Saturday 18 May 2024

What's 'woke'? Let me explain.

 


You hear it all the time now.'Woke.' "He's woke." "She's woke." "That's woke." Woke, woke. woke. You hear it all the time.

But 'woke' to what?

James Lindsay likes tweaking the noses of those that are called 'woke,' but he's a fairly knowledgable chap too. "There's a right name for the 'Woke' ideology," he explains, "and it's 'Critical Constructivism.' Critical constructivist ideology is what you "wake up" to when you go 'Woke'." He explains in a lengthy Twitter thread:

Reading this book [above], which originally codified it in 2005, is like reading a confession of Woke ideology. Let's talk about it.
    The guy whose name is on the cover of that book is credited with codifying critical constructivism, or as it would be better to call it, critical constructivist ideology (or ideologies). His name is Joe Kincheloe, he was at Magill University, and he was a critical pedagogue.
    Just to remind you, critical pedagogy is a form of brainwashing posing as education that is the application of critical theory to educational theory and praxis as well as teaching and practice of critical theories in schools. ... [C]ritical pedagogy was developed ... to use educational materials as a 'mediator to political knowledge,' i.e., excuse to brainwash.
    The point of critical pedagogy is to use education as a means not to educated but to raise a critical consciousness in students instead. That is, its purpose is to make them 'Woke.' What does that entail, though? It means becoming a critical constructivist, as Kincheloe details.

As some people have said, it always starts with teacher mis-education. 

Note what we've already said, though. Yes, Marcuse. Yes, intersectionality. Yes, CRT and Queer Theory et cetera. Yes, yes, yes. That's Woke, BUT Woke was born and bred in education schools. I first recognised this right after [Helen Pluckrose and I] published our 2020 book 'Cynical Theories: How Activist Scholarship Made Everything About Race, Gender, and Identity—and Why This Harms Everybody.'
    Critical pedagogy, following people like Henry Giroux and Joe Kincheloe, forged together the religious liberationist Marxism of [Paulo] Freire, literally a Liberation Theologian, with the 'European theorists,' including both Critical Marxists like Marcuse and postmodernists like Foucault.
    In other words, when Jordan Peterson identifies what we now call 'Woke' as 'postmodern neo-Marxism,' he was exactly right. ["Yes,no, and sort of," says philosopher Stephen Hicks.] It was a neo-Marxist critique that had taken a postmodern turn away from realism and reality. The right name for that is 'critical constructivism.'


CRITICAL CONSTRUCTIVISM CONTAINS (OR SYNTHESISES) two disparate parts: 'critical,' which refers to Critical Theory (that is, neo-Marxism or Critical Marxism), and 'constructivism,' which refers to the constructivist thinking at the heart of postmodernism and poststructuralism.
Critical Theory we all already generally understand at this point. The idea is pretty simple: 
  • ruthless criticism of everything that exists; 
  • calling everything you want to control 'oppression' until you control it; 
  • finding a new proletariat in 'ghetto populations'; blah blah blah.
    More accurately, Critical Theory means believing the world and the people in it are contoured by systems of social, cultural, and economic power that are effectively inescapable and all serve to reproduce the 'existing society' (status quo) and its capitalist engine.
    Critical Theory is not concerned with the operation of the world, 'epistemic adequacy' (i.e., knowing what you're talking about), or anything else. They're interested in how systemic power shapes and contours all things and how they're experienced, to which they give a (neo)-Marxist critique.
    Constructivism is a bit less familiar for two reasons:
We've done a lot of explaining and criticising Critical Theory already, so people are catching on, and it's a downright alien intellectual landscape that is almost impossible to believe anyone actually believes.
 
You're already very familiar with the language of constructivism: 'X is a social construct.' Constructivism fundamentally believes that the world is socially constructed. That's a profound claim. So are people as part of the world. That's another profound claim. So is power. I need you to stop thinking you get it and listen now because you're probably already rejecting the idea that anyone can be a constructivist who believes the world is itself socially constructed. That's because you're fundamentally a realist, but they are not realists at all.
    Constructivists believe, as Kincheloe says explicitly, that nothing exists before perception. That means that, to a constructivist, some objective shared reality doesn't exist. To them, there is no reality except the perception of reality, and the perception of reality is constructed by power.
    I need you to stop again because you probably reject getting it again. They really believe this. There is no reality except perceived reality. Reality is perceived according to one's social and political position with respect to prevailing dominant power. Do you understand?
    Constructivism rejects the idea of an objective shared reality that we can observe and draw consistent conclusions about. Conclusions are the result of perceptions and interpretations, which are colored and shaped by dominant power, mostly in getting people to accept that power.
    In place of an objective shared reality we can draw conclusions about, we all inhabit our own 'lived realities' that are shaped by power dynamics that primarily play out on the group level, hence the need for 'social justice' to make power equitable among and across groups.
    Because (critical) constructivist ideologies believe themselves the only way to truly study the effects of systemic dominant power, they have a monopoly on knowing how it works [despite the contradiction in terms], who benefits, and who suffers oppression because of it. Their interpretation is the only game in town.
    All interpretations that disagree with critical constructivism [they insist] do so for one or more bad reasons, for example:
  • not knowing the value of critical constructivism, 
  • being motivated to protect one's power on one or more levels, 
  • prejudice and hate, or
  • having bought the dominant ideology's terms, etc. 
CRITICAL CONSTRUCTIVISM IS PARTICULARLY HOSTILE to 'Western' science, favouring what it calls 'subjugated knowledges. This should all feel very familiar right now [hello Mātauranga Māori], and it's worth noting that Kincheloe is largely credited with starting the idea of 'decolonising' knowledge. 
    Kincheloe, in his own words, explains that critical constructivism is a 'weltanshuuang,' that is, a worldview, based on a 'critical hermeneutical' understanding of experienced reality. This means it intends to interpret everything through critical constructivism.
    In other words, critical constructivism is a hermetically-sealed ideological worldview (a cult worldview) that claims a monopoly on interpretation of the world by virtue of its capacity to call anything that challenges it an unjust application of self-serving dominant power.
    When you are "Woke," you are a critical constructivist, or at least suffer ideological contamination by critical constructivism, whether you know it or not. You believe important aspects of the world are socially (politically) constructed, that power is the main variable, etc.
    More importantly, you believe that perception (of unjust power) combined with (that) interpretation of reality is a more faithful description of reality than empirical fact or logical consistency, which are "reductionist" to critical constructivists.
    This wackadoodle (anti-realist) belief is a consequence of the good-ol' Hegelian/Marxist dialectic that critical constructivism imports wholesale. As Kincheloe explains, his worldview is better because it knows knowledge is both subjective and objective at the same time.
    He phrases it that all knowledge requires interpretation, and that means knowledge is constructed from the known (objective) and the knower (subjective) who knows it. It isn't "knowledge" at all until interpretation is added, and critical constructivist interpretation is best.
    Why is critical constructivist interpretation best? Here comes another standard Marxist trick: because it's the only one (self)-aware of the fact that 'positionality' with respect to power matters, so it's allegedly the only one accounting for dominant power systems at all.

