What’s up, Janus Athena? she said, a bit brusquely. She’s always visibly skeptical that AI could contribute anything substantive to her project.
Went to the whiteboard and tried to show her how AI could help. Always awkward to explain things to computer illiterates, a translation problem, a matter of deploying metaphors and finding gross generalizations that aren’t too gross.
Started this time with rehearsal of Hayek’s argument that markets deliver spontaneous value, and are therefore the best calculator and distributor of value, because central planning can’t collect and correlate all the relevant information fast enough. So planning always got things wrong, and the market was just better as a calculator. The Austrian and Chicago schools had run with that opinion, and thus neoliberalism: the market rules because it’s the best calculator. But now, with computers as strong as they’ve gotten, the Red Plenty argument has gotten stronger and stronger, asserting that people now have so much computing power that central planning could work better than the market. High-frequency trading has been put forth as an example of computers out-achieving the market proper, but instead of improving the system it’s just been used to take rents on every exchange. This a sign of effective computational power, but used by people still stuck in the 1930s terminology of market versus planning, capitalism versus communism. And by people not trying to improve system, but merely to make more money in current system. Thus economists in our time.
In fact, entirely new organizational possibilities now emerging with power of AI. Big data analyzed for best results, all money tracked in its movement all the time, allocations made before price competition distorts real costs into lies and universal multi-generational Ponzi scheme, and so on. Particulars here got both pretty technical and pretty theoretical at the same time, but important to do one’s best to sketch out some things Mary might both understand and consider worth ordering team to do. Dick already up to speed on most of this.
Mary sighed, trying to focus on computer talk without boredom. Tell me how, she said.
So often they don’t even understand the nature of the need. Reminded her that Raftery modeling still showed the vast bulk of the most probable twenty-first centuries experiencing an average temperature rise of 3.2 degrees Celsius. Chances of keeping average temperatures below 2 degrees C were five percent. Keeping it under 1.5 degrees C were one percent.
Mary just stared. We know it’s bad, she said acidly. Give us your ideas to help!
Told her about the Chen paper, useful for its clarity, and now getting discussed in several different discourse communities, it being one of the earlier of various proposals to create some kind of carbon coin. This to be a digital currency, disbursed on proof of carbon sequestration to provide carrot as well as stick, thus enticing loose global capital into virtuous actions on carbon burn reduction. Making an effective carrot of this sort would work best if the central banks backed it, or created it. A new influx of fiat money, paid into the world to reward biosphere-sustaining actions. Getting the central banks to do that would be a stretch, but them doing it would be the strongest version by far.
Mary nodded grimly at that. A stretch, she repeated.
Persisted with arguments for carbon coin. Noted that some environmental economists now discussing the Chen plan and its ramifications, as an aspect of commons theory and sustainability theory. Having debunked the tragedy of the commons, they now were trying to direct our attention to what they called the tragedy of the time horizon. Meaning we can’t imagine the suffering of the people of the future, so nothing much gets done on their behalf. What we do now creates damage that hits decades later, so we don’t charge ourselves for it, and the standard approach has been that future generations will be richer and stronger than us, and they’ll find solutions to their problems. But by the time they get here, these problems will have become too big to solve. That’s the tragedy of the time horizon, that we don’t look more than a few years ahead, or even in many cases, as with high-speed trading, a few micro-seconds ahead. And the tragedy of the time horizon is a true tragedy, because many of the worst climate impacts will be irreversible. Extinctions and ocean warming can’t be fixed no matter how much money future people have, so economics as practiced misses a fundamental aspect of reality.
Mary glanced at Dick, and he nodded. He said to her, It’s another way to describe the damage of a high discount rate. The high discount rate is an index of this larger dismissal of the future that J-A is describing.
Agreed to that.
And this Chen line of thought solves that? Mary asked. It extends the time horizon farther out?
Replied, Yes, it tries to do that.
Explained how the proposal for a carbon coin was time-dependent, like a budget, with fixed amounts of time included in its contracts, as in bonds. New carbon coins backed by hundred-year bonds with guaranteed rates of return, underwritten by all the central banks working together. These investments would be safer than any other, and provide a way to go long on the biosphere, so to speak.
Mary shook her head. Why would people care about a pay-off a hundred years away?
Tried to explain money’s multiple purposes. Exchange of goods, sure, but also storage of value. If central banks issue bonds, they’re a sure thing, and if return set high enough, competitive with other investment. Can be sold before they mature, and so on. Bond market. Then also, since this is a case of central banks issuing new money, as in quantitative easing, investors will believe in it because it’s backed by long-term bonds. And this money could be created and given to people only for doing good things.
Like what? Mary asked. Issued for what?
For not burning carbon.
Started writing on the whiteboard, feeling she was oriented enough to be ready for some figures. Not equations, which might just as well be Sanskrit to her, only some numbers.
