Big Oil, Big Finance, and Saving the World

Obama’s recent proposal to allow offshore drilling off the Atlantic coast of the United States has incited a flurry of talk about why the price of oil is so high.  The villain du jour is the speculators.

Big Finance, the story goes, not satisfied with nearly shattering the world economy with the depression of 2008 to 2009, is back up to its old tricks.  In its greedy quest for more money, it is buying up everything, using the proceeds of the bank bailouts to fuel speculation in half a dozen places it doesn’t belong.

Besides, it’s unfair that a bunch of people who don’t even have any use for the oil are buying it all up.  It’s one thing when they pass around pieces of papers, like credit default swaps and stocks, but oil?  We need oil.  How dare they, who don’t need it, buy it when we need it?

Of course, this talk is so ridiculous that I suspect it’s being made not out of mere ignorance, but with far more sinister motives.  The argument of the anti-speculators becomes transparent with even the simplest examination.  Why, for example, has Big Finance chosen oil as the thing to buy?  Because they expect the price of oil to go up.  Why do they expect the price of oil to go up?  Because it’s a limited resource whose fresh supply is expanding more slowly than demand.

In short, Big Finance realizes what the Green movement has known for a long time: oil is eventually going to run out, or at least become very scarce.    They’re just trying to make a buck while it happens.  What’s more, they’re providing a useful service.

To understand this, let’s assume that speculators who buy futures contracts on oil are actually buying oil and storing it somewhere (which isn’t necessarily always true).  What will happen in the future?  1) Vast new and accessible reserves of oil will be discovered, prices will fall, and the speculators will lose a lot of money.  Rising supply and consumption volumes will render whatever oil the speculators have set aside insignificant.  2) The discovery of new reserves will continue to dwindle, and the competition for existing oil will increase.  The price will skyrocket, and the speculators will make a boatload of money.  In the mean time, the higher the price goes, t he fewer people will be able to afford oil, and more money will be poured into developing alternatives, which will become more economical the higher the price of oil goes.

It is this second case in which the speculators are providing a service.  Think about the oil they are setting aside as a reserve.  If we start running out of oil, they have saved some for us,  to tide us over while we work on alternatives.

This is probably an exaggeration – especially because of the assumption that the oil speculators buy is physically stored somewhere.  But even if it is not, the speculators are still serving a useful function in the event that the supply of oil dwindles in the future.  By driving the price of oil up now, they cause us to modify our behavior.  Expensive prices drive us to consume less, to take fewer trips.  They make the development of alternative sources of energy more economical.

So this brings us back to the anti-speculators.  What are their real motives?  Simple: they just want cheap gasoline for their SUVs.  In short, they want to continue the policy of extravagant subsidies for automotive travel that Washington has been handing out hand over fist since the fifties.  It started with the building of the interstate highway system and continued to our own time with the war in Iraq, to ensure continuous access to oil, and the bailouts of Detroit.  Now the financial system is in the cross-hairs.  Anything or anyone that brings us closer to the reality of expensive oil will be targeted.

Ironically, the financial bad boys are the good guys this time.  This entire controversy is an object lesson in 1) the potential of free markets to solve (some) problems and 2) the manipulation of the American people by the likes of Fox News (#1 hit on Google for oil speculation as of this writing).

A final point bears mentioning.  There exists a real possibility that there are, in fact, vast, easily accessible, untapped reserves.  It behooves us to begin thinking about alternatives to oil because we cannot know when we will no longer have oil.  The current price of oil, and the speculation surrounding it, is a reflection of this uncertainty, perhaps even a measure of it.  The problem is that if it turns out that there are vast untapped reserves, we will probably end up facing another gigantic bailout of the speculators, because the U.S. government (and people) are cowardly, China-loving weaklings unwilling to live in a world where property is sacred and justice brings consequences for the foolish irresponsibility of the wielders of great power.

Global Warming? Do Nothing.

Human-caused global warming is a fact; skeptics can refer to Realclimate.org (also in my links column).  So that means we should all ditch our SUVs, turn out the lights, and stop heating our houses in the winter, right?  Let’s hope the future isn’t as bleak as that.

But really, what can we do?  Global warming is a real, substantive threat to the future of humanity, and even if you think it’s unlikely, you have to take it seriously.  If we love humanity and its place in the universe, we have to start envisioning a future for ourselves, and this future must account for the likely effects of our present actions.

