The hamster wheel economy

This is a post about how inflation and the banking sector works, but more importantly is another example for how Universal Basic Income (UBI) solves everything.

The Goldilocks economy
A common buzzword heard on financial news media in the months preceding the 2008 financial crisis was that we were in a goldilocks economy, referring to the balance of inflation vs. non-inflation pressures being neither too warm nor too cool.  That turned out to be a euphemism for "all hell is about to rain down on us".  The slightest nudge of interest rates upward caused the dominoes of the mortgage securitization scams, the Lehman Bros. scam, and the Bernie Maddoff scam to unravel.

The reason a small interest rate hike was the first domino in that chain is that many mortgages had been given to subprime (least creditworthy) lenders at low teaser variable interest rates and the nudge up caused many unaffordable mortgage renewals at the teaser rate expiry.  Directly leading to bank troubles.


The importance of bank health
Banks are generally useful entities.  They let you buy homes with fairly little cash, and provide other useful credit services that can fuel a healthy and growing economy.  Bank failures do negatively affect the rest of the economy.  With that said, heavily regulating them to protect them/prevent failure is important, and ideally, grants by society towards bank profitability is worth avoiding.

The importance of housing
Keeping housing prices high and rising  is critically important to bank health, personal wealth sustainability, and adds economic activity towards home building and improvement.  Our societies have been in structural decline for several years, but this decline is masked almost entirely by the propping up of housing prices.

Everything you need to know about the housing market is in http://www.naturalfinance.net/2015/05/all-land-in-florida-is-worthless.html but the short version is that low interest rates is by far the biggest factor for boosting housing prices.  A 6% interest rate lets you afford a $100k home for just $6000 in yearly interest, but dropping interest rates to 3%, lets that same home have the same affordability if sold for $200k (double).  The danger is that if normal interest rates go back up to 6%, then housing prices would fall in half, and most banks would collapse.

The hamster wheel economy
The hamster wheel economy is one where

• Housing prices must be sustained by
• low interest rate fueled inflation that sustains
• Banks, government borrowing, personal wealth, and stock prices (also helps banks and personal wealth) 

If you stop running in the hamster wheel, the hamster that is probably behind you will bite your tail off.

The link between low interest rates and stock prices is partly that profitability is enhanced by low borrowing costs, and healthy banks and personal wealth, but more importantly, from more recent year financial media buzzwords, there's nowhere else to put your money.

The hamster wheel economy is a super precarious state, where the economy is on the brink of collapse when interest rates are near 0, and cannot be increased, and the absurdity of negative interest rates appears not just viable but proposed as necessary.

low interest rate fueled inflation
Deflation has to be avoided because that ruins housing prices and  thus everything else.  Low interest rate fueled inflation is the primary anti-deflation tool, and is also the type of inflation that affects housing costs the most.

QE is a similar anti-deflation policy, that doesn't help housing prices as directly, but helps inflation of assets that help the richer members of society buy houses too... and financial institutions.

Causes of deflation
unemployment and low income employement is a primary cause.  Cheap imports, and productivity fueled cost cutting causing more unemployment and lower income occupations feed the cycle.

The evil of the hamster wheel economy
The hamster wheel economy selects winners.  Namely, those lucky enough to have already purchased a home and stocks, the financial sector, and public company insiders.  This is a demographic that heavily skews older, as well.  The selected losers are those who at best only have the option to buy such assets at precarious hamster wheel high prices (and at greater risk if they collapse).  Obviously, also, high home prices freeze out those still without a home.

Wage inflation (as opposed to low interest fueled inflation) resulting from economic booms significantly benefits the younger skewing demographic that seeks employment, both with better pay and easier work finding opportunities.

The age-based conflict is a topic well expanded in this essay, and an issue not peacefully resolvable without UBI.  But this conflict is made worse by intentional low tax policies eliminating jobs, welfare, education in order to increase hardship so that interest rates can stay low and homes and stocks high.

