Thursday, March 05, 2015

"The Crisis in Energy Education"

Alex Epstein writes:

There is a dangerous lack of energy education…. In particular, there is a lack of education about the indispensable benefits provided by fossil fuels. What are the consequences of this, and how do we fix it? That's the topic of my latest Forbes column, "The Crisis in Energy Education":

        The fossil fuel industry, as the leading and most misunderstood energy industry, has an obligation
        and self-interest in educating its employees and the public about energy, yet does a miserable job at it.

From kindergarten through high school through Ph.D. programs, all of us are taught that fossil fuel use is fundamentally immoral—a self-destructive addiction that’s destroying our planet, or at best a necessary evil that we have to get rid of as soon as possible, even if that (unfortunately) means a few more decades. [...] Where are we taught that fossil fuels are not a self-destructive addiction to get off of, but a healthy choice that billions of people need more of?

As a culture, almost nowhere.

Read More.

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A Bearish Nightmare…

Guest post by Bill Bonner

Rubber_band_walletDear Diary,

US stocks fell yesterday. The Dow dropped 85 points, or 0.5%. No biggie.

The biggie is still ahead…

Our guess is the smart money is selling to the dumb money. The people who take the trouble to figure out what something is really worth are unloading. People who just think they should be “in the stock market” are buying.

The “big three” US stock market benchmarks – the S&P 500, the Dow and the Nasdaq – are at near record levels.

Why? Because they represent good value for money? Or because they are propped up by near-zero interest rates and a flood of QE liquidity, now coming from Japan and Europe?

Don’t forget: Global growth is slowing. US corporate earnings are falling. Europe is in danger of coming unstuck in June, when the Greeks have to face up to making a big payment on their debt. And China looks more and more like a massive case of malinvestment on the verge of going bad.

A Time for Modesty

Economic researcher Chris Martenson recently interviewed former investment banker and broker Grant Williams of the Things That Make You Go Hmmm blog for some insight:

We don’t know how it will end, but something has to give. It’s a question of what it will be. Because when you start playing with the forces of nature, you can suppress them for a while, but they will eventually overwhelm you. We’ve seen this constantly throughout history.
   
Stocks can… and will… fall. They always do.

And newsletter veteran Richard Russell, of Dow Theory Letters, gives more detail:

Many an investor will be wiped out if he insists on waiting to find out if the bull market has topped out in hindsight. The way around this is to limit yourself to conservative positions in the market.
   
The bearish nightmare could be as follows: One day the market opens with the Dow gapping down 1,000 points. The exchange decides to close for three days. Bearish rumours and fantasies flood the media.
   
With the market closed, there is no liquidity, and stockholders are locked into positions that are unknown in terms of what their positions are worth. Fear takes over, and when the market opens again, it gaps down in an erratic series of crashes.
   
This is a bearish scenario but one that has occurred to me. It also makes the case for subscribers holding very conservative positions in stocks or ETFs. This is not a time for genius. It’s a time for modesty, small or no positions in stocks, and peace of mind.

When the crash comes, everybody rushes for the door. The sellers are all there. But where are the buyers?

They disappear.

The other thing that disappears is credit… then cash.

The Fed Is Not “Printing Money”

One of the great mysteries of the post-crisis world is why consumer prices have failed to take off. After all, the Fed was “printing money” by the trillions.

According to classic theory, a larger volume of money should lead to higher consumer prices.

It took a long time for us to figure it out: The Fed is not “printing money” at all. It is lowering the cost of credit.

ZIRP (zero-interest-rate policy) and QE (quantitative easing) accomplish the same thing by different means. They make credit – and speculation – cheaper by lowering borrowing costs [and producing counterfeit capital].

Since 1971, cash and credit have been indistinguishable. You can buy a steak dinner with a credit card or with cash. And as long as credit continues to expand, your credit card will be as good as cash.

Adding credit to the system, rather than cash, is how Wall Street got rich. It sold credit!

And it is why the rich got richer, too: They were creditworthy! They could take the Fed’s cheap credit and bid for stocks and bonds – driving up asset prices.

All the plain people could do was to borrow money to buy a car or, if they couldn’t find a job, get a student loan.

They could go deeper into debt. But they couldn’t benefit from the rise in asset prices – because they didn’t have any assets. The top 5% of the population owns 75% of financial assets. The bottom 80% owns less than 5%.

Free Fall

But there’s one big difference between cash and credit: In a crisis, credit collapses.

Cash – even cash backed by nothing – nevertheless has a physical, tangible presence. If the stock market gets cut in half, those Jacksons and Lincolns are still there. You can still use them to buy beer and cigarettes.

But what happens in a real credit crisis? What happened in 2008? Every bank on Wall Street would have gone broke had the feds not intervened so vigorously.

Credit works on trust. A friend had a huge line of credit at Lehman Brothers in 2008. In 2009 he was out of business; his credit had vanished.

Now, imagine the next crisis. We’ve already seen what happened to dot-coms, housing and energy. What would happen if all asset classes were affected at once?

The collateral of the banking industry would fall. The banks would look at each other and wonder whose credit was still good. Merchants would look at your credit card and wonder if its issuer was still in business. House sellers would check your mortgage company to see if it was still solvent.

Trust would disappear. And along with it, credit. The economy would go into free fall.

Then the big surprise: Instead of the inflation or hyperinflation that we expected, suddenly the dollar – the almighty dollar… the old-fashioned, paper, greenback buck – would become more valuable.

That is not the end of the story. It is just the beginning.

Stay tuned…
Regards,
Bill


imageBill Bonner is an American author of books and articles on economic and financial subjects, the founder and president of Agora Publishing, co-founder and regular contributor to The Daily Reckoning, and author of a daily financial column,Diary of a Rogue Economist.
    He is author and co-author of Financial Reckoning Day: Surviving The Soft Depression of The 21st Century; Empire of DebtMobs, Messiahs and Markets and the recent Hormegeddon: How Too Much of a Good Thing Leads to Disaster.
This article originally appeared at at Bill's website.
Pic: Wikimedia

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Wednesday, March 04, 2015

Formula 1: Pit Stops, 1950 & Today

So there’s now more than four, and they’re not both refuelling, but …

[Hat tip Kopu Nitpicker]

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Of Genius and Genuflection—Freddy Kempf's Beethoven

Guest review by Lindsay Perigo

"I love sport, so continue to jog religiously and do strength work too. I've also more recently started to work on my swimming as it's something I was never very good at—and I'm still determined to be able to attack any kind of black (ski-)run one day. I think a secret ambition of mine is to do the Ironman one day."

