Friday, 18 December 2009

Economics and Climate Change

I was watching a report on TV about a town in Kansas which is "going green", spending a fortune on a green school, houses powered by sun and wind and so on, and how it would create jobs.

Now, this is a "nails down the blackboard" thing for me because "creating jobs" using government money simply means "destroying jobs" elsewhere. It may be desireable as a public service, but it doesn't "create jobs".

But I had a new thought tonight. Why is "climate change denial" considered to be so criminal, yet "broken window fallacy denial" OK? And why are so many broken window fallacy deniers quick to talk about science when it comes to climate change, yet ignore the (very simple) science behind the broken window fallacy?

To anyone not familiar with Bastiat's theory, it says that one way of looking at someone breaking a shopkeeper's window is that they're doing a service. The broken window means that a glazer gets employed by the shopkeeper". What's not seen is that the shopkeeper now has less money to spend on the things he wants to do (such as buying some new shoes or a book) which would themselves employ people.

Now, Bastiat's fallacy doesn't take much proving. You can do it with a diagram with 4 stick men. It's been around since the middle of the 19th century.

And let's remember Gordon Brown, the man who talked about the "flat earth" climate change sceptics was also the man who backed a chancellor who believed in quantitative easing. The history of QE (or printing money) is basically proven. The science is settled, if you like. The Mongols and Persians tried it in the 13th century. The Chinese carried through to the 16th century. Germany in the 20th century and Zimbabwe now. As a model being tested, it's run for a lot longer than the CRU models on climate have, and we know that it doesn't work, and the science says it shouldn't work too.

The reason is, of course, that most greens are watermelons who will gladly wave the flag for science when it suits them (climate change) but when it comes to economics, mathematics, psychology, medicine or genetics, they frequently choose to ignore it.

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