Unstable, unbalanced, uncoordinated and unsustainable

China’s Fall, Not Its Rise, Is the Real Global Threat

China’s rise to global prominence has long preoccupied the leaders of the developed world. They should be more concerned about what happens if the country’s growth falters.

With its combination of cheap labor, easy money, undervalued currency, heavy investment in manufacturing and focus on exports, the nation of 1.3 billion has built an impressive economic engine. From 2008 through 2010, China contributed more than 40 percent of the world’s growth.

But the Chinese model has its limits, and that has far- reaching consequences for the U.S. and Europe, both of which are increasingly dependent on China. The country’s share of global exports already exceeds 10 percent, larger than that of Japan at its peak in 1986. Barring some miracle, Chinese exporters can’t expand their market share much further without lowering prices and wiping out their own profits, research by economists at the International Monetary Fund suggests. China’s dependence on exports also makes it highly vulnerable to slowing growth in the developed world, and to rising trade tensions: The U.S. Senate today began debating a bill that could ultimately lead to punitive tariffs on Chinese imports in retaliation for undervaluing its currency.

Meanwhile, economic stress is mounting at home. Labor costs are surging as the supply of young, capable factory workers wanes and living conditions rise along with expectations of better wages. Cheap and abundant credit has driven over- investment and pushed up real-estate prices to levels many families can’t afford, adding to social tensions and possibly setting the country up for a bust. China’s approach to managing its exchange rate is fueling inflation, which government figures put at 6.2 percent in August.

Well Aware

Chinese officials are well aware of the problems their country faces. As Premier Wen Jiabao famously put it back in 2007, the country’s growth is “unstable, unbalanced, uncoordinated and unsustainable.”

The government’s aim, as laid out in its latest five-year plan, is to move away from reliance on exports and spur Chinese consumers to spend more -- an outcome that would benefit the entire global economy by boosting China’s demand for other countries’ goods and easing the trade imbalances that have contributed to the developed world’s debt troubles.

The implementation will be tricky. Getting people to spend requires the Chinese government to eliminate many of the subsidies -- including cheap labor, low interest rates and an undervalued currency -- that have fueled growth so far. Consumers need more income, so companies will have to pay their workers more. Consumers also need a stronger currency to boost their buying power, so exporters will lose some of their competitive edge. Savers need to earn a high enough return to guarantee their retirements, so banks’ and companies’ borrowing costs will rise.

Unprofitable Industry

As a result, vast swaths of Chinese industry could be rendered unprofitable. Bad loans could force the government to step in and recapitalize banks. Fixed investment, which makes up 46 percent of the Chinese economy compared with only 12 percent in the U.S., could fall sharply, undermining the employment growth needed to boost spending.

In short, China’s export-driven model could fall apart before consumers are able to pick up the slack.

In such a crisis, China’s economic weight would become a liability. The IMF estimates that the impact of Chinese demand on the world’s largest economies has more than doubled over the past decade. A deteriorating outlook for Chinese imports could send commodity prices plummeting, precipitating heavy losses for investors and risking financial contagion.

China’s Fate

There is very little the leaders of the developed world can do to influence China’s fate. Trade wars, such as the one the U.S. Senate may be on the verge of launching, will only make the situation worse. Instead, Europe and the U.S. need to focus on limiting their own vulnerability: The longer they keep growing at rates not far above zero, the more likely it is that an unexpected shock -- such as a Chinese crisis -- will tip them back into a recession.

In Europe, leaders must move quickly to solve a deepening debt crisis and deal with insolvent banks. In the U.S., they need to take radical measures, including pumping more federal stimulus money into a stalled economy and providing debt relief to underwater homeowners, to clear the way for renewed growth. Over the long term, leaders on both continents need credible plans to stop debt from growing faster than the underlying economies.

Prudence requires being prepared for contingencies such as a bad outcome for China. If we don’t solve our own problems soon, we won’t be ready.

The dictatorship of the bean-counters

Euro-crisis 

The bankrupting of democracy is too high a price to pay for the Euro-elites’ scheme to save their system through more austerity and integration.

by Mick Hume 

Amid all the endless speculation and wrangling over how the Euro-crisis will end, one question remains unanswered: who has bothered to ask the people of Europe what they think of the anti-crisis measures being imposed across the continent, or of their rulers’ plans for the future of the Eurozone and the European Union?

When even the Europe editor of the Europhile BBC suggests that ‘it is quite possible that an early casualty in the Eurozone crisis will be democracy’, it is surely time to ask some serious questions about the way that the handling of Europe’s financial and economic problems is intensifying the crisis of democratic politics.

