How do we balance the benefits and risks from the digital technology giants?

Digital technology giants such as Facebook, Google and Amazon create value  through their technology, network effects, information non-rivalry, and through managing aggregated or “big data” in service delivery. 

However, their dominance creates market power concerns.  Big data misuse can erode civil society and challenge democracy itself. The big digital technology companies control personal data, and this creates privacy concerns. There are calls for tighter regulation, yet these companies are productivity-enhancing technology leaders, and they deliver “free goods” and new affordances for society. 

How then can we optimise the benefits from the digital technology giants, while managing risks?

People value privacy to protect themselves from material harm such as identity theft, and also because it is bound up with self-identity, individual rights and personal freedoms.  Information or data that private firms or government have about a person has important privacy implications.

From 1890 Louis Brandeis began to create a basis for the right to privacy and legal protection for it.  As a Supreme Court judge he was a free speech and privacy rights advocate, and he opposed big business monopolies.  In the 1960s Alan Westin started to lay the legal foundation for consumer data privacy protection suited to the digital age.  He framed privacy as the right to control how much of ourselves we reveal to others.  Westin closely associated privacy with personal freedoms. 

In recent years data privacy breaches, including alleged misuse of data for politically manipulative purposes, has roiled around digital technology firms, including Facebook and Google.

However, such companies have strong incentives to protect privacy and to safeguard consumer interests more generally.  For example, Facebook is a two-sided platform company with consumers and advertisers interacting through a common platform.  Facebook must retain both sides confidence and avoid privacy breaches to stay in business.

Recent decades have seen digital technology transform economies and societies, and play a pervasive role in almost everyone’s workplaces, homes, and in their lives more generally.  Consumers have rewarded the lead digital technology businesses, and investors have valued this.  As at March 2020 the top five biggest US companies by market capitalisation were all digital technology companies – Microsoft, Apple, Amazon, Google and Facebook.  Their success reflects the digital and computational technologies they have harnessed, and the non-rivalry and networking economies these give rise to.

These technology-based companies have transcended the constraints of mainstream product market businesses.  In the traditional business model, a firm draws on supplier inputs, adds value, and then delivers products or services to customers.  The product mix is typically physical rival goods that can be “consumed” only once.  However, internet-leveraged digital technology has given rise to firms based on non-rival goods, that is “goods” such as information where one person’s use does not deprive another of that same information. 

While it is expensive to create valuable information, once created the marginal dissemination costs to additional users can be near zero.  Non-rivalry drives marginal costs down and helps big digital technology companies deliver consumer as well as producer surpluses.  Consumer benefits include free goods such as Youtube, Google Maps, and social media connections that pervade our lives and fall outside market exchange and GDP statistics.

The digital technology giants exploit network effects that arise when something becomes more valuable to consumers as more people use it – a telephone network in the old economy or a digital technology platform in today’s economy.  Network effect accumulation is akin to the “Matthew Effect” in the Bible – “to he who has shall be given even more”. 

Dominant digital technology companies strengthen their hold through software upgrades, new functionality, and tight control over data channels.  They learn constantly from platform users’ search inquiry patterns and revealed preferences and draw inferences from them. 

Industry dominance by a few or even one company does not necessarily lead to efficiency loss and stagnation.  For example, when America’s telecommunications industry was highly concentrated in AT&T, researchers working in AT&T’s Bell Laboratories helped develop radio astronomy, the transistor, the laser, the photovoltaic cell and other transformative technologies that had impacts far beyond AT&T’s commercial interests. Nine Nobel Prizes and four Turing Awards were awarded for work completed at Bell Laboratories. 

America’s digital technology sector is highly concentrated, and some key companies  have bought out likely nascent competitors.  They have used their network economies, data aggregations (“big data”) and control over data channels as barriers to competitive entry. 

However, these companies deliver knowledge and technology spill-overs that feed into wider innovation they cannot fully capture the benefits from.  They also diversify and create value in new markets.  For example, Google began as a search engine and has diversified into business management and communication tools, email services, cloud storage, language translation, research tools, mapping, navigation, and self-driving cars. 

Companies such as Microsoft, Google and Amazon provide connectedness and other capabilities to respond to societal challenges with speed, flexibility and fitness for purpose.  In the coronavirus crisis they are helping keep essential services functioning during lockdowns, and facilitating the connectedness that helps international researchers deliver new vaccines at unprecedented speed.

There has always been a public good and open society culture in the digital technology sector.  The internet is the ultimate network of networks, and the uber-platform for platforms.  It has made possible many non-profit public good initiatives.  An example is Wikipedia – an information resource with unparalleled global heft. 

However, some digital capabilities and networks that promoted internationalism have at times been turned into tools for nationalism, separatism and political polarisation.  The Facebook-Cambridge Analytica incident that played out over 2014-2018 highlighted the potential for big data to be repurposed for political purposes.  Digital technology, including social media, has been used to interfere with democratic processes in Europe and the United States. 

New challenges to privacy, civil society and democracy are looming, and may well be amplified by computational and artificial intelligence advances.  For example, biodata, face and voice recognition technology will allow inferences to be drawn relating to an individual’s health risks.  However, such technology could also be used against individuals, for example through capturing and analysing data relating to ethnicity, beliefs, values, personality, peoples’ vulnerabilities, and how behaviour can be predicted and perhaps manipulated in different contexts and scenarios. 

Such dystopian risks may come as authoritarian governments command such technologies.  However, democratic governments, polities and civil society can channel new digital technologies towards good social purposes.  A further check on authoritarian power abuse is the distributed nature of the Internet, the private ownership of key companies, and VPNs that protect private information.

Governments have been under pressure to regulate and perhaps even break up digital technology giants.  However, society as a whole benefits from these companies’ technological contributions.  Heavy-handed regulation could stifle innovation, reduce benefits from technology spill-overs, and create huge compliance costs.

Breaking up dominant digital technology companies could fragment their aggregated databases (their “big data”).  However, in both the private and public sectors the most powerful insights, explanatory power and predictive analytics depend on big data aggregations.  The more data available the more value that can be created from its analysis.  This is true whether the big data is held by Facebook and Google or in government databases such as New Zealand’s integrated data infrastructure (IDI). 

There may also be opportunities for government and technology companies to partner together on joint analyses using both public and private sector big data to support non-proprietary applications, for example public health objectives.

In relation to privacy concerns, excessive transaction costs make it impractical for individuals and digital technology companies to negotiate bespoke agreements on private data ownership and how such data can be used.  However, consumer data rights (CDRs) can create individual rights over personal data held by a private company – New Zealand government agencies are working on this.

In Europe, the General Data Protection Regulation (GDPR) enforces data portability. CDRs in New Zealand could make consumer data held by a company portable to a third party.  Consumers could use their rights over portable data to opt for better banking, utilities and other services options.  This might be especially beneficial in encouraging open banking and fintech innovation.  It might also in some small way help check the dominant power of the big digital technology businesses. 

The optimum overall approach is therefore not to tightly regulate the digital technology giants, and rather to allow them high freedom to operate subject to strengthened individual data rights, for example through CDRs.

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The Treaty of Waitangi (Te Tiriti o Waitangi) and New Zealand’s constitutional evolution

“Good leaders join networks so that their followers can have greater opportunities. Bad leaders develop walls so that outsiders cannot get in and insiders cannot get out.”
Sir Mason Durie

Unlike the US, New Zealand has no supreme constitution, and has instead an archipelago of laws, treaties, common law principles, articles of association and documents defining the purposes of thousands of community, sporting and other such clubs and collectives.

The 1840 Treaty of Waitangi (Te Tiriti o Waitangi) is a starting point in New Zealand’s constitutional evolution.  It was an international treaty of cession, and by itself not enforceable domestically.  A government system needed to be established for laws and regulations to be made and enforced in New Zealand.  The British Government enacted the New Zealand Constitution Act 1852 to establish representative government, with some provision made “for the time being” for the maintenance of Māori “laws, customs and usages” so far as “they are not repugnant to the general principles of Humanity”. 

The 1852 Act enfranchised propertied males over 21.  This included some Māori, however most were excluded because they failed the property criterion, even though many held collective property in traditional form. This anomaly was addressed by the creation of four Māori seats through the Maori Representation Act 1867.  This enfranchised all Māori males over 21 regardless of their property holdings.  Pakeha males without property were only enfranchised in 1879.

The 1852 Act created one of the oldest continuously operating Parliaments in the world.  The 1840 Treaty as an international agreement and the 1852 Act together started our journey to becoming an outward-looking and independent democracy. 

New Zealand’s decolonisation and transition to an independent country began in 1907 when New Zealand ceased to be a colony and became a Dominion.  The Statute of Westminster in 1931 gave the Dominions responsibility for their own law making, though New Zealand only accepted this in 1947. 

The 1852 Constitution Act was finally replaced by the New Zealand Constitution Act 1986.  This Act is now our key constitutional document. It formally states New Zealand’s constitutional arrangements, including the roles of the executive, the legislature and the judiciary.  It continues to recognise the Queen as the head of state, however in practice the 1986 Act marks the point where the elected Parliament became fully sovereign with the Crown’s only roles being symbolic and procedural.  It is now Parliament not the Crown that makes laws.  It is also the elected government and its executive that have relationships with its citizens, not Queen Victoria or Queen Elizabeth the Second.

The 1996 introduction of MMP helped counter the risk of majoritarian governments overriding minority interests.  The logical next constitutional step for New Zealand may be a republic and/or an even closer relationship with Australia. 

New Zealand’s modern history began with early contact between Europeans and Māori, driven largely by trade interests.  Foresighted Māori leaders from early in the 19th century on were more internationalists than nativists.  Māori were keen to acquire metals, tools, textiles, muskets, new food crops and the know-how to make use of them.   They actively competed for trade contacts and immigrants to facilitate access to new technology.  Mission stations were encouraged and protected, with the missionary schools playing a key role in literacy and the spread of Christianity. 

However, European contact also caused instability through, for example, access to muskets.  The “musket wars” from around 1807 to 1837 killed around 20,000 to 40,000 Māori.  They further altered tribal boundaries that had been fluid in pre-European times as iwi fought among themselves for resources and mana. 

In the years leading up to the Treaty, New Zealand was as lawless and violent as any modern failed state.  European immigrants included ex-convicts, thieves and murderers.  Charles Darwin after his 1835 visit to New Zealand described the (non-missionary) European population as “the very refuse of society”. 

Aware of the disorder, violence and fraudulent land sales, James Stephen an undersecretary in the Colonial Office conceived of a treaty between the Crown and New Zealand’s indigenous people.  Stephen was the son of a prominent abolitionist, and himself a social reformer.  He had strong Christian faith and was concerned to protect indigenous peoples from harm.

When the Treaty was signed in 1840 New Zealand had a population of around 70,000 to 90,000 Māori and less than 2,000 Europeans.  Māori were the strongest party, however they needed European trade and technology and a central authority that could keep the peace. 

The Treaty was initially drafted in English, and the missionary Henry Williams translated it into Māori.  Governor Hobson greeted each chief signing the Treaty with the pledge: “He Iwi Tahi Tatou” (we are now one people).  

When chiefs debated the Māori language Te Tiriti o Waitangi, Williams told Māori they would be “one people with the English, in the suppression of wars, and of every lawless act; under one Sovereign, and one Law, human and divine”.  The “divine” was left out of the final text – the Treaty is secular.  Williams then took the Māori language version that had been discussed with and acceded to by Māori and retranslated it back into English.  This then became the official English language version.

The Treaty consists of a Preamble and three Articles.  The Preamble states the need for the rule of law and for stable government.  It foreshadows further immigration, tacitly inviting Māori acceptance of this.  It states that Civil Government will “avert the evil consequences which must result from the absence of the necessary Laws and Institutions alike to the native population and to her Subjects.” 

Article One establishes Crown sovereignty and its right to govern.  It requires that chiefs “cede to Her Majesty the Queen of England absolutely and without reservation all the rights and powers of Sovereignty which the said Confederation or Individual Chiefs respectively exercise or possess.”

In William’s translation, “kawanatanga” is the neologism for sovereignty.  It is a transliteration of “governance” or, as Sir Hugh Kawharu translated it, “kawanatanga” means “government”.  At least 700 Māori had visited Sydney alone by 1840 and had observed the effects of Crown governorship in Australia.  The over 500 chiefs that signed the Treaty unequivocally agreed to cede sovereignty completely and forever to the Queen.  Māori were under no illusions about Queen Victoria’s powers.  Te Heu Heu was one of the few chiefs who did not sign the Treaty, because to do so would “place the mana of Te Heu Heu beneath the feet of a woman.”

