peace where there is strife.  We heard the good work that Sister has done in Philadelphia, and the incredible work that Dr. Brantly and his colleagues have done.  We see faith driving us to do right.

But we also see faith being twisted and distorted, used as a wedge -- or, worse, sometimes used as a weapon.  From a school in Pakistan to the streets of Paris, we have seen violence and terror perpetrated by those who profess to stand up for faith, their faith, professed to stand up for Islam, but, in fact, are betraying it.  We see ISIL, a brutal, vicious death cult that, in the name of religion, carries out unspeakable acts of barbarism  -- terrorizing religious minorities like the Yezidis, subjecting women to rape as a weapon of war, and claiming the mantle of religious authority for such actions.

We see sectarian war in Syria, the murder of Muslims and Christians in Nigeria, religious war in the Central African Republic, a rising tide of anti-Semitism and hate crimes in Europe, so often perpetrated in the name of religion.

So how do we, as people of faith, reconcile these realities -- the profound good, the strength, the tenacity, the compassion and love that can flow from all of our faiths, operating alongside those who seek to hijack religious for their own murderous ends?

Humanity has been grappling with these questions throughout human history.  And lest we get on our high horse and think this is unique to some other place, remember that during the Crusades and the Inquisition, people committed terrible deeds in the name of Christ.  In our home country, slavery and Jim Crow all too often was justified in the name of Christ.  Michelle and I returned from India -- an incredible, beautiful country, full of magnificent diversity -- but a place where, in past years, religious faiths of all types have, on occasion, been targeted by other peoples of faith, simply due to their heritage and their beliefs -- acts of intolerance that would have shocked Gandhiji, the person who helped to liberate that nation.

So this is not unique to one group or one religion.  There is a tendency in us, a sinful tendency that can pervert and distort our faith.  In today’s world, when hate groups have their own Twitter accounts and bigotry can fester in hidden places in cyberspace, it can be even harder to counteract such intolerance. But God compels us to try.  And in this mission, I believe there are a few principles that can guide us, particularly those of us who profess to believe.

And, first, we should start with some basic humility.  I believe that the starting point of faith is some doubt -- not being so full of yourself and so confident that you are right and that God speaks only to us, and doesn’t speak to others, that God only cares about us and doesn’t care about others, that somehow we alone are in possession of the truth.

Our job is not to ask that God respond to our notion of truth -- our job is to be true to Him, His word, and His commandments.  And we should assume humbly that we’re confused and don’t always know what we’re doing and we’re staggering and stumbling towards Him, and have some humility in that process.  And that means we have to speak up against those who would misuse His name to justify oppression, or violence, or hatred with that fierce certainty.  No God condones terror.  No grievance justifies the taking of innocent lives, or the oppression of those who are weaker or fewer in number.

And so, as people of faith, we are summoned to push back against those who try to distort our religion -- any religion -- for their own nihilistic ends.  And here at home and around the world, we will constantly reaffirm that fundamental freedom -- freedom of religion -- the right to practice our faith how we choose, to change our faith if we choose, to practice no faith at all if we choose, and to do so free of persecution and fear and discrimination.

There’s wisdom in our founders writing in those documents that help found this nation the notion of freedom of religion, because they understood the need for humility.  They also understood the need to uphold freedom of speech, that there was a connection between freedom of speech and freedom of religion.  For to infringe on one right under the pretext of protecting another is a betrayal of both.

But part of humility is also recognizing in modern, complicated, diverse societies, the functioning of these rights, the concern for the protection of these rights calls for each of us to exercise civility and restraint and judgment.  And if, in fact, we defend the legal right of a person to insult another’s religion, we’re equally obligated to use our free speech to condemn such insults -- (applause) -- and stand shoulder-to-shoulder with religious communities, particularly religious minorities who are the targets of such attacks.  Just because you have the right to say something doesn’t mean the rest of us shouldn’t question those who would insult others in the name of free speech.  Because we know that our nations are stronger when people of all faiths feel that they are welcome, that they, too, are full and equal members of our countries.

