Global Warming Today and Yesterday

The Arctic is melting, and therefore we have to curb our carbon dioxide emissions. This message is repeated over and over again by environmentalists and climate alarmists. Here is a typical scare story:

The Arctic Ocean is warming up, icebergs are growing scarcer and in some places the seals are finding the water too hot, according to a report to the Commerce Department yesterday from Consulafft, at Bergen, Norway

Reports from fishermen, seal hunters, and explorers all point to a radical change in climate conditions and hitherto unheard-of temperatures in the Arctic zone. Exploration expeditions report that scarcely any ice has been met as far north as 81 degrees 29 minutes.

Soundings to a depth of 3,100 meters showed the gulf stream still very warm. Great masses of ice have been replaced by moraines of earth and stones, the report continued, while at many points well known glaciers have entirely disappeared.

Very few seals and no white fish are found in the eastern Arctic, while vast shoals of herring and smelts which have never before ventured so far north, are being encountered in the old seal fishing grounds. Within a few years it is predicted that due to the ice melt the sea will rise and make most coastal cities uninhabitable.

Sounds familiar, doesn’t it? There is only one problem with the story: It was published in The Washington Post in November 2, 1922.[1]

If this report was accurate when it was made, we have had Arctic melting for over 90 years, and most, if not all, coastal cities are still inhabitable. But the report may of course be inaccurate and based on selective data. But climate alarmism was not yet born in 1922, and the politicians of the time did not see the potential of using such reports to enhance their own powers. And neither was modern environmentalism born. It would be many years before Norwegian philosopher Arne Næss was to propose that the human population should be reduced to 100 million in order to prevent… well, such things as the Arctic melting and making coastal cities uninhabitable.

Let’s move on to 1974. At that time there was serious concern that we are entering a new ice age. See this link[2], from which I quote:

Weather satellites sweeping across the Northern Hemisphere have come up with a surprise: The permanent snow and ice cap has increased sharply.

The finding is cited as one more indication of what some climatologists believe to be a basic change in the world’s climate, a cooling trend.

The trend could affect weather and rainfall patterns, perhaps impairing the world’s ability to produce enough food for the expanding population, according to a number of authorities. […]

In the United States, the leading proponent of the changing climate theory is Reid A. Bryson, director of the Institute for Environmental Studies at the University of Wisconsin.

“The evidence is now abundantly clear”, Bryson has said, “that the climate of the Earth is changing, and is changing in a direction that is not promising in terms of our ability to feed the world.”

I have looked up Reid Bryson, and he seems to have been a serious scientist who was also honest enough to later admit that his prediction was wrong. Later on he maintained that the earth is indeed slowly warming but that the carbon dioxide emission had nothing to do with it; he thought that we are in a natural warming cycle and are still coming out of the “little ice age”.

Today, climatologists seem to agree that there a slight warming trend but are very much divided on the question of its extent and, above all, on what causes it.[3] But climatology has been politicized – this is why we hear all the time that there a broad consensus that global warming is anthropogenic and that the issue is settled and no further discussion necessary. Politicians simply love their own power and their ability to meddle with our lives, and the demise of industrial civilization is a price they are willing pay – or rather, make the rest of us pay.

Meanwhile, 100 million followers of Arne Næss want to see the rest of us – approximately 6.9 billion human beings – dead.

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[1]) Thanks to my FB friends Frank Schulwolf and Stuart Hayashi for drawing my attention to this report.

[2]) I found it on a Facebook group called Climate Change Lies.

[3]) Logically, I can see four different alternatives (with many gradations in between):

1. There is no global warming.

2. There is global warming, but carbon dioxide emission have nothing to do with it; they are part of natural, non-anthropogenic fluctuations.

3. Carbon dioxide emissions have some effect, but it is negligible compared to natural fluctuations.

4. No, on the contrary, carbon dioxide emissions are responsible for most of the global warming, and the natural fluctuations are negligible in comparison.

I don’t believe in alternative (1), and alternative (4) is simply absurd. Yet, this is the alternative we are told to accept by the climate alarmists and the politicians.

(I have discussed this in a Swedish blog post on the subject.)

Correlation and Causation

(This is an adaptation of a Swedish blog post I wrote a couple of days ago.)

People who are in favor of gun control probably don’t read this blog. It is simply too obvious that criminals prefer disarmed victims to armed ones. It is equally obvious that dictators and would-be dictators prefer a disarmed population to an armed one. Not understanding this is stupid – and I wouldn’t insult my readers by assuming they are stupid, would I?

But there is a certain argument one hears once in a while: If one points to statistics that confirm that fewer crimes are committed when people are allowed to wear arms, one will hear that this is an invalid argument, because “correlation isn’t causation”.

