The Charybdis is a swirling water feature in the temperate house at Savill Garden. It was designed by Giles Rayner in 2006. https://funandgames.org/web/wp-content/uploads/2020/09/The-Charybdis_Savill-Gardens_9257-2-scaled.jpg

This is a quote attributed to Lenin (courtsey of Branko Milanovic’s X account, where a gentle exchange about whether it was genuine ensued), which seems perfect for the moment we are in.

It was back in 1998 that George Monbiot first pointed out that no sector was as wedded to PFI deals as health. The famous example in Captive State of the Walsgrave hospital in Coventry, knocked down and replaced by a smaller hospital at much greater cost, was just one of many. It didn’t occur to me at the time, but the wider lesson from these early examples, borne out by everything we have seen since, is that privatisation, in whatever form (and, after all, what is PFI but the privatisation of a funding source), always solves a smaller problem than the one you have. The history of privatisation in the NHS has been a series of smaller easier problems dealt with in some cases very efficiently by the private sector (although the efficiency only ever seems to increase the profits of the private companies concerned rather than reduce their price). As it has been in transport (with rail franchises yo-yoing in and out of state control whenever the ask becomes too complex for the train operators taking them on), and utilities, mail services, etc etc.

And the size of the problems that the private sector can take on would appear to be getting smaller.

Take insurance. Ann Pettifor highlights this week what Petra Hielkema, chair of the European Insurance and Occupational Pensions Authority, has to say about the future of the sector in the FT. Apparently he told them that governments and banks will struggle to cope with the soaring costs of natural catastrophes such as floods and wildfires. More households will be unable to insure their homes and the mounting losses from natural disasters could destabilise banks. Two things he said were particularly striking:

“I think it is the biggest risk facing society, frankly” and “Member states — they can’t cope with this.”

There is now talk of an “insurance death spiral“, where insurance premiums shoot up, those least likely to claim drop out, and insurers are left with exclusively “sub-prime” risks on their books (should sound familiar to anyone who has read about the causes of the 2008 crash). In the US, there are obviously problems in the Californian insurance industry which look like causing some degree of financial contagion, but also a particular focus on the health insurance industry as a result of the way Obamacare was implemented.

This contrast between public and private ownership of problems struck me while I was reading the excellent report from the Institute and Faculty of Actuaries and the University of Exeter on climate change: Planetary Solvency. By taking the approach that an insurance company would take in determining its risk appetite and then seeing if its risk exposure matched up to it, it occurred to me that the reason this had never been done before for global climate change was that any insurer would have left such a market years ago on the basis of a brief initial analysis of the problem. Something that a private insurer can always do with any problem.

What if, instead of the NHS being threatened by covert privatisation, the threat is that even the smaller problems private health is currently solving within the system get handed back to the NHS? Because that is the difference. During the pandemic, the threat was that the NHS might not be able to cope with the surge in very ill people and that many would die without care as a result. The reason large parts of NHS operations were repurposed and we were all urged to “flatten the curve” was because, ultimately, there is noone the NHS can hand the responsibility back to and their resources are measured in hours of the right people available to work for them rather than pounds spent and so have a hard physical limit. Although there were significant failures as the Covid Inquiry is currently exploring, the NHS as a whole did not fall over.

However, neither did the US system, because an insurer merely withdraws from a market which might cause it to. It has no responsibility to the system as a whole.

As one MIT researcher responded to being asked about the lessons for the US system of the pandemic:

“The pandemic has revealed the American health care system to be a non-system.”

So it seems to me that arguments about privatisation and nationalisation are a bit beside the point. We have big problems, getting bigger every day, which absolutely have to be solved and limited physical resources with which to do so. Unfortunately His Majesty’s Opposition are still trying to disentangle themselves from the wreckage of Tufton Street’s “thought leadership”, risking a Trumpian climate change denying, health service privatising Reform Party replacing them, and His Majesty’s Government appear to have no idea what they are doing.

So reality does feel pretty radical at the moment. We need to be equally radical in our response to it.

Risk trajectory (black circle) shows the anticipated future state for the risk in 2050. Current risk position in grey. Source: https://actuaries.org.uk/planetary-solvency

The excellent report from the Institute and Faculty of Actuaries and the University of Exeter Planetary Solvency – finding our balance with nature splits the risk trajectories into four sections: Climate, Nature, Society and Economy. I have focused on the Society one above as, in my view, this is the reason we are interested in all of the other ones. According to the Planetary Solvency report, we are on track for a society in 2050 described as follows:

Nature and climate risk trajectories will drive further biophysical constraints including stresses on water supply, further food supply impacts, heat stress, increased disease vectors, likely to drive migration and conflict. Possible to Likely risk of Severe to Decimation level societal impacts, with increasingly severe direct and indirect consequences of climate and nature risks driving socio-political fragmentation in exposed and vulnerable regions.

So what are we doing about it? Well the United States has just voted in Donald Trump as President. There was a flurry of executive orders issued in his first week (with the appropriate caveats about how many of these might actually be implemented), the climate-related ones of which are neatly summarised here by Bill McKibben:

The attacks on sensible energy policy have been swift and savage. We exited the Paris climate accords, paused IRA spending, halted wind and solar projects, gutted the effort to help us transition to electric vehicles, lifted the pause on new LNG export projects, canceled the Climate Corps just as it was getting off the ground, and closed the various government agencies dedicated to environmental justice. Oh, and we declared an “energy emergency” to make it easier to do all of the above.

Timothy Snyder has written about how to respond to tyranny in your own country. What is happening currently in the United States is threatening tyranny for many (as Robert Reich lists here):

The government now recognizes only two “immutable” genders, male and female. Migrants (now referred to as “aliens”) are being turned away at the border. Immigration agents are freed to target hospitals, schools, and churches in search of people to deport. Diversity efforts in the federal government have been dismantled and employees turned into snitches. Federal money will be barred from paying for many abortions.

The first thing you should do, according to Timothy Snyder, is to not obey in advance.

Most of the power of authoritarianism is freely given. In times like these, individuals think ahead about what a more repressive government will want, and then offer themselves without being asked. A citizen who adapts in this way is teaching power what it can do.

And how did we respond to all of this in the UK? Well Keir Starmer was keen to tell The Donald that we were deregulating to boost growth in their first phone call. His reward for this was the story that Trump thought he was doing a good job. Supposedly an endorsement from the “Drill Baby Drill” guy is the proper corrective from being told he should be locked up by the Nazi salute guy.

