Wednesday, June 7, 2017

Ontario Liberals are in love with the ideas of Karl Marx

Below is my quick response to the current Ontario Liberal campaign. They sent me an email asking me to support them in their efforts.  I declined and opted instead to send them a brief response.


Unfortunately you have chosen to launch initiatives that are straight out of the ideology of Karl Marx. Each of the initiatives listed below requires a massive violation of the rights of Canadian citizens the government is elected to protect. I believe Sir Wilfred Laurier would recoil in horror at what the meaning of being a Liberal has become. In his lifetime he lived just long enough to see the ideas of Karl Marx start bloody revolutions that in the end resulted in the deaths of tens of millions of people across the world. More die daily as a result of these same ideas in countries like Venezuela, while countries that are throwing away these ideas like China and India are advancing more rapidly that any country in history.  The Liberal party ideology needs to return to its roots and re-discover the ideas that made Canada a great country – individual rights and a government that protects them, not one that violates them.

While volumes have been written about all that is morally and economically wrong with these ideas, I will simply state here how they violate the rights of citizens, with government forcibly sacrificing a part of innocent lives to the whims, wishes and wants of other people. These actions are the exact opposite of fair.

The five initiatives are:
1. A $15 minimum wage - violates the right of employees and employers to negotiate terms of employment contract free of interference from parties who are not involved in the contract.

2. A basic income pilot - violates the rights of those who are working to create value and exchange it for wages by seizing some of their money and giving to others who are not or who have chosen not to work in support of their own lives.

3. Free pharmacare for youth and children - violates the rights of all those who work to support their own lives and those of their family, forcibly taking part of their hard work and giving it to those who did not earn it.

4. Free post-secondary education - violates the rights of all those people who work to pay for the education of themselves or their loved ones and all the rest of society's producers too, forcing them to pay for the education of strangers at the expense of their priorities in life. Such an action raises the expenses of education, stifles innovation and competition, and punishes those who work the hardest and whose work is the most productive.

5. Rent control - violates the rights of the people who have saved and invested their capital to provide rental accommodations for willing tenants. Such an action can only cause less rental properties to exist and to reduce the quality of such properties.

Wednesday, May 10, 2017

MP McGuinty's October 4 2016 statement in the House is replete with fundamental errors

On October 4, 2016 MPP for Ottawa South David McGuinty made a statement in the House of Commons that was so full of economic and scientific errors I felt it worthy of comment. To find his statement follow the link and then search for his name and go to the second occurrence of it.

1. The statement says the issue of climate change has nothing to do with ideology, yet the very essence of the topic is political control over people's decisions regarding energy and how they live their lives. If advocating for a massive interference in the governance of the nations of the world and the use of political force against all of humanity is not an ideology then I wonder what an ideology is?

2. The statement refers to 2,200 Nobel Peace Prize winners. Aside from the fact the Nobel Peace Prize has nothing to do with science but rather is ideological, only the IPCC organization was awarded the prize, not 2,200 scientists. The scientists referenced are those whose work is cited in support of the IPCC hypothesis of dangerous man-made climate change warranting a massive restriction of human rights, a hypothesis which is explicitly rejected by many of the scientists whose work is cited by the IPCC.  Dr. Frederick Seitz, in reference to the 1995 IPCC report: "I have never before witnessed a more disturbing corruption of the peer review process than the events that led to this IPCC report." Richard Lindzen, prof of meteorology at MIT, who at first participated in the IPCC process but then gave up: "There's little doubt that the IPCC process has become politicized to the point of uselessness." "They controlled who participated and who were the lead authors, especially of critical chapters."

3. The statement refers to IPCC scientists as if the IPCC was a scientific body, when in fact it is a political body composed of government representatives. A small number of scientists write chapters for the IPCC reports and an even smaller number review the full content.

4. The statement states that we have droughts and floods. While no doubt true, this statement is meaningless since it ignores all context. Are such weather events similar to the past or not? Do they represent a greater or lesser danger to mankind due to our use of fossil fuel energy? There is massive evidence that humanity is safer from nature and nature is safer from humanity due to our use of fossil fuels. Global death rates from extreme weather events declined by 98 percent since the 1920s, while economic damages corrected for population growth and wealth have not increased. Similarly, the incidence of droughts and famines in history is well documented and has declined massively since the advent of fossil fuel energy.

