I’m talking today at a Brisbane Institute forum on oil and whether it’s running out. 12:30 at the Hilton. I’ll try to post my presentation soon.
387 thoughts on “Peak Oil”
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John Quiggin 
Lets assume that peak oil is real and approaching.
To solve this problem democratically we need to convince 51% of the population that our tax dollars should be spent on new infastructure or that new regulations should be imposed on us all to steer our behaviour in a given direction.
To solve this problem through market forces we would have to convince a number of speculators that there was profit to be made in stock piling oil (increasing Oils cost in the short term and mitigating its cost in the long term). If we could convince enough institutional fund managers then we would be making progress.
If I had to trust my future prosperity (10 years from now say) to either the government or to a fund manager then whilst it would be a choice between the devil and the deep blue sea, I would have little hesitation in selecting the later.
In practice I imagine that if enough people get concerned about this issue we would see action through government as well as from the private sector. Either way the peak oil idea will have to pass muster with a lot of people before we see mitigating action from speculators or government.
Andrew wrote : “I would argue that there is always, and by its very nature, less intelligence in government than in the community at large, simply because, in a representative democracy like ours, there are a limited number of representatives, living predominately in one city who make decisions that affect us all.”
You have ignored one of the main points in my previous post and again imply that the situation, as it now exists, is how it must always be. From this premise, your assertion that ‘market forces’ (i.e. large unelected corporations) must necessarily be more responsive to circumstances and more ‘intelligent’ than such remote and clearly unaccountable governments, as we now have in this country, seems a lot more plausible than would otherwise be the case.
However, to reiterate my point, there is no inherent need, particularly in the age of mass electronic communications, for government to be that way.
There should be no reason why our system of democracy can’t be changed to make it possible for many more people to directly be involved in our decision making. For example, it should be possible to insist that controversial legislation (e.g. Telstra Privatisation, IR ‘reforms’, ‘welfare to work’, anti-democratic ‘anti-terror’ laws) be subject to popular plebiscite, particularly in cases where it had not even been previously put to the electorate.
There is no reason why restrictions to Government information under ‘Freedom Of Information’ laws need to be so so great and for the charges for retrieved information, that, in the age of the Internet would cost next to nothing to provide, to be so prohibitive.
Powers such as previously existed in the Senate Committe system (before the rigged Senate election system gave the Coalition an outright majority) need to be extended. And parliamentarians must be obliged to heed petitions, instead of, as is the current practice, ignoring them almost completely on almost every single occasion. When a sufficient number of petition signatures have been received proposals from that petition should be put to the public as a referendum questions.
Also, I happen to think that power from central governments should be devolved as far as is practicable, not towards unelected corporations, but towards the community, and from higher to lower levels of Government. A good start would be for the (reputedly) Labor Government of NSW to give local governments back their powers over housing development applications, so that the trend of developers to turn Sydney communites into ghastly regions of crowded high rise apartments, could be stopped. (see http://www.sos.org.au).
If this were to be done, then much of the appeal of simplistic arguments in favour of ‘small government’ would go up in smoke.
James,
You seem to believe that “the market” solely consists of “large unelected corporations”. This is the nonsence at the root of your misunderstanding of my argument. The market, as an entity, does not exist. It is simply the accumulated decisions of the billions of people on this planet. Some of them choose to invest in entities that then become companies, which profit by satisfying (at least partially) the wants of some, or lots of, the people. The market is that simple and that complex.
Andrew,
Of course the market is more than large corporations.
However, the influence of large corporations in most sectors of the economy is overwhelming, e.g. the Woolworths Coles supermarket duopoly, whilst the influence that ordinary people can have over the course of the direction of society as small shareholders or purchasers is very limited. The influence, through market mechanisms, of the significant number of people on incomes near the minimum rate of pay, is is practically nil.
When Governments argue that the ‘free market’ can better provide services than itself, it is nearly always an excuse for handing control of commonly owned infrastructure and assets to unelected corportions. That’s what has happened when the Menzies Government privaised our publicly owned oil refinery in the 1950’s and that is what has happened with innumerable other privatisations since then.
That was the point I was making.
Unfortunately, James I disagree. The only way that Coles and Woolworths sell anything is because people buy things. The way that they built up their market position was not by holding a gun to anyone’s head, but by selling things to people, things the people may or may not have needed, but believed they wanted.
Your refinery argument is a good example of why the government should not own businesses. They were inefficient, union ridden and slow. They were also protected. The sale was to mates of the government. If they had not been government owned in the first place it would have been better all round.
One of the reason why I think democractic decisions are generally less wise than market based decisions is to do with feedback.
Lets say we all vote for an increase in spending on alternate technology via government because we think oil will run short of demand next year. If the oil shortage event does not transpire we don’t tend to learn a lot as individuals. In fact when the news is released that oil did not run short we might be thinking about other things like the possibility that the drought has not broken and why the government does not spend enough on aged care.
Lets say we individually invest in solar technology via the stock market because we think oil will run short next year. Lets say we buy stock in a spread of oil companies. If the oil shortage event does not transpire then we get direct hip pocket feedback. Losing your own hard earned money is generally quite personal in nature.
Built into the market mechanism is a process for learning. The democratic approach is not as refined. In the democratic system the cost of mistakes is often bourne by somebody other than the original proponents. Even with instantaneous electronic democracy this problem would persist. In fact lowering the individuals cost of voting merely compounds the problem. At least with the current system of representative government there is a chance that the representatives will feel burnt by mistakes and learn a thing or two.
Andrew Reynolds wrote : “The only way that Coles and Woolworths sell anything is because people buy things.”
This precisely illustrates why our purchasing power is no substitute for direct decision making through our democratic institutions. Around the order of 80% of residents of Maleny Queensland opposed the building of a Woolworths supermarket in the main street of their town, yet their wishes were ignored by Woolworths and were overruled by both the Shire Council and the Queensland Government (see http://www.malenyvoice.com).
Also, most primary producers would prefer not to have to deal with either Woolworths or Coles because of the way they abuse their duopoly position, but have no choice.