So humility I think is needed.  And the second thing we need is to uphold the distinction between our faith and our governments.  Between church and between state.  The United States is one of the most religious countries in the world -- far more religious than most Western developed countries.  And one of the reasons is that our founders wisely embraced the separation of church and state.  Our government does not sponsor a religion, nor does it pressure anyone to practice a particular faith, or any faith at all.  And the result is a culture where people of all backgrounds and beliefs can freely and proudly worship, without fear, or coercion -- so that when you listen to Darrell talk about his faith journey you know it's real.  You know he’s not saying it because it helps him advance, or because somebody told him to.  It's from the heart.

That’s not the case in theocracies that restrict people’s choice of faith.  It's not the case in authoritarian governments that elevate an individual leader or a political party above the people, or in some cases, above the concept of God Himself.  So the freedom of religion is a value we will continue to protect here at home and stand up for around the world, and is one that we guard vigilantly here in the United States.

Last year, we joined together to pray for the release of Christian missionary Kenneth Bae, held in North Korea for two years.  And today, we give thanks that Kenneth is finally back where he belongs -- home, with his family.  (Applause.)
Last year, we prayed together for Pastor Saeed Abedini, detained in Iran since 2012.  And I was recently in Boise, Idaho, and had the opportunity to meet with Pastor Abedini’s beautiful wife and wonderful children and to convey to them that our country has not forgotten brother Saeed and that we’re doing everything we can to bring him home.  (Applause.)  And then, I received an extraordinary letter from Pastor Abedini.  And in it, he describes his captivity, and expressed his gratitude for my visit with his family, and thanked us all for standing in solidarity with him during his captivity.

And Pastor Abedini wrote, “Nothing is more valuable to the Body of Christ than to see how the Lord is in control, and moves ahead of countries and leadership through united prayer.”  And he closed his letter by describing himself as “prisoner for Christ, who is proud to be part of this great nation of the United States of America that cares for religious freedom around the world.”  (Applause.)
We’re going to keep up this work -- for Pastor Abedini and all those around the world who are unjustly held or persecuted because of their faith.   And we’re grateful to our new Ambassador-at-Large for International Religious Freedom, Rabbi David Saperstein -- who has hit the ground running, and is heading to Iraq in a few days to help religious communities there address some of those challenges.  Where’s David?  I know he’s here somewhere.  Thank you, David, for the great work you’re doing.  (Applause.)

Humility; a suspicion of government getting between us and our faiths, or trying to dictate our faiths, or elevate one faith over another.  And, finally, let’s remember that if there is one law that we can all be most certain of that seems to bind people of all faiths, and people who are still finding their way towards faith but have a sense of ethics and morality in them -- that one law, that Golden Rule that we should treat one another as we wish to be treated.  The Torah says “Love thy neighbor as yourself.”  In Islam, there is a Hadith that states: "None of you truly believes until he loves for his brother what he loves for himself.”  The Holy Bible tells us to “put on love, which binds everything together in perfect harmony.”  Put on love.

Whatever our beliefs, whatever our traditions, we must seek to be instruments of peace, and bringing light where there is darkness, and sowing love where there is hatred.  And this is the loving message of His Holiness, Pope Francis.  And like so many people around the world, I’ve been touched by his call to relieve suffering, and to show justice and mercy and compassion to the most vulnerable; to walk with The Lord and ask “Who am I to judge?”  He challenges us to press on in what he calls our “march of living hope.”  And like millions of Americans, I am very much looking forward to welcoming Pope Francis to the United States later this year.  (Applause.)

His Holiness expresses that basic law:  Treat thy neighbor as yourself.  The Dalai Lama -- anybody who’s had an opportunity to be with him senses that same spirit.  Kent Brantly expresses that same spirit.  Kent was with Samaritan’s Purse, treating Ebola patients in Liberia, when he contracted the virus himself. And with world-class medical care and a deep reliance on faith -- with God’s help, Kent survived.  (Applause.)

And then by donating his plasma, he helped others survive as well.  And he continues to advocate for a global response in West Africa, reminding us that “our efforts needs to be on loving the people there.”  And I could not have been prouder to welcome Kent and his wonderful wife Amber to the Oval Office.  We are blessed to have him here today -- because he reminds us of what it means to really “love thy neighbor as thyself.”  Not just words, but deeds.

