Short And Long Term Economic Solutions

Sometimes making up a fictional story can clarify a point better than laying down the facts, so let me tell this story. Once upon a time a king was elected to sit on the throne and wave a magic wand to make things happen for his people, the human race that inhabits planet Earth. In the winter season of the year 2008-2009 the king was unexpectedly called upon to wave the wand and do his magic.

The problem crying out for solutions was that in a place called the United States of America, there lived approximately 100 million families who were badly served by a system they thought was good but turned out to be wanting. This was the case because the financial leaders of that nation were a bunch of snake oil peddlers who pushed toxic mortgages and mortgage backed securities on the public in America and everywhere else in the world.

When the bubble that those leaders created to inflate their holdings finally burst, the system began to collapse and to drag everything down with it. To save the situation, those who were in government brought in a few hundred billion dollars to serve as crutches and they used them to keep the system from totally collapsing before the king had the time to do his abracadabra.

When the time came, the king did what he had to do and thus restored the situation almost exactly to where it was in the summer of 2007, a time when the majority of the people did not know what was going on and were having a party. But there was a small difference between the two situations in that the king did not give back to the investors the 10 trillion dollars or so that they lost on the stock markets and other industries.

Instead, the king allocated 10 trillion dollars to solve the problem in a different way. He dedicated 2 trillion dollars to shore up the capital of the banks, a move that restored the latter to where they were before the collapse. And he deposited on the kitchen table of every family a bag containing 80,000 dollars.

The result was that all the prices that were deflating during the collapse started to inflate again, and they got back to their previous levels. Confidence was restored among the banks and the people alike, and they all went back to doing business the same way they did before this whole thing started. What happened after that is of no importance because the point of the story is not the plot but the lesson that we can draw from it.

And so I begin with this question: Can the newly elected government in America do what the fictional king did and solve the financial crisis facing the world today both for the short term and the long term? And the answer is that he can but not exactly in the same manner as did the king because the President elect does not have a magic wand. He can, however, do something close to that.

You see, years of running a balance of trade deficit with the rest of the world has flooded the markets with American dollars. A great deal of that money found itself in the hands of foreigners and the hands of Americans abroad. And much of that money, as well as money in the hands of Americans at home have now been destroyed by the near meltdown of the financial system. This happened because the money was not made of actual bills but was of paper that resembled cheques written with no sufficient funds behind them.

With this in mind, the American government can now restore the situation at home to where it was by doing two things. First, set aside 2 trillion dollars to re-capitalize the banks. Second, set aside 8 trillion dollars to help the American families. The rationale behind this is the following:

The reason why the banks need to be re-capitalized is that such an act will restore confidence among them. This will get them to lend to each other again and lend to the public. However, those in charge must consider the 2 trillion dollars a line of credit and draw on it only when necessary. In return for cash, the banks will have to do business close to the level they did before the meltdown. The banks that refuse to co-operate should be nationalized. Their refusal will be called a strike and the government will respond in the same way that president Reagan responded to the strike of the air traffic controllers. That is, the heads of those banks will be fired and replaced with people who will run the show as it must be run.

As for the 80,000 dollars to each household, you don’t really need to do that unless you want to devalue the dollar to the pre-meltdown level. What happened over the decades is that the dollar lost value due to the accumulated trade deficits run by Americans. Now, however, much of this money has been destroyed and the dollar has started to rise again. But if you "print" money and flood the markets as much as before, the dollar will devalue again.

To understand this part we must realize that when American toxic securities were sold to foreign banks, these securities were used as collateral to borrow money from the central banks over there. But when the securities proved to be worthless, the foreign banks lost their capital upon which their central banks re-capitalize them with local currencies. The effect was that the supply of foreign money on the world markets increased at the same time as the supply of American dollars was decreasing.

Thus, to issue new money in America at this time will not disadvantage the dollar by much in relation to the other currencies. But what this whole saga will do is paint an image of Uncle Sam as being the con artist who swindled the world of trillions of dollars. And you can imagine what this will do to the confidence that foreigners will have for the American business model and for the idea of doing business with America at all.

The point of all this is that an American stimulus package worth a few trillion dollars at this time will not be catastrophic for America because this much money existed at some point in the past and has since been destroyed. The worst that can happen is that the dollar will go back to being worth 70 Euro cents. But the smart thing to do now is to spend the trillions wisely and spend them only if and when needed.

