"Suffering is a divided mind. Happiness is an integrated state." #QotD

"Conflict is not a pleasant state. PJ Eby says, with deep truth, that ‘suffering is a divided mind.’
    "Happiness is an integrated state."

-- two quotes combined: from Jean Moroney's post on 'Eyes-Wide-Open Decision-Making,' and from Onkar Ghate's interview with Dave Rubin on 'Ayn Rand's Philosophy of Happiness'
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"Simplicity - with a capital "S" - is difficult to comprehend nowadays. Life is a more complex struggle now. It is now valiant to be simple: a courageous thing to even want to be simple. It is a spiritual thing to comprehend what simplicity means.” #QotD

“As we live and as we are, Simplicity - with a capital "S" - is difficult to comprehend nowadays. We are no longer truly simple. We no longer live in simple terms or places. Life is a more complex struggle now. It is now valiant to be simple: a courageous thing to even want to be simple. It is a spiritual thing to comprehend what simplicity means.”
          ~ Frank Lloyd Wright, from his book 'The Natural House'

[Hat tip Frank Lloyd Wright's Unity Temple Restoration Foundation]

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Question of the Day: "What does zero interest mean?"

"News Flash: the central bank cannot print wealth...
    "What does this really mean [then when the interest rate on the 30-year Treasury, or arguably the 10-year], gets to zero?
    "What does zero interest mean? It means there is no demand for credit by businesses that justifies [them] paying more than zero... If businesses had opportunities to profit at higher rates, they’d take all the credit they could get at those rates. But ... debt capacity aside, what would they put the cash to?
    "No, buying their own shares, or speculating on other assets, does not count.
    "What does zero interest mean? It means cash borrowed at zero is expected to generate a marginal return. And that means all the cash borrowed previously, at higher rates, is generating submarginal returns. Those capital assets are being churned. That is, competitors buy bigger machines, build bigger hotels, or more glorious restaurants simply by dint of borrowing cheaper. And the process has culminated in a market interest rate of zero. Zero means: 'here, take this cash and use it for free. Yeah, no, we don’t expect a return.'
    "When there is no return on lending, that is a sign that there is little to no return on anything that can be financed by borrowing. One necessitates the other. We encourage you to stop here and think about this. It is a critical point.
Getting back to the problem of all the borrowing incurred at a higher rate, well much of it can be refinanced at lower rates or at the then-current zero rate. But that does not fix the problem of a restaurant that looks dated, with middling finishes and cheaper materials that now competes against an opulent Dining Palace. Customers prefer the latter, and no amount of refinancing can fix that problem.
    "Large corporations might borrow to refurbish and remodel their stores. This piles more debt on top of the old debt, which they cannot retire. They cannot operate the perfectly good old restaurant, so they go deeper into debt to rebuild it into something that can be operated. It may pay the debt service (hah!) payroll, food ingredients, etc. But it cannot amortise the debt.
    "And that brings us full circle. At zero interest, the debt has become so heavy it cannot be lifted. The force that would lift it is: return on capital. And it is precisely RoC that has been atrophied by decades of force-feeding capital to businesses. During this long process, the demand for capital picked up, only with each downtick in interest rates.
    "And finally the end is reached. Zero interest. In physics, there is a construct of infinite mass and zero volume. It is called the singularity.
    "A black hole."
          ~ Keith Weiner, from his post at Monetary Metals on 'The Economic Singularity'

RELATED READING:

• 'The  Unreserved Reserve Bank of NZ: Why Unorthodox Monetary Policy Needs Boundaries' -  Oliver Hartwich, Eric Crampton & Robert McCulloch, NZ INITIATIVE
• In 1789 Marie Antoinette said 'let them eat cake.' In 2019, the Reserve Bank tells us to eat 'cheap money.’ - NOT PC
• Rising House Prices: There are two leading causes - NOT PC
• How the Stock Market & Economy Really Work - NOT PC

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"We got into this stupid housing mess because the 'Let's protect Precious Agricultural Land' people teamed up with the 'Let's protect Precious Neighbourhood Amenity' people and banned anybody building anything anywhere." Bonus #QotD

"We got into this stupid housing mess because the 'Let's Protect Precious Agricultural Land' people teamed up with the 'Let's Protect Precious Neighbourhood Amenity' people and banned anybody building anything anywhere.
    "I get depressed when a government that came in promising to fix the housing crisis screws this stuff up."
          ~ Eric Crampton, from his post on 'Precious Arable Land'

[Hat tip Mitchell Palmer]

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“Proposals for an increased volume of credit, therefore, are merely another name for proposals for an increased burden of debt. They would seem considerably less inviting if they were habitually referred to by the second name instead of by the first.” #QotD

“Proposals for an increased volume of credit, therefore, are merely another name for proposals for an increased burden of debt. They would seem considerably less inviting if they were habitually referred to by the second name instead of by the first.”

~ Henry Hazlitt, from his book Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics -- the book that has Deborah Russell MP's panties in a bunch
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"Cheap money policies eventually bring about far more violent oscillations in business than those they are designed to remedy or prevent." Bonus #QotD

"[W]e may define 'savings' and 'investment' as constituting respectively the supply of and demand for new capital. And just as the supply of and demand for any other commodity are equalised by price, so the supply of and demand for capital are equalised by interest rates. The interest rate is merely the special name for the price of loaned capital. It is a price like any other.

