American Elephants


The Most Powerful Defense of Market Capitalism You Will Ever Read. by The Elephant's Child

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Economist Deirdre McCloskey recently spoke in London, and this brief summary captures the essence of her talk and her work on the power of economic freedom. Next year, her latest book: “Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World”  will arrive, the final book of a trilogy on the wonder-working power of modern capitalism. Here is a seven page summary of her upcoming book, and below is a summary of her summary by James Pethokoukis of AEI.

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Perhaps you yourself still believe in nationalism or socialism or proliferating regulation. And perhaps you are in the grip of pessimism about growth or consumerism or the environment or inequality.

Please, for the good of the wretched of the earth, reconsider.

Many humans, in short, are now stunningly better off than their ancestors were in 1800.  … Hear again that last, crucial, astonishing fact, discovered by economic historians over the past few decades. It is: in the two centuries after 1800 the trade-tested goods and services available to the average person in Sweden or Taiwan rose by a factor of 30 or 100. Not 100 percent, understand—a mere doubling—but in its highest estimate a factor of 100, nearly 10,000 percent, and at least a factor of 30, or 2,900 percent. The Great Enrichment of the past two centuries has dwarfed any of the previous and temporary enrichments. Explaining it is the central scientific task of economics and economic history, and it matters for any other sort of social science or recent history.

What explains it? The causes were not (to pick from the apparently inexhaustible list of materialist factors promoted by this or that economist or economic historian) coal, thrift, transport, high male wages, low female and child wages, surplus value, human capital, geography, railways, institutions, infrastructure, nationalism, the quickening of commerce, the late medieval run-up, Renaissance individualism, the First Divergence, the Black Death, American silver, the original accumulation of capital, piracy, empire, eugenic improvement, the mathematization of celestial mechanics, technical education, or a perfection of property rights. Such conditions had been routine in a dozen of the leading organized societies of Eurasia, from ancient Egypt and China down to Tokugawa Japan and the Ottoman Empire, and not unknown in Meso-America and the Andes. Routines cannot account for the strangest secular event in human history, which began with bourgeois dignity in Holland after 1600, gathered up its tools for betterment in England after 1700, and burst on northwestern Europe and then the world after 1800.

The modern world was made by a slow-motion revolution in ethical convictions about virtues and vices, in particular by a much higher level than in earlier times of toleration for trade-tested progress—letting people make mutually advantageous deals, and even admiring them for doing so, and especially admiring them when Steve-Jobs like they imagine betterments. The change, the Bourgeois Revaluation, was the coming of a business-respecting civilization, an acceptance of the Bourgeois Deal: “Let me make money in the first act, and by the third act I will make you all rich.”

Much of the elite, and then also much of the non-elite of northwestern Europe and its offshoots, came to accept or even admire the values of trade and betterment. Or at the least the polity did not attempt to block such values, as it had done energetically in earlier times. Especially it did not do so in the new United States. Then likewise, the elites and then the common people in more of the world followed, including now, startlingly, China and India. They undertook to respect—or at least not to utterly despise and overtax and stupidly regulate—the bourgeoisie.

Why, then, the Bourgeois Revaluation that after made for trade-tested betterment, the Great Enrichment? The answer is the surprising, black-swan luck of northwestern Europe’s reaction to the turmoil of the early modern—the coincidence in northwestern Europe of successful Reading, Reformation, Revolt, and Revolution: “the Four Rs,” if you please. The dice were rolled by Gutenberg, Luther, Willem van Oranje, and Oliver Cromwell. By a lucky chance for England their payoffs were deposited in that formerly inconsequential nation in a pile late in the seventeenth century. None of the Four Rs had deep English or European causes. All could have rolled the other way. They were bizarre and unpredictable. In 1400 or even in 1600 a canny observer would have bet on an industrial revolution and a great enrichment—if she could have imagined such freakish events—in technologically advanced China, or in the vigorous Ottoman Empire. Not in backward, quarrelsome Europe.

A result of Reading, Reformation, Revolt, and Revolution was a fifth R, a crucial Revaluation of the bourgeoisie, first in Holland and then in Britain. The Revaluation was part of an R-caused, egalitarian reappraisal of ordinary people.  … The cause of the bourgeois betterments, that is, was an economic liberation and a sociological dignifying of, say, a barber and wig-maker of Bolton, son of a tailor, messing about with spinning machines, who died in 1792 as Sir Richard Arkwright, possessed of one of the largest bourgeois fortunes in England. The Industrial Revolution and especially the Great Enrichment came from liberating commoners from compelled service to a hereditary elite, such as the noble lord in the castle, or compelled obedience to a state functionary, such as the economic planner in the city hall. And it came from according honor to the formerly despised of Bolton—or of Ōsaka, or of Lake Wobegon—commoners exercising their liberty to relocate a factory or invent airbrakes.



The Illusions of Green Energy by The Elephant's Child

https://i0.wp.com/www.renewablesinternational.net/files/smthumbnaildata/original/3/9/1/9/0/3/old_new_energy_scr1.jpgThe best places for wind turbines have already been used. To supply the United States with energy from wind power would take a wind farm the size of Texas with densely sited turbines, but there’s not windy places for the turbines everywhere. A turbine requires wind blowing at a certain speed to produce power. If it blows too hard, the turbines have to shut down for they could be damaged. If it blows too gently, they do not produce energy at all , the backup power station which has been running all the time has to take over the production of energy.

