I haven’t posted for quite a while. Basically, family commitments have eaten into my blogging time, and this state of affairs will likely continue for an indefinite period longer. Nonetheless, I will try to get some posts out as we grind through the last few innings of what I would term the ‘Great Hiatus’: a hiatus period—or pause— amid the longer term trend of rising global mean temperatures, higher oil prices, increasing resource constraints and greater global economic instability.
For example, with a 70-80% chance of an El Nino by year-end, temperature records have the potential to start falling again. Further, oil has built a solid base above $100 per barrel but appears poised to go higher in the next year or so as oil companies struggle to find new fields that can be developed at the right price.
At the same time, many of the financial fragilities in the system posed by ageing demographics, declining productivity and increasing resource constraints have to date been countered by the super easy monetary policy pursued worldwide. The aggressive, unprecedented and unorthodox monetarism led by the Federal Reserve Board has been a policy triumph over the short term. Since the credit crunch of 2008/2009, the sky has not fallen down.
Yet the jury is still out as to whether the provision of free money can be maintained long enough to see a return to sustainable economic growth, or whether it will beget a new cycle of chronic instability through having fostered the extension of credit into intrinsically poor investments and a generalized asset price inflation that benefits few but the rich.
In the meantime, here are some links which I hope will flesh out some of the themes of this blog:
- Occasionally, my left-learning friends berate me for reading the right-of-centre Daily Telegraph. I offer two defences: first, you need to read opinion with which you may instinctively disagree, but find of some merit with a bit of reflection. Second, a good newspaper has intellectual mavericks—and The Telegraph has many (probably more than The Guardian). Here is an article by Ambrose Evans-Pritchard portraying the fossil fuel industry as poor capitalists; in short, the oil majors have been investing ever more, to reap ever less; while renewables are slowing sloughing off their subsidies. Joseph Schumpeter would be proud of this epic creative destruction.
- And despite all the new technology we are bringing to bear on oil extraction, when fields go into decline it is damn tough fighting the tide. North Sea oil was a much ignored saviour of the British economy in the 1980s, but is decline is inexorable and, according to the Office for Budget Responsibility (OBR), accelerating. The Financial Times has the story here (access to FT articles after free registration), but if you want to go to the primary OBR source you can find it here.
- We are still seeing a lot of commentary over “Capital in the Twenty-First Century” by Thomas Piketty. Piketty argues that the relative reduction in inequality in advanced countries over the post-war period was something of an aberration. Accordingly to his analysis, without direct political intervention (or in the most extreme case revolution), capital will gradually accrue to a relative few. In short, when the return on capital is greater than the growth rate, it is the owners of capital who prosper most, not those in capital’s employ. For a fuller treatment, I recommend Cory Doctorow’s summary here, and an interview by Maththew Yglesias of Vox a while back with Piketty here.
- You can also slice growing inequality in different ways. The Institute for Fiscal Studies (IFS) in the UK has just issued a report detailing how the real incomes of young people are falling much faster than those of any other age cohort (here). Meanwhile, I have often commented on how London has detached itself form the rest of the UK. In the US, Emily Badger of The Washington Post’s Wonk Blog charts a similar divergence between cities showing a virtuous cycle of education and growth and those showing a vicious cycle of poor education and decline (here)
- Climate sceptics love to start any global mean temperature chart with a data point centred on 1997/98, which happens to coincide with the largest El Nino for a century. This monster El Nino ushered in the record breaking hot year of 1998 (slightly eclipsed in later years depending on which data set you look at, but still one of the hottest years on record: see NASA’s data set here). Global mean temperature is a construct of short-term weather volatility, long-term green-house gas induced temperature rise and the medium-term ENSO cycle. Eventually, CO2 will do its stuff and records will fall regardless of whether we have an El Nino. But for us to quickly retire all the talk of a hiatus in temperature rise will require a new and powerful El Nino. True, an El Nino appears on the cards by year-end, but quite how strong it will be is still clouded in uncertainty as this post at Skeptical Science explains here.
- If you visit London, take time to visit some of the quirky, smaller museums. One of the most intriguing (and downright disturbing) is the Old Operating Theatre that used to be part of St Thomas Hospital just south of The Thames. This is no Disney Land reconstruction, but a perfectly preserved part of pre-antiseptic medical history. Despite appearing to be a set from a particularly dark Harry Potter movie scene, the Old Operating Theatre shows how and where surgeons removed a damaged limb in around two minutes flat, with minimal anaesthetic. The museum demonstrates how far we have come health-wise in an historical blink of an eye (150 years or so). And for those who would welcome an economic collapse as a route toward a more authentic form of living, I direct you to a post at Club Orlov explaining a world of post-collapse, or village, medicine. Humanity is put right back on the St Thomas Hospital’s operating table. Pray for four strong men to hold you down—and a surgeon who has not only washed his hands, but is also quick with blade and saw.