Normally don't post so long an article, but I'm learning from Mark. <g>
Jay's getting less strident, eh?
Tom
=========================
Date: Mon, 19 Mar 2001 14:50:54 -1000
From: "Jay Hanson" <[EMAIL PROTECTED]>
Subject: FTAA
Aloha! This is the occasional mailing to the BRAIN FOOD mailing list.
You are receiving this message because you have subscribed. If you do
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--------------------------------------------------------------------------------
New Canadian mailing list!
Some new information has come to my attention that the Canadian
Provinces themselves -- not the Federal Government -- control the export
of energy. I have been told that NAFTA applies to the FEDERAL government
which has jurisdiction AFTER energy leaves the province. If this is so,
then Alberta could pull the plug on the global economy any time it chose
to!
I just set up a new mailing list to discuss Canadian energy issues --
specifically to understand the free trade issues like NAFTA. This list
is not moderated and anyone can join.
If you are interested and have information on this critical issue, join
http://groups.yahoo.com/group/CanadaEnergy and tell us what you know.
Jay
--------------------------------------------------------------------------------
NEWS!
Abraham: Energy Crisis Threatens
Story Filed: Monday, March 19, 2001 1:25 PM EST
WASHINGTON (AP) -- Energy Secretary Spencer Abraham said Monday the
country is facing the most serious energy shortages since the 1970s.
Without a solution, he said, the energy crisis will threaten prosperity
and national security and change the way Americans live.
http://library.northernlight.com/EB20010319950000059.html?dx=1006&rq=0#doc
Mexico's proven oil reserves slide 4 pct in 2000-Pemex
Sunday, March 18, 2001 01:59 PM ET
MEXICO CITY, (Reuters) - Mexico's proven crude oil reserves posted a
four percent decline in 2000 from the previous year, though badly needed
investment could catapult reserves now classified as probable into the
proven category, said state oil monopoly Petroleos Mexicanos (Pemex) on
Sunday.
http://www.business.com/directory/energy_and_utilities/news/full_story/index.asp?uuid=07E20DDD-3698-4F60-B7D2-714F9B2B5595&source=Reuters%20Business%20Report
Mexico vows to tackle sliding oil reserves
Sunday, March 18, 2001 03:59 PM ET
MEXICO CITY, (Reuters) - Faced with evidence that its crude reserves are
on a downward spiral, oil powerhouse Mexico on Sunday vowed to bolster
its supplies of the fuel and improve the state-run industry's operations
to better confront fierce world competition.
http://www.business.com/directory/energy_and_utilities/news/full_story/index.asp?uuid=E0369E52-796F-489E-A988-27CEC820D90A&source=Reuters%20Company%20News
UK oil production for January lowest since 1993
MONDAY MARCH 19 2001
UK OIL production fell by 5.2 per cent during January to its lowest
level for that month since 1993, according to a report from the Royal
Bank of Scotland published just days after Opec announced swingeing
production cuts.
http://www.thetimes.co.uk/article/0,,5-100969,00.html
Mexico turns over new maple leaf
Financial Post - Saturday March 17, 2001
<snip>
Aside from the fact that an energy shortage threatens to stifle economic
growth, Mr. Fox knows that inaction has more immediate political risks.
Mexican consumers, like Canadians and Americans, had to pay high prices
for natural gas this winter, forcing many companies to shut down and
resulting in thousands of layoffs. Even with its large domestic reserves
of natural gas, Mexico is importing about 13% of its requirements from
the United States.
http://finance.canada.com/bin/story?StoryId=CoRlVud8bntaZmteX&Topic=Financial_Post&Type=home&Heading=News%20from%20Financial%20Post&BC=Financial%20Post
For more news, see http://208.49.25.221/policypete/policypete.htm
--------------------------------------------------------------------------------
FTAA: Accelerating Towards the Great Glomart Train Wreck at Olduvai
Cliff
By Karl Davies
March 2001
"Glomart" is short for "Global Market Economy." It is my name for the
Corporate Beast who is our common enemy - the enemy of humanity and Gaia
alike. Resemblances to the names "Walmart" and "K-Mart" are entirely
intentional.
