Archive for September, 2012

Impossible things before breakfast

Sunday, September 30th, 2012

Oct. 1, 2012

The Queen in Alice in Wonderland claimed she could do six impossible things before breakfast every day. We can’t.

You can’t spend money you don’t have. You can borrow for a time but eventually you must pay back. Our current government deficits (federal) and mounting government debts and obligations (local, state and federal) will lead to bankruptcy if we don’t vigorously grow our economy.

Unless we get a growing economy we will revert to a zero-sum one where any gain to one comes with a loss to another. In a zero-sum economy the only way to get richer would be violence. Before the industrial revolution and free enterprise changed the rules, that was how it was. Everywhere. Always. We don’t want to go there.

The Republican Party is in favor of growing the economy. They are not unanimous on how to do it. Some advise cutting spending. Some advise cutting taxes. Some both. Some don’t have a clue.

The Democratic Party is conflicted about growth. Their environmentalist wing is against it, believing that a growing economy means a shrinking ecosystem. Government-unions want to grow the government part, but not necessarily the private part. OWS activists and assorted progressives are more centered on redistributing the wealth rather than growing it.

Which is better, redistribution or growth?

Facing a severe economic slump FDR, like Obama, campaigned to make the rich pay “their fair share.” FDR said the challenge was not to grow the economy but to spread the wealth around and solve the problem of what he called underconsumption (today the progressives favor the synonym demand).

In 1932 our GNP was 58.7 billion dollars. In 2010 it was 14,526 billion. We managed to grow the economy under both Democratic and Republican administrations so that we find ourselves 248 times as wealthy as we were in 1932. We are more equal in basic rights with less discrimination against minorities. Our environment is better too.

Almost everyone realizes that new technologies like steam engines, electricity and computers had a lot to do with the enormous growth in populations and wealth over the last two hundred years. Not as many realize capitalism has played an equally major role.

What is it about capitalism that fosters economic growth?

Win-win exchanges.

Unfortunately (like capitalism itself) this truth is not sexy enough for a good bumper sticker. Nevertheless win-win exchanges are the ultimate efficiency engines of capitalism that create profits, foster innovation and make modern civilization possible.

To get more wealth Adam Smith explained in 1776 you need three things: private property, specialization of labor, and free trade.

In olden days the peasant or serf (or slave) produced potatoes. He did not own the potatoes or the land. The lord did. The peasant or serf was not free to trade the potatoes for a loaf of bread or for a carriage ride to Paris or Rome. The lord could but probably would not. He could get the bread by commanding his peasants to raise the grain and bake a loaf. He could get the ride to Paris or Rome by commanding servants to hitch up his horses and take him. All free of charge.

Well, not really free. In a zero-sum command economy the lord had obligations as well as privileges. He had to provide basic survival benefits to his peasants or serfs (or slaves). Things like food, housing, security and health care. These entitlements were given in minimal quantities. Some lords were richer and more benevolent than others, but no lord wanted his workers to get sick or die on him.

When the lord wanted more land or more potatoes or more bread or more serfs or peasants–economic growth in other words–he led his knights to attack a neighbor and steal what they could. If the peasant or serf wanted a larger share he revolted and tried to take it from the lord. Like all command economies, it was zero-sum. If I win, you lose. If you win, I lose.

Actually the lord’s power was not based solely on violence. In medieval times the church reinforced zero-sum memes. Barbara Tuchman, dean of medieval historians, explains: “The Christian attitude toward commerce…held that money was evil, that according to St. Augustine ‘Business is in itself an evil,’ that profit beyond a minimum necessary to support the dealer was avarice, that to make money out of money by charging interest on a loan was the sin of usury, that buying goods wholesale and selling them unchanged at a higher retail price was immoral and condemned by canon law, that, in short, St. Jerome’s dictum was final: ‘A man who is a merchant can seldom if ever please God.’” The Church did soften this advice by also preaching benevolence, forgiveness and charity to the poor.

Note how similar these zero-sum ideals are to the views of modern secular progressives and radical Muslims. Making only minor word changes progressive leaders like FDR and Obama, as well as radical leaders of al-Qaeda and the Taliban, would for the most part agree with the Church and the nobles. A major difference is progressives and radical Muslims want to substitute a benevolent government for Church and nobility.

