Saturday, September 23, 2006

Review by John Gray of: Heat: how to stop the planet burning by prize British nut George Monbiot

It may be too late to do anything about global warming. So, rather than pretending it can be stopped, shouldn't we concentrate on coping with the disruption?

The belief that human beings are masters of the planet dies hard. I cannot count the number of times I have heard environmentalists warning that we have only ten, 20 or 30 years in which we can prevent disaster. The implication is that, provided we apply sufficient intelligence and political will, we can arrest the dangerous environmental changes that are under way - as if global warming weren't a physical process that does not wait on humans. The assumption that we can stop it becomes less scientifically tenable by the day, and is in fact not much more than a green version of anthropocentrism.

In Heat, the environmental activist and thinker George Monbiot tries to bring the debate about climate change closer to known facts and reasonable conjecture, avoiding the woolly thinking that is so prevalent on the subject. The result is a book that anyone who thinks they know what should be done about global warming must read. One virtue of Monbiot's consistently heretical inquiry is that he recognises the magnitude of the danger: if present trends continue, the result could be a climate shift analogous to that which wiped out much of the world's biodiversity when the Permian era came to an abrupt end roughly 250 million years ago. Even if the change turns out to be much less dramatic, we can forget about carrying on with business as usual.

Monbiot clears the mind of a great deal of cant. As he shows, many fashionable environmental nostrums are either pointless or harmful in their effects. Micro wind-turbines are not worth the time and money spent on them: Britain needs a larger national grid, not a smaller one. Biofuels are a particularly dangerous panacea. To reduce our dependence on fossil fuels significantly, we would need to plant them on a vast scale, further reducing the world's shrinking inheritance of land and water. A large part of the present crisis is a result of the agricultural destruction of wilderness, which plays a vital role in maintaining global climate. Between 1985 and 200o, production of palm oil - currently the cheapest source of biofuel - accounted for nearly 90 per cent of deforestation in Malaysia. A large-scale shift to biofuels - as advocated by George W Bush, for example - could have a comparable effect worldwide, increasing the harm done by farming while diminishing food production. The result would damage human welfare and the biosphere as a whole. As Monbiot notes: "Biofuel production is a formula not only for humanitarian disaster but also for environmental catastrophe."

This is not the only example of environment-alist policies that can prove to be self-defeating. It is a pity Monbiot says nothing about the phenomenon of global dimming. As well as greenhouse gases, humans are releasing aerosol particles into the atmosphere through industry and air travel. These are pollutants, but one of their effects is to reflect sunlight back into space - dimming the sky and at the same time cooling the planet. Reducing this kind of pollution - by discouraging flying, for instance, as Monbiot proposes - would make the world cleaner; it would also accelerate global warming.

If so many of the policies touted by environmentalists are counter-productive, how are we to stop the planet burning? Monbiot allows some scope for technical fixes - he is optimistic that new, low-cost methods of electricity transmission can be developed, for example - but the implication of his analysis is that reducing global emissions depends largely on changing the way we live. Since he accepts that emissions need to be cut by around 90 per cent over the next 30 years, the task is plainly a formidable one, and he struggles valiantly to show how this could be done. Some system of carbon rationing must be devised, he believes, and the economy be transformed by redesigning the public transport system, replacing out-of-town shopping centres by a system of warehouses and deliveries, and constructing more energy-efficient homes.

It is hard to judge whether this programme would have the desired effect, but in a sense the question is immaterial. Monbiot is more realistic than most greens. Yet, like them, he overlooks some crucial facts. Britain's emissions of greenhouse gases make up a tiny percentage of emissions worldwide, and while reducing them by 90 per cent might generate a pleasing sensation of virtue, it would have a negligible impact on climate change. Monbiot's programme would have to be implemented globally to be feasible at all, and applied most vigorously in the countries that are the largest sources of emissions: China, India and the United States. However, the first two countries cannot afford to reduce their emissions by anything like the necessary amounts, and a majority of the population in the third country will not accept the changes in lifestyle that a 90 per cent reduction demands.

What of the rest of the world? Does Monbiot seriously believe that oil-rich Russia and resurgent Iran are going to accept policies that penalise fossil-fuel production merely to avert a catastrophic alteration in the world's climate? Or that western countries are likely to hold off from developing Canadian tar sands - which could potentially supply more energy than Saudi Arabia, but at the cost of producing far more greenhouse gases - just because going ahead could set the planet on fire?