-Tom Ellis [quoted in 1]
We're all on this huge Glomart Express train going down these
Hydrocarbon Economy tracks. The train's energy comes from the tracks.
We're accelerating at 2% per year and have been for quite some time.
We're going really fast now. The tracks look OK, and the ride feels OK,
but every now and then there's a bump, or a sway...
-Karl Davies [1]
The Olduvai theory states that the life-expectancy of Industrial
Civilization, defined in terms of world energy use per capita (e), is
less than or equal to 100 years. HISTORY: We know that the peak of e
occurred in 1979 and that e declined from 1979 to 1999 (the 'slope').
FUTURE: The Olduvai theory predicts that e will decline even faster from
2000 to the so-named 'cliff event' (the 'slide').
-Richard Duncan [2]
Background
Western hemisphere government and corporate trade representatives will
meet April 20-22 in Quebec City to move the Free Trade Area of the
Americas (FTAA) one giant step forward towards ratification by all the
governments of the western hemisphere [3].
Since the contents of the FTAA are still a very closely guarded secret -
as were the contents of the Multilateral Agreement on Investments (MAI)
[4] which is a model for the FTAA - there are many questions as to how
the FTAA will impact energy issues, as well as a host of other issues.
In order to gain some perspective, we first need to examine what the
North American Free Trade Agreement (NAFTA) did for trade in energy
resources. Canadian Maude Barlow wrote an excellent critique of the
energy aspects of NAFTA as part of a longer critique of NAFTA. [5].
In essence, Canadian national energy resources were "corporatized" (the
opposite of "nationalized") to benefit the owners and managers of
transnational corporations (TNCs), and to keep the Glomart Express [1]
going at full speed towards Olduvai Cliff [2,6].
Canada Had What They Wanted
About 15% of US natural gas consumption currently comes from Canadian
reserves. About 30% of California natural gas consumption comes from
Canadian reserves. Natural gas is crucial to electric power generation
in California and elsewhere in the US. With US demand for natural gas
increasing at about 2% per year and accelerating, supplies must grow at
the same rate in order to avoid shortages, ie, rolling blackouts.
Since US natural gas supplies have been in decline since about 1970, all
the growth in demand since then has been met by increasing
production/extraction of Canadian natural gas. But according to the
Canadian Gas Potential Committee, this trend cannot continue [7]. The
graph below from that committee shows that Canadian natural gas
extraction will soon be in decline.
[Note: Over 80% of Canadian natural gas comes from Alberta. Since nearly
100% of it comes from the Western Canada Sedimentary Basin (WCSB [8]),
which is mostly in Alberta and adjoining Saskatchewan and British
Columbia, the graph should be representative of the trend of all
Canadian gas production/extraction.]
With Canadian natural gas soon to be in decline, where will the Glomart
Express get additional supplies? Glomart geologists are scouring the
Western Hemisphere, but they're not finding enough because what's left
is in small deposits, and it's in very inhospitable environments.
There's ice to the north in the Arctic, storms and icebergs to the east
off the Maritimes, and Zapatistas to the south in southern Mexico -
where significant oil and gas reserves are reported to have been found
[9].
Crystal Ball
So what specific mechanisms can we expect to see in the FTAA to help
facilitate the global corporate takeover of the scarce remaining energy
resources - and everything else? How could NAFTA be "improved" for the
benefit of the TNCs? Most observers look to the World Trade Organization
(WTO) and its Global Agreement on Tariffs and Trade (GATT) machinations
for insight [10]. They also look to the Multilateral Agreement on
Investments (MAI) [11]
Under NAFTA, Mexican energy resources were not corporatized because
Pemex, the national oil company of Mexico, is national property by
virtue of the Mexican constitution [12]. The framers of NAFTA did not
want to mess with the Mexican constitution. But there is evidence that
the framers of the FTAA could be headed in that direction now that they
have their boy Vicente Fox in the Mexican presidential office [13].