In the late Middle Ages all this began to change as Christian monasteries along with a growing merchant class began to make loans with interest, to raise capital to found new industries for profit; to foster trade; to move away from entitlement barter toward fungible money; and to support the creation of new more efficient technologies like wheelbarrows, better horse collars, rotation of crops, windmills and waterwheels.

With the Industrial Revolution these trends increased dramatically. Economic growth was now possible without theft or violence. Growth came now from the win-win transactions of free trade that produced profits, efficiency, and progress in science and technology.

There were holdouts. Our southern slave-based plantation society held out until the Civil War. After the Civil War industrial unions in the North challenged the power of industry owners and brought more equitable sharing of the newly created wealth.

When the peasant became a factory worker he (or she) was paid in money instead of benefits. No matter how small, the money was his to do with as he pleased. If he used some of it to buy a loaf of bread–the baker, the farmer who grew the grain, the teamster who transported the grain, etc. all profited in a series of win-win transactions. All strived to become more efficient to increase their share of the profits. Occasionally an ambitious peasant-turned-factory-worker saved some of his or her wages and invested in a new venture–say a new way of baking bread that used a new kind of mixer or a bigger oven. The peasant-turned-teamster bought a bigger wagon. The newly independent-farmer planted more wheat on now-fertilized acres that he now owned. The oven maker made more efficient ovens. Etc. The peasant entrepreneur became rich. The baker, farmer, teamster and oven-maker all profited and people got cheaper and better bread.

We can grow the economy today by multiplying win-win transactions. Reducing zero-sum ones (austerity) might help, but not as much and not always.

How do you tell whether a transaction is win-win or zero-sum?

It is win-win if someone is willing to pay good money for the goods or services. This means that most private sector transactions are win-win ones. The producer strives to offer a better product or service (or the same one more efficiently). In the end producers and consumers all profit.

Not all win-win transactions are good. Drug deals may be harmful to both buyer and seller. Deals may not be fair if one side is dishonest or has intimidating power. Deal that violate equal rights or foster discrimination are not good. Deals that harm the environment are not good.

As a general rule, transactions that involve the government tend to be zero-sum, but not all. Zero-sum is not necessarily bad. Some zero-sum ones are essential and some are zero-sum in the short term but win-win in the long run.

I’ll speculate next week on how government can help, or hinder, economic growth. Who knows, maybe we can do six impossible things before breakfast.

Bill Stonebarger, Owner/President Hawkhill

P.S. For a fresh look at the role of capitalism, religion and science in a growing democratic economy see the DVDs: Capitalism and DemocracyReligion and Democracy, and Science and Democracy. You can read and copy the scripts at no cost at www.hawkhill.com.

Clean enough for you?

Sunday, September 23rd, 2012

Sept 24, 2012

Autumn began the day before yesterday, the fall equinox. Maybe now we won’t have to hear that tiresome question we heard so often this summer, “Hot enough for you?” Let’s tweak it to, “Clean enough for you?”

A common refrain today is that pollution is very bad in our air, water and soil, and it is getting worse by the day. Repeating this untruth does us all a gross disfavor.

The latest report from the EPA tracked air quality since 1980 for six pollutants: carbon monoxide, sulfur dioxide, ozone, particulates, lead, and nitrogen dioxide. In all six cases the trend had been decisively downward. All today are far below levels the EPA considers safe. Before 1980 there are apparently no reliable statistics that I could find. I can attest from my experience that in 1948 the air in Pittsburgh was so thick with particulates (and no doubt most of the other invisible pollutants above) that it was difficult to see across the street. Pittsburgh was far from unique.

Carbon dioxide is another story. It has increased. CO2 is not a pollutant though. It is an essential chemical for plant photosynthesis. Without it plant and animal life on our planet would be impossible.

Climatologists worry that the increased levels of CO2 in the atmosphere will add to the greenhouse effect and lead to global warming. Maybe. Maybe not. In a surprising 2012 report the Dept. of Energy found that emissions of carbon dioxide in the U.S. have actually declined over the past 20 years. They attribute the decline to increased use of natural gas instead of coal in power plants. I wonder why they did not consider the possibility of more natural carbon sinks than previously thought to be there. This would go along with my guess that Gaia (the whole earth ecosystem) is homeostatic, as all other living systems are. Move to a higher altitude, there is less oxygen to breathe. Our bodies respond by making more red blood cells so that we get more of the now scarcer oxygen to our cells. My guess is that when we add more CO2 to the atmosphere, Gaia responds by decreasing CO2 in the atmosphere. That may be why the atmosphere has been remarkably constant in composition for quite a few million years.