WE COULD GO ON AND on about this, but you hopefully get the idea. Critical constructivism is the real name for 'Woke.' It's a cult-ideological view of the world that cannot be challenged from the outside, only concentrated from within, and it's what you 'wake up' to when Woked. [A different name for 'Critical Constructivism': Cognitive Onanism.]
    Critical constructivism is an insane, self-serving, hermetically sealed cult-ideological worldview and belief system, including a demand to put it into praxis (activism) to recreate the world for the possibility of a 'liberation' it cannot describe, by definition. A disaster.
    There is a long, detailed academic history and pedigree to 'Woke,' though, so don't let people gaslight you into believing it's some right-wing bogeyman no one can even define. It's easily comprehensible despite being almost impossible to grok like an insider.
    People who become 'Woke' (critical constructivists) are in a cult that is necessarily destructive. Why is it necessarily destructive? Because it rejects reality, and attempts instead to understand a 'reality' based in the subjective interpretations of power .....
    Furthermore, its objective is to destroy the only thing it regards as being 'real,' which are the power dynamics it identifies so it can hate them and destroy them. Those are 'socially real' because they are imposed by those with dominant power, who must be disempowered. Simple.

To conclude, Woke is a real thing. It can be explained in great detail as exactly what its critics have been saying about it for years, and those details are all available in straightforward black and white from its creators, if you can just read them and believe them.

 

Friday 17 May 2024

The More Resources We Consume, the More We Have



It seems counterintuitive, but it's true: The freer we are, the more resources we have. And as Marian Tupy points out in this guest post, globalisation supercharges the process of knowledge creation and knowledge dissemination, thereby leading to even greater resource abundance. Humans, he points out, especially those living in the countries on the frontier of innovation, create knowledge that allows us to grow our resources well in excess of the resources that we consume. Turns out that the more we consume, the more we have ...


The More Resources We Consume, the More We Have

by Marian Tupy

It is conventional wisdom that adding billions of people to the global economy must result in increased use and therefore greater scarcity of resources, but that is wrong.

Resources have become significantly cheaper since 1980 relative to wages, thereby becoming much more abundant.

Humans, especially those living in countries on the frontier of innovation, create new knowledge that allows us to grow our resources well beyond our consumption.

Globalisation allows this new knowledge to flow from the countries on the frontier of innovation to the “catch‐​up” nations, leading to improved economic and environmental outcomes worldwide.

Introduction


Common sense dictates that adding billions of people to the global economy—and the subsequent rise in production and consumption—must result in increased use and, therefore, greater scarcity of resources. Many of the academic and nonacademic opinions agree on that point, but they are all mistaken. Relative to wages, resources have grown significantly cheaper since 1980, thereby becoming much more abundant. We thus face a seeming contradiction: the more resources we use, the more we end up with. Resolving that requires us to understand the key role played by the creation of knowledge.

Knowledge possesses a peculiar characteristic: the more knowledge we consume, the more knowledge we have. Furthermore, generation of new knowledge is the exclusive domain of the human mind. So, the more people who inhabit the planet and partake in global exchange, the more knowledge is created. This new knowledge, in turn, expands our resource base. Globalisation—or the process of interaction and integration between people and companies worldwide—supercharges the process of knowledge creation and knowledge dissemination, thereby leading to greater resource abundance.

Empirical Evidence for Falling Resource Prices


The Simon Abundance Index, which I coauthored with Gale L. Pooley, is an annual measure of the relationship between population growth and the abundance of 50 basic commodities, including food, energy, materials, minerals, and metals. The base year of the index is 1980, and the base value of the index is 100 percent. In 2020, the index reached 708.4 percent. In other words, the index rose by 608.4 percentage points over the preceding four decades, implying a compound annual growth rate in resource abundance of around 5 percent and a doubling of global resource abundance every 14 years or so.

The Simon Abundance Index is measured in time prices, or the number of hours that the average worker must work to earn enough money to buy something. To calculate a commodity’s time price, the nominal price of a commodity is divided by the global average nominal wage per hour worked. Between 1980 and 2020, the average nominal price of the 50 commodities rose by 51.9 percent and the global average nominal hourly wage rose by 412.4 percent. So the average time price of the 50 commodities fell by 75.2 percent.

The personal resource abundance multiplier is calculated by dividing the average time price of the 50 commodities in 1980 by the average time price of the 50 commodities in 2020. The multiplier tells us how much more of a resource a person can buy for the same hours of work between two points in time. Pooley and I found that the same hours of work bought one unit in the basket of 50 commodities in 1980 and 4.03 units in the same basket in 2020.

The average worker’s personal resource abundance rose by 303 percent. The compound annual growth rate in personal resource abundance amounted to 3.55 percent, implying that personal resource abundance doubled every 20 years.

Between 1980 and 2020, the average time price of the 50 commodities fell by 75.2 percent and the world’s population increased by 75.8 percent. So, for every 1 percent increase in the world’s population, the average time price of the 50 commodities decreased by almost 1 percent (i.e., −75.2 percent ÷ 75.8 percent = −0.992 percent).

Note that the personal resource abundance analysis looks at resource abundance from the perspective of an individual human being. The question we aim to answer is: How much more abundant have resources become for the average worker?

Population resource abundance analysis, in contrast, allows us to quantify the relationship between global resource abundance and global population growth. You can think of the difference between the two levels of analysis by using a pizza analogy. Personal resource abundance measures the size of a slice of pizza per person. Population resource abundance measures the size of the entire pizza pie.

The population resource abundance multiplier is calculated by multiplying the change in personal resource abundance with the change in global population (i.e., 4.03 × 1.758). The multiplier of 7.08 corresponds to the 708.4 percent increase in the Simon Abundance Index. It indicates an increase in the global resource abundance of 608.4 percent at a compound annual growth rate of around 5 percent. As such, Pooley and I estimate that global resource abundance doubled every 14 years or so.

Finally, let us look at the resource abundance elasticity of population. In economics, elasticity measures one variable’s sensitivity to a change in another variable. If variable x changes by 10 percent, while variable y, because of the change in x, changes by 5 percent, then the elasticity coefficient of x relative to y is 2.0 (i.e., 10 ÷ 5). A coefficient of 2.0 can be interpreted as a 2 percent change in x corresponding to a 1 percent change in y.

Pooley and I found that every 1 percent increase in population corresponded to an increase in personal resource abundance (i.e., the size of the slice of pizza) of 4 percent (i.e., 303 ÷ 75.8). We also found that every 1 percent increase in population corresponded to an increase in population resource abundance (i.e., the size of the pizza pie) of 8.03 percent (608.5 ÷ 75.8).