So said ace pianist Freddy Kempf in my interview with him in the lead-up to his playing/conducting of the five Beethoven Piano Concertos with the New Zealand Symphony Orchestra. The series is called, "Freddy Kempf's Beethoven." After its first outing, at Wellington's Michael Fowler Centre last Saturday, February 28, I greeted him by saying, "Well, Maestro, you said you wanted to do a triathlon; I think you just did!" If three gruelling concertos in a row where the aesthetics are matched by the athletics constitute a Triathlon, he certainly did! And he was a winner.

imageFrom what seemed to me like preposterously short rehearsal time (but I'm assured is normal), with a conductor/pianist barely off the plane from the other side of the world, came ... perfection. Going into the concert, both orchestra and conductor/soloist were of the view that it could go either way; in the event, it could hardly have gone any better. The precision, cohesion and empathy between orchestra and soloist/conductor (whom many of the musicians couldn't see), was miraculous, a tribute to the cunning plan hatched in advance between Freddy, section leaders and the Concert Master. Afterward, orchestra members were fully aware of the enormity of the feat that had just been achieved, and where the main credit lay: "Very, very few soloists who've been down here," one observed to me, "could have pulled that off!"

Concertos 1, 2, and 3 showcase the evolution of Beethoven from incipient to full-blown Romanticist. No. 2, actually written first, could be Mozart or Haydn in drag—regally splendid, but still steeped in formalism; by No. 3 we see the unambiguous imprint of Beethoven's distinctive personality, pointing the way to a century in which that kind of expressiveness pervaded and defined serious music. Romanticism ruled. The composers' own world-view and introspections; their personal values; their loves, fears, joys, sorrows, laughter and tears, humour and horror, exaltation and despair ... all these and more were given unprecedentedly free rein during this period. This was "Music of the Gods," and Beethoven the first god.

While bringing out the oft-overlooked humour in Beethoven, Freddy Kempf and the NZSO gave the sublime sorrow of the second movements its due, and more. The Largo from the 3rd in particular was almost unendurable in its sad uplift. My companion for the evening, who likes to consider himself a "Bah! Humbug!" sort of chap immune to such blubbering balderdash as weeping, was ... weeping. This is the movement that Freddy says nearly caused the Emperor (No. 5) to be replaced by No. 3 as his personal favourite. His inspiration was the Bernstein/Zimerman performance; on Saturday night, he was right up there with them. The palpable hush all around the hall (apart from the occasional stifled sob) all the way through, was testament to the exceptional magic the Maestro was weaving.

On a technical level I am persuaded that much of that magic lies in the left hand—or should I say, the fact that Freddy gives the left hand the attention it deserves. His right hand is, of course, just as admirably precise and expressive, but where some pianists might underplay with the left, Freddy, where appropriate, drills away with it so you can't help but notice! An example is the section beginning about six minutes into the 2nd movement of the No.1. Kissin does something very similar—until I heard his version, I was inattentive to what the bass was up to. Obtuse of me, no doubt, but with Kissin or Kempf such inattention is impossible.

Sublime sorrow made way in each case, of course, for the rollicking rapture of the third movements. Frenetic Freddy lunged and leapt, twirled and trilled, coaxed and cajoled, thundered and thrilled; the result was that "rapture" was undoubtedly the crowd's takeaway mood. The night after the concert, I had the honour of dining with Freddy. After three hours of fevered conversation, we walked along Courtenay Place towards our respective destinations. Although he was bespectacled and dressed casually, he was recognised by a Malaysian lass who had attended the performance. When she recovered from the shock, she ran after us. Breathless and red-faced, after double-checking that he was indeed Freddy Kempf, she snapped a "selfie" with him. The look on her face as she beheld it eloquently bespoke the unforgettable joy of the previous evening.

I forgot during dinner to ask Freddy about his use of the baton. He had used it for some of his conducting but not with all of it. I was still curious as to why, so I asked him via e-mail the next day. His reply was so interesting I'd like to quote it in full, with his permission:

My personal philosophy means that my use of the baton depends on the orchestra and its chief conductor. If the orchestra’s chief conductor uses a baton then I shall aim to do so to – if not, then I discard the stick. Simple as that. Pietari Inkinen uses a baton – therefore so did I. However, during the concerti I only use the baton during the opening tuttis of each concerto’s 1st movements – and the overture too.

My thought is that the baton triggers a slightly different reaction to the hand. The hand “asks” for a response or an action whereas the baton “indicates.” I think the baton eliminates one tiny process of the brain – it shows the players when the “energy” is there – whereas the hand "suggests." And this is also affected by what the orchestra is most used to. The other consideration is that the baton is a less obvious skill to learn – a little like a manual gear shift as opposed to automatic – in that if you don’t start with the baton then there’s a danger that one will never learn how to effectively use it. The most obvious difference would be at the start of a movement – where the baton will get a more mechanical and instant response.

The final consideration is just to make things easier to remember for myself. Holding the baton “reminds” me of my conducting duties – in which sense I just need to remember when to put the baton down, and then my mind realizes that I will need to think about playing the piano too.

NZ audiences yet to attend "Freddy Kempf's Beethoven" need not now be puzzled by any seeming batonic inconsistency!

One final thought occurs to me as I wrap up these reflections: while rapture was the dominant emotion at the concert, there was a level of frustration at having to observe the no-applause-till-the-end protocol before giving voice to that rapture. Evidently I didn't succeed entirely—at the end of the first movement of the first concerto a cadaverous-looking person to my right informed me I had been moving too much. Now, I do tend to “swayn” (that's a combination of swaying and swooning) a little to such glories as we're discussing here, but I always stay within my space and can't imagine my swayning to be so conspicuous as to be a distraction. (I find it distracting that so many people can manage to do Sphinx impersonations when in the presence of such pulsating beauty. I wonder how Mr Talking Corpse would fare in Italy!) In any event, it appears that the aforementioned No Applause Between Movements protocol, far from being the venerable and noble institution it is touted as, is quite recent in origin—it didn't take hold until well into the twentieth century, and then for ignoble reasons. It certainly didn't obtain in Beethoven's day, when applause not only between but during movements was the norm. From the outset most leading musicians considered NABM nonsensical. Many audiences are now openly flouting it—to the delight of many musicians. Here's pianist Stephen Hough:

The reason why humans hit the palms of their hands together if they like something is probably buried in the mists of pre-history. Some audiences stamp too, or scream, or whistle, or shriek … (or occasionally boo). In Holland there is the famous 'standing ovation,' seemingly given to all, regardless of quality or level of appreciation. There are slow, rhythmic handclaps too, although with a positive connotation in musical settings, unlike politics. All of these responses by an audience have to do with their participation in what is happening on stage rather than with boosting the egos of the musicians. To experience passively something which is moving, touching, exciting or thrilling demands some active outlet if we're not to burst.

