A Threesome: Some Prayers, a Prime Minister, and a Parable
Prayers for Police and for Peace
In these tense days of troubles among African-Americans and law
enforcement officers, we suggest these prayers from A New Zealand Prayer Book*.
FOR THE JUDICIARY AND
God of truth and justice;
we ask you to help the men and women
who administer and police our laws;
grant them insight, courage and compassion,
protect them from corruption and arrogance
and grant that we, whom they seek to serve,
may give them the support and affection they need;
so may our people be strengthened more and more in respect and concern for one another.
We make this prayer through Jesus Christ. Amen.
ON THE 25TH
SUNDAY AFTER PENTECOST: For Our World
Universal and unchanging God,
we are one, unalterably one,
with all the human race.
Grant that we who share Christ’s blood
may, through your unifying Spirit,
break down the walls that divide us.
we ask through Christ our Mediator. Amen.
May To Become U.K. Prime Minister
July 13, the U.K. will get its second woman Prime Minister when Theresa May, currently
Home Secretary, assumes that higher office.
As we wrote last week, David Cameron resigned immediately after the
Brexit vote on June 23; he will do that formally July 13 by presenting himself
and his letter of resignation to the Queen; he will inform her that Ms. May is
available and in his view would be worthy of the appointment. Later in the day, Ms. May will be presented
to the Queen.
give you this follow-up information for a couple of reasons. Obviously, it is an important step forward in
the U.K.’s new sense of itself. Ms. May
favored remaining in the EU, but she seems always to have understood what
people wanted in breaking away and will work carefully on that process. Comments we saw about her indicate that she
is a most conscientious worker in government and concentrates on the substance
of matters, rather than the perks and personality points of holding
office. “I don’t tour the TV studios,”
she has stated.
brings us to the second reason we want to give specific mention to this
development. We are struck by the “adult”
attitudes of the U.K. leaders at this time.
Boris Johnson, who seemed to be a leading candidate early on, and Andrea
Leadsom, the other finalist for election as Conservative Party leader, both
pulled out to allow the selection to take place with the least controversy
possible. At this point in time, with
much uncertainty, having the election process as brief as practicable helps
significantly in both domestic and international affairs, and we are impressed
that egos have not gotten in the way and that everyone has seemed to be in line
to move forward, despite the shock of the Brexit vote outcome. Concluding the Prime Minister decision
promptly will permit more time on the substance of the conditions for the U.K.’s
departure from the EU, and Ms. May seems to be someone who will give ample
consideration to all concerns in this important step.
the 3rd Servant Was Right To Bury his Talent
Gospel selection assigned for today’s (July 12) Daily Office readings in the
of Common Prayer is the parable of the talents, Matthew 25:14-30. A man of wealth is going off on a long
journey and decides to let three slaves manage some of his funds while he is
away. To one slave, he gives 5 “talents”,
to a second slave, 2 talents and to a third slave, 1 talent. The first two make investments or form businesses,
and each doubles his money. When the
master returns, he is very pleased with their performances and promises them
promotions. The third slave buries his
talent in the ground; he doesn’t lose any money, but he doesn’t gain anything
either. As we know, the master is upset
at this action – or non-action – by the third slave; he takes back the talent and
throws the slave out on the street, leaving him penniless and homeless.
some dialogue this morning with Barbara Crafton, she and I both realized that
there might be times when the third slave actually did the right thing in
burying the talent. Last week in Japan,
for instance, that government issued 10-year bonds with a yield of -0.243%; that is, there is negative interest
on the bonds, so that investors are paying the government a fee to keep their
money safe for 10 years and return it to them.
Similarly, in Germany, a recent auction of 30-year government bonds
carried a negative yield of -0.76%. So
investors there also are paying the government to keep their money for them and
return it at the designated time.
simply by burying the talent in the ground and returning it to the master at
the proper time, the slave might have fulfilled an important function, keeping
the master’s money safe and keeping it from eroding in value.
– you knew there had to be a “however” – the broader economic environment that surrounds
these negative bond yields is hardly one that produces many business
opportunities that result in doubling someone’s active investment. So it’s unlikely that the other two slaves
would have been nearly as successful in this scenario. The German stock market
is down 13% from a year ago, the Japanese stock market 21%. The U.S. market is up, but by only 1.3%. Investors would have done all right with
gold, at a gain of almost 15% from a year ago, but a broad index of industrial
and agricultural commodities is down 13%.
lesson for investors in these differential results is that we need to assess
the whole environment and be aware of the risks. As Barbara wrote in her own comments on this
parable, the underlying issue is not money but risk. For the three slaves and for us, probably the
best answer is a mix of assets with varying risks. We see that sometimes, burying the talent in
the ground can be the best thing. And
perhaps all of the time, at least some of the funds should be in something with
a guaranteed outcome. Otherwise, nothing
is totally sure.
