>Muldoon: A Harbinger of Our Times

>Jatropha: Another Man Made Disaster Looming

There are few left who remember the colossus that was Robert Muldoon, former Prime Minister of New Zealand. Faced with the “oil shocks” of the seventies, he committed vast sums of the public’s money to Think Big projects. Think Big was all about borrowing and spending prodigious amounts to create energy alternatives out of nothing. Of course, almost every project was a failure and eventually was bankrupted or written off.

But the spending and the economic dislocation was real enough. It led eventually to the economic crisis of the eighties, where the New Zealand economy had become more state controlled than Eastern Bloc communist countries, wage and price controls had become a permanent fixture, and the entire country was teetering on the verge of bankruptcy. The seeds of this calamity were sown in Think Big which led to huge, persistent, structural deficits and which eventually brought the country to its knees.

Energy crises may tend to bring forth mini-Muldoons. But when energy crises are married to global warming hysteria we see the emergence of maxi-Muldoons. The rule of thumb is that every economic project governments get involved in to produce alternative energy, clean energy, or assuage global warming ends up being both an exorbitant waste of people’s money and dislocating to the economy. Everyone ends up poorer and weaker as a result.

Environment 360 has just given us another case study of the syndrome. Remember the jatropha bush, which has been hailed as the wonder shrub which will produce vast quantities of bio-diesel. Even Air New Zealand got sucked in, telling us that it was going to source aviation bio-diesel from jatropha bushes. It made a big PR test flight of one of its planes over Auckland to try to built green brand credibility. The plane was powered by biofuel–and we were told, the airline had plans to source biofuel from the miraculous jatropha bush.

Jatropha has been said to have significant advantages as a miracle biofuel:

The widespread publicity surrounding a seeming wonder-plant called Jatropha curcas began in earnest in the mid-2000s. A good-news story, it went like this: In the mildly toxic, oval-shaped, oily seeds of this hardy, shrubby tree was a near-miraculous source of biofuel. Since jatropha could grow on arid, barren lands, cultivating it would avoid displacing food crops such as corn and soybeans — a major drawback of so-called first generation biofuels. The world’s thirst for combustible fuels could be slaked, according to the buzz surrounding jatropha, with energy harvested from wastelands rather than from fertile fields.

So went the hype. Think Big swung into action.

Fast forward a couple of years. By 2009, governments from China to Brazil, along with several major biofuel companies, had planted — or vowed to plant — millions of acres of jatropha. In India alone, the government has announced plans to subsidize an intensive program to plant jatropha for biofuels on 27 million acres of “wastelands” — an area roughly the size of Switzerland. And the jatropha push is on in other countries such as Myanmar, Malaysia, Malawi, and Brazil. (Emphasis, ours)

What is the problem? Well, for a start it turns out that the ability of jatropha to grow in non-fertile soils has been grossly exaggerated. Thinking Big will do that to you. If it stays in non-fertile soils, its yield is, well, small. In order to get a decent, economic yield, it has to be planted in fertile soils, well irrigated and fertilised. In order to get the required quantity of bio-diesel vast swathes of fertile land have to be planted in the thing.

Enter the curse of land-substitution. Food is now being squeezed out by jatropha production, as land use goes away from food into jatropha.

Consider India’s great push to plant jatropha. According to the Indian environmental group, Navdanya, government foresters have drained rice paddies in order to plant jatropha in the poor and mostly tribal state of Chhattisgarh. As early as mid-2007, protests broke out in the mostly desert state of Rajasthan over a government scheme to reclassify village commons lands — widely used for grazing livestock — as “wastelands” targeted for biofuel production, primarily jatropha.

On Mindanao, the second-largest of the Philippine islands, protests erupted in late 2008, with indigenous leaders insisting that jatropha plantations had begun to displace needed crops of rice, corn, bananas, and root vegetables.

A striking symbol of jatropha’s pitfalls can be found in Myanmar, formerly Burma. Late in 2005, Myanmar’s military dictatorship — newly enamored with what’s been called “the biofuel tree ” — ordered all of that nation’s states and other political divisions to plant about a half-million acres each. In a predominantly agrarian country where child malnutrition is rampant, entire plantations have sprung up where food crops once grew.

Not that all is bad. On a micro-level (that is, when governments are not Thinking Big) it would appear that jatropha has some very real contributions to make.

It’s not all bad news. In the West African nation of Mali, on the southern edge of the Sahara, jatropha had long been grown as a sort of living fence to keep wildlife from crops, and sometimes as a source of handmade soap. In recent years, often with the help of nonprofit groups like the Denmark-based charity Folkecenter, local jatropha processing mills have appeared in hundreds of villages, providing fuel for lamps, cookstoves, and generators. The biofuel is not only cheaper than conventional oil and diesel, but it is available during rainy seasons, when impassable roads can block conventional fuel delivery. Even the solid “press cake” left over after the oil is squeezed out of the seeds has value as either an organic fertilizer or, if processed to neutralize the natural toxicity, animal feed.

Get the picture. When governments stay out and stop trying to save the planet, when they relinquish “Think Big”, some great micro-solutions can emerge that are truly win-win for those concerned and bring economic and social progress for smaller communities.

“Think Big” jatropha is a disaster in the making–and the making is by politicians and voters wedded to the idea of the omni-competence of governments, and to opportunistic, unscrupulous capitalists who line their pockets on gargantuan government projects. It will all end in waste, failure, and tears.

One can almost hear the spectral cackle of our former Prime Minister who showed the world what can truly happen when government Thinks Big.

>A New Inquisition

>Enough, Already

When will the climate change sceptics stop hounding us with inconvenient truths! The latest from Bjorn Lomborg, former member of Greenpeace.

When it comes to global warming, extreme scare stories abound. Al Gore, for example, famously claimed that a whopping six meters (20 feet) of sea-level rise would flood major cities around the world.

Gore’s scientific advisor, Jim Hansen from NASA, has even topped his protégé. Hansen suggests that there will eventually be sea-level rises of 24 meters (80 feet), with a six-meter rise happening just this century. Little wonder that fellow environmentalist Bill McKibben states that “we are engaging in a reckless drive-by drowning of much of the rest of the planet and much of the rest of creation.”