In trying to imagine this future, I turned to Realclimate.org.  Since the site is run by scientists, I tend to trust that the conclusions stated there will be relatively conservative (in the scientific sense, i.e. certain).*

Realclimate.org itself says relatively little about what we can do about climate change, but a number of links, such as this one, suggest that immediate reduction in greenhouse gas emissions are necessary.  The obvious routes to implementation are a voluntary approach, where hippies eat roots and ride bicycles (the approach the U.S. is taking now), a nationwide carbon tax (something along the lines of “cap and trade”), or a dictatorial approach (E.P.A. marries Gestapo).

I have the same problem with the nationwide approaches – cap and trade and dictatorial – that I have with the voluntary approach.  To wit: they don’t share the burden evenly, and as a result, they are doomed to failure as those who are permitted to freeload commit the bad behavior that the rest of us are forced to avoid.

In the individual approach, where I turn out the lights and take the stairs, the freeloaders are the rednecks driving pickup trucks a quarter of a mile down the road and leaving their grills on all day.  In the nationwide approaches, the freeloaders are other countries.

Consider China.  China wants to be like us.  Chinese people want to be like us.  They want to drive SUVs, leave the lights on, run air conditioners all day, and do it all with cheap, dirty power, especially fossil fuels.  If the U.S. stopped using oil cold-turkey, the global price would plummet, leaving more for everyone else to gobble up.  If not China, then India.  If not India, Brazil.  If not Brazil, perhaps those fossil fuels will give Africa the developmental burst that it needs.

Cap-and-trade gets in the right direction; it removes responsibility from individuals, shifts a collective responsibility onto a collective, and rewards those who impose less of a burden on society and the planet.  But cap and trade is not enough.  It is sheer arrogance to think that a nation of 300 million in a world of 6 billion can stop, or even substantially alter, the path of fossil fuel use.  With all the technology that now exists to utilize fossil fuels, they will be used, if not by us, then by someone else.

If we impose cap and trade now, everything its opponents say will come true.  Goods will get more expensive, consumption will drop, GDP will drop, per capita income will drop, life will stink.  But the carbon profile of the planet in 200 years will be indistinguishable from what it would otherwise have been.

*One of my few complaints about Realclimate.org is that its own content is light, or at least lightly-indexed, and that it forces us to rely on a number of other sites created by non-scientists.  We must trust that these sites are scrupulously reviewed by Realclimate.org editors before being listed.

Epistemology is Cool, Vitalism is for Morons

Epistemology is cool?  What?  I’m beginning to believe that many of today’s most interesting problems boil down to epistemology.  In our age, we have an epistemological problem that the ancients never dreamt of.  To wit, we have discovered that there is really a very, very great amount of things to know.  Indeed, there are far more things to know than one puny mind, as we now understand the term, can possibly comprehend in a lifetime.

Simply put, the old epistemological questions were things like “What is knowledge?” or “How do we get to know things?”  Now, the question is “How can we get every individual member of our species to know all of the things that he needs to that, collectively, we already know?”  More briefly, the old question was “How do we get to know things?”  The new question is “How do we get other people to know things?”

It was not always so.  With the help of one or two devoted pupils, Aristotle compassed nearly all of the scientific knowledge of his age, and made the greatest of contributions in most other fields too.  Aristotle, showed that, in principle at least, the acquisition of complete knowledge by an individual was possible in his time.  Even much more recently, it was possible for an educated man to be familiar with all of the most important cultural touchstones of human history; such familiarity made the writings of the nineteenth and twentieth centuries possible.

Today, this is no longer true.  I have worked out in some detail (and a long time ago) how the proliferation of knowledge – or at least information – has created a problem in the arts, and particularly literature.  I have also discussed, in gloss, how the highly developed nature of scientific knowledge has, in a way, limited mankind’s ability to understand the grave existential threats facing it today.  Now I wish to discuss one of the most irritating consequences of our epistemological problem, the persistence of vitalism.

Vitalism is the belief that some separate principle, or essence, occupies living things and makes them distinct from “inanimate” (literally, soulless) matter.  A common vitalist proposition is something like, “You can’t create life in the laboratory, because there’s some constituent of life outside the realm of matter that you don’t know about.”  Most vitalists are actually mystics: they not only believe that there’s some principle of life that we don’t know about, they also believe we can’t know it, that the scientific method will never understand this mysterious, non-material vital principle.

