Bureaucratic Follies Involving the Number 2

By: Bob Hoye | Fri, Oct 30, 2015
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No, this is not a segment from Sesame Street with the "Count" going on about the number "2". It is about today's bureaucrats fixated on the number. Not one and not three, but the number in between. Arbitrarily chosen and arbitrarily used by those with the audacity to think they can "manage" the economy and the climate.


Central Banking

In central banking circles, the collective worry is that if the rate of CPI inflation falls or stays below 2 percent it will be a bad thing. Throughout financial history a flat-lining rate of inflation has had the least distortion upon the information conveyed to the markets by changes in supply and demand.

Chronic and deliberate currency depreciation distorts financial markets prompting massive mal-investment. It is also a means of transferring wealth from producers to the state.

The official dread of the US CPI falling below 2 percent is rather difficult to support. The 1980 method puts inflation at 7 percent and the 1990 method puts it at 4 percent.

It is worth noting that the original argument in establishing the Fed was that it could eliminate the financial setbacks that precede business recessions. This was an imperfection of financial markets that needed remedy.

The notion that an enlightened agency can "manage" a national economy has yet to be proved. Indeed, quite the opposite prevails. There has been 19 recessions since 1914, a great bubble that concluded with a Great Recession and Great Depression.

The great bubble of 2007 was followed by another "Great Recession" and it is too early to make the call on another Great Depression.

Publicly-traded financial markets developed in the 1670s and modern central banking started with incorporation of the Bank of England in 1694. The usual 3 to 4-year business cycle is evident back to the 1500s. There are examples of severe financial volatility and massive bankruptcies in Italy in the 1340s and reports of similar disasters in mortgage markets in Ancient Rome.

Market history is the history of significant changes in commodity prices and interest rates. It is also the history of bureaucracies trying to ameliorate such changes or even to prevent them.

A book published in 1937 says it all: The New Deal In Old Rome:

There seems to be two basic blunders behind intrusive economics. One is the assumption of a national economy that can be "managed". There is no such thing as a national economy. The other is the notion that a central bank expansion of credit will force an expansion of business. This is confusing correlation with causation, otherwise known as a primitive syllogism.


Climate Control

The term Climate Control does not refer to the dial on the wall by which one sets the comfort level of the room. But ambitious bureaucrats are out to set the comfort level of the planet. Governments have decided that the Earth's climate is imperfect and needs fixing. Of course, this can only be done through massive increases in regulations and taxation.

The touted link between increasing CO2 and temps is another huge confusion about correlation and causation.

Politicians and bureaucrats that have identified the threats and boast of remedies may not be free of bias.

Although involving a different set of experts, the focus is also on the number "2". As in if the Earth's temperature rises more than 2 degrees C above the pre-industrial level it would be a very bad thing.

The determination is also arbitrary, but gets frequent coverage. This will increase going into the Paris Climate Change Conference held in late November-early December.

"Limiting Global Warming To 2 Degrees 'Inadequate' Scientists Say"

- Reuters, May 1, 2015.

"G7 to Limit Global Warming to Below 2 Degrees"

- Politico, June 8, 2015.

In the early 1960s, geophysics lectures about ice ages could not fully explain how they occurred. Some thought they were random and some backed the Milankovitch theory. The latter was based upon orbital mechanics of the solar system. At the time, there was not enough evidence to decide either way.

The build of data since has confirmed that major changes in climate have been periodic. More recent research has linked actual climate change to changes in cloud cover, which has been part of the mechanics of the solar system. It works and the theory does not include any influence from carbon dioxide.

The concept of Anthropogenic Global Warming, or as it is now called Climate Change, has been widely promoted over the past 30 years. It has not been working for the past 18 plus years. If it did not enhance the power of the state it would have remained as a no longer accepted driver of climate change.

However, power is corrupting. But the "models" have not been working. So the state and its paid-for researchers have been reduced to altering the history of global temperature.

The theory about man-forced climate change was unable to explain the Medieval Warm Period that ended in the early 1300s. It was also unable to explain the Little Ice Age that reached its worse in the late 1600s.

Michael Mann confected the "Hockey Stick" graph, which purpose was to eliminate theoretical failure. So he erased the two climate extremes. Some have said that putting baseball scores into Mann's model would result in a Hockey Stick graph.

More recently, actual temperature records from some twenty years ago have been marked lower. This as well as cranking in some rough estimates for ocean temps and the 18 plus years of flat-lining is turned into a rising trend.