And what about the IPCC itself? In the 2013 IPCC Technical Summary, under Key Uncertainties, there are a few interesting statements.

"There is only medium to low confidence in the rate of change of tropospheric warming and its vertical structure."

"Based on model results there is limited confidence in the predictability of yearly to decadal averages of temperature both for the global average and for some geographical regions. Multi-model results for precipitation indicate a generally low predictability. Short-term climate projection is also limited by the uncertainty in projections of natural forcing."

"In Antarctica, available data are inadequate to assess the status of change of many characteristics of sea ice (e.g., thickness and volume)."

"There is low confidence in an observed global-scale trend in drought or dryness (lack of rainfall), due to lack of direct observations, methodological uncertainties and choice and geographical inconsistencies in the trends."

"There is low confidence that any reported long-term (centennial) changes in tropical cyclone characteristics are robust, after accounting for past changes in observing capabilities."

5. The statement references the Stern report, which is an economic paper referenced to give support for the use of massive political power over citizens' activities. Economic analysis of the Stern report, however, shows that Stern chose to use an extremely low, near-zero discount rate (0.1%) instead of a normal rate such as 3.5%, thus essentially Stern equates cost and value today with that in the distant future, when we know that economic growth has made us many times wealthier today than a hundred years ago and that this trend continues. To highlight this, at 3.5% growth we would have 31.2 times more wealth in 100 years whereas at 0.1% growth we will be 1.1 times wealthier. This is not a trivial difference and reveals the uselessness of the Stern report.

6. The statement references the carrying capacity of the planet and the need to live within it. The notion of a planetary carrying capacity is an anti-concept that uses non-essential characteristics to make us think there is a problem. An essential characteristic of man is that he creates resources from raw materials found in nature. The raw materials have always been there and they only become resources through the application of human reasoning to make them valuable for human life. The concept of value is a moral one and not a scientific one, thus no scientist can identify a threshold for the excess creation of value, since there is no measurable limit to value creation. The entire physical matter of the planet is a potential resource for humans, as are other planets and stars.

The challenge of human food supply provides one illustration of the limitless ability of humans to create value. Before the discovery, commercialization and industrialization of fossil fuel energy, the basic condition of humans was to be hungry, weak and sick. With fossil fuel energy we live longer, healthier lives with abundant food. Only in the shrinking portion of the world that has yet to adopt a greater degree of capitalism and industrialization is widespread hunger a problem. 150 years ago, 25 men working all day harvested and threshed a ton of grain. Today with a combine harvester it takes… six minutes. Farm productivity is up 2,500-fold by this measure. In just the last 25 years 2 billion people have emerged out of a condition of hunger and only a single country's population gets less than 2,000 calories per day: Zambia. In just 25 years (1990-2015) extreme poverty was reduced by 138,000 people per day, for a total of 1.25 billion.

How does a reasoning being, faced with the incredible improvements in the human condition due to the use of fossil fuel energy that provides 85% of world energy not see the wonders we have accomplished? Only an ideology that sees humanity as a blight upon the face of the planet - a philosophy that is fundamentally anti-human - can oppose human freedom to produce more energy and progress naturally towards the discovery of even more abundant, more concentrated and even more powerful energy sources we will no doubt find. To quote Amory Lovins, one of the leaders of just such an ideology that has become known as environmentalism, "Complex technology of any sort is an assault on human dignity. It would be little short of disastrous for us to discover a source of clean, cheap, abundant energy, because of what we might do with it." Oh, the horrors of clean, cheap, abundant energy!

Friday, April 21, 2017

Data used to promote "sustainable" mutual fund shows a big economic problem

The promotional piece for a mutual fund based on “sustainability” shows the graphic in Figure 1 below. I thought it would be interesting to parse this claim a bit to see what I could learn.

Figure 1

I note that this figure makes a claim about the number of jobs and not about economic reasoning or “sustainability”, whatever that actually means.  Since the subject of the day is investment, clearly economic reasoning should play the crucial role in assessing the merits of any claims made about the mutual fund’s mandate.