If there is one thing that worries the Euro-elites even more than their out-of-control finances these days, it is their uncontrollable electorates. Governments, EU bureaucrats and Euro-bankers do not trust the ignorant European masses, many of whom have stubbornly refused to accept (on the rare occasions they have been asked) that the authorities know what’s best for them. We have followed on spiked in recent years the elites’ sustained efforts to impose a new centralised constitution on the EU and then, when those nations offered a vote rejected their imperious plans, to sneak it in through the backdoor anyway. They will not take ‘no’ for an answer, no matter how often and how loudly we tell them.

The contempt for democracy in high places has come out more forcefully in response to the Euro-crisis. First the faceless officials and financiers of the EU, the European Central Bank (ECB) and the International Monetary Fund effectively deposed the elected government of Ireland and took over managing its debt-ridden economy. Now Greece, the current cockpit of the Euro-crisis, is suffering the same fate, sentenced to a debtors’ prison and subjected to dictatorship-by-bureaucrat.

And the supposedly more powerful members of the Euro club are not immune either. We now know that in August the ECB wrote to Italian premier Silvio Berlusconi, demanding that ‘bold and immediate action’ to cut public spending and reform the labour market was ‘essential’ before the ECB could help to lower Italy’s debt burden. It reads like a bailiffs’ demand to indebted tenants, only aimed at a sovereign government. And all done in private, of course, until somebody leaked the letter last week.

Some elder European statesmen have raised concerns about this behind-closed-doors undermining of democratic governments. The German president Christian Wulff has warned that the ECB’s manipulation of Euro states’ national finances through the purchase of government bonds strikes at the ‘very core’ of democracy, leaving some governments in ignorance of what is happening to their own treasuries. A former Austrian chancellor has also reportedly warned of the danger of an advancing ‘dictatorship of experts’ in Europe.

Yet within today’s political circles there remains a largely unspoken consensus that this is how things have to be. Everybody can now see that it was misconceived to imagine they could smoothly integrate economies as different as mighty Germany and creaky Greece into the same single European currency. But what is the only solution the elites can see for the failure of economic integration? Why, more and closer Euro-integration, of course! They want to centralise control over public finances and borrowings as well as exchange and interest rates. And this concentration of more power in the hands of bureaucrats, bankers and accountants is now effectively endorsed as the only solution not only by the Euro-bureaucrats themselves, but also by ‘outsiders’ such as US president Obama and Tory chancellor of the UK exchequer George Osborne.

Every discussion of the possible outcome of the crisis only seems to suggest two options: either a ‘disastrous’ break-up of the Eurozone or its ‘restructuring’ – that is, a mega-bailout coupled with further moves towards fiscal as well as economic union. The first of these is not really considered an option at all by the Euro-elites. It would be an act of political suicide on their part. So the second option is their only one. But they also fear what the reaction of their peoples will be to that, especially in Germany and France.

Their answer has been effectively to suspend democratic debate of these matters and keep the public out of the loop, conducting the real deals in smoke-free rooms and secret correspondence behind a curtain of media obfuscation. So for example, we have been repeatedly assured that the idea of the Greek government defaulting on its debts is out of the question. Meanwhile behind the scenes, plans have been put in place for a sort of slow-motion, secret default on at least half of Greece’s national debt. We have also been assured that each bailout of banks and governments is the last – until the next one. Meanwhile, the numbers apparently required for a grand bailout of governments and re-capitalisation of banks have crept up from ‘only’ billions of Euros to trillions. No doubt when the leaders finally agree the latest deal it will be declared a triumph for European democracy, the absence of any public consent for it quietly shoved under the carpet along with those unpaid Greek debts.

Through all of this semi-secret financial jiggery-pokery there has been a remarkable absence of any real public discussion of the fundamentals of Europe’s economic crisis. Great play was made in the British media last week of the German parliamentary debate before the Bundestag voted to pass the Greek support package by a large majority. Rather less was said about the fact that this stage-managed occasion was merely ratifying the deal done back in July, not the Euro-leaders’ latest proposed mega-bailout, and that it was passed only after senior figures assured parliament that there would be no bigger demands made on the German taxpayer. Even then, the uncertain parliamentarians were hardly reflecting the views of their voters, half of whom tell opinion pollsters they would rather scrap the Euro and bring back the Deutschmark. Little wonder the Eurocrats are so nervous about telling us the truth.

Yet despite the widespread discontent and anger across much of Europe at the counter-crisis measures being imposed, there is little sign of any political alternative on offer. Instead, formal political debate has been reduced to the sort of petty issues we have seen kicked around during the UK party conference season. Meanwhile, the leaders of all Europe’s major parties basically agree that on the substantive issue of the crisis there is no alternative; the austerity-and-integration show must go on, whether the citizens of Europe they purport to represent like it or not, and whether or not it will work.