    "This whole subject has been so appallingly confused in recent years by complicated sophistries and disastrous governmental policies based upon them that one almost despairs of getting back to common sense and sanity about it. There is a psychopathic fear of 'excessive' interest rates. It is argued that if interest rates are too high it will not be profitable for industry to borrow and invest in new plants and machines. This argument has been so effective that governments everywhere in recent decades have pursued artificial 'cheap money' policies. But the argument, in its concern with increasing the demand for capital, overlooks the effect of these policies on the supply of capital. It is one more example of the fallacy of looking at the effects of a policy only on one group and forgetting the effects on another…

    "The effect of keeping interest rates artificially low, in fact, is eventually the same as that of keeping any other price below the natural market. It increases demand and reduces supply. It increases the demand for capital and reduces the supply of real capital. It brings about a scarcity. It creates economic distortions. It is true, no doubt, that an artificial reduction in the interest rate encourages increased borrowing. It tends, in fact, to encourage highly speculative ventures that cannot continue except under the artificial conditions that gave them birth. On the supply side, the artificial reduction of interest rates discourages normal thrift and saving. It brings about a comparative shortage of real capital.

    "The money rate can, indeed, be kept artificially low only by continuous new injections of currency or bank credit in place of real savings. This can create the illusion of more capital just as the addition of water can create the illusion of more milk. But it is a policy of continuous [monetary and asset-price] inflation. It is obviously a process involving cumulative danger...

    "Cheap money policies, in short, eventually bring about far more violent oscillations in business than those they are designed to remedy or prevent."

~ then NY Times senior economics writer Henry Hazlitt, writing as if yesterday on 'The Assault on Saving,' from his book Economics in One Lesson

* * * * * 

Henry Hazlitt explains the primary lesson contained in his book, "Economics in One Lesson," beginning with the reason the lesson is still needed: "Economics is haunted by more fallacies than any other study known to man..."

A walk through Hazlitt's chapter 'The Assault on Saving' ...

"Socialists imagine that the minimum wage increases wages paid. But the fact is that it increases, not the wage paid to a given worker, but the threshold. That is, it raises the bar on what employment is legally permissible." #QotD

"In an attempt to raise wages, the government imposes a minimum wage by law. Socialists imagine that this increases wages paid. But the fact is that it increases, not the wage paid to a given worker, but the threshold. That is, it raises the bar on what employment is legally permissible..."
    "A price fixing scheme like minimum wage is based on the idea that ... there is a magically right wage—nowadays called “living” ... And the government, of course, has the job to ensure it is paid. Of course, the government cannot guarantee any such thing....
    "On one side, there are people who go without work. They suffer the hardships of poverty .... On the other side, there are entrepreneurs who go without workers. ...
    "By fixing price, they think to fix the economic outcomes. But the reality is the opposite ... government intrusion into the market causes dis-coordination. There are people who lack for work, and at the same time companies who lack for workers. This is an extraordinary thing, for all that we take it for granted and accept it as if it were normal."
          ~ Keith Weiner, from his post 'Distortion Due to Minimum Wage Law'
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"It will scarcely be necessary to demonstrate the beneficial tendency of free trade in general, or to prove that it is for the interest of a nation to purchase its commodities where they are cheap, and not where they are dear. Self-evident as this proposition may appear, it has had to make its way against all the resistance which strong interests and still stronger prejudices could oppose to it." #QotD

"It will scarcely, we imagine, be any longer deemed necessary to demonstrate the beneficial tendency of free trade in general, or to prove that it is for the interest of a nation to purchase its commodities where they are cheap, and not where they are dear. Self-evident as this proposition may appear, it is one of the most modern of all modern discoveries, and has had to make its way against all the resistance which strong interests and still stronger prejudices could oppose to it."

~ John Stuart Mill, from his 1825 essay “The Corn Laws" (reprinted in Essays on Economics and Society Part I)

[Hat tip Cafe Hayek]
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In 1789 Marie Antoinette said 'let them eat cake.' In 2019, the Reserve Bank tells us to eat 'cheap money.’

A piece of excrement called Adrian Orr
[pic of Herald hard copy]

Many savers live off their savings. In order to maintain their capital, many -- older, retired folk, especially -- live off the interest on their savings.

Mr. Adrian Orr has just told all those people, every single one of them, to get stuffed.

Mr. Adrian Orr is the governor of the New Zealand Reserve Bank.

This makes him, by virtue of the Official Cash Rate, which he dictates, the person who sets the level of New Zealand's interest rates.

Without any special inflationary pressure on him (controlling which purports to be the purpose of his job), Mr. Adrian Orr announced this week that he intends to savage savers. Not in those words, naturally. What he did was announce a savage and unprecedented cut to the make the OCR the lowest it has ever been in history, while telling savers to suck it up: Savers, he said, "might have to think about investing in other assets if you want to get higher than what you consider the lowest-risk nominal returns."

In other words, savers who wish to stay afloat need to seek out all those forms of risky too-good-to-be-true investments that collapsed so spectacularly just over a decade ago.

Mr Orr is considered a prudent manager of the country's interest rates.

Clearly however, by his subsequent (and frankly stupid) comments about the "need" at this dangerous time for govt spending, for greater borrowing and spending, and to flush out cash from under pillows, he is a student of John Maynard Keynes -- who famously called for interest rates to be driven to zero in order to bring about "the euthanasia of the rentier." That is, to euthanase all those folk, like all those retirees, all those rentiers, as he labelled them, who live off the interest on their savings.