There are certain movements in the repertoire that absolutely demand applause. In piano concertos, off the top of my head, there are the first movements of both Brahms Concertos, Rachmaninov 1st and 2nd, Grieg, Tchaikovsky 1st and 2nd … and so on: the list is long. ...

And it assuredly includes the Beethoven we heard the other night, especially when it's played as Freddy Kempf played it! I should say I don't know what Freddy's thoughts are on this, and I'm certainly not speaking for him or the orchestra. It is just my personal view that New Zealand, which prides itself on leading the way in so many matters, should make the death of such pointless, anal-retentive protocols official, and emblazon hills and streets around international airports with: "Welcome to New Zealand, where applause between movements is allowed and encouraged!"

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This post first appeared at Lindsay Perigo’s Sense of Life Objectivists (SOLO) site.

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Capitalism with Cows

The old “two cows” story is doing the rounds again, this time in a slightly different version….

Traditional Capitalism
You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.

American Capitalism
You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows and a subsidy for ten. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. You sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet provided with the release. The public buys your bull.

Australian Capitalism
You have two cows. You sell one, and force the other to produce the milk of four cows. You are surprised when the cow drops dead.

French Capitalism
You have two cows. You go on strike because you want three cows.

Japanese Capitalism
You have two cows. You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk. You then create clever cow cartoon images called Cowkimon and market them world wide.

German Capitalism
You have two cows. You re-engineer them so they live for 100 years, eat only once a month, and milk themselves.

British Capitalism
You have two cows. Both are mad.

Canadian Capitalism
You have two cows. Come to think of it, they look more like a pair of moose – in fact, yes, they are. One speaks French, one speaks English. One fights to create a new country, the other won’t let it. They both play ice hockey rather well.

Italian Capitalism
You have two cows, but you don’t know where they are. You break for lunch.

Russian Capitalism
You have two cows. You count them and learn you have five cows. You count them again and learn you have 42 cows. You count them again and learn you have 12 cows. You stop counting cows and open another bottle of vodka.

Swiss Capitalism
You have 5000 cows, none of which belong to you. You charge an outrageous fee to others for storing them.

Chinese Capitalism
You have two cows. You have 300 people milking them. You claim full employment, high bovine productivity, and arrest and detain without trial the journalist who reported the number of cows.

New Zealand Capitalism
You have two cows. That one on the left is kinda cute…

Not to sully the joke, if it could be more sullied, but the sad thing is capitalism is still the exception rather then the rule around the world. What the world endures instead, to a greater or lesser degree, is a mixed economy – which is to say a mixture of trade and plunder.

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Netanyahu: The Iranian state and Islamic State are equivalent in almost every way but one

So on the one side you have a president saying, in essence: "Republicans & Israel can't be trusted, but let's totes have faith in Iran to do the right thing."

And on the other you have a Prime Minister pointing out to the US Congressthings that the Iranian state and Islamic State are equivalent in almost every way but one—in that the former is much more dangerous than the latter.

ISIS might dominate part of Iraq and Syria, but “Iran now dominates four Arab capitals, Baghdad, Damascus, Beirut and Sanaa. And if Iran’s aggression is left unchecked, more will surely follow.”

[T]he ideology of Iran’s revolutionary regime is deeply rooted in militant Islam, and that’s why this regime will always be an enemy …
Don’t be fooled. The battle between Iran and ISIS doesn’t turn Iran into a friend …
    Iran and ISIS are competing for the crown of militant Islam. One calls itself the Islamic Republic. The other calls itself the Islamic State. Both want to impose a militant Islamic empire first on the region and then on the entire world. They just disagree among themselves who will be the ruler of that empire.
    In this deadly game of thrones, there’s no place for America or for Israel, no peace for Christians, Jews or Muslims [or atheists – Ed.] who don’t share the Islamist medieval creed, no rights for women, no freedom for anyone.
    So when it comes to Iran and ISIS, the enemy of your enemy is your enemy.
    (APPLAUSE)
    The difference is that ISIS is armed with butcher knives, captured weapons and YouTube, whereas Iran could soon be armed with intercontinental ballistic missiles and nuclear bombs. We must always remember — I’ll say it one more time — the greatest dangers facing our world is the marriage of militant Islam with nuclear weapons. To defeat ISIS and let Iran get nuclear weapons would be to win the battle, but lose the war. We can’t let that happen.
    But that, my friends, is exactly what could happen, if the deal now being negotiated is accepted…

There’s no deal like a bad deal, and that bad deal was the reason the US president didn’t even bother watching the speech.  Because the reason the US president and his cheerleaders didn’t want Israeli Prime Minister Benjamin Netanyahu speaking to US Congressthings was simple: it might upset Iran.

It should.

Equally, it might have enlightened the Congressthings, and maybe many others around the world in favour of action against ISIS to think further afield.

Netanyahu’s message to Congress ... was straightforward, analytic, and difficult to dispute on almost all fronts. First, Iran is the implacable enemy of both Israel and the U.S. Second, Iran is on the march. Instead of trying to join the community of nations, the regime is gobbling up nations, as Netanyahu put it.
    Third, the nuclear deal that, according to publicly available information, is likely to emerge would “all but guarantee that Iran gets nuclear weapons” for two reasons. One, it would leave Iran with a vast nuclear infrastructure and therefore with the ability to breakout to a nuclear weapon in a year or less. It could break out even more quickly if it cheated on inspections, as it has consistently done in the past.
    Two, because the deal reportedly will expire in ten years or so, it would leave Iran with the ability to obtain nukes without violating a single provision of the deal. When the deal expires, Iran could have as many as 190,000 centrifuges (the number the regime says it aspires to), plus the missiles needed to deliver nuclear warheads anywhere in the world. Thus, Iran would be weeks away from being a major nuclear power.

Does anyone outside the Iranian state want that to happen?

[Hat tip Gena Davidovich]

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Quote of the morning: On political power

"It's said that ‘power corrupts,’ but actually it's more
true that power attracts the corruptible. The sane are
usually attracted by other things than power.