It has become almost a cliché to talk about the need for more leadership in European politics. Like many clichés, it is true. But what the political-media class largely means by leadership today is having the nerve to press ahead more forcefully with the bureaucracy’s big plan for Euro-survival, and worry less about what the little people think. For them, ‘leadership’ equals unqualified elitism. For some of us, on the other hand, genuine political leadership in a supposedly democratic society would mean leading a public debate on the crisis and winning the argument for your vision. The pathetic excuses we have for leaders today, however, have no argument to offer, beyond the spectre of Euro-apocalypse and the desperate need to cling together for their own survival.

Yet what opposition does exist today seems to have if anything even less a grasp of reality. The sort of protest groups that have grabbed headlines in Europe and America of late look more like childish adolescents throwing a tantrum at their mean parents than serious movements for social change. In this context, the protesters’ demand for countries such as Greece and Ireland to default on their debts looks less like a radical alternative than another stop-the-world-I-want-to-get-off cop-out. There is no more engagement with the issues of economic crisis and the future of our societies here than in the empty debates in our parliaments and at party conferences.

Is there an alternative to the current elitism scheme for imposing further austerity-plus-integration? The consequence of allowing debtor nations to default and the fallout that would follow would undoubtedly be very serious. But that is no excuse for closing down the debate and refusing to think outside the accountants’ box-file.

Democracy is a meaningless charade without choices and competing visions for the future of society. And the bankrupting of democracy is surely too high a price to pay for any financial package. There is no ready-made alternative economic solution to hand. But the very least we should demand is that the true depth of the crisis be made public, and that every aspect of the counter-crisis measures must be openly debated. The first step in that direction should be to challenge the way that European democracy is being bankrupted and asset-stripped in the name of saving the continent. Fighting for the future of Europe is not the same thing as the survival of the Euro-elites.

As things stand, we in Europe look set to end up with the worst of both worlds. We are supposed to swallow the abrogation of democracy and imposition of the dictatorship of experts and bureaucrats in the name of economic necessity. And then their elitist schemes won’t work anyway either to bring about an integrated Europe or to revitalise the Euro economy.

The future of all the peoples of Europe is far too important to be left to the discretion of Eurocrats, accountants, bankers and political cowards.

Mick Hume is editor-at-large of spiked.

Never let a good crisis go to waste

Turkey's House of Cards

By Caroline Glick

To the naked eye, Turkish Prime Minister Recep Tayyip Erdogan seems to be moving from strength to strength.

Erdogan was welcomed as a hero on his recent trip to Egypt, Tunisia and Libya. The Arabs embraced him as the new face of the war against Israel.

The Obama administration celebrates Turkey as a paragon of Islamic democracy.

The Obama administration cannot thank Erdogan enough for his recent decision to permit NATO to station the US X-Band missile shield on its territory.

The US is following Turkey's lead in contending with Syrian President Bashar Assad's massacre of his people.

And according to Erdogan, the Obama administration is looking into ways to leave its Predator and Reaper UAVs with the Turkish military when US forces depart Iraq in the coming months.

Turkey requires the drones to facilitate its war against the Kurds in Iraq and eastern Anatolia. The Obama administration also just agreed to provide Turkey with three Super Cobra attack helicopters.

Despite its apparent abandonment of Iran's Syrian client Assad, Turkey's onslaught against the Kurds has enabled it to maintain its strategic alliance with Iran. Last month Erdogan announced that the Turkish and Iranian militaries are cooperating in intelligence sharing and gearing up to escalate their joint operations against the Kurds in Iraq.

Erdogan is probably the only world leader that conducted prolonged friendly meetings with both Iranian President Mahmoud Ahmadinejad and US President Barak Obama at the UN last month.

Then there are the Balkans. After winning his third national election in June, Erdogan dispatched his Foreign Minister Ahmet Davutoglu to Kosovo, Bosnia and Romania to conduct what the Turks referred to as "mosque diplomacy."

Erdogan's government has been lavishing aid on Bosnia for several years and is promoting itself as a neo-Ottoman guardian of the former Ottoman possessions.

EVEN ERDOGAN'S threats of war seem to be paying off. His attacks on Israel have won him respect and admiration throughout the Arab world. His threats against Cyprus's exploration of offshore natural gas fields caused Cypriot President Demetris Christofias to announce at the UN that Cyprus will share the revenues generated by its natural gas with Turkish occupied northern Cyprus.

Christofias said Cyprus would do so even in the absence of a unification agreement with its illegally occupied Turkish north. Moreover, due to Turkish pressure, Cyprus has agreed to intensify reunification talks with the Turkish puppet government in the northern half of the island. Those talks were set to begin in Nicosia last Tuesday.

