A regular green claim is that, for the sake of the planet, we can’t afford any more economic growth. How many times have you heard something like the following:
The other tough reality demanding more honest business reflection is the incompatibility of further, orthodox economic growth in the OECD with the 2C target. The structure of markets relying on the shareholder model also demands that companies must grow. But the best analysis available suggests that growth in OECD countries cannot be squared with halting warming at 2C, 3C or even 4C.
Where are the companies brave enough to even ask the question of what the optimal size of a company might be, after which it should grow no further, and how that company should be governed and function with regard to investors?
What would a world without economic growth really be like?
At first we probably wouldn’t notice. Next year would be much the same as this year. But there would be an important but subtle difference, which would become more apparent with every passing day.
Capitalism is not a zero sum game, because of growth. It is possible for me to become wealthy, without harming anyone, because the total sum of all wealth can be expanded. If someone creates a new wonder drug which helps cure cancer, or a new educational game for your kids which dramatically improves their school results, nobody is hurt – everyone benefits. The sum of global wealth is increased, because there are fewer sick people, or because you have more leisure time to spend with your kids, rather than nagging them to do more homework. That is the essence of wealth creation.
Remove the growth, and something terrible happens. People can still become wealthy – but only at the expense of everyone else. The economy is not allowed to grow. You can’t stop people from innovating – but to suppress growth, you have to make everyone poorer, every time an innovation arises which in the normal scheme of things would have caused economic growth. An enforced zero growth economy turns achievement and success into exploitation.
How can growth be suppressed? The simplest way is to put a price on carbon.
For example, consider the EU emissions trading scheme. All businesses over a certain capitalisation were allocated a ration of carbon credits, based on their history of energy usage.
This created a myriad of perverse incentives. For example, any business which created a new product, had to pay a penalty for their achievement, by buying more carbon credits off less innovative competitors.
Thankfully these destructive practices mostly ground to a halt, when the European carbon price collapsed – in my opinion, most likely because many of the EU member states tried to cheat, to give their own national markets an unfair advantage, which resulted in an embarrassing oversupply of carbon credits across the EU.
However, even a pure auction system would in my opinion act as a growth suppressant – under an auction system, big businesses which control large pools of carbon credits get to gang up on small innovators, by forcing them to pay a premium for the carbon credits they would need, to profit from their innovations.
Some innovation, energy efficiency related innovations, might still be possible – but at the very least carbon pricing takes the focus off product improvement, and refocusses businesses on reducing energy use, by any means possible – say by switching off the heating in winter, like a fairy tale scrooge callously mistreating their workers.
An enforced zero growth economy is a cruel economy. Because when economic growth is suppressed, individual innovation, thought, humanity’s greatest asset, is turned into an instrument of pain. In an enforced zero growth economy, the ambitious only become wealthy, by making everyone else a little poorer.
if my memory serves me right that recipe was already tried and miserably failed by the marxist regimes.
In the old Soviet Union the maxim was “we pretend to work, they pretend to pay us”.
Want to see a zero growth economy?…Go to Cuba.
Tons of doctors…no sheets.
Tons of people…no food.
Tons of work to be done w/no one doing it…no money.
A friend told me that he though Cubans had the right idea…in that they didn’t get upset by anything. I responded by saying They have NO choice and NO chance at bettering themselves…so why would they get upset at anything once they’ve accepted that?
And I believe that doesn’t represent “enlightenment”…it respresents hopelessness.
the Cuban model is deceptively simple. it is illegal to start a business. it is as simple as that. say for example you are a fantastic car mechanic. you cannot open a shop repairing cars. only the state can do that. so, you either work for the state auto repair company, or you don’t repair cars.
since only the state can open a car repair company, this eliminates all price competition for car repairs. you either pay what the state run company says the repairs will cost, or you skip the repairs. there is no second quote from the other repair company down the street, because there is no other company down the street.
the end result is that the repairs are too expensive for anyone to afford, so they go without, and as a result their are no jobs repairing cars. no workers gets taken advantage of by employers, because there are no workers and no employers. the beauty of centrally planned economy is that this is infinitely sustainable.
Obviously cars are getting repaired. All the cars on the Cuban roads are from the 1950s. http://mashable.com/2014/12/25/cuba-classic-cars/
You can bet people are bartering to get their cars fixed.
Freedom and free markets are inseparable.
All true…with the addition of the black market economy that no one wants to admit exists. So there’s another car shop, with another mechanic, and it’s illegal, and it pays off some official somewhere so that it can operate.
I read an article by a journalist in Cuba. Want parmesan cheese?…better find a black market food supplier.
I’m more and more convinced Cuba is Cuba because Americans want to have a Castro and communism there. Just open trade and travel as much as you can, and Castros will be gone for good.
“Allowing the sale and purchase of cars in 2012 drove prices incredibly high. A Peugeot running $53,000 in the UK, for example, can reach prices as high as $262,000 in Cuba”
I spent three months in Eastern Europe back in 1985 and it seemed to me that much if that economy was underground and everyone was on the take. In reality, capitalism flourished under communism but was quite restricted of course.
In Romania the official exchange rate was about 40 Lei to one dollar. At any hotel lobby or resteraunt I could get 800.
The gasoline ration was 10 liters a month but with dollars I could get gas anytime, day or night for 30 cents a gallon.
The station attendant would get dollars for gas then exchange on the black market and make 3 months wages on one tank of gas.
Capitalism was alive and well.
“All the cars on the Cuban roads are from the 1950s”
What, no catalytic converters?
Thank you Jimmaine.
I’ve been to Cuba under Fidel Castro.
I’ve also been to East Berlin and East Germany under the Honecker regime – through Checkpoint Charlie just before the fall of the Berlin Wall.
Your comments are accurate – terrible governments – the destruction and waste of so many lives.
This is the result of allowing doctrinaire scoundrels and imbeciles to gain political power. These people are of limited intellect, and they adopt a rigid political position despite overwhelming evidence that they are wrong and their beliefs have led to human and economic disaster.
If this sounds a lot like the warmist movement, it is no accident.
See Greenpeace co-founder Patrick Moore’s 1994 essay at
http://www.ecosense.me/index.php/key-environmental-issues/10-key-environmental-issues/208-key-environmental-issues-4
Thank you, Allan and thank Eric for this wonderful quote.
“An enforced zero growth economy is a cruel economy. Because when economic growth is suppressed, individual innovation, thought, humanity’s greatest asset, is turned into an instrument of pain. In an enforced zero growth economy, the ambitious only become wealthy, by making everyone else a little poorer.”
Marxist, socialist, communist, world government, fascists, and big government usurping more and more freedoms all want the same thing–power and money, and fame at the public expense. The ACGW movement is just another of these anti-freedom movements manifesting the same old objectives.
Personal liberty and economic liberty produce wealth and the general welfare as no government policies ever have or ever will. Many empires have grown rich and powerful, but their totalitarian governments build wealth and power by confiscation of wealth and power first from the conquered and then from the general public. These empires are literally built killing, hurting, and confiscating wealth to make those they rule poorer and poorer. So any government limitations on personal and economic freedom are inherently cruel and destroy much of the good in human spirit.
The rock band Rush stated the case very well, in the song titled: “Heresy” (Album: Roll The Bones, 1992):
“All around that dull gray world from Moscow to Berlin
People storm the barricades, walls go tumbling in
The counter-revolution, people smiling through their tears
Who can give them back their lives
And all those wasted years?
All those precious wasted years
Who will pay?
All around that dull gray world of ideology
People storm the marketplace and buy up fantasy
The counter-revolution at the counter of a store
People buy the things they want and borrow for a little more
All those wasted years
All those precious wasted years
Who will pay?
Do we have to be forgiving at last?
What else can we do?
Do we have to say goodbye to the past?
Yes, I guess we do
All around this great big world, all the crap we had to take
Bombs and basement fallout shelters, all our lives at stake
The bloody revolution, all the warheads in its wake
All the fear and suffering, all a big mistake
All those wasted years
All those precious wasted years
Who will pay?”
Written about the time of the fall of the Berlin Wall. Who would have thougt that fall had merely released the Red Menace, filling them with a terrible resolve to dissolve the Western World from within (See; Agenda 21, ICLEI).
For your continued thought,
MCR
jimmaine
One can easily make the argument that the Soviet Union (Russia) was “docile” under the Communists because they “bred out” those who complained or who “got upset” by change and by the lack of progress under the czars and Byzetiume controls: Any who complained were killed, were starved, were exiled to Siberia and had their lands, their businesses, their families destroyed by the czars’ agents and the communists’ secret police for hundreds of years.