As Apirana Ngata wrote in 1922:

It was the first article of the Treaty which transferred the chiefly authority of your ancestors, affecting you and future generations for ever (Ngata 1922).

Ngata also wrote that the Treaty:

“…made the one law for the Maori and the Pakeha. If you think these things are wrong and bad then blame our ancestors who gave away their rights in the days when they were powerful” (Ngata 1922).

The Treaty did not even metaphorically create an equal partnership between the Crown and Māori.  Māori could not in the same treaty be both subjects of the Crown and partners with it. 

Treaty Article Two extended to Māori English common law and Magna Carta rights at the individual as well as the tribal levels.  Magna Carta included a fundamental principle that:

“No freeman shall be… stripped of his rights or possessions…except by the lawful judgement of his equals or the law of the land (modern translation).

Article Two protects property rights.  The English language version of Article Two confirms and guarantees rights “to the Chiefs and Tribes of New Zealand and to the respective families and individuals thereof the full exclusive and undisturbed possession of their Lands, Estates Forests Fisheries and other properties.” This makes clear that individuals as well as Chiefs and Tribes are protected.  In the Māori version “ki nga tangata katoa o Nu Tirani” refers to “all the peoples of New Zealand” being guaranteed ownership rights and powers (“tino rangatiratanga”) over their properties. 

In traditional Māori society “ariki” were first-born chiefs in high-ranking families, whilst “rangatira” were akin to “gentlemen” (Firth, 1929).  That is, tino rangatiratanga protected the rights of propertied individuals and did not privilege ariki over rangatira.  Tino rangatiratanga is about property rights and has nothing whatever to do with sovereignty – an issue clearly determined in Treaty Article One. 

Tino rangatiratanga, in protecting individuals and their whanau, is powerfully anchored in English belief in the strong  relationship between property rights and human rights.  “An Englishman’s home is his castle”, or as the great Prime Minister William Pitt the Elder said in 1763:

The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail; its roof may shake; the wind may blow through it; the storm may enter; but the King of England cannot enter.

The Māori version of Article Two does not refer to forests or fisheries.  It states that the “Queen of England confirms and guarantees to the Chiefs and Tribes and to all the people of New Zealand the possession of their lands, dwellings and all their property” (“taonga”).  Some words used in the Treaty have changed in meaning since the mid-19th century.  Hongi Hika used “taonga” to refer to tangible “property procured by the spear.” However, in modern times “taonga” is now claimed to include cultural “properties” such as language.  This wider definition gives litigants and advocates more leverage in Treaty and other claims relating to intangible assets.

When there is conflict between statute law and common law it is statute law that prevails.  If the government makes or exercises laws or regulations that override property rights, the expected norm is that due process should be followed and compensation be paid for property rights takings.  

The Treaty only reduces Māori rights compared to other New Zealanders’ through the Article Two pre-emption clause giving the Crown the exclusive right to buy Māori land.  This right reduced the prices that Māori might have realized from land sales.  This Crown pre-emption clause is now outdated.  However, it was justified in the 1840 context where there was widespread land fraud, and confusion over who owned what and who had rights to trade in land.  

Article Three confers on Māori the rights and privileges of Crown subjects and extends to them the Crown’s protection.  It creates equal rights with other Crown subjects, not different rights. In Article Three the English version refers to the Queen of England extending “to the Natives of New Zealand Her Royal protection and imparts to them all the Rights and Privileges of British Subjects.” 

The Treaty reference to the Queen’s Royal protection included protection against external as well as internal threats.  This was prescient – a hundred years after the Treaty was signed the Japanese Empire posed an existential threat to New Zealand.

Ngata reflected on Treaty Article Three in 1922:

The Treaty found us in the throes of cannibalism: that was murder, a crime punishable by death, be the murderer rich or poor. That was the British law which became law for the Maori under the provisions of the second part of the above article “and imparts to them all the rights and privileges of British subjects”. The Treaty found the strong committing outrageous acts against the weak, the chiefs against the commoner, the Pakeha against the Maori, and such acts were breaches of the law punishable by imprisonment with hard labour, according to the British code of law adopted as the law for both the Pakeha and the Maori…” (Ngata 1922).

The equal rights guarantee in Treaty Article Three might imply but cannot by itself lead to socio-economic equity.  The Waitangi Tribunal process was needed for just restitution and to safeguard the Crown’s honour.  However, it was not designed to close the economic gaps between Māori and other New Zealanders. 

The Treaty wording, including tino rangatiratanga, creates rights for individuals and whanau.  However the Waitangi Tribunal deliberations have focused on the iwi and hapu level. Treaty settlements have been managed by Māori leaders (“chiefs”) more so than by individuals. Many settlements have been well-managed, but there has been some corruption, and some tribal elitists have captured disproportionate benefits.  The settlements have encouraged some retribalisation, yet it is difficult to identify internationally a tribal or kinship-based society that has ever flourished in modern times. 

The socio-economic gap between Māori and other New Zealanders is a social class issue that can only be addressed through economic interventions, yet the wider Treaty-related discourse often focuses more on constitutional change and culturalism rather than economic wellbeing. 

Group identity politics, separatism, suppression of free speech, and contempt for democracy, science and humanism have shaken Europe and the United States.  They are also challenging New Zealand. 

Advocacy for separate Māori representation, parallel structures or co-leadership in government and non-governmental institutions can amplify the differences between people rather than strengthen the commonalities.  It can exacerbate centrifugal forces that pull people apart, and weaken the centripetal forces that pull people together. 

Achieving socio-economic equity for Māori at the individual and whanau levels would deliver tino rangatiratanga in a tangible rather than rhetorical sense.  When we have achieved this we can then thank rather than blame our ancestors for the wisdom they showed from the lead-up to our 1840 Treaty and onwards.


Firth, R.1929: Primitive economics of the New Zealand Maori. London, George Routledge and Sons Ltd.

Ngata, 1922: The Treaty of Waitangi: An Explanation. The Treaty of Waitangi an Explanation | NZETC (

Relevant earlier blog posts are linked at:

What is matauranga Māori? | Peter Winsley (

The evolving Treaty of Waitangi discourse and its wider benefits | Peter Winsley (

Maori, identity and socio-economic development | Peter Winsley (

The upstart crow and why I feel I belong here | Peter Winsley (

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Let’s use the NZSF and KiwiSaver to invest in economic development as well as retirement security

The Kirk government’s 1974 superannuation scheme required compulsory contributions to individualized and portable accounts drawn on at retirement age, supplementing a base pension.  A Superannuation Corporation invested in shares and bonds to grow retirement savings, while at the same time investing in New Zealand’s economic development.  However, in 1975 the Muldoon government repealed the 1974 scheme and replaced it with a “pay as you go” system with no compulsory savings element.

Australia took until 1992 to introduce its own equivalent of New Zealand’s 1974 scheme, however it has stuck with it, and as at June 2020 its superannuation assets totaled around A$2.9 trillion.  As a result, Australia is a more capital-intensive and productive economy than New Zealand, it has higher per capita income, and its retirees are far better off financially.  Australia owns dominant stakes in its major industries and corporates, and it has a much stronger offshore investment position.

Since Muldoon’s disastrous decision, successive governments have struggled with the NZS’s affordability.  With Michael Cullen’s visionary leadership, the Clark administration established the NZ Superannuation Fund (NZSF) in 2001, to accumulate savings to part-fund future NZS outgoings.  The NZSF has also contributed significantly to capital market development.  In 2019 the NZSF was worth around $44B, with over $6B invested in New Zealand, including in knowledge-intensive businesses such as Datacom and financial services businesses such as Kiwibank.

KiwiSaver was launched in 2007, and as at October 2019 it manages around $62B.  It is deepening and diversifying our capital markets.  For example, KiwiSaver managers such as Booster, Milford, Kiwibank and Simplicity are investing in venture capital and in private equity.  KiwiSaver funds could also be encouraged to invest in domestic as well as overseas infrastructure. 

Long-term productivity determines per capita income and therefore wider wellbeing.  However, New Zealand’s economy is capital-shallow, and this means a low capital to labour ratio and therefore low labour productivity.  Furthermore, capital investment flows are distorted towards property and the non-tradeable sector rather than export businesses and supporting infrastructure.  From Glaxo over a century ago to recent digital, biotechnology, electronics and electrical engineering examples, thin and impatient capital markets have long stunted growth or forced our most knowledge-intensive businesses to move offshore.

To lift productivity and grow international competitiveness we need to lift domestic savings and steer its investment into wealth-creating tradeable sector businesses.

Within the NZSF, the Elevate NZ Venture Fund was established in 2019 to support early stage growth companies and the venture capital ecosystem as a whole.  While there is plenty of seed and start-up venture capital available, Elevate NZ may fill a gap for growth capital investments of around $20M.  However, it is difficult for our growth businesses to raise locally $50M to $150M in equity investment to achieve international scale and competitiveness, while anchoring core benefit streams in New Zealand.  This lack of $100M or so “growth and anchoring” equity investment is a big gap that should be filled. 

Covid-19, recession and international instability have shaken New Zealanders.  A Labour government with a strong electoral mandate opens an “Overton window” Overton window within which it can progress fundamental change.  Michael Cullen’s work on the NZSF and KiwiSaver, David Parker’s on Elevate NZ, and business voices such as Brian Gaynor and Sam Stubbs have laid a platform to build from.

Sovereign wealth funds invest internationally, however they tend to have a strong domestic focus.  Keynes himself argued that while ideas must be international, capital investment should be local  What we might learn from Keynes about investment being local

Substantial ongoing contributions must be made to the NZSF to support its NZS pre-funding role.  However, a larger share should be invested in knowledge and technology-based businesses, focusing on their internationalization whilst retaining core competencies in New Zealand.  As well as Elevate NZ, the NZSF should invest in around the $100m business equity range.  KiwiSaver should be made compulsory, to deepen capital markets and support economic growth as well as lift retirement savings.  With these changes, the NZSF and KiwiSaver together would replicate the economic impacts sought from the 1974 Superannuation Act, and would create a productivity-enhancing growth path for our sustainable economic development.

The question now is who in our polity or business community can understand how disruption in our times creates opportunities for future times, perhaps saying to herself, whilst thinking of those who come after:

The time is out of joint, O cursed spite,

that ever I was born to set it right…

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Donald Trump, and the stress-testing of constitutions and institutions

Donald Trump’s term is a stress test of America’s constitutional protections and institutions, and their ability to limit the damage from an unqualified and narcissistic President. 

James Madison, John Jay and Alexander Hamilton wrote the Federalist Papers that argued for the ratification of America’s Constitution.  Madison in Federalist No. 10 explored how a republic could balance diverse perspectives, while elevating the public good over factional interests.  America’s Constitution aimed to balance power within and between states, and to unite them into a republic. It has endured, however it has been slow to evolve and for its principles to be fully reflected in all Americans’ lives. For example, it took from the end of the Civil War till the 1960s to remove discriminatory laws and deliver civil rights to black Americans, and Jim Crow still casts a shadow. 

History tells us that democracies need supporting protocols and norms as well as well-designed constitutions and institutions to flourish.  Civil societies require politeness, respect, inclusiveness and decorum – these are not Donald Trump traits.  History also teaches us that leadership matters, and that it requires humility, curiosity, vision, prudence, the ability to draw out the best from people, and the willingness to change one’s views in accord with the facts.

Donald Trump ignored evidence and disparaged science.  He assailed the public service, forcing out those who adhered to the law’s letter and spirit, did due diligence, and gave objective non-partisan advice.  He was unable to distinguish between state affairs and his own private business interests.  Democratically-elected leaders have fiduciary duties, they must uphold institutional integrity, and they need to work for the wider public good and for future generations.  Donald Trump always asks “what do I want and how do I get it”.   Democrats and Lincoln Project Republicans ask “for whom am I acting, and how should I behave?”

America’s polarisation between warring Republican and Democratic camps has origins in the 1980s, as broad-based, lively and pluralistic media outlets started to lose ground to cable TV and narrowcasting.  Newt Gingrich took over as Speaker of the House in 1995, and used such tactics as government shutdowns to impede the Clinton administration’s ability to function.  Fox News swung Republicans towards political extremes that saw no room to learn from or compromise with the Democrats.  The electoral college evolved from a deliberative to a ceremonial body.  Both George W Bush and Donald Trump lost the popular vote, but were still appointed as President.  Over time, the internet and social media siloed factions.  They gave a forum to ludicrous conspiratorial theories and memes such as from QAnon that have deepened political polarisation even further.