Then there is the Turkish economy.

On the face of it, it seems that Turkey's assertive foreign policy is facilitated by its impressive economic growth.

According to Turkey's statistics agency, the Turkish economy grew by 8.8 percent in the second quarter of the year - far outperforming expectations. Last year the Turkish economy grew by 9 percent. With this impressive data, Erdogan is able to make a seemingly credible case to the likes of Egypt that it can expect to be enriched by a strategic partnership with Turkey.

For Israelis, these achievements are a cause for uneasiness. With Turkey building itself into a regional powerhouse largely on the back of its outspoken belligerency towards Israel, many observers argue Israel must do everything it can to mend fences with Turkey. Israel simply cannot afford to have Turkey angry at it, they claim.

If Turkey's position was as strong as the conventional wisdom claims, then maybe these commentators and politicians would have a point. But Turkey's actual situation is very different from its surface image.

Turkey's aggressive, peripatetic foreign policy is earning Ankara few friends.

Erdogan's threat to freeze Turkish-EU relations if the EU goes ahead as planned and transfers its rotating presidency to Cyprus next July has backfired.

European leaders wasted no time in angrily dismissing and rejecting Erdogan's threat. So too, Germany and France have been loudly critical of Turkey's belligerence towards Israel.

Then there is Cyprus. Turkey's ever escalating threats to attack Cyprus's natural gas project have angered both the EU and Russia. The EU is angry because as an EU member state, Cypriot gas will eventually benefit consumers throughout the EU, who are currently beholden to Russian suppliers and Turkish pipelines.

Russia itself has announced it will defend Cyprus against Turkish threats.

Russia is annoyed by Turkish courtship of the Balkan states. It sees no reason to allow Turkey to throw its weight around in Cyprus. Doing so successfully will only strengthen Ankara's appeal in the Balkans and among the Turkic minorities in Russia.

THIS BRINGS us to the Muslim world. Despite Erdogan's professions of friendship with Iran, it is far from clear that their alliance is as smooth as he presents it. The Iranians are concerned about Turkish ascendance in the Middle East and angry at Turkey for threatening Syria.

In truth if Assad is able to ride out the current storm and remain in power, he will owe his survival in no small measure to Turkey. Since the riots broke out in the spring, Turkey has restrained Washington from taking any concerted steps to overthrow the Syrian dictator.

Had it not been for Erdogan's success in containing the US, it is possible the US and Europe might have acted swiftly to support the opposition.

But whether he stays in power or is overthrown, it is doubtful that Assad will feel any gratitude towards Erdogan.

Rather, Assad will likely blame Erdogan for betraying him. And if Assad is toppled, the Kurds of Syria could easily forge alliances with their brethren in Turkey, Iraq and Iran, to Turkey's strategic detriment.

Since former Egyptian president Hosni Mubarak was overthrown in February, Turkey has been making a concerted effort to build an alliance with the Egyptian Muslim Brotherhood.

Ankara has reportedly transferred millions of dollars in aid to the Islamic group, and of course continues to support Hamas as well as Hizbullah.

Yet for all of his efforts on the Muslim Brotherhood's behalf, the Brotherhood issued a sharp rebuke of Erdogan during his visit to Egypt. Brotherhood leader Essam el-Arian rejected Erdogan's call for Egypt to adopt the Turkish model of Islamic democracy as too secular for Egypt.

As for the Turkish economy, a closer analysis of its financial data indicates that Turkey's expansive growth is the result of a credit bubble that is about to burst. According to a Citicorp analyst quoted in The Wall Street Journal, domestic demand accounts for all of Turkey's economic growth.

This domestic demand in turn owes to essentially free loans the government showered on the public in the lead-up to the June elections. The loans are financed by government borrowing abroad.

Turkey's current accounts deficit stands at nearly 9 percent of GDP.

Greece is engulfed in a debt crisis with a current accounts deficit of 10 percent.

Analysts project that Turkey's deficit will eclipse Greece's within the year. And whereas the EU may end up bailing Greece out of its debt crisis, Turkey has no one to bail it out of its own debt crisis.

Consequently, Turkey's entire economic house of cards is likely to come crashing down very rapidly.

It is hard to understand why Erdogan is acting as he is given the poor hand he is holding. It is possible that he is crazy.

It is possible that he is so insulated from criticism that he is unaware of Turkey's economic realities or of the consequences of his aggressive behavior. And it is possible that he is hoping to combine a foreign policy crisis with Turkey's oncoming economic crisis in order to blame the latter on the former. And it is possible that he believes that US backing gives him immunity to the consequences of his actions.