However sensible it may be in parts, there is a profound unreality surrounding the programme of action Monbiot proposes. "Curtailing climate change must be the project we put before all others," he writes. But who are "we", exactly? Humanity at large is ridden with intractable conflicts, and delusional bigots rule its most powerful state. An American air attack on Iran would produce an oil shock greater than any that has yet occurred, triggering the search for other sources of energy - many of them dirtier than oil. Moreover, continuing growth in human numbers (a crucial factor in the worsening en vironmental situation that Monbiot mentions only once in the book, giving it less than a single complete sentence) is increasing resource scarcity around the world. It is always claimed that the human environmental impact is a matter of per capita resource rather than sheer numbers, but there is an upper limit. By conservative estimates, there will be some two billion more human beings on the planet 50 years from now. Coming decades are far more likely to bring intensifying resource wars than concerted action against climate change.

There is, in fact, not the remotest prospect of the world adopting anything like Monbiot's programme, but once again this may not matter. As he recognises, it may already be too late: "Because the carbon released now stays in the atmosphere for some 200 years and causes climate change many years into the future, there is perhaps a 30 per cent chance that we have already blown it." It is a sobering admission, from which Monbiot immediately retreats. "I am writing this book in a spirit of optimism," he declares, "so I refuse to believe it."

Here and throughout the book, Monbiot is torn between the angry passion of the activist and the stoic lucidity of the analyst. Like nearly all environmentalists, he believes we would lose nothing by moving towards a more sustainable way of life. But is this actually the case? If there is a 30 per cent chance that the ground on which we are standing is going to give way whatever we do, what is the point in focusing all our energies on trying to make our position more sustainable? Growing numbers of scientists believe the probability of highly disruptive climate change occurring during the present century may be a good deal higher than 30 per cent. If this is so, will we not be better employed preparing to cope with the disruption than by pretending that it can still be stopped?

There are some useful things that can be done. In Britain, we can increase flood defences against rising sea levels, secure our electricity supplies by commissioning replacements for existing nuclear power stations, develop new technologies for cleaner coal and create wildlife corridors to help other species adapt. But first we have to accept that we cannot control the process of climate change we have set in motion. Unfortunately this requires an insight into the limits of human power that is beyond most environmentalists. Like the rest of humankind, they cannot bear very much reality.



World Heritage sites such as the Great Barrier Reef or Kathmandu, in Nepal, could be taken off the tourism map by 2020 due to the effects of climate change and too many visitors, a think tank said today. In a report prepared for UK insurance company Churchill, the Centre for Future Studies (CFS) listed 10 popular destinations that could be either permanently closed or have a visitor cap within 15 years. "I'm reasonably confident we're going to see an increasing climate degradation that is going to impact on various places in the world with increasing severity," CFS director Frank Shaw told Reuters. "Floods, storms, droughts, increasing and erratic temperatures will combine to bring about changes in destination choice for tourists."

Florida's Everglades in the United States, Athens in Greece, Croatia's Dalmatian coastline, Tuscany and the Amalfi Coast in Italy as well as the Maldives are some of the other destinations at risk highlighted by the report. The study drew on evidence provided by scientists, governments, as well as tourism and environmental organisations from around the world. Tourism activity on the Great Barrier Reef, situated off Queensland, injects an estimated STG2 billion ($A5 billion) into the local economy each year. "There is a conflict between environmental concerns and commercial interests," added Shaw. "For some countries tourism represents a significant part of their gross domestic product. "But there is evidence Australia and many other governments are considering what can be done to protect national assets."



Housing prices forced up by shortage

When the American radical economist Doug Henwood met London Times editor Robert Thomson in 2003 he wanted to know what it was that kept the UK economy so buoyant in the face of its industrial downsizing. He was bemused by Thomson's answer: the housing market. To any independent observer it seemed obvious that the housing sector was in very bad shape. After all, house completions are at an historic low - 169,000 in 2002, compared with as much as 400,000 in the boom years of the 1960s. Yet on the narrow definition, the boom was a success: rising house prices meant an improvement in assets for homeowners.