Labels: Christianity, Financial Markets, People, World
What the _______ Just Happened Between the U.K. and the EU?
The people of the U.K. voted in a referendum on June 23 that
tells their own government they want to disaffiliate from the EU. This outcome was clearly a major
surprise. Even though, as we pointed out
a couple of weeks ago, results of opinion polls had gone back and forth in the
months running up to the vote, no one really expected the Leaves to come out
ahead. But they did, 51.9% to 48.1%.
First, why did this happen?
Second, what happens next? Third,
do we know what it all means? What follows is hardly complete, but we’ll try to
make some response to these questions.
First, why did
people want to leave the EU?
There seem to be two main proximate causes: discomfort with immigration
and impatience with EU bureaucracy. In
our commentary on June 20, we noted that many people in the U.K. are concerned
about immigration, and we drew a parallel to the interest in Donald Trump in
the U.S. elections. We’re hardly the
only observers making this comparison. Citizens
of an EU member country can live anywhere in the EU they want at any given time,
and these days, among other implications, this causes nervousness about terror
threats. Notably, however, the U.K. does
not have the most liberal border policy it might have; it is not an adherent to
the EU’s so-called “Schengen Agreement,” which allows totally free travel,
basically passport-less, among almost all the other EU countries. But EU citizens can move into the U.K. without
undergoing any approval process.
In addition, a country’s membership in the EU means that it
participates in the EU’s joint regulatory system, which amounts to a huge
bureaucracy. The EU administration
consists of seven different bodies, most of which are headquartered in
Brussels. These include the European
Council, which is the summit of the heads of each member nation; the EU
Parliament & Council of Ministers, which together constitute the
legislative body; the European Commission, which is the executive branch; the
Court of Justice; the European Court of Auditors; and the European Central
Bank. Since the U.K. has its own
currency, it does not participate in the Central Bank.
The functions of each of these institutions are classified
by “competences”, some of which are “exclusive” to the EU, some “shared” with
member nations’ governments and some “supportive” of member governments. A few examples might give some sense of the
reach of the EU into each member’s internal affairs. Clearly, since the EU is a free-trade zone,
customs regulations are “exclusive” to the joint organization, and many
international agreements are also reserved for the joint system. Much commercial policy, including antitrust
laws, is managed by the European Commission, which has just brought new charges
against Google, for instance.
Much of the “shared competence” work also involves
businesses, such as consumer protection, energy and the environment and
agriculture. Social policies and public
health matters are also managed by the Commission. Among the “supportive” competences, the
Commission helps members with disaster response, tourism and education, among
Thus, there is a lot of bureaucracy – the Commission itself
has 32,900 employees – and many kinds of business decisions are governed or
influenced by policies, not made in London, Paris or Madrid, but in Brussels by
people who may not be directly associated with the specific country having a
Again, then, we see the parallel to the Trump model in the
U.S. Many people in the U.K. – more
than had been understood – want to “take their country back,” to bring
decision-making powers back home.
All this is no small matter.
As you might imagine, trade is very important to the U.K. economy. Total exports of goods and services were 27%
of GDP last year, compared to 13% in the U.S.
Imports of goods and services were 29% of GDP, compared to 16% in the
U.S. Of goods exports, 55% go to the EU,
and 47% of imports come from the EU. If
they lose export market share and also have to pay duties on imports that now
enter without such fees, that will be costly in several ways. Of course, one of the goals is to help
domestic production by making imports more expensive. So there are potential offsets.
Further, some private economists estimate that 3 million
jobs are presently associated with EU trade, constituting about 10% of total
employment. The stakes are high.
The referendum vote on June 23 was not the enactment of a
law, but the expression of a viewpoint.
