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Contents

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Let’s consider the following statement. If it’s true that the market can only go up or down over the long-term, then using the most basic 1:1 risk/reward ratio, there should be at least 50% winners, shouldn’t there? Well, there isn’t. This article debates in favour of the notion that a trader is their own worst enemy, and that human error is at the root of most problems. In short, the main reason why Forex traders lose money is no rocket science. It’s the traders themselves.

Financial trading, including the currency markets, requires long and detailed planning on multiple levels. Trading cannot commence without a trader’s understanding of the market basics, and an ongoing analysis of the ever changing market environment. For those interested in investing and trading, read through the suggestions below and you will learn how to avoid losing money in Forex trading.

Overtrading

Overtrading – either trading too big or too often – is the most common reason why Forex traders fail. Overtrading might be caused by unrealistically high profit goals, market addiction, or insufficient capitalisation. We will skip unrealistic expectations for now, as that concept will be covered later in the article.

Insufficient capitalisation

Most traders know that it takes money to make a return on their investment. One of Forex’s biggest advantages is the availability of highly leveraged accounts. This means that traders with limited starting capital can still achieve substantial profits (or indeed losses) by speculating on the price of financial assets.

Whether a substantial investment base is achieved through the means of high leverage or high initial investment is practically irrelevant, provided that a solid risk management strategy is in place. The key here is to ensure that the investment base is sufficient. Having a sufficient amount of money in a trading account improves a trader’s chances of long-term profitability significantly – and also lowers the psychological pressure that comes with trading.

As a result, traders risk smaller portions of the total investment per trade, while still accumulating reasonable profits. So, how much capital is enough? Here it is important to learn how to stop losing money in Forex trading due to improper account management. The minimum Forex trading volume any broker can offer is 0.01 lot.

This is also known as a micro lot and is equivalent to 1,000 units of the base currency that is being traded. Of course, a small trade size is not the only way to limit your risk. Beginners and experienced traders alike need to think carefully about the placement of stop-losses. As a general rule of thumb, beginner traders should risk no more than 1% of their capital per trade. For novice traders, trading with more capital than this increases the chances of making substantial losses.

Carefully balancing leverage whilst trading lower volumes is a good way to ensure that an account has enough capital for the long-term. For example, to place one micro lot trade for the USD/EUR currency pair, risking no more than 1% of total capital, would only require a $250 investment on an account with 1:400 leverage. However, trading with higher leverage also increases the amount of capital that can be lost within a trade. In this example, overtrading an account with 1:400 leverage by one micro lot quadruples potential losses, compared to the same trade being placed on an account with 1:100 leverage.

Trading Addiction

Trading addiction is another reason why Forex traders tend to lose money. They do something institutional traders never do: chase the price. Forex trading can bring a lot of excitement. With short-term trading intervals, and volatile currency pairs, the market can be fast paced and cause an influx of adrenaline. It can also cause a huge amount of stress if the market moves in an unanticipated direction.

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To avoid this scenario, traders need to enter the markets with a clear exit strategy if things aren’t going their way. Chasing the price – which is effectively opening and closing trades with no plan – is the opposite of this approach, and can be more accurately described as gambling, rather than trading. Unlike what some traders would like to believe, they have no control or influence over the market at all. On certain occasions, there will be limits to how much can be drawn from the market.

When these situations arise, smart traders will recognise that some moves are not worth taking, and that the risks associated with a particular trade are too high. This is the time to exit trading for the day and keep the account balance intact. The market will still be here tomorrow, and new trading opportunities may arise.

The sooner a trader starts seeing patience as a strength rather than a weakness, the closer they are to realising a higher percentage of winning trades. As paradoxical as it may seem, refusing to enter the market can sometimes be the best way to be profitable as a Forex trader.

If you feel confident that you can avoid trading addiction when trading, why not open a Forex trading account with Admiral Markets? Traders who choose Admiral Markets can trade with an award-winning, fully regulated broker that provides access to over 40 CFDs on currency pairs, tight spreads, fast deposits & withdrawals, and so much more! Click the banner below to start trading Forex today!

Building patience is rather the biggest asset when you don’t want to get addicted to trading, but what should you do if you are already addicted to trading? An expert’s opinion is always the best guidance. The following free webinar is hosted by experienced trader, coach and mentor – Markus Gabel – where he explains how you get trading addiction and what you can do about it.