How could so sluggish a sector produce such extraordinary growth? The answer is simple. The housing boom is not a housing boom at all; at least it is not a boom in new house production. Rather it is a boom in house prices. And the boom is taking place almost entirely in the second-hand housing market. As Shaun Spiers of the Council for the Protection of Rural England rightly says, the housing market is 'dominated by transactions involving existing, not new homes'. In the inverted world of housing, most houses are bought second-hand. It is as though Sotheby's shifted more units than Ikea.

The simple explanation for the rise in house prices is that it is caused by the shortfall in house completions. The supply of new homes is not enough to meet the demand, so the prices of the smaller pool of homes rise, dampening demand. But increased prices do not seem to have dampened the demand, and the market continues to boom. And worse still, developers have not responded to the higher prices by increasing house building, all of which seems to add up to a bubble in house prices.

In fact, house prices rose year on year from 1997 right through to 2003, by five, 10, 15 and even 20 per cent, only seeming to stop in August 2004, responding, perhaps, to the interest rate rises made by the Bank of England. The causes of the boom are debatable. On the most optimistic reading it is just the effect of rising incomes - a reading that is not without justification. Between 1985 and 2001 the UK workforce grew by a fifth, from 24 to 28 million. Each of these new incomes potentially represents an ambition to own. Economics commentator Heather Stewart argues: 'The number of households in Britain is rising; since the financial liberalisation of the "greed is good" 1980s, everyone wants to own their own home - and not enough houses are being built to accommodate them all.'

It is important to put the housing shortage in perspective - at least in its impact upon house prices. Houses are in short supply relative to the increasing number of incomes chasing them. And as Stewart says, the shortfall is in relation to growing expectations of home ownership that were fuelled in the 1980s. Homelessness, which was a re-occurring problem in the 1980s, has not become more widespread, as some expected it would. The Centre for Housing Research at York University found that there were around 44,000 rough sleepers in England between the ages of 16 and 24. Difficult as these circumstances are, they are not characteristic of the greater part of the population's experience of housing, 14 million of whom own their own homes outright (up by four million on 1991), and a further 27 million of whom have a mortgage, making more than two thirds of the country owner-occupiers.

The shortcoming of the explanation for the boom from incomes alone is straightforward enough: while average earnings are growing at around four per cent a year, house prices are growing at 20 per cent, pricing many out of the market altogether, as we can see from the rise in the rented sector. One might expect some lag between the rise in prices and producers reacting to increase supply, but in fact the lag has turned into a straight refusal. Now the difficulty is to understand why the sector has proved so unresponsive to the price signals that orthodox economics say ought to engender more output.

Embarrassed at the growing problem, the government has tended to blame the developers, accusing them of sitting on land-banks, speculating on future profits instead of meeting demand today. But the developers in turn have a more straightforward explanation for the non-appearance of new homes. They point the finger at the regulatory framework that holds back new growth: the planning laws, the green belt, the onus on greenfield developments, and so on. Alan Evans sets out the economics of the green belt and other controls on development in his Economics and Land Use Planning: 'The supply restriction means that prices rise will rise faster than they otherwise would.'

It is not just that the Town and Country Planning Act makes it difficult to begin building, though that is problem enough. When investors decide where to put their money, the prospect of a delay of years is good reason to put it elsewhere. In tying up capital, those delays increase costs, often prohibitively. But on top of that, the planning regime imposes additional costs. Section 106 of the Town and Country Planning Act allows local authorities to trade off planning permission against agreements on the part of the developers to make improvements to the site that might normally have been their responsibility. These can include road improvements, the provision of parks, capital improvements to local schools, and hospital or recreational facilities. Section-106 agreements turn planning permission into a tradeable commodity, with which local authorities can wring resources, 'planning gain', from developers over and above their commitments to local and national tax.

As Evans says, authorities 'came to realise they had something of value, which others wanted, and the result was, as an economist might expect, that local authorities tried to appropriate some of the profits for themselves'. Champions of civic responsibility will no doubt applaud the attempts to make the developers pay for the upkeep of the social fabric - but they ought to consider how this windfall tax can act as a disincentive to build. London's mayor Ken Livingstone has been aggressive in the use of Section 106 to achieve goals like the provision of social housing from developers, and most recently, from supermarkets. According to economic writer David Smith, the building industry 'argues that the government has loaded so many extra costs on to builders, including the requirement in many cases to provide social housing in new developments, that this has become a serious constraint'.