Now, correlation isn’t necessarily causation. Some statistical correlations are mere coincidence. At best, correlation shows that there some causal connection to look for. To take a familiar example, smokers contract lung cancer more often than non-smokers. That means one should look at the possibility of a causal connection. On the other hand, not every smoker contracts lung cancer – and sometimes even non-smokers contract lung cancer. What this implies is that there is a causal connection to look for, but that there are also other factors involved.

On the other hand, causation always and necessarily implies correlation. For example, the law of gravity implies that the vast majority of things one drops will fall to the ground, and if some things do not fall to the ground, one will have to look for the factor that counteracts gravity. If a leaf or a feather does not hit the ground, or does it with a delay, this is explained by air resistance. If birds and airplanes manage to fly, it is because of a cause that counteracts gravity, and therefore birds fall to the ground only when they are shot, and an airplane (or a space ship) only when its motor for some reason stops working properly.

And in the case of gun control failing to avert crime and even causing crime, the cause is equally obvious. Criminals may be intelligent or stupid, but they are never so stupid as to choose armed victims when there are disarmed victims to attack. Neither would a dictator, or a would-be dictator, fail to realize that an armed citizenry would be a formidable obstacle. Not even a madman on a shooting spree would miss this.

It has been pointed out, time and time again, that mass shootings in the vast majority of cases have been perpetrated in “gun free zones”, and that they never occur at shooting ranges where every potential victim is already armed. It has also been pointed out that crime rates rise when guns for self-defense are outlawed. It is simply ridiculous to say that this is a mere statistical coincidence and that it is a correlation that does not prove causation. We know the causation and should not be surprised by the correlation.

Even proper ideas can be misused, and this is an example.

New Kindle Book by George Reisman

George Reisman has published a new Kindle book called The Benevolent Nature of Capitalism and Other Essays, which is available from Amazon for $5.74. The title essay may be regarded as a condensed (well, very condensed) version of his magnum opus, Capitalism: A Treatise on Economics; the rest of the essays are elaborations on various aspects of capitalism. They have all been published earlier, but some of them, e.g. “Capitalism: The Cure for Racism” and “Education and the Racist Road to Barbarism”, may be hard to find today.

For Scandinavian speaking readers: Two of those essays, Freedom and The Toxicity of Environmentalism are also available in Swedish translations, and I am currently working on translating the title essay.

Taxing the Rich Makes Us Poorer

That taxing the poor makes the poor even poorer is not exactly rocket science. It would be a great boon to the poor man if the income tax and the value-added tax were simply abolished. In Sweden (and I believe in most countries) alcoholic beverages and tobacco products are heavily taxed; those taxes obviously hurt the poor much more than the rich: the poor man may have to quit drinking and smoking just to be able to afford his daily food and paying the rent for his apartment; while the rich man may enjoy his vintage wines and his Habana cigars without it making a dent in his fortune. (In the category of “rich” are also included the politicians who levy the taxes.) The rationalization for this is that it is necessary to preserve the poor man’s health.

At least here in Sweden, gasoline and electricity are also heavily taxed; this is part of the effort to “save the planet” from the results of industrialization. The relatively poor – those who can at least afford a car – are made to pay extra for driving to and from their work; but it does not make a dent in the fortune of Al Gore, who is able to afford a well-lit mansion and to drive in a limousine or fly by private airplane while traveling the world to preach austerity to the rest of us.

But what about exclusively taxing the rich and hand the money out to the poor (after a handsome deduction for paying the politicians and their henchmen other public servants)? Here is a quote from Ayn Rand:

In view of what they hear from the experts, the people cannot be blamed for their ignorance and their helpless confusion. If an average housewife struggles with her incomprehensibly shrinking budget and sees a tycoon in a resplendent limousine, she might well think that just one of his diamond cuff links would solve all her problems. She has no way of knowing that if all the personal luxuries of all the tycoons were expropriated, it would not feed her family – and millions of other, similar families – for one week; and that the entire country would starve on the first morning of the week to follow. […] How would she know it if all the voices she hears are telling her that we must soak the rich?

No one tells her that higher taxes imposed on the rich (and the semi-rich) will not come out of their consumption expenditures, but out of their investment capital (i.e., their savings); that such taxes will mean less investment, i.e., less production, fewer jobs, higher prices for scarcer goods; and that by the time the rich have to lower their standard of living, hers will be gone, along with her savings and her husband’s job – and no power in the world (no economic power) will be able to revive the dead industries (there will be no such power left). (“The Inverted Moral Priorities” in The Voice of Reason, p.  274.)

