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Thyroid Cancers Surge Among Fukushima Youths | Zero Hedge

Thyroid Cancers Surge Among Fukushima Youths | Zero Hedge.

It seems US sailors aren’t the only ones who three short years after the Fukushima disaster are being stricken by cancers and other radiation-induced diseases. For once, the media blackout surrounding the Japanese nuclear power plant tragedy appears to have crumbled, and at least a portion of the truth has been revealed. Hong Kong’s SCMP reports that fifty-nine young people in Fukushima prefecture have been diagnosed with or are suspected of having thyroid cancer. Notably, all of newly diagnosed were younger than 18 at the time of the nuclear meltdown in the area in March 2011. They were identified in tests by the prefectural government, which covered 239,000 people by the end of September.

And while it is not rocket surgery to put two and two together, now that the data is in the public domain, here come the experts to explain it away.

On one hand, there are those who seemingly have not been bribed by the Abe government to “bend” reality just a bit in the name of confidence. People such as Toshihide Tsuda, a professor of epidemiology at Okayama University who has called upon the government to prepare for a possible increase in cases in the future. “The rate at which children in Fukushima prefecture have developed thyroid cancer can be called frequent, because it is several times to several tens of times higher,” Japan’s Asahi Shimbun quoted him as saying.

He compared the figures in Fukushima with cancer registration statistics throughout Japan from 1975 to 2008 that showed an annual average of five to 11 people in their late teens to early 20s developing cancer for every 1 million people.

And then come those who probably would still be touting the great job Tepco is doing in containing the worst nuclear catastrophe in history, even though Tepco itself has now admitted the exploded nuclear power plant is out of control.

Tetsuya Ohira, a professor of epidemiology at Fukushima Medical University, disagreed. It was not scientific to compare the Fukushima tests with cancer registry statistics, he argued. Scientific? Or notpolitically feasible for a prime minister who is desperate to restart domestic nuclear power plants, since Abenomics is getting monkeyhammered thanks to soaring energy and food import costs (and, among other factors, leading to a crash in Abe’s popularity rating), and any reality leaking, pardong the pun, from Fukushima will end both that ambition, and his political career prematurely.

Shockingly, a month ago, prefectural officials deemed it unlikely that the increase in suspected and confirmed cases of cancer was linked to radiation exposure. Their “logic” is that in the Chernobyl disaster of 1986, it was not until four or five years after the accident that thyroid cancer cases surged. Apparently the thought that the local cancer victims may have been subject to radiation orders of magnitude higher than Chernobyl thanks to a lying government which consistently repeated that “all is well” has not crossed anyone’s mind.

“It is known that radioactive iodine is linked to thyroid cancer. Through the intake of food, people may absorb and accumulate it inside glands,” said Dr Choi Kin, a former president of the Hong Kong Medical Association.

Children might absorb more of it than adults because they were still growing, he said, but it remained to be proven that the radioactive iodine came from the nuclear disaster instead of the normal environment.

Bottom line “experts” are divided about whether the Fukushima cancers are caused by nuclear radiation… which, perhaps, is why they are experts. As everyone else knows, a surge in thyroid cancer in a population in close proximity to an exploded power plant, can only be due to one thing: non-participation in the ponzi stock market. So start buying stocks, or else the p53 mutations are coming for you too!

 

How Central Banking Really Works – Fed Anniversary Redux | Zero Hedge

How Central Banking Really Works – Fed Anniversary Redux | Zero Hedge.

Submitted by Simon Black of Sovereign Man blog,

Here’s a question– if you’re in the Land of the Free, do you think those green pieces of paper in your wallet are dollars?

They’re not. A US dollar was defined by the Coinage Act of 1792 as 416 grains of standard silver.

No, those green pieces of paper are Federal Reserve notes. “Notes” in this case meaning liabilities to the central bank of the United States.

That makes you, me, and anyone else holding those green pieces of paper essentially creditors of the Federal Reserve, whether we signed up for it or not.

The Fed is theoretically like any other business. On one side of its balance sheet, it has assets. On the other side, it has liabilities.

The Fed is unique, though, in that its liabilities– namely Federal Reserve Notes– are passed off as money in the Land of the Free.

And they have a legal monopoly in this money business. Just ask Bernard von NotHaus, the founder of Liberty Dollar who was labeled a domestic terrorist and convicted for minting silver coins to be used as a competing money.

Moreover, the Fed has the ability to increase its liabilities at will. Mr. Bernanke can conjure additional Federal Reserve notes out of thin air and pump them into the system.

And at this point, thanks to a long-standing policy of wanton money printing, the Fed has more liabilities than ever before in its history. By an enormous margin.

This precarious balance sheet is dangerous, because if the Fed goes bust, everyone loses.

Is it even possible for a central bank to go bust? Definitely. Zimbabwe and Tajikistan are infamous examples.

And most recently it happened in Iceland. The banking system there collapsed from being so highly leveraged, and Iceland’s central bank suffered tremendous losses.

The end result was insolvency, and the central bank’s liabilities, i.e. the Icelandic kronor, went into freefall, losing 60% against the dollar and euro in a matter of days.

So yes, it does happen. And the consequences are devastating.

But how likely is it that the Fed could go bust?

In its most recently published balance sheet, the Fed listed assets valued at $3.5 trillion.

Most of this is US Treasuries and ‘agency’ debt securities. You probably remember those– the toxic mortgage debt that blew up a few years ago like Fannie Mae and Freddie Mac. Not exactly low risk.

Meanwhile, the Fed has become one of the biggest creditors of the United States government… which has managed to accumulate more debt than any government in the history of the world.

Of course, the only way the US government can pay interest to the Fed is by going into even more debt (which the Fed then has to buy).

Every time this happens, the Fed’s already razor-thin capital gets smaller and smaller, and the Fed’s balance sheet becomes riskier and riskier.

In fact, the Fed’s capital ratio (1.53%) is lower than Lehman Brothers when they went bankrupt in 2008.

But what happens if the Fed becomes insolvent?

In the case of Iceland, the government bailed out its central bank.

Iceland’s government went from being essentially debt free to having debts in excess of 100% of the country’s GDP, just to bail out the bank.

But the US, Japan, and Europe are already too indebted to bail out their central banks. An insolvent government cannot bail out an insolvent central bank.

The IMF is not an option either. The US, EU, Japan, etc. make up roughly half of the IMF capital quota– these are the countries who fund the IMF, not the other way around.

There really is no backstop for the Fed. The buck, so to speak, stops here. And with a capital ratio of just 1.53%, the Fed’s balance sheet is already in precarious financial condition.