UBI as a solution to Technological displacement
UBI provides an obvious solution to technological employment dislocation.  Just tax robot owners profits, and distribute the tax proceeds equally to all adult citizens, and then have the citizens pay for robot stuff.  Robot owners get fithy rich.  Everyone else has everything they need, and less reason to complain about not having a job that is not necessary.  We don't need to wait until robots are everywhere for the advantages of UBI. UBI paid through taxes brings huge economic benefits to our society.

The only other theoretical solution to technological displacement is the theory that product prices will fall rapidly along with automation.  This is the deflation that causes our tail to get bitten off.  For one, if cars go down in price to $100, you still need $100 in income to buy one.  The other point is that no matter how much productivity increases, the price of land is not affected as much, and central banks will use every weapon in their arsenal to prevent a hamster flop in property prices.   So if everyone needs to make and sell 50 cars per year to just afford a place to live, and 100 cars per year to afford other basic needs,  its a big problem if everyone is not buying 100 cars per year.  50M cars per year sold in the US would support 500k workers (making an average $10k/year) through the full supply chain.

This theoretical alternative also skews the benefits of productivity increases to those who have accumulated savings in the past (those darn boomers again).

UBI can fight deflation and allow interest rate breathing room
There is irrational (at best) scaremongering that UBI will cause inflation.  If some people choose to stop working, it is likely to improve the job opportunities of those who want to work.  UBI also inherently increases spending and growth in the economy.  If their wages rise too high, then it improves the opportunities to develop automation that replace them.  Another reason that such inflation doesn't matter is any effect that increases spending in the economy increases tax revenue, and so the ability to fund higher UBI to match inflation.

To tie everything to the rest of this paper, UBI stops deflation by stimulating economic growth.  low interest fueled inflation has not stimulated growth and structurally never can alone anymore.  Investment is only made because an idea seems good, and good ideas exist when many people might be able to afford to buy the result of that idea, and do not exist if fewer people can afford anything.  Or the only ideas left are how to cut costs in the face of fewer customers... leading to fewer customers.

A primary cause for our economic decline being structural and permanent is lower birth rates.  Housing prices and economic activity (work) is sustained by increasing population.  Sustainably high birth rates not only create the sustainable housing price increases needed for credit based economy (without artificially low interest rates), but were fundamental assumptions in the creation of socialized retirement policies.

UBI helps banks too
The main reason your home values are staying high is that this is necessary to keep banks solvent.  UBI will help housing demand too, but there is room to raise interest rates to mitigate housing and other inflation.  High home values with higher interest rates is awesome for banks.  Bigger loans at higher interest rates, and a cushion to lower interest rates if home prices ever fall again.

UBI also creates better lending opportunities in general.  Borrowers with a guaranteed income level have much more borrowing security, and that means less risk and higher profitability to lenders.

UBI can't hurt stock returns either.


Recent tax focused analyses of UBI
http://www.naturalfinance.net/2015/07/green-partyca-proposal-for-gli.html
http://www.naturalfinance.net/2015/07/a-taxation-solution-focused-on.html

My original philosophy
http://www.naturalfinance.net/2012/06/imperative-need-for-social-dividends.html

Another Central bank option
Another obvious option for (full or partial) funding of UBI is to print money and distribute it in equal share to citizens, as I demonstrated here.

An alternative that may be more palatable to central banks, is to simply issue more government debt to fund UBI, while the central bank repeats its past QE procedures.  QE helps banks and helps government, and central banks like helping both.  An accounting issue with imagining money to buy government debt (QE) is that the central bank is trading an asset (bond) for the imagined money (liability), and so it can pretend its books are balanced, and that when the bond is repaid it will then cancel the money instead of perpetually buying a new one.

If QE is credible, then this maneuvre is equivalent to direct printed UBI funding, without involving accounting deficits, providing free debt to governments, and helping bankers get rich by buying bonds ahead of the fed.