This is what taxing the rich will inevitably accomplish: less investment, fewer jobs, higher prices, scarcer product, and in the end (if practiced consistently enough) starvation.

This point is also stressed by “Austrian” economists, especially by George Reisman. There is an essay by Reisman on the Ludwig von Mises Institute’s web site, called Anti-Obamanomics: Why Everyone Should Be in Favor of Reducing Taxes on the “Rich”, from which I quote:

The progressive personal income tax, the corporate income tax, the inheritance tax, and the capital-gains tax are all paid with funds that otherwise would have been saved and invested. All of them reduce the demand for labor by business firms in comparison with what it would otherwise have been, and thus either the wage rates or the volume of employment that business firms can offer. For they deprive business firms of the funds with which to pay wages.

By the same token, they deprive business firms of the funds with which to buy capital goods. This, together with the greater spending for consumers’ goods emanating from the government, as it spends the tax proceeds, causes the production of capital goods to drop relative to the production of consumers’ goods. This implies a reduction in the degree of capital intensiveness in the economic system and thus its ability to implement technological advances. The individual and corporate income taxes, and the capital-gains tax, of course, also powerfully reduce the incentive to introduce new products and improve methods of production. In all these ways, these taxes undermine capital accumulation and the rise in the productivity of labor and real wages, and thus the standard of living of everyone, not just of those on whom the taxes are levied.

And later on:

Starting with tax cuts for the so-called rich — based on equivalent reductions in government spending — is the only hope for the resumption of significant economic progress, indeed, for the avoidance of economic retrogression and growing impoverishment. Because of this, it is actually the quickest and surest road to any major reduction in the tax burden of the average wage earner. It holds out the prospect of the average wage earner being able to double his standard of living in a generation or less. The average standard of living would double in a single generation if economic progress at a rate of just 3 percent a year could be achieved. Such economic progress would also mean a halving of the average wage earner’s tax burden in the same period of time — if government spending per capita in real terms were held fixed, for then he would have double the real income out of which to pay his present level of taxes. And then, of course, once all the taxes that most stood in the way of capital accumulation and economic progress were eliminated, further reductions in government spending and taxation could and should take place that would be of corresponding direct benefit to wage earners, that is, show up in the reduction of the taxes paid by them.[1]

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But if there should be no taxes on the poor and no taxes on the rich, what taxes should there be? Who, then, should pay the salaries of our politicians and their henchmen other public servants? Or should there be no politicians and no government at all? Should the proper functions of government (as some anarcho-capitalists suggest) be taken over by insurance companies? At least, they would not levy taxes but be paid voluntarily.

Well, as you probably know, Ayn Rand addresses this question in her essay “Government Financing in a Free Society” in The Virtue of Selfishness. I quote parts of it:

In a fully free society, taxation – or, to be exact, payment for governmental services – would be voluntary. Since the proper services of a government – the police, the armed forces, the law courts – are demonstrably needed by individual citizens and affect their interests directly, the citizens would (and should) be willing to pay for such services, as they pay for insurance.

And here is her proposal:

As an illustration (and only as an illustration), consider the following possibility. One of the most vitally needed services, which only a government can render, is the protection of contractual agreements among citizens. Suppose that the government were to protect – i.e., to recognize as legally valid and enforceable – only those contracts which had been insured by the payment, to the government, of a premium in the amount of a legally fixed percentage of the contractual transaction. Such an insurance would not be compulsory; there would be no legal penalty imposed on those who did not choose to take it – they would be free to make verbal agreements or to sign uninsured contracts, if they so wished. The only consequence would be that such agreements or contracts would not be legally enforceable; if they were broken, the injured party would not be able to seek redress in a court of law.

And later on:

When one considers the magnitude of the wealth involved in credit transactions, one can see that the percentage required to pay for such governmental insurance would be infinitesimal – much smaller than that paid for other types of insurance – yet it would be sufficient to finance all the other functions of a proper government.

And:

Men would pay voluntarily for insurance protecting their contracts. But they would not pay voluntarily for insurance against the danger of aggression by Cambodia. […] A program of voluntary government financing would be amply sufficient to pay for the legitimate functions of a proper government. It would not be sufficient to provide unearned support for the entire globe.

And I have to quote this paragraph:

It may be observed, in the example given above, that the cost of such voluntary government financing would be automatically proportionate to the scale of an individual’s economic activity; those on the lowest economic levels (who seldom, if ever, engage in credit transactions) would be virtually exempt – though they would still enjoy the benefits of legal protection […] These benefits may be regarded as a bonus to the men of lesser economic ability, made possible by the men of greater economic ability – without any sacrifice of the latter to the former.

