The six years of global economic sluggishness following 2007′s world financial meltdown contain many lessons though few advanced nations’ economic managers will recognise them.
One is that increasing debt and monetary charged fiscal stimulus has not worked. Markets are in a lather about the US forecast to have achieved 4 per cent annualised growth this quarter. The US has a far more flexible economy than other advanced countries and its federal structure allows dispersed decision making to its great advantage in allowing some states to lead the way with new forms of gas and oil. Even so, the US cannot sustain such a growth rate until the federal government has mended its excessive spending and monetary creation, thus paving the way for a recovery in savings and investment.
Since 2007 advanced countries have seen real growth at under one per cent per annum (the EU’s has been negative). That means real living standards have dropped. Australia has performed better than most with growth averaging about 2.5 per cent, but this is less impressive when set against the increasing reality that Australia is an economic appendage of the developing countries to our north growing at 6 to 8 per cent in that period.
The growth in Government spending,though basically taking from the earners of wealth, thereby having adverse incentive outcomes, has not got the destructive force of redistributions in previous eras when the venue was military uses. It is however very difficult to reverse.
On top of the deficits and cannibalisation of investable funds by government spending that has damaged the economies of the advanced nations. Regulatory intrusion has played a major part. Nowhere is this more evident and costly than in energy.
Ever-cheapening energy was the wellspring of the industrial revolution. As well as powering factories, other commercial premises and homes it provided the basis for the synthetic materials we now take for granted. However, governments throughout the developed world have implemented policies deliberately designed to increase its price in order to reduce carbon dioxide emissions. Usually they have done so reassured with cock-eyed technological optimism that new “”clean” energy will eventually be lower cost than the fossil based sources.
The resultant impost places a ball and chain around traditional productive activities across the western world. Colin Robinson reminds us, that the UK has a policy for an 80 per cent reduction in carbon emissions, incorporating a minimum carbon tax, subsidised windmills and solar power, minimum efficiency level regulations on appliance and housing, and government sponsored nuclear power. All of these, with the exception of still demonised nuclear, remain features of policy in Australia – indeed our own situation is worsened by the banning of unconventional gas in Victoria and its discouragement in New South Wales.
Developing nations totally reject any but token measures to inhibit their use of low cost energy and have stood firm against the western world at the various climate change conferences. They have benefitted from the developed world’s purpose-driven impediments to their own industries’ access to low cost energy and have now attained sufficient economic muscle to out-stare threats to impose penalties, for example on airlines that avoid paying a carbon tax.
Even Among developed economies those that have been less forceful in implementing tax-induced energy price hikes have seen businesses migrate to them. Thus, Ontario, formerly Canada’s manufacturing heartland has seen ‘renewable energy’ raising electricity prices from being among the lowest in N America to being one of the highest. Factories are moving to take advantage of cheaper energy in the United States. Heinz, Caterpillar and Kelloggs left for Arkansas this year. Maurice Newman warns that this is happening in an article in today’s The Australian.
Fortunately, none of this is irreversible. We are observing a deflation of the scary climate change (nee global warming) stories from the mundane climate model assassinating empirics of no warming for 17 years do the ludicrous attempts to demonstrate warming’s effects by an Antarctic research expedition now stuck fast in ice that should have disappeared.
Facts are undermining the fashionable science based on human induced warming often and will eventually mute governments’ energy distorting policies – though sadly the accretion of interest groups and people in powerful positions is unlikely to allow this to proceed as fast as it should.
According to Fox News
“Chris Turney, a professor of climate change at Australia’s University of New South Wales, said it was “silly” to suggest he and 73 others aboard the MV Akademic Shokalskiy were trapped in ice they’d sought to prove had melted.”
The exhibition, complete with Guardian journalist, was expecting to be wallowing in water. They were apparently unaware that the ice is accumulating. Warmistas have no scholarship. And is there a Lawrence (Titus Oates) on board prepared to sacrifice for the good of the rest of the party?