Given that the Fed’s assets are so closely tied to the finances of the US government, the outlook should concern independent, thinking people.

If they go bust, the value of Federal Reserve notes (i.e. ‘dollars’) is going to plummet… along with the paper wealth of anyone holding them.

 

Canadian Economy: 2014 May Be Year Things Finally Get Better. Again.

Canadian Economy: 2014 May Be Year Things Finally Get Better. Again..

OTTAWA – Wait until next year.

It’s a familiar refrain for sports teams, but the premise is getting old for Canadians awaiting the return of an economy that can be counted on for jobs, solid incomes and financial security.

As far back as 2010, the Bank of Canada held out the prospect of better times in the year ahead. But unexpected events — whether it was a tsunami in Japan, a debt crisis in Europe, or political shenanigans in Washington — always took the shine off the optimism.

“If you were looking for a theme song for the Canadian economy, it would either be ‘With a Little Help from my Friends,’ or, alternatively, Led Zeppelin’s ‘The Song Remains the Same,’ ” says Craig Alexander, TD Bank’s chief economist.

He says we’re still waiting for a hand-off from consumer-driven growth.

“We are going to eventually get this rotation toward exports and business investment and away from real estate and consumer spending. We said that would happen in 2013. It didn’t happen. Now we’re saying it is going to start next year,” Alexander said.

He’s not predicting eye-popping growth.

TD, like the Bank of Canada and a consensus of economists, is estimating growth will rebound to about 2.3 per cent in 2014. That would follow two years of sub-par growth at 1.7 per cent in 2012 and an estimated 1.7 per cent growth this year.

The improvement foreseen for 2014 is not much of a bump and won’t lead to massive job creation and steep income growth. But the difference between 1.7 per cent and 2.3 per cent is important.

The Bank of Canada believes economy has the “potential” to grow about two per cent. At 1.7 per cent, the economy has underachieved its potential whereas, at 2.3 per cent, the economy can eliminate slack and head toward full recovery.

The central bank thinks 2015 will see the gap close further with 2.6 per cent growth, enabling the economy to return to health by the middle or the end of that year.

The other important distinction is the composition of growth.

According to the central bank and others, 2014 will be the year the economy finally enters the zone of what Bank of Canada governor Stephen Poloz calls self-generating, self-sustaining “natural growth.”

That is critical because Canada, for the past three years, has experienced a kind of un-natural recovery.

Yes, it has recouped all it lost during the recession in terms of output and jobs, but a persistently low inflation reading and continuing slack in production capacity suggest something has not been quite right.

Growth was achieved primarily at first because federal and provincial governments pumped tens of billions of dollars into the economy — all of it borrowed.

The Bank of Canada — as well as its U.S. counterpart — has also kept interest rates at or near rock bottom, encouraging businesses and households to borrow money and spend.

Snatch away the stimulus measures and Canada, some say, would most likely still be in recession.

CIBC chief economist Avery Shenfeld there was nothing fundamentally amiss about Canada’s domestic economy before 2008 when the world’s financial system was dealt a severe blow by a meltdown in the U.S. real estate, which spread to banking and other industries.

While Canada’s economy initially emerged from the 2008-9 global recession in relatively good shape, it has limped along more recently amid weakened demand for many of the country’s major exports.

“Part of the reason Canada hasn’t seen the lift in capital business spending is because the rest of the world has disappointed us,” Shenfeld said.

“Interest rates have been low, financing has been available, but unless you are sure the product demand is going to be there, it’s hard to trigger a boom in capital spending. So a brighter global economy could see a return in capital spending in the resource in sector, which is part of that rotation that’s been missing.”

That’s where a little help from our friends, particularly the United States where 75 per cent of exports end up, will go along way to curing Canada’s ills, say analysts.

Optimism for 2014 is tied to how quickly the U.S. recovers and how much that boosts Canadian exports. The Royal Bank is among the most optimistic, pencilling in a 2.6 per cent expansion next year, and 2.7 the year after that, which will more quickly close the output gap and get the Bank of Canada to raise interest rates in 2015.

Exporters will also benefit from a swooning loonie, analysts say, because, by comparison, the U.S. economy will outperform Canada’s. The loonie has already lost about six per cent in value in the past year and now hovers around 94 cents US. By many estimates, it could be at least as low as 90 cents by the end of 2014.

With all these factors in Canada’s favour, it’s a wonder the economy won’t do better. But the Bank of Canada has noted that exporters haven’t kept pace, given the rebound in the United States, so they won’t likely benefit as much in 2014 as they have historically.

Part of the reason, says governor Poloz, is that the country lost about 9,000 exporting companies in the aftermath of the 2008-09 recession.

Alexander, TD’s chief economist, lists other factors: an increase in the number of right-to-work states in the U.S. that have brought down labour costs; a shale oil and gas revolution; and low gas prices that have decreased energy input costs for a lot of U.S. manufacturers.

“And we’ve had really strong productivity growth in the U.S.,” Alexander added. “So U.S. manufacturing is far more competitive than it was before and that makes it much tougher for Canadian exporters.”

The consensus view assumes that the modest pick up in exports, which will lead to companies investing in machinery and equipment in order to become more competitive exporters, won’t be counterbalanced by a retrenchment in the household sector and in housing.

Taking the contrary view, as does David Madani, the chief analyst at Capital Economics, leads one to the conclusion that 2014 won’t be any different from 2012 and 2013 in terms of aggregate economic growth — even if the composition is healthier.

With the housing market overbuilt and household debt at record levels — 164 per cent of annual aftertax income — Madani expects a bad year for the construction industry and a slowdown in consumer spending, which makes up the majority of the economy.

“So you have a situation where weakness in housing and slower household consumption growth is now offsetting the improvement in exports and perhaps business investment,” Madani says.

Rather than improving, Madani thinks the economy will deteriorate further to 1.5 per cent growth, which may cause the Bank of Canada to cut interest rates further and even push Finance Minister Jim Flaherty off his austerity drive — although he admits that’s a long shot.

Madani’s advice. Wait till next year and, by next year, he means 2015 or even 2016. By then there will have been a correction in housing and global demand may be strong enough to make more of a difference to Canada.

The Real Oil Extraction Limit, and How It Affects the Downslope | Our Finite World

The Real Oil Extraction Limit, and How It Affects the Downslope | Our Finite World.

