Monday, 30 October 2006

More sustainability

The Austrian Economics Environment Study Guide (just updated) is the sort of resource that National's wet Bluegreens should be eating up, instead of ignoring.

The two highlights are George Reisman's insightful refutation of resource doomsday-ism -- he points out that "the entire planet is a big ball of chemicals that, with the right technology, can be used to meet human wants ...for all practical purposes, [natural resources] are infinite"; (and this ain't just theory folks) -- and John Brätland's article on "sustainable development" which has just come online.

Brätland's article (pdf) deals with the economic theory of intergenerational sustainability, more popularly known as "sustainable development". The red flags pop up right away for Austrians with this description by a proponent:

Fundamentally, "sustainable development" is a notion of... disciplining our current consumption. This sense of "intergenerational responsibility" is a new political principle, a virtue that must now guide economic growth. The industrial world has already used so much of the planet’s ecological capital that the sustainability of the future is in doubt. That can’t continue.

Brätland's basic strategy is to deploy insights from the calculation argument against the neoclassical theory of Robert Solow and others. A few suggestive quotes from Brätland will, I hope, pique your interest in this excellent article:

The concepts of valuation, capital, and income only take on valid or coherent meaning in the context of individual action, private property and market exchange... The critical goal of legitimate sustainability is to establish an expanded system of private property rights that allows the owners to manage resources as capital assets. (p. 21)

...the ethics underlying the acquisition of private property is not even acknowledged in the economics of intergenerational sustainability. The entire resource base of the world’s society is implicitly under the control of some government making allocative decisions. (p. 22)

Without private property, monetary exchange, and capital accounting, no rational economics of asset maintenance could exist... The extent that individual business plans may conflict and be incapable of mutual success creates a barrier to aggregation or "macro-reckoning." Hence, society or a government as its agent has no aggregated measure of capital for which it can legitimately presume to make decisions. (pp. 28,29)

...public control of resources in the name of "sustainability" is not only contradictory but also self-defeating. (p. 41)

LINKS: Austrian Economics Study Guide: Natural sciences and the environment - Mises Institute
Environmentalism refuted - George Reisman, Mises Economics Blog
Toward a calculational theory and policy of intergenerational sustainability - John Brätland, Quarterly Journal of Austrian Economics [34-page PDF]

RELATED: Politics-NZ, Environment, Philosophy, Ethics


  1. PC: I'd like to contrast your rather rose-tinted and optimistic vision of the world as an infinite bounty of natural resource with (keeping it architectural) Buckminster Fuller's well-known 'Spaceship Earth' analogy.

    On the one hand, Reisman exhorts us to believe that the recoverable bounty of the earth is so great that we shouldn't spare a thought to the remaining 'bank balance' - as the sum is so staggeringly vast that the exercise is pointless. (I'll return to that with reference to another of your linked articles - which makes the point succinctly).

    Fuller, on the other hand, sees the planet as a 'spaceship'. As to earth's bounty, he says "...[t]o begin our position-fixing aboard our Spaceship Earth we must first acknowledge that the abundance of immediately consumable, obviously desirable or utterly essential resources have been sufficient until now to allow us to carry on.... Being eventually exhaustible and spoilable, they have been adequate only up to this critical moment." Remarkably prescient for something written a long time ago.

    So on one hand, the economist who believes the world's resources are effectively infinite. On the other, a designer/architect who sees the world's resources as all-too-finite.

    Personally, I see the conceiving of the world's stock of resources as 'infinite' as folly - spin of the highest order. There is no regeneration of resource (other than solar energy), so in a system whereby what we have is being progressively burned, gasified, and detroyed in an ultimately entropic system, how could anyone compare something so obviously finite to the concept of infinity? Bizarre.

    However, the crowning jewel of bizarreness in the post is the linked article in der Spiegel (behind the twee 'this ain't just theory folks). Far from being a credible theory for earth's limitless bounty, it is stark proof that easy and cheaply-recoverable materials are being used up at such a rate as to make difficult and costly exploitation of undersea resources viable, in today's environment of increasing scarcity.