And then there were the actions on the environment. From the talking out of the Climate and Nature Bill which sought to meet new legally binding targets on climate change and protect nature. To a housing policy which will be both hugely environmentally destructive and fail to make houses more affordable. To announcing the intention to overhaul the planning rules, in the upcoming Planning and Infrastructure Bill, to reduce the power of people to object (and, as the Conservatives’ restrictions on protest have not been lifted, subsequently bang them up for years on end if we subsequently demonstrate about it) so that global firms would think that the UK was a “great place to invest” .

And then today we had Rachel Reeves’ big speech. Approval for developing the third runway at Heathrow, as had been extensively trailed, and the creation of “Europe’s Silicon Valley” between Oxford and Cambridge were the main announcements. There was quite a lot of talk about investment in sustainable aviation fuel (which means biofuels, the benefits of which have already been shown to be wiped out by rising demand).

And as for the Silicon Valley idea, I am not sure we want one. First there is the lack of real innovation despite the excellent game they talk. And second, is it going to be the authoritarian nightmare that the Californian one is turning into? The early signs are not good. Just last week Marcus Bokkerink, the Chair of the Competition and Markets Authority (CMA), was replaced by Doug Gurr, until recently Jeff Bezos’ head of Amazon UK. So not exactly standing up to Technofeudalism then.

According to Cory Doctorow:

Marcus Bokkerink, the outgoing head of the CMA, was amazing, and he had charge over the CMA’s Digital Markets Unit, the largest, best-staffed technical body of any competition regulator, anywhere in the world. The DMU uses its investigatory powers to dig deep into complex monopolistic businesses like Amazon, and just last year, the DMU was given new enforcement powers that would let it custom-craft regulations to address tech monopolization (again, like Amazon’s).

But it’s even worse. The CMA and DMU are the headwaters of a global system of super-effective Big Tech regulation. The CMA’s deeply investigated reports on tech monopolists are used as the basis for EU regulations and enforcement actions, and these actions are then re-run by other world governments, like South Korea and Japan.

When you see Trump flanked by Bezos and the other Tech Bros at his inauguration, it certainly feels like we are obeying in advance. Rachel Reeves’ speech had an enormous increase in energy demand implicit in pretty much every measure announced, which is expected because, GDP (the thing she is looking to boost) and energy consumption have been in lockstep forever. This is the implication of prioritising GDP growth over everything else.

What were missing were both a compensatory increase in renewable energy capacity and/or a reorganisation of our economy away from energy intensity. The problem for the government is that the latter would not increase GDP, so instead we get into the absurd position of the Business Secretary saying we “cannot afford to not build runways”.

However it seems that when the motivation is big enough (in this case to dispute the assertion that the Russian economy is doing well in wartime despite the official statistics, which the EU really needs to do in order to continue to make the case for sanctions) alternative ways to measure the economy can be found. In section 3.2 we find this:

The general assumption of connecting GDP growth to making people better off is not relevant in this situation, which should be included in any discussion of how the Russian economy is doing.

What is interesting about this analysis is that:

a. It is carried out by the kind of orthodox economists (the Stockholm Institute of Transition Economics) who believe GDP would be a good index to use in normal circumstances; and

b. They are saying this even if the GDP figures published by Russia are technically accurate. As they go on to say:

What this analysis suggests is that if we believe in official Russian statistics, then Russia has economic capacity to sustain current policies in the short run, a conclusion shared with many other observers. We also find, though, that beyond the GDP numbers, the redirection into a war economy is already putting pressure on all sectors not directly involved in the war, causing internal macroeconomic imbalances, increasing risks in the financial sector, and eroding export revenues and existing reserves. Short term growth is kept up by a massive fiscal stimulus, but the impact is mitigated by necessary monetary contraction to deal with inflationary pressures, and structural factors (demographics, weak property rights) limiting the possible economic response to the stimulus.

Some of which sound familiar closer to home – “necessary monetary contraction” (things we cannot afford) and “increasing risks in the financial sector” anyone?

We are currently facilitating a world where the only capacity we are increasing is to fly over the climate-ravaged areas of the globe and their fleeing populations. Fly Baby Fly is not going to get us anywhere we want to go.

When I started writing this blog in April 2013, one of its main purposes was to highlight how poor we are at forecasting things, and suggest that our decision-making would improve if we acknowledged this fact. The best example I could find at the time to illustrate this point were the Office of Budget Responsibility (OBR) Gross Domestic Product (GDP) growth forecasts over the previous 3 years. They do not appear to have improved much since then.

Fast forward to 2025 and apparently we have a crisis. Rachel Reeves has been forced to defend her budget following rises in 10 year gilt yields to levels not seen since the financial crisis and the Prime Minister has been forced to say that she will stay in post for the rest of Parliament. Everyone has piled in, from the former Deputy Governor of the Bank of England to the Institute for Fiscal Studies. So is there in fact a crisis? Well no, not really. As an opinion piece in the FT has pointed out, the drivers of the latest rate rise are not really UK-specific at all. Another piece in the FT puts the gilt yield “crisis” into yet further perspective. Finally, there is the comparison with the US gilt market, which moved above its 2008 level in 2022.

The reason for all of the hype of course is the totally self-constructed cul-de-sac that the Government has built around its economic policy options. Tiny movements in government debt or CPI or GDP or indeed gilt yields have been given heightened significance by being explicitly tied to how much the Government will allow itself to spend on its various programmes. As stated in the FT:

Only the OBR can accurately predict how much headroom the Treasury has against its fiscal rules, the Treasury insisted on Wednesday. “Anything else is pure speculation,” it added.

I refer back to the aforementioned forecast history of the OBR and ask how we ever got in a situation where their forecasts would determine how the UK government behaved. As the recent essay by Stefan Eich (on Adam Tooze’s Chartbook) points out, Keynes said:

“Our power of prediction is so slight, our knowledge of remote consequences so uncertain that it is seldom wise to sacrifice a present benefit for a doubtful advantage in the future.” It was consequently rarely right to sacrifice the well-being of the present generation for the sake of a supposed millennium in the remote future.

Meanwhile we are now doing precisely this on the basis of OBR forecasts. As Rachel Reeves set out at the start of her chancellorship in July, in a precise inversion of Keynes:

Because if we cannot afford it, we cannot do it.

Unfortunately for the government, while they spend all of their time trying to solve this imaginary problem they have created for themselves, there are actual real problems that do need to be addressed, and which are currently being drowned out by the noise of political commentators with too little of substance to talk about apparently.