Not Adapting to the Market Conditions

Assuming that one proven trading strategy is going to be enough to produce endless winning trades is another reason why Forex traders lose money. Markets are not static. If they were, trading them would have been impossible. Because the markets are ever-changing, a trader has to develop an ability to track down these changes and adapt to any situation that may occur.

The good news is that these market changes present not only new risks, but also new trading opportunities. A skilful trader values changes, instead of fearing them. Among other things, a trader needs to familiarise themselves with tracking average volatility following financial news releases, and being able to distinguish a trending market from a ranging market.

Market volatility can have a major impact on trading performance. Traders should know that market volatility can spread across hours, days, months, and even years. Many trading strategies can be considered volatility dependent, with many producing less effective results in periods of unpredictability. So a trader must always make sure that the strategy they use is consistent with the volatility that exists in the present market conditions.

Financial news releases are also important to keep track of, even if a selected strategy is not based on fundamentals. Monetary policy decisions, such as a change in interest rates, or even surprising economic data concerning unemployment or consumer confidence can shift market sentiment within the trading community.

As the market reacts to these events, there’s an inevitable impact on supply and demand for respective currencies. Lastly, the inability to distinguish trending markets from ranging markets, often results in traders applying the wrong trading tools at the wrong time.

Poor Risk Management

Improper risk management is a major reason why Forex traders tend to lose money quickly. It’s not by chance that trading platforms are equipped with automatic take-profit and stop-loss mechanisms. Mastering them will significantly improve a trader’s chances for success. Traders not only need to know that these mechanisms exist, but also how to implement them properly in accordance with the market volatility levels predicted for the period, and for the duration of a trade.

Keep in mind that a ‘stop-loss to low’ could liquidate what could have otherwise been a profitable position. At the same time, a ‘take-profit to high’ might not be reached due to a lack of volatility. Paying attention to risk/reward ratios is also an important part of good risk management.

What is the Risk Return Ratio?

The Risk/Reward Ratio (or Risk Return Ratio/ RR) is simply a set measurement to help traders plan how much profit will be made should a trade progress as anticipated, or how much will be lost in case it doesn’t. Consider this example. If your ‘take-profit’ is set at 100 pips and your stop-loss is at 50 pips, the risk/reward ratio is 2:1. This also means that you will break-even at least every one out of three trades, providing that they are profitable. Traders should always check these two variables in tandem to ensure they fit with profit goals.

The best way to avoid risks completely in Forex trading is to use a risk-free demo trading account. With a demo account you can trade without putting your capital at risk, while still using the latest real-time trading information and analysis. It’s the best place for traders to learn how to trade, and for advanced traders to practice their new strategies. To open your FREE demo trading account, click the banner below!

Not Having or Not Following a Trading Plan

How else do Forex traders lose money? Well, a poor attitude and a failure to prepare for current market conditions certainly plays a part. It’s highly recommended to treat financial trading as a form of business, simply because it is. Any serious business project needs a business plan. Similarly, a serious trader needs to invest time and effort into developing a thorough trading strategy. As a bare minimum, a trading plan needs to consider optimum entry and exit points for trades, risk/reward ratios, along with money management rules.

Unrealistic Expectations

There are two kinds of traders that come to the Forex market. The first are renegades from the stock market and other financial markets. They move to Forex in search of better trading conditions, or just to diversify their investments. The second are first-time retail traders that have never traded in any financial markets before. Quite understandably, the first group tends to experience far more success in Forex trading because of their past experiences.

They know the answers to the questions posed by novices, such as ‘why do Forex traders fail?’ and ‘why do all traders fail?’. Experienced traders usually have realistic expectations when it comes to profits. This mindset means that they refrain from chasing the price and bending the trading rules of their particular strategy – both of which are rarely advantageous. Having realistic expectations also relieves some of the psychological pressure that comes with trading. Some inexperienced traders can get lost in their emotions during a losing trade, which leads to a spiral of poor decisions.

It’s important for first-time traders to remember that Forex is not a means to get rich quickly. As with any business or professional career, there will be good periods, and there will be bad periods, along with risk and loss. By minimising the market exposure per trade, a trader can have peace of mind that one losing trade should not compromise their overall performance over the long-term.