    How this is seen as proof of earth's limitless bounty, I can't see. These 'black smokers' are not puffing out magical minerals created from thin air by pixies. Scarcity has made collection of these minerals viable, under dangerous and unusual conditions. To quote examples of this scarcity (which I do with impunity, as it was linked as proof of earth's 'infinite resources'):

    "- The price of a ton of copper, for example, jumped from $2,000 in the late 1990s to $8,700 this year.

    - In the same period, the price of a ton of zinc went from $1,000 to almost $4,000.

    - The price of indium has increased tenfold within just a few years, with existing resources expected to be exhausted by 2013."

    Infinite resources? Sure.


  2. I disagree with you in so many ways.

    Highly theoretical arguments are great, but every farmer in the country will tell you that sustainable development actual does happen from time to time, and that there are economic benefits.

    And yes, I know they are the land owners - but you have not actually linked your arguments about the invalidity of sustainability and the "expanded system of private property rights that allows the owners to manage resources as capital assets". Land owners use the ideas that you have poo-pooed in the interests of managing their property in a way that they see as economically viable.

  3. Nothing is truly lost. The easy sources are expended, but they will be anyway at some given point in the future. Metal doesn't grow on trees after all and the metal used up is still there somewhere else. We just have to re-concentrate it ourselves instead of waiting for some planetary process to do it again. Why does a resource have to be generated by non-human means anyway? All it takes to make any partiuclar source of a commodity viable is sufficient energy and a bright idea The resources are effectively infinite until the sun dies and every other source of energy is lost.

  4. Den, it's not a matter of what or whom you believe, it's a matter of which is correct.

    Reisman doesn't "exhort you to believe" -- he points out (very clearly) that matter and energy that exist in abundance, and what transforms these into what we call resources is the grey matter in the minds of entrepreneurs who continually find and produce new value from all that the matter and energy available. The ultimate resource is the individual human mind, which is what transforms that abundant stuff into goods. (And the matter and energy so transformed does not disappear, it is just transformed.)

    The point is that the matter and energy available with which to provide the necessities of life are potentially infinite, but only if minds are left free to investigate and produce.

    Ironically, it is this resource -- the unfettered application of the human mind to human survival and flourishing -- that is most under threat currently, which is what makes that potential less than what it could be.

    By contrast Fuller posits the poetic notion of a spaceship, which of course needs a commander. Remarkably alluring for those who wish to take up that position, don't you think? But in the end, Fuller's position is no more than poetry, and in this matter it is hard analysis that is wanted.

    Now, you conclude by pointing out that prices indicate the current scarcity of resources rather than their potential infinitude. I believe you rather make another of Reisman's point for him -- that misunderstanding price signals and their role in encouraging exploration and exploitation of new resources is one of the reasons that what we might term doomsday-ism is now rife.

    Higher prices encourage and make possible both greater and more sophisticated exploration, and great er and more sophisticated exploration of alternatives. Higher prices for minerals and the like indicates a lesser availability of economic sources of those particular minerals -- it says nothing about the potentially infinite stock of matter and energy about which Reisman is talking.

  5. Polemic, you said: " have not actually linked your arguments about the invalidity of sustainability and the "expanded system of private property rights that allows the owners to manage resources as capital assets"."

    No, in this post I have linked to an article that does that job for me. I do recommend getting to grips with it.

    "Land owners use the ideas that you have poo-pooed in the interests of managing their property in a way that they see as economically viable."

    Actually, I would say that land-owners use the ideas I encourage to manage their properties: it is the property rights that land-owners (sometimes) enjoy that allow them the long-term time horizons to plan long-term, to become (if that word has any meaning) 'sustainable.'

    But here's another irony: it is the very uncertainty engendered by the destruction of property rights under the authoritarian 'Spaceship Earth' model -- a model in which "the entire resource base of the world’s society is implicitly under the control of some government making allocative decisions" -- that destroys any possibility of those long-term time horizons that property rights makes possible.

  6. PC: You can spin what constitutes a resource as much as you like, bu tthe truth is that within an entropic system it doesn't matter how efficient and clever the minds are working on the problem, the actual matter, the stuff which I refer to as 'resources' is being expended in the most absolute sense. It is not infinite, and anyone who suggests that the earth is infinitely consumable given man's ingenuity is being intellectually dishonest, and showing a desperately poor grasp of simple thermodynamics.

