Research Reports: April 4, 2011
Markets Can Ease the Food Crisis
With proper incentives, developing nations can profit from higher prices.
by Craig J. Richardson, PhD, Visiting Research Fellow
Higher Tax Rates Won’t Fix Deficits
History has shown that increasing the tax burden of the rich would have little impact on cutting the deficit. Instead, it slows growth.
by Julie Ni Zhu, Research Intern
Ask the Expert: Health Savings Accounts
by Kevin T. McGrath, CPA, a tax partner with BST Advisors, LLC.
Business-Cycle Conditions, April 2011
The Consumer Returns, But Timidly
People are spending more and cautiously borrowing. But no clear engine of growth has emerged to drive the still-modest recovery.
by Polina Vlasenko, PhD, Research Fellow
RR20110404
History has shown that increasing the tax burden of the rich would have little impact on cutting the deficit. Instead, it slows growth.
by Julie Ni Zhu, Research Intern
Ask the Expert: Health Savings Accounts
by Kevin T. McGrath, CPA, a tax partner with BST Advisors, LLC.
Business-Cycle Conditions, April 2011
The Consumer Returns, But Timidly
People are spending more and cautiously borrowing. But no clear engine of growth has emerged to drive the still-modest recovery.
by Polina Vlasenko, PhD, Research Fellow
RR20110404
People are spending more and cautiously borrowing. But no clear engine of growth has emerged to drive the still-modest recovery.
by Polina Vlasenko, PhD, Research Fellow RR20110404
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How Many People Must Die to Fix the Planet?
On the 40th anniversary of the first world climate conference in 1979, the journal Bioscience published the ominously titled “World Scientists’ Warning of a Climate Emergency.” “Scientists,” the Warning begins, “have a moral obligation to clearly warn humanity of any catastrophic threat and to ‘tell it like it is.’ On the basis of this obligation…we declare, with more than 11,000 scientist signatories from around the world, clearly and unequivocally that planet Earth is facing a climate emergency.” Addressing this emergency, the Warning continued, will require a stunning prescription: “the world population must be stabilized—and, ideally, gradually reduced.”
The Warning itself might have gone the way of most academic editorializing, but the 11,000 “scientists” who added their names and reputations to the effort caught the public imagination. The press picked it up and everyone was off to the races. Right until people started looking at the credentials of the more than 11,000 signatories.
The list includes shockingly few climate scientists. It does include people who describe themselves as “PHD Student,” “MD,” and “Zoo keeper,” though. And those were drawn just from people with last names beginning with A. Critics had a field day with this, but they had more fun with signatories Mickey Mouse and Albus Dumbledore, who also signed on.
That 11,000 academics of any description would sign off this sort of thing is what’s most telling, and most damning. What do the 11,000 suggest? Quickly implementing “massive energy efficiency and conservation practices,” “eating mostly plant-based foods,” creating a “carbon-free economy,”and “reducing population,” among other things, all with the goal of bringing about “major transformations in the way our global society functions.”
Is that all?
Their set of recommendations follows almost perfectly from a strange obsession economists have had for over two centuries, which holds the threat of “overpopulation” imperils humanity’s very existence. In past variants, this threat entailed resource depletion that would supposedly condemn most of the world to misery and starvation.
Today’s scientists have adapted identical reasoning to climate change. In each instance, scholars claiming the mantle of scientific expertise have enlisted apocalyptic fears of a coming “population crisis” to advance sweeping programs of social engineering as a way to alter the course. But curiously, the predicted population catastrophe never comes. We are simply expected to believe that, for some reason, this time things are different even if the prescription is the same.
The root of this idea traces to eighteenth-century economist Thomas Malthus, who began with a simple, intuitively plausible observation: the population of human beings expands at a faster rate than food production increases, ensuring that the typical person’s quality of life ultimately decreases to the point of misery as a result. He was so persuasive on this count that the process became known as the “Malthusian catastrophe.”
While Malthus’s religiosity constrained him from taking this intuition to its full prescriptive end, his followers in the nineteenth and twentieth centuries attempted to mechanize a “scientific” solution by enlisting the powers of the state to socially plan and control population rates.
Before his name became synonymous with his macroeconomic diagnosis of the Great Depression, the British economist John Maynard Keynes attained fame as one of the world’s most prominent neo-Malthusians. “There is no more important object of deliberate state policy,” Keynes wrote in 1924, “than to secure a balanced budget of population.” Indeed, Keynes prescribed population control as a “solution” to the underlying political causes of World War I, to the Soviet Union’s food and political crises, and even to the economic malaise of interwar Germany.
In a heretofore unpublished speech given before the Malthusian League in London in 1927, Keynes contended that a proper population policy must not only achieve population stability but continue to maintain and cultivate a population of a certain character after the growth pattern had been reversed. At first he spoke of birth control, but almost seamlessly slipped into the pseudoscience of hereditary social planning known as Eugenics.
“Within our own lifetime,” Keynes predicted, “the population of [Great Britain] will cease to increase and will probably diminish.” Following Malthusian logic to its end, Keynes thought this both good and necessary, even if the nations of the earth “are now faced with a greater problem, which will take centuries to solve.” The solution? Keynes concluded, “I believe that for the future the problem of population will emerge in the much greater problem of heredity and Eugenics.” As a scribbled line on his notes further acknowledged, “Quality must become the preoccupation.”
What we needed to address the Malthusian catastrophe, according to Keynes, was a smaller and “better” population, cultivated by “the powerful weapon of the preventive check” and administered through a state-directed population policy. This is the ugly intellectual heritage – and hubris – behind today’s population planners in the climate activist movement.
