Environmentalism is (still) refuted

 

The Simon Abundance Index: 1980-2023 (1980=100)

Several decades ago, gloom-monger Paul Erlich and techno-optimist Julian Simon had a bet.

Erlich was certain resources were running out and humanity was doomed. Simon asserted they weren't and wouldn't be. The bet was that, by the end of that decade, a basket of resources chosen by Erlich would cost more to buy — more, said Erlich, because by then those resources would be running out. Less, said Simon in reponse. (Simon, you see, was confident that the ultimate resource, from which all others derive, is the human mind — a machine for turning shit into useful stuff.) 

Simon won. 

Resources weren't running out. 

They still aren't.

The "Simon Abundance Index" (SAI),which measures the relative abundance of resources since that bet, now stands at 609.4. Meaning that in 2023, the Earth was 509.4 percent more abundant in 2023 than it was in 1980!

How astonishing is that! World population since 1980 has almost doubled; while resources produced by human beings have multiplied by more than five times!! 

Turns out that as global population increases, that "virtually all resources became more abundant. How on earth (literally) is that possible?"

Unlike Erlich and the sundry other doom-sayers who litter the planet today, Simon recognised that without the knowledge of how to use them, raw materials have no economic value whatsoever. They are just so much stuff. What transforms a raw material into a resource is knowledge — knowledge of how that stuff might satisfy a human need, and how to place it in a causal connection to satisfy that need. (The great Carl Menger explained this process way back in 1870!) And since new knowledge is potentially limitless, so too are resources.

 Infinite, because the ultimate resource is the human mind.

In this sense, as George Reisman puts it, environmentalism is refuted.

You would think that when serious problems exist in the world, the world would be desperate to understand the causes. Yet causality, as a field of inquiry, is in decline. The great tragedy, as Finn Andreen explains in this guest post, is that discovering the real and underlying causes for social and economic problems is too often deemed unnecessary (and far too often wilfully ignored), and the public’s support instead is too often for easy, simple, and wrong-headed statist solutions ...

Libertarianism and the Importance of Understanding Causality

by Finn Andreen

Even though support for the free market has become stronger in the last decades, and a self-proclaimed libertarian just elected to President in Argentina, libertarianism itself can still only be considered a fringe movement. Most people still believe that many social problems are due to “market failure” and therefore require state intervention to be “solved.” Despite the obvious flaws of modern socialism—with its unlikely combination of a redistributive welfare state and globalist crony capitalism—and despite libertarianism’s robust philosophical and empirical foundations, the liberalism of Ludwig von Mises is still far from enjoying the majority support that it so amply deserves.

There are many reasons for this. Of course, media bias and public education prevent the dissemination of the ideas of freedom in society and limit the understanding of the free market. However, an often overlooked, yet equally important, reason is a general disregard for causality. When the real and underlying causes for social and economic problems are unknown or misunderstood, the public’s support for wrong-headed statist solutions to these problems is not surprising.

The Importance of Causes

The importance of causes to human inquiry has been grasped since early antiquity, crystalising with Aristotle and his still seminal theory of causality. Following in this tradition, Herbert Spencer considered the discovery of causal laws the essence of science; those who disregard the importance of the identification of causes, he argued -- whatever the subject matter -- are liable to draw erroneous conclusions.

In the Twilight of the Idols, Friedrich Nietzsche chastised modern society for still making errors of causality, namely, “the error of false causality,” “the error of imaginary causes,” and “the error of the confusion of cause and effect.” Unfortunately, these errors are made all too frequently in economic and political life.

In the realm of international relations, for instance, a disregard for contemporary history has led to an ignorance of the real causes of serious political events. Today’s conflicts could arguably have been avoided if their many and deep causes had been soberly and objectively considered by decision-makers. When George Santayana said that “those who cannot remember the past are condemned to repeat it” and when George Orwell wrote in his masterpiece 1984 that mastering the past is the key to mastering the present, both had in mind the crucial importance of knowing the actual causes of political events.

Nietzsche considered the error of the confusion of cause and effect to be the most dangerous one; he called it the “intrinsic perversion of reason.” This was not an exaggeration, considering the impact of this all-too-common reversal of causality. For example, this error happens when the state is absolved of the nefarious consequences of its previous actions, thereby empowering the state to legitimise policies that “solve” problems for which the state was itself originally responsible.

Examples: Recessions, Inflation, and Unemployment

As an example, it is possible to mention the boom-and-bust cycles of the typical state capitalist economy. The original cause for this cycle is the state, through its monopolistic monetary policy. As Murray Rothbard wrote, “The business cycle is generated by government: specifically, by bank credit expansion promoted and fueled by governmental expansion of bank reserves.”

Yet, during hard times—because this original cause of recessions is not generally recognised—the state itself is looked to by society to “save” the economy through measures such as bailouts or interest rate reductions (which mostly benefit big banks and strategic industries). This in turn sets the stage for the next artificial boom, and the cycle continues.