    The stuff of the earth, the 'resources' we have available are NEVER potentially infinite.

    The fact that 'Spaceship Earth' needs a commander is your convenient inference. Contrary to all the fervently promulgated propaganda, us Green-type people don't have a secret control agenda.

    In terms of making Reisman's point for him:

    "The price of indium has increased tenfold within just a few years, with existing resources expected to be exhausted by 2013."

    That's pretty unequivocal. Maybe we can synthesise indium, maybe we can recycle a large amount from what we have used, but the bottom line is that we have torched a large amount of what easily recoverable supply we had.

    Semantics can do some fine things, but it won't convince anyone that the earth is infinitely consumable.


  7. I've always liked the simple example of the advent of the automobile and its impact upon the environment.

    Approx 100 yrs ago large urban areas had a major sanitation problem with animal (horse) waste as a result of mass-urbanisation following the Industrial Revolution.

    The 'horseless carriage' was seen as that era's clean solution.

    Now that vehicle emission has become a problem, let that same unshackled marketplace exercise creativity and vision in terms of finding a viable solution. One that consumers will *choose* of their own volition because it makes sense. It gives proof to the old adage that if something's a good idea, they won't have to force you to do it.

    But statists can't see past govt to *enforce* change.

    Why? Because it's all about regulation & control, baby.

    Regulation & control. In that order.

  8. With respect, Den, I don't think you've at all got to grips with Reisman's explanation of what constitutes a resource, and what makes it so, and what happens to resources when they are "consumed" -- all points which are central to your objection.

    I might post a summary later of that specific and very important point, but in the meantime let me just suggest you think about the point.

    And consider this too: that the Stone Age didn't end because we ran out of stones, and nor was the whale oil shortage of the 1890s solved by finding a substitute for whale oil, but by the discovery and application of electricity.

  9. but PC, the greens will make sure we will run out of oil this time: no nuclear energy ever!

  10. DenMT said...
    [Contrary to all the fervently promulgated propaganda, us Green-type people don't have a secret control agenda.]

    Yes, that's right , you don't have a secret control agenda, but you lobby hard the government to control producers of the society from advancing forward in innovations, by way of legislations.

    Greenies think that I am a dumb asshole, that somehow, I don't know that eating McDonald could make me obese. Greenies think that I don't know that smoking could lead to lung cancer. I can go on and on and on and on, but there is no space here to list them all.

    The man who had invented semiconductor which is the cornerstone of modern electronics of today is the same man, who would invent something new resources if he ever run out of silica-based material for the production of semiconductors. NOT the ludicrous greenies, who would invent such new resources. The greenies would demand that the inventor finance himself to invent the new technology WITHOUT fuck'n contibuting to that themselves. Greenies would demand that Telecom build them a fast communication for the internet without forming a company themselves to compete with Telecom which might force them to install fast internet as a way to get ahead of competitors. There is whinge here & whinge there from the greenies. It is a matter of fact that if all greenies of the world would be hypothetically given , say the whole of the African continent to inhabit , they would be trapped in a timewarp. They will ever want to invent things which will contribute to the advancement of their society.

  11. FF: First, and most importantly, your assertion that 'Greenies' aren't 'producers' in society is fundamentally flawed. You are clinging to an old cliched hyperbole of 'Greenies' as dreadlocked, jobless hippies fighting against 'the Man'.

    This is just not the reality. Even if I didn't have my own firmly held environmental ideals, I'd have to swiftly learn how to bullshit as if I did, considering that an ever-growing contingent of my clients demand sustainable design and a good working knowledge of green materials and building techniques. This is not just our office, but endemic across the profession. And if you are going to tell me that architects are not 'producers,' there are plenty of other professions which are going the same way, due to internal and external pressures.