There is a lot of confusion about which limit we are reaching with respect to oil supply. There seems to be a huge amount of “reserves,” and oil production seems to be increasing right now, so people can’t imagine that there might be a near term problem. There are at least three different views regarding the nature of the limit:

  1. Climate Change. There is no limit on oil production within the foreseeable future. Oil prices can be expected to keep rising. With higher prices, alternative fuels and higher cost extraction techniques will become available. The main concern is climate change. The only reason that oil production would drop is because we have found a way to use less oil because of  climate change concerns, and choose not to extract oil that seems to be available.
  2. Limit Based on Geology (“Peak Oil”). In each oil field, production tends to rise for a time and then fall. Therefore, in total, world oil production will most likely begin to fall at some point, because of technological limits on extraction. In fact, this limit seems quite close at hand. High oil prices may play a role as well.
  3. Oil Prices Don’t Rise High Enough. We need high oil prices to keep oil extraction up, but as we reach diminishing returns with respect to oil extraction, oil prices don’t rise high enough to keep extraction at the required level. If oil prices do rise very high, there are feedback loops that lead to more recession and job layoffs and less “demand for oil” (really, oil affordability) among potential purchasers of oil. One major cut-off on oil supply is inadequate funds for reinvestment, because of low oil prices.

Why “Oil Prices Don’t Rise High Enough” Is the Real Limit

In my view, our real concern should be the third item above, “Oil Prices Don’t Rise High Enough.” The problem is caused by a mismatch between wages (which are not growing very quickly) and the cost of oil extraction (which is growing quickly). If oil prices rose as fast as extraction costs, they would leave workers with a smaller and smaller percentage of their wages to spend on food, clothing, and other necessities–something that doesn’t work for very long. Let me explain what happens.

Because of diminishing returns, the cost of oil extraction keeps rising. It is hard for oil prices to increase enough to provide an adequate profit for producers, because if they did, workers would get poorer and poorer. In fact, oil prices already seem to be too low. In years past, oil companies found that the price they sold oil for was sufficient (a) to cover the complete costs of extraction, (b) to pay dividends to stockholders, (c) to pay required governmental taxes, and (d) to provide enough funds for investment in new wells, in order to  keep production level, or even increase it.  Now, because of the rapidly rising cost of new extraction, oil companies are finding that they are coming up short in this process.

Oil companies have begun returning money to stockholders in increased dividends, rather than investing in projects which are likely to be unprofitable at current oil prices. See Oil companies rein in spending to save cash for dividends. If our need for investment dollars is escalating because of diminishing returns in oil extraction, but oil companies are reining in spending for investments because they don’t think they can make an adequate return at current oil prices, this does not bode well for future oil extraction.

A related problem is debt limits for oil companies. If cash flow does not provide sufficient funds for investment, increased debt can be used to make up the difference. The problem is that credit limits are soon reached, leading to a need to cut back on new projects. This is particularly a concern where high cost investment is concerned, such as oil from shale formations. A rise in interest rates would also be a problem, because it would raise costs, leading to a higher required oil price for profitability. The debt problem affects high priced oil investments in other countries as well.  OGX, the second largest oil company in Brazil, recently filed for bankruptcy, after it ran up too much debt.

National oil companies don’t explain that they are finding it hard to generate enough cash flow for further investment. They also don’t explain that they are having a hard time finding sites to drill that will be profitable at current prices.  Instead, we are seeing more countries with national oil companies looking for outside investors, including Brazil andMexico. Brazil received only one bid, and that for the minimum amount, indicating that oil companies making the bids do not have high confidence that investment will be profitable, either. Meanwhile, newspapers spin the story in a totally misleading way, such as, Mexico Gears Up for an Oil Boom of Its Own.

US natural gas is another product with a similar problem: the price is not high enough to justify new production, especially for shale gas producers. The huge resource that some say is there is simply too expensive to extract at current prices. Would-be natural gas producers cannot tell us this. Instead, we find a recent quote in the Wall Street Journal saying:

“We are not dealing with an era of scarcity, we are dealing with a situation of abundance,” Ken Cohen, Exxon’s vice president of public and government affairs, said in an interview. “We need to rethink the regulatory scheme and the statutory scheme on the books.”

Cohen could explain that without natural gas exports, there is no way the natural gas price will rise high enough for Exxon-Mobil to extract the resource at a profit. Without exports, Exxon Mobil will lose money on the extraction, or more likely, will have to leave the natural gas in the ground. With low prices, the huge resource that Obama has talked about is simply a myth–the prices need to be higher. Of course, no one tells us the real story–it seems better to let people think that the issue is too much natural gas, not that it can’t be extracted at the current price. The stories offered to the news media are simply ways to convince us that exports make sense. Readers are not aware how much stories can be “spun” to make the current situation sound quite different from what it really is.

What Goes Wrong with “Climate Change” and “Limit Based on Geology” Views

The Illusion of Reserves. Oil and gas reserves may seem to be “be there,” but a lot of conditions need to be in place for them to actually be extracted. Clearly, the price needs to be high enough, both for current extraction and to fund new investment. Other conditions need to be in place as well: Debt needs to be available, and it needs to be available at a sufficiently low rate of interest to keep costs down. There needs to be political stability in the country in question. Something as simple as a continuation of the uprisings associated with the Arab Spring of 2010 could lead to the inability to extract reserves that seem to be present. Other requirements include availability of water for fracking and the availability of skilled workers and drilling rigs.

In the past, we have been far enough away from limits that issues such as these have not been a big problem. But as we get closer to limits and stretch our capabilities, these become more of a problem. Right now, availability of debt at low interest rates is a particularly important issue, as is the need for adequate oil company profitability–things that are easy to overlook.

Wrong Economic Views Leading to Wrong Oil Views. Economists have put together economic models based on a world without limits. A world without limits is the easy approach, because mathematical relationships are much simpler in a world without limits: a relationship which held in 1800 is expected to hold in 1970 or in 2050.  A world without limits never offends politicians, because growth always seems to be possible, meaning a never-ending supply of jobs and of goods and services for constituents. A model without limits produces the simple relationships that we are accustomed to, such as “Inadequate supply will lead to a rise in price, and this in turn will tend to create greater supply or substitutes.” Unfortunately, these models omit many important variables and thus are inadequate representations of the world we live in today.

In a world with limits, there are feedback loops that cause high oil prices to lead to lower wages and more unemployment in oil importing countries. Thus “demand” can’t keep rising, because workers can’t afford the higher oil prices. Oil prices stagnate at a level that is too low to maintain adequate investment. High oil prices also feed back into slower economic growth and a need for ultra-low interest rates to raise demand for high-priced goods such as cars and homes.