No matter what stands behind Turkey's actions, it is clear Ankara has overplayed its hand. Its threats against Israel and Cyprus are hollow. Its hopes to be a regional power are faltering.

The only thing Israel really needs to be concerned about is the US's continued insistence that Turkey is a model ally in the Islamic world. More than anything else, it is US support for Turkey that makes Erdogan a threat to the Jewish state and to the region.

People Vs Fruit Flies

Malthus and the Assault on Population

by Murray N. Rothbard

One of the first Smithian economists, and, indeed, a man who was for two decades the only professor of political economy in England, was the Rev. Thomas Robert Malthus (1766–1834). Malthus was born in Surrey, the son of a respected and wealthy lawyer and country gentleman. Malthus graduated from Jesus College, Cambridge, in 1788 with honors in mathematics and five years later became a fellow of that college. During that same year, Robert Malthus became an Anglican curate in Surrey, in the parish where he had been born.

Malthus seemed destined to lead the quiet life of a bachelor curate, when, in 1804, at nearly 40, he married and promptly had three children. The year after his marriage, Malthus became the first professor of history and political economy in England, at the new East India College at Haileybury, a post he retained until his death. All his life, Malthus remained a Smithian, and was to become a close friend, though not disciple, of David Ricardo. His only marked deviation from Smithian doctrine, as we shall see, was his proto-Keynesian worry about alleged underconsumption during the economic crisis after the end of the Napoleonic Wars.

But Malthus was, of course, far more than a Smithian academic, and he gained both widespread fame and notoriety while still a bachelor. For "Population" Malthus became known worldwide for his famous assault on human population.

In previous centuries, insofar as writers or economists dealt with the problem at all, they were almost uniformly propopulationists. A large and growing population was considered a sign of prosperity, and a spur to progress. The only exception, as we have seen, was the late-16th-century Italian absolutist theorist Giovanni Botero, the first to warn that population growth is an ever-present danger, tending as it does to increase without limit, while the means of subsistence grows only slowly. But Botero lived at the threshold of great economic growth, of advances in total population as well as standards of living, and so his gloomy views got very short shrift by contemporaries or later thinkers. Indeed, absolutists and mercantilists tended to admire growing population as providing more hands for production on behalf of the state apparatus as well as more fodder for its armies.

Even those 18th century writers who believed that population tended to increase without limit, curiously enough favored that development. This was true of the American Benjamin Franklin (1706–90), in his Observations Concerning the Increase of Mankind and the Peopling of Countries(1751). Similarly, the physiocrat leader Mirabeau, in his famous L'Ami des Hommes ou traité de la population (The Friend of Man or a Treatise on Population) (1756), while comparing human reproduction to that of rats — they would multiply up to the very limit of subsistence like "rats in a barn" — yet advocated such virtually unlimited reproduction.

Interpreting Religion

When Science Isn't

By Peter Greenberg

You could almost feel the fear emanating from the official statement/caveat issued by the director of CERN, the European Organization for Nuclear Research. Its scientists, it seems, had discovered something they shouldn't have. Uh oh.

It would have been different if CERN's experimenters had loyally backed up the conventional scientific wisdom/orthodoxy about Climate Change, formerly global warming. The name had to be changed when certain unfortunate facts kept turning up. As they will in real science.

Now the most embarrassing piece of evidence yet has made its appearance at that super-sophisticated physics lab over in Switzerland where they put atomic particles through their very fast paces.

This time CERN's researchers have found that nearly half of the global warming observed of late isn't traceable to man's activities after all but to sunspots, specifically the fluctuations in solar cosmic rays that promote cloud formation (I don't understand it, either, but I'll take the textbooks' word for it).

Whatever the scientific validity of the physicists' findings, it's dynamite politically. As CERN's director, Professor Rolf-Dieter Heuer, must have well understood. Because, even before the experiment's findings were published, he told his scientists to "present the results clearly but not interpret them" -- lest they find themselves entering "the highly political arena of the climate-change debate." Which, of course, is just where they now find themselves.

How could it be otherwise when you're overturning applecarts everywhere in the Global Warming industry? There are certain possibilities you don't even want to hint at if you intend to stay a member in good standing of the scientific establishment. For climate change isn't just a theory any more, it's an article of faith. And anyone who dares dissent is treated as a heretic.

The prudent thing to do, if a scientist must blab, is to present the results of his experiments "clearly but not interpret them." Some things should not be noised about. An Italian named Galileo Galilei got much the same advice from his friends in the church when he was challenging scientific dogma some time ago. But the man just would not shut up, or stop peering through his new-fangled telescope.