This prescription will contribute to the short term solution of the problem. But the meltdown can also be an opportunity to fix the long term problem. And the need for this is exemplified by the global nature of the current crisis which made everyone realize that while the arteries for trade have been opened to global commerce, they have also been opened for global mischief which is detrimental to the stability of the newly erected worldwide system.

Consequently a few cherished ideas will have to be re-examined, among them the notion that a jurisdiction which has a comparative advantage in one sector of the economy or a handful of them should concentrate on that advantage. It was thought that due to the opening of a worldwide market for every conceivable product and every service, the jurisdiction that fully exploits its advantages will do very well.

But it is now dawning on people that the idea of resting an economy on a single industry or a handful of them will subject the jurisdiction to a danger over which those in charge will have no control. In other words, it is realized that a jurisdiction without a diversified economy is a jurisdiction that is at the mercy of outside forces that may not have its interest at heart.

Here the historical record will be the guide for the decision makers. These people will see that ever since the beginning of industrialization, single industry towns and similar localities have experienced an anxiety about being at the mercy of forces they could not control, and have responded to the challenge by diversifying their economic activities. They did so by subsidizing the outside industries which came to take advantage of a rent-free land they granted to a new commerce, by offering to those industries tax credits or tax holidays, and by tailor-making a package of other incentives to suit the needs of every newcomer.

And when the underdeveloped nations of the world began to develop in earnest, they too adopted a similar approach except that in addition to granting the familiar incentives, they offered to the incoming industries such things as cheap labor, lax environmental regulations, low cost utilities, simplified business procedures and so on.

But now that globalization is destined to come under scrutiny and control, there will have to be a new worldwide agreement under which all jurisdictions will be granted the right to protect the industries they deem vital to their national security and for which they will negotiate an acceptable level of subsidization and other similar protectionist measures.

An agreement of this kind will encourage all jurisdictions to strive towards the achievement of a balanced economy as much as possible. The essential features of a balanced economy being the approximate match between the production capacity and the consumptive needs of the population in every industrial sector, the measures will cover one or more of the following sectors: agriculture and food processing, textile and related industries, machinery and transport equipment, chemicals and pharmaceuticals, communication and home entertainment electronics.

But given that a jurisdiction which used to channel its resources and efforts towards the one sector where it did well must now diversify and spread itself thin, the question becomes: What will that do to the high productivity that the jurisdiction used to enjoy, to the comparative advantage it had and most importantly, to the potential for growing the economy at the fast pace that it did previously?

The answer to that question is this. There was a tradeoff to be made between less volatility with diversification on the one hand, and more volatility with a higher growth on the other hand; and the choice was made to go with the more balanced approach. But this is not the end of the story because the average of the economic growth over a long period of time will prove to be the same in both cases.

And there is no mystery as to why this is so. For the same reason that you save on gas when you drive a car at a steady and lower speed, you spend a minimum of effort and capital when you go for a steady and lower growth in the economy. By contrast what happens in a situation of fits and starts is that you burn a great deal of cash to accelerate to a high level of growth then find yourself depleted of energy by the time you get up there. You glide downward while you rebuild your reserves and when you reach the trough, you wonder if it is worth going through the cycle again.

Moreover, when all the jurisdictions of the world will drop the beggar-thy-neighbor approach and adopt the steady and balanced approach to their economies, the whole world will consistently score a steady rate of growth which will be beneficial to all if only because of its predictability. This situation will be much more preferable than the periods of boom and bust that the world has experienced up to now.

So how do we get there from here? The answer is that with diversification in mind, America should negotiate with the rest of the world a treaty that will allow every jurisdiction to take all necessary steps to protect its industries up to an acceptable percentage. Then spend 8 trillion dollars or so to rebuild the low tech, labor intensive civilian industrial base over say, the next 10 years. Concurrent with this must come the related infrastructures which will span the range from a network for technical education to the modernization of the electric grid. And always bear in mind that it is a fallacy to believe you can have a viable economy of only high tech industries and of services in a country the size of America.

America is a massive and diverse country that has massive and diverse needs. Unlike Dubai or Singapore it cannot continue to import its everyday mundane supplies from abroad and hope to pay for them with innovation and services. This reality has become glaringly obvious these days by the fact that the only innovations America has offered to the world lately are of the toxic financial type mixed once in a while with a new way to brew a cup of coffee, a stylized way to cook French fries or an innovative way to flip a hamburger.