The problem of high inflation and high unemployment may be seen in the same way. Price inflation is caused by the state when its central bank increases the money supply to pay for its chronic budget deficits, with the added benefit of reducing the relative size of its enormous debt. Yet, when prices increase in the economy because of such actions, then the central bank itself is expected to come to the rescue—for instance, by artificially imposing price controls or hiking interest rates, thus slowing economic activity—to the further detriment of society.

High unemployment is also a phenomenon caused by the state, of course, when it imposes rigid labour laws and high taxation on companies, while redistributing “generous” unemployment benefits. Yet, when unemployment becomes “too” high because of these actions, then the state itself is expected to solve the problem—for instance, by providing tax incentives to companies for hiring low-skilled workers or by hiring more civil servants.

The Fallacy of “Market Failure”

It seems counterintuitive to believe that an agent responsible for social problems should also be the one to solve those problems. The only reason this flawed logic continues to be accepted is because of errors of causality. The real causes for economic problems are not well understood by the general public and are often confused with its consequences. In economics, this disregard for causal connections has probably wrecked as much damage upon societies as the international conflicts mentioned earlier by giving free rein to those who see few limits to the state’s regulation of economic and social life.

The same reasoning is applicable to an aspect that is usually blamed on the free market: so-called “externalities,” or the “external” costs that third parties sometimes bear. The extreme case of this is the concept of the “tragedy of the commons,” which is often used to justify the many globalist “green” initiatives to “fight” climate change. Quite apart from whether there are apocalyptic grounds to support such extreme social top-down policies, the libertarian view is that the real cause of many “externalities” is generally that private property rights have not been adequately defined.

Since causality is disregarded, social and economic problems such as those mentioned earlier are generally attributed to so-called “market failure,” thereby reducing the credibility of libertarianism among the general public. Indeed, libertarianism is usually rejected by the majority as a political and economic system because social problems are attributed erroneously to an incapability of the free market to provide solutions. There is rarely any perception that the real causes of these problems are statist interventions in the free market in the first place.

Libertarians have always recognized the importance of causality, as per the title of Mises’s magnum opus Human Action. Carl Menger, the founder of the Austrian School of Economics, explicitly mentioned that, as an important means of gaining insight into economic processes, he had “devoted special attention to the investigation of the causal connections.” Importantly, this was not only the position of the Austrian School at the time: “the search for these causal laws of reality was very much an international enterprise among economists in the last quarter of the nineteenth century and up to World War I.” However, for several sad and tragic reasons, this focus on causal connections in economic research was then lost.

As this article has tried to show, it is essential for causality in both economics and politics to be better understood -- by politicians, economists, and the general public. 

This is key to rein in the authoritarian inroads from governments that are taking place in all areas of life. 

And by demonstrating that the market only fails when it is constantly disrupted by state intervention, a better understanding of causal connections would also lead to an increase in the appreciation and popularity of libertarianism.

In fact, it would improve the standard of thinking all round.

* * * * * 

"Why am I still a skeptic?"

"Now, I have accepted the two basic premises of the Global Warming movement — the two points on which the so-called '97% agree' (so count me among them). I have accepted the lines of evidence that the IPCC offers in support of their hypothesis ('It is unequivocal that human influence has warmed the atmosphere, ocean and land. Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred' and 'It is very likely that well-mixed GHGs were the main driver of tropospheric warming since 1979…') I have even agreed that CO2 is a greenhouse gas and that it is at an historic high.
    "Why am I still a skeptic?
    "I am still a skeptic because all of those things, freely accepted more-or-less as claimed, do not add up to anything even near a 'proof' of the IPCC hypothesis [that] CO2 and other anthropogenic emissions are 'the dominant cause of the observed warming since the mid-20th century'....
    "I would even go as far as to say that the evidence offered up by the IPCC, in their hundreds of pages of painstakingly reviewed and re-reviewed reports does nothing more than present a case for the possibility that the hypothesis could be true.
    "The IPCC and the Climate Science community have, so far, failed to rule out the CO2 driven global warming hypothesis — nothing more. They have, however, shown in their historical reconstructions that the main bodies of evidence their hypothesis relies on — surface air temperature, sea level rise, snow and ice cover — all started changing long before CO2 concentrations could possibly had any appreciable effect.
    "It is an accepted tenet of modern science that an Effect cannot precede its Cause. So here I find myself accepting the major offered data as more-or-less valid (close enough for my purposes) and the evidences offered as more-or-less true, yet I find that proposed CO2-driven Global Warming Hypothesis, in order to be true, would require retrocausality, or, in other words, that the Effects have preceded the Cause.
    "I am a firm proponent of the idea that time flows in one direction only and that the arrow of cause always points forward (past-to-present, present-to-future). That leaves me forced to reject the CO2-driven Global Warming Hypothesis as generally presented."

~ Science research journalist and contributing expert on sea-level and sea-level rise Kip Hansen, from his post 'Why I Don't Deny: Confessions of a Climate Skeptic, Part 2' (Part 1 is here)

"The Phillips Curve model is wrong because Keynesians get causality reversed."