If the FTAA turns out to be a "Hemispheric Corporate Constitution" as
expected, it won't brook any competition from any national constitutions
- or from Canadian provincial constitutions either, which could be
called upon to justify Canadian "hoarding" of energy resources [14].
One likely element of the FTAA corporate constitution will be increased
empowerment of TNCs to sue national governments for anything that might
infringe on their abilities to extract resources, exploit labor, and
dispose of wastes as they see fit in their pursuit of higher shareholder
equity and the acceleration of the Glomart Express.
They already have limited powers in this regard under Chapter 11 of
NAFTA [15], but they want more powers. Pemex and Canadian provincial
controls could definitely be seen as infringements on corporate power
regarding extraction of energy resources, and could therefore be targets
of corporate mega-SLAPP suits [16].
TNC Rationale
How can these extremely anti-democratic, fundamentally fascistic
policies be rationalized? Much of the rationale boils down to control of
energy resources. The energy problem for the owners and managers of
Glomart Express is that if they let Canadians, or Colombians, or
Mexicans, or anyone else "hoard" their energy resources - or any other
resources - prices will go up for everything because there is embodied
energy in everything that Glomart produces.
There would be inflation, which would lower stockholder equity. There
would also be conservation and substitution of renewable energy
resources, which would lower the value of stocks in the energy divisions
of Glomart.
The success of this rationale and the success of the TNC agenda is
reflected by the prices of stocks over the past two decades of trade
"liberalization." The graph below is a couple years out of date, but it
shows the trend. In order to keep the stockmarket rising, all inputs to
Glomart Express must be kept cheap, and their flows must be unimpeded.
Glomart can't tolerate tariffs or duties, environmental regulations,
worker strikes or slowdowns, rebellions or wars, or nationalizations of
assets. It can't tolerate corporate performance standards of any sort.
Everything must be "homogenized" and brought to the absolute lowest
level [17].
Trade "liberalization" as manifested by enactment of international trade
"agreements" is in fact a continuous and relentless coup d'etat against
governments throughout the world that seek to impose restrictions on TNC
activities.
Energy Prices
Glomart economists have calculated optimal price levels for oil and gas
that will maximize profits while preventing conservation and
substitution [18]. But, and this is a big but, these prices cannot be
maintained without wholesale exploitation of Canadian, Mexican,
Venezuelan, Colombian, and other global energy resources. This is the
case because oil and gas supplies from the United States have been in
steady decline since 1970 [19].
In the past year those optimal prices have risen due to declining oil
and gas supplies from many countries other than the United States. The
countries of the Persian Gulf are the only major ones in the world where
supplies are not in decline, but where they will be in the
not-too-distant future [20].
Blind Guides
Government and corporate trade representatives, most of whom are
economists and lawyers [21], don't have a clue about the physical world
and the finiteness of energy, mineral and natural resources. They
believe that resources are effectively infinite due to substitution and
technical innovation [22]. These trade
representatives/economists/lawyers are the high priests of the Church of
Exponential Growth.
The notion that there could be such a thing as an Olduvai Cliff [23], or
even an Olduvai Valley, is heresy to trade representatives, and must be
uprooted and expunged from the public mind by any means possible. They
cannot imagine any speed other than full speed ahead - and accelerating
- for the Glomart Express.
Thermodynamics of Financial Capital
Financial capital can be seen as a symbolic representation of high
entropy. It's the by-product of the conversion of low entropy energy
resources, low entropy mineral and natural resources, plus labor and
technology, into high entropy waste heat, high entropy waste products of
manufacturing, high entropy exploited labor (couch potatoes,
automotons), and high entropy manufactured products.
Financial capital is the token that shows that these conversions were
done efficiently - with a minimum of waste [sic]. The only value of
financial capital lies in its ability to create more high entropy. It
can only be used to purchase more low entropy energy resources,
minerals, natural resources, labor and technology - and convert them to
high entropy wastes and products.