On your repeated assertions that Governments can never be as smart as an unfettered free market, please tell me how much ‘intelligence’ you believe was displayed by the markets in the following decisions :
1. Making most of our global agriculture dependent upon fossil fuel fertilisers, which are finite non-renewable resources, as referred to above.
2. Making much of our global agriculture dependent upon non-renewable underground water supplies.
3. Burning up almost half of humankind’s endowment of fossil fuels in in around 150 years, as referred to above.
4. Building suburbs on top of our best agricultural land, particularly in the Redland Bay region of Brisbane and in Toowoomba, so that the food we eat must now be transported in from up to hundreds of kilometres away by truck using non-renewable fossil fuel.
5. Dysfunctional cities in which most inhabitants are forced to commute vast distances each day through gridlocked traffic in order to get to work and to reach other amenities.
6. Planned obsolescence of manufactured artefacts.
7. Failure to standardise components in common consumer items, forcing up the price of spare parts and repairs.
8. Failure to effectively recycle valuable materials in, for example computer monitors.
9. Destruction of rainforest for a few years worth of cattle grazing (as occurs in Brazil, for example)
10. Exhaustion of much of the world’s fishing stocks.
11. Hunting of tigers almost to extinction.
12. The arms trade.
13. The running down of our rural telecommunications infrastructure to save Telstra investors a few dollars.
14. Bechtel corporation forbidding Bolivians from collecting rainwater out of the sky as part of the privatisation agreement in 2003.
15. The deal which obliged the NSW Government to close surface roads in order to force motorists to use the the Cross City Tunnel.
16. Inflated prices paid for by Australian farmers for their land which have forced them to degrade the quality of the land in order to meet loan repayments. As one farmer put it : “Like everyone else on the planet, we need to make a living and most farmers have huge debts that don’t allow us to sit back and watch the native vegetation grow on all of the land we or our forefathers paid a fortune for.” (See comment in Online Opinion forum (currently at : http://www.onlineopinion.com.au/author.asp?id=576) arising from Jennifer Marohasy’s (http://www.onlineopinion.com.au/author.asp?id=576) article “Jared Diamond’s gated community of the mind”. See, also, Chapter on Australia in Jared Diamond’s “Collapse”.)
17. Prices for free-standing houses in cities, once affordable by people on working class incomes now in the order of half a million dollars and more.
18. etc.
19. etc, etc, etc etc.
… or do you intend to argue that, ‘big government’ and not market forces, are to blame because we don’t yet live in a world completely run, in every possible corner, according to your neo-liberal prescription?
If, instead, power had been taken out of the hands of corporations and decisions had been taken by society through its democratic institutions, do you seriously expect anyone to believe that the outcome could have been anywhere near as bad?
The unconstrained free market has, demonstrated more than adequately, and to our great cost, that it is a deadly menace to our survival.
It is time that our Governments started to act to fix up the mess and told the corporations to get out of their way.
James,
Is there any role you see in an economy for the freedom of the individual, or do you believe the government always knows best? I only ask because many of the so called market failures above are the result of government decisions. Some of the others are actually logical if you remove ideological blinkers and the remainder are not problems.
Give it some thought – I am a patient person – and let me know if you can think of an area, just one will do, where a government will or even may do something worse than a private citizen or corporation.
I think you may be over reaching, Sinnamon. Your argument falls down on the facts. Without dealing with the entirety of you laundry-list, I’ll just point out a few key errors.
“1. Making most of our global agriculture dependent upon fossil fuel fertilisers, which are finite non-renewable resources, as referred to above.”
The hydrogen for the Haber process is easy to get from natural gas, but it’s just as easy (although currently more expensive) to get it from water and sunlight.
“3. Burning up almost half of humankind’s endowment of fossil fuels in in around 150 years, as referred to above.”
Even if it’s true that half of the readily obtainable oil has been burnt up, it’s simply not true to state that this equals half of “humankind’s endowment of fossil fuels”. There’s coal, currently uneconomic oil, there’s gas, etc.
“16. Inflated prices paid for by Australian farmers for their land which have forced them to degrade the quality of the land in order to meet loan repayments. As one farmer put it : “Like everyone else on the planet, we need to make a living and most farmers have huge debts that don’t allow us to sit back and watch the native vegetation grow on all of the land we or our forefathers paid a fortune for.â€? (See comment in Online Opinion forum (currently at : http://www.onlineopinion.com.au/author.asp?id=576) arising from Jennifer Marohasy’s (http://www.onlineopinion.com.au/author.asp?id=576) article “Jared Diamond’s gated community of the mindâ€?. See, also, Chapter on Australia in Jared Diamond’s “Collapseâ€?.)”
This last point is just mind-boggling silly. Current prices for farming land may be high, and people who paid such prices may well be stuffed. But argue that “our forefathers paid a fortune for” this land is false and borders on deliberate deception.
I realize that you’re trying to fight the good fight, James, but you ain’t helping your cause here.
I thought that most rainforest destruction was occuring on government owned land.
Andrew Reynolds,
Of course, I support individual freedom and I also think that there can be a useful role for market forces in society. Where have I said otherwise?
You wrote “I only ask because many of the so called market failures above are the result of government decisions.”
They were Government decisions made in favour of private corporations against the public interest. The reason that they were made, in the case of the Cross City Tunnel agreement made by the NSW Government, is because they are willing prisoners of the same ‘small government’ ideology that you espouse. Which other decisions are you referring to?
Andrew Reynolds wrote: “Some of the others are actually logical if you remove ideological blinkers and the remainder are not problems.”
I think most people would find all of the above to be illogical and serious problems from the standpoint of the public interest. Please be a little more specific. What other decisions do you think are ‘logical’ or not to be problems, and why?
The reason I gave these examples is that you have written over and over and over and over and over again that market forces are inherently more ‘intelligent’ than society acting through its democratic inititutions.
I would say that the examples given above amply demonstrate otherwise.
Perhaps it is you who should be removing your ideological blinkers.