Scientists, the real ones, are like that: incorrigible. A stubborn bunch, they believe all theories are to be tested by the evidence. No matter how sacrosanct they have become. These types have no idea how politics works, whether it's of the church or state variety.

The latest Nobel laureate (physics, 1973) to join these subversives is Ivar Giaever at Rensselaer Polytech, who's just resigned from the American Physical Society after it formally declared that the theory of global man-made warning is "incontrovertible." As if any scientific theory can be. Mr. Giaever was a fellow at the society, a rare distinction. He's certainly earned it now by speaking out.

Not that Ivar Giaever is the first to notice that the emperor's clothes may not be quite there. He's following the examples set by another Nobelist, Robert B. Laughlin at Stanford; the late Norman Borlaug of Green Revolution fame; and the late Harold Lewis, emeritus professor of physics at UC-Santa Barbara and another APS fellow.

Professor Lewis resigned from this outfit last year, having had more than enough of its herdthink. He described the theory of Man-Made Climate Change, née Global Warming, as "the greatest and most successful pseudo-scientific fraud I have seen in my long life as a physicist."

It's not that every one of these gentlemen believed or disbelieved the scientific theory/fad called Anthropogenic Global Warming. They just preferred to keep an open mind. But that's no longer allowed scientists in our advanced age.

Remember Climategate? The most revealing aspect of that treasure trove of hacked emails was not how the evidence was being manipulated (as with the notorious hockey-stick graph and trick) but how the emailers were conspiring to blacklist any scientists who dared disagree with them.

If this latest scientific theory and fad really is incontrovertible, why devote so much effort and email traffic to censoring any dissent from it? To quote one of the emails on the necessity of keeping the UN's Intergovernmental Panel on Climate Change free of any dissenting views: "I can't see either of these papers being in the next IPCC report. Kevin and I will keep them out somehow -- even if we have to define what the peer review is."

Whenever dissent is voiced, the high priests of Climate Change have a simple response. Shut up, they explain.

The ranks of Global Warming's true believers closed almost as soon as CERN's latest findings got out. The sheer number of scientists, UN bureaucrats and politicians-speaking-as-scientists (see Gore, Al) is often cited as proof of man-made climate change. As if scientific truth were determined by majority vote. And climate change has won by a landslide!

Recommended reading: "The Truth About Greenhouse Gases" by William Happer, Cyrus Fogg Professor of Physics at Princeton, that nest of subversives, in the June/July issue of First Things. He compared the worldwide enthusiasm for this oh-so-scientific theory with the crazes chronicled by Charles Mackay in his classic "Extraordinary Popular Delusions and the Madness of Crowds."

To quote from the second edition of that work in 1852: "Men, it has been said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one." And one by one, our scientists seem to be recovering.

Eternal fallacies

The Totally Confused Peter Thiel

By Robert Wenzel

Peter Thiel is co-founder PayPal and an early investor in Facebook. He is ranked #365 on the Forbes 400 list (2010).

The Manhattan Institute and e21 hosted a conversation with Thiel at the National Press Club in Washington DC. Although considered by some to be a libertarian, his views often ranged far from Liberty Nation. At times, he sounded like Tyler Cowen with more facts.

He predicted a return of Malthusianism. He thinks, like Malthus, that we are running out of food and other resources. He said that energy started going wrong in the 1970s. And he said that food yields have barely kept pace with global population growth in the last 30 years. [Which means they have kept pace-RW]

Here's Murray Rothbard on Malthus and his equations:

...a third element explained his instant renown: the spurious air of the "scientific" that his alleged ratios gave to a doctrine in an age that was increasingly looking for models of human behavior and its study in mathematics and the "hard" physical sciences.
For spurious Malthus's ratios undoubtedly were. There was no proof whatever for either of these alleged ratios. The absurdly mechanistic view that people, unchecked, would breed like fruit flies cannot be demonstrated by simply spelling out the implications of the alleged "doubling itself every twenty-five years."...

In a few more centuries, at the same rate, the "ratio" of population to subsistence would begin to approach infinity. This is scarcely demonstrable in any sense, certainly not by referring to the actual history of human population that, in most of Europe, remained more or less constant for centuries before the Industrial Revolution.
Still less is there proof of Malthus's proclaimed "arithmetical ratio," where he simply assumes that the supply of food will increase by the same amount for decade after decade...
Then, by the 1960s and 1970s, antipopulation hysteria arose again, with ever more strident calls for voluntary or even compulsory zero population growth, and countries such as India and China experimented with compulsory sterilization or compulsory abortion. Characteristically, the height of the hysteria, in the early 1970s, came after the 1970 census in the United States noted a significant decrease in the birth rate and the beginnings of an approach toward a stationary state of population. It was also observed that various third-world countries were beginning to see a marked slowing of the birth rate, a few decades after the fall in death rate due to the infusion of Western advances in medicine and sanitation. It looked again as if people's habituation to higher living standards will lead them to lower the birth rate after a generation of enjoying the fruits of lower death rates. Population levels will, indeed, tend to adapt to maintain cherished standards of living.It looks as if Godwin was right that given freedom, individuals in society and the marketplace will tend to make the correct birth decisions..

