Home > The Economics Profession > I write to you from a disgraced profession

I write to you from a disgraced profession

The following is the text of  James Galbraith‘s written statement to members of the Senate Judiciary Committee delivered a few days ago.

Chairman Specter, Ranking Member Graham, Members of the Subcommittee, as a former member of the congressional staff it is a pleasure to submit this statement for your record.

I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis. Concepts including “rational expectations,” “market discipline,” and the “efficient markets hypothesis” led economists to argue that speculation would stabilize prices, that sellers would act to protect their reputations, that caveat emptor could be relied on, and that widespread fraud therefore could not occur. Not all economists believed this – but most did. 

Thus the study of financial fraud received little attention. Practically no research institutes exist; collaboration between economists and criminologists is rare; in the leading departments there are few specialists and very few students. Economists have soft- pedaled the role of fraud in every crisis they examined, including the Savings & Loan debacle, the Russian transition, the Asian meltdown and the dot.com bubble. They continue to do so now. At a conference sponsored by the Levy Economics Institute in New York on April 17, the closest a former Under Secretary of the Treasury, Peter Fisher, got to this question was to use the word “naughtiness.” This was on the day that the SEC charged Goldman Sachs with fraud.

There are exceptions. A famous 1993 article entitled “Looting: Bankruptcy for Profit,” by George Akerlof and Paul Romer, drew exceptionally on the experience of regulators who understood fraud. The criminologist-economist William K. Black of the University of Missouri-Kansas City is our leading systematic analyst of the relationship between financial crime and financial crisis. Black points out that accounting fraud is a sure thing when you can control the institution engaging in it: “the best way to rob a bank is to own one.” The experience of the Savings and Loan crisis was of businesses taken over for the explicit purpose of stripping them, of bleeding them dry. This was established in court: there were over one thousand felony convictions in the wake of that debacle. Other useful chronicles of modern financial fraud include James Stewart’s Den of Thieves on the Boesky-Milken era and Kurt Eichenwald’s Conspiracy of Fools, on the Enron scandal. Yet a large gap between this history and formal analysis remains.

Formal analysis tells us that control frauds follow certain patterns. They grow rapidly, reporting high profitability, certified by top accounting firms. They pay exceedingly well. At the same time, they radically lower standards, building new businesses in markets previously considered too risky for honest business. In the financial sector, this takes the form of relaxed – no, gutted – underwriting, combined with the capacity to pass the bad penny to the greater fool. In California in the 1980s, Charles Keating realized that an S&L charter was a “license to steal.” In the 2000s, sub-prime mortgage origination was much the same thing. Given a license to steal, thieves get busy. And because their performance seems so good, they quickly come to dominate their markets; the bad players driving out the good.

The complexity of the mortgage finance sector before the crisis highlights another characteristic marker of fraud. In the system that developed, the original mortgage documents lay buried – where they remain – in the records of the loan originators, many of them since defunct or taken over. Those records, if examined, would reveal the extent of missing documentation, of abusive practices, and of fraud. So far, we have only very limited evidence on this, notably a 2007 Fitch Ratings study of a very small sample of highly-rated RMBS, which found “fraud, abuse or missing documentation in virtually every file.” An efforts a year ago by Representative Doggett to persuade Secretary Geithner to examine and report thoroughly on the extent of fraud in the underlying mortgage records received an epic run-around.

When sub-prime mortgages were bundled and securitized, the ratings agencies failed to examine the underlying loan quality. Instead they substituted statistical models, in order to generate ratings that would make the resulting RMBS acceptable to investors. When one assumes that prices will always rise, it follows that a loan secured by the asset can always be refinanced; therefore the actual condition of the borrower does not matter. That projection is, of course, only as good as the underlying assumption, but in this perversely-designed marketplace those who paid for ratings had no reason to care about the quality of assumptions. Meanwhile, mortgage originators now had a formula for extending loans to the worst borrowers they could find, secure that in this reverse Lake Wobegon no child would be deemed below average even though they all were. Credit quality collapsed because the system was designed for it to collapse.

