Friday, December 21, 2012

ALL ECONOMISTS ARE WRONG - DEAD WRONG




Captain, My Captain...

ALL  ECONOMISTS ARE WRONG – DEAD WRONG!



Why we are in this mess:


Where did it all begin? Why are they all wrong? What is wrong?


Going back to the start of the industrial revolution in Britain, the seeds for the modern neo-classical economic thesis were planted by a Scottish philosopher and professor, named Adam Smith, in his historic inquiry and book, "The Wealth of Nations."  That's where the problem started.

First. economics as therein defined, concerns itself with allocating scarce resources; seeking to achieve an optimal production and consumption of goods and services, algebra. It is in the restricted context and definition of "production and consumption" where a quantum flaw occurs. It is a linguistic flaw too. (i.e. extraction is not production)

What Smith and followers have advocated, was that extraction constructs or elements; particularly those relating to non-renewable resources, were equal or equivalent to production constructs. They  clearly are not, as any geologist will confirm. Such elements are in fact produced by the planet over periods of millions of years, then extracted for human production, that coverts these elements into consumable items So to combine extraction and production constructs, creates a false view of reality's physical flow of elements. Smith's thesis, therefore, would have been more realistically accurate had he delineated this founding neo-classical economic thesis into three distinct constructs - separating extraction constructs from production and consumption constructs, in the overall model.

Another major flaw in Smith's thesis, is that the growth generated by free markets, will through its natural forces seek an equilibrium, thereby solving any immediate imbalances of an economy's production and consumption algebra.  Meaning, that the perpetual pursuit of growth is the single remedy needed to forever correct imbalances, and hence return an economy to its desired steady state. This is existentially, scientifically and logically absurd, because Smith ignores the finite constraints imposed by the extraction constructs.This flaw sets the stage for an inevitable collision between his abstract reality and existential reality - leading to a monumental collapse of Smith's abstract version.

While there are many other similar flaws in Smith's thesis, these two stand out because they are the most damaging and pervasive to the human condition and its prospects to sustain any possible form of activity that aims to extend human longevity - thus avoiding premature extinction. Divorced from the hard constraint of reality, physics and mathematics; turns Smith's thesis into a manifest of gibberish or likewise, utter poppycock. Yet to this day, all the leading economic textbooks, schools, professors and Noble Prize winners continue to premise their ideas, narrative and recommendations on these utter falsehoods that are disconnected clearly and logically from what is existential reality. Meanwhile, the end result of these flaws on human enterprise is sure to be catastrophic in some form.

Why are we so disconnected? There are many reasons, some are distractions, but the ultimate causes must trace back to shortcomings of humanity's neurological physics, affecting key social and psychological processes.We are neither individually nor collectively quite as smart  as we think. From an evolutionary view, humanity's cognitive functions did not keep pace with the responsibility entrusted and skills required for the extended management of the planet. The results and status of which are outlined clearly below in Brian McGavin's featured abstract," Sustainable Planet? The Silent Crisis".  Telling us, that we are in a heap of trouble, facing extinction or a serious transformation, if we do not get our act together soon to deal with this silent and invisible reality.

To do so,  economists and economics must first begin to embrace extraction as the third component of the overall model. And also, integrate their thesis with the laws and principles of objective mathematics and science - and most particularly; physics and exponential mathematics, and the hard constraints they impose on the extraction constructs that define human-activity's limits.

If we fail because of the neurological shortcomings, then the Darwinian outcome will reflect exactly how evolution destines our journey - joining the thousands of other species who had once inhabited this planet. But, if we fail because we continue to believe the dead wrong thinking of economists, lacking the will to correct their false and absurd thesis - no words can describe the magnitude of the tragedy, nor the loss of possible human opportunity. NO words.


Moreover, there are no longer any excuses not to change the operative and logically-flawed economic thesis, as its structural shortcomings are self-evident and they are corroborated by a preponderance of  irrefutable physical, scientific and mathematical evidence.  There are no longer any excuses. There are no other sensible choices.

Let us,  just however hope. Let us, just however hope, that it is not too little - too late? That last question, is now for you to decide and -  TO ACT UPON!