Linkedin Q3 2015 results

Linkedin is a company worth fairly $5B today, that could one day hope to be worth $10B, if it performs perfectly.  Its market value is near $30B.

Continuation of my chronicling the eventual collapse of LNKD's stock value.  Previous entry

 Results (see also)

• $41M loss. Almost as high as Q1's record $42M loss, but lower than Q2's record $68M loss.  The $51M before tax loss is considerably higher than Q1's record $32M loss.  Q2's pretax loss was $93M.
• Near or record low year over year growth rates for its 3 main revenue categories (33.6% hiring solutions (2nd lowest. previous quarter was 11th consecutive record. ), 28% marketing (3rd consecutive drop. lowest since q2-13), and 21% subscriptions (12th consecutive record drop).  Down from last quarter's growth of 32%, 32% 22%)
• Record low growth rates in members (12th consecutive), unique visiting members,  mobile visiting members (12th consecutive), and corporate solutions customers (12th consecutive).  Its other user metric of member page views had lower growth than last quarter.  Mobile visitors in particular are just 55M monthly. 30% higher than Q3-2014, which was 45% higher than 2013, which was 129% higher than 2012.
• Its overall revenue growth rate of 37% includes near 8% points from lynda.com, and so without that acquisition, its growth rate would have plunged below 30% for the first time.
• International marketing and subscription (12th consecutive record) growth is well below 20%.
• After 11 consecutive record low growth in  Other Americas, Q3 matched Q1 growth of 19%.  After 4 consecutive record low growth in APAC, a slight uptick from 28% to 32%.  After 11 consecutive record lows in EMEA, growth went back to Q1 levels of 34%.  If all of lynda.com's revenue was US revenue and did not help any of the above then US had 3rd consecutive sharp record low growth of 29%.  If its not fair to assume all lynda revenue is US, then all other regions did not really bounce from record lows.
• US hiring solutions (relying on linkedin's claim that lynda.com is mainly a US business) grew a record low 28.7%.  Its main business, and greater than all international revenue sources combined.  US marketing solutions growth lowest since 2013.  US Premium subscriptions 12th consecutive record low 23%.
• lynda.com's Q3 revenues of $41M is lower than the standalone company's Q1 revenues of $43.5M.  And so a deterioration of, what was a 25% annual growth, business under linkedin management.
• It did manage cost containment in its marketing and administrative functions.  Actually reducing the total compared to last quarter despite 10% sales growth relative to that quarter.  These adjustments just get it back to Q1-bad (instead of Q2-terrible) cost ratios.  34% sales and marketing costs, 15% in administrative costs.  Compared to Q1 levels of 36% sales, and 15% admin.
• record level and sharp increase in depreciation and amortization to $118M.  Near 100% year over year increase and much larger than their revenue increase of 29%-37%.  All other cost categories increased more than 30%.  Cost of revenue increased 48%.  Growth in headcount was 44%.  Depreciation (without amortization) was $72M.  A 44% increase.
• Loss before taxes was $51M.  Higher than the record at the time Q1 loss of $32M, but lower than Q2's.  Q2's results included one time adjustments from lynda.com acquisition, and so a portion of that loss excusable.  But a continued deterioration trend from Q1 does exist.
• Revenue per member was  $1.97.  Per monthly unique: $7.80 including lynda.  $7.39 excluding lynda.  In Q3 2014, this quarterly revenue per monthly unique visitor was $6.31.  Only 17% year over year growth.