When Partisanship Trumps Ideology

Sometimes you see a scientist or a medical doctor testify in a courtroom in favor of one thing or another but you know deep down they do not believe a word of what they are saying. Most of the time they would be testifying for the defense who pay them to come and say things that run contrary to what they were taught and what they have been practicing until now.

If scientists and medical doctors can do it so can the economists who write pieces for a publication or go in front of the television camera to say things you know are contrary to their ideological beliefs. But they write what they write and say what they say because this is the stand that matches the one taken by the party to which they belong at this time.

Well, this is the case now with Marty Feldstein who is not just a Reagan economist but the one most responsible for founding that school of economics. When you read Feldstein and listen to him these days, you wonder if he really believes that what he preaches is Conservative Reaganite Economics or it is a page out of Soviet Economics, the very thing that Ronald Reagan fought against tooth and nail.

Much of the world, including America, find themselves in the midst of an economic slump these days and Feldstein is advocating not a Reagan style approach to solving America’s problems but a plan for a Soviet style stagnation instead of one for economic growth. Feldstein is wrong this time, and my hope is that he will soon start to advocate a plan that is more consistent with the capitalist system to which he adheres.

So how is growth realized in a market economy? Well, let us begin with the goal of economic growth. The goal is to achieve a standard of living that is higher than the standard we enjoy at the present time. What this means in practice is that as a society we need to do two things: We need to produce more goods and services and we need to consume more of them in the future than we do now.

This says there are two equally important parts to the standard of living, the production part and the consumption part. Under the current definition of what constitutes a high standard of living, it does not matter who or what is responsible for the production, and who or what is responsible for the consumption. Instinctively, however, the capitalist system never bought this definition while the Soviet system did, and this may have been the reason why that system crumbled. And yet, this is the performance that Marty Feldstein wants America to duplicate.

What the Soviet system never understood was the intimate relationship that exists between production and consumption in a healthy economy. It is possible, for example, in a small jurisdiction like Dubai to have a large number of guest workers extracting a natural resource from the ground to qualify the nation as a high production jurisdiction. And it is possible in a small jurisdiction like Singapore to repackage and sell a high volume of goods abroad to qualify it as a high consumption one. But neither of these jurisdictions can enjoy a quality of life that approaches Sweden, for example, where there is a rough balance between what is produced in the country and what is consumed within its borders.

In fact, it would be difficult for a country with a population that is larger than say, 20 million people to go on for a long time being only a high producer of goods and services, or being only a high consumer of such things. To be truly a developed nation you must be both a producer and a consumer at the same time. And this is becoming evident to the Chinese who are beginning to look to their internal market as opposed to relying on export in order to maintain the growth that they have been enjoying for some time now.

Thus, to maintain a high standard of living in a large country that is developed or to achieve a high standard in a country that is developing you must in the end break away from your dependence on the rest of the world and depend instead on the local population to sustain the growth in the goods and services you produce, and the growth in the consumption of what you produce.

America and most of the big Western nations have followed that model and have done well over the decades, even the centuries. By contrast, the Soviet system in Russia and the satellite nations followed a model where consumption was discouraged by the fact that very little consumer goods or services were allowed to be produced in the command economies to which they adhered. In the end, psychology and economics combined with outside forces to participate in the defeat of that system.

While discouraging the production of goods and services for the consumer, those regimes directed their resources toward the production of massive civilian projects, some of which were useful and some were not. The regimes also diverted much of their resources towards the production of military equipment in order to respond to a challenge that was thrown at them by Ronald Reagan of America.

What the leaders of those economies did not realize was that such equipment is better produced by a large industrial base like the one that existed in America more so than it did in their command economies. And this happened because America adhered to a system that catered to the needs of the consumers which caused the country to develop a culture of expansion and one of abundance. By contrast, the Soviet regime developed a culture of retrenchment at home so as to deploy all the available resources against the Western challenge. What resulted, however, was that the Soviets were caught so unprepared, they could not mobilize fast enough to respond to the Reagan challenge when he started his military build up. And those regimes fell one after the other like domino chips.

This triumph belonged to the same America that won the wars in the Pacific and in Europe in the middle of the Twentieth Century precisely because she had a civilian industrial base that was quickly adapted to produce the weapons needed by her military and by her allies, including the Soviet Union. And the American civilian industrial base was there because the consumers were there, and they were none other than the workers themselves who were paid well enough to buy the goods and the services they produced. Thus, you had the production side of the economy and the consumption side of the nation rolled into one, and they formed the American public.

