Major Economic and Geographic Myths Commonly Found in the Social Sciences

The term ‘myth’ is employed here for several reasons. First, ‘myth,’ as derived from the Greek word, mythos, can mean both a story and a legend, and additionally, it may mean a word or speech. Second, the term has been transformed to carry two quite distinct valances: one carrying a positive and the other a negative connotation. In its positive connotation, myth refers to life sustaining, spirit lifting legendary stories in which the hero or heroine performs an exemplary function, in the vein of Carl G. Jung (The Structure and Dynamics of the Psyche, 2nd

Ed., 1968; and The Archetypes and the Collective Unconscious, 2nd Ed., 1968) and of Joseph Campbell (Myths to Live By, 1993; and The Masks of God: Creative Mythology, 1995). George Lucas recognized the significance of the positive connotation of the term, as he acknowledged his debt to Joseph Campbell’s works, especial The Hero with a Thousand Faces (1948). The negative connotation of myth, is that of an ‘untrue’ story, something not to taken seriously or believed in, either as an inner transforming reality, or as an explanation of external events, e.g., the ‘myth’ or ‘story’ or ‘legend’ of Gilgamish. Here, I choose to attach the negative connotation to the term, since much of what passes for fact in the world today is little more than popular expressions of individual opinions expressed by self-appointed experts. These ‘opinions’ have not be subjected to rigorous proof using Bacon’s ‘scientific method,’ but anecdotal data and ‘wishful thing.’ The appropriate response to such academic non-sense should be: “Show me the facts, just the facts; forget opinion and forget all appeals to academic authority. Daniel J. Boorstin in his classic work, The Discoverers: A History of Man’s Search to Know the World and Himself, observed that: “Galileo was an early crusader for the paradoxes of science against the tyranny of common sense.” (1983, 316) There is ONE truth, not many truths, in scientific inquiry and that ONE truth is determined by the use of the ‘scientific method’, not personal opinion. A given truth (the Ptolemaic-Christian or geocentric view of the universe – ‘the earth is the center of the universe’) may hold until it is replaced a truth that is more accurate, capable of explaining more or is a simpler explanation of some observable phenomena (the Copernican or heliocentric view of the universe – ‘the sun is the center of the universe’).

All too often critics of an opponent’s perspectives (‘environmental conditions’ or ‘human welfare’ are improving) will dismiss them deprecatingly as a ‘myths,’ without doing the ‘heavy-lifting’ of demonstrating the falsity of those views. It is far easier to use labels than it is to employ the ‘objective’ processes of what should have been learned in grade school, i.e., the ‘scientific method’ or the ‘Baconian Method’ (after Sir. Francis Bacon, 1561-1626). . A perfect example of such a non-scientific methodology is provided by Paul Ehrlich, a notorious entomologist who began his professional career chasing insects in the Arctic. Clearly, Dr. Ehrlich has the academic background and credentials to comment meaningfully on insects, their ecology and other aspects of their interactions with the environment and with man. But, does this background in entomology qualify him, no matter how well read he may be, to render ‘scientific judgments’ regarding human populations (the realm of ‘demography’), climate change (the domain of ‘climatologists’ and ‘quaternary geologists’), or resource depletion (the field of ‘resource economists’ and ‘economic geologists’)? His observations in these areas are little more than an ‘educated’ opinion, but an opinion, nonetheless! His opinions in these areas are no better and no worse than are yours or mine! Ehrlich’s vituperative comments and ad hominum attacks on his main academic critic and opponent, Julian L. Simon (a University of Chicago-

1

trained economics PhD.) are a classic example of the ‘politician’ and subversion of the ‘scientific method’ in the pursuit of individual/or group agendas. The title of an article he published in 1981 says it all: “An Economist in Wonderland” and this seriously calls into question the ‘scientific objectivity’ of the so-called scholarly journal in which the article was published: Social Science Quarterly [vol. 62, no. 1 (March, 1981)] Here the entomologist declaims:

Simon is wrong about the economics of mineral resources …The trough-like patternlong predicted for mineral resources prices has now shown up, as Cook (1976) points out, for all industrial metals except lead and aluminum. This includes copper. …I and my colleagues … jointly accept Simon’s astonishing offer [a bet on the ‘real’ market prices of any five metals Ehrlich wanted to choose over the period 1980 and 1990]before other greedy people jump in. (46, as quoted at: “Julian Simon’s Bet With Paul Ehrlich,” www.overpopulation.com/faq/People/julian_simon.html; emphasisadded)

Imagine, this biologist pretends that he is able to correct an economist on the principles of economics – the ‘laws of supply and demand,’ resource allocation, production theory? One might ask, as the little old lady in the Wendy’s commercial of yore did – “Where’s the beef?” – “Where’s the proof?”

Strictly speaking, ‘falsification’ is the task of the Baconian ‘scientific method’ – since it is easier to prove a hypothesis to be incorrect, than it is to prove it correct – there is a basic asymmetry to any scientific proof, i.e., to prove some thing false requires the discovery of only ONE exception, while to prove something true requires an extremely large number of confirming instances, even then there is an infinitesimally small probability that it is incorrect. Bacon’s methodology involves obtaining data from the external world (Observation); measuring, sorting, and classifying the observations (Classification); analyzing of the results, looking for patterns or relationships in/among these data and the formulation of an hypothesis that explains those relationships (Formulation of Hypotheses); subjecting the ‘hypothesis’ (a product of external observation and inner interpretation given existing theoretical structures or ‘paradigms’) to validate or falsify it by testing (Experimentation); if the hypothesis provides a ‘best’ explanation for external [keeping Occam’s Razor in mind – ‘ the best explanation of an outcome or event is the simplest, using the fewest assumptions’; after William Occam, var. Ockham] observations, it becomes a Theory.

Unfortunately, the requirement to use the ‘scientific method’ to arrive at new ‘truths’ has been ignored in a most shameful and irresponsible manner, frequently resulting in what has come to be known as ‘junk science’. It must be noted explicitly that ‘junk science’ is becoming more and more common in both the physical and the social sciences, with the rise of ‘moral relativism’ and the claimed, but unsubstantiated, at least by the use of the ‘scientific method,’ nexus among population growth, resource depletion and environmental degradation. In this manner many accepted ‘truths’ that pervade contemporary society are little more than a new ‘faith’ or religion [from: L. religio – reverence for the gods, holiness]. Cardinal Joseph Ratzinger (now Pope Benedict XVI) as ‘Prefect of the Congregation for the Doctrine of the Faith’ identified ‘Liberation Theology’ formulated by the Brothers Boff, as well, as all forms of Marxism, as a ‘Christian Heresies’ – a belief-system based on faith and NOT science. Under such circumstances it will be necessary to explore first the nature and scope of the ‘scientific method’ a bit more rigorously.

2

The Scientific Method (or ‘Baconian Method’)

One source states that “The method of science involves three activities titled: observa-tion, hypothesis, and theory.” (‘The scientific method’ <the habit of truth>; available at: www.geowords.com/histbooknetscape/b10.htm). This source continues:

In cycling through these activities to add to knowledge, the method is iterative and finds patterns. The goal of science is understanding; not the making of a better mouse-trap, which is technology.

As concise as these statements are, they leave much unaddressed. An alternative source, Ted Nordgren, outlines the steps or stages of the ‘scientific method,’ in the following manner:

… the category of knowledge we call science is defined in a very simple, thoughprecise, way that can be understood by anyone, whether they are involved in thescience or not. Here it must be acknowledged that there are many who attempt todefine science so broadly that it encompasses all forms of knowledge; however, from the beginning of what is called ‘modern science,’ it was the Baconian Scientific Method that guided all successful scientific endeavors. The BaconianScientific Method is given as follows and applies only to naturally recurring processes that occur in the present. (www.thingsrevealed.net/sciences1.htm.)

