Home » Columns »Sustainable Planet » Currently Reading:

Neo-Liberal Economists: “We Are Irrational”

January 21, 2015 by Tony Noerpel filed under Columns, Sustainable Planet No Comments
noerpel150

“Irrational is a strong word, which connotes impulsivity, emotionality, and a stubborn resistance to reasonable argument.” Economics Nobel laureate Daniel Kahneman [1]

On global warming Kahneman wrote that it is “preposterous to forecast what it would be like to live on a warmer planet when we did not even know what it is like to live in California.” Kahneman was concerned whether or not people would be happy in a warmer world, warming more than ten times faster than at any other time in the last hundred million years, as shown by the example in Figure 1 [2] while physical scientists worry whether we will survive at all. See Figure 2 for the current physical state of California. I suppose people can still be happy right up until the time there is no more water to drink. Perceptive people who see it coming years in advance may be unhappy but if there are not many of those Kahneman may be right.

Figure 1 comparison of the rate of current anthropogenic climate change with one of the most remarkable climate events in the last hundred years.

Figure 1 comparison of the rate of current anthropogenic climate change with one of the most remarkable climate events in the last hundred years.

Figure 2 The California Drought.   Source: https://theconomicsof.wordpress.com/2014/09/14/el-nino/

Figure 2 The California Drought. Source: https://theconomicsof.wordpress.com/2014/09/14/el-nino/

Moving on, never mind that economic Nobel laureate Robert Solow’s production function is not just overly simplified it is not even physical [3]. The human economy simply does not work the way economists think it does. It runs on energy, or more precisely on an energy gradient. See Figure 2 [4]. Atmospheric physicist Timothy Garrett estimates that it takes 9.7±0.3 milliwatts to produce one 1990 US dollar [5].

The dominant economic model in America today is the neo-liberal school of free-market economics. It ignores the role of energy, pollution and human nature. This is why one result of liberalizing the financial sector begun under Reagan and Thatcher has been the explosion of worldwide organized crime [6] not to mention the Great Contraction of 2008 [7]. Economists seem not to be aware that the most efficient way to make a whole lot of money is to steal it and that is what laissez-faire free markets encourage. It has been estimated that 1% of humans are psychopaths [8], so who do economists think are going to dominate an unregulated economy? The good news is that Daniel Kahneman’s Behavioral Economics replaces economics Nobel Laureate Milton Friedman’s consumer units with actual human beings. Kahneman, though a human-caused global warming denier and therefore resistant to reasonable argument, insists that humans are not irrational [1].

Figure 3, Energy flow through the human economy during the last two millennia (red curve) and human accumulation of wealth (blue curve)

Figure 3, Energy flow through the human economy during the last two millennia (red curve) and human accumulation of wealth (blue curve)

In their own words:

“Oil is a renewable resource, with no intrinsic value over and above its marginal cost… There is no original stock or store of wealth to be doled out on any special criterion… Capital markets are equipped to handle oil depletion…It is all a matter of money”, M.A. Adelman, Professor of Economics, MIT

“It is appropriate to conclude that, as long as the sun shines brightly on our fair planet, the appropriate estimate for the drag on the economy from increasing entropy is zero.” Economist William Nordhaus

“ … the world can, in effect, get along without natural resources … at some finite cost, production can be freed of dependence on exhaustible resources altogether….” Economics Nobel Laureate Robert Solow

“Natural resources. Hold your hat – our supplies of natural resources are not finite in any economic sense. Nor does past experience give reason to expect natural resources to become more scarce. Rather, if history is any guide, natural resources will progressively become less costly, hence less scarce, and will constitute a smaller proportion of our expenses in future years. Population growth is likely to have a long-run beneficial impact on the natural-resource situation.” Economist Julian Simon [9]

Economist F. Scott Armstrong, testifying [10] before congress on human-caused climate change, an irrational circumstance to begin with, in 2011 said: “I actually try not to learn a lot about climate change. I am a forecasting guy.” Given that he missed forecasting the Great Contraction of 2008 [11], one might ask why Congress would care about his opinion on anything else?

George Mason University economist/statistician, Edward Wegman was invited by conservatives to testify on climate change. When asked by Illinois Democrat Jan Schakowsky if he knew how carbon dioxide traps infrared heat in our atmosphere, Wegman replied [12] “Carbon dioxide is heavier than air. Where it sits in the atmosphere profile, I don’t know. I’m not an atmospheric scientist to know that. But presumably, if the atmospheric – if carbon dioxide is close to the surface of the earth, it’s not reflecting a lot of infrared back.” Wegman could have simply said he didn’t know.

