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Environmentalism: The Pious Moralism of the 21st Century

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Green Faucet
Published : August 06th, 2008
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Category : Editorials





A Bone to Pick with Boone


T. Boone Pickens' energy plan falls short. He has to weave what he views as ‘political realities' into a comprehensive plan from which he can also profit. While, I believe his highest goal is to develop a plan which best serves the longer term economic and energy interest of the country, I think he has not properly factored in some shorter term ‘economic realties' which could short-circuit his scheme, well-intended as it may be.


His plan, available here, is basically to generate up to 20% of the nation's base load power from wind and solar, thereby freeing up natural gas to be used as significant portion of our transportation fuel. Boone already has significant investments in using natural gas in this capacity. Though, reconstructing vehicles and our infrastructure is a high hurdle itself, for argument purposes, I am willing to accept the obstacles are not insurmountable. I am more concerned with what Boone is leaving out. By passively saying that he is "all for" coal, nuclear, and oil and gas drilling, saying "we should do them all", but not explicitly including them in his plan to generate base load power he is in effect saying: "hey look coal and nuclear, I'm sorry but the environmental lobbyists and silicon valley ‘green investors' wield much more power than you do." In Pickens' mind that is more likely to be insurmountable than some of the technical factors in his plan.


By saying "we should do them all" without actively promoting coal, nuclear, and more drilling, he avoids offending proponents of those energy sources while cleverly capturing support from such groups as the Sierra Club because they understand that without an aggressive campaign championing them, they will fall by the way side and clear the way for renewable to totally replace fossil fuels. Or so they believe regarding the point on replacement.


Environmentalist Propaganda of the Scariest Order


We should all be deeply concerned over the power the environments have grabbed and the threat to freedom that this increasingly represents. The fact that we have governors canceling construction of new coal-fired power plants and an Al Gore-led extremist group subjecting us to the impression, through their effective $300 million commercial campaign, that we are "all coming together" in a crusade to fight the gravest threat to mankind-global warming-should scare you.


Such extreme environmentalism is rooted in an ideology that the free market corporate world is ‘evil' and needs to be corrected by an enlightened elite who can lead this reformation. This comes at a time when many families are going to struggle to pay for heating, electricity, and transportation for the first time in their lives. Renewable energy sources are years away from having any meaningful impact. The short term and transitional solution (until we can depend on other alternatives) for the US is coal. This is clear for anyone who does not have an ideological ax to grind. It is cheap, abundant and quite simply our best alternative over the next decade.


Environmentalism has become a "Pious moralism" which makes it vulnerable to the vagaries of theory and not rooted in the truth discovered from experience. Murray Rothbard chronicles the evolution of the ideology where today's extreme environmentalism is rooted. In his essay titled, "Origins of the Welfare State in America" he writes:


If it wasn't industrialism or mass movements of the working class that brought the welfare state to America, what was it? Where are we to look for the causal forces? In the first place, we must realize that the two most powerful motivations in human history have always been ideology (including religious doctrine), and economic interest, and that a joining of these two motivations can be downright irresistible. It was these two forces that joined powerfully together to bring about the welfare state. Ideology was propelled by an intensely held religious doctrine that swept over and controlled virtually all Protestant churches, especially in "Yankee" areas of the North, from 1830 on. Likewise, a growing corollary ideology of statism and corporate socialism spread among intellectuals and ministers by the end of the 19th century. Among the economic interests promoted by the burgeoning welfare state were two in particular. One was a growing legion of educated (and often overeducated) intellectuals, technocrats, and the "helping professions" who sought power, prestige, subsidies, contracts, cushy jobs from the welfare state, and restrictions of entry into their field via forms of licensing. The second was groups of big businessmen who, after failing to achieve monopoly power on the free market, turned to government - local, state, and federal - to gain it for them. The government would provide subsidies, contracts, and, particularly, enforced cartelization. After 1900, these two groups coalesced, combining two crucial elements: wealth and opinion-molding power, the latter no longer hampered by the resistance of a Democratic Party committed to laissez-faire ideology. The new coalition joined together to create and accelerate a welfare state in America. Not only was this true in 1900, it remains true today.


You can download the essay here. The new pietism took on a very religious tone at inception, but eventually grew to embrace a secularist nature, particularly after Dewey and the Progressives become the standard-bearers. Today, the environmental extremists have picked up the mantle. This is at the root of the environmental movement today. Beyond the root are scientists whose modeling leads them to believe in the harmful effects of man-made global warming and the greedy green capitalist investors who are trying to make a buck. They are desperate to make some money now that their information technology investments have largely either stagnated or gone bust.