However, there are signs that the US is starting to overcome polarisation.  Democrats and Republicans are jointly promoting the Endless Frontiers Act to massively boost American investment in technological innovation in response to perceived PRC threats.  Survey evidence suggests that responding to coronavirus is uniting Americans who otherwise would be at “cultural war” with each other. 

President Biden will face huge challenges.  Every American state is entitled to two Senate representatives regardless of its population base.  This means a lightly-populated state such as Indiana has the same number of Senate representatives as California.  Even within strongly Democratic states, the way district boundaries are drawn can mean that the State Assembly is still Republican-controlled.  The Supreme Court will be stacked 6-3 against the Democrats, which means Republicans can obstruct Democrat fiscal, healthcare and environmental initiatives. 

America needs to fine-tune its Constitution and achieve a better balance between Federal and State powers, for example to deal with challenges that traverse state boundaries. It needs to adopt a proportional voting system, and to select candidates on merit not on how much money they can raise.   The two major parties need to be more pluralistic and less partisan.  They must learn to “hold hands across the aisle” on the major challenges America faces.

America still plays a dominant world role in multi-lateral institutions, including those concerned with health and global commons as well as financial, trade and security institutions.  It must reassert this role not through displays of raw power but through its heft and benign exceptionalism.  Franklin D Roosevelt united Americans as his New Deal dragged America out of the Great Depression, and when he led the war against Nazism and the Japanese Empire. 

A Green New Deal may be the next flagship policy ensemble for America’s socio-economic and environmental future.  This in turn will shape the world’s wider and longer-term prospects.  America can then again lead the world, and be the City on a Hill.

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Why is science productivity so low and technological change so stagnant?

A hit, a very palpable hit – Hamlet

Never before have we had so many researchers in the world, so much knowledge to build on, and so much computational power and experimental technology.  However, science productivity has dropped and technological change has stagnated in recent decades.  This may result from too much science being centralised and disconnected from technology and from people’s lives.  Furthermore, we need to develop better ways of moving young researchers faster to the frontiers from which they can then begin to create new knowledge.

Learning is evolutionary and cumulative.  It is Bayesian.  It accords with Occam’s razor, and aims to minimise energy use needed to optimise learning.  Learning comes largely from doing and involves sensory feedback that helps retain learning. 

Learning retention is directly related to the extent that environmental or experiential feedback is palpable.  This ensures learning feedback is felt in impactful ways and therefore retained.  Some feedback is feather-light, some shocking enough to trigger amygdala-mediated recalibration, as in PTSD. 

Sensory feedback is translated through and shaped by touch, sound, vision, smell, sensation, respiration, temperature, heart rate and the emotional circuitry, biochemical and physiological processes associated with them. Palpability works at all learning levels – including the highest.  Great scientific advances often involve feelings of transcendence and awe that are visceral, “sending a shiver down your spine”. 

Learning is therefore haptic, emoted, tangible, that is, it is palpable. There is therefore no mind-matter nor self-world dichotomy, only learning endogenous to the world.

Learning forms connect through an ensemble of processes that operate from primitive life right through to advanced technological innovation.

All life evolves through natural selection.  Within a rugged fitness landscape, variations are selected through differential survival.  What survives reflects what the past has “taught”.  Primitive life learns as new information is genetically encoded, cumulates, is passed on genotypically and expresses itself phenotypically.  Later comes consciousness, and from this learning by doing, and purposeful and prospective higher learning.

The Second Law of Thermodynamics suggests that entropy can lead to disorder.  Karl Friston asked how, given entropy, can an organism stay alive?  Organisms create structures from the cellular to the most complex levels that are akin to Markov blankets protecting from external harm, whilst drawing resources and learning from the external environment. 

Friston argues that neuronal processes start from prior beliefs and make predictions which are then compared with sensory feedback.  They aim to minimise the gap between predictions and feedback.  Friston labels this gap “free energy” or “surprise”, though it is better termed “waste energy” that life depends on minimising.  Cognitive processes are very energy-intensive, and therefore energy must be used as efficiently as possible, given the learning to be acquired.

When feedback differs from predictions, the brain can update its assumptions, or it can seek to change reality, that is to remake the environment within which it is living.  The brain can also deny the feedback and fail to adjust to reality, which can be fatal as natural selection does its work.

Efficient cognitive energy use requires focus and parsimony.  Einstein said “everything should be made as simple as possible, and no simpler.” Occam’s razor holds that where there is more than one explanation for a phenomenon, the one with the fewest assumptions is likeliest to be correct.  This parsimony principle is applicable in physics, biology and in learning.  Rivers rise in the mountains and follow the easiest path to the sea.  Some metal alloys and muscle have memory.  Neuronal connections that wire together fire together, and so minimal brain energy is used once connections are well developed. 

In its primitive origins most learning was concerned with survival.  Learning by doing is amplified by necessity, that is by the drive to survive through natural selection.  Unschooled street urchins learn the language and arithmetic needed to trade. 

Blue skies thinking, ideation and thought experiments have long contributed new insights and generated theory and propositions far in advance of means of testing them, let alone of practical applications.  However, science is not generally driven by free-ranging intellects rating each other’s papers.  It comes from engagement with the real world.  Science may lead, but more commonly it follows technology that links science to human experience.  Technological innovation solves real world problems, and technology then advances science.

Most fundamental scientific advances are grounded in or spin-offs from practical problem solving.  Radio astronomy arose from Jansky’s telecommunications work at Bell Labs.  Louis Pasteur became microbiology’s father by tackling health and agricultural problems, leading to advances in vaccination, industrial fermentation and of course pasteurisation.

Technological change typically starts with trial and error learning rather than ex ante theory.  From this learning, theory with explanatory and predictive power is developed and used to refine technology towards optimality.  That is, reality creates data, and from this data theory is developed, rather than abstract theory generating hypotheses that selectively narrow the data against which they are tested.

Rather than being concentrated in universities or research laboratories, learning by doing typically draws on tacit knowledge that is decentralised and differentiated by local context. It encompasses Alfred Marshall’s view that “the secrets of industry are in the air”.  It fits with the Austrian economic preference for methodological individualism, and its discomfort with mathematical modelling and macroeconomic analysis.

In industrial settings learning can occur as an unplanned and natural social process.  Erik Lundberg demonstrated that, beginning in the 1930s, the Horndal steel works in Sweden achieved productivity gains of 2% a year for 15 years with virtually no new capital investment. In his famous 1962 learning by doing paper, Kenneth Arrow argued that technological change is a process of learning about the environment in which we operate. Production activity gives rise to problems for which favourable responses are selected over time.  That is, evolutionary natural selection is at work.

Arrow integrated learning by doing into endogenous growth theory, arguing that productivity growth results from internal factors not from knowledge showers from welkin ivory towers.  Technological innovation arises from differentiated, domain-dependent learning that is socially interactive and integrating. It is an evolutionary and cumulative process that lays a platform for further knowledge creation and technological functionality that is superior to that which came before.  Knowledge’s indivisibility and non-rivalry means sharply diminishing marginal costs as ascending knowledge platforms build from antecedents and create exponentially new potentialities and affordances.  To survive and to be passed on, knowledge has to be valuable.  Such knowledge tends to be irreversible, and if it underpins new learning it is typically cumulative. 

Nassim Taleb describes as a “Ludic Fallacy” abstract modelling of the real world and making long-term predictions from this.  A map is not the territory – a representation of something is not the thing itself.  A model can so simplify reality as to turn it into non-reality.  Desk-top modelling that purports to predict long-run future states departs from messy reality that can only be understood by those who live in, engage with and receive feedback from the world. 

Wall Street and City of London financiers can do a lot of damage through naïve and unworldly modelling and manipulative rent seeking.  In contrast, London’s Inns of Court live through experience and felt necessity.  Common law is not academic brain coinage. It builds enduring legal principles from case law derived from interactions between warm-blooded people doing things that matter to them.  Common law has its feet on the ground, not its hand in the till. 

Abstract models may start with well-informed prior beliefs, but they are projected long into the future without ongoing updating from real world feedback.  In contrast, plumbers, chefs and musicians all receive instantaneous or near-term feedback.  Not so financial and macroeconomic modelers.

Learning by doing is undertaken by those with “skin the game”, and with incentives to minimise energy use.  Abstract modellers typically face no risk from failure, and lose nothing when models mislead because others bear the consequences.  Economic and financial modelers move on before their prognostications are mugged by reality – with some exceptions. 

Long-Term Capital Management (LTCM), a hedge fund, was established in 1994 based on an absolute returns and high financial leverage model.  On its board were Robert Merton and Myron Scholes, who had been awarded the Nobel Prize for a “new method to determine the value of financial derivatives”. LTCM was caught out by the 1997 Asian and the 1998 Russian financial crises.  LTCM’s collapse caused another international financial crisis, and it was dissolved in 2000.

In contrast with much financial and economic forecasting, epidemiological models are grounded in empirical evidence, with exponential projections updated with new data from real-world observations.  Coronavirus modelling projections were Bayesian and constantly revised in near real-time.  Testing, diagnosis, treatment, demographic, sociological and behavioural data led to revised inferences, and sometimes to the abandonment of flawed prior beliefs.

Learning involves natural selection, so that beliefs that are maladaptive pass away funeral by funeral.  However, some flawed or false beliefs, and the institutions, societal rules and norms that instantiate them persist long after beliefs have been logically discredited.  Dogmatic belief defies reality because it is not exposed to it.

In past times belief, only some of which was knowledge, was translated into traditions, rituals, religious beliefs or memeplexes that were passed on through the generations.  Uncritical acceptance economised on cognitive energy, but stifled new learning.  The lack of Bayesian updating of beliefs over time made them maladaptive.

The changing world leaves behind outdated cultural, religious and scientific beliefs , except where they ossify into sects, dogmas or identarian habitations.  These can function as group Markov blankets, with a surface tension that blocks out external sensory feedback and critical thinking – for a time…  “Darwin’s dangerous acid”, the receding tide on Dover Beach, new Kuhnian science revolutions, the Vatican’s 1992 newspaper headline: “Galileo got off”, and the 2008 global financial crisis are surfactant way marks.

Transformative new technological advances and potentialities have trended down over recent decades.  Different reasons for this are cited.  Perhaps the greatest advances have already occurred, and we are up against natural law limits?  Perhaps too many fine minds are playing on-line games, or are engrossed in Facebook?  Or are scientific and technological advances being constrained by their public good nature, which means industry doesn’t invest in them because their benefits are not privately appropriable? 

What seems plausible is that science’s self-referenced peer review nature has led to disconnectedness from technology and therefore from people’s lives.  In our times, the overweighting of abstract science and disembodied information technology means we have become remote from tangible material technology and engrossed in abstractions.  Yet living standards depend on the material engineered world, not its internet-mediated phantasmagoria.  Our mobiles require metals and rare earths, and our bitcoin consumes electricity produced by coal, natural gas, concrete hydro-dams and metal wind turbines.

Prior knowledge is the starting point for new learning.  As Pasteur said: “fate favours a prepared mind”.  As knowledge in every discipline accumulates there is a higher threshold learning burden to reach the starting point for new knowledge creation, let alone to move beyond it.  This can lead to longer research apprenticeships as doctorate graduates have to complete a post-doctoral fellowship before they have a chance for a secure career.  It also leads to more narrow specialisations, and often to larger teams being required to pull together the capabilities needed to make progress. 

However, these constraints can be overcome.  Much science is translated through technology into optimisation routines that codify complex knowledge and make it accessible without too much need for every technology user to have deep understanding. 

Knowledge embodied in technology that is digitally retrievable can be functionally valuable to learners without needing to be visible.  New knowledge and means of acquiring it can be subject to low or near-zero marginal costs of dissemination.  Digital technology codifies pertinent knowledge and enhances its retrieval.  Computational technology will only get better.  Autonomous intelligence will drive learning advances unforeseeable to us now.  Whether this will take eons, eras, periods, epochs, ages or next year only time will tell. 

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Emerging from the Covid-19 medically-induced coma we need to think more deeply about connectedness

Covid-19 triggered a medically-induced economic coma.  As we awake we need to think through how we manage risks from international connectedness, while still capturing benefits from it.

We live in a globalised age of rich connectedness through ideas exchange, telecommunications, trade, people movement and financial flows.  However, connectedness has downsides.   Since at least Roman times, trade route development led to widespread plague and other epidemics.  Colonisation of the Americas and elsewhere saw smallpox, influenza and other diseases wiping out most of the indigenous populations of whole regions. Intensive agriculture saw dense populations living close to animals, and more exposure to zoonoses.

