Paris is grey. But not grim. People are out and about. Face masks have almost disappeared.
But everybody grumbles…and in France, as in the US, elite deciders are making everyday life harder. One thing: they’ve banned the use of outdoor heaters, which were ubiquitous in sidewalk cafes. You used to be able to sit outside near the gas heater and enjoy the street life. No more…
Meanwhile, we’re working our way through a list of things that can go wrong. The World Economic Forum (WEF) calls it a ‘polycrisis’. We prefer the half-word ‘cluster’ as it’s more descriptive of the disaster to come.
Inflation, for example. The WEF’s Global Risks Report signals higher living costs as one of its near-term flash points. And here’s the latest. CNBC reports: ‘Inflation just dropped to 6.5% — but the “most important” factor in predicting if it will keep falling is up 0.4%’:
‘In Thursday’s CPI report, “services less rent of shelter” showed a 0.4% increase in December…since wages are “the largest cost in delivering these services,” [Powell] said, that might indicate out-of-control wage growth…’
There is ‘sticky’ inflation…and inflation of the Teflon variety. The non-sticky inflation includes things that go up and down readily — such as oil and commodities. The ‘sticky’ inflation comes from things such as wages and shelter, that don’t get marked to market on a daily basis.
Yesterday’s numbers tell us that the sticky part may become a tar baby — hard to get rid of. In the ‘services including rents’ category, for example, prices are up more than 7%. Much of that is wages. And nobody takes a wage cut to fight inflation.
‘Davos men’
WEF is a sinister organisation. It believes the common man is a dope — which, of course, he is. But it also believes that (or rather its adherents) the great and the good from all over the world are geniuses — which they are not. They are human too…just better at school…or better at getting their names in the paper…or simply lucky enough to have no tender feelings nor nuanced thoughts that might keep them from making fools of themselves. With no real weight — neither inner dignity nor outward-facing principles — they rise to the top, like plastic bottles floating in a fetid swamp.
The list of attendees has recently been released. It includes the usual public policy jackasses…as well as a large group of people in private industry who have become ‘Davos men’ and are ready to lead the rest of us to the Promised Land.
The problem is that when you look more carefully at the land they are promising, it looks more and more like a prison, one constructed by true believers who think they know what’s best for us.
Which brings us to their polycrises…and to our cluster. Included among the coming tempests — at the top of both of our lists — is the deflation of asset prices and the potential for a worldwide, 1930s-style depression. But looking out further…over 10 years…their survey focuses on bigger threats. Its top five are all related to ‘climate change’. They think human activity is ruining the planet.
On our list, by contrast, in number four position, is a very different crisis — a man-made catastrophe, a little like the disaster in China of the ‘Great Leap Forward’, in which 50 million people died — caused by an almost religious faith in ‘green’ power.
This tilted world
WEF could be right. Maybe the planet really is warming. And maybe it will pose problems. But there are a lot of unknowns. Is the planet heating up because of something we do? We don’t know for sure. Is a warmer Earth a bad thing? Don’t know. Could we stop it? We don’t know that either. Would we be better off if we tried…how much would it cost? Again, question marks. Would it be worth it? Who knows?
The risk we see is not a climate disaster, but a much more likely public policy cluster. The odds are in our favour. We know of no major, ambitious, and costly public policy that wasn’t a catastrophe — from the Crusades and the Inquisition to the trenches of the First World War and the jungles of Vietnam…all were disasters.
Yes, there are plenty of squishy unknowns in our cluster too. But the ground is dry. Fossil fuels are 1) cheaper than green energy, 2) already in place and ready for duty, and 3) reliable — they do the job even when the sun doesn’t shine and the wind doesn’t blow.
Replacing fossil fuel with ‘green’ energy, even gradually, will almost certainly lower living standards. (Today’s standards of living depend on energy at today’s prices.) In our developed world, we sit on a fat cushion of wealth, made possible by economies using traditional energy. Would lower living standards be a bad thing? We don’t know. But what about those billions of people who sit on hard benches…for whom air conditioning and automatic transmissions are still a dream? They live on US$5 a day…and barely stay alive.
We don’t know. But combined in a cluster of market correction, war, and other calamities, tilting the whole world towards an expensive and untested new energy system is risky. Some of the world’s eight billion humans are bound to fall off.
Regards,
 |
Bill Bonner,
For The Daily Reckoning Australia