Thiel went on to say that travel got faster every decade from the 1500s onward, but that stopped in the 70s [But he ignored the fact that more people fly at the fastest rates now than ever before]

He said that what's happening in the middle east is technological failure that has produced "desperate people more hungry than scared" [which means he completely ignores the role that totalitarian governments play in suffocating a country]

He said regulatory inertia has come to dominate because no one believes the future will be better. [I have no idea where he gets this, everyday there are more and more regulations. Has he heard of the Consumer Finance Protection Bureau? Has he heard that bank fees are going up because of new regulations? Has he heard of Obamacare?)

Then he said of the woman who forcibly takes money from the German people and gives it to the Greeks so that they can give it to the banksters that she, Angela Merkel, is the leading conservative leader in the world today. [Pardon me while I puke.]

Paging Hayek! Thiel then actually said that scientists and engineers are extremely underrepresented in the political culture. Theil obviously doesn't get that it is not the planners, but the fact that society can not be planned, that is the problem with government planning. No one knows what some lone scientist is dreaming up that will change the world. No one knows what some entrepreneur has spotted that will be in demand across the globe, once he brings it to our attention. It is absolutely insane to think that a central planner, even a scientist or engineer, can know what the entire world is thinking, big and small, and thus plan out the entire world.

Then, incredibly, Thiel said, he would prefer small government, but if it's going to be big we should at least have a plan for what we're doing instead of chaos. [Chaos is the only thing that will save us from a big government, which by definition will be totalitarian]

Bottom line: Thiel, like Cowen, seems to have no problem taking one side of a position and then, minutes later, taking the opposite,e.g. although favorably bringing up Malthus at one point, at another point, he disses Malthus.

But even more seriously, he seems to fail to get the the big picture fact that central planning can not work, even if "scientists and engineers" are brought in, since as Hayek and Ludwig von Mises taught us, knowledge is dispersed through out the population and it is impossible for one planner to ever have all the information.

Thiel, thus, is another example of a billionaire, who doesn't understand how the economy works. For the same reason that we would never have Michael Jordan perform heart surgery on us, despite the fact that he was a great athlete, with great stamina, we should stop listening to billionaires about how to run the economy. Thiel proved today that making a billion is certainly a different skill than understanding how the economy that he made his billions in works.

It's All About Them

The Melancholia of the middle classes

 

Lars von Trier’s new film brilliantly teases out the link between the rot of the bourgeois mind and the rise of apocalyptic fantasies.

By Brendan O’Neill

It is an unwritten law of modern moviemaking that the more realistic-looking the apocalypse becomes, the less believable it is. Films like The Day After Tomorrow and 2012 may have bombarded our eyes with a CGI-fuelled glimpse into the end of days, but they were far too daft to make an impact on our hearts and minds. Never had watching the obliteration of mankind felt so tepidly unmoving.

Melancholia, directed by Dogme badboy turned darling of the European arthouse, Lars von Trier, is different. It eschews the big-bucks bulldozing of major cities in favour of showing the apocalypse play out amongst a dysfunctional upper middle-class family in a remote mansion in some unnamed country. And, as bizarre as it may sound, the end result is a properly gripping drama, which tells us a hundred times more about contemporary apocalypitis, about our End Times obsession, than any Hollywood film has managed.

The genius of Melancholia is that it draws a direct link between the soullessness of the modern bourgeois existence and the flourishing of fantasies about the end of the world. Indeed, the apocalypse in the movie is inseparable from the existential disarray of its assorted vulgar characters. It seems almost to be a physical manifestation of the intellectual and bodily lethargy of the lead character in particular - Justine (Kirsten Dunst), a pretty, well-off, cushily employed woman who has just got hitched to a man who looks like one of the hunks from True Blood (Alexander Skarsgård), yet who is inexplicably unhappy. As everyone keeps saying to her, with increasing levels of bemusement, ‘You should be happy’.

In Part 1 of the film, titled ‘Justine’, we watch as Justine survives being the bride in the bourgeois wedding from hell. Skating perilously close to parody, von Trier gives us a mad collection of posh creeps and sexual weirdos. Justine’s dad, for example, played by John Hurt, is obsessed with buxom women called Betty. It’s hard to work out who’s the most obnoxious character: Justine; her mother, played by Charlotte Rampling, who is so wantonly icy she makes the Ice Queen of Narnia look like St Bernadette; or Justine’s brother-in-law (Kiefer Sutherland), who I think is meant to symbolise Capitalism, because all he talks about his how much filthy lucre he has.