Make sure to understand that patience and consistency are your best allies. Traders don’t need to make a small fortune with one or two big trades. This simply reinforces bad trading habits, and can lead to substantial losses over time. Achieving positive compound results with smaller trades over many months and years is the best option.

In Summary

There we have it, the main reasons why Forex traders fail and lose money, along with the steps traders need to take in order to prevent them from occurring. Studying hard, researching and adapting to the markets, preparing thorough trading plans, and, ultimately, managing capital correctly can lead to profitability. Follow these steps and your chances for consistent success in trading will improve dramatically!

Furthemore, to increase those chances even further, you should consider upgrading your MetaTrader trading platform with the ultimate enhancement – MetaTrader Supreme Edition! This free plugin offered by Admiral Markets enables you to boost your trading experience by adding excellent features such as the regular technical analysis updates provided by Trading Central, global opinion widgets, FREE real-time news, and so much more!

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About Admiral Markets
Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world’s most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

50 Reasons Why Some Businesses Fail While Others Succeed

Why is it that so many businesses fail while so few succeed?

One of the great mysteries of entrepreneurship is why businesses fail. Some people start one successful business after another while others fail to succeed.

Why some businesses fail while others succeed?

The worst part about a failing business is that the entrepreneur is unaware of it happening until it is often too late. It makes sense because if the entrepreneur really knew what he was doing wrong, he might have been able to save the business. Some entrepreneurs live in a land of denial while others are unaware of their mistakes.

One thing for sure, a business almost always fails because of the entrepreneur.

It’s not the plan that is important, it’s the planning.” Dr. Graeme Edwards

There are over 28 million small businesses in the United States, according to the SBA.

It’s an impressive number. The sad reality is that only about 50% of them survive. What’s worse is that only about one-third survive 10 years or more. The life of an entrepreneur is unforgiving. It is a constant challenge. There are many moving parts. Any one of them could put you out of business.

Businesses fail for many reasons. The following list includes some of the most common reasons:

1 – Lack of planning – Businesses fail because of the lack of short-term and long-term planning. Your plan should include where your business will be in the next few months to the next few years. Include measurable goals and results. The right plan will include specific to-do lists with dates and deadlines. Failure to plan will damage your business.

2 – Leadership failure – Businesses fail because of poor leadership. The leadership must be able to make the right decisions most of the time. From financial management to employee management, leadership failures will trickle down to every aspect of your business. The most successful entrepreneurs learn, study, and reach out to mentors to improve their leadership skills.

3 – No differentiation – It is not enough to have a great product. You also have to develop a unique value proposition, without you will get lost among the competition. What sets your business apart from the competition? What makes your business unique? It is important that you understand what your competitors do better than you. If fail to differentiate, you will fail to build a brand.

4 – Ignoring customer needs – Every business will tell you that the customer is #1, but only a small percentage acts that way. Businesses that fail lose touch with their customers. Keep an eye on the trending values of your customers. Find out if they still love your products. Do they want new features? What are they saying? Are you listening? I once talked to the CEO of a training company who told me that they don’t respond to negative reviews because they are unimportant. What? Are you kidding me?

5 – Inability to learn from failure – We all know that failure is usually bad, yet it is rare that businesses learn from failure. Realistically, businesses that fail, fail for multiple reasons. Often entrepreneurs are oblivious about their mistakes. Learning from failures is difficult.

6 – Poor management – Examples of poor management are an inability to listen, micro-managing – AKA lack of trust, working without standard or systems, poor communication, and lack of feedback.

7 – Lack of capital – It can lead to the inability to attract investors. Lack of capital is an alarming sign. It shows that a business might not be able to pay its bills, loan, and other financial commitments. Lack of capital makes it difficult to grow the business and it may jeopardize day-to-day operations.

8 – Premature scaling – Scaling is a good thing if it is done at the right time. To put it simply, if you scale your business prematurely, you will destroy it. For example, you could be hiring too many people too quickly, or spend too much on marketing. Don’t scale your business unless you are ready. Pets.com failed because it tried to grow too fast. They opened nationwide warehouses too soon, and it broke them. Even the great brand equity that they have built couldn’t save them. Within a few months, their stock went from $11 to $0.19.