In what world would you call that "prudence"?

Every student of Keynes is aware of Keynes's ambition here. Because this was not just one of My Keynes's many idle remarks. This was

a linchpin of his basic political programme, the “euthanasia of the rentier” class: that is, the state’s expanding the quantity of money enough so as to drive down the rate of interest to zero, thereby at last wiping out the hated creditors. It should be noted that Keynes did not want to wipe out investment: on the contrary, he maintained that savings and investment were separate phenomena. Thus, he could advocate driving down the rate of the interest to zero as a means of maximising investment while minimising (if not eradicating) savings.

The basic message to savers being, as from Mr Orr, to get stuffed. This cheap money policy is here to stay, Keynes wished for and Orr now seems to say, and the "class of savers" seeking should simply suck it up and get used to it. As with others, like the FT's Martin Wolf, who have similarly invoked Keynes's methodology

What makes [this] conclusion so tainted is that he understands the consequences of this policy... the ruination of people who earn interest on their savings.
    He sees the problem as insufficient aggregate demand...
    This is classic Keynesian logic: solve the problems of debt and monetary expansion by engaging in more debt and monetary expansion. With governments reluctant to expand spending further he concludes that we are stuck with the second-best solution of a cheap money policy consisting of ultra-low interest rates and quantitative easing.

Besides, as we have observed, Mr. Orr believes the cautious "rentier" no longer serves a useful purpose.

Mr. Orr's comments are of a piece with other we might declare as an "unabashed mouthpiece for the ruling power elite." Because as Mark Thornton points out about the FT's Martin Wolf when he openly advocated (in a piece titled “Wipe out Rentiers with Cheap Money,”) what Mr Orr now clearly implies:

He clearly and correctly [observes] what this policy actually accomplishes — cheap monetary policy hurts most people in the economy, particularly workers and savers and redistributes wealth to the ruling elites. The losers from easy credit policy include the broad categories of insurance, pensions, and households. This long known result was confirmed in a [2014] study ... by the McKinsey Global Institute.

    Insurance is far more important than most people think. Insurance protects us against the loss of life (life insurance), our health (medical insurance), our homes (home, flood, and fire insurance), and our vehicles (car insurance). There is also general liability insurance and various types of business insurance. Insurance companies even offer incentives to be better drivers, to maintain safer homes, and to live healthier lifestyles, and they strive to eliminate moral hazard. Insurance companies are hurt by cheap money policies because their interest return on investments are now lower than required to meet their payout obligations. This hurts the companies and their policyholders because it requires higher premiums and raises the possibility of bankrupting insurance companies.
    Pensions and retirement savings accounts are also hurt by easy credit policies. These institutions arose to address the problems associated with increased longevity brought about by increased prosperity. By saving during your working career you provide income for your retirement. Cheap money policy and low interest rates discourage saving and also makes it more difficult for pensions to earn returns on their investments necessary to make future payouts to retirees. The same is true for individuals who have retirement savings accounts.
    In order to achieve higher returns, pension funds and people saving for retirement have been forced into more risky investments. Savings accounts, money market mutual funds, certificates of deposit, and short-term government bonds earn less than 1 percent, and after taxes and inflation they are losing purchasing power. Hence, central banks have been forcing these people to invest in the stock markets and junk bonds and the possibility of large losses in the future.

This is precisely and specifically what Mr Orr demands of householders, to "stop suffering money illusion and if that's still too low a return then push your bank or investment advisers for alternatives." The unspoken adjective here being "riskier" alternatives.

    The class labeled 'households' [who are the losers here] is basically everyone except the small number of people who benefit from cheap money policy. Households are harmed in a variety of ways, including the weak job market, declining real wages, and the negative impact on savings. It has also harmed them by encouraging households to take on extremely high amounts of debt, much of which comes with much higher interest rates.

    The winners from cheap money policy are the government, large corporations, and large banks in the US. Low interest rates clearly benefit borrowers with lower interest rates and governments, banks, and corporations are the biggest borrowers. In general, artificially low interest rates benefit capital and hurt labor. Cheap money policy by central banks helps banks, like subsidized flour policies would help bakeries. Banks are also helped by most forms of government bailouts.
    The easy money policy makes it easy for large corporations to borrow large amounts of credit at very low interest rates. It also forces stock prices up as alternative forms of savings, such as certificates of deposits, yield a real negative return. It has also made it very cheap for corporations to buy back their stock and to leverage their balance sheets. The stock market bubble is the direct effect of the cheap money policy of the central bank.
    Mr. Wolf and central bankers around the world [like Mr. Orr still] have the idea that cheap money policies can increase stock prices and that this will lead to sustainable increases in investment, consumer spending, and increased aggregate demand. In reality, cheap money policies cause economic bubbles that are inherently unstable and subject to crash. It should be obvious that harming the workers and savers of society to benefit the wealthy ruling class is no way to get the economy back on track. Therefore, cheap money policy is a scam of gigantic global proportions.

    Achieving economic recovery and growth requires first knowing what caused the problem in the first place. A lack of aggregate demand is the effect, not the cause. A lack of aggregate demand is the crisis, not the cause of it. The cause of the crisis is easy money policy and runaway government spending and debt. Continued easy money policy and government spending will only make the negative consequences of the crisis even worse.
    The solution consists of: 

1. Central banks should have no monetary policy and they should not interfere with interest rates.
2. Government budgets should be balanced and reduced over time.
3. Government regulations, subsidies, and taxes should be eliminated.
4. Land, labour, and capital should be transferred from the public sector to the private sector. And,
5. Programmes that burden future generations should be ended.