Given all the warnings, here is a slightly inconvenient truth: over the past two years, the global sea level hasn’t increased. It has slightly decreased . Since 1992, satellites orbiting the planet have measured the global sea level every 10 days with an amazing degree of accuracy – 3-4 millimeters (0.2 inches). For two years, sea levels have declined. (All of the data are available at sealevel.colorado.edu.)

This doesn’t mean that global warming is not true. As we emit more CO2, over time the temperature will moderately increase, causing the sea to warm and expand somewhat. Thus, the sea-level rise is expected to pick up again. This is what the United Nations climate panel is telling us; the best models indicate a sea-level rise over this century of 18 to 59 centimeters (7-24 inches), with the typical estimate at 30 centimeters (one foot). This is not terrifying or even particularly scary – 30 centimeters is how much the sea rose over the last 150 years.

Simply put, we’re being force-fed vastly over-hyped scare stories. Proclaiming six meters of sea-level rise over this century contradicts thousands of UN scientists, and requires the sea-level rise to accelerate roughly 40-fold from today. Imagine how climate alarmists would play up the story if we actually saw an increase in the sea-level rise.

Increasingly, alarmists claim that we should not be allowed to hear such facts. In June, Hansen proclaimed that people who spread “disinformation” about global warming – CEOs, politicians, in fact anyone who doesn’t follow Hansen’s narrow definition of the “truth” – should literally be tried for crimes against humanity.

It is depressing to see a scientist – even a highly politicized one – calling for a latter-day Inquisition. Such a blatant attempt to curtail scientific inquiry and stifle free speech seems inexcusable.

But it is perhaps also a symptom of a broader problem. It is hard to keep up the climate panic as reality diverges from the alarmist predictions more than ever before: the global temperature has not risen over the past ten years, it has declined precipitously in the last year and a half, and studies show that it might not rise again before the middle of the next decade. With a global recession looming and high oil and food prices undermining the living standards of the Western middle class, it is becoming ever harder to sell the high-cost, inefficient Kyoto-style solution of drastic carbon cuts.

A much sounder approach than Kyoto and its successor would be to invest more in research and development of zero-carbon energy technologies – a cheaper, more effective way to truly solve the climate problem.

Hansen is not alone in trying to blame others for his message’s becoming harder to sell. Canada’s top environmentalist, David Suzuki, stated earlier this year that politicians “complicit in climate change” should be thrown in jail. Campaigner Mark Lynas envisions Nuremberg-style “international criminal tribunals” against those who dare to challenge the climate dogma. Clearly, this column places me at risk of incarceration by Hansen & Co.

But the globe’s real problem is not a series of inconvenient facts. It is that we have blocked out sensible solutions through an alarmist panic, leading to bad policies.

Consider one of the most significant steps taken to respond to climate change. Adopted because of the climate panic, bio-fuels were supposed to reduce CO2 emissions. Hansen described them as part of a “brighter future for the planet.” But using bio-fuels to combat climate change must rate as one of the poorest global “solutions” to any great challenge in recent times.

Bio-fuels essentially take food from mouths and puts it into cars. The grain required to fill the tank of an SUV with ethanol is enough to feed one African for a year. Thirty percent of this year’s corn production in the United States will be burned up on America’s highways. This has been possible only through subsidies that globally will total $15 billion this year alone.

Because increased demand for bio-fuels leads to cutting down carbon-rich forests, a 2008 Science study showed that the net effect of using them is not to cut CO2 emissions, but to double them. The rush towards bio-fuels has also strongly contributed to rising food prices, which have tipped another roughly 30 million people into starvation.

Because of climate panic, our attempts to mitigate climate change have provoked an unmitigated disaster. We will waste hundreds of billions of dollars, worsen global warming, and dramatically increase starvation.

We have to stop being scared silly, stop pursuing stupid policies, and start investing in smart long-term R&D. Accusations of “crimes against humanity” must cease. Indeed, the real offense is the alarmism that closes minds to the best ways to respond to climate change.
(This piece has been republished from Project Syndicate, which can be found here:

>Ouch!

>Christopher Monckton of Brenchley Speaks Out Again

Monckton is a fiercely intelligent British aristocrat. The American Physical Society, a forum on physics and society, has recently published a thorough critique of the IPCC’s pseudo-science by Monckton. Those of you that love equations will enjoy. The conclusion to the paper is worth quoting in full:

Even if temperature had risen above natural variability, the recent solar Grand Maximum may have been chiefly responsible. Even if the sun were not chiefly to blame for the past half-century’s warming, the IPCC has not demonstrated that, since CO₂ occupies only one-ten-thousandth part more of the atmosphere that it did in 1750, it has contributed more than a small fraction of the warming. Even if carbon dioxide were chiefly responsible for the warming that ceased in 1998 and may not resume until 2015, the distinctive, projected fingerprint of anthropogenic “greenhouse-gas” warming is entirely absent from the observed record. Even if the fingerprint were present, computer models are long proven to be inherently incapable of providing projections of the future state of the climate that are sound enough for policymaking. Even if per impossibile the models could ever become reliable, the present paper demonstrates that it is not at all likely that the world will warm as much as the IPCC imagines. Even if the world were to warm that much, the overwhelming majority of the scientific, peer-reviewed literature does not predict that catastrophe would ensue. Even if catastrophe might ensue, even the most drastic proposals to mitigate future climate change by reducing emissions of carbon dioxide would make very little difference to the climate. Even if mitigation were likely to be effective, it would do more harm than good: already millions face starvation as the dash for biofuels takes agricultural land out of essential food production: a warning that taking precautions, “just in case”, can do untold harm unless there is a sound, scientific basis for them. Finally, even if mitigation might do more good than harm, adaptation as (and if) necessary would be far more cost-effective and less likely to be harmful.

In short, we must get the science right, or we shall get the policy wrong. If the concluding equation in this analysis (Eqn. 30) is correct, the IPCC’s estimates of climate sensitivity must have been very much exaggerated. There may, therefore, be a good reason why, contrary to the projections of the models on which the IPCC relies, temperatures have not risen for a decade and have been falling since the phase-transition in global temperature trends that occurred in late 2001. Perhaps real-world climate sensitivity is very much below the IPCC’s estimates. Perhaps, therefore, there is no “climate crisis” at all. At present, then, in policy terms there is no case for doing anything. The correct policy approach to a non-problem is to have the courage to do nothing.

Read the full text here.

