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Pater Tenebrarum

http://www.acting-man.com/?author=6

is an independent analyst and has been active in the financial markets for 28 years. He writes economic and market analyses for independent research organizations and a European hedge fund consultancy. His articles are regularly published at the blog 'Acting Man'. The blog presents articles on the markets and the economy in a mixture of commentary on current events as well as on economic theory and history from an Austrian School of Economics point of view.

 

 

Marxism and Environmentalism: The Unholy Alliance

March 23, 2016 | Author Pater Tenebrarum

The Evil of the Scarcity Meme

In order to avoid misunderstanding, let us make clear from the outset that scarcity is an unavoidable fact of life – it is the very thing that impels economic activity. If all material human wants were satisfied and we were living as immortals in the Land of Cockaigne, there would no longer be a reason to plan for the future, to save and invest, and to weigh the opportunity costs of different choices.

 

Waking up in the Land of Cockaigne. At the time this Utopia was made up, how to obtain sufficient amounts of food was the foremost concern of people.

Image by orph.us

 

In this hypothetical scenario, people may for a while engage in the pursuit of various pleasures, many would probably indulge in producing art or would pursue philosophy and science, but it is a good bet that most people would soon become severely depressed from sheer ennui. However, we live in the real world, and scarcity is a feature of this real world. Purposeful human action is directed toward  relieving this scarcity, a process that has greatly accelerated with the adoption of capitalistic production processes and the associated growth in the division of labor.

Voluntary cooperation between human beings in the framework of the market economy has made it possible for more than seven billion human beings to live on planet Earth, has cut down child mortality to a tiny fraction of what it once was, has more than doubled the lifespan of human beings, has vastly reduced famine, has improved the quality of the environment (contrary to the popular meme, air and water quality have been improving for decades), while global per capita incomes have soared.  A few months ago we discussed themisguided analysis of the market of the new left-leaning pope, on which occasion we showed the following chart by Max Roser:

 

How free market capitalism has improved human life expectancy – click to enlarge.

 

It is no coincidence that both life expectancy and the human population began to soar right after the Industrial Revolution (an event the Left describes routinely as an unmitigated evil!). In other words, free market capitalism has been very successful in relieving scarcity. Who knows what our average lifespan could be today if a completely unhampered free market economy had been in place over the past century? 130? 150? We’ll never know, but we can certainly conclude that the struggle against central economic planning and the ideologies that support it is a worthy and important one.

The chart above was originally shown in an article by Rachelle Peterson at the National Association of Scholars – as a reminder, we reproduce her remarks again below:

 

“A popular trope has it that we use one and a half earth’s worth of resources every year, destining our descendants to scarce resources. But our “mess of a planet” is actually in the best post-lapsarian shape it’s ever been. Life expectancy is up in every region of the world at all income levels , the global expectancy jumping from 66 in 1990 to 71 in 2013. That’s about 35 billion cumulative years added to the human family. By comparison, global life expectancy in 1900 was about 30 years.

Child mortality is down by half since 1990 alone , quality of life is rising, and happiness is generally ticking skyward . The percentage of the world’s population living on a dollar a dayhas plummeted 80% since 1970 , down from more than a quarter of the globe’s inhabitants to 5.4% as of 2006.

Far from “doing nothing,” we’ve cut pollution and cleaned up the environment. Air pollution has been declining for the past 110 years , and the risk of death from poor air quality has fallen eight-fold. Since 1990, more than 2 billion people have gained access to clean drinking water.”

 

(emphasis added)

Ever since Malthus wrote his screed about the imaginary threat of overpopulation in 1798, the idea that population control is needed and that we are “running out of resources” has been very popular, in spite of what are by now almost 220 years (!) of rather glaring evidence to the contrary. It is actually astonishing that a revered economist like Malthus could make the error of believing economics to be a kind of zero-sum game.

 

Malthus’ 1798 essay on population will forever stand as a monument to economic error.

 

Considering the time when overpopulation “guru” Paul Ehrlich and the Club of Rome first appeared on the scene, it seems that the popularity of scarcity memes tends to increase whenever credit expansion and money printing egged on by central bank policies cause commodity prices to soar. Note here that one cannot know in advancewhich prices will be driven higher by money printing, but one can be certain that some prices will be.

Sometimes the commodities sector becomes a beneficiary of monetary pumping, especially after a lengthy bust comes to an end and production capacities have been reduced.  Whenever that happens, we see a veritable flood of very earnest papers and press reports about “peak oil”, about the world “losing all its top soil” and “running out of water any minute”, and of course running out of every other commodity one can think of. Soon billions will starve to death, unless they get cooked or drowned by global warming first.

Even respected investors like GMO’s Jeremy Grantham can suddenly discover their inner Karl Marx when faced with a few years of rising commodity prices (see “Grantham and Marx – the Odd Couple of the Month” for details on this).

 

Paul R. Ehrlich – according to one web site, he is “the worlds most renowned population analyst” (we think he should be the most reviled one). Every major prediction he has made since the 1960s has been utterly wrong (as in, 180 degrees wrong because the exact opposite happened). So has he recanted? No! He still believes, in his own words: “We have to humanely and as rapidly as possible move to population shrinkage“. We note that Mr. Ehrlich has so far refused to set an example by removing himself from the gene pool.

Photo credit: L. A. Cicero

 

These periods of rising scarcity paranoia are regularly followed by a collapse in prices when the boom invariably turns to bust. Then the tone of press reports will suddenly change rather noticeably and one gets to read about things like a sudden “oil glut”. In fact, the number of Google search results on “glut of oil” is close to overtaking the number of “peak oil” references (8,530,000 vs. 9,320,000 results). Who would have thought?

The ideas propagated by Ehrlich, the Club of Rome and similar doomsters are what we refer to as the “scarcity meme” above. Their flavor of scarcity propaganda represents a sub-movement of environmentalism. Since the latter inter alia regards mining and oil exploration as the devil’s work, the scarcity meme obviously fits well with its agenda.

After all, so the theory of the scarcity propagandists goes, we would be better off by not extracting valuable commodities! Hopefully it is not necessary to explain why this idea is complete rubbish. We do believe our readers have at the very least an inkling about economic principles, something Ehrlich and his associates can certainly not be accused of.

So why are we calling this propaganda evil? Its main objective is to scare people, in order to get them to accept certain policies. One may well wonder how “we” are supposed go about moving “rapidly and humanely to population shrinkage” as Mr. Ehrlich proposes. Should we build a few gas chambers? Just asking. Allow us to point out in this context that population growth is actually positive for human progress, not negative as Ehrlich contends (we plan to discuss this point in more detail in a future post on demographics).

No matter which scarcity meme one looks at, whether it is the overpopulation scare or the peak oil scare, at its root there is always the demand for the “government to do something”, i.e., the demand for more central planning and coercion. In short, it is all about exercising power over the lives of people.

 

The Left and Environmentalism – Enemies of Civilization

Until about the 1960s the political left never cared about environmentalism. Previously it was, if anything, more likely to be opposed to it. In fact, the command economies of the former communist bloc, i.e. the countries in which socialism had been realized to its full extent, were the worst polluters in all of human history. As an example, after German reunification air pollution in the former socialist GDR was found to be between 8 to 12 times higher than in West Germany.