To view the full version of this issue of the CEI Planet, please click here to download the PDF document. Below are selected articles from the July-August 2010 issue.
Remembering Julian Simon
By Stephen McIntyre and Ross McKitrick
The following is adapted from Messrs. McIntyre and McKitrick Julian Simon Award acceptance speeches at the 2010 CEI Annual Gala.
When you are Canadian in the United States, you get used to certain expressions of sympathy. How can you live in a country that has government-run health care? A government that finances itself by borrowing so much money all of the time? That talks about a value-added tax? That seems to want to regulate every aspect of your life? We feel your pain.
It is very flattering to receive an award named after the late economist Julian Simon. Stephen likes to say that he — someone who spent 30 years in the mining industry — essentially made a career taking the wrong end of the Simon-Ehrlich wager.
The wager, as you might recall, was made in 1980 between Simon and biologist Paul Ehrlich, best known for his eco-alarmist views and his thoroughly discredited 1968 book, The Population Bomb. The bet was about Simon and Ehrlich’s disagreement about resource scarcity in the decade leading up to 1990. They chose five metals — copper, chromium, nickel, tin, and tungsten. Simon bet the prices would fall, while Ehrlich bet they would rise. By 1990, the real prices of all five metals had dropped, and Ehrlich paid Simon to settle the wager.
Ironically, as was said, Stephen spent much of his career betting against Simon, with predictable results. After finishing university in 1973, he started work with Noranda Mines, then an important Canadian multinational mining company and copper producer. This was right at the top of the copper market. Bad timing. Noranda was then a very large company, but it no longer exists. This fate was shared by many firms as Simon’s predictions became reality. Stephen spent 30 years in the mining business, during which time the price of copper trended steadily downward, as Simon predicted.
Julian Simon made his arguments with simple intuition and real-world data — unlike most economists, unfortunately. And that is why his ideas have had so much reach and endurance than is usually the case for academics. What he taught us was that the abundance of resources in a nation is not just an accident of geography or history. Resources are not simply found; they must be developed and put to productive uses through the application of human ingenuity and creativity.
Nations that enjoy the benefits of plentiful resources are those that preserve freedom, support entrepreneurship, encourage risk taking, and allow citizens to enjoy the fruits of their own work. In other words, the abundance of resources is a consequence of the ideas a nation holds dear.
We are being recognized for this award due to our involvement in the so-called Climategate scandal, in which thousands of emails and files were leaked from the University of East Anglia’s Climatic Research Unit. Much of Climategate involves research initially called into doubt by our analysis of climate models. The scientists involved in the scandal saw us as major threats to global warming orthodoxy and to their own credibility. Consequently, we are mentioned more than 150 times in the Climategate emails.
In particular, the scientists were upset with our criticisms of the infamous “hockey stick” — the graph promoted by the Intergovernmental Panel on Climate Change as proof that global temperatures had been stable for 900 years until increasing rapidly in the 20th century. Our debunking of the hockey stick was confirmed in 2006 by a panel of professional statisticians convened by the House Energy and Commerce Committee.
With respect to energy and global warming policy, we merely ask for transparency, honesty, and common sense in the scientific and political processes. Before laws regulating energy use are enacted that could well cost the global economy trillions of dollars, it is crucial to understand the extent to which the alleged scientific consensus supporting global warming alarmism has been discredited by Climategate and related scandals. That, we feel, is not too much to ask.
Being on the receiving end of this award, it is an irony that the people who probably deserve this award more than anyone are the ones that are giving it away. But we do wish to thank Fred Smith and Myron Ebell and everyone involved at CEI for all the work that they do. Thank you very much.
Stephen McIntyre is editor and founder of Climate Audit. Ross McKitrick is a professor of economics at the University of Guelph in Ontario, Canada. They were jointly awarded the 2010 Julian Simon Award.
FROM THE PRESIDENT: Opera and Politics: Not So Different After All
By Fred L. Smith, Jr.
When I was younger, I enjoyed the theme that introduced the Lone Ranger, a heroic individual who went after bad guys. Now that I’ve become interested in opera, I know that it was the overture to the opera William Tell by Giacchimo Rossini.
And while both the Lone Ranger and William Tell were heroic, their targets were a bit different. The Lone Ranger fought generic bad guys. William Tell? He worked to free his nation, Switzerland, from the tyranny of a foreign power (perhaps someone Switzerland needs once again given the ongoing battle between Swiss bankers and the U.S. government).
