May 20, 2004
HE'S PREDICTING HYPER-INFLATION TOO:
We're Doomed Again: Paul Ehrlich has never been right. Why does anyone still listen to him? (RONALD BAILEY, May 20, 2004, Wall Street Journal)
Environmentalist Paul Ehrlich has proved himself to be a stupendously bad prophet. In 1968 he declared: "The battle to feed all of humanity is over. In the 1970s, the world will undergo famines--hundreds of millions of people are going to starve to death." They didn't. Indeed, a "green revolution" nearly tripled the world's food supply. In 1975, he predicted that, by the mid-1980s, "mankind will enter a genuine age of scarcity," in which "accessible supplies of many key minerals will be facing depletion." Far from it. Between 1975 and 2000 the World Bank's commodity price index for minerals and metals fell by nearly 50%. In other words, we abound in "key minerals." Naturally, Mr. Ehrlich has won a MacArthur Foundation genius award--and a Heinz Award for the environment. (Yes, that Heinz: Teresa Heinz Kerry is chairman of the award's sponsoring philanthropy.)So why pay him any notice? Because he is a reverse Cassandra. In "The Illiad," the prophetess Cassandra makes true predictions and no one believes her; Mr. Ehrlich makes false predictions and they are widely believed. The gloomier he is and the faultier he proves to be as a prophet, the more honored he becomes, even in his own country.
Any thinking person will thus want to know, accolades aside, what actual effect "One With Nineveh" will have on the intellectual environment. The title is taken from "Recessional," the poem in which Rudyard Kipling warned Victorian England that it, too, could fall, like the capital of the ancient kingdom of Assyria. Mr. Ehrlich--writing with his wife, Anne--asserts that "humanity's prospective collision with the natural world" means that "what is at risk now is global civilization."
"One With Nineveh" begins by recycling the now familiar catechism of environmentalist doom, but most of it is devoted to the Ehrlichs' hugely ambitious plans for reorganizing the world's economy and systems of government to ward off apocalypse. Homer used the word hubris to refer to this aspect of human nature.
C'mon, if being catastrophically wrong could get you read out of the intellectual elite there'd be none.
Then again, their point isn't to be right, but to get the rest of us to transfer them the power they think they deserve. As Eric Hoffer puts it, in Working and Thinking on the Waterfront:
[Intellectuals] are people who feel themselves members of the educated minority, with a God-given right to direct and shape events. An intellectual need not be well educated or particularly intelligent. What counts is the feeling of being a member of an educated elite.An intellectual wants to be listened to. He wants to instruct and to be taken seriously. It is more important to him than to be free...
Posted by Orrin Judd at May 20, 2004 6:03 PM
"There are ideas so thoroughly stupid that only an Intellectual could possibly believe them."
-- George Orwell
Scarcity in the 20th and 21st centuries, (and, I would argue, forevermore), is not caused by any fault or defect of "nature", but rather of humans, and their inability to work well together.
Posted by: Michael Herdegen at May 21, 2004 2:33 PMOJ, it is interesting that you brimg up the topic of intellectuals along with economic prediction. I've been reading the book "When Genius Failed, te Rise and Fall of Long-Term Capital Management" by Roger Lowenstein. LTCM was the mega-leveraged hedge fund that went belly-up in 1998 and needed a bailout by the Fed and several Wall Street investment banks. LTCM was run by an elite team of Wall Street bond arbitrageurs and MIT/Ivy League Nobel Laureates and economic theoreticians. Here are some quotes from the book:
"Kapor, a former disc jockey and teacher of transcendental meditatin, thought he had discovered the next wave. He hatched plans for a second venture and invited Rosenfeld (a future partner at LTCM)to join him. But Kapor had also caught the finance bug. He was so intrigued by his friend's account of how stocks mimicked molecules that he enrolled at MIT. But after Kapor took Merton's (another future partner at LTCM) finance course, he decided that quantitative finance was less a science than a faith - a doctrine for ideologues "blinded by the power of the model." "
LTCM was able to obtain huge, unprecedented loans from Wall Street and money center banks, often without disclosing the exact nature of its trades, on the reputation of its all-star academic team of experts. The lure of the intellectual overcame common sense, and LTCM turned into an object lesson on the folly of intellectual arrogance.
So what does this have to do with hyperinflation? Because much of our current financial mess is due to misplaced trust that the general public, and even the professionals in the financial world, have for the experts and intellectuals, like Greenspan, who are saying "it is different this time, don't worry, be happy". Wall Street has not learned the lessons of LTCM, highly leveraged speculation in derivatives is more rampant now than in 1998, fed by a wide-open spigot of cheap money.
It is a distrust of intellectuals and experts that drives my skepticism on the economy OJ, not the reverse. It goes against common sense to say that "debt doesn't matter". However, you have put your trust in the experts, so you needn't be troubled with common sense anymore.
Posted by: Robert Duquette at May 23, 2004 5:55 PM