Monday, December 24, 2007
But it is the fourth piece that wins the prize for absurdity (and dishonesty). After casually substituting the words “climate change” for “global warming,” it dares to complain about “uncharacteristic frosts” ruining 40 percent of an avocado grower’s crop. In fact, in the apparent belief that its readers are unconcerned with contradictions, The Times actually titled this piece “Chile’s Rising Waters and Frozen Avocados.” The rising waters will supposedly come about because of the melting of Antarctic ice caused by global warming. And yet that same global warming is portrayed as the cause of uncharacteristic frosts and frozen avocados. The writer and The Times apparently believe, and expect their readers to believe, that freezing, no less than warming, is a product of global warming.
The news pages of the same edition of The Times contain yet another propaganda piece about the evils of global warming, this time without any excuse of being merely an expression of opinion. Disguised as a news story, the piece appears on page 16 of the paper’s main section, with the title “As Earth Warms, Virus From Tropics Moves to Italy.”
The virus in question is “chikungunya,” which is described as “a relative of dengue fever normally found in the Indian Ocean region.” A careful reading of the article, together with some investigation of actual climate conditions, shows no connection whatever between the arrival of this virus in Italy and global warming. In reality, its arrival in Italy is nothing more than an unfortunate by-product of globalization and its attendant increase in international trade and travel.
The facts reported in the article are that “[t]iger mosquitoes [a potential carrier of the virus] first came to southern Italy with shipments of tires from Albania about a decade ago” and then proceeded to enlarge their habitat. The mosquitoes by themselves caused no problems beyond that of being a nuisance. What was responsible for their becoming an actual carrier of the chikungunya virus was the arrival in an Italian city of a resident’s relative who had contracted the virus on a trip to India. He was bitten and the mosquitoes then spread the virus from him to others, in widening circles.
The only connection the article offers to global warming is the assertion that the tiger mosquito’s habitat “has expanded steadily northward as temperatures have risen,” as though there had been some significant rise in temperatures over the last ten years and that this rise was a prerequisite to the enlargement of the mosquito’s habitat, at least in a northerly direction. Yet the facts are that global mean temperature has risen a scant .7◦C (1.26◦F) over the entire period since 1900 and, according to data supplied by The University of East Anglia and The Hadley Centre, global mean temperatures have actually been modestly declining since 1998! (For verification of this last point, see the website http://www.eurekalert.org/pub_releases/2007-12/uoea-awy121207.php). Moreover, since temperature lows in the region of Italy where the outbreak occurred are lower than those in most of France and England by 1 or 2 degrees Celsius, temperature conditions in those areas, which are considerably further north, have been ripe for the tiger mosquito at least for a century or more. (For comparative temperature lows, see the website of Euroweather at http://www.eurometeo.com/english/climate/home_min).
Thus, however unfortunate the outbreak of the virus may have been, there is no actual basis for blaming it on global warming. The accusation is nothing more than part of the attempt to create panic over global warming and thus to stampede frightened and ignorant people into sacrificing their freedom and prosperity for the sake of what looks more and more like a coming global dictatorship.
This article is only one of many that make The Times read like something produced at a ministry of propaganda rather than a newspaper produced in a free country. Its author, one Elizabeth Rosenthal, has previously demonstrated that she is an enthusiastic and utterly naive advocate of environmentalism. (See her “Cleaner consumption and the low-carbon life” in the February 23 issue of the International Herald Tribune, a newspaper owned by The Times.) The Times definitely does not read like a newspaper in which reporters apply critical thinking, exercise independent judgment and common sense, verify the facts they report by means of doing the necessary research, and strive for logical consistency. It is in fact something of a joke as a newspaper, or at least would be a joke if it were not as successful as it has been in helping to poison our culture and destroy our country.
Copyright © 2007, by George Reisman. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics. His web site is www.capitalism.net.
Friday, November 30, 2007
To a man, the candidates who were opposed to abortion (apparently all of them, with the exception of former New York Mayor Rudolph Giuliani) declared that there would be no punishment whatever for the woman. Only the abortionist, i.e., the physician or whoever else performed the abortion, would be punished.
Now I am not an attorney. Still less have I had any experience working in a prosecutor’s office. However, I have watched innumerable episodes of the television program “Law and Order” and similar shows. “Law and Order,” of course, is the show in which one of the Republican candidates, former United States Senator Fred Thompson, has played the role of district attorney for the last several years.
What I have learned from such shows and from casual reading on the subject is that the law punishes premeditated murder more severely than murder that is not premeditated, and also that it generally punishes the instigator and planner of a murder more severely than the person who is employed to carry out the murder. Accordingly, let us imagine that instead of a woman who has had an abortion and has paid a physician to perform it, we have a woman who has arranged the murder of her husband by means of hiring someone to do it.
I can imagine Senator Thompson, in his role as DA, telling one of his assistants to offer the suspected “hit man” a “deal,” in the form of pleading guilty to a lesser crime than Murder in the First Degree, say “Murder Two” or even “Man One,” in the vernacular of the show. The purpose of the deal, of course, would be to get the hit man to “roll” on the worse offender, in this case, the person—the woman—who employed him.
I now ask, what is different in the case of abortion, if abortion really is murder? Abortions do not occur spontaneously, in an isolated moment of disordered thinking and uncontrollable emotion. They must be planned. A woman who wants an abortion, must generally make an appointment at a medical facility to have it done. Before the abortion takes place, she will probably have to undergo an examination and tests of various kinds to be sure that the procedure does not pose an undue risk to her life or health. Thus, some period of time must elapse before the abortion actually occurs.
Especially in an environment of secrecy and stealth, of kitchen tables and coat hangers, in which abortions would once again have to be performed if they were once again made illegal, there must generally be a more or less considerable lapse of time between a woman’s forming the intent to have an abortion and being able to have it actually performed. This is because in such conditions, an abortionist cannot be found simply by looking in the yellow pages or on the internet. One can be found only through a series of discreet and time-consuming inquiries.
The inescapable conclusion to be drawn from all this is that a woman who has an abortion must not only form an intent to have it but must also maintain that intent for a more or less considerable period of time. What is the name for this if not premeditation?
Accordingly if abortion really is murder, then it is premeditated murder. And by the usual standards of justice, the guilt of the woman, as the instigator and planner of the murder, is greater, not less, than that of the physician or other party employed to carry it out.
But there is more, and it is downright scary. Most or all of the Republican candidates who oppose abortion are in favor of the death penalty for crimes such as premeditated murder. Thus, the logic of their view of abortion implies that they should not only urge the severe punishment of a woman who has an abortion, but capital punishment. Their alleged love of the life of the unborn fetus that is taken in an abortion should, in logic, lead them to urge the death of the woman who orders the taking of that life.
I must say that I am confident that the common sense and personal good will of the anti-abortion candidates would continue to prevent them from advocating any actual punishment of women who would have illegal abortions, let alone capital punishment, despite the fact that that is where the logic of their beliefs would take them. However, the same is by no means necessarily true of all of their followers and of the anti-abortion movement as a whole. In today’s world there seems to be no idea that is too bizarre to find followers once it is identified as a logical implication of a deeply rooted belief.
Hopefully, there will be a larger number of more reasonable people, who will be led to question the premise that abortion is murder. To do that, they will need to question the premise that a fetus, especially, in the early stages of pregnancy, is an actual human being. In reality, when, for example, a fetus must still be measured in mere tenths of an inch, it is simply not a human being. At that point, it is nothing more than a growth in a woman’s womb that has the potential to become a human being. Removing it is not killing a human being but simply stopping—aborting—a process that if left unchecked would result in a human being weeks or months later. Weeks or months later, there would be a human being. But not at the time of the abortion.
Unfortunately, persuading people of this elementary fact of perception can be very difficult. There are far too many people for whom seeing is not believing, but rather, if anything, believing is seeing—that is, people whose mistaken ideas are held so strongly that they override the evidence of the senses. Epistemologically, the notion that a speck in a woman’s womb is a human being is not all that different than the notion, popular elsewhere in the world, that animals carry the souls of one’s ancestors. Both notions represent seeing what just isn’t there, based on a projection from inside one’s mind.
Seeing a human being where there is none and consequently murder where there is none, serves to destroy the lives of women, and of families, who cannot afford the burden of an unwanted extra child, which they are nonetheless forced to accept because the possibility of abortion is denied them. Because of this distorted conception of things, a woman has only to become pregnant, and ownership of her body is immediately claimed by the State. Whatever plans she may have had for her future, such as gaining an education, pursuing a career, or simply enjoying her youth, are forcibly thrown aside, as she is made to live with no more choice in her own destiny than a pregnant animal. She is compelled to defer whatever hopes, dreams, and ambitions she may have had until she has completed what is tantamount to serving a twenty-year sentence in going through an unwanted pregnancy and then raising an unwanted child.
And why? By what right is such devastation inflicted on her life? The answer is that here in the United States, just as in the Middle East, there are large numbers of people who believe that the cloak of religion and their claim to be inspired by the will of God entitles them to practice lunacy, in total disregard of the suffering and harm they cause to others. Their pretended “love” and “goodness” is a sham.
This article is copyright © 2007, by George Reisman. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.
Thursday, November 08, 2007
As Hillary’s spouse, not only exercising the normal substantial influence of one spouse over the other but also being in possession of eight years of actual experience in the Presidency, it would appear that Bill Clinton would thus once again effectively exercise Presidential Powers. Yet this would be in substantive violation of the Twenty-Second Amendment to the United States Constitution, which states that “No person shall be elected to the office of the President more than twice . . . .”
True enough, Bill would not have been elected more than twice, and thus his presence and activities in the White House would not technically be in violation of the Constitution. But the obvious purpose of the Twenty-Second Amendment was to limit the occupation of the Office of President, and the exercise of the powers of that Office, to two terms. Its authors did not contemplate marriage as a route to the powers of the Presidency alternative to election to that Office.
If and to the extent that Mrs. Clinton’s chances of election increase, the couple needs to find a way to guarantee that Mr. Clinton would not in fact be a three or four-term President.
This article is copyright © 2007, by George Reisman. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.
Wednesday, November 07, 2007
1. Is identity theft, about which so many people are concerned, some form of mirage or is it a real phenomenon?
2. If it is a real phenomenon and identities are actually being stolen—as many thousands of victims of identity theft are prepared to swear, and as the banks and credit card companies of these victims also swear—then does it not follow that identities are a form of property? For nothing can be stolen that is not first owned by someone.
3. If identities are a form of property, are they not intellectual property, since they consist entirely of words and symbols, not the physical persons of the people to whom the identities refer?
