Economic Growth and the Irish Potato Famine

America’s feel good voters and The Myth of Government Jobs and Free Money are putting politicians in power that will drive everyone to the poorhouse. What the Left and the Democrat voter base doesn’t know about economics is pushing us over a cliff.

For example, in the article, “The Myth of Affordable Energy – Interview with Ed Dolan” by James Stafford of Oilprice.com, Dolan says, In my view it is a myth that cheap energy – “affordable energy” as many people like to say is vital to growth.

This comment affords us a glimpse into a big error in thinking. Moreover, it is emblematic of an error that underlies all Leftist Stonkernomics.

Energy is an example of a resource. It is of course involved in providing all of the goods and services that people want.

As resources become scarce the price for them goes up. Anytime there are changes in the price of resources the use of all other resources will be affected and the use of them to provide the same or substitute goods and service will be rearranged.

The setting of prices of resources by market forces has proven to be the most efficient means of allocating resources. Meddling with market forces for political purposes will result in a diminished level of wealth creation. Downward economic effects of market interference are especially destructive to wealth creation when the prices of scarce resources are manipulated and especially when such changes are unnatural, episodic, unpredictable and unrelated to market forces at work elsewhere in the world.

In economic terms the finance function is the maximization of net present wealth. Capital is an important factor in the creation of wealth.

Capital is essentially stored labor. Interest is the cost of money. Accordingly, the interest rate is important (for example, we learn from Irving Fisher that if money was free a railroad would be justified in borrowing enough money to finance the flattening of every rail in the country because the fuel savings in perpetuity would eventually pay off any amount of investment. However, once you attach a cost to money you quickly realize that we have better things to do with our money and more productive things to accomplish than simply tunneling through every mountain).

Politically dictating the interest rate has the same effect as politically increasing or decreasing the cost of a single resource. Such meddling changes everything and leads to the misallocation of all factors of production, creates artificial scarcities and decreases the level of net present wealth. By extension the standard of living of a society will suffer and there will be more misery, poverty and death as a result and in the same way that a blight caused the Irish Potato Famine.

An examination of geophysical history shows us that the Earth has been in a cooling trend over the last 10,000 years and someday–perhaps sooner than later–polar bear fur may hit the fan. See, Easterbrook Graph… A 10,000 year cooling trend. The species from which humanity descended barely survived the period before that. Needless to say, even with our huge brains — that the god of natural selection must look upon with a smirk given its variance from what’s needed for simple survival — humans in the Western world are not yet smart enough to know they don’t control the climate. All our increased intelligence is pretty much wasted if our survival as a species ever actually depends on the level of scholarship that is demonstrated in the field of climatology that outside Western civilization is likened to the science of ancient astrology.

Given the scarcity of capital and the cost of money, the need to efficiently allocate resources, and the ingenuity and productive nature of a free people, society has better things to do with its wealth than waste it on more and more filing cabinets full of government-funded global warming junk science.