Nordgren has outlined the ‘scientific method’:

The Scientific Method:

1. Observation: Direct or indirect in the present.2. Problem: Question posed about natural process that is relevant

and testable in the present.3. Hypothesis: An educated proposal for an explanation of naturally

recurring processes in the present and for the future.4. Experiment: Direct test of hypothesis in the present which is possible

to repeat in the future.5. Theory: Hypotheses about the present and future confirmed by experi-

ments in the present. Scientific theories are judged by their predictive value for the future.

While Bacon’s methodology has unlocked many ‘truths’ about the universe, it has many opponents seeking to replace rigorous experimentation with a ‘faith-based’ revelations, including the ‘scientific socialism’ of Marxists, the ‘occultism’ of the Nazis, and the ‘creationism’ of the Evangelicals. Abandonment or Betrayal of the Scientific Method [Apologies to

Paul Ehrlich]

The failure to adhere to the methodology of science (use the ‘scientific method’ and to substitute personal or public/political judgment and opinion for science) has led all too frequently to the abuse of science. This has been done in the name of ‘racial improvement’ (the ’eugenics’ movement, both in the United States and in Nazi Germany. And, more recently, ‘racial cleansing’ Jews and Gypsies in Hitler’s Germany and Jews and Kalmuks and Jews in Stalin’s Russia), the improvement of the ‘human condition’ (population control through a

3

variety of means, including infanticide (a tried and true approach, even in ancient Athens), forced-sterilization, especially for those classified as ‘life unworthy of life’, or euthanasia), reducing ‘risks’ to life and health from a variety of sources (including pharmaceuticals, guns, cigarettes, cycling, or seatbelts) and ‘improving the ‘quality of the environment’ (over-fishing; over-hunting, dirty water, lead in paint, bad air, holes in the ozone layer, global warming, a coming ice age, exotic plants, reptiles and animals). All too often, emotions, wrought by evocative, but false verbal images, have replaced thoughtful analysis and the methods of science.

To begin with, it is necessary to acknowledge that at any given moment, say t0, the supply or availability of resources (also known to economists as factors of production) – land, labor, capital and entrepreneurship -- are fixed. Over a short time horizon, from a given moment, t0, out to a year or so, t1, some resources available to a firm [or income to a household], say semi-skilled workers for the assembly of a final consumer good (a toaster, or i-Pod) may become more plentiful as labor is trained, or as rising wages induce additional workers to enter the labor force. Supplies of other factors of production – capital, say a thermal (coal-fired) power station, may become available as demand for electricity increases [use of new appliances], electricity prices ($/kwh) rise sufficiently to cover the added costs of ‘stack scrubbers’, and/or society becomes more accepting of combusting such ‘dirty’ fuels as low-grade, sub-bituminous or lignite coals [perhaps because prices for electricity have increased]. It takes years (three to five to create thermal power plants – from design, to order, construction and installation), the ‘real’ delays – the lengthening of the gestation process – are associated with the ‘public sector’ (or the government) and its bureaucrats, via the ‘permitting process’, which may in some cases hearings have delayed the granting of a permit for a power plant by up to nine and ten years. Only after the permits have been granted, will a utility order construction on the power plant and it generators to begin. If this seems unreasonable, consider the amounts of money that are put ‘at risk’ pending the whims of the government regulators whom bear none of the costs of their actions in the form of less energy and higher prices than would have been the case absent the actions’ of the regulators. These costs, known as ‘alternative’ or ‘opportunity’ costs are externalized or imposed on the rest of society. [For an understanding of this point, see: Frank H. Knight. 1921. Risk, Uncertainty, and Profit. University of Chicago Press; also see: Robert L Formaini. “Frank H. Knight – Origins of the Chicago School of Economics,” Economic Insights, 7 (3); available at: www.federalreserve.org/research/ei/ei0203.html]

When the time horizon is extended even further, out to say a generation – about thirty (30) years – or so, the availability of factors of production are increased, as technologies change, resource requirements shift, and populations grow, and so it has been since the so-called Industrial Revolution, variously dated at 1760. The Industrial Revolution was precipitated and accompanied by an on-going ‘Scientific Revolution,’ both of which ushered in the modern era of mass production and mass consumption. The ‘Scientific Revolution’ was founded on a rejection of faith, appeals to the ‘authority figures’, and belief in Scholasticism’s and Aristotelianism’s capacity to provide an understanding of man, his nature and the physical environment, in favor of the use of the ‘Baconian’ or ‘Scientific Method’ which relies on observation, analysis, formulation and experimentation (testing). It was this incessant questioning of conveyed wisdom that has resulted in increasing resource productivity and improved welfare of humanity. This is at the heart of the ‘environmentalist’/’economist’ debate on population growth and resource depletion issues … the Reverend Thomas R. Malthus (1766 – 1834) and Paul Ehrlich favored the

4

view that there was a ‘population explosion’ (following a ‘geometric’ progression: 1, 2, 4, 8, 16, 32, 64,…., n) – increasing demand for food and goods, which in turn necessitates the expansion of resource use (which, at best, follows and ‘arithmetic growth rate’: 1, 2, 3, 4, 5, 6, 7,…., m) and the depletion of the world’s resource base. In contrast to the ‘environmentalist’ viewpoints (including ‘global cooling’/’global warming’; ‘mass starvation’; and ‘reduced standards of living’) are the research of Edward S. Deevey, Jr. (1914-1988), Scott Gordon, Julian Simon (1932-1998) and others in which the ‘limiting assumptions’ of the Malthus/Ehrlich ‘explosion models’ are exposed for the intellectual frauds that they are.

See the following:

Thomas R. Malthus. 1798. An Essay on the Principles of Population, First Edition.Harold Hotelling. 1931. “The Economics of Exhaustible Resources,” Journal of Political

Economy,Scott Gordon. 1958. “Economics and the Conservation Question,” Journal of Law and

Economics, 1, 110-Edward S. Deevey, Jr. 1960. “The Human Population, Scientific American, 203, 195-

204.Paul Ehrlich. 1969. The Population Bomb.Dennis Meadows, et al. 1972. The Limits to Growth.Sir John Maddox. 1972. The Doomsday Syndrome.Julian Simon. 1977. Economics of Population Growth.__________. 1981. The Ultimate Resource.

An interesting side-bar is the role that Edward S. Deevey, Jr. played in Florida – he was the Distinguished Research Curator in Paleoecology and Professor at the Florida State Museum of Natural History at the University of Florida. He was an early pioneer in the use of 14C [carbon-14] dating of lake sediments. (For an illuminating biography of Deevey, see: www.nap.edu/html/ biomems/edeevey.html. An important source for interpreting these issues may be found on Michael Crichton’s ‘official’ website [www.crichton-official.com]. The key speeches are:

Michael Crichton, M.D. 2003. “Aliens Cause Global Warming,” Michlin Speech,California Institute of Technology, Pasadena, CA., January 17.

__________. 2003. “Environmentalism as Religion,” speech at the CommonwealthClub, San Francisco, CA., September 15.

__________. “Science Policy in the 21st Century,” Joint Session AEI-Brookings Institution, Washington, D.C., January 25.

__________. 2005. “The Impossibility of Prediction,” National Press Club, Washington, D.C., January 25.

__________. 2005. “The Role of Science in Environmental Policy-Making,” statement to the U.S. Senate Committee on Environment & Public Works, September 28. Available @: //epw.senate.gov/hearing_statements.cfm?id=246766.