4.If individuals do have a property right in their own identities, do they not also have a property right in the words and symbols that uniquely identify their products and services? And, by extension, do not voluntary associations of individuals, such as business partnerships and private corporations have a property right in the words and symbols that uniquely identify them and their products and services? Thus, for example, does not General Motors have a property right in its name and logo and in the names and logos of its various individual products and services? In other words, are not brand names and trademarks legitimate forms of intellectual property?
5. Are trademarks and brand names not essential for the operation of free competition, in which better producers benefit from their record of past good work and poorer producers suffer from their record of past poor work?.
I believe that the answers to these questions are all clearly “yes.”
I want to say that I recognize that we live in an age of intellectual disintegration, in which philosophers, lawyers, and judges have proved themselves capable of corrupting practically any concept. As a result, it should not be surprising that there are corruptions of the concept of intellectual property and its application. One that comes readily to mind is Ralph Lauren’s ability, according to John Stossel, to appropriate the word “Polo,” to the point that even organizations of actual polo players cannot use the word without being held guilty of violating an alleged intellectual property right of Lauren’s. The truth, of course, if Stossel is right, is that Lauren’s appropriation of the word “Polo” is a violation of their intellectual property rights.
I’ve deliberately avoided any discussion of patents and copyrights here because my purpose has been simply to establish the legitimacy of the concept of intellectual property as such.
*This article was originally a posting to the Ludwig von Mises Institute’s discussion list.
Copyright © 2007, by George Reisman. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics. His web site is http://www.capitalism.net/.
Monday, November 05, 2007
Calling falling prices per se “deflation” is one of the most serious errors one can make in economics. It’s tantamount to confusing becoming richer with becoming poorer. It leads people to believe that increases in production, which are the foundation of enrichment, but which also operate to make prices fall, are at the same time the source of depression and impoverishment.
To get matters straight, we need to clarify some things.
Prices can fall either because of more supply (i.e., more goods and services being produced and sold) or because of less demand (i.e., less money in existence and/or less overall spending of money in the purchase of goods and services).
A depression is characterized not only by falling prices, but also by a plunge in business profits (which may even become negative in the aggregate) and by a sharply increased difficulty of repaying debt. It is also characterized by mass unemployment.
While a gold standard very definitely can and probably will be accompanied by falling prices, it is not accompanied by plunging profits, a greater difficulty of repaying debt, or mass unemployment. The conjunction of these latter with falling prices is the result of a decrease in the quantity of money and volume of spending. A decrease in the quantity of money and volume of spending is the result not of a gold standard but of the incompleteness of a gold standard. It is the result of a fractional-reserve gold standard, in which gold represents only a portion of the money supply while the rest is based on debt. In such circumstances, the failure of debtors is capable of causing bank failures, which serves to reduce the quantity of money and volume of spending.
Under a full, i.e., 100-percent reserve gold standard, new and additional gold continues to be mined, and at a rate faster than gold is physically lost, e.g., in such things as shipwrecks and the burial of people with gold dental fillings in their mouths. Thus the quantity of money and volume of spending under a full gold standard increases. However, it does so at a modest rate. Prices fall under a full gold standard to the extent that the increase in the production and supply of goods and services other than gold outstrips the increase in the quantity of gold and the spending of gold.
Despite the fall in prices, the increase in the quantity of gold money and spending under a full gold standard serves to increase the economy-wide average rate of profit and interest. It does so for the simple reason that in the nature of the case there tends to be more money and spending in the economy at the time when products are sold than there was at the earlier points in time when money was expended for the means of producing those products. Thus the margin by which sales revenues outstrip costs is correspondingly increased.
Furthermore, despite the accompanying fall in prices caused by the more rapid increase in the production and supply of goods and services other than gold, the increase in the quantity of gold and the volume of spending in terms of gold serves to make the repayment of debt somewhat easier. For example, suppose that sales revenues in the economic system are rising at a two percent rate because of increases in the supply and spending of gold, but that prices are falling at a three percent rate because the supply of goods and services other than gold is increasing five percent per year. The average seller in this case will have five percent more goods to sell at prices that are only three percent less. His sales revenues will rise by two percent. He will be able to earn progressively increasing sales revenues and income despite the fall in his selling prices, because the increase in the supply of goods and services he has available to sell outstrips the fall in his selling prices to the extent of the increase in the quantity of gold money and spending.
The modest elevation of the rate of profit resulting from the increase in the quantity of gold is the opposite of what happens in a depression. So too is the greater ease rather than greater difficulty of repaying debt.
Thus, the truth is that a full gold standard, with its falling prices, is as much the enemy of deflation as it is of inflation.
As for mass unemployment: If there is a deflation, in the correct sense of a decrease in the quantity of money and/or volume of spending, then falling prices, so far from being the cause of deflation/depression are the way out of it. In such circumstances, a fall in wage rates and prices is precisely what’s needed to allow a reduced quantity of money and volume of spending to buy all that a previously larger quantity of money and volume of spending bought. If, for example, as in 1929, there was originally roughly $50 billion in payrolls employing 50 million workers at an average annual wage of $1,000 per year and now, because of deflation, there are only $40 billion of payrolls employing 40 million workers, full employment could be restored if the average wage rate fell from $1,000 to $800 per year. In that case, $40 billion could employ as many workers as $50 billion had done.
Viewing the fall in wage rates and prices that is needed to recover from deflation as itself being deflation and thus preventing the fall in wage rates and prices, as occurred under Hoover and the New Deal, serves only to perpetuate the unemployment and depression.
Confused concepts result in catastrophic consequences.
P.S. For elaboration of the points made in this discussion, see my article "The Goal of Monetary Reform," The Quarterly Journal of Austrian Economics, Fall 2000, vol. 3, no. 3, pp. 3–18, and my book Capitalism: A Treatise on Economics, pp. 544–46, 557–59, 573–80, 809–20. See also my Mises.org Daily Article "The Anatomy of Deflation," August 22, 2003
Friday, August 10, 2007
The genesis of the present problem goes back to the bursting of the stock-market bubble in the early years of this decade. In an effort to avoid its deflationary consequences, the bursting of the stock market bubble was followed by successive Federal Reserve cuts in interest rates, all the way down to little more than 1 percent by the end of 2003.
These cuts in interest rates were accomplished by means of repeated injections of new and additional bank reserves. The essential interest rate in question was the so-called Federal Funds rate. This is the interest rate that the banks that are members of the Federal Reserve System charge or pay in the lending and borrowing of the monetary reserves that they are obliged to hold against their outstanding checking deposits.
The continuing inflow of new and additional reserves allowed the banking system to create new and additional checking deposits for the benefit of borrowers. The new and additional deposits were created to a multiple of ten or more times the new and additional reserves and made possible the granting of new and additional loans on a correspondingly large scale. The sharp decline in interest rates that took place encouraged the making of mortgage loans in particular. The reason for this was the steep decline in monthly mortgage payments that results from a substantial decline in interest rates. The new and additional checking deposits were money that was created out of thin air and which was lent against mortgages to borrowers of poorer and poorer credit.
So long as the new and additional money kept pouring into the housing market at an accelerating rate, home prices rose and most people seemed to prosper.
But starting in 2004, and continuing all through 2005 and the first half of 2006, in fear of the inflationary consequences of its policy, the Federal Reserve began gradually to raise interest rates. It did so in order to be able to reduce its creation of new and additional reserves for the banking system.
Once this policy succeeded to the point that the expansion of deposit credit entering the housing market finally stopped accelerating, the basis for a continuing rise in home prices was removed. For it meant a leveling off in the demand for housing. To the extent that the credit expansion actually fell, the demand for houses had to drop. This was because a major component of the demand for houses had come to be precisely the funds provided by credit expansion. A decline in that component constituted an equivalent decline in the overall demand for houses. The decline in the demand for houses, of course, was in turn followed by a decline in the price of houses Housing prices also had to fall simply because of the unloading of homes purchased in anticipation of continually rising prices, once it became clear that that anticipation was mistaken.
This drop in the demand for and price of houses has now revealed a mass of mortgage debt that is unpayable. It has also revealed a corresponding mass of malinvested, wasted, capital: the capital used to make the unpayable mortgage loans.
The loss of this vast amount of capital serves to undermine the rest of the economic system.
The banks and other lenders who have made these loans are now unable to continue their lending operations on the previous scale, and in some cases, on any scale whatever. To the extent that they are not repaid by their borrowers, they lack funds with which to make or renew loans themselves. To continue in operation, not only can they no longer lend to the same extent as before, but in many cases they themselves need to borrow, in order to meet financial commitments made previously and now coming due.
Thus, what is present is both a reduction in the supply of loanable funds and an increase in the demand for loanable funds, a situation that is aptly described by the expression “credit crunch.”
The phenomenon of the credit crunch is reinforced by the fact that credit expansion, just like any other increase in the quantity of money, serves to raise wage rates and the prices of raw materials. It thereby reduces the buying power of any given amount of capital funds. This too leads to the outcome of a credit crunch as soon as the spigot of new and additional credit expansion is turned off. This is because firms now need more funds than anticipated to complete their projects and thus must borrow more and/or lend less in order to secure those funds. (This, incidentally, is the present situation in the construction of power plants and other infrastructure, where costs have risen dramatically in the last few years, with the result that correspondingly larger sums of capital are now required to carry out the same projects.) In addition, the decline in the stock and bond markets that results after the prop of credit expansion is withdrawn signifies a reduction in the assets available to fund business activities and thus serves to intensify the credit crunch.
The situation today is essentially similar to all previous episodes of the boom-bust business cycle launched by credit expansion. The only difference is that in this case, the credit expansion fed an expanded demand for housing and, at the same time, most of the additional capital funds created by the credit expansion were invested in housing. Now that the demand for housing has fallen, as the result of the slowdown of the credit expansion, much of the additional capital funds invested in housing has turned out to be malinvestments. In most previous instances, credit expansion fed an additional demand for capital goods, notably plant and equipment, and most of the additional capital funds created by credit expansion were invested in the production of capital goods. When the credit expansion slowed, the demand for capital goods fell and much of the additional capital funds invested in their production turned out to be malinvestments.
In all instances of credit expansion what is present is the introduction into the economic system of a mass of capital funds that so long as it is present has the appearance of real wealth and capital and provides the basis for sharply increased buying and selling and a corresponding rise in asset prices. Unfortunately, once the credit expansion that creates these capital funds slows, the basis of the profitability of the funds previously created by the credit expansion is withdrawn. This is because those funds are invested in lines dependent for their profitability on a demand that only the continuation of the credit expansion can provide.