Now the U.K. Parliament must pass legislation instructing its government
to invoke an article of the EU organizing document, Article 50 of the Treaty of
Lisbon of 2007. This will set in motion
specific negotiations for the withdrawal of the U.K.; these negotiations could
well last for two years and that may be extended. Even before Parliament acts, however, the
U.K. government will need to outline its needs, surely in consultation with a
variety of business and other private institutions. Prime Minister David Cameron has said he will
resign to permit new government leadership to execute these very fundamental
changes. Two candidates have emerged in
preliminary Conservative Party voting; a final choice will be made in
Thus, nothing structural will happen right away. Surely there has been an immediate and
dramatic reaction in financial markets as a result of the shock of the unexpected
vote result. However, where market
valuations move from here depends on many factors currently unknown. Some of the dust has settled, and the
best-known stock index, the FTSE 100, is now running slightly higher than prior
to the announcement of the vote result. In
contrast, the foreign exchange value of the pound fell immediately, and it has
not recovered; it presently down 13%, to about $1.29 from $1.50 on June 23. These differing market reactions highlight
the overall uncertainty. This exchange
rate movement already means the U.K. exports have become cheaper. The Motley Fool website points out that a
trip there for U.S. tourists and business travelers is now already cheaper. However, it just got much more expensive for
U.K. residents to go anywhere else.
Third, do we know what
this all means?
Not really. There is
no explicit timeframe for concrete actions, although we note with great
interest that the Conservative Party is moving promptly with its election
process. And while the Article 50
authorization for the U.K. to leave the EU supposedly has a two-year time
limit, associated negotiations on accompanying trade policies could drag out
far longer than that.
Such basic questions mean economic growth, already sluggish,
of course, is well likely to be restrained further. Forecasts range widely, from a roughly 1% hit
to growth in the near-term to 3 or 4%.
The effects on specific businesses are also uncertain. Some analysts believe that international
banks might leave London to better concentrate their work in Europe
itself. But other analysts point out
that Parliament might take advantage of newfound flexibility to effect tax
reductions, making the U.K. more attractive to businesses than locations on the
These notions apply broadly – even to the Arts. We were startled to find a commentary in the
weekly email from New York’s classical radio station, WQXR, titled “How ‘Brexit’
Affects Opera and the Arts.” The drop in
the U.K. exchange rate has already had a major impact on the value of European
singers’ salaries when they perform at the Royal Opera at Covent Garden, for
instance. British conservatories also
have two scales for their tuition fees, EU and non-EU, the latter as much as
twice the former. What will happen to
those fees when the actual “Leave” takes place and will European students still
come to study there?
People from other EU countries who currently live and work
in the U.K. face uncertainty. They will
no longer have automatic authorization to live there. Some of them have already applied to the U.K.
Home Office for permanent residency or outright citizenship. Some may have to leave.
Another issue is that Scotland voted heavily to Remain in
the EU, and its government is already trying to figure out if there is a way to
handle that. The “United Kingdom” might
then be less “united” if Scotland remains while Great Britain leaves.
The distress over the vote and the nasty campaign ahead of
it, marked by the tragic murder of MP Jo Cox, has brought a response from
Church leaders. As we in the U.S.
struggle with our own political divisions, we might take note of the following
selection from a Church of England litany for these days:
our nation in the days and months ahead
to walk the paths of peace and reconciliation.
Hear us, Lord of life.
Lord, graciously hear us.
to our leaders wisdom and sensitivity
to work for unity and the common good.
Hear us, Lord of life.
Lord, graciously hear us.
and restore to wholeness whatever has been damaged by heated debate.
Hear us, Lord of life.
Lord, graciously hear us.
and support the anxious and fearful
and lift up all who are dejected.
Hear us, Lord of life.
Lord, graciously hear us.
+ + + +
Various issues of The
Wall Street Journal and associated website www.wsj.com
U.K. economic data from the Office of
National Statistics. Sourced from Haver
Analytics, Inc., databases.
Dominic Webb and Matthew Keep. In
brief: UK-EU economic relations.
U.K. Parliament: House of Commons
Library. Briefing Paper number 06091, 13
June 2016. www.parliament.uk/commons-library.
Sean Williams. “8 Ways Brexit could directly affect you and
your money.” June 27, 2016. http://www.fool.com/investing/2016/06/27/8-ways-brexit-could-directly-affect-you-and-your-m.aspx. Some of Williams other ideas besides cheap
trips to the U.K. also include the fact that anticipated sluggish economic
performance will keep interest rates low, making mortgages cheap and keeping
credit card rates from rising. However,
the sluggish economies could also keep house prices under pressure.
Fred Plotkin. “Operavore: How ‘Brexit’ Affects Opera and
the Arts.” www.wqxr.org/#!/ July 1, 2016.
Labels: Economy, Government Policies, World
Legends & Lies: The Patriots
We’re working on some commentary about the dramatic vote
results in the UK “Brexit” vote about membership in the EU.
