DAVID CAMERON BREAKS WIND


david-cameronOnce again I’ve just been reading Jeremy Warner in today’s Daily Telegraph (link below) where he’s written an article entitled “David Cameron is ‘pure wind’ on the economy”.  Mr Warner makes reference to George Orwell who pointed out that, “political language – and with variations this is true of all political parties, from Conservatives to Anarchists – is designed to make lies sound truthful and murder respectable, and to give the appearance of solidity to pure wind”.  Reading Mr Warner’s piece got me thinking.

The economic situation is much, much more profound than is generally being aired and discussed by mainstream economists, politicians and central bankers.

The fundamental issue here is that mankind’s brief era of ‘consumerism’ has reached the end of its life.  The idea that human beings should work primarily to acquire ‘stuff’ and create as much ‘leisure time’ as possible was a one-off characteristic of the industrial age.  We’re not actually supposed to live like this; we’re constrained by the laws of physics, and especially the Second Law of Thermodynamics, which means that we’re not entitled to something-for-nothing ad infinitum.

By ‘something-for-nothing’ I’m referring to mankind having twigged a couple of hundred years ago how to unleash 2 billion years’ worth of accumulated energy (sunlight). This has allowed hundreds of millions of us primarily in the developed world to live like kings of yore for several generations. It has also fostered within us, and within economists in particular, the idea that industrial age rates of economic growth are some form of inalienable, God-given right to mankind, available to us forever.

However, that era – the extended industrial age – is now drawing to a close and it is the symptoms of this that we’re witnessing all about us now.  Some of us are arguing that the politico-economic orthodoxy simply cannot handle this concept. For all the time prior to the Industrial Revolution, mankind enjoyed trend economic growth of less than 1.0% per annum.

The situation is profound because unless and until we internalise the notion that we’ve reached the end of the era of industrial age (ie fossil-fuelled) rates of economic growth, then we shall continue to read articles about individuals and organisations being baffled about the absence of economic growth; or “disappointment on growth” to use Mr Warner’s understatement.

The terrible danger is that we’ll go on and on kidding ourselves that industrial age rates of economic growth will somehow (how?) be restored soon … and so governments, in particular, will remain on course for societal bankruptcy.  The greatest risk we face over the next quarter-century is civil unease and unrest (or worse) fomented by the proverbial ‘powers that be’ failing to grasp that we’ve reached the end of (industrial age rates) of growth.

Bluntly, our complex society, characterised as it is by staggering levels of debt and unfunded future liabilities, simply cannot function unless it is propped up by a reliable trend rate of economic growth of around 3.0% per annum; some people would argue that even this is inadequate given politicians’ propensity to tax, borrow, print and spend money largely without reference to economic realities, still less to the laws of physics.

I accept that this thesis might be hopelessly wrong.  However, I shall stand by it for as long as developed world’s economies skud along at a trend rate of growth of less than 3% per annum, and whilst the oil price in particular sits stubbornly at some four times its 140-year, inflation-adjusted trend price of $25 per barrel.

‘David Cameron is pure wind on the economy’: http://tinyurl.com/d84f3ry

Also posted at the ‘Renegade Economist’: http://tinyurl.com/c7t38rh

9 comments

  1. “I intend to make proposals about how we should be preparing for a lower energy future in the fullness of time on this blog.”

    For those that can’t wait, watch The Simpsons S24E09

    🙂

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    1. moraymint · ·

      Sounds like excellent advice, John. Will check it out. I’m the the proud owner of a beer glass emblazoned with Homer Simpson and the logo “Best Dad in the House!” Gives me a warm glow …

      Like

  2. Spot on, the resource crunch is also the root of the financial crisis (which as it is debt based must have at least a growth rate of 3% to service the interest element, which is never created btw, to stand still let alone feed, cloth and supp,y all the rest that the growing popularion wants or desires).

    I really do not know where this will end but it will not be pretty (the analogy I was given was the regular explosions in the rat population on the Ganges which occur every few years, intially all is bountiful when the river runs dry again then the rats turn on each other)

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  3. All that is very true – but it is exponential population growth which still concerns me most of all.

    Is it so wicked to wish for a Malthusian solution?

    Like

    1. moraymint · ·

      Yes, it is indeed exponential population growth (and, to some extent politically-facilitated unfettered migration) that is our greatest challenge over the next generation …

      Like

  4. Hysteria · ·

    something for nothing is certainly part of the problem – backed up by a belief (supported by c. 80 years of evidence) that “the state will provide”

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  5. I think you’re about right on the fossil fuel growth era, it’s not quite over yet, but it’s definitely on the way. The sources are becoming ever more difficult to get at (physically & politically). Conflicts likely to continue as the wells run dry.
    But during this era, we’ve pushed the boundaries back scientifically, and whilst the nuclear side is still relatively new, it’s pretty likely we’ll be able to harvest some of that energy efficiently and live beyond our means for a bit longer – it’s potentially a bigger and longer revolution (and much more dangerous. By my reckoning, we’ve got until then to sort out governance and rights issues globally, along with food, healthcare etc, otherwise we’ll probably screw things up hugely.

    Like

  6. I regularly read your posts on the Telegraph blog and appreciate the calm, clear analysis you bring to many economic issues.
    ‘The economic situation is much, much more profound than is generally being aired and discussed by mainstream economists, politicians and central bankers.’ This has often perplexed me and I was wondering how this could be addressed. What, for example, would be a simple, sit up and take note, fact to illustrate the legacy we are leaving for future generations.
    A couple of examples:
    1: How much every family / household / individual is in debt thanks to decades of government largess, this to be mentioned at least weekly and compared to 1 year and 10 years ago.
    2: A method to ‘visualise’ the debt, e.g. how long would it take to pay off today’s debt (not deficit) by handing over £50 notes at the rate of 1/second.
    First there has to be a clear definition of the debt, should it include pension and PFI liabilities?
    Keep it simple, visual and keep reminding us regularly.
    What think you Mr. M?

    Like

    1. moraymint · ·

      Thanks for your comment 9DS. I agree that there is a significant communication challenge here. At the risk of sounding patronising, most of our fellow citizens “don’t do macroeconomics” as such. Most folk are probably quite rightly and understandably focused on their immediate world view. There are times when I think that the only way our society will handle a transformation to a lower-energy future, to a post-consumerism future, to a post-carbon future, call it what you like, is when individuals and families and, possibly, local communities become so hammered by the economic realities of the end of growth that change is forced upon them/us all. Certainly, I have little sense that the political class will lead our society in to the next century in the way that I think needs done. Politicians generally don’t lead societies anyway; they tend to feed off them. I intend to make proposals about how we should be preparing for a lower energy future in the fullness of time on this blog. However, for now I’m just trying to raise awareness about the state we’re in, so to speak. Stay in touch.

      Like

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