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103 comments on Hirsch on CNBC: Peak oil problem "as massive as one can possibly imagine"

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john15 on May 20, 2008 - 3:14pm Permalink | Subthread | Parent | Comments top

And in the case of a catastrophic collapse in supply, I do believe that capitalism will be overturned, just as it is now being overturned by countries seeking to protect their food security.

the problem in most countries is not the market but it's gov't interference in the market. rarely do they report that gov't policies in most of the countries we read about are caused by subsidies and etc. what's the worst economy right now? it's zimbabwe. that is an gov't created problem through and through.

Pricing Somalia out of the market for grain is a perfectly acceptable free market solution to scarce food resources.

that is your example? a war torn region that probably doesn't have anything resembling a market economy? are you saying the ENTIRE country can't buy grain? I don't believe that. anyways, the wealth produced by the free market can make enough money available to send grain to places where starvation is a problem.

today mises had an article about the potato famine. someone on here said "just remember that the market said F-you to millions of starving people in Ireland" a few months ago. that is entirely wrong. the market was interfered with.

What Caused the Irish Potato Famine?

Was the Potato Famine an ecological accident, as historians usually say? Like most famines, it had little to do with declines in food production as such. Adam Smith was right that "bad seasons" cause "dearth," but "the violence of well-intentioned governments" can convert "dearth into famine."

In fact, the most glaring cause of the famine was not a plant disease, but England's long-running political hegemony over Ireland. The English conquered Ireland, several times, and took ownership of vast agricultural territory. Large chunks of land were given to Englishmen.

These landowners in turn hired farmers to manage their holdings. The managers then rented small plots to the local population in return for labor and cash crops. Competition for land resulted in high rents and smaller plots, thereby squeezing the Irish to subsistence and providing a large financial drain on the economy.

Land tenancy can be efficient, but the Irish had no rights to the land they worked or to any improvements they might make. Only in areas dominated by Protestants did tenant farmers have any rights over their capital improvements. With the landlords largely residing in England, there was no one to conduct systematic capital improvements.

http://mises.org/story/2978

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kenny on May 20, 2008 - 3:45pm Permalink | Subthread | Parent | Comments top

Regardless, we see national interest in food security overturning free market trade again and again. The U.S. and western Europe no less than Egypt or India or any other nation. Perhaps this is all caused by government intervention in the first place. But the one thing you can be sure of is that no government will ever resort to some kind of faith-based reliance on unregulated markets to sort out the problem. The same approach we've always seen for food will be increasingly applied to energy.

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john15 on May 20, 2008 - 7:15pm Permalink | Subthread | Parent | Comments top

But the one thing you can be sure of is that no government will ever resort to some kind of faith-based reliance on unregulated markets to sort out the problem.

it's staggering how much contempt there is on TOD for faith-based markets. no wonder so many here just don't get it.

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GreyZone on May 21, 2008 - 2:02am Permalink | Subthread | Parent | Comments top

Tell me how faith based markets addressed the Irish potato famine. Oh they didn't, did they? Instead the British used the famine AND the market to strip the Irish of their ancestral lands and then worked them to death in near concentration camp conditions, burying them in mass unmarked graves.

Or how about those free, unregulated markets that have created the largest credit mess in the entire history of the world and have to have government bail out the likes of Bear Stearns and other financial institutions?

Your faith in free markets demonstrates a blindness in yourself, not in others. No one but a fool (or a libertarian anarchist) argues for totally free markets. Likewise, the collapse of the USSR demonstrates the folly of trying to plan the entire economy. So the answer lies (as usual) somewhere in between.

The question then is how much market activity can we hope for in the time before we reach critical supply problems. Now, since you are relatively new here at TOD, we can forgive your ignorance On Energy Transitions Past and Future. But if you bother to read that article, you discover that every other major transition took 50-80 years to occur without government intervention. Further, each transition was supported by the new energy source being as cheap as or cheaper than the source it replaced. And finally, each energy source was higher quality and higher energy density than the source it replaced.

Now, today, we face a different problem. We need to turn the energy ship around right now, not 80 years from now. And the alternatives are all more expensive than the fossil fuels they are replacing. Further, of the alternatives we have, most are not of the same quality or energy density as petroleum.

So, we have a unique set of problems that history clearly tells us that the "free market" has never, ever addressed before. Further, we have 6.7 billion lives dependent on the existing energy system.

I'll take my chances with a Manhattan style project rather than wait 50-80 years to see if the "free market" can pull its head out of its ass and do something constructive on a large scale. Childlike faith in free markets didn't help win WWII, did it? Sometimes the "free market" is not the right answer, except for a religious boob who knows no better than to chant a silly mantra.

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ccpo on May 21, 2008 - 3:12am Permalink | Subthread | Parent | Comments top

Excellent rejoinder. I shall bookmark this forthwith.

