Showing posts with label economic growth. Show all posts
Showing posts with label economic growth. Show all posts

The World's Resources Aren't Running Out -2-


Today 7:44 PM ET (Dow Jones)
Haiti is 98% deforested and literally brown on satellite images, compared with its green, well-forested neighbor, the Dominican Republic. The difference stems from Haiti's poverty, which causes it to rely on charcoal for domestic and industrial energy, whereas the Dominican Republic is wealthy enough to use fossil fuels, subsidizing propane gas for cooking fuel specifically so that people won't cut down forests.
Part of the problem is that the word "consumption" means different things to the two tribes. Ecologists use it to mean "the act of using up a resource"; economists mean "the purchase of goods and services by the public" (both definitions taken from the Oxford dictionary).
But in what sense is water, tellurium or phosphorus "used up" when products made with them are bought by the public? They still exist in the objects themselves or in the environment. Water returns to the environment through sewage and can be reused. Phosphorus gets recycled through compost. Tellurium is in solar panels, which can be recycled. As the economist Thomas Sowell wrote in his 1980 book "Knowledge and Decisions," "Although we speak loosely of 'production,' man neither creates nor destroys matter, but only transforms it."
Given that innovation--or "niche construction"--causes ever more productivity, how do ecologists justify the claim that we are already overdrawn at the planetary bank and would need at least another planet to sustain the lifestyles of 10 billion people at U.S. standards of living?
Examine the calculations done by a group called the Global Footprint Network--a think tank founded by Mathis Wackernagel in Oakland, Calif., and supported by more than 70 international environmental organizations--and it becomes clear. The group assumes that the fossil fuels burned in the pursuit of higher yields must be offset in the future by tree planting on a scale that could soak up the emitted carbon dioxide. A widely used measure of "ecological footprint" simply assumes that 54% of the acreage we need should be devoted to "carbon uptake."
But what if tree planting wasn't the only way to soak up carbon dioxide? Or if trees grew faster when irrigated and fertilized so you needed fewer of them? Or if we cut emissions, as the U.S. has recently done by substituting gas for coal in electricity generation? Or if we tolerated some increase in emissions (which are measurably increasing crop yields, by the way)? Any of these factors could wipe out a huge chunk of the deemed ecological overdraft and put us back in planetary credit.
Helmut Haberl of Klagenfurt University in Austria is a rare example of an ecologist who takes economics seriously. He points out that his fellow ecologists have been using "human appropriation of net primary production"--that is, the percentage of the world's green vegetation eaten or prevented from growing by us and our domestic animals--as an indicator of ecological limits to growth. Some ecologists had begun to argue that we were using half or more of all the greenery on the planet.
This is wrong, says Dr. Haberl, for several reasons. First, the amount appropriated is still fairly low: About 14.2% is eaten by us and our animals, and an additional 9.6% is prevented from growing by goats and buildings, according to his estimates. Second, most economic growth happens without any greater use of biomass. Indeed, human appropriation usually declines as a country industrializes and the harvest grows--as a result of agricultural intensification rather than through plowing more land.
Finally, human activities actually increase the production of green vegetation in natural ecosystems. Fertilizer taken up by crops is carried into forests and rivers by wild birds and animals, where it boosts yields of wild vegetation too (sometimes too much, causing algal blooms in water). In places like the Nile delta, wild ecosystems are more productive than they would be without human intervention, despite the fact that much of the land is used for growing human food.
If I could have one wish for the Earth's environment, it would be to bring together the two tribes--to convene a grand powwow of ecologists and economists. I would pose them this simple question and not let them leave the room until they had answered it: How can innovation improve the environment?
Mr. Ridley is the author of "The Rational Optimist" and a member of the British House of Lords.

(END) Dow Jones Newswires
April 25, 2014 19:44 ET (23:44 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.


TedsWoodworking Plans and Projects

Four Reasons Businesses Could Begin Spending Again Soon

By


Spending
Despite record profits and exceptionally high corporate cash levels, capital spending by U.S. businesses remains subdued.
While companies clearly have the means to invest, they lack the confidence in the face of a still nervous consumer and uncertain end-user demand. In other words, low confidence and an unusual amount of policy uncertainty are likely impeding corporate spending. In addition, capital spending has also been kept in check by the lackluster nature of the recovery.
However, as I write in my recent Market Perspectives paper " Sitting on Cash ," four interrelated reasons suggest capital spending may marginally improve this year.
Improving consumer confidence. Despite the government shutdown and unimpressive recovery in the labor market, consumer confidence, while low, is improving. During the back half of 2013, the Conference Board's measure of consumer expectations averaged a little below 78, a material improvement from the previous four years when this measure of consumer sentiment averaged below 60. While today's levels are still far below the long-term average, they are heading in the right direction.
Better economic growth. I expect the U.S. economy to grow by at least 2.5% this year , above last year's 2% rate. This should provide CEOs and CFOs with greater conviction on end-user demand.
Normalization in real interest rates. The improving economy is leading to a normalization in real interest rates, which suggests higher rates of return on investment. In fact, to the extent the macro environment continues to improve and the Federal Reserve (Fed) exits its quantitative easing (QE) program by year's end, I would expect real long-term yields to continue to normalize, a development that in the past has been associated with higher levels of capital spending.
Companies have little choice. While still relatively low by official estimates, capital utilization rates are probably overstating the amount of excess capacity, given the rapidly aging nature of the capital stock. In short, we are likely to see an increase in capital spending because in many industries, there will be little choice.
Given the above trends, my baseline expectation for 2014 is that capital spending continues to improve, a trend that was already evident in the latter part of 2013.
So why does this matter for investors? To the extent there is even a modest pickup in capital spending in 2014, this should help support U.S. equity market valuations. In terms of specific beneficiaries, I believe capital spending is likely to be led by financial, telecom and service industries. This suggests that technology stocks may be beneficiaries if capital spending begins to accelerate.

Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here .

Source: BlackRock research

Read more: http://www.nasdaq.com/article/4-reasons-businesses-could-begin-spending-again-soon-cm337485#ixzz2wjjQLvqE