Pollutants in air have decreased steadily over the last sixty years. Some think we should worry because there still are measurable amounts of some pollutants in the air. Worse, our water and soil have measurable amounts of pesticides, insecticides, hormone-disrupters, radiation-emitters and who knows how many other modern man-made chemicals.

One trouble with this fear is that it is virtually impossible to reliably test the dangers that might come with these measureable, but extremely small amounts. A second problem is that to get rid of the last microgram of a suspect chemical is very expensive. We have done a good job removing or keeping 99.9% of them out of our air, water and soil. To remove the last 0.1% or 0.01% or 0.001%, the cost is prohibitive and the benefits questionable, if there are any at all.

With modern chemical techniques we can identify minute quantities of a given chemical. We never could have done that twenty or thirty years ago. Identifying is not the same as finding they are dangerous. Bruce Ames, biochemist at the University of California-Berkeley and arguably the world’s most respected expert on mutagens and carcinogens in the environment, says simply, “everybody seems to think pollution in the U.S. is a serious problem. It’s not.” After testing thousands of chemicals, natural and synthetic, he found that the same proportion of each (around 50%) turn out to be carcinogenic or mutagenic when taken in large enough quantities. The same rule applies to both synthetic and natural chemicals—the poison is in the dose. Even the purest water can cause death if taken in large enough quantities. Infinitesimal quantities of poisons, natural or synthetic, are harmless.

Matter cannot be created or destroyed. To illustrate the size of the quantities we are talking about take a story I have used in my educational videos. Suppose you could mark every molecule in a glass of water so that you could recognize them if you came across any of them again. You pour that water down the kitchen sink. Give it time (I realize it may take a few centuries) to cycle evenly into all of the air, water and soil of the earth ecosystem. Now travel to China, Mexico or Australia and dip into any stream, lake, pond or ocean shore you find there. Dip up a glass of water and you would have about 200 of your original water molecules no matter where on earth you dipped!

If you doubt this story and want to give an interesting challenge to your teenager or yourself, find on the Internet how many molecules of H2O are in an 8-ounce glass of water, how many molecules of H2O there are of fresh and salt water on our planet, and do the math.

Consider the numbers of the atoms and molecules that make up your eye. Some of the very same atoms and molecules that now make your eye, one day in the past were in the eye of Julius Caesar or Abraham Lincoln or your Stone Age great-great-grandfather. That’s the power of numbers when you’re talking about infinitesimal amounts of chemicals—atoms and molecules.

Water quality and soil quality are complicated and uncertain and vary greatly from place to place (so does air but not as much). Reports from the EPA in this country and from environmental monitors in the UN are cautiously optimistic about worldwide progress over past decades in making drinking water safer; keeping rivers, lakes and the oceans more productive of life; and preserving and enhancing soils so that we can grow enough food for an expanding world population. There are serious problems in specific places but most scientists see these problems not as irreparably damaged ecosystems, but as opportunities for creative work and repair.

Supplying enough fresh water for the ever-expanding needs of growing populations is a challenge. Fresh water issues are serious in some parts of the world. If the climate does change it will exacerbate some problems and help solve others. A changing climate will bring more rain and fresh water (and flooding) to some areas and less rain and fresh water (drought) to others. So what else is new? Pessimists see these as doomsday forecasts. Optimists see them as opportunities for creative profit.

We can’t change the laws of nature. We are made of chemicals. We can clean our house and we can clean our air, water and soil environment. Not perfectly but responsibly. We can’t get rid of every trace chemical that might harm us someday. If we insist on trying to get rid of the last microgram of every possible carcinogen, mutagen and hormone disruptor, we will end up spending every cent we don’t have and can’t borrow. Instead of more safety we will find more bankruptcy.

Clean enough for you?