At the most fundamental level, all life depends on a balance between autonomy and connectedness.  From the monocellular level to the largest nation state, no being is fully autonomous, and all need connectiveness. However, life also depends on mechanisms that prevent rather than facilitate connectivity, such as blood-brain barriers.  “Markov blankets” define the internal and external boundaries of a system such as a cell or multi-cellular organism.  Life depends on maintaining boundaries, and viruses evolve ways of breaking through them, as seen with coronavirus.

At an ecosystem scale, biodiversity forms an ecological Markov blanket that breaks down as human habitation shrinks natural environments, “social distancing” between humans and animals diminishes, and zoonotic spill-overs occur. Too much connectivity can and does kill.

Globalisation has lifted millions of people out of poverty, benefiting workers and consumers.  However, the Stopler-Samuelson theorem shows how production specialisation impacts on capital returns and wages.  This means trade liberalisation creates winners, and also losers such as wage workers in import-competing industries.  Globalisation can lead to more focus on foreign investor interests, and less on domestic working conditions or local environmental standards.  It has facilitated large-scale tax arbitrage and evasion.

Covid-19 has accelerated the IT connections and telepresence needed for more distance learning and working.  However, as we have observed with social media an increasingly connected online world can polarise and silo thinking.  It can stifle the information flows and critical thinking that generates the diversity upon which memetic selection pressures act to generate new learning.  Information networks are also very vulnerable to cyberattacks.

In the decades leading up to the Global Finance Crisis (GFC), local retail banks were progressively supplanted by globally-connected investment banks and financial firms that grew “too big to fail”.  Subprime mortgages and complex derivatives proliferated, while there was a decay in the publicly-visible transaction records that linked derivatives to the real property underlying their value. Hyper-connectivity in the global financial system magnified risk and widened damage far beyond the epicentres in the world financial centres.

Globalisation has privileged  efficiciency in production processes at the firm level over resilience at the economy-wide level.  Global value chains (GVC) that once were configured within state or regional borders have become internationalised.  GVC run on “just in time” principles mean countries become more specialised rather than retaining their own domestic productive capacity.

GVCs make countries dependent on each other, which in theory should foster peaceful cooperation. However, cooperation breaks down when system shocks such as Covid-19 see countries competing for critical resources such as medical equipment.  The US has decided that “just in case” is a better strategy than “just in time” – there are now bills before Congress to re-shore medical supply chains in the US.

Agricultural sustainability depends on resilient productive systems that satisfice rather than optimise. Distance helps keep animals healthy in extensive grazing systems, and it is lack of distance which spreads contagion and sickens them in poultry cages and pig stalls.

Hyper-efficiency, connectedness to international markets and production maximisation forces farmers to stretch their production systems beyond their ecological limits. This is profitable in normal times, however storm and drought events and animal disease outbreaks can be catastrophic. Over the much longer term, production maximisation mines soil carbon and turns it into greenhouse gas.

However, regenerative agriculture, farmers keeping surplus hay and silage in the barn as a buffer, and ensuring well-nourished and healthier animals have shade and shelter can make farming resilient while still well-geared to international trade.

Balancing the benefits and risk of connectivity needs to be anchored in key future directions.  The most important is to foster a sense of universal human interests that overcome small-minded nationalism and identity politics and which support public good science, critical thinking and cultural exchange that traverses borders.

We must foster requisite variety.  That is, to manage the uncertainty and diverse challenges the world presents we need to have available a range of responses as complex and nuanced as the problems we may encounter.  Requisite variety is needed in science, economics, social policy, business models, productive systems and biosdiversity.  It is underpinned by a society’s pluralism and freedom of speech.  

Standard, theory-based economic and statistical forecasting aims to optimize efficiency and gives little robust thought to resilience.  We should distrust abstract models, even where they are empirically based.  Business statisticians can forecast risks based on past observations, and investors can hedge or otherwise manage these risks.  Economists can populate theoretical models with empirical data and forecast accordingly.  However, these models are aids to thinking, not approximations to reality.  They fail to account for non-linear events such as the GFC whose catastrophic impacts swamp their statistical probabilities.

Naïve and simplified statistical models are inadequate to guide us through complex reality.  What is more meaningful is trial and error and Bayesian active inferential learning from the real world from those who face personal risks that sharpens their focus on what their senses are telling them and forces them to revise their assumptions accordingly.

Investing in “just in case” capabilities or buffers at the nation state level ties up money and may seem wasteful.  However, we think nothing of investing billions in defence equipment that never sees action.  Some resilience-focused or “just in case” investment can also deliver capability and outputs which deliver multiple benefits.

For example, we could fund New Zealand businesses to manufacture off-patent drugs and pharmaceutical ingredients, develop new vaccines, ICU and PPE products and create blockchain tracking technology. This could create new business opportunities, while also building skills that enable rapid and independent response to future health exigencies.  Some of these capabilities might be flexibly applied to biosecurity as well as human health markets.

Tariffs to protect local production and build resilience against the risk of global value chains breaking down does nothing to foster innovation and they impose costs on consumers.  Holding inventories to cover exigencies creates deadweight loss. What is needed is more flexibility in manufacturing and in repurposing.

This might mean a more agile and better resourced innovation system, and technologies which give us flexibility, while being where possible competitive in niche international and domestic markets.  Such technologies well describe New Zealand’s past strengths in flexible production and industrial automation, and our emerging capabilities in areas such as wireless power and 3D printing that can enhance our resilience while also creating new, internationally-connected sources of advantage.


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Economic recovery can create something better

In Covid-19 recovery we can recreate our economy as it was, or future-proof it against climate change and make it environmentally sustainable.  In doing so we can lift productivity and move closer to the world’s technological production possibility frontier.  This can lift wider wellbeing, including from value that is not priced and exchanged in markets.

Covid-19 is a massive economic shock within a short timeframe and with far-reaching effects.  Climate change is abstract, appears distant in time, and doesn’t emote a pandemic’s visceral imagery and burning platform immediacy.  It will be more devastating and expensive to counter even than Covid-19, and play out over a longer time.

We are recovering from a global natural disaster, not from the Great Depression.  Fiscal expansion should not focus on getting people spending for its own sake.  We will recover from Covid-19 through investing in the economy’s wealth-generating capacity, not through austerity that takes more than it gives.

Transitioning to a low net GHG and environmentally sustainable society requires public investment, regulatory change, and private sector delivery.  This will lift productivity if interventions upskill workers, and if we grow outwards-facing technological capabilities that are anchored in New Zealand firms.

If recovery is to be transformative as well as remedial, it means that when for example we insulate houses, build wind turbines or develop distributed energy systems we need to also:

  • Upgrade skills that are transferable so workers can adopt or create new technology and enhance workplace productivity
  • Build capabilities as close as possible to the international technological leading-edge
  • Anchor advanced capabilities within New Zealand firms to contribute to their future productivity and competitiveness

Recovery and transformation must be both labour intensive and skill uplifting. This does not mean using technology to destroy jobs.  It means extending current skills to increase the tasks a worker can perform, rather than eliminate workers from task performance. For example, electrical skills for built environment applications can be transferred and applied in future to wind turbine, EV, energy storage and distributed generation developments.

Government procurement gives scale, stability and predictability over timeframes that give firms confidence to invest.  It can ensure that New Zealand firms develop the technologies and capabilities to help the economy diversify and become more knowledge and skill intensive, and that these capabilities are both anchored in New Zealand and looking outwards to international markets.

Initiatives within this strategy might include:

Energy-efficient and sustainable built environments

 New housing development should drive adoption and mainstreaming of international sustainable building and energy management technology.  For example, German passivhaus (passive houses) can generate and feed into the grid more energy than they consume.  Housing development is labour intensive and can also extend skills to the international frontier.  It can engage many different firms and skillsets, with deep linkages and multiplier effects throughout the economy.

Existing housing and commercial and industrial buildings can be retrofitted with better insulation, double-glazing, solar water heating, LED lights and heat pumps. This would improve energy efficiency and deliver healthier indoor environments, while fostering technology adoption, skills enhancement and workplace productivity.

 Multi-storey buildings can be made from engineered wood products rather than steel and concrete.  They can deliver superior earthquake resilience and fire resistance, while sequestering carbon.  New Zealand is already technologically advanced in wood engineering, and mass adoption of this technology can lift radiata into higher value markets.

Transport system transformation

Road infrastructure spending is subject to long lag times.  It is capital rather than labour and skill intensive. It has weak backstream economic linkages and therefore low multiplier effects. It would not be a strong economic enabler because roading is already well developed, and at least in the short to medium-term Covid-19 takes pressure off roads due to its impact on tourism and on non-citizen inwards migration.

Railways are capital-intensive and inflexible.  Our geography and low population are constraints.  However, rail freight can take pressure off some roads, with safety and other benefits.  Existing urban rail services can be upgraded.

The big transport sector advances will be mass adoption of EVs, and supporting infrastructure such as a nationwide recharging system.  Mass EV adoption would save New Zealand billions a year in oil imports, and could be enabled through distributed generation.

Sustainable energy and distributed generation

New Zealand has among the world’s highest per capita endowments of renewable electricity.  This includes hydroelectricity, wind, geothermal and solar.  It underutilizes these resources, and squanders them through poor building energy efficiency and transmission losses.

More supportive rules are needed for wind power, photovoltaics, solar thermal, distributed generation and energy storage systems to smooth out generation intermittency.  This might include building regulation changes, feed-in tariff rules, and facilitation of lines companies’ innovation to support distributed generation.

Sustainable development of food and fibre industries

New Zealand’s food and fibres industries must help drive our economic (including regional) recovery and our climate change and environmental sustainability transitions.  They and their regional communities must be respected for this.

Pandemics are “zoonotic spill-overs” that arise from human-animal interactions, especially in densely populated countries with poorly regulated and unhygienic “wet markets”.  We have high animal health status, and freedom from many diseases common in other countries.  Our free-range farming systems, and our lack of dense, unhygienic contact between humans and intensive factory farming systems creates competitive edge internationally for our pastoral industries.

Carefully planned multi-functional dams can deliver hydro-power and amenity values as well as drought-proofing farming against climate change impacts.  Pyrolysis bioenergy can deliver co-benefits such as carbon sequestration in soil, reduced nitrate water pollution, and productivity gains.

We should foster clusters around our core industries, and support spin-offs from them such as knowledge and skill-intensive manufacturing, servicing and digital businesses.

We have strong food safety and biosecurity capabilities that support international food and fibre trade.  Covid-19 means countries will demand more surety in tracking supply chains and managing future biological risks.  This can create opportunities for us.  We can become a world leader in border control as it relates to tracking and tracing biologics, whether food, pests or viruses.

Medsafe is a world leader in tracking pharmaceutical supply chains.  Its capabilities have affinities with those we’ve developed for food safety and biosecurity.  Such capabilities require fidelity, verifiability, cross-border credibility, customer and regulatory compliance.  They are digitally-enabled and may increasingly use blockchain and AI technologies.

Increasingly these capabilities, and testing, monitoring and verification technologies can be applied to risk profiling of cross-border trade between countries with different food safety, biosecurity and human health regimes and different sociological structures.  For example, NBER research suggests that Facebook can help track correlations between coronavirus spread and social networks, potentially helping to predict pandemic pathways and manage them better (NBER Working Paper No. 26990 April 2020.)

Niche knowledge-intensive manufacturing and services (including digital) businesses

Covid-19 will see countries stepping back from value chain globalisation to secure pharmaceutical, medical equipment and other supply chains.  This may close off some opportunities for us, and create new ones.

We can carve out niches in medical services, and in high value biochemical development, akin to the niche Fisher and Paykel Healthcare has developed in medical electronics.  Malaghan Institute’s Graham Le Gros, supported by credible academic experts, suggests New Zealand should develop its own vaccine capabilities.

It is up to businesses to see the opportunities and exploit them, and government should foster the “general purpose technologies (GPTs) that underpin them, and perhaps identify “opportunity domains”.

For example, GPTs such as electrical, electronic and digital technology are enablers for sustainable energy, industrial processing, transport, agricultural and forestry equipment and drone technology.  An “opportunity domain” might, for example, be “distance industries” – online learning, remote monitoring, drones for environmental protection, search and rescue and fisheries surveillance.

Digital technology can overcome our scale constraints and turn them into advantages.  For example, 3D printing technology makes small-scale flexible manufacturing viable – akin to the advances we have made in the past in variable speed drives and flexible production systems.

Unpriced and non-market goods and services

We should also reflect on what we live for, as well as how we make our living.  While social media can waste time and polarise, it enables social connections.  It also delivers “cultural consumption” goods such as through Youtube that are not valued in GDP, and yet they mean a lot to people.