According to a study of about 3200 high growth internet startups done by Startup Genome, about 70% of the startups in their dataset scaled prematurely.

9 – Poor location – Poor location is a disadvantage that might be too much to overcome. If your business relies on foot traffic, location is a strategic necessity. A poor location might make your customer acquisition costs too high.

10 – Lack of profit – Revenue is not the same as profit. As an entrepreneur, you must keep your eyes on profitability at all times. Profit allows for growth. According to Small Business Trends, only 40% of small businesses are profitable, 30% break even, and 30% are losing money.

11 – Inadequate inventory management – Too little inventory will hurt your sales. Too much inventory will hurt your profitability.

12 – Poor financial management – Use a professional accounting software like Freshbooks. Keep records of all financial records and always make decisions based on the information you get from real data. Know where you stand all the time. If numbers are not your thing, hire a financial professional to explain and train you to understand, at least the basics.

13 – Lack of focus – Without focus, your business will lose it the competitive edge. It is impossible to have a broad strategy on a startup budget. What makes startups succeed is their ability to quickly pivot, and the lack of focus leads to the inability to make the necessary adjustments.

14 – Personal use of business funds – Your business is not your personal bank account.

15 – Overexpansion – It is easy to make the mistake of expanding your business into too many verticals. Before you enter new markets make sure you maximize your existing market.

16 – Macroeconomic factors – Entrepreneurs can’t control macroeconomic factors. Common macroeconomic factors are business cycles, recessions, wars, natural disasters, government debt, inflation, and business cycles. Your business can still succeed in bad times. Hyatt, Burger King, FedEx, Microsoft, CNN, MTV, Trader Joe’s, GE, HP are only a few examples of wildly successful companies started during a tough economy.

17 – No succession plan – Future leaders should be identified in advance. Without an effective succession plan, your business is unprepared to fill openings in created by retirements, unexpected departures, or death.

18 – Wrong partner – It’s no secret that it is easier to succeed in business with the right partners. The wrong business partner will, at the very least hurt, or, at worst, destroy your company.

If you are serious about making it as entrepreneurs, focus on the following:

19 – Make a plan – It all begins with planning. The biggest mistake many entrepreneurs make as they start their ventures is that they don’t sit down and write a business plan. The goal is to keep it concise. Don’t treat it like a business school project. Leave writing a 50,000-word business plan to academics. Let them waste their time. You can do a great business plan in one or two pages. There are some great books on business plans such as “The Secrets to Writing a Successful Business Plan” and “Successful Business Plan“.

Your business plan should include the following:

20 – Core values – Your core values are the fundamental beliefs that drive your business. They are your guiding principles that should remain constant. Even as your company grows your core values should remain the same. Core values can also serve as a moral compass. Some of the more common core values are integrity, trust, excellence, respect, responsibility, and teamwork.

Don’t allow your core values to become empty words, make them part of your culture.

21 – Mission statement – A brief statement that defines why your company exists. Your corporate reason for being. It describes your target market and the services/products you offer. If you have done it right, your mission statement, in just a few sentences, will communicate the essence of your business to your business and to the world.

22 – Who are your customers – If you are going to succeed in business you will have a clear definition of your customer. It is not an abstract idea. It is something that can be expressed in numbers. For example, if your target customers are family law attorneys, you have to be able to put a number on it. For example, there are 175,000 (fictional number) family law attorneys in the USA and they are our customers.

23 – What is your product/service – It’s key to have a clear definition of the services you offer. Without a clear definition, you will be unable to effectively develop, market, and sell your services.

24 – Involve your customers in product development – Most businesses that fail create products/services without involving their customers. If you are serious about success, you will build your products with your customers. Businesses that fail build products based on assumptions.

25 – How will you sell and market your product/service – Marketing and selling your service could be one of your biggest business challenges. A sales and marketing plan is a must. Set measurable goals. Create systems to manage the process.

Proper preparation doesn’t require a 100-page formal business plan. The keyword is “proper,” not “planning.” If you do everything in your power to properly plan your business, you increase your chances for success. Don’t confuse planning with avoiding action or paralysis analysis. No amount of planning is a substitute for action.