“My guess is that global warming will simply be another transient concern, barely worthy of consideration ten years from now in a book like this one.” Julian Simon, 1994, 20 years before yet another hottest year on record [13]. The probability that the Earth surface has not been warming since Simon penned his prediction is less than 1 part in ten billion billion using extreme event statistics [14]. Since the universe itself is only 13.8 billion years old, Simon would be correct one time in a billion universes or simply not at all.

Friedman describes the methodology of neo-liberal economics [15]. “In so far as a theory can be said to have assumptions at all, in so far as their realism can be judged independently of the validity of predictions, the relation between the significance of a theory and the realism of its assumptions is almost the opposite of that suggested by the view under criticism. Truly important and significant hypotheses will be found to have assumptions that are wildly inaccurate descriptive representations of reality and, in general, the more significant the theory, the more unrealistic the assumptions.”

Figure 3 shows just one way human-caused climate change is destroying our economy. Extreme weather related events are accelerating so fast that eventually the destroyed wealth will exceed the ability of the economy to generate wealth. In 2011, Dr. Peter Höppe, Head of the Geo Risks Research Department at Munich Re explained what had persuaded him of the causal link [16]: “For me the most convincing piece of evidence that global warming has been contributing already to more and more intense weather related natural catastrophes is the fact that while we find a steep increase in the number of loss relevant weather events (about tripling in the last 30 years) we only find a slight increase in geophysical (earthquake, volcano, tsunami) events, which should not be affected by global warming. If the whole trend we find in weather related disaster should be caused by reporting bias, or socio-demographic or economic developments we would expect to find it similarly for the geophysical events.”

Economist Steve Keen argues [17] forcefully that physicists, engineers, and biologists need to take the field over from the economists. Instead of our Congress trying to inform science with “wildly inaccurate descriptive representations of reality” we should be informing economics with hard evidence.

[1] Daniel Kahneman, Thinking Fast and Slow, Farrar, Straus and Giroux, 2011.

[2] Lee Kump, The last great global warming, Scientific American, July 2011

[3] Source: https://theconomicsof.wordpress.com/2014/09/14/el-nino/

[3] Robert U Ayres & Benjamin Warr, accounting for Growth: the Role of Physical Work, Center for the Management of Environmental Resources, INSEAD, Fontainebleau, France and Wiliam Barnett II, Dimensions and Economics: Some Problems, online version: www.mises.org/journals/qjae/pdf/qjae6_3_2.pdf.

[4] Tony Noerpel, Big Introduction to Big Data, http://brleader.com/?p=12957

[5] T. J. Garrett, “No way out? The double-bind in seeking global prosperity alongside mitigated climate change,” Earth Syst. Dynam., 3, 1–17, 2012, www.earth-syst-dynam.net/3/1/2012/ doi:10.5194/esd-3-1-2012

[6] Misha Glenny, McMafia: A Journey Through the Global Criminal Underworld, 2009

[7] Carmen Reinhart and Kenneth Rogoff “This Time is Different”.

[8] Kent A. Kiehl, The Psychopath Whisperer: The Science of Those Without Conscience, 2014

[9] Julian Simon, http://www.juliansimon.com/writings/Ultimate_Resource/TINTRO.txt

[10] Nate Silver, The Signal and the Noise, why so many predictions fail – but some do not, The Penguin Press, 2012.

[11] Most economists who did predict the great contraction such as Nouriel Rubini, Steve Keen, Dean Baker and Robert Shiller are well known. There is no evidence Armstrong predicted it and considerable evidence that nobody at the Wharton school “forecast” the great contraction. http://www.forbes.com/2009/11/18/behavorial-economics-indicators-entrepreneurs-finance-wharton.html and http://www.ifw-members.ifw-kiel.de/publications/the-financial-crisis-and-the-systemic-failure-of-academic-economics/KWP_1489_ColanderetalFinancial%20Crisis.pdf

[12] Michael Mann, The Hockey Stick and the Climate Wars, dispatches from the front lines, Columbia, 2012.

[13] http://www.webcitation.org/5XuOha9HO

[14] updated to include 2013 and 2014 from Tony Noerpel, To the Arctic Amplified and Bayes Applied, November 27, 2013, http://brleader.com/?p=12412

[15] Milton Friedman, The Methodology of Positive Economics, in Essays in Positive Economics, Chicago: University of Chicago Press, 1953, pp. 3-43.

[16] http://thinkprogress.org/climate/2011/01/04/207288/munich-re-pielke-extreme-weather-damages-climate-change/ and http://thinkprogress.org/climate/2015/01/15/3612054/global-warming-extreme-weather/

[17] Steve Keen, Debunking Economics, Zed Books, 2011.