If you “breed” for capitalists and for people who seek new ideas, you get families who desire change and growth and new ideas. Those who fear change and who fear the “risks” of success and the risks of changing things stay in one place (European-style cradle-to-grave feudal socialism, eastern states’ central cities) and do not emigrate to the dangers of new places (the colonies on the east coat, then the frontier, the Midwest, the far west, the America’s in general – and add South Africa, India, Australia, New Zealand.) Australia respects its early “rebels” and prisoner traditions – because they did “try” to change things against the “cities” in olde England. (Illegally change things certainly, but they at least tried to change things. ) A king is “stable”. A king (or dictator) is friendly to those who support the king and the dictator. A friendly dictator is a treasure to the friends of the dictator in Big Government and Big Finance and Big Business and Big Universities who need Big Budgets.
But the Soviets? The czarist Russians? The thousands of years of oppression and central control in China? What does that “breed” when those who try to change things face an endless bureaucracy of “peer approval” written in the “law of the books” and enforced with the whip, the chains, and the bureaucracy’s taxes?
“Soviet Union (Russia) was “docile” under the Communists because they “bred out” those who complained or who “got upset” by change and by the lack of progress ”
That’s a massive euphemism. Stalin sent 20 million to the labor camps. One particular ‘class’ of people singled out were the ‘kulaks’, they were the farmers who were enterprising enough to have more than 25 acres of land. They were killed, by the millions.
You are right. Tyranny is stable, static, and unchanging. It’s death.
Freedom is dynamic, unstable and changing. It’s life.
We are being told to fear (climate) change. And the solution we are told is enforced stability.
Obliquely related to the article and your comment, I fond this post saddening.
Oops. Here’s the link I was trying to share. http://imgur.com/gallery/Uv3jy
There is a lot of energy in the universe and I’ve long predicted that man will not ultimately use all of it.
================
Where does all the energy go? The sun turns matter into energy, but where is energy being turned into matter? Allowed to continue this would lead to a Universe full of energy, which is clearly not sustainable. Don’t we need a tax on fusion to correct the imbalance?
Maybe it should be a tax on Entropy. To make this work, I think we need the Team to manufacture a couple of papers. First we need a nice tidy picture showing that entropy was constant for the past 2000 years until the industrial revolution started, at which point entropy skyrocketed. Second, we need a paper that shows that humans are the source of the majority of entropy in the universe. The logic is simple: we know that entropy is increasing and we have eliminated every conceivable cause, leaving on human emissions of entropy as the leading cause. QED.
Plants turn energy into matter.
Life defies entropy.
Plants use energy (photons) to turn smaller bits of matter into larger bits, ie CO2 and H2O molecules into bigger sugar and oxygen molecules:
6 CO2 + 6 H2O —> C6H12O6 + 6 O2.
Stored energy is mass. So says Einstein, so says science.
Another place mass is being created is during supernovae, when atoms heavier than iron are forged, thus storing some energy in atomic nuclei as mass. This mass is reconverted to energy during fission. Some of it anyway.
Or the rest mass has energy, but in practical solutions, the key parameter is the real ability to do work. You can have all the energy you need, if it is stored as the rest mass of lead atoms, there are very few (zero) practical ways to harness it into use. Carbon + oxygen, uranium and thorium are all substances which allow a small amount of the rest mass to be extracted into use.
/nitpick
I once argued for extra credit on a physics exam that the manner in which entropy is reversed on Earth is evidence for the existence of God. Fortunately, the instructor had a sense of humour and I received credit.
A grad student, of course, and long ago, even more of course.
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Plants turn energy into matter.
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nope. Plants use energy to turn simple molecules into more complex molecules. They do not create matter.
Nope, yourself. Menicholas is right. It takes energy for plants to construct complex hydrocarbons from CO2 and H2O. Some of this energy is stored within the molecules, and can be released if the hydrocarbon is burned back to CO2 and H2O. Stored energy = mass.
kim
May 27, 2015 at 11:14 am
“I once argued for extra credit on a physics exam that the manner in which entropy is reversed on Earth is evidence for the existence of God.”
That’s kinda depressing because it might indicate that my flat is a godless place.
I plainly confess that I was nit picking, but the man asked a question. I supplied an answer.
Stored energy is measurable as increased mass, although some texts do differentiate between mass and matter, so I suppose I should have said plants turn energy into mass, not matter.
But I am not clear on the distinction. Mater has mass. Now, there are no extra protons, electrons or neutrons in the plant after it has converted the CO2 and H20 into glucose.
The amount of mass gained by means of stored chemical energy, or any sort of energy for that matter(!), is given as one microgram per 25 kilowatt-hours, or equivalently, about 90 megajoules.
I did not say it was a lot, but as Einstein pointed out, and we have ample evidence is indeed the case…it don’t take much.
Shall we delve into nitpicking the minutia of the other place I mentioned that stars turn energy into mass?
Your call.
🙂
Recall from general physics that by the time an object reaches the speed of light, it has infinite mass…which is why it can’t. (Or one reason anyway, who knows? When I start seeing infinities in physics, I think we need an extension, a correction, or an amended theory.)
Black holes are turning energy to mass and probably particles. When light and EM radiation is sucked to black hole, it adds to its mass. Then black hole can disappear by evaporation. So only particles remain.
“Black holes are turning energy to mass and probably particles. When light and EM radiation is sucked to black hole, it adds to its mass. Then black hole can disappear by evaporation. So only particles remain”
If all of these things turn out to be true, then they will turn out to be true.
Right now we have a bunch of theories, many of which are contradicted by observations, and others by common sense, and still others by some esoterica of various “truisms” of physics.
Recent papers have made it clear that some physicists question every part of this.
Or are we going to have a discussion of the consensus of theoretical astrophysicists?
Sorry, got my “rile” on tonight.
🙂
Google “Heat death of the Universe”. You’ll have to wait many trillions of years for it, though (hundreds or thousands of times longer than the moment since the Big Bang).
“(Or one reason anyway, who knows? When I start seeing infinities in physics, I think we need an extension, a correction, or an amended theory.)”
===================================================
True, true, yet hard to avoid these singularity infinities is it not?
Regarding the ““Heat death of the Universe”. That is nothing more then an idea, far beyond our capacity to ascertain.
Carbon consumption is proportional to population. Taxing carbon is a means to force couples into suffering higher costs for raising children.
Carbon Tax is Population control. Period. It all goes back to the Club of Rome.
Actually, carbon tax is not population control because people who can’t afford to pay tax still breed. Population growth is generally lowest (negative, even) in countries where the highest proportion of people pay tax. Population control can be started with supply of plentiful cheap energy [the opposite of a carbon tax] and of real education (of girls especially).
Ok Mike. I do in practice agree with that. Rather the objective of the carbon tax is to stifle western populations, heap money into 3rd world countries, have the UN come in and sterilize most of the 3rd world population, (that will be the deal for the money from taxing the western rich) advance materialism (western socialism) and destroy the 3rd world concept of the family, thereby, ushering in population control via social breakdown under the guise of advancement.
I admit it is not as simple as I first stated, but the end game is the same.
“the best analysis available” that sounds suspiciously like another computer model
Slightly off-topic but related. When we in the UK State of the PDRofEU joined this club & the Single Market was created, we were told about the wonderful business & employment opportunities that would arise as a result. Companies & businesses could freely bid for foreign projects, with no barriers in an open market. A few years ago in the Construction industry, there was public civil engineering works available in France & Germany both worth ϵbillions. So 3 separate British, French & German consortia put in bids for this work, carefully treading their ways through the complex & drawn-out bidding process. Surprise, surprise, the French Consortium got the French public works, the German Consortium got the German public works. The system failed at the first hurdle!
The Common Market has been a disaster for the UK since 1973. Get out and get out now.
Finally, a logical explanation for all this. It’s not at all about that pesky carbon dioxide molecule or temperature histories going back years and years measured with decimal accuracy based on proxies.
Since cattle produce greenhouse gases with their incomplete digestion, they and similar bovine ruminants shall be banned. Since animal husbandry of every stripe is an inefficient use of grains, etc, the raising of animals shall be banned. Animal skins of any kind will be verboten. Footwear shall be made of woven hemp, or other natural organic sustainable fibers.
(This is deliciously fun, all of this forward- thinking central planning stuff.)
Heh, the modern meme of sustainable means paralyzed and Smart Growth generally does sting.
Please, please don’t get me started on ‘living wage’, as if ‘living’ is so easily defined.
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Attention Shoppers! According to those self-anointed saviors of “the workers” who want a “living wage” for the o’so many “victims” of evil Capitalism’s “Big Corporations”, there must be an awful lot of Zombies working at your local WalMart!
Unstoppable. Shoppers, too. We have drills for when they overwhelm the hills.