That economy is still there in America today but it is getting shakier by the day. At the pinnacle of it there exists the auto industry and the workers who make up a good part of the consumer base. But what Marty Feldstein is calling for is a quadruple whammy to be delivered to that set-up. In response to the stand taken by the bosses of his Party who for a mysterious reason are dead set against the auto industry, he is advocating the following: (1) kill America’s industrial base, (2) throw the workers out, (3) cut off benefit to the retirees that worked a lifetime to earn them (4) start producing weapons in an industrial base that will increasingly shrink to look like the Soviet industrial base of the cold war.

I doubt that Marty Feldstein believes this is conservative economics. While he may point to the fact that a military build up was started during the Reagan era, he knows that the build up in itself was not good economics but that it was made possible by the fact that America stood on a sound industrial base. And this was the case because America had experienced a peace time expansion following the Second World War, an expansion to which the Soviets did not participate because they went for military expansion absent a civilian industrial base that was strong enough to feed the military.

More and more, it looks like America is becoming the losing Soviet Union of yesterday while China is becoming the triumphant America of yesterday. Neither Marty Feldstein nor the Conservatives of America will forgive themselves when they reach the point of no return. They can still turn around now but they have very little time left to do so.

Defining Cowboy Capitalism

Life is always about competing interests and there are many players in the field. Most of the time, however, the lesser players suspend the pursuit of their interest to join a stronger group in the hope that they will be rewarded with at least "a piece of bone" in the end. The consequence of such re-alignments is that every struggle has boiled down to one between two camps. For example, there is now or has been the notion of Left vs. Right, East vs. West, Freedom vs. Repression and so on where one giant group of players was pitted against another giant group of players.

However, as one group won and the other lost, long held notions disappeared to be replaced by other notions, and so the global landscape has constantly changed in purpose and outlook. But as the old saying goes, the more things change the more they remain the same, and this happens because the dead notions keep coming back at a later date. And they came back throughout the ages under the same name or a different one as if recycled by a mysterious force called necessity.

In fact, what is going on in the United States of America at this time is the shaping of a struggle which is sometimes referred to as a class struggle but is in reality something else even if some of the militants seem to borrow from what used to be the old European class struggles. For a lack of a better expression, I shall call the American version a struggle between the heavy lifters whom I consider to be the pillars of America’s capacity to produce wealth, and the paper pushers whom I view as shameless in-your-face freeloaders.

In any given economy the heavy lifters are those who create real wealth, meaning those who produce tangible goods. These are the farmers, miners and manufacturers - be they blue collar or white collar workers, owners or hired hands. They are also producers of the sort of services that give logistical support to the first group. These would be the transportation, utility and construction people.

There are also heavy lifters in the purely service industries without whom an economy cannot go far. These are the educational, medical and hospitality industries. And there is also what I call the necessary evils such as the wholesale and retail trades as well as the financial industries such as the insurance and banking services.

I call the wholesale and retail trades evil because they can be the fields on which to learn how to make a gain without the pain. And I call the financial industries evil because they are the fields where the industries are often misused resulting in tragic consequences.

It is from this last category that comes the bad apples I call paper pushers. In the United States of America, these people have locked themselves into a deliberate class struggle with the heavy lifters who are, in effect, almost everyone else. This is not a class struggle in the old European sense but a struggle between two classes of people nevertheless.

There is in America, as there is everywhere else, those who lead a style of life commensurate with the wealth they produce, and there is the paper pushers whose taste for the high life comes in the inverse proportion to what they are capable of producing. But only in America does the latter group make a virtue of their excesses.

In America, the heavy lifters want a system of meritocracy that rewards them for what each individual is capable of producing and is willing to work for. The paper pushers, on the other hand, want a hereditary system that supports them because of who they believe their ancestors were. The first group wants to build a world of their imagination and enjoy it; the second group wants a world like they imagine their ancestors enjoyed even if no such world was left for them to inherit.

I would say that the tension between these two groups has existed in America since the founding of the nation and may have been the creative force that produced the nation’s ability to renew itself and was, therefore, the secret of America’s continuous vitality. But every good thing comes to an end when pushed too far as it is evident by the current financial crisis which brought the struggle between the groups to the fore with a clarity that prompted some people to see it as a manifestation of Cowboy Capitalism.

The financial crisis started when the paper pushers pushed the envelop past the breaking point. Just before that, they were making hundreds of millions of dollars not because they produced as much as a paper clip but because they clipped from the gross national product a share of the wealth that went past the grotesque and past what is considered to be an indecent level of executive compensation.