Figure 4 Total number of catastrophic events world wide

Figure 4 Total number of catastrophic events world wide

Comment on this article


By commenting, you agree to abide by our Terms of Service.


 

 

 

 

 

Columns

The Holocene Climate

noerpel_new

(Public Input Loudoun County Board of Supervisors, 7 March, 2017) Figure 1 shows the climate variation over the last million years. The low points on the curve correspond to ice ages when glaciers up to a mile thick covered New …

Choosing To Forgive

moore-sobelnewmug

By Samuel Moore-Sobel “Truly forgiving is the ability to say, ‘Thank you for giving me that experience.’” James Arthur Ray vaulted into fame on the Oprah Winfrey Show back in the mid-2000’s. Stunned hearing these words while watching The Rise and …

Five Key Retirement Questions

Smith0035

Beyond asking yourself where you see yourself and even what your lifelong goal are, effective retirement and longevity planning begs some very big questions. Review the points below and consider how housing, transportation and health considerations all play a role …

Work Woes

drmikenewpic

By Michael Oberschneider, Psy.D. Dr. Mike, I’m a manager at a large tech company and my boss has directed me to fire someone on my team, but as a Christian, I just can’t do it. It’s true that the employee …

Joy or Suffering

Lunde new

By Mary Rose Lunde No one likes to suffer. When given the chance, many people would choose to laugh rather than cry, to sit in silence with their friends rather than talk through their feelings, because not even their friends …

Wage Radio

wage

I will always remember – very fondly – the first time I ever set foot on the property at 711 Wage Drive Southwest in Leesburg, Virginia. It was a warm, sunny July morning in 1997, and I’d driven all the …

Speaking Truth to Power

noerpel_new

“With public sentiment nothing can fail. Without it nothing can succeed.” Abraham Lincoln On Thursday evening, February 23, I requested the Board of Supervisors pass a proclamation resolving to support the March for Science on Earth Day, April 22 [1]. …

Student News

Congratulations, Class of 2016

6 Jul 2016

grads_woodgrove

Woodgrove High School’s Class Of 2016 Graduation – By Amanda Clark On June 16, Woodgrove’s Class of 2016 was the 5th graduating class to walk the stage and accept their diploma. The ceremony was filled with anticipation as the chorus, …

(Be the first to comment)

Buckland Earns Degree In Medicine

6 Jul 2016

buckland

Molly Buckland, D.O., graduated from the West Virginia School of Osteopathic Medicine with a degree of Doctor of Osteopathic Medicine on May 28. While at WVSOM, Dr. Buckland received the Dr. Roland P. Sharp President’s Award and the James R. …

(Be the first to comment)

Adams Promoted To Lieutenant

6 Jul 2016

adamspromoted

Lt. James Adams, from Sterling and a Potomac Falls Halls Graduate, earned the promotion to the rank of Lieutenant. Adams is a Navy Week and Executive Outreach Planner for the Navy Office of Community Outreach in Millington, Tennessee. U.S. Navy …

(Be the first to comment)

Calendar

March 2017
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
February 27, 2017 February 28, 2017 March 1, 2017 March 2, 2017 March 3, 2017

LAST HAM STANDING COMEDY IMPROV

LAST HAM STANDING COMEDY IMPROV
March 4, 2017

Notaviva Vineyards - Bluegrass Jam - FREE event

Notaviva Vineyards - Bluegrass Jam - FREE event
March 5, 2017
March 6, 2017 March 7, 2017 March 8, 2017 March 9, 2017 March 10, 2017 March 11, 2017 March 12, 2017
March 13, 2017 March 14, 2017 March 15, 2017 March 16, 2017 March 17, 2017 March 18, 2017

Wine & Chili Weekend

Wine & Chili Weekend
March 19, 2017

Joshua Carr River Safety Foundation Rummage Sale

Joshua Carr River Safety Foundation Rummage Sale
March 20, 2017 March 21, 2017 March 22, 2017 March 23, 2017 March 24, 2017

March Fourth Friday

March Fourth Friday
March 25, 2017 March 26, 2017

Spring Brunch

Spring Brunch

Spring Brunch

Spring Brunch
March 27, 2017 March 28, 2017 March 29, 2017 March 30, 2017 March 31, 2017 April 1, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

Nebbiolo Vertical Tasting

Nebbiolo Vertical Tasting

Notaviva Vineyards - Bluegrass Jam - FREE event

Notaviva Vineyards - Bluegrass Jam - FREE event

Old Time Country Ham and Turkey Dinner

Old Time Country Ham and Turkey Dinner
April 2, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