It is during Justine’s loveless wedding that we first see Melancholia, a planet that has been hidden behind the sun for eons but which is now on the move. At first, the characters mistake the faint red entity in the nighttime sky for a star, but as the film progresses we discover that it is in fact a planet, vastly bigger than Earth, and heading our way. It’s no coincidence that this celestial object makes itself visible on the evening of Justine’s nuptials - because its progress, even the name that mankind will shortly give it, mirrors her own state of mind. Just as Justine’s loss of joie de vivre is puzzling, so is the sudden appearance of this long-lost gigantic orb.

Part 2 of the film, titled ‘Claire’, focuses on Justine’s sister (Charlotte Gainsbourg). A smart and optimistic sort, and the mother of a young son, Claire wants to live, and thus sees the potential collision between Melancholia and Earth as something terrible. Justine, by contrast, welcomes it, even discovering a new lease of life, one perversely based on her fervent hope that all life might soon be extinguished. ‘Life on Earth is evil’, she tells Claire, as casually as… well, as casually as your average environmentalist will these days denounce the hubris of humankind. Melancholia seems to grow or shrink, move closer to or farther from Earth, depending on whose mood is stronger: hopeful Claire’s or bitter Justine’s.

In intimately tying up End Times with the moodiness of a spoilt rich girl who is massively down in the dumps and seems to be developing ME (that’s what her lethargy mostly brings to mind), von Trier taps into a profound truth about modern-day apocalyptic miserabilism: its origins lie less in real likely events than in the rot of the bourgeois mind and body politic.

All of today’s frequent fretting about the demise of days - or ‘global warming’, ‘peak oil’, ‘the tipping point’, to give it some of its deceptively secularist monikers - likewise springs from the existential crises of influential sections of society. It is decadent, self-pitying bourgeois thinkers and activists, middle-class miserabilists, real-life Justines, who have fashioned the idea that we are heading towards certain doom, and in every single instance it is their own inner turmoil that has led them to embrace such fiery fantasies. Just as Melancholia seems to bulge and hum in tune with Justine’s moral self-immolation, so today’s warnings about climatic catastrophe always reveal tonnes more about campaigners’ narcissistic angst than they do about what will happen to Earth and us in 2020 or 2050 or whenever.

Sometimes, the sons and daughters of the well-off and well-connected will unwittingly let slip that their apocalypitis is All About Them. So the unfathomably wealthy green David de Rothschild says he first got serious about climate-change campaigning during a jolly to the North Pole, when ‘I felt like nothing more than a speck of dust on the endless horizon’. Franny Armstrong, director of the green ‘documentary’ The Age of Stupid, admits that for someone like her, ‘a member of the MTV generation’, it’s almost a relief that climate change has helped to make life ‘so much more meaningful than what was planned’. Recently, a bevy of implacably middle-class young hacks were taken on a freebie trip to the Arctic by a green group, and all of them dutifully filed newspaper columns about their Damascene conversions to green apocalypse-fretting, because ‘there’s nothing like a glacier crumbling into the sea in front of your eyes’ to remind you that the end of the world is nigh, intoned one.

Just as von Trier’s wayward planet of Melancholia seems to mould itself around Justine’s moods, so today’s climate-change hysteria always seems to encapsulate at-sea rich kids’ feeling that life is losing its point and their view of people (Other People, that is) as dirty and dangerous. In one of the more controversial scenes in the movie, Justine writhes naked and with undisguised glee in the nighttime light cast by Melancholia upon Earth. But is that really such a weird image at a time when, day in, day out, we’re snowballed with eco-porn about coming floods and storms of locusts written by people who clearly get some kind of kick from doom-dredging? It is tres amusant that Europe’s cultural elite is heaping praise upon von Trier’s film (even if much of it is deserved), because this movie looks to me like a sometimes stinging exploration of the cultural elite’s own superbly narcissistic habit of magicking up ‘coming apocalypses’ which always seem perfectly to reflect their own fears and prejudices and desperation for some Day of Judgement momentum in their increasingly purposeless lives.

The final 10 minutes of Melancholia contain some of the best special effects I’ve ever seen, way more subtle yet far more believable than the end-of-world fare dished up in apocalyporno films like 2012. The intense noise and oppressive growth of Melancholia (the cinema I was in felt like it was shaking) will nearly convince you that life as we know it has just ended - and that it’s all down to a bourgeois princess’s desire for doom, her loathing of ‘life on Earth’.