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So guess who’s now seeking to be exempted from Los Angeles’ newly-mandated $15/hour minimum (living) wage:
http://twitchy.com/2015/05/27/epic-mock-alanche-in-progress-as-labor-unions-who-pushed-for-15-minimum-wage-in-los-angeles-now-want-an-exemption/
Minimum wage should be applied to all illegal alien hires first, so that the rest of us might profit by their example.
An enforced zero growth economy is a cruel economy.
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history shows that cruelty is sustainable.
Carbon trading is riddled with rorts. An example being China cranking up old coal fired plants previously shut down. An then shutting them down again for credits. And how about corporates acquiring low emitting companies to transfer their carbon responsibilities. The system attracts corruption..
How about all the credits I’m due to for not building coal fired plants that I would have otherwise have built? Think of all the carbon pollution I avoided. This should be worth billion$.
It is regularly shocking how ignorant that educated liberal minds are on business matters. The rest of the population misses the bus often enough but at least has the common sense to recognize how a business works. These self proclaimed elitists are completely ignorant though. They couldn’t operate a lemonade stand but believe they could run a global economy.
It is really too bad that they have taken over universities across the country. The kids heads come out filled with literal mountains of nonsense that must be removed.
But all of these kids produce negative growth in the companies that are stupid enough to hire them; so productive people must be hired at a premium to offset it to arrive at zero growth.
Similarly, Germany can just continue to de-grow Southern Europe and grow itself and claim successful zero Growth for the EU. Et viola sustainability!
For those who deny climate change is real, all you have to do is consider that the settlement of the cliff dwellings at Mesa Verde became abandoned when a pervasive drought destroyed farming in that area about 1300 AD, long before Al Gore sounded the alarm.
I am awating sound research showing the optimum climate for our present biosphere. All I see in what passes for research on the climate is an attempt to secure the optimum level of government intrusion in our lives.
It is no surprise that almost every demand made by advocates of global warming converges on bigger government, higher taxes, less freedom and more restrictions on how we choose to live our lives. That tells me all I need to know about this massive fraud.
buckwheaton
Mayan civilization collapsed also – due to drought.
Roman civilization collapsed as northern tribes invaded towards the warmer, more southern European areas.
Mongolian hordes were no “refugees” – but also invaders from a colder climate.
Poor farming techniques, as their population grew like all centrally planned economies their socialist leaders chose to focus on the present rather than the future. They stopped rotating their crops so they could have more food in the near term but ultimately the fields went fallow and they starved to death.
Drought results from cooling and drying of a regional climate. Nothing to do with CO2 warming.
*NO-ONE* denies that climate change is real – that is a strawman. Strawman – that’s a big word, isn’t it? Can you say “strawman”?
We’d end up with the 3Bs running society – Bureaucrats, Beancounters and Backstabbers.
…and Brown-nosers. Not to worry, those 4 types inhabit every human enterprise, yet we muddle along.
Alan, it is when they rule human enterprise that life becomes especially cruel and short for those they rule.
But they will feast. Remember, for them boot polish is a food group.
Union membership can grow unfettered in this model.
Demand on resourced to support the 3rd world can grow unfettered.
And the PRC still gets a 30 year pass to catch up….
Not just the PRC. Note it is only the OECD countries to be halted. Non developed countries get to grow. Ignoring such things as ability or stability… Just another hidden wealth redistribution gimmick.
At my last job a female whose name I forget rebuked me when she was told the gross margin on each of projects I had sold in that month for actually making a profit which she thought was thoroughly disgusting. When I asked her where she thought the money came from to pay her salary she burst into tears at the realisation that her life had become dependant upon the profit the company was making for being in business which she thought was repugnant so she handed in her notice and began working as a waitress in a local restaurant for a fraction of the salary she was earning because it made her feel better.
A candidate for a Darwin Award since she now cannot afford to have children.
Unless she finds an evil mate who works for the carbon- creaters!
Profit is merely the value of the product versus the cost to produce it. In other words, how much the product is adding to the standard of living.
Resources out versus resources in. Profit is a measure of how much the good/product/company is adding to our well-being. The higher the better.
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And I think the overall environment and the state of nature is improving now just about everywhere. The Greens don’t even understand that the environment is better now than it has been in 100 years precisely because our standard of living has gone up enough so that we can afford to let it become healthier. Another accidental benefit of the free enterprise system.
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The socialist economic system is being increasingly abandoned everywhere because it simply does not work while the free enterprise system continues to show over and over again just how well it works.
Not much different than climate science. There is a theory about how something “should” work (but doesn’t) and then there is how the real Earth System actually works.
What about those profits that the High Priests of Climate Science reap when they gain the whole world, yet lose their own soul?
“Profit is merely the value of the product versus the cost to produce it. In other words, how much the product is adding to the standard of living.”
How true. It one time buggy wipes in “high” demand and we all know what happen to that industry. Some in government still want us to buy “buggy wipes”
And baby whips?
“Profit is merely the value of the product versus the cost to produce it. In other words, how much the product is adding to the standard of living.”
==============================
True statement, but only if highly qualified. The freer the market, the more true this becomes. (We did have a Robber Barron era) Also, this requires wisdom in consumers. Heroin is highly profitable, and equally destructive to one’s standard of living.
There is also the contrarian truth that population growth has added to greatly increased prosperity. This is completely counter to the meme of progressives who see additional people as useless eaters and drains on the “limited” resources their stupidity limits them to seeing. Specialization of labor and other things account for this, but it is an undeniable truth. I wish these people would walk their own talk and lead by example by eliminating themselves first just to show us how moral they are and how it is to be done. But they see themselves as the leaders of their centrally-planned utopia and the rest of us a merely the subjects who are to be sacrificed. I’m not sure how else to define them other than mentally-deranged defectives who should be regarded as very dangerous.
Not “become” dependant”; it always had been, and every meal she served as a waitress made a profit for the restaurant (else it would close).
True, the poor woman is living in an inescapable house of horrors, where mutual gain is an impossible circumstance.
People would just create their own monetary system creating an underground economy. Capitalism will always find a way.
But how many people today are actually skilled at tasks which others are willing to pay for? Many, if not most, so-called white collar jobs could not exist in an underground economy.
Sort of depends on how you define “white collar”. Take a true underground economy- the drug trade. If the only “blue-collar workers” are those who make/grow the stuff, there’s an awful lot of others who transport, wholesale, retail, police (enforce), bookkeep, manage, bank, lawyer, and otherwise “white-collar” the business.
None of this should be surprising, of course, and it doesn’t appear anyone here really is surprised. As one post noted, in truth the whole thing is about population control. And controlling the people who survive the great culling, which will be enforced by making food and energy so scarce that only Soros and his buddies can afford it.
Frank:
I believe that true leaders should lead by example and go first.
I think its time to set up a trading bloc of non European nations. If Europe inveigles other lemming states into the fold, they can then freeze out those who don’t sign UN agreements. They WILL embargo these countries. Quit the UN now and see what happens already!! Where did all the lambs come from that are peacefully lining up in the abbatoir pens?
“I think its time to set up a trading bloc of non European nations”
Funny, Putin and Xi Jinping had the same idea, they are forming the Eurasian Economic Union.
Also, the EU’s days are numbered. And the Euro’s.
So is the U.S. dollar.
It’s not quite Carbon Trading, but the UK’s electricity supply industry is being hard hit by the UK government’s Carbon Price Floor – a CO2 tax. A few years ago the tax level was set by our participation in the European Union Emissions Trading System, but then the government saw the opportunity for a hidden tax – where the energy companies would be blamed by consumers. The current EU tax for carbon dioxide emissions by power stations is £5.30 per ton. In the UK coal fired power stations are being taxed at a rate of £23.38 per ton – with the UK government pocketing the £18.08 difference. As a result the coal fired power stations are being closed (power cuts here we come) and consumers (and industry) are paying higher prices for electricity.
And politicians wonder why the country has been so slow to pull out of the recession.
1970’s all over again?!
Mr Worral: You managed to summarize “Atlas Shrugged” in a few paragraphs. Impressive.
If anyone reading this has no read Atlas Shrugged, you need to.
One of my favourite books 😉
I made it all the way through it, ONCE. Maybe the most overwritten book I’ve ever read. It was exhausting and exasperating, like watching the same movie 12 times in a row.
Of course (most of) Rand’s ideas were important and valid, but jeez.
Might I recommend ‘The God of the Machine’ by Isabel Paterson. Isabel Paterson was Ayn Rand’s mentor. It’s been claimed (and no doubt refuted by many Objectivists) that Rand learned everything she knew from Paterson. Ultimately they had a parting of the ways due to their disagreements: Paterson was a deist whereas Rand was a crusading Atheist. Apparently, however, their respect for one another remained.