Knowledge Creation and Resource Expansion


There are several ways in which humans can make resources more abundant. To start, consider the increase of supply. When the price of a commodity increases, people have a monetary incentive to start searching for new sources of that commodity. For example, when the price of petroleum increases, people will look for more oil deposits. Thus, after a century of petroleum use, we have more known reserves of oil than ever before. Moreover, much of the Earth’s crust, not to mention the ocean floor, remains unexplored. The potential for finding much more petroleum when the price of oil is high enough to induce us to dig deeper and explore more exotic locations is very high. The supply of petroleum can also be increased through technological change. Many of the oil fields that were previously deemed exhausted still contain a great deal of oil trapped in underground shale rock. Replacing conventional oil drilling with hydraulic fracturing allows us to get at that oil in an economical way.

Increased efficiency is also important. Efficiency can increase in relative and absolute ways. For example, when the Coca‐​Cola can first appeared on the market in the late 1950s, it contained three ounces of aluminum. Today, it contains half an ounce. Of course, it is possible to decrease the amount of aluminum in each soda can while producing so many cans that the absolute amount of aluminum used increases. Remarkably, Andrew McAfee from the Massachusetts Institute of Technology found that the total amount of resources used by the US economy peaked in the first decade of the new millennium and then started to decline. To be precise, 66 out of 72 resources tracked by the US Geological Survey were “post‐​peak” when McAfee wrote his book More from Less in 2019. In the meantime, the US economy continued to expand. Similar trends could be observed in the United Kingdom and some other advanced economies.

Dematerialisation helps to explain why economic growth and resource use reduction can go hand in hand. Most readers will be familiar with thick blue copper cables that ran from the walls of most hotel rooms in the United States until recently. That cable enabled hotel guests to access the internet—a task that can now be accomplished via Wi‐​Fi. No cables are necessary, and all that saved copper can be used somewhere else. The iPhone is another example of dematerialisation, for it replaces (or substantially decreases the need for) calculators, satellite navigation, watches, torches, radios, compasses, cameras, postal mail, telephones, voice recorders, stereos, alarm clocks, and many other things. In addition to the materials not used in the process of making an iPhone, we must also add the energy not used in the mining of the resources that are no longer needed and in the running of all the separate devices that the iPhone replaces.

New knowledge can also help us create ever more value from the same resource. Around 5,000 years ago, someone in Mesopotamia noticed that when sand is heated to 3,090 degrees Fahrenheit, it melts and turns to glass. Our distant ancestors’ first use of glass was for decorative purposes, such as glass beads. Sometime later, they started to use sand to make glass jars, cups, and, later still, windows. Today, we use glass in fiberoptic cables and microchips. With every step of the way, the value we derived from a grain of sand increased, and no one knows what marvelous innovations will rely on sand in the future. The US economist Thomas Sowell is thus surely correct to observe that 
“the cavemen had the same natural resources at their disposal as we have today, and the difference between their standard of living and ours is a difference between the knowledge they could bring to bear on those resources and the knowledge used today.”
Consider also our ability to turn a previously useless or even harmful resource to our benefit. In the early 20th century, when oil was the primary target of drilling operations, natural gas was often seen as a byproduct with little or no economic value. As such, gas was frequently vented into the atmosphere or flared (burned off), which was wasteful and environmentally harmful. Moreover, natural gas leaks were a significant hazard, particularly in oil fields, where accidental ignitions could lead to explosions. Today in advanced economies, we have the technology to capture, transport, sell, and use gas in great volumes, thereby increasing our resource base and reducing our carbon dioxide emissions into the atmosphere.

Substitution is a crucial economic concept that’s much underappreciated by the public. Generally, we don’t care how we obtain a good or a service, so long as we get it at an acceptable cost. Thus, humans felled forests to get the wood they needed to heat their homes and slaughtered whales to get the lamp oil for illumination. Today, many of us heat and light our homes using electricity derived from a variety of sources, including mostly carbon‐​dioxide‐​free nuclear fission, with the added benefit that both forests and whales have rebounded. Those concerned about resources that are currently in high demand (such as lithium, which is needed to make batteries for electric vehicles) should take substitution into account. No one knows what resources will be needed to make batteries in 50—let alone 100—years’ time. But new technology‐​driven surprises are almost guaranteed.

We can also recycle and reuse our resources. The aforementioned copper internet cables, for example, were almost certainly recycled and turned into something else—perhaps copper pipes used in residential plumbing. The 14,000 tons of US government silver, which was used in electromagnets needed by the Manhattan Project to make atomic bombs, was similarly recovered after the end of World War II and added to the stock of precious metals that propped up the value of the US dollar. The point is that atoms of copper, silver, zinc, and much else are only temporarily assigned to perform a certain task. If necessary, they can be extracted and reassigned to make or do something else.

While humans have explored only a tiny fraction of our planet, it is theoretically possible that at some point in the distant future we could encounter an acute shortage of a resource, such as the very rare rhodium, which is currently used in catalytic converters. Let us further assume that the limits on the natural supply of that metal cannot be overcome via increased efficiency, dematerialisation, substitution, recycling, or anything else.

In such a case, our descendants could turn to transmutation. Transmutation, which was once a province of alchemy, became real in 1919 when scientists turned nitrogen into oxygen. According to an article I coauthored with University of Oxford physicist David Deutsch
“Today, transmutation is everywhere. The smoke detectors in our homes, for example, contain americium—a manmade radioactive metal produced by plutonium’s absorption of neutrons in nuclear reactors. Specialists transmuted lead into gold many years ago—though the process is currently uneconomical, for it requires far too much energy to replace mining.”
The key to transmutation, then, is plentiful, reliable, supercheap energy, which could be provided by, for example, future fusion reactors. Lest we forget, it was via fusion (nucleosynthesis, to be precise) that many of the elements we use on Earth were created in the first place. Incredibly high temperatures and pressures inside different stars transformed lighter elements into heavier ones, and the heavier elements dispersed throughout the universe after supernovae. Some of those elements eventually helped to form our planet and can be mined in Earth’s crust.

By the time humanity needs to resort to such sophisticated measures to increase our resource base, we may well be a spacefaring civilisation, mining the asteroid belt between Mars and Jupiter by ourselves or with the help of AI robots. The belt is rich in resources, including water. Water, which covers 71 percent of our planet, is key, for it contains hydrogen, which also happens to be the most common element in the universe. The Big Bang only created the lightest elements, primarily hydrogen. All other elements are derived from those. A combination of hydrogen and fusion, therefore, could allow us to create everything else we need de novo—indefinitely.