In the aftermath of credit expansion, today no less than in the past, the economic system is primed for a veritable implosion of credit, money, and spending. The mass of capital funds put into the economic system by credit expansion quickly begins evaporating (the hedge funds of Bear Stearns are an excellent recent example), with the potential to wipe out further vast amounts of capital funds.
As the consequence of a credit crunch, there are firms with liabilities coming due that are simply unable to meet them. They cannot renew the loans they have taken out nor replace them. These firms become insolvent and go bankrupt. Attempts to avoid the plight of such firms can easily precipitate a process of financial contraction and deflation.
This is because the specter of being unable to repay debt brings about a rise in the demand for money for holding. Firms need to raise cash in order to have the funds available to repay debts coming due. They can no longer count on easily and profitably obtaining these funds through borrowing, as they could under credit expansion, or, indeed, obtaining them at all through borrowing. Nor can they readily and profitably obtain funds by liquidating the securities or other assets that they hold. Thus, in addition to whatever funds they may still be able to raise in such ways, they must attempt to accumulate funds by reducing their expenditures out of their receipts. This reduction in expenditures, however, serves to reduce sales revenues and profits in the economic system and thus further reduces the ability to repay debt.
To the extent that anywhere along the line, the process of bankruptcies results in bank failures, the quantity of money in the economic system is actually reduced, for the checking deposits of failed banks lose the character of money and assume that of junk bonds, which no one will accept in payment for goods or services.
Declines in the quantity of money, and in the spending that depends on the part of the money supply that has been lost, results in more bankruptcies and bank failures, and still more declines in the quantity of money, as well as in further increases in the demand for money for holding. Such was the record of The Great Depression of 1929-1933.
Given the unlimited powers of money creation that the Federal Reserve has today, it is doubtful that any significant actual deflation of the money supply will take place. The same is true of financial contraction caused by an increase in the demand for money for holding. In confirmation of this, The New York Times reports, in an online article dated August 11, 2007, that “The Federal Reserve, trying to calm turmoil on Wall Street, announced today that it will pump as much money as needed into the financial system to help overcome the ill effects of a spreading credit crunch.… The Fed pushed $38 billion in temporary reserves into the system this morning, on top of a similar move [$24 billion] the day before.” In addition, the print edition of The Times, dated a day earlier, reported in its lead front-page story that “the European Central Bank in Frankfurt lent more than $130 billion overnight at a rate of 4 percent to tamp down a surge in the rates banks charge each other for very short-term loans.”
Thus the likely outcome will be a future surge in spending and in prices of all kinds based on an expansion of the money supply of sufficient magnitude to overcome even the very powerful impetus to contraction and deflation that has come about as the result of the bursting of the housing bubble.
Another outcome will almost certainly be the enactment of still more laws and regulations concerning financial activity. Oblivious to the essential role of credit expansion and of the government’s role in the existence of credit expansion, the politicians and the media are already attempting to blame the present debacle on whatever aspects of economic and financial activity still remain free of the government’s control.
It probably is the case that at this point the only thing that can prevent the emergence of a full-blown major depression is the creation of yet still more money. But that new and additional money does not necessarily have to be in the form of paper and checkbook money. An alternative would be to declare gold and silver coin and bullion legal tender for the payment of debts denominated in paper dollars. There is no limit to the amount of debt-paying power in terms of paper dollars that gold and silver can have. It depends only on the number of dollars per ounce.
To be sure, this is an extremely radical suggestion, but something along these lines will someday be necessary if the world is ever to get off the paper-money merry-go-round of the unending ups and downs of boom and bust, accompanied since 1933 by the continuing loss of the buying power of money.
Copyright © 2007, by George Reisman. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics. His web site is www.capitalism.net.
Sunday, July 01, 2007
No, Mr. Gore, it’s not the carbon dioxide. If you take the trouble to do an internet search on Google for “carbon dioxide” + “Martian atmosphere,” you will learn that the Martian atmosphere is 95 percent carbon dioxide, yet the average surface temperature on Mars is -63° C (-81° F). (It's true that the atmosphere on Mars is only about .6 percent as dense as that on Earth, but it's also true that its relative concentration of carbon dioxide is about 2400 times as great as that of Earth, which appears to make up for the thinness of the Martian atmosphere about 14 times over.)
Consider this tale of two planets. Earth and Venus are almost exactly the same size, and have almost exactly the same amount of carbon. The difference is that most of the carbon on Earth is in the ground — having been deposited there by various forms of life over the last 600 million years — and most of the carbon on Venus is in the atmosphere.
As a result, while the average temperature on Earth is a pleasant 59 degrees, the average temperature on Venus is 867 degrees. True, Venus is closer to the Sun than we are, but the fault is not in our star; Venus is three times hotter on average than Mercury, which is right next to the Sun. It’s the carbon dioxide.
But even putting this decisive objection aside, there is simply no informed or honest way for you to suggest that the amount of atmospheric carbon dioxide on Earth is or ever will be comparable to the amount on Venus. According to The Encyclopedia Britannica, the atmosphere of Venus is 96 percent carbon dioxide. The atmosphere of the Earth, in contrast, is less than .04 percent carbon dioxide. That’s not .04, but .0004, i.e., four one-hundredths of one percent. To be precise, carbon dioxide is presently 383 parts per million of the Earth’s atmosphere. All of the brouhaha going on about the subject is over a projected increase to perhaps as much as 1000 parts per million by the year 2100, i.e., to .1 percent, which is 10 one-hundredths of one percent.
It is on the basis of such ignorance or dishonesty that you declare that
we should demand that the United States join an international treaty within the next two years that cuts global warming pollution by 90 percent in developed countries and by more than half worldwide in time for the next generation to inherit a healthy Earth. (Italics added.)The “global warming pollution” you talk about is the production of the energy that lights, heats, and air conditions our homes, powers our automobiles, trucks, trains, airplanes, and ships, runs our refrigerators, television sets, computers, and all other electrical appliances, and powers the machinery and equipment that produces all of the goods we buy. You want to cut this by a staggering percentage!
You conclude by describing this suicidal program as one of a “privilege”:
The climate crisis offers us the chance to experience what few generations in history have had the privilege of experiencing: a generational mission; a compelling moral purpose; a shared cause; and the thrill of being forced by circumstances to put aside the pettiness and conflict of politics and to embrace a genuine moral and spiritual challenge.Such mindless, rabid enthusiasm for a cause so self-destructive calls to mind the equal moral fervor and rising to “spiritual challenges” of the generations led by such madmen as Lenin and Hitler. It is also very much in the spirit in which suicide bombers depart on their missions.
You feel free to make your calls for unprecedented economic destruction from the comfort of a home that consumes more than 20 times the electricity of the average American home. You apparently have no awareness of the extent of your hypocrisy because you have purchased “carbon offsets,” in such forms as paying for the planting of a few trees here and there that will supposedly absorb carbon dioxide equivalent to that emitted in powering your home. (Mark Steyn, “Rev. Gore Doesn't Practice What He Preaches,” The Bulletin, March 8, 2007.) Yet your “spiritual challenge” does not include such offsets for the rest of the American people, so that they too might go on enjoying their lives.
If you understood in personal terms what you are talking about, you would know that your supposedly glorious “spiritual challenge” is a call for Mrs. Gore to scrub your laundry (if you would still have any) against a rock on the bank of a river, the way women do in Third World countries. That’s the actual meaning and measure of your “spiritual challenge.” You want to turn our glorious economic system into a poverty-stricken hell-hole.
You need to calm down, Mr. Gore, and give yourself and the world a rest. Along the way, you should try to understand the extent and depth of the horrors you want to unleash.Copyright © 2007, by George Reisman. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.
Wednesday, June 27, 2007
People like Moore believe capitalism is the disease and government takeover the cure for our healthcare ills. They think people have a "right" to free healthcare simply because they need it.
If so, why stop at medicine? Couldn't we claim the same "right" to other necessities? Take food, for instance. What if the government seized control of the food industry and fed us for free with a new entitlement, "Foodcare"?
Initially Foodcare will empty the horn of plenty into your lap. With your appetite and wallet parting company, the lobster you ate only on your birthday will become regular fare, as will your favorite Belgian chocolates and filet mignon.
Because the same idea occurs to 300 million others, costs skyrocket, and a Foodcare crisis develops. Big Brother can no longer foot the bill for your busy mouth, so he must limit your mastication. This requires new agencies, bureaucrats, and a 100,000-page rulebook.
You visit your favorite restaurant to find it changed. Gone are the tablecloths, flowers, and cheerful hostess to greet you, enhancements you had gladly paid for in the price of your meal. The Department of Restaurants eliminated them as frivolous indulgences of the people’s resources.
The menu is reduced to a few modest offerings. Missing are the savory specials of the talented chef, whose last creation took forty pounds—not of ingredients but of paperwork—to gain approval from the New Recipe Administration.
You want steak, but getting it requires that the chef call a central office to obtain pre-authorization. With the clock ticking and a long line waiting to slide into your barely warm seat, you order hamburger instead. You notice your neighbor eating steak—and sitting at the best table. You remember when he was laid off and you bought him dinner. Back then, he thanked you for your charity and quickly got another job. But now that he has a “right” to food, he's stopped working to eat courtesy of your tax dollars.
You barely recognize the frazzled chef buried in paperwork. The once happy figure doting over your every need now slaves for a new master, one that denies his fee for serving Cognac, second-guesses his decision to make cheesecake, requires a Certificate of Need to buy an oven. You know that under Foodcare he's merely biding time till retirement. When he goes, you doubt he’ll be replaced because enrollment in chef’s schools has dropped as the number of bureaucrats hounding them has risen.
As time passes, everyone forgets how it started, but the crisis worsens. Michael Moore makes a pilgrimage to North Korea in search of adequate food.
You realize that the amount you pay into Foodcare exceeds what you had paid when you bought your own food and didn't obtain it for “free.” Then you didn't pay for bureaucrats and inspectors to tell you what to eat, or for those milking the system like your neighbor. Besides emptying your wallet, Foodcare has drained all the pleasure you once derived from eating.
Politicians blame their scapegoat, the capitalists—grocers, chefs, food manufacturers—and pass laws to prevent any from owning a Mercedes while someone goes to bed hungry in America. They tell us profit is evil and free food for all is a moral ideal.
