Talk:Solar Dollar

Critique by James Quilligan

James Quilligan:

"One of the most interesting proposals I've seen, although I haven't read the three papers referred to in the video. So it's rather difficult to assess this proposal from the basic outlines presented in a three-minute film and the remarks that follow. Currency value here is based on a risk assessment of climate change, and on that basis a 'mitigation reward' is then combined with carbon taxes and/or a cap-and-trade protocol. This implies some thermodynamic understanding of the problem (i.e., the entropic nature of global warming), yet puts forward solutions that would not be helpful. The elements of this proposed monetary system are market-based measures that are geared toward financial investment in green technology to mitigate climate change. What does this mean? Think about it for a moment. Since global risk assessments would be the basis for the price of the solar dollar, the world will derive monetary value entirely from the metrics of the demand for financial innovation on climate mitigation. Here, once again -- as is repeatedly expressed by ecological economists when they try and apply their thermodynamic knowledge to money -- we see the epistemological confusion between actual monetary value and financial value. Monetary value and financial value are two entirely different things and need to be kept separate, not conflated: the monetary value of a currency is a measure of resources held in reserve to guarantee the purchasing power of the currency -- NOT its financial price in the marketplace. Yet, for solar dollars, there are no reserve assets! (only "green quantitative easing", as the Solar Dollar King exclaims in his remarks following the video). Because *if climate risk is truly a reserve asset*, this means that the world has given up business as usual, we are now in a state of major emergency in fighting global warming, and the risk of disaster from a hotter planet is our only standard for a sustainable civilization. I agree that the carbon crisis is a HUGE problem, but so is the hydrological crisis in water scarcity and the nitrogen crisis of declining yields in soil and food production. These are all symptoms of a larger problem, which is simply aided and abetted by solutions like that proposed by Solar Dollar: humanity is in denial that the non-renewable resources available on the planet are not being conserved at a pace that will leave much left for future generations, and renewable resources are not being replenished quickly enough to meet the needs of the present population which continues to grow. It's been said many times but can't be said enough: human population is using resources faster than Nature can replenish them. So the image of *Solar Dollars* sounds truly wonderful: we're going to use the Sun to provide a healthy measure for a thriving civilization that is harnessing solar energy to generate sustainable, syntropic, bountiful resource yields to meet the needs of the entire population of the planet! Yet, what Solar Dollars really represents is a commitment to a program of disaster mitigation which is completely based on the unsustainable, entropic and deathly effects of solar energy and its heritage in fossil fuels, humanity's foolish overheating of the planet, and civilization's inability to stay within the limits of its carrying capacity. Solar Dollars would only throw fuel on this fire." (https://www.facebook.com/groups/p2p.open/permalink/1627933447250828/?)

Response by Delton Chen

Delton Chen Ph.D.:

"The main topic of discussion is not the Solar Dollar per se, but the Global 4C Risk Mitigation policy. Two new publications and a revamp of the www.global4c.org website are planned for 2018, and these actions should clarify the policy for most informed readers. Here I give my feedback to the comments of J. Quilligan. The comments of Quilligan are mostly vague and contradictory, and so it is not easy to respond. Firstly Quilligan says that the policy "...puts forward solutions that would not be helpful." Yet, the policy provides long-term debt-free finance for proven climate mitigation and innovation. Given that mobilising climate finance is the core issue of the climate crisis, I think it fair that we consider the more detailed comments put forward by Quilligan, and leave the general statements for the reader to reflect upon.

Quilligan's Statements 1 & 2: "Currency value here is based on a risk assessment of climate change, and on that basis a 'mitigation reward' is then combined with carbon taxes and/or a cap-and-trade protocol. This implies some thermodynamic understanding of the problem (i.e., the entropic nature of global warming), yet puts forward solutions that would not be helpful. The elements of this proposed monetary system are market-based measures that are geared toward financial investment in green technology to mitigate climate change. What does this mean? Think about it for a moment. Since global risk assessments would be the basis for the price of the solar dollar, the world will derive monetary value entirely from the metrics of the demand for financial innovation on climate mitigation. Here, once again -- as is repeatedly expressed by ecological economists when they try and apply their thermodynamic knowledge to money -- we see the epistemological confusion between actual monetary value and financial value. Monetary value and financial value are two entirely different things and need to be kept separate, not conflated: the monetary value of a currency is a measure of resources held in reserve to guarantee the purchasing power of the currency -- NOT its financial price in the marketplace. Yet, for solar dollars, there are no reserve assets! (only "green quantitative easing", as the Solar Dollar King exclaims in his remarks following the video). Because *if climate risk is truly a reserve asset*, this means that the world has given up business as usual, we are now in a state of major emergency in fighting global warming, and the risk of disaster from a hotter planet is our only standard for a sustainable civilization"