Globalisation, the Spread of Knowledge, and Resource Creation


In the 2021 edition of the Simon Abundance Index, Pooley and I found that the time price of wheat fell by 76.1 percent between 1980 and 2020. That means that for the same number of hours of work that would have bought our worker a pound of wheat in 1980, he or she could have bought 4.18 pounds of wheat in 2020. Resource abundance of the worker rose by 318 percent, growing at a compounded annual rate of 3.64 percent, thereby doubling every 19.4 years. (The COVID-19 pandemic and the Russian war on Ukraine affected these numbers negatively, yet Pooley and I found that the trend still holds in the 2024 edition of the index.)

Over the same period (1980–2020), the world’s population rose from 4.44 billion to 7.82 billion, or by 76 percent. Put differently, for every 1 percent increase in global population, the time price of wheat fell by 1 percent. In addition to population growth, the latest round of globalisation, which is generally taken to have started in 1980, added billions of new workers to the global economic exchange. These factors contributed to a massive increase in resource consumption and output not only in the countries on the frontier of innovation, such as the United States and those in Western Europe, but also in the “catch‐​up” countries, such as Bangladesh, Brazil, China, India, Vietnam, and the nations of the former Eastern bloc. Personal incomes and consumption rose.

Yet wheat, a staple eaten all over the world, became much more abundant. Here the salutary effects of globalisation are easily discernible because several Western companies have been at the forefront of the agricultural revolution that provided technologies, seeds, and farming practices that enhanced wheat productivity in the catch‐​up countries. Consider some real‐​life examples:
  • Syngenta’s disease‐​resistant wheat varieties. Syngenta, a global agribusiness company headquartered in Switzerland, has developed wheat varieties that are resistant to common diseases and pests. For instance, in parts of Africa and Asia, Syngenta’s disease‐​resistant wheat varieties have helped farmers combat issues such as wheat rust, a major threat to wheat crops. These varieties have not only increased yields per acre of land but also ensured more stable wheat production.
  • John Deere’s advanced agricultural machinery. American company John Deere is known for its advanced agricultural machinery. The adoption of this machinery in countries such as India and Ethiopia has revolutionised wheat farming. Mechanised tractors, planters, and harvesters have increased the efficiency of planting and harvesting wheat, leading to higher yields and reduced labor costs.
  • BASF’s agronomic solutions. German chemical company BASF provides various agronomic solutions, including fertilisers and pesticides, which are crucial in wheat cultivation. For example, in countries such as Mexico and Pakistan, the use of BASF’s fertilisers and pesticides has resulted in better wheat crop health and increased yields by controlling pests and enhancing soil fertility.
  • Bayer’s crop science innovations. Bayer, following its acquisition of Monsanto, has become a key player in agricultural technologies. The company’s development of integrated crop solutions, including advanced seed treatments and chemical products, has improved wheat yields. For example, in Brazil and parts of Africa, Bayer’s products have helped farmers grow wheat more efficiently, even under challenging climatic conditions.
  • DuPont’s hybrid wheat seeds. DuPont (now part of Corteva Agriscience after a merger with the Dow Chemical Company) has developed hybrid wheat seeds that are tailored to specific climatic and soil conditions. These seeds have been particularly effective in Eastern Europe and parts of Asia, where they have helped boost wheat yields through improved disease resistance and stress tolerance.
  • CIMMYT’s collaboration with Western companies. The International Maize and Wheat Improvement Center (CIMMYT), though not a commercial entity, collaborates with Western companies to develop high‐​yielding wheat varieties. CIMMYT’s work in countries such as Kenya and India, often in partnership with Western agricultural companies, has led to the introduction of wheat varieties that are well‐​suited to local conditions, resulting in significant yield improvements.
The results of the spread of information and technologies from the countries on the frontier of innovation to the catch‐​up countries are readily discernible. In 1980, wheat productivity measured in 100 grams per hectare was lower, sometimes substantially, in the catch‐​up countries relative to the United States and Western Europe. By 2020, some had overtaken the United States, while all of them, including the United States, remained less productive relative to Western Europe. Still, all the selected catch‐​up countries experienced greater productivity gains than the United States and Western Europe between 1980 and 2020.

Environmental Benefit


The period of globalisation saw absolute poverty (the threshold of which is considered to be earning wages of $2.15 or less per day) measured in 2017 dollars adjusted for purchasing power parity decline from 43.8 percent in 1981 to 8.9 percent in 2019. Concomitantly, the calorie supply per person rose from 2,497 in 1981 to 2,928 in 2018, or by 17 percent. In Africa, the world’s poorest continent, the calorie supply per person rose from 2,238 to 2,604, or by 16 percent, over the same period. That’s higher than the Portuguese calorie supply in the early 1960s. This trend is likely going to improve in the future, raising the obvious question: What will happen to the animal and plant habitats as humans strive to produce more food and other resources? The answer is once again counterintuitive.

Writing about US corn production in 2015, Jesse H. Ausubel, an environmental scientist at the Rockefeller University, said, 
“The average yield of American farmers is nowhere near a ceiling. In 2013, David Hula, a farmer in Virginia, grew a US and probably world record: 454 bushels of corn per acre—three times the average yield in Iowa.… In 2014, Hula’s harvest rose 5 percent higher to 476 bushels, while Randy Dowdy, who farms near Valdosta, Georgia, busted the 500‐​bushel wall with a yield of 503 bushels per acre and won the National Corn Growers Contest. ... If we keep lifting average yields toward the demonstrated levels of David Hula and Randy Dowdy … then an area the size of India or of the United States east of the Mississippi could be released globally from agriculture over the next 50 years or so.”
A similar story can also be told of wheat, rice, barley, potatoes, casava, beans, and other crops. There is no obvious limit on our ability to produce ever more staples per hectare, thus returning ever larger chunks of the planet back to nature, except for the generation of knowledge and its dissemination to (and acceptance in) the least developed corners of the world. Whether lab‐​grown meat can alleviate the environmental footprint of cattle, chicken, and pig farming is still an open question. At present, the knowledge to make lab‐​grown meat economical does not exist. But knowledge is not stagnant. It grows, and those who are betting against lab‐​grown meats may yet lose their shirts. Finally, the exploitation of raw materials has grown much cleaner in recent decades, a trend that’s likely to continue as nations develop and, per the environmental Kuznets curve, place greater emphasis on environmental quality.

Conclusion


Humans, especially those living in the countries on the frontier of innovation, create knowledge that allows us to grow our resources well in excess of the resources that we consume. Consequently, resources have grown much cheaper relative to wages and, therefore, more abundant. In terms of overall human well‐​being, however, it is globalisation that allows the new knowledge to flow from the countries on the frontier of innovation to the catch‐​up nations. Finally, the planet and its biosphere benefit as catch‐​up nations adopt best practices and begin to approximate the care for the environment that’s characteristic of innovative societies.

* * * * 

Marian L. Tupy is a senior fellow at the Cato Institute’s Center for Global Liberty and Prosperity, coauthor of the Simon Abundance Index, and editor of the website HumanProgress.org.