You wonder: Is there something wrong with this picture? The ideal isn't the private system, with happy chefs and grocers earning a good living in return for their talent and entrepreneurial skill, and satisfied customers enjoying a Shangri La of affordable food. The ideal isn't a spectacular abundance, with everyone's standard of eating—including the poor—raised dramatically, and this achieved without government force—without fleecing taxpayers and robbing consumers and suppliers of their freedom to make their own personal choices and to interact voluntarily. Instead, the ideal is to transform free, self-determining individuals into state-controlled puppets.
The Foodcare scenario is actually playing out in healthcare. Once the gold standard of the world, American medicine has fallen to its knees from decades of crippling regulation, with the final blow about to come from universal healthcare.
To stop this despotism we must repudiate the notion that healthcare is a right. No one has a right to demand for free the goods and services produced by others. We have the freedom to take action to further our own lives—to work, earn money, and pay for the things we need—while respecting the same rights of others. We don't have any right to enact laws to seize people's money, control their activities, and force them to provide services on terms dictated by Big Brother.
No good can result when the means used to achieve it are plunder and coercion. Universal healthcare merits the label "sicko"—or more accurately "tyranny."
Genevieve (Gen) LaGreca is the author of Noble Vision, an award-winning novel about a doctor's fight for freedom in a state-run health system.
Wednesday, May 30, 2007
Global Warming Does Not Imply a Carbon Cap
Early this winter, the UN’s Intergovernmental Panel on Climate Change released the summary of its latest report on global warming. It’s most trumpeted finding was that the existence of global warming is now “unequivocal.”
Although such anecdotal evidence as January’s snowfall in Tucson, Arizona and freezing weather in Southern California, and February’s more than 100-inch snowfall in upstate New York, might suggest otherwise, global warming may indeed be a fact. It may also be a fact that it is a by-product of industrial civilization (despite two ice ages having apparently occurred in the face of carbon levels in the atmosphere 16 times greater than that of today, millions of years before mankind’s appearance on earth).
If global warming and mankind’s responsibility for it really are facts, does anything automatically follow from them? Does it follow that there is a need to limit and/or reduce carbon emissions and the use of the fossil fuels—oil, coal, and natural gas—that gives rise to the emissions? The need for such limitation and/or rollback is the usual assumption.
Nevertheless, the truth is that nothing whatever follows from these facts. Before any implication for action can be present, additional information is required.
One essential piece of information is the comparative valuation attached to retaining industrial civilization versus avoiding global warming. If one values the benefits provided by industrial civilization above the avoidance of the losses alleged to result from global warming, it follows that nothing should be done to stop global warming that destroys or undermines industrial civilization. That is, it follows that global warming should simply be accepted as a byproduct of economic progress and that life should go on as normal in the face of it.
(Of course, there are projections of unlikely but nevertheless possible extreme global warming in the face of which conditions would be intolerable. However, as I explain below, to deal with such a possibility, it is necessary merely to find a different method of cooling the earth than that of curtailing the use of fossil fuels; I also show that such methods are already at hand.)
In fact, if it comes, global warming, in the projected likely range, will bring major benefits to much of the world. Central Canada and large portions of Siberia will become similar in climate to New England today. So too, perhaps, will portions of Greenland. The disappearance of Arctic ice in summer time, will shorten important shipping routes by thousands of miles. Growing seasons in the North Temperate Zone will be longer. Plant life in general will flourish because of the presence of more carbon dioxide in the atmosphere.
Strangely, these facts are rarely mentioned. Instead, attention is devoted almost exclusively to the negatives associated with global warming, above all to the prospect of rising sea levels, which the report projects to be between 7 and 23 inches by the year 2100, a range, incidentally, that by itself does not entail major coastal flooding. (There are, however, projections of a rise in sea levels of 20 feet or more over the course of the remainder of the present millennium.)
Yes, rising sea levels may cause some islands and coastal areas to become submerged under water and require that large numbers of people settle in other areas. Surely, however, the course of a century, let alone a millennium, should provide ample opportunity for this to occur without any necessary loss of life.
Indeed, a very useful project for the UN’s panel to undertake in preparation for its next report would be a plan by which the portion of the world not threatened with rising sea levels would accept the people who are so threatened. In other words, instead of responding to global warming with government controls, in the form of limitations on the emission of carbon dioxide and other greenhouse gases, an alternative response would be devised that would be a solution in terms of greater freedom of migration.
In addition, the process of adaptation here in the United States would be helped by making all areas determined to be likely victims of coastal flooding in the years ahead ineligible for any form of governmental aid, insurance, or disaster relief after the expiration of a reasonable grace period. That would spur relocation to safer areas in advance of much of any future flooding.
What Depends on Industrial Civilization and Man-Made Power
As the result of industrial civilization, not only do billions more people survive, but in the advanced countries they do so on a level far exceeding that of kings and emperors in all previous ages—on a level that just a few generations ago would have been regarded as possible only in a world of science fiction. With the turn of a key, the push of a pedal, and the touch of a steering wheel, they drive along highways in wondrous machines at seventy miles an hour. With the flick of a switch, they light a room in the middle of darkness. With the touch of a button, they watch events taking place ten thousand miles away. With the touch of a few other buttons, they talk to other people across town or across the world. They even fly through the air at six hundred miles per hour, forty thousand feet up, watching movies and sipping martinis in air-conditioned comfort as they do so. In the United States, most people can have all this, and spacious homes or apartments, carpeted and fully furnished, with indoor plumbing, central heating, air conditioning, refrigerators, freezers, and gas or electric stoves, and also personal libraries of hundreds of books, compact disks, and DVDs; they can have all this, as well as long life and good health—as the result of working forty hours a week.
The achievement of this marvelous state of affairs has been made possible by the use of ever improved machinery and equipment, which has been the focal point of scientific and technological progress. The use of this ever improved machinery and equipment is what has enabled human beings to accomplish ever greater results with the application of less and less muscular exertion.
Now inseparably connected with the use of ever improved machinery and equipment has been the increasing use of man-made power, which is the distinguishing characteristic of industrial civilization and of the Industrial Revolution, which marked its beginning. To the relatively feeble muscles of draft animals and the still more feeble muscles of human beings, and to the relatively small amounts of useable power available from nature in the form of wind and falling water, industrial civilization has added man-made power. It did so first in the form of steam generated from the combustion of coal, and later in the form of internal combustion based on petroleum, and electric power based on the burning of any fossil fuel or on atomic energy.
This man-made power, and the energy released by its use, is an equally essential basis of all of the economic improvements achieved over the last two hundred years. It is what enables us to use the improved machines and equipment and is indispensable to our ability to produce the improved machines and equipment in the first place. Its application is what enables us human beings to accomplish with our arms and hands, in merely pushing the buttons and pulling the levers of machines, the amazing productive results we do accomplish. To the feeble powers of our arms and hands is added the enormously greater power released by energy in the form of steam, internal combustion, electricity, or radiation. In this way, energy use, the productivity of labor, and the standard of living are inseparably connected, with the two last entirely dependent on the first.
Thus, it is not surprising, for example, that the United States enjoys the world’s highest standard of living. This is a direct result of the fact that the United States has the world’s highest energy consumption per capita. The United States, more than any other country, is the country where intelligent human beings have arranged for motor-driven machinery to accomplish results for them. All further substantial increases in the productivity of labor and standard of living, both here in the United States and across the world, will be equally dependent on man-made power and the growing use of energy it makes possible. Our ability to accomplish more and more with the same limited muscular powers of our limbs will depend entirely on our ability to augment them further and further with the aid of still more such energy.*
A Free-Market Response to Global Warming
Even if global warming is a fact, the free citizens of an industrial civilization will have no great difficulty in coping with it—that is, of course, if their ability to use energy and to produce is not crippled by the environmental movement and by government controls otherwise inspired. The seeming difficulties of coping with global warming, or any other large-scale change, arise only when the problem is viewed from the perspective of government central planners.
It would be too great a problem for government bureaucrats to handle (as is the production even of an adequate supply of wheat or nails, as the experience of the whole socialist world has so eloquently shown). But it would certainly not be too great a problem for tens and hundreds of millions of free, thinking individuals living under capitalism to solve. It would be solved by means of each individual being free to decide how best to cope with the particular aspects of global warming that affected him.
Individuals would decide, on the basis of profit-and loss calculations, what changes they needed to make in their businesses and in their personal lives, in order best to adjust to the situation. They would decide where it was now relatively more desirable to own land, locate farms and businesses, and live and work, and where it was relatively less desirable, and what new comparative advantages each location had for the production of which goods. Factories, stores, and houses all need replacement sooner or later. In the face of a change in the relative desirability of different locations, the pattern of replacement would be different. Perhaps some replacements would have to be made sooner than otherwise. To be sure, some land values would fall and others would rise. Whatever happened individuals would respond in a way that minimized their losses and maximized their possible gains. The essential thing they would require is the freedom to serve their self-interests by buying land and moving their businesses to the areas rendered relatively more attractive, and the freedom to seek employment and buy or rent housing in those areas.
Given this freedom, the totality of the problem would be overcome. This is because, under capitalism, the actions of the individuals, and the thinking and planning behind those actions, are coordinated and harmonized by the price system (as many former central planners of Eastern Europe and the former Soviet Union have come to learn). As a result, the problem would be solved in exactly the same way that tens and hundreds of millions of free individuals have solved greater problems than global warming, such as redesigning the economic system to deal with the replacement of the horse by the automobile, the settlement of the American West, and the release of the far greater part of the labor of the economic system from agriculture to industry.**
Emissions Caps Mean Impoverishment
The environmental movement does not value industrial civilization. It fears and hates it. It does not value human life, which it regards merely as one of earth’s “biota,” of no greater value than any other life form, such as spotted owls or snail darters. To it, the loss of industrial civilization is of no great consequence. It is a boon.
But to everyone else, it would be an immeasurable catastrophe: the end of further economic progress and the onset of economic retrogression, with no necessary stopping point. Today’s already widespread economic stagnation is the faintest harbinger of the conditions that would follow.
A regime of emissions caps means that all technological advances requiring an increase in the total consumption of man-made power would be impossible to implement. At the same time, any increase in population would mean a reduction in the amount of man-made power available per capita. (Greater production of atomic power, which produces no emissions of any kind, would be an exception. But it is opposed by the environmentalists even more fiercely than is additional power derived from fossil fuels.)
To gauge the consequences, simply imagine such caps having been imposed a generation or two ago. If that had happened, where would the power have come from to produce and operate all of the new and additional products we take for granted that have appeared over these years? Products such as color television sets and commercial jets, computers and cell phones, CDs and DVDs, lasers and MRIs, satellites and space ships? Indeed, the increase in population that has taken place over this period would have sharply reduced the standard of living, because the latter would have been forced to rest on the foundation of the much lower per capita man-made power of an earlier generation.