When prices remain in the $100 barrel range, they are still high enough to damage the economy. Businesses are not much damaged, because they have ways they can work around higher oil prices, especially if interest rates are low.  Most of the ways businesses can work around high oil prices involve reducing wages to US workers–for example, outsourcing production to a lower cost country, or cutting the pay of workers, or laying off workers to match lower demand for goods. (Lower demand for goods tends to occur when oil prices rise, and businesses raise their prices to reflect the higher oil costs.)

Workers are still affected by costs in the $100 barrel range, and so are governments. Governments must pay out higher benefits than in the past, to keep the economy afloat. They must also keep interest rates very low, to try to keep demand for homes and cars as high as possible. The situation becomes very unstable, however, because very low interest rates depend on Quantitative Easing, and it does not appear to be possible to continue Quantitative Easing forever. Thus, interest rates will need to rise. Such a rise in interest rates is likely to push the country back into recession, because taxes will need to be higher (to cover the government’s higher debt costs) and because monthly payments on homes and new car purchases will tend to rise. The limit on oil production then becomes something very remote from geology–something like, “How long can interest rates remain low?” or “How long can we make our current economy function?”

The Interconnected Nature of the Economy. In my last post, I talked about the economy being a complex adaptive system. It is built from many parts (many businesses, laws, consumers, traditions, built infrastructure). It can operate within a range of conditions, but beyond that range it is subject to collapse. An ecosystem is a complex adaptive system. So is a human being, or any other kind of animal. Animals die when their complex adaptive system moves out of its range.

It is this interconnectedness of the economy that leads to the strange situation where something very remote from the real problem (oil limits) can lead to a collapse. Thus, it can be a rise in interest rates or a political collapse that ultimately brings the system down. The path of the downslope can be very different from what a person might expect, based on the naive view that the problems will simply relate to reduced supply of oil.

A Case Study of the Collapse of the Former Soviet Union 

The Soviet Union was major oil exporter and a military rival of the United States in the 1950s through 1980s. It also was the center of a huge economic system, involving many other countries. One thing that bound the countries together was the use of communism as its method of government; another was trade among countries. In effect, the group of communist countries had their own complex adaptive system. Things seemed to go fine for many years, but then in December 1991, the central government of the Soviet Union was dissolved, leaving the individual republics that made up the Former Soviet Union (FSU) on their own.

While there are many theories as to what all caused the collapse, it seems to me that low prices of oil played a major role. The reason why low oil prices are important is because in an oil exporting country, such as the FSU, oil export revenues represent a major part of government funding. If oil prices drop too low, there is a double problem: (1) it becomes unprofitable to drill new wells, so production drops and, (2) the revenue that is collected on existing wells drops too low. The problem is then a huge financial problem–not too different from the financial problem the US and many of the big oil importing countries are experiencing today.

Figure 1. Oil production and price of the Former Soviet Union, based on BP Statistical Review of World Energy 2013.

Figure 1. Oil production and price of the Former Soviet Union, based on BP Statistical Review of World Energy 2013.

In this particular situation, oil prices (in inflation adjusted prices) hit a peak in 1980. Once oil prices hit a peak, FSU oil production very much flattened. There was a continued small rise until 1983, but without the very high prices available until 1980, aggressive investment in new oil extraction dropped back.

Not only did FSU oil production flatten, but FSU oil consumption also flattened, not long after oil production stopped rising (Figure 2). This flattening helped maintain exports and the taxes that could be collected on these exports.

Figure 2. Former Soviet Union Oil Production and Consumption, based on BP Statistical Review of World Energy, 2013.

Figure 2. Former Soviet Union Oil Production and Consumption, based on BP Statistical Review of World Energy, 2013.

Even though total exports were close to flat in the 1980s (difference between consumption and production), there were some countries where exports that were rising–for example North Korea, shown in Figure 4. This mean that oil exports for some allies needed to be cut back as early as 1981. Figure 3 shows the trend in oil consumption for some of FSU’s allies.

Figure 3. Oil consumption as a percentage of 1980 consumption for Hungary, Romania, and Bulgaria, based on EIA data.

Figure 3. Oil consumption as a percentage of 1980 consumption for Hungary, Romania, and Bulgaria, based on EIA data.

A person can see that oil consumption dropped off slowly at first, and increased around 1990. All of these countries saw their oil consumption drop by at least 40% by 2000. Bulgaria saw is oil consumption drop by 65% to 70%.

The FSU exported oil to other countries as well.  Two countries that we often hear about, Cuba and North Korea, were not affected in the 1980s (Figure 4). In fact, Cuba’s oil consumption never seems to have been severely affected. (It is possible that exports of manufactured goods from the FSU dropped, however.) Cuba’s drop-off in oil consumption since 2005 may be price-related.

Figure 4. Oil consumption as a percentage of 1980 oil consumption for Cuba and North Korea, based on EIA data.

Figure 4. Oil consumption as a percentage of 1980 oil consumption for Cuba and North Korea, based on EIA data.

North Korea’s oil consumption continued growing until 1991. Its drop-off was then very severe–a total of an 83% reduction between 1991 and 2010. In most of the countries where oil consumption dropped, consumption of other fossil fuels dropped as well, but generally not by as large percentages. North Korea experienced nearly a 50% drop in other fuel (mostly coal) consumption by 1998, but this has since somewhat reversed.

By 1991, the FSU was in poor financial condition, partly because of the low oil prices, and partly because its oil exports had started dropping. FSU’s oil production left its plateau and started dropping about 1988 (Figure 2).  The actual drop in FSU oil production meant that oil consumption for the FSU needed to drop as well–a big problem because industry depended upon this oil. The break-up of the FSU was a solution to these problems because (1) it eliminated the cost of the extra layer of government and (2) it made it easier to shift oil consumption among the member republics, so that those republics that produced more oil could keep it for their own use, rather than sending it to republics which did not produce oil. This shortchanged non-oil producing republics, such as the Ukraine and Belarus.

If we look at oil consumption for a few of the republics that were previously part of the FSU, we see that oil consumption was fairly flat, then dropped off quickly, after 1991.

Figure 5. Oil consumption as a percentage of 1985 oil production for Russia, the Ukraine, and Belarus, based on BP Statistical Review of World Energy 2013.

Figure 5. Oil consumption as a percentage of 1985 oil production for Russia, the Ukraine, and Belarus, based on BP Statistical Review of World Energy 2013.

By 1996 (only 5 years after 1991), oil consumption had dropped by 78% for the Ukraine, by 61%  for Belarus, and by “only” 47% for Russia, which is an oil-producing state. At least part of the reason for the fast drop off was the fact that in the years immediately after 1991, oil production for the FSU dropped by about 10% per year, necessitating a quick drop off in consumption, especially if the country was to continue to make some money from exports. The 10% drop-off in oil production suggests that the decline in oil production was more than would be expected from geological decline alone. If the decline were for geological reasons only, without new drilling, one might the expect the drop off to be in the 4% to 6% range.