A third element in the toxic brew was a simulacrum of “insurance,” provided by the market in credit default swaps. These are doomsday instruments in a precise sense: they generate cash-flow for the issuer until the credit event occurs. If the event is large enough, the issuer then fails, at which point the government faces blackmail: it must either step in or the system will collapse. CDS spread the consequences of a housing-price downturn through the entire financial sector, across the globe. They also provided the means to short the market in residential mortgage-backed securities, so that the largest players could turn tail and bet against the instruments they had previously been selling, just before the house of cards crashed.

Latter-day financial economics is blind to all of this. It necessarily treats stocks, bonds, options, derivatives and so forth as securities whose properties can be accepted largely at face value, and quantified in terms of return and risk. That quantification permits the calculation of price, using standard formulae. But everything in the formulae depends on the instruments being as they are represented to be. For if they are not, then what formula could possibly apply?

An older strand of institutional economics understood that a security is a contract in law. It can only be as good as the legal system that stands behind it. Some fraud is inevitable, but in a functioning system it must be rare. It must be considered – and rightly – a minor problem. If fraud – or even the perception of fraud – comes to dominate the system, then there is no foundation for a market in the securities. They become trash. And more deeply, so do the institutions responsible for creating, rating and selling them. Including, so long as it fails to respond with appropriate force, the legal system itself.

Control frauds always fail in the end. But the failure of the firm does not mean the fraud fails: the perpetrators often walk away rich. At some point, this requires subverting, suborning or defeating the law. This is where crime and politics intersect. At its heart, therefore, the financial crisis was a breakdown in the rule of law in America.

Ask yourselves: is it possible for mortgage originators, ratings agencies, underwriters, insurers and supervising agencies NOT to have known that the system of housing finance had become infested with fraud? Every statistical indicator of fraudulent practice – growth and profitability – suggests otherwise. Every examination of the record so far suggests otherwise. The very language in use: “liars’ loans,” “ninja loans,” “neutron loans,” and “toxic waste,” tells you that people knew. I have also heard the expression, “IBG,YBG;” the meaning of that bit of code was: “I’ll be gone, you’ll be gone.”

If doubt remains, investigation into the internal communications of the firms and agencies in question can clear it up. Emails are revealing. The government already possesses critical documentary trails — those of AIG, Fannie Mae and Freddie Mac, the Treasury Department and the Federal Reserve. Those documents should be investigated, in full, by competent authority and also released, as appropriate, to the public. For instance, did AIG knowingly issue CDS against instruments that Goldman had designed on behalf of Mr. John Paulson to fail? If so, why? Or again: Did Fannie Mae and Freddie Mac appreciate the poor quality of the RMBS they were acquiring? Did they do so under pressure from Mr. Henry Paulson? If so, did Secretary Paulson know? And if he did, why did he act as he did? In a recent paper, Thomas Ferguson and Robert Johnson argue that the “Paulson Put” was intended to delay an inevitable crisis past the election. Does the internal record support this view?

Let us suppose that the investigation that you are about to begin confirms the existence of pervasive fraud, involving millions of mortgages, thousands of appraisers, underwriters, analysts, and the executives of the companies in which they worked, as well as public officials who assisted by turning a Nelson’s Eye. What is the appropriate response?

Some appear to believe that “confidence in the banks” can be rebuilt by a new round of good economic news, by rising stock prices, by the reassurances of high officials – and by not looking too closely at the underlying evidence of fraud, abuse, deception and deceit. As you pursue your investigations, you will undermine, and I believe you may destroy, that illusion.

But you have to act. The true alternative is a failure extending over time from the economic to the political system. Just as too few predicted the financial crisis, it may be that too few are today speaking frankly about where a failure to deal with the aftermath may lead.

In this situation, let me suggest, the country faces an existential threat. Either the legal system must do its work. Or the market system cannot be restored. There must be a thorough, transparent, effective, radical cleaning of the financial sector and also of those public officials who failed the public trust. The financiers must be made to feel, in their bones, the power of the law. And the public, which lives by the law, must see very clearly and unambiguously that this is the case. Thank you.

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  1. Alice
    May 18, 2010 at 11:04 am

    Your father spent many years of his life explaining the incompetence and the failure to observe the real world that emerged in economics and, regrettably, it really commenced failing in his lifetime, perhaps more than yours. We are now living the failures of economics that your father could see decades ago.

