- #0 (no title)
- Jane Ginn’s Resume
- #0 (no title)
- #0 (no title)
There is no better way to appreciate the beauty and grandeur of our planet than from the ground. Recently I did just that on a road trip across Utah and the Colorado Rockies.
Embedded in the spectacular vistas along my route were the scars of past mining operations. Upon reflection it occurred to me that the reason for those mining enterprises was rooted in the one factor that dwarfs all others relating to environmental stress – human consumption. The correlation is iron clad; increasing consumption increases the potential for damage to our environment.
Water resources are stressed because the state subsidizes farmers to grow water (grapes) in the California desert. The Everglades are in danger because the State protects the sugar interests of the Florida Fanjuls. I could go on for the rest of my life listing all the ways state action endangers the environment in the name of increasing our consumption and “protecting” business interests.
The typical response by the environmental activist community (green bugs) is to demand state action restraining consumption. This not only butts heads with the hard wired human desire for the good life, but also runs counter to government policies (usually supported by the same green bugs) that impel its constituents to consume at a constantly accelerating pace.
While considering these relationships I realized that if the green bugs’ objective were really to preserve and protect the environment then they would embrace a policy that restrains consumption and therefore become gold bugs. More broadly they would also become radical free marketeers like me.
The economic arguments against a gold based monetary system have long been thoroughly demolished. It was so thorough that even the statist fiat currency proponents’ assertions regarding the historical record were shown to be specious at best. What never occurred to the defenders of the gold standard as the lynchpin of a sound monetary and economic system is that gold is green.
The foundation for the conclusion that gold is green is that a gold standard eliminates any possibility of generalized consumer price inflation which literally drags consumers to prolific and profligate consumption – the key element threatening the environment. That the gold standard is necessary to the health of the environment extends as well to alleviating even the unsubstantiated claims of human influences on recent global warming trends.
Killing the gold standard was an essential requirement of the U.S.’s Keynesian economic policy of spend, borrow and print money to stimulate demand. In other words, create as much monetary inflation as possible in order to maintain high levels of aggregate demand (consumer consumption) allegedly chronically deficient in a free market economy.
Byproducts of inflation are debt, wild speculation and increased volatility – booms and busts. Most important from the environmental perspective is that monetary inflation results in persistent generalized increases in consumer prices. This creates a mindset of buy now before prices go up further – exactly what policy makers want. Remember Bush II’s exortation to go out and shop. The buy now mentality also promotes the use of debt to facilitate immediate gratification significantly increasing current consumption, again placing even more strain on the environment.
The monetary gold standard tends to restrain consumption because there is no consumer price inflation and therefore no buy now before prices go up mentality. It gets even better because under a true gold standard consumer prices will drop as productivity increases (more output with less input). Consumers are then faced with the choice of buying now or at a lower price in a short while (e g consumer electronics today and textiles early in the industrial revolution). Clearly this has exactly the opposite effect of profligate, frivolous consumer spending promoted by current statist policies around the world. I have often passed on buying new computers and big flat screen TV’s because I knew they would be much cheaper in only a few months time.
Where consumers face stable or lower prices in the future there is less impetus to spend right away. There is less frivolous spending because each purchase comes with extra consideration of whether it is really necessary. The buy now before prices rise mentality is flipped upside down.
Statist policies also subsidize debt and discourage savings by allowing income tax deductions for interest payments on mortgages and home equity lines of credit, while at the same time taxing income from savings and investment. This too promotes immediate gratification while making it more expensive to save and less expensive to purchase more stuff now.
Policies that subsidize consumption and penalize saving and investment also have a severely negative long term environmental impact. Saving and investment are the economic source of future gains in productivity – crating more value out of fewer resources (e g better capital equipment and more research and development including basic science).
Increasing prosperity does not mean buying more stuff. It requires increased productivity – something greatly hindered in by today’s policies promoted by idiot economic experts who say the consumer is 70% of the economy as if consumers invent better ways of doing anything.
The gold standard also forces politicians to be more disciplined in their spending and borrowing because deficits cannot be repaid using the monetary printing press as they are now at the federal reserve. Keep in mind that government spending is just another way of saying state consumption of the most frivolous and destructive kind.
Emblematic of the consequences of statist action to promote consumption is the single family home. In 1970 the average new home had 1500 square feet. This rose to 2050 square feet in 1994 and 2500 square feet at the peak in 2008. Since the average family size declined during that period, square footage per person grew even faster from 484 in 1970 to 962 in 2008.
One factor in the huge increase in the size of new homes was the mistaken belief generated by inflationist policies that home prices were a lock to increase. The other, in my opinion, was that we needed the extra space to hold all our new stuff.
Before dropping out of the 24/7, type A, workaholic lifestyle nine years ago, my wife and I owned a 4000 sq. ft. home, but I barely used 30% of the space. Today, I am more than happy with 1200 sq. ft. and much less stuff. My recollection is that in my prior incarnation my stuff owned me more than I owned my stuff. In short, I was caught up is the same stuff syndrome as everyone else.
This digression relates to the above analysis because it offers anecdotal evidence that the difference in consumption of stuff caused by fiat currency based government policies is huge. Think about the difference such reduced frivolous consumption would have had on our environment.
The environmentally beneficial effects of a gold standard in the United States of only three hundred million people are dwarfed by the effects a worldwide gold standard would have on reducing future environmentally damaging consumption patterns of the three billion Chinese, Indians and southeast Asians. Right now these people are huge net savers, but western policy advisors are pushing the same destructive consumer behavior on them that they pushed on the west over the past 60 years.
As an objectivist, I am obviously not opposed to individuals seeking their own path to happiness even if it involved amassing lots of stuff. I am opposed to statist policies, especially fiat currency, that facilitate stupid spending – by governments as well as individuals.
One of the greatest philosophers said that there are no contradictions and that if you think you have found one you need to check your premises because one of them is wrong. To that I add to check you data and your logic because somewhere there is an error. This is the answer to the conundrum posed by the analytic-synthetic dichotomy that stumped philosophers for thousands of years (e g it works in theory but not in practice). In this case it means that good economic policy is also good environmental policy.
Gold is green.