So under this proposal, the taxes would, predominantly, maybe even exclusively, be paid by the rich. But it certainly wouldn’t have the effects that taxes on the rich have today.[2]

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What, then, are the chances of such a tax reform ever being implemented? Pretty slim, I would say. In today’s world, non-existence. But maybe in some distant future. As Ayn Rand writes in her essay

…the principle will be practicable only in a fully free society, a society whose government has been constitutionally reduced to its proper, basic functions. […] Any program of voluntary government financing is the last, not the first, step on the road to a free society – the last, not the first reform to advocate.

If we were to argue for such a reform today, would the politicians even listen?

One obvious stumbling block[3] is that a fully free society would mean fewer politicians and government employees than we have today – fewer by a large extent. Would today’s politicians and government officials voluntarily step down, take their place in the market economy and leave the rest of us alone and only interfere in our lives when our rights have been violated?

A political career is quite lucrative today. Politicians grant themselves quite handsome salaries – and when they are voted out of office (which does happen, sometimes), they also grant themselves quite handsome pensions; they do not even have to begin looking for other jobs, if they don’t feel like it. And if they do feel like it, they take well-paid jobs as lobbyists, without having to relinquish their handsome pensions. (At least, this is the case here in Sweden, but I do not think it is much different in the rest of the Western world.) With a government “constitutionally reduced to its proper, basic functions”, this would not be possible.

So, judging by the situation today, I have to be pessimistic. And the distant future is – well, distant.

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[1]) This part of the essay is adapted from Capitalism: A Treatise on Economics, p. 308-310.

[2]) Ayn Rand’s essay does not seem to be available on the web, so you will have to buy the book. – There is a good elaboration on her essay by Craig Biddle of The Objective Standard; if you are not a subscriber, you can download it for the modest price of $3.95.

[3]) Another stumbling block is (to use George Reisman’s words) “massive ignorance of economics”. It will take, at best, a generation to uproot “mainstream” economics and replace it with sound, “Austrian” ideas.

Communism vs. Capitalism

This is an old Soviet poster depicting the difference between communism and capitalism. To the left, the exploited worker under capitalism; to the right, the same worker under communism. See anything wrong here?

I got this picture from Wladimir Kraus on Facebook. I quote his comment:

This Soviet poster describes lives under capitalism and socialist USSR.

Under capitalism: the overworked worker is barely able to survive on his meager wage, while the fat capitalist sits on sacks of gold–wealth serving his greed and war lust.

Under socialism: a well-fed and well-dressed worker is happily carrying loads of merchandise; in the background are university, cinema, factories–wealth serving the masses.

Of course, by now everybody knows that nothing could be further from the truth. It is, to be precise, exactly the opposite! Still, it seems that little has changed in the public’s fundamental understanding of how capitalism operates and whom it benefits.

Under capitalism capitalist wealth is at the service of the buying public, i.e. the workers. Workers far from being exploited by that capital are directly benefited by the wealth of the richest capitalists precisely because they do not keep that wealth in the form of cash (or gold) but invest it in capital goods and use it to pay wages.

My own comment is that this would be funny, if it weren’t tragic. There are still people who believe the worker is exploited under capitalism and that communism will pour a horn of plenty on him. That this is praxeologically wrong may be hard to see for those unacquainted with sound economics; but is it really hard to see that it is empirically wrong?

”Royal Swedish Envy”

This is a common expression in Swedish: Whenever a Swede shows signs of envy, another Swede rushes in and says this is an example of “Royal Swedish envy” – as if envy were an emotion particularly and peculiarly Swedish, not to be found in Denmark, Norway, Finland, much less then in countries outside of Scandinavia.

Why blog about this? Well, The Economist recently published a short piece called Who’s Shrugging now, dealing with Ayn Rand’s influence in Sweden. I quote:

Sweden might seem an odd place to foster a Randian movement. In 1976 she decried its welfare state as “the most evil national psychology ever described” […]

So how did Ayn Rand arrive at this conclusion? Did she travel extensively in Sweden and talked to many Swedes to discover what our national psychology is like? Well, no.

The quote is from Ayn Rand’s very last Ford Hall Forum lecture, “The Moral Factor” (April 11, 1976), also issued in pamphlet form. Among other things, the lecture discusses the case of Ingmar Bergman, who was arrested in 1976 on a charge of tax evasion. I quote from the pamphlet:

Harry Schein, chairman of the Swedish Film Institute, and a friend of Mr. Bergman, said: “’There is something very Swedish about this whole case. The idea of people saying “you can’t get away with anything.” We call it “the royal Swedish envy,” and it’s 400 years old.’ He added: ‘One of the reasons Swedish equality is so advanced is that the motive behind it is not just socialism, but an active dislike of people who are supposed to be better. You have to cut people down. Everyone must be equal. Make someone who’s exceptional feel unexceptional.’”