So Sir Michael Marmot, author of the landmark Institute of Health Equity reports on health inequalities in 2010 and 2020 and the recent report on the role of the property sector in improving health, referred to the maintenance of the two child benefit cap as “almost a form of eugenics”.

The Trussell Trust reports that:

A record 9.3 million people face hunger and hardship across the UK. This includes 6.3 million adults and 3 million children. This represents one in seven (14.0%) people across the UK, and one in five (20.9%) children. Current levels are more than a third higher than they were 20 years ago, when 6.7 million people faced hunger and hardship.

And a group from the Institute and Faculty of Actuaries, in partnership with Prof Tim Lenton and his team from the University of Exeter, set out in a report today (Guardian summary here, Planet Critical discussion here) the dangers of the current massive underestimation of climate change risk. As Tim Lenton says:

The choice is simple: continue to be surprised by rapidly escalating and unexpected climate and nature-driven risks, or implement realistic Planetary Solvency risk assessments to build resilience and support ongoing prosperity. We urge policymakers to work with scientists and risk professionals to take this forward before we run the ship of human progress aground on the rocks of poor risk management.

The part which really stood out for me (in such contrast to the equally massively exaggerated risks ascribed to movements in bond markets this week) was on the inadequacy of global risk management practices:

  • Policymakers often prioritise the economy, with their information flows focused on this. But our dominant economic model doesn’t recognise a dependence on the Earth system, viewing climate and nature risks as externalities.
  • Climate change risk assessment methodologies understate economic impact, as they often exclude many of the most severe risks that are expected and do not recognise there is a risk of ruin. They are precisely wrong, rather than being roughly right.
  • The degradation of natural assets such as forests and soils, or the acidification and pollution of the ocean, act as a risk multiplier on the impacts of climate change and vice versa. Traditional risk management techniques typically focus on single risks in isolation, missing network effects and interconnections, underestimating cascading, compounding risks.
  • Current risk management approaches fall short of the RESILIENCE principles detailed in this report for realistic and effective risk management. Consequently, policymaker risk information is likely to significantly understate the potential impact of climate and nature risks, weakening the argument for urgent action.
  • These limitations mean that policymakers are likely to have accepted much higher levels of risk than is commonly realised.

If policymakers judged these risks on the same calibration scale as they current view the knockabout on financial markets I doubt we would ever hear about the intricacies of the 10 year gilt yield or the decimal places of CPI ever again. Similarly, if the societal impact of prolonged policies targeting the poor was included (perhaps in the form of meaningful measures of poverty based on the work of the Social Metrics Commission), rather than the level of the FTSE 100, we might start to make inroads into the current dire statistics.

We have hard problems to solve which require a serious government prepared to be bold, do big things and take the political risk of doing so (because the political risks are so tiny compared to the actual risks the population face), not one so focused and constrained by minutiae that it defeats itself.

Happy new year to everyone who reads this blog! I am planning for there to be quite a lot more activity here in 2025, moving from an average of one article a month to at least weekly. There should be more cartoons too – Pinhead and Spikes even made it to our Christmas cake this year.

There is a lot I want to write about this year. Expect some or all of the following themes in the next few months (in no particular order):

  • Some examples using Steve Keen’s Ravel software to demonstrate how Government debt is not the constraint they think it is.
  • Extending Naomi Alderman’s argument in The Future that we could get rid of the Tech Bros and not miss them, effectively upending Ayn Rand’s ideas in Atlas Shrugged. They are not key workers.
  • Keynes’ argument that, with the future so uncertain, we should not sacrifice people in the present to our models of it.
  • Spiegelhalter on the four types of luck, which cuts away at the meritocracy argument for distributing wealth.
  • How the professions have become a way of solidifying and enabling the massively uneven distribution we see. Have they outgrown their usefulness in their current form, just like the guilds did?
  • How the choice for providing public goods appears to boil down to public ownership or private monopoly – with accompanying Technofeudalism replacing capitalism. Why are we so much more relaxed about private monopolies than we were 100 years ago, when it accelerates inequalities so much?
  • The relationship between worldbuilding in science fiction and people living in their own models in the policy making world. Great example of this just this morning in the FT.

So plenty to do. If this sounds interesting to you, please stick with the blog, which will not be going to Substack and will not be charging a subscription. If it sounds really interesting to you, tell a friend! Will be in touch again soon.

The biggest battle in the climate sphere used to be between climate deniers and climate scientists, perhaps the battle we are most used to. Some, like Michael Mann for instance, are still earnestly fighting this one, but at the recent UK election, only 14% of voters opted for the one climate denial party (Reform). In fact the climate deniers are now more frequently climate denier deniers, ie denying they are or ever have been denying.

Then last year the biggest battle seemed to have become between climate campaigners and climate doomers. Rebecca Solnit wrote an exasperated piece in The Guardian in July last year called We can’t afford to be climate doomers, which drew an equally exasperated response from Jem Bendell called Let’s tell the moodsplainers they’re wrong and then get back to work.

I think Solnit clarifies most starkly what her argument is all about when she talks about hope:

Hope is not happiness or confidence or inner peace; it’s a commitment to search for possibilities.

However Bendell is also focused on searching for possible solutions. He quotes the Kenyan climate activist, Dr Nyambura Mbau, who argues that “The millions of people being uprooted by climate change do not benefit from the ‘stubborn optimism’ of environmental elites. Instead, they will be better served by the stubborn realism of the experts and activists now brave enough to call for urgent degrowth in rich countries and fair adaptation everywhere.”

Then there is that increasingly less marginal idea of degrowth. Only this week, James Meadway, Aashis Joshi and Jason Hickel had a fairly heated exchange on X about the recent paper by Hickel and Sullivan called How much growth is required to achieve good lives for all? Insights from needs-based analysis. Joshi felt that the degradation already caused by climate change made the outcomes possible via better distribution of wealth suggested by Hickel and Sullivan unachievable. One of Hickel’s tweeted responses went like this:

To say you’re happy to live in a world where you get to use a phone and laptop, but these should be actively denied to people who don’t have them because… ecological collapse might happen? Not acceptable.

I saw another take on this by Chris Shaw earlier today at the Dark Times Academy launch event. He seemed to share many of the views set out by Bendell above, and his book, Liberalism and the Challenge of Climate Change, goes further in suggesting that liberalism cannot provide us with acceptable climate solutions as long as it continues to present net zero as solving all our problems rather than as the least worst option that will still leave us with a much depleted global environment. His dismissal of degrowth revolved around the lack of narrative of how we get from here to there, specifically the dramatic movement of political power that would be required. However amongst the academics presenting their new courses for the Academy, Piers Locke’s Future Thriving looked like it would present some challenges to Shaw’s critique.