Our recovery can create space for a less material consumption and market transaction-based society.  This means valuing more non-material and non-market “goods”, services and experiences. These include green space, children’s play and adventure grounds, clean rivers, beaches, forests, mountains, tramping and mountain biking amenities.  It includes rare birds again in our gardens, relationships flourishing, and memories of good times we’ve had, including when we were “poor”…

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Economic response to coronavirus: increase physical distance and reduce intellectual distance, and replace nation state idiocy with the Republic of Science

Climate change and pandemics such as coronavirus illustrate the supreme idiocy of leaders who think their arbitrary nation state borders are hermetically sealed off from the world.  The stable genius leading the state with the greatest global heft decided that coronavirus was no worse than the flu, until he flipped into closing the borders long after the virus had established itself within his own country.

The UK Prime Minister is keeping borders open so that the continent is not isolated from civilization.  This is worthy and other-centred, however he seems to be accepting mass spread in the hope of achieving herd immunity (!) Failure will be hugely consequential.

The good news is that the Republic of Science laughs at nation state borders and communicates in a common language.  Within days of coronavirus becoming salient scientists cooperated internationally to understand it and start work on response strategies.  Citizens of the Republic of Science share their knowledge of technology such as test kits rather than reinvent what is already in the public domain.

After a nervous start, New Zealand’s response to coronavirus is the right approach, and will become more decisive.  What is yet to be established is the economic response to a pandemic that magnifies an emerging recession in a global secular stagnation environment where monetary policy lacks traction.

Absolute priority must be given to health services needed. This will be the best economic investment we can make.  Basic income needs must be met for the vulnerable, including those who fall ill.  It is too soon for economy-wide fiscal stimulation, and in any case how effective can it be if we expect people to stay home and avoid shops, sporting and other events that set the tills ringing. What therefore can we do?

Most economic activity requires people working with and transacting with other people, thereby risking further spread.  However, in the Republic of Science people can work together without being together.  We need to increase the physical distance and reduce the (internet-enabled) intellectual distance between people.

Distance from people is not distance from nature: most New Zealanders have access to uncrowded parks, public gardens, and walking and cycling tracks and trails.  Access to green space makes working from home more palatable in New Zealand than in other countries.

We can risk-buffer or subsidize time away from work.  For those who cannot work from home, we can encourage them to learn from home.  This can include recommending online learning resources that suit their needs, and prompting them to engage.  Coursera’s “Learning how to learn” course is one of many examples of free online learning resources that can be life-changing for many workers who discover how easy it is to become better learners.

A challenge would be deciding how to link specific individuals or worker cohorts to the online learning resources that can most benefit them.  However, we have the data to do this, and the entrepreneurial people and startup and other IT companies that can rise to this challenge if targets are set clearly and financial incentives are in place.

Encouraging mass online learning can create an inflection point.  For example, the ANZAC frigate project in the 1990s required companies bidding for work to submit tenders online.  This forced many digitally-challenged New Zealand companies to lift their IT and online capabilities, to their long-term benefit.  The coronavirus crisis therefore offers a chance to prompt hundreds of thousands of New Zealanders to become online learners and workers, with widely spread and long-term economic benefits.

Secular stagnation partly results from a lack of new technology-based businesses that are worth the cash-rich investing in.  Major countries have failed to take climate change seriously enough to invest in the mass adoption of green technologies that are already economic and that the Republic of Science has helped gift to us.  These include wind and solar power, pyrolysis carbon capture and storage, energy-efficient buildings and electric vehicles.

New Zealand has been especially slow in adopting and applying new international technologies to our own opportunities.  Doing so often requires local R&D investment as well as the capital investment needed to commercialize the results.  We also need a more supportive regulatory framework for adoption of some new technologies, for example GM-based pastoral plant breeding.

We could substantially increase funding for long-term research and applied technology development that focuses on “the Pasteur quadrant”.  This would expand New Zealand’s technological possibility frontier in the long run rather than counter short-term recession.

It takes time to ramp up R&D capabilities, and it is only fair that those choosing research careers can be assured of long-term income security. The low interest rate environment and our low net public debt position makes it possible to finance such long-term investments and in so doing help diversify and risk-buffer the economy against future shocks, pandemic or otherwise.

The light is getting darker and will turn black for some.  However, in putting health first and trusting the Republic of Science we can ameliorate economic loss and leverage a painful inflection point to lift our technology adoption, long-term learning, knowledge creation and productivity.




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Economic opportunities for biochar in New Zealand


  1. Anthropogenic warming results from fossil fuel use, deforestation and soil carbon loss disrupting carbon cycles[1] and elevating atmospheric CO2 Internationally, the top climate change priorities are reducing fossil fuel emissions, and stopping carbon losses from deforestation and from wetlands and peat soils.  We must also reduce nitrous oxide (N2O) and methane (CH4) emissions.  We must do so while supporting food security at a time of growing world population, and while transitioning away from many unsustainable industrial, energy and natural resource use practices.


  1. There is more carbon in soils than in plants and the atmosphere combined. However, since agriculture emerged around 12,000 years ago about 133 billion tonnes of carbon has been lost from soil (Sanderman et al., 2017).  We must stop mining soil carbon.


  1. Under the Paris Agreement, 195 nations have committed to holding the increase in average global temperature to well below 2 °C above pre-industrial levels, and to strive to limit the increase to no more than 1.5 °C above. This requires “a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of the century”.


  1. The IPCC notes that even massive reductions in carbon emissions will be inadequate to achieve carbon neutrality by 2050, and that large-scale atmospheric CO2 removal is needed to prevent overshooting the 1.5°C temperature threshold.


  1. The IPCC has designated pyrolysis biochar as a credible negative emissions technology (NET) capable of contributing to large-scale removal of CO2 from the atmosphere, and this is triggering increased research and other investment in it.


What is biochar?


  1. Biochar is charcoal made from biomass and added to soil[2] as a long-term carbon store, to lift productivity, and to protect the environment. Most soil carbon is labile, that is it decomposes and re-emits CO2 back into the atmosphere (as part of the fast carbon cycle).  In contrast, pyrolysis transforms biomass into biochar – carbon that can be stored in the soil long-term[3].  That is, pyrolysis biochar converts fast cycle to slow cycle carbon.


  1. Biochar is not soil or fertiliser. It is carbon with high porosity and Cation Exchange Capacity (CEC). Porosity means biochar stores and recycles water, which is beneficial in arid soils. Porosity and CEC helps nutrient retention and recycling, and is associated with enhanced microbial activity and with healthier and more diverse soil microbiome.  Biochar can have positive benefits in animal and plant health and in bioremediation.  It also reduces soil acidity.


  1. Between its pyrolysis production and its end storage in soil biochar delivers “cascading benefits” such as productivity gains, and wider bioremediation and environmental benefits. These benefits include reduced N2O and CH4 emissions, and reduced nitrate loss into water.  The pyrolysis process also delivers valuable energy by-products[4].


  1. Conserving and recycling nutrients is essential for long-term sustainability. Modern farming systems are often energy-intensive and depend on synthetic nitrogen fertiliser[5] made with non-renewable natural gas.  High quality (low contaminant) phosphate is a scarce and increasingly politically locked-up resource.  Biochar in soil can reduce nutrient leaching and improve nutrient recycling and its bioavailability for plants (Major et al, 2009).  Biochar can form part of slow release and “enhanced efficiency” fertilisers.

How does biochar compare with other negative emission technologies (NETs)?

  1. Fuss et al (2018) include biochar in a list of NETs that have multi-gigatonne sequestration potential by 2050. Table 1 in Appendix 1 attached compares the benefits, costs, acceptability, and likely impacts of different NET options.


  1. The most important comparison is between biochar and Direct Air Capture of CO2 (DAC). DAC machines suck CO out of the atmosphere and it is stored, for example underground. DAC can involve use of hydroxide solution, or of amine adsorbents in modular reactors.


  1. DAC is capital and energy-intensive. It offers no clear productivity or wider environmental benefits.  DAC raises questions about how CO could be stored in a geologically secure environment for centuries, given for example earthquake risks.  Injection of DAC CO2. underground may impact on aquafers, with effects similar to fracking.


  1. Unlike other NETs, biochar produces a valuable product with multiple economic and environmental applications. Schmidt et al (2018) conclude that pyrolytic carbon capture and storage (PyCCS) can aspire to carbon sequestration efficiencies of >70%.  They note that PyCCS does not create environmental hazards and that global scale-up is feasible within 10-30 years.
  2. Smith (2016) concluded that soil carbon sequestration and biochar addition to land had lower negative impacts and fewer disadvantages than other NETs. Biochar could be implemented in combination with bioenergy with carbon capture and storage.


  1. Hepburn et al (2019) reviewed 11,000 papers in assessing ten pathways for CO2 utilisation and removal, including biochar. Biochar is competitive with other pathways, depending on a range of productivity impact, carbon pricing and other assumptions.  Pratt & Moran (2019) compare marginal cost curves of different abatement options.  They conclude that even the most expensive biochar projects rival the cost effectiveness of alternative NETs.


  1. Gaunt & Lehmann (2008) found that biochar and bioenergy production combined with applying the biochar to agricultural land avoided between two and five times the emissions compared to when biomass was used solely for fossil fuel energy offsets. They also concluded that revenues from carbon emissions trading alone could justify maximising a pyrolysis plant for biochar production.  Therefore, combining pyrolysis for bioenergy production with biochar carbon sequestration is more effective than producing solely bioenergy.


  1. Biochar lends itself to diffuse, small scale applications. However, large numbers of pyrolysis plants and biochar applications can aggregate into high carbon storage at the nation state and global levels.


  1. Overall, an increase of terrestrial and marine biomass production including long-term carbon sequestration via pyrolysis is considered the NET strategy that may be implemented the most rapidly, and with the lowest risk for other geological and ecological processes.

Political economy and technological system challenges for biochar


  1. Biochar faces political economy and technological system challenges.


Biochar is an inherently diffuse technology


  1. A barrier to widespread biochar adoption is the lack of concentrated business interests who can advocate for its adoption. This can be countered by a change in economic strategy, and a supporting “spirit for our times” zeitgeist that diffuses power and opportunity.


  1. Pyrolysis can be undertaken in large-scale continuous production industrial plants right through to small-scale batches in a backyard. Larger-scale plants can deliver co-products such as heat, power or chemicals. At the smallest scale biochar can be produced in a home log fire, while at a farm scale biomass can be pyrolyzed in a pit to produce biochar with minimal capital cost.


  1. Overall, biochar is a diffuse resource. As Roberts et al (2010) noted, transportation costs are a hurdle to the economic profitability of some pyrolysis biochar systems.  As at 2010 they contended that biochar may only deliver climate change mitigation benefits and be financially viable as a distributed system using waste biomass.  Mobile pyrolysis kilns can be moved to where the biomass is to support a distributed system that depends on seasonal or other “lumpy” biomass production flows, for example forestry harvesting skid sites.


  1. Like biochar, renewable energy sources such as wind and solar tend to be dispersed resources, and they can contribute to sustainable rural communities. A system that facilitates decentralised biochar production on thousands of small-scale sites helps normalise the diffusion of economic power.  Such a distributed system complements a more decentralised energy system as farmers, small businesses and householders integrate solar panels, heat pumps, wind turbines and micro-hydro into their businesses and their lives.  These distributed systems also enhance rural community resilience.


  1. Distributed generation can strand capital assets and depreciate their value. However, there is potential to repurpose stranded assets.  For example, the gas and coal-fired Huntly power station could be converted into a biochar production plant[6].


Biochar as a NET is at an early developmental stage


  1. Biochar is a very old technology for agricultural applications, however it is at an early development stage when used as a NET. Much climate change mitigation R&D aims at centralised, high technology and geoengineering solutions.  The policy advisory community can struggle with such concepts as repurposing indigenous technologies to deal with modern world challenges.


  1. However, pyrolysis biochar is becoming mainstream within the research and applied technology community. It is supported by world class basic science and applied research.  With the rapid scientific and technological progress being made, biochar will become more cost effective and more precisely customised for specific applications.


  1. As biochar moves from a developmental to an operational stage, demand for biochar production will trigger a supply response and scale economies will emerge. Biochar demand will create opportunities for New Zealand manufacturing businesses to make kilns, pyrolysis plants, energy co-product systems and other equipment.  As biochar is widely adopted a contracting industry will emerge, including with mobile pyrolysis plants configured around seasonal use.  Many other uses for biochar beyond agriculture will be exploited.