The horrible irony here is that when Keynes wrote approvingly of the euthanasia of the rentier class, he was speaking of a powerful class of monopoly capitalists and aristocrats. When [Mr. Orr implies] the euthanasia of the rentier he is actually targeting insurance, pensions, and households, with a policy that has enormous financial benefits to the class of people that Keynes was targeting for extinction!
    In 1789 Marie Antoinette said 'let them eat cake.' In [2019, Mr. Orr] tells us to eat 'cheap money.'

[Note: The text quoted above comes from a 2014 post by Mark Thornton critiquing the Financial Times's Martin Wolf. That it could have been written yesterday, and directed at Adrian Orr, is reason enough to quote it in full, with permission, here.]

RELATED READING:

• "When the Fed [i.e., the US Federal Reserve Bank] goes back to rate cuts, after months of stopping rate cuts, it means only that their recovery failed, the economy is moving back toward recession, and the Fed sees a need to go back to stimulus measures because the economic recovery was not sustainable on its own.
      "It means the patient is in need of perpetual life support to stay alive, and that is horrible news. Truly abysmally horrible, as it is the end of hope for the US [and world] economy if the Fed, by going to the zero bound for years and creating the largest heap of new money ever created for years, could not create a recovery that can sustain itself but has to go right back on to emergency life support.
      "It also demonstrates how utterly dependent on the Fed this market has become, which is miserably unhealthy."
  When will we win? Chinese trade victory is a mirage - THE GREAT RECESSION BLOG

• "The boom-and-bust business cycle is not a natural result of free-market capitalism, but rather of government intervention."
  Austrian Economics Is Essential to Understand Booms, Busts, and Money Itself - Richard Ebeling, FEE

• "If the market interest rate is artificially suppressed, people save less and consume more out of their incomes – compared to a situation in which the market interest rate had not been artificially lowered. In addition, firms invest in projects that had not been undertaken had the market interest rate not been manipulated downward. In other words: The artificially lowered market interest rate leads an unsustainable production and employment structure."
  The Fed Has No Choice But to Return to Ultra-Low Interest Rates - Thorstein Polleit, Mises Wire

• "According to the Austrian School of economics, however, the latest crisis has been brought about by a monetary policy of artificially suppressing the interest rate; and pushing interest rates down even further will only make matters worse."
  The Cure (Low Interest Rates) Is the Disease - Thorstein Polleit, Mises Wire

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"Through all time, wherever mankind have attempted to live in peace with each other, both the natural instincts & the collective wisdom of the human race have acknowledged and prescribed, as an indispensable condition, obedience to this one only universal obligation: viz., that each should live honestly towards every other." #QotD

"The science of justice ... is the science of all human rights; of all a man’s rights of person and property; of all his rights to life, liberty, and the pursuit of happiness.
    "It is the science which alone can tell any man what he can, and cannot, do; what he can, and cannot, have; what he can, and cannot, say, without infringing the rights of any other person.
    "It is the science of peace; and the only science of peace; since it is the science which alone can tell us on what conditions mankind can live in peace, or ought to live in peace, with each other.
    "These conditions are simply these: viz., first, that each man shall do, towards every other, all that justice requires him to do; as, for example, that he shall pay his debts, that he shall return borrowed or stolen property to its owner, and that he shall make reparation for any injury he may have done to the person or property of another.
    "The second condition is, that each man shall abstain from doing so another, anything which justice forbids him to do; as, for example, that he shall abstain from committing theft, robbery, arson, murder, or any other crime against the person or property of another.
    "So long as these conditions are fulfilled, men are at peace, and ought to remain at peace, with each other. But when either of these conditions is violated, men are at war. And they must necessarily remain at war until justice is re-established.
    "Through all time, so far as history informs us, wherever mankind have attempted to live in peace with each other, both the natural instincts, and the collective wisdom of the human race, have acknowledged and prescribed, as an indispensable condition, obedience to this one only universal obligation: viz., that each should live honestly towards every other.
    "The ancient maxim makes the sum of a man’s legal duty to his fellow men to be simply this: 'To live honestly, to hurt no one, to give to every one his due.'
    "This entire maxim is really expressed in the single words, to live honestly; since to live honestly is to hurt no one, and give to every one his due."
          ~ Lysander Spooner, from his 1882 pamphlet on Natural Law

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"It is only because the majority opinion will always be opposed by some that our knowledge and understanding progress." #QotD

"It is only because the majority opinion will always be opposed by some that our knowledge and understanding progress."          ~ Friedrich Hayek, from his book The Constitution of Liberty.

"If you're running a dictatorship, you don't really have to worry about the welfare or the property rights of the ordinary citizen. Only the people who keep you in power, a very small group, matter." #QotD

"If you're running a dictatorship, you don't really have to worry about the welfare or the property rights of the ordinary citizen. Only the people who keep you in power, a very small group, matter."
          ~ Bruce Bueno de Mesquita

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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it." #QotD

"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
          ~ Thomas Paine, from The American Crisis, No. 4, 1777

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"The moment that housing, a universal human activity, becomes defined as a problem, a housing problems industry is born with an army of experts, bureaucrats and researchers, whose existence is a guarantee that the problem won't go away." #QotD

"The moment that housing, a universal human activity, becomes defined as a problem, a housing problems industry is born with an army of experts, bureaucrats and researchers, whose existence is a guarantee that the problem won't go away."