Meantime, especially as July 4 approaches, we want to call
your attention to a very interesting TV show on Sunday nights. Legends & Lies: The Patriots
showing on Fox News at 8:00PM. While
this is a Bill O’Reilly production, it has absolutely nothing to do with contemporary
politics. It is indeed about the
American Revolution. The first two
episodes dealt with the Boston Massacre, the Boston Tea Party and Paul Revere’s
ride. This week we’ll have stories about
Ben Franklin and the battle of Bunker Hill.
The material includes some dramatized scenes interspersed with
commentary by O’Reilly and by university history professors who are experts in
Our regular readers know that we are fascinated by the
Revolution and that we talk about it every year at this time. So this TV program obviously fits in to Ways
of the World
themes. The series
will run all summer on Sundays at 8:00PM.
Again, it’s on the Fox News cable network. Check it out; we think you’ll enjoy it.
Labels: American Society
Jo Cox and the EU
Most of what you’ve
been hearing about since June 12 pertains to the mass shooting in
Orlando. Clearly we are upset about that
horrible tragedy. But we want also to
give attention to a not-totally-unrelated event in northern England on June 16.
This Thursday, June 23, people in the U.K. will vote on whether
to remain in the EU or leave. The EU is
an association of 28 European nations enjoying free trade among each other and
whose citizens can move freely among the countries, living anywhere they choose
at any time. Nineteen of these
countries, obviously not including the U.K., also use a common currency, the
There is dissatisfaction among some U.K. citizens over
belonging to the EU, such that when he ran for re-election to Parliament in
2013, the current Prime Minister David Cameron promised that Parliament would
authorize a public election over whether to stay in it.
This hardly sounds like an issue that should spawn
violence. But as the voting date has
approached, two vociferous camps have emerged and campaigning has been raucous
Still, the nation – and many others – was shocked last
Thursday, when Jo Cox, a Member of Parliament supporting the Remain camp, was
shot and stabbed in front of the public library in her town of Birstall.
Violence. What is it
about these days that political disagreements seem to be spurring such deadly
violence? The gentleman who murdered Jo
Cox on Thursday was known to have mental problems, but still, outright killing
is extreme. Tommie Mair even used a
sawed-off shotgun to do this in a country where almost all guns are outlawed,
and most police don’t even carry them.
We have to talk first about Jo Cox herself.
An extraordinary person.
She is from Birstall in Northern England, just north of Leicester and
south of Nottingham. The region is a
factory community; it includes a large Muslim population, apparently mainly
from India, as workers were needed for factories. Jo Cox’s father worked in a factory. She apparently always presumed she would do the same. But she had the opportunity to attend
Cambridge and she was the first member of her family to attend university. She spent 10 years as an aid worker,
affiliated with Oxfam, the Gates Foundation and the Freedom Fund, this last an
organization that fights modern slavery.
The Wall Street Journal explains that in Parliament “she pushed
for international action to help Syrians who had been caught up in fighting
there .” She was also a vocal proponent of the UK staying in the EU.
She lived simply, with her husband and two children on a
houseboat, and, according to The Economist
magazine, she commuted
to Parliament on a bicycle. Ms. Cox was
on her way to conduct constituent appointments at the local library in Birstall
when she was attacked. A witness reported
that the attacker shouted “Britain first” as he struck her. In Mr. Mair’s court appearance, the
prosecutor stated that he had said, “Britain first,
keep Britain independent, Britain always comes first.”
Perhaps coincidentally, “Britain First” is actually
an organization committed to banning Islam in the U.K. The group denied responsibility, however,
although they are concerned that immigration is the root of many of the U.K.’s
current problems. When asked to state
his name during his court appearance Saturday, June 18, he replied, “Death to traitors, freedom for Britain.”
Thus, we seem to face three forces here. First, the awful killing of a highly regarded
public servant, popular in her community and respected in Parliament. A bright, relatively young woman, age 41, who
obviously had much to say and do toward the benefit of the people she
represents. Second, a raucous, divisive
campaign about whether the U.K. should Remain in the EU or Leave it; indeed the
groups in support of each side are “Remain” and “Vote Leave”. Polls show sentiment is almost evenly divided
and oscillates from one preference to the other, so it is not at all clear
which will come out ahead in the vote.
Campaigning was suspended altogether from Thursday after Jo Cox’s death
through Saturday. Third, there is the
immigration issue. Being part of the EU
means that immigration into the U.K. from Europe is relatively easy.
This last issue, immigration, even strikes us as bearing
some resemblance to at least one of the factors in the Donald Trump campaign in
the U.S. Trump’s supporters tend to
blame immigrants for some of our problems, similar to the U.K. citizens who
blame immigrants for whatever distress they are feeling.