It seems to me that there is room for different takes on the optimism/realism axis here. For instance Simon Sharpe’s excellent Five Times Faster, while not shying away from the size of the task ahead on decarbonising, definitely has a feel-good quality to it. It is designed to wake us up to the possibilities offered to us by exponential technological change and social tipping points. By contrast, the Institute and Faculty of Actuaries’ Sustainability Group’s publication earlier this year, Climate Scorpion – the sting is in the tail, is all about waking people up to a higher level of climate risk than they may previously have been aware of. Meanwhile Sir David King, former UK Government Chief Scientific Adviser, is currently Chair of the Climate Crisis Advisory Group and founded the Centre for Climate Repair at the University of Cambridge. He set out his thoughts about where we are here.

So there are many shades of hope and despair on show here (I could obviously have mentioned many more that the few picked out here). What really matters is how fast and how radically we can act as a global species to the climate emergency. And the UK would make a good start if it stopped pretending that £22 billion is a lot of money for a developed country to find.

Source: https://youtu.be/31xY6rYiu2E

When I was nearing qualification as an actuary at the turn of the century, one of the recommended texts for both the specialist pensions (the then equivalent of SP4 and SA4) exams was Alastair Jollans’ 1997 paper to the Staple Inn Actuarial Society (SIAS) entitled Pensions and the ageing population. At the time there was quite a lot of actuarial comment about how superior a funded pension system was to a pay-as-you-go system and the example of Chile in particular. The following sentence from Alastair’s paper stuck with me at the time:

It is also clear that the Chilean scheme made a huge psychological difference, and this may be one of the major advantages of funding.

Meanwhile the Labour Government had been moving to reform the State Earnings Related Pension (SERPS) with its Green paper of 1998 A new contract for welfare: partnership in pensions, and replace it with a new State Second Pension (S2P). It had two aims – giving more help to people for whom private pensions were not an option and helping moderate earners to build up better second pensions through the introduction of stakeholder pensions. The intention was that S2P would become flat-rate over time with the following reasons given for this (bold mine):

Although SERPS is an efficient second pension, it is earnings-related. It does least for those on low incomes who have most difficulty in building up a good second pension. Many people on modest incomes will also receive limited benefits from SERPS or from the private provision they may make instead.

So the limitations of the current system (where the new State Pension has replaced S2P and auto-enrolment has replaced stakeholder pensions), as previously discussed here, were recognised from the outset of the experiment of moving to funded pensions.

Fast forward to now and Chile’s system is tottering, leading to mass protests. It turns out that the psychological advantage of its funding approach was only an advantage for those that could afford it, whereas the 40% who gained no benefit from invested funds (a remarkably similar proportion to the UK statistics) preferred the psychological advantage of a guaranteed state pension. Even the FT admits it needs reform, although fairly technical in nature:

At the very least, a sensible reform now should be to eliminate the investment limits by asset class and introduce an investment policy based on risk metrics at the portfolio level. The government should also relax the restrictions on alternative investments and eliminate the ill-designed hedge requirements.

The Council on Foreign Relations was less restrained in 2022:

Pensions were never a good fit for strictly private management, as basic building blocks of the welfare state are definitive public goods. Yet the failure of the system has reverberated beyond the retirees trying to make ends meet. Pensions became a leading cause for the millions of Chileans who took to the streets in protest in 2019, spurring the formation of a Constituent Assembly to write a new Constitution that will be voted on in September.

The best path for pensions would be a reform that ensures adequate retirements for more Chileans. This requires a more robust public system with dedicated funding to sustain it. If legislators can make this happen, they can reduce the financial hardship too many of Chile’s elderly now face. And, to the benefit of democracy in both Chile and its neighbors, they could also thereby restore at least some of the political legitimacy that the old system helped to put in doubt.

In my first post in this series, I explained why the State Pension needs to be much bigger than the Triple Lock is ever going to get it to. The second post then moved on to discuss the leaky pensions budget and what to do about it. In this third and final post in the series, I focus on why increasing pensions should be a priority when there is so much destitution in all parts of our society.

We are living in anxious times, with discomfort about the state of the world now so extreme that many of us are disconnecting from it and, instead, treating it as a personal mental health challenge requiring breathing exercises and mindfulness and radio programmes like Radio 2 Unwinds with Angela Griffin and similar. This follows a pattern with other crises, where we have been encouraged to abandon collective action to protect our pay and conditions by ever more onerous anti-union legislation or to abandon collective action to combat climate change by ever more onerous anti-protest legislation. Instead we are constantly encouraged to look inward and focus on our own wants and the things about ourselves which are standing in the way of those wants, ie to approach the world solely as a consumer. It is much more convenient for the companies working in the retail markets if we all behave this way.

Moving away from the collective provision of state pensions for all to a reasonable level and instead towards the individual provision of funded occupational pensions follows this pattern. However, as we have seen, many have been left in poverty without any asset security as a result of this move. This leaves them more vulnerable to sickness, debt and generally less resilient to the uncertainties of the future.

Seth Godin recently blogged about the engineering philosophy essential to creating something both useful and fit for purpose. It involves asking who is it for and what is it for.

Increasingly I feel that we have lost sight of these two questions in how we provide pensions, my answers would be:

  • Who is it for? Everyone.
  • What is it for? To increase people’s resilience.

In the case of resilience, the discussion has been kept at a, in my view deliberately, high level of abstraction so that most people feel that it is not their concern. McKinsey produced a particularly incomprehensible example here, but it is probably unfair to pick on them as they are just one of many, and they did at least mention societal resilience. A great technique for excluding people from the discussion is to produce a proliferation of definitions which noone can agree on (five were identified in this article in Nature by Rockstrom et al, for instance). However, as Rockstrom identified, in essence a resilient system needs just five characteristics:

  1. Diversity, ie support comes in multiple forms and does not assume everyone is the same;
  2. Redundancy, ie if one part of the system fails, there is always a good Plan B and mechanisms available to replace system failures quickly and efficiently;
  3. Connectivity, ie our supply chains are diversified and the resources we need drawn from a wide range of sources, and our populations are kept well connected with each other and the services they need;
  4. Inclusivity and equity; and
  5. Adaptive learning, ie we review whether the system is working reasonably frequently and learn from experience.

So what would be gained from increasing the state pension for all?