- David Brin (after Frank Herbert)

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Economics for Real People: Economic Ideas–“The World is Ruled by Little Else”

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Yes, students are (finally) back at university. So here’s your information about the first seminar of the year from our friends at the Auckland Uni Economics Group:

Economics Group Seminar: Economic Ideas - The World is Ruled by Little Else
John Maynard Keynes, by whose ideas the world is still ruled, once observed,

        “The ideas of economists and political philosophers, both when they are right and when they are
    wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical
     men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of
    some defunct economist.”
 

Keynes was right: economic ideas do rule the world, for good and bad, and have done so for centuries. Yet many economists consider that studying the history of economic ideas to be an indulgence that, while potentially interesting, is nothing more than a distraction from the real issues facing the world today. But aren’t those who understand history better equipped to avoid repeating it?
    Haven't the events of the past seven years given us grounds to rediscover the lessons of the past?
    Our guest speaker for the first Economics Group seminar of 2015 is Julian Darby, investment consultant to a number of New Zealand’s largest investment funds. In his fascinating presentation, which he has given at conferences throughout Australasia, Julian will take us though the history of economic ideas.  He will examine the influential ideas that led Adam Smith to write his monumental treatise on economics and explain why a sound grasp of these ideas matters so much today.

    Time: 6pm-7pm
    Date: Thursday, 5 March
    Location: Auckland University Business School, (Owen G> Glenn Building), Level 0, Case Room 1
                            (plenty of parking in the basement, off Grafton Rd)

We look forward to seeing you there!

PS: Keep ut to date with us on the web at our Facebook group.

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Tuesday, March 03, 2015

Quote of the day: On government “investment”

“You are right when you say that "It's true that money has to be spent over a long period in order to get more money in the end, but that this does not constitute any reason why the government should do it."

“… [N]ot every long-term investment of money is necessarily and automatically profitable or self-liquidating; that depends on the investor's economic judgment; bad judgment leads to a total loss, to bankruptcy or to "money poured down the drain." When, however, the investor is the government, then the results are necessarily disastrous for the economy, for the following reasons:

“A. There is no way, standard or criterion by which to judge the economic value and future of an investment, outside of the free-market mechanism of supply and demand (see Ludwig von Mises for the details of why economic calculation is impossible to a socialistic government).

“B. Assume in some specific case that the government has invested money in some long-term project which may actually have future economic value; the fact that it was a forced, premature investment which was not yet economically justified (that is: not yet profitable for private investors), which the economy could not yet afford, has disastrous repercussions on the whole economy and causes unpredictable, incalculably harmful consequences. The best example of that is the government-subsidised construction of the so-called first transcontinental railroad in the United States (the Union Pacific and the Central Pacific). A railroad, as such, is an economic value; but the premature construction of a railroad which private capital could not yet find profitable caused economic evils (the plight of the farmers, the Granger movement, etc.) which are still multiplying to this day.

“To illustrate my point in a simple manner: suppose that you are an industrialist and that you want to market an invention which will bring you a fortune in ten years; if your calculations are sound, that would be a good investment, and you would be justified in saving your money for it and in living modestly for ten years. But suppose you decide to market an invention which will bring you a fortune in a hundred years and for which the savings of your lifetime are not sufficient. Would that be a good investment? Would you become prosperous by spending your life on the level of semi-starvation and by draining the resources of all those who may lend you money? Would that be wise or economically sound? By what standard could you be certain—even if your entire generation died in misery, pouring all resources into your project—that the invention would still be needed or valuable to your children or grandchildren who, by that time, would be perishing for lack of shoes, clothes and adequate shelter?

“These are merely the economic or "practical" consequences of government "investment."  The moral meaning and consequences are obvious: by what right does the government take the money of some individuals for the future benefit of other individuals? By what right does it [force] privations on an individual, against his own choice and judgment, for the future benefit of himself or others, actual or hypothetical?  That which is in fact beneficial to an economy (that is: to the individuals who comprise an economy) is done by men voluntarily (as the history of capitalism demonstrates); that which cannot be proved to be beneficial does not become so at the point of a gun.”

- --Ayn Rand, from a letter to John Hospers, November 27, 1960, published in The Letters of Ayn Rand

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How Modern Money Production Worsens Income Inequality

Guest post by Jörg Guido Hülsmann

Bridging the gapThe starting point for any serious reflection on the subject of money production is the fact that the creation of new money does not bring about uniform and simultaneous changes. An increasing money supply tends to entail a higher money price level1, but the individual prices change at different points of time and each to a different extent  (i.e., Cantillon effects).

As a consequence, money production creates winners and losers. The winners are those who can use the new money first, because at this point in time the money prices of the other goods are still relatively low. Due to these expenditures, prices and incomes gradually increase, and in this way the new money spreads through the economy. The losers of this process are those who only later — or last of all — enjoy a higher money income. This is because they are already having to pay the higher prices, created by the increased money expenditure of the early users of the new money, out of their previous lower income.

Strictly speaking, this distributive effect is independent of the question whether the additional money is actually being spent, and of whether such spending entails any price changes. For example, in the past five years, the U.S. Federal Reserve has repeatedly increased the base money supply on a massive scale, while the impact on the price level has remained quite moderate. Nevertheless this increase in the base money supply amounted to a large-scale redistribution, because some market participants received large quantities of a qualitatively better type of money (base money) while the overall money supply (including fiduciary media created by commercial banks), and the price level, remained relatively stable.

As an analogy, think of the croupier in a casino, who right at the start of a poker game deals one of the players a few additional aces. The game hasn’t even begun, and all players have the same amount of cards, but the privileged player already has the upper hand. We have the same situation here. The overall money supply has not been increased and thus the price level has not yet risen, but some market participants have, in relative terms, improved their position enormously.

Distributive effects of money production exist in every monetary order. However, in the case of a natural order based on silver and gold, the distributive impact of money production is severely limited, because money production itself is very limited due to its high costs. The situation is entirely different in our contemporary fiat money system. Here, money production is pushed far beyond the level it would reach on a free market. As a result it causes a redistribution of income and money wealth far beyond what would be expected on a free market.

Some economists do not agree. They argue as follows: In our contemporary monetary systems, money is being produced in the form of credit. Central banks and commercial banks do not dig money out of the ground and spend it; they create money by creating credit. Now in that case, it makes no difference who receives the new money first, as the beneficiary is no richer than before. After all, the new money was lent, not given. The gross wealth of the beneficiary rises, indeed, but his debts now rise to the same extent as well. For example, if Mr. Jones takes out a loan of one million dollars to buy a house, his net wealth does not rise by one cent. It’s true that his gross wealth is now greater, namely by the said million, but his debts have risen by exactly the same amount.