These people, in fact, went as far as to paint a picture of what constituted a financial pornography and did not even stop there. They had the gal to demand that they be admired for the financial instruments they were creating, those they considered to be masterpieces and used as a teaching tool to demonstrate to the developing markets of the World the financial clout that they have gathered with nothing more than the force of their limitless financial prowess.

But the crisis came and exposed them as something else especially when it spread to the real economy, the engine which used to create the wealth that made it possible for them to engage in the orgies of their secret dealings. However, as if they did nothing wrong, these people went to the government and asked to be handed billions of taxpayer dollars so that they may continue to do business as usual because as they saw it, society owed them a standard of living at that high level. And the proof they gave as to why they deserved what they were getting was that they hired each other at those levels of salary, perks and bonuses.

You see, dear friend, this is the work of the same old Society of Mutual Admiration which goes like this: I say you’re terrific and you say I’m terrific. I say you’re worth 400 million and you say I’m worth 400 million. And no one will argue with that because we’re the experts, and the proof of this is that we’re making 400 million a piece which cannot be said about those who give us the money to pay each other 400 million a piece. Case closed. Hand over the money and shut up. Class dismissed…the class that does the heavy lifting, that is.

For a long time, this sort of argument kept the general public under sedation as everyone was made to dream that they too will someday lead the high life. This sort of mentality went unchallenged as long as most of the people were making enough income to live on and had something left over to save for emergencies and for the future. But then the people were awakened by the fact that they, their neighbors or someone they knew were losing their home, life savings, retirement account, health insurance, the means to send their children to college and so on. And they asked: Why is that?

Only at this point was it revealed to them that this is how the system really works. And the description that was given as to how the American system works in reality as opposed to how it is supposed to work clearly demonstrated that the American system had little to do with what Europe experienced since the Continent got rid of its medieval set up.

Contrary to all that was previously advanced, it proved that at the heart of the American system resided not meritocracy or even a preference for one industry over another but a preference for one human characteristic over another. It turned out that in America, the smooth talking but aggressively acting con man was the most cherished of the brands even if such operator came with the word SWINDLER written all over his forehead.

It was explained in plain language that there exists in the system something called bankruptcy whereby an industry such as the auto industry is forced to rid itself of its obligations towards millions heavy lifters in order to stand on its feet and be viable again. "But what about the financial institutions? Why not let them go bankrupt?" asked the people. And the answer was that those institutions cannot be made to fail because if they do, the whole system will fail.

But what about the executive paper pushers who were responsible for the failures? Why should they get compensated as much as before? asked the people. And the answer came: Unlike the obligation to the millions in the auto industry where a contract goes down the tube together with the bankrupt company, in the case of the financial industries a contract is a contract is a contract.

But that’s not all, argued the intellectual arm of the paper pushers. It went on to say that even those who may have committed criminal offences should not be investigated because these people are special people who must be handled with special care. You can easily find a President to preside over a 14 trillion dollar economy in exchange for a million dollar salary but you cannot find a con artist to run a financial institution for less than 400 million a year. Get it once and for all, you idiot.

That was never the reason for the French Revolution or the Bolshevik Revolution that followed or even the American Revolution. This is revolting, pure and simple.

At The Dawn Of The Television Age

Under the title, A New Dawn, Ian McEwan published an article in the Wall Street Journal on November 8, 2008 to which I here respond. My arguments are based essentially on scientific considerations but I must begin with something I witnessed as a child when I lived with my parents and siblings in Ethiopia some sixty years ago.

I knew then what radio was because I could see my parents listen to it all the time. What I did not know was that there were only a few local stations and that my parents were listening to short wave broadcast coming from afar. Also, I knew next to nothing about radio waves but I was not the only one in this boat. A few others were in it too, and there are some stories I could tell in this regard but no story is more interesting than what happened to a high official in the Ethiopian government.

The story I heard repeated over and over again, one that stuck in my memory for all these years, was that of the man who brought with him the newest of the new technologies upon his return from a tour abroad. What he brought was something we baptized in our household the "visual radio" but is now called a television set.

That official asked the chief electrician in the government to come to his mansion and set up the thing for him, having made the mistake of inviting his friends before trying the thing first. Most of the guests who responded to the invitation were from the foreign embassies, people he wanted to surprise and impress with his new acquisition.

When the moment came and the television set was turned on, all that he and the guests could see were a dark screen and the randomly distributed scintillating points we now know to be the echo of the Big Bang. The poor man could not get the channels that he enjoyed watching so much while stationed in America and, I believe, Britain too.