  • Marginalising older people when their bodies already feel less resilient and forcing them into the boxes required by our processes of means-testing are likely to extinguish many of these voices from the national discussions we need to have. A significant increase in pensions for all, instead of the ridiculous triple lock which is only tolerated as it slowly gets us to this goal without having to have the discussion about what a decent pension would be, is what is needed.
  • A larger state pension would give us all more security through redundancy, ie a decent baseline underneath the other sources of income. Our invested pensions are not as diversified as they look and very vulnerable to a range of system-wide events and our means-tested benefits are very frequently prone to error and delay. The prospect of this greater level of security and certainty in retirement would also ease the burden of many working age families who are supporting older relatives, and the effects would therefore extend well beyond the retired population.
  • Poverty crushes the diversity of a population, as the cartoon above from the UN Special Rapporteur on poverty Olivier de Schutter makes clear. We need diverse people with diverse thought and we need to include them in our society and listen to what they have to say.
  • Focusing on those of retirement age to allow them to live better will save money in other areas. According to a Guardian study, an 85-year-old man costs the NHS about seven times more on average than a man in his late 30s. Health spending per person steeply increases after the age of 50. It would also reduce reliance on an inefficient and fragmented disability benefit system.
  • Increasing the state pension would obviously have a much greater effect at the bottom half of the income deciles than at the top and would therefore have a big impact on inequality. As the Institute of Fiscal Studies said of increases to the minimum wage for working people between 2011 and 2021:

...inequality in male earnings rose between 1980 and the Great Recession, driven by rising wage inequality at the top and rising hours inequality at the bottom. This trend appears to have stopped in the last decade, as growth in the minimum wage outstripped wage growth further up the distribution, and hours worked stopped falling disproportionately for low-wage men.

Increases to the state pension would be likely to have just as dramatic an effect.

And we all gain from a more equal society, even those we redistribute away from. As the Equality Trust have shown in their research, high levels of income inequality are linked to economic instability, financial crisis, debt and inflation; less social mobility and lower scores in maths, reading and science; an increase in murder and robbery rates; reduced longevity, more mental illness and obesity, and higher rates of infant mortality. People in less equal societies are less likely to trust each other, less likely to engage in social or civic participation, and less likely to say they’re happy.

My view is that we need to start somewhere in creating a more equal, and therefore more resilient, society here in the UK. And I would start with pensions.

I originally talked about Chartered Actuary status (here, with the cartoon above) when the Institute and Faculty of Actuaries (IFoA) first proposed the idea and set up a consultation in 2018. I said then that sometimes an idea comes along that seems so obviously good that you wonder why it hasn’t been done a long time ago.

Four years on from the retreat from the proposal following the slenderest of straw polls offering some challenge, and it remains a good idea. There are still relatively few full actuarial roles available for associates and many firms still assuming a default career path of continuing to fellowship.

There are some differences this time however:

  • There will be two chartered actuary designations: Chartered Actuary (Fellow) and Chartered Actuary (Associate), with the hope that the FIAs who were most concerned with maintaining their distance from AIAs last time will now support the proposal. The original proposal suggested Chartered Actuary (CAct) would be a single distinct qualification, a required qualification point for all student actuaries to reach before going any further and globally recognised as the generalist actuarial qualification from the IFoA. This approach has been abandoned, with no requirement to complete the core curriculum before tackling specialist modules. It will be interesting to see whether Chartered Actuary (Associate) will be seen as a destination in its own right, or just a change of letters. This will depend on all of us within the profession (see below).
  • The environment we are operating in has certainly changed, with the replacement of our regulator, the FRC, by the Audit, Reporting and Governance Authority (ARGA). One of the concerns that the IFoA were looking to address in 2018 was that another, much larger, profession, could pose an existential threat. If actuaries have a unique skill set, which is likely to be lost to a wide range of businesses and other sectors if it is unable to meet the demand for those skills due to a simple lack of numbers, then the need to take any perceived barrier to practise away from our emerging young professionals is clear. The move from FRC to ARGA does not remove this threat and there also remains in the regulatory proposals to date the threat of differential regulation, where actuaries are regulated more heavily than other professionals doing similar work could price us out of markets where we have value to add. The profession therefore needs to grow to increase our voice and influence over the future regulation of the profession.
  • We have acknowledged the impact of the Great Risk Transfer within the finance sector, but in my view the impacts more generally of the increased individual risks and uncertainties millions of the UK population face as energy, food and housing costs escalate need to be faced up to by our profession. For that we need to continue to be a destination of choice for a growing number of your people with a widening range of backgrounds and experiences.

So what do we need to do to make this a change worth making? We need to start behaving like a generalist actuarial qualification is what we want, and offering roles for actuaries on completion of core practice modules in future. It will mean not necessarily insisting on further actuarial specialisation as a requirement for senior roles within our firms. It will mean getting comfortable with a much wider range of specialisms amongst those we consider to be actuaries. Some are already doing this, but most of us need to go much further. A good place to start might be the IFoA’s own website, where the Route to Becoming An Actuary still features a diagram where an IFoA Associate is shown as a milestone on the way to the final destination of becoming a Fellow.

For those of you totally immersed in the daily to and fro of the finance industry, this post about Stuart Kirk will probably seem a little late in the day. For those of you who are not, let me explain briefly what I am talking about today!

Stuart Kirk was Global Head of Responsible Investments at HSBC Asset Management. On 19 May 2022 he gave a talk at the FT Live Moral Money Summit Europe conference with the provocative title of Why investors need not worry about climate risk. Stuart’s talk was a real crowd splitter. Many called for his dismissal (HSBC subsequently suspended him), others regarded his talk as a missed opportunity and full of things which were not true, while others have regarded his stance as speaking truth to power.

However what interests me most about all of the column inches devoted to the affair is what he has not been criticised for and what this tells us about financial markets.

What Stuart said was structured around the following 12 statements:

  1. Unsubstantiated, shrill, partisan, self-serving, apocalyptic warnings are ALWAYS wrong.
  2. As the warnings became ever graver, the more asset prices INCREASED in value.
  3. One of only three explanations can explain the impending end of the world and higher risk asset prices:
    1. Climate risk is negligible.
    2. Climate risk is already in the price.
    3. All investors are wrong.
  4. Even by the UN IPCC own numbers, climate change will have a negligible effect on the world economy – A (large) temperature rise of 3.6 degrees by 2100 means a loss of 2.6 per cent o global GDP. Let’s assume 5%.
  5. Adaption is cheap and effective: climate related costs relative to GDP and mortality rates are down.
  6. Perhaps the biggest error of thinking with climate risk is confusing volumes and values – Plenty of things happen between a volume disruption and a move in asset values.
  7. Climate “winners” and losers” can create value. Climate “winners” and “losers” can destroy value.
  8. The difference between volumes and value is regularly made clear in markets.
  9. Even if climate risk isn’t negligible, it’s too far into the future to matter for most companies.
  10. To make climate change appear like a significant threat, scaremongers are torturing their models.
  11. It’s easy to show that climate change is an investment risk if you engineer a bond market collapse.
  12. Climate change isn’t a long-run risk just like wars, energy crises, pandemics, financial crises and so on (with the graphs shown above to supposedly prove this point).

