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The Hissink File - September 2, 2016

September 1, 2016

 

Spring cleaning and Henry has moved house to a new web service; Henry’s Spring as it were, to coin a hackneyed phrase.

 

So we have survived another federal election and I have to say that the winning margin of one seat in the House of Representatives with an increase in independents in the Senate means our ‘lurch-to-the-left’ Liberal National Party will find it difficult to enact new legislation. And then on the other hand if the L-NP and the ALP are now indistinguishable politically, this close election result may not be as desirable as one might wish, since unwanted legislation may actually be easier to implement, especially with a politicised public service. But then the Senate may mitigate this situation, and collusion between the various political parties to further strengthen the role of government becomes possible.

 

Of course the latest farce when the Opposition won a couple of votes, because a couple of government members left the parliament before the House was adjourned, merely shows that our politicians, especially the government, are full of hubris.

 

The farce that was the National Census caused me much mirth. I received my dead-tree census forms the Thursday before and learnt that the ABS computer was already slow to the point of concern; my interlocutor mentioned he could not submit his timesheet electronically!  Being a sort of computer literate type of person, (I’ve been working with computers since 1972), I never bothered to complete my census online.

 

We in the boonies, or remote rural areas, tend not to get too involved with the various social crises occupying our city cousins but we can’t avoid learning about them on social media such as Facebook. Not being surgically attached to my cell-phone (I hesitate to call it a smart phone, because smart it certainly is not), I don’t use Twitter or Facebook, but do use WhatsApp via WiFi because cellphone reception where I am located is fairly woeful.  Having admitted this does not mean I actually use the social media for its designed purpose; instead I have discovered that government uses it as an information dissemination channel and that’s what I use it for - as a news-feed.

 

Now here’s an interesting snippet of news: the reported explosion of a rocket/satellite at Cape Canaveral. This was reported by Russia Today via my iPad that resides next to my bed during the night. (It’s there because it’s also my source of reading books, apart from the telephone and other communication services). Russia Today reported that it was a communications satellite for Facebook’s African service. But our ABC didn’t report that in the early news this morning. Checking the online ABC report confirms the Facebook connection, however, and this raises an interesting problem.

 

If the goal of Facebook, and by implication government, is to connect everyone on the planet via Facebook, and other social media services, then this means wholesale adoption of either cellphones, iPads and PC’s globally. This is good news for the mining and energy industry because this move to connect everyone requires the widespread distribution of energy globally. Which means cell towers everywhere in remote areas, and the supply of electrical power everywhere.

 

Yet at the same time we have the noisy sustainers yelling we need to close down the world’s coal fired power stations, and move towards renewable energy sources such as solar and wind.

 

Global coverage of social media via cellphones etc. and at the same time relying on renewable energy is simply a contradiction in the grandest sense: a utopian dream if there ever were one. It simply can’t happen. Living at the substance level and at the same time enjoying technological progress are silly incompatible goals.

 

Writing of silly incompatible views, the following is an extract from John Maynard Keynes’ “The General Theory”, pages 220-221:

 

Let us assume that steps are taken to ensure that the rate of interest is consistent with the rate of investment which corresponds to full employment. Let us assume, further, that State action enters in as a balancing factor to provide that the growth of capital equipment shall be such as to approach saturation point at a rate which does not put a disproportionate burden on the standard of life of the present generation. On such assumptions I should guess that a properly run community equipped with modern technical resources, of which the population is not increasing rapidly, ought to be able to bring down the marginal efficiency of capital in equilibrium approximately to zero within a single generation; so that we should attain the conditions of a quasi-stationary community where change and progress would result only from (p. 220) changes in technique, taste, population and institutions, with the products of capital selling at a price proportioned to the labor, etc., embodied in them on just the same principles as govern the prices of consumption-goods into which capital-changes enter in an insignificant degree.

 

If I am right in supposing it to be comparatively easy to make capital-goods so abundant that the marginal efficiency of capital is zero, this may be the most sensible way of gradually getting rid of many of the objectionable features of capitalism. For a little reflection will show what enormous social changes would result from a gradual disappearance of a rate of return on accumulated wealth. A man would still be free to accumulate his earned income with a view to spending it at a later date. But his accumulation would not grow. He would simply be in the position of Pope’s father, who, when he retired from business, carried a chest of guineas with him to his villa at Twickenham and met his household expenses from it as required (p. 221).

 

Abundant capital at ZIRP ? And what enormous social changes this policy has wrought - enormous numbers of unemployed, mischief-making, young people and ballooning sovereign debts, all based on the utopian belief that zero interest rates means infinite capital. This might be so in the guessed world that Keynes dreamed of, and which his followers are blindingly following with their interest rate policies, but it’s still an impossible utopian dream.

 

Keynes refused to accept Say’s Law, which in its simplest exposition is that you have to produce in order to consume. So if you want money to buy food, then you either produce something to exchange it for some money in the market that is explicitly defined as the activity of consensual free exchange, or you steal it, aka plundering. And of course there is always the solution of begging, come to think of it.

 

And it was not all that long ago that most city states could only survive by plunder, but it was the age of enlightenment and the following industrial revolution that changed things, until the ruling elite regained the power they lost, as they have today, to slowly return to the bad old days of feudalism in which the people are impoverished by continually paying for the irreplaceable destruction of wealth caused by the continued wealth consuming military-industrial complex that has replaced the robber barons of yesterday.

 

But it’s not that simple as I might write here, because capitalism, the accumulation of wealth by consuming less than what one produces, is not possible in subsistence economies. And exploding human populations then necessitates the abandonment of autarkic subsistence economic systems for ones based on the division of labour and the policy of mass production of goods for mass consumption. Experience has shown that such systems do not work under regimes of central planning, but do so under free-markets.

 

It is an economic axiom that raising the price of a good or service reduces the demand for that good or service.  This results in the search for lower cost alternatives and in the case of unskilled labour, when this is priced out of the market by minimum wage laws, then obviously cheaper alternatives are searched for - robots.

 

But our exploding human population is not necessarily caused by a general increase in population everywhere , but by a differential increase in one sub-population offset by a decreases elsewhere. That the developed world is experiencing population declines is fact, but it’s being more than offset by population growth in the undeveloped world. But these population increases are not simply due to increased fecundity but also due to a natural biological axiom - that populations tend to increase under rising temperatures, and decrease under waning temperatures.  This rule is simply confirmed by not refrigerating food, for example. Want to preserve your freshly butchered meat? Put it in a freezer and it will last for months or years. But leave it in the open environment, it either putrefies or becomes desiccated, (dried out).  The human population is increasing due to the waning of the last (mini) ice age, a period of cold that the earth is still recovering from.

 

Human populations, everything else being equal, wax and wane, like any other biological species, by changes in the environment. If it gets colder, populations decrease in number; if it gets warmer populations increase. So its the fluctuating environment that is causing the biosphere to wax and wane, and not vice versa.

 

Except that some of us believe differently, believing that humans control the climate than vice versa, the climate controlling us. But if most of us also believe in the efficacy of ZIRP to produce infinite wealth, then I suppose so too the climate.

 

And this is the problem.

 

Louis Hissink

Henry’s Retired Geologist.

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