Each of us has a role in fulfilling our common, greater purpose -- not merely to seek high position, but to plumb greater depths so that we may find the strength to love more fully.  And this is perhaps our greatest challenge -- to see our own reflection in each other; to be our brother’s keepers and sister’s keepers, and to keep faith with one another.  As children of God, let’s make that our work, together.

As children of God, let’s work to end injustice -- injustice of poverty and hunger.  No one should ever suffer from such want amidst such plenty.  As children of God, let’s work to eliminate the scourge of homelessness, because, as Sister Mary says, “None of us are home until all of us are home.”  None of us are home until all of us are home.

As children of God, let’s stand up for the dignity and value of every woman, and man, and child, because we are all equal in His eyes, and work to send the scourge and the sin of modern-day slavery and human trafficking, and “set the oppressed free.”  (Applause.)

If we are properly humble, if we drop to our knees on occasion, we will acknowledge that we never fully know God’s purpose.  We can never fully fathom His amazing grace.  “We see through a glass, darkly” -- grappling with the expanse of His awesome love.  But even with our limits, we can heed that which is required:  To do justice, and love kindness, and walk humbly with our God.
I pray that we will.  And as we journey together on this “march of living hope,” I pray that, in His name, we will run and not be weary, and walk and not be faint, and we’ll heed those words and “put on love.”

May the Lord bless you and keep you, and may He bless this precious country that we love.

Thank you all very much.  (Applause.)

President Barack Obama Weekly Address January 31, 2015 (Video/Trascript )

President Barack Obama
Weekly Address
The White House
January 31, 2015

Hi, everybody.  At a moment when our economy is growing, our businesses are creating jobs at the fastest pace since the 1990s, and wages are starting to rise again, we have to make some choices about the kind of country we want to be.
Will we accept an economy where only a few of us do spectacularly well?  Or will we build an economy where everyone who works hard has a chance to get ahead?
That was the focus of my State of the Union Address – middle-class economics.  The idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.

This week, I will send a budget to Congress that’s built on those values.

We’ll help working families’ paychecks go farther by treating things like paid leave and child care like the economic priorities that they are.  We’ll offer Americans of every age the chance to upgrade their skills so they can earn higher wages, with plans like making two years of community college free for every responsible student.  And we’ll keep building the world’s most attractive economy for high-wage jobs, with new investments in research, infrastructure, manufacturing, and expanded access to faster internet and new markets.

We can afford to make these investments.  Since I took office, we’ve cut our deficits by about two-thirds – the fastest sustained deficit reduction since just after the end of World War II.  We just have to be smarter about how we pay for our priorities, and that’s what my budget does.  It proposes getting rid of special interest loopholes in our tax code, and using those savings to cut taxes for middle-class families and reward businesses that invest in America.  It refuses to play politics with our homeland security, and funds our national security priorities at home and abroad.  And it undoes the arbitrary, across-the-board budget cuts known as “the sequester” for our domestic priorities, and matches those investments dollar-for-dollar in resources our troops need to get the job done.

Now, I know that there are Republicans in Congress who disagree with my approach.  And like I said in my State of the Union Address, if they have ideas that will help middle-class families feel some economic security, I’m all in to work with them.  But I will keep doing everything I can to help more working families make ends meet and get ahead.  Not just because we want everyone to share in America’s success – but because we want everyone to contribute to America’s success.

That’s the way the middle class thrived in the last century – and that’s how it will thrive again.

Thanks, and have a great weekend.

President Barack Obama Weekly Address January 24, 2015 (Video/Trascript )

President Barack Obama Weekly Address The White House January 24, 2015

Hi, everybody.  This week, in my State of the Union Address, I talked about what we can do to make sure middle-class economics helps more Americans get ahead in the new economy. 

See, after some tough years, and thanks to some tough decisions we made, our economy is creating jobs at the fastest pace since 1999.  Our deficits are shrinking.  Our energy production is booming.  Our troops are coming home.  

Thanks to the hard work and resilience of Americans like you, we’ve risen from recession freer to write our own future than any other nation on Earth. 

Now we have to choose what we want that future to look like.  Will we accept an economy where only a few of us do spectacularly well?  Or will we commit ourselves to an economy that generates rising incomes and rising chances for everyone who makes the effort?