SJ,
You cannot use hydrogen for fertilisers as far as I am aware.
We have enough coal to last until 2158, if there is zero economic growth. Other figures are for 1.5% growth, 2080, 2.2% growth: 2071 and 3% growth: 2062. (Gregson Vaux “Projection of Coal Demand give diminishing oil suplies” in “The Final Energy Crisis” (2005) page 276.)
And you have completely misunderstood my point about agricultural land values. As a result of them having been overvalued by the same ‘market forces’ which both Terje and Andrew assure us are so much more intelligent than ourselves acting collectively through our democratic institutions, farmers are forced to overstock and grow more crops than the land can properly sustain. That is a major contributing cause of so many of soil salinity, soil acidity, soil erosion, etc.
Terje: and your point is …. ?
James,
OK, then, point by point.
1. Finite resourses are resourses just the same. My life is a finite resourse, James – that does not mean I can’t use it. The pity is I sometimes use it to respond to silly points like this.
2. See 1 – but much of the underground water is renewed – each time there is rain.
3. See 1.
4. Really two points. For the second, see 1. For the use of land for housing, If we have enough food and people want to live there, why not?
5. People happen to like the freedom to live where they want. If they want to live close in they can. If not they do not have to. Why is this a problem, apart from the reason given at point 1?
6. Why build something that will persist for decades if something better and cheaper will be able to replace it in a few years?
7. Variety is the stuff of evolution – if there is no variety, how can we tell which is better?
8. If it costs more and uses more resourses to recycle, recycling makes no sense. If you have spotted a market failure here James, go start a business exploiting it.
9. The reason for this is that there is no security of land tenure, so not reason to use the land correctly. In addition, Brazilian farmers are still getting subsidies for tearing down the forest. The only failure here is of the Brazilian government – as Terje pointed out.
10. Again, a failure of ownership. The incentives built in here (and the government subsidies paid) encourage overfishing. If the fish could be owned then there would not be a problem. As they appear to not be ownable then there may be a cause for government regulation. Terje, any comments?
11. Up until very recently, most governments gove bounties for the killing of tigers; unfortunate, but true. We now just have to deal with the nonsence of the Chinese medical beliefs.
12. Hmm, a whole industry. Guess what? Dominated by government firms, with governments as the primary buyer.
13. We have had a whole thread on that one, James. We could not agree there and I do not believe in your claims on it, so lets leave ths one, hmmm?
14. Bechtel did not pass the legislation James – guess who did?
15. Oh, gee, a company pushed poor little Neville around, did it? Evil company. James, if you cannot see this as a government failure, there is little hope.
16. Wot SJ said, and much else besides. This is mind bogglingly silly.
17. People want to live somewhere, it gets expensive. Not enough land released (by who?) it gets more expensive. Taxes are imposed on land transfer, it gets still more expensive.
18, 19, 20, 21, 22, 23, 24…
.
I asked the question on where there is scope for freedom because you have not yet (as far as I can remember) made a case for any individual or any company having any freedom. What is not said can be as revealing as what is said.
Although it was not in response to me… Mr Vaux seems to have some incredibly precise information on current consumption, likely future patterns of use, current reserves (including those as yet undiscovered) etc. etc. etc. In my experience people with answers this precise are usually wildly inaccurate – at best. In truth, nobody knows the above and attempts to be this precise will always be wrong. Perhaps you should take a leaf from our host’s book and be less precise and more willing to see scope for errors in predictions of the future.
James – I hope you come back with some better points next. Otherwise, this will be my last contribution to this thread.
S.J – before you go pointing out Jame’s errors perhaps you should read the earlier posts in the thread.
“The hydrogen for the Haber process is easy to get from natural gas, but it’s just as easy (although currently more expensive) to get it from water and sunlight.”
The hydrogen for the Haber process can be obtained in many ways however splitting water up into hydrogen and oxygen is never easy. Even the most efficient cells are less that 50% efficient. It is far better to return to some older land managment practices and use farm waste wisely. Cells to efficiently and economically split water using sunlight are alas many years in the future despite some excellent research here in Australia.
“Even if it’s true that half of the readily obtainable oil has been burnt up, it’s simply not true to state that this equals half of “humankind’s endowment of fossil fuelsâ€?. There’s coal, currently uneconomic oil, there’s gas, etc.”
Uneconomic oil requires massive amounts of natural gas. To obtain just 5 million barrels per day from the Alberta Tar Sands by 2030 almost all the NG output from Canada would have to be used. Currently this gas is being used to generate electricity and heat homes and make fertiliser. So what do you want your car, or food and heat?
Andrew – “My life is a finite resourse, James – that does not mean I can’t use it.”
Yes it is Andrew however people that use their lives in risky and stupid ways are usually considered to be throwing their lives away. And what of future generations? Are they just expected to do without oil? Here we have this amazing irreplacable resource that contains thousands of useful chemicals and can be made into millions of different products that we just break down and burn up.
“If it costs more and uses more resourses to recycle, recycling makes no sense.”
Again the thing with money. What if the resouce is irreplaceable or creates pollution. Usually is it cheaper to throw away because:
1. We do not care that no-one else will be able to use that resource because by the time it is a problem we will be dead.
2. The manufacturer or consumer does not pay the full cost of the life-cycle of the product – that is someone elses problem.
In most of the points you have argued your final solution is to suggest to make money from the problem. How does making a lots of money actually help? In the words of Douglas Adams “They thought that most of these problems could be solved by moving small pieces of green paper around when on the whole it was not the small green pieces of paper that were unhappy”
Making lots of money will not necessarily help these problems as some of the programs that we need are not huge profit making ventures – however they still need to be done. Also some of the steps we need to take will diminish profits and economic growth. None of these steps will be palatable to groups that depend on infinite growth.