“No matter what one does, regardless of failure or success, the experience is a form of success in itself.” Jack Ma, billionaire founder of Alibaba

Your first action item is to write your business plan. Completing your business plan will give you an opportunity to process your idea in detail. One of the best things you can do is to collect your thoughts before you make a real commitment to starting your business. If you aren’t passionate about writing your business plan, it’s unlikely that you’ll get passionate about your business either.

One day you might think of a product that could revolutionize life on earth as we know it. You might dream up something so great that no one ever thought of before. The reality is that most successful businesses are without revolutionary ideas. Instead, they modify or improve well-established products or services.

Must Have Business Plan Components

If you don’t prepare a business plan, your initial enthusiasm will fade and you will fail.

26 – In the end, enthusiasm is not enough to succeed. It takes much more than that. You need to research your market, your competition, the financial feasibility of your concept, and more. As you fight through the battles of making your dream come true, you need to be able to go back to read and re-read your business plan. The concepts laid down in your business plan will help you to convince your bank to give you the loan you need, or to determine the best marketing strategy for your business. Don’t be emotional when you prepare your business plan. Treat it as a business process with goals and deliverables. Once you complete it, ask yourself, “Would I invest in this company?” Remember, you are going to have to convince others to support your idea. Bankers, corporate buyers, investors, partners, and the like will look at your business based on facts. Their decision is not going to be based on emotion. When creating a written business plan you give yourself a chance to think about your idea thoroughly. As you put your ideas in writing, you tend to give them more thought. You might think writing a business plan is boring, or a waste of time. Truly, it should be one of the most exciting projects you could ask for. You are writing your future.

27 – You are accountable – Many businesses fail because people treat them like hobbies. From day one treat your business as a business. Treat yourself as an employee. Set measurable goals and hold yourself accountable. If you only plan to work in your business a couple of hours a week, you can’t expect great results. Owning your own business requires focus and commitment. Educate yourself about the wide range of options and technologies. You can’t expect to get an ounce more out of your business than what you’ve put into it. If you are only willing to put in a few hours a week, expect to get a few hours a week of income. There are no shortcuts.

Entrepreneurs can stay accountable several ways:

28 – Write down your goals. Keep your goals in front of you and keep coming back to them, at least once a month.

29 – Build an advisory board.

30 – Join a peer advisory group. You will get feedback from fellow entrepreneurs. The best kind of peer advisory group is where your business is the smallest business. You definitely don’t want to be the largest or most successful business of your group. When you are the smallest you will be pushed harder to catch up to the others in your group.

31 – Find a coach. Try to work with a coach who has already built a successful business.

33 – Forget the idea, take action – You should never start a business based on a great idea. An idea is just that: an idea. It’s worthless. It is not going to help you succeed in business. Ideas won’t do; you need action to succeed. Wantrepreneurs are full of ideas that never result in action. Entrepreneurs are action takers.

Here are some effective ways to turn your idea into action:

34 – Believe that you can do it. I don’t mean fooling yourself into anything, but the only way can you make it happen if you believe that it will happen.

35 – Reach out to mentors. There are many successful people within your own existing network, and you can also make new connections. Connecting with mentors helps you hear what it takes to be an entrepreneur.

36 – Minimize risk, but understand that it is unavoidable.

37 – Give it due time. Ideas are fast, but making them happen will take time. Even if all goes well, almost everything you do in business will take longer than expected.

38 – Get others to believe in you. Successful entrepreneurs are great at selling their visions. You might have to convince vendors, partners, landlords, investors, employees, or a list of more people.

39 – Prepare to fail – Do not fear failure. There is one thing for sure, you will fail before you succeed. Expect failure but don’t fear it. Think of it as a normal part of your business. It is necessary. It is good for your business. It teaches you. It helps you make the right decision the next time. It is super important that you don’t associate failure with quitting. Only those that take action fail and only those that take action succeed.

40 – Pivot, rinse and repeat – Successful entrepreneurs are always adjusting. There are many reasons to adjust. Your customers might ask for a new software feature. Or, the recession might have put your best customers out of business. The price of raw materials might rise one day. Your business and its environment are dynamic. If you are good, you develop a keen eye for changes and make quick adjustments. Most businesses that fail do so because they ignore the world changing around them.