I frequently say that the great fault of wind power is that wind is too intermittent. It just doesn’t blow at a steady strength at all, but you have been out in the wind, and you know that.
part-1-fig-11-1024x6611 Here is a graph of electricity production as a percent of wind capacity. I think this one is from Bonneville Power, but I just saved the graph, not the source. Assume that the correct speed for producing electricity from these turbines is at the 50% mark. The power plant operating on natural gas is chugging away, and whenever the wind drops below 50% the gas takes over. So to however much the energy produced by the turbines costs, you have to add in the cost of the natural gas fired power plant.

The Obama administration is eager to shut down any coal-fired power plants to eliminate the CO2 that might go into the atmosphere to fertilize the plants of the earth and enhance our food supply, might add to the tiny bit of CO2 in the atmosphere and cause the earth to warm uncontrollably, although the amount is almost too small to be measured, and there has been no warming at all for eighteen years and eight months. Here’s a bit of reality.

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Up until very recently our coal-fired power plants were producing over 40 percent of our electricity. Obama, persuaded that an increase of CO2 in the atmosphere would cause the oceans to rise and the earth to boil,  set about shutting down coal-fired power plants, which will accomplish nothing at all except to put more hundreds of workers out of a job. Oddly enough, as the big coal companies neared bankruptcy, thanks to Mr. Obama, George Soros popped up to buy a controlling interest in the big coal companies. You can figure out what that means on your own.



Everything is Connected, But That Doesn’t Mean You Can Make Sense of it by The Elephant's Child

saudi-arabia-oilFor those of us who have forgotten our history, 1973 was the year of the Yom Kippur War. Egypt and Syria launched a surprise attack on Israeli positions in territories occupied by Israel. In August, Saudi King Faisal and Egyptian president Anwar Sadat met in Riyadh and negotiated an accord whereby the Arabs would use the “oil weapon” as part of the coming military conflict.

October 6, Egypt and Syria attack Israeli-occupied lands in the Sinai Peninsula and the Golan Heights on Yom Kippur, the holiest day in the Jewish calendar. The Soviet Union acted to supply Egypt and Syria with weapons and supplies. (Notice that Russian interest in Syria is not new) October 8, Israel goes on full nuclear alert.

The United States initiates Operation Nickel Grass, a strategic airlift to provide replacement weapons and supplies to Israel. OPEC negotiations with the major oil companies to revise the 1971 Tehran price agreement fail. October 19, Congress appropriates $2.2 billion in emergency aid to Israel. Libya proclaims an embargo on oil exports to the U.S. and Saudi Arabia and other Arab states follow suit the next day. October 26, the Yom Kippur War ends in complete defeat for the Arab forces. Dissension, negotiation. Israel agrees to withdraw from the west side of the Suez Canal. Oil ministers , with the exception of Libya, announce the end of the embargo. The 1973-74 stock market crash ends.

OPEC forced the oil companies to increase payments dramatically. Price of oil quadrupled to nearly $12 U.S. per barrel. The oil exporting countries got very wealthy. Gold faucets and fancy yachts.

The U.S initiated price controls. Out of that developed the 55 mph speed limit, the Strategic Petroleum Reserve, The Department of Energy, and the National Energy Act of 1978. Ad campaign “Don’t be Fuelish,” compact cars, front wheel drive and 4-cylinder engines. Greater interest in “renewable energy.” Research in solar power and wind power. More emphasis on Mass transit. End of big cars with tail fins, welcome for the Volkswagen Beetle, rise of Japanese cars.

1978, Protests against Mohammad Reza Pahlavi Shah of Iran, wave of political unrest and violent clashes, Muslim fundamentalists seek a Muslim state, 1979, Shah leaves on vacation, never to return. One million Iranians march in support for exiled Ayatollah Khomeini. Ayatollah returns to Iran after 14 years of exile. Gasoline shortage, world oil glut. OPEC increases full 14.5 % increase in price. Iran takes western hostages. Jimmy Carter tried to rescue hostages, made a mess of it. Ronald Reagan succeeded Carter, hostages were released.

This is all more or less accurate, but perhaps gives a sense of the back and forth of cause and effect that got us where we are today, but not much sense of what to expect. The middle east still has vast oil wealth, but we are no longer dependent on their oil nor natural gas, but instead need approval to export our own plentiful supplies of oil and gas.

In the first years of the seventh century, when the Prophet Mohammad began his mission in Arabia, the whole of the Mediterranean was part of Christendom. A few decades after the death of the Prophet, his Arab followers burst out of the Arabian peninsula and attacked Persia and Byzantium. The Persian empire was conquered, then Syria, Palestine, Egypt and North Africa — and then Spain, and Sicily. It’s been going on ever since. The aim of the fanatics is to return to the pure Islam of the days of the Prophet. The aim of the West seems to be a colony on Mars.




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