What Happens When the Economic Wheels Fall Off?


Getting back to Boone's plan, it might be all well and good in normal economic times, but the perfect economic storm is brewing on the horizon as negative feedback loops between the financial markets fiascos and the real economies build. Marc Faber in his August commentary observes that by "writing a massive check to the shareholders of the commercial and investment banks" the Fed is not addressing the cause of the problem, which is excessive debt and leverage - aside from a rotten and conflict ridden financial sector - but simply shifting "private sector" liabilities to the government (the tax payers). Talk about negative feedback loops! If excess credit and debt are public enemy number on the collapse of the housing bubble are where its effects are the most pronounced. Falling home prices negatively affect the securitized debt market and the banking/financial sector. They equally hurt the real economy as homeowners see their wealth deteriorate and ability to consume diminish.


The pathological optimists still believe the bottom is just around the corner. Those who have the courage to look at things realistically, however, see things as International Herald Tribune writer Vikas Bajaj does in his August 4 article titled "A second, far larger wave of mortgage defaults is building." Vikas observes:


After two years of upward spiraling defaults, the problems with mortgages made to people with weak, or subprime, credit are showing the first, tentative signs of leveling off. But with the U.S. economy struggling, homeowners with better credit are now falling behind on their payments in growing numbers...Defaults are likely to accelerate because many homeowners' monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks are tightening their lending standards, making it harder for people to refinance loans or sell their homes. ...Subprime was the tip of the iceberg," said Thomas Atteberry, president of First Pacific Advisors, an investment firm in Los Angeles that trades mortgage securities. "Prime will be far bigger in its impact."


Given the fact that our policy makers are prescribing more of the measures which got us in this mess in the first place, I think that our economic plight is going to become even more dire. In such an environment the rallying cry of constituents will be energy that is "cheap, cheap, cheap" and not "clean, clean, clean." And that means coal. The greenies in government are too focused 50 years into the future to have any idea over the economic sledge hammer that is about to hit us all over the head. Perhaps if we were not fiscally bankrupt as a nation, they could afford their policies.


"Cheap, cheap, cheap", means "mine, mine, mine" - coal, that is. This is not to be confused with "drill, drill, drill." Drilling more will only enable us to partially replenish the supply we will be losing over the next few years. While we will also reach "peak coal" someday we are not there yet. If Boone Pickens wants to free up natural gas from power generation he doesn't need to build 10,000 windmills to do so. He could do so by merely switching power plants to coal from natural gas. If we approach the economic duress I am expecting soon, this will be the selected course of action. Furthermore, coal companies are already taking the initiative to create coal-to-liquids transportation fuels. Two plants will be constructed along the Ohio River within 50 miles of each other over the next couple of years. One will cost $5.5 billion and produce 53,000 barrels of jet fuel and diesel per day; the other costs $800 million and will generate 100 million gallons of 87-octane gasoline and 720,000 tons of methane annually.


And they are doing it without government subsidies. What a novel idea.


Excerpted from the 08/04/08 Global MegaTrends Portofolio's Newsletter:


To learn more about Kurt's Kasun's Global MegaTrends Portfolio, click here


 

Kurt Kasun

www.greenfaucet.com


A contributing writer to GreenFaucet.com, Kurt Kasun writes a high-end investment timing service, GlobalMacro, which is focused on identifying opportunities that produce returns in excess of market with reasonable risk. He is strategically located in Washington, D.C., a key to maintaining contacts and relationships which help Kurt understand global policy and economic factors as they emerge. His investment approach has always been macro in nature largely due to his undergraduate studies at the U.S. Military Academy at West Point (B. S. National Security, Public Affairs, 1989) and his graduate studies at George Mason University (M.A. International Commerce and Policy, 2006).




 





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A contributing writer to GreenFaucet.com, Kurt Kasun writes a high-end investment timing service, GlobalMacro, which is focused on identifying opportunities that produce returns in excess of market with reasonable risk. He is strategically located in Washington, D.C., a key to maintaining contacts and relationships which help Kurt understand global policy and economic factors as they emerge. His investment approach has always been macro in nature largely due to his undergraduate studies at the U.S. Military Academy at West Point (B. S. National Security, Public Affairs, 1989) and his graduate studies at George Mason University (M.A. International Commerce and Policy, 2006).
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