I have to disagree with the idea that capitalism is not a zero sum game. It is. Otherwise, why would companies spend so much time and effort on playing legal games to exclude/destroy competitors?
Simple, they want the $$$$$$ that the other companies are taking from your pocket, and there are only so many dollars in your pocket … A perfect definition of a zero sum game.
In real, non inflated value, there is no more wealth today than there was a year ago. There are more dollar bills floating around, yes, but only because the fed decided to print more.
You are just ignorant of economics, or are a communist, still wanting equal poverty for all, except the elites of course.
EBC, +1
Its proper title is free market capitalism, which, by definition, has rules to prevent companies “playing legal games to exclude/destroy competitors”.
True, these rules don’t always work as they should, but you don’t ban motor cars just because some drivers exceed the speed limit.
If economic growth is to be halted, does that mean that increases in public spending on healthcare, education, etc should also zero?
Increases in public spending should never exceed inflation/population growth. Ever.
Plus spending should be half of what it is now. But that’ll never happen.
Eustace,
+ several shed-loads.
And we will see if the ‘new’ UK Government, shorn of the tree-hugging, beard and sandal, brigade of Dim-Lebs will serious seek to take the state out of areas it has no sense being in (at least in the longer term).
House building – where the restrictive planning rules need a sympathetic overhaul, which doesn’t favour NIMBYs too much.
Rail infra-structure/bus companies/adoption/most education [perhaps special needs excepted].
And certainly ditch the awful, horrendously-expensive ‘Private Finance Initiatives’ [this fortnight’s ‘Private Eye’ has those initials as ‘Private Fortunes Incorporated’].
Even with a (nominally) Tory Government, there is a lot to do, a whole lot.
Auto
PS Philip – you’re pretending to work. Your Masters will pretend to pay you.
Year on year the change usually isn’t very noticeable, unless a given year contains a major world changing breakthrough, like the invention of a new wonder drug like penicillin. But go back a decade or two, and the changes should be more obvious.
I have to disagree. Look at the market cap of Apple. Tell me all the wealth existed before and was just shifted to Apple… you can’t. I understand where you are coming from, but in the end the article is right. Wealth can be created with a new idea.
At Wharton I had a professor who conducted a fascinating, long-running survey. He’d ask business people something to the effect of:
Which scenario would you choose?
A) Your company earns $5 million, and your competitor’s company earns $10 million.
B) Your company earns $2 million, and your competitor’s company earns $1 million.
It turned out that something like 97% of the respondents chose B. Let in how stupid that is! That survey (and that professor) had a profound impact on me.
So, zero smarts does not mean zero sum.
So all the wealth in the world already existed when humans came along? Where the heck was it?
Exactly! For example, everyone in the U.S. is much richer than George Washington was in many important ways – as judged by our [still generally increasing] Standard of Living. Wealth is not a fixed pie and not an immutable item. It can and must be created, and continually created just to stay even, since things and services also continually deteriorate. On the other hand, forced “Redistribution Unto Equality!” is eventually not compatible with wealth creation because people do not like being Slaves, which is where they end up in redistributive Socialist/Communist systems: equally enslaved, impoverished, or dead – aka The “Progressive” Utopia!
Philip, you are clearly and demonstrably wrong.
Just compare how much stuff people have now to what they had twenty, fifty, a hundred years ago. And a thousand, and a hundred thousand.
Places like China have lifted tens of millions out of poverty and subsistence in a handful of years.
A person in the US of even modest middle class means likely eats better, has more to wear, has better health, entertainment, travel options and opportunities, than a king from centuries past.
When raw materials are pulled from the ground and converted into houses, cars, washing machines, farm tractors, clothing, and all of the things we use to make our lives better and longer and note productive…and easier!…all of these transformations increase the wealth in the world.
Typo…longer and more productive…
The sad truth about Philip’s post is that he is representative of the vast majority of ill-informed people who make voting decisions that change the balance of power. Whole generations have been fed this garbage about class envy and a finite pie of wealth. The whole thing can easily be taught in 5 minutes if someone has enough of an open mind to consider it.
If Philip and I are the only people on the planet living hand-to-mouth off the land, there is no wealth. If he decides to spend two years of his spare time building a house, then he has created wealth. Something of lasting value has been created where is did not exist before. If, in a fit of jealously, I burn down his house, then I have destroyed its value, erasing wealth. Wealth is created. Wealth is destroyed. Wealth can also be transferred.
Once you understand this simple set of economic basics, your whole world view can change. Philip’s house construction did not come at my expense. Philip’s act of wealth creation had no effect on my wealth. There is no reason therefore to hold the wealthy in contempt. The whole notion of class envy is the result of poor economic education. It is that class envy which is at the heart of the entire socialist theme. Socialism is built upon a fundamentally wrong assumption of basic economic principle.
Quick economics lesson, to explain specifically where Philip is ill-informed, or where he just hasn’t thought things through:
1) Firms compete with other firms, but they cooperate with their customers and workers. This cooperation is where value is created. As Philip suggests, competition may be a zero-sum game (although actually I could cite cases where it’s negative- or positive-sum). However, cooperation in exchange is definitively positive-sum — assuming that transactions are uncoerced and properly informed on both sides. Who would exchange if they did not expect to gain from it?
2) Value is created, first, through exchange, by transferring a good from someone who values it less (in use) to someone who values it more.
3) Value is also created, second, through production, by combining workers’ labor with firms’ tools & equipment (in the context of the firm’s market connections etc.). The sum of the values of output is greater than the values of inputs — otherwise, they wouldn’t bother. Firms’ owners and workers share the gains — otherwise, again, neither would bother (see point 1).
4) More broadly, value is also created through entrepreneurship and innovation — by finding more productive ways to combine inputs, by substituting abundant and cheap inputs for scarce and expensive ones, by developing new products or adding features to old ones, by developing new forms of business and social organization, and by creating new institutions. A leading economist has estimated that entrepreneurial profits are typically around 2 percent of the total value that an innovation creates. Steve Jobs and Apple shareholders gained much from Apple’s innovations, but customers gained much more.
As others have pointed out, the wealth created by capitalist economies, in contrast to socialist societies, is strong evidence that capitalism is positive-sum.
Money, by the way, is just a means of exchange. It’s not wealth. Wealth consists of goods useful for consumption or production. Doesn’t anyone read Adam Smith anymore?
“there is no more wealth today than there was a year ago”
There’s roughly an additional 58 million tonnes of aluminium, 19 million tonnes of copper, 10 million tonnes of zinc, 25,000 tonnes of silver, 2400 tonnes of gold, …
Ironically, another Greenie claim is that “green” industries such as wind and solar are growth industries, in addition to helping “save the planet”. Perhaps. Cancer is also a type of growth.
Where are the companies brave enough to even ask the question of what the optimal size of a company might be, after which it should grow no further, and how that company should be governed and function with regard to investors?
This MIGHT be a good approach, however not with “climate” as objective but to cap the extreme accumulation of capital.
All money exceeding a predetermined limit should then be constitutionally given to the poorest people in this world.
This would make more sense.
Most of the people I know who advance this kind of argument seem to think their income is “appropriate” – that the limit should be set way higher than what they earn. But the fact you have access to a computer makes you vastly richer than much of the world’s population. It would be interesting to see where really poor people would set the limit – probably a lot lower than you would find comfortable.
“An enforced zero growth economy is a cruel economy.”
No, not true but let’s separate the terminology here, “enforcement” versus “zero growth”. The former is not compatible with capitalism but the latter most certainly is. Insinuating that capitalism cannot survive without growth is just a lie. If everyone is comfortable with their standard of living and there is static population growth then there does not need to be growth – only consumption and replacement. Capitalism will exist and will be just as beneficial to society in a replacement/consumption economy every bit as much as in a growth economy.
Capitalist food production for example will still supply the most food at the lowest cost. The surplus food, generated by the capitalist model will still be there to be taxed or otherwise given to those who are unable to provide for themselves via government or charity.
I would argue that your subsistence economy is unstable – it would quickly evolve into something more vigorous, unless something held it back. Optimising things like food production creates wealth. Our society is a vast accumulation of often quite small innovations.
” unless something held it back” – No, the MARKET is the throttle no matter the size of the demand.
“Optimising things like food production creates wealth.” What’s wrong with that in a steady state situation?
What is wrong with that in a growth situation?
Thecearth is a very large object with a very large amount of raw materials in and on it. And nothing is really ever destroyed, atomically, with insignificant exceptions. So in theory everything can be recycled. It only takes energy.
And the Earth, the Solar System, the galaxy and indeed the whole universe is awash in energy.
I believe people that worry about sustainability have a profound lack of optimism, insight, awareness and imagination of our true relationship with our environment.