While we have no answers to any of this, we can offer you a
prayer concerning the U.K. vote, published by the Church of England back in
April. It is obviously directed at
this specific issue, but its themes can apply to many topics of public debate:
God of truth, give us grace to debate the issues in this
referendum with honesty and openness. Give generosity to those who seek to form
opinion and discernment to those who vote, that our nation may prosper and that
with all the peoples of Europe we may work for peace and the common good; for
the sake of Jesus Christ our Lord. Amen.
And among the myriad
tributes to Jo Cox, here is one offered at a prayer service at a church in
Birstall last Thursday and published on the website of the Diocese of West
Yorkshire and the Dales:
Labels: People, World
Why Workers Might Favor a Businessman for U.S. President
Back at the beginning of the Presidential primary elections,
a friend sidled up to me and growled, “Can you explain Donald Trump to
me?” The gentleman thought that I, as a
political conservative, might have some insight into this unusual candidate for
high public office.
I think I might have some modest insight about this, but
it’s my penchant for economic data, not my political views that might help us
out. Indeed, there's nothing politically motivated in what follows.
Many voters are frustrated in the lack of economic progress
in recent years. We hear all the time
that incomes have stagnated and inequality has worsened. Our latest wanderings around the website of
the Bureau of Labor Statistics (BLS) yield some interesting information on how
pervasive these conditions are. We can
thus understand better Trump’s appeal to working-class people who think this
outspoken businessman might have some ideas for helping these conditions, for
“making America great again.”
Many comments about income inequality refer to total income,
which, of course, includes dividends and investment capital gains, flows that
favor the high-end. Or comments about
wages just talk about CEOs’ oversized compensation as a huge multiple of
average workers’ wages. There’s little
mystery in these as causes of frustration among hard-working laborers.
Wage Stagnation and Inequality Pervade Labor Market
But what we found goes deeper. First, workers’ compensation has indeed been
stagnant overall. Average wages and
benefits were $21.50 an hour in 2014, down from $21.91 in 2007, just before the
Great Recession started. This overall
result comes from an annual survey of companies’ pay in some 800 different
occupations, summarized in 19 “groups”, from management at the top ($59.93/hour
in 2014) to food preparers and servers at the bottom ($8.88/hour). Some groups near the middle include
construction workers at $24.67/hour, production workers at $21.31 and office
and administrative at $20.53. Over the
last seven years, averages increased for nine of the 19 groups, but they
declined in ten of them. Among the
declines are ones you’d think: office workers, transportation workers and
installation and repair people. But
hourly compensation also declined for higher-skilled occupations, including
computer scientists, scientists and even a bit for healthcare professionals –
really. So it’s hard to generalize,
to make a simple statement about wage stagnation.
Further, and in some ways more irritating, inequality
measures increased, even within these narrow pay categories. While the overall 50% median compensation
number went down 41 cents an hour over the seven-year period, the 90% level
increased; so the top 10% of workers made $56.73 in 2014, up from $54.31 in
2007. And seeming to add insult to
injury, the degree of inequality went up within individual occupational groups:
in eight occupations where the average went down, an inequality measure went
up. Thus, high-end positions in those
eight occupations, including computer techs, healthcare professionals, social service workers, installers & repairers and transport workers continued to rise even as middle and low-end salaries struggled. Workers may not see our data, of course, but
they surely have a sense of the awkward pay relationships among their own colleagues.
Workers in all kinds of jobs have reason to feel exasperated.
Possible Remedies: Reorient Education, Encourage Business
I don’t know a simple answer to these compensation
issues. The economist in me says, let’s
encourage business investment and better skill-training so workers can do their jobs more easily. As you can see from the
variety of occupations we’ve mentioned, “skill training” is probably a better
term than “education”. Kids can learn
coding for computer apps or they can become truck mechanics rather than heading
for college to get a broader, but possibly less practical cultural
background. In fact, one brand-new book,
, by sociologists Katherine Newman and Hella Winston, argues
for renewed emphasis on vocational education over the recent “college for
everyone” approach that often leaves graduates without a well-defined, real-world
expertise, but plenty of debt.
Some of you might think greater government regulation is
necessary to realign workers’ pay. But
that may well have the opposite effect of diluting business’ incentives to do
better, thus worsening productivity, to say nothing of the cost of designing
jobs to match government specifications.
It’s a very important economy question of the 2010’s. In fact, the National Federation of
Independent Business, a trade association representing small businesses, says
that government regulation already adds to the cost of hiring workers, such
that businesses are tending to favor temporary employees now rather than
This adds emphasis to our
main immediate point about how frustrated workers might indeed want a new kind
of leader in Washington who better understands the business world.
