Tuesday, September 27, 2022

The revenge of the material economy

America’s narrow escape last week from a major rail-worker strike brought home an important truth: people who make and ship real things – let’s call them material workers – now hold the whip hand over our supposedly ‘post-industrial’ economy. Firms trading non-tangibles – currency, bits and bots – may still hoard the most cash. But when it comes to eating, staying warm and, for many, making a living, the material economy is what matters most.

Yet the material economy has been hugely constrained in recent years – and deliberately so. This has become all too apparent since the war in Ukraine. Back in the pandemic era, thanks to the recurring lockdowns, the biggest winners were the tech giants and their supporters in Wall Street. Now Silicon Valley, suffering from the worst IPO market in 20 years, resembles something akin to a psychiatric ward, while Goldman Sachs is contemplating mass layoffs. Today, many green-energy projects and ESG funds (that is, funds rated as environmentally sustainable) are languishing, despite benefitting from massive government subsidies and relentless public-relations campaigns in recent years. Meanwhile, oil companies, once demonised by climate-obsessed politicians and activists, are now enjoying bumper profits, as are some commodity firms.

The conflict between the material economy and the economy based in ephemera – such as the creative industries, tech and financial services – is likely to define the coming political conflicts both within countries and between them. The laptop elites, led by Silicon Valley, the City of London and Wall Street, generally favour constraining producers of fuel, food and manufactured goods. In contrast, the masses, who produce and transport those goods, are now starting to realise that they still have the power to demand better futures for themselves and their families. Like railway workers, they can threaten to shut things down and win much higher pay.

The prospect of union organisation is spreading even to companies like Amazon and Starbucks. But there could be a backlash to this from employers. If wages rise too quickly, we could end up with a lot of union members without jobs, as the economy weakens and automation, spurred by rising labour costs, kicks in. Already, as California plans to force huge raises for fast-food workers, some fast-food giants are now backing ventures that aim to replace workers with robots.

The biggest threat to the material economy is likely to be the green agenda. Even before Russia’s invasion of Ukraine and the global energy crisis, problems with often unreliable and expensive renewable energy were accelerating the deindustrialisation of the UK and much of the EU – including Germany, which had long been an industrial powerhouse. Energy rationing could be on the horizon in Europe this winter. Globally, energy-price inflation threatens to drive far more bankruptcies than the 2008 financial crisis. And food inflation, which in some countries has been driven by green agricultural policies, has led the percentage of people worldwide experiencing food insecurity to double since 2019.

Good material jobs cannot easily co-exist with Net Zero policies, which are aimed at wiping out fossil fuels in the near term. Trillions of dollars have been spent on global power generated by green energy over the past 20 years, but the percentage of fossil fuels has barely declined. The bulk of greenhouse-gas reductions in recent years has come from switching from coal to natural gas. Yet the negative consequences of trying to eliminate fossil fuels and nuclear power have been profound, both for companies and consumers. Thanks to Germany’s much vaunted ‘energy transition’, German consumers had to endure the highest electricity prices in the world, even before Russia’s invasion of Ukraine. In uber-green California, residents pay up to 80 per cent above the US national average for electricity.

The elites’ turn against the material economy has been going on for at least half a century. It surfaced prominently in the 1972 book, The Limits to Growth, which argued that natural resources were diminishing rapidly and so the world needed to transition to a less materially based economy with slower growth. This mentality has persisted and even grown, even though many green assertions dating back to that period – including warnings of mass starvation in much of the world – turned out to be exaggerated or plain wrong.

The green script has changed slightly over the years in response. It used to warn that scarcity was on its way unless we made radical changes, whereas now it calls for us to create scarcity deliberately. Today, no one talks about ‘peak oil’. Instead, you hear calls to keep fossil fuels in the ground, where they cannot be used.

Another difference between the 1970s and now is that the impetus for Net Zero policies comes not only from green activists and politicians, but also from the financial regime imposed by ‘woke’ capitalists, who have gone to great efforts to deprive fossil fuels of investment.