The Original Mike M
May 27, 2015 at 8:46 am
“” unless something held it back” – No, the MARKET is the throttle no matter the size of the demand.”
New products CREATE new demand. (At least the ones people actually want)
Say’s Law.
Best example IPhone (to Nokia’s surprise).
” DirkH New products CREATE new demand. (At least the ones people actually want)”
I didn’t PRECLUDE new demand, I asserted that capitalism itself is still valid without creating new demand. If it can function perfectly okay without any new products of expanding population … then it will function okay with a little or a lot.
” menicholas What is wrong with that in a growth situation?”
Nothing – where did I state there was?
“Nothing – where did I state there was?”
I did not say you stated anything.
You asked one question, I countered with a somewhat different one.
There are people around who insist that growth is not sustainable.
If you are not one of them, good on ya.
@The Original Mike M: I understand what you mean There is a difference between “capitalism” and “wealth creation” Capitalism is the free exchange of “money” for goods and services. The only way to create wealth is to take a idea from start to a finished product can be traded for goods and services. The use of Iron ore is a good example of “wealth creation”. Taking a raw material and finding new uses for it.
I’m not an economist and my question might seem quite novice. However, how would it be sustainable to not have growth? You would still need inflation to pay for all the interest on loans. Without growth, but continued inflation, how would the economy survive?
Or am I out of my depth and those aren’t related…
“You would still need inflation to pay for all the interest on loans.” Why is the payment of interest required? For a static population, monetary supply should be static as well; inflation and interest can be zero with no ill effect. The only losers in that scenario are banks and government – not those producing commodities and replacing worn out stuff.
@ The Original…
Please, please, please enroll at your local community college and take their introductory courses on macro- and micro-economics. Why on God’s green earth would I loan you money at no interest? It’s an asset. I should expect it to return an income. Would you expect someone to rent you a car for $0 per day?? What lunacy!!
Firstly, you are lamely misrepresenting what I stated which was that interest “CAN BE zero” – not that it should be! Secondly it was in reference to my assertion that even zero interest will not have any magical deleterious affect on free market capitalism, there is still profit to be made in the PRODUCTION of commodities and replacements.
Yes, I agree there’s lunacy at work here and the fact is that I implied NOTHING of the sort.
I suggest that you take reading comprehension.
CBeaudry
May 27, 2015 at 8:16 am
“I’m not an economist and my question might seem quite novice. However, how would it be sustainable to not have growth? You would still need inflation to pay for all the interest on loans.”
A static money supply makes inflation in the long run impossible. Austrian economics even defines inflation as inflation of the money supply.
Interest for loans would still be possible: The debtor uses the credit to build his enterprise and can pay off the loan plus interest from the profits of his new enterprise – with money he obviously gets from willing customers.
“For a static population, monetary supply should be static as well; inflation and interest can be zero with no ill effect”
This would seem t be well into the realm of pure speculation, since such conditions have never existed, (Except perhaps in some Yanomami village, or similar culture, where there is no money, hence no interest and no inflation.) and may never exist.
It sure seems debatable and highly unlikely to me, but since it is purely speculative, it is a matter of unresolvable opinion and so debate would be a waste of time.
What are we talking about, some far future Jetson’s sort of Earth, in which everything is free because there is plenty of everything for everyone?
I would posit that we will need plenty of growth to ever get there, or else a drastic shrinkage of the population.
Ever read Michael Moorcock’s series, “The Dancers at the End of Time”?
“You would still need inflation to pay for all the interest on loans.”
Inflation is a result of governments wanting to pay of debt with “money” that will be “worth less in the future.. In reality it is a hidden tax. Banks create “money” by loaning money out.
And who is to enforce these zero growth concepts? You? A world government?
Again why don’t you live what you say and lead by example; reduce your income to something fair? How about the average income of the world? Of those in Africa?
Where are all you lunatics coming from? I NEVER said anything of the sort! I was asserting that the FREE MARKET capitalist model remains a perfectly viable economic system even in a NATURALLY evolved zero growth economic situation. … and that’s was ALL! Capitalism does not require growth. Try re-reading what I wrote. Sheesh!
“Where are all you lunatics coming from? I NEVER said anything of the sort! I was asserting that the FREE MARKET capitalist model remains a perfectly viable economic system even in a NATURALLY evolved zero growth economic situation. … and that’s was ALL! Capitalism does not require growth. Try re-reading what I wrote. Sheesh!”
Well Original Mike, you did not say all of that at the outset. You made some remarks that sounded an awful lot like some other sorts of commenters, who believe growth is evil and capitalism is murder, rape, thievery and torture all bound up together.
The Original Mike M
May 27, 2015 at 8:02 am
“If everyone is comfortable with their standard of living and there is static population growth then there does not need to be growth….”
Your “ifs” are too big. They describe nothing more than the usual “Sustainable Progressive Utopia” = a “Just So” Fantasyland…where The Elites will in fact tell everyone exactly what the “comfortable standard of living” is and also enforce the “correct” population number. But it can’t work in the real world because at least a large minority of people want Freedom, in contrast to Ants. Communism never works unless it goes Capitalistic, at which point there must be growth, which in turn shows everyone that Communism is at best irrelevant to the well-being of people and at worst one of the most “cruel” ways to organize a society. On the other hand, “Power to the Ants!”
No, I didn’t write anything of the sort. How many cars can you afford to buy right now? How many do you own? I am merely stating the OBVIOUS of diminished returns in acquiring material wealth. It’s a natural phenomenon of saturation that happens all by itself without any outside influence, elitist or otherwise, and that’s what I believe is the direction of the US market place.
The Original Mike M
May 27, 2015 at 11:53 am
“I am merely stating the OBVIOUS of diminished returns in acquiring material wealth. It’s a natural phenomenon of saturation that happens all by itself without any outside influence, elitist or otherwise, and that’s what I believe is the direction of the US market place.”
But as I suggested above, now you are appealing to what is really only your own version of the Law of Diminishing Returns which claims there is not much more in the way of “returns” to be gained. However, I reject your conclusion simply because I don’t know what the myriad of other free people with free thought in a free market will invent or bring about, just as no one, say in 1850, knew what miracles would occur as a result of such freedoms 50-150+ yrs. later.
You are satisfied with your Standard of Living, which is fine by me. But you should not make any claim of ‘saturated diminishment’ against the future concerning the general question of Standards of Living for other people or future people. In a free society that’s their decision. And as Eric Worrall implied above when he said, “your subsistence economy is unstable – it would quickly evolve into something more vigorous, unless something held it back,” I don’t think you should try to stop these interactions on the argument of “diminishing returns”. Significant improvements in our Standard of Living continue to occur. But it sounds like you want to enforce an end to Freedom and such improvements in favor of your own “just so” controlled society, exactly like the other pseudo-intellectual Elites want. That’s what I’m mainly worried about.
“JPeden May 27, 2015 at 1:00 pm But it sounds like you want to enforce an end to Freedom and such improvements in favor of your own “just so” controlled society, exactly like the other pseudo-intellectual Elites want. That’s what I’m mainly worried about.”
Worry no more – WHERE did I say anything about “enforcement”? I always stated that the MARKET will determine the demand and my guess is that demand will go down as the population stabilizes and everyone accumulates what they need to some “point” of satisfaction per their personal choice.
Eric wrote “Capitalism is not a zero sum game, because of growth.”
I disagree with that – capitalism will work perfectly fine in a “no growth” economy. If the MARKET becomes no-growth (totally on its own…) – so what? It does not invalidate capitalism.
To Phillip: Ask any of the thousands of engineers who left Venezuela and friends and family so they could increase their salaries from $450/month at PDVESA (the Venezuelan government owned monopoly oil company) to the US where they make a minimum of $9,000/month at any one of a number of companies. Government monopolies are worse than any private monopoly and there is no monopoly oil company in the US. Capitalism leads to an improved standard of living for everyone due to its emphasis on increasing productivity. Government companies all over the world never improve productivity, so wages stagnate.
A zero growth economy implies that the population remains the same but the big boys are saying we only need a few million of us around. I do believe that will need a whole lot of negative growth to happen. The BRICKS couldn’t be coming on line at a better time.
“emphasis on increasing productivity.” … therefore leading to the sale of the most product at the lowest price thus benefiting the most people. Leftists love to carp about the riches of someone like John Rockefeller but his riches were spit in the ocean compared to the value of the benefit he provided to millions of people. Ditto most other rich industrialists who would have brought us exactly ZERO benefit if not for the lure of getting rich. Greed is … natural.
Mike – Thanks, agree with this.
Greed is natural – it bring more mating = off-spring opportunities (generally).
Mind, some of your verbiage above looks pretty off-base, and your justifications – to me, IMHO – seem a tad inconsistent.