So far, so good. However, even if we pay due attention to the difference between gross and net wealth, the fact remains that it does make a difference whether Jones gets the house due to money creation. The difference is that Jones now lives in the nice house, which without money creation would have been sold at a lower price to someone else. He can now live there with his family. He receives his guests there.

If we look at the funding of firms, the impact is even greater. Here again it’s true that money creation does not necessarily lead to changes in the respective net company fortunes, but it influences the kind of products that now enter the market. Loans to a manufacturer of men’s shoes enable him to realize his projects. Because of the loan he can pay higher wages and higher prices for leather than, say, the manufacturers of ladies’ purses. The shoe production expands while purse production stagnates or shrinks. The provision of shoe wearers is improved, that of the purse carriers worsens.

Thus our above conclusion is confirmed: Money production always affects the distribution of real incomes. The first money users win, the last ones lose.


Jörg Guido Hülsmann is a German economist and one of the leading modern-day proponents of the Austrian School. He is a professor of economics at the University of Angers in France, senior fellow of the Mises Institute, and author of Mises: The Last Knight of Liberalism and The Ethics of Money Production. He teaches in France, at Université d'Angers.
This article is adapted from Chapter 11 of  The Fed at 100: A Critical View on the Federal Reserve System. It first appeared online at the Mises Daily.

NOTES:

  1. For equities and houses, for example, even as it makes possible a temporarily lower price level for consumer goods and commodities through credit-based malinvestment – both of which so much recent counterfeit capital has caused.

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Monday, March 02, 2015

“You’re Worse than England!”

I wrote this for the Australian Footy Almanac site. You might enjoy it too.


For every Australian who wasn't at Eden Park on Saturday, there's this from a New Zealander who was.

David Warner started it. He had kindly invited us to bring out our inner bogan, and we did.

It took a few overs mind you, delayed in part by the frustratingly clean batting of Mr Warner himself, but by the time Southee clean bowled Finch the top was already starting to come off.

1 for 30, and as a crowd on a gorgeous in-swinging Eden Park day we suddenly sensed it. Blood. Victory. A rout. Revenge for a thousand real and imagined trans-Tasman slights.

And maybe, just maybe it would be something like the capitulation our fellow NZers enjoyed in Wellington one week previous. A day-night game finished before the floodlights in a victory talked about for years to come.

We dared to dream.  And the Black Caps dared with us.

First into the valley rode the unlikely figure of Daniel Vettori, summoned by his daring captain to stem the flow of runs disappearing worryingly over the short boundaries. We cheered every dot ball, as did his captain.

We cheered even louder when the man who even his mother wouldn’t have in the team1 had his clock cleaned by NZ’s favourite nerd2. It started properly next ball3, when the Man Who Would Be Ogre was out lbw to Southee. Oh how we cheered as Warner, D., trudged back to his dressing room, helped on his way by a crowd eager to inform him that masturbation must be one of his primary pastimes.

Well, he had rather brought it on himself.

And by the time Australia lay limp at 9 for 106, with only Cummins left to come in,  a modest taunt began to be heard in some quarters of the ground:

“You’re Worse than England!” Bam-bam-bibam-bam.

It was true! With even England’s modest total of 123 looking unlikely, we dared to believe.

So unfortunately, did Brad Haddin, but even his fighting 44 could only lift the total to 152 – barely enough, surely, on Eden Park’s boundaries with a bristling Brendan McCullum willing himself to clear them.

McCullum had started his morning with a few rounds of boxing just to get himself set pugilistically. And from the first ball he was charging the fast bowler to punch out another game while his opponent was still on the canvas.

We began to plan our early dinner dates as orange t-shirted teenagers and men clambered for catches as the boundary looked too short to defend. A six, a four, a six, another six. Martin Guptill came and went amidst the festival of hitting – first 50 runs in 4.6 overs; Mitchell Johnson throwing thunderbolts that were treated as pies -- but who worried about wickets-in-hand when the runs (and run-rate advantage) looked like they were there for the taking!

With Australia sagging and New Zealand flying, when Craig Cummins4 slipped on his approach the ignominy seemed complete and the baying truly started for real. It came full throated and unleashed from right around the ground:

“You’re Worse than England!”Bam-bam-bibam-bam.

“You’re Worse than England!”Bam-bam-bibam-bam.

You could see Australians in the field flinch. Could there be a worse taunt? Could we be happier? Could we be more cock-a-hoop?

Could we have been more stupid?

A lesser team (like the  England we were taunting them with) would have, should have folded. Scuttled away in disgrace.  Instead, with McCullum swinging the bat with danger to everyone near and far, Michael Clarke posted a man to stand on his elbow at short leg.

Short leg! What was he thinking! It was either certain suicide or Clarke had been watching Jardine place a field to Larwood.

It was the latter. The very next ball5 showed the short leg had burrowed into Brendan’s brain, and Mitchell Johnson thudded a fast one straight into an unpadded forearm fending off something worse.

Was this the brain explosion David Warner had promised? Was this the broken arm Clarke had earlier and famously sledged?

It was nothing of the sort, but it showed (if we hadn't been too drunk on success and sponsor’s product to realise it) that this team wasn't going to just meekly hand us a famous victory.

Mind you, we were still having our fun: at Warner’s expense – especially when he got anywhere near the fence; at Mitchell Johnson’s expense -- 0 for 68 off bugger all overs, as he was loudly reminded by the East Stand crowd when Clarke tried to post him on the boundary at deep square leg before relenting and allowing him to move in to stand on the circle; even at Shane Warne’s expense, bemused at being cheered off while every other Australian was being booed (as he left the ground with Alan Border after some on-field comments) – the situation loudly explained to him by one wag that “everyone loves a rooter”; and with an ill Martin Crowe’s encouragement when the great man was inducted at dinner time into the ICC Hall of Fame, and who spent most of his speech eulogising the Black Caps before shedding tears as he left to our loud applause.

So we sang and we crowed and at one stage, with NZ needing only a run every second over, and with umpteen6 wickets still in hand, the singing just got louder still.

“You’re Worse than England!” Bam-bam-bibam-bam.

It was almost our downfall.  I suspect it was Australia’s motivation. Who among them could stomach being worse than Eion Morgan’s mob?

So with the shadows starting to fall across the wicket and the bowlers coming in out of the still-strong sunlight, we suddenly started to see the wickets fall that we had thought we wouldn’t need. Imminent hat tricks suddenly abounded, and runs now looked as hard to find as a memorable Shane Watson innings.