Can you spot the pattern here? All of these statements are about the map that Stuart is standing in (think of Joey standing in his map to orientate himself in Friends). It is a complicated map of asset prices and charts and reports written by lots of other people standing in the map with Stuart, but it is still just a map. And the map is the territory as far as Stuart is concerned. If something does not appear in his map, it is not worth worrying about. And climate risk is struggling to make it into his map. In Stuart’s view, this is a problem for climate risk, and the people “torturing” their models to make climate risk appear significant and piling him up with regulatory reporting responsibilities are very annoying.

But of course this take is completely upside down. This is not a problem for climate risk. Rather climate risk is a problem for us and the fact that it does not appear in our models unless we torture them (which I am sure is true) means that we have the wrong models. Because the scientific consensus about the consequences of climate change on our current trajectory of between 3 and 4 degrees warming are (amongst others from Mark Lynas’ Six Degrees: Our Future on a Hotter Planet):

Africa […] split between the north which will see a recovery of rainfall and the south which becomes drier […] beyond human adaptation.
Indian monsoon rains will fail. The Himalayan glaciers providing the waters of the Indus, Ganges and Brahmaputra, the Mekong, Yangtze and Yellow rivers [will decrease] by up to 90%.
The Amazonian rain forest basin will dry out completely. In Brazil, Venezuela, Columbia, East Peru and Bolivia life will become increasingly difficult due to wild fires which will cause intense air pollution and searing heat. The smoke will blot out the sun. Drought will be permanent in the sub-tropics and Central America.
Australia will become the world’s driest nation.
In the US Gulf of Mexico high sea temperatures will drive 180+ mph winds. Houston will be vulnerable to flooding by 2045. Galveston will be inundated. Many plant species will become extinct as they will be unable to adapt to such a sudden change in climate.
The [IPCC] in its 2007 report concluded that all major planetary granaries will require adaptive measures at 2.5° temperature rise regardless of precipitation rates.[and] food prices [will] soar. Population transfers will be bigger than anything ever seen in the history of mankind. [The feedback effects from the] Amazon rain forests dry[ing] out and wild fires develop[ing] [will lead] to those fires [releasing] more CO2, global warming [intensifying] as a result, vegetation and soil begin[ning] to release CO2 rather than absorb[ing] it, all of which could push the 3° scenario to a 4°-5.5° [one].

Much of the discussion about the talk was that Stuart was speaking out bravely and that HSBC had only suspended him to silence inconvenient truths, that he had been silenced by “extreme environmental ideology“. I have no idea about all of the reasons why HSBC suspended Stuart other than their official statements, but it seems clear to me that many people in the finance industry agree with what he said. This suggests to me an extreme ideology of its own of resolutely refusing to look out of the window.

In Kim Stanley Robinson’s excellent New York 2140, global sea levels have risen by 50 feet. Everyone lives in tower blocks connected by sky bridges which occasionally topple into the canals which were once streets. I used to think that money markets would not survive events like this, but Robinson posits what I believe is a more likely future scenario. The Intertidal Property Pricing Index is developed instead, carefully constructed to be reasonably stable despite the instability of the actual real estate being valued, and people bet on it. And soon everyone is fixated on what this index is saying daily rather than the buildings collapsing around them.

This is exactly what our finance sector will do of course, there will be money to be made out of such activities after all. And so expectations that they will, in any way, be a leader out of the climate emergency are, in my view, unrealistic.

We will however need the finance industry to facilitate aspects of how we transform our economies over the next 10 to 20 years. And this will involve much more of the regulation which annoys Stuart and others so much.

Last week, the news from the Actuary magazine was that climate change could slash global GDP by 18%. This was based on a Swiss Re report, the economics of climate change, from which the analysis above is taken.

According to the report, “The current trajectory of temperature increases, assuming action with respect to climate change mitigation pledges, points to global warming of 2.0–2.6°C by mid-century.” It was unclear why they had decided to stop at 2050, when current commitments continue to push temperatures up until 2100. And the scenarios from the IPCC’s AR5 Synthesis Report (see below) show that the path we are currently on diverges far more considerably from the Paris agreements after 2050. Climate effects are very long-term and many of the impacts of a 2-3°C warming would be irreversible ones, ensuring continuing losses at similar or greater levels for decades to come, and that is before we even consider the much higher probabilities of feedback effects: from the melting of the permafrost, additional methane releases, loss of Amazonian carbon and the loss of the albedo reflectivity of Arctic ice. The Swiss Re report makes clear that is has not considered these.

You might notice that there is a separate column to the left, in a different colour, with the title “Well-below 2°C increases” and sub-title of “Paris target”. It is actually an agreement which 189 countries have signed up to, including the UK. As the Paris Agreement says (Article 2 Point 1):

This Agreement, in enhancing the implementation of the Convention, including its objective, aims to strengthen the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty, including by:
(a) Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature
increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;

There has been some debate over whether the Agreement is aiming for 1.5°C warming with a 50% chance of staying below it, or for “well below” 1.5°C similar to the 2°C goal with a 66% chance of avoiding more than 1.5°C warming, but the modelling used for the next IPCC report has adopted the latter definition. Either way, I cannot see why Swiss Re has decided to put the Paris Agreement targets in a different column from what it calls the “likely range of temperature gains” as if those we have committed to are no longer feasible to aim at.

In saying this, I do not underestimate the massive challenge of keeping to the Paris target. As Mark Lynas says in Our Final Warning, at the end of 2018 over 1,000 GW of additional fossil-fuelled electrical power generation capacity was planned, permitted or already under construction around the world, equivalent to adding an additional 188 Gt CO2 into the atmosphere to the 658 Gt already baked in from existing infrastructure, which gives a total of 846 Gt of CO2 not including impacts from deforestation, agriculture and future land-use change. This compares to a future carbon budget as estimated at the end of 2018 by the IPCC (although estimates of this vary considerably) of 420 Gt of CO2 (or 1,170  Gt of CO2 for 2°C warming). So an extraordinary change of direction is required and we should be very cautious of getting anywhere near these limits when we do not know precisely where they are.