~ Colin Ward, in his Preface to John Turner's book Housing By People: Towards Autonomy in Building Environments.

"The human race divides politically into those who want people to be controlled and those who have no such desire." #QotD

"Political tags — such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth — are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire. The former are idealists acting from highest motives for the greatest good of the greatest number. The latter are surly curmudgeons, suspicious and lacking in altruism. But they are more comfortable neighbours than the other sort." 

          ~ Robert Heinlein
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"The question I get asked by religious people all the time is, without God, what’s to stop me from raping all I want? And my answer is: I do rape all I want. And the amount I want is zero." #QotD

"The question I get asked by religious people all the time is, without God, what’s to stop me from raping all I want? And my answer is: I do rape all I want. And the amount I want is zero. And I do murder all I want, and the amount I want is zero. The fact that these people think that if they didn’t have this person watching over them that they would go on killing, raping rampages is the most self-damning thing I can imagine." 

        ~ Penn Jillette (the talking half of Penn and Teller) from an interview at Interrobang

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"One of the principal costs of abandoning libertarian principle on immigration is an immigration police state.' #QotD

"One of the principal costs of abandoning libertarian principle on this particular issue [of immigration is] an immigration police state, one consisting of highway checkpoints for travellers who have never left the United States, roving Border Patrol checkpoints, warrantless searches of farms and ranches within 100 miles of the border, body-cavity searches of Americans returning from overseas vacation, warrantless searches of cell phones and mandatory disclosure of passwords, violent raids on private businesses, forcible separation of children from parents, squalid conditions in immigrant concentration camps, and boarding of private buses to examine people’s papers.
    "What is the real argument that these libertarians are using in support of [abandoning their principles and joining up with the statists on this particular issue]? They are saying that if we have open borders and a welfare state, foreigners will come to the United State and get on welfare, which will mean that Americans will have to pay higher taxes. That’s the core of their argument—that libertarians should abandon their principles because open borders and a welfare state will mean that people will have to pay higher taxes.
    "Of course, that’s not necessarily true..."
   ~ Jacob Hornberger, from his post 'Open Borders Are Compatible With a Welfare State'
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"We like to tell ourselves that the satanic hysteria that wrongfully convicted Peter Ellis wouldn’t happen today, but with the spread of woke mob social media where accusation is the new evidential threshold, he’d probably be found guilty of everything under the sun if the accusations were made on social media today." Bonus #QotD

"We like to tell ourselves that the satanic hysteria that wrongfully convicted Peter Ellis wouldn’t happen today, but with the spread of woke mob social media where accusation is the new evidential threshold, he’d probably be found guilty of everything under the sun if the accusations were made on social media today."

~ Martyn Bradbury, from a post exploring why the left are crap at winning hearts and minds
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"Preventing access to unstructured play can deprive children of the opportunity to develop risk-management skills that are necessary for them to thrive." #QotD

"If a parent worries that unsupervised play is dangerous, the [Canadian Public Health Association, with support from the Lawson Foundation] responds:
    "'It is understandable you’re concerned for your child’s safety, and these concerns are appreciated. Children actually learn new skills when we allow them to engage in unstructured play, and they’re less likely to have more serious injuries later on. They are able to learn about their physical capabilities which allow them to rely less on adults to manage their environments.
    "'Preventing access to unstructured play can deprive children of the opportunity to develop risk-management skills that are necessary for them to thrive as they grow older. These skills include learning how to navigate risky circumstances and environments, knowing personal physical limits, how to cooperate with peers, and solve unforeseen problems.'"
~ from Lenore Skenazy's post at 'Let Grow': 'Let My Kids Play Outside With All Those Strangers and Cars??? An Evidence-Based Response'

[Pic from Let Grow]
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"The notion that we need inflation to make an economy grow is obscenely brainless." Bonus #QotD

"The notion that we need inflation to make an economy grow is obscenely brainless."
          ~ Vinay Kolhatkar

"One has to free oneself from the illusion that international climate policy is environmental policy. This has almost nothing to do with environmental policy anymore..." #QotD

"One has to free oneself from the illusion that international climate policy is environmental policy. This has almost nothing to do with environmental policy anymore..." 

~ United Nations Intergovernmental Panel on Climate Change (IPCC) official Ottmar Edenhofer, lead author of the IPCC’s fourth summary report released in 2007, in an interview with Germany’s NZZ Online.

"The institution of private property, in the full, legal meaning of the term, was brought into existence only by capitalism. In the pre-capitalist eras, all property belonged to the head of the tribe, and was held only by his permission, which could be revoked at any time, at his pleasure." #QotD

"The institution of private property, in the full, legal meaning of the term, was brought into existence only by capitalism. In the pre-capitalist eras, private property existed de facto, but not de jure, i.e., by custom and sufferance, not by right or by law. In law and in principle, all property belonged to the head of the tribe, the king, and was held only by his permission, which could be revoked at any time, at his pleasure ... on the unchallenged axiom that wealth is an anonymous, social, tribal product.    "That notion has not been challenged to this day; it represents the implicit assumption and the base of contemporary political economy." 

          ~ Ayn Rand, from her essay 'What is Capitalism?'
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"When you want to help people, you tell them the truth. When you want to help yourself, you tell them what they want to hear." #QotD

"When you want to help people, you tell them the truth. When you want to help yourself, you tell them what they want to hear."  