My Response 1: Firstly, before replying—I made it clear that referring to my co-authors and myself as "..the Solar Dollar King.." is condescending and I requested an apology. It is not clear what Quilligan is trying to say here. It appears that he is making a comment about certain types of money that have a commodity backing (e.g. gold standard) and therefore could have a resource value (the tangible value) that is different to the market price of the currency in financial markets. This comment is not helpful, because it is a distinction that is already very well known and is only a 'straw man' complaint in this case. The Global 4C policy sets the currency value under monetary policy, and the value is not established by the carbon mitigation per se, because the cost of mitigation is "externalised" from the economy. This is why climate change is called a "market failure", and this is why economists spend a lot of time developing market-based policies to correct the market failure!!! The comment is also confusing because it appears that Quilligan wants to differentiate between "economic value" and "price". Certainly these are different, because price is what everybody can agree upon in the marketplace, whereas economic value is more general and is interpreted as the 'good' and the 'utility' for society as a whole. What is the point here? The Global 4C policy is very precisely focused on defining a monetary policy/system that will transfer purchasing power from fiat currencies into a new parallel currency (the Solar Dollar) that has a biophysical unit of account. There is no argument over the price of the Solar Dollar, because it will be the result of supply-and-demand, and with the demand underwritten by central banks. The market/financial value is what the Solar Dollar can purchase in the marketplace. This purchasing power is ultimately created by national economies with their national fiat currencies. These national currencies have value because their respective economies produce goods and services and their governments impose taxation and laws to define the legal tender status of the currencies. End of argument. The economic value of the Solar Dollar is to avoid a climate catastrophe, to limit systemic risks and to provide regenerative co-benefits.

My Response 2: Quilligan drifts between a discussion about thermodynamics and the store of value of the Solar Dollar. The Global 4C policy is not a product of ecological economics (e.g. which often supports a steady state policy for the economy) because it is really a theory founded in biophysical economics and consistency with the laws of thermodynamics. The laws of thermodynamics are applicable (qualitatively and quantitatively) to civilisation as a biophysical system; but these same laws are not directly applicable to the circulation/pricing of money, mainly because fiat currencies are 'informational'. There are, however, many important relationships between GDP, the purchasing power of money and energy consumed in the economy, and this has been shown in the literature. In conclusion, the Global 4C policy is specific about the value of money and the use of thermodynamics. It is not possible to elaborate further because the comments of Quilligan are too vague."

Quilligan's Statements 3-4: "...I agree that the carbon crisis is a HUGE problem, but so is the hydrological crisis in water scarcity and the nitrogen crisis of declining yields in soil and food production. These are all symptoms of a larger problem, which is simply aided and abetted by solutions like that proposed by Solar Dollar: humanity is in denial that the non-renewable resources available on the planet are not being conserved at a pace that will leave much left for future generations, and renewable resources are not being replenished quickly enough to meet the needs of the present population which continues to grow. It's been said many times but can't be said enough: human population is using resources faster than Nature can replenish them. So the image of *Solar Dollars* sounds truly wonderful: we're going to use the Sun to provide a healthy measure for a thriving civilization that is harnessing solar energy to generate sustainable, syntropic, bountiful resource yields to meet the needs of the entire population of the planet! Yet, what Solar Dollars really represents is a commitment to a program of disaster mitigation which is completely based on the unsustainable, entropic and deathly effects of solar energy and its heritage in fossil fuels, humanity's foolish overheating of the planet, and civilization's inability to stay within the limits of its carrying capacity. Solar Dollars would only throw fuel on this fire." (https://www.facebook.com/groups/p2p.open/permalink/1627933447250828/?)

My Response 3: The comment of Quilligan is rambling, and so it is difficult to form a response. Firstly, Quilligan seems to see the climate crisis as separate to the " ...the hydrological crisis in water scarcity and the nitrogen crisis of declining yields in soil and food production..". The essential point that Quilligan misses is that global warming will be experienced as radical changes in the hydrological balance and agriculture. Why Quilligan makes this statement is unclear, because it simply ignores the reality that extreme weather, droughts, floods, changing evapotranspiration and crop yields are all related to climate change. Nitrogen (N) fertilisers are also highly soluble and are manufactured with fossil fuels. The above statement of Quilligan is either illogical or just poorly worded. Assuming that it is just poorly worded, we can agree that current over-consumption of natural resources (and related GDP growth) is unsustainable. A book chapter will be published in 2018 that addresses the growth issue, however the topic also needs to be assessed with quantitative economic modelling. Such modelling is needed to address the questions that will be put forward by stakeholders.

My Response 4: The policy and the Solar Dollar do not make any claims about using solar energy or any other natural resources in any specific proportion. The mitigation of climate change and the supply of renewable energy will be determined by markets, and in whatever proportion is most effective in reducing carbon emissions to net zero and while simultaneously improving social and ecological co-benefits. The policy does not offer miracles, because society and market actors will have to do the best they can under the circumstances. Quilligan should write his own policy document if he feels strongly that he has a better policy.