First published at the Cato at Liberty blog, part of their series Defending Globalisation.

Thursday 16 May 2024

" The 'vision' seems to be to catch Australia. Wouldn’t that be great?"


"[T]he Prime Minister announce[d] a bold new economic performance goal. ... His 'vision' seems to be that economic growth in New Zealand over the next 16 years will be so strong that we’ll have matched – perhaps even exceeded – what is on offer abroad. .... The 'vision' seems to be to catch Australia.
    "Wouldn’t that be great? ...
    "[Luxon] ... reminded us of his firm focus ('resolutely and unapologetically') on 'delivery.'
"So having set out a bold vision what is the Prime Minister offering as a policy programme to achieve it? It isn’t, after all, a small ambition. ...
    "The Prime Minister does lay out some substance on the [first-hundred] days [etc.] ... but to a first approximation what it mostly does is undo stuff the previous government did and restore something like the policy set of 2017. ... [but] we weren’t making any progress then either in closing gaps to the rest of the advanced world ...
    "[I]t is welcome, and sounds good, but…..we’ve heard lines about fixing the RMA before, including from the previous National government.
    "And that was sort of the problem with the entire economic strand of [the PM's] vision. It brought to mind ... [John Key's] 'concrete goal' [in 2008] of closing the income gap with Australia by 2025.' ... [I]t all made no difference whatsoever. ... the goal ... would have greatly benefited New Zealanders had it been seriously pursued. It wasn’t. ...
    "[T]here ha[s] been a lot of talk over the years. ... Who knows if Mr Luxon is any more serious about his 'vision' – laudable on its own terms – than John Key was about the 2025 goal. ... but Key and his government did nothing even close to being equal to the task to make it happen. There seems little basis – whether in [Luxon]’s speech, his campaigning last year, or anything about what his government is and isn’t doing now – for believing it will be any different this time. ...
    "It would be great to be proved wrong on that, because the people who pay the price of empty political aspirational rhetoric never matched by policy seriously equal to the task aren’t Prime Ministers, who eventually move on to gilded retirements, but the children and grandchildren of ordinary New Zealanders.
    "If, as he should be, the Prime Minister is serious about that aspiration of New Zealanders (net) coming home not just because mountains and beaches make it a nice place for many to live, but because economic performance means you don’t have to leave for a higher income, the concrete policies need to start matching the rhetoric.
    "In the PM’s own words, delivery matters."
~ Michael Reddell from his post 'Words and (in)actions'

 

Will Te Huia become extinct today?


Te Huia is the occasional train between a Hamilton suburb and an Auckland one. Today the future of Te Huia is being decided by people who don't use it, on behalf (we hope) of people who are paying for it. (At the rate of $92 per passenger.)

I like trains. I like using them. But using Te Huia is hard work.

Let me demonstrate the problem: It's like it's been designed by people who don't use trains.

First, let's say I've had a meeting in Hamilton (which happens more than you'd think).

Let's say my meeting is in central Hamilton, at the Ibis Tanui overlooking the river, say, where you can watch the river flow and the trains come past. After which I'm coming back to my office in Newmarket.

Here's the first problem: those trains coming past me don't stop in central Hamilton. They keep going. Hamilton's railway station is 19-30 minutes from central Hamilton by bus. And because no bus goes from central Hamilton directly to the railway station (I know, right?), there's no way to avoid a walk of at least ten to fifteen minutes.



Like I say, it's like it's been designed by people who don't use trains. So I'll get a lift to Frankton Railway Station. (Thank you.) And then I have to work out how to buy a ticket. (Turns out there's no way to buy one on the platform.)

Second, problem of course, is getting the damned train. 'Cos there's only two per day (or three on Thursdays and Fridays, none on Sundays). So most recommendations by Mrs Google recommend the bus (which will get me to my office in Newmarket, by bus from Hamilton and then train from Papakura) in 2 hours and 23 minutes. Or car (which gets me there between 1 hour 30 and 2 hours 20).


But let's say I'm keen. Keen for a train trip. So keen I time my trip to coincide with the few daily trips of the mighty Te Huia. That trip on at that train is going to take me 3 hours and 22 minutes. Virtually a whole hour longer than the bus just for the sake of going by train!


Sure, it's a pleasant trip — partly because the train is mostly empty. And the scenery is pleasant. And it only stops a few times, for no particular reason, so we get to enjoy it all the more. And if you get yourself a seat with a table you can work on your computer on the way. But that's not really commuter travel is it.

It gets worse if you want to go anywhere near central Auckland. Which brings us to the third problem. Te Huia doesn't roll splendidly into downtown Auckland, with cafes, galleries, bars and plenty of transport connections on offer. Instead it rolls into an abandoned carpark in Parnell.

Let's say my meeting in Hamilton went so well that I want to head home, skip the office and finish the day in my favourite local bar. That calls for 39 minutes of walking in a 3 hour 42 minute journey! I'd leave central Hamilton at 1:35pm, and I wouldn't be getting to the Northern Line Bar in Beresford Square until around 5:15! (I'd sure as hell be out of my brain on that 5:15!!)


You can see the problem. Te Huia doesn't leave anywhere near central Hamilton, and nor does it arrive anywhere near central Auckland. It arrives at that car park in The Strand, Parnell, with few connecting buses. (And the day I arrived the one bus made sure it had left before the train arrived.) So, just like the other end, most people are getting picked up and dropped off by car. 

It's like travelling NZ Rail back in the bad old days.


Did I say that Te Huia seems to have been designed and put together by people who don't use public transport?

It's like they didn't want it to work. It is, after all, named after a bird that is long extinct.

Q: "How does the same mind hold, 'Nothing is certain' and ' Climate catastrophe is certain'?"


"We constantly hear that man can know nothing for certain, that truth is relative to the individual, that observations are 'theory-laden' so cannot claim to be objective, that no scientific claim can be proved true, that we can say only it hasn’t been refuted by the data so far. At the same time and from the same people, we hear that catastrophic climate change is beyond doubt, that those who question it are 'deniers' who should be kicked out of any position of consequence.
    "How does the same mind hold, 'Nothing is certain' and ' Climate catastrophe is certain'?"

~ Harry Binswanger on 'Unnoticed Contradictions'

Wednesday 15 May 2024

"...*if* Mr Bishop delivers on his promise."