Biochar is a multi-purpose product


  1. Pyrolysis biochar is a multi-purpose technology that produces different products and services that have different “price” structures (and sometimes no price at all). For example, pyrolysis bioenergy may be valuable if produced close to an industrial heat user, but not valuable elsewhere.  Biochar may deliver “bankable” cascading services such as crop yield increases, but the biochar’s end use in carbon storage may not be valued.  The economics change dramatically if carbon credits are awarded for biochar placed in soil.


  1. Roberts et al (2010) noted that the economic viability of the pyrolysis biochar systems they compared is largely dependent on the costs of feedstock production, the pyrolysis process, and the value of carbon offsets. These costs and values can change enormously, and with this the economic assumptions change.


  1. We need to assess and put value on the wider benefits biochar can deliver. For example, Biederman et al (2013) in a meta-analysis drawing on 317 independent studies looked at a range of economic and ecological benefits.  They concluded that, despite variability due to soil and climate, biochar addition to soil resulted on average in increased crop yield, enhanced soil microbial biomass and higher soil carbon levels compared with control conditions.  They noted that “the central tendencies suggest that biochar holds promise in being a win-win-win solution to energy, carbon storage, and ecosystem function”.


Biochar appears to improve its functionality with time, rather than depreciate in time


  1. Biochar is an unusual economic good because of its enduring presence in soil, and because over time its functionality can improve. Biochar may be costly to apply initially, however once in the soil it enhances productivity over the long-term.  Based on analysis of terra preta soils in Amazonia, it is also plausible that biochar functionality improves over the very long-term.


Specific opportunities for biochar in New Zealand’s food and fibre (primary) industries


  1. Specific opportunities for biochar include:


Cattle and dairy farming

  1. ANZBI (2019) records financially profitable weight gains from feeding biochar to cattle in Australia, with the biochar ending up in the soil as a carbon store. Cattle farming productivity was increased with as little as a 1% biochar addition to stock feed.


  1. At the 2019 ANZBI conference results from biochar use in recent Australian dairy farm trials were reported. These trials indicated that biochar lifted dairy farm productivity and net profit substantially, as well as delivering soil carbon store benefits.  However, it is unclear whether such results could be mainstreamed to all Australian dairy farms, let alone to New Zealand dairy farming systems.  The Australian results were for intensive feeding of cattle rather than extensive pastoral grazing.


  1. Profitability is heavily influenced by biochar costs[7]. The ANZBI-reported trials used biochar priced between A$100 to A$6,750 tonne – a huge variance that makes a big difference to the economics.  The lowest price was for an industrial waste product.  The economics greatly improve when biochar is a by-product of other processes such as bioenergy production, or when the biochar is made from waste that would otherwise be costly to dispose of.


  1. Farmers and orchardists can make their own small biochar batches cheaply and use them on their farms or orchards. Such production might have minimal capital costs, though it could be labour intensive.


  1. N2O emissions and nitrate loss that harms water quality are big challenges in dairy farming. Many studies are relevant to addressing such issues (see Clough et al, 2013; Steiner et al, 2010; Huang et al, 2014).  Hestrin et al (2019) provide insight into the chemical bonding mechanisms through which biochar enhances nitrogen management while minimising air and water pollution.


  1. Biochar could capture nitrogen and other nutrients from dairy farm drainage and slurry pond[8] Nutrient-laden biochar could then be added to soils to lift productivity and become a permanent carbon sink.  There is also a lot of research underway internationally on using biochar to lower CH4 emissions from soil.


  1. Activated charcoal (including biochar) has long been used in veterinary medicine for animal health. This could have particular significance in the dairy industry, however the benefits are much wider.  Schmidt et al (2016) and Toth & Dou (2016) report that biochar may boost feed conversion rates and improve stock health for poultry, pig and fish farming as well as cattle industries.  Biochar may reduce antibiotic use in intensive animal industries.


  1. Biochar has shown promise as a feed additive to inhibit methanogenesis in ruminants. It is in use in the EU for this, and is also employed in bedding for wintering barns and poultry operations where its denitrification attributes can improve stock health and reduce farm costs.

Integrated dairy composting barn system incorporating biochar

  1. Composting barn systems can be used to improve cow welfare and reduce negative environmental impacts. They are being trialled in New Zealand.  The barn system needs dry biomass such as miscanthus or sawdust for the cows to lie on.  Cow wastes can be absorbed, and composted together with biochar, and incorporated back into the soil as an enriched amendment and a carbon store.

Sheep and beef farming

  1. Sheep and beef farming involves extensive grazing undertaken on many different soil types and topographies. Biochar making would need to draw on different biomass sources and the biochar tailored to different conditions.  Biochar could reduce liming needs on acidic soils.  In sufficient quantities it could improve water retention on drought-prone soils.


  1. Tree, berry, vine crop regimes and greenhouse horticulture produce pruning and other biomass waste from which biochar can be made. This can be used to improve microbial activity, nutrient recycling and bioavailability, reduce fertiliser input costs and improve water retention.


  1. In Australia trials with mixing biochar into topsoil around avocado trees have lifted productivity and been profitable. Biochar has also had plant health and crop quality benefits in macadamia trials.  When biochar prices are high it is often only economic in targeted applications for high value crops, for example when added to tree or vine root zones.  Banded application of biochar is more effective than uniform mixing in the soil.


  1. Biochar can enhance plant health – see for example Elad et al. (2010). Wood vinegar is a liquid by-product from the volatile pyrolysis gases. It has fungicidal and other properties.  In the right quantities it can improve seed germination and enhance plant health.

Arable (including cereal) and vegetable growing

  1. In arable crop and vegetable growing biochar could be used to improve nutrient cycling. This could reduce fertiliser input costs and lift productivity. Biochar can improve soil structure, foster microbial life, and enhance water storage.  It can have plant health benefits, including lifting crop seed germination rates.


  1. There is strong international evidence of biochar delivering large yield increases in tropical soils – see: . However, the evidence suggests that fresh biochar is unlikely to have significant, positive productivity effects on fertile temperate soils in the short-term[9].  This is because it can reduce plant nutrient availability by binding and immobilizing nutrients.  It may also feed a bloom of microbes that use up nitrogen in the soil, depriving plants.


  1. However, these problems can be corrected by adding a small amount of fertilizer to the biochar or soaking it in liquid nutrient before biochar is added to soils. For example, biochar used for dairy effluent filtration would capture nutrients, and the nutrient-rich biochar could then be added to soil.


  1. Ye et al (2019) did a meta-analysis of one year field trials on crop yields, using different biochars with a range of management practices in different soils and climates worldwide. These trials involved biochar, inorganic fertilizers (IF) and organic amendments (OA).  Key findings were that, compared with a non-fertilized control, a 26% yield increase was observed with the use of IF only.  When biochar was added (at 10t ha or less) with the IF a 48% increase occurred.  When the control was IF, the addition of biochar added 15% to 19% to crop yield.


  1. Crop yields did not increase if more than 10t ha of biochar were added. Use of biochar alone did not increase crop yield. Evidence suggests that the beneficial biochar impacts were more through CEC than through liming effects.


  1. A meta-analysis by Jeffery et al (2011) found that crop productivity increased by 10% on average following biochar soil amendment. However, yield effects ranged between positive and negative with different soil types, environmental, and management conditions.
  2. Further effects of biochar amendments include lower emissions of N2O, with lower CH4 emissions measured especially on flooded soils (Kammann et al, 2017). Biochar can also have a positive effect on a soil’s water balance. On temperate soils, a 16% reduction in water losses was measured, which at the same time reduced the negative effects of soil dryness on microbial abundances by up to 80%.
  3. Dokoohaki et al (2019) noted that there was huge variance in biochar’s impacts on crop yields, depending on soil type and other factors. A consistent finding was biochar had low or negative impacts on yields from soils with high soil organic matter (SOM), high CEC and high pH soils, and high yield impacts on soils with low SOM, low CEC and low pH.


  1. They noted that lowering soil acidity likely results in increased microbial activity that in turn enhances nutrient availability. They forecast that enriching soil with biochar could increase U.S. crop yields by between 4.7 and 6.4 percent, with improvement more marked when applied to less productive soils.


  1. Economically profitable yield increases from biochar applications in maize growing have been reported from China. The Chinese experience is that biochar-enhanced chemical fertilisers can be profitable.  However, there is little evidence so far of economic returns from biochar applications in arable farming in developed, temperate countries, with the exception of some crops.
  2. Keske (2019) concludes that it is economic in Canada to use black spruce biochar to grow potato and beet crops. In Australia, biochar applied at around 145kg per ha has significantly improved potato production. However, biochar has not so far proved economic in Australian broadacre cropping on a large scale (ANZBI, 2019).


Municipal waste management

  1. Municipal biomass waste is costly to dispose of, and if deposited in landfills CH4 is often emitted. Pyrolysis can turn waste into value whilst reducing emissions. Biochar can also adsorb excess nitrate and phosphorus from effluent before it is discharged.  Large-scale pyrolysis in municipal and other waste plants can produce energy for cogeneration or process heat as well as biochar.  For example, in Sweden and Finland pyrolysis bioenergy is used for district residential heating and industrial process energy, as well as biochar production.


  1. Massey University researchers are researching the economics of producing biochar from municipal sludge. Avoidance of tipping fees can make biochar so economic that municipal authorities could afford to deliver this biochar to farmers for free.  Such biochar would be especially valuable to farmers if the biomass source had high ash content and fertilizer value.



Home garden, urban trees, parks and amenities

  1. While biochar is perceived as a product for the agricultural industries, it has widespread urban applications. These include niche applications such as in potting mix (as a peat substitute) for home garden or landscaping use, and biochar to improve urban tree health.  In Stockholm, urban trees often had plant health problems and high mortality rates.  Over about a decade these problems have been solved through modifying soils around the trees with biochar.  In some cases, six year old trees planted in biochar-modified soils are five times larger than 30 year old trees planted without it.


  1. Biochar can also be used for urban amenity turf applications. For example, ANZBI (2019) recorded high economic returns from biochar used to enhance water efficiency in an arid region Californian golf course.


  1. Radiata forestry can impinge on soil fertility and acidity. Forest debris left to itself decomposes and releases CO2.  It can also create environmental risks through downstream damage from storm events, as we learnt in June 2018.  Turning such debris into biochar on site through mobile pyrolysis plants and applying it to forest lands could remove downstream hazards as well as sequester carbon for the long-term.


  1. While biochar made from forestry residue has high carbon content it would not add much to soil nutrient levels. However, biochar alkalinity can reduce soil acidity and enhance replanting of seedlings for the next forestry rotation.  Solla-Gullon et al (2008) report reduced radiata mortality and higher growth in biomass due to biochar application in control plots in Spain.  Thomas & Gale (2015) in a meta-analysis report large tree growth responses from biochar applications.


  1. On amenity and conservation lands, wilding pines and other invasive plants can be converted to biochar, offsetting control costs.

Forest processing waste

  1. A big opportunity for the forestry sector may be making biochar from wood waste. This can range from slash left after forestry harvesting through to sawdust.  A wood processor turning logs into sawn timber or more elaborately-engineered products could convert wood waste into biochar and use the pyrolysis heat to dry the high value processed wood products.


  1. It is noted that switching from coal to wood bioenergy in industrial applications will create more demand for wood waste, and so biochar will need to compete with this alternative use. However, biomass boilers can be designed to produce biochar as an output alongside process heat.


Miscanthus for bioenergy and biochar co-production

  1. Miscanthus can be used for bioenergy production such as renewable diesel fuel (RDF). This can reduce fossil fuel emissions, with biochar made as a by-product.  Miscanthus can be integrated into intensive dairy farm production, into extensive sheep and beef farm regimes, or it could be grown as a dedicated crop.  Similar opportunities may come from hemp, including where it is grown for seed and produces fibre suited to biochar.

Intensive animal industries

  1. Pig and poultry industries produce concentrated, high nutrient waste. Some of this can be made into biochar, however it seems likely that most would be best turned into compost with biochar added to it to enhance its quality.


  1. Adding biochar to feed may have also have animal health benefits, and may help with reducing antibiotic use in intensive animal industries. Biochar incorporated into bedding may, through denitrification, reduce ammonia gas levels in broiler barns.

Compost making

  1. Compost by itself is quickly broken down in soil by microbial processes. Adding biochar to it makes a more humified, stable and biologically productive form of compost.  Adding biochar even in small amounts (e.g. 2-10%) can have big positive impacts on compost quality, and also deliver wider environmental benefits.


