In our recent debate on shale gas drilling, one salient question that arose is whether the audience represented the “reasonable man”, in the phrasing of environmental activist Jonathan Deal. Faced with rising electricity prices, what exactly distinguishes the economic choices and values of one person from those of another?
A possible clue to why two sides in a debate, both of whom claim to have a benign view of human nature and a healthy concern for the environment, differ so strongly on an issue such as shale gas drilling, lies in something Cormack Cullinan said. Cullinan is an environmental lawyer retained by the Treasure the Karoo Action Group, led by Jonathan Deal. His lobby group opposes shale gas drilling in the Karoo, fearing pollution, even if the evidence shows that such a choice has grave consequences for electricity prices, which impact heavily on industrial productivity, consumer prices and unemployment rates.
Cullinan drew a curious distinction between seeking economic profit, and individuals pursuing their own welfare. The former he saw as greedy and immoral, but the latter as entirely benign and in harmony with nature.
I’ve never understood the difference.
Economics is the study of human action. It aims to understand how people make choices, and under what circumstances they choose to forgo one benefit for another. Some of those benefits are explicitly measured in monetary terms, but many are not. Every time a free choice is made, whether it involves trading labour for income, trading income for food, buying one product instead of another, investing income for long-term security, cashing in investments for short-term survival, we make an economic choice. Even with apparently non-financial issues such as protecting rather than exploiting a particular piece of land, what to have for dinner, how to spend a holiday, or trading productive time for time to spend with your family, we essentially make an economic choice. We seek to improve our well-being; that is, we seek to profit.
Ludwig von Mises explains this dynamic well in a book entitled simply Human Action (free PDF): ‘‘Choosing determines all human decisions. In making his choice man chooses not only various material things and services. All human values are offered for option. All ends and all means… are ranged in a single row and subjected to a decision which picks out one thing and sets aside another.”
Mises understood that when he set out to write a book about economic behaviour, he really was writing about what motivates all human action – hence the title. Our decisions are inherently subjective, and cannot be objectively judged as rational or irrational by outsiders. They are inherently welfare-maximising; that is, profitable.
To one person, playing golf may be the best way to spend a day. To others, it is an utterly irrational activity and a waste of an opportunity to earn a little extra income, or spend time with their family. To one person, burning wood or paraffin to keep their child warm at night may vastly outweigh any consideration for the environment or the child’s long-term health. After all, should the child not survive, the future does not matter to them. To another person, living a prosperous, comfortable existence in which short-term needs are routinely taken care of, longer-term desires may be of far more value, and they’ll prefer to pay more for electricity, heating oil or a gas heater. Although the decisions each of us reach may directly contradict each other, none are more or less rational for that reason.
This returns us to a telling point Deal made during the debate. He raised the legal notion of a “reasonable man”, and pointed at the audience as representative. If such reasonable people object to shale gas drilling, both in law and in democratic politics, that objection should be upheld, he argued.
The legal concept of a reasonable man, or the democratic concept of a majority vote, does not imply that the average person knows what is best for everyone else. There is a reason the legal system employs judges and magistrates, rather than artists and cashiers, to determine cases. Even in jury systems, which defer far more obviously to the judgement of the “reasonable man”, there is judicial oversight to prevent the jury from making a decision out of ignorance of the underlying facts, or contrary to principles of law.
There is a reason not all cases are determined the same way. There is a reason why democracy chooses a representative government, but does not impose central state control over all our individual choices.
Few average people, reasonable or otherwise, have anywhere near the knowledge required to make a decision about whether or not a particular industrial activity can be undertaken sufficiently safely to reap its benefits.
Many people are led in one direction or another by propaganda, lobbyists, advertising or popular myths. They surely have the right to make choices about their own lives, even if that means swearing by the latest diet fads, wearing hologram bracelets or healing crystals, or treating disease with pure water that supposedly has “memory” of a herbal infusion, instead of modern medicine tested and proven in clinical trials.