For every ton of carbon not burned, or sequestered in a way that would be certified to be real for an agreed-upon time, one century being typical in these discussions so far, you are given one carbon coin. You can trade that coin immediately for any other currency on the currency exchanges, so one carbon coin would be worth a certain amount of other fiat currencies. The central banks would guarantee it at a certain minimum price, they would support a floor so it couldn’t crash. But also, it could rise above that floor as people get a sense of its value, in the usual way of currencies in the currency exchange markets.
Mary said, So really this is just a form of quantitative easing.
Yes. But directed, targeted. Meaning the creation, the first spending of the new money, would have been specifically aimed at carbon reduction. That reduction is what makes the new money in the first place. The Chen papers sometimes call it CQE, carbon quantitative easing.
Mary said, So anyone could get issued one of these coins after sequestering a ton of carbon?
Yes. Or also a fraction of a coin. There would have to be a whole monitoring and certification industry, which could be public-private in nature, like the bond rating agencies are now. Probably see some cheating and gaming the system, but that could be controlled by the usual kinds of policing. And the carbon coins would all be registered, so everyone could see how many of them there were, and the banks would only issue as many coins as carbon was mitigated, year by year, so there would be less worry about devaluing money by flooding the supply. If a lot of carbon coins were being created, that would mean lots of carbon was getting sequestered, and that would be a sign of biosphere health that would increase confidence in the system. Quantitative easing thus directed to good work first, then free to join economy however.
Mary said, So if you combined this thing with carbon taxes, you would get taxed if you burn carbon, but paid if you sequester carbon.
Agreed, and added that any carbon tax should be set progressively, meaning larger use more pay, to keep it from being a regressive tax. Then it becomes a good thing, and feebates can be added that pass some of this tax income back to citizens, to make
it even better. A carbon tax thus added to the carbon coin was said by Chen and others to be a crucial feature of the plan. When both taxes and carbon coins were applied together, the modeling and social experiments got much better results than when either strategy was applied by itself. Not just twice as good, but ten times as good.
Mary said, Why is that?
Confessed did not know. Synergy of carrot and stick, human psychology— waved hands. Why people did what they did— that was her bailiwick.
Dick pointed out that for economists, carrots and sticks are both just incentives, and thus the same, although they tend to assume sticks are more efficient than carrots.
Mary shook her head vigorously. No fucking way, she said. We’re animals, not economists. For animals, negative and positive are generally regarded as quite distinct from each other. A kick versus a kiss. Jesus Christ. She looked back and forth at us, said, It’s a question which of the two of you are the more inhuman, the computer geek or the economist.
Both referents nodded at this. Point of pride, in fact. Trying to out-do each other; attempt to attain Spocklike scientific objectivity a worthy goal, and so on. Dick quite hilarious on this matter.
Mary saw the nods and sighed again. All right, when you align both negative and positive reinforcements to press us toward a certain behavior, we then do that behavior. It’s just Pavlov, right? Stimulus and response. So how could we get this started?
Said, If the dozen biggest central banks agreed to do it together, it would go.
But that’s true of almost anything! Mary exclaimed. What’s the minimum you think it would need to succeed?
Said, Any central bank could experiment with it. Best would be the US, China, and the EU. India might be the most motivated to go it alone, they’re still very anxious to get carbon out of the air fast. But the more the merrier, as always.
She asked to be led through the time element again.
Explained how the central banks could simply publish the rate of return that they planned to pay out in the future, no matter what. Investors would therefore have a sure thing, which they would love. It would be a way to go long, and to securitize their more speculative bets. The stick, the carbon tax, also needed to rise over time. With that tax rate and its angle of increase published in advance, and a long-term rate of return guaranteed for investing in carbon coins, one could then calculate the cost of burning carbon, and the benefits of sequestering it. Normal currencies float against each other in the exchange markets, but if one currency is guaranteed to rise in value over time no matter what, then it becomes more valuable to investors. It will always stay strong in the currency market because it’s got a time stamp guarantee of a rise in value. The carbon coin designed in that way would eventually probably replace the US dollar as the world’s benchmark currency, which would strengthen it even more.
It’s like compound interest again, Dick remarked to Mary.
Said, Yes, but this time guaranteed by being delinked from current interest rates, which often hit zero, or even go negative. With this coin, you’re good to go no matter what happens.
Dick said, That could make for a liquidity trap, because investors would stash money there for safety rather than put it to use.
Shook head at that. Set the rate low enough that it’s seen as more of a back-up.
Dick said, If the central banks announced they were upping the amount of carbon needed to earn a coin, they could then balance it with other safe asset classes like treasury bonds and infrastructure bonds. That would add liquidity and give traders something about this that they could short, which is something they like to do.
Agreed this might be good.
Mary said, Could we issue these carbon coins ourselves from the ministry?
Shook head. You have to be able to buy them all back at some floor rate, to make people believe in them. We might not have the reserves to do that.
We can barely pay our staff, Mary said.
We’ve noticed, Dick joked. Good to see he liked this plan.
