No wonder people get global warming and poverty wrong

In 2009, the second edition of Mark Maslin’s book Global Warming. A Very Short Introduction appeared in the well-known series published by Oxford University Press.

According to Maslin’s website, the book has sold over 40,000 copies – and yet it betrays a fundamental flaw in thinking, knowledge and understanding before it even gets going.

In the Preface, Maslin commits two profound errors when he makes the extraordinary claim that

Fundamentally global poverty is about unequal distribution of global wealth and resources.

Mark Maslin, Global Warming. A Very Short Introduction, 2009, p. xiii.

Global wealth and resources are indeed unequally distributed – but not in the way he thinks.

Japan and the four Asian Tigers/Dragons of South Korea, Taiwan, Hong Kong and Singapore are among the wealthiest countries on the planet and boast world-class and world-famous brands such as Toyota, Nissan, Panasonic, Samsung, Hyundai, Asus, Acer, Foxconn and HTC, as well as highly successful financial centres and entrepôts.

And yet, they have virtually no resources.

Africa, Russia, the Former Soviet Union and Venezuela, on the other hand, are chock-full of resources, but are poor and barely boast a global brand between them.

Africa was colonised, but Ethiopia and Liberia were not and are no richer than their counterparts on the continent, while Venezuela became fully independent in 1830, but is now on the verge of civil war and collapse despite having the biggest known oil reserves in the world.

Russia, on the other hand, is a former imperial power with the third-biggest empire in global history after Britain and Mongolia.

Russians often say that their country is the richest in the world due to its bounty of natural resources.

During the Cold War, the Soviet Union had all 26 metals required for industrial and military production.

In contrast to the United States and the West, it was not dependent on Africa for some strategic resources, such as the vanadium used in jet engines and high-speed military aircraft.

Today, most vanadium is mined in South Africa, China and Russia, which extracted more than 97% of the 79,000 tonnes of vanadium produced in 2013. Needless to say, Chinese and Soviet vanadium was off limits during the Cold War.

But despite its vast resources and immense efforts trying to catch up with the West in the 300 years since Peter the Great, Russia has only achieved middle-income status – and is now arguably going backwards.

In the 1950s, the Soviet Union was much richer and technologically far more advanced than China, but now, Russia is on the verge of being overtaken by The Middle Kingdom in terms of per capita income and has been left standing with regard to infrastructure and technology.

After the Kremlin’s Ukraine misadventure and the imposition of western sanctions in 2014, Russia “pivoted” to the east, but is very much China’s junior partner – although China itself remains desperately poor and will get old before it gets rich.

So why does Maslin get the basics so spectacularly wrong? He is, after all, highly credentialled. He is a Fellow of the Royal Geographical Society (FRGS), a Fellow of the Royal Society of Arts (FRSA) and a Professor of Climatology at London University with 55 papers in journals such as Science, Nature, and The Lancet under his belt and a PhD from the University of Cambridge.

And yet, like so many other people nowadays, Maslin fails to understand basic economics and economic history. His views smack of ideological bias which ignores empirical reality and fails to think things through.

He makes the fundamental mistake of assuming that wealth is distributed rather than created, and seems to believe that, for some inexplicable reason, resources should be distributed fairly – and that if they were, everything would be just fine.

He also puts some of the blame onto business, writing, for instance, that

It remains a puzzle why industry and business do not improve their energy use, as this can significantly cut running costs; however, this may be in part [due to] capitalists’ obsession with turnover and profit.

Mark Maslin, Global Warming. A Very Short Introduction, 2009, pp. 151 & 154.

Apart from the pure speculation of the reason for industry’s “incorrect behaviour,” this view again displays an ignorance of economics and business.

Business and finance courses teach standard techniques for measuring in monetary terms the inputs (costs) needed to produce goods and services and the outputs (profits) – the excess of outputs over inputs minus taxes.

Turnover just means total sales: a high turnover is no good to a company if it makes a loss or a low profit. In fact, a high turnover often leads to bankruptcy since it requires more money to finance the higher inputs. The company then goes out of business or needs to find more profitable ways to invest its money – i.e. its resources.

A negative profit or return – i.e. a loss – indicates that more resources have gone into making a product or providing a service than are obtained. In other words, resources are wasted.

This basic insight is understood by every business student and businessman, but is beyond the comprehension of countless numbers of highly and far less credentialled people who continue the venerable tradition established by Marx of despising business and all its works.

Such people still naively believe there is a better way of doing things, but in the 200 years since the French Revolution, no one has developed a better way of organising an economy than prices, which simply tell producers how much people are willing to pay for goods and services – if anything.

Two alternative systems have been tried, but neither has worked.

The Soviet Union’s central command system was incapable of coordinating and harmonising the prices of the tens of millions of items in the system, while the decentralised system of workers’ councils in communist Yugoslavia meant that employees just ended up paying themselves more and working less due to what in economic jargon are called “soft budget constraints” – i.e. there was no need to sell the stuff they made.

It is a damning indictment on the West’s collapsing standards of education and thinking that such nonsense can appear in a book which, presumably, underwent two anonymous peer reviews in line with standard practice and is published by the prestigious Oxford University Press.

After all, as this short article demonstrates, basic economics can be taught in a few minutes.

And needless to say, the advocates of global warming undermine their credibility by making such basic errors.

Footnote: the 3rd edition of Maslin’s book appeared in 2014 under the title Climate Change: A Very Short Introduction.

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