As credulous politicians in both Australia and New Zealand are currently trying to talk up emissions trading schemes, claiming that they will deliver both economic growth and wealth, claims that are deceptive, misleading and downright dishonest, we stand at the edge of the precipice. In 1930, a recession turned into a five year world-wide depression, because of incompetence and diametrically-wrong government policies. It is now highly likely that we will see a replay mutatis mutandis of that folly, which resulted in extreme suffering of millions. In fact, with biofuel madness it has already begun.

Once analyzed rigorously, the IPCC’s formulations and pronouncements have turned out to be hot air in search of whispers. Any government that devises economic and social policies based on such folly makes itself unfit to govern. As Monckton says, if you don’t get the science right, you shall get the policies wrong. How true.

>A Credible and Responsible Green Party, Part #1

>The Essential Principles

Some time ago, we argued that the responsibilities of taking care of our environment were far too important to be left to the representations and remonstrations of the New Zealand Green Party. That Party lacks credibility.

A respondent laid down a challenge: what would a more responsible green party stand for? It is a fair and provocative challenge. Having given the matter some thought, we would like to lay down our beliefs of what a responsible and serious green party would represent. The easiest way to do this is via negativa—that is, to stipulate what we believe a credible green party would not stand for.

1. A credible green movement would not subject mankind, nor make mankind vulnerable to the rest of nature.

In New Zealand, with the greenist demand that only renewable sources of energy be exploited, we are now subject to the vagaries of the natural order. As the population grows and the demand for energy increases, going without electricity will increasingly become the norm.

Renewable sources of energy are finite and limited, in the sense that only so much wind blows in any given time period; only so much rain falls. There is a finite quantum of energy which can be developed from these renewable sources; as the demand for energy increases, eventually they will run out. Moreover, not only are renewable energy sources finite, they are also unpredictable and, more often than not, beyond our control to command. If the wind does not blow, nor the rains fall, we run short of power.

In African countries, in a continent with immense natural resources, the greenist movement has worked to restrict the exploitation of those resources for the generation of electricity. In so doing, the greenist movement (from the comfort of its own padded armchair, in its air-conditioned home) would condemn many poor, vulnerable people to a world without electricity. They insist that, for the greater good, these people must be prepared to sacrifice themselves to a life of disease ridden poverty for the greater good of mankind. They must remain vulnerable to, and subject, to the rest of the natural order.

A creditable green party would completely reject all such notions.

2. A credible green movement would neither deny nor decry the duty and responsibility of man to rule over the rest of nature, subdue it, and develop it.

To be credible, a green party must acknowledge and celebrate the regnant place of man within the realm of nature. Man has a duty to rule over, subdue, and develop the rest of nature. To the extent that any green movement denies the unique place and special responsibilities of man within nature, to that extent it is anti-man and anti-Christian.

A credible green movement will seize upon, and celebrate, the duty and responsibility of man to rule over the creation. It will espouse the evil of nature left untended and undeveloped. It will acknowledge that many species have been lost to the world without human involvement; it will acknowledge that much destruction of landscapes has occurred without any human involvement. It will articulate that some of the most destructive effects upon nature occur if men do not get involved, to husband, manage, and control.

It will espouse prudent and responsible development, and uphold conservation rather than an anti-developmental bias.

3. A credible green movement would neither be irrational nor emotive over technological advances and developments.

The NZ Green Party is both rationalistic and consequently irrational in its approach to technology. A property green movement would be scientifically rational and neutral to all technologies, and would not proscribe any. For example, nuclear energy would not be precluded from the outset.

It would not ban drilling and developing oil fields, since proper management has proved that oil exploitation will not result in destruction of the environment. An example, is that during the terrible hurricane season in which Katrina struck, not one oil rig in the Gulf of Mexico leaked or spilled oil. Moreover it is now demonstrably true that oil rigs situated in the ocean greatly enhance marine life.

Moreover a credible green party would not ban genetic engineering from the outset. It would welcome it, and argue for its application with discriminate care and appropriate testing and safeguards.

4. A credible green movement would not play off technology against nature.

The greenist movement repeatedly sets up a dichotomy between nature and technology or economic growth. A credible green movement would completely reject that dichotomy. It would insist instead that a growing blade of grass and a slab of concrete are both alike natural. Both are part of the natural order. Both are part of the creation. Both are subjected to exactly the same natural laws. Both are part of God’s created world

All technological developments are part of Nature, part of the natural order. Not all are equally beneficial or helpful. Some developments are destructive; others constructive. But all alike are natural and must be celebrated as such, if a green movement is to have any credibility.

5. A credible green movement would not accept that the finitude or limited nature of resources restricts economic growth or development.

A credible green movement would be knowledgeable about economic history and human development. It would recognise that technological developments have meant that in practical terms there is no limit to natural resources, since man is not limited in his ability to continue to discover the potentiality of the creation, and develop marvelous applications of it—such is the glory of the creation as made out of nothing by the Living God.

A credible green movement would not use arguments of scarcity of resources to restrict economic development. Rather it would call for constant pure and applied research to break though whatever limitations current resources are applying. For example, the world has a limited supply of copper. The technology which required copper lines to transmit electricity meant that the supply of electricity to every person in the globe would have exhausted the world’s supply of copper. However, in time, research discovered the conductive properties of silica, which is increasingly making copper redundant as an electrical conductor. Last time we checked, there was no shortage of silica in the world.

Old photographic technology was threatening to consume much of the world’s supply of silver. Now photographic film has been consigned to the “dark ages” through the development of digital photography.

When environmental problems and damage emerges, the first response of a credible green movement would not be to restrict and ban. It would be to call for more research and development, for more sophisticated technologies and abilities that would reduce, alleviate, or prevent the problem. For example, if burning coal puts poisonous chemicals into the atmosphere, the first and most insistent response of a credible green movement would be for research into technologies that would give us clean emissions when coal was fired. It would not be to ban coal.

To be continued . . .

>Global Temperature Falls, Again

>Global Temperature Update: More Time, Please

The global temperature statistics are now out for May. They show that the month was the coolest in twenty-two years. The longer term graph previously published has now been updated. The satellite data—which of course reflects actual measurements, not computer model predictions—shows that over the past sixteen months, the change of temperature in the lower troposphere has been -0.774 degrees centigrade. This is equal in magnitude to the generally agreed “global warming signal” of the past one hundred years.