The Railroad Ahead
Will capitalism survive on a decreasing rate of resource extraction?
Historically, capitalism has depended on geographical frontiers
(Americas, India, Africa, East Asia) and geological frontiers (coal,
oil, natural gas, metals) that were expanding at exponential rates.
Geographical frontiers are long gone. Geological frontiers are now
contracting, and will continue to do so.
The Glomart Express may not be accelerating quite as fast now, but it's
still headed very fast towards Olduvai Cliff. Despite all the sermons
and incantations of the high priests of the Church of Exponential
Growth, there's a train wreck straight ahead unless somehow the train
can be slowed down or stopped before it gets to Olduvai Cliff.
References
[1] http://la.indymedia.org/display.php3?article_id=5698
[2] http://groups.yahoo.com/group/dieoff/message/10
[3] http://www.a20.org
[4] http://www.corpwatch.org/trac/globalization/treaties/#mai
[5] http://www.interlog.com/~cjazz/ftaa.htm
[6] http://dieoff.com/page224.htm
[7] http://www.geo.ucalgary.ca/NatGasCan/ceripaper.pdf
[8] http://www.range-petroleum.com/properties/wcsb
[9] http://www.globalexchange.org/campaigns/mexico/news/081799.html
[10] http://www.newdemocracyworld.org/grossman.htm
[11] http://www.valleyadvocate.com/articles/mai.html
[12]
http://www.itcilo.it/english/actrav/telearn/global/ilo/frame/energyla.htm
[13] http://www.la.utexas.edu/chenry/mena/bibs/oil/2000/msg00012.html
[14] http://208.49.25.221/policypete/policypete.htm
[15] http://wtoaction.org/greenfield4.phtml
[16] http://www.gatt.org/slapp.html
[17] http://store.globalexchange.org/globvilorglo.html
[18]
http://www.daviesand.com/Perspectives/Forest_Products/Oil_Subsidies/_18_Crude
[19] http://www.oilcrisis.com/hubbert
[20] http://www.oilcrisis.com/fleay/crunch.htm
[21] http://www.foreignpolicy-infocus.org/briefs/vol3/v3n23trad.html
[22] http://www.dieoff.org/page148.htm
[23] http://dieoff.com/page224.htm
--------------------------------------------------------------------------------
A SECT WITH A CREED AND A POLITICAL PROGRAM
by Jay Hanson
"Beware of Greeks bearing gifts."
-- Virgil, 30 BC
"A sect with a creed and a political program naturally presents many
aspects and calls for interpretative analysis from many standpoints
other than ours."
-- Joseph Shcumpeter, 1954
Religion is the opposite of science. Science attempts to make its
doctrine conform to the physical world, but religion attempts to make
the physical world conform to its doctrine. Moreover, scientific
doctrine is based upon "observation and experiment" (and is subject to
revision), but religious doctrine is based upon "revealed truth" (and is
immutable).
Modern economics is shrouded in idiosyncratic self-serving definitions,
arcane mathematics, and circular arguments which make it very difficult
to understand. But if one removes the math and jargon from modern
economics, one finds the revealed truth of eighteenth century liberalism
codified in the economic dogma of the French Physiocrats:
"Quesnay's theories of state and society were nothing but
reformulations of scholastic doctrine. The motto, Ex natura jus, ordo,
et leges might have been, though it presumably was not, taken from St.
Thomas. The physiocrat odre naturel (to which there corresponds in the
world of real phenomena an odre positif) is the ideal dictate of human
nature as revealed by human reason. What difference there is between
Quesnay and the scholastics is not to the formers credit...