    A profession blindsided?? Caveat emptor is just laissez faire…a most uneconomic objective that is not at all new.

    Thankyou, James Galbraith. Nice family.

  2. s h a r o n
    May 18, 2010 at 11:19 am

    Hail to homo sapiens.

    And hail to Modern Man who seems to want nothing more than to aggrandize wealth and acquire “things”.

    Oh, and don’t forget our primary driver: Get something for nothing.

  3. May 18, 2010 at 1:26 pm

    I subscribe to that view: VERY cool family, the Galbraiths. Much brain, compassion, ingenuity, creativity.

  4. May 18, 2010 at 5:49 pm

    Bravo!

  5. May 19, 2010 at 9:36 pm

    this economic disgrace mentality of passing the buck is what I have been saying for years, since the Savings and loan crisis, actually. In hawaii, mortgages and agreements of sales have been the status quo, it NEVER mattered what the borrower was worth because he was going to sell before the balloon became due and pass it off to another mortgagee based on the assumption that the price of the land would always go up.

  6. bruce rogan
    May 20, 2010 at 9:03 am

    Bertrand Russell had the same approach- if somebody says something to me that contains a word I cannot understand, I first look up the word and see if what he said now makes sense to me. If it does, I pay attention, if it doesn’t, I stop listening.
    I would say that every person of normal intelligence throughout the entire world knows that the financial and political scene is in the hands of criminals. What everyone is waiting for is a latter day Ghandi (dare I say Christ) to lead us out of the wilderness. Many mistakenly thought it would be Obama (myself included).

  7. americafarm
    May 20, 2010 at 1:02 pm

    Right, the financial AND the political scene are in the hands of gangsters. Going to a bunch of career politicians, all bought, and asking for help is like asking a monkey in the zoo for help. “Monkey, please…help!”

  8. Tom Dennen
    May 20, 2010 at 2:02 pm

    From ‘Grand Theft, Planet’ by Tom Dennen (A very early version is available on the Internet).

    Professor John Kosy, of Global Research adds, “When we look at classical/neoclassical economics, how can its intent be determined? In the absence of any stated purpose, one can examine the things it does and those it doesn’t. In the (almost three) centuries it has been practiced, orthodox classical capitalism has not brought growing or even a stable level of prosperity to the peoples who inhabit the countries in which it has been practiced. Spurts of apparent prosperity have been continuously destroyed by economic crashes that have over and over again ruined the lives of millions.”
    The first economic crash under this system of monumental greed was called the South Sea Bubble and it happened in 1720.
    There have been four others between that one and this one, on schedule as regular as clockwork, making five.
    Today’s ‘Global Meltdown’ is just the sixth in a planned, 300-year series.

    BOOM -BUST BY DESIGN

    This ‘meltdown’ is current history and all of that which I am going to examine in the next few pages can be checked, challenged, researched and then wept over. Because it is the proof that we have simply been parted from our money once again.
    It is history cast in three centuries of stolen wealth:
    On average, every forty-six years, for the last three hundred years (the lifespan of Capitalism), since the collapse of the South Sea Bubble in the first decade of the1700s there has been commodity peak in the world’s stock markets, followed by a crash, followed by a depression (and the theft of a generation’s wealth.)
    That statement is paraphrased from “The Great Reckoning” by James Dale Davidson and William Rees-Mogg, Sidgwick & Jackson, published, yes, in 1993, when by then we should have known.
    Theft is my interpretation of their observation of these last six events because I believe that once is an accident, twice is a coincidence, three times is a Declaration of War.
    Four times is the realization that the Declaration fell on the deaf ears of sleeping fools, five times is simple daylight rape and plunder of the same fools – the sixth time, this time, Grand Theft, Planet©, is perhaps and hopefully, the lesson finally learned, and do we now wake up?
    The clues are lying open in the field of history:
    There is on record a nine-year gap between commodity peaks and market crashes over the last five generations. Add forty-six years to that (the average number of years between peak and crash) and you have a boom-bust cycle twice every hundred years or once a generation, meaning every generation of western working and middle-class citizens has, for the last three hundred years, been good and truly and thoroughly plucked:
    • First Time: Commodity prices peaked in London in 1711. The ‘South Sea Bubble’ burst exactly nine years later in 1720.
    Depression followed.
    • Second time: Producer prices peaked in London in 1763. The London stock market crashed again in 1772 (nine years later).
    Depression followed.
    • Third time: Commodity prices peaked in London in 1816.The London stock market crashed in 1825 (nine years later).
    Depression followed.
    • Fourth time: Wholesale prices peaked in New York in 1864. Worldwide assets crash began in May 1873 (nine years later).
    Depression followed.
    • Fifth time: Then followed our beloved Great Depression in the 30s, about which much has been said, from which, little learned.
    Commodity prices peaked some fifty years later – the sixth time, in Tokyo, 1980.
    The Tokyo stock market crashed in 1989 (again, nine years later). The depression following that crash is now upon us.
    Look around you and do the math: The last depression is called The Great Depression.
    I call this one ‘Grand Theft, Planet’ ©.