41 – Focus on your customer – You customer keeps you in business and puts you out of business too. If you listen to them, you can improve your products or services. If you ignore they fire you. Customers don’t disappear, they go to your competitors. Reach out to your customers. Ask them questions. Ask what they like or dislike. Welcome negative feedback. Don’t be defensive about it. Negative feedback gives you a chance to improve.

42 – Stay profitable – Staying profitable will solve many problems. The lack of profit could put you out of business even if you have record sales. Forget sales. Forget your revenue. Forget the total number of customers. Always be mindful of profitability.

43 – Manage cash – Entrepreneurs that fail often confuse cash flow with profit. The two are not synonymous. It is possible for you to go bankrupt with record cash flowing into your business. To succeed in business you don’t just need cash flow, you need positive cash flow. With positive cash flow happens when the cash funneling into your business is more than the amount of cash leaving your business. It is simple yet often ignored. The companies that ignore this end up with negative cash flow. This happens when the outflow of cash is more than your incoming cash. You should never allow negative cash flow.

Here are 10 of the most profitable companies in the world:

  • Apple
  • Exxon Mobil
  • Wells Fargo
  • Microsoft
  • J.P. Morgan Chase
  • Berkshire Hathaway
  • Chevron
  • Walmart
  • Johnson & Johnson
  • General Electric (GE)

Here are a few ways to improve your cash flow:

44 – Get paid in advance, ask for deposits or full payment in advance.

45 – Be very selective in offering credit to customers, avoid it if possible.

46 – Increase your sales.

47 – Offer incentives for early payment.

48 – Secure loans for emergencies.

49 – Disasters do happen – Even though Warren Buffet has a hands-off approach to managing his portfolio of companies. He does require the CEOs of each of his companies to have a one sheet in case of an emergency. The sheet of paper contains information on key aspects of the company. While the one sheet of paper might be overly simplified the point is that you have to be prepared for the worst.

50 – If you will succeed in business, you must figure out how to deal with the unexpected. It’s not that “what if it happens“, but “when it happens“. What if your best salesperson quits tomorrow? How long before you will replace her? Do you have a system in place, so when you hire a replacement she can sell?

Systems are crucial to recovering from a disaster. Formal procedures are key. Identify the key parts of your business and think about what it would take to recover losing any of them. For example, if your company relies on your e-commerce website, develop a system to recover your site even if your current site crashes and your hosting company goes out of business within the same day. You don’t have to be paranoid about it, but create systems of key parts of your company.

In Conclusion

Few places are less forgiving than the business world. Eventually, everything adds up. If your customers prefer your competitors, your employees would rather work for someone else, your partners no longer believe in each other or the business, and the many mistakes you can make along the way. And that is why businesses fail.

Yes, it is true that most businesses fail. It is also true that many of them succeed. Those that succeed are not the result of miracles. Entrepreneurs who lead businesses to success understand that it takes a carefully planned and executed strategy. A little luck also helps.

5 reasons why the economy is failing the environment, and humanity

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The world has entered the Anthropocene. We are today a “big world on a small planet” where the economy exerts phenomenal pressure on Earth. There is no free natural capital left. All remaining biodiversity, freshwater, atmosphere, coral reefs, oceans, forests and ice sheets play a direct role in regulating the stability of Earth and thereby the economy.

The trouble is, our economic system was developed, from Adam Smith to Keynes, when we were still a “small world on a big planet”. When there were no frontiers and the idea of the global economy affecting the planet was seen as ridiculous. We could emit greenhouse gases for free, empty oceans for free, pollute polar regions for free, without risking invoices being sent back from Earth.

This is no longer the case. In the 1980s the first invoices started coming back – the ozone hole, collapse of fisheries, tipping points in freshwater lakes, accelerated ice melt, shifts in heatwaves and storm patterns. And, as geopolitical fuel, the polluters are seldom the victims.

Here are five ways the economy is failing people and the planet.

The tragedy of the commons

Despite recognition by many economists, the economy remains frustratingly locked in the tragedy of the commons. Economic growth comes with unaccounted environmental costs and with it, rising risks of catastrophe. The economy remains unable to internalize real Earth costs.

