Environment and Population

Binary economics spreads productive (and the associated consuming) capacity so that all individuals in the population – including babies, carers and those not normally in conventional employment – have at least some form of secure, independent income. The income starts small and grows larger over time.[63] A secure, reasonable income for everybody is essential if there is to be any hope of changing people’s attitudes towards excessive consumption.[64]

Changing Flowers
Insecurity causes greed

At present virtually everyone has either had a scarring experience of poverty or has a perception or fear that they might fall into poverty. In short, people feel insecure and that is one of the main factors in explaining greed. The insecurity – and the associated aggressive consuming attitudes – will only disappear if, as in binary economics, ALL people have material security and, at the same time, all people in some degree earn in exactly the same way as do others (i.e. at least part of their individual income should come through capital ownership). Only then will there be hope of people voluntarily minimising their greed. Moreover, as between individual countries, fairness between populations is essential if there is to be willing co-operation.

Present financial system causes greed and destruction

Greed is also caused by the present financial system which creates sufficient money for the principal of interest-bearing loans to be repaid but does not create sufficient money with which to repay the interest.[65] The result is that more interest-bearing money has to be created (with more inflation and more people going into debt) and more frenetic activity in the endeavor to try to make repayment.[66] Worse, the system favors the short term destruction of natural wealth rather than its long term maintenance.[67] Unless the role of interest in the financial system is substantially diminished (as happens with binary economics) not only is the environment at risk but so is the stability of the world financial system.[68]

Stable population levels

It is also the case that populations stabilise when there is a reasonable standard of living, good education, health and at least some status for women. Binary economics provides a reasonable standard of living, good education, health and full and equal status for women particularly by ensuring independent income. Thus binary economics is the only hope for moderating the present growth of the world’s population.[69]

Alternative technologies

Lastly, there is now an extraordinary range of ‘alternative’ green technologies capable of generating clean electricity but which cannot be used because, in the present system of interest-bearing money, they are not financially viable.

La Rance, France, tidal barrage power plant

Examples include tidal barrages and tidal lagoons; and large-scale solar structures. However, with interest-free loans they will become viable.[70]

There is now also hope that some technologies – at present viewed with varying degrees of skepticism by mainstream science and previously thought to be physically impossible – are practical. Indeed, there are many ‘alternative’ technologies that, in principle, would be eligible for research and development funding under binary economics. Some of these technologies, if physically possible, would enable the clean generation of electricity for cars, houses, trains and factories and they can be found among the Top 100 Technologies which are a mixture of that which lies within, on the edge of, and outside existing science. An example is the use of magnetic interactions for clean electricity generation which does not require the input of any other energy (i.e. ‘free’ energy generation). Cars, houses, trains, factories could be powered by clean, ‘free’ magnetically-generated electricity.[59] All of these technologies should be implemented with interest-free loans.

NB An Irish company – Steorn www.steorn.com – may, or may not, be on the verge of succeeding in using magnetic interactions to produce clean electricity with no input other than that coming from the magnets. If this proves to be practical, a major component of the solution to the world’s environmental problems will be in place. Another company – Blacklight Power – might be about to produce a powerful new clean electricity technology.

Dark Green Forest


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Below is the text of the London Global Table submission to the United Nations Development Program for the Bali (Indonesia) conference in December, 2007.


An example of a large-scale environmental capital project is the construction of miles of sea barrage covered by mangrove forest.

CENTRAL BANK-ISSUED INTEREST-FREE LOANS FOR ENVIRONMENTAL CAPITAL AND OTHER PROJECTS

Challenge addressed

Adapting to climate change in the developing world (and elsewhere) will cost billions of dollars per year. A new, reliable, effective and non-inflationary financial mechanism is urgently required.

Scope of the proposal

The proposal covers all environmental capital projects, all governmental capital projects, and micro-credit. Moreover, it is capable of being extended to small business, the private sector (if wide ownership is involved), student loans and, crucially, to the development of new alternative technologies particularly for the clean generation of electricity – see R.A. Shakespeare The Modern Universal Paradigm (2007).

Structure of the proposal

The banking system, using the fractional reserve system, today creates money out of nothing, adds compound interest and does not necessarily direct it at the development and spreading of productive (and the associated purchasing) capacity. In the UK and USA over 95% of the new money supply is created in this way.

It is proposed that a country’s central bank should create interest-free loans. (Such loans could also come from the IMF, World Bank, individual countries or the Islamic ummah). On repayment, the loans (like the principal of normal bank loans) are cancelled leaving the capital projects in existence.

The money for repayment of loans would be collected and repaid as it is at present except that the capital projects would cost, roughly, half or less what they cost today.

The collateral for the loan would be similar to that today e.g., either secured on the project itself or on the repaying power of the government and its administrative systems. Essentially, the government would be repaying itself thereby removing creative liquidity which has fulfilled its function.

In the past the mechanism has been successfully used for public capital projects in Canada, New Zealand, China and Guernsey and is believed to be being used in Malaysia today for some big public capital projects.

Gradually, over time, the banking system (by an increase in required reserves) would be increasingly restricted in its own creation of money unless such creation demonstrably spreads productive capacity and assists sustainable development.

A diagram is below and further information can be found at www.binaryeconomics.net.

Estimated value or influence

The proposal in its full form focuses all new money creation (as loans) onto environmental capital and the development and spreading of various forms of productive capital.

Moreover, the proposal is capable of being implemented in developed economies.

Therefore the overall value of the proposal can be described as environment-addressing, financially huge, global-wide, effective and inclusive.

Other matters and key points for discussion

Since the loans are repaid and cancelled and result in an expenditure of half the usual cost, there is probably only one substantial question to be addressed – Why should central bank interest-free loans be used thereby depriving of interest those who usually benefit from issuing interest-bearing loans?

The answer is that either the environmental situation in the world is taken seriously and a reliable effective mechanism is established, or it is not.


Economics WordsFootnotes

63. Norman Kurland, Dawn Brohawn & Michael Greaney (2004) op. cit.
64. Robert Ashford & Rodney Shakespeare (1999) op. cit.
65. Tarek el-Diwany (2003) The Problem with Interest.
66. Tarek el-Diwany (2003) op. cit.
67. Tarek el-Diwany (2003) op. cit.
68. Tarek el-Diwany (2003) op. cit.
69. Robert Ashford & Rodney Shakespeare (1999) op. cit.
70. Rodney Shakespeare (2007) op. cit.


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