Click on graph to see in full.

In other words, the data show that since 1998 there has been a rapid and large cooling of the earth’s temperatures reversing one hundred years of global warming.

It is around about now that the protagonists of the theory of Anthropogenic Global Warming (AGW) start to engage in caveats, qualifications, and denials. This is normal. It is the way science ordinarily proceeds in the minds of individuals and the scientific community at large. When you get some unexpected, rogue results, the first response is usually to go back and research harder and test some more.

One qualification put forward by AGW theorists is that one has to distinguish between weather and climate. Climate is long term, gradual (and often intergenerational) changes to the world’s temperatures. Weather reflects shorter term impacts due to winds, ocean currents, and other cyclical influences. Thus, the caveat runs, the recent sharp decline in world temperatures reflects weather changes (shorter term cyclical influences) not climate change.

However, this begs a rather nasty question. If the decline in global temperature since 1998 is caused by weather, why would the rise in temperatures in the last quintile of the last century not also be caused by weather, rather than climate? Why would rises in temperature reflect climate influence, whereas falls reflect weather influences? At the very least, if a distinction between weather and climate is valid, far more thorough work now needs to be done to break out climate from weather influences in the data of the last fifty years. If that were done, it is likely the whole computer modeling college would need to be rebuilt.

The upshot is that the qualification distinguishing climate from weather has huge implications for AGW theories—which need to be rigorously worked through by those theorists. One hopes that the tide of strident demands for action on global warming in the face of the imminent doom of the planet would subside while that work is being done. We are not holding our breath, however.

Secondly, there are those who have argued that such recent variations and sharp drops in temperature are accommodated in the climate computer models. The models, it is argued, allow for and have factored in such variability, including such a drastic and rapid drop in temperature—where one entire century’s warming is reversed by a mere sixteen months of cooling.

However, this also begs a rather nasty question. How many standard deviations from the predicted mean do the models tolerate? That is to say, how much variability is allowed? How long does the deviation from the predicted mean need to persist before the model is invalidated? Here we approach the heart of the problem. If AGW theories are to be taking seriously and accepted as having a scientific foundation (that is, be accepted as reflecting causality in the real natural world) they must be able to declare the terms and conditions under which such theories would be falsified. That is a necessary (although not sufficient) precondition of such theories being taken seriously and researched diligently.

The more temperature variability the models allow for and tolerate, the less open they are to falsification. The longer substantial deviations from the projected temperature mean can be tolerated, the more the models appear to be tautologies.

If we were to say that it is absolutely certain the sun will either rise tomorrow or it will not, no-one could challenge us. But clearly, by the same token, we can be dismissed as irrelevant, for we have not added one jot to human knowledge. The prediction, because it covers all possible permutations, is true by definition, but utterly useless. On the other hand, it matters a great deal whether the sun actually does rise tomorrow or it does not. There would be radically different effects and consequences. It is very important to know which is going to occur.

Similarly with climate change predictive models. If the models, say, have been constructed so as to accommodate fifty years of radically cooling global temperatures, we can confidently say that they will never be falsified; they would be true by definition—but utterly useless. Meanwhile, living conditions will alter radically if indeed we do get fifty years of global cooling.

It is important, therefore, to know whether the radical cooling of global temperatures in the last sixteen months, and the cooling trend evident from 1998, can be tolerated by the models—and for how long. Meanwhile our judgment on the models needs to be, at the very least, suspended—and all programmes based on them halted—immediately.

Meanwhile, we need to start thinking about the implications arising from global cooling. As has been pointed out, cooling is potentially far more devastating and threatening to human life than warming, just as starvation is far more threatening to humanity than running out of oil. (Not that we need big centralist government programmes and initiatives, mind. They, with all the best intent in the world, always end up either making the problem worse, or causing problems of far greater magnitude elsewhere. The wretched testimony of biofuel mania is sufficient evidence.)

It would be ironic, would it not, if the whole world were to run full tilt at counteracting the threat of imaginary global warming, while all the time cooling is the greater and real threat we face. The devastation arising from such folly would be catastrophic indeed. But not unexpected. It is a well declared principle of divine providence for the Lord to allow people, cultures, and nations to reap the fruits of their folly, hubris, and madness.

The upshot: APG protagonists and theorists have far more work to do testing and verifying their science before one more dollar is spent or one more programme initiated to combat global warming. Just as the UN has now called for a moratorium on all biofuel investment and a removal of all subsidies for biofuels (which will kill the pseudo business stone dead), we now need to see it call for a moratorium on all anti-global warming programmes, initiatives, institutions, and activity until further notice.

The threats and dangers humanity faces under potential significantly colder temperatures are too great to allow policies and programmes formulated upon such poorly constructed and inadequately established theories of global warming to continue. Robust, contestable scientific proof and substantiation is now required.

Fire the policy analysts. They have been terribly premature. Let the real scientific effort begin. Advocacy and alarmism need to give way to thoroughgoing research, testing and analysis.

>Peak Oil on Artificial Steriods

>Bubble, Bubble, Oil and Trouble

The prospective price of oil has been a hot topic in recent weeks. It is the kind of issue which fascinates us at Contra Celsum because it has so many facets. We posted recently that the West has recently taken on the role that OPEC played in the great oil shocks of 1973 and 1974—albeit for different, although connected, reasons. Both OPEC then, and the West now, see themselves as being under real and substantial threats. Both acted (and are acting) to restrict the supply of oil.

In the seventies, OPEC felt that it was being exploited by Western oil consuming nations. So Arab nations (predominantly) formed a cartel, restrained output, and forced the world oil price up. The impact was felt all around the world. It resulted a decade of stagflation in the US and Europe (and other western economies, such as New Zealand). Stagflation is a macro-economic condition of rising prices (inflation) coupled with stagnant or no economic growth.

Stagflation leads to rampant inflation. Universal rising prices are tolerable (although not healthy) where productivity and economic growth is matching or outstripping price rises. Where prices are rising, but economic growth is static or contracting, however, as is the case under stagflation, in the end inflation becomes rampant. That is, economic actors (producers and consumers) engage in adaptive behaviour and adjust their production and consumption decisions to the expectation that costs and prices are going to rise.