And suddenly, at 9 for 146 with only Trent Boult’s bat standing between Mitchell Starc and the most unlikely victory that could possibly have been imagined, we suddenly heard in the crowd the first thing from Australians we’d heard from them all day.  We put our heads in our hands, while they stood up and cheered like men released.

Who knew they were even there up to that point?

Who could have cared before now?

And what other game could deliver this kind of finish: a team that had been absolutely dominant for all of the shortened day looking ominously likely to end up in defeat instead of with the victory we had given up our throats for.

That was the brutal calculation.  6 runs or one wicket.  Australians stood and cheered while the rest of covered our eyes, unable to look. Which is why most of us didn't see Glenn Maxwell take time to turn and taunt us with a choking gesture.

Fortunately for all things good on this side of the Tasman, Trent Boult blocked the last two balls of Starcs’s almost-winning over while we collectively held our breath, and Kane Williamson made the most of a long hop in the first of Cummins’s next to get the six we desperately needed, snatching a famous victory from the jaws of a famous choke.

And all around the country, grown men started Googling the techniques of CPR to be properly prepared should anything like that ever happen again.

Could a team worse than England have conspired to have produced the game of this and many other World Cup tournaments? No, probably not.

But Warner’s team-mates might be asking him not to unleash all the bogans next time.

And us? Over here, we’re still daring to believe.


1. Watson, S.
2. Vettori, D.
3. Not all of the statistics or descriptions of deliveries herein are totally, completely, 100% accurate. In my defence, my game notes from which this story is taken are liberally stained with winner’s piss. And when it comes to sporting commentary we should never, ever let truth get in the way of a good story. True?
4. A man whose name must surely be used for a banned brand of cider sometime in the near future.
5. See 3 above.
6. I did tell you not to take any data herein at all seriously.

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Sunday, March 01, 2015

Don’t tell lies

The full quote, from her journals:

I believe and I want to gather all the facts to illustrate this-that the worst curse on mankind is the ability to consider ideals as quite abstract and detached from ones everyday life. The ability to live and think quite differently, thus eliminating thinking from your actual life. This applies not to deliberate and conscious hypocrites, but to those more dangerous and hopeless ones who along with themselves and to themselves, tolerate a complete break between their convictions and their lives, and still believe they have convictions. To them either their ideals, or their lives are worthless, and usually both.
    I hold religion mainly responsible for this. I want to prove that religion breaks a character before its formed, in childhood, by teaching a child lies before he knows what a lie is. By breaking him of the habit of thinking before he has begun to think, by making him a hypocrite before he knows any other possible attitude toward life. If a child is taught ideals he knows is contrary to his own deepest instincts, ideas such as unselfishness, meekness, and self sacrifice...
    If he is told he is a miserable sinner for not living up to ideals he can never reach, and doesn't want to reach, then his natural reaction is to consider all ideals as out of his reach forever... as something theoretical, and quite apart from his own actual life. Thus the beginning of self hypocrisy. The killing of all desire for a living ideal.
April 9th, 1934 - The Journals of Ayn Rand

[Hat tip Landon Walsh, The Objective Standard]

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Read it as a family…

…because reading the Bible together as a family is a good way for a Biblically oriented family to connect with each other. In addition, it is a good antidote to the constant swarm of filth, porn and evil flooding out from our atheistic liberal society.

[Hat tip Robert Lindsay]

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Friday, February 27, 2015

Watch out, there are more music thieves about

Conventional wisdom says that as you make online music easier to buy rather than steal1, then buy-rather-than-steal becomes more preferred.

Turns out this is bullshit.  As the number of legal downloading, streaming and listening opportunities continues to expand, the number of US uni students (the stealingest bunch there is) who steal rather than buy is increasing, not decreasing.

image

Increasing a lot:

The percentage of college students in our survey that DO NOT buy digital music has risen from 26.5%  in 2014 to 36.7% in 2015.  This corresponds to reports of drops in sales of digital music elsewhere.

So that’s (let me just calculate here, hold on…) a whole shitload more musicians this year not getting paid for their work than last year.

Nice.

What was the last piece of music you bought legally?


1. Yes, I know there are arguments that downloading someone else’s music without paying for it and without their permission not to pay for it is not stealing. It’s just that those arguments are ludicrously self-serving, and wrong.

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Getting people out of the shit

Welfare dependence in New Zealand is intergenerational.  There’s around a million or more New Zealanders who depend on welfare for their weekly wedge. And, as Lindsay Mitchell reports, new research shows conclusively that, and I quote, “three quarters of the forward cost of welfare rests with those who go on welfare under twenty.”

Got that? Three quarters of the forward cost of welfare rests with those who go on welfare under twenty.

And of that number under twenty,

(9 in 10) were from beneficiary families, the majority of whom received a main benefit for most of their teen years.

And

51% were in beneficiary families for 80% or more of their teen years.

So it surely looks as though entitle-itis is born, not made.

As Lindsay says, “this gets to the crux of welfare dependence. For the most past, welfare is not helping helping folk get out of a bad situation. Instead, it is encouraging bad situations to remain, and to become intergenerational. 

It is not helping people out of the shit. It is creating generation after generation of folk who see shit as their permanent station in life – as suckers on the state tit for life.

Call it the soft bigotry of low expectations.

Only the people who created this system could be happy.

It’s not just unaffordable – government debt increasing every year to pay for it. It’s not just unsustainable – the experiment is only decades long, and already beyond the means of most countries to sustain it. It’s destructive all round, for no real fruit.

So how do we get welfare out of the shit?

How about start by removing welfare at the margins.

What are the margins?

Well, there’s a list you can make, from most- to least-deserving of your coin:

  1. Individuals and families who are in the shit
  2. Businesses and sports teams who are in the shit
  3. Businesses and sports teams who want a favour

Then, use  the Old-White-Haired Mother test created by PJ O’Rourke: recognise that all welfare is paid for out of somebody else’s pocket, extracted at the barrel of a gun. So ask yourself, does this particular measure justify putting a gun to the head of my kindly white-haired old mother.

Unless you’re a Sky City director you’d have to agree at getting rid of #3. And unless you’re a beneficiary of South Canterbury Finance, or Grant Dalton, you’d surely agree there’s little justification for #2.

See how easy it is? Already we’ve slashed away some big margins.

How about the people in item 1: individuals and families who are in the shit. What do we do about them.

