Main Stream Politics and Economic Common Sense

Main Stream Politics and Economic Common Sense

Not long ago I came across an interesting on line Reuters article about the report of a United Kingdom parliamentary committee on the possible effects of oil supply constraints on future global economic development. Here are some statements from the report:

"The deepening energy crisis has the potential to make poverty a permanent state for a growing number of people, undoing the development efforts of a generation."

"Communities across the globe are more vulnerable than ever, living in an unsustainable present and facing an uncertain future."

"It is clear that the current level of global energy consumption is unsustainable, from both environmental and geological points of view."

Wow! These are incredible statements coming out of a committee of elected officials in a highly developed country like the UK. Such officials are, almost by definition, adherents of economic orthodoxy and faithful members of the Church of Everlasting Growth. This report is an encouraging example of rationality and common sense triumphing over cultural indoctrination.

Of course the Reuters article in which these statements are embedded immediately goes on to make an effort to ensure that we do not take these shocking statements too seriously. After all we would not want people to abandon their belief that manufacturing and consuming as much stuff as we possibly can is the road to economic 'health'. They write:

"Peak oil has long been considered marginal and the theory has its detractors who say technology can extend the life of the world's reserves and point out that previous predictions of a peak have been premature."

"Other critics of peak oil include British oil company BP Plc, which argues that any peak in world oil production would be because of a decline in demand rather than constraint on supply."

There is absolutely no need for us to grow up and stop stuffing our faces full of cake and cookies. Technology will extend the life of the reserves for a long time, and eventually other energy technologies will come along which will allow the feeding frenzy to continue forever, world without end, amen.

Still, any sign whatsoever that main stream institutions are capable of publicly recognizing that the truth that two plus two equals four applies to economics just a much as it does to any other quantitative discipline should be welcomed. George Orwell was right.

July 30, 2008