Ender,
Unfortunately, your argument hangs in the air in the same way that bricks don’t. It is not a thing with money – money is a token, valueless in itself (unless, pace Terje, it is made of gold or some other valuable substance). Money is, however, a means of recognising costs and value. Let me use a simple example:
Much of the paper used in Australia ends up being put in the recycling bins most of us now have. Most of the paper that goes into the recycling bins ends up in landfill. The reason for this is that the process to recycle the paper uses more chemicals, effort (i.e. produces more greenhouse gasses) and time than the process to produce new paper from trees. The paper produced by this process is also inferior. The environmental and economic impact of recycling paper is actually negative, so in any sane system we would not do it. The reason why it is done is because some people are willing to pay more for the inferior product.
.
Lots of wealth allows us to do things for the environment that poorer people cannot do. This was powerfully brought home to me a few weeks back when I went to the DMZ in Korea and looked over the border into North Korea. On the South, a rich (comparatively) country, there were forests. On the North side, only 4 km away, not a single tree could be seen. They had all been cut down and burnt for fuel – a terrible waste of trees and resulting in the visible evidence of mudslides that was taking away the arable land.
Time and again poor countries will allow, or even encourage, the destruction of their environment to try to overcome short term adversity. We, in the wealthy nations, can choose to do something about it as we do not have that struggle for existence. This is something we should do – but making ourselves poor in doing it would be highly counterproductive. Forcing the issue through government action will only create resistance and reaction. Persuasion and a sensible approach, using social pressure, rather than government action, is a much better approach than a simplistic government programme.
QUOTE: It is not a thing with money – money is a token, valueless in itself (unless, pace Terje, it is made of gold or some other valuable substance).
RESPONSE: Personally I would say that gold is just as worthless as a paper token. You can’t eat gold and you can’t burn it for warmth. The value of money (be it gold or paper) stems from its utility as a medium of exchange and its rarity. Although gold also has value as an adornment. I am not of the gold bug school of thought that tries to defend gold as holding “intrinsic value”. A most ridiculous notion in my book and a major discredit to the concept of a gold standard.
For a good example of paper tokens maintaining value without government support see the following article:-
http://en.wikipedia.org/wiki/Swiss_dinar
On the topic of land ownership, deforestation and public policy in Brazil.
http://www.mongabay.com/brazil.html
EXTRACT:-
A significant amount of deforestation is caused by the subsistence activities of poor farmers who are encouraged to settle on forest lands by government land policies. In Brazil, each squatter acquires the right (known as an usufruct right) to continue using a piece of land by living on a plot of unclaimed public land (no matter how marginal the land) and “using” it for at least one year and a day. After five years the squatter acquires ownership and hence the right to sell the land. Up until at least the mid-1990s this system was worsened by the government policy that allowed each claimant to gain title for an amount of land up to three times the amount of forest cleared.
In essence clearing of public lands is being encouraged by government policy.
The government is paying people to clear public land. The payment is made in the form of subsequent land title.
This would suggest to me that government is a very poor land custodian in Brazil. Although it is no doubt a complex topic.
Andrew – Touche – I will pay that one.:-)
Not suggesting that we make ourselves poor – just recognise that infinite growth cannot forever. We already rich beyond the wildest dreams of 80% of the world’s population.
BTW richer countries can afford to keep their environment however there are exceptions. The Soviet Union was hardly poor and it has one of the worst environmental records whereas countries like Kenya can preserve their natural environment without being rich. There is more to environmental preservation that just money. Also rich countries preserve their environments by degrading poorer countries that are are trying to be rich. Some of the deforestation of Borneo is carried out to furnish Japanese houses where 70% of its forests remain by government decree.
10. Exhaustion of much of the world’s fishing stocks.
10. Again, a failure of ownership. The incentives built in here (and the government subsidies paid) encourage overfishing. If the fish could be owned then there would not be a problem. As they appear to not be ownable then there may be a cause for government regulation. Terje, any comments?
RESPONSE by TERJE: I agree with Andrew that it is essentially a failure of ownership. If nobody owns the ocean then it will get plundered. A tragedy of the commons.
Such a problem is not a case of free market failure. If the oceans are owned by governments then it is a failure due to:-
a) Theft (by theives).
b) Poor custodial management.
There are several ways to tackle this issue but the problem is not a problem with free trade. Personally I think that fishing quotas and territorial policing is the most expedient but I am open to other ideas.
QUOTE: Also rich countries preserve their environments by degrading poorer countries that are are trying to be rich.
RESPONSE: This is like saying that it is exploitation to give somebody a job.
The truth is that poor countries are trying to get rich by selling off there natural assets. And most poor countries are keeping their people in poverty with high tax rates and errant monetary policy. Solve the latter and you mitigate the former.
James Sinnamon Says: “You cannot use hydrogen for fertilisers as far as I am aware.”
Please tell us the constituents of ammonia, genius.
Terje,
Gold is not valueless; apart from anything else it is one of the best electricity conductors short of platinum. Most motherboards and video cards use it extensively. It is one of the reasons these are well recycled. Paper currency can be used as wall paper, so I suppose I was wrong there. In late 1920’s Germany wallpaper was a high value use for the Mark.
Andrew, you’re correct that gold is used frequently in electronics, but it’s not for the reason you suppose. Gold isn’t the best conductor, silver and copper are both better. Platinum isn’t a particularly good conductor at all.
Electrical conductivities of some of the metals are:
Silver: 61 MS/m
Copper: 57 MS/m
Gold: 41 MS/m
Aluminium: 35 MS/m
Iron: 10 MS/m
Platinum: 9.7 MS/m
(The units used above are megasiemens per metre).
The reason gold is used is because of its resistance to tarnishing, i.e. it won’t form a non-conductive oxide layer on its surface. This makes it useful as a contact material. Platinum is also resistant to tarnishing, and is harder than gold, and this makes platinum useful in some circumstances, too.
QUOTE: Gold is not valueless; apart from anything else it is one of the best electricity conductors short of platinum.
RESPONSE: Well actually what I said was that gold is just as worthless as a paper token.