"Far too many New Zealanders already suffer from serious financial stress because of the ridiculous price of houses. The problem is only going to get worse unless the Government delivers on the promise made by the Minister of Housing, Chris Bishop, who, in a major speech near the end of February, said the Government is aiming to get house prices back to where the median house price is between three and five times the median household income. To protect himself from the anger of thousands of property-owning voters, he did say that that was his ambition over the next 'ten to twenty years,' but if he is at all serious New Zealanders better get used to the idea that house prices will not be rising steadily year after year into the indefinite future.
    "Increasingly, as houses get older and in need of repair, and if the market is working as it should do, they will sell for less than they cost to buy.
    "But what about the land they sit on? Surely that won’t decline in value? Certainly there will always be land which has special appeal: that will quite likely rise in value faster than other prices and faster than incomes. But given New Zealand has a great abundance of land, section prices should be nowhere near where they are currently in most of our cities. That implies that section prices are likely to stagnate or decline from present levels if Mr Bishop delivers on his promise. [Yes, "if" - Ed.]
    "In an earlier article I quoted the case of a 455 square-metre bare section on sale in Drury – nearly 40 kilometres from downtown Auckland – for $842,000 including GST, or $1,850 per square metre. This is more than 10 times the average price per square-metre of sections in the US. This difference is caused primarily by the tight restrictions imposed by local governments on where houses are allowed to be built.
    "Those who demand that housing be confined within tightly prescribed urban boundaries – as is true in all our major cities – must be told again and again that they and they alone are primarily responsible for the appalling social costs arising from the outrageous price of housing in New Zealand’s major cities."

~ former Reserve Bank governor Don Brash from his post 'Perhaps house prices don’t always go up'


HOUSING: "What regulation has ruined, deregulation can repair."




"Government regulation has raised housing prices far above the physical cost of land and construction.
    "And what regulation has ruined, deregulation can repair.
    "It's tempting to look at America's [and New Zealand's!] most expensive addresses and repeat the top three principles of real estate: 'location, location, location.' But this glosses over the artificiality of today's locational scarcity. Since the dawn of the skyscraper [or even just of the Georgian terrace house or Manhattan brownstone], technology has allowed vast populations to simultaneously enjoy the world's top locations. The government response, in turn, has been to make building skyscrapers [or terrace houses] in desirable places nearly legally impossible.
    "Indeed, U.S. [and New Zealand] regulators view almost all multifamily housing with deep suspicion. That's why they zone a supermajority of residential land for single-family homes. [See Auckland council for example.] But even the single-family supply is heavily restricted, because governments routinely set high minimum lot sizes to force builders to waste most of their land. Physically fitting six mansions on an acre is easy, but legally you're lucky [in some areas] to get a green light for one.
    "Averaging over the whole U.S., a conservative estimate is that regulation has doubled the price of housing. [No reason to think it's any less here — and given the outrageous price of building materials here, is more likely much more!] It's much worse in places like the Bay Area and Manhattan, and a minor issue in the countryside. But as a recent paper by Gyourko and Krimmel shows, regulation raises prices almost everywhere that lots of people actually want to reside.... As a matter of arithmetic, then, halving the price of housing would [at minimum] cut the cost of living by 10%, raising the standard of living by 11%. (As you may recall, 1.0/.9≈1.11).

    "Even better, deregulation will deliver these gains beyond a reasonable doubt. Laissez-faire in housing is not a futurist Libertopia. A hundred years ago, U.S. housing markets were close to laissez-faire [as they were here in NZ before the first Town Planning Act in 1928], and the least-regulated regions of the U.S. are still close to laissez-faire. Furthermore, we don't have to blithely assume vigorous competition will arise, because vigorous competition in the construction industry already exists. The total number of builders is immense, and even in our regulated world, many are champing at the bit to expand.
    "Indeed, the construction industry could revolutionise our lives for the better if it simply were free to deploy the technology of a century ago! Work on the Empire State Building started in 1930, and was complete just 410 days later. [Likewise, work on Auckland's Grafton Bridge, the longest reinforced concrete-arch span in the world at the time, started in 1908 and was completed just over a year later!] Imagine what industry would accomplish if we combined the light regulation of the past with the advanced technology of the present.
    "Almost all political thinkers like to keep up with the news cycle — to talk about the latest, most salacious topics. I've indulged this temptation myself more than once. But if your worldview has merit, you can do so much better than opine on the scandal of the century of the week. Housing deregulation realistically promises to enrich humanity by trillions of dollars. And all government has to do to make this happen is stop preventing it."
~ Bryan Caplan, from his article 'Trillions' — promoting his new 'graphic novel' Build, Baby, Build

Tuesday 14 May 2024

"You're free to build, but ..."

 


The National-led Coalition boasts that it will "fix housing" by bringing in rules requiring councils to zone enough land* on which land-owners are free to build sufficient housing to allow for the next thirty years of demand.**

Doesn't that sound great, you think. "Free to build," you say! 

The National-led coalition's housing honchos are either stupid, naive, or they think that we are.

As should have been obvious from Auckland council's passive-aggressive resistance to government diktats on the Medium-Density Residential Standards (MDRS), telling councils to "free up land" only works if councils are so inclined. If they are already so inclined, ministers wouldn't need to tell them. And if they aren't so inclined then, well, as Bryan Caplan points out in his new "graphic novel" Build, Baby, Build: The Science and Ethics of Housing Regulation, councils can hinder construction in dozens of other ways ... if it's so inclined. (And it is.)

For starters it could ...

Go tell Minister Bishop. (Or send him a copy of Bryan's book.)

* * * * 

* Zoning is a restriction on land telling owners that the planners know better than the owner (and would-be buyers) what should go there. How is it a restriction, you ask? If the planners' zone allows what the owner would do anyway, it's not needed. If it disallows it, it's not wanted.

** This presumes that the grey ones would even know, to any standard of meaningful proof, what demand would look like over the next thirty years. I mean, it's not like there's any thirty-year stretch in recent history they could point to and say "look, we got it right."

Monday 13 May 2024

"Debt is tax."


"There is no point reducing taxation if spending remains unchanged. It is government spending that takes goods and services out of the community, not the means by which Wellington pays for it.
    "Debt is tax."

~ Damien Grant from his column 'Nicola Willis isn’t going to balance the books by culling a few tea ladies'

"How did Hipkins, Ardern and Robertson manage to make Kiwis less productive over the six years they were in office?"

 

SOURCE: Productivity figures, NZ Treasury, The blue line comes from
the Treasury's Productivity Slowdown publication released this past
week, which uses updates from the latest Budget Policy Statement 2024.

"How did Hipkins, Ardern and Robertson manage to make Kiwis less productive over the six years they were in office? My suspicion is that they changed our culture. They divided the nation. They turned rich against poor, farmers against environmentalists, pro-vaccinators against anti-vaccinators. Neither of these sides ever deserved to be demonised. Yet that is what the past Labour government did. It took away the largely harmonious nature our society, which was one of NZ's great achievements & which had previously lifted us above the troubles of nearly every other nation. We lost our comparative advantage. Ironically, though 'kindness' was the mantra of the last government, it turned Kiwis mean. It rewarded people who had not put in the effort and did not have the achievements required to make them deserving of high office and top jobs. In doing so, it took away the reward for truly high-achieving NZ children, which made them feel they had to go overseas to be recognised for their talents, or drop-out.
    "My explanation for our currently plummeting productivity lies in a culture shift which has undermined out national unity and taken away the incentives to perform. Ardern, Robertson and Hipkins took away our pride in ourselves."