  9. RL
    May 20, 2010 at 3:26 pm

    A lot of flowery language that goes largely over the heads of the majority of Congress and certainly the American people. The “suited” thieves that wrought this will never be punished in proportion to their crimes nor will they make whole again those that they have so cruely damaged.
    WAKE UP AMERICA YOUR COUNTRY IS BEING STOLEN AND PLUNDERED WHILE YOU WATCH ESPN AND GO TO NASCAR RACES.

  10. May 20, 2010 at 3:46 pm

    Such truth is hard to find because it is so seldom spoken, I suppose.

    That many too many people have had knowledge of what Professor Galbraith is reporting now and chose willfully, deceitfully, dishonestly to remain silent while grand theft occurred is anathema to democratic principles and practices. Surely we are dealing with thieves of the highest order.

    Thanks for speaking out, Professor Galbraith.

    Steven Earl Salmony
    AWAREness Campaign on The Human Population, est. 2001

    http://sustainabilityscience.org/content.html?contentid=1176

    http://sustainabilitysoutheast.org/

  11. May 21, 2010 at 2:34 am

    100% financing, as the name implies, offers complete financing of your property. The other option, 80/20 finance your mortgage with two loans. Loans may be made by the lender, but sometimes the seller or the lender is obligated to reach second mortgage of 20%.

    100% financing is easier to handle, but not all lenders offer this type of loan.

    Qualifications for the Zero-Down

    If a credit score of 600 or more may be best, large cash reserves to qualify, too.

    If you choose 80/20 financing with the seller of the second mortgage, you can be treated with sub-prime lenders with a score 560th

  12. Lewis L. Smith
    May 22, 2010 at 6:00 pm

    As one who came into economics through “the door” of finance, was an on-balance successful “player” in securities markets and briefly co-owned a small mortgage originator, I can only say “amen” to Dr. Galbraith’s presentation.

    The “fools and knaves” who still run Wall Street and one of our major parties and have bought themselves a large segment of the Congress, in their state of greed and ideological blindness, do not understand that the USA cannot tolerate another crisis like the latest one. Next time, there will be no fooling around. We will nationalize the big banks and have done with it.

    Too much of business in the USA is run like organized crime when it should be run like a professional sports competition.

    ###

  13. Tony Ryals
    May 23, 2010 at 4:32 am

    Maybe James Dale Davidson of the National Tapayers Union and Agora Inc and the Lew Rockwell ians and Libertarians should all be refered to as Misesians which they all answer to anyway but I somehow like the title Ludwigians better.Anyway poor Ludwig Von Mises would probably be turning in his grave if he knew whose his modern day proponents were – stock,gold,mortgage scammers and money launderers which is what my experience with Agora Inc Misesians taught me about them.And Agora Inc VERY Beltway connected.Ita founder James Dale Davidson is working with Dick Morris through his newsmax.con to bash the dollar and tout go gold – a true Libertarian-Misesian and Agoran and Lew Rockwellian obsession !Davidson who bribed Bill Clinton and laundered money for George Herbert Walker Bush using worthless U.S.PENNY STOCKS AS CURRENCY STARTED THE RUMOR LIE THAT HIS BIOTECH PENNY STOCK frauds Endovasc and Genemax WERE ‘NAKED SHORTED’ IN 2002. THAT IS THE VERY SAME RUMOR-LIE EX SEC CHAIR CHRIS COX HIMSELF USED TO ‘EXPLAIN’ THE COLLAPSE OF FREDDIE MAC AND FANNIE MAE IN 2008! .