Because this time, they tell us, it’s different. But it would have to be, because when Malthus penned his original prediction more than 95 percent of the world’s population of one billion lived in extreme poverty. That population has grown more than seven fold, but only about one third of it lives in extreme poverty today. The Malthusian catastrophe never came. Instead, we got growing wealth and comfort on a global scale, a process that continues unabated.
Yet according to the 11,000 signatories, a new Malthusian tipping point is approaching. This time the cause is not impoverishing resource depletion itself, but the belief that too many people are enjoying the fruits of prosperity. Electricity, affordable and accessible transportation, and even the consumption of meat are recast from signs of unprecedented global prosperity and into “strains” on the climate. The sky is falling now, and once again governments must turn to seldom-elaborated forms of social engineering aimed at reducing the global birth rate.
And here is where the pedigree of the 11,000 matters. They urge us to uproot nearly the entirety of human life using an argument that has never, in over 200 years, been correct. And they are absolutely unqualified as a group to do so. The ever present danger is that politicians will take cover behind them and their bad ideas, which is not at all a far-fetched concern.
Presidential candidate Bernie Sanders, in a recent town hall meeting on climate change, went right back to the same Mathusian well. In response to a question on global overpopulation he said that women “in the United States…have a right to control their own bodies and make reproductive decisions. The Mexico City agreement, which denies American aid to those organizations around the world that allow women to have abortions or even get involved in birth control, to me is totally absurd.” Such measures, he continued, were needed “especially in poor countries.”
A candidate for the presidency of the United States thinks it is absurd that the American people should be cautious in inflicting schemes of population control on impoverished nations. What he means but will not say is that he thinks Keynes was right. He thinks that we, in the developed West, need to decide how many and what kind of people should be born in less developed countries.
Because the environment. Because this time it’s different.
James R. Harrigan
James R. Harrigan teaches in the Department of Political Economy and Moral Science at the University of Arizona, and is CEO of FreedomTrust.
Phillip W. Magness
Phil Magness is a Senior Research Fellow at the American Institute for Economic Research. He is the author of numerous works on economic history, taxation, economic inequality, the history of slavery, and education policy in the United States.
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The Most Important Concept Mises Taught Me
Key among the basic concepts of Austrian economics (a term that Mises rarely used; he preferred just “economics” or more broadly, “praxeology”) is the concept of methodological individualism. This has been the most important of Mises’ basic concepts in my personal life over the fifty years since I met Mises in person and began my study of economics.
Methodological individualism? Try saying it fast three times. A snappier phrase might do better in our era of sound bites; I’ll leave that to others. Mises did, however, pen a snappy sentence that captures the concept: “The hangman, not the state, hangs the criminal.”
And let’s please have it understood that we’re not talking about ethics or politics here. Not “rugged individualism.” Methodological individualism is a principle that is every bit as foundational to social science (praxeology) as is conservation of momentum in physics. It simply recognizes the biological fact that we initiate our actions from within the privacy of our thoughts and emotions. It has ever been thus and ever will be, at least until that unhappy day when humans get USB ports implanted above their ears.
Yes, we usually take account of other people when we act: contracts or commitments we have made, examples or expectations others have set, threats of violence, and much more. Sometimes we cooperate, sometimes we compete, sometimes we fight, sometimes we sit on our hands. The fact remains: we initiate our actions.
I am a slower learner but I can safely say that over fifty years, methodological individualism has sunk in. When I read or hear statements that defy the concept, usually implicitly, my reaction is pretty much automatic.
Some examples:
We Californians see idiotic Proposition 65 warning labels that tell us some product is “known to the State of California” to cause cancer. My reaction: there is no acting entity called the State of California that knows anything. Individual bureaucrats, corporate lawyers, politicians, and earlier on, voters all acted in some way to bring these warnings into existence. This observation is entirely separate from the propriety or rationality of such warnings. (They’re counter-productive, I must add: because the warnings are so often applied to things that are clearly harmless, we likely overlook some genuine cancer links.)
At GM.com we are told “General Motors is committed to fostering smart, safe and sustainable communities around the world.” Once again, there is no acting entity called General Motors that is committed to anything. Granted, it may be a convenient shortcut to say that GM acts, but if we think about what really happened, we recognize that individual employees put this statement together and others more or less bought into it. Whether they were serious about these lofty words or what they might mean in practice are separate matters.
Our local utility, PG&E, was found criminally liable for a gas explosion a few years ago. What can it possibly mean for a corporation to be a convicted felon? I’m no lawyer but I thought crimes were individual actions that violate the rights of others, subjecting those who initiated them to punishment, often confinement. You can’t put a corporation in jail. You can, of course, put executives and employees in jail, but that didn’t happen.
We hear a lot about the trade deficit these days (more properly, current account deficit). The concept is mathematically coherent but very misleading because countries don’t trade with each other. Literally. Individuals and companies trade (and of course within companies, individuals carry out actions). Absent coercion, they do so because they mutually expect to benefit, and if there is a current account deficit, so what? It is necessarily balanced by a capital account surplus. But that concept is just as misleading.
On a grander scale, consider democracy. Elections make governments legitimate because they express the voice of the people, we are told. Hogwash! The winners are individuals with the best skills in getting elected. Benighted voters make their choices for all sorts of reasons, trivial or profound. Once in office, politicians and bureaucrats mainly seek power, prestige, and money. These players are all individuals responding to incentives. “Voice of the People” is an empty but dangerous phrase. There is no such voice.
Yes, it’s convenient to say the government or General Motors or the university did this or that. I do it myself. But let’s at least try to remember Mises’ hangman when we do.
I only wish Ludwig von Mises were still among us so I could thank him for propounding this important concept. Of course, it was my choice alone to study and adopt it.
Warren C. Gibson
Warren Gibson teaches engineering at Santa Clara University and economics at San Jose State University.
