Thursday, February 08, 2007

have faith in the market

Interesting place, the business pages of a newspaper.

Partly it's the real truth - the money people need to know what's really going on, so there's less spin and trivia than in the rest of the paper. GM crops, for example, were all over the business pages for months before the rest of the paper knew what to do with them (eventually plumping for 'another health scare' along the lines of salmonella, BSE, botulism and whatever).

But then there's the flipside; the economists' view of the world. These are, after all, people who believe that perpetual economic growth is possible and desirable. They are, therefore, completely insane.

They think economics is not the name for the study of certain sections of human behaviour, or even a model for understanding what goes on around humans. They think it's the whole story. If the market requires something then it will always be made available. It's blind faith.

The business pages of today's Independent features a piece on the new Barclay's Equity Gilt Study. Apparently we're going to avoid catastophic climate change and have an economic boom at the same time. Why? Because that's what'd be best for the economy.

Barclays Capital challenges the conventional wisdom that global warming will have a devastating impact on economic growth. It believes the need to increase energy capacity by 50 per cent by 2035, while simultaneously reducing dependence on hydrocarbons, will spark an "energy revolution" reminiscent of the technology revolution which led to the boom.

"If ever the time were ripe for such an energy revolution, it is now," said Tim Bond, global head of asset allocation at Barclays Capital, and author of the report. "And like all historical adoptions of general purpose technologies, the process should prove immensely stimulative to economic growth."

Mr Bond says that those who couch the climate change debate in terms of the cost to growth are underestimating the impact of an energy revolution. Last year's Stern Review concluded that if temperatures rise by five degrees celsius, up to 10 per cent of global output could be lost.

"All of the historical changes in energy supply - from dung to wood to coal to oil - were stimulative for the economy concerned...

"The impact of the replacement, restructuring and expansion of our energy infrastructure cannot be ignored," Mr Bond said. "Just as the personal computer cannot be un-invented, neither can the impending energy revolution."

I love the idea that you can't un-invent something that hasn't happened yet. It illustrates more eloquently than my analysis ever could just how utterly fucking deluded Mr Bond is.

There is a projected increase in energy consumption of 50% in 30 years. This is presumably based on the fact that we consume what we do now, and are going to get hungrier.

Climate change makes the need to cut fossil fuel use imperative.

These two things are not opposed in any way; they will surely be combined in some happy way as yet unforeseen.

The real issue that screams from the page goes completely unmentioned. He not only doesn't say how the new energy sources are to be economically viable and on-stream so fast. He neglects to say what the new energy sources might even be.

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