Dr Peter G Kinesa
December 21, 2012 



Please note that I have highlighted what I believe are salient matters of concern in this abstract.- Peter




Sustainable Planet? The Silent Crisis
By Brian McGavin
19 December, 2012

Today there is a ‘Silent Crisis’ in our midst. The crisis, still largely unrecognised, is potentially greater than all the other problems that transfix our policy makers.

For many decades now there has been a wilful blindness in recognising that relentless human population growth is one of the pre-eminent problems we face. A problem that is driving the astonishing growth of fossil fuel use and its depletion, climate warming, bio-diversity loss, the growing shortage of fresh water to meet human needs - and as a consequence of these changes - the prospect that agriculture will be unable to produce enough food to feed us.

In 1950 world population was barely over two billion. In October 2011 we passed seven billion. It is nothing to celebrate.In most countries today existing populations are not living environmentally sustainably, yet even if the UN’s assumption of birth-rate decline in developing countries happens, global population will rise to 9.3 billion by 2050. Less reported is that if current birth rates persist, the United Nations Population Division warned in March 2009 that our population will exceed 11 billion by then. A report in October 2011, The State of World Population 2011 says the world's population could more than double to 15 billion by the end of this century.




More and more developed countries offering new ‘baby bonuses’ make it even less likely that we will achieve the lower figures being quoted in the media. We have to start thinking about a ‘genuinely sustainable’ rather than ‘endless growth’ economy – an economy that is already faltering around us, with commodity prices soaring and living standards falling. Politicians focus on reviving economic growth and stimulating spending, but in an era of rapidly depleting resources, the ‘business as usual’ mindset will need to be radically rethought to keep our complex society functioning, with a transition to a qualitative, dynamic, self-supporting economy that satisfies our needs.



The growth lobby is pushing two great myths: That our ageing population will be a disaster unless we have higher birth rates and, despite rising unemployment, there is a terrible shortage of labour that only high immigration can supply. Both claims have been repeatedly shown to be either false or grossly exaggerated. They have huge long-term costs on our infrastructure and environment. Young people get old too and have higher dependency costs. Politicians don’t emphasise this.


 

In Africa, the UN now admits that it won’t meet its Millennium Development Goals but fails to explain the underlying causes for pessimism. Many countries in Africa already have massive unemployment and not enough food. How will they provide all the schools, jobs, hospitals and food to sustain populations that are set to more than double and in some cases triple in size in less than 40 years?



Governments will be struggling with millions of unemployed and hungry people attracted to violence and extremism. Look at the problems already in our news in countries like Haiti, Pakistan, Somalia, Yemen and Afghanistan – all countries on constant food aid, with exploding populations and increasingly scarce resources – yet population growth is never mentioned!

In Australia, the population is now set to double every 33 years, fuelled mainly by immigration - this in an arid continent with only six per cent of the country suitable as arable land. America, Canada and the UK’s already high environmental impact are also increasing due to demographic pressures.





Saving the planet and greenwash


 

Most environmental organisations tell us that ‘if only we each reduced our environmental demand, population growth would not be a problem’. But our economic system based on growth is driving us in the opposite direction. Even if all the efficiency and renewable alternatives could be implemented the savings would be quickly wasted if populations continue to grow.
You can try reducing consumption all you want, but when you keep adding 100 million and another 100 million, you simply drive every human to a lower and lower standard of living. You cannot escape that reality.

Professor John Beddington, former UK Chief Scientist, warned in March 2009 that: "Our food reserves are at a 50-year low, but by 2030 we need to be producing 50% more food, we will need 50% more energy, and 30% more fresh water. They are dramatic problems, and they are all intimately connected." We are producing ever more pollutants and greenhouse gasses. No reasonable amount of "Green" behaviour changes could possibly compensate for this tsunami of demand generated by population growth

.
Most experts now agree we will pass ‘peak oil’ production in 2012 and production of all liquid fossil fuels will drop within 20 years to half what it is today. Yet, forecasts project energy demand will grow by 60 per cent between 2002 and 2030. (Sources: (US) Energy Information Administration 2009 report and chief executive, BP oil).