  1. Following the addition of 2% biochar to compost, Jindo et al (2012) recorded a 10% increase in carbon captured by humic substance extraction and a 30% decrease of water-soluble, easily degradable carbon. They also found an increase of fungal species diversity in the mature biochar compost, as compared to the control.  They inferred that these fungi were responsible for the increased humification.  Co-composting of biochar with nitrogen-rich manures can reduce nitrogen losses due to ammonia volatilization by up to 50% (Steiner et al, 2010).

Short-rotation coppicing of poplar, willow or other species

  1. Short rotation coppice (SRC) plantings can use fast-growing species such as poplar or willow[10]. These are easy to manage and to harvest mechanically, and can yield 10-20 tonne per ha per annum of dry matter within two to three years of planting.  Each tonne of biomass could yield 300-500 kg of biochar under different process conditions.


  1. As an example, if a 300 ha dairy farm planted 5% percent of its area in SRC, using its least productive land or riparian margins from which cattle are excluded to protect water quality, it could be making biochar and storing around 80 to 100 tonnes of carbon annually. Scaling this approach across the dairy sector as a whole, this could total around 2MT pa of CO2 removed from the atmosphere[11], with only minor alterations to land use and farm practices.  This takes no account of other wider productivity and environmental benefits.


  1. Sheep and beef farms typically have a higher percentage of less productive land than dairy farms. This means more opportunities for growing poplar, willow and other biomass for biochar production.  However, topography would make mechanical harvesting more difficult on some sites[12].


Manuka-based biochar

  1. Honey is harvested from manuka growing wild, typically on low fertility soils. Manuka is a succession species – left to itself other species will grow through and suppress it.  Efforts are underway to systematise plantation production to optimise honey output sustainably.


  1. One possible production regime would be continuous harvesting and replanting of manuka to maintain ongoing honey, oil[13] and wood production, with wood turned into biochar, perhaps with pyrolysis by-products such as energy. Coppicing is another option to produce biomass for biochar, while sustaining honey and oil production.

Tagasaste (tree lucerne)

  1. Tagasaste is fast-growing, and fixes nitrogen and provides fodder year-round. It is winter flowering and valuable for bees. It produces protein-rich fodder, is suited to varying climates and soils, and is drought-tolerant.  Its roots can access soil nutrients as deep as 10 metres down.  Tagasaste can be grown for biochar production.  It can also be coppiced to provide ongoing biomass for biochar making, while also delivering fodder and other multi-use benefits.

What interventions are needed to catalyse mass adoption of pyrolysis biochar?


  1. New Zealand currently lacks a high-volume biochar supplier, which constrains trials with it. Biochar has been slow to win acceptance in New Zealand, however the Biochar Network New Zealand has built awareness, and the sterling work of Massey and Lincoln academics and research students has contributed to rapid growth in the international scientific understanding of biochar and to recognition of the key role it will play in future.  However, there is still low awareness in the agricultural industry of what biochar can deliver.


  1. Biochar offers industry a positive opportunity to lift productivity, while reducing GHG emissions. It is more attractive than other NETs that have environmental risks.  It does not stop farmers from farming, nor does it require radical changes in proven farming practices.


  1. To develop biochar into an effective NET and a sustainability technology in New Zealand we need:
  • formal government recognition of biochar’s value and the roles it can play
  • the formation and oversight of market(s) for sequestration credits
  • end-to-end quality control and certification
  • strategic funding of pilot demonstration projects[14]
  • information and extension services that share results from pilot projects, and allow biochar production and application to be continuously refined

Recognition of biochar’s value in climate change policy and for sustainability

  1. The IPCC recognises biochar as a credible NET, and this must be reflected in our formal climate change policy settings. We need to also promote biochar’s contribution to sustainable productivity.


  1. Soil carbon falls outside the Paris Agreement’s carbon accounting boundary, however it falls inside the international voluntary carbon market. Biochar needs its own sequestration status as a stable carbon form to distinguish it from short-term labile soil carbon.


  1. For biochar to earn carbon credits there needs to be a valid carbon accounting methodology and verification system[15]. Verified credits can be monetised in the voluntary offsets market if buyers are secured.  Buyers can be businesses that are willing to buy soil carbon rather than forestry carbon (for example in recognition of the implications of forestry carbon farming on isolated rural communities).


  1. In New Zealand, a market for biochar to earn verified carbon credits would incentivise biochar pyrolysis and allow scale economies to emerge. This market could involve a public or private entity or be a public-private partnership agency.


  1. Some Finnish businesses[16] led by Fortum in collaboration with a financial services company and the Swedish bank SEB have established Puro, a marketplace that aims to make carbon removal from the atmosphere verifiable and tradeable through an open, online platform.


  1. Puro establishes a parallel voluntary mechanism for CO2 removal methods currently excluded from existing carbon pricing schemes. It issues CORemoval Certificates (CORCs) that are technology-neutral.  It currently supports three COremoval methods – biochar, carbonated building materials, and wooden building elements.  Links are at: and

  1. Large-scale biochar production and sequestration can be monitored efficiently so carbon credits are valorised. However, this is difficult with small-scale production at the farm or household level.  Rather than incentivise small-scale production at the micro-scale with carbon credits, it may be better to offer free on-line optimisation information (or extension services) that enables small-scale players to maximise biochar productivity in their chosen application without claiming carbon credits.




An end-to-end quality control and certification system


  1. Biomass sources, pyrolysis processes, cascading uses, and end sequestration must be fit for purpose. End-to-end quality control is needed.


  1. A certification-based or other such verification system would need to validate how a biochar product was produced, its carbon and nutrient content, and its performance in specific applications. Such a system would provide confidence in biochar cascading uses and final sequestration in soils rather than, for example, use as a charcoal fuel.  An authentication mechanism could be built into a blockchain system.


  1. Quality biochar starts with quality biomass. Biomass contaminated with toxic chemicals[17] or metals should not be used in agriculture or horticulture.  Biomass source influences biochar properties – for example wood-derived biochar has higher carbon content whilst food waste and manure-derived biochar has higher nutrient content.


  1. Pyrolysis process settings must comply with rigorous stack emissions and air quality standards. This must minimise release of flue gases with products of incomplete combustion, particulates that can damage air quality, and release of embers that create fire risks.  This is achievable with large production plants, however it may be more difficult to achieve with small-scale operations.


  1. Process settings must be calibrated to achieve the desired balance between biochar, biogas and biooil (“wood vinegar”). This balance will be determined by the intended cascading use and the end biochar sequestration, and by the value of by-products such as energy.  For a typical biomass, slow pyrolysis produces around 35% biochar, 30% biooil, and 35% biogas by weight. Fast pyrolysis produces around 20% biochar and 60% biooil and 20% biogas by weight.


  1. Pyrolysis temperatures influence biochar properties and long-term stability in the soil. Different biomass sources and pyrolysis conditions can be used to make biochar optimised for specific applications such as animal feed additives, maximising stable carbon sequestration[18], nutrient sorption or phosphate recycling.


  1. The European Biochar Certificate (EBC) is the voluntary European industrial standard. It is designed to ensure sustainable biochar production and minimise hazards to agronomic systems. These standards guarantee ecologically sustainable procurement and production of biomass feedstock for biochar production, compliance with emission standards, and environmentally safe storage.  Biochar quality is comprehensively monitored, documented and independently controlled and complies with all threshold standards related to the Ordinance on Soil Protection.


  1. The EBC pillars are independent on-site control (government accredited), accredited laboratories, and legal backup. The EBC certifies sustainable provision and production of biomass feedstock, energy efficient, low emission pyrolysis techniques, biochar quality (low contamination), low hazard biochar use and application.


  1. New Zealand can also draw on Australian work on biochar end-to-end quality control assurance, or it can develop its own system.

R&D-based pilot demonstration projects


  1. Enough is known about biochar to focus R&D on some applied demonstration projects in “real world” New Zealand agricultural and horticultural production systems. Results from these projects can be promoted through on-line tools, and can support fine-tuning of biochar technology and its mainstreaming.  Higher levels of investment should be made in the Biochar Research Centre at Massey, and in biochar-related research at Lincoln and Waikato universities.


Continuous learning and fine-tuning

  1. As biochar use expands and is applied to different opportunities it will be important to continuously learn from its productivity and environmental performance in different agricultural and horticultural settings. This will allow ongoing finetuning and optimisation, with results disseminated to those engaged in biochar technology.


  1. New Zealand’s biochar research must be linked to and leverage off the international research effort. We should be fast in identifying, testing and leveraging possible “game-changing” results.  For example, Masek et al (2019) find that a low concentration potassium addition to biochar can improve its soil carbon sequestration effect by up to 45%.  Potassium doping also increases nutrient content of resulting biochar, making it better suited for agricultural applications.


  1. New Zealand needs to quickly adapt scientific advances in biochar research, both domestic and international, and apply them to our own opportunities. In doing so, biochar can be a key part of our climate change response, while also lifting our productivity and sustainability.




Appendix 1: Comparison of negative emissions technologies (NETs)

Table 1: NET Comparision

NET Description Assessment
Direct Air Capture (DAC) of CO2 DAC machines suck CO2 out of the atmosphere and it is stored, for example underground. DAC can involve use of hydroxide solution, or of amine adsorbents in modular reactors.


DAC is capital and energy-intensive, see:


DAC offers no clear productivity benefits, except possibly if the CO2 is used for such purposes as enhancing greenhouse horticultural output.  However, this would still lead to CO2 release as biomass breaks down.  CAC has no wider environmental and bioremediation benefits.  DAC raises question about how CO2 could be stored in a geologically secure environment for centuries.

Enhanced weathering This can involve pulverising olivine or other materials to increase their surface area and absorb more carbon.  This carbon can then be stored in seawater or soils. This is very capital and energy-intensive.   It also delivers no wider productivity or bioremediation benefits.
Ocean seeding Iron or nitrogen could be added to seawater to encourage algal blooms, thereby absorbing more CO2.


Creates risks of low oxygen dead zones.  Would face international as well as local opposition.
Blue carbon habitat restoration Restoration of salt marshes, mangroves, tidal wetlands, seagrass beds to act as carbon sinks.

Protection and where possible enhancement of wetlands and peat soils.

Good strategy to follow, with wider environmental including biodiversity benefits.  It is however limited by geographic constraints.
Afforestation Planting trees to sequester carbon. Afforestation (and avoiding deforestation) have key roles to play.  However, there are limits to available land, and risks of crowding out food production at a time of rapid population growth.

Woodfield (2019) raises concerns that incentives for forestry planting for carbon sequestration in NZ are too short-term, and may have unintended negative consequences.  He contends there is no clear “what next” strategy after carbon credits are earned on the first rotation, noting that harvesting incurs liabilities unless the forest is then replanted.

However, it might be possible to sustainably manage some permanent forests for co-products such as honey, edible fungi or coppiced wood as well as using them as carbon sinks.

Using wood and other biomaterials to replace GHG-intensive materials. Sustainably-produced timber and other biomass can replace GHG-intensive materials such as concrete, steel and plastics.  Examples include engineered wood in multi-storey buildings. With policy change, it might be possible to offset forest harvesting liabilities through credits for carbon stored in long-life wood products. This is an effective strategy, enabled by advances in multi-story wood engineering technology.  Each tonne of dry wood that displaces concrete-based materials avoids nearly four tonnes of CO2 emissions (Sathre & O’Connor, 2010).  However, global impacts may be small due to the limited quantities of wood that can be used in building.


It is noted that biochar as well as wood can substitute for carbon emission-intensive construction, infrastructure and packaging materials.

Bioenergy carbon capture and storage (BECCS). Burning biomass to produce energy for electricity generation or process heat, with CO2 capture and storage.


This avoids some fossil fuel CO2 emissions.  However, it raises issues about how CO2 that is captured can be stored.  There is concern that BECCS may be harmful to ecosystem services and biosphere integrity if implemented at scale (Boysen et al., 2016b; Burns & Nicholson, 2017; Heck et al., 2018).

Note that replacing fossil fuel use with bioenergy can reduce emissions, however this is not a NET because CO2 is not removed from the atmosphere.  When bioenergy that replaces fossil fuel use is combined with biochar production and sequestration it is a NET.

Enhancement of labile soil carbon. The importance of soil carbon sequestration is widely recognised.  In 2015 the French Government launched a call for a 0.4% increase in soil carbon annually.  Using farming techniques to lift labile soil organic matter (SOM) can help support this. Gains can potentially be made in lifting SOM by changing farming techniques.  However, labile carbon turns over rapidly, releasing CO2 back into the atmosphere rather than being a permanent carbon store.
Biochar Turning biomass into charcoal and using this biochar for productivity and bioremediation purposes before storing it in soil as a long-term carbon store. Unlike other NETs, biochar produces a valuable product with multiple economic and environmental applications.