Mary brought the meeting to a close. Work this up into a full proposal, she said. One I can take to the central banks and defend. I’ve got meetings with them already scheduled. We’ll see where it takes us.
43
I am a secret so everyone can know me. First you must count every part of me, then translate those parts into signs that do not describe me. Together we are shackled, and with the sign that does not describe me you can open me up and read me as I am. People will give you their promises for me, and if wrongdoers try to take me away from you, you can find me and tell the world where I am hidden. I began as a silent speaking, a key to open every door; now that I have opened all the front doors, I am the key that locks the back doors by which wrongdoers try to escape the scene of the crime. I am the nothing that makes everything happen. You don’t know me, you don’t understand me; and yet still, if you want justice, I will help you to find it. I am blockchain. I am encryption. I am code. Now put me to use.
44
The part of Antarctica that holds its ice the longest is near the middle, between the Transantarctics and an ice-submerged mountain range called the Gamburtsev Mountains. The Gamburtsevs are almost as high as the Alps, yet still completely buried by ice; they were only discovered by overflights using ice-penetrating radar. Between this newly discovered range and the Transantarctics there’s a flat plain, surrounded by mountains in such a way that scientists estimate the ice sitting on it won’t reach the coast for at least five thousand years. In other areas of the continent ice will get to the sea in the next couple of decades. So it’s another case of location, location, location.
Naturally this Point of Maximum Ice Sequestration is a long way from the sea, and the polar ice cap there is ten thousand feet thick, meaning about that high above sea level, as the bedrock under all that ice lies just slightly below sea level. So if you were thinking of pumping seawater up onto this part of the ice cap to keep sea level from rising, it was going to take a lot of energy. And a lot of pipeline too. Run the numbers and you can see: not going to happen.
Still there were people who wanted to try it. Non-quantitative people, it would seem, and yet rich despite that. Chief among these curious people was a Russian billionaire from Silicon Valley, who felt Antarctica as a place to dump seawater just had to be tested, so much so that he was willing to fund the test. And you take grant money where you can find it, when it comes to getting to Antarctica. At least that’s been my working method.
So an austral spring came when a fleet of private planes flew south from Cape Town, South Africa, where there’s a permanent gate at the airport that says ANTARCTICA (I love that) and we landed on the Ronne Ice Shelf, overlooking the frozen Weddell Sea. There we unloaded and set up a village of yurts, Jamesways, and tents, which looked small in the vast expanse of ice, because it was. Even the tourist villages at Pioneer Hills and under the Queen Astrid Range were larger. But this one served as the drop site for an ever-growing collection of specialized equipment, some of it lent to the operation by Transneft, the Russian state-owned oil pipeline corporation. The biggest piece of equipment was brought to the edge of the Ronne Ice Shelf by a massive Russian icebreaker, and unloaded in a tricky operation: a giant pump. Intake pipes were punched through the sea ice, and a transport pipeline was attached to the pump and run inland, across the Ronne Ice Shelf and up to the polar cap, past the South Pole to Dome Argus, the highest point on the Eastern Antarctic Ice Sheet. Because it was higher, this was felt to be the energy equivalent of the even more distant Gamburtsevs.
The power for the pumping, also the heating of the pipeline to keep the water liquid in the pipes, was provided by a nuclear submarine reactor donated for the occasion by the Russian navy. If it turned out to be feasible, the billionaire had explained to people back in Russia, this operation might turn into one of the biggest industries in the world. And save St. Petersburg from drowning. The fact that this supposed industry would require the power of about ten thou
sand nuclear subs was apparently left out of the discussion. But okay, an experiment in method, sure. Why not.
All the ice melting around the world was now raising sea level at a rate of some 5 millimeters a year, which did not sound too bad until one remembered that it had been 3 millimeters a year just twenty years before, and this rapid rate of increase was also itself speeding up. If the current rate doubled every year, then very quickly the sea would be rising so quickly that the coastlines of the world would be inundated, and that catastrophe would greatly complicate an already tricky ecological situation.
Many had pointed out that if sea level rise did increase in speed in any significant way, it would overwhelm any possible attempt to pump that water back up onto Antarctica or anywhere else. If it got as bad as even a centimeter a year, which could easily happen if things went south, ha ha, the amount of water in that rise would equal a cube roughly the size of the District of Columbia at its base, thus twice as tall as Everest. And moving that would take far more pipe than ever made in all history.
But since the rate of future sea level rise was unknown, it was felt by many, or at least by the billionaire in question, to be worth looking into. It would provide some real costs to check against the modeling exercises, and also would test what happens to seawater when released high on the polar cap. How far would it spread, how it would affect the ice already up there, and so on.
When we got the first line attached to the pump and started running it south, we took helos inland to get to the front edge of the operation. A longer flight every week. Looking down we could see the pipeline below us, like a black thread on white cloth.
It’s like sucking up the ocean in a drinking straw, I said, and spitting your mouthfuls onto shore.
It’s true, someone replied. But if you had ten million straws …
The Ministry for the Future Page 17