For additional internet sources relating to these issues:Dossier, “Environmental Scientist: Dr. Paul Ehrlich,” www.nationalcenter.org/

5

dos7111.html.Joe Wortham. “The Doomsayers and Brownlasher,” @ www.geocities.com/jwortham/

Maddox.html?20064.The Third Culture. “Sir John Maddox,” @ www.edge.org.3rd_culture/bios/maddox.html.“Thomas Malthus,” from the Wikipedia, the free encyclopedia; @ www.en.wikipedia. org/wiki/Thomas_Mathus.Michael Crichton, M.D. 2005. “The Role of Science in Environmental Policy-Making.”

Statement Before the U.S. Senate Committee on Environment and Public Works, September 28. Available @ www.epw.senate.gov/hearing_staements.cfm?id= 246766.

“Paul R. Ehrlich,” from the Wikipedia, the free encyclopedia; @ www.en.wikipedia.org/ wiki/Paul_R._Ehrlich#Education.

Julian Simon – see: www.juliansimon.org/vita.html.

David Deming. 2004. “Malthus Reconsidered,” @

Implications of the Abandonment of the ‘Baconian Method’

With the abandonment of the ‘Scientific Method’ has a number of socio-politic-economic implications, not the least of which has been the rise of ‘junk-science’ – characterized by the use of anecdotal data, use of models with absurd assumptions, failure to subject models to ‘replicable-testing’ standards, and absence of peer review – remember the ‘discovery’ of ‘cold-fusion’ technology? What are the implications of this debate between the ‘environmentalists’ and the ‘economists’ and the ‘hard scientists’? The first issue is the evidence for ‘geometric growth rates of population’ as opposed to the ‘arithmetic growth rate of resources.’ It must be noted, explicitly, that Malthus (1798), Ehrlich (1969) and Meadows, et al. (1972) permit population to grow geometrically through time, while assuming the growth rate of the resource-base to be limited by restricting technological improvements to an arithmetic rate of change and assuming ‘real’ prices to be constant – this is most evident in the Club of Rome Report, The Limits to Growth (1972), where these unrealistic and unreasonable assumptions are clearly stated.

First, let’s examine the notion of sustained population growth at ‘geometric’ rates. Edward S. Deevey, in his seminal article in Scientific American (1960), “The Human Population,” provides a sharp criticism of the simplistic geometric growth model by noting that it is graphically represented by plotting population (arithmetically) on the Y-axis (the dependent variable) against time, in years, along the X-axis (the independent variable). The resulting relationship, then, assumes:

Population = f (Time),

with the assumption that the relationship is ‘positive’ (+), e.g.,

Population Size = b0 + b1Time + b2Time2 + ε.

6

While intuitively gratifying, the assumed model leaves unanswered a critical question basic to science and the ‘Baconian Method’ – what are the levels of ‘measurement’. All too often this issue is ignored by many physical scientists and most social scientists, despite its importance to the ‘scientific method.’ This may be made apparent by using an explanation of the term, its applications, followed by a simple concrete example. In 1956 Sidney Siegel addressed the problem forthrightly in his textbook, Nonparametric Statistics for the Behavioral Sciences, but his analysis has been ignored in a most irresponsible manner. He has written:

When a physical scientist talks about measurement, he usually means the assigning of numbers to observations in such a way that the numbers are amenable to analysis by manipulation or operation according to certain rules. This analysis by manipulation will reveal new information about the objects being measured. In other words, the relation between the things being observed and the numbers assignedto the observations is so direct that by manipulating the numbers the physical scientist obtains new information about the things. For example, he may determine how much a homogeneous mass of material would weigh if cut in half by simply dividing its weight by 2. (21, all emphasis added)

The social scientist, taking physics as his model, usually attempts to do likewise in his scoring or measurement of social variables. But in his scaling the social scientistvery often overlooks a fundamental fact in measurement theory. He overlooks the fact that in order for him to be able to make certain operations with numbers that have been assigned to observations, the structure of his mapping numbers (assigning scores) to observations must be isomorphic [Gk: iso- equal; - morph having a form; having a one on one correspondence] to some numerical structure which includes these operations. If two systems are isomorphic, their structures are the same in the relations and operations they allow. (21-22, boldface in original; italics added)

For example, if a researcher collects data made up of numerical scores andthen manipulates these scores by, say, adding and dividing (which are necessary operations in finding means and standard deviations), he is assuming g that the structure of his measurement is isomorphic to the that numerical structure known as arithmetic.That is, he is assuming that he has attained a high level of measurement. (22, emphasis added)

The theory of measurement consists of a set of separate or distinct theories, each concerning a distinct level of measurement. The operations allowable on a given set of scores are dependent on the level of measurement achieved. Here we discuss four levels of measurement – nominal, ordinal, interval, and ratio – and we will discuss the operations and thus the statistics and statistical tests that are permitted with each level. (22, boldface in original, italics added)

Siegel provides an extended technical discussion of each of these levels of measurement, followed on page 30 with a summary table (Table 3.1) of the levels of measurement. This table is outlined below:

7

Table 3.1 Four Levels of Measurement and the Statistics Appropriate to Each Level.

Defining Examples of AppropriateScale relations appropriate statistic statistical tests

ModeNominal (i) Equivalence Frequency

Contingency coefficient

Median Percentile

Ordinal (i) Equivalence Spearman rs

(ii) Greater than Kendall τ Kendall W

Mean (i) Equivalence Standard deviation

Interval (ii) Greater than Pearson product-moment(iii) Known ratio of correlation, r any two intervals Multiple product-moment

correlation, R

Ratio

restricting the rate of technological change to an arithmetic rate. The empirical evidence

for technological change outpacing population growth over extended periods may be observed through changes in ‘productivity’, especially changes in ‘labor productivity’. Labor productivity is best expressed as the ‘level of output per worker per unit of time,’ e.g., consider, a secretary using a manual typewriter may be able to type forty-two (42) words per minute (wpm). If the old ‘Remington’TM clunker is replaced with an IBM ‘Selectric’ TM (an electric typewriter), the same typist may be able to type upwards of sixty-two (62) words per minute (wpm). This simple example is revealing: the ‘productivity’ of the typist has increased, on average, by twenty wpm, or by nearly 48% [(62 – 42)/42] by substituting a ‘new’ technology for an ‘older’ technology. To accomplish the change or improvement in technology, resources (land, labor, capital, and entrepreneurship) must be devoted to developing new ways of solving old problems and the ‘new’ problems that arise as the new technologies begin to emerge, e.g., older, multiple-use ink impregnated cloth ribbons (black or red and black) used with manual typewriters had to be replaced by single-use carbon backed film ribbons; individual letter-keys had to be replaced by

8

‘Selectric’ TM –script letter/symbol balls. Even with massive infusions of land, labor, capital, and entrepreneurship, the development of new products and new technologies require TIME to meet and overcome technical and organizational impediments.

Once it is recognized explicitly that there is a time dimension associated with the development of new technologies and technological changes, it becomes necessary to examine the process of these changes. During the first quarter of the 20 th Century a Russian economist, Nikolai D. Kondratiev (1892-1938) identified a partial explanation – observing that ‘capitalism’ is characterized by long-term business cycles, averaging 50 to 54 years in duration. These alternating periods of economic expansion followed by economic contraction are known as Kondratiev waves, or simply K-waves (for one graphic interpretation of the Kondratiev-wave, see: www.angelfire.com/or/truthfinder/index22.html.)