    In defence of poor idiot economist Ludwig Von Mises – he had never heard of or used the term ‘naked short selling’.That was popularized or made up by Agoran Misesian and National Taxpayers Union founder James Dale Davidson himself to distract from his unending penny stock frauds.And in the end the SEC and Christopher Cox and his selected IG H David Kotz – (who recently appointed himself to defend Goldman Sachs from Barack Obama and his own SEC colleagues who have filied charges against them!) – both lied about Fannie Mae and Freddie Mac being being ‘victims of naked short selling’.H David Kotz who would prosecute Obama before Goldman Sachs has lied about penny stocks being naked shorted(an Agora Inc- Misesian obsession) and should himself be prosecuted along with ex SEC Chair Chris Cox for using the term to distract from what Goldman Sachs was really doing to short Fannie Mae Freddie Mac etc..

    Anyway speaking of Misesians and Libertarians – the great Misesian and Libertarian,Loyola University ‘ Ludwigian economist’ ,and racist in residence, Walter Block,(who some suspect of being off his),has been invited to speak by
    Paul Geddes of the Vancouver Libertarian Party on May 8 as I posted below.

    However I decided the event should receive broader notice and so I wrote my
    opinion of the event in the post with link below and (and brief quote) titled,

    ‘Naked Short Lie:Agora Inc.,Lila Rajiva,Walter Block:Vancouver Libertarian Paul Geddes brings CIA racist stock fraud money launderers to Canada’……

    http://la.indymedia.org/news/2010/04/237794.php

    Aren’t you as a Canadian capable of creating your own political party that at least has no ties to stock fraud,money laundering gold and mortgage scams of the U.S.Libertarian Party and Republican ‘libertarian-in-chief’ Ron Paul with his criminal ties to James Dale Davidson’s,Lord William Rees-Mogg’s and ex CIA ‘economist’ Mark Skousen’s Agora Inc crime family ?! …..

    Besides being a ‘Libertarian’ like yourself,Mr.Geddes,Bud Burrell has
    also has some Canada stock fraud and money laundering experience by
    way of CMKX Diamonds that he also claims was not an illegal pump and
    dump but a ‘victim off naked short selling’ just like James Dale
    Davidson’s,Brent Pierce’s and Grant Atkins Genemax cancer vaccine
    fraud with its Nevada and Vancouver connections !

  14. May 23, 2010 at 3:59 pm

    Economics is a disgrace to humanity’s eovlution of thought.

    It is a crime to hide banking practices behind national statistics in an attempt to explain what’s happening to people, WITHOUT studying what money is and what functions it fulfils for whoever creates it.

    At the London School Economics, one student wasn’t allowed to write her PhD on the creation of money, because it wasn’t “capitalism”.

    May everybody who is waking up enjoy their new insights and act on them with as much effectiveness as James Galbraith!

    More on http://sabinemcneill.blog.com/forum-for-stable-currencies/

  15. Alan North
    May 24, 2010 at 3:56 am

    Isn’t everybody forgetting that it was JK Galbraith who gave us the solution for every recession that has ever hit this Country, and has since been exported to every other Banana Republic – that you can print money to ‘spend’ your way out of trouble. Hayek, Von Mises and numerous others have been warning us about the implications, including massive inflation – of the JK Galbraith ‘fiat currency solution’ – for decades. The only reason it didn’t happen earlier is that under the guise of ‘Free Trade Agreements’, we have CONNED the rest of the world into using the US dollar as the medium of exchange / trade. What Global Commodity ISN’T traded in $US??

    Its precisely that approach, and along with Zimbabwe – the abandonment of the Gold Standard, that got us into this mess in the first place. James Galbraith is merely repeating the same family jargon as his father. But he is right about the private banking crooks controlling the Federal Reserve.