There are, of course, winners from these new fixations, including makers of electric vehicles (EVs), whose growth will further tax already stressed electric grids in many countries. These policies have made Tesla CEO Elon Musk, at least for now, the richest man in the world. But for the rest of humanity, high energy prices and related inflation are profoundly destabilising and will stoke class divisions. Potential losers include people working in energy, truck drivers, factory workers and logistics workers. A move to ban fracking in the US – which vice-president Kamala Harris has supported – would by itself cost several million jobs, according to a report by the US Chamber of Commerce.

The material-ephemeral divide is already reordering politics in the high-income world. The generally anti-fossil-fuel policies of US president Joe Biden have won the support of barely a third of Americans according to one recent survey, as he continues to use the weight of the entire federal bureaucracy to slow down fossil-fuel investment and development.

The division between the real-world workers and the laptop elite has sparked a resurgence of radical politics on both extremes. We see the rise of far-left politics in France, the United States and throughout Latin America. At the same time, many small-business owners and material workers have rallied to right-wing movements, such as the Sweden Democrats or Marine Le Pen’s National Rally in France. Italy could be next to shift to the far right. In the United States, Trumpism, particularly in its now ugly post-election phase, finds its base largely in states that rely on manufacturing, energy production and food production, like Texas, Oklahoma, Arizona, Indiana, Ohio and Iowa.

In Europe, where real incomes are falling almost everywhere, draconian green policies can no longer be pushed without opposition. When Emmanuel Macron’s government raised green taxes on diesel in 2018, only a few years after the Paris climate agreement was signed, we saw the rise of the gilets jaunes movement. This anti-green unrest is not confined to France. In June 2021, Swiss voters rejected a key referendum to curb CO2 emissions on car and air travel, with most of the support coming from the countryside.

Now, as the energy and economic crises deepen, unrest is spreading throughout Europe, including in usually stable countries like Norway and the Netherlands. A key battleground has been agriculture – the most basic of industries. Farming has become a major target for green zealots, aided by uber-rich environmentalists like Bill Gates. They seek to limit farmers’ use of chemical fertilisers and to force farmers to cull their herds. Dutch farmers are protesting their government’s restrictions on emissions and fertiliser use, which are threatening farms that have been in operation for generations. Recently, the Dutch farmers have been joined by their Spanish, Polish and Italian counterparts.

One can only imagine what might happen if the US or Australian governments – all now dominated by ultra-greens – were to start imposing similar restrictions on their own massive resource-driven economies. I would not like to be the federal agent telling a Montana cattle farmer or an outback sheep operation that their herds must be culled for the good of the planet, or telling a farmer in Iowa that he can’t use fertilisers to boost his output.


North Sea licences to be sped up in race for more oil and gas

Regulators are preparing to slash red tape in the North Sea in a bid to speed up the development of oil and gas wells, as part of Liz Truss’ dash for new energy supplies.

The North Sea Transition Authority (NSTA) is considering cutting the application period for its upcoming new licensing round to a minimum of 90 days, compared to typical rounds of roughly 120 days.

Companies hoping to drill for oil and gas in the North Sea must apply for a licence, with 100 new areas of sea set to be put up for bidding. Securing a licence does not necessarily mean a company can or will drill there.

The North Sea Transition Authority (NSTA) is also trying to identify areas that can be developed quickly as they have known reserves and are close to existing pipes and rigs, which it will try to licence ahead of others.

Insiders cite the “urgency” of getting new supplies online amid a renewed focus on energy supplies across Whitehall.

Russia’s war on Ukraine continues to cause turmoil across energy markets, underlining the importance of securing future fuel supplies.

Cuts to Russian gas flows to Europe have pushed up gas prices for months, forcing the Government to step in and subsidise energy bills for households and businesses at an estimated cost of £60bn over the next six months.