Here’s another kind of list that cuts through the fog:

  1. People who through no choice of their own are in the shit; and
  2. People who’ve made choices that turned into shit; and finally
  3. People who’ve chosen to stay in the shit.

It’s fairly clear that in any kind of quest for coin, it’s not number 3 who are the most deserving of your white-haired old mother’s mugging.

And those  #2 folk can, at best, only justify mugging her temporarily, by making their stay on the state tit temporary.

So #1 folk are the only ones with any kind of moral claim on my mother’s mugging – people who through no choice of their own, and through either disability, illness or severe quadriplegia are in the shit for life, with no parole.

And, well, really, there’s hardly a million in that boat, is there. Let’s be fair, hardly even 10,000.

Not so many, in fact, that they couldn’t all be helped out by voluntary charity…

Think about it.

Intergenerational state welfare has delivered unsustainable debt and an all-but permanent underclass.

If you can save those permanently enmired and your white-haired old mother at the same time, why wouldn’t you?

If we’re going to help – you know, like actually help, with actual positive outcomes and all that -- then let’s help people out of the shit they’re in, not lock them (and us) in there permanently.

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‘Audit the Fed’ gains ground as the left (re) discovers its inner Love of central banking

Guest post by Nick Sorrentino

Eccles building cc

The American Federal Reserve, as we have noted before, is the world’s Prime Mover of crony capitalism. It is a politburo. It is a central planning committee. It is a tool by which the big banks are backstopped with the wealth of the American people. It should be audited. It should be opened.

This is what the U.S. dollar has done under the Fed:

dollar graph  c                          c

In fairness it’s not JUST the Fed. Other central banks1, like NZ’s Reserve Bank, have done their part for other currencies as well.

Fed advocates like Paul Krugman (featured in the attached article, below) fear fundamentally that the citizenry will one day lose confidence in a dollar which is conjured out of nothing. So long as the major media, the big banks, Keynesian economists like himself, and the politicians are all singing from the same song sheet then the game can continue. If however someone was to really get through to the American people, and was to effectively highlight the insanity of the Fed system, well then all bets are off for the crony capitalists. Krugman would have to spend the rest of his life cuddling his cat in disgrace. Which would be just fine.

The anti-audit-the-Fed stuff we’ve seen in recent weeks is coming because the Federal Reserve is scared. All the flak being shot isn’t because the Fed’s friends are actually afraid that an audit would somehow throw the economy off the rails. No, they are afraid of an audit because they’ve bought completely into a dishonest fiat money system and they are afraid that they will have to stand naked before history. That’s what they fear.

Audit the Fed and then end it. Make ‘em stand naked.

(From Forbes)

An empirical review published in 2011 by the Bank of England — not exactly a “fever swamp” — of the performance of the fiduciary currency standard relative to the performance of the Bretton Woods gold-exchange standard and the classical gold standard, found, as then summarized by Forbes.com contributor Charles Kadlec:

  • Economic growth is a full percentage point slower, with an average annual increase in real per-capita GDP of only 1.8%

  • World inflation of 4.8% a year is 1.5 percentage point higher;

  • Downturns for the median countries have more than tripled to 13% of the total period;

  • The number of banking crises per year has soared to 2.6 per year, compared to only one every ten years under Bretton Woods;

  • The number of currency crises has increased to 3.7 per year from 1.7 per year;

  • Current account deficits have nearly tripled to 2.2% of world GDP from only 0.8% of GDP under Bretton Woods.

Click here for the article.

1. Other central banks, like the Bank of England, for example,

From 1989 to now CPI has averaged just 2.8 per cent per year.
   
But the amount of money circulating in the UK has been ‘inflated’ at an average annual rate of 11.5 per cent over the same period.
   
In 1971 there was £31bn in circulation. Now there is just under £2,100bn (that’s £2.1 trillion). That is a 67-fold inflation (see, I’m using the word correctly and suddenly it makes sense) of the supply of money.
   
There are very few families, however, that are 67-times richer. I know mine isn’t.
   
That’s largely because wages have not kept up with the 67-fold increase in money supply. They’ve gone from about £2,000 in 1971 to around £25,000 today. So many families now find themselves having to work longer hours, with both spouses in the workplace, taking on larger debts and having fewer children just to maintain an ordinary middle class lifestyle. Their children face unprecedented levels of debt and, in many parts of the country, will never be able to buy a house.


This post originally appeared at Against Crony Capitalism

Thursday, February 26, 2015

Mercy to the guilty is injustice to Jeremy Frew

“Pity for the guilty is treason to the innocent.”
- Ayn Rand

“’Mercy’ means an unearned forgiveness.”
- Leonard Peikoff

So a dickhead who helped kill someone apparently appears on a TV show, and the producers don’t even bother to give the audience the full context of the crime for which he was jailed – a "rampage of violence" said the judge who convicted him; a “commotion” says the YV show -- nor warn the parents of the young man he killed that a thug who helped kill their son will soon be singing on their TV screen.

But it’s all okay, says the producer, because the thug has “paid his debt to society”  and everyone should move on.

Bullshit.

You see, this is just one more problem with having so many victimless crimes: when so many crimes are victimless, it’s so easy to forget that real crimes do have real victims. Your “debt,” as a criminal, is not to a collective; it is to those people whom you’ve harmed – those very real victims of your actions.

And dead victims can’t move on.

Mercy to the guilty is an injustice to the innocent. The producers of X Factor have committed an enduring injustice to Jeremy Frew and his family.

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A “target”?

It’s said that taking part in the war against IS barbarians will make New Zealanders a “target.”

Because, supposedly, people are only a “target” for Islamic barbarians if the barbarians are attacked by the people’s governments.

Really?

Then why was a Japanese journalist executed by Islamic State thugs, when Japanese armies hadn’t left their shores since 1945?

Why is Islamic State calling for their followers to launch attacks against famously neutral Switzerland?

Why were New Zealanders in Bali a target for Jemaah Islamiyah fully a year before New Zealanders joined the war in Iraq?

Why were Australians, a year before that same war?

Not to mention several thousand entirely innocent bus and train riders in London and Madrid and office workers in New York.

You can keep asking questions like that, but the truth is non-Islamic countries and non-aggressive non-Islamic folk are not targets because they’re going to war with Islamists. Because they’re not.  And because the truth is much, much simpler, which is this: Islamists are going to war with us because we are non-Islamist.

That’s it. That’s it right there.

Because that’s the real message of their “religion of peace” – a message evident from the history of Islam, from its birth to its Barbary Coast bandits and right up to its modern-day barbarians --  that “peace” in their eyes is only possible after all who don’t follow their prophet are subdued.