Your right.
My misunderstanding, no doubt.
Good night (here).
Auto
Economic growth is what allows living standards to improve. It gives economies “breathing room”, allowing for inevitable economic shocks (like the Great Recession). It is also what allows us to have a cleaner environment. The greenie luddites endgame is with people shivering in mud huts, eating twigs (and burning them), and living shorter, harder lives.
The law of diminishing returns is upon us. How much improvement is needed when you are satisfied with the living standard you have? If you have 2.5 bathrooms how much will one more improve your standard of living? The idea that everyone will be happier with yet bigger houses with even more stuff in them is beginning to lose its luster as people now have the spare time to discover that surrounding yourself with excess material wealth is not a prerequisite for a happy life.
When you look at what free market capitalism has created for us – our cup runneth over.
For some, maybe. For others, not so much. Also, you have erected a straw man there. No one said that “more is better”, nor that bigger is better necessarily. This isn’t about improving the lives of people who are already wealthy. People know instinctively what quality of life is. Getting rid of poverty, and strengthening the middle class are good places to start.
Erroneous assumption in the first sentence. Planet Earth is not the limit of human action, so pfthtpt on your “law of diminishing returns” theory. Not everyone is as well off as you presume. Many have very little and have to work damn hard for that little. Capitalism is more likely to raise that poor person’s lot in life than misguided Malthus ‘ism.
” Bruce Cobb For some, maybe. For others, not so much. Also, you have erected a straw man there. No one said that “more is better”, nor that bigger is better necessarily. ”
No – it’s not a “straw man”. Every free 1st world capitalist country is seeing it’s indigenous population stabilize. A population that is no longer growing = far less opportunity to seize on a growing market (outside of the occasional new “thing” to come along).
Compared to poor starving people in 3rd world socialist hell holes who spend 95% of their income on food, the so-called “poor” in the USA on welfare and food stamps are living like royalty. Not only do they have clean hot and cold running water, central heat and air conditioning, free education and all the food they can eat, (looking at them waddling along), some of them own a car, some even own their own house. There isn’t much room left for our economy to “grow” and I think that’s the foolish idea behind admitting millions of poor immigrants here – like that will somehow keep growth going as though a capitalist model cannot survive without it. I say bunk to that.
The cure for the 3rd world is for them to become HONEST, EDUCATED AND SELF SUFFICIENT. They need to exploit their own natural resources to become rich like us and that means ending this UN CAGW nonsense being imposed on them. Then they too will see their populations stabilize just like ours did – naturally.
Bruce, good summary, thanks. Ever notice the green leftists want fewer people but they never lead by example?
Some do. I know a few that have no kids and live modestly. I presume they expect my grandkids to pay for their Social Security benefits, as they left no offspring to do so.
While China overtakes the western democracies in economic and military power by choosing not to be subjected to this idiotic carbon tax scheme, we are supposed to just give up all that we are as fairly well off States because some leftist, green idiots who may have some temporary power or control in some parts of governments say we should… Because there is a possibility of global warming, which is still being debated within the scientific community. And, none of these “saviors of the world at our expense only” idiots have not even considered that what they are preaching may be too late or that we can have adaptation strategies IF it comes down to it. Instead of shutting down the economic well being and rushing into a shutdown / destruction of our economies, we should be doing exactly what the non participants in this scheme are doing. Expanding and growing. If we all die of heat stroke, at least it’s mutually assured destruction instead of laying down and giving up. The Idiots I mentioned above can lie down, give up and be responsible for themselves if that’s what they want…Just don’t shove it down everyone else’s throats.
Mr. Pissed off. And plenty.
From a game theory standpoint, if I were China and Russia, I would be stoking climate fears to the maximum extent possible — even to the point of falsifying my climate data to make it appear “worse than we thought”. Given the West’s proclivity for self-loathing and our willingness to impair our future prosperity to indulge the neuroses of the Greens, all that China and Russia need to do to dominate the world is to convince us to shut down our own economies. Global Warming is the psychological super weapon of choice to be used against the west.
So true. And perhaps they are more successful with obama over here helping them along.
I think there is a good possibility that the Commies have been behind the destructive green / CAGW movement from the beginning
Jim Francisco
May 27, 2015 at 11:41 am
“I think there is a good possibility that the Commies have been behind the destructive green / CAGW movement from the beginning”
Well, it was the UN, actually. After the attempt to make the UN the world superpower failed in 1961 after the Katanga massacre, they needed a decade to reorient themselves and then came up with Limits To Growth, the Sustainability scarecrow, ecological destruction, see 1971 summit on the environment, Maurice Strong.
Club Of Rome: “…the common enemy of humanity becomes humanity itself…”
If there is disparity in the world, give a hand up where you can, and if it’s possible within reason without committing economic suicide to come t a parity. What makes everyone in the world richer is that there are better, more prosperous economies. The politics and other social factors which limit some regions in the world from becoming more prosperous is only going to change when the people in those less well to do regions make some necessary changes in their political and social systems…Not by throwing money at them. Now…A welfare world rather than a welfare state…Expanding the welfare system to the entire world. It has already been proven it doesn’t work. Give them the tools to do it and help them work it out themselves where ever possible, but do not throw money at them because it will be a never ending waste as has already been proven here in the U.S.
Indeed, but that’s only icing on the cake.
Thwarting gold circulation, and then moving irredeemable debt (IOU nothing) to the asset column and calling it ‘money’, is unbeatable.
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
By the way, what makes people think we even have positive growth? Fabricated GDP numbers?
GDP = Money supply X velocity? No one can even define the money supply!
In fact, in our debt-based monetary system, what matters is the marginal productivity of debt. That is, how much additional GDP is produced for each new unit of debt incurred.
If the marginal productivity of debt is negative, that means that each new unit of debt incurred DESTROYS capital.
Well, the marginal productivity of debt is negative. We are going backwards.
Carbon taxes will only grease the skids.
Well the sun is only slated to last
It’s surprising greens haven’t recommended taxing use of the sun thinking that would slow down the sun getting brighter. Don’t we need to prevent the suns energy output from causing all of the water vapor on the earth to disappears into space in 1 billion years?
As stupid as that sounds the zero sum game greens like to play is equally as stupid.
Hymn to Money
by Ayn Rand
excerpt from Atlas Shrugged
(Note: Ayn Rand uses the term ‘money’ to mean ‘gold money’.)
Must Give Value for Value
So you think that money is the root of all evil. Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced, and there are men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must do so by trade, and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by men who produce. Is this what you consider evil?
When you accept money in payment for your effort, you do so on the conviction that you will be able to exchange it for the products of the effort of others. It is neither the moochers nor the looters who give value to money. Neither an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into bread you will need to survive tomorrow. Those pieces of paper, which should really be gold, are a token of honor – your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on the moral principle that is the root of money. Is this what you consider evil?
Wealth Is the Product of Man’s Capacity to Think
Have you ever looked for the root of production? Take a look at an electric motor and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover how to do it for the first time. Try to grow food by means of nothing but physical motions – and you’ll learn that it is man’s mind that is the root of all the goods produced and of all the wealth that has ever existed on earth.
But you say that money is made by the strong at the expense of the weak. What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man’s capacity to think. Does it follow, then, that money made by the inventor of the motor is at the expense of others who invented nothing? Is money made by the intelligent at the expense of the fools? Or by the able, at the expense of the lazy? Money is made – before it can be looted or mooched – by the effort of every honest man, each to the extent of his ability. An honest man is one who knows that he can’t consume more than he has produced.
Every Man is the Owner of His Mind and His Efforts
To trade by means of money is the code of men of good will. Money rests on the axiom that every man is the owner of his mind and his efforts. Money allows no power to prescribe the value of your effort, except by the voluntary choice of the man who is willing to exchange the fruits of his effort with you. Money permits you to obtain for your goods and labor what they are worth to men who buy them, but no more. Money permits no deals except those to mutual benefit by the free judgment of traders. Money demands of you the recognition that men must work for their own benefit, not their injury; for their gain, not their loss – the recognition that they are not beasts of burden born to carry the weight of your misery – that you must offer them value, not wounds – that the common bond among men is not the exchange of suffering, but the exchange of goods. Money demands that you sell, not your weakness to men’s stupidity, but your talent to their reason; it demands that you buy, not the shoddiest they have to offer, but the best money can find. And when men live by trade – with reason, not force, as their final arbiter – it is the best product that wins, and the best performance. It is the man of best judgment and highest ability that wins, and his reward is commensurate with his productivity. This is the code of coexistence whose tool and symbol is money. Is this what you consider evil?