After a moment of embarrassment, a foreign diplomat who knew all about the new invention ended the agony of our hapless official by explaining what was supposed to happen but did not. He said that unlike the signal of short wave radio which is reflected back to earth by the ions in the upper atmosphere and is therefore capable of traveling far, the television signal goes in a straight line and, if not captured by a set in the line of sight, goes out into space and is lost for ever.

Not all signals have the same characteristics, the diplomat went on to say, as some will be reflected by a solid object and others by a field of some kind. Some will be absorbed by one sort of object and some absorbed by another sort. And I, the curious child that I was, became greatly impressed hearing these things repeated by several of my elders.

Those were the days when I began to develop an intense love for short wave radio. By the time the family had moved to Egypt I was old enough to be an avid listener of short wave broadcast from around the world. This state of my affair with radio lasted until 1961 when television came to the country and I switched my affection to the gorgeous new gal in town, not that I ever forgot my first love. In the meantime, I was learning a great deal about the electromagnetic waves that made all of this possible and the spectrum to which they belong.

Here now is the passage from the Ian McEwan article that I want to respond to: "A molecule of CO2 absorbs the longer wave length of light, trapping radiant heat from the Earth". The fact is that the longer the length of a wave, the more apt it is at going around an object without being absorbed or trapped by it. Unfortunately, the way that McEwan states it, that sentence represents a false statement.

But the fault does not rest on the shoulders of this novelist; it rests on the shoulders of the scientists who tarnished the honor of their profession in order to win favor with the organized mob of special interest they used to fight against. Or it may be that the scientists began to aspire winning an Oscar in Motivational Fiction or a Nobel prize in Destructive Quackery or both that the mob promised to organize for them if and when they join the cause.

What those scientists did was to construct a complicated model so as to utilize an insignificant natural phenomenon and make it sound like there is a greenhouse effect where there is none. They took the simple transfer of heat between bodies and gave it the fancy name of Outgoing Longwave Radiation (OLR) to confuse the ordinary layman. And with that, the scientists fabricated a meaningless argument to then conclude that the CO2 molecule first absorbs the heat wave then gives it off to be absorbed by something else. The fact is that such transfers of heat happen all the time but they are not the greenhouse effect.

The simplest analogy I can make to show the difference between the phenomenon called greenhouse effect and the phenomenon that those scientists call Outgoing Longwave Radiation is that of a styrofoam cup filled with water at room temperature. Here, the system is at thermal equilibrium and nothing happens. You now add a spoonful of boiling water to the cup and the heat, which is made of long waves, goes out of the hot water and radiates its way throughout the cooler water. This radiation keeps on going back and forth and in every direction until all the water molecules have the same temperature upon which a new equilibrium is established.

What happened here is the same effect as OLR but is not the greenhouse effect. What resembles the greenhouse effect is what the wall of the cup did. Because the wall is made of an insulating material that does not conduct heat, the phenomenon created here replicates what the glass wall of the greenhouse does, it kept the heat inside the cup. In short, the greenhouse effect is not an interactive phenomenon, it lets the heat through and traps it there. By contrast, the OLR effect happens when there is a constant interaction between the molecules and/or atoms so as to establish a thermal equilibrium in the system.

Knowing this, now examine what those scientists are in effect saying. They are saying that when you use night vision goggles and you see someone in the night as the goggles capture the heat waves emitted by that someone, you are creating a greenhouse effect. They are also saying that when you dip your finger in hot water and feel the heat, it is because you have created a greenhouse effect. This is absurd beyond belief and it is disturbing to know that someone would say it. But there is something even more disturbing concerning the behavior of those scientists. To explain it, however, I must first discuss something else.

When you burn hydrocarbon, you release hydrogen which has a negligible atomic weight, and carbon which has an atomic weight of 12. Each atom of carbon combines with 2 atoms of oxygen taken from the atmosphere, and having an atomic weight of 16. This is a total atomic weight of twice 16 plus 12 which comes to 44. Thus, to dump 44 tons of carbon dioxide (CO2) into the atmosphere, you need to burn 12 tons of hydrocarbon which will remove 32 tons of oxygen from the atmosphere and combine with them.

Now, if you reject the mumbo jumbo about OLR, you realize that when the world burns 6 million tons of oil products as it does every day, all that happens is that 16 million tons of oxygen are removed from the atmosphere and replaced with 22 million tons of CO2. Thus, the amount of extra heat retained by the atmosphere, whose weight is 5 million billion tons, is near zero. And when you realize that the Earth receives meteor showers from outer space and loses atmosphere to space in excess of that, you wonder what the fuss is about.

