CO2 Emisions &
New Monetary System

Big Government leads to
Serfdom an
d Poverty

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   Update 24-10-2009

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The best Social Program is a Job ( R. Reagan )

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The dangerous Return of Utopian Socialism.
Not "unbridled Capitalism" but the ill conceived Monetary System caused the crisis

We do not need to replace the Capitalist System with a Swedish style social model as UN economist Jeffrey Sachs argues. We only need a just monetary system. Such  system can only be equitable and contribute to an efficient allocation of resources when money growth is zero or at the most limited to the growth of the real economy. A return to the gold standard may be the best guarantee thereto

Jeffrey Sachs' bombastic climate alarmism in the run up to the Copenhagen Climate Conference next month is an ultimate attempt to convince conference goers to step into the global emissions bureaucracy. Politics turned CO2 Emission rights into a totally fictitious but legally indispensable commodity for most production processes. Politicians will arbitrarily decide both its degree of scarcity and the regional allocation. This political interference does not only boost production costs, but also disconnect costs from market reality, causing massive distortions in the global trade. The UN emissions scheme is nothing less than disguised protectionism causing developing nations more damage than good.  Insider knowledge is  likely to turn the Emissions Trading System into one big swindle...

jeffrey sachsJeffrey Sachs is senior economist at the UN and author of the bestseller "Common Wealth" and the controversial Time essay "The Case for Bigger Government". In a recent interview for  the Belgian Journal ‘De Tijd” Jeffrey Sachs blames “unbridled American market capitalism” for the financial crisis and pleads in favor of the Swedish social model as an alternative. His ideological argument is revealing for the dominant utopian-socialist mind at the top of the UN.

The Swedish social model   which Sachs promotes so enthousiastically, has not the only the largest Size of Government of Western World, but also the weakest economic performance of the OECD. In 1970, Sweden still was the fourth wealthiest nation in the world. Thirty years later, Sweden had fallen to rank 17 with catastrophic social consequences. In the meantime the U.S. consistently managed to remain the second or third for more than half a century. So there is not much socio-economic wisdom to be learned from the Swedish Social Model.  

EU countries growth scandinavia ireland

Sachs also argues that "unbridled capitalism" is the cause of the current crisis. The reality is that during the last twenty years central planning progressively intruded Western economies who now bear the burden of governments spending 40% to 55% of GDP. Entrepreneurs face ever more crippling restrictions, licensing schemes, quotas and price and quality controls. Businessmen endure tens of thousands of pages of new rules and regulations each year, all written in a lawyers slangy that totally undermines the legal certainty of the free market and which transformed business into a gamble on the next political caprice and on judicial interpretations of the legal jargon. Size of government, computerized control and dirigisme has now reached a level plan economists of the Soviet Union could only dream of. Not the capitalistic system failed, but excessive dirigisme is to blame for the crisis.

Monetary Policy
Sachs also fails to mention the role of monetary policy in the financial crisis. Still it was interest manipulation and "money printing" that undermined our purchasing power, and heavily forged our means of exchange and saving, with massive distortions as a result.

The reason why interest rate manipulation causes so much distortion is that the interest rates are the key factor in all spending and investment decisions. Not only in the choice between saving and consumption, but also in the investment calculus between capital intensive and labor-intensive production processes. Years of low interest rates lead to overinvestment in futuristic automation and nonsensical expulsion of low-skilled labor from production processes. The colossal waste of their unemployed capacities tumbles overall productivity resulting in lasting stagflation and heavily suboptimal living standards.

It was way too easy access to cheap credit that provided the incentives for the banks' under-capitalisation and their extreme leverage ratios.   Easy money provided big business with an excessive competitive advantage over labor-intensive SMEs. System threatening concentration and monopolies are the result. Industrial overproduction and chronic shortages of service providers are just a couple of the actual symptoms.  Massive inefficiencies are the result.

New Monetary system
Technological and commercial progress result in average productivity gains of 2 to 3% each year. Prices should therefore fall by 2 to 3% and not rise as we now witness for as long as we can remember. The positive inflation targets adopted by Central Banks worldwide seize the benefits of progress in favor of the bankers, and systematically confiscate 4 to 6% of Joe Sixpack’s and Sally Housewife’s added value.

fold dollar billsThis inflation leads to severe distortions and is fundamentally unjust. The collective achievement of progress belongs to the whole of society, and in the first place to those who most contribute to it. Worse still is that inflation devalues worker’s savings so much that the real purchasing power is often only one third when they reach retirement.

We do not need a Swedish social model as Jeffrey Sachs argues, but a just monetary system. Such  system can only be equitable and achieve efficient allocation of resources when monetary growth is zero or at the most limited to the growth of the real economy. A return to the gold standard may be the best guarantee thereto.

Kyoto and Emission rights

Jeffrey Sachs also belongs to the side of the "climate fixers" who take the controversy over the global warming trend for a "global consensus". They continue to claim that human action caused the trend and that humans can even reverse it.  Sachs professes that Southern Europe will soon dry out resulting in massive flows of refugees to the north. This  bombastic climate alarmism in the run up to the Copenhagen Climate Conference next month must be understood as an ultimate attempt to convince conference goers to step into the global emissions

Politics turned CO2 Emission rights into a totally fictitious but legally indispensable commodity for most production processes. Politicians can arbitrarily decide both its degree of scarcity and the regional allocation. The political interference does not only boost production costs, but also disconnect costs from market reality and therefore cause massive distortions in the international trade. The UN emissions scheme is nothing less than disguised protectionism, which does developing nations more damage than good.