The quantity of gold used as a monetary assett is absolutely massive compared to the amount of gold used in electronics. And much of the worlds jewellery gold is actually partially monetary. In India when gold jewellery is sold the price is itemised to show the price of the gold content as well as a separate price component for the craftsmanship. Such jewellery is frequently resold (back to the same jeweller often) as a way of redeeming wealth. Nearly all the gold extracted down through history is used in a manner that is at least partially monetary.
The inherient value of paper tokens can be seen by going into any coin collectors shop. Old notes that are no longer in circulation are frequently worth a lot more than their original face value. The Swiss Dinar was disendorsed by Saddam and had no official backing anywhere but continued to circulate in the Kurdish north for more than a decade and ended up worth heaps more than its southern replacement. The Mona Lisa is a piece of paper (or canvas actually) that is worth a small fortune. And pokomon cards are better than gold in the economy of most school playgrounds.
The reason I advocate a gold standard it not because paper tokens can’t be valuable. And paper tokens are far more convienient to carry in your wallet than gold. Paper tokens are far easier to recognise and quantify than gold. In fact paper is superior to gold as a form of money in so many ways but one. And paper notes (or polymer notes) would be integral to a gold standard.
Somehow, I think we have diverged from the topic. How unusual.
SJ,
I stand corrected.
.
Terje,
Yes, yes, yes.
QUOTE: I think we have diverged from the topic.
RESPONSE: Yeah sorry. I shouldn’t take the bait.
Terje,
That was an inclusive, not exclusive, “we”.
Andrew Reynolds wrote : “… you have not yet (as far as I can remember) made a case for any individual or any company having any freedom.”
To every argument that is made for concerted action by our society to confront these awful looming threats, you stridently assert that Governments can never possibly be as ‘intelligent’ as market forces.
I give concrete examples to demonstrate that market forces are anything but ‘intelligent’ so you then leap to the conclusion that I must be completely opposed to the freedom of individuals and the freedom of companies.
Andrew Reynolds wrote : “Why build something that will persist for decades if something better and cheaper will be able to replace it in a few years?” Because many consumers, myself included, can’t afford, every ten years, to replace all the white goods in their houses, or cars or televisons etc. If they could build artefacts in the early twentieth century that could last into this century, then why can’t the same be done today?
Planned obsolescence results in a staggering waste of our non-renewable natural resources, and cannot possibly be in the interests of most consumers. If you truly believe that planned obsolescence demonstrates the ‘intelligence’ of the market place, then we don’t have a lot more to discuss.
Andrew Reynolds wrote : “Variety is the stuff of evolution – if there is no variety, how can we tell which is better?”
Can you possibly see that there can be such a thing as too much variety? Why should this years make of a motorcycle have parts that don’t fit last years make? Having so many different parts in a company’s inventory means that spare parts are often very difficult to come by and very expensive it they do happpen to be in stock? 11 years ago, I had to virtually give away a motorcycle, because I could not afford a few parts that were required before I could obtain a roadworthiness certificate. One of the parts was an indicator light. Again, if your truly believe that this demonstrates the ‘intelligence’ of the market place, then we don’t have a lot to discuss.
Andrew Reynolds wrote : “The reason for this is that there is no security of land tenure, so not reason to use the land correctly. In addition, Brazilian farmers are still getting subsidies for tearing down the forest. The only failure here is of the Brazilian government.”
On privately owned blocks of land adjacent to a house in which I have lived, rare tracts of inner city rainforest were destroyed in order to allow the owners of the properties to enjoy unearned windfall profits by building units. Your argument about private ownership being a solution to deforestation is therefore rubbish. If Governments fail to properly care for the land then the solution lies with more democracy and more accountability. The solution is not to throw out the baby with the bathwater.
Andrew Reynolds wrote : “14. Bechtel did not pass the legislation James – guess who did?”
Andrew Reynolds wrote : “15. Oh, gee, a company pushed poor little Neville around, did it? Evil company. James, if you cannot see this as a government failure, there is little hope.”
Now, please tell me something I did not already know, and please, also, give me some indication that you have read the words I wrote earlier : “… (you make) no acknowledgement of the fact that so much bad government has, indeed, been precisely the result of corruption by the same market forces that (you hold) to be the saviour of humankind.”
The IMF controlled by neo-liberal economists have forced many third world governments to make similar rotten privatisation deals. How can you seriously suggest that these were driven by ‘big government’ and not ‘market forces’ in whose interstes those govenments were acting?.
Regarding our cities, far too many poeple have to spend far too much of their days commuting to and from work. Nobody I know travel slong distaces to work i happy doing so.
It should have been possible to have our cities designed so that most people would hve been within easy cycling distance, at most, from their places of work and amenities. The reason that this is not the case is that Governments fro at least fifty years, have effectively handed across the reposnibilit for urban desgn to property speculators and private properly developers.
There is a lot more I could write, but I think the point I was trying to make will be understood in spite of your obfuscation.
Andrew Reynolds wrote : “I hope you come back with some better points next. Otherwise, this will be my last contribution to this thread.”
Suit yourself, Andrew. I don’t conribute to this forum because I have nothing better to do. I do so, because I believe that the ideas you help to propogate are harmful to the fabric of our society and are a threaat to the very survival of our civilisation.
James,
I make no such lofty claim for myself, but if our civilisation is the one that gave birth to some of the monsters of the last century then perhaps a little constructive change is needed.
I leapt to no such conclusion, James. I just could not recall any instance where you had anything positive to say about the role of the freedom of the individual in a society.
Other than that, as you say, we do not have a lot to discuss.
Gold is used more for electronics because of its ductility than because of any resistance to tarnishing – the latter could easily be allowed for.
Conductivity is a misleading measure. The most “conductive” power transmission cables are a sort of candle construction, with aluminium cladding on a steel cable support. For the same weight per unit length as copper you can make it so much wider that it has less resistance per unit length, and that’s even before allowing for the cost. It’s like efficiency – you have to remember what outputs you’re comparing with what inputs.
Andrew,
Obviously civilisation needs to change.
I have never anywhere apologised either for Fascism or for the monstrous Stalinist police states of the twentieth century (unlike one prominent long time journalistic advocate of our own ‘Man of Steel’ on ABC Radio in 1996).