When oil consumption dropped greatly, population tended to decline (Figure 6). The decline started earliest in the countries where the oil consumption drop was earliest (Hungary, Romania, and Bulgaria). The steepest drop-offs in population occur in the Ukraine and Bulgaria–the  countries with the largest percentage drops in oil consumption.

Figure 6. Population as percent of 1985 population, for selected countries, based on EIA data.

Figure 6. Population as percent of 1985 population, for selected countries, based on EIA data.

Some of the population drop is from emigration. Some of it is from poorer health conditions. For example, Russia used to provide potable water for its citizens, but it no longer does. Some is from conditions such as alcoholism. I haven’t shown the population change for North Korea. It actually continued to increase, but at a much lower rate of growth than previously. Cuba’s population has begun to fall since 2005.

GDP growth for the countries shown has tended to lag behind world economic growth (Figure 7).

Figure 7. GDP compared to world GDP - Change since 1985, based on USDA Real GDP data.

Figure 7. GDP compared to world GDP – Change since 1985, based on USDA Real GDP data.

Nearly all of the countries listed above have had financial problems, at different times.

Belarus’s GDP seems to be doing better than the rest on Figure 7. Belarus, like the Ukraine, is a pipeline transit country for Russia. In Belarus, natural gas consumption has increased, even as oil consumption has decreased. This increase is likely helping the  country industrialize. Inflation occurred at the rate of 51.9% in 2012 according to the CIA World Fact Book. This high inflation rate may be distorting indications.

Conclusion

We can’t know exactly what path our economy will follow in the future. I expect, though, that the path of the FSU and its trading partners is closer to the path we will be following than most forecasts we hear today. Most of us haven’t followed the FSU story closely, because we wrote off most of their problems to deficiencies of communism, without realizing that there was a major oil component as well.

The FSU situation may, in fact, be better that what the Industrialized West is facing in the next few years. The FSU had the rest of the world to support it, offering investment capital and new models for development. Oil production for Russia was able to rebound when oil prices rose again in the early 2000s. As situations around the world decline, it will be harder to “bootstrap.”

One of the things that hampered the recovery of the FSU was the fact that the communist economic model proved not to be competitive with the capitalistic model. In a way, the situation we are facing today is not all that different, except that our challenge this time is competition from Asian economies that we have not had to compete with until the early 2000s.

Asian economies have several cost advantages relative to the Industrialized West:

(1) Asian competitor countries are generally warmer than the industrialized West. Because of this, Asian workers can live more comfortably in flimsy homes. They also don’t need much salary to cover heating and can more easily commute by bicycle. It is often possible to produce two crops a year, making productivity of land and of farmers higher than it otherwise would be. In other words, Asian competitor countries have an energy subsidy from the sun that the Industrialized West does not.

(2) Asian competitors are often willing to ignore pollution problems, reducing their costs relative to the West.

(3) Asian competitors generally depend on coal to a greater extent than we do, keeping their costs down, relative to countries that use higher-priced fuels.

(4) Asian competitors are less generous with employee benefits such as health care and pensions, also holding costs down.

Economists, through their wholehearted endorsement of globalization, have pushed industrialized countries into a competitive situation which we are certain to lose. While oil prices tend to push wages down, competition with Asian countries makes the downward push on wages even greater. These lower wages are part of what are pushing us toward collapse.

To solve our problems, economists have proposed a shift toward renewable energy and the implementation of carbon taxes. Unless these changes are done in a way that actually reduces costs, these “solutions” are likely to make us even less competitive with low-cost competitors such as those in Asia. Thus, they are likely to push us toward collapse more quickly.

To support this position, economists point to climate change models based on the view that the burning of fossil fuels will increase greatly in the decades again. In fact, if collapse occurs in the next few years in the Industrialized West, carbon emissions are likely to fall quickly. Because of the interconnectedness of the world system, the rest of the world will likely also encounter collapse in not many more years, and their carbon emissions are likely to fall quickly, as well. Even the “Peak Oil” emissions that are used in climate change models are way too high, relative to what seems likely to be the case.

If I am right about collapse being a possibility for the Industrialized West, then our problem will be that we as nations become so poor that we can no longer find goods to trade with Asian countries. Most of our goods will not be competitive as exports, and we won’t be able to simply add more debt to rectify the situation. Thus, we will become unable to buy many goods we depend on, including computers and replacement parts for wind turbines.

Breakups of many types are possible. The European Union may cease to operate in the way it does today. The International Monetary Fund is likely to cease operating in the way it does today, because of the collapse of many of its members who provide funding. The US will be subject to strains of the type that lead to break up. If nothing else, oil producing states will want to withdraw, so that they are not, in effect, subsidizing the rest of the US economy.

It is unfortunate that economists are tied to their hopelessly out-of-date economic models.  Part of the problem is that the story of “collapse around the corner” doesn’t sell well. The alternate story economists have come up with really isn’t right, but it is pleasing to the many who benefit from subsidies for renewables, and it makes politicians look like they are doing something. The specter of climate change in the distance gives an excuse to cut back oil use, among other things, so has at least some theoretical benefit.

It is unfortunate, however, that we cannot look at the real problem. Unless we can understand the problem as it really is, it is impossible to find solutions that might actually be helpful.

 

Will US Light Tight Oil Save The World? » Peak Oil BarrelPeak Oil Barrel

Will US Light Tight Oil Save The World? » Peak Oil BarrelPeak Oil Barrel.

There has been plenty of hoopla lately concerning the boom in shale (LTO) oil production. From the New York Times: Surge Seen in U.S. Oil Output, Lowering Gasoline Prices

Domestic oil production will continue to soar for years to come, the Energy Department predicted on Monday, scaling to levels not seen in nearly half a century by 2016.

The annual outlook by the department’s Energy Information Administration was cited by experts as confirmation that the United States was well on its way — far faster than anticipated even a year ago — to achieving virtual energy independence.

What the EIA is actually predicting:  AEO2014 EARLY RELEASE OVERVIEW. The data is C+C.

AEO 2014

The first two points were what was actually produced in 2011 and 2012 and the rest of the blue line is what they are predicting for the future. The orange line is what they predicted last year. The predicted numbers this year are a lot higher but the shape of the curve looks the same. They predict US Crude + Condensate will plateau in 2016, actually peak in 2019 and by 2021 be headed for a permanent decline.