  16. Ros Hirschowitz
    May 28, 2010 at 12:25 pm

    Pehaps we need to look beyond fraud and the perpetrators to the existing ideology that is still attempting to gain ascendancy in the world in spite of the financial crisis, namely neo-liberal or neo-conservative economics. This ideology underpins fraud, since it promotes entitlement among the super-rich. Neo-liberal economics is an ideology, since it is belief system without any scientific backing. It focuses on the unfettered exchange of money, goods and services through “free markets”. This ideology enshrines the following principles:
    1.“Markets”, on their own, should be the determining factor of the value of goods and services, rather than any other factor, for example the need of the poor to attain satisfaction of their basic needs;
    2. Markets are more important than any other institution, for example they should take priority over educational and health institutions, and the market mechanism should be dominant over any other forms of social organisation;
    3. Competition is the highest value. Competition for market share should be unfettered, and prices of goods and services should be determined by competition in the marketplace rather than by any other means;
    4. There should be no price controls imposed artificially on markets;
    5. Financial markets should be unrestricted in setting the value of currencies;
    6. Efficiency should be highly esteemed, and should be more important than any other concerns, such as cooperation and altruism.
    7. Markets should be left to their own devices in order to be allowed to function efficiently;
    8. The private sector is believed to be more efficient than the public sector and should therefore be given freedom to function without restraint through efficient global markets;
    9. The public sector is made up of inefficient, bloated bureaucracies, which cost the taxpayer money.
    10. To function at its maximum efficiency, the private sector needs to be freed from all government constraints. Trading across the globe should be deregulated and freed from all restrictions;
    11. Privatisation should occur regarding all state-owned enterprises such as transport services; postal services; telecommunications; electricity generation; the provision of gas and other energy sources; and the provision of clean reticulated water. Certain social services, such as the prison services and hospitals should also be privatised.
    12. Labour markets should be made more flexible, without the setting of minimum wages or other conditions on employment, so that workers can be more easily exploited;
    13. Maximum profits should be the goal of all transactions and of life in general; and
    14. Government spending should be cut.
    With this type of ideology, it is no wonder that so much grand-scale fraud is possible

  17. erik andersen
    May 29, 2010 at 5:05 pm

    Something to consider and I would dearly like to read thoughts by others. In my reading of this brilliant representation, particular note is made by James of the absence or inadequacy of the “law” when systems are designed with contract law as a given.
    Would there be some diminishment of fraud if in fact there was no law. Fraud seems to be mostly possible because of contracts and their associated law. Should there be no law as in not having any court to go to, parties to an agreement would, out of shear terror of total loss, avoid putting themselves in harms way.
    In the case of commodity exchanges, speculators are tolerated if not encouraged because they provide liquidity (conveniently generating more fess and commissions for the exchange owners). The creation of one type of a contract could be where the real producers and consumers have exclusive use. It would feature mandatory physical delivery as the only form of settlement. A second type of contract may or may not be created for those parties wishing to speculate and settlement would only be guarranteed by the exchange owners in conjungtion with the speculators. Parties would have no recourse to any court in the case of dispute or payment failure.

  18. June 28, 2013 at 1:40 pm

    の1つはの中で最も古典的なメッセンジャーバッグで起こって型ですシャネルキルトのハンドバッグ(と様々なニセモノバージョン)。どうかに関係なくは、jrロッキング女の子それ彼女とパンストあり、Uggのブーツ、またはその女性おばあさん身に着けているそれビンゴの夜、このバッグに管理カテゴリクロスを通じて、年齢差一緒にもすることができます変換に合うようにおスタイルの特定女性。

  19. September 2, 2013 at 9:08 pm

    If human population dynamics is essentially common to the propulation dynamics of other species and, consequently, if food supply is the independent not the dependent variable in the relationship between food and population, then a lot of what has been reported over many months within the CoF could be distractions that serve to dismiss rather than disclose vital but unwelcome science of what could somehow be real regarding the human population and, more importantly, why our behavior is so utterly destructive of everything we claim to be protecting and preserving. May I make a request? Could we focus now, here, on whether or not human exceptionalism applies to its population dynamics alone or is the dynamics of all species, including human beings, similar? Whatever your response, please make reference to scientific research that supports your point of view.