On the expectation that prices will continue rising they markedly increase their debt levels (borrow now, and pay back later with cheaper, inflated dollars) thereby pushing up interest rates. They hoard real assets on the expectation that they will match rising prices (gold, silver, real estate, hard commodities) driving up hard asset prices still further. Manufacturers build in greater margins on the expectation that the next lot of raw materials will cost more, thereby pushing up prices still further. Employees, demand and get higher wages, without any increase in productivity or more effort. Rising labour costs result in yet another universal price rise. So the spiral goes viciously upward.

Well, we hear you say, so what? As long as everything keeps adjusting upwards the party can go on for a long time. Not if you are on a fixed income, or have no hard assets, or are renting. For such people, who are usually the most vulnerable in our society, stagflation and rampant inflation is devastating and results in impoverishment. Moreover, inflation means that more and more paper money is in circulation in the economy. To cope with rising prices and economic pain, credit restrictions are eased. But the transmission of the money supply is never uniform. There will always be those who are closest to the money spiggots; they always benefit, but at the expense of those who are furtherest away. Monetary based inflation is theft, pure and simple.

To break stagflation and burn it away required the harsh monetarist medicine of the eighties, with the inevitable accompanying recessions.

There have been plenty of people raising the stagflation spectre in recent weeks. But it takes more than the rise in the price of a commodity to create conditions of stagflation. Rising oil prices are a necessary, but not sufficient condition. The world is now far more of an open global economy than the seventies and while it is possible that stagflation will eventuate, it is not likely. Nevertheless, were trade barriers to be erected once again, were free trade agreements and treaties to break down, were wage and price controls begin to emerge, and were widespread government deficit spending to re-occur, all bets would and truly be off. But we are not there yet—not by a long way.

Meanwhile, will the price of oil come down again? Courtesy of the Hive, we read that a senior economist for Export Development Canada is arguing that the price will drop in the second half of this year back down to around US$80 per barrel. Reason: slowing economic growth will reduce world-wide demand for oil. And George Soros is quoted in another article, also courtesy of the Hive, arguing that the oil price will drop, but his reason is different. He reckons price is now the result of a speculative bubble which will burst. So, which is it to be? Slowing economic growth or the bursting of a speculative bubble? If both are right, the price may drop back to US$40 or US$50 per barrel.

Not so fast. Courtesy of Adam Smith of the Inquiring Mind we have been linked to a very thoughtful piece in the Wall Street Journal. It argues, based on research work being done by the International Energy Agency (IEA), that supplies of oil are going to be far tighter than previously thought. In fact, we are already at conditions of “peak oil”.

The methodology of the IEA until recently has been to forecast world demand for oil, and it has simply assumed that production would rise gently and gradually to meet demand. Now, however, the IEA is looking at supply, and concluding that aging oil fields and diminished investment mean that it is unlikely that world supply will keep up with demand.

But this occurrence of “peak oil” is an artificial creation. There are plenty more supplies of oil in the world. As one analyst put it, the difficulties in oil supply are not buried in oil fields—they are above ground. They are social and political. In the West they are largely the result of greenist ideology.

To be sure, the greenists do not mind that peak oil is being artificially created. They would be quite happy to see not one more drop of oil consumed—for this, they believe, would combat global warming. They are very pleased to see the price of oil so high, and wish that it were higher. They will probably be gratified in the months ahead, unless our Canadian economist and George Soros are correct.

In their zealotry, hard core greenists are happy to see everyone poorer. They write off as mere “collateral damage” the degradation, starvation, and death of millions in the poorest countries in the mad drive to manufacture ecology-destroying biofuels. Like all good utopians, rationalists, and ideologues, the end really does justify the means.

What of the reality, however? Laying aside the lunatic fringe, will greenism triumph? Not when it starts to hurt. All the soft-core greenists, the fellow travelers and the politicians who represent them, are likely to desert the cause pretty quickly. The most likely immediate response to high oil prices: reduced taxes on gasoline. We are bold enough to predict that in the forthcoming election campaign in New Zealand, one of both major political parties will move to reduce the price of petrol at the pump by reducing state petrol taxes. France’s Sarkosy has already made such a call—yesterday, in fact. Gordon Brown has proclaimed that high oil prices are his current apocalypse du jour. (Last week it was global starvation as a result of biofuels. Poor Gordon is finding that all the pet leftist causes are creating global crises which he is now left to deal with. Old Blony Tair. You have to give the man credit. He has to be the ultimate exponent of the hospital pass.)

Secondly, expect that when rising oil prices are seen as a threat to national security, the US congress will move rapidly to open up some of its vast oil reserves in Alaska and the western states to exploration and development. Greenism will quickly be seen as a nice-to-have, but only when you are sitting in your warm living room, with lots of affordable groceries in the kitchen. But it will take time to bring the oil onstream.

Thirdly, expect the major developing countries in the Third World, which have never bought into greenist ideology, to move quickly and effectively to assist in exploration and development, in exchange for favourable supply contracts, in the poorer third world. We continue to expect that within ten years the crisis will have passed.

“Peak oil” will seem like a distant memory, a time of temporary madness. What is an open question is whether greenism will have been thoroughly discredited and completely repudiated in the process.

Unlikely, for as Freeman Dyson recently argued environmentalism has now replaced socialism as the established secular religion. High priests and zealous acolytes do not relinquish religious beliefs so easily.

>The S-Files

>A Lone Voice of Moral Sanity

Contra Celsum has nominated Olivier de Schutter—a United Nations special adviser on food—for an S-Award because he has had the courage, the moral perspective and rectitude to call for an immediate freeze on investment in biofuels.

Citation:

Contra Celsum is delighted nominate Olivier de Schutter for the award.

The ABC (www.abc.net.au/news qv “UN adviser calls for halt on biofuels investment”) provides the following summary:

1. Mr de Schutter says the pursuit of biofuels is contributing to a global food crisis threatening 100 million of the world’s poorest people.

2. He has described it as a massive violation of basic rights and called for a special session of the UN Human Rights Council to tackle rising food prices and global shortages.

3. “I believe that any new investment in first-generation agri-fuels should be [frozen] immediately and that we should discuss in an open and transparent manner whether the current levels of production of bio-diesel, bio-ethanol—which are no so bio—should continue,” he said.

Contra Celsum applauds this clarion call to halt further biofuel investment, and to look at rolling back present production. At least someone in the UN is listening to the cries of 100 million suffering people and for their sake is prepared to slaughter a sacred cow that they might be able to afford food again. At least someone in that subterranean Gothamesque labyrinth has some moral perspective.