"In fact, the Keynesian Phillips curve model is simply wrong. It’s not wrong because there is no relationship between inflation and unemployment. A sharp fall in both wage and price inflation tends to be associated with a temporary rise in unemployment. Rather the Phillips Curve model is wrong because Keynesians get causality reversed. They assume that causation goes from economic overheating to wage and price inflation, whereas the opposite is more nearly true. To be precise, it is unexpected increases in nominal growth in spending that cause both rising inflation and falling unemployment."

~ Scott Sumner, from his post 'Fortunately, this isn't the Volcker disinflation'

Quote of 2022: "I don’t want an air ticket. I want ammunition."

"[Y]ou can’t really be an historian without a philosophy of history. You have to understand the nature of causation. These days, nobody bothers with that, which is why a lot of academic history is garbage ... There [is] a very central problem, namely that any causal statement ... implies a counterfactual....

    "Lewis Namier was a great Cambridge historian who said that the key to history was having a sense of what didn’t happen. And I always think of Thelonious Monk’s line about jazz. 'It’s the notes you don’t play.' And as a jazz fan, I think history has to have that kind of Thelonious Monk feel to it where you’re telling the reader, 'This didn’t happen, but it nearly did, and people at the time thought about it.' ...

    "[T]here is [therefore] a very important role for contingency, and that continues to be true today.... Contingency here means a relatively small event or decision. And it doesn’t need to be a decision. It can be something accidental, [that] has very major consequences. And historical causations like that, something relatively small, can have tremendous ramifications.
    "I’ll give you [a contemporary] illustration. This year, most people, including the US government, thought that if Russia invaded Ukraine, the Ukrainian government would quite quickly fold, and it was assumed that Volodymyr Zelenskyy, the Ukrainian president, would bail. He didn’t. He gave his famous response, 'I don’t want an air ticket. I want ammunition.' And Zelenskyy’s courage when they were closing in on Kyiv with a high probability that they [the Russians] would assassinate, turned the course of history in a way that I think is now quite widely understood....
    "[I]t emboldened ordinary Ukrainians not to fold, and it also intimidated the collaborators who were ready to help the Russians, not to act. So the contingency there is if Zelenskyy had gone according to our expectation and taken the plane, then Putin would’ve had Kyiv within a matter of days or weeks, and the war would be over.
    "So I think one of the things that’s exciting about the study of history is you are trying to remind yourself again and again that what happened, that what we know happened, might have gone the other way. That the Cuban Missile Crisis ended in both sides essentially backing down was not predetermined. There was a moment when a Soviet submarine commander gave the order to fire a nuclear torpedo at US naval surface ships. So we came within a hair’s breadth of World War III. These alternate worlds, these histories that didn’t happen, have to be alive in your mind when you are writing history.
    "The fatal mistake is to write history as if it was bound to happen the way it happened. And this, of course, is the mistake that a great majority of historians make. Forgetting that, we don’t know at the time, at the moment, we didn’t know the morning of the 24th of February that Zelenskyy would stand his ground. Nobody knew that. I wonder if even Zelenskyy at that moment knew what it was that he was going to do.
    "So I say all this because I think it’s really important to convey ... how exciting history is, and how studying it makes you understand the course of events in your own life better -- removes that passivity to which people sometimes succumb. If you think great historical forces are going to have inevitable outcomes, if you have a deterministic view of the historical process, it’s very easy to lapse into fatalism. (There’s the other trap, which is the conspiracy theories. 'Well, the truth of the matter is that actually, Soros and the Rothschilds are orchestrating all this.' Again, you throw up your hands and you abandon the attempt to understand how the historical process works.)"

~ Historian Niall Ferguson, in conversation with Tim Ferriss, taken from 'The Tim Ferriss Show Transcripts: Niall Ferguson, Historian — The Coming Cold War II, Visible and Invisible Geopolitics, Why Even Atheists Should Study Religion, Masters of Paradox, Fatherhood, Fear, and More'

Here's Thelonious Monk... 

"Must I?"

"Another way many of us think unclearly is by going through life with a list of made-up obligations. We wake up in the morning with a long list of 'must do' items. After a while, our feet start dragging and we feel a heavy burden on our shoulders. But we 'must' press on. Such phoney obligations get in the way of clear thinking.
    "There is very little in the world that we actually must do. Let’s face it, unless we are in jail or otherwise detained, we have complete freedom about how to spend our day. The reason we don’t just pack up and go sit on the beach every day is that our actions lead to outcomes—and many of our 'have to’s' give us the outcomes we want. Going to work, for example, provides camaraderie and a feeling of importance, as well as the money to buy the things we need and want. The 'I must' person tells himself that he must go to work. The clear-thinking person says, 'If I work at this job for another year, I’ll be able to buy a house. I could quit my job today, but if I want that house a lot, I’d better show up for work on Monday morning.'
    "The 'I must' attitude increases our burdens and lessens our humanity. When we have goals in mind, we should reframe the issue from 'I must' to 'I want.' I want to go to work so that I can feed my kids, buy a car, buy a house, or change the world. If my goals don’t seem to justify the effort, then maybe I should rethink my goals and my overall strategy. When we act with clarity of mind, we cease being a fake prisoner and realise our true freedom."

          ~ David Henderson, from his post 'Yes, I Can'