A huge problem is most alternative energy sources are poor energy performers because they need a high-energy input to provide a given energy return. Wind and solar power are intermittent, while Hydrogen is only as clean as the fuel source used to produce it and provides only a quarter the energy as the same volume of gasoline. Ethanol, from corn or sugarcane, contains 33 per cent less energy than the same amount of oil and competes with food production. Already, 18 per cent of U.S. corn now goes to producing ethanol, but provides only one per cent of the liquid fuel used in the U.S.





Charles Hall, professor of Environmental Science at the State University of New York, warns that apart from bicycles, there are virtually no forms of transportation that are not powered by oil and most goods are made with oil. Most jobs would cease to exist without it. Renewables (other than hydropower or wood) provide around one per cent of the energy used in the world, but the annual increase in the use of most fossil fuels is far greater than the total electricity production from wind turbines and photovoltaics.
Governments now plan to spend billions by substantially increasing nuclear generation. Apart from potentially critical contamination risks, even doubling the number of reactors across the world could see commercially extractable uranium ore run out in just 20 years.



According to some energy analysts, the energy commitment required in mining, waste storage and disposal will shortly make the nuclear industry a net user of energy, just when the energy famine begins to hit hard. Unless there is an unlikely breakthrough with fusion power and we drastically cut demand, we are on course to exhaust the energy we need in the lifetime of many people alive today.


Water



The Stockholm International Water Institute calculated in 2008 that 1.4 billion people live in regions where existing water cannot meet the agricultural, industrial and environmental needs of all and only 2.5 per cent of the world’s water is fresh. Today, one person in five has no access to safe drinking water, and one in three lacks safe sanitation.


Around 19% of US energy demand goes into food production. Fossil fuels to meet this demand are declining and many regions are already reaching the limits of their water resources, according to the UN’s World Water Development Report in 2009.


And then there is the impact of climate change. The accelerating icecap melt will make at least a metre rise in sea level probable by 2100, according to the International Panel on Climate Change, threatening the world's major cities and fertile crop-growing deltas. Freshwater glaciers that feed major rivers are shrinking.


If governments won’t talk population, then they are not serious about cutting emissions, managing the water supply, managing food supplies, and a secure quality of life for our people. Look at the facts. Look at the numbers. The problems are here, they're real.


Those who say there is no problem about future resources and energy supplies need to do so on the basis of what is probable, not gamble on what just might be, because the quality of life and the lives of billions of people will depend on having sufficient energy, food and resources once fossil fuels become scarce.



It is not a question of ‘either or’ and who needs to act. We are in this together. Rich nations are consuming too much and populations continue to rise. Legitimate aspirations to raise living standards in high population countries like China and India are consuming ever-more resources. In many developing countries with acute water and food shortages, populations are projected to double or triple in size within 40 years – driving social unrest and migration on a massive scale.


There are several key challenges we have to talk about and face. In particular, ensuring development aid from donor countries delivers fully accessible and properly funded reproductive health care for all, along with equal access to education for girls and women. In many countries there are still barriers to this. We also have to start incentivising welfare systems to encourage fewer births rather than more.


Moral values?




Some people believe they have a right to have as many children as they want, whether they can look after them or not and fail to understand or just ignore the consequences of growing populations. Many commentators wilfully promote an ever-larger population in the name of freedom of choice and growth. There will be precious little choice left if we go on multiplying with no thought for the future.Others claim their religion as an excuse for actions that impact on others: Have large families "in the name of God"; Over-consuming resources? "God will provide" - so we don't need to think about the ecological consequences; and when the day of reckoning and collapse arrives - "It is God's will" - a religious opt-out from moral responsibility.


We have superior intellect to understand the consequences of our actions and the ecological and social devastation that will run like a scourge of misery for billions if population keeps increasing. Do we plan for a secure and better life or do we carry on blindly toward a minefield of lethal limits?


Rights come with responsibilities. Society has a right to expect its citizens to act in ways that do not endanger others. Governments ‘incentivise’ many aspects of our lives for a common good, but the more crowded we become the more governments will police our behaviour and restrict our activities. We still have a choice. The world badly needs a grown-up, rational discussion of the population issue - without blame, abuse and hysteria.


It would be a tragedy if population growth became a catastrophe - a catastrophe we were too polite to talk about. Our children will not thank us for being driven to an abyss.


Brian McGavin is a UK-based writer, analyst and environmental campaigner


"where the streets have no names" -U2

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