Truth and Reality Exiting Stage Left

By Dr. Tim Ball Monday, February 23, 2009


“When we remember that we are all mad, the mysteries disappear and life stands explained.” Mark Twain’s comment helps me understand the absolute contradictions presented as truth, sense and reality. Consider just a short list.


Warming is causing global cooling.
The sun has virtually nothing to do with global temperature change.
Carbon dioxide, a harmless gas essential to life on Earth is labeled a toxic substance and a pollutant and must be reduced.
Rewarding failures will reduce the number of failures.
Punishing success will encourage more success.
You can have more freedom by letting the government control more of your life.
You get out of debt by going further into debt.
The best people to get you out of trouble are the ones who got you there.

The list of absolute contradictions about environment and economies gets longer every day as we drift further from logic and reason.

The frustration and madness is that many of the contradictions only apply to government thinking and worse their actions. These are far removed from reality and all infused with the hypocrisy of, “Do as I say not as I do”. Consider the concept that you can get out of debt by going further in debt. How are ordinary people advised to resolve the problems of indebtedness caused by bad money management?

Reality TV shows are generally anything but reality. However, there is one that appears to be real because it is based on logic and common sense. It is a Canadian program called “Till Debt do us Part”.

The fundamental premise is that “Money is the number one cause of failed marriages.” As a result it uses real people and takes them through the steps necessary to balance their budget, get out of debt and secure their financial future. This is achieved by first sorting out the mess with draconian actions, then ensuring that expenditures do not exceed income. There is a reward for achieving the goals but only given for success.

All these are solid, sensible, ideas, but why do they only apply to ordinary people? Why can’t they go into more debt to get out of debt like the government? The closest they are allowed to come to this notion in the TV program is a debt consolidation loan. But this is only so they can get some breathing space. It allows a reduction of interest rates and though it may extend the repayment time it precludes default and prevents increase in the debt. The debt is not increased because there is no additional money advanced, but as with all personal debt collateral is required.

Why can’t we apply the same rules to the financial mess the corporations and the government have created? A major point that illustrates the difference is collateral. What is the collateral on government loans? I recall asking my students about a $2 billion loan Citibank made to Zaire. What was the collateral? Would Citibank repossess Zaire? Will China repossess the US if it defaults? Who wants to own a bankrupt General Motors? Canadian banks were given high ratings for their operations and ability to avoid some of the financial credit crisis. The joke about Canadian banks is that to get a loan you have to prove you don’t need one.

In the TV program, the credit and debit cards are confiscated. The couple has to detail their expenditures to determine how their profligacy created the debt. They are forced to live within their means. They are forced to live on cash. They must establish a schedule to reduce and eliminate the debt.

The recent massive US Stimulus package is not a debt consolidation. The only collateral is the indebtedness of future generations. (Environmentalists call this an inter-generational when talking about the environment; see the UN quote below.) The Stimulus is a massive loan that will require many years to repay; certainly beyond the tenure of a one-term President. Most of the programs don’t come into effect until the latter half of his first term. By that time the economy will have partially or fully recovered as the market recovers. They will claim it is due to the Stimulus package. Meanwhile government departments will expand and evolve to perpetuate themselves, the debt and the tax burden.

Some madness results in positive effects through unintended consequences. A recent poll of public concerns by The Pew Center shows the economy is the top concern. However, it also shows the environment way down the list as the 16th concern.

Between January 2008 and January 2009 “environment” fell the most of any on the list.

It is reasonable to assume ‘environment’ includes climate change. If Obama continues his opportunistic populist approach, he will set aside any policy that does more harm to the economy. Attempts to limit carbon is unnecessary by any means whether it is a tax, punitive controls through the EPA, or a cap and trade scheme that will have negative economic impact. Shortly negotiations on the next phase of climate change will begin through the UN meeting in Copenhagen. Propaganda to prevent any use of the economy to ignore climate change has already appeared. As Achim Steiner, Executive Director of the UN Environment Program (UNEP) says, With unemployment soaring, bankruptcies climbing, and stock markets in free-fall, it may at first glance seem sensible to ditch the fight against climate change and put environmental investments on hold. But this would be a devastating mistake of immediate, as well as inter-generational, proportions.

However, China among others has already given notice that reduction quotas proposed for the Copenhagen talks won’t work because of their stage of economic development.

Ignoring the environment, especially climate change, is not only sensible at first glance, it is completely sensible because CO2 is not a problem. Obama must know if he doesn’t fix the economy anything else he does becomes madness. So hopefully he will have sanity about climate change forced upon him.



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