Now, we await some clear moral leadership from our own politicians. Our political leaders in New Zealand have all endorsed biofuels. Some have militated for their urgent production and introduction to the fuel market in New Zealand to help save the planet.

Now, where does the moral compass of our leaders lie? Who will be the first political leader to demonstrate they have the slightest smidgin of human decency? Who will be the first to stand up and say that a policy which will contribute to the threat of starvation for 100 million of the world’s poorest people is morally bankrupt—and that, regardless of what threats climate change is supposed to present—biofuels represent a morally unacceptable answer.

Who will be the first to say, “The price is too high, and that under current conditions, biofuels represent the grandiose policies of the megalomaniac?” We are waiting.

Olivier de Schutter: S-Award, Class I for actions in the course of duty that are Smart, Sound, and Salutary.

>The Wolves are Beginning to Feed

>Rapacious Capitalists and Their Running Dogs

When a moral imperative is providing a backbone to a capitalist—beware. Of course, not all moral imperatives are wrong. But there remains a sneaking suspicion that the capitalist will attempt to use the moral imperative to skew the market in his favour, weakening competitors and fleecing the public accordingly.

Adam Smith saw this with astounding clarity. Having a realistic view of human nature, Smith characterised capitalists as being motivated by a “mean rapacity”. He said that when in a group, businessmen “seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” (Adam Smith, Wealth of Nations, [New York: Modern Library, 1937], p.128.) The only way to restrain such rapacity was to keep the economy open and subject to full blooded competition. It is the dynamic of competition which restrains and controls the innate rapacity of human beings.

When a capitalist pronounces or seizes upon a moral imperative for their particular good or service, however, all bets are off. For almost inevitably they will turn to the political realm to secure particular non-competitive advantage, subsidy, or protection, for their business on the grounds of a greater good or a higher purpose.

In recent days we have been treated to the ugly spectacle of Patricia Woertz, CEO of Archer Daniels Midland Corporation, which just happens to be the largest ethanol producer in the United States, telling us that it would be a terrible mistake to pull back from producing biofuels. (CNN Money, “Archer Daniels Defends Ethanol,” 30th April, 2008) This is an industry which has been built by government subsidies and tax relief. Federal tax breaks alone amounted to $3.2bn last year. Then, on top of that, we have to add the guaranteed minimum price which the Federal government will pay for raw materials and a multitude of related subsidies and supports. Archer Daniels spent just short of a million dollars lobbying the US Federal Government to secure subsidies and government favours for its business.

But, says Woertz, all this is to the good. Why? Because it will “ensure” that the US will be able to meet the rising demand for energy. Adopting the garb of the humanitarian statesman, Woertz issued a litany of warnings about bad consequences that would flow if the US government pulled back from its subsidies to biofuel (that is, to her company). This would be “wrong. It’s foolish. I think it’s dangerous. I think it’s a mistake.”

Yup, we get the picture. But wrong for whom; dangerous for whom? may we inquire.

The problem, according to Woertz, is the stupid, inefficient market. It is the high price of oil which has driven up food prices, not the plague of locusts that is the biofuel industry. Oh, yes—and what has caused the linkage between food and oil prices in the global market? Your company has—because you are rapaciously taking grain out of the food production chain and converting it to ethanol—all the while subsidised and funded by the Federal Government. No, the market is very efficient. It is responding accurately to the gross distortions which Woertz and her ilk have introduced.

But, then, the kicker: “Retreat from biofuels is just an empty gesture. That won’t fill anybody’s stomach and won’t fill anybody’s gas tanks,” said Woertz. To which we need to ask a simple moral question of Woertz and her political cronies: which is morally more important—food in the stomach or gas in the tank? In case it has not occurred to you, people can survive without gas in the tank, but no food is lethal. For the solution to the current food crisis which is already causing severe suffering—and looks likely to result in an horrendous global catastrophe—is simple. If the morally and ethically bankrupt ethanol industry were to stop consuming 30 percent of US corn production—as it currently does—and the figure is going to rise rapidly every year from now on—global prices of grains would ease immediately. Within a year, every staple food price would have fallen sharply around the globe—grains, meat, dairy, fish, and vegetables. Vulnerable lives would be saved.

This is a man made crisis. It is an artificially engendered crisis. It is the confluence of loopy global warming fears, coupled with inhuman greenist utopianism, politicians seeking to curry electoral favour by trumpeting “think big” visions, and of capitalists seeking to take advantage and make what is in effect, blood money.

Adam Smith was right. Beware the capitalist trumpeting a moral imperative and his politician-running dogs. A mean and cruel rapacity is being cloaked. In the end, the wolves will come out to feed. They have now emerged and are starting to feed on the carcases of the destitute and the vulnerable the poor, and the wretched of the earth.

>The S-Files

>Sue Kedgley: Conduct Unbecoming in the Course of Duty.

Contra Celsum has nominated Sue Kedgley for an S-Award for her “clear and present danger” call over the threat of New Zealand being crippled by global food shortages.

Citation:

Sue Kedgley, Green Party Safe Food spokesperson has blown the trumpet of alarm over rising international food prices. She has called for urgent measures to move New Zealand to self-sufficiency in as many basic staple crops as possible. (NZ Herald, 9th April, 2008)

However, her analysis of the causes of rising food prices is deplorable. Yes—wait for it—she blames “changing climate conditions.” She conveniently neglects to mention that the food crisis is largely man made and caused by environmentalism, by greenism—the very things she stands for. Bluntly, Kedgley and her fellow travellers are the cause of the food shortage.

There are at least two major causes of global food shortages for which geenism is directly responsible.

1.The drive to bio-fuel production. Motivated by a utopian dream of saving the planet millions of hectares of arable land and millions of tonnes of edible crops have now been removed from food production and diverted into fuel production. As Gwynne Dyer recently observed:

“But the worst damage [to food production] is being done by the rage for ‘biofuels’ that supposedly reduce carbon dioxide emisions and fight climate change. (But they don’t really—at least not in their present form.) Some 30 percent of this year’s US grain harvest will go straight into an ethanol distillery, and the European Union is aiming to provide 10 percent of the fuel used for transport from biofuels by 2010.