New oil and gas discoveries generally take five or more years to get into production, though that is coming down. Speeding up the licensing process may make a limited difference on its own, but comes on top of other plans in Whitehall to cut bureaucracy. It also aims to send a signal to investors about the Government’s commitment to the basin.

Jacob Rees-Mogg, the Business Secretary, on Wednesday confirmed the UK's first North Sea licensing round since 2020 as he lifted the ban on fracking for gas.

One hundred new licences are set to be issued, thought to include prospects west of Shetland and northern North Sea. Whether they will all get taken up and developed is not clear.

Investment in the basin has fallen considerably over recent years, from about £16bn in 2014 to an expected £4bn this year. Supermajor oil companies have turned to newer prospects elsewhere in the world, while investors have also shifted away from the sector in favour of greener energy.

“Some people think the round will be oversubscribed; some think it will be undersubscribed,” said an industry source. “There may be a lot of companies taking protection acreage – just because you take a licence doesn’t mean you are committing to developing anything. I’m not sure it’s going to be very indicative of anything.”

On Friday, the Treasury named five North Sea fields in development among around 140 infrastructure projects it expects to benefit from cuts to red tape, as part of its new plan for growth. They include the controversial Cambo oil field west of Shetland.

Chancellor Kwasi Kwarteng said on Friday: “The time it takes to get consent for nationally significant projects is getting slower, not quicker, while our international competitors forge ahead. We have to end this.

“We will streamline a whole host of assessments, appraisals, consultations, endless duplications, and regulations.”

Industry sources say they are encouraged by the Government’s recognition of the need for domestic oil and gas supplies, even as the UK moves towards a lower carbon economy in the push to net zero emissions.


Environmentalism Is a Fundamentalist Religion

Today's climate activists resemble nothing so much as a religious movement, with carbon the new devil's spawn. The green movement is increasingly wedded to a kind of carbon fundamentalism that is not only not realistic but will reduce living standards in the West and around the world. And as with other kinds of religious fundamentalism, the climate hysteria is often overwrought and obviously so; a decade ago, the same activists predicted a planetary disaster by 2020 if the U.S. and China did not reduce their emissions by 80 percent—which of course never happened.

This approach is a losing one that reduces the effectiveness of the green lobby. What's needed to combat climate change is a pragmatic approach based on adapting to real and verifiable dangers. And this starts with environmentalists acknowledging the limits of our ability to curb emissions in the short run.

This is not to cede the fight. The reality is what we do in the West means increasingly little. Today's biggest emitters comes from China, which already emits more GHG than the U.S. and the EU combined, while the fast growth in emissions comes increasingly from developing countries like India, now the world's third largest emitter. These countries have developed a habit of blaming climate change on the West, then openly seeking to exempt themselves from net zero and other green goals. And the West's penchant for hyper-focusing on our own state or national emissions misses the reality of where the future problems are actually concentrated.

We aren't just missing the forest for the trees, though. Under the green lobby's current policies, our "war" against climate change is doomed to make things worse for most people, creating what economist Isabel Schnabel calls "greenflation." Higher prices for energy and food, worsened further by the war in Ukraine, are already are forcing countries to adopt massive subsidies for food and gas. In the developing world, billions now face immiseration, malnutrition or starvation. And green targets of zero emissions only make this situation worse.

Residents of rich countries will also suffer from the rapid adoption of current green policies that are focused almost entirely on wind and solar. Germany, for example, suffered the highest electricity prices in the world before Russia's war in Ukraine. In California, residents pay up to 80 percent above the national average for power. Reliance on wind power has made even Texas' grid vulnerable.

The real winners from green policies are not the birds and the bees but tech oligarchs, the uncompetitive U.S. auto industry, and Wall Street.