Please don’t imply that I have.
If we are to avoid repeats of those horrifc tragedies, and far worse, it will be because some of us will have spoken up against the outrages committed against democracy, accountability, free speech and fairness by governments such as our own Government of John Howard, instead of just having made excuses for them.
James,
I have nowhere implied that you had done so and would withdraw unreservedly had you done so. I note, though, that you have not given me an example of where individual choice is appropriate.
I would ask you to clarify whether you believe that the actions of John Howard could or would fall into this category, as you seem to be implying that they do.
I personally, as you would know from previous discussions, do not support several of the actions of this government, but I do generally support the government as better than the alternative presented at the last election. I would hate to think that you believe I am supportive of a government that falls into the category you mentioned.
Andrew Reynolds wrote: “I have nowhere implied that you had (apologised either for Fascism or for the monstrous Stalinist police states of the twentieth century) done so and would withdraw unreservedly had you done so.”
Thank you. It’s a releif to know that was not what you were meaning to imply in your last post.
Andrew Reynolds wrote: “I note, though, that you have not given me an example of where individual choice is appropriate.”
I am not quite sure what you mean. In my own case my own capacity for individual choice seems to have diminished considerably in the last 25 years as a result of neo-liberal inspired downsizing and offshoring in the private sector, cutbacks in job opportunites and general penny pinching in the public sector, outsourcing of my job from the TAFE system in Queensland, housing hyper-inflation, etc, etc.
… and this is in spite of my having obtained a University degree and having taken few holidays in that period.
Having read Elisabeth Whynhausen’s excellent “Dirt Cheap” it seems to me that choices for many other ordinary Australians in low paid jobs have become similarly limited in recent years, and that is well before the enactment of Howard’s medievel IR ‘reforms’.
So, I am defintely in favour of winding back many of the ‘free market’ reforms that have so badly screwed the prospects for so many ordinary Australians and giving them back many of the choices they were once able to exercise.
More broadly, I think all laws are necessary evils at best and there should be as few of them as possible. I am against seat belt laws even though I would choose to wear a seat belt anyway. I am against laws which require bicycle riders to wear helmets. I am against compulsory voting laws. I am against laws which criminalise the use of recreational drugs.
In regard to corporations, clearly constraints on their behaviour are often necessary to protect the public interest. In general the public would be better served if far more restrictions were placed on corporations.
I can’t recall you’re opposition to any Howard Government policies, except, that I recall ttah you said that you favour buying back Telstra in order that it can be sold it again as a whole.
Had the Government put the IR laws to the Australian public last October they would have lost in the biggest landslide in all history. They have no right whatsoever to do what they are now doing,
If you actually defend their right to do this, then you are not a suppporter of democracy according to my understanding of the dictionary meaning of the world.
This is not to say that I believe that you would support a fascist regime or a military dicatatorship, or perhaps, for example, Howard deciding to ‘postpone’ elections at some future point in time on the pretext of a claimed terrorist threat or civil unrest.
However, it has been said of Stalin, that if the Joseph Stalin of the 1920’s could have foreseen the Joseph Stalin of the late 1930’s he would have killed himself.
Andrew Reynolds wrote : “If it costs more and uses more resources to recycle, recycling makes no sense.”
Agreed. Recycling is often a false solution to environmental problems. However, the answer should not be to continue to throw things away, rather it should be to manufacture artefacts so that they last. Also, manufacturers should be required to manufacture artefacts so that they can be easily disassembled. (which of course I expect Andrew would object to on the basis of his objecton to any Government interference in the free market.)
I have witnessed scandalously, in a number of demolition jobs, how valuable items: desks, workbenches, timber, chairs, thick glass doors, shop front counters, dozens of expensive electric lights, stainless steel sheets, cupboards, shelves, tens of metres of concertina steel shop-front security doors, etc,etc have been loaded into large steel bins to go to to land fill. They couldn’t even take the time to notify the Salvation Army, or the Smith Family (only a few doors away) of the valuable material being thrown away.
Andrew, do you seriously hold this to be an an example of the superior ‘intellingence’ of market forces? Can’t you see understand why many believe it would be utter folly to place our hopes in such processes to safeguard the future of our planet?
In fact I would advocate a Government Recycling authority to ensure the recycling, as far as possible of all materials. With democratic accountability, tranparency, good Freedom of Information legislation, and a massive economy of scale, much of the valuable items, now smashed up and lying in landfill would have, instead, been put to good use.
The ‘free market’ had been given more than enough oportunity to fix this porblem. Why should the rest of society be forced to stand back and allow appalling situation to continue?
Andrew Reynolds wrote : “If you have spotted a market failure here James, go start a business exploiting it.”
I have become quite used to this sort of response from neo-liberals. The unstated implication is that if one is not prepared to go out and set up such a business then one is not truly serious about these concerns.
I would protest that many creative, talented and hard-working people find the hurdles and red tape (including the ‘never ever’ GST) placed by this Government in recent years, before people who wish to start their own business, to be too great.
So, for now I hesitate to approach a bank for a loan, make a business case, engage an accountant etc etc, and spend at least many long months, working long and hard without an income, and no certainty of success, in order to be able to act upon your suggestion.
Your neo-liberal prescription for our society effectively turns many well meaning, motivated and potentially hard-working people, who would love an opportunity to apply their talents into fixing our environment, into spectators.
James,
I am obviously not getting through. You blame the government for not being able to start a business and somehow this is the market’s fault? Go figure.
On to the ‘superior’ intelligence. Superior is a relative term. It does not need to be demonstrated that the results of people interacting in a market context is perfect in all ways, with perfect foreknowledge and faultless use of resources – people simply do not have that ability. All that needs to be proven is that resource allocation is more efficient under a deregulated system than under a highly regulated system. The work of Hayek in particular demonstrates this well.