GALLERY COFFEEHOUSE: Readers Theater, “One Slight Hitch”

GALLERY COFFEEHOUSE: Readers Theater, “One Slight Hitch”
Current Print Issue:
Sign up for our email newsletter:

Recent Comments

  • David on Protecting Free Speech: Constitutionally protected speech is exactly what it sounds like, protected. We all have the legal right to utter nonsensical and...
  • Martha on Protecting Free Speech: Free speech is not a cherished right at the not-quite accredited Patrick Henry College, a religious school that Del. LaRock...
  • Martha Polkey on First Look at Envision Loudoun Results: It remains to be seen whether the direction citizens have provided to the Envision process is actually incorporated into the...
  • David on Protecting Free Speech: Mr. LaRock, I assume that the only reason you weren’t at every School Board meeting in 2005 passionately defending the...
  • LongTimePville on Purcellville Emergency Meeting Postponed to March 10: I bet Kelli Grim flip flops on her conflicts of interest and transparency campaign she ran on and does not...

Steady and NoBull

Lifestyle

Sterling Library Moving To New Location

25 Mar 2017

Library

Sterling Library’s current location, 120 Enterprise St., Sterling, will close beginning Saturday, March 25, to prepare for the opening of the new Sterling Library on Saturday, April 15. Patrons can return library materials using the drop box at the new location, 22330 S. Sterling Boulevard. Printer-friendly Related

(Be the first to comment)

Middleburg Gallery Presents Country Pursuits Exhibit

25 Mar 2017

Mr and Mrs Andrews 24x35 59 2016 whelan

The Gallery on Madison in Middleburg is presenting an exhibit of Brian Whelan’s (a London Irish painter now settled in Waterford) ) transcriptions of a gallery of paintings by Thomas Gainsborough, ‘Mr. and Mrs. Andrews’ through April 2. The exhibit includes 23 paintings, two masks, two graphics, and nine preparatory drawings. Printer-friendly Related

(Be the first to comment)

Loudoun Workforce Resource Center Presents STEM Career Fair March 28

16 Mar 2017

Illustration of STEM education word typography design in orange theme with icon ornament elements

Anyone interested in a career in the rapidly growing field of STEM (Science, Technology, Engineering and Math) is encouraged to attend an upcoming STEM Career Fair in Loudoun. The Loudoun Workforce Resource Center, in partnership with Northern Virginia Community College (NVCC)’s Loudoun campus and NOVA SySTEMic Solutions, is holding a STEM Career Fair Tuesday, March 28, from 1:00 to 4:00 …

(Be the first to comment)

Around Virginia

Virginia Schools Kick Off Statewide Campaign To Encourage Safe Teen Driving

image004

More teen drivers in Virginia will be involved in traffic crashes between the months of May and August than any other time of the year, statistics show. To help save lives and prevent such crashes during the high-risk warm weather months, Virginia schools are kicking off a statewide teen safety …

(Be the first to comment)

Protecting Free Speech

Dave_larock

By Dave LaRock (R-33) As elected officials and members of the legislature, our most fundamental responsibility is to protect God-given constitutionally protected rights. The First Amendment of the United States Constitution prohibits the government, including governmental public colleges and universities, from infringing on free speech and the free exercise of …

(3 comments)

Walbridge To Run for State Delegate in the 33rd District

Tia walbridge

Tia Walbridge announces her run for the District 33 seat in the Virginia House of Delegates. Walbridge is a wife and mother of two daughters and an active member of the Round Hill community. “Like many people in our district, my family has found its prosperity in a Virginia-based small …

(Be the first to comment)

Sports

Vikings Runner-Up at the State Championship 

8 Mar 2017

vikings

The Loudoun Valley Vikings are the boy’s runner-up at the VHSL 4A State Indoor Track and Field Championships at Roanoke College.  During the 2015-2016 school year, the Loudoun County School Board approved Indoor Track and Field as a Tier 2 (self-funded) sport.  The seven boys competing scored 48 points, second …

(Be the first to comment)

WLVBC U14 Boys Finish 3rd at VA Beach Event

23 Feb 2017

WLVBC300

The Western Loudoun Volleyball Club’s U14 Boys Team garnered 3rd place in their first travel tournament of 2017, the Virginia Beach Invitational. This event was held Feb. 18-19 and featured more than 24 teams from the U14 to U18 age group. The team was second on their net on day …

(Be the first to comment)

Archives

  • +2017
  • +2016
  • +2015
  • +2014
  • +2013
  • +2012
  • +2011
  • +2010
  • +2009