This, I submit, is the most evil national psychology ever described. This is the bottom of the moral abyss. Many of you have read my essay on “The Age of Envy,” which deals with what I regard as the lowest evil: hatred of the good for being the good. It is shocking to read of an entire nation committed to that kind of hatred. Yet such is the base of the Welfare State and the motive required to hold it together.

It is, indeed, “shocking to read of an entire nation committed to that kind of hatred”. It is even more shocking to hear this of the nation where I was born and have lived most of my life – and to learn that throughout my life, I have been surrounded by “haters of the good for being the good”, without even noticing it. What does this tell about my powers of observation, and of my ability to induce from my observations, even in a case where there is an abundance of concrete instances to induce from?

Enough sarcasm. – Certainly there are some bad people in Sweden, just like everywhere else. And certainly a majority of Swedes support the welfare state. But I believe in most cases, this is simply because they do not understand better. A few of them might be motivated by this “hatred of the good for being the good”; but those people are in a minority in any nation or culture.

What is the line of reasoning here? There is a slightly jocular expression in the Swedish language; this is taken to be representative of the national character, or national “sense of life” of the Swedish people; and then the conclusion it that Sweden is the most envious country on earth.

I am not much of a patriot; but neither do I think the entire Swedish people should be condemned on such a flimsy basis.

Precious Metals Inflation?

In the past, I have written extensively on the evil of inflation and of fractional reserve banking; and I have pointed out, time and again, that newly created money reaches some people before prices have risen and others after prices have risen; and that this is a way of defrauding the latter category. Nobody has been intelligent enough to ask me the question: “Would this not also be true with an increase in the precious metals? If a vast new gold and silver mine were to be discovered and mined, would this not have the same effects?” Since I am intelligent enough to ask this question, I will also answer it.

First, this is what Ludwig von Mises has to say:

If the supply of caviar were as plentiful as the supply of potatoes, the price of caviar—that is, the exchange ratio between caviar and money or caviar and other commodities—would change considerably. In that case, one could obtain caviar at a much smaller sacrifice than is required today. Likewise, if the quantity of money is increased, the purchasing power of the monetary unit decreases, and the quantity of goods that can be obtained for one unit of this money decreases also.

When, in the sixteenth century, American resources of gold and silver were discovered and exploited, enormous quantities of the precious metals were transported to Europe. The result of this increase in the quantity of money was a general tendency toward an upward movement of prices in Europe. In the same way, today, when a government increases the quantity of paper money, the result is that the purchasing power of the monetary unit begins to drop, and so prices rise. This is called inflation. (Economic Policy: Thoughts for Today and Tomorrow, p. 55.)

So, yes: An increase in the amount of precious metals will have this inflationary effect; and it is also true that also in this case the money would reach some people first and others only later. But there are some important differences between this and paper money and/fractional reserve inflation.

First of all: Who will be the first ones to receive this new money? The persons who mine the metals and those who then mint it. But this is eminently just: It is simply their payment for the work they have done. This cannot be compared with the “work” of a counterfeiter, be he a private criminal or a central bank.

Second: Fiat paper money and fractional reserve money pretend to be real money, although they are not. But a new gold or silver coin does not pretend to be anything else than it really is.

Thus, there can be no moral objection to this kind of increase of the money supply. But there is a more practical point that needs to be stressed – if only to show, once again, that the moral is the practical.

Both fiat money and fractional reserve money (fiduciary media) will eventually disappear. They are created “out of thin air” and will eventually disappear into the same thin air. Fiat paper money will inevitably someday lead to hyperinflation, and the paper currency will collapse. As for fiduciary media, they will disappear the day the inflation bubble bursts and we get a depression.

By contrast, gold and silver once mined remains in existence, and so do gold and silver coins once coined. They cannot disappear. (Even the gold and silver occasionally lost in ship wrecks may one day be retrieved.) For this reason – and this one of the important things one can learn from George Reisman, in particular – it is not just inflation proof, it is also deflation proof.

Earlier on this subject:

Debating Fractional Reserve Banking
A Belated Open Letter to Ayn Rand on Fractional Reserve Banking
More on Fractional Reserve Banking
Fractional Reserve Banking Yesterday and Today
Should Pick-Pocketing Be Legalized?
Is “Fractional Reserve Banking” Compatible with Objectivism?

And, in Swedish:
Varför “fractional reserve banking” bör förbjudas
“Fraktionella reserver” än en gång