Thus, if we do what some of those scientists are recommending and stop burning fossil fuels, we shall not make a dent in the warming phenomenon of the Earth. But if we do what others are recommending and sequester the carbon dioxide, we shall remove from the atmosphere and sequester oxygen that is vital to life. Oxygen, you see, is what keeps the brain alive; without it the brain dies. But can we afford to be even more brain dead than we are now?

And this, dear reader, is a glaring example as to why it is dangerous for scientists to stoop this low. When you read McEwan’s article you see that the way he phrased that famous passage, he meant to say that a long wave is absorbed by objects more readily than a short wave. He believes this and so do all the kids who are being "educated" as to the perils of hydrocarbons by, among others, their own science teachers.

And now I ask you: Do you expect these kids, armed as they are with junk science, to compete with the kids in Asia? No, they will not. It is more likely that when they grow up they will end up looking like the Ethiopian diplomat who was confused about a new piece of technology that was familiar to someone else but not to him because his countrymen believed in superstition more than they practiced real science.

This is what I find so disturbing about those scientists. So why are they still on someone’s payroll being paid like scientists? Why are they not out there catching dogs instead?

It Is Necessary To Avoid Confusion

With a new administration in the White House and the enormous problems facing the United States of America, it is necessary for the people in charge to separate the message from the noise so that the efforts made to solve the problems go toward the solution and not the chase of the proverbial wild goose.

Three of the major problems facing America and the world today have been made to intertwine so badly in the everyday discussions that the confusion created by the situation threatens to make all of them worse. The first problem is pollution; the second is the apparent climate change; the third is the scarcity of resources - more specifically the energy resources.

I begin with the last. Right now the world depends a great deal on the dwindling fossil fuels which are oil, natural gas and coal. These are substances made of hydrogen and carbon, the reason why they are called hydrocarbons. There are a number of other energy resources such as wind, solar, biomass, waterfalls and nuclear. However, except for the last two, these sources cannot be relied on to form what is called a base load, thus they can never replace the fossils fuels.

To produce electricity from the wind, we use the windmill which is important in the context of this discussion not because of the amount of energy it will contribute to the economies of the future – this will be minimal - but because of the symbolism that the windmill represents.

The windmill is a testimony to the fact that technology never forgets its past. Like the waterwheel, the windmill is an ancient invention that uses energy other than animal power to feed our needs in the homes, industry and commercial enterprises. By the way, hydropower too is produced by an offshoot of an ancient invention, the aforementioned waterwheel now called the turbine.

What all of this means is that in view of the fact the whole world now wishes to industrialize, we are going to need all the technologies we can invent from scratch and all those we can revive from the past to produce energy. Thus, there is not a realistic way by which we can turn our backs on the more recent of the old inventions, the technologies that are based on fossil fuels. Like it or not, these technologies will remain with us until the last drop of oil, the last puff of natural gas and the last lump of coal have been used up. Then the technologies will be adapted to serve other purposes.

Let me now talk about pollution. Garbage is not something we appreciate and we certainly must clean up our cities, water streams, lakes and oceans. But more important than the visible garbage are the invisible compounds such as the chemicals we dump into the atmosphere and those we dump into the waters we drink and the waters where the fish make their habitats. There are ways to clean up our act and we are more or less doing a good job now by installing scrubbers where they are necessary. And there is no doubt we shall continue to make progress in this field and do a better job at cleaning up after ourselves.

But the big debate we are having and from where the confusion is emanating relates to the possible change in the climate of the planet. We ask: What is this beast and what can we do about it? Well, if the planet is warming up for good and not just experiencing one of its many cycles, either it is warming because of natural causes we cannot control or it is warming because of industrial activities we can control.

If the warming is natural, we may have no choice but to adapt to it because if we do not already know what it is, we cannot adapt nature to suit our needs. If the warming is due to our activities, we must find out how and why this is and then do something about it. So far, the finger has been pointing at the rise of carbon dioxide in the atmosphere, and steps have been taken to curb the emission of this gas. But are we wasting valuable time and costly efforts chasing a wild goose?

I published an article in September of 2007 that answers this question and it can be found on this website under the title Global Warming In Perspective. So far no one has successfully rebutted the points I make. However, one rebuttal was made suggesting that carbon dioxide may be acting like the glass of a greenhouse, letting the energy pass in the direction from the sun to the earth but blocks it when going in the opposite direction.