Further, the Dean of the Harvard Business School says in a
recent Wall Street Journal
, “solutions to problems like inequality
and the lack of employment opportunities or wage growth aren’t going to come
from government alone. They’re also going to require imaginative businesses
that find new ways to employ people and create real value.”
Other Economic Policy Questions Add to the Quandary
We see that what we have here is a can of worms. And this is just one issue, frustration over
inadequate pay and lack of progress. We
have to mix this with all the other issues of the day. An important Trump theme is immigration, for
instance. We thought to discuss this
here, but it’s really a whole separate article on some recent information about
the motivations of immigrants; these facts differ markedly from Mr. Trump’s usual
arguments. But it’s still an issue that
middle-class workers of today care about.
Other issues that might give them headaches include national security
and the protracted wars in the Middle East.
And while gasoline prices have at least come off their highest levels
with the drop in oil prices, workers in North and South Dakota and Texas are
being laid off as some oil production becomes unprofitable at the lower
prices. Apparently, we also have figure
out how to deal with coal miners; coal is clearly an important climate-change
issue, but the economies of West Virginia and other Appalachian regions depend
on it. We can’t just leave all those
people out in cold – so to speak. And on
Note that while average pay for healthcare professionals decreased
somewhat, the number of those workers, including doctors and nurses, rose
markedly. We still were startled that
median pay and benefits in that profession did not go up.
3. Katherine S.
Newman and Hella Winston. Reskilling
America: Learning to Labor in the Twenty-First Century. New York:
Metropolitan Books (Henry Holt and Company). 2016.
Labels: American Society, Economy, Government Policies
Signs of Progress in Reducing Carbon Emissions
On Earth Day, the anti-climate change agreement that had
been hammered out in Paris back in December was officially signed by
representatives of 175 countries.
There’s no doubt about the importance of the Paris Agreement
priorities. We keep hearing about
climate change and its dramatic consequences.
On the face of it, this seems to be an overwhelming situation and is
full of challenges and bad press. For
instance, we hear that car companies in Germany – no less – have cheated in
their reports of gas mileage. We hear
horror stories about the poor people in China who go around the streets of
Beijing wearing face masks to filter out the extreme air pollution. We hear that the Arctic ice cap is melting
Thus, on the face of it, it seems that nothing good is
happening. Clearly there is lots to do
to rectify these conditions. But
indicators we consulted from the International Energy Agency show that
some trends are headed in the right direction.
Yes, there’s a long way to go in counteracting climate change, but there
is progress. 
Lower Emissions in Several Parts of the World
Carbon dioxide emissions are already drifting lower in
industrialized regions. For the 34 major
industrialized countries belonging to the Organization for Economic Cooperation
and Development (OECD), total emissions peaked in 2005 and by 2013, the latest
available, they had fallen 6.1%, overall.
In the U.S., emissions are down 10.2% in that timeframe, and in Europe,
11.7%. Granted, there is more to do toward
achieving the Paris Climate Change agreement goals. But this is certainly a start. We’ll come back with a couple of examples
Emissions are, though, still rising in many of the world’s
regions. China and India are two obvious
examples, with CO2
output up 67.5% in China from 2005 to 2013, and
72% in India. Emissions in Africa are up
Even in these places, there are some signs of
improvement. In both China and India,
the increase in emissions is evidently tied to economic growth, which has been
quite rapid. But notably, emissions have
increased by less than GDP. In China,
GDP was up at a 10% average pace from 2005 to 2013, while emissions increased
at “only” a 6.7% rate. Two positive
developments are producing the slower rise in emissions: energy usage is also expanding less than GDP
and the energy that’s being used produces somewhat less emissions over
time. In India, GDP grew at a 7.5% rate,
while emissions rose at 7.0% pace. There,
energy use is also growing more slowly than GDP, although the specific kinds of
energy used there are still producing increasing amounts of CO2
By contrast in Europe and the U.S., the decline in emissions
is resulting from declines in energy use and declines in the CO2
content of the energy used. So there’s a
shift toward “cleaner” energy. Here is a
little bit about the efforts of two major U.S. companies to reduce their own
Specific Companies Take Specific Actions
General Electric reduced its energy use by almost 19% from
2004 to 2014. For carbon emissions, companies’ carbon footprints are often
characterized as emissions per dollar of revenue, and over that ten-year
period, GE cut down that measure from 59 metric tons per million dollars of
revenue to 33.9 metric tons. Among other
projects, it has redesigned the engines it makes for Boeing aircraft, and it has
restructured operations at a power plant in Greenville, South Carolina, by
simply installing real-time sensors and instituting a measuring system. Its plans going forward are directly tied to
the 2-degree-Celsius formula emphasized in the Paris agreement
American Airlines has found several interesting ways of
reducing fuel consumption, obviously the main source of any airline’s carbon
emissions. They’ve learned they can
taxi around airports using just one engine.