I believe the choice is clear.  Today, thanks to a growing economy, the recovery is touching more and more lives.  Wages are finally starting to rise again.  Let’s keep that going – let’s do more to restore the link between hard work and growing opportunity for every American. 

That’s what middle-class economics is – the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules. 

Middle-class economics means helping workers feel more secure in a world of constant change – making it easier to afford childcare, college, paid leave, health care, a home, and retirement. 

Middle-class economics means doing more to help Americans upgrade their skills through opportunities like apprenticeships and two years of free community college, so we can keep earning higher wages down the road. 

Middle-class economics means building the most competitive economy in the world, by building the best infrastructure, opening new markets so we can sell our products around the world, and investing in research – so that businesses keep creating good jobs right here.

And we can afford to do these things by closing loopholes in our tax code that stack the decks for special interests and the superrich, and against responsible companies and the middle class.

This is where we have to go if we’re going to succeed in the new economy.  I know that there are Republicans in Congress who disagree with my approach, and I look forward to hearing their ideas for how we can pay for what the middle class needs to grow.  But what we can’t do is simply pretend that things like child care or college aren’t important, or pretend there’s nothing we can do to help middle class families get ahead. 

Because we’ve got work to do.  As a country, we have made it through some hard times.  But we’ve laid a new foundation.  We’ve got a new future to write.  And I’m eager to get to work. 

Thanks, and have a great weekend.

Can Capitalists Save Capitalism?

by Thomas B. Edsall

Source:  The New York Times

Key Democrats have reached agreement on a set of policies known as “inclusive capitalism”: a forceful market-oriented economic agenda intended to counter inequality, restrain the accrual of vast wealth at the top and provide the working and middle classes with improved economic opportunities.

From the White House to Congress to liberal think tanks, recent Democratic proposals would substantially alter the rules of the marketplace. These include major revisions of the tax code, legislation to pressure corporations to increase pay to match productivity growth and an expansion of refundable tax credits to include low-income workers as well as households making as much as $80,000 a year.

According to a report by the former Treasury secretary Lawrence Summers and Ed Balls, a top British Labor Party politician, unless there is serious government intervention, inequality and a lack of financial resources among those in the bottom half of the income distribution will result in “insufficient aggregate demand – too little spending by consumers and businesses to keep gross domestic product at its capacity.” Developed nations “need new social and political institutions to make 21st century capitalism work for the many and not the few,” Summers and Balls wrote.

“Inclusive capitalism,” according to its advocates, seeks “to make our economic system more equitable, more sustainable and more inclusive.” It is an international movement that has now made its way into Democratic Party circles.

Mark Carney, the Canadian governor of the Bank of England, articulated a fundamental premise of inclusive capitalism in a speech delivered in Britain last May: “Just as any revolution eats its children,” Carney said, “unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself.” Among the attendees at the conference in London in May were such Democratic and liberal luminaries as Bill Clinton; Eric Schmidt, executive chairman of Google; and Summers, who served President Obama as a top economic adviser.

Two of the earliest advocates of inclusive capitalism were the late C.K. Prahalad, professor of business at the University of Michigan, and Stuart L. Hart, professor emeritus of strategic management at Cornell. In a widely cited 2002 article, “The Fortune at the Bottom of the Pyramid,” Prahalad and Hart argued that powerful corporations could — must — improve the conditions of the world’s poor by promoting commercial activity, employment opportunities, access to credit, and wealth creation among those at the bottom of income distribution – a group they refer to as the fourth tier, the world’s poorest four billion people.

Prahalad’s core thesis was that the poor could be the

engine of the next round of global trade and prosperity. If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up.

The concept of inclusive capitalism has expanded over the past 13 years to apply to those at the bottom and middle of the ladder in developed nations, including the United States. The fundamental “inclusive capitalism” argument is that business enterprises lose profit-making opportunities when consumers have little money to spend. Inadequate purchasing power among the many threatens corporations and poses a direct danger to the top 1 percent, and, indeed, to capitalism itself.

As testimony to the power of the concept of “inclusive capitalism,” President Obama in his State of the Union address called for the enactment of tax policies designed to provide a larger share of market-driven economic growth to the working and middle classes. In a May 7, 2014, speech in Dublin, “Global Lessons for Inclusive Growth,” Jason Furman, chairman of the Council of Economic Advisers, outlined central elements of the White House agenda. Administration policies, Furman argued, would result in “higher median incomes, lower poverty rates, and broader, more inclusive growth.”