Put this way, it’s obvious that vitalism is not really a much more dignified belief than the belief in ghosts or ESP.  After all, if there’s one aspect of our daily lives that can’t be understood or measured, why not others?  If I have a mystic principle animating me that I can’t detect or know anything about, why couldn’t that mystic principle exist outside of the body?  Since this mystic, non-material principle seems to be able to influence matter (for instance, by giving me life), why shouldn’t ghosts be able to talk or do whatever else it is that ghosts do?

Of course, most religious types are vitalists too.  The vital principle for a religious type is the “soul”, which, when they speak of it, is an entirely separate form and mode of existence from the body, something ethereal and mystical, but somehow capturing all of an individual’s individuality.

Most pre-modern philosophers were also vitalists.  The belief in the animating principle spawned Descartes’s mind-body duality, the inane ramblings of Aquinas, and even the more tripped-out theories of the Greek philosophers.

Now, let us imagine our philosopher, our modern philosopher.  He has a complete understanding of science, and can imagine, in broad outline, how he could construct a bacterium, or even a simple sponge.  It’s not possible yet, of course, because in a way, the smallest microbe poses the same challenge as a great mountain: we know what the mountain, or the bacterium, is made of, but we lack the extraordinary resources that would be required to create one out of nothing.  Still, the philosopher knows of what a microbe or a sponge is made, and he mostly understands humans; he’s optimistic that in a hundred years he’ll know everything.  Having this knowledge enables the philosopher to completely escape the abyss of vitalism, and in so doing, keep a cautious distance from religion, ancient metaphysics, belief in ghosts, and any number of other intellectual crosses that humanity continues to bear.

Now, the epistemological problem arises: how is he to communicate this knowledge to others?  The philosopher acquired his knowledge of the way the world works by decades of painstaking study.  It did not take decades because he learned inefficiently, or learned the wrong things; it tooks decades because there was so much to know.  In short, the philosopher can only communicate his secret with others by passing on his knowledge, in toto, to them.  For anyone to escape the trap of vitalism, decades of study are necessary.  Ironically, then, the philosopher, who believes that knowledge is communicable, that the universe is comprehensible, that laws govern the natural world, and that we can discover and use these laws, arrives at the same problem as the mystic, who believes the opposite of all of these things: the philosopher has knowledge, but its transmission is impractical – though not, as with the mystic, impossible.

There is another way.  The philosopher could resort to what would now be termed the “technocratic” solution.  He could appeal to the unknowing people to trust that his years of study have produced for him intransmissible knowledge, but knowledge that would give him the power to solve problems and help the people.  If the appeal is not taken, the same solution applies, through a longer route: build a culture of awe and respect.  Over enough generations, the philosopher and his heirs could instill in the people the idea the fervent belief that the philosopher holds superior knowledge.  He would, of course, hold such knowledge, though the years of study required to attain it make it hard to prove to the people that he does in fact have the knowledge.  That is why the priest, I mean the philosopher, would have to instill belief and trust in the people, as opposed to convincing them on merit.

And therein lies the problem: the philosopher, to receive his power, must appeal to the same devices as the priest.  Technocracy ruled our society for millenia before the advent of scientific knowledge; that technocracy was called the priesthood.  The priests could not prove to the people that they held superior knowledge, but they said that they did, and they sometimes resorted to tricks to convince people.  The philosopher would be left to the same devices, the same claims, and the same arguments that the priest used for thousands of years.  To borrow from Arthur C. Clarke (here), the people must view the sufficiently advanced knowledge of the philosopher in the same way they view the magical claims of the priest.

And so, perhaps there is no hope for humanity: the scientists are left to argue with the priests on grounds that, in the eyes of the people, are totally equal.  The only difficulty is that the scientists cannot choose their ground, their position on issues; it is determined for them by their very real knowledge.  The priests, on the other hand, are free to have “revealed” to them whatever positions the people seem to favor.

Could the scientists outline the argument I have given here, and appeal to the very fact that no one would take their position if not impelled to it by real knowledge?  For example, could we appeal to people to believe in global warming because why on Earth would a scientist choose to take the position that we have to adopt a poorer, simpler lifestyle?  (There are, actually, many reasons, which I hope to someday discuss.)  I think not; such an argument is weak because it rests on no actual information, and can be used as a defense for anyone arguing for an apparently unpopular position.

We can make heroic efforts (such as the one here), but ultimately, we must tackle our epistemological problem before we can solve any of humanity’s other problems.