Bill Stonebarger, Owner/President Hawkhill

P.S. For a basic look at chemical recycling and a primer in atoms and molecules see our best-selling DVDs Chemical Cycles in the Biosphere andThe Atom.

Heroes

Sunday, September 16th, 2012

Sept. 17, 2012

I watched both conventions and the most popular hero was Horatio Alger, the girl or boy of humble means who played by the rules and with grin and grit achieved wealth, acclaim and success. That is the American Dream. But, alas, the American dream is not well. The American middle class is not doing great either.

Outside of political conventions Horatio Alger and the middle class are used often as punching bags. In the early twentieth century Sinclair Lewis wrote a best-selling satirical novel, Babbitt. His fictional hero, George F. Babbitt, didn’t suspect his last name would be a classic put-down for boosters, businessmen and middle class achievers. In awarding the Nobel Prize for literature to Lewis in 1930 the European committee wrote snidely that Babbitt was, “the ideal of an American popular hero of the middle-class. The relativity of business morals as well as private rules of conduct is for him an accepted article of faith, and without hesitation he considers it God’s purpose that man should work, increase his income, and enjoy modern improvements.”

Our 30th president, Calvin Coolidge, was also an easy target for ridicule. He wrote, “The business of America is business.” And, “Civilization and profit go hand in hand.” Silent Cal did have a sense of humor, “I have never been hurt by what I have not said.” And, “Any man who does not like dogs and want them about does not deserve to be in the White House.”

As for richer capitalists, leftists like to quote the famous line, “greed is good,” of Gordon Gekko (the anti-hero of Oliver Stone’s 1987 movie, Wall Street). OWS protesters claim this is the religion of modern bankers, businessmen and Republicans.

Heroes are in the eyes of the beholder. Republicans celebrate Abraham Lincoln and Ronald Reagan. Democrats celebrate Franklin Roosevelt and Barack Obama. Left-wingers like Fighting Bob Lafollette, Woody Guthrie, Bobby Kennedy and Che Guevara. Right-wingers like Ayn Rand, Clint Eastwood, Paul Ryan, and Rush Limbaugh.

Heroes, like Campbell’s soups, come in many varieties.

The soldier, marine, sailor, astronaut or diplomat who risks his life for his country or his comrades is for sure a hero. The politician who founds a country (George Washington); frees the slaves (Abraham Lincoln); fights to enact Civil Rights laws (Lyndon Johnson); or challenges prejudice with his life (Martin Luther King)—is a hero.

Another kind of hero is the scientist who discovers a way to prevent rabies (Louis Pasteur); a way to avoid infections (Joseph Lister); a vaccine for polio (Jonas Salk); a new way to distribute energy (Thomas Edison) or to see a universe (Galileo Galilee, Isaac Newton, Charles Darwin, Albert Einstein). All qualify.

Some idolize sports stars like Tiger Woods, Peyton Manning, Serena Williams or Ryan Braun. Old folks like me have favorites in music like Frank Sinatra, Peggy Lee and Cole Porter. Young folks have different musical tastes, like … (I draw a blank here, help me out youngsters). Still others worship entertainers like Marilyn Monroe, Robert Redford or Will Smith. Not sure any of these celebrities are genuine heroes but they are sure popular.

Then there are literary stars (William Shakespeare, John Keats, Ernest Hemingway, James Joyce) and saints (Pope John Paul II, Mahatma Gandhi, and Mother Teresa). Recent biographies of Gandhi and Teresa show some clay feet, but nobody is perfect and achievements of literary stars and saints are often impressive enough to qualify them as heroes.

The computer pioneer Bill Gates is an interesting case. Few would call him a saint though he has spent the last decade or so doing good works. His computer work at Microsoft made him a billionaire. As a philanthropist he is giving away billions to cure diseases in Africa and improve education in the USA. Which is of more value?

Most people today assume non-profit work and philanthropy is more noble and helpful than work that makes a profit. Michelle Obama once told a group of students about to graduate that they should look for work that benefits people, not just a job to make money. Obviously she disagrees with Cal Coolidge that, “Civilization and profits go hand in hand.”

For the big picture and in the long run I side with Calvin Coolidge.