Now add to this the effects of successive reductions in the production of man-made power compelled by the imposition of progressively lower ceilings on greenhouse-gas emissions, ceilings as low as 75 or even 40 percent of today’s levels. (These ceilings have been advocated by Britain’s Stern Report and by the United Nations Intergovernmental Panel, respectively.) Inasmuch as these ceilings would be global ceilings, any increase in greenhouse-gas emissions taking place in countries such as China and India would be possible only at the expense of even further reductions in the United States, whose energy consumption is the envy of the world.
All of the rising clamor for energy caps is an invitation to the American people to put themselves in chains. It is an attempt to lure them along a path thousands of times more deadly than any military misadventure, and one from which escape might be impossible.
Already, led by French President Jacques Chirac, forces are gathering to make non-compliance with emissions caps an international crime. According to an Associated Press report of February 5, 2007, “Forty-Five nations joined France in calling for a new environmental body to slow global warming and protect the planet, a body that potentially could have policing powers to punish violators.”
Given such developments, it is absolutely vital that the United States never enter into any international treaty in which it agrees to caps on greenhouse-gas emissions.
An Answer to the Hellfire-and-Brimstone Version of Global Warming
In previous centuries it was common for Religion to threaten those whose way of life was not to its satisfaction, with the prospect of hellfire and brimstone in the afterlife. Substitute for the afterlife, life on earth in centuries to come, and it is possible to see that environmentalism and the rest of the left are now doing essentially the same thing. They hate the American way of life because of its comfort and luxury. And to frighten people into abandoning it, they are threatening them with a global-warming version of hellfire and brimstone.
This is not yet so open and explicit as to be obvious to everyone. Nevertheless, it is clearly present. It is hinted at in allusions to the possibility of temperature increases beyond the UN report’s projected range of 3.5 to 8 degrees Fahrenheit. For example, according to The New York Times, “the report says there is a more than a 1-in-10 chance of much greater warming, a risk that many experts say is far too high to ignore.”
Environmentalist threats of hellfire and brimstone can be expected to become more blatant and shrill if the movement’s present efforts to frighten the people of the United States into supporting its program appear to be insufficient. Hellfire and brimstone is the environmentalists’ ultimate threat.
Thus, let us assume that it were true that global warming might proceed to such an extent as to cause temperature and/or sea-level increases so great as to be simply intolerable or, indeed, literally to roast and boil the earth. Even so, it would still not follow that industrial civilization should be abandoned or in any way compromised. In that case, all that would be necessary is to seek out a different means of deliberately cooling the earth.
It should be realized that the environmentalists’ policy of reducing greenhouse-gas emissions is itself a policy of cooling the earth. But it is surely among the most stupid and self-destructive such policies as it is possible to imagine. What it claims is that if we destroy the energy base needed to produce and operate the construction equipment required to build strong, well-made, comfortable houses for hundreds of millions of people, we shall be safer from hurricanes and floods than if we retain and enlarge that energy base. It claims that if we destroy our capacity to produce and operate refrigerators and air conditioners, we shall be better protected from hot weather than if we retain and enlarge that capacity. It claims that if we destroy our capacity to produce and operate tractors and harvesters, to can and freeze food, to build and operate hospitals and produce medicines, we shall secure our food supply and our health better than if we retain and enlarge that capacity. This is the meaning of the claim that retaining this capacity will bring highly destructive global warming, while destroying it will avoid such global warming.***
There are rational ways of cooling the earth if that is what should actually be necessary, ways that would take advantage of the vast energy base of the modern world and of the still greater energy base that can be present in the future if it is not aborted by the kind of policies urged by the environmentalists.
Ironically, the core principle of one such method has been put forward by voices within the environmental movement itself, though not at all for this purpose. Years ago, back in the days of the Cold War, many environmentalists raised the specter of a “nuclear winter.” According to them, a large-scale atomic war could be expected to release so much particulate matter into the atmosphere as to block out sunlight and cause weather so severely cold that crops would not be able to grow.
Wikipedia, the encyclopedia of the internet, describes the mechanism as follows:
Large quantities of aerosol particles dispersed into the atmosphere would significantly reduce the amount of sunlight that reached the surface, and could potentially remain in the stratosphere for months or even years. The ash and dust would be carried by the midlatitude west-to-east winds, forming a uniform belt of particles encircling the northern hemisphere from 30° to 60° latitude (as the main targets of most nuclear war scenarios are located almost exclusively in these latitudes). The dust clouds would then block out much of the sun's light, causing surface temperatures to drop drastically.Certainly, there is no case to be made for an atomic war. But there is a case for considering the possible detonation, on uninhabited land north of 70°, say, of a limited number of hydrogen bombs. The detonation of these bombs would operate in the same manner as described above, but the effect would be a belt of particles starting at a latitude of 70° instead of 30°. The presence of those particles would serve to reduce the amount of sunlight reaching most of the Arctic’s surface. The effect would be to maintain the frigid climate of the region and to prevent the further melting of its ice or, if necessary, to increase the amount of its ice. Moreover, the process could be conducted starting on a relatively small scale and proceeding slowly. This would permit the observation of essential empirical relationships and also allow the process to be stopped at any time before it went too far.
This is certainly something that should be seriously considered by anyone who is concerned with global warming and who also desires to preserve and enhance modern industrial civilization and retain its amenities. If there really is any possibility of global warming so great as to cause major disturbances, this kind of solution should be studied and perfected. Atomic testing should be resumed for the purpose of empirically testing its feasibility.
If there is any remnant of the left of an earlier era, which still respected science and technology, and championed industrial civilization, it might be expected to offer additional possible solutions for excessive global warming, probably solutions of a kind requiring grandiose construction projects. For example, one might expect to hear from it proposals for ringing North Africa and Australia with desalinization plants powered by atomic energy. The purpose would be to bring massive amounts of fresh water to the Sahara Desert and the deserts of Australia, with the further purpose of making possible the growth of billions of trees to absorb carbon dioxide from the atmosphere. Another possibility would be an alternative proposal simply to pump an amount of sea water into confined areas in those deserts sufficient to provide an outlet for a growing volume of global seawater other than heavily inhabited coastal regions. (I would not be ready to endorse any such costly proposals, but they would be a vast improvement over the left’s only current proposal, which is simply the crippling of industrial civilization.)
Once people begin to put their minds to the problem, it is possible that a variety of effective and relatively low-cost solutions for global warming will be found. The two essential parameters of such a solution would be the recognition of the existence of possibly excessive global warming, on the one side, and unswerving loyalty to the value of the American standard of living and the American way of life, on the other. That is, more fundamentally, unswerving loyalty to the values of individual freedom, continuing economic progress, and the maintenance and further development of industrial civilization and its foundation of man-made power.
Global warming is not a threat. But environmentalism’s response to it is.
It claims to want to act in the name of avoiding the risk of alleged dreadful dangers lying decades and centuries in the future. But its means of avoiding those alleged dangers is to rush ahead today to cripple industrial civilization by means of crippling its essential foundation of man-made power. In so doing, it gives no consideration whatever to the risks of this. Nor does it give any consideration to any possible alternatives to this policy. It contents itself with offering to the public what is virtually merely the hope and prayer of the timely discovery of radically new alternative technologies to replace the ones it seeks to destroy. Such pie in the sky is a nothing but a lie, intended to prevent people from recognizing the plunge in their standard of living that will result if the environmentalists’ program is enacted.
If the economic progress of the last two hundred years or more is to continue, if its existing benefits are to be maintained, the people of the United States, and hopefully of the rest of the world as well, must turn their backs on environmentalism. They must recognize it for the profoundly destructive, misanthropic philosophy that it is.
They must solve any possible problem of global warming on the foundation of industrial civilization, not on a foundation of its ruins.
*The last five paragraphs, with slight adaptation, are an excerpt from pp. 77 and 78 of my book Capitalism: A Treatise on Economics.
**The last four paragraphs, with slight adaptation, are an excerpt from pp. 88 and 89 of Capitalism.
*** The examples in this paragraph are adapted from p. 88 of Capitalism.
This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.
Sunday, May 27, 2007
Environmentalism is the product of the collapse of socialism in a world that is ignorant of the contributions of von Mises—a world that does not know what he has said that would logically explain the collapse of socialism and, even more importantly, the success of capitalism.
Because of ignorance of the contributions of von Mises, the great majority of the intellectuals, and of the general public too, which has been subjected to the educational system fashioned and run by them, continues to believe such things as that the profit motive is the cause of starvation wages, exhausting hours, sweatshops, and child labor; and of monopolies, inflation, depressions, wars, imperialism, and racism. At the same time, they believe that saving is hoarding and a cause of unemployment and depressions, as is, allegedly, economic progress in the form of improvements in efficiency. And by the same logic, they regard war and destruction as necessary to prevent unemployment under capitalism. In addition, they believe that money is the root of all evil and that competition, is “the law of the jungle” and “the survival of the fittest.” Economic inequality, they believe, proves that successful businessmen and capitalists play the same social role in capitalism as did slave owners and feudal aristocrats in earlier times and is thus the logical and just basis for “class warfare.”
Real, positive knowledge of the profit motive and the price system, of saving and capital accumulation, of money, economic competition, and economic inequality, and of the harmony of interests among men that results from the joint operation of these leading features of capitalism—all of this knowledge is almost entirely lacking on the part of the great majority of today’s intellectuals. To obtain such knowledge, it would be necessary for them to read and study von Mises, who is far and away the most important source of such knowledge. But they have not done this.
Ignorance of the ideas of von Mises—the willful evasion of his ideas—has enabled the last three generations of intellectuals to go on with the delusion that capitalism is an “anarchy of production,” a system of rampant evil, utter madness, and continuous strife and conflict, while socialism is a system of rational planning and order, of morality and justice, and the ultimate universal harmony of all mankind. For perhaps a century and a half, the intellectuals have seen socialism as the system of reason and science and as the ultimate goal of all social progress. On the basis of all that they believe, and think that they know, the great majority of intellectuals even now cannot help but believe that socialism should succeed and capitalism fail.
Ignorant of the contributions of von Mises, the intellectuals were totally unprepared for the world-wide collapse of socialism that became increasingly evident in the last decades of the twentieth century and that culminated in the overthrow of the communist regimes in Eastern Europe and the former Soviet Union. Carrying their ignorance to the depths of depravity, they have apparently chosen to interpret the undeniable failure of socialism not as evidence of their own ignorance but as the failure of reason and science. Socialism, they believe, is the system of social organization implied by reason and science. Its failure, they conclude, can only be the failure of reason and science. Such is the state of ignorance that results from ignorance of the contributions of von Mises.