Which brings me onto the modelling of economic impacts. The first thing to say is that modelling in terms of impact on GDP, while guaranteed to get the attention of the financial community, is perhaps not the best way of communicating the devastation of runaway climate change.

In the summary of Mark Lynas’ excellent book Six Degrees: Our Future on A Hotter Planet , which summarised the scientific consensus already arrived at by 2007, the three degree increase for which damages are being estimated is expected to lead to Africa […] split between the north which will see a recovery of rainfall and the south which becomes drier […] beyond human adaptation. Indian monsoon rains will fail. The Himalayan glaciers providing the waters of the Indus, Ganges and Brahmaputra, the Mekong, Yangtze and Yellow rivers [will decrease] by up to 90%. The [IPCC] in its 2007 report concluded that all major planetary granaries will require adaptive measures at 2.5° temperature rise regardless of precipitation rates.[and] food prices [will] soar. Population transfers will be bigger than anything ever seen in the history of mankind. [The feedback effects from the] Amazon rain forests dry[ing] out and wild fires develop[ing] [will lead] to those fires [releasing] more CO2, global warming [intensifying] as a result, vegetation and soil begin[ning] to release CO2 rather than absorb[ing] it, all of which could push the 3° scenario to a 4°-5.5° [one]. The recent update to this: Our Final Warning, describes “entering the three-degree world means we are now living in a hotter climate than any experienced on Earth throughout the entire history of our species”. These impacts, which are likely to pose existential risks for many, appear totally inconsistent with the economic loss modelling shown above.

In his 2020 paper, The appallingly bad neoclassical economics of climate change (apologies, Journal access required), Steve Keen says in the abstract:

Forecasts by economists of the economic damage from climate change have been notably sanguine, compared to warnings by scientists about damage to the biosphere. This is because economists made their own predictions of damages, using three spurious methods: assuming that about 90% of GDP
will be unaffected by climate change, because it happens indoors; using the relationship between temperature and GDP today as a proxy for the impact
of global warming over time; and using surveys that diluted extreme warnings from scientists with optimistic expectations from economists. Nordhaus has misrepresented the scientific literature to justify using a smooth function to describe the damage to GDP from climate change. Correcting for these errors makes it feasible that the economic damages from climate change are at least an order of magnitude worse than forecast by economists, and may be so great as to threaten the survival of human civilization.

There follows a demolition of the methodologies employed by Nordhaus and others in this field. To be fair to the Swiss Re report, some of the criticisms in Keen’s paper appear to have been borne in mind when constructing their model, eg:

A shortcoming of our model build so far is that some economic impacts are linearly estimated: non-linearities are not adequately captured. We use multiplicative factors of 5 and 10 to simulate the increasing severity of outcomes from nonlinearities… Importantly, the framework does not consider
tipping points, events such as the partial disintegration of ice sheets, biosphere collapses or permafrost loss, that pose a threat of abrupt and irreversible climate change. This is because it is thought that tipping points will materialise well after our model horizon of mid-century only.

And as the Swiss Re report also acknowledges:

It is likely that the estimated impacts of GDP damages from climate change will rise as existing modelling develops to incorporate economic linkages in trade, migration and other channels, and to generalise the results to multiple countries.

And they are getting criticisms from the usual suspects of climate denial, eg Bjorn Lomberg on Twitter here, that even their attempts to date to quantify the uncertainties caused by non-linearity are a step too far.

And yet there remains a problem with these analyses in that they fail to capture existential risk. One of the things Steve Keen points out in his paper is the different attitude Nordhaus found towards estimating damages from climate change in natural scientists as opposed to economists. Natural scientists typically estimated the damage at 20-30 times higher than economists and some refused to cooperate with the exercise at all:

I must tell you that I marvel that economists are willing to make quantitative estimates of economic consequences of climate change where the only measures available are estimates of global surface average increases in temperature. As [one] who has spent his career worrying about the vagaries of the dynamics of the atmosphere, I marvel that they can translate a single global number, an extremely poor surrogate for a description of the climatic conditions, into quantitative estimates of impacts of global economic conditions. 

But how do you calibrate what is clearly a complicated model that Swiss Re and Moody’s have constructed for this analysis? Obviously we all have a very recent GDP fall in our minds at the moment – here is a summary from the UK Commons Library of Economic Indicators as at 30 April 2021 (themselves sourced from OECDstat and Eurostat):

This shows an almost identical GDP fall of 10.5% year on year in Q2 2020 for the OECD as predicted in the event of a 3.2°C warming, although it has bounced back pretty quickly since. For a longer term view of the global data, Our World In Data have an Annual growth in GDP per capita graph which runs from 1961 to 2017 (see below).

One very large GDP fall which stands out in the data here is the 26.5% fall in China in 1961. This was towards the end of the China’s Great Famine, in which approximately 3 million people died of starvation over a 3 year period. This certainly qualifies as an existential event and Swiss Re’s modelling suggest something of similar proportions in Asia and Africa at 3.2°C warming.

The biggest danger in all of this is that rich countries will look at a 10.6% reduction in GDP (at 3.2°C warming) and think this liveable with and adaptable to for their populations. After all, Simon Wren Lewis calculates that the austerity policies between 2010 and 2018 in the UK reduced GDP by nearly half of this amount every year for at least the second half of this period, compared to where it would have been without these policies, with an estimated cumulative loss of 15.9% of GDP. An 18.1% overall world average loss, however, effectively means more than a 25% loss for the rest of the world outside the OECD, as the OECD accounts for around half of the world’s total GDP which, even if we did not allow for the acknowledged likelihood that these are underestimates, is still in the Chinese Famine category of disaster and neither liveable with nor adaptable to.

We are already seeing vaccine nationalism carve up the world between rich and poor countries, with up until last month only 0.3% of the vaccines administered around the world having gone to people in low-income countries. This is likely to reduce the ability of poorer countries to be represented properly at this year’s COP26 when it frames a global response to the climate change which will affect them so disproportionately. And the losses if we do not act will be measured in far more frequent floods and sea level rise, extreme storms and heatwaves, crop failures, water and food shortages and mass migration on a scale we have never seen before, not GDP.

Could climate change slash global GDP by 18%? It’s much worse than that.

 

There is a particular variety of We Know Zero graphs that look like this one – showing an experience of a steady increase in something (usually bad, but not always) up until now, followed by a projection of that thing falling in the future. My wife Marsha suggested I call them Hope-over-Experience graphs, which seems to suit them very well.