Guidance

•  Linkedin increased their Q4 revenue guidance by $10M compared to last quarter.  This increase is entirely attributed to lynda.com expectations.
• Their projected operating loss is $56M for the quarter, and -$202M for the year.  This is an improvement to the guidance from last quarter for a $258M loss, though its projected ebitda of $148M less its projected other operating costs of $244M was an expectation of $96M loss.  Its results were ebitda of $208M and $245M in other costs, and so $59M of the lower full year projected loss difference of $56M (the portion related to Q4 expectations) comes from the beat on this quarter's guidance.  These guidance numbers may not all include the additional $16M in expected other expenses not included in their shorter guidance statements.  But overall a high record loss (excluding Q2) is expected for their most important quarter of the year.
• Lynda.com is expected to contribute to ebitda losses until 2017. (excluding associated stock compensation and depreciation)
• Shares outstanding will be 134M.  A 6% increase over last year.
• With a $58M lynda.com component to their revenue guidance, Q4 is expected to result in only 23% revenue growth over last year's buisness.
• Depreciation is expected to be $78M for the quarter.  35% higher than last year.
• The $58M Q4 lynda.com guidance if annualized with 3 other quarters of $41M would be $181M total 2015 lynda.com revenue.  2014 revenue was $153M.  Only 18% growth.  Lynda.com's 2014 growth was 25%. 

Lynda.com Masking poor results
lynda.com is contributing over 5% of their total sales, and 8% of talent solutions.  7% of previous year's comparable total sales, and 12% of previous year's talent solutions.  There is no turnaround occurring.  There's even decline in projected lynda.com growth to 18% YoY from when it was a separate company last year.

There is no core buisness turnaround and a $51M pretax loss instead of the projected $100M+ loss.  Next quarter's guidance is only raised by a $10M bump to previous lowball lynda.com estimates, and there is even a slight increase to projected losses for next quarter.  Guiding for a loss while projecting a nosedive core-organic growth rate of 23% is not reason for enthusiasm.


Shareholder performance margin
The core reason to be negative on linkedin is that it can't ever make money, and this is especially the case if its core (cost of revenue and depreciation) and other expenses grow faster than its sales.  Linkedin reaccelerated its equipment purchases by 38% over last quarter to $167M.  This will feed future depreciation growth well over its sales growth.

SPM is a metric useful in examining unprofitable companies, by giving them credit for R&D expenses helping them in the future, but then from that number determining how much each $ in R&D needs to create in revenue or savings to break even.

Linkedin's SPM in Q1-2015 was 10.6%.  Meaning that its R&D spending has to return 10x to be worthwhile.  Leading tech companies have 33% SPM, and their R&D only needs to return $3 to break even.

Linkedin's SPM in Q3-2015 is (-40.5(net income) + ((13 (other income loss) + 202 (R&D))*(0,65 after tax benefit of these expenses) =)  $99.25M, or as a percentage of revenue: 12.7%.  This is a small improvement over Q1, but excluding the benefit of other losses to this calculation brings their SPM ratio close to 11%.  Its terrible, and objectively stays terrible at any SPM under 20% (for an R&D tech company)

Free cash flow less stock-based compensation
Free cash flow at its core takes Net income, adds back non-cash stock compensation, amortization and depreciation expenses, but because depreciation is a real cost that must be accounted for somehow, subtracts the equipment purchased during the quarter.

Stock based compensation is a real cost that negatively affects shareholders by diluting their interests and handing out the future benefits of the company to insiders.  Amortization is understandably intangible, and it is quite reasonable to prefer tracking actual equipment spending to depreciation.  That spending does create more expenses in future quarters.

FCFLSBC has been negative every year since 2013 and all but 2 quarters.  -$298M in 2014.  -$279M in trailing 4 quarters up to Q3-15.  Equipment purchases in Q3 were 38% higher than last year (ahead of revenue growth), and FCFLSBC was -$54M.  I believe these numbers also excuse plausibly-excusable items such as currency losses, its interest expenses related to shareholder dilution (convertible notes) which are new this year and I have not added these back in, even though there is very good reason they are included in GAAP earnings.

The bottom line is that this performance is very poor and has been at this poor level for at least 7 quarters.  Cummulative FCFLSBC loss since Q1 2013 is -$408M.

Future guidance
At the beginning of the year, I thought there was a good chance they would increase sales by $800M.  They are still likely to come close to that, but with $111M of those sales coming from the lynda.com acquisition.  So, organic sales increase a touch below  last year's $690M increase.  Its fair to use $700M/year for future year growth.