    It seems to me that if we keep engaging in and hotly pursuing worldwide overproduction, overconsumption and overpopulation activities, distinctly human activities that cannot be sustained much longer on a planet with size, compostion and ecology of Earth, then the human species is a clear and present danger on our watch to future human well being, life as we know it, and environmental health. If we can see ourselves to be ‘the problem’, then it is incumbent upon us to bring forward the best available evidence from science, especially when that evidence happens to relate directly to why we are pursuing a soon to become, patently unsustainable (superhigh)way of life. A tip of the hat is due Rachel Carson for making me aware of the superhighway. Should humankind emerge from ‘the bottleneck’ E.O. Wilson imagines for us in the future and somehow escape the precipitation of our near-term extinction, how are those survivors to organize life sustainably and not repeat the mistakes we are making now… and have been making for a long time? Without knowledge of why we are doing what we are doing, every one of us is forever trapped in an eternal recurrence of unsustainable life cycles, I suppose.

    Sincerely yours,

    Steve Salmony

    PS: Rachel Carson’s quote,

    We stand now where two roads diverge. But unlike the roads in Robert Frost’s familiar poem, they are not equally fair. The road we have long been traveling is deceptively easy, a smooth superhighway on which we progress with great speed, but at its end lies disaster. The other fork of the road—the one “less traveled by”—offers our last, our only chance to reach a destination that assures the preservation of the earth.
    Rachel Carson (1907 – 1964)

  20. November 16, 2013 at 7:23 pm

    It seems to me that as long as experts willfully ignore the “system causation factor” of the human population explosion, that is to say, the increasing food supply which is literally fueling the explosion, we will continue to see the promulgation of politically convenient thought and economically expedient policymaking. Science regarding ‘why the human population is exploding’ will continue to be denied and endless preternatural, ideologically-driven chatter about ‘what is happening’ will pass for a complete sharing of knowledge. We are in a sad state of affairs.

    Just for a moment, let us imagine that now we have all the greatest population experts speaking with one voice. They tell us that we are headed rapidly for 8 billion people on the surface of Earth, declining TFRs in many western European countries notwithstanding. When that number is reached in the foreseeable future, we will have too much food, too little water and clean air, and no decent environment to speak of. Pollution will be visible to all, everywhere. In the meantime many species of birds and wildlife will go extinct because of the destruction of their habitat from land clearance to grow more food to support an exploding human population. What is happening is made evident. Why this situation is occurring with a vengeance of our watch is avoided at all cost. All this is good, they say.

    All these top rank population experts, inside and outside the scientific community, then go on to say that in order to have more and more happy people we need more and more people who can be counted upon to increase the depletion and degradation that will rapidly subtract from the source of that happiness, our planetary home, until such time as Earth is no longer able to function as a source of happiness. More importantly, because we self-proclaimed experts are ‘free to know’ and then speak of what is determined by the powers that be to be best for the rest of us to know, some scientific research can be and will be denied. While these experts do not lie, they deliberately refuse to give voice to the whole of what is true to them, according to the lights and knowledge they possess. By their conscious silence, these experts will ensure that the unsustainable growth of the human species, the reckless depletion of resources and the irreversible degradation of ecology of the planet happens as soon and efficiently as possible. All this is good, they say, because we are making things better.

  21. Lyonwiss
    November 17, 2013 at 2:15 am

    Steve, The reason why human population explodes is: there is a need to support an economic structure which is a giant Ponzi scheme, needing ever expanding membership. More and more working taxpayers are required to support retiring taxpayers, in “pay-as-you-go” pension systems, such as the US social security system.

    The result is exploding government debt (aka unfunded liabilities). The falling populations in developed countries are partly compensated by immigration, both legal and illegal. The population of developing countries continue to explode for the same reason, but by a different mechanism. In countries without a pension system, the next generation of a family is the retirement provider of of the current generation, which has the incentive to grow the family.

    At least part of the answer for the problem of population explosion and economic Ponzi scheme, implemented in many countries, is self-funded retirement, which is to pay for one’s own consumption in retirement through one’s own accumulated savings from a life-time of work.

    But even this solution to end the Ponzi scheme is being derailed by current Keynesian policy of “euthanasia of the saver”. Equilibrium economics has led to a blindness or a short-sightedness which has created an unsustainable world.

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