Yes, people interacting in a market context do make mistakes. They are people – the market itself does not give them more intelligence. The basic reason a market system of resource allocation is more efficient is because the people closest to the issues are making the decisions. They will not be perfect every time, or perhaps any time, but they have more chance of getting it right than someone sitting in Parliament or in the bureaucracy.
P.M.Lawrence Says:
I wonder what line of reasoning led you to this conclusion? It certainly didn’t come from any actual knowledge, or from looking things up, e.g.
http://en.wikipedia.org/wiki/Gold
http://www.leachintl2.com/english/english2/vol6/properties/00050.html
P.M.Lawrence Says:
You say “The most “conductive””, and then go on to redifine conductivity as “less resistance per unit length” “for the same weight per unit length”.
That simply isn’t what the word conductive means, and even if it did, you still made a false claim. Solid aluminium has less resistance per unit length for the same weight per unit length. Ionized gas has even less resistance per unit length for the same weight per unit length. Any superconductor has less resistance per unit length for the same weight per unit length.
Are you working with a different definition of the word “misleading” than the rest of us?
And I can’t begin to imagine what you think the word “candle” means.
Wow, just for a change, something completely on topic. Thanks, SJ.
.
PrQ,
I’m sorry, please remove the tags again.
Andrew Reynolds wrote : “You blame the government for not being able to start a business and somehow this is the market’s fault? Go figure.”
This seems to be an attempt to avoid having to respond to my main point by focusing on a secondary aspect of my argument and attempting to subject it to ridicule.
In any case, I am still waiting for any indication that you have read my words : “… (you make) no acknowledgement of the fact that so much bad government has, indeed, been precisely the result of corruption by the same market forces that (you hold) to be the saviour of humankind.�
The implication I believe that you were trying to draw was that unless someone is prepared to take the extraordinarily onerous steps which are necessary to start up a business these days, in order to rectify a failure of the market that he/she has identified, he/she should not be taken seriously.
I believe I have shown why this is unreasonable and unfair, and why this would effectively relegate many concerned people in our society to roles of powerless spectators, if not drive them if not drive them to outright apathy.
I was also attempting to make a point about the hypocrisy behind the ‘free market’ pro-small business rhetoric of this Government.
Up to a generation ago, it was relatively easy for anyone to set up a small business, but since the neo-liberal economic ‘revolution’ which began around 25 years ago, pro ‘free market’ governments of all stripes have progressively added to the administrative burden of people who wish to run their own businesses. For a few people I know, the ‘never ever’ GST was the straw that broke the camel’s back.
My guess is that this was not an accident, although it may be hard to prove. I think that it is the intention of Governments to deprive a good many people of yet one more avenue for economic independence so that they have no choice other than to work as employees or to apply for social welfare.
James,
With respect, you seem to be confusing the words of governments with their actions. Let me make it clearer. I oppose our current government where it attempts to, or succeeds in, increasing regulation or centralising power. Just because a government calls itself Liberal does not mean that it is liberal. The people you are calling neo-liberal (if I can work out which strawman you are beating up) should probably be called conservatives. I think that should be clear now.
On corruption. It is power that corrupts – as I thought I had made clear in my first response to this. The solution to that problem does not, IMHO, lie in giving still more power to government. That will only increase the corruption, whether it comes from people in corporations, people in government or wherever. Devolving power from the government to the individuals in society is the only way to reduce corruption.
Andrew Reynolds Says:
My sarco-meter is maxing out. Sorry that I’m distracting people from your debate, by correcting side issues that you introduced.
Sheesh.
SJ, you missed what I was getting at. I didn’t deny that gold’s noble metal properties were relevant, I pointed out that the choice of gold usually had more to do with its ductility. That’s relevant because it makes it practical to fabricate some of the small structures needed.
You also missed the point on my description of transmission cables. I did not redefine conductivity, in fact I put “conductive” in quotation marks where I did precisely in order to avoid using the term inaccurately. I then went on to state explicitly – not as a redefinition – the criteria actually used in choosing the composite steel/aluminium structure in preference to copper wire.
That composite structure resembles a cross section of a candle, with a cord down the middle of softer material. It so happens that I made an accurate assertion in stating that for a given all up weight this gives less resistance per unit length than a comparable copper wire. This is not invalidated in any way whatsoever by the fact that I made no observations on ionised gas, superconductors, pure aluminium or whatnot.
SJ,
I don’t think I can take the credit here for introducing gold. In common with every other thread regarding economics the credit for introducing gold goes to (drum roll) Terje! (much applause all round).
All I did was to note that gold, unlike paper money, had intrinsic value. I then corrected myself in that you could use paper money for wallpaper.
(Can we get this thread up to 200 comments?)
QUOTE: Can we get this thread up to 200 comments?
RESPONSE: I’ll see what I can do to help.
P.M.Lawrence Says:
I didn’t miss what you were gettting at all. I was pointing out that you were wrong.
If you have some evidence to support your claim about ductility, then, fine, produce it.
I suspect, though, that you’ve half-remembered some stuff from high school about gold. About how it’s both the most ductile and the most malleable of all metals, which allows it to be formed into very thin foils, i.e., gold leaf.
Perhaps you project this into some imaginary fabrication process whereby gold leaf is stuck onto other materials.
But this is complete bull…it, because electoplating is the way it’s actually done, and ductility doesn’t enter into it.
I srongly suspect that the actual criteria involve cost, somewhere, and that the reason why, say, silver isn’t chosen has more to do with this factor than your silly and false conductivity per unit mass per unit length criterion.
No, you didn’t. You said: “The most “conductiveâ€? power transmission cables are a sort of candle construction, with aluminium cladding on a steel cable support.”
The words “The most”, are absolute, not comparitive. You were just wrong. Get over it.
Andrew Reynolds wrote : “The solution to that problem does not, IMHO, lie in giving still more power to government.”
So at least I trust that we agree that the Federal and State govenments’ new package of anti-democratic ‘anti-terrorist’ laws are an abomination?
BTW, Sinnamon, I’m still waiting for an answer to my question about ammonia.
SJ,
‘Sinnamon’?
