The collapse in the price of oil is a challenge to the old world order

Allister Heath in The Telegraph


It is one of life’s mysteries that being wrong about everything has never been much of a barrier to success. Take Thomas Malthus, the British theologian: his big idea was that the number of human beings would necessarily grow faster than the supply of food, leading to calamity. There was little difference, in his mind, between people and rabbits: both were doomed to over-breed, over-consume and starve.

Yet this theory, expounded in 1798 in An Essay on the Principle of Population, one of the most influential books ever written, and now also routinely applied to oil and other resources, is bogus. Unlike rabbits, who are powerless to control their environment, the more we need, the more we eventually find a way of producing: the availability of food and oil are determined by technology and economics, not by some law of nature. Modern techniques (such as fertilisers, genetic selection or fracking) mean that agriculture and the extraction of commodities have become hugely more efficient.

The average British field yielded just over three tons of cereal per hectare per year in 1961; today, it is twice that. Thanks to the spread of free markets and knowledge, the world has never produced so much food, and the number of hungry people worldwide has dropped by 216m since the early Nineties, according to the United Nations.

Ditto oil production: in 2000, the Energy Information Administration estimated that the world contained just over one trillion barrels of untapped oil; since then, proved reserves have shot up by 60pc, increasing every single year despite booming consumption from energy-thirsty emerging markets.

Malthus wasn’t just far too pessimistic about supply: he was also wrong about demand. Rabbits can’t control their birthrates; we can. As more countries embrace markets and globalisation, thus ensuring that their economies develop, global birth rates keep on falling. As to energy consumption, it is just a matter of time before improved battery technology and ever-cheaper solar power finally lessen our dependence on the internal combustion engine and oil. We will eventually be able to feed and fuel the world’s population using significantly less land and fewer hydrocarbons than we do today.

Jesse H Ausubel, an academic at the Rockefeller University in New York, has calculated that an area the size of the Amazonian forest could be returned to wildlife when the average farmer around the world becomes as productive as their US counterparts. Ausubel calls this the Great Reversal: nature’s chance to restore land and sea to their original use. It is an intriguing and exhilarating prospect, made possible by the wonders of capitalism, innovation and human ingenuity.



The abject failure of Malthusianism was, in fact, one of the defining trends of 2015, especially in the oil market; it will continue to be one of the central forces of 2016, impacting everything from how quickly the Bank of England puts up interest rates, to the stability of the Middle East. The price of Brent crude oil, which briefly reached $147 a barrel in 2008, is now down to around $37. Some analysts even believe it could fall briefly to $20, especially if more Iranian supplies than expected hit the global markets.

There are many reasons for this historic collapse. Thanks to shale, America is poised to become a net oil exporter. Opec, the old cartel that wreaked so much havoc in the Seventies, is now all but defunct; its members no longer have the ability to push up oil prices. At the same time, the slowdown in China has reduced demand for energy.

The cost to oil-exporting countries from the lower prices is nearing $2 trillion a year. Drivers, by contrast, have saved a fortune, allowing them to spend the cash on other things and contributing to a strengthening in consumer spending across the Western economies.

Drivers have saved a fortune thanks to low petrol prices

Manufacturers’ costs have also slumped, facilitating investment and creating jobs. Europe, China and India have been the great winners. In Britain, lower petrol prices have helped eliminate consumer price inflation. Take-home pay has thus shot up after years of austerity. Cheap oil has also delayed – and delayed again – the prospect of a rate hike from the Bank of England, helping borrowers but hurting savers, some of whom had already lost out from their holdings in commodity and oil firms.

Perhaps the biggest impact will be geopolitical. In oil-exporting Venezuela, the public has booted out the Corbynite government whose demented Left-wing policies had led to a shortage of toilet paper. In Russia, the budget deficit is likely to reach alarming levels this year, forcing the country to dip into its reserves and putting pressure on President Putin, especially given his military commitments in Syria.

The Gulf states face the greatest challenge to their viability. Some, such as the UAE, a close ally of the West’s fight against terror, have such large cash reserves that they ought to be able to cope with low oil prices for decades. Others, including Iraq and Bahrain, will find it much tougher; Saudi Arabia has just been forced to pass an emergency budget. All will slash their purchases of Western assets and luxury goods, hitting the London economy.



The West will be hoping that the existing Gulf regimes aren’t replaced by something worse, while also hoping that the collapse in the price of oil will reduce flows of cash to extremist Wahhabi and Salafist groups around the world. If radical Islamist terror groups end up being the biggest losers, the collapse in the oil price could yet end up achieving more than sanctions or Western military intervention ever could; but a successful uprising in somewhere like Saudi could also risk turning a bad situation into a catastrophe.