NEEDLESS TO SAY, NOT ALL INNOVATIONS ARE OF EQUAL SIGNIFICANCE

One simple example will help understand the nexus among the Baconian Method, resource productivity, and human welfare: (i) the genetic improvement (hybridization, including the use of those ‘evil’ ‘gene-splicing’ techniques) of the major food grains (corn, wheat and rice) and the development of the ‘germ theory’ of disease etiology; (ii) improved agricultural output per unit area (acre or hectare) and improved nutrition; and (iii) increased life expectancies. The ‘official’ data will be gathered from U.S. Department of Agriculture and U.S. Department of Commerce sources and are readily available to those interested in verifying their reliability. First, consider the following table,

Corn for Grain, U.S., 1866 – 2005.

Harvested Acres Production YieldYear (000,000 acres) (000,000 bushels) (bushels/acre)

________________________________________________________________________

1866 30.02 730.81 24.31876 55.28 1,478.17 26.71886 73.91 1,782.77 24.11896 89.07 2,671.05 30.0

1906 95.62 3,032.91 31.71916 100.56 2,425.21 24.11926 83.28 2,140.20 25.71936 67.83 1,258.67 18.61946 78.41 2,916.09 34.2

1956 64.87 3,075.34 47.41966 57.00 4,167.61 73.11976 71.51 6,289.16 88.01986 68.91 8,225.76 119.4

9

1996 72.64 9,232.56 127.1

2004 73.63 11,807.22 160.42005 74.33 11,032.11 148.4

_______________________________________________________________________Source: U.S. Department of Agriculture, National Agricultural Statistical Service,

annual figures are available at www.nass.usda.gov.

Annual figure are available, but for ease of analysis data have been compiled in ten year increments. What relationships are discernable immediately? First, the number of acres under cultivation rose from the mid-part of the 19th Century through the First World War (1916) and, declined slightly and remained essentially stable (in the ± 70 million acres) into the 21 st Century. Second, the production or output of ‘corn, for grain’ (bushels) has risen continuously over the entire 1966 – 2005 period. And finally, the productivity of corn cultivation (yield or output/acre) was stable in the 20 to 30 bushels per acre range from the middle of the 19 th Century until the 1930s, and since then has increased rapidly, reaching 160 bushels/acre in 2004.

These data confirm that the ‘productivity’ of the land (bushels per acre) has improved, permitting farmers to obtain more output (bushels) from less land (acres). ‘More from less,’ given the reality of resource scarcity is an indication of increasing economic efficiency in agriculture over the past century or so. There are a number of ramifications of improved efficiency in corn cultivation: first, and perhaps foremost, greater supplies of grain (as a feed for animals, for example) exert downward pressures on prices of protein sources (meat, eggs, milk), which provides an improved diet at the same price for more consumers, i.e., a better fed population. Second, an increased food supply permits population growth at a rising standard of living. Third, a better fed population, typically, is a healthier population, which has, on average, a longer life expectancy.

Next, consider the following table:

Expectation of Life (in Years) at Birth by Race and Sex, 1900 -2003, Selected Years_____________________________________________________________________________

Total White BlackYear Total Male Female Total Male Female Total Male Female

1900 47.3 46.3 48.3 47.6 46.6 48.7 33.0 32.5 33.81905 48.7 47.3 50.2 49.1 47.6 50.6 31.3 29.6 33.11910 50.0 48.4 51.8 50.3 48.6 52.0 35.6 33.8 37.51915 54.5 52.5 56.8 55.1 53.1 57.5 38.9 37.5 40.5

1920 54.1 53.6 54.6 54.9 54.4 55.6 45.3 45.5 45.21925 59.0 57.6 60.6 60.7 59.3 62.4 45.7 44.9 46.71930 59.7 58.1 61.6 61.4 59.7 63.5 48.1 47.3 49.21935 61.7 59.9 63.9 62.9 61.0 65.0 53.1 51.3 55.2

10

1938 63.5 61.9 65.3 65.0 63.2 66.8 52.9 51.7 54.3

1940 62.9 60.8 65.2 64.2 62.1 66.6 53.1 51.5 54.91945 65.9 63.6 67.9 66.8 64.4 69.5 57.7 56.1 59.61950 68.2 65.6 71.1 69.1 66.5 72.2 60.8 59.1 62.91955 69.6 66.7 72.8 70.5 67.4 73.7 63.7 61.4 66.1

1960 69.7 66.6 73.1 70.6 67.4 74.1 63.6 61.1 66.31965 70.2 66.8 73.7 71.0 67.6 74.7 64.1 61.1 67.41970 70.8 67.1 74.7 71.7 68.0 75.6 64.1 60.0 68.31975 72.6 68.8 76.6 73.4 69.5 77.3 66.8 62.4 71.3

1980 73.7 70.0 77.4 74.4 70.7 78.1 68.1 63.8 72.51985

Sources: U.S. Department of Commerce, Bureau of the Census.1975. Historical Statistics of the United States: Colonial Times to 1970 - Bicentennial Edition;

Additionally, corn has many uses in a modern economy – a sweetener (corn syrup – a key ingredient of Coca ColaTM is ‘high fructose corn syrup and/or sucrose’); a primary ingredient for the production of alcohol or ethyl alcohol (C2H5OH) for uses as a fuel, in industrial and medical processing, and as an intoxicating beverage (whiskey). In recent years, with fears of an ‘energy crisis’ and ‘global warming,’ the federal government has approved, sponsored and subsidized the use of ‘gasohol’ (formulation of 10% ethanol and 90% gasoline) in the transportation sectors, e.g., in 2000, Archer-Daniels-Midland or ADM, Decater, IL., produced forty percent (40%) of the nation’s ethanol used in gasohol.

A similar data set, one for wheat has also been compiled:

T.D. Lysenko (Т. Д. Лысéнко) and Eclipse of Soviet Genetics

The clearest example of contemporary trend for the abandonment of the ‘scientific method’ in favor of either religious or secular faith-systems has resulted in social and economic catastrophes throughout human history. Perhaps one of the best known recent examples of a ‘secular faith-system’ that replaced the ‘scientific method’ occurred in Soviet Russia, following the death of V.I. Lenin and the rise of J. Stalin – and the creation of a ‘new biology’ that accompanied the collectivization of agriculture, the initiation of the ‘purge trials’ and the implementation of the First Five Year Plan (1928-32). The chief architect of the ‘new biology’ was Trofim D. Lysenko [Трофим Дисвич Лысéнко] (1898-1976) and the ‘new biology’ came to

11

be known as Lysnkoism. Lysenko, born to a Ukrainian peasant family, was educated at the Kiev Agricultural Institute and worked as an agricultural researcher at an agricultural experimental station in Azerbaijan during the mid- to late-1920s. In 1927 the official Soviet newspaper, Pravda (Правда or ‘truth’) proclaimed that T.D. Lysenko had

discovered a method to fertilize fields without using fertilizers or minerals, and that he had proved that a winter crop of peas could be grown in Azerbaijan, ‘turning the barren fields of the Transcaucasus green in winter, so that cattle will not perish from poor feeding crop of peas, and the peasant Turk will live throughthe winter without trembling for tomorrow… (www.en.wikipedia.org/wiki/Trofim_Lysenko.)

The use of the media to proclaim ‘scientific truth’ and establish a ‘politically correct’ set of scientific dogma to advance the goals of the Communist Party of the Soviet Union (CPSU), and enforced by the power of the state through it’s ‘apparatchiki’ [аппаратчики] (including the NKVD, forbearer of the KGB or state security [secret] police) does not conform to the Baconian ‘Scientific Method.’ Rather, this process is more akin to what John Milton had written in his Areopagitca (1644) “…the famous Galileo grown old, a prisoner of the Inquisition, for thinking in Astronomy otherwise than the Franciscan and Dominican licensers thought.” (See: Boorstin, 1983, 317.)