Note the difference between AEO 2013 and AEO 2014. The difference rises to just over 2 mb/d and holds that difference util 2030 when it slowly closes down to 1.37 mb/d in 2040. And everything above about 5 mb/d is all Shale, or Light Tight Oil. They expect LTO to rise to about 4.5 mb/d by 2016, hold that level for almost 5 years and for LTO to still be above 2.5 mb/d by 2040. 

Anyway here is what Saudi Arabia thinks about it all. Saudi will not be affected by shale oil output: report:

“Since we doubt that tight oil production will grow as much as most commentators surmise, and since we believe that tight oil production will keep representing only about 3% of total liquids supply, we do not believe that the growth in oil production from tight rock formations in the US, or from shale formations elsewhere, will materially affect Saudi Arabia’s long-term position in the oil industry,” Jadwa said in a study.

And questions are being raised elsewhere: Shale well depletion raises questions over US oil boom

In October, the government began issuing a monthly report on drilling productivity that charted declines in six major U.S. shale plays. The U.S. Energy Information Administration estimates that it takes seven of every 10 new barrels produced in those areas just to replace lost production.

Of course this article is quoting the EIA and their new Drilling Productivity Report.

Speaking of that report, Steve’s blog, SRSrocco Report, has this headline: Eagle Ford Shale Decline Shoots Up A Stunning 10% in One Month!

What Steve is talking about is this. First from last month’s Drilling Productivity Report:

Eagle Ford Dec

And see the difference from the latest report:

Eagle Ford Jan

But getting back to the statement in the “Fuel Fix” article that it takes seven of every 10 new barrels produced in those areas just to replace lost production. If the EIA is correct in their latest report it takes a bit more than 7 of every 10 barrels just to make up for the declines of old wells. If their figures are correct, in Eagle Ford, it takes almost 7.6 barrels of every 10 barrels from new wells just to make up for the decline in production from old wells. And of course that number increases every month.

If the EIA’s decline rates are anywhere close then the Bakken should reach her peak at about 1.25 mb/d and Eagle Ford at about 1.6 mb/d, or at some point very close to those numbers.

Bottom line, all the hype is just hype. The US will likely never reach 4.5 million barrels per day of shale oil, the peak will not be spread out over five years as the EIA believes, and the decline will be a whole lot steeper than the chart above indicates. Shale oil may delay the peak of world oil production for one year, or two at the most.

While it is true that only the Light Tight Oil is keeping Peak Oil from being an obvious fact, that can only last for a year or two, then the US, along with almost every other nation in the world will be in decline.

The EIA’s International Energy Statistics is about a month late already. International oil production data is a really low priority with the EIA. They are much more concerned with the price of kerosene and other such matters than they are with world crude oil, the lifeblood of every economy in the world. So we will have to do without it until they get around to posting that data, if ever. But in the meantime I have constructed the below chart using mostly JODI data, with some EIA data used for countries that do not report to Jodi. I use it just to show what the world oil supply would look like without US Light Tight Oil. The last data point is October 2013.

Jodi World Less USA

According to JODI, the world less USA peaked in January of 2008 and almost reached that point again in July of 2008. In October of 2013 we are down about 2.25 mb/d from that point. Interesting to note also that the world less USA has dropped some 1.5 mb/d since July. July was the last month the EIA’s International Data Statistics has data for.

Euan Mearns, below, asks that this chart be posted. The last data point is October 2013:

World Les US & Canada

It doesn’t look a lot different from the “World Less USA” chart. Down 2.53 Megabytes a day from the peak of July 2006. Keep in mind this is JODI data which differs somewhat from the EIA data. The EIA however only has updates through July 2013. There has been considerable attrition in production since then.

The following charts are based on data from the EIA’s AEO 2014 Early release.

aeo2014uscc1/
aeo2014uslto/

THIS ENTRY WAS POSTED IN UNCATEGORIZED. BOOKMARK THE PERMALINK.

 

How to Keep Warm – Wildwood Survival

How to Keep Warm – Wildwood Survival.

How to Keep Warm

by Walter Muma

Here are some tips on keeping warm.
While sleeping (trying to sleep):

  • Put a warm hat on – your head loses a lot of heat.
  • Use your coat as another warm layer on top of your sleeping bag.
  • Are your socks dry? If damp, they might be chilling your feet. Put on clean and dry socks.
  • Add layers – put on clothing – clean and dry clothes are best.
  • Drink something hot or warm.
  • Wake up.
  • Eat something – just a snack.
  • Go for a pee – your body is using energy to keep that extra liquid warm.
  • Get up and build a fire to get warm. Then go back to bed.
  • Tense and relax muscles for a while – the passive equivalent of getting some exercise.
  • Use a hi-tech solution – instant hand and feet warmers – those little packets that you squeeze and get warm.
  • Make sure you are well enough insulated underneath.
  • If you are in a primitive shelter, ensure no breeze is getting in, and that you are not exposed to the sky.
  • Cozy up with a partner. If you are getting seriously cold, this is the most effective way to get warm, and it is no time to be shy or reluctant.
To get or keep warm while out and about:

  • Stay out of the wind. Seek out a sheltered spot.
  • Wear a warm hat
  • Build a fire – remember that in the winter, in most places, you can always stop and make a fire (provided you have the means to do so!).
  • Drink something hot.
  • Go for a pee – your body is heating that extra water for no reason.
  • Be comfortable – being uncomfortable can make you colder by being mentally stressed.
  • Be mentally prepared to be a little bit cooler than your ideal of being “nice and warm”.
  • Stay active, but don’t sweat.
  • Use a hi-tech solution – instant hand and feet warmers – those little packets that you squeeze and they get warm.
  • Eat something, more like a snack.
  • Put on more clothing.
  • If your feet are damp, put on clean dry socks, and wear dry boots.
  • Eat fatty foods.
  • If the sun is out, tilt your face towards the sun – you can absorb a lot of heat this way.
  • Sit close beside another person.

Canada’s deficit ticks higher to $13.2B – Business – CBC News

Canada’s deficit ticks higher to $13.2B – Business – CBC News.

The devastating Alberta floods this summer made a significant dent in the federal government's finances this year.The devastating Alberta floods this summer made a significant dent in the federal government’s finances this year. (The Canadian Press)

The Canadian government has spent $13.2 billion more than it has taken in so far this year, a slightly larger deficit than the one for the same period in 2012.

The Department of Finance said Monday the federal deficit was $13.2 billion for the fiscal year up to October. That’s ahead of the $11.9 billion during the same period in 2012.

But that data is skewed by two major one-time events that impacted Ottawa’s finances: The Alberta floods of last summer, and the government’s sale of $700 million worth of GM shares in September.