This much at least must be said here about the actual relationship between socialism and reason. Reason is an attribute of the individual, not the collective. As von Mises repeatedly said, “Only the individual thinks. Only the individual acts.” So far from being any kind of system demanded or even remotely supported by reason, socialism constitutes the forcible suppression of the reason of everyone except that of the Supreme Dictator. He alone is to think and plan, while all others are merely to obey and carry out his orders. A system in which one man, or a few men, presume to establish a monopoly on the use of reason must, of course, fail. Its failure can certainly not be called a failure of reason. It can no more be called a failure of reason than it could be called a failure of human legs if one man or a handful of men were somehow to deprive the rest of the human race of the power to use its legs and then, of course, found its own legs inadequate to support the weight of the human race. So far is the failure of socialism from being a failure of reason that it would be much more appropriate to describe it as a failure of lunacy: the lunacy of believing that the thinking and planning of one man or a handful of men could be substituted for the thinking and planning of tens and hundreds of millions of men cooperating under capitalism and its division of labor and price system. (Of course, because they never bothered to read von Mises, the intellectuals do not even know that ordinary people do in fact engage in economic planning, planning that is integrated and harmonized by the price system. From the abysmally ignorant perspective of the intellectuals, ordinary people are chickens without heads. Thinking and planning are allegedly actions that only government officials can perform.)
Because of ignorance of the contributions of von Mises, one cannot expect very many people to know that Nazism was actually a major form of socialism and thus that the fifteen million or more murders for which it was responsible should be laid at the door of socialism. Nazism and all of its murders aside, Marxian “scientific” socialism was responsible for more than eighty million murders in the twentieth century: thirty million in the former Soviet Union, fifty million in Communist China, and untold millions more in the satellite countries.
The great majority of the intellectual establishment never took these latter mass murders very seriously and certainly did not regard them as being caused by the nature of socialism. (They did take seriously the murders committed by the Nazis, which, in their ignorance, they blamed on capitalism.) Even when, late in the twentieth century, well after the great majority of the murders had been committed and were known to the world, President Reagan characterized the Soviet Union as “the evil empire,” the intellectual establishment was capable of no other response than to criticize him for being impolite, undiplomatic, and boorish.
Now the reality is that the great majority of intellectuals of the last several generations have blood on their hands. Morally speaking at least, in urging the establishment of socialism and/or in denying or ignoring its resulting bloody consequences, they have been accessories to mass murder, either before the fact or after the fact.
And, indeed, the intellectuals have some form of awareness of their guilt. For not only do they blame reason and science for the failure of socialism but they now also regard reason and science, and its offshoot technology, as profoundly dangerous phenomena, as though they, and not socialism and the intellectuals who made socialism possible, had been responsible for the mass murders. Indeed, the same intellectual quarter that a generation or more ago urged “social engineering” has taken the failure of social engineering so far as to now oppose engineering of virtually any kind. The same intellectual quarter that a generation or more ago urged the totalitarian control of all aspects of human life for the purpose of bringing order to what would otherwise allegedly be chaos, now urges a policy of laissez-faire—out of respect for natural harmonies. Of course, it is not a policy of laissez-faire toward human beings, who are to be as tightly controlled as ever. Nor, of course, is it a policy that recognizes any form of economic harmonies among human beings. No, it is a policy of laissez-faire toward nature in the raw; the alleged harmonies that are to be respected are those of so-called eco-systems.
But while the intellectuals have turned against reason, science, and technology, they continue to support socialism and, of course, to oppose capitalism. They now do so in the form of environmentalism. It should be realized that environmentalism’s goal of global limits on carbon dioxide and other chemical emissions, as called for in the Kyoto treaty, easily lends itself to the establishment of world-wide central planning with respect to a wide variety of essential means of production. Indeed, an explicit bridge between socialism and environmentalism is supplied by one of the most prominent theorists of the environmental movement, Barry Commoner, who was also the Green Party’s first candidate for President of the United States.
The bridge is in the form of an attempted ecological validation of one of the very first notions of Karl Marx to be discredited—namely, Marx’s prediction of the progressive impoverishment of the wage earners under capitalism. Commoner attempts to salvage this notion by arguing that what has prevented Marx’s prediction from coming true, until now, is only that capitalism has temporarily been able to exploit the environment. But this process, he claims, must now come to an end, and, as a result, the allegedly inherent conflict between the capitalists and the workers will emerge in full force. (For anyone interested, I quote Commoner at length in Capitalism.)
Concerning the essential similarity between environmentalism and socialism, I wrote:
The only difference I can see between the green movement of the environmentalists and the old red movement of the Communists and socialists is the superficial one of the specific reasons for which they want to violate individual liberty and the pursuit of happiness. The Reds claimed that the individual could not be left free because the result would be such things as “exploitation,” “monopoly,” and depressions. The Greens claim that the individual cannot be left free because the result will be such things as destruction of the ozone layer, acid rain, and global warming. Both claim that centralized government control over economic activity is essential. The Reds wanted it for the alleged sake of achieving human prosperity. The Greens want it for the alleged sake of avoiding environmental damage . . . [And in the end,] [b]oth the Reds and the Greens want someone to suffer and die; the one, the capitalists and the rich, for the alleged sake of the wage earners and the poor; the other, a major portion of all mankind, for the alleged sake of the lower animals and inanimate nature. (p. 102)
All that I have said up to now should be understood as in the nature of an introduction. I consider the substance of my talk to be the refutation of the two essential claims of the environmentalists and then a critique of their essential policy prescription. The two essential claims of the environmentalists, which I take for granted are already well known to everyone, are (1) that continued economic progress is impossible, because of the impending exhaustion of natural resources (it is from this notion that the slogan “reduce, reuse, recycle” comes), and (2) that continued economic progress, indeed, much of the economic progress that we have had up to now, is destructive of the environment and is therefore dangerous. The essential policy prescription of the environmentalists is the prohibition of self-interested individual action insofar as the byproduct of such action when performed on a mass basis is alleged damage to the environment. The leading concrete example of this policy prescription is the attempt now underway to force individuals to give up such things as their automobiles and air conditioners on the grounds that the byproduct of hundreds of millions or billions of people operating such devices is to cause global warming. And this same example, of course, is presently the leading example of the alleged dangers of economic progress.
The basis of my critique of the essential claims of the environmentalists is Carl Menger’s theory of goods. The basis of my critique of their essential policy prescription is the spirit of individualism that runs throughout the writings of Ludwig von Mises.
In his Principles of Economics, Menger develops two aspects of his theory of goods that are highly relevant to the critique of the environmentalists’ two essential claims. The first aspect is his recognition that what makes what would otherwise be mere things into goods is not the intrinsic properties of the things but a man-made relationship between the physical properties of the things and the satisfaction of human needs or wants. Menger describes four prerequisites, all of which must be simultaneously present, in order for a thing to become a good, or, as he often puts it, have “goods-character.”
If a thing is to become a good, or in other words, if it is to acquire goods-character, all four of the following prerequisites must be simultaneously present:
1. A human need.
2. Such properties as render the thing capable of being brought into a causal connection with the satisfaction of this
3. Human knowledge of this causal connection.
4. Command of the thing sufficient to direct it to the satisfaction of the need. (p. 52)
All this has immediate bearing on the subject of natural resources. It implies that the resources provided by nature, such as iron, aluminum, coal, petroleum and so on, are by no means automatically goods. Their goods-character must be created by man, by discovering knowledge of their respective properties that enable them to satisfy human needs and then by establishing command over them sufficient to direct them to the satisfaction of human needs.
For example, iron, which has been present in the earth since the formation of the planet and throughout the entire presence of man on earth, did not become a good until well after the Stone Age had ended. Petroleum, which has been present in the ground for millions of years, did not become a good until the middle of the nineteenth century, when uses for it were discovered. Aluminum, radium, and uranium also became goods only within the last century or century and a half.
An example concerning goods-character being created only after the establishment of command sufficient to direct the resource provided by nature to the satisfaction of a human need would be the case of petroleum deposits lying deeper than existing drilling equipment could go. As drilling equipment improved, command was established over deposits lying at greater and greater depths. Those deposits, to the extent that they were known, then became goods, which they had not been before. Similarly, for some years after the creation of the goods-character of petroleum, those petroleum deposits containing a significant sulfur content were unuseable for the production of petroleum products and were therefore not goods. Their goods-character was created only when Rockefeller and Standard Oil developed the process of cracking petroleum molecules, which then made sulfurous deposits useable.
The second aspect of Menger’s theory of goods that is highly relevant to the critique of the environmentalists’ essential claims is his principle that the starting point both of goods-character and of the value of goods is within us—within human beings—and radiates outward from us to external things, establishing the goods-character and value first of things that directly satisfy our needs, such as food and clothing, which category of goods Menger describes as “goods of the first order,” and, second, the means of producing goods of the first order, such as the flour to bake bread and the cloth to make clothing, which category of goods Menger describes as “goods of the second order.” Goods-character and the value of goods then proceed from goods of the second order to goods of the third order, such as wheat, which is used to make the flour, and cotton yarn, which is used to make the cloth to make the clothing. From there they proceed to goods of the fourth order, such as the equipment and land used to produce the wheat, and the raw cotton from which the cotton yarn is made. Thus, goods-character and the value of goods, in Menger’s view, radiate outward from human beings and their needs to external things more and more remote from the direct satisfaction of human needs.
In Menger’s own words: “The goods-character of goods of higher order is derived from that of the corresponding goods of lower order” (p. 63). And: “. . . the value of goods of higher order is always and without exception determined by the prospective value of the goods of lower order in whose production they serve” (p. 150). And as to the value of goods of the first order: “The value an economizing individual attributes to a good is equal to the importance of the particular satisfaction that depends on his command of the good” (p. 146). “The determining factor . . . is . . . the magnitude of importance of those satisfactions with respect to which we are conscious of being dependent on command of the good” (p. 147).
In Menger’s view, it is clear that the process of production represents a progression from goods of higher order to goods of lower order, that is, from goods more remote from the satisfaction of human needs and the source of the value of all goods, to goods less remote from the satisfaction of human needs and the source of the value of all goods. The process of production unmistakably appears as one of continuous enhancement of utility, as it moves closer and closer to its ultimate end and purpose: the satisfaction of human needs.