Such diagrams are often very comforting for those who want to maintain the status quo. Let’s look at three such curves in particular (the excellent Doughnut Economics by Kate Raworth has alerted me to the first two of these).

The Kuznets Curve

There is a considerable body of evidence, most notably from Kate Pickett and Richard Wilkinson, that inequality impacts most health and social problems adversely, to the detriment of all socio-economic groups, but what is to be done about it? Enter our first Hope-over-Experience graph. In this case the x-axis is actually income per capita, but to the extent that this is something expected to increase with time I don’t think this matters too much. The y-axis is inequality. It was originally proposed by Simon Kuznets (the inventor of GDP) in his 1955 paper Economic Growth and Income Inequality (my apologies, but you will need journal access to read this) based on data from England, Germany and the United States from 1875 onwards, and the belief that economic growth will automatically deal with inequality has been a powerful influence on economic policy at the World Bank and elsewhere since.

However, more recent data has shown the patterns suggested by this limited original data set are no longer correct, if indeed they ever were. Thomas Piketty and Emmanuel Saez, in their 2001 paper Income Inequality in the United States 1913-1998, state:

In particular, the evidence presented in this paper, together with the evidence on France by Piketty (2001a, 2001b) and the U.K. by Atkinson (2001),
strongly suggest that there was no such thing as a “spontaneous”, Kuznets-like decline of inequality in developed countries during the first half of the 20th
century. The inequality decline was to a large extent accidental (depression, inflation, wars) and amplified by political factors (progressive taxation). This does not mean that the current rise of inequality will not be followed by a mechanical downturn during the first few decades of the 21st century: this is simply saying that such a mechanical downturn apparently never occurred in the past.

Their data suggests a curve which looks like this instead:

The Environmental Kuznets Curve

This was first proposed by Gene Grossman and Alan Krueger in 1994 in their working paper Economic Growth and the Environment, which suggested that there was an eventual inverse relationship between pollution and income per capita, with a turning point mooted at around $8,000. Most of their graphs are not quite as U-shaped as the Kuznets Curve, but this nonetheless has come to be known as the Environmental Kuznets Curve.

However, in 2016, the international industrial ecology research community and United Nations Environment agreed on a comprehensive data set for global material extraction and trade covering 40 years of global economic activity and natural resource use, which led to several papers including the UNEP Global Material Flows and Resource Productivity: A Report of the International Resource Panel (again apologies but journal access needed). Their graph of material extraction instead looked like this:

The Human Development Index (HDI) is the geometric average of 3 indices: Gross National Income, Health and Education. An optimum score of 1 is achieved where life expectancy is 85 or more years, adult literacy is 100%, school enrolment is 100% and the Gross National Income is US$40 000 or more per person per year in purchasing power parity. So again, this is not very supportive of a reduction in material footprint with increased wealth.

Which brings us to the third graph, often cited as an argument for why one of the most obvious ways to reduce inequality rather than just focusing on average income per capita, ie make taxation more progressive, is pointless.

The Laffer Curve

The story of the Laffer Curve, dating from the 1970s, is recounted by Arthur Laffer himself here. It plots tax rates against tax revenues to indicate that there is a tax rate beyond which tax revenues actually reduce. As he says:

The Laffer Curve itself does not say whether a tax cut will raise or lower revenues. Revenue responses to a tax rate change will depend upon the tax system in place, the time period being considered, the ease of movement into underground activities, the level of tax rates already in place, the prevalence of legal and accounting-driven tax loopholes, and the proclivities of the productive factors. If the existing tax rate is too high…then a tax-rate cut would result in increased tax revenues. The economic effect of the tax cut would outweigh the arithmetic effect of the tax cut.

However, returning to Piketty, this time in the 2011 paper,  Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities by Piketty, Saez and Stefanie Stantcheva, the evidence underpinning this curve is again highly questionable. As they point out in the abstract (bold type added by me):

This paper presents a model of optimal labor income taxation where top incomes respond to marginal tax rates through three channels: (1) standard labor supply, (2) tax avoidance, (3) compensation bargaining…The macro-evidence from 18 OECD countries shows that there is a strong negative correlation between top tax rates and top 1% income shares since 1960, implying that the overall elasticity is large. However, top income share increases have not translated into higher economic growth. US CEO pay evidence shows that pay for luck is quantitatively more important when top tax rates are low. International CEO pay evidence shows that CEO pay is strongly negatively correlated with top tax rates even controlling for firm characteristics and performance, and this correlation is stronger in firms with poor governance. All those results suggest that bargaining effects play a role in the link between top incomes and top tax rates implying that optimal top tax rates could be higher than commonly assumed.

There are a number of charts which could be used from this paper, but I have chosen the plot of economic growth against changes in top marginal tax rate to illustrate most clearly the problems with the Laffer Curve idea:

This graph should show an inverse relationship if the Laffer Curve were true.

Why do I feel the need to debunk these simple so-called economic laws which are nothing of the sort? Because you will always prioritise economic growth over everything else if you believe that:

  • Growth will fix inequality;
  • Growth will fix pollution;
  • Trying to fix inequality through the tax system is counter-productive.

And these beliefs will then also have policy implications when faced with a different sort of curve.

This was an explainer from Grant Sanderson at 3Blue1Brown about COVID-19 from March 2020 setting out quite simply how it was likely to spread, and how different case numbers in different countries (eg between Italy and the UK) were as likely to be due to being at different time points since the start of the pandemic as reflecting the relative success of their containment policies. We now know the UK Government locked down too late, at least partly because they prioritised economic growth over containment policies in the first few weeks:

Those attitudes changed and we have had an incredibly successful vaccine rollout in the UK, but this has been at the expense of any idea of international cooperation in vaccine supply. Wealthy countries such as the UK have bought enough vaccinations to cover our populations almost three times over, while Covax, the global vaccine procurement scheme, only aims to vaccinate 20% of the populations of recipient countries this year.

This is very short-sighted if we think there might be an international issue even more threatening to life than COVID-19 which can only be combatted by unprecedented levels of international cooperation. And of course this is exactly what we have in the form of the climate emergency and our final graph (from the National Oceanic and Atmospheric Administration (NOAA) in the US showing the relentless rise in the level of carbon dioxide in the atmosphere as global emissions continue to increase:

 

Living in Hope-over-Experience may be very comfortable for some people for a limited time, but if it stops us engaging with the more implacable curves of the world we actually live in then none of us will be safe.