What might an analysis of the data for jobs and energy use tell us about the productivity of investments made in solar and wind energy projects when compared to fossil fuel energy production? How would workers in the wind and solar sector compare to the output of people working in coal, oil and gas energy production?  Given that wind and solar are intermittent, dilute and non-portable energy sources that have not been adopted by producers and consumers until recent huge taxpayer subsidies, one would suspect the traditional energy worker to be more productive than the newer ones in wind and solar, but by how much?  Would there be a small gap in favour of fossil fuel energy workers? Would the wind and solar workers be able to take advantage of the “sustainability” and “renewability” of wind and solar to leverage these innovation in energy production and perhaps be even more productive than the old-fashioned workers toiling in “dirty” oil, gas and coal companies?  

To determine this, we need to know what percentage of energy is produced by these different sources, then combine this with the number of workers in each energy sector. Every year a report titled “BP Statistical Review of World Energy” is published and provides great depth of information on trends in energy consumption by geographical distribution and by energy type. The report lumps wind and solar together with other alternative energies under the category of “Renewables” energy, so the data will somewhat overstate the true amount of wind and solar energy, but since other renewables such as biofuels are much smaller, this is not very important for our discussion.  Figure 2 shows the world consumption of energy. I note that the thin but growing upper orange slice is the renewable energy category and that it only represents 2.8% of global energy production.

Figure 2. World energy consumption in 2015, BP Statistical Review of World Energy 2016, p.42

However, the United States is far more advanced technologically than most countries, and one would expect that after a few decades of massive taxpayer subsidization of wind and solar that it would be a larger percentage of energy than for the world, and so it is. In fact, in the United States renewables account for 3.1% of total energy consumption, about one tenth more than for the world average. Not too impressive an accomplishment, as measured by promoters of renewable energy, is it?

Now to the heart of the matter - the integration of jobs data (which I will refer to as workers instead of jobs because I find it to be a more human term and it focuses our attention on the essential characteristic of work done instead of position held) with energy production data (which must be equal to energy consumption as shown in the research source). So, which of the following are you betting on?
  1. Fossil fuel workers are somewhat more productive than wind and solar workers.
  2. Workers in both categories are about equally productive.
  3. Wind and solar workers are somewhat more productive than fossil fuel workers.
  4. None of the above

Figure 3 combines the energy data from the 2016 edition of the BP statistical review of world energy with jobs data from the U.S. Energy and employment report of January 2017.  It turns out that in 2016 fully 86.0% of all U.S. energy came from fossil fuel sources, while as previously stated only 3.1% came from all renewables, including wind and solar. Given the number of workers in each sector, it takes 95.4 fossil fuel energy workers per million tonnes of oil equivalent energy whereas it takes 6,632.4 workers in renewables to produce the same amount of energy.

Figure 3. Energy production per worker in the United States in 2016

In other words, the average fossil fuel worker produces 69.5 times more energy than one in the renewable energy sector and the multiple choice answer is d) None of the above.  When advocates for renewable energy are promoting investment because it creates jobs, they really, really mean it.  A company that produces renewable energy needs to hire about seventy workers for every one worker needed by a fossil fuel company, but is this a virtue?  Does this mean the renewable company is more deserving of receiving an investment?

If the key criterion for making an investment is the number of jobs created then the motivation is to make the worker as unproductive, as inefficient, as regressive as possible.  In the fossil fuel business this would mean giving up trucks in favour of wheelbarrows, sacrificing excavating machines in favour of pick-axes, eliminating tanker ships in favour of wooden barrels. Sure, many more jobs would be created, but the cost of energy would skyrocket back to the level it was before industrialization and the entire world, not just the non-industrialized countries, would be back in an era of energy poverty. In fact the world would be in total poverty since it is energy that enables production of all other good than support our civilization.

The problem is that advocates of renewable energy use the wrong standard of value. They use standards like “nature as untouched by man” or “climate stability” or “bio-diversity.” By their standards, value is detached from human lives and thus actually loses all meaning, since without humans to value it there is, by definition, no reasoning being to assign value by choosing from the alternatives.

When human flourishing is the standard of value then decisions are focused on what promotes human well-being, human life and human happiness. By adopting a standard of value that is in keeping with the ideas of the best enlightenment thinkers, and more recently as elaborated by philosopher Alex Epstein, author of “The Moral Case For Fossil Fuels,” humanity can accelerate the pace of progress and continue to make our environment safer, cleaner and more enjoyable for future generations.