To apply Menger’s views to the critique of the essential claims of environmentalism, it is first necessary to stress the fact that in his account of things, nature’s contribution to natural resources is implicitly much less than is generally supposed. According to the prevailing view, what nature has provided is the natural resources that man exploits, that is, for example, all of the iron mines and coal mines, all of the oil fields and natural-gas wells, and so on. At the same time, according to the prevailing view, man’s only connection to these allegedly all-nature-given natural resources is merely that he uses them up, with no means of replacing them. It is generally thought, for example, that while man produces such things as automobiles and refrigerators, his sole connection to the natural resources used in their production, such as iron ore, is merely to use them up, with no possibility of replacing them.
As I say, in Menger’s view, nature’s contribution to natural resources is much less than what is usually assumed. What nature has provided, according to Menger, is the material stuff and the physical properties of the deposits in these mines and wells, but it has not provided the goods-character of any of them. Indeed, there was a time when none of them were goods.
The goods-character of natural resources, according to Menger, is created by man, when he discovers the properties they possess that render them capable of satisfying human needs and when he gains command over them sufficient to direct them to the satisfaction of human needs.
All that needs to be added to Menger’s view of the man-made creation of the goods-character of natural resources is a precise, explicit recognition of the extent of the things Menger refers to that nature has provided and which are not yet goods, but which, under the appropriate circumstances, might become goods, or, at least, from the domain of which things might be drawn to a greater extent to receive goods-character by virtue of man’s contribution to the process. In other words, what precisely has nature provided with respect to which man might discover causal connections to the satisfaction of his needs and over greater portions of which he might gain command sufficient to direct such things to the satisfaction of his needs?
My answer to this question is that what nature has provided is matter and energy—matter in the form of all the chemical elements both known and as yet unknown, and energy, in all of its various forms. I call this contribution of nature “the natural resources provided by nature.” Natural resources in the much narrower sense of “goods,” as Menger uses the term, are drawn from this virtually infinite domain provided by nature. Natural resources that are goods in Menger’s sense are natural resources provided by nature that man has made useable and accessible by virtue of discovering properties they possess that enable them to satisfy human needs and by virtue of gaining command over them sufficient to direct them to the satisfaction of human needs.
What is essential here is to grasp the distinction between the two senses of the expression “natural resources.” First, there are natural resources as provided by nature. Such natural resources, as I say, are matter, in all of its elemental forms, and energy, in all of its forms. And then, second, drawn from this domain, are natural resources to which man has given goods-character.
We are already familiar with the fact that an outstanding characteristic of natural resources in the first sense, that is, of natural resources as provided by nature, is that none of them are intrinsically goods—that their achievement of goods-character awaits action by man. A further, equally important characteristic of natural resources as provided by nature, and which now needs to be stressed as strongly as possible, is the enormity of their quantity. Indeed, for all practical purposes, they are infinite. Strictly speaking, they are one and the same with all the matter and energy in the universe. That is the full extent of the natural resources supplied by nature.
Thus, in one sense, the sense of useable, accessible natural resources—that is, of goods as Menger defines the term—the contribution of nature is zero. Practically nothing comes to us from nature that is ready-made as a useable, accessible natural resource—as a good in Menger’s sense. In another sense, however, the natural resources that come from nature—the matter, in the form of all the chemical elements, known and as yet unknown, and energy in all of its forms—are virtually infinite in their extent. In this sense, nature’s contribution is boundless.
Even if we limit our horizon exclusively to the planet earth, which certainly need not be our ultimate limit, the magnitude of natural resources supplied by nature is mind-bogglingly huge. It is nothing less than the entire mass of the earth and all of the energy that goes with it, from thunder storms in the atmosphere, a single one of which discharges more energy than all of mankind produces in an entire year, to the tremendous heat found at the earth’s core in millions of cubic miles of molten iron and nickel. Yes, the natural resources provided by nature in the earth alone extend from the upper limits of the earth’s atmosphere, four-thousand miles straight down, to its center. This enormity consists of solidly packed chemical elements. There is not one cubic centimeter of the earth, either on its surface or anywhere below its surface, that is not some chemical element or other, or some combination of chemical elements. This is nature’s contribution to the natural resources contained in this planet. It indicates the incredibly enormous extent of what is out there awaiting transformation by man into natural resources possessing goods-character.
And this brings me to what I consider to be the revolutionary view of natural resources that is implied in Menger’s theory of goods. Namely, not only does man create the goods- character of natural resources—by obtaining knowledge of their useful properties and then creating their useability and accessibility by virtue of establishing the necessary command over them—but he also has the ability to go on indefinitely increasing the supply of natural resources possessing goods-character. He enlarges the supply of useable, accessible natural resources—that is, natural resources possessing goods-character—as he expands his knowledge of and physical power over nature.
The prevailing view, that dominates the thinking of the environmentalists and the conservationists, that there is a scarce, precious stock of natural resources that man’s productive activity serves merely to deplete is wrong. 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 essential question concerning natural resources is what fraction of the virtual infinity that is nature does man possess sufficient knowledge concerning and sufficient physical command over to be able to direct it to the satisfaction of his needs. This fraction will always be very small indeed and will always be capable of vastly greater further enlargement.
As I stated a moment ago, the supply of useable, accessible natural resources expands as man expands his knowledge of and physical power over the world and universe. Up to now, although considerably expanded in comparison with what it was in previous centuries, man’s physical power over the world has been essentially confined to the roughly thirty percent of the earth’s surface that is not covered by sea water, and there it has been further confined to depths that are still measured in feet, not miles. Man is literally still just scratching the surface of the earth, and the far lesser part of its surface at that. And nowhere is he dealing with nature nearly as effectively or efficiently as he someday might.
In addition to the examples previously given with respect to iron, petroleum, aluminum, radium, and uranium, consider the implications for the supply of useable, accessible natural resources of man becoming able to mine at greater depths with less effort, to move greater masses of earth with less effort, to break down compounds previously beyond his power, or to do so with less effort, to gain access to regions of the earth previously inaccessible or to improve his access to regions already accessible. All of these increase the supply of useable, accessible natural resources. They do so, of course, by virtue of creating what Menger describes as command over things sufficient to direct them to the satisfaction of human needs. All of them bestow the character of goods on what had before been mere things.
As I wrote in Capitalism:
Today, as the result of such advances, the supply of economically useable natural resources is enormously greater than it was at the beginning of the Industrial Revolution, or even just one or two generations ago. Today, man can more easily mine at a depth of a thousand feet than he could in the past at a depth of ten feet, thanks to such advances as mechanical-powered drilling equipment, high explosives, steel structural supports for mine shafts, and modern pumps and engines. Today, a single worker operating a bulldozer or steam shovel can move far more earth than hundreds of workers in the past using hand shovels. Advances in reduction methods have made it possible to obtain pure ores from compounds previously either altogether impossible to work with or at least too costly to work with. Improvements in shipping, railroad building, and highway construction have made possible low-cost access to high-grade mineral eposits in regions previously inaccessible or too costly to exploit.
There is no limit to the further advances that are possible. 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. Hydrogen, the most abundant element in the universe, may turn out to be an economical source of fuel in the future. Atomic and hydrogen explosives, lasers, satellite detection systems, and, indeed, even space travel itself, open up limitless new possibilities for increasing the supply of economically useable mineral supplies. Advances in mining technology that would make it possible to mine economically at a depth of, say, ten thousand feet, instead of the present much more limited depths, or to mine beneath the oceans, would so increase the portion of the earth’s mass accessible to man that all previous supplies of accessible minerals would appear insignificant in comparison. (p. 64)
The fundamental situation is this. Nature presents the earth as an immense solidly packed ball of chemical elements. It has also provided comparably incredible amounts of energy in connection with this mass of chemical elements. If, over and against this massive contribution from nature stands motivated human intelligence—the kind of motivated human intelligence that a free, capitalist society so greatly encourages, with its prospect of earning a substantial personal fortune as the result of almost every significant advance, there can be little doubt as to the outcome: Man will succeed in progressively enlarging the fraction of nature’s contribution that constitutes goods; that is, he will succeed in progressively enlarging the supply of useable, accessible natural resources.
The likelihood of his success is greatly reinforced by two closely related facts: the progressive nature of human knowledge and the progressive nature of capital accumulation in a capitalist society, which, of course, is also a rational as well as a free society. In such a society, the stock of scientific and technological knowledge grows from generation to generation, as each new generation begins with all of the accumulated knowledge acquired by previous generations and then makes its own, fresh contribution to knowledge. This fresh contribution enlarges the stock of knowledge transmitted to the next generation, which in turn then makes its own fresh contribution to knowledge, and so on, with no fixed limit to the accumulation of knowledge short of the attainment of omniscience.
Similarly, in such a society the stock of capital goods grows from generation to generation. The larger stock of capital goods accumulated in any generation on the foundation of a sufficiently low degree of time preference and thus correspondingly high degree of saving and provision for the future, together with a continuing high productivity of capital goods based on the foundation of advancing scientific and technological knowledge, serves to produce not only a larger and better supply of consumers’ goods but also a comparably enlarged and better supply of capital goods. That larger and better supply of capital goods, continuing on the same foundation of low time preference and advancing scientific and technological knowledge, then serves to further enlarge and improve the supply not only of consumers’ goods but also of capital goods. The result is continuing capital accumulation, on the basis of which, from generation to generation, man is able to confront nature in possession of growing powers of physical command over it.
On the basis of both progressively growing knowledge of nature and progressively growing physical power over nature, man progressively enlarges the fraction of nature that constitutes goods, i.e., the supply of useable, accessible natural resources.
I turn now to the second aspect of Menger’s theory of goods that relates to the critique of the essential tenets of environmentalism, namely, his view of the process of production as one of continuous enhancement of utility as it moves from goods of higher order to goods of lower order.
All that it is necessary to add to Menger’s view is recognition once again of the fact that the earth is an immense ball of solidly packed chemical elements. Now these chemical elements constitute man’s external material surroundings, i.e., his environment. They are the external material conditions of human life.
When these facts are kept in mind, it becomes clear that the process of production, and the whole of economic activity, so far from constituting a danger to man’s environment, as the environmentalists claim, have the inherent tendency to improve his environment, indeed, that that is their essential purpose.