    So rather than 'lobby[ing] hard the government[sic] to control producers in society' its more a case of being part of an industry that makes change from within, rather than lobbying. I am almost certain that the next electoral cycle will see more stringent energy-efficiency requirements added in to the Building Code, which will no doubt wring anguished screams and bile-outpourings from PC ;) however looking at the industry, its almost unnecessary as the impetus is coming from within - market pressure and environmental stewardship from designers who realise the magnitude of energy use they are ultimately responsible for.

    PC: I trucked my way through the Reisman drudgery again, to see if I could glean exactly what it is you think I'm missing. At length, I have to say that my initial feeling stands: Reisman trots out a lengthy, overwrought semantic diatribe in an effort to assuage guilt at 'exhausting' natural 'resources' - or 'goods' as he would argue they should be more correctly termed.

    Parts are horrendously misguided in my esteem:

    "Seen in its full context, man’s productive activity serves to enlarge the supply of useable, accessible natural resources by converting a larger, though still tiny, fraction of nature into natural resources possessing goods-character"

    The resources-goods distinction is an egregious bit of sophistry. 'It wasn't useful before, but our hey-presto value-transformation makes it useful, thus creating new worth from scratch!' Surely by this rationale, and again if one was to conveniently ignore entropy, Reisman could argue that far from being potentially infinite, humankinds ability to add value to dumb resource by transforming it into goods is actually an infinite growth cycle, as surely successive generations can find successively more valuable uses for the same base elements? At a purely intellectual level, this might have a shred of currency, but out here in the real world, once something is expended, it actually is gone. Not always of course, we can recover things through reuse and recycling, but our stock of useful 'dumb resources' is not infinite and it is plain irresponsible to argue otherwise.

    You have to love his phrasing at times, as well:

    "Reductions in the cost of extracting petroleum from shale and tar sands have the potential for expanding the supply of economically useable petroleum by a vast multiple of what it is today."

    Surely what he means is reduction in the RELATIVE cost - no one will touch oil shale with a barge pole until all cheaper, easier sources of oil are effectively tapped. Then it becomes justifiable to spend the extra bucks. Unless this is an argument for a putative future technology that is super-cheap and super-effective.

    The most disturbing thing is that getting towards the end of it, I couldn't get the voice of the little blind bloke off the Simpsons out of my head. I wonder what Reisman actually sounds like...


  12. DenMT said...
    [And if you are going to tell me that architects are not 'producers,' there are plenty of other professions which are going the same way, due to internal and external pressures.]

    Perhaps, I should have been more specific. I mean that producers, such as companies like Rakon & Oscmar International Ltd. Keith Locke and the Green party have been criticising these private businesses and lobbying the government to investigate them if they have broken the law for exporting products that could be used in military weapon systems. These companies never violated any law relating to the Green's claim. If Rakon sells crystals to Rockwell or any of those US military contractors, it is not Rakon's fault that Rockwell resells the crystals to Lockheed or Boeing, etc... Rakon and other private businesses are there to make a profit. It is not their fault that some of their crystals ended up in a guiding systems for tomahawk missiles to be used in Irag or Afghanistan. It is the US military's decision to shoot the missile and not Rakon.

    It is a fact that Green Party in general doesn’t like corporations; at the same time they are enjoying things that corporations do produce, such as Software, Telecommunication systems, modern medical equipments, cell-phones, cars, aeroplane, satellites, and so forth. Imagine a society that its citizens oppose those inventions, perhaps because it would damage the environment. That society will be a follower rather than a leader. Just look at the Pacific Islands. There is nothing there that they produce (used to be coconuts & bananas, but not anymore). Everything you see over there is imported from other producing countries. So, it is fair to say that the Islanders are perhaps behind NZ or Australia by 30 or more years. They are not behind because they are Greenies (although they are starting to be aware about the environment), but because they just don't produce. The only real advancement of any society is producing and as PC frequently quoted here, the unproductive of the society must get out of the way, so producers can do what they are good at, and that is producing and not be hindered from the government by legislating against them.

  13. FF: I think your getting mmixed up between environmentally-minded folks such as myself and the Green party - because here you are arguing a specific bit of Green policy which is only peripherally rrelated to their environmental policy.

    You can't possibly assume that anyone with a strong 'Green' bent automatically subscribes to every last policy invented by the Greens.