As for Scotland, the nationalist electorate will eventually have to wake up to the new reality of a world awash with oil. The SNP’s plans for independence didn’t even come close to adding up even when the price of Brent crude was over $100 last year.

At current prices and with output sliding, an independent Scotland that sought to retain the NHS and the welfare state would face immediate bankruptcy.

Forget about politics and slick campaigns: if anything keeps the UK together over the next few years, it will be cheap oil and the latest, abject failure of Malthusianism, one of the most wrong-headed ideologies of the past 200 years.

Where Cruelty Is Kindness

Those who promoted laissez-faire economics required an explanation when the magic of the markets failed to deliver their promised utopia. Malthus gave them the answer they needed.

GEORGE MONBIOT in Outlook India

Kindness is cruelty; cruelty is kindness: this is the core belief of compassionate conservatism. If the state makes excessive provision for the poor, it traps them in a culture of dependency, destroying their self-respect, locking them into unemployment. Cuts and coercion are a moral duty, to be pursued with the holy fervour of Inquisitors overseeing an auto da fé.

This belief persists despite reams of countervailing evidence, showing that severity does nothing to cure the structural causes of unemployment. In Britain it is used to justify a £12 billion reduction of a social security system already so harsh that it drives some recipients to suicide. The belief arises from a deep and dearly-held fallacy, that has persisted for over 200 years.

Poverty was once widely understood as a social condition: it described the fate of those who did not possess property. England's Old Poor Law, introduced in 1597 and 1601, had its own cruelties, some of which were extreme. But as the US academics Fred Block and Margaret Somers explain in their fascinating book The Power of Market Fundamentalism, those who implemented it seemed to recognise that occasional unemployment was an intrinsic feature of working life.

But in 1786, as economic crises threw rising numbers onto the mercy of their parishes, the clergyman Joseph Townsend sought to recast poverty as a moral or even biological condition. "The poor know little of the motives which stimulate the higher ranks to action — pride, honour, and ambition", he argued in his Dissertation on the Poor Laws. "In general it is only hunger which can spur and goad them onto labour; yet our laws have said, they shall never hunger."

Thomas Malthus expands on this theme in his Essay on the Principle of Population, published in 1798. Poor relief, he maintained, causes poverty. It destroys the work ethic, reducing productivity. It also creates an incentive to reproduce, as payments rise with every family member. The higher the population, the hungrier the poor became: kindness resulted in cruelty.

Poverty, he argued, should be tackled through shame ("dependent poverty ought to be held disgraceful") and the withdrawal of assistance from all able-bodied workers. Nature should be allowed to take its course: if people were left to starve to death, the balance between population and food supply would be restored. Malthus ignored the means by which people limit their reproduction or increase their food supply, characterising the poor, in effect, as unthinking beasts.

His argument was highly controversial, but support grew rapidly among the propertied classes. In 1832, the franchise was extended to include more property owners: in other words, those who paid the poor rate. The poor, of course, were not entitled to vote. In the same year, the government launched a Royal Commission into the Operation of the Poor Laws.

Like Malthus, the commissioners blamed the problems of the rural poor not on structural factors but on immorality, improvidence and low productivity, all caused by the system of poor relief, which had "educated a new generation in idleness, ignorance and dishonesty". It called for the abolition of "outdoor relief" for able-bodied people. Help should be offered only in circumstances so shameful, degrading and punitive that anyone would seek to avoid them: namely the workhouse. The government responded with the 1834 Poor Law Amendment Act, which instituted, for the sake of the poor, a regime of the utmost cruelty. Destitute families were broken up and, in effect, imprisoned.

The commission was a fraud. It began with fixed conclusions and sought evidence to support them. Its interviews were conducted with like-minded members of the propertied classes, who were helped towards the right replies with leading questions. Anecdote took the place of data.

In reality, poverty in the countryside had risen as a result of structural forces over which the poor had no control. After the Napoleonic wars, the price of wheat slumped, triggering the collapse of rural banks and a severe credit crunch. Swayed by the arguments of David Ricardo, the government re-established the gold standard, that locked in austerity and aggravated hardship, much as George Osborne's legal enforcement of a permanent budget surplus will do. Threshing machines reduced the need for labour in the autumn and winter, when employment was most precarious. Cottage industries were undercut by urban factories, while enclosure prevented the poor from producing their own food.

Far from undermining employment, poor relief sustained rural workers during the winter months, ensuring that they remained available for hire when they were needed by farms in the spring and summer. By contrast to the loss of agricultural productivity that Malthus predicted and the commission reported, between 1790 and 1834 wheat production more than doubled.

As Block and Somers point out, the rise in unemployment and extreme poverty in the 1820s and 1830s represented the first great failure of Ricardian, laissez-faire economics. But Malthus's doctrines allowed this failure to be imputed to something quite different: the turpitude of the poor. Macroeconomic policy mistakes were blamed on the victims. Does that sound familiar?