What's more - it results in the official boast about the highest temperature in recorded history. By one-one hundredth of a degree!

Contrary to this is that the Antarctic Ice Cover has been clocking record levels until March of this year. The extent was three standard deviations above the mean. For the rest of the year, the extent has been at two standard deviations above the mean.

This season's ice free period for the Arctic was the shortest on record and the current extent is the highest number in five years.

Satellite and ice coverage numbers have not been corrupted and do not confirm the alarming numbers used by the global warming promotion.


Wrap

The early 1600s saw the culmination of a long-running experiment in authoritarian government. One of the most powerful bureaucracies in history was centred in the Vatican and it backed the concept whereby the solar system rotated around the Earth. As data on planetary orbits mounted Vatican "models" became more and more complicated and absurd. At the same time more practical minds confirmed the heliocentric model. Kepler's discovery of elliptical orbits provided a predictable model.

The Catholic Church officially abandoned the Earth-centric model in 1822. It accepted Anthropogenic Global Warming in 2015.

The early 1800s was another period of political ferment and Goethe observed:

"Most men only care for science so far as they get a living by it, and they worship even error when it affords them a subsistence."

Another long experiment in authoritarian government has been riding unfounded bandwagons. One is the concept that a committee with supernatural powers can "manage" the economy. The other is that something similar can "manage" the climate.

Global financial markets have again become unstable and another contraction is possible. Veteran traders have always doubted the abilities of policymakers. In 1929 the boast that nothing could go wrong was because of the "new and scientific" Federal Reserve System. In 2007 it was that here was a "dream team" at the Fed.

On the next contraction the public could look at the amount of taxpayer money squandered through reckless central banking. Widespread condemnation is possible.

The audacity of economic policymakers has been impressive - that governments can manage the climate is audacity without precedent.

One of the keystones of real science is predictability. In the 1990s solar physicists, Penn and Livingston, determined that the sun would enter another solar minimum. This would be associated with an end to the trend of rising temps that has been on since the Little Ice Age. The change fits with the ~200-year cycle in solar activity, which is another form of prediction.

Of course, the El Niño will elevate global temps but such increases are usually offset by subsequent La Niña.

In the meantime, the "2" should be placed in perspective. The promotion rests upon spurious notions about positive feedback. Mankind's production of CO2 will force a dramatic warming and other than too hot and violent weather, the problem will be rising sea levels. Flooding coastlines will afflict millions of people.

The issue is that the promoters live in political time and don't have a grasp of geological time. For example, the worry that rising sea levels will wipe out coral reefs. Corals have existed for millions of years and have endured many ice ages and their warming inter-glacials. With the current interglacial period, sea levels have risen by more than a 100 meters and the following chart shows that the biggest part of the rise was much more rapid than over the past 5,000 years. In a serious amount of geological time with soaring sea levels, corals survived.

Europeans survived as rising sea levels created the English Channel. Mankind arrived on the West Coast of North America some 10,000 years ago. In the face of a 200-foot rise in sea levels and without today's nanny state they were able to keep their settlements above the high-tide line.

In political time, the last big concern about climate was cooling. It died in the 1980s and has been replaced with warming which is much more compelling. But it is another political fad close to failure. The amount of money being consumed is out of control. Warming has been used to bypass constitutional limitations and to enable another experiment in unlimited government. The basic concept resting solely upon carbon dioxide has always been absurd. But despite the best funded promotion in history, the public's concerns rank last on a list of 20 serious issues.

The great promotions that both the economy and the climate can be managed by government could come under widespread public scrutiny. If it wasn't promoted with complete seriousness it could be taken as black comedy. Bureaucrats and their "2s" have contrived fantasy objectives which is bad enough, but they have been distorting their own data. There are three different versions of inflation. This week it was announced that the House Committee on Science will investigate NOAA's temperature adjustments.

The following is a draft of a presentation being prepared by Tom Wysmuller. It provides perspective on CO2 and sea levels.

The Inconvenient C02/Sea Level Non-Linkage Page 1
The Inconvenient C02/Sea Level Non-Linkage Page 2
The Inconvenient C02/Sea Level Non-Linkage Page 3
The Inconvenient C02/Sea Level Non-Linkage Page 4

 


 

Bob Hoye

Author: Bob Hoye

Bob Hoye
Institutional Advisors

Bob Hoye

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