Saturday 11 May 2024

MILEI EXPLAINS: 21 Quotes to explain prosperity and economic freedom



Why is Argentina leading the world? Because, says its president, "while in the rest of the world the ideas of freedom are under siege, in Argentina there is a renewed faith in them.... " Here in twenty-one quotes (courtesy of @MileiExpains) Argentine president Javier Milei explains how the West got rich — and why you should care...
"The West is in danger.
    "It is in danger because its leaders long ago moved away from the ideas of freedom. Ideas that made the West the most important civilisational achievement in the history of mankind. And instead of defending the ideas that generated the prosperity that everyone here enjoys, they listen to siren songs that lead inexorably to socialism, and consequently to poverty."

"In some sense, we Argentines are prophets of an apocalyptic future, which we have already lived. All those discussions of today, based on supposedly well thought out desires of wanting to help our fellow man, based on an erroneous idea about the nature and function of the State, sustained by economic theories that have been long refuted by data and empirical evidence, we Argentines lived them 100 years ago, and unfortunately applying those ideas have led us to ruin."


"Since the 19th century, and as a result of the industrial revolution, the GDP per capita not only increased but did so exponentially. In the last 150 years it multiplied by 15, generating an explosion of wealth that lifted 90 percent of the world's population out of poverty, reaching the point that by the year 2020 only 5 percent of the global population lived in extreme poverty."

"Far from being the cause of our problems, free enterprise capitalism as an economic system is the best tool we as a species have known to end hunger, poverty, and extreme poverty across the globe."


"While the success of capitalism is easy to demonstrate, what is not so accessible to many is the counterfactual, where the systematic choice of a collectivist model leads. As I said before, perhaps the best example is the Argentinean example. Our entire history is a testimony of what can happen when the model of freedom is abandoned and replaced by collectivist experiments."

"Since 1949 the monetary base in the United States has multiplied 16 times, while in Argentina the figure multiplied the astronomical number of 25,000 trillions times. Yeah, it is a real number. I'm not making it up.
    "I repeat it, the monetary base expanded 25,000 trillion times. That is the level of disaster that politicians can produce if they are allowed to deviate from the basic principles of the market economy."

"Those who lead the West have forgotten an elementary truth, and it is the moral responsibility of those of us who still remember it to defend and declaim it. And that inescapable truth is that economic freedom, in pursuit of individual interest, produces collective benefits, and therefore the entrepreneur who risks capital in pursuit of profit is a social benefactor."

"Those who lead the major nations and organisations in the West do not give enough credit to this idea and look at the economy from a theoretical framework that believes the market is imperfect, that it produces failures, and that it requires state intervention to perfect it. The problem with this conception is that it justifies interventions that bring more problems than benefits and undermine economic growth."

"The market, presupposing free competition and a system of free prices with clear signals, constitutes a mechanism for the extraction and transmission of information in which the greater the freedom the better is the performance. In other words, the free market is a process of discovery in which the capitalist finds, on the fly, the right course of action in a constant search for profit, and that translates into offering goods of better quality at the best prices."

"Those who insist with interventionism not only impede the virtuous functioning of the market, but on top of that they congratulate themselves and exchange medals of social responsibility in pompous ceremonies, while they end up promoting an agenda of values that opens the door little by little to socialism and consequently to misery."

"I do believe that the private sector has a very clear mandate of social responsibility, but it has nothing to do with being moralistic or guilty. The true social responsibility of the entrepreneur is a natural effect of the free functioning of his own economic activity. The mandate is to produce goods and services of better quality at the best price, linked to the maximisation of profits. The social responsibility of the entrepreneur is to make money, and he can only do that by serving his fellow man with better quality goods at a better price."

"Entrepreneurs are social benefactors, far from the criticisms usually made of them by spendthrift and profligate politicians."

"Since free markets have existed we have crossed frontier after frontier. We have lifted the whole world out of poverty in 250 years. We have put men on the moon and now we are looking at Mars. And we have done it because of the ambition, creativity and optimism of men like you who partner with each other in pursuit of your happiness."

"We must not lose faith in that primal ambition that we humans have as our guide. We are a species of explorers, of creators, of inventors, not bureaucrats. And it is the adventurous entrepreneur, not the desk bureaucrat, the kind of man who embodies in the present this timeless quality of the human spirit."

"I look at Argentina with all the changes we are undertaking and I see that we are going in the opposite direction that the rest of the world, because while in the rest of the world the ideas of freedom are under siege, in Argentina there is a renewed faith in them."

"While the West turns towards control and imposition, Argentina turns towards trusting its citizens in the exercise of their freedom. While the West turns towards deficit, bureaucracy and the intrusive State, Argentina turns towards austerity, towards savings, and to retire the State from the economic activity. While the West turns towards economic shamanism and unsustainable formats of heterodoxy that endanger the future of all, Argentina returns to the path of reason, to the ideas of common sense."

"Our goal is to give back to the Argentines every peso we save, first by eliminating inflation and then, in the future, by reducing taxes as a consequence of economic growth. And we have as our north, to dismantle the tangle of regulations that Argentina has become, in order to free economic activity and unleash its productive force."

"For us, the only task of the State is to protect the life, liberty and property of Argentines, so that each one can be the architect of his own destiny. This is our vision. It is a vision similar to the one held by all the prosperous countries of the West in the great moments of their history. The task of the State is not to put invented money in people's pockets, but to ensure the macroeconomic and legal conditions so that the private sector can develop on its own."

"I want to conclude these words by inviting everyone here, who are the heroes of the history of the progress of humanity... If you believe as I do in the superiority of free enterprise capitalism. If you believe as I do that the West is walking to a slow but sure retreat. If you believe as I do that merit, ambition, freedom and innovation and optimism are essential values of the human species that should be rewarded. I would like to invite you to bet on Argentina, to help me, you who are human progress personified, to make Argentina the new Rome of the 21st century."

"It is you who can prove to the bureaucrats of the world that they are destroying the West, that the ideas of freedom are the only way to achieve prosperity."

"Let us once again embrace the ideas of freedom with pride, let us be proud to be entrepreneurs, proud to be businessmen, because they are the true social benefactors, they are the ones who create wealth, they are the ones who have taken the world out of misery. To finish, I also ask you to accompany us, the Argentines, in this rebirth of the West."


Friday 10 May 2024

"The point, today, is that we must reject the categorical 'coloniser' argument. With mockery, whenever possible."


"Humans have always moved around, and humans have always fought over patches of land. I've written in the past about 'snapshot geography,' a phrase coined by Jonah Goldberg that explains how people select a particular moment in time as their determinant of who is the proper owner of a particular patch. Those who drop the 'coloniser' truth-bomb almost invariably base their snapshot on skin colour, no matter that doing so may lump bitter enemies into a single group....
    "The point, today, is that we must reject the categorical 'coloniser' argument. With mockery, whenever possible. It's a fraudulent assertion that relies on the very racism and bigotries that its users claim to be fighting."