That would put it at $10B sales at the end of 2025.  With its high R&D, marketing and admin expenses.  From there it might be able to figure out how to make $1B in profits, and if it does, then in 2025 it might be worth $10B market value.  With less than 7M new shares per year, there would be 200M shares outstanding by then.  Expected optimistic value in 2025: $50/share.

Linkedin is involved in a sales intensive business that also happens to be an R&D intensive business.  It has been blessed by story telling allies that the key to success is chasing sales.  Its pretty much an impossibility to reach $30B in inherent value for linkedin.  Lynda.com has the same defect. 

Partly related topics

Google announced a $5B stock buyback this quarter

Google's stock structure permits its insider owners to never repay the muppet stockholders, yet a stock buyback does make it possible for a muppet to actually receive cash from a google action.  Muppets are the outsider public clients of the financial industry.  The financial industry itself are not muppets because 1. they can gain from the relationship with insider owners through delivering muppets to them, and more importantly, 2. They have complete awareness of every muppet's pulse and sentiment and acceptance of any story-based buildup of a company's future.  The financial industry knows how well any story is selling at any time, and so can trade ahead of that story.  For the muppet, confidence in the story teller is not likely to increase wealth.

The inherent value of any investment is the return paid by the time that investment is forced to sell.  For bonds, its the coupons and principal repayment.  For stocks, its dividends and buyout price.  Even if you can resell a stock at anytime, the inherent value calculation remains for the buyer, and so counting on short term price spikes is fundamentally the same calculation you could make for investing in pyramid/ponzi schemes.  You can hope that someone stupid will buy it after you at a higher price, but such investments are manipulation psychology based rather than based on the inherent value of the contract.

A stock buyback does not change the inherent investment value.  It increases risk to the company by using its cash to buy out those who no longer wish to be invested in its future.  A key point about Google's buyback is that it is below the amount of new shares it is handing out to insiders.  Buyback announcements also are not binding commitments to actually go through with the buyback.

Another point is that the stock price reaction this quarter was very enthusiastic likely based mostly on this buyback announcement.  This quarter was not as good as Q2, but the enthusiasm over results was much higher, especially considering that the main effect of price enthusiasm after Q2 was to increase expectations for Q3.

My reason for mentioning Google in a post on Linkedin, is that both companies share a dual stock structure where the real insider owners do not have any accountability to muppets.  These companies/insiders never needed capital cash infusions, and so the terms under which they took muppet money was to their advantage.  Google as a company, and black box for its insiders, is generating substantial real cash and profits.  Unlike Linkedin.

I am surprised that Google is making it possible to transfer cash from it to a muppet.  It never has to from a purely selfish perspective.  Its understandable as an enthusiasm generator though.  That helps the insiders sell their stock too.

Twitter comparison to Linkedin
This quarter Twitter had the noteworthy, but not that impressive, accomplishment of having a smaller loss than its after tax R&D spending.  Just slightly.  While losing money is something it has in common with Linkedin, the rate at which it is losing money is improving every quarter, and its growth rate is much higher.  It's likely to have more revenue than Linkedin in 2017.  It has significantly leapfrogged it in comscore US monthly visitor metrics.  Impressive considering last year it was a full year behind.

Not that I am endorsing Twitter, but the fact that it is not in a sales intensive business does mean there is a possibility of success.

Ebay has averaged 20% growth over last 5 years
Linkedin is entering the 20% target growth circle.  Ebay is profitable, though its 20% sales growth has been much faster than its profit growth.  $13B in tangible net assets prior to paypal spinoff.  Earnings multiple (after backing out tangible net assets) under 20, and going forward looks pretty close to 10x. (though more modest growth this year)

Comparison to Facebook
 In Q3-2014, Linkedin had profit before taxes of $9M.  About break even.  In Q3-2015, if R&D expenses would have been fixed to 2014 levels, but they still got all of their sales, then their pre-tax profit would have been   $15M (-$51M + $66M extra R&D spent).  While that is a little better, $212M (37% higher including lynda 31% without) extra sales resulted in only $6M extra contribution excluding R&D.  $6M / $212M suggests 3% pretax profit potential.  If R&D is expected to grow more than 3% of sales, then there is no profit potential.