This becomes obvious as soon as one realizes that not only does the entire world physically consist of nothing but chemical elements, but also that these elements are never destroyed. They simply reappear in different combinations, in different proportions, in different places. As I wrote in Capitalism:
Apart from what has been lost in a few rockets, the quantity of every chemical element in the world today is the same as it was before the Industrial Revolution. The only difference is that, because of the Industrial Revolution, instead of lying dormant, out of man’s control, the chemical elements have been moved about, as never before, in such a way as to improve human life and well-being. For instance, some part of the world’s iron and copper has been moved from the interior of the earth, where it was useless, to now constitute buildings, bridges, automobiles, and a million and one other things of benefit to human life. Some part of the world’s carbon, oxygen, and hydrogen has been separated from certain compounds and recombined in others, in the process releasing energy to heat and light homes, power industrial machinery, automobiles, airplanes, ships, and railroad trains, and in countless other ways serve human life. It follows that insofar as man’s environment consists of the chemical elements iron, copper, carbon, oxygen, and hydrogen, and his productive activity makes them useful to himself in these ways, his environment is correspondingly improved.
Consider further examples. To live, man needs to be able to move his person and his goods from place to place. If an untamed forest stands in his way, such movement is difficult or impossible. It represents an improvement in his ennvironment, therefore, when man moves the chemical elements that constitute some of the trees of the forest somewhere else and lays down the chemical elements brought from somewhere else to constitute a road. It is an improvement in his environment when man builds bridges, digs canals, opens mines, clears land, constructs factories and houses, or does anything else that represents an improvement in the external, material conditions of his life. All of these things represent an improvement in man’s material surroundings—his environment. All of them represent the rearrangement of nature’s elements in a way that makes them stand in a more useful relationship to human life and well-being.
Thus, all of economic activity has as its sole purpose the improvement of the environment—it aims exclusively at the improvement of the external, material conditions of human life. Production and economic activity are precisely the means by which man adapts his environment to himself and thereby improves it. (p. 90)
When the environmentalists speak of “harm to the environment” in connection with such things as clearing jungles, blasting rock formations, or the loss of this or that plant or animal species of no known or foreseeable value to man, what they actually mean in the last analysis is the loss of the alleged intrinsic values constituted by such things, and not any actual loss whatever to man. On the contrary, they are eager to sacrifice human life and well-being for the preservation of such alleged intrinsic values. To them, the “environment” is not the surroundings of man, deriving its value from its relationship to man, but nature in and of itself, deriving its value from itself—i.e., allegedly possessing “intrinsic” value.
Of course, the environmentalists also frequently pose as supporters of human life and well-being, and at such times they direct their fire at various comparatively minor negative byproducts of production and economic activity, such as local degradation of the quality of air or water, while totally neglecting the enormous positives, which, of course, are of overwhelmingly greater significance.
What guarantees that the positive benefits of production and economic activity incalculably outweigh any negatives associated with their byproducts is the principle of respect for individual rights. Although by no means always observed, this principle requires that one’s production and economic activity not only benefit oneself but also that insofar as any other people are involved in the process, the use of their labor and property must be obtained only by their voluntary consent. And, of course, to secure their voluntary consent, their cooperation must be made worth their while.
Thus, for example, if I wish to construct a building, not only will I benefit from it, but also all those who work for me in its construction and all those who supply me with materials and equipment for constructing it. So too will the building’s purchaser or tenants—if I construct it for the purpose of sale or rent. In addition, no third party’s property or person may be harmed by my action. For example, I risk serious legal penalty if I construct my building in a way that undermines a neighboring building’s foundation or which makes my building unsafe for passersby.
The major complaints the environmentalists currently make concern the fact that I heat and air-condition my building—to be sure, not I as one isolated individual, but as one of many tens or hundreds of millions of individuals using fossil fuels or CFCs. In so doing, mankind is allegedly guilty of the crime of increasing the level of carbon dioxide and other greenhouse gases, thereby causing “global warming,” or increasing the level of ozone-destroying molecules in the upper atmosphere, thereby causing higher rates of skin cancer. And because mankind is allegedly guilty in these ways, the environmentalists assume that I as one individual man must be restricted, if not prohibited altogether, in my use of fossil fuels and CFCs, even though I, as one individual, am utterly incapable of causing any of the harmful effects alleged; and the same, of course, is true, mutatis mutandis, for each and every other individual.
Here I want to turn to the enormous spirit of individualism that is found in von Mises. Only individuals think and only individuals act, says von Mises. It follows, of course, that it is only for his own actions that an individual should be held responsible. The son should not be punished for the sins of the father; one member of a race or nation or economic class should not be held responsible for the deeds of any other members of that race, nation, or economic class.
And so too should it be in the case of any alleged environmental damage. If an individual, or an individual business enterprise, is incapable by himself of causing global warming or ozone depletion, or whatever, on a scale sufficient to cause harm to any other specific individual or individuals, then there is absolutely no proper basis on the individualistic philosophy of von Mises for prohibiting his action. As I say in Capitalism, “To prohibit the action of an individual in such a case is to hold him responsible for something for which he is simply not in fact responsible. It is exactly the same in principle as punishing him for something he did not do" (p. 91).
The individual should not be punished for consequences that can occur only as the result of the actions of the broader category or group of which he is a member, but do not occur as the result of his own actions. Thus, even if it is true that the combined effect of the actions of several billion people really is to cause global warming or ozone depletion (neither of these claims has actually been proven—the claims of global warming have all the certainty of a weather forecast, extended out to the next 100 years!), but even if, as I say, the claims were true, it still would not follow that any proper basis existed for prohibiting any specific individual or individuals from acting in ways that only when aggregated across billions of individuals resulted in global warming or ozone depletion or whatever.
If global warming or ozone depletion or whatever, really are consequences of the actions of the human race considered collectively, but not of the actions of any given individual, including any given individual private business firm, then the proper way to regard them is as the equivalent of acts of nature. Not being caused by the actions of individual human beings, they are equivalent to actions not morally caused by human beings at all, that is to say, to acts of nature.
Once we see matters in this light, it becomes clear what the appropriate response is to such environmental change, whether global warming and ozone depletion, or global cooling and ozone enrichment, or anything else nature may bring. It is the same as the appropriate response of man to nature in general. Namely, individual human beings must be free to deal with nature to their own maximum individual advantage, subject only to the limitation of not initiating the use of physical force against the person or property of other individual human beings. By following this principle, man will deal with the any negative forces of nature resulting as byproducts of his own activity taken in the aggregate in precisely the same successful way that he regularly deals with the primary forces of nature.
Allow me to elaborate on this. Here we are. We enjoy an incredibly marvelous industrial civilization, whose nature is indicated by the fact that because of it vast numbers of human beings can travel at breathtaking speeds for hundreds of miles at a stretch in their own personal automobiles, listening to symphony orchestras as they go—indeed, can fly over whole continents in a matter of hours in jet planes, while watching movies and drinking martinis; can walk into darkened rooms and flood them with light by the flick of a switch; can open a refrigerator door and enjoy delicious, healthful food brought from all over the world; can do all this and so much more. This is what we have. This, and much, much more, is what people everywhere could have if they were intelligent enough to establish economic freedom and capitalism.
But all this counts for virtually nothing as far as the environmentalists are concerned. They are ready to throw it all away because, they allege, it causes global warming and ozone depletion, i.e., bad weather. And the best way, they say, for us to avoid such bad weather, and thus to control nature more to our advantage, is to abandon modern, industrial civilization and capitalism.
The appropriate answer to the environmentalists is that we will not sacrifice a hair of industrial civilization, and that if global warming and ozone depletion really are among its consequences, we will accept them and deal with them—by such reasonable means as employing more and better air conditioners and sun block, not by giving up our air conditioners, refrigerators, and automobiles.
More fundamentally, the answer to the environmentalists is that the appropriate response to environmental change, whether global warming or a new ice age, is the economic freedom of a capitalist society. Sooner or later, such environmental change will occur—if not in this new century or even in this new millennium—then certainly at some time in the more remote future. At that time, it will require vast changes in human economic activity. Some areas presently used for certain purposes will become unuseable for those purposes. Conceivably, they might even become uninhabitable. Other areas presently uninhabitable or barely habitable, will become much more desirable. Major changes in the comparative advantages of vast areas will take place, to which people must be free to respond.
As I wrote in Capitalism,
Even if global warming turned out to be a fact, the free citizens of an industrial civilization would have no great difficulty in coping with it—that is, of course, if their ability to use energy and to produce is not crippled by the environmental movement and by government controls otherwise inspired. The seeming difficulties of coping with global warming, or any other large-scale change, arise only when the problem is viewed from the perspective of government central planners.
It would be too great a problem for government bureaucrats to handle . . . . But it would certainly not be too great a problem for tens and hundreds of millions of free, thinking individuals living under capitalism to solve. It would be solved by means of each individual being free to decide how best to cope with the particular aspects of global warming that affected him.
Individuals would decide, on the basis of profit-and-loss calculations, what changes they needed to make in their businesses and in their personal lives, in order best to adjust to the situation. They would decide where it was now relatively more desirable to own land, locate farms and businesses, and live and work, and where it was relatively less desirable, and what new comparative advantages each location had for the production of which goods. Factories, stores, and houses all need replacement sooner or later. In the face of a change in the relative desirability of different locations, the pattern of replacement would be different. Perhaps some replacements would have to be made sooner than otherwise. To be sure, some land values would fall and others would rise. Whatever happened individuals would respond in a way that minimized their losses and maximized their possible gains. The essential thing they would require is the freedom to serve their self-interests by buying land and moving their businesses to the areas rendered relatively more attractive, and the freedom to seek employment and buy or rent housing in those areas.
Given this freedom, the totality of the problem would be overcome. This is because, under capitalism, the actions of the individuals, and the thinking and planning behind those actions, are coordinated and harmonized by the price system . . . . As a result, the problem would be solved in exactly the same way that tens and hundreds of millions of free individuals have solved much greater problems, such as redesigning the economic system to deal with the replacement of the horse by the automobile, the settlement of the American West, and the release of the far greater part of the labor of the economic system from agriculture to industry. (pp. 88-89)
George Reisman is Pepperdine University Professor Emeritus of Economics, and is the author of Capitalism: A Treatise on Economics. His website is www.capitalism.net.
Copyright © 2001 by George Reisman. Permission is hereby granted to reproduce and distribute this article electronically and in print, other than as part of a book. (Email notification is requested). All other rights reserved.
This article, which draws on the author’s Capitalism, is an abridged version of his Mises Memorial Lecture, delivered at the Ludwig von Mises Institute’s Austrian Scholars’ Conference in 2001. A more abridged version appeared in The Quarterly Journal of Austrian Economics, vol. 5, no. 2. The present version was published as a Daily Article on www.mises.org, April 20, 2001, under the title “Environmentalism Refuted.”