Lysenko was the archetypal ‘scientific hero’ of the Soviet system, the intellectual counterpart of Aleksandr Stakhanov (Алекср Стаханов) the ‘industrial hero’ for whom the Stakhanovite movement (1935) was named. (For various Soviet terms, see: ‘Glossary – Soviet Union;’ available at: //fas.org/irp/world/Russia/su_glos.html.) Such a pantheon of ‘Saints’ of ‘scientific socialism’ provided evidence on the ability of ‘Soviet Man’ to overcome the economic and technological constraints imposed by Nature on the Soviet Union, especially its ‘continental’ and subhumid climates. The ‘science’ of Lysenko was based primarily on the work of Lamarck, the ‘theory’ of “Inheritance of Acquired Characteristics,” as the ‘driver of evolution’. Hummm … I guess that this means that my children will inherit ALL of the knowledge that I have acquired during my lifetime! As an example of Lysenkoism, his ‘scientific’ methodology has been reported:

… primary procedure was a mixture of so-called ‘vernalization’ (by which Lysenkogenerally meant anything he did to plant seeds and tubers) as well as hybridization.During one period, for example, he picked a spring wheat with a short ‘stage of vernalization’ but a long ‘light stage,’ which he crossed with another variety of wheat with a long ‘stage of vernalization’ and a short ‘light stage.’ He did not explain what was meant by these stages. Lysenko then concluded on the basis of his stage theory thathe knew in advance that the cross would produce offspring that would ripen sooner and as such yield more than their parents and thus did not have to test many plantsthrough their generations. Though scientifically unsound on a number of levels, Soviet journalists and agricultural officials [‘apparatchiki’ (аппаратчики)] were delighted with Lysenko’s claims, as they sped up laboratory work and cheapened it considerably. Lysenko was given his own journals, Vernalization, in 1935, with whichhe generally bragged about forthcoming successes. [www.en.wikipedia.org/wiki/Trofim_Lysenko), emphasis added]

The substitution of Lysenkoism for the ‘scientific method’ has a number of sources, several have already been cited above, but all find their origins in the pretenses of Karl Marx (1818 - 1883)

12

and Frederick Engels (1820 - 1895). Marxism is an economic/political system based on a mystical ‘faith’ in the Hegelian dialectical view of history. Friedrich Engels in his, Dialectics of Nature indicates all is explicable in terms of the ‘struggle of opposites’ – the ‘laws of dialectics,’ the most general laws, which may be reduced to three:

-- the law of the transformation of the quantity into quality and vice versa; -- the law of the interpenetration of opposites; and-- the law of the negation of the negation.

All of this nonsense sounds like the religious mystical speculations, such as the ‘coincidentia oppositorum’ of late medieval writers, including Nicholas Cusanus (St. Francis of Assisi and St. Bonaventure), or an exercise in alchemy, as described by Carl G. Jung:

The alchemist’s endeavours to unite the opposites culminate in the ‘chymical marriage,’ the supreme act of union in which the work reaches its consummation.(1963, Mysterium Coniunctionis, 89)

Russell Madden has chronicled a number of recent examples of the betrayal of the ‘scientific method’ and “The Resurrection of Lysenko” (//home.earthlink.net~rdmadden/ webdocs/Ressurrection_of_Lysenko.html.) Quoting Robert Conquest’s, The Great Terror (1990, 296), who noted, “The triumph of Lysenkoism was the most extraordinary of all indications of the intellectual degeneracy of the Party mind…, Madden observed:

While no scientist in our country has been jailed or murdered due to his beliefs, the same insidious seeds of intellectual destruction committed in the name of political agendas have taken root in our society – and in some instances even been nourished by government officials and policies. Under Soviet style Lysenkoism, it became evident that ‘[w]hen encouraged by the political system, quackery prevailed and ‘good’ scientists deferred to politically imposed scientific truth.’ In recent years, a similar substitution of politics for reality as one’s standard for truth has made itself evident insuch areas as environmentalism, economics, and medicine (in its research on gunownership, cigarettes, and drugs). [Emphasis added]

Madden is not alone in his criticism of the ‘betrayal of the scientific method’ and the substitution for it of ‘junk science’. A representative, but far from exhaustive list of other examples, include:

Deveey. 1980. “Human Population,” Scientific AmericanJohn Maddox. The Doomsday Syndrome. Julian Simon. Hoodwinking the Nation. Michael Fumento. 1993. Science Under Siege. John Stossel. 2004. Give Me a Break: How I Exposed Hucksters, Cheats, and Scam

Artists and Became the Scourge of the Liberal Media…. Perennial Currents.

13

Madden continues with:

The pattern of distortions, omissions, and lies continues to expand in ripples as faulty or fraudulent [sic] research is selected by politically motivated individuals and used to advance their goals of political control. In press releases and in the halls of government, these falsehoods are passed along to a public which often lacks the knowledge or ability to recognize and refute the pronouncements handeddown by authorities they are instructed to trust. The issue is not simply reasonabledisagreements over interpretations of data and theories. As did their earlier brethren, the proponents of modern-day Lysenkoism seek ‘to change…human attitudes…by the use of naked police power,’ i.e., by appealing to government and its monopoly on force rather than persuasion to achieve their ends.

It is well known in economics that individuals and groups have a tendency to pursue their own self-interest. Often this is accomplished by pursuing ‘rent-seeking behaviors’ – Zoltan J. Acs and Daniel A. Gerlowski have defined ‘rent-seeking’ as: “

An attempt by some interested party to alter the allocation of rents in a contractual agreement; in general, does not create value within the organization. (1996. Managerial Economics and Organization, 448)

In their chapter, “Distribution, Rents, and Efficiency,” they have defined ‘rents’ as:

…benefits earned by an economic resource that exceed what the resource could willingly earn else where. (221)

They continue by defining ‘economic rents’ as:

…the benefits from an activity going to a resource in excess of what is needed to attract that resource to that activity. (222)

And, somewhat later,

… it is useful to think in terms of rents as being captured by some entity; both economic and quasi-rents are said to ‘go’ to some factor of productionor, equivalently, to some party of the exchange.

In a competitive economy, there are no economic rents. The reason is clear.In a competitive setting, positive economic profits attract entrants who eliminate all rents in the long run. The obvious exception is, of course, whether a factor of production is in inelastic (that is, fixed) supply, in which case rents may exist in the long run. (226)

So, how does all of this ‘economic theory’ about ‘rents’ and ‘rent-seeking behavior’ relate to the betrayal of the ‘scientific method’? Well, it helps us understand the ‘how’ and ‘why’ of both private and public decision-making thereby providing a system of incentives or disincentives, culminating in the abandonment of the ‘scientific method’. Gwartney and Stroup – Principle # 1 Alawys and everywhere incentives matter.

14

‘junk science’

role of ‘tort’ law suits

Little known fact: the levees around New Orleans were not improved due to a judicial decision supporting claims made by the ‘Save Our Wetlands’ environmental group – Bad Science, KILLS!

The claims of impending disaster and of past catastrophes have accompanied man’s cultural evolution from the Neolithic and Bronze ages to the present, from the I Ching, with its entire symbolic cosmology, and the mystical visions of the Book of Revelations, through Dante’s Inferno, Thomas Malthus (Principles of Population, 1st Ed., 179 ), George Perkins Marsh ( ), William S. Jevons ( The Coal Question, 18 ), culminating in Paul Ehrlich (The Population Bomb, 196 and The Club of Rome (Limits to Growth, 196 ). The most recent embodiment of such ‘cataclysmic’ views/interpretations of the human condition, ‘environmentalism’, has been described as the last refuge of anti-capitalists (both socialists and communists). Paul Ehrlich opened the prologue to his book, The Population Bomb, with the statement:

The battle to feed all of humanity is over. In the 1970s and 1980s hundreds of millionsof people will starve to death in spite of any crash programs embarked upon now. Atthis late date nothing can prevent a substantial increase in the world death rate. (The Population Bomb, xi.)