Given our limited ability to meaningfully reduce emissions, more attention should be placed on adapting, something we're actually good at. Since the beginning of the modern era, technology and science have been employed successfully to changes in temperature and precipitation. In the 1700s, people dealt with a colder climate by planting potatoes, which thrive in cooler weather. They also learned to use waterpower, wind and most critically fossil fuels, which made life bearable in the icy cities of the north and, later, with air conditioning, in the brutally hot south.

The Netherlands, where catastrophic flooding in the sixteenth century prompted an extensive expansion of coastal berms to prevent future floods, represents a classic example of successful adaptation. The Dutch even profitted from rising sea levels by opening new farmlands and expanding their exports to the global economy. Climate change was thus turned into a net plus.

Constructing proper adaptive polices may not be as emotionally satisfying as screaming about "climate criminals," but it could prove far less damaging to the masses of people and to the future of democracies. A regime run by the climatistas is likely to be very authoritarian, with many seeing in the COVID-19 lockdowns a "test run" for top-down edicts over how people live. In a sign of things to come, Switzerland is considering jail terms for those who try to stay too warm this winter.

For us to make progress on climate, the environmental movement needs to give up "utopian fantasies," writes Ted Nordhaus, a longtime California environmentalist, and "make its peace with modernity and technology." Instead of placing all bets on fundamentally intermittent, unreliable and economically problematic solar and wind energy, we should focus more on other options, from nuclear power to hydroelectric generation to continuing to replace coal with abundant, cleaner natural gas.

A smart adaptive policy would start with a serious assessment of costs and risks. If our worry is rising ocean level, we may look into duplicating the sea-wall like that has protected the Texas Port of Galveston for the past century. A gradual shift to more energy efficient vehicles—not just electric cars—would allow for competition from other new technologies like hydrogen, recycled gas, and hybrids. Investment in a more decentralized power system, desalination plants, and better storage of water also could help alleviate damage often traced to climate change.

Nothing short of the stability of the global political economy is at stake.

Where climate hysteria promises only gloom, class conflict and ever-increasing repression, an adaptation scenario allows humans to adjust to a warming world, even as we work to bring down emissions. Adaptation gives us a way of addressing climate change while retaining prosperity, creating opportunities, and showing that, rather than wage a scorched earth policy to save Gaia, we can learn instead to work within its limits.


Australia: fishing being hijacked by Green extremist thinking

The fishing industry in Queensland has been hijacked by greenies and it’s sending professional anglers out of business.

The latest Palaszczuk Government decision has been masqueraded as some sort of “save the fish’’ campaign, suggesting unless fishing bans on Spanish mackerel stocks were made they wouldn’t survive.

Rubbish. Spanish mackerel stocks have been replenished spectacularly in recent years.

It’s a stitch up by a fisheries department that has been infiltrated by conservationists who’d rather eat salad than fish.

This move by Fisheries Minister Mark Furner is just another example of a government caving into the Green movement, which it is tied to at the hip.

Charter boat operator and Cairns Professional Game Fishing Association spokesman Dan McCarthy is furious but not surprised. “Minister Furner and the QLD Labor government seem to always back green extremist ideology over hardworking Queenslanders,’’ he said. “More small businesses are now looking at their life’s work and their futures being trashed to please urban greenies.

Mr Furner’s anti-fishing program has reduced recreational catch to close to zero at one fish per person or two per boat.

Mr McCarthy says it’s the dodgiest science he’s seen. “These include warnings from scientific experts who specialise in Spanish mackerel and fisheries management who have been very critical of the process,’’ he said.

“They’ve used a baseline biomass from 1911. You can’t make this stuff up.’


My other blogs. Main ones below

http://dissectleft.blogspot.com (DISSECTING LEFTISM )

http://edwatch.blogspot.com (EDUCATION WATCH)

http://pcwatch.blogspot.com (POLITICAL CORRECTNESS WATCH)

http://australian-politics.blogspot.com (AUSTRALIAN POLITICS)

http://snorphty.blogspot.com/ (TONGUE-TIED)


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