Profits come from providing a product or service that some other person is willing to put out his or her hard-earned money for. As Cal said, profits lead to progress and civilization. Non-profit products and services may be important to the recipients and to givers, but you never can be as sure. Sometimes they end up zero-sum or worse. As Henry David Thoreau once said, “If I knew for a certainty that a man was coming to my house with the conscious design of doing me good, I should run for my life.”

Industrialists (Carnegie, Rockefeller, Vanderbilt, Ford, Gates, Jobs) who pioneered new profit-making industries that provided jobs and useful products of staggering importance to millions of people are vilified as robber barons. Even more vilified are the investors and Wall Street bankers who make new industries and jobs possible (J. P. Morgan, Warren Buffett, George Soros and Mitt Romney).

As Liberace once commented, these industrialists and investors get their revenge “crying all the way to the bank.” Opinions change, envy fades, and ordinary folk are happy to pay good money to visit and admire the palaces (Vanderbilt Mansion, Newport RI mansions, Morgan Library, Frick Museum) built with their profits. As well as the libraries, settlement houses, hospitals and clinics also built with their profits freely given in philanthropy.

One of my literary heroes, Anton Chekhov, wrote, “Any idiot can face a crisis—it’s day to day living that wears you out.”

Moderate folks like Chekhov and I don’t believe in heroes but we do admire many businessmen, teachers, politicians, writers, artists, and assorted white- and blue-collar workers. We admire, that is, the vast majority of the middle class. People who live their lives day in and day out with dignity, humor and integrity. These middle class heroes are also the ones world-around who do believe, “man should work, increase his income, and enjoy modern improvements.” They don’t have much in common with Gordon Gekko or OWS protesters.

I did not always share the sentiments in that last paragraph. I went through a Mark Twain phase. “When I was a boy of 14, my father was so ignorant I could hardly stand to have the old man around. But when I got to be 21, I was astonished at how much the old man had learned in seven years.”

My doubts about middle class morality took longer than seven years to fade away. In college I remember reading Sinclair Lewis’s Babbitt, Main Street and Elmer Gantry; seeing Arthur Miller’s plays, Death of a Salesman and All My Sons; and reading many other literary works with similar messages. I recognized the uncomfortable resemblances to my middle class family in their satires. Like so many newly educated dummies I labored for more years than I like to admit thinking that salesmen, bankers, businessmen, small town boosters, religious worshippers and middle class achievers were not only gauche but were hypocrites worthy of ridicule.

As I got older I was astonished to find that these middle class achievers were not so bad after all. In fact they were very human and a lot like me. I came to appreciate a sampler my mother had hanging in our hall, “there is so much good in the worst of us and some much bad in the best of us that it little becomes any of us to talk about the rest of us.”

Have a good day and don’t take any wooden heroes.

Bill Stonebarger, Owner/President Hawkhill

P.S. For a long view of how we all got where we are, see my new book (above), Twilight or Dawn: a Traveler’s Guide to Free Market Liberal Democracy.

Sustainable birthday

Sunday, September 9th, 2012

Sept 10, 2012

Today is my 86th birthday. Seems like a good time to address an issue with long-range consequences—sustainability.

On the face of it sustainability sounds wise. Surely everyone wants to support policies that … well, when you come down to it, what exactly is sustainable policy?

My last blog claimed we did not get our wealth by raping and plundering mother earth. Instead, “people may be hurting but the earth is doing fine.”

Many people do not believe that. A common view is that we are overpopulated, pollution is getting worse, we are running out of resources and worst of all, the climate is changing and leading us to worldwide catastrophe.

To fight off these threats believers say we need new sustainable green practices. Here are a few of their suggestions:

Taxes on carbon; ban new mines; restrict oil and gas drilling; stop suburban sprawl; buy local and organic; slow international trade; stop outsourcing jobs; ban risky technologies like nuclear power, genetic engineering, hydraulic fracking, arctic and deep-water drilling; tear down dams and don’t build new ones; oppose new power plants, pipelines and power lines; construct more windmill farms; install more solar panels; ban chemical fertilizers, pesticides and herbicides on farms, lawns or lakes; raise prices on gasoline; make cars and all machinery more efficient; ban SUVs and gas-guzzling trucks; restrict the use of plastics; slow and reverse population growth; recycle; compost food wastes; reduce travel; more apartments and fewer single family houses; set thermostats cooler in the winter and warmer in the summer; favor second-hand instead of new; bike instead of drive; borrow books instead of buying them; take shorter showers; use fluorescent bulbs; use a clothesline instead of a dryer; share power tools instead of buying for individual use; lobby governments to build more sidewalks and bike lanes; eat low on the food chain; break up large corporations and banks; foster local, organic and collective-run communities to replace outdated corporate industrial behemoths.