They’ve learned they can reduce the weight of a flight meaningfully by
switching from paper flight plans to using iPads and also having flight
attendants use small Samsung tablets instead of a 5-pound paper instruction
manual on the planes. Finally, they
attached “winglets” to the tips of the wings of 240 of American’s planes,
improving the planes’ “lift”; this change alone saves 700,000 metric tons of
carbon emissions a year.
Low-Carbon Investment Strategies
In addition, from a different perspective, we note with
considerable interest that companies with low carbon emissions or small carbon
footprints constitute a growing theme for investors. Standard & Poor’s has even devised indexes
of stocks for low-carbon-emissions companies and fossil-fuel-free companies. The “S&P 500 Carbon Efficient Index” has been
marginally stronger than the full S&P 500 index over most time periods in
the last several years. Since the
beginning of 2012, an index of fossil-fuel-free companies has outrun the
overall market by 5%. While that’s not a
huge difference, it does suggest that investors view lower-energy or
clean-energy companies in a favorable light.
Here are two examples of that investment strategy. At that Paris Climate Change conference, the
New York State Comptroller, Thomas DiNapoli, announced that the New York State
Common Retirement Fund would invest $2 billion in a fund created by Goldman
Sachs which emphasizes companies with small carbon footprints. The Common Retirement Fund is the pension
fund for New York State employees and is said to be the country’s third largest
pension fund. Similarly, the
non-profit McKnight Foundation, with a total of $2.1 billion in assets, can
perhaps be identified as a pioneer here; back in 2014, it invested $100 million
in a broad-based carbon-efficient fund managed by Mellon Capital.
The distinction for these two investment initiatives is that
they are active in-vestment strategies.
Previously, funds that wanted to emphasize climate and environment
concerns generally used a di-vestment strategy, eliminating coal and possibly
oil companies from their portfolios. But
selling these shares has had little impact because those companies are so large
that having a few shareholders sell out doesn’t mean much. Instead, enlisting fund managers to devise investment
strategies for companies that operate using desirable practices makes a more
positive, constructive statement.
Thus, there are tangible efforts at individual investor and
company levels that encourage and support the implementation of carbon
reduction actions. Environmental issues
have the advantage that they are clearly measurable, so we can see
progress. As we said at the outset,
there is a lot to do, but there is progress.
 Tina Rosenberg. Op. cit.
Labels: Economy, Environment, Financial Markets, World
The FBI versus Apple: A Catch-22
We knew this would probably happen sometime – a court fight
over smartphone security issues. Sure
enough, the FBI is hard at it with Apple.
The terrorists in San Bernardino, California, back in December were
using an iPhone. The FBI wants Apple to
hack the phone and Apple is saying no.
That would compromise one of the main features of those phones and set a
most unfortunate precedent. However, law
enforcement officials of all kinds are anxious for resolution because all kinds
of criminals use smartphones, which at present can be “tapped” only with great
legal and technical difficulty.
We do think this issue is worthy of discussion. It’s obviously controversial for Apple to
even have objected at this point in time, since the immediate cause is a
domestic terrorist attack in which 14 people were killed. And it’s easy to say, “but of course Apple
should provide the mechanism for opening the phone’s contents.” But Tim Cook, the CEO of Apple, does have a
point that this is precedent-setting and the way to deal with it should be
6 Weeks' Worth of Data Locked in the Phone
This San Bernardino event is a great test-case. iPhones are secure to the owner/user. They can be backed up to a storage area on a
“cloud”. Data that are transferred to
the cloud can be obtained by investigators, and indeed, the FBI has already
obtained those data from terrorist Syed Rizwan Farook’s account. However, the attack took place on December 2,
and Farook had not backed up the phone since October 19. So plenty of fresh and helpful information
was likely recorded on the phone during the last six weeks just before the
attack: who Farook’s associates and ISIS connections might be, whether other
projects similar to his are being planned, and so on. The phone itself is owned by San Bernardino
County, which employed Farook; those officials, the owners, think it’s fine for
the FBI to inspect the phone’s contents.