This helps to explain the persistence of the fallacy. Those who promoted laissez-faire economics required an explanation when the magic of the markets failed to deliver their promised utopia. Malthus gave them the answer they needed.

And still does. People are poor and unemployed, George Osborne and Iain Duncan Smith claimed in this week's Sunday Times, because of "the damaging culture of welfare dependency". Earlier this month, Duncan Smith, in a burst of Malthusiasm, sought to restrict child benefit to two children per family, to discourage the poor from reproducing. A new analysis by the Wellcome Trust suggests that the government, which is about to place 350 psychologists in job centres, now treats unemployment as a mental health disorder.

The media's campaign of vilification associates social security with disgrace, and proposes even more humiliation, exhortation, intrusion, bullying and sanctions. This Thursday, the new household income figures are likely to show a sharp rise in child poverty, after sustained reductions under the Labour government. Doubtless the poor will be blamed for improvidence and feckless procreation, and urged to overcome their moral failings through aspiration.

For 230 years, this convenient myth has resisted all falsification. Expect that to persist.

Humanity's 'inexorable' population growth is so rapid that even a global catastrophe wouldn't stop it

Steve Conor in The Independent

The global human population is “locked in” to an inexorable rise this century and will not be easily shifted, even by apocalyptic events such as a third world war or lethal pandemic, a study has found.

There is no “quick fix” to the population time-bomb, because there are now so many people even unimaginable global disasters won't stop growth, scientists have concluded.

Although measures designed to reduce human fertility in the parts of the world where the population growth is fastest will eventually have a long-term impact on numbers, this has to go hand-in-hand with policies aimed at reducing the consumption of natural resources, they said.

Two prominent ecologists, who normally study animal populations in the wild, have concluded that the number of people in the world today will present one of the most daunting problems for sustainable living on the planet in the coming century – even if every country adopts a draconian “one child” policy.

“The inexorable demographic momentum of the global human population is rapidly eroding Earth’s life-support system,” say Professor Corey Bradshaw of the University of Adelaide and Professor Barry Brook of the University of Tasmania in their study, published in the journal Proceedings of the National Academy of Sciences.

“Assuming a continuation of current trends in mortality reduction, even a rapid transition to a worldwide one-child policy leads to a population similar to today’s by 2100,” they say.

“Even a catastrophic mass mortality event of 2bn deaths over a hypothetical window in the mid-21st century would still yield around 8.5bn people by 2100,” they add.

There are currently about 7.1bn people on Earth, and demographers estimate that this number could rise to about 9bn by 2050 - and as many as 25bn by 2100, although this is based on current fertility rates, which are expected to fall over the coming decades.

The number of people in the world today will present one of the most daunting problems for sustainable living on the planet in the coming century (Getty)

Professor Bradshaw told The Independent that the study was designed to look at human numbers with the insight of an ecologist studying natural impacts on animals to determine whether factors such pandemics and world wars could dramatically influence the population projections.

“We basically found that the human population size is so large that it has its own momentum. It’s like a speeding car travelling at 150mph. You can slam on the brakes but it still takes time to stop,” Professor Bradshaw said.

“Global population has risen so fast over the past century that roughly 14 per cent of all the human beings that have ever lived are still alive today – that’s a sobering statistic,” he said.

“We examined various scenarios for global human population change to the year 2100 by adjusting fertility and mortality rates to determine the plausible range of population sizes at the end of the century.

“Even a worldwide one-child policy like China’s, implemented over the coming century, or catastrophic mortality events like global conflict or a disease pandemic, would still likely result in 5bn to 10bn people in 2100,” he added.

The researchers devised nine different scenarios that could influence human numbers this century, ranging from “business as usual” with existing fertility rates, to an unlikely one-child-per-family policy throughout the world, to broad-scale global catastrophes in which billions die.

“We were surprised that a five-year WWIII scenario mimicking the same proportion of people killed in the First World War and Second World War combined, barely registered a blip on the human population trajectory this century,” said Professor Brook.

Measures to control fertility through family planning policies will eventually have an impact on reducing the pressure on limited resources, but not immediately, he said.

“Our great-great-great-great-grandchildren might ultimately benefit from such planning, but people alive today will not,” Professor Brook said.

Simon Ross, the chief executive of the charity Population Matters, said that introducing modern family planning to the developing world would cost less than $4bn – about one third of the UK’s annual aid budget.

“So, while fertility reduction is not a quick fix, it is relatively cheap, reliable, and popular with most, with generally positive side effects. We welcome the recognition of the potential of family planning and reproductive education to alleviate resource availability in the longer term,” Mr Ross said.