Excluding the two events, the annual deficit would have been slightly smaller, at $11.1 billion.

For the fiscal year as a whole, Ottawa has taken in $144.9 billion and spent $158.2 billion so far. On a monthly basis, October’s deficit was $2.5 billion, the same as the one from the same month last year.

“The Government remains on track to balance the budget in 2015,” the department said in a release.

 

The Tories’ Naked Self-interest in Foreign Policy | Yves Engler

The Tories’ Naked Self-interest in Foreign Policy | Yves Engler.

Should the primary purpose of Canadian foreign policy be the promotion of corporate interests?

Canada’s business class certainly seems to think so. And with little political or ideological opposition to this naked self-interest, Harper’s Conservatives seem only too happy to put the full weight of government behind the promotion of private profits.

Recently, the Conservatives announced that “economic diplomacy” will be “the driving forcebehind the Government of Canada’s activities through its international diplomatic network.” According to their Global Markets Action Plan (GMAP), “All diplomatic assets of the Government of Canada will be marshalled on behalf of the private sector to increase success in doing business abroad.”

The release of GMAP is confirmation of the Conservatives’ pro-corporate foreign policy. In recent years the Conservatives have spent tens of millions of dollars to lobby U.S, andEuropean officials on behalf of tar sands interests; expanded arms sales to Middle East monarchies and other leading human rights abusers; strengthened the ties between aid policy and a Canadian mining industry responsible for innumerable abuses.

While some commentators have suggested that GMAP is a “modern” response to China’s international policy, it actually represents a return to a time many consider the high point of unfettered capitalism.

Often in the late 1800s wealthy individuals not employed by Ottawa conducted Canadian diplomacy. The owner of the Toronto Globe, George Brown, for instance, negotiated a draft treaty with the U.S. in 1874, while Sandford Fleming, the surveyor of the Canadian Pacific Railway, represented Canada at the 1887 Colonial Conference in London.

From its inception the Canadian foreign service reflected a bias toward economic concerns. There were trade commissioners, for instance, long before ambassadors. By 1907 there were12 Canadian trade commissions staffed by “commercial agents” located in Sydney, Capetown, Mexico City, Yokohama and numerous European and U.S. cities.

Despite this historic precedent, in the 21st century it should be controversial for a government to openly state that economic considerations drive international policy. Yet criticism of GMAP has been fairly muted, which may reflect how many progressives feel overwhelmed by the Conservatives’ right-wing aggressiveness in every policy area.

Or perhaps there’s a more fundamental explanation. The mainstream political/media establishment basically agrees with the idea that corporate interests should dominate foreign policy.

In response to GMAP, Postmedia ran a debate between John Manley, head of the Canadian Council of Chief Executives and a member of the advisory panel that helped draw up the Conservatives’ plan, and former foreign minister and leading proponent of the Responsibility to Protect doctrine, Lloyd Axworthy.

While Manley lauded the Conservatives’ move, Axworthy criticized it as “bad trade policy” and said: “The best way to enlarge your trade prospects and to develop a willingness for agreements and to improve economic exchange is to have a number of contacts to show other countries that you are a willing and co-operative player on matters of security, on matters of human rights, and on matters of development.”

Axworthy did not express principled criticism of the Conservatives’ move; he simply said that “trade prospects” — a euphemism for corporate interests — are best advanced through a multifaceted foreign policy. Widely lauded by the liberal intelligentsia, Axworthy reflects the critical end of the dominant discussion, which largely takes its cues from the corporate class. And Canada’s business class is more internationally focused than any other G8 country.

Heavily dependent on “free trade” Canadian companies are also major global investors. The world’s largest privately-owned security company, GardaWorld, has 45,000 employees operating across the globe while another Montréal-based company, SNC Lavalin, is active in100 countries. Corporate Canada’s most powerful sector is also a global force. The big five banks, which all rank among the top 65 in the world, now do a majority of their business outside of this country. Scotiabank, for example, operates in 50 countries.

The mining sector provides the best example of Canadian capital’s international prominence. Three quarters of the world’s mining companies are based in Canada or listed on Canadian stock exchanges. Present in almost every country, Canadian corporations operate thousands of mineral projects abroad.

With $711.6 billion in foreign direct investments last year, Canadian companies push for (and benefit from) Ottawa’s diplomatic aid and military support. As their international footprint has grown, they’ve put ever more pressure on the government to serve their interests. There is simply no countervailing force calling on the government to advance international climate negotiations, arms control measures or to place constraints on mining companies.

There’s also limited ideological opposition to neoliberalism. Few in Canada promote any alternative to capitalism. Until unions, social groups and activists put forward an alternative economic and social vision it’s hard to imagine that Canadian foreign policy will do much more than promote private corporate interests.

 

How the NSA Paid Security Firm $10 Million to Promote Flawed Encryption | A Lightning War for Liberty

How the NSA Paid Security Firm $10 Million to Promote Flawed Encryption | A Lightning War for Liberty.

Stories documenting the NSA’s intentional attempt to weaken encryption standards have been floating around for months now, but Reuters put out a story Friday that documents just how far the out of control agency has gone to weaken security for hundreds of millions of computer users.

RSA has been a leader in cryptography ever since it revolutionized the field after its genesis in the 1970s from three MIT professors. The company actually provided a lot of successful pushback against the NSA and the Clinton Administration’s push to introduce the Clipper Chip in the 1990′s, but has completely sold out in recent years as it became more corporatized and many of the technology leaders left. If it is true that the only received $10 million from the NSA, they sold out the American public very cheaply. RSA is now owned by EMC

From Reuters:

Documents leaked by former NSA contractor Edward Snowden show that the NSA created and promulgated a flawed formula for generating random numbers to create a “back door” in encryption products, the New York Times reported in September. Reuters later reported that RSA became the most important distributor of that formula by rolling it into a software tool called Bsafe that is used to enhance security in personal computers and many other products.

Undisclosed until now was that RSA received $10 million in a deal that set the NSA formula as the preferred, or default, method for number generation in the BSafe software, according to two sources familiar with the contract. Although that sum might seem paltry, it represented more than a third of the revenue that the relevant division at RSA had taken in during the entire previous year, securities filings show.

The earlier disclosures of RSA’s entanglement with the NSA already had shocked some in the close-knit world of computer security experts. The company had a long history of championing privacy and security, and it played a leading role in blocking a 1990s effort by the NSA to require a special chip to enable spying on a wide range of computer and communications products.

Started by MIT professors in the 1970s and led for years by ex-Marine Jim Bidzos, RSA and its core algorithm were both named for the last initials of the three founders, who revolutionized cryptography. Little known to the public, RSA’s encryption tools have been licensed by most large technology companies, which in turn use them to protect computers used by hundreds of millions of people.