~ Peter Venetoklis, from his post 'Selective Colonisers' [hat tip Louise Lamontagne]

 

MMT and Boiling Frogs

 


MMT = Modern Monetary Theory, aka Marxist Monetary Theory. It's the ancient idea, now promoted by modern-day empty heads, that you can get something for nothing — in its MMT guise it's the notion that its power to print dollar bills gives governments a horn of plenty from which to buy votes. In this guest post Jonathan Newman explains to MMT promoter Stephanie Kelton that despite her earnest wishing to the contrary, money still doesn't grow on trees ...

MMT and Boiling Frogs

by Jonathan Newman

“Why do we borrow our own currency in the first place?”

MMT promoter Stephanie Kelton poses this question in her new documentary Finding the Money, and a clip of Jared Berstein’s fumbled response to the question has gone viral on social media. Bernstein is the Chair of the Council of Economic Advisers to Biden, and so we would expect that he would have an articulate answer to Kelton’s question. He didn't.

Instead of trying to parse his response or explain why he fumbled, I want to provide an answer: the State borrows to expropriate real resources from the private, productive part of society.


When I made this claim on Twitter, one MMTer responded (somewhat) approvingly: “We all agree on this part. The question is how they do it and what the effect is. MMT gets that part right [and] Austrians get it wrong.”

So let me go into a bit more detail. The reason the State borrows money (money that it also has the power to tax and print) is so that it can balance the negative political consequences of its various methods of expropriation.

Murray Rothbard would take issue with the original question as soon as the third word, “we,” is uttered:
The useful collective term “we” has enabled an ideological camouflage to be thrown over the reality of political life. If “we are the government,” then anything a government does to an individual is not only just and untyrannical but also “voluntary” on the part of the individual concerned. If the government has incurred a huge public debt which must be paid by taxing one group for the benefit of another, this reality of burden is obscured by saying that “we owe it to ourselves.” (Anatomy of the State, p. 10)
Rothbard was responding to those who downplay the burden of government debt by over-aggregating the groups of winners and losers into one “we.” MMTers, on the other hand, go many strides further by claiming that public debt isn’t a burden at all. For them, public debt is private savings—they literally flip public debts and deficits upside down.


While they describe their framework as providing the “full picture” of government finance, they do not proceed in their analysis (at least not in sufficient detail) by asking what happens when the government pays the people holding the bonds. The money used to pay back the bondholder ultimately comes from taxing and printing, both of which involve expropriation from the private sector.

So MMT’s public-debt-as-private-savings falls apart with just one additional step of analysis. The closest Kelton gets to this insight in her book The Deficit Myth, is this: “In truth, paying interest on government bonds is no more difficult than processing any other payment. To pay the interest, the Federal Reserve simply credits the appropriate bank account.” Later, she describes that the only potential constraint is price inflation: “Every dollar that is paid in the form of interest becomes income to bondholders. If those interest payments become too large, the risk is that total spending could push the economy above its speed limit.”

And that’s the end of it. 

Paying bondholders might have negative consequences in the form of excessive price inflation. 

MMTers don’t connect debt service to their prior claims that public debt is actually private savings because it negates the alleged aggregate benefits of government bonds held by the public. Paying bondholders requires an expropriation from the productive part of society in the form of either taxes or diminished purchasing power, which means that in the aggregate public debt is not private savings.

They employ an individual bondholder’s perspective when it suits them, and employ an aggregate perspective when it suits them. They see, correctly, that holding a bond means that you can receive payments from Uncle Sam in the future, but then gloss over the costs of Uncle Sam servicing this debt. It’s a perfect example of a violation of what Henry Hazlitt described in 1946 as the art of economics: “The art of economics consists in looking not merely at the immediate hut at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

In his seminal book Economics in One Lesson, Hazlitt relied on the work of Frédéric Bastiat from 1850. Despite its name, Modern Monetary Theory is full of old errors. The only thing new about it is the jargon they use to do something people have been doing for millennia: disguise the true costs of government expropriation.

Since the State has nothing and produces nothing, everything it does involves expropriation and distortion. The reason it employs a variety of methods of expropriation is because each one has negative political consequences. If any one method is employed “too much,” the politicians and bureaucrats who wield that particular weapon get blamed and can lose their position. Using one particular weapon “too much” makes the State’s expropriation obvious and risks revolt in either soft or hard forms.

Heavy taxation is unpopular. High interest rates are unpopular. Price inflation is unpopular. But if the State can blend taxing, borrowing, and printing in just the right amounts, then they can boil the frogs without them jumping out of the pot.

This insight reveals something about MMT. As much as its proponents brandish accounting tautologies and purely descriptive claims about government finance, in the end it is 100% political. Their framework is about giving the State maximum power—power to expropriate and power to override what would prevail in unhampered markets. This is on full display in their writings and in their new film. They want to revolutionise the way politicians and voters view money and debt for the sake of their progressive agenda. When it comes to climate change, inequality, healthcare for all, and all the other 'Green New Deal' issues, they want a world in which nobody asks about the costs.

* * * * * 

Dr. Jonathan Newman earned his PhD at Auburn University while a Research Fellow at the Mises Institute. He was the recipient of the 2021 Gary G. Schlarbaum Award to a Promising Young Scholar for Excellence in Research and Teaching. Previously, he was Associate Professor of Economics and Finance at Bryan College. He has published in the Quarterly Journal of Austrian Economics and in volumes edited by Matthew McCaffrey and Per Bylund. His research focuses on Austrian economics, inflation and business cycles, and the history of economic thought. He has taught courses on Macroeconomics and Quantitative Economics: Uses and Limitations in the Mises Graduate School. He is the author of two children’s books: The Broken Window and Ludwig the Builder. 
His post first appeared at the Mises Wire.

Thursday 9 May 2024

How many journalists understand the 'Gell-Mann Amnesia Effect'?



"Media carries with it a credibility that is totally undeserved. You have all experienced this, in what I call the Murray Gell-Mann Amnesia effect. ...
    "Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the 'wet streets cause rain' stories. Paper’s full of them.
    "In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know."
    "That is the Gell-Mann Amnesia effect. I'd point out it does not operate in other arenas of life. In ordinary life, if somebody consistently exaggerates or lies to you, you soon discount everything they say. In court, there is the legal doctrine of falsus in uno, falsus in omnibus, which means untruthful in one part, untruthful in all. But when it comes to the media, we believe against evidence that it is probably worth our time to read other parts of the paper. When, in fact, it almost certainly isn't. The only possible explanation for our behavior is amnesia."
~ author Michael Crichton, from his 2002 talk 'Why Speculate?'