There should be no doubt that the restrictive regime of planning has limited development, and that this is a major cause of the housing price boom. However, we cannot be confident that even if the Town and Country Planning Act were abolished tomorrow that developers would meet the new demand. Smith acknowledges the developers are tied down by the obligations arising out of planning constraints, but insists that 'the problem is that private developers haven't filled the gap left by the public sector'. When annual house completions numbered 400,000 in the late 1960s, according to Smith, half were completed by local councils. 'That's not a plea for a return to large-scale council housing', he says, but it does raise the question of whether the private sector is in the right frame of mind to meet the shortfall.

Economic journalist Benjamin Hunt examined in detail the 'risk aversion' that he found endemic among corporate bosses, in his book The Timid Corporation. He identified shareholder activism and its demands to unlock value as one of the main constraints on longer-term investments, and argued that, against expectations, corporations were greatly influenced by the anti-growth mood promoted by environmentalists. 'Greed is good' meets 'the good life' in a mutual antipathy to long-term investments in development.

Certainly in 2001 the Department of Trade and Industry's investigation into competitiveness found that 'evidence does not suggest that the UK is over-investing'; in fact 'the UK remains relatively risk averse' and 'the UK's relatively more risk-averse approach contributes to lower levels of entrepreneurial activity'. In the construction industry, the problem of risk aversion is evident in the low level of building. After all, they make as much, if not more money selling a few over-priced homes as they do selling lots of realistically priced ones. No doubt they are pleased that the planning regulations make it possible for them to make money without having to take any risks or put in any effort.

In some quarters, developers are under fire for hanging on to land without building. Suspicions of gentlemen's agreements to moderate competition might seem like paranoia, but developers have agreed not to compete for labour - as was revealed when Laing O'Rourke outraged rivals by offering extra pay to recruit labourers to build terminal five at Heathrow. The government might find that it is not enough to lift the restraints on development, but will also need to direct investment, with subsidies, to persuade timid investors that their risks are worthwhile. In other words, there will have to be a revolution in attitudes to development on both sides.

Even after identifying the income-driven growth in demand, the regulatory limits on supply and the problem of risk-averse investors, we have not wholly explained the reasons for the house price boom. Economist Sabina Kalyan of the consultants Capital Economics Ltd argues that 'although the number of housebuilding completions has stagnated in the 1990s, the situation has not worsened dramatically - at least not enough to explain the current soaring house price inflation'.

Indeed. At least a part of the boom in house prices is part of a pattern that is nothing to do with houses. Instead of buying houses to live in, many people are now buying houses as a way to invest their spare cash. Of course, most of us generally talk about our homes as 'an investment', enjoying their climb in value, despairing if they fall. But that is not the same thing as the growth of the housing investment market. The Office of the Deputy Prime Minister notes the growth in 'the influx of new landlords due to the introduction of buy-to-let mortgages' and that the number of second homes owned principally as an investment more than doubled between 1994 and 2001. The Guardian's perspicacious economics editor Larry Elliott writes: 'Sadly the trend over many decades means that Britain's economy is now much better suited to buying and selling houses than making things.'

Elliott is right to put the housing boom into the wider context of speculative investments. For the past 15 years or so there has been a free-floating speculative bubble, which is largely indifferent to the sectors that it inhabits, taking a hold of them, not for the purpose of creating new products, but for realising profits on alienation, buying cheap to sell dear. The speculative bubble has wandered the globe searching for high returns, stoking boom and bust as far afield as Moscow's banks and Hong Kong's real estate. It has passed through East European and Thai economies - without apparently adding any positive improvements in the 'real' economy of material production. In time, the East Asian asset prices reached unsustainable levels, and investors withdrew their capital - just in time for the boom. As economist Phil Mullan explains: 'Surplus capital attaches itself to certain phenomena at different times, such as shares, bonds, commercial property, mortgages, or gold.'

Housing investments cushion a lot of people against insecurity, but the booming housing market - perversely - is not leading to the building of new houses. To achieve that we need to take the restraints off development, but also use government incentives to create new homes.



Many people would like to be kind to others so Leftists exploit that with their nonsense about equality. Most people want a clean, green environment so Greenies exploit that by inventing all sorts of far-fetched threats to the environment. But for both, the real motive is to promote themselves as wiser and better than everyone else, truth regardless.

Global warming has taken the place of Communism as an absurdity that "liberals" will defend to the death regardless of the evidence showing its folly. Evidence never has mattered to real Leftists

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