Tulip Bulbs and Global Warming

 

Mania can be variously described as a vehement passion or as a certain kind of madness that tends to inflict the population from time to time. The latest mania to inflict our world is in the form of the now ubiquitous “emissions trading scheme” or ETS – hailed as the next big thing- the way of the future- the saviour of the planet- not to mention the human race.
This most recent and heroic invention, designed to stop global warming and redistribute wealth has its origins in the musty recesses of a United Nations committee. Cause enough for alarm one might surmise, but like a spark in the Australian bush during high summer; an inferno of personal guilt at having a “carbon footprint” erupted, engulfing all reason and sense before it, as has happened many times before in our commercial history.
 The dot-com craze, along with the 1987 share market boom are recent examples of mania, but surely the most extraordinary and irrational occurrence (before the advent of the  emission trading scheme) was - The Great Tulip Bulb mania of the 1630s.
The commercial world went totally silly over tulips. A single “rare” bulb sold for the equivalent of 12acres of land. No self respecting merchant could ignore the demand to engage in the craze that swept the then commercial world. Fortunes were made on the speculative trading in tulip bulbs. Indeed it was deemed to be in poor taste if one did not invest in a collection of tulips. It was observed that the tulip possessed neither the perfume of a rose nor the beauty of a sweet pea yet the business fashion of the day decreed that the flower was to be highly valued. Within 3 years the bubble burst and vast fortunes were lost. Sound familiar?
Another mania occurred in 1720 when the now infamous South Seas Company was given the sole right by the British Government to trade with the South American continent, mainly in slavery. The company advertised itself as a company “for carrying out an undertaking of great advantage”. Regrettably nobody was to know what that advantage was.   The South Seas Company simply told people what they wanted to hear and the public believed the rhetoric.
During that heady time a company even promised to reclaim sunshine from vegetables. Not totally dissimilar from a carbon credit  which rewards the growing of vegetation that absorbs one gas and gives off another) Those shares sold well as did shares in a company that promised to build floating mansions to extend Britain’s land mass. One enterprising fellow advertised an unknown scheme, to be revealed at the end of the month, and took in $10,000 the first day.
Even today, nobody knows what the speculative carbon credit will be worth in a month’s time as the rules of engagement appear to differ depending on the amount of credits ‘suddenly’ discovered by countries with a deficit of carbon credits. New Zealand has gone from a supposed half a billion dollar credit to a 2 billion dollar deficit and back into credit within 3 years.
 Just how the shuffling of carbon credits will impact on people’s consumptive behaviour and the world’s climate, is also a great unknown, yet governments are desperate to buy into the business - on our behalf. The logic of having a financial instrument that excludes at least half of the world appears totally fanciful.
Financial markets now and then can ignore sound economic principles in the belief that for every one foolish person’s investment – two will follow, if there is money to be made; until the inevitable crash.
The carbon credit market is not driven by an environmental disaster but by the misguided belief - in other people’s belief. (See Al Gores film An Inconvenient Truth)
The Great Emission Trading Scheme is a political construct requiring the artificial pricing of a market seeking a political and commercial outcome which of course will inevitably be a disaster of our own making.
The Government of NZ will drive the willing, the gullible, and the skeptical into the speculative world of carbon credits due to its heroic desire to save the world from warming, by the simple transfer of credits from one nation to another, all the while excluding the worst polluters. To ignore the ‘emerging’ countries such as India, China and South America’s contribution to global warming is simply nonsense. Technology exists to “scrub” emissions from coal fired power stations but no technology can eliminate or scrub livestock gas emissions from livestock. The New Zealand Government should phase out livestock farming not just tax it, if it is so concerned over the emissions of sheep and cattle and their tenuous contribution to global warming.
If the world’s authorities want to clean up green house gas emissions they need only to employ the reasoning behind Pascal’s Wager. Blaise Pascal was a 17th century  mathematician who put forward the proposition that it was smart to believe in God because if he exists- you benefit, but if he doesn’t exist –you loose nothing by living your life well. So it is with global warming. If man induced global warming is correct to the extent of changing the worlds climate, then cleaning up the atmosphere is clearly necessary and sensible.
What must happen is the engagement of the entire industrial world in cleaner technology and not penalize the poor as “The Great Emissions Trading Scheme” will undoubtedly do. Nor should we hugely distort a functioning civilization – in order to save it.
 
Gerrard Eckhoff
Roxburgh