The Scourge of Men Who Attempt to Reverse the Law of Causality
But money is only a tool. It will take you wherever you wish, but will not replace you as the driver. It will give you the means for the satisfaction of your desires, but will not provide you with desires. Money is the scourge of men who attempt to reverse the law of causality – men who seek to replace the mind by seizing the products of the mind.
Money will not purchase happiness for the man who has no concept of what he wants. Money will not give him a code of values if he’s evaded the knowledge of what to value. It will not provide him with a purpose if he’s evaded the choice of what to seek. Money will not buy intelligence for the fool, admiration for the coward, or respect for the incompetent. The man who attempts to purchase the brains of his superiors to serve him, thus trying to replace judgment with money, ends up by becoming the victim of his inferiors. The men of intelligence desert him, but the cheats and frauds come flocking to him, drawn by a law which he has not discovered, that no man may be smaller than his money. Is this the reason why you call it evil?
Money Will Not Serve the Mind That Cannot Match It
Only the man who does not need it, is fit to inherit wealth – the man who would make his own fortune no matter where he started. If an heir is equal to his money, it serves him; if not, it destroys him. But you look on and cry that money has corrupted him. Has it? Or has he corrupted money? Do not envy a worthless heir: his wealth is not yours and you would have done no better with it. Do not think that it should have been distributed among your cronies: loading the world with fifty parasites instead of one would not bring back the dead virtue embodied by the fortune. Money is a living power that dies without its root. Money will not serve the mind that cannot match it. Is this the reason why you call it evil?
Money As a Means of Survival
Money is your means of survival. The verdict you pronounce upon the source of your livelihood is the verdict you pronounce upon your life. If the source is corrupt, you have damned your own existence. Did you get your money by fraud? By pandering to men’s vices or their stupidity? By catering to fools, in the hope of getting more than you deserve? By lowering your standards? By doing work you despise, for others you scorn? If so, then your money will not give you a moment’s joy or a penny’s worth of happiness. Then all the things you buy will become, not a tribute to you but a reproach; not an achievement but a reminder of shame. Then you’ll scream that money is evil. Evil, because it will not pander to your self-respect? Evil, because it would not let you enjoy your depravity? Is this the root of your hatred of money?
Money Is Always an Effect with You As the Caus
Money will always remain an effect and refuse to replace you as the cause. Money is the product of virtue, but it will not give you virtue and will not redeem your vices. Money will not give you the unearned, whether in matter or in spirit. Is this the root of your hatred of money?
Or do you mean that it’s the love of money that’s the root of all evil? To love a thing is to know and love its nature. To love money is to know and love the fact that money is the product of the best powers within you, and your pass-key to trade your effort for the efforts of the very best among men. It’s the person who would sell his soul for a nickel, who is the loudest in proclaiming his hatred of money – and he has good reason to hate it, too. The lovers of money are willing to work for it. They know that they deserve it. Let me give you this rule of thumb: the man who damns money has obtained it dishonorably; the man who respects it has earned it.
The Only Substitute for Gold Money is the Muzzle of the Gun
Run for your life from anyone who tells you that money is evil. That sentence is the leper’s bell of an approaching looter. So long as men live together on earth and need means to deal with one another – their only substitute, if they abandon money, is the muzzle of the gun.
When Coercion Is the Standard, Murderers Win over Pickpockets
But money demands of you the highest virtue, if you wish to make it or keep it. Men who have no courage, pride, or self-esteem, men who have no moral sense of their right to their money, and are not willing to defend it as they would defend their life, men who apologize for being rich – will not remain rich for long. They are the natural bait for swarms of looters that stay under the rocks for centuries, but come crawling out at the first smell of a man who begs to be forgiven for the guilt of owning wealth. They will hasten to relieve him of his guilt, and of his life – just as he deserves.
Then you see the rise of men of a double standard – men who live by force yet count on those who live by trade to create value to back their looted money – hitch-hikers of virtue. In a moral society these are criminals, and statues are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law – men who use force to seize the wealth of disarmed victims – then money becomes its creator’s avenger. Such looters believe it safe to rob defenseless men, once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters who get it from them the way they’ve got it from you. Then the race gets under way, and the prize goes, not to the ablest at production, but to the most ruthless at brutality. When coercion is the standard, the murderer wins over the pickpocket. And then society vanishes in a spread of ruin and slaughter.
Money Is the Barometer of Society’s Virtue
Do you want to know whether that day is coming? Watch money. Money is the barometer of society’s virtue. When you see that trading is done not by consent but by compulsion – when you see that in order to produce you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal not in goods but in favors – when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – then you will know that your society is doomed. Gold is so noble a medium that it does not compete with guns and does not make terms with brutality. It will not permit a country to survive as half property, half loot.
Paper Money Is Mortgage on Wealth That Doesn’t Exist
Whenever destroyers appear among men, they start by destroying gold money, for it is man’s protection, and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold is an objective value, an equivalent of wealth produced. Paper money is mortgage on wealth that does not exist, backed by guns aimed at those who are expected to produce. Paper money is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: “account overdrawn”.
When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and to become fodder for the immoral. Do not expect them to produce when production is punished and looting rewarded. Do not ask who is destroying the world. You are.
Where Wealth Is Obtained by Conquest There Is Little to Conquer
You stand in the midst of the greatest achievements of the greatest productive civilization and you wonder why it’s crumbling around you while you are damning its life-blood – money. Throughout man’s history money was always seized by looters of one brand or another, whose names changed, but whose methods remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, deprived of honor. That phrase about the evil of money which you mouth with such righteous recklessness, comes from a time when wealth was produced by the labor of slaves – slaves who repeated motions discovered long before by someone’s mind and left unimproved for centuries. So long as production is ruled by force and wealth is obtained by conquest, there is little to conquer. Yet through all the centuries of stagnation and starvation, men exalted the looters as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised producers as slaves, as traders, as shopkeepers – as industrialists.
The Country of Money
To the glory of mankind there was, for the first and only time in history, a country of money – and I have no higher, more reverent tribute to pay to America, for this means: a country of reason, justice, freedom, production, achievement. For the first time man’s mind and money were set free, and there were no fortunes-by-conquest but only fortunes-by-work, and instead of swordsmen and slaves there appeared the real maker of wealth, the greatest worker, the highest type of human being – the self-made man – the American industrialist.
The Essence of Morality
If you ask me to name the proudest distinction of Americans, I would choose – because it contains all the others – the fact that they were the people who created the phrase “to make money”. No other language or nation has ever used this combination of words before; men have always thought of wealth as a static quantity – to be seized, begged, inherited, shared, looted, or obtained as a favor. Americans were the first to understand that wealth must be created. The phrase “to make money” holds the essence of morality.
Yet these were words for which the Americans were denounced by the rotten cultures of the looters’ continents. Now the looters’ credo has brought you to regard your proudest achievements as a hallmark of shame, your prosperity as guilt, your greatest men, the industrialists, as blackguards, and your magnificent factories as the product and property of muscular labor, the labor of whip-driven slaves, no better than the pyramids of Egypt. The rotter who simpers that he sees no difference between the power of gold and the power of the whip, ought to learn the difference on his own hide – as I think he will.
Blood, Whips, and Guns – or Gold
Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, men become the tools of men. Blood, whips, and guns – or gold. Take your choice – there is no other – and your time is running out.
Most excellent!
“Until and unless you discover that money is the root of all good..”
True but money still can be the root of problems –
http://www.listen2unclejay.com/gallery/albums/userpics/10001/women-problems.jpg
I found the mistake here that whoever graded it missed:
You mixed up the sign on #4) Money is the root of all problems.
This is incorrect. Lack of money is the root of all problems.
So you must reverse the sign, and hence problems are equal to lack of woman.
Well, I thought at least some of the ladies here would thank me for pointing that out.
*mumbles to self while kicking rocks in the back lot*
Wow…Well said Ayn. Very apt.
Economic growth must keep pace with population growth. Any restriction placed upon the economy will produce a negative feedback upon the population. Elites will, of course, be insulated from any adverse effects- for the poor of the world it would be catastrophic!
The elites in the Russian Monarchy weren’t very well insulated during the Bolshevic revolution. I’m not advocating that, but elites do take falls when their society crumbles around them.
Dalquist, the problem the Czar had in Russia, and the Shah in Iran, and many Mercantilists in Latin America – is “too little too late”.
The last Russian Czar was relaxing toward some freedoms – a legislature was elected, for example, except the Marxists executed it.
The Shah of Iran was moving toward some freedoms, including for females.
But Marxists and Religionists offered a quick-fix to people who didn’t grasp individual freedom.
“Did you say you wanted to buy more jet fuel Mr. Gore?” “Sorry…We’re clean out of it”
These are not the people you want in your lifeboat. Theirs is a model for failure and lacks the simplest expression of self-survival. I’d be perfectly happy to pass laws forbidding them from being consumers of manufactured goods. Especially food, but let us help kick-start their poverty by denying them electricity.