“A huge amount of the world’s farmland is being diverted to feed cars, not people. Rainforest is being cleared to grow more biofuels. A study in the US journal Science calculated that destroying ecosystems to grow corn or sugarcane for ethanol, or oil palms or soybeans for bio-diesel, releases between 17 and 420 times more carbon dioxide than is saved by burning the biofuel grown instead of fossil fuel.

“It’s all done in the name of climate change, but the numbers don’t add up.

“’If . . . more and more land [is] diverted for industrial biofuels to keep cars running, we have two years before a food catastrophe breaks out worldwide.’ said Vandana Shiva, director of the India-based Resaerch Foundation for Science, Technology and Natural Resources Policy. ‘It’ll be 20 years before climate catastrophe breaks out, but the false solutions to climate change are creating catastrophes that will be much more rapid than climate change itself.’” (NZ Herald, 10th April, 2008)

But, wait, it gets worse. Vandana Shiva is wrong. Climate change is a phyrric threat. It is not a threatening catastrophe but a gigantic false alarm, as the actual measured evidence is beginning to show. We are left with the deplorable situation that false solutions to what is increasingly showing up to be a non-existent problem are causing a very real global catastrophe. “The wicked flee when no-one pursueth.”

Sue Kedgley is right to call our attention to the looming food crisis. It is, however, utterly duplicitous for her not to confess that she and all her fellow greenists are the cause of the problem. Her continued advocacy and support for the current biofuels mania is deplorable, wrong, scientifically asinine, and a great threat to the world.

At Contra Celsum we are unsure whether Kedgley is acting out of foolish ignorance or her behaviour represents a wilful obscuring of the truth. She is an educated person, so we lean to the latter explanation.

2.The luddite greenist opposition to genetically modified food crops is a further cause of food shortages.

World population rose rapidly in the last half of the twentieth century. However, food production rose at a faster rate, leading to rising living standards around the globe and a decrease in hunger and malnutrition. The cause of the increased production of food was the discovery of genetically modified, disease resistant, higher crop yielding strains of basic cereals. These amazing developments, called—somewhat ironically now—the Green Revolution, resulted in much improved food production.

The greenists’ mindless, inveterate opposition to genetically modified crops is a significant factor in food production not being able to keep up with population growth in the past decade. It is a material cause of rising food prices.

Sue Kedgley is like a mother who systematically starves her child, then blames anyone and everyone but herself for the child’s demise. There is none so blind as those who will not see. Such cant, such hypocrisy must not go unrecognised. It deserves an S-Award.

Sue Kedgley—S-Award Class II for behaviour that is Stupid, Short Sighted and Stupefied.

>The S-Files

>S-Award given to Dr Jan Wright, Parliamentary Commissioner for the Environment

Contra Celsum has given an S-Award to Dr Jan Wright who argues that New Zealand should not be forced to use biofuels.

Citation:

Contra Celsum is aware that many would have the view that Dr Jan Wright, an independent Parliamentary watchdog for the environment, should be given an S-Award, Class II because she has used her position to argue against mandatory use of biofuels in New Zealand—one of the great greenist hopes for the planet.

But Contra Celsum is pleased to give her the Class I award. In her testimony to a parliamentary select committee recently, not only did she note the increasingly environmentally damaging effects of the biofuel programmes, she also insisted that account must be taken of the social cost. Rising food prices are hurting people, especially and particularly in poor countries.

For far too long greenism has waged an ideological war against the human race—whether by intention or consequence—and it is positive and refreshing to see an official with environmental duties face our politicians up to the social, human costs of the latest greenist crusade.

Dr Jan Wright: S-Award, Class I for actions in the course of duty that are Smart, Sound, and Salutary.

>Mass Starvation in a World of Plenty

>There’s a Rampaging Green Elephant in the Room and It’s Man Made

There is no shortage of food in the world—only bad policies and governance. Can this really be true? After all, hunger is now on the rise again. Central Africa, for example, is a region where more than one third of people are hungry—that is, they do not get sufficient food. In India and Bolivia between a third and a fifth of the population do not get adequate food—they are malnourished.

Yet, last year saw a record world cereal harvest. Rising food prices will stimulate new investment and even greater production in the future. So, the experts say, there is no shortage of food in the world. (The Economist, 28th March, 2008). But global food prices are telling a very different story—and prices rarely lie.

Food, like any other tradeable good or service, is subject to the normal cyclical market forces of supply and demand. For the past five years, world food stocks have been decreasing, even while production has increased. Why? Well, demand has also increased—and it has increased more quickly than supply. There have been two long term reasons for this.

The first is the gradual, steady rise in world population. While overall population growth has slowed since the mid last century, it is still “ticking over”. The US Census Bureau projects that at current growth rates world population will have doubled by 2050. More mouths to feed mean inevitably a growing demand for food.

The second factor is rising living standards, particularly throughout Asia and the Middle East. As living standards rise, the “first” thing people do is eat more food. The second thing they do is change what they eat. They move from a cereal or starch based diet to a higher protein (Western) diet.

These two factors have led to demand outstripping supply over the past five years. More mouths to feed, and more food being eaten per mouth, as it were. When this happens we can expect the normal market, cyclical market response. Prices rise, leading to a short term lessening of demand. But, a second factor normally comes into play—namely, higher prices lead to greater profits for food producers, which incentivises them to invest more, to produce more—which eventually leads to greater supply. Eventually, of course, the market settles down to a general equilibrium point.

The food aid people tell us that this normal market mechanism appears to be working, and that the supply of food—as measured by the amount of grown—is rising in response to the higher prices. So, we should expect that food prices will eventually peak and track down again. Right? Well, no—at least not anytime soon.

Why? As we have described, the food market was at the critical point of a cyclical re-adjustment. Food stocks were falling, demand was rising, and prices were trending upwards. Farmers got busier and supply started to react, trending upwards. Then came the rogue element. It entered the arena right at the critical moment. This rogue element dislocated the food market, moving what would have been a normal (and gradual) market adjustment of demand, supply, and price to a situation of severe dislocation, which can only be described as a global food shock—as far as we know, the first in human history.

In the past, severe dislocations to the world food markets have occurred due to extreme weather—and they have been relatively short lived. Not this time. Western governments, particularly the EU, the US and Canada have now adopted the view that the world was getting warmer primarily because fossil fuels were being burnt. The world, if it were to be saved, had to move radically and quickly to renewable fuel sources. The age of biofuel had come.