There are many other parallels between the world of opera and that of politics. Opera is filled with drama, with intrigue, with betrayal. So is politics, except that politics has far fewer heroes. Opera also has its comedy and tragedy, its divas and castrati, but then so does politics — especially the castrati!
But just like in politics, wealth creation in opera can lead to wealth redistribution. Rossini, a very successful opera composer, was awarded a pension and retired at the early age of 38. Good for Rossini — not so good for opera, as he never composed anything further — and a very bad precedent that may well trigger the bankruptcies of Europe, California, and perhaps America.
Opera, like policy work, can be a very demanding activity. At an opening night at the New York Met, a stagehand noticed the great tenor Enrico Caruso standing behind the curtains with shaking hands.
“Mr. Caruso, what is the matter?” he asked.
“The matter? You simpleton, I’m frightened!” replied Caruso.
“But how can you, the greatest tenor in generations, be frightened?”
“You,” he exclaimed, “You do not need to be frightened. But I — every night — I must sing like the Great Caruso!”
And in policy battles, we too are only as good as our last fight. The defense of freedom is not for summer soldiers and, unlike operas, we don’t have a fixed schedule or intermissions. Legitimizing liberty in this most illiberal world is not a 9-to-5 job, but a lifelong commitment.
At CEI, we work hard and we take seriously the challenge of preserving economic liberty. If we succeed, the peoples of the world will continue to enjoy all that life has to offer, and that includes opera.
Recall the one operatic phrase that almost everyone knows: “It’s not over until the fat lady sings!” I don’t like that adjective, but it is worth noting that the phrase refers to Brunhilda’s final aria at the ending of Wagner’s 20-hour mini-series The Ring. Since Wagnerian sopranos are rarely Twiggies, the phrase became shorthand for the ending of a struggle.
To us at CEI, this phrase suggests that no policy battle is truly lost as long as we keep “singing.” So while economic liberty has recently experienced some painful setbacks, CEI continues to sing louder than ever.
The Good, the Bad, and the Ugly
THE GOOD: CEI Scores Supreme Court Victory in PCAOB Ruling
Nearly five years ago, CEI and accountant Brad Beckstead discussed mounting a constitutional challenge to the Sarbanes-Oxley Act’s Public Company Accounting Oversight Board (PCAOB). The PCAOB’s rules were strangling Beckstead’s two-person firm in Henderson, Nevada, and the small public companies he served, with miles of red tape, the bulk of which provided little value to shareholders. On June 28, the Supreme Court struck down key provisions of the PCAOB as unconstitutional. A majority of justices agreed that the current structure of the PCAOB fails to adhere to constitutional provisions governing the removal of major officers. CEI General Counsel Sam Kazman said that the ruling “reestablishes the fact that Congress cannot simply create agencies wrapped up inside other agencies unable to be disciplined whatsoever. Instead, we now have a new possibility of seeing the incredibly expensive and oppressive accounting requirements imposed by this agency now being subject to challenge in court by those who’ve been laboring to comply with them.”
THE BAD: House “Privacy” Bill Would Undermine Privacy and Commerce
In mid-July, Rep. Bobby Rush (D-Ill.) introduced the BEST PRACTICES Act, a bill ostensibly aimed at enhancing online privacy by imposing stringent new rules on companies that collect and store individual data. Yet such a command-and-control approach is misguided. “Natural competitive outcomes in the online privacy arena cannot properly emerge in a world in which government policies discourage responsible data collection altogether,” argued CEI Vice President for Policy Wayne Crews. “Today, businesses increasingly compete to deliver technologies that enhance our privacy and security. At the same time, information sharing also enables firms to sell us the things we want. This seeming tension is perfectly natural—privacy is a complex relationship that varies from person to person, not a ‘thing’ for governments to specify for anyone beforehand.”
THE UGLY: “Climategate” Investigation Yields Whitewash Report
After emails from the University of East Anglia’s Climatic Research Unit (CRU) were leaked last November—in which top climate scientists were shown illegally conspiring against politically disfavored scientists and discussing the manipulation of data—the resulting firestorm led to the creation of an investigatory commission. Predictably, the commission was largely comprised of climate alarmists and friends of the accused, so the ultimate exoneration of those concerned should not be surprising. On the release of the Muir Russell report, CEI Director of Energy and Global Warming Policy Myron Ebell said, “The committee relied almost entirely on the testimony of those implicated in the scandal or those who have a vested interest in defending the establishment view of global warming. The critics of the CRU with the most expertise were not interviewed.” Ebell also noted that the whitewash is unlikely to succeed in sweeping some of the more damning evidence under the rug because it “is simply too obvious and too strong to cover up.”