        ~ Thomas Sowell
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"Conflating people advocating for small, limited government with anything to do with Nazism is intellectual malpractice." #QotD

"Conflating people advocating for small, limited government with anything to do with Nazism is intellectual malpractice."
          ~Mark Gleason

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"We are descended from a people whose government was founded on liberty; our glorious forefathers of Great Britain made liberty the foundation of everything. That country is become a great, mighty, and splendid nation; not because their government is strong and energetic, but, sir, because liberty is its direct end and foundation." #QotD

"We are descended from a people whose government was founded on liberty; our glorious forefathers of Great Britain made liberty the foundation of everything. That country is become a great, mighty, and splendid nation; not because their government is strong and energetic, but, sir, because liberty is its direct end and foundation."
~ Patrick Henry, 1787, from the Debates on the Adoption of the [US] Federal Constitution.

"Boris Johnson is taking over the Conservative party like a gangster taking over a crime syndicate... Yet step back and you see a weak man posing as a tough guy." #QotD

"Boris Johnson is taking over the Conservative party like a gangster taking over a crime syndicate...
    "Don’t let ideological labels mystify you. 'Remainer,' 'Leaver,' 'no dealer' – these are just words to confuse the credulous and stop them seeing their country clearly. Power is the only word that need concern you. Power, rather than ideology, is what runs together resignations and sackings...
    "I have never believed the media wisdom that 'the thing about Boris is that he just wants to be loved.' As an old journalist once told me, the one thing everyone says about a public figure is invariably wrong. So it has proved with Johnson.
    "He does not want to be loved. He wants to dominate and to command: he wants to be obeyed...
    "Yet step back and you see a weak man posing as a tough guy. He has a nominal parliamentary majority of three and falling. He has become Tory party leader by making promises which are impossible to meet ..."
          ~ Nick Cohen, in his op-ed 'Boris is a weak man posing as a tough guy'

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Ignore the Fear Mongering, Here's What Climate Change Models Actually Say

According to data from the most recent IPCC assessment, even so-called “unchecked” climate change would probably only mean that our great-grandkids will see a smaller increase in their standard of living than they otherwise would have. In other words, explains Bob Murphy in this guest post, it would probably merely mean that people in the year 2100 will only be a lot richer than we are, as opposed to a whole lot richer...

An Earth scientist’s recent article currently circulating around social media highlights a terrifying conversation he had with “a very senior member” of the IPCC, which is the UN’s body devoted to studying climate science. The upshot of their conversation was that millions of people will die from climate change, a conclusion that leads the author to lament that humans have created a consumption-driven civilization that is “hell-bent on destroying itself.”

As with most such alarmist rhetoric, there is little to document these sweeping claims—even if we restrict ourselves to “official” sources of information, including the IPCC reports themselves. The historical record does not justify panic, but instead should lead us to expect continued progress for humanity, so long as the normal operation of voluntary market interactions continues without significant political interference to sabotage it.

The Conversation

Here is the opening hook from James Dyke’s article, in which he grabs the reader with an apocalyptic conversation:

It was the spring of 2011, and I had managed to corner a very senior member of the Intergovernmental Panel on Climate Change (IPCC) during a coffee break at a workshop…
    The IPCC reviews the vast amounts of science being generated around climate change and produces assessment reports every four years. Given the impact the IPPC’s findings can have on policy and industry, great care is made to carefully present and communicate its scientific findings. So I wasn’t expecting much when I straight out asked him how much warming he thought we were going to achieve before we manage to make the required cuts to greenhouse gas emissions.
    “Oh, I think we’re heading towards 3°C at least,” he said.
    …
    “But what about the many millions of people directly threatened,” I went on. “Those living in low-lying nations, the farmers affected by abrupt changes in weather, kids exposed to new diseases?”
    He gave a sigh, paused for a few seconds, and a sad, resigned smile crept over his face. He then simply said: “They will die.”

Putting aside (if you can) the creepiness of someone smiling as he predicts millions of deaths—sort of like a James Bond villain—we must enquire: How plausible are these warnings? Does the climate change literature actually support such bold projections?

As it turns out, the answer is “no.” It is certainly true that there are many particular dangers regarding climate change, which could have deleterious consequences on human welfare (broadly defined). But in order to conclude that millions of deaths hang in the balance—or even billions, as the author of the article states in his concluding remarks—we have to grossly exaggerate all of the various mechanisms and scenarios, and we have to assume that humans do nothing at all to adapt to the changing circumstances over the course of decades.

In reality, it is much more likely that humans will adapt to whatever changes the climate brings them in the coming decades, and that various measures of human well-being—including not just GDP but also life expectancy and declining mortality rates from various ailments—will continue to improve. The voluntary market economy is an excellent general-purpose solution to the challenges facing humanity, including the handling of whatever curveballs climate change might throw.

IPCC’s Summary of Climate Change Damages

Unfortunately, it is difficult to come up with a statistic such as, “How many excess deaths does the IPCC predict from climate change by the year 2100, if governments don’t take further action?” If you consult the AR5, which is the latest IPCC report, and look at chapter 11 (Working Group II) on the impacts of climate change on human health, you will see various trouble areas and figures concerning at-risk populations, but nothing so crisp as to allow us to evaluate the casual claims of millions of deaths.

