60 comments on Why oil (and helium) are still underpriced
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On the other hand, I completely share your low opinion of the foresight of government in many cases. Obviously, an institution that operates on a 2 year or 4 year election cycle has very little incentive to take a long view. The funding of basic research is the exception, not the rule.
I share Prof Serreno's sense that the human race is acting in an obviously foolish manner when looked at on a decades-centuries time scale. We cannot possibly continue to grow exponentially on a finite world, and I think it's going to end in tears in my lifetime, and certainly in my kids and grandkids.
So the question is what kind of societal institutions could we create that would take a longer view. How do we learn to think about the seventh generation, in addition to this fiscal year and the next election.
It appears to me that if we are to stop governing ourselves like greedy kindergarteners, we need to add some kind of institution to the governmental system of checks and balances which has, as it's explicit mission, taking care of long term resource/environment/sustainability issues. I can imagine something a bit like the Supreme Court with the President making lifetime appointments of people with a range of appropriate qualifications for thinking about long term issues. Such a 7th Generation Council would need to have real power (eg the right to veto legislation), in order to do any good.
"I suspect that the post-peak era will be inflationary, and high interest rates reduce the time window with which a net-present value calculation looks forward"
now...that's what you'd think...increased scarcity of various commodities...same or more demand...prices go through the roof...bingo..inflation
i would have thought the same thing...but..the bond market is saying the opposite..no matter how much mr. greenspan and his minions push up short term rates..the only interest mechanism they control..long term rates have stubbornly stayed the same...and that in the face of fed funds increasing from 1% to 4%
now, you could argue that long term rates are being artificially depressed, because all those foreign governments like china , japan and saudi arabia are recycling their foreign exchange profits by buying the long bond...and that very well may be the case...
but i've been thinking..(if i can anthropomorphise a bit)...maybe the bond market is trying to tell us something..and they have been doing it for several years now...maybe what we're facing is deflationary recession ( or depression, if that's your flavor)
as alan g. said ...it's a conundrum
I've been thinking of why the Chinese are so willingful to grant us such a generous line of credit in spite of the obviuos tensions between our countries. Besides the obvious motivation of keeping WalMartism, and thus their own economy alive I suspect that they plan to use the dollar card to keep us under control. It is logical - it would be much cheaper and safer for them to beat us on the financial markets than to confront us on the military front.
Pretty soon the one-child policy will present younger Chinese workers with their own problem: how to care for their two ageing parents, and without any help from SS. There will come a time when they become net importers of finished goods, certainly including food and health products, and will convert their dollars into goods and services, completing the trade of goods that is one-sided today. When this period begins the inflation we exported to Asia will return along with our dollars to the US.
Just as a thought experiment, what exactly is to keep us from repudiating that mountain of debt, once they decide they want to start spending those dollars in a big way?
What you have in mind is, I think, less a U.S.-style Supreme Court and more a U.K.-style House of Lords. Ideally, the Lords are supposed to insure the long-term view is heard. Of course, the problem with Lords is that membersip was largely due to accident of birth (not counting the ecclesiastical Lords).
So, shall we prose amending the U.S. consitituion by transforming the Senate into such a 7th generation council? What powers do you all think this Senate should have, and how will its powers be balanced? How will its members be selected, and how long should they serve in office?
Another model is the Federal Reserve, where we have a piece of the government which exists fairly autonomously for a special function (managing the money supply), just as the Supreme Court has it's special function (interpreting the constitution). We (hopefully, most of the time) appoint highly talented economist/finance types to the Federal Reserve Board, and (hopefully, most of the time) highly qualified laywers/judges to the Supreme Court. We generally appoint roughly the right kind of people (political disagreements aside), just because we are aware of the specialized function of these institutions, and the importance of their doing a good job, and we get upset if less-than-stellar folks are proposed (as President Bush found out the hard way with the Mier's nomination).
The Supreme Court has lifetime appointments, as does the House of Lords, but the Federal Reserve has fixed terms. My gut feel is lifetime appointments is better (because doing the right thing for the long term sometimes involves having to do unpopular things in the short term).
Perhaps a more important question might be what kind of qualifications would we want for the members of a 7th generation council. I am of course tempted to say "eminent scientists!", since so many of these long term issues are complex and scientific, and parsing the science and deciding how much accord to give it is critical. But I also think most scientists have lived their lives entirely inside academia and have a dangerously limited view of how the rest of the world works.
I would keep it smaller than the senate, but bigger than the Supreme Court. Maybe 24 people. Enough that it can represent a diverse group of expertises, but small enough to be cohesive.
Maybe have a council with assigned seats for three groups: eminent scientists, retired business leaders and economists, and religious leaders. President proposes, Senate confirms. 7th generation council can veto legislation with a 2/3 vote. Can propose new legislation to the lower houses. Can hold hearings and subpoena people.
I think just having an institution with a name and a mission that said "Long Term" all over it, and some real power would make a huge difference. When they held hearings about world population projections for 2100, the media would have to cover it. It would put the rest of the century on the political agenda, instead of leaving it completely up to chance.
I'm all for listening to on-point criticism whatever the source, but giving religion a binding vote is dangerous to government and corrupting to religion.
I would rather pick 50% scientists (ones having as versatile background as possible) and 50% of retired businessmen. Generally in society women are the keepers of the long-term so maybe women should be preferred for the job.
My concern is: how do you prevent the inevitable war between this institution and just about anybody else?
Second, would it help to veto something? You really need dictatorial powers to divert large resources to something else, particularly when the budget is already drowning. There would be enormous resistance whether you cut other programs or raised taxes.
Third, it might not be needed. Remember that no planning was used to prepare for WWII, yet gm shifted from cars to tanks on a dime. (GM maybe not a good example - seems they cant shift from suv's to prius type care in time to stave off bankruptcy.) The market will move resources all by itself as soon as prices rise.
"If the American peole ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered...The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
-Thomas Jefferson