May I add an example or two just because?

Medical care in the US: tens of millions not covered; injured and dying sometimes refused care.

Education in the US: Supposedly open and equal to all, but actually highly unequal in quality because it is funded dependent upon wealth of the neighborhood since education is paid for with property taxes. (Not a perfect example, but the financing is supported by an income dependent upon highly unstable market forces.)

Etc.

The "free" market does not address issues of the Commons well.

A simple thought test. If the market can and should be trusted to manage economies, and societies have generally become more "democratic", why is it that wealth distribution hasn't materially changed? Why does it still generally follow the 1/5/20/80 rule?

Why is it that societies based upon community ownership, therefore no economic classes, have higher rates of satisfaction with life?

Cheers

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Noizette on May 21, 2008 - 11:27am Permalink | Subthread | Parent | Comments top

Free markets are a myth designed to oppress and rip off the subservient, the losers (countries, groups, etc.), the dependent, the poor, employees, etc. Free markets have never existed and never will. (See the US, a very controlled, protectionist, economy in the hands of...) The freedom is on the side of the powerful, those with the guns, nukes, and so on.

Trite tales of exchanges benefiting all (your coconuts or your daughter for my boat) are folklore erected to practically religious status, slathered in ideology and numbers that make no sense, far more powerful than Islam, Catholicism, or Soccer mom principles, for ex.

In a way, it is new religion. An organizing principle that nobody dares contest, everybody has to pay lip service to; making profits is wonderful, except that, on the ground, err -

the profits seem to be extracted from ppl /countries / groups who object; deplete natural resources, and create social strife, and lead to wars...Duh.

The experts (with guns and bombs in the background, and pay offs for the top officials) tell ppl they have to sell at ‘market value’ which is only what the rich will pay.

Russia lost the ‘cold war’, and was subjected to a heavy dose of ‘modernity’ and ‘free markets’ and now the US is going down the tubes for the same reason. The debt bubble (free market for the lenders, impunity in law) will plunge the US into deep recession, or even outright stark depression.

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Magnus Redin on May 22, 2008 - 8:51am Permalink | Subthread | Parent | Comments top

I basically do not care if free markets are an ideal theory, a halfway working reality, an illusion or a great conspiracy.

Regardless of wich I find it proven that competition driven by the full range of human feelings including opportunities for cooperation is very good for efficiency and change. Thus I find it good that my governmnet has market management and creation as one of the methods for leadership. I want the solutions to global warming and resource constraints to compete with each other, there is no singe winner for solving such a very large problem.

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Vintermann on May 21, 2008 - 3:38am Permalink | Subthread | Parent | Comments top

john15, you read mises.org and believe it. The point is that you are far, far out on a wing politically speaking. Even far-right governments rely on market interventions, or other things than markets entirely, to get such things as national security (which includes food security). That was not "staggering contempt" you saw there. I see more like "OK, I know I'm not going to reach through to you, but be aware that no politician in power sees things your way".

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r4ndom on May 20, 2008 - 3:50pm Permalink | Subthread | Parent | Comments top

You make some very good points, but the fact is that there never has been and never will be a totally unfettered market. There will always be interests with the power and desire to distort markets, either by manipulating the information in the market (the Saudi's saying they are increasing production, IOC's production "forecasts"), by force of arms or implied force of arms (nationalization of resources such as Libya or Venezuela), or by subsidizing consumption.

In the real world these forces eventually have to balance out and we get a market price that reflects the consensus reality, but it is to a large degree a manufactured reality by the time it hits the futures market.

Austrian school economists tick me off. Talk about a discipline divorced from reality, they are actively hostile around the Mises site to any possibility of a reality check of their pet ideas.

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Mamba on May 21, 2008 - 3:17am Permalink | Subthread | Parent | Comments top

Austrian school economists tick me off.

Me too. I used to love to listen to Jim Puplava's podcasts about Peak Oil, but Puplava's brutish insistence on the market has put me off, and I'm also annoyed that he has taken on the Republican mantle of Global Warming Basher as well, constantly bleating how it will only be a problem "in 40 or more years, if ever".

Most Republicans just do not get the full picture. Some of 'em support the Peak Oil thesis because it means they can make money from energy stocks, gold and silver, but with Global Warming they just can't work out a profitable angle — yet.

Mark

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andym on May 21, 2008 - 4:10pm Permalink | Subthread | Parent | Comments top

I couldn't agree more. The market was interfered with. When this happens, the longer term negative consequences far outweigh any short term gains. The problem is simply that we have subsidized oil production and consumption. Will Hinton is correct here:

http://www.themarkettraders.com/content/foreign-oil-dependency-and-polit...

Andy

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103 comments on Hirsch on CNBC: Peak oil problem "as massive as one can possibly imagine"

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