However, the IPCC chapter does tell us upfront:

The Fourth Assessment Report (AR4) pointed to dramatic improvement in life expectancy in most parts of the world in the 20th century, and this trend has continued through the first decade of the 21st century (Wang et al., 2012). Rapid progress in a few countries (especially China) has dominated global averages, but most countries have benefited from substantial reductions in mortality. There remain sizable and avoidable inequalities in life expectancy within and between nations in terms of education, income, and ethnicity (Beaglehole and Bonita, 2008) and in some countries, official statistics are so patchy in quality and coverage that it is difficult to draw firm conclusions about health trends (Byass, 2010). Years lived with disability have tended to increase in most countries (Salomon et al., 2012).

If economic development continues as forecast, it is expected that mortality rates will continue to fall in most countries; the World Health Organization (WHO) estimates the global burden of disease (measured in disability-adjusted life years per capita) will decrease by 30% by 2030, compared with 2004 (WHO, 2008a). The underlying causes of global poor health are expected to change substantially, with much greater prominence of chronic diseases and injury; nevertheless, the major infectious diseases of adults and children will remain important in some regions, particularly sub-Saharan Africa and South Asia (Hughes et al., 2011). [IPCC Fifth Assessment Report, Working Group II, Chapter 11, bold added.]

Later in that same chapter, we see the following table, which is illustrative of the general pattern when it comes to long-term projections about climate change harms to humanity:

Source: IPCC AR5, Working Group II, Chapter 11

As the table indicates, the absolute number (let alone the percentage of the population) of undernourished children in all developing countries, even with climate change, is projected (with certain assumptions) to drop by 9.4 million from the year 2000 to 2050. It’s true that the number increases in sub-Saharan African, but it falls in every other region. (It also rises in sub-Saharan Africa even without climate change.) We should also keep in mind that UN projections assume the populations in 26 African countries will at least double by 2050, meaning that the percentage of children who are malnourished still drops even in sub-Saharan Africa and even with climate change, according to the UN’s estimates.

As I have explained—most recently in this article—when it comes to climate change, the big projected damages don’t occur until many decades into the future. But for those people, standard economic growth will have raised their baseline standard of living by so much, that even if the UN-endorsed best-guess projections of climate change are accurate, those humans will still be much better off than we are today.

“It’s Getting So Much Better All the Time”

To see more evidence of this pattern, consider the following chart depicting mortality from various causes, created by Our World in Data using data from the Institute for Health Metrics and Evaluation (IHME), 2018:



As the chart indicates, the death rates from various types of causes have fallen sharply around the world, particularly those from communicable diseases, and all within the last 20 years—when climate change was ostensibly becoming a deadly problem for humanity that only “deniers” could ignore.

For another line of evidence, let me show you a table where the UN did give us some measures of “aggregate” damages from climate change. Specifically, in chapter 10 of the AR5 we see the following table summarising the climate change economics literature on the subject:

Source: Table 10.B.1, IPCC AR5, Working Group II, p. 82.

As the table summarises, even for warming of three degrees Celsius, all but one of the studies predicted non-alarming amounts of damage. (I discuss the table more in this article.) Now I should emphasise that although the impacts are measured in GDP terms, these damage estimates include things like impacts on human health and mortality. It isn’t simply a measured reduction in the flow of TV output because some of the factories are under the sea.

In any event, it should be clear from the table that—contrary to James Dyke—we should not expect millions, let alone billions (!), of people to die from climate change. Even if climate change proceeds as the peer-reviewed literature assumes in the most pessimistic emissions scenarios, it will probably merely mean that people in the year 2100 will only be a lot richer than we are, as opposed to a whole lot richer.

What About the Catastrophic Scenarios?

Now it’s true, nobody can guarantee that there won’t be a climate change catastrophe. But we must realise that at least several of the featured studies warning of huge negative impacts are based on obviously flawed assumptions.

Oren Cass provides us with some examples. One study looked at the increase in mortality in a cold, northern US city during a particularly brutal summer, and then extrapolated to show a staggering number of excess heat deaths decades down the road, when such “bad summers” were more common. Yet in the projections, the northern cities were no hotter than southern US cities are right now, and yes these southern cities don’t have nearly the same heat death rate as is projected for the northern cities decades down the road.

What is happening here should be obvious after a moment’s reflection: A northern city like Philadelphia is not adapted to hot summer the way Houston or Las Vegas is. But if climate change did indeed make such temperatures the norm—over the course of several decades —then the residents of the northern cities would adapt. The most alarming of the projections of climate change damages rely on naïve assumptions about human adaptability. They would install more air conditioning, and the people born in the year (say) 2080 would be much better able physically to cope with higher temperatures in 2100 than the people alive today.

This is also the general response I would give the issue of sea-level rise. I think that much of the rhetoric here is overblown, but even to the extent that it is true, we don’t need to worry about millions of people literally dying. Even if true, this is a problem that will manifest itself over several generations. If certain coastal regions are truly threatened, then in the worst case humans will stop building (and eventually even repairing) the houses and businesses near the rising seas. Humans can gradually move out of these (sinking) neighbourhoods and go further inland, through a process of attrition rather than mass migration in the face of a tidal wave.

The climate change alarmists are given a free pass to throw out the most absurd rhetoric, such as a recent author’s warning that potentially billions of people could die because of human-caused climate change. Yet despite their claimed fidelity to the “consensus science,” such claims are not supported by the UN’s own climate change reports.