Many people are convinced that scientists say if we don’t do these green things the oceans will rise, cities will be underwater, agriculture will be disrupted, disease epidemics will spread, species will go extinct, we won’t have enough food to go around, we won’t have enough of anything to go around, and the earth itself will be severely damaged (some claim it will be destroyed) by the multiplying virus Homo sapiens.

If we do take these suggestions seriously they might or might not slow climate change. The only certainty is that most of them (with the exception of efficiency, windmills and solar panels) would lead to fewer jobs and economic loss rather than economic growth.

Let’s look at the record of past environmental scares.

Rachel Carson in her famous 1962 book Silent Spring warned that synthetic chemicals, especially DDT, were going to massacre wildlife and lead to a catastrophic increase in human cancer.

In 1968 ecologist Paul Ehrlich wrote: “The battle to feed all of humanity is over. In the 1970s the world will undergo famines-hundreds of millions of people are going to starve to death in spite of any crash programs embarked on now … nothing can prevent a substantial increase in the world death rate.”

Environmental activist Paul Watson added, “We need to radically and intelligently reduce human populations to fewer than one billion … Curing a body of cancer requires radical and invasive therapy, and therefore, curing the biosphere of the human virus will also require a radical and invasive approach.”

Life magazine reported in 1970: “Scientists have solid experimental and theoretical evidence to support … the following predictions: In a decade, urban dwellers will have to wear gas masks to survive air pollution … by 1985 air pollution will have reduced the amount of sunlight reaching earth by one half.”

In 1970 Harrison Brown forecast in Scientific American that lead, zinc, tin, gold, and silver would all be gone by 1990.

In 1972 a prestigious group of scientists in The Club of Rome warned that we were fast running out of the natural resources needed for living in an industrial world.

President Jimmy Carter in a 1977 speech claimed, “We could use up all of the proven reserves of oil in the entire world by the end of the next decade.”

In the 1980s acid rain was going to kill forests around the world. Bernhard Ulrich, a soil scientist at the University of Göttingen, said Germany’s forests: “cannot be saved.” Journalist Fred Pearce wrote in New Scientist, “The forests and lakes are dying. Already the damage may be irreversible.”

In the 1970s the best-selling economist Robert Heilbruner said, “The outlook for man, I believe, is painful, difficult, perhaps desperate, and the hope that can be held out for his future prospects seem to be very slim indeed.”

Bringing the chorus up to date, The Bulletin of the Atomic Scientists moved its Doomsday Clock one minute closer to midnight in 2012, and warned: “The global community may be near a point of no return in efforts to prevent catastrophe from changes in Earth’s atmosphere.”

Not a very good batting average.

Air pollution did not get worse—it improved dramatically; growing populations did not cause worldwide famines—we now have a food surplus worldwide; we have more stocks of lead, zinc, tin, gold and silver than ever before; DDT did not massacre wildlife or lead to epidemics of cancer; we have not run out of oil reserves; acid rain did not kill off our lakes and forests; mad cow disease, ozone holes, SARS, AIDS, nuclear winter, and the hundreds of other eco disasters foreseen by reputable scientists (often a majority) and gullible journalists never happened.

There remains the current climate change threat. Despite the recent hot summer and drought in the Midwest this one too is overblown in my opinion.

Let me be clear. I don’t think climate change is a hoax. The greenhouse effect is real. The climate has warmed in the last century—about one degree centigrade. The arctic ice today is melting faster than usual. The ice in Greenland is melting—about one percent a century.

Extrapolating that to apocalypse in the 21st century is a stretch. Like acid rain, overpopulation, the ozone hole, the mineral shortage, the oil peak and the many other dire predictions since 1962, it ain’t necessarily so.