Somewhat later:

…a minimum of ten million people, most of them children, will starve to death duringeach year of the 1970s. But this is a mere handful compared to the numbers that will bestarving before the end of the century. (3, italics in original, boldfaced added)

Given these ‘predictions,’ how shall Ehrlich’s reliability as an analyst of socio-economic processes be judged? The empirical evidence demonstrates his predictions on mass starvation were totally incorrect! Yes, as is pointed out in “Paul Ehrlich,” [www.overpopulation.com/faq/people/paul_ehrlich.html.]:

In fact the last quarter of the 20th century has been amazing for the reduction in famine.If current trends persist, by 2001 only about 2 million people will have died from famine-related causes. Many of those died in Africa’s various famines where governments suchas Ethiopia used food as a weapon against people – the food was there, but the politicalwill to feed the starving was missing. (2)

He has made numerous, other even wilder statements, including predictions of ‘massive shortages in various natural resources for decades’, as well as:

If I were a gambler, I would take even money that England will not exist in the year 2000.

15

So, what went wrong? Quite simply, Ehrlich, repeating the errors of the past, misunderstood the dynamics of economic growth processes and human behavioral responses to changing conditions. Both Malthus (1798) and Ehrlich (1971) implicitly hold technology constant, permitting resources, including food, to grow as an ‘arithmetic progression,’ i.e., 1, 2, 3, 4, 5, 6,…., m; while allowing population to expand as a ‘geometrical progression’, i.e., 1, 2, 4, 8, 16, 32 …. , n; clearly by the 6th generation the original 1:1 relationship between resources and resources has been transformed under a constant or ‘steady-state’ technology into a 6:32 deficit, allegedly leading to mass starvation AND impoverishment of human kind. Therefore, policies must be implemented (legislative action) on the ‘demand-side’ (population growth), rather than on the ‘supply-side’ (technological change and resource expansion) to avert certain disaster:

Our position requires that we take immediate action at home and promote effective action worldwide. We must have population control at home, hopefully through changes in our value system, but by compulsion if voluntary methods fail. (xi-xii, emphasis added)

In support of his push for population control in the U.S. via ‘changes in our value system’ Ehrlich supported reductions in tax deductions for dependent children, and imposing ‘luxury’ taxes on “cribs, diapers, diaper services, expensive toys”! (131-3) His methods are far more draconian for countries in the Third World, pursuing a death-rate’ solution by withholding food from nations refusing to implement population controls! (146-8) Adfdi5tionally, he has called for the ‘forced sterilization of all Indian men with three or more children’. (151) In all of this, Ehrlich seems to be taking a cue from Garrett Hardin, whose horrific 1968 article, “The Tragedy of the Commons,” Science, 162 (1243-1248) is frequently cited by radical environmentalists seeking to extend governmental controls over the lives of others. The article may be found on numerous websites using a search for ‘Tragedy of the Commons’. Ehrlich equates the government’s right to limit the number of children that a couple may have, with its right to limit the number of spouses one may enjoy! (“Paul Ehrlich,” www.overpopulation.com/fac/ people/paul_ehrlich.htm., 3)

Corn for Grain, U.S., 1866 – 2005.

ProductionHarvested Acres (000,000 of bushels/ Yield

Year (000,000 acres) acres) (bushels/acre) ________________________________________________________________________

1866 30.02 730.81 24.31876 55.28 1,478.17 26.71886 73.91 1,782.77 24.11896 89.07 2,671.05 30.0

1906 95.62 3,032.91 31.71916 100.56 2,425.21 24.11926 83.28 2,140.20 25.7

16

1936 67.83 1,258.67 18.61946 78.41 2,916.09 34.2

1956 64.87 3,075.34 47.41966 57.00 4,167.61 73.11976 71.51 6,289.16 88.01986 68.91 8,225.76 119.41996 72.64 9,232.56 127.1

2004 73.63 11,807.22 160.42005 74.33 11,032.11 148.4

_______________________________________________________________________Source: U.S. Department of Agriculture, National Agricultural Statistical Service,

annual figures are available at www.nass.usda.gov.

These data on agricultural production (food supply), exemplified by Corn for Grain, in the United States are quite revealing. Perhaps the most significant of the time series is the yield or output (bushels of grain per acre). Between 1866 and the end of the Second World War the average yield of Corn for Grain remained relatively constant, ranging between 18.2 (1901) and 33.0 (1944) bushels per acre. By the early 1950s, corn yields began to explode and the have continued to rise through the early years of the 21st Century, e.g., 160 bushels per acre (2004). Over the 1866-2004 period the compound average annual growth rate of total corn production for grain has risen 2.04 per cent/year, while yields have increased at a 1.38 percent average annual rate.

A similar pattern of output increases may be seen for wheat production over the same period, 1866 to 2004.

All Wheat, U.S., 1866 – 2004.

ProductionHarvested Acres (000,000 of bushels/ Yield

Year (000,000 acres) acres) (bushels/acre) ________________________________________________________________________

1866 15.41 169.70 11.01886 36.31 531.54 14.1

1906 46.23 740.51 16.01926 56.62 832.21 14.71946 67.11 1,162.12 17.21966 49.61 1,304.89 26.31986 60.69 2,090.57 34.4

17

1996 62.82 2,277.39 36.3

2004 49.99 2,158.25 43.2 ________________________________________________________________________

Source: U.S. Department of Agriculture, National Agricultural Statistical Service, annual figures are available at www.nass.usda.gov.

Congruent with the ‘scientific method’ Julian Simon challenged Paul Ehrlich to put his money where his mouth was, a bet! If resources are becoming increasingly scarce [or, are constant in availability] and population growth is placing greater demand on the physical environment, then the economic ‘laws of supply and demand’ would dictate that ‘real’ resource prices (price adjusted for the inflation rate) should be rising! Simon knew that the ‘real prices’ of resources had been declining since late in the 19th Century. Simon’s challenge was for Ehrlich (the prophet of doom) to pick any five metals worth $ 1,000 in 1980 dollars. The bet was on the relative ‘real prices’ of those metals a decade later. If the real price rose (decline in supply) Ehrlich would win the bet, but if the real price fell, Simon would win the bet. Ehrlich accepted the bet and chose: copper, chromium, nickel, tin and tungsten. The loser would pay the winner the difference in price. By 1990 the real price (1980 dollars) for all five metals had fallen, reflecting an increase in the general availability (supply) or decline in the demand for these minerals (due to technological change and resource substitutability – fiber-optic cable for copper, aluminum containers for tin cans, etc.). Once again, Ehrlich’s predictions were proven incorrect.

Perhaps a more sober interpretation may be found in one of the last books written by Julian L. Simon (1932 – 98) – economics professor at the University of Maryland: The Hoodwinking of a Nation. He begins this book (‘Introduction’) by asking the penetrating question:

Why do false statements of bad news dominate public discussions of these topics [‘ourenvironment is getting dirtier,’ ‘we are running out of natural resources,’ and ‘ populationgrowth in the world is a burden and a threat’.]? ….