The effect of this has been to turn vast swathes of grain producing land into production hubs for the raw material to produce ethanol. The most commonly used raw material is corn. Consequently, a huge amount of grain has been suddenly removed from the world’s food supply. So the world food aid people are right: more food crops are being produced than ever before—and there is theoretically no shortage. That is only half right. Yes, food crops are being grown, but it is being diverted away into ethanol production. Food is no longer food; it is fuel.

At a time when global food supply and demand were tightly stretched anyway, suddenly the world food market has been distorted by a giant politician-cum-green monkey wrench. The result: huge market dislocation and a global food shock.

The relatively recent US Energy Bill legislated a target of producing 20% of fuel via ethanol within fifteen years. To achieve this, it provided a federal subsidy for the production of ethanol, which in turn meant that ethanol plants could pay higher prices for corn. So the price of corn shot up from $2 a bushel to over $6.

There are currently 134 ethanol refineries in the US. There are another 77 presently under construction. In just one year, demand for corn from ethanol distilleries jumped from 54 million tons in 2006 to 81 million tons in 2007. This more than doubled the annual growth in world demand for grain. But, even more insidiously, it removed this amount of grain out of the world food supply chain. This will not abate—it will get worse. It is expected that ethanol production will consume 28% of US grain production in 2008. But this only represents 3 percent of current US gasoline needs. And it will not stop there. We are on a mission to save the planet. Remember the US has legislatively mandated 20% of US gasoline to come from ethanol by 2020’s—and that’s just a short twelve years away, in case you need reminding.

Add to this situation a further element in the equation: the amount of global arable land able to produce food is pretty much fixed. Most of the arable land in the world is already in food production. So farmers can’t simply head to the hills and produce more food. Arable land is now a scarce global resource.

Well, I hear you say, that’s no problem. I don’t like cornbread, and I can pass on tortillas. Sorry, four realities make it a problem—a problem that everyone in New Zealand is noticing right now—and we are hardly to be considered vulnerable.

1.The global price of other grains also shoots up, because other grains are suddenly subject to double the normal annual increase in demand. If people can’t get corn, they move to rice or soy beans or substitute some other grain. Unexpected rapid increases in demand create severe shortages, leading to sharp price rises. If people in New Zealand are complaining that they can no longer afford food, how do you think millions and millions of people who were already hungry or malnourished are faring? Famine, disease, starvation and death is facing them. And there is no end in sight.

2.Corn is most commonly used in the US to feed chickens and cattle. This is normal in northern hemisphere, colder climate farming regions. With huge rises in the corn price due to the ethanol behemoth “confiscating” food supplies, the prices of eggs, chicken, beef and other grain-fed proteins is rising rapidly.

3.This has produced transfer-demand to other proteins. Hence global prices have begun to rise drastically for dairy products, fish and meat. Demand has transferred across, prices are rising.

4.The price of every food group is consequently rising. This is unprecedented. Normally, when the supply of one food type (rice, or corn) falls leading to price rises, demand substitutes across to other foods, leading to an eventual downward adjustment in the price of that initial food, as the original demand pressure eases. But the world is faced now with price rises in all food types across the board. This is why it is accurate to characterise what is now occurring as a global food shock.

And the reason? It is the ethanol elephant coming into the room. As we noted above world food demand was already rising, stocks were falling. The market was already under pressure. Yet, markets are remarkably robust and there was every reason to have expected that gradually supply, demand, and prices would have adjusted in an orderly and productive fashion. But not this time. The global food market has been dislocated beyond comparison. Into the already tight food supply and demand matrix has come the ethanol elephant and it smashing everything in the room.

So, let’s look at the data. According to Lester R Brown of the Earth Policy Institute:

“The World Bank reports that for each 1 percent rise in food prices, caloric intake among the poor drops 0.5 percent. Millions of those living on the lower rungs of the global economic ladder, people who are barely hanging on, will lose their grip and begin to fall off.

“Projections by Professors . . . of the University of Minnesota four years ago showed the number of hungry and malnourished people decreasing from over 800 million to 625 million by 2025. But in early 2007 their update of these projections, taking into account the biofuel effect on world food prices, showed the number of hungry people climbing to 1.2 billion by 2025. That climb is already underway.

“Since the budgets of international food agencies are set well in advance, a rise in food price shrinks food assistance. The UN World Food Programme (WFP), which is now supplying emergency food aid to 37 countries, is cutting shipments as prices soar. The WFP reports that 18,000 children are dying each day from hunger and related illnesses.”

Now, let us be clear. This situation—which will cause people to starve and others to slip into malnutrition leading to sickness, diseases, and death—is a man-made disaster. It has been caused by the folly of mankind—in particular, a knee jerk reaction to a purported threat to the planet and mankind from global warming. It will turn out that the “cure” to what we believe is a fabricated fantastical problem will be far worse and far more damaging than the original imagined malady. Count every child lost, every person slipping into the degradation of poverty and malnutrition and think of Al Gore and his blasted, benighted, demonic Inconvenient Truth.

Give me global warming any day, even if it were true. At least no-one dies from global warming. At least people would have time to adjust. But as a consequence of the megalomaniac madness of modern governments, determined to tilt at climate windmills, all the while slyly seeking party electoral advantage at the expense of genuine needs of their people, human beings can, and are most certainly, dying. But who cares about the poor and wretched of the earth when there is money to be made, elections to be won, and Nobel gongs to be awarded.

Next time you consume a piece of now very (and soon to be more) expensive cheese, think about how our western governments, the EU, Canada, the US, Australia, New Zealand, not to speak of the UN, and all the vested interests that circle around, dancing their dervishes to line their tawdry pockets, have combined to act in a way that is likely to cause the death of millions and millions of people. Hiroshima will be a mere side show. The Holocaust will have nothing on this baby. Stalin will be a mere babe in arms in comparison. We may well see the mass kulakisation of the third world on a grand scale. And, oh, let’s not forget—to assuage starvation widespread cannibal activity returned amongst the Kulaks, as Stalin strove mightily to save the world for dialectical materialism. But at least it was all in a good cause. Worth the price, I’d say.

Let’s hear it for our wonderful Athenian nobles and overlords. Let’s put our bloodied hands together and honour them as they deserve.