This is a weak argument that is refuted in the article itself, therefore there is no need for me to refute it again. For those who will not read the entire article, here are the 5 paragraphs most pertinent to this discussion.

[In its most pristine state, the atmosphere of the Earth is made of nitrogen at about 78%, oxygen at 21% and argon at nearly 1%. Because plants exchange oxygen and carbon dioxide back and forth with the atmosphere and because the oceans have the ability to absorb and to release gases including carbon dioxide, we find traces of the latter in the atmosphere at 0.033% or thereabout depending on where and when the reading is taken. Thus, the atmosphere is made of nitrogen, oxygen and argon at about 99.967% and a whiff of carbon dioxide. This is a ratio of 1 in 3,000.]

[All of the gases are held near the surface of the Earth by the force of gravity and there are no transparent walls to separate them from the void of outer space. As the sun shines on the half of planet Earth that faces it, light delivers a fraction of its energy to the gases and water vapor in the atmosphere. Light then goes on to deliver the rest of the energy to everything below the atmosphere like the oceans, the polar ice caps, the deserts, the plants and so on. Given that everyone of these has an index of reflectivity, each absorbs some energy and reflects the rest back out in the form of visible light.]

[The question is this: what happens to the energy that is absorbed by the oceans, the plants, the soil and so on? Well, photosynthesis and the chemical processes that use light make life possible. Also, the physical processes that use other forms of energy make the weather such as rain, lightening, wind, waves and other phenomena possible.]

[There is also this: the second law of thermodynamics is called Entropy, and it says that all those processes will eventually turn into heat which is infrared radiation. Some of this radiation is reflected back into space and the rest is absorbed by the gases and the water vapor that linger within a kilometer or two above the ground. And it is this energy that determines the average temperature of the planet.]

[This energy represents a small fraction of what is delivered to Earth in the first place. And given that water vapor absorbs and delivers more energy than gases, the latter do little to warm the planet. And since carbon dioxide is only 1 part in 3,000 of the atmospheric gases, carbon dioxide does not contribute to the warming of the planet one appreciable iota. The real culprit could be the water vapor…]

Using this as a background, let me now put a new argument in perspective. The weight of the atmosphere over the entire planet is about 5 quadrillion tons; a quadrillion is a million times a billion. The amount of petroleum used every day in the whole world is about 12 million tons but only half of that is used as fuels. The rest goes into the production of such things as plastics, synthetic fibers, cosmetics, car tires and the rest.

Taking into account the atomic weights of carbon and oxygen, the fact that one atom of carbon combines with two of oxygen to make a molecule of carbon dioxide, and working out the mathematics, you find that the 6 million tons of petroleum fuels used each day make carbon dioxide in the ratio of 1 part in 333 million when compared to the total weight of the atmosphere. And when you compare the amount of carbon dioxide that our activities produce with the amount of carbon dioxide already in the atmosphere and put there by nature, you find the ratio to be about 1 part in 111,000.

In fact, considering that all the known reserves of conventional oil on the planet amount to about 200 billion tons, you will have to burn in a single day 14 times as much as that to double the amount of carbon dioxide in the atmosphere. And you know what? This will not even change the temperature of the planet by one degree. What it will do is increase the amount of plant life which in turn will increase the amount of animal life. Such thing will happen because life as we know it is made of carbon and hydrogen. In fact, the best foods you can eat are the carbohydrates because they are the hydrocarbons that have not yet fossilized. Thus, to burn oil is to release carbon and hydrogen and to recycle life. It is as hopeful and as simple as that.

Let me make one more point. An experiment called The Biosphere was conducted a few years ago to see how well a self contained community could live in outer space in an atmosphere that replicates the earth in miniature. If today you build one such contraption that is half a sphere in shape with a diameter of 500 meters, you can do an interesting experiment.

If you try to pump into the biosphere carbon dioxide at the same rate that the planet is being filled with the gas due to human activities, you will have to bring not a machine but a sleepy newborn baby to exhale his or her carbon dioxide into the biosphere. This is how much "damage" all of our industrial plants, cars, planes and what have you do to the earth. It is no worse than that.

Yes, we do need to clean up the environment because it is healthier to live in one, and we do need new sources of energy because the planet is running out of them. But let us not do things for the wrong reasons even if they seem to be the right thing in the short run because you can be certain they will prove to be useless and costly in the long run.