The most alarming of the projections of climate change damages rely on naïve assumptions about human adaptability. Even if we stipulate the basic projections made in the most recent IPCC assessment, what “unchecked” climate change will probably mean is that our great-grandkids will see a smaller increase in their standard of living than they otherwise would have, if some of the carbon dioxide in the atmosphere could have been costlessly removed. Such a possible outcome is no reason to panic, and it doesn’t justify massive government intervention in the energy or transportation sectors.

_______________________________________________________________________________

Robert P. Murphy is senior economist at the Independent Energy Institute, a research assistant professor with the Free Market Institute at Texas Tech University, and a Research Fellow at the Independent Institute.

This article first appeared at the Mises Blog.

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"One of the beginnings of human emancipation is the ability to laugh at authority, it's an indispensable thing." #QotD

"Mockery of religion is one of the most essential things. Because to demystify supposedly 'holy texts that are dictated by god' -- and show that they are man-made -- what you have to show are their internal inconsistencies and absurdities. One of the beginnings of human emancipation is the ability to laugh at authority, it's an indispensable thing. People can call it blasphemy if they like, but if they call it that they must assume there is something to be blasphemed, some divine work. Well, I don't accept that premise."
          ~ Christopher Hitchens, from his interview (above) with Jeremy Paxman

"The difference between patriotism and nationalism is the difference between the love a father has for his family and the love a mafia Godfather has for his 'family'" #QotD

"The difference between patriotism and nationalism is the difference between the love a father has for his family and the love a [mafia] Godfather has for his 'family'... Patriotism is a warm and personal business. Nationalism is another business entirely. It’s the kind of business Salvatore Tessio talks to Tom Hagen about after Tessio’s betrayal of Michael Corleone. Tessio: 'Tell Mike it was just business.' ...
    "Nationalism is not to be confused with patriotism… By 'patriotism' I mean devotion to a particular place and a particular way of life, which one believes to be the best in the world but has no wish to force on other people... Nationalism, on the other hand, is inseparable from the desire for power. The abiding purpose of every nationalist is to secure more power and prestige, not for himself but for the nation or other [ideological, theological, racial, etc.] unit in which he has chosen to sink his own individuality.
    "Sinking your own individuality into anything is not a prescription for happiness. Even if what you’re sinking it into is beer."
   ~ PJ O'Rourke partly paraphrasing George Orwell, in his post Patriotism v Nationalism
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"What we had seen in Apollo 11 in naked essentials — but in reality, not in a work of art — was the concretised abstraction of man’s greatness This is the fundamental lesson to be learned from the triumph: that nothing on earth or beyond it is closed to the power of man’s reason." #QotD

"What we had seen [in Apollo 11] in naked essentials — but in reality, not in a work of art — was the concretised abstraction of man’s greatness. . . .
    "One knew that this spectacle was not the product of inanimate nature, like some aurora borealis, or of chance, or of luck, that it was unmistakably human — with 'human,' for once, meaning grandeur — that a purpose and a long, sustained, disciplined effort had gone to achieve this series of moments, and that man was succeeding, succeeding, succeeding! For once ... the worst among those who saw it had to feel — not 'How small is man by the side of the Grand Canyon!' — but 'How great is man and how safe is nature when he conquers it!'
    "That we had seen a demonstration of man at his best, no one could doubt — this was the cause of the event’s attraction and of the stunned, numbed state in which it left us. And no one could doubt that we had seen an achievement of man in his capacity as a rational being — an achievement of reason, of logic, of mathematics, of total dedication to the absolutism of reality...
    "There was an aura of triumph about the entire mission of Apollo 11, from the perfect launch to the climax... Not because success was guaranteed -- it is never guaranteed to man -- but because a progression of evidence was displaying the precondition of success: these men knew what they were doing.
    "No event in contemporary history was as thrilling, here on earth, as three moments of the mission's climax: the moment when ... there flashed [on the television screen] the words: 'Lunar module has landed' -- the moment when the faint, grey shape of the ... module came shivering from the moon the screen -- and the moment when the shining white blob that was Neil Armstrong took his first step... He made no reference to God; he did not undercut the rationality of his achievement by paying tribute to the forces of its opposite; he spoke of man. 'That's one small step for a man, one giant leap for mankind.' So it was...
    "Why did I feel that joyous sense of self-confidence while watching the mission? In all of its giant course, two aspects pertaining to the inhuman were radiantly absent: the causeless and the purposeless. Every part of the mission was an embodied answer to [the two questions] 'Why?' and 'What for?' -- like the steps of a life-course chosen by the sort of mind I worship. The mission was a moral code enacted in space...
    "The lunar landing was not the greatest achievement of science, but its greatest visible result. The greatest achievements of science are invisible: they take place in a man's mind; the occur in the form of a connection integrating a broad range of phenomena. The astronaut who remarked that his spacecraft was driven by Sir Isaac Newton understood this issue. (And if I may be permitted to amend that remark I would say that Sir Isaac Newton was the copilot of the flight; the pilot was Aristotle.) In this sense, the lunar landing was a first step, a beginning, in regard to the moon, but it was a last step, an end product, in regard to the earth -- the end product of a long, intellectual-scientific development.
    "This is the fundamental lesson to be learned from the triumph of Apollo 11 ... [that] nothing on earth or beyond it is closed to the power of man’s reason."

~ Ayn Rand, from her LA Times op-ed 'Apollo 11' - written after attending the launch, and praised on his return  by Apollo 11 astronaut Michael Collins who “thought the article was probably the best I have read on Apollo XI.”
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