Schmidt et al (2018) conclude that pyrolytic carbon capture and storage (PyCCS) can aspire to carbon sequestration efficiencies of >70%.  They note that PyCCS does not create environmental hazards and that global scale-up is feasible within 10-30 years.


Smith (2016) concluded that soil carbon sequestration and biochar addition to land had lower negative impacts and fewer disadvantages than other NETs.  Biochar could be implemented in combination with bioenergy with carbon capture and storage.


Pratt & Moran (2019) compare marginal cost curves of different abatement options.  They conclude that even the most expensive biochar projects rival the cost effectiveness of alternative NETs.


Biochar lends itself to diffuse, small scale applications. However, large numbers of pyrolysis plants and biochar applications can aggregate into high carbon storage at the nation state and global levels.



ANZBI 2019: A Report on the Value of Biochar and Wood Vinegar.  See link at:

Biederman, L. et al 2013: Biochar and its effects on plant productivity and nutrient cycling:  a meta-analysis.  GCB Bioenergy 5, 202-214.

Borchard N et al 2019: Biochar, soil and land-use interactions that reduce nitrate leaching and N2O emissions: A meta-analysis.  Science of the Total Environment 651 2354–2364

Boysen, L. 2016: Impacts devalue the potential of large-scale terrestrial   removal through biomass plantations. Environ Res Lett 11 095010.

Burns, W.; Nicholson, S. 2017: Bioenergy and carbon capture with storage (BECCS): the prospects and challenges of an emerging climate policy response,” Journal of Environmental Studies and SciencesVol. 7(4), pp. 527-534.

Chen, J. et al 2018: Beyond fossil fuel-driven nitrogen transformations. Science 360, eaar6611. (2018).

Clough, T. et al 2013: A Review of Biochar and Soil Nitrogen Dynamics. Agronomy 2013, 3(2), 275-293.

Dickinson, D. et al 2015: Cost-benefit analysis of using biochar to improve cereals agriculture.  Global Change Biol. Bioenergy 7, 850-864 (2015).

Dokoohaki, H. et al 2019: Where should we apply biochar?  Environmental Research Letters Vol 14, No 4.  Published 29 March 2019.

Elad, Y. et al 2010: Induction of systemic resistance in plants by biochar, a soil-applied carbon sequestering agent.  Phytopathology. 2010 Sep;100(9):913-21.

Fuss, S. et al 2018: Negative emissions – Part 2: Costs, potentials and side effects.  Environ. Res. Lett. 13, 063002 (2018).

Gaunt, J.; Lehmann, J. 2008: Energy Balance and Emissions associated with Biochar Sequestration and Pyrolysis Bioenergy Production. Environ. Sci. Technol.  2008 42, 11 4152 – 4158.

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Hepburn, C., Adlen, E., Beddington, J. et al. 2019 The technological and economic prospects for CO2 utilization and removal. Nature 575, 87-97 (2019)

Hestrin, R. 2019: Fire-derived organic matter retains ammonia through covalent bond formation.  Nature Communications 8 February 2019:

Huang et al 2014: Fertilizer nitrogen uptake by rice increased by biochar application.  Biology and Fertility of Soils 50 (6): 997: 1000. August 2014.

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[1] The slow carbon cycle forms coal and oil over millions of years.  The fast carbon cycle sequesters carbon in vegetation and soil and then releases carbon back into the atmosphere over months or years.

[2] Kelpie Wilson’s superb outline of how biochar functions in soil is at:

[3] Biochar can store carbon for hundreds of years or more.  The longevity depends on factors such as the biomass used, the pyrolysis process applied and soil and climate conditions.  For policy purposes we can regard biochar as a permanent carbon store over the timeframes needed to avoid catastrophic climate change.

[4] There are many wider biochar applications that are not discussed in this paper. See link to 55 uses for biochar at: updated at: Biochar can play a key role in a circular economy.  Answering the question ‘what unsustainable resource use can biochar displace?’ will generate biochar innovation in many different fields.  Albert Bates and Kathleen Draper co-authored a recent book on non-agricultural uses of biochar: BURN: Using Fire to Cool the Earth.

[5] Excessive synthetic nitrogen fertiliser leads to air and water pollution and harms the soil microbiome.  Chen et al (2018) explores ways of reducing the need for fossil fuel use to meet nitrogen needs.


[6] This fits well with current plans to phase out coal use at the Huntly plant.  The Huntly plant is close to both biomass sources and to dairy and other agricultural users of biochar.  It is also located in a community that needs jobs and new business development.

[7] Massey University researchers have estimated a biochar production cost of NZ$400 per tonne for the purposes of assessing economic opportunities in New Zealand.

[8] One approach might be to use a floating mat of biochar on a slurry pond surface to bind nitrogen.

[9] It is difficult to gauge biochar’s long-term effects, though it seems that biochar functionality improves over time.  Kelpie Wilson likens terra preta soils to well-aged cheese.  These soils have been dated back thousands of years.  They seem to self-generate, in that when terra preta soils are “mined” as potting mix, leaf and other plant material that falls onto these soils is colonised by biochar microbiome, forming new and highly productive terra preta soils but without enhanced carbon content.


[10] Some research in Taranaki and Manawatu suggests that biochar made from willow can lift clover growth for reasons other than liming effects.

[11] This is based on one tonne of carbon equalling 3.67 tonnes of carbon dioxide emitted.

[12] Some sheep and beef farms have large and unproductive poplar trees that could be turned into biochar.

[13] Manuka oil extraction requires harvesting biomass and bringing it to an extraction facility which requires process heat.  Residue from this could be turned into biochar using an integrated oil extraction and pyrolysis facility.

[14] These projects could be supported by adaptable multi-user facilities to produce biochar with different characteristics for diverse research and pilot demonstration projects.

[15] Australia has made progress with carbon farming initiatives, including methodologies governing measurement and verification.

[16] Other businesses involved include Tieto, Valio, St1, ÅF Pöyry, Compensate Foundation, Carbofex, Yara Suomi Oy, Lassila & Tikanoja, SOK, Orbix, Nordic Offset and Hedman Partners.

[17] An example is tantalised timber.

[18] Singh et al (2012) report that the mean residence time (MRT) of biochar in clayey soil ranges between 90 and 1,600 years, based on limited laboratory trials using a range of biomass sources.  They considered that the MRT was likely to be longer in field conditions.

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Bardolatry or secular clarity – why Shakespeare keeps us sane in identarian times

In a social media age that isolates as much as connects people, and that polarizes politics and fuels extremism it is reassuring to see William Shakespeare flourishing through it all.

It is striking how much hostility Shakespeare has attracted over the centuries.  Most attempts to suppress or ignore his works aim to limit human consciousness as revealed in Shakespeare, in order to promote narrow moral, religious, nationalistic, cultural or racial codes or world views, or simply for small-minded or intellectually lazy reasons.

Shakespeare has been censored or de-platformed for bawdiness, failure to deliver happy endings, subliminal undermining of the Corn Laws, lack of a class angle or socialist realism, failure to check his privilege, suspected grain-hoarding, portraying black people and continentals in too favourable a light, cultural appropriation, plagiarism, identity theft, promotion of underage sex, homoeroticism and cross-dressing.

He is guilty of all of these, except for identity theft – “Shakespeare wrote Shakespeare”, and yet over 5000 books have been written to “prove” this was not so.

The anti-Stratfordian sect began with Delia Bacon who devoted her life to “proving” that Shakespeare’s works were written by Francis Bacon (no relation).  Although she ended her life in institutional care believing herself the Holy Ghost, her theory grew into a movement that also attributed to Bacon authorship of the King James Bible,  Montaigne’s Essays, Spencer’s Faerie Queene, Burton’s Anatomy of Melancholy, and the plays of Lyle, Greene, Kyd and Marlowe – despite the fact that Bacon was dismissive of drama!

Some anti-Stratfordian “scholars” such as Looney, Silliman and Battey had surnames that were less than confidence-building.  However, they were not all barking mad.  Some argued (speciously) that Shakespeare could not have written Shakespeare because he was from too humble a background, was too provincial, hadn’t travelled to all his plays’ settings or been an eye witness to ancient Greek and Roman events, didn’t have a university degree in creative writing (which is not surprising as he never attended university), and so on.

Another line of attack on Shakespeare argues that little is known of his life – did he even exist?  Actually, an enormous amount is known about Shakespeare’s life, though certain claims are still controversial.  For example, Flann O’Brien’s assertion that Shakespeare’s last words (spoken to his wife) were “did you put the cat out?” has never been fully documented.

To be charitable, the anti-Stratfordians were to some extent reacting to excessive worship of Shakespeare, especially from the 18th century.  This “bardolatry” was an admiration of Shakespeare so amplified as to become unhinged.  It attributed to him supreme wisdom, infallibility on all questions, and deigned him divine.

A manifestation of this is George Romney’s 18th century painting The infant Shakespeare attended by Nature and the Passions.  This is a Nativity scene that some see as sacrilegious idolatry, while others see it as diminishing to Shakespeare by comparing him with a religious leader!  Much later, James Joyce wrote that Shakespeare created more than anyone other than God.  With belief in God in modern times shrinking, the logic might be that Shakespeare is increasingly a substitute for God.  However, those who love Shakespeare give him centre stage for his secular perspicuity and clarity, and do not claim divinity for him.

Shakespeare’s birth is a singularity, that is it is a unique event that has changed the world, however no one claims he is the son of God.  There is no official Nicene Creed that codifies what we all have to dogmatically believe about Shakespeare.  However, some unofficial protocols exist.  For example, the Chandos portrait that was owned by Richard Plantagenet Temple Nugent Brydges Chandos Grenville is seen as the most lifelike depiction of what Shakespeare actually looked like.

Bardolatory as a mindset falls across a spectrum.  At the weaker end is the belief that Shakespeare’s works instantiate all human psychology and constitute supreme human reality.  At the extreme end are those who ban paper bags for fear they may be made of the pulped works of Shakespeare.  In the middle are those who sometimes refer to Shakespearean scenes in the present tense, or who get confused over whether his characters are real people, imaginary characters or possible people.

Shakespeare was not uniquely and supremely gifted at birth.  Other English poets had Shakespeare’s innate talent, though not his staying power, luck, sanity or work rate – poets are made as well as born.  The erratic Christopher Marlowe was stabbed to death at 29 years old in a fight.  Keats died of TB at age 25.  Thomas Chatterton poisoned himself with arsenic at age 17.

While Shakespeare’s observations about the natural world and medical matters are impressive for his time, they are not unique. Shakespeare tells us nothing about quantum physics or Galois theory. However, he is unique in his observations of human nature, psychology and sociology.

Shakespeare recorded human nature as he saw it, not as it was assumed to be.  He saw things directly and not through the distorting lens of dogma and theory.  He benefited greatly from a school system that taught him deep language and classical content, rhetoric, and how to think.  He was the better for not studying theology or going to university and imbibing the flawed theories of the time.

Shakespeare invented around 1700 new words and many metaphors and turns of phrase to describe things no one else had observed with such clarity.  His mind roamed so freely that anyone immersed in his work can think of Shakespeare scenes or quotes that provide insight into all major events and emotions in their lives.  These insights help you see you are not alone, that others have faced similar things and got through them.  There is no powerful human experience, emotion or relationship that Shakespeare does not shed light on and help us understand better.

Shakespeare’s work has spurred centuries of monumental creative achievement.  A tiny homeopathic sample includes Romeo and Juliet inspiring West Side Story, and Taming of the ShrewKiss me Katie.  The Tempest alone inspired around 37 operas, while Verdi composed operas such as Otello and Falstaff and Mendelssohn the music for the ballet Midsummer Night’s Dream.  Tchaikovsky, Prokofiev and Berlioz all wrote music for Romeo and Juliet. Other composers such as Rossini, Sibelius, Stravinsky, Vaughan Williams, Smetana and Elgar all set Shakespeare to music.

Countless poems, short stories and novels from Dogs of WarBrave New WorldOwls do Cry to Pale Fire take their inspiration or their titles from Shakespeare.

When trillions of Twitter messages, Facebook uploads, and WhatsApp exchanges are forgotten Shakespeare will survive and his influence will continue to expand multiplicatively as his works spur more achievements in literature, music, arts and other fields.  However, what is most important today is that his works anchor human universality, and uphold it against an identarian world which (by the nature of group identity) is divided within itself.

In doing so, Shakespeare helps keep us sane as well as human.


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