"In his paper on Droit naturel, Quesnay defined Physical Law as the
'regulated (r�gl�) course of all physical events which is evidently the
most advantageous to mankind,' and Moral Law as 'the rule (r�gle) of
every human action conforming to the physical order evidently most
advantageous to mankind': these 'laws' form together what is called
'natural law,' and they are all immutable and the 'best possible ones'
(les meilleures lois possibles). In the case of the scholastic doctors,
such principles were confined to the realm of metaphysics and not
directly applied to historically conditioned patterns. In the case of
Quesnay they were directly applied to particular institutions, such as
property. And Quesnay's political theory -- both analytically and
normatively -- turned upon a monarchical absolutism in an uncritical and
unhistoric manner that, as we have seen, was also quite foreign to the
scholastics.
"Now, we know how well the old natural-law system fared in the
eighteenth century and how acceptable it proved to be, in its essential
features, to la raison. Therefore, Quesnay's particular form of it, some
non-essential frills excepted, fell in with the intellectual fashion of
the hour: everybody readily understood this part of his teaching,
sympathized with it from the start, and felt at home when discussing it.
And, unlike other votaries of La raison, Quesnay harbored no hostility
either to the Catholic Church or to the monarchy. Here, then, was La
raison, with all its uncritical belief in progress, but without its
irreligious and political fangs. Need I say that this delighted court
and society?" [1]
Lionel Robbins has described David Hume (1711-1776) as "the greatest
philosophical mind in the English language". Hume was a Scottish
historian and philosopher whose ideas profoundly influenced the
development of skepticism and empiricism.
Hume -- like empiricists (scientists, engineers) even to this day -- did
not understand the futility of pointing out to an economist that his
dogma does not agree with observation or experiment. Hume simply did not
understand that economics was a religion based on revealed truth, and
thus, immutable. In fact he became so exasperated after a heated
exchange with the physiocrat Turgot that he wrote to Morellet:
"I see you take care in your prospectus not to offend your economists
by a declaration of your views; and in this I commend your prudence. But
I hope in your work you will batter them, crush them, pound them, reduce
them to dust and ashes The fact is they are the most fanciful and
arrogant set of men to be found nowadays, since the destruction of the
Sorbonne... I ask myself with amazement what can have induced our friend
M. Turgot to join them." -- David Hume, July 10, 1769
The Physiocrats were the first to describe the economy as a circular
flow and held that whatever increased economic activity was good, and
whatever decreased economic activity was bad. [2] According to Joseph
Shcumpeter, it is possible to trace practically the whole arsenal of
liberal argument to the Physiocrats.
The First and Second Laws of Thermodynamics were unknown at the time of
Physiocrats. The French physicist N.L.S. Carnot didn't formulate the
Second Law concepts until 1824. The German physicist Helmholtz and the
British physicist Lord Kelvin didn't explain the First Law until the
middle of the 19th century. So when the Physiocrats were inventing
modern economics, they simply didn't know that economic activity is
limited by available energy, that energy resources themselves are
limited -- limited energy stocks "stocks" (e.g., oil) and limited energy
"flows" (e.g., wind), or that all economic activity wastes energy.
Modern economists don't know it either.
The classical economists Jeremy Bentham, Adam Smith, Robert Malthus,
David Ricardo, John Stuart Mill, and Henry George were all operating
with the eighteenth-century scientific worldview of the Physiocrats. In
the 1870s, neoclassical economists such as William Stanley Jevons in
Britain, L�on Walras in France, and Karl Menger in Austria moved even
further away from reality by shifting emphasis from limitations on
supply to interpretations of consumer choice in psychological terms.
One of the features of the classical framework was the notion of a
three-factor production function -- one puts Land (natural resources),
Labor (including entrepreneurship) and Capital in one side, and then one
gets goods and services out the other side. In contrast, the
neoclassical framework combined natural resources with capital in order
to make it easier for economists to pretend they were scientists. But if
one removes the math and jargon from modern economics, one finds that
nothing of substance has changed since the days of the Physiocrats.