Have we adopted the social mannerisms of British boarding schools as in the ‘Jennings’ stories? (�Boys at British schools were always known by their last names.� see http://histclo.hispeed.com/lit/uk/literaryengjen.html)
Could you please tell me your surname so I can reciprocate.
Or, if you like you can call me ‘James’, ‘James Sinnamon’ or ‘Mr. Sinnamon’, whatever you prefer
Yes, I take your point that Ammonia can indeed be made from Hydrogen, but I had thought that a lot more was needed to make soils fertile. As a correspondent to the Running on Empty, Oz (roeoz) mailing list wrote, the problem remains that a lot of energy is needed (as. I acknowledge, that you yourself have acknowleged to a degree) :
…you also have to create the inputs, because neither is found in pure form in nature.
Hydrogen can be made by electrolysing water, but that is endothermic (it needs energy) :
Nitrogen is obtained by the fractional distillation of liquefied air,
that is, you cool air to -196 °C , then raise the temperature to -184 °C so that the Nitrogen boils off leaving the Oxygen behind.
For every 17 Kg of Ammonia you need to cool 18.7 Kg of air, containing 14 Kg of nitrogen, by about 221 °C. The resulting Nitrogen has to be purified using hot Copper to remove any traces of Oxygen, and a dehydration agent like P4O10 to remove water vapour.
(The Copper and the P4O10 requires energy to make …. )
So making Nitrogen takes a lot of energy – I’ll spare you the detail.
As you can see, the energy to make Hydrogen and pure Nitrogen out of water and air is way more than the energy given off during the Haber Process, so Ammonia is an energy intensive product.
This is quite aside from all the energy that gets wasted in the form of heat or cold leaking out of the system, and friction in the pumps, and resistance is the wiring, and ….
So all you need to maintain the Nitrogen compounds in the soil into the indefinite future is water, air AND ENERGY.
Of course there is more to fertiliser than just Nitrogen compounds, there is also Phosphorus, Potassium, Calcium, etc etc. and they can all be made out of other things so long as you have enough ENERGY.
Its a pity we are running out of cheap energy, because that means we are running out of cheap fertiliser, and all the poor people are going to starve.
….
But wait, there’s more.
Ammonia itself is not a very suitable fertiliser.
Ammonia dissolves in water to produce Ammonium hydroxide, which is strongly alkaline (caustic), so the plants won’t like that for very long.
What we need is a neutral compound, a salt such as ammonium sulphate or nitrate.
Ammonium nitrate is very soluble in water so gives a fast acting hit of Nitrogen to the plants (organic farmers don’t like these strong hits, but agro-industrialists do) It is made by reacting the alkaline hydroxide with Nitric Acid :
But where does the Nitric Acid come from?
It is commercially prepared by the Ostwald Process using Ammonia and Oxygen :
Once again, the high temperature and expensive catalyst indicates that this process is going to use a lot of energy, partly to rearrange the molecules and partly as waste heat leaking from the hot reaction.
The acid is very corrosive towards metals, so the capital equipment needs to be cleverly designed.
But where does the Oxygen come from?
Well if you were smart, you could have kept the Oxygen from the electrolysis of water that gave us our Hydrogen. Or you could have kept the Oxygen from the liquefied air that gave us our Nitrogen.
Or you could heat air (3 parts Nitrogen and 1 part Oxygen by weight) to 500 °C and then zap it with a high voltage electric arc, to make the Nitrous Oxide (NO) directly.
In effect, Ammonium nitrate is water split into Hydrogen and Oxygen, with the Hydrogen joined to a Nitrogen, and the Oxygen joined to another Nitrogen.
– easy if you’ve got the energy.
>Yes, people interacting in a market context do make mistakes. They are people – the market itself does not give them more intelligence. The basic reason a market system of resource allocation is more efficient is because the people closest to the issues are making the decisions. They will not be perfect every time, or perhaps any time, but they have more chance of getting it right than someone sitting in Parliament or in the bureaucracy.
Yes, but when they DO “get it wrong” government can sometimes correct the errors.
To fursue the earleir example of overfishing, the solution that seems to be emerging is to create a property right in a share in the sustaianble yield in a fishery.
However there’s no way such a property right can be created or enforced without government involvement.
When I worked as an environmental economist for the EPA the standard approach to a problem was this:
1. Is there a problem? If so is it of sufficient magnitude to justify doing anything? (More often than not this decision was taken at the political problem.
2. Is there a market solution?
3. If so, why isn’t it already being implemented? Is it a matter of information failure or the perverse result of existing government interventions?
4. If simple information provision or changes to regulation are insufficient to solve the problem, what is the smallest, most efficient and least market-distorting form of government intervention?
SJ, I’ll tell you just once more, in simple language, then I’ll ignore the rest of what you put on this subject on later occasions.
The ductility of gold is relevant since it makes those small structures less fragile. Not as part of the fabrication process.
I was making statements comparing different available transmission cables. Those descriptions were accurate. (Ionised gas or superconductors would bring in additional weight from their ancillary equipment.)
I wasn’t recalling stuff from high school – I didn’t go to one (I went to a British Public School). I specifically avoided conductivity as such, the whole point I was trying to bring out was that conductivity was not the relevant criterion. I went to some trouble to point that out, not to substitute a spurious redefinition of conductivity. I entirely agree that what you describe isn’t conductivity – but that’s your mistaken understanding of what I wrote there, not my mistaken understanding. There’s certainly a failure of communication, but now I’ve told you repeatedly I don’t see how it can be at my end.
You just didn’t understand the points at issue. If you still don’t, get over it.
IG, in general property rights do not require governments. Rather, the usual situation is that governments intervene and substitute their own monopoly of force for other more personal enforcement methods.
This is frequently more convenient (not always, by a long chalk). In the particular case of fishing rights, for instance, private enforcement by owners would be so all round inconvenient that some more general approach makes more sense.
However one should always bear in mind that government enforcement of almost anything generally creates another externality too, from the way government revenues are detached from government services. The cure is often (again, not always) worse than the disease.
And now we are 200!