FB's 3Q results, for comparison, had $1.3B increased sales, and $760M increased contribution excluding R&D.  The pretax profit margin on those extra sales 58.5%.

Other comparable metrics:

• US advertising revenue growth:  FB 56%, LNKD 36%.
• 3 quarter average compared to Q4-2014 US advertising revenue:  FB: +$137M/quarter (10% better), LNKD: -$8M/quarter (compared to $71M Q4`14 revenue... over 10% worse).  In 2014, LNKD managed +$9M for same metric.
•  Total advertising growth:  FB 45%, LNKD 28%
• 3 quarter average compared to Q4-2014 advertising revenue: FB + $220M/quarter (6% better).  LNKD: _$20M quarter (compared to $153M Q4`14 revenue...  13% drop)

Whale oil history as an incentive to destroy the world.

As far as I know, whale oil was primarily used in house lamps, and alcohol, starting in the 1830s was a significantly cheaper fuel source.  $0.50/gallon vs $1.30+/gallon for whale oil.  https://en.wikipedia.org/wiki/Timeline_of_alcohol_fuel
image is from Wikipedia article on whale oil, and Walter S. Tower, 1907 book.

The mystery then, is why would whale oil imports surge 1000% over the next 20 years?

Economic strategies available to dominant but declining industries
Those in declining industries will see reason to worry, and likely foretell, the eventual decline.  If burning fossil fuel will destroy the planet, but make you money in the process, then you will tend to value the making you money part than whatever that first part said.

If you see competitive alternatives to your energy source that are cheaper and cleaner, and you know they will eventually displace your energy product, then you:

1. overproduce your energy product to bring its price down while making the alternative challenger less profitable and less capable of encroaching on your marketing, distribution,, and political monopoly. 
2. Use your marketing, distribution, and political power to spread the wealth from your energy product to existing and new friends, to extend your dominance as long as possible.
3. Management corruption of corporate interests further ensures evil, because their interests are not to preserve shareholder wealth through prudent investment, but to maintain as powerful an empire for as long as possilbe.

From axiom 1, kill all the whales was an ensured outcome.  Prior to alcohol competition, sustainable whaling made whaling easy and more profitable by restricting supply.  Overproducing became necessary to make it easier for consumers to choose murdered whale byproduct for their lighting needs.

Axiom 2 and 3 could explain the eventual 1860 $2/gallon tax on alcohol.  A theory would be that politicians after being lobbied for 30 years on shutting down alcohol would be eventually pursuaded even if all of the benefits of alcohol destruction went to the new fossil oil industry.

I'd appreciate any Historian's input as to specifics in how the 3 axioms influenced the peak whale oil transition.

Analogies to our current energy tipping point
Renewables are competitive purely on energy price, and with climate and pollution costs, obviously preferable.  The assured reaction by dominant incumbents though is rapid desperate overproduction, and the need for political allies at any cost to preserve incumbents positions.

A history of whale oil and how the industry managed to increase production so much in the face of better competition is a very important illumination to the corruption alternatives that the planet destroying energy incumbents have and will use to preserve their lifestyles.

Random bits of evidence

A not so illuminating whaling history,  though a point I ignored in comparing whale oil to alcohol is the potential differences in energy content.  A gallon of gasoline for instance has more energy capacity than a gallon of alcohol, and so a gallon of whale oil could have burned brighter or longer than a gallon of alcohol. Estimates are that whale oil has the same energy density as kerosene, and less than 30% higher than ethanol. Though energy density does not mean a bright flame.  It appears as though camphene (alcohol mixed with turpentine) was  brighter than kerosene.

 this reddit discussion has additional info on the uses of whale oil and relative lighting properties of alternatives.  Specific support for marketing awareness of pushing whale oil as the "civilized" lighting alternative

“Great noise is made by many of the newspapers and thousands of the traders in the country about lard oil, chemical oil, camphene oil, and a half-dozen other luminous humbugs,” The Nantucket Inquirer snorted derisively in 1843. It went on: “But let not our envious and — in view of the lard oil mania — we had well nigh said, hog-gish opponents, indulge themselves in any such dreams.”