There are already data in the wind that support a more moderate prediction. A new 2012 report from the U.S. Dept. of Energy found that we are emitting less carbon dioxide now then we were twenty years ago; while there has been an historical correlation between carbon dioxide concentrations and warm periods in geological history the warm periods in the past have preceded the increased carbon dioxide concentration; global warming predictors assume that increased cloud cover and moisture will lead to higher average temperatures by a feedback mechanism, but they could equally well lead to a decrease in average temperatures if, as is more likely, Gaia reacts homeostatically the way other living systems do. And finally, even if the climate does warm (or cool), it’s not the first time and won’t be the last. We will cope, and far more effectively than we could have done in earlier times.

What is far more certain is that if we take seriously and act on the recommendations of radical environmentalists the resulting slow-down and reverse in economic growth will bring catastrophe.

We don’t need sustainable policies for the earth but we do need them for government deficits and debts. Capitalism and the free market is good at efficient economic growth. But if the population, the resource base and the economy slow or stop growing we (the U.S., Japan and Europe) will have to continue to borrow massive amounts of money to support our aging life styles. There is no free lunch. This will lead to skyrocketing unemployment, food scarcity, health care deterioration, pension collapse, increasing violence and ethnic strife, education collapse, a turn away from science and increased superstition, shortened life spans, a return to gross inequality (1% nobility and 99% peasants, serfs and slaves)—in short a return to an organic agricultural age.

The earth will survive but people will suffer grievously.

Bill Stonebarger, Owner/President Hawkhill

P.S. For a long view of how we got here see my new book, Twilight or Dawn: a Traveler’s Guide to Free Market Liberal Democracy.

How we got rich and how to spend the money

Sunday, September 2nd, 2012

Labor Day reminds us that we are a very wealthy society. How did we get so rich? How should we spend our money?

Many leftists claim we got wealthy by stealing from other countries. Others claim we dug, drilled, and stole it from mother earth, leaving behind a polluted mess. If the first is true we should give it back. If the second is true we should stop growing and start shrinking—fast.

Fortunately neither is true. Or even close.

If we got our wealth by raping and pillaging resources from other countries how come Latin America, Africa, and Asia aren’t wealthy too? Countries there have never been shy about using rape and pillage. Are we just better at it?

If we got our wealth by plundering mother earth, how come other countries in Latin America, Africa and Asia aren’t wealthy too? Many have more natural resources than we do and despite what you hear, mother earth has never been healthier. (See next week for details.)

What has made us then the richest country in the world?

Very simple. A growing free market economy in a democratic environment.

How can we prosper in the future?

A growing free market economy in a democratic environment. It is that simple.

When you get down to brass tacks of course it is not that simple. In the U.S., Democrats and Republicans and all parties in between and off the edge have different ideas. Which is as it should be in a healthy democracy.

Both major political parties are coalitions.

In the Republican’s big tent are business groups, libertarians, evangelicals, tea partiers, neo-conservative intellectuals and special interest groups supporting gun, taxpayer, defense and pro-life agendas. They unite today in wanting a smaller government; lower taxes; reduced regulations; private sector growth and government spending restraint. Republicans appreciate and use entitlements like Social Security, Medicare and Medicaid, all of which were pioneered by Democrats. Today they want to re-pioneer entitlements (especially Medicare) to make it less likely we go bankrupt as the population ages and costs continue to soar. They note that many social welfare democracies in Europe are on the edge of the bankruptcy cliff right now due to skyrocketing social welfare costs.

In the big tent of Democrats you find government and industrial unions, environmentalists, trial lawyers, Hollywood celebrities, media stars, social workers, teachers and special interest groups supporting minority, retiree, welfare, peace and pro-choice agendas. They unite in wanting to expand the size and scope of government, increase taxes (especially on the rich) and tighten regulations on business and consumers. Cool to reform, Democrats want to expand the size and scope of entitlement programs like Social Security, Medicare and Medicaid. They claim that European democracies are doing well with higher taxes, bigger pensions, better (and cheaper) health care—more unemployment but less poverty.

Free market growth in a democratic environment equals wealth. The Republicans favor the free market growth part. The Democrats favor the democratic environment part. It wasn’t always that way.

In the mid-19th century the Republicans were for high tariffs and opposed free trade. The Democrats supported free trade and were against high tariffs. On the other hand the Republican Party was founded to get rid of an ugly stain on the democracy, a practice we inherited from agricultural ages, slavery. In the mid-19th century the Democratic Party supported slavery.

