Cannon Law

What’s the link between how far you could fire a gun in the 17th century, the 2009 Nobel Prize for economics, and the forthcoming Insights book on Fisheries? The answer is: governance.

The last chapter of the Insights looks at how fish stocks could be managed sustainably. One of the issues is that the oceans are a global commons, with every nation having the right to travel on them and exploit what is in or under them.

It’s not an unlimited right though, being governed by the Law of the Sea. That’s where the guns come in. In the 17th century, certain aspects of territorial integrity and sovereignty were decided on the basis of the “cannon shot rule” – how far you could fire a cannon. The three-mile limit around a coast is based on this. This has now been extended to 200 miles, but that still leaves out most of the world’s oceans. (more…)

Climate change: Fisheries too

When thinking about climate change, we usually think about the Earth’s atmosphere, but oceans are affected too, with serious impacts on marine life.

According to a new study by the FAO increasing temperatures could have dire consequences for the fishing industry. Over 500 million people rely on fish as a source of protein and income, and fish provide at least half the animal proteins and dietary minerals for 400 million of the world’s poorest people.

The FAO says both marine and inland fisheries are poorly positioned to withstand the new problems posed by climate change. Marine fisheries in particular may see major decline, as they are already trying to cope with overfishing, habitat loss and mismanagement.

These issues are explored in a forthcoming Insights, Fisheries: While Stocks Last? to be published in Spring 2010 to coincide with a major OECD conference on aquaculture.

We are a bit bemused


 

A new name to add to the list of those who want to know what caused the crisis: Queen Elizabeth II. During a visit to the London School of Economics, the British monarch asked economists why they didn’t do a better job of predicting the timing and scale of the slowdown, The Observer reports. “She seemed very interested, and she asked me: ‘How come nobody could foresee it?,” Professor Luis Garicano of the LSE told the newspaper.

Stirred by the Queen’s query, some of Britain’s leading economic experts wrote to her to explain what they think went wrong. “Everyone seemed to be doing their own job properly on its own merit. And according to standard measures of success, they were often doing it well,” they told her. “The failure was to see how collectively this added up to a series of interconnected imbalances over which no single authority had jurisdiction.” While the crisis had many causes, they concluded, “[it] was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.”

A crisis of (over-)confidence?

Malcolm Gladwell is probably the world’s most famous “pop” sociologist. His work often focuses on “how little things can make a big difference,” to quote the subtitle of his bestseller The Tipping Point. No surprise, then, that the financial crisis has caught his attention. Here, he argues that the roots of Wall Street’s crisis were in large part psychological: The overconfidence of many of those working in financial markets, he argues, led them to suffer from the “illusion of control” – an inability to recognise both the limits of their own knowledge and their capacity to control events. Can such overconfidence be reined in? Not easily, says Gladwell: Confidence is the lifeblood of financial markets everywhere, and it’s usually the most confident (and even overconfident) players who score the biggest wins. But if everyone becomes overconfident – i.e., if everyone acts in the hope that their bluff won’t be called – realistic assessment of risks and rewards goes out the window.

Subsidising Pollution?

How can we reduce fossil fuel use and make the switch to clean energy?  Debates on fossil fuel dependence and its consequences for the environment have reached a crescendo as COP15 nears its deadline.  But did you know that governments still subsidize the use of fossil fuels?  Helen Mountford of the OECD Environment Directorate, Peter Wooders of the IISD and Dr. Fatih Birol of the IEA explain the importance of dealing with these contradictory policies.

Useful links:

OECD and COP15
The IISD Blog
COP15

If one of us fails, everyone suffers…

Trillions of taxpayers’ dollars were needed to save the very institutions that provoked the worst financial crisis in 60 years. The bailouts seem to have succeeded, but to stop the same thing happening again, the structure of the global financial system has to be rethought, notably to deal with the risks linked to counterparty failure and contagion.

Writing in the Wall Street Journal,  Adrian Blundell-Wignall of the OECD puts forward a proposal to contain risk by addressing what banks actually do. The proposal does not require draconian Glass-Steagall divestment of securities businesses from commercial banks. But it does require some important structural changes for banking conglomerates to make sure that the failure of one does not mean trouble for all.

Useful links:  The Financial Crisis: Reform and Exit Strategies