You heard it here first – Friedman on Cheney

In Thomas Friedman’s Wednesday column in the New York Times, he reiterates a point that I made several months ago: climate change and nuclear proliferation present similarly grave threats to humanity’s future on Earth.  Furthermore, as Dick Cheney apparently preceded both of us in pointing out, the catastrophic nature of certain potential outcomes from climate change or nuclear proliferation, even if such outcomes are unlikely, makes preparation for – or aversion of – those outcomes imperative.

Dick Cheney, of course, was merely using the “one percent doctrine”, as Ron Suskind called it, as an excuse for doing whatever he wanted.  What’s shocking is Cheney’s inability to see that his own argument applies to global warming.  How can so many people who believe we should hunt terrorists to the ends of the Earth just to avoid the small possibility of a nuclear attack not believe that we should convert to a green economy to avoid the small possibility that humanity will be wiped out by extreme weather?  The reverse question applies, too: how can so many environmentalists not believe every person entering the United States should undergo a full body cavity search, or that we should occupy every nation that even might be harboring terrorists?

Is it possible that people just don’t understand the one percent doctrine?  My own previous explanation may have gotten lost in verbiage, so here’s a simpler way of thinking about it.  Suppose you have a farm with a thousand apple trees.  If you lose more than five hundred trees in a given year, you will go out of business.  Now suppose there was a pestilence going about, and you estimated that there was a ten percent chance that you would lose a hundred trees… would it make sense to buy insurance, at slightly unfair odds, against the pestilence?  No, because even if it hit, you would only lose a hundred trees, and you could just hope to have better luck next year.  But what if there was a two percent chance that you would lose five hundred trees?  Then it would make sense to buy insurance, even if the odds were slightly unfair, because you’d want to avoid the possibility of going out of business.

In just the same way, nuclear proliferation and climate change call for an aggressive response.  Sure, the recent revelations of fraudulent scientific activity cast doubt on years of global warming research, but to the average citizen, shouldn’t it appear that there’s at least a chance that there’s enough other research out there to indicate that global warming is real to justify action?  If there’s a one percent chance that the scientists aren’t lying, don’t we have to take the threat to humanity’s existence seriously?

Real Big Problems

We’ve got problems.  In writing this blog, I’ve focused almost exclusively on what might be called political and cultural issues, to the near-total exclusion of issues that are perhaps of a far more pressing nature.  The issues in question are global warming and nuclear proliferation.  (I can sense you clicking away already.)  Why is it that these issues arouse so much less passion, in the vast majority of people, than, say, gun control or abortion?

I suspect that the answer is that these issues are not moral issues.  Nobody’s soul is at stake here, and with the exception of a few extremists who insist on blaming large corporations for everything, no one is at fault either.  An issue where we can’t invade someone, fight someone, arrest someone, or at least publicly humiliate someone, is a boring issue.

Furthermore, there is the epistemological question.  How do we acquire knowledge about global warming and nuclear proliferation?  What are we to believe?  What are the solutions?  Since a number of the parties involved in the climate change debate, and to a lesser extant the weapons debate, appear to be operating from a position of intellectual dishonesty – and actual dishonesty – it’s hard to know what to believe.

Nonetheless, I would consider these two issues to be some of the most important issues facing us today.  Unlike healthcare, gun control, the depression, or Kanye West, these two issues present a serious threat to all human life on Earth.  It seems to me that no matter what anyone believes about these issues, a risk-cost analysis would make a fuller understanding of these issues an imperative.  (A risk-cost analysis would integrate the costs of various outcomes on a political issue over the expected chance of those outcomes coming to pass.  Issues with the potential to threaten the existence of the human race, even with a miniscule chance of actually coming to pass, should swamp out all other issues, due to the nearly infinite cost of those issues.)  Even if some people think there is virtually no chance of a lone crazy person acquiring the potential to destroy the world, we must ask ourselves: how could we stop such a person?  Can we stop such a person?

Look at climate change from the perspective of the common person.  What does he know?  He knows that the Earth is probably getting warmer because of greenhouse gas emissions.  He knows that green nuts think driving is bad for the environment.  He knows that he’s always being encouraged to conserve energy.  But he also knows that energy consumption is what makes possible nearly every comfort of his lifestyle.  He occasionally encounters green activists panhandling for money on the street, but he has no rational reason to contribute, because no one else is, and he knows that half-measures and individual charity won’t solve a problem of this magnitude.

Is this mere apathy?