In the mid-20th century things reversed. The Democratic Party took the lead in Civil Rights and social welfare legislation to expand democratic equality. The Republicans were often in opposition. To muddy the waters though, the lead Democrats got much of their support from northern Republicans and much of their opposition from southern Democrats. To muddy them still more, Democrats and Republicans have alternately been on opposite sides of free market, free trade issues. And surprisingly, Republican administrations since 1960 have added more to entitlement spending than Democratic administrations have!

The conflict between a growing free market economy and a democratic environment pits liberty against equality.

Most of us want both. My view is that we owe our two-hundred-thirty-year success story to a creative balance of liberty and equality. In the coming election we have both sides represented in an unusually sharp way as the Democrats press for more equality and the Republicans for more liberty.

Both parties are united in favor of a healthy and growing middle class. Both parties want to lessen unemployment, lift people out of poverty, protect and enhance our environment, combat prejudice, protect seniors and the disabled, advance freedom at home and around the world. Given this common ground there is room for compromise and cooperation.

When it comes to specifics the divisions appear.

Democrats have a major problem with the growth part of our wealth equation. One of their most important factions, environmentalists, want nothing to do with growth. Instead they believe that “a growing economy means a shrinking ecosystem.” They want to reduce populations, cut back on energy and use  fewer resources. To prevent climate change, pollution and resource depletion their watchword is sustainable. To achieve this they promote green technology and hope that local, organic and collective strategies can replace growth.

Government unions, another important Democratic faction, want growth of government, but not necessarily of business. They believe that government is a better wealth creator and a better judge of investments that will create jobs and benefit all equally. They oppose privatizing of education, prisons or other government services.

Industrial unions are more sympathetic to business and oppose regulations that interfere with job growth. Unlike the environmentalists they favor the Keystone XL Pipeline; oil and gas drilling expansion; housing developments; commercial and public infrastructure projects. Industrial unions also favor expansion of the social welfare part of modern democracy when it comes to pensions and health care, although many of their members resent tax money spent on welfare for what they see as the undeserving poor.

Republicans are united in favor of private sector growth. They want to downsize government. They believe that millions of private individuals and groups create jobs and wealth, not governments. They believe that entrepreneurs like Thomas Edison, Henry Ford, Steve Jobs and Bill Gates did build companies and create jobs. One of their heroes, Ronald Reagan, said in his inaugural address in 1981, “government is not the solution to our problem; government is the problem.”

Republicans favor laws to limit class-action suits of trial lawyers that drive up health care costs. They oppose nanny state regulations and welfare programs that foster dependency. They favor tax reforms that encourage entrepreneurial risk.

Like the Democrats, the Republicans have problems with conflicting factions.

Republicans want to reduce regulations on businesses, but some slip into crony capitalism, supporting subsidies for businesses they profit from. Pro-lifers favor laws to prevent abortion, ban same-sex marriage and support pro-life policies. Libertarians don’t agree.

All in all, if you favor more equality—and less growth—the Democrats have the better agenda. If you favor more liberty—and more growth—the Republicans have the advantage. If you want both liberty and equality … good luck.

Historically we have managed in the long run to have both—more liberty and more equality. It’s a little like the chicken and egg debate but in my reading of history, liberty came first. Freedom of enterprise, combined with advances in science and technology (which also depend on freedom), led to the enormous growth in wealth worldwide in the 19th and 20th centuries. Before that both equality and freedom were talking points for poets, philosophers and saints but had little meaning to the 99% who were always poor, unequal and oppressed.

Today I recommend the Romney/Ryan agenda because it is more likely to lead to growth. There is no free lunch. Without economic growth, advances in equality will be impossible. Without economic growth there is no solution to our debt and deficit problems. To get growth we need more entrepreneurs in the private sector, and less dependency in the public sector. It’s that simple.

All that said, the sustainable anti-growth challenge of the Democrat’s environmental faction is serious and real. Do population, resources and climate change issues radically change the picture?

I have addressed this conflict before but it is worth another look next week.

Bill Stonebarger, Owner/President Hawkhill

P.S. For a long view of how we got here see my new book, Twilight or Dawn: a Traveler’s Guide to Free Market Liberal Democracy.