Today, the number one economic threat to humanity is our inability to value nature.

This is not only about monetization. Sure, valuing natural capital and ecosystem services is critical. A global price on carbon is necessary. But it is – as science and myriad attempts have shown, not easy and not always possible (particularly to get the right price). So, valuing nature also means that we have to accept leaving the realm of economics. We enter the realm of ethics, inclusiveness and justice.

The Fourth Industrial Revolution can only succeed on a stable and resilient planet. We need to set planetary boundaries for world economic development. This requires political leadership. The markets cannot do it alone.

From linear thinking to non-linear reality – why discount rates do not work

Science clearly shows that human pressures on the environment follow a resilience path. When environmental resilience is high, change is slow, linear and incremental. Economies can exploit the environment with seemingly no or limited impacts. This is possible when we have abundant biodiversity, redundant atmosphere and glacial capacity to absorb greenhouse gases and pollution. When resilience has been drained following long periods of linear change, the environment can abruptly shift. Tipping points are crossed, triggering large system shifts, often irreversible, potentially catastrophic.

When costs for society go from predictable to non-predictable, from manageable to potentially infinitely dangerous, then we can no longer use market based discount rates to assess where it is most cost-effective to place our investments. In essence this means that in a non-linear world – where Earth sends invoices – the conventional economic theory falls apart.

Linear economic models do not work on a finite planet

Our economic system builds on linear principles focused on throughput, optimization and cost-benefit efficiency. We exploit, create value, and then waste.

There is no such thing as a Fourth Industrial Revolution with 9 billion thriving co-citizens in the world, if it is accomplished on linear economic principles. We need a transition to circular economic principles and practice.

The current economic model benefits the few at the expense of the many

There is an old belief that solving environmental problems can only be achieved by first building enough economic wealth, so we can “afford to save the environment”. This “Kuznets Curve” thinking has never been correct and must be abandoned once and for all if we are serious about economic development for a thriving humanity on Earth.

The cynical truth is that it is only “thanks” to poverty that we do not have very dangerous climate change already. People in low income nations are responsible for far less emissions every year.

Moreover, economic growth – as shown by Piketty and others, does not trickle down to the poor. An inequity aggravated by the fact that the economic wealth in the world so far is accomplished through unsustainable subsidies from the planet, while the cost for these subsidies are largely taken up by others, in general to poorest communities.

Cost-benefit analyses no longer work for natural capital

And much less so for the stability and resilience of planet Earth. We are unable in our current economic system to incorporate long-term risk and value. We may, already when transgressing 2C, trigger the irreversible melting of the Greenland ice sheet. Not over decades but over centuries. This would subject future generations to a rise in sea level of 7-metres. Clearly, an unacceptable future. Still, the economy is unable to place any value whatsoever to long-term infinite and existential global risk.

Under stable and incremental conditions, a free market economy spurs entrepreneurship, ensures efficiency and generates wealth. Those conditions no longer apply.

Global risks are too high, and the benefits of transitioning to global sustainable development are not recognised. We are failing to create the right incentives on the market. Unsustainable behaviour still gives the highest returns.

Global sustainability is now the only avenue to future inclusive progress that can deliver the Sustainable Development Goals and the Paris climate agreement. To succeed, we need to set planetary boundaries to create a safe operating space on Earth for the world economy – that is, confining the Fourth Industrial Revolution within social and environmental boundaries. This is not a way of grinding the revolution to a halt. It is instead a way of spurring deeper innovation and step-changes to a healthy, thriving global economy.

Expressions on dynamic objects #136

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NickDarvey commented Jan 8, 2020

I’m wondering what the story is for System.Linq.Dynamic.Core and types that aren’t known till runtime. Is this supported right now, and if it’s not, will it be one day?

Right now, I have an IEnumerable I can that I’d like to query. Is there any way I can compose a query on top of that? Is there any other way you know of for handling this case?
(The collection contains ExpandoObject s from a JSON payload deserialized by Json.NET. I see you have a test for JObjects but we don’t want to be bound to that type as we may have multiple serializers.)

There is a test in there for verifying a Select on a collection of dynamic objects, but it’s disabled right now.

Repro

Expected

Actual

It’s commented out. It fails when running it:

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