But Apple Worries about Construction of a "Backdoor"
Apple, through a public statement by its Chairman Tim Cook
and also in an official court filing, is objecting to unlocking the phone. The company argues that the work it would do
to enable decryption of the contents of an iPhone could be applied to any
iPhone, thereby potentially eroding the extraordinary security provisions on
all iPhones. As it stands, the data on
any given iPhone are associated with the owner’s “Unique ID”. The FBI is wanting Apple to devise a
workaround to get to the data without the ID.
This is known in the jargon as a “backdoor”. Apple is, quite logically, very concerned
about creating such a backdoor technology.
Conceivably, then, any iPhone a thief or other criminal got hold of
could be hacked.
We were watching a Fox News program late last week in which
a retired Army colonel was being interviewed on this issue. The colonel said something like, “this is a
national security issue and of course Apple needs to develop this decryption
software!” The news anchor conducting
the interview instantly blurted out, “but that’s why I have an iPhone –
precisely because it can’t
decrypted by anyone else.”
FBI Does See the Importance of the Phone's Security
FBI Director James Comey initially sounded impatient with Apple,
claiming that Apple’s defense, spontaneously described by the anchor in that
newscast, is based on marketing and reputation, not on the technology. Apple and many of its customers would not
agree; the security of the phone is a basic characteristic of the product. Given that there are in fact some 825 million iPhones around the world, their interests would seem a worthy consideration. And evidently, Mr. Comey himself
has come to a deeper understanding of what he was asking of Apple. Later, on February 25, he testified before
the House Intelligence Committee that this encryption issue is “the hardest
question I’ve seen in government.”
Addressing the Law Enforcement Need Now
There is legal precedent, of course, for telecommunications
companies to provide call data to law enforcement agencies. In 1994, Congress passed the Communications
Assistance for Law Enforcement Act which requires carriers to build
surveillance capability into their networks.
So AT&T and Verizon automatically provide whatever such “wiretap”
access is called for in court orders; in the last half of 2015, there were more
than a quarter million such requests from all kinds of law enforcement agencies
in both criminal and civil proceedings.
In the first half of last year, 998 requests came specifically for
national security purposes. Sprint also
has had many thousands of such data requests.
Apple in fact does address these requests too. It reports that it had 971 law enforcement
requests for “account data” stored on iCloud or iTunes accounts in the first
half of last year, and it responded to 81% of them. In addition, it had 499 requests based on
national security needs.
The difference is evidently that the information the
carriers provide is only phone numbers and text message connections. According to The Wall Street Journal
“can’t provide access to . . . message content or calls made over mobile apps
such as WhatsApp, Skype or the blue iMessages sent between two iPhones.
Formal Legislation Likely Needed
Regardless of the specific outcome of the San Bernardino
case itself, it is likely to add to already building momentum for formal
legislation on this situation; that is, there should be some general rules so
people who own phones can know what to expect, and representatives of the
people should make those rules. Indeed,
the Chairman of AT&T Randall Stephenson this week noted, “The rapid pace of
technological innovation is challenging laws crafted in a very different era
for totally different, and much less complex situations. Recent developments, in particular, bring
home the need for legal clarity.” And
the Chair of the Senate Intelligence Committee is working on a bill that would
create criminal penalties for companies that don’t comply with court orders to
decipher encrypted communications. It
remains to be seen what the specific language of such a law might require.
So, most immediately, the dilemma remains. More, in the San Bernardino situation, there
is considerable irony. We noted that the
county government owns the phone; Farook was only the user of that phone. That government is in possession of software called
“mobile device management” that would have enabled the county to make provision
for the FBI to open the phone. But Farook’s
department did not sign up for it to be installed on their inspectors’ phones. Another irony is that, even as the federal
government is fighting for the right to get Farook’s phone decrypted, the
federal government provides grants to tech developers to create more encryption
A clear summation of this Catch-22 was given last spring by
a former CEO of Sprint at a cybersecurity conference: “Which CEO is more
patriotic, the one who provides all the information the government requests to
help catch a criminal or prevent a terrorist attack? Or the CEO whose company creates tools that
make it difficult for law enforcement . . .
to acquire a customer’s information, believing that protecting civil
liberties is a higher calling?”
+ + + + + +
We don’t cite all the general
sources about this story, which are plentiful; most of our material is from
various articles in The Wall Street Journal, beginning right after the federal
court order to Apple was made public on February 16. We also sourced The Economist magazine and www.foxnews.com
, as well as Apple CEO Chairman Tim Cook's "A Message to Our Customers", a letter dated February 16 and found on Apple's homepage at www.apple.com.
The footnotes cover specific
aspects and quotes.
 Ryan Knutson. Op. cit.
Labels: American Society, Government Policies, Science and Evolution