The Whalemen's Shipping List, a journal devoted to the whaling industry, was particularly notable in pushing the anti-camphene agenda. In one issue, it claimed:

"We have often thought that the State, which recently seems to take such care of what we shall eat, and what we shall drink, ought to interfere in this matter. We have statutes for the storage of gun-powder. It is put away, out of the reach of hap and hazard. Yet every day we hear of this house burned, of that child killed, by the explosion of what is called 'camphene.' It seems to us that the State might find some ground for its legislation, even here."

These types of "You wouldn't want your children to use lead-enriched Chinese toothpaste, would you" appeals are a strong implication of desperation and marketing push.  Despite any claimed superiority of whale oil, the industry would have needed to ramp up production considerably to keep the price premium over camphene "reasonably small".

In the web of links here and in reddit thread, the main historical debate so far has been between the oil industry claim that it saved the whales through kerosene, and the claim that alcohol saved the whales 30 years later.

To me, the truth appears closer to the whalers tried killing all the whales as a response to alcohol fuel competition.  Kerosene did gain quick dominance in lighting applications around 1860, but in the US, this was due to taxes on alcohol, though it also likely had convenience advantages as well, including a lack of denigration history by the whaling industry.

A price correction:
http://www.petroleumhistory.org/OilHistory/pages/Whale/prices.html lists prices paid to ships for whale oil.

From a 1955 Yale Professor's book , Camphene was 68 cents per gallon and produced 11 candle powers at 4 oz per hour... vs sperm whale oil $2.50/gallon producing 7 candle powers at 2oz per hour.

 Shocked... Shocked! that Exxon would know about destructive climate effects of its production
Recent revelations show Exxon knew about CO2's effect on climate change as early as 1981, despite contributing to creating social and political doubt for these effects.  I actually don't blame them for such a position.  Rather our entire political systems are broken and corrupt for being susceptible to their influence for this long.

If someone told you that a $100 bill you own may be counterfeit, your first reaction would not be to throw it in the trash.  Human nature would compel you to look for facts that suggest it is not counterfeit.  The entire value of Exxon's property is tied up in the premise that it contains oil and that oil is beneficial.  Their opinion that oil is beneficial is certain regardless of truth behind the claims, and therefore the opinion is worthless.  The only problem is entirely within a political system that can side with such opinions.

A carbon tax and dividend scheme (revenue from carbon tax is redistributed equally to all citizens) is absolutely necessary to curb destructive climate effects of fossil fuel use.  It is especially appropriate now that renewable power has achieved cost parity with high CO2 and pollution producing fuels.  I suggest enough taxes to create a $4000 per person (US consumption) dividend.

The effect of a carbon tax is that individual people can:

• Make no change at all in behaviour:  On average, dividend received will pay exactly for extra taxes paid.
• Invest in efficiency and alternatives:  A high tax on energy greatly enhances the payback period of any efficiency/alternative energy investment.
• Reduce energy use:  Allows on average each person to pocket the profits of energy conservation.

A tax and dividend plan is automatically progressive as the rich are more likely to use more energy than the poor.  Heating 10000 square feet costs more than 800 square feet.  It gives every individual the option of making no change, and so only provides more choice to everyone.

A carbon tax and dividend plan can also be a component in a greater UBI program.  $4000 of UBI coming from a carbon tax greatly reduces the funding requirments from other sources, and more easily allows a UBI threshold that is sufficient to eliminate all other social assistance programs while permitting a self-development budget (education but not limited to institutionalization) for every citizen.