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  • From: lbsaltzman@aol.com
  • To: permaculture@lists.ibiblio.org
  • Subject: Re: [permaculture] Economists don't get it
  • Date: Thu, 04 Mar 2010 15:52:00 -0500

This may be the reference.
 
Larry
 
Economists and the Environment
by Ravaioli, Carla   
 
Edition: Illustrated. Binding: Paperback Publisher: Zed Books Ltd Date
published: 01/02/1995 ISBN-13: 9781856492782 ISBN: 1856492788



Description: Used-Good. Book in good or better condition. Dispatched same day
from US or UK warehouse. Please email with any questions for quick response




-----Original Message-----
From: Toby Hemenway <toby@patternliteracy.com>
To: permaculture <permaculture@lists.ibiblio.org>
Sent: Thu, Mar 4, 2010 8:15 am
Subject: [permaculture] Economists don't get it




I was just sent this excerpt from an interview with Nobel-prize winning
economist Milton Friedman in which he says incredibly stupid things.
It's proof that economists think that the laws of their field trump the
laws of physics, and gives an indication as to why conventional thinking
is not going to solve many problems. Unfortunately, it was sent without
a reference, so I don't know where it's from.

Toby
http://patternliteracy.com

**/Ravaioli/****/:/**/ But there are many other environmental problems .../

**Nobel Laureate Friedman:** Of course. Take oil, for example. Everyone
says it's a limited resource: physically it may be, but economically we
don't know. Economically there is more oil today than there was a
hundred years ago. When it was still under the ground and no one knew it
was there, it wasn't economically available. When resources are really
limited prices go up, but the price of oil has gone down and down.
Suppose oil became scarce: the price would go up, and people would start
using other energy sources. In a proper price system the market can take
care of the problem.

**/Ravaioli/****/:/**/ But we know that it takes millions of years to
create an oil well, and we can't reproduce it. Relying on oil means
living on our capital and not on the interest, which would be the
sensible course. Don't you agree?/

**Nobel Laureate Friedman:** If we were living on the capital, the
market price would go up. The price of truly limited resources will rise
over time. The price of oil has not been rising, so we're not living on
the capital. When that is no longer true, the price system will give a
signal and the price of oil will go up. As always happens with a truly
limited resource.

**/Ravaioli/****/:/**/ Of course the discovery of new oil wells has
given the illusion of unlimited oil …/

**Nobel Laureate Friedman:** Why an illusion?

**/Ravaioli/****/:/**/ Because we know it’s a limited resource./

**Nobel Laureate Friedman:** Excuse me, it's not limited from an
economic point of view. You have to separate the economic from the
physical point of view. Many of the mistakes people make come from this.
Like the stupid projections of the Club of Rome: they used a purely
physical approach, without taking prices into account. There are many
different sources of energy, some of which are too expensive to be
exploited now. But if oil becomes scarce they will be exploited. But the
market, which is fortunately capable of registering and using widely
scattered knowledge and information from people all over the world, will
take account of those changes.

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