As a teacher, I am confronted daily with the miseducation of today’s youth. In many public schools basic economics is not taught because the NEA/AFT consider it to be “right-wing”. So, here I am looking at future voters who have no idea of what a “supply chain” is. Where did all this stuff come from? Houses, cars, electronics, the desk you’re sitting at? They don’t know. So, I take a quick poll of the kids think. What do companies make? “Pollution”. What does the gov’t do? “They give you money.”
And no, I’m not just talking about climate scientists. I primarily teach 18-19 year old college students. The majority have what I call an “institutional view”, where your life is “hopeless” because larger forces beyond your control, racism, sexism, ableism, etc. make it impossible for you to succeed.
So, the EPA will continue to destroy jobs and push industry off-shore and the kids will blame the “greedy” companies for low wages and the lack of opportunity here at home, cheered by Hollywood celebrities and the mainstream media.
It’s a common misconception among “progressives” that there is a fixed amount of money and that the rich control it all.
The first cave man who sharpened a rock for cutting created wealth and grew the economy.
If the rich control wealth disproportionately, how does one explain Bill Gates and Mark Zuckerberg…among many, many others who created wealth from nothing but an idea?
Dave Worley
This is because 85% of liberals/progressive/socialists/communists “earn” a living from the fixed resources of government/universities/teaching/union job markets where there IS only a fixed amount of resources and you MUST kill and defeat competing (liberals) interests among the “rich” (the powerful bureaucrats) to “get your “fair” share of the single-sized-fits-all pie of economic resources. That “fighting” for limited resources IS their life, their future and their past. They have NO other experiences. SO, therefore, that morally bancrupt competition for fixed financial resources unwilling given from a population forced to pay their taxes by a police-enforced amoral state is their life.
Were that it were true that most liberals were leeches on society but Obama did not get elected without being backed by wealth and crony capitalists. People who should know better vote liberal.
Executive secretary of U.N.’s Framework Convention on Climate Change, admitted that the goal of environmental activists is not to save the world from ecological calamity but to destroy capitalism.‘
“This is the first time in the history of mankind that we are setting ourselves the task of intentionally, within a defined period of time, to change the economic development model that has been reigning for at least 150 years, since the Industrial Revolution,” she said.’
And it’s not like the idea of communist socialism hasn’t already been proven to be a recipe for poverty. It convinces me that the only thing people who espouse socialism actually want is POWER for themselves; they couldn’t care less about the dire consequences socialism brings to people under their thumb.
Bingo we have a winner. Case in point: Clinton’s pay to play
One part of the issue involved is that new wealth is created in reality as a surplus of capacity that can be “reinvested” in the transformation of future cycles of production. Wealth is not a computer model regarding the whirlwind of paper in the market. The difficulty in organizing modern capitalism is somehow effectively being able to distinguish between Slash and burn pirates who are taking off with the booty and entrepreneurs who are creating new wealth. Sometimes both creatures tangled up in the same corporation but only the latter is actually creating wealth for the economy. Then there are the lawyers that largely fall into the pirate category using writs as their cutlasses.
Or maybe more broadly, new wealth is the result of productivity improvements. Those who invent better ways of doing things are really the people creating new wealth. However, liquidity is essential to creating the incentives that drive innovation. So we need a financial sector that provides for a high degree of capital mobility and liquidity. Without it the engine would be starved of fuel.
“lawyers that largely fall into the pirate category” Or parasite category per the class action SEC litigation notices I receive from time to time telling me I’ll get $5 and they’ll get $5,000,000.
It appears that people who *can* learn from history are the abnormal ones.
That “zero sum” conclusion is true as far as it goes, but only if people OBEY the law that the economy can’t grow. What would really happen is that all or nearly all of our economic activity would move to the black market. The result would look very much like Latin America, where most economic activity already is in the black market (simply because business is so over-regulated and overtaxed there that no one can afford all the fees (and bribes to bureaucrats) he’d have to pay to operate a business legally, so everyone just bribes the police instead).
Where are the
companiesgovernments brave enough to even ask the question of what the optimal size of acompanygovernment might be, after which it should grow no further, and how thatcompanyshould be governed and function with regard toinvestorsindividuals?Funny how they never bother to ask the right question.
But still Greenies and Commies and “Free Market Advocates” are silent on The Central Banks, The Petro-Dollar and Fiat Currency in general.
Real fans of a free market (not a “Free Market”, it’s easy to masquerade) know we have not had one for decades. There is a big difference between choosing growth to being forced to grow in order to counter the fake money flooding the market and devaluing everything you do.
So many impressions from travel. The dourness of Hanoi vs the vibrancy of Saigon. The shabbiness of St. Petersburg. The tin shanty towns of Africa. Grinding poverty. Black markets in Shanghai, South Vietnam,Chile. The anti-free market leftists are delusional(insane?) and dangerous. Morally obscene.
The real disaster comes from the infighting of liberal policy designs, with one side cutting growth back while the other side assumes growth will pay for rapidly rising debt obligations and over-promises of benefits for votes. At this rate we will have one advanced fighter plane for an air force and one advanced ship for a navy.
If you believe that capitalism doesn’t work, or that command economies under socialism work better, then answer me just one question. Where is the Venezuelan toilet paper?
Beware of the term “capitalism”, popularized by Karl Marx who meant something fundamentally different from the person who raised the term herein.
It’s much better to talk of individual freedom protected by defense and justice systems.
That encompasses both ideas and actions, many of which are economic. It avoids the mind-body dichotomy that neo-Marxists and Mercantilists believe in.
Mercantilists talk of economic freedom but don’t really mean it, we have much here in the form of the Bush family in the US and Stephen Harper in Canada, but Latin America really suffers from it. Though not as badly as they do under Marxism.
Marxism and Mercantilism are based on a negative view of humans as incapable and untrustworthy. That leads to fixed-pie economics, and drive-to-the-bottom ethics. Environmentalism is based on those two presumptions.
Environmentalists fail to look around them and grasp the obvious – demonstrated productivity for human life including secure shelter and medical advances, as well as the tended gardens, the replanted forests, clean water, and waste disposal. It’s as though they have a psychological barrier to accepting reality. (Their evasion is amazing. For example:
– an accomplished aviation mechanic in northern Vancouver Island claimed that people are cutting down all the trees, yet he’s undoubtedly flown over huge areas of trees, including many replanted areas.
– people keep babbling that deer are in urban areas near Victoria BC because their habitat has been eliminated by development, yet there are huge areas of wilderness not far from the cities (often in the news as some of it is a protected watershed). The obvious reasons for deer being in urban areas is better food (people flowers and vegetables are much tastier than rough shrub leaves), fewer of the strong predator (cougars – deer can handle individual dogs), and they are now being tolerated instead of harvested (they are now a resident population, breeding in the city).
Marxism and its Post-Modern derivative are bizarre ideologies. They actually teach contradiction – it’s called “dialectic logic”. They teach lying for the cause. And more than Mercantilism they always create an elite, because without a life-fostering moral compass, without recognition of the power of the mind, people are easily conned. Without respect for individuals, that elite will be oppressive. The bad rises – look at Lenin and Trotsky who met as cheap thugs in jail, look at Adolph Hitler (who was elected)
Tom J May: I dislike gross exaggerations. Ayn Rand had strong ideas for individual freedom before she met Patterson. Why do you want to tear her down?
Phillip, you are missing that people are more productive, due to better knowledge, more trading of values, and accumulated capital (gasp!) which funds machinery to produce more per person. Compare today with a century ago, in most fields and notably agriculture. And look at the standard of living most people have. (Even really poor people, in part because a more productive society has more to give to deserving people in need. No, the government did not do it – check the number of private charities in NYC a century.)
As for the effectiveness of squeezing competition, I recommend reading http://www.moralindividualism.com/monopol3.htm.
CBeaudry: Well, you are asking which is in theory good. But why do you assume inflation is needed to pay for interest on loans?. The interest is in effect rent payments for the capital you use. You are doing something with it, such as buying equipment to make things.
TheOriginalMikeM: You are very confused. See my reply to CBeaudry above. OTOH, inflation can and should be zero. Note also that growth and inflation do not go together.
(Interesting to compare products that are relatively static in design – when price is adjusted for inflation, it is little changed over many decades.)
I recommend economists Northrop Buechner, George Reisman, and Richard Salsman for rational explanations.
For a broad review of the benefits of individual freedom to humans, including a contrast to the Middle Ages, I recommend Andrew Bernstein’s narrowly-named book “The Capitalist Manifesto” and variants of it.