Understand that, and you’ll understand you’re already a target anyway.

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Quote of the morning: It’s easier for demagogues

"It is often sadly remarked that the bad economists present their errors to the public better than the good economists present their truths. It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it. But the basic reason for this ought not to be mysterious. The reason is that the demagogues and bad economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases the answer consists in showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups." -- Henry Hazlitt in Economics in One Lesson

[Hat tip Lawrence Reed]

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It’s nice to be the gatekeeper.

“…there's no place for pure capitalism, unregulated capitalism,” says the CEO of Goldman Sachs. “We have a regulated system."

It’s certainly true there’s no place for unregulated capitalism at the entity often called Government Sachs. Not when the regulators, and the government, are in your back pocket -- and you’re the gatekeeper for their sluice.

[Hat tip Drew Taggart,

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Wednesday, February 25, 2015

“Turning to social liberalism, the issue I would suggest ACT focuses on is voluntary euthanasia.”

David Farrar was asked to talk to last weekend’s ACT conference on how ACT might gain more voters to increase their representation in parliament and decrease their reliance on the Epsom electorate?

Mark Hubbard will be pleased…

…I think a clear message of opposition to most forms of corporate welfare has potential appeal to not just economic liberals on the right, but also to many on the left. It would make it hard for the left to paint ACT as the party of big business, if they are signing up to your campaigns against corporate welfare.

Turning to social liberalism, the issue I would suggest ACT focuses on is [voluntary] euthanasia. Is anything a more fundamental human right than being able to choose between quantity of life and quality of life?
    This is not some abstract issue. Sadly for many families, they have been through the horrors of a loved one who was unable to make an informed choice to reduce their suffering.  I actually used to be against euthanasia until I listened to the speech Rodney Hide made in 2003 about the death of Martin Hames. It reduced me to tears and made me realise how harmful the current law can be, and converted me to favouring a law change.
    It is an issue that is both very real to many, but also very popular. The last public poll on this issue saw 61% in favour of terminally ill people being able to choose when to end their lives and only 18% opposed. A 3:1 ratio in favour is about as good as it gets.
    Labour has banned their MPs from advancing this issue, because it may distract them from their core mission of getting more people to join a union. National MPs are discouraged from doing bills on conscience issues. In fact I think National discourages their MPs from doing any bills that haven’t been written by Chris Finlayson for them. The highlight was the West Coast MP’s bill on reforming the law of habeas corpus.
    NZ First are generally against euthanasia, except for immigrants. The Greens are admirably supportive, but the suspicion is they see it as a way to reduce carbon emissions. 
    More seriously there is an opportunity for ACT here to lead on this issue, and connect to New Zealanders on an issue that resonates, as well as clearly position themselves as the only party not wanting the state to interfere in decisions that belong to individuals.

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Quote of the afternoon: Menger on economic progress

“The quantities of consumption goods at human disposal are limited only by the
extent of human knowledge of the causal connections between things, and by the
extent of human control over these things. Increasing understanding of the causal connections between things and human welfare, and increasing control of the less proximate conditions responsible for human welfare, have led mankind, therefore,
from a state of barbarism and the deepest misery to its present stage of civilisation
and well-being, and have changed vast regions inhabited by a few miserable,
excessively poor, men into densely populated civilised countries. Nothing is more
certain than that the degree of economic progress of mankind will still, in future
epochs, be commensurate with the degree of progress of human knowledge.”

- Carl Menger, founder of Austrian economics, from 
his Principles of Economics (1870)

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“The Earth Is Not a God: The false theology of radical environmentalists”

Some quotes from a superb review of Alex Epstein’s book The Moral Case for Fossil Fuels:

Epstein makes a compelling “big picture” case that the interaction of technology and fossil fuels provides everything we take for granted today. He also reminds us of earlier hysterical predictions of doom concerning fossil-fuel use. In the late 1960s and early 1970s, environmentalists such as Paul Ehrlich predicted mass starvation by the year 2000 because “world food production could not keep up with the galloping growth of population.” Flat wrong: the world’s population doubled, and the average person today is far better fed than when the starvation apocalypse was announced. That’s because the other apocalypse proclaimed back then—the depletion of oil and natural gas by 1992 and 1993, respectively—also proved wrong. Since 1980, worldwide usage of fossil fuels increased massively, yet both oil and natural gas supplies have more than doubled, and we have enough coal to last 3,000 years.
    Epstein explains what the environmental doomsayers could not or would not see: first, that “fossil fuel energy is the fuel of food”; and second, that the human mind is as powerful as [Benjamin] Franklin and [Francis] Bacon said it was.

Why do hysterical warnings about sustainability and depletion persist despite the failure of the crackpot 1960s and 1970s predictions? Because the non-impact standard—conceiving of the environment as a loving but finite God—sees the environment as having a limited “carrying capacity” of gifts, such as arable land, water, and crucial minerals, in addition to fossil fuels. The more people on the planet, the closer we are to maxing out that carrying capacity, the thinking goes. … This notion of a finite carrying capacity discounts the powerful role of human ingenuity in finding natural resources. …
    Epstein argues brilliantly that the carrying-capacity superstition amounts to a “backward understanding of resources.” The fact is that nature by itself gives us very few directly supplied energy resources: most resources “are not taken from nature, but created from nature,” he maintains. Every raw material in nature is but a “potential resource, with unlimited potential to be to be rendered valuable by the human mind.” Right now we have enough fossil fuels and nuclear power to last us thousands of years. “The amount of raw matter and energy on this planet,” Epstein writes, “is so incomprehensibly vast that it is nonsensical to speculate about running out of it. Telling us that there is only so much matter and energy to create resources from is like telling us that there is only so much galaxy to visit for the first time. True, but irrelevant.”

Until the Industrial Revolution, the climate was dangerous for all human beings. Since then, we have marched steadily toward “climate mastery.” Fewer people die today from the weather than at any time in history. “We don’t take a safe climate and make it dangerous,” according to Epstein. “We take a dangerous climate and make it safe.”

Alex Epstein’s book is a breath of fresh air in this polluted opinion climate. The Moral Case for Fossil Fuels shows why fossil fuels are good for human flourishing in general and good for the world’s poor in particular. Epstein is a true friend of the earth—an earth inhabited and made better by human beings.

Read the whole review here: The Earth Is Not a God: The false theology of radical environmentalists – Jerry Weinberger, CITY JOURNAL

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