… this book is about the entire complex of the production of false bad news by researchers, organizations, and the press and television, the nature of what is producedfor our consumption, and our propensities as human beings that lead us to consume (and be consumed by) that body of false statements. [emphasis is added]

Much of this material is available on the net, at: www.juliansimon.com/writings/Truth_Shortaage/.The chapter headings in The Hoodwinking of a Nation are:

Chapter 1 “The Vanishing Farmland Scam of the Government and the Media”;Chapter 2 “An Open Letter to Leonard Downie About False Bad News”;Chapter 3 “Global Confusion, 1980: A Hard Look at the Global 2000 Report”:Chapter 4 “What Does the Public Wrongly Believe About Environment, Resources, and

Population?”;Chapter 5 “Personal Knowledge Versus Media-Shaped Opinions”;Chapter 6 “Population Control and Knowledge Information Control: A Case of Lysenkoism”;Chapter 7 “How the Comparisons People Make Affect Their Beliefs About Whether Things

Are Getting Better or Worse”;

18

Chapter 8 “Why Do We Hear Prophecies of Doom From Every Side?”;Chapter 9 “Mundane Reasons for the Bad-News Bias”;Chapter 10 “The Old-Time Journalistic Methods Don’t Work Here”;Chapter 11 “Why Are So Many Biologists Alarmed?”;Chapter 12 (Now Part of Chapter 11);Chapter 13 “The Population Establishment and False Bad News: A Case Study”;Chapter 14 “How Do Green Rhetoricians Operate”;Chapter 15 “Damn Lies, Statistics, and Doomsday”; andChapter 16 “Why Does the Public Not Hear Environmental Sound Thinkers?”.

Perhaps a partial, but clearer answer to Simon’s question – “Why do false statements of bad news dominate public discussions of these topics?” – is to be found in Francis Bacon’s, Novo Organum (1620), Book I, aph. 49, as quoted in “In Defense of Bacon” (www.uno.edu/ ~phil/bacon.htm}:

[W]hat a man [or woman] had rather were true he [or she] more readily believes. There-fore he [or she] rejects difficult things from impatience of research …

The full quotation is:

XLIX

The human understanding is no dry light, but receives an infusion from the will andaffections; whence proceed sciences which may be called ‘sciences as one would.’For what a man had rather were true he more readily believes. Therefore he rejectsdifficult things from impatience of research; sober things, because they narrow hope;the deeper things of nature, from superstition; the light of experience, from arroganceand pride, lest his mind should seem to be occupied with things mean and transitory;things not commonly believed, out of deference to the opinion of the vulgar. Number-less in short, are the ways, and sometimes imperceptible, in which the affections color and infect understanding.

Capitalism is inherently unstable, i.e., is beset periodically by economic crises, known variously as – ‘economic downturns’, ‘recessions’, ‘depressions’, or ‘crashes’. The so-called ‘market-instability’ is deemed to be a flaw in the free-market system and, therefore needs to be ‘corrected’ by the direct intervention of ‘the brightest and the best’ (aka* the self-appointed, intellectually superior bureaucrats employed by the government.) This idea had it origins in the pessimistic writings of Thomas Malthus [especially his: Principles of Political Economy, 2nd Ed. 1836] and was popularized by Karl Marx and Friedrich Engels [see: below]. These views were accepted as proven by John Maynard Keynes and those who adopted his theory, thereby justifying ever greater interventionist government policies. [See: J.M. Keynes. The General Theory of Employment, Interest and Money (1936/1964)]

19

John Micklethwait and Adrian Wooldridge, in their widely heralded book, The Company: A Short History of Revolutionary Idea (2003), in describing the rise of the ‘modern company’ have identified several conditions essential for their founding: “First”, they note:

was the idea of shares that could be sold on the open market.… the naval capitalism of the sixteenth and seventeenth centuries dramatically expendedthe idea, bringing stock exchanges in its wake. The other idea, which had occasionally surfaced before was limited liability. Colonization was so riskythat the only way to raise large sums of money from investor was to protect them.

The first chartered joint-stock company was the Muscovy Company, which was finally given its charter in 1555. [the reign of Ivan IV or Ivan Groznii]

…the Company was given a temporary monopoly over trade routes to the Russian port [Archangelsk]…. The company was able to raise enough money to finance the long journey to Russia by selling tradable shares. (18, emphasis added)

An essential question that you must ask yourself is: ‘Just who had the power and authority to grant “a temporary monopoly over trade routes”?’ For a broader view on the issue of ‘monopoly’ and its source, see: Alan Greenspan. 1961. “Antitrust,” in Ayn Rand. 1967. Capitalism: The Unknown Ideal. New York: Signet Book, 63-71. Greenspan in his discussion of the ‘westward expansion of railroads’ in the 1860s, and the initiation of governmental regulations, has written:

In the name of ‘public policy’ it was, therefore, decided to subsidize the railroads in their move to the West….

As might be expected, the subsidies attracted the kind of promoters who always exist on the fringe of the business community and who are constantly seeking an ‘easy deal.’ Many of the western railroads were shabbily built:they were not constructed to carry traffic, but to acquire land grants.

The western railroads were true monopolies in the textbook sense of the word. They could, and did, behave with an aura of arbitrary power. But that power was not derived from a free market. It stemmed from governmental subsidies and government restrictions…. (64-5)

…. In the meantime, however, an ominous turning point had taken place in our economic history: the Interstate Commerce Act of 1887.

That Act was not necessitated by the ‘evils’ of the free market. Like subsequent Legislation controlling business, the Act was an attempt to remedy the economic distortions which prior government interventions had created, but which wereblamed on the free market. (65, emphasis added)

At this juncture it is appropriate to add some observations made by the Nobel Laureate, James M. Buchanan, that provide further evidence buttressing Greenspan’s point:

From Wicksell, Buchanan concluded that governments are not

20

efficient, purely altruistic entities that effortlessly correct marketimperfections. Instead, governments are aggregates of individualspursuing private rather than the public interest through regulationsand tax laws. These private interests create wasteful lobbying efforts known as rent seeking. (Emphasis added)

Public choice economists support strong legal rules that constrain rent-seeking special interests from undermining an appropriate public-goods process.

At first glance, public choice theory seems to be nothing more than common sense: Governments are collections of individuals whose interaction is determined by the same self-interest that motivatespeople in the private sector. The simple view that government is a collective decision-making process that altruistically solves socialproblems has a long and, according to Buchanan, romantic traditionboth in political theory and in economics….his public finance models lie outside the neoclassical mainstream belief in the collective problem-solving model and in measurable, explicit opportunity costs… A pure subjective-cost approach denies that the actual costs of any action canever be known, even by the decisionmaker(s), because the act of choice is itself cost, subjectively perceived. A theorist adhering to this doctrinewould not carry out any benefit-cost analysis, as costs are inherently notobservable and, therefore, not measurable… (Emphasis in the original)

As many economists came to doubt the efficacy of large, state-fundedprograms, they saw public choice theory as a way to examine what has come to be known as government failure. For decades following ArthurCecil Pigou’s famous book The Economics of Welfare, economists sawgovernment as a disinterested agency that could correct market failures. Buchanan and other public choice theorists altered the debate by proposing that government may not really correct problems in the market-place because of the wealth trading, or rent seeking, that occurs during the legislative process… (Emphasis added)

Influenced by what he considered the government’s overreaching in the 1960s, Buchanan believes the closer a person can come to self-sufficiency,the better off he is. (Emphasis added) [Robert L. Formaini. “James M. Buchanan – The Creation of Public Choice Theory,” Economic Insights, 8 (2); available at: www.dallasfed.org/research/ei/ei0302,emphasis added.]

There are three critical points in Formaini’s review of Buchanan’s approach to economic relationships: (i) politicians/bureaucrats are self-interested, not altruistic, decision-makers [‘public servants’, as they like to call themselves]; (ii) as such, they engage in ‘rent-seeking’ behaviors by trading favors (e.g., legislation that benefits small cohesive ‘special interest groups’ at the expense of the majority of the citizens); and (iii) claims that government intervention in the market place to correct so-called ‘market-failures’ result in ‘government failure’…note the similarity to Greenspan’s conclusions, cited above: “an attempt to remedy the economic distortions which prior government interventions had created, but which were blamed on the free market.