From RSA’s earliest days, the U.S. intelligence establishment worried it would not be able to crack well-engineered public key cryptography. Martin Hellman, a former Stanford researcher who led the team that first invented the technique, said NSA experts tried to talk him and others into believing that the keys did not have to be as large as they planned.

The stakes rose when more technology companies adopted RSA’s methods and Internet use began to soar. The Clinton administration embraced the Clipper Chip, envisioned as a mandatory component in phones and computers to enable officials to overcome encryption with a warrant.

RSA led a fierce public campaign against the effort, distributing posters with a foundering sailing ship and the words “Sink Clipper!”

A key argument against the chip was that overseas buyers would shun U.S. technology products if they were ready-made for spying. Some companies say that is just what has happened in the wake of the Snowden disclosures.

The White House abandoned the Clipper Chip and instead relied on export controls to prevent the best cryptography from crossing U.S. borders. RSA once again rallied the industry, and it set up an Australian division that could ship what it wanted.

Doesn’t seem to me the NSA is doing any protecting whatsoever. On the contrary, it appears they are merely doing a lot of harm to computer security.

Full article here.

In Liberty,
Mike

 

Permanence and the State – Ludwig von Mises Institute Canada

Permanence and the State – Ludwig von Mises Institute Canada.

Engraved outside the National Archives Building in Washington D.C. is the phrase: “This building holds in trust the records of our national life and symbolizes our faith in the permanency of our national institutions.” It’s an uplifting quote meant to channel the spirit of patriotism. It’s also one that is supposed to burn an imprint into the reader’s mind: the state and its behemoth bureaucracies are here to stay.

Monuments of grandeur serve a special purpose. H.L. Mencken once wrote “the average man, whatever his errors otherwise, at least sees clearly that government is something lying outside of him and outside the generality of his fellow men.” This is very much true, and large, menacing buildings such as J. Edgar Hoover Building or the Lincoln Memorial help establish this cognitive divide. By using architectural techniques dating back to ancient Rome, the designers meant to create an aura of endearing superiority for the plebes to drool over.

In a recent National Review piece, Kevin D. Williamson wrote the initial builders of Washington’s various monuments “wanted to show that this new country of free men could hold its head high in the world and stand beside the pomp of any empire.” That may very have been a driving force, but I have a different theory: government monuments are meant to be imposing. But even more than that, they are formed for the purposes of transcending the here and now. If a sense of permanence can be established in the citizenry, there is little standing in the way of perpetual domination. The use of the word “permanency” on the National Archives building is no coincidence. There is no better way to dispel resistance than to perpetuate the idea that it’s futile.

The state, as Rothbard noted, appears to many as “the supreme” and “the eternal.” But that perception is a farce. Very little makes an indelible mark on human history. People are born and die. Businesses start and end. Wealth comes and goes. And states are established and dismantled. None, except for the brightest and most convincing of thinkers, sticks around for very long.

Pulling off immortality would be a great feat for man. But alas, we are born with a set time in the material world. The state’s quest for permanency is nothing but extreme hubris displayed by the most imperialistic of empires. Governments rise and fall all the time. Currently, the regimes in both Syria and the Ukraine risk falling due to civil unrest. In Europe, governments are continually teetering on the brink. Just two decades ago, the Soviet Union collapsed, giving way for a new cronyist form of governance. It was no different from the crumbling of the empires of Rome, Ottoman, and Byzantine.

What truly achieves permanence is not lofty monuments built to worship some all-powerful dictator, but ideas. Mankind’s future is decided on mental battlefields. The very reason we have oppressive governments today is because enough have been fooled to believe that society couldn’t function without them. It’s why public schooling is mandatory in much of the Western world. Get ‘em young, pump ‘em full of tall tales of national glory, and watch ‘em recite the pledge of allegiance until they have one foot in the grave. That’s the tried-and-true formulate for institutionalizing subservience. It’s the Orwellian logic of, “he who controls the past controls the future. He who controls the present controls the past.”

By teaching that monopoly government is eternal, it becomes eternal. The lesson boxes in the thought process of impressionable fellows. It disallows them the ability to conceive of anything different from the status quo. And worse, it ingrains the idea of eternal residing in the heart of national government.

A sloppy understanding of what is really universal follows. No longer are principles seen as defining features for societal relations. Government becomes the focal point of all disputes. Order comes only from the starched-shirt bureaucrat – not from any logical precepts. Discovering the rational boundaries by which humans should live, organize, and govern their actions is the basis of natural law. It is meant to be timeless, applying universally to all humanity. The very notion of an all-encompassing order is a threat to state, which relies on unquestioned obedience. More so, it is threat to the Marxist/progressive theory of ever-evolving laws that replace and duplicate each other on a journey to the end of history.

Even some libertarians doubt the efficacy and truthfulness of permanence in teleological law. In a recent FEE.org debate, minarchist philosopher Tibor Machan wrote, “because none of us is going to live for eternity, none of us can establish anything as timelessly true.” This is the same mindset that decides slavery was once justified, state-enforced segregation was perfectly fine, and unions were a virtuous force in combating excess capitalism. In simpler words, it’s a superfluous understanding of history in relation to logic-based law. What it amounts to is a rationalization of crimes just because they happened in the past. Everything is nothing, and nothing is everything all at once.

Understanding the nature of permanence in relation to government provides insight into how fickle the state truly is. Societies have progressed from despotism to democracy to monarchy to republics. Opinions have changed, elections have occurred, and ruling bodies have been tossed out overnight. No matter how espoused, the sacredness of government eventually unravels. The people are then left staring at the truth: that their leaders are nothing but pompous tyrants.

This tenuous reality was present in the recent public execution of Jang Song-thaek in North Korea. Song-thaek, uncle to supreme dictator Kim Jong-un, was given the death treatment for angering his nephew. The Kim dynasty is supposed to be sacred. Their word is supposed to be God’s. Yet, here a second-hand man by marriage was offed like an injured race horse. In the most tyrannical country on earth, the aura of permanence saw a hole poked through it. In effect, the emperor was revealed to have no clothes, except for some rags of irrational tendencies.

The heads of the state would love nothing more than to wield the force of immortality. It’s a power-trip that pays off financially and mentally. Constructing the potemkin village of surreal authority makes for quick shock and awe. It aides in scaring the citizenry into compliance. But facades don’t last forever, no matter the marble symposiums erected as tribute.

James E. Miller is editor-in-chief of the Ludwig von Mises Institute of Canada. Send him mail

 

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