[1] pp. 128-129, HISTORY OF ECONOMIC ANALYSIS, Joseph Schumpeter; George
Allen, 1954 ;
http://www.amazon.com/exec/obidos/ASIN/0195105591/brainfood.a
[2] THE ECONOMICS OF PHYSIOCRACY: Essays and Translations (Reprints of
Economic Classics), by R. L. Meek; Kelly, 1962;
http://www.amazon.com/exec/obidos/ASIN/0678014663/brainfood.a
"'We must not lose heart', wrote Quesnay in a letter to Mirabeau
enclosing the first version of the Tableau Economique, 'for the
appalling crisis will come, and it will be necessary to have recourse to
medical knowledge.' To cure a patient suffering from an illness requires
a knowledge of the principles of physiology;, similarly, to cure a
society suffering from grave maladies requires a knowledge of the
physiology of the social order. Since for Quesnay the basis of the
social order lay in the economic order, an understanding of the laws and
regularities governing economic life appeared to be of primary necessity
if the sickness of society was to be cured.
"It is difficult to give a short summary of the basic doctrine of
Physiocracy without distorting it, and without involving oneself in
certain difficult problems of interpretation which I have reserved for
discussion in the last part of the present volume. Let me, then, state
here more or less dogmatically what I believe to have been the essence
of the doctrine, setting aside for the time being all refinements and
elaborations, and leaving it to the reader, if he wishes, to study the
defence of my interpretation which he will find at the end of the book.
"The Physiocrats assumed that the system of market exchange which it was
their main purpose to analyse was subject to certain objective economic
laws, which operated independently of the will of man and which were
discoverable by the light of reason. These laws governed the shape and
movement of the economic order, and therefore (on the Physiocrats'
basically materialist hypothesis) the shape and movement of the social
order as a whole. Now the relationships between the different variables
in a system of market exchange are very intricate -- so much so, indeed,
that in a certain sense everything can be said to be dependent upon
everything else. If the laws governing the particular type of exchange
economy with which the Physiocrats concerned themselves were to be
ascertained, therefore, it was necessary to put these variables into
manageable form -- in other words, to construct what we would call today
an abstract theoretical model of the economy.
"In the construction of this theoretical model, the Physiocrats' main
aim was to illuminate the operation of the basic causes which determined
the general level of economic activity. For this purpose, they believed
that it was useful to conceive economic activity as taking the form of a
sort of 'circle', or circular flow as we would call it today. In this
circle of economic activity, production and consumption appeared as
mutually interdependent variables, whose action and interaction in any
economic period, proceeding according to certain socially-determined
laws, laid the basis for a repetition of the process in the same general
form in the next economic period. Within this circle, the Physiocrats
then endeavoured to discover some key variable, movements in which could
be regarded as the basic factor causing an expansion or contraction in
the 'dimensions' of the circle, i.e. in the general level of economic
activity. The variable which they hit upon was the capacity of
agriculture to yield a 'net product', i.e. a disposable surplus over
necessary cost. Anything which increased this net product would cause an
expansion in economic activity, and anything which reduced it would
cause a contraction in economic activity. 'The discovery of the net
product', wrote Mirabeau, 'which we owe to the venerable Confucius of
Europe, will one day change the face of the world. . The whole moral and
physical advantage of societies is . summed up in one point, an increase
in the net product; all damage done to society is determined by this
fact, a reduction in the net product. It is on the two scales of this
balance that you can place and weigh laws, manners, customs, vices, and
virtues.'
"The leading assumption of the Physiocrats' theoretical system was that
this net product was yielded by agriculture, and by agriculture alone.
Agriculture was the supreme occupation, not only because it was morally
and politically superior to others, not only because its produce was
primary in the scale of wants and always in demand, but also -- and
mainly -- because it alone yielded a disposable surplus over necessary
cost." [pp. 18-20]
Nowadays, the Physiocrats would say that the net product was yielded by
"information": "Twenty years on from the oil shock of the 70s, most
economists would agree that oil is no longer the most important
commodity in the world economy. Now, that commodity is information." [
Blair with the "big lie" at Davos
http://www.asiamedia.ucla.edu/Davos2000/Speeches/Blair.htm ]