21

Somewhat later, Micklethwait and Wooldridge have observed that such a joint-stock, limited liability company played a major role in the founding of the United States –

The Virginia Company duly raised funds from seven-hundred-odd Elizabethan ‘adventurers,’ including Sir Francis Bacon – and produced, in return, no profits.

…. The risks of investing in voyages to the spiceries of Indonesia would be akin to the risks of investing in space exploration today. (19)

After several failed British attempts to send ventures to the East Indies,

It was hardly surprising that the Dutch merchants decided that state-sponsored collusion was preferable to this. The monopoly that they eventually secured from the state in 1602 – the Dutch East India Company, alternatively known as the VOC (for Vereenigde Oost-Indische Compagnie) or the Seventeen (after its seventeen-strong board) – became the model for all chartered firms. The VOC’s charter also explicitly told investors that they had limited liability. Dutch investors were the first to trade their shares at a regular stock Exchange in 1611…. All the Amsterdam hub needed to prove itscapitalistic credentials was a market crash, which duly arrived withtulip mania in 1636-1637. (20, emphasis added)

There are several points that must be pointed out explicitly in this discourse: (i) in any economic system, regardless of its organizational structure, production involves risk taking (even in a subsistence economy, as noted by game theory); and (ii) once again, there is a tendency for equating capitalism with “a market crash.” A little thought on the matter reveals that ‘risk’ applies to all economic systems because it arises out of ‘uncertainty’. This is a well-known relationship since Frank H. Knight published his seminal work, Risk, Uncertainty, and Profit (1921), but has been ignored in a most irresponsible manner. [For a brief summary of Frank Knight and his contributions, see: Robert L. Formaini. “Frank H. Knight – Origins of the Chicago School of Economics,” Economic Insights, 7 (3); available at: www.dallasfed.org/research/ei/ei0203.html.] ‘Uncertainty’ arises from an inability ‘to know’ or ‘predict’, with any degree precision, the outcome of an event or series of interrelated events as they unfold through time. ‘Risk’, on the other hand, is, to some extent or in some manner, “susceptible of measurement.” More specifically, Knight has made the following distinction:

Hence the problem of profit is one way of looking at the problem of the contrast between perfect competition and actual competition….

… the problem of profit…have arisen from a confusion of ideas whichgoes deep down into the foundations of our thinking. The key to the whole tangle will be found to lie in the notion of risk or uncertainty and the ambiguities concealed therein…. (19)

But Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been precisely separated. The term ‘risk,’ as loosely used in everyday speech and ineconomic discussion, really covers two things which, functionally atleast, in their causal relations to the phenomena of economic organization,

22

are categorically different…. The essential fact is that ‘risk’ means in some cases a quantity susceptible of measurement, while at other times it is some-thing distinctly not of this character; and there are far-reaching and crucialdifferences in the bearings of the phenomenon depending on which of the two is really present and operating. There are two other ambiguities in the term ‘risk’ as well, which will be pointed out; but this is the most important.It will appear that a measurable uncertainty, or ‘risk’ proper, as we shall usethe term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all. We shall accordingly restrict the term ‘uncertainty’ to cases of the non-quantitive (sic) type. It is this ‘true’ uncertainty, and not risk,as has been argued, which forms the basis of a valid theory of profit andaccounts for the divergence between actual and theoretical competition. (19-20)

Much later, Knight demonstrates the ‘who-and-why’ of the knowledge/risk/uncertainty phenomena:

…changes in conditions give rise to profit by upsetting anticipations and producing a divergence between costs and selling price, which would otherwise be equalized by competition If all changes were to take placein accordance with invariable and universally known laws, they could beforeseen for and indefinite period in advance of their occurrence, and would not upset the perfect apportionment of product values among the contributing agencies, and profit (or loss) would not arise. Hence it is our imperfect knowledge of the future, a consequence of change, not change as such, which is crucial for the understanding of our problem…. (198, emphasis added)

…it is unnecessary to perfect, profitless imputation that particular occurrences be foreseeable, if only all the alternative possibilities are known and the profitability of the occurrence of each can be accurately ascertained. Even though the business man could not know in advance the results of individualventures, he could operate and base his competitive offers upon accurate foreknowledge of the future if quantitative knowledge of the probability of every possible outcome can be had….knowledge is in a sense variable indegree and that the practical problem may relate to the degree of knowledgerather than to its presence or absence in toto. (198-199).

Note: the high risks associated with

Karl Marx. Capital.

Karl Marx. A Contribution to the Critique of Political Economy. Trans. N.I. Stone. Chicago: Charles H. Kerr & Company, 1904).

Human actions are the cause of ‘global warming’ – note: there is no denial that ‘global warming’ is taking place! The only issue is: what are the causal factors in this warming process? The world’s climates have been warming for the PAST 10,000 to 12,000 years, a period known as the Holocene (a period of relative warming following the end of the last period of glaciation, known as the Quaternary Period, in Pleistocene, which lasted

23

from 1.8 million years ago to the beginning of the Holocene). This last era of glaciation is known as the Wisconsin or Würm period, which lasted from 70,000 years ago to about 18,000 years ago. The Pleistocene Period was characterized by alternating periods of extensive glaciation, interrupted by periods of warming. (See below)

Late Pleistocene and Holocene Periods and Estimated Dates (650,000 B.P. to Present)

Name Glacial/Interglacial Dates _________________________________________________________________

≈ 12,000 B.P. toHolocene Interglacial (warming) present

Wisconsin ≈ 70,000 B.P. to (Würm) Glacial (cooling) 15,000 B.P.

Sangamon ≈ 130,000 B.P. to (Riss-Würm) Interglacial (warming) 110,000 B.P.

Illinoian ≈ 180,000 B.P. to (Riss) Glacial (cooling) 130,000 B.P.

Yarmouth ≈ 230,000 B.P. to (Mindel-Riss) Interglacial (warming) 180,000 B.P.

Kansan ≈ 300,000 B.P. to (Mindel) Glacial (cooling) 230,000 B.P.

Aftonian ≈ 330,000 B.P. to (Croner) Interglacial (warming) 300,000 B.P.

Nebraskan ≈ 470,000 B.P. to (Günz) Glacial (cooling) 330,000 B.P.

----------- / ≈ 540,000 B.P. to(Waalian) Interglacial (warming) 470,000 B.P.

---------- / ≈ 550,000 B.P. to(Donau II) Glacial (cooling) 540,000 B.P.

--------- / ≈ 585,000 B.P. to(Tiglian) Interglacial (warming) 550,000 B.P.

-------- / ≈ 600,000 B.P. to(Donau I) Glacial (cooling) 585,000 B.P.

24

/ Pastonian ≈ Interglacial Interglacial (warming)

______________________________________________________________________Various sources, including: pubs.usga.gov/gip/geotime/divisions;

www.ucmp.berkeley.edu/qaternary/hol; and www.wikimedia.org/wikipedia.

A review of the data (www.wikimedia.org/wikipedia/en/d/d2/Atmospheric_CO2_with glaciers_cycles.gif) reveals an interesting relationship between levels of CO2 (ppm – parts per million for you graduates of public high schools), global temperatures (global warming/cooling) and glacial/interglacial cycles. It must be noted that the duration of the warming phases have become shorter and shorter, while that of the cooling phases have gotten longer and longer! Curiously, the levels of CO2 were higher in Yarmounth (Mindel-Riss) [≈ 300,000 B.P. to 200,000 B.P.] and the Sangamon (Riss-Würm) [≈ 131,000 to 114,000 B.P.] interglacial periods than they have been, thus far, in the Holocene! Hum – the megafauna must have been driving their BMWs and Audis too much and been watching too many soap operas!

25