Representative Chris Van Hollen, ranking Democrat on the House Budget Committee, outlined additional inclusive capitalism policies in “An Action Plan to Grow the Paychecks of All, Not Just the Wealth of a Few.”

The Summers-Balls report – “The Report of the Commission on Inclusive Prosperity” – is the most comprehensive summary. This report, which uses the phrase “inclusive capitalism” more than a dozen times, was published by the Center for American Progress, a Democratic think tank founded by John Podesta – Bill Clinton’s former chief of staff who in February will join Hillary Clinton’s exploratory presidential campaign.

Those pressing the Democratic Party to take more populist stands contend that the lack of a persuasive Democratic economic program contributed to, or drove, devastating losses in the 2014 elections in states as diverse as North Carolina, Maryland, Iowa and Colorado. According to an Oct. 13, 2014, Gallup pre-election survey, voters believed Republicans were better equipped to handle the economy than Democrats by 50 percent to 39 percent.

If policies grounded in “inclusive capitalism” become central to the party platform, it will mark the party’s strongest commitment to the economic interests of working- and middle-class Americans since Franklin Roosevelt’s New Deal. The new agenda stands apart from Lyndon Johnson’s War on Poverty, which was focused primarily on the “Other America” of the very poor.

The most damaging contemporary American trend that the proposals seek to counter is the sharply declining share of national income flowing to labor, and the parallel increase in the share flowing to owners of capital. This trend, which accelerated sharply in 2000, is shown in Figure 1, a graphic produced by the White House.

Photo

The share of total income going to labor. The gray bars indicate recessions. Credit whitehouse.gov, from a speech by Jason Furman

“We need to share the wealth,” said Senator Charles E. Schumer, chairman of the Senate Democratic Policy and Communications Committee and a leading proponent of the party’s focus on economics.

 

Schumer, in an interview, voiced strong enthusiasm for the Summers report. “It could bring together the left and center and even parts of the right,” Schumer suggested.

In his State of the Union address, Obama put it this way: “Let’s close loopholes so we stop rewarding companies that keep profits abroad, and reward those that invest in America.”

His plan calls for the imposition of new taxes on the wealthy and on major financial institutions, totaling $320 billion over 10 years. The money would be used to finance tax cuts and credits for low-to-moderate-income men and women, and to make attendance at community colleges tuition-free.

Not only would Obama raise capital gains tax rates from 23.8 to 28 percent for couples making more than $500,000 in taxable income, but he would eliminate a provision in tax law that allows the very rich to avoid taxation on much of the wealth passed on to their children and he would end a current exemption from taxation on the increase in the value of stocks, bonds and other assets when passed on through inheritance.

This exemption, technically called the “stepped up basis,” is crucial to the unrestricted intergenerational transfer of wealth, a practice that many liberals, and even some conservatives, contend conflicts with equality of opportunity. The Obama plan additionally calls for a .07 percent fee on financial institutions with more than $50 billion in assets that would produce $110 billion in revenue over 10 years.

Van Hollen, in turn, would raise revenues by imposing a transaction tax on stock trades. He would use the money to finance a $1,000 tax credit for workers making less than $100,000 annually, a $20,000 deduction for two-earner families, an annual $250 payment to those who put at least $500 into an approved retirement pension plan, and to substantially increase child care tax credits.

Van Hollen would also bar large corporations from deducting C.E.O. and other corporate compensation over $1 million unless employees got pay raises reflecting increases in worker productivity and the cost of living.

The Summers-Balls report includes many of the proposals outlined by Obama and Van Hollen. Balls warned on his blog that “unfettered markets and trickle-down economics are leading to increasing levels of inequality, stagnating wages and a hollowing out of decent, middle income jobs.”

Their report addresses four major economic developments broadly undermining wages and working conditions:

First, that “increasing global economic integration has also meant increased competition for many workers who produce tradable goods and services.”

Second, that “advances in robotics and artificial intelligence have put intermediate-skill jobs at risk in what economists call a hollowing out of the labor market.”