The Soviet debacle learned to what systemic waste the falsification of competition and the elimination of market forces lead. High subsidies for extremely low productive windmills and solar panels in the Western World for example are causing awfully suboptimal use of scarce resources worldwide. Under free market conditions much more productive use would be found in developing countries.  The global ETS scheme is not only fraud sensitive. Scarcity and allocation being the result of political decisions, insider knowledge is likely to turn the ETS scheme into one big swindle with  grave counter-productive effects for global wealth.

Market oriented Alternative
Before attacking the hypothetical problem of global warming, let us first solve the real problems that threaten humanity. One single water pump at an equivalent cost of a couple of solar panels can indeed spare hundreds of Sahel women the daily journey to the spring and spare many infections and lives.  At the fraction of the cost of a windmill, a small investment in mosquito nets can save thausends of lives due to malaria.

Fundamentally, Kyoto emission rights are nothing less than a World Tax on existential human needs and are therefore highly incompatible with the human right to development. The scheme will cost a small country like Belgium 3 to 5 billion Euro annually in the first phase, or the equivalent waste of a "Long Wapper" each year. And such type of taxes tend to increase over time. 

If indeed reduction of human CO2 emissions ever proved to be effective in the “climate management”, national governments can just as well raise existing taxes on fossil fuels without the extravagance of the distorting UN emissions bureaucracy. As consumers will only substantially save energy when energy becomes expensive, it is the only effective and market-oriented way to reduce emissions without the distorting political interference. The administrative cost of such an increase is zero whereas a shift of the tax burden from income to consumption restores the incentives to productive labor and boost the economy rather than destroying it as would be the case with the UN emissions scheme. 

The emission rights scheme and the World Climate Organization which Sachs calls for are dangerous steps towards a "New World Order" that bring closer the specter of World taxes, and wold Government under UN tyranny.  

world-governmentJeffrey Sachs calls it frightening that the fate of the world depends on what (democratically elected national) senators think about global warming.

Even more frightening is to entrust
our living standard and our way of life to the utopian socialist ideals of a few UN bureaucrats  who escape all democratic control. Even Karl Marx considered the bourgeois idealism of utopian socialists the biggest threat of all to mankind.

Martin De Vlieghere, philosopher

Paul Vreymans, businessman

You can participate in this debate at The Brussels Journal

Czech EU President Vaclav Klaus
"Global Warming" is being used as a Vehicle to Suppress Human Freedom

Prof. Bjorn Lomborg before the US Congress Committee on Energy and Commerce:
"Very costly with very little effect"

Climate " management "
Extremely low Cost / Benefit ratio

Let's think rationally and economically
 in choosing the right priorities

35   inconcenient  Thruths


35   inconcenient  Thruths


ipodGlobal Warming Podcasts   

How Copenhagen should handle Global Warming and other World Problems (Lomborg)
Alan Jones interviews Lord Monckton about Climate Change
CZ president Vaclav Klaus warns for the hidden agenda's behind climate alarmism
Dr. David Evans - Recent climate change sceptic from the Greenhouse Office
A damning critique of the 'evidence' of man-made global warming (Ian Plimer)
Christopher Monckton on the Global Warming Scam (from min 19:35 onwards)
Christopher Monckton on the Global Warming Scam (min 1-18)
Some Complete barking madness from John Holdren, Obama's science advisor
Climate Change Fables : It is all about Taxes
Climate Change Fables : Polar Bears and Arctic Sea Ice
Climate Change Fables : Hurricanes and Sea Level Change
Climate Change Fables : Glaciers, all 160,000 of them Worldwide
Climate Change Fables : Snow - Is it Increasing or decreasing?
Climate Change Fables : Wildfires and Rain have no Connection to CO2 in the Atmosphere
Climate Change Fables : One Volcan Eruption Releases more CO2 Gas than all of Mankind in 6000 Years

Streaming Audio: Turn on speakers and Click the ► to listen  |   Right Click to Download

The Road to Serfdom. This masterpiece of Nobel Prize laureate Friedrich Hayek is an eye-opener, strongly advocating the free market principles. In this all-time classic Hayek persuasively warns against the authoritarian utopias of central planning and the welfare state. Fascism, communism and socialism share these utopias. For the implementation of their plans these authoritarian ideologies require government power over the individual, inevitably leading to a totalitarian state. Every step away from the free market toward planning reduces people's freedom and is a step toward tyranny. Planning also cannot assess consumer preferences with sufficient accuracy to efficiently co-ordinate production. However in a free market, "Price" is the all-inclusive source of information, guiding entrepreneurs to produce whatever is wanted and directing workers wherever they are most needed. Free markets also provide the entrepreneurial climate for a thriving economy and for releasing the creative energy of its citizens. Free individuals in their native strive to develop their talents and to improve their fate produce spontaneous progress. All public interference in the economic process disturbs the market equilibrium, distorts the optimal allocation of resources and consequently reduces the level of wealth. Where planning replaces free markets people do not only loose their freedom and individuality. Resulting slow growth also increases welfare demands causing dependence similar to slavery. In the end people's self-reliance and self-respect is ruined, and citizens are degraded to a means to serve the ends of the collective mass. road-to-serfdom
  Free condensed pdf
   Dutch Abstract
Paperback Version
Readers' Digest

More Books of
Friedrich Hayek here
The Tragedy of the commons  by  Garrett Hardin   Free access and unrestricted demand for a finite resource ultimately dooms the resource through over-exploitation. This occurs because the benefits of exploitation accrue to individuals, each of which is motivated to maximise his or her own use of the resource, while the costs of exploitation are distributed between all those to whom the resource is available (which may be a wider class of individuals than those who are exploiting it). The theory itself is as old as Aristotle who said: "That which is common to the greatest number has the least care bestowed upon it.      more here

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