But why would they have the right to impose their own decisions on others? And why would they be any more reasonable than someone who believes cleaner, more efficient energy generation is an improvement, and even if cleaner energy might one day be price-competitive it makes no sense to let an unattainable long-term ideal be the enemy of progress in the meantime?
However, Deal’s “reasonable man” test raises another moral question. The audience at which he pointed was not at all representative. It was, perhaps, representative of a certain kind of white, liberal, upper-middle-class elite, but in none of the debates about shale gas drilling that I have addressed have I ever seen more than a token brown face or two. The people who are poor or unemployed in the Karoo, or elsewhere in South Africa, are simply not represented.
As the charts alongside demonstrate only too clearly, South Africa already labours under unaffordable electricity prices. EU countries pay dearly for their green idealism, while the US has the cheapest electricity of all, thanks to its shale gas boom. Japan is also paying a very dear price for its rash decision to cave in to scare-mongering about nuclear power.
The irony is that nuclear remains, in terms of deaths per unit of power produced, the safest of all sources of energy. However, countries that are rejecting it in favour of renewables, such as Germany and Japan, find their industries are turning instead to the dirtiest and least safe form of energy, coal.
If that happens even in rich countries, which can arguably afford lavish subsidies to pander to the green lobby’s fears and ideals, what chance does South Africa have to avoid a similar fate? We’re already building massive new coal-fired power stations, made none the cheaper by corruption and first-world environmental standards. When future power stations are planned, is more coal, instead of clean, efficient gas, really what environmentalists want? Are they prepared to sacrifice significant progress because it doesn’t meet their standard of perfection?
The people who cannot afford to pay two or three times the odds for electricity generated from wind and solar, as citizens in Denmark or Germany do, will inevitably choose more dangerous, unhealthy and polluting forms of energy such as coal, wood or paraffin. Because electricity is a master resource, upon which all other productivity depends, high prices contribute directly to lower industrial output, rising consumer prices and higher unemployment. Those who would reject shale gas because of unlikely, avoidable and manageable risks may believe they can afford to sacrifice for their idealistic and misguided risk aversion, but even if their green dreams were achievable in the long run, many South Africans cannot afford that luxury.
On a previous occasion, a white man, a pastor who claimed to represent the poor brown-skinned people of the Karoo, got up and asserted that we ought to protect the beautiful relationship the rural unemployed have with the land. When I chanced to meet him some weeks later in his own home town, he did not even deign to count “them” among his own town’s population.
He expressed confusion that “those people” did not appear to trust his high-minded missionary motives. Well, would you trust a man who doesn’t acknowledge your membership of society, yet claims to speak for you, and tells other wealthy white people that you ought to be left to suffer in your grinding poverty, because it is “beautiful”?
Nobody in that audience may have thought of themselves as anything other than a “reasonable man” (or woman), but they were certainly not average. Their choices may well differ from those of the rural poor, but to think that these upper-class values ought to be imposed upon the poor and unemployed, because rich white people know what is good for poor brown people smacks of a regressive and condescending kind of neo-colonialism.
Besides the environmental claims about shale gas drilling, which are one by one collapsing under independent scrutiny – so much so that even Deal now publicly dissociates his group from propaganda films such as Gasland – there are deeper reasons why our government will not be swayed by these activists.
For all the distrust I have of governments and large companies who get together behind crony-capitalist doors to divide the loot, they are right to dismiss the objectors. The activists have lost any standing or credibility as honest watchdogs.
The job of holding the companies and government accountable for corruption or liability will fall to others. Independent journalists, in hock to neither the oil and gas lobby on one hand, nor the green and coal lobbies on the other, will have to do what the media has always claimed to do: report without fear or favour, and provide the public with a fair and balanced view.
Now that government owns a stake in one more of the major media houses, one hopes there are enough such journalists left. DM
Riding a Black Unicorn Down the Side of an Erupting Volcano While Drinking from a Chalice Filled with the Laughter of Small Children is the title of a dark cabaret album by 'Voltaire'