Third, that “Major corporations have opted to use subcontracting to perform basic functions, and many workers are now classified as independent contractors, eroding basic labor law protections.”

And fourth, “corporations have come to function much less effectively as providers of large-scale opportunity. Increasingly, their dominant focus has been on maximization of share prices and the compensation of their top employees.”

In addition, Summers and Balls argue that competition in the banking sector has broken down and “will need interventions to support the reasonable functioning of the free market.”

What do these points actually signify in practice? In a section titled “U.S. Policy Response,” Summers and Balls call for making parent companies responsible for the working conditions of employees of subcontractors; adopting government policies favoring employee stock ownership so that workers benefit from the growing share of national income flowing to capital as opposed to wages; and imposing tough and costly sanctions on employers who use illegal tactics to fight unionization.

Not stopping there, Summers and Balls call for a substantial boost in the $24,000 pay ceiling under which employees must get time and a half for overtime work beyond 40 hours a week; increased infrastructure spending of $100 billion a year, or $1 trillion over 10 years; and strengthened provisions in trade agreements guaranteeing collective bargaining rights and basic environmental protections to reduce the movement of American companies to countries with the lowest labor standards.

Among their other proposed policy initiatives are creation of an income tax credit for those with moderate pay levels. It would start at $23,260 for joint filers with children, just where the current earned-income tax credit phases out. At $85,000, the credit would diminish, reaching zero at $95,000. They would also change the mortgage interest and property tax deductions into tax credits. Deductions inherently provide larger benefits to those in higher tax brackets. Credits provide equal benefits to all who qualify.

Republican leaders in Congress have already stiff-armed these proposals.

In response to Obama’s plan to tax the wealthy to boost breaks for the working class, Michael Steed, spokesman for the speaker of the House, John A. Boehner, said in a statement, “More Washington tax hikes and spending is the same old top-down approach we’ve come to expect from President Obama that hasn’t worked.”

“The president needs to stop listening to his liberal allies who want to raise taxes at all costs and start working with Congress to fix our broken tax code,” Senator Orrin Hatch, chairman of the Senate Finance Committee, said in a statement,

Taken together, the Obama, Van Hollen, and Summers interpretations of “inclusive capitalism” are a victory for the left of the Democratic Party. This is especially the case for the Economic Policy Institute, which has been conducting a lonely fight for stronger legislative and regulatory initiatives to counter stagnating wages.

Josh Bivens, the research director at E.P.I., said in an email that the proposals did indeed “look like a shift in the Democratic Party on economic policy.” He said his hope was that “the next two years becomes a competition about who is willing to be the most aggressive in trying to boost low/middle-class incomes.”

Dean Baker, co-director of the Center for Economic and Policy Research, called the Obama plan “a pretty big deal. Raising the capital gains tax rate and ending the stepped-up basis at death are changes that almost exclusively hit the wealthy, and they amount to a fair bit of money.”

  

While none of the proposals, or their advocates, acknowledge this explicitly, one of the objectives of the evolving Democratic economic agenda is to get back support among whites without college degrees – the polling shorthand version of what is sometimes still called the white working class.

In 2014, these voters, who made up 36 percent of the electorate, cast their ballots for Republican House candidates by a 30-point margin (64-34 percent). This was nearly double the 16-point Republican margin among white college graduates, 57-41.

Inclusive capitalism has its critics on the left, nicely summed up by the Guardian columnist Nafeez Ahmed. He argued last May that the inclusive capitalism movement represented “less a meaningful shift of direction than a barely transparent effort to rehabilitate a parasitical economic system on the brink of facing a global uprising.”

Andrew Grove, founder of Intel, put the push toward “inclusive capitalism” in a more positive light. “Our generation has seen the decisive victory of free-market principles over planned economies,” he told the Economist in 2012. “So we stick with this belief largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.”

While the new agenda has no chance of passage in the Republican-controlled Congress, Democrats plan to use the tenets of inclusive capitalism in the 2016 elections. One Democratic goal in putting specific policies forward is to use them as wedge issues to force Republicans to choose between their affluent backers and their supporters in the white working class. This will be no easy task because a decisive majority of whites without college degrees has been voting against Democratic candidates for two decades, making it very difficult for the party to break what has been a Republican hammerlock since 1994.