Political and corporate defeatism

Charles Mackay’s 1841, titled Extraordinary Popular Delusions and the Madness of Crowds has enduringly served to refute claims of collective wisdom. He described events like Dutch tulip mania and the 1711-22 South Sea Bubble as frenzies of collective investment hysteria.

In the modern era, every decade or so we have seen more such investment delirium, including the build-up to the 1929 Wall Street crash with lesser events like the 1970s Poseidon mining boom/bust and the 2007 collapse of US leveraged housing funds.

In all cases, investment frenzies ramped up share prices to stratospheric levels. Lessons have not been learned. The next debacle will centre on puncturing the carbuncle of funds focused on virtue signalling their Environment, Social, and Governance credentials (ESG), the apogee for which is fossil-fuel-phobia and renewable-energy-philia.

Collective madness is not confined to money markets. Even before media control hid reality, huge majorities of Germans, Russians, and Chinese willingly supported leaders who were promoters of violence and destroyers of economic stability.

The antidote to unsound business investments is that an accumulation of investors recognises them and sells them. For political malfeasance, such a cleansing is more difficult. Thus, even with an independent media and Parliamentary accountability, a likely majority of US citizens support the obviously corrupt and incompetent President Biden. More parochially, Victorians have sequentially re-elected a Premier who has squandered public funds, including by increasing public service employees by twice as much as other states.

Modern vulnerabilities to political turmoil stem from political hubris in claiming expertise in where the economy’s structure should be heading. Previously, politicians could not credibly claim expertise in the innovations and investments necessary to drive economic growth. The developments that have created the modern economy’s wealth – in transport, automation, energy, health, and communications – took place with little direct political input.

But today’s electorate seems to accept politicians’ claimed expertise in controlling the vital area of energy policy. The genesis of this control started with confected concerns about global warming. These are easily dismissed – there has been no increase in climate emergencies, no increase in hurricanes, no loss of coral, no rise in the oceans, no loss of ice cover, and so on. Blind to such evidence, political measures have been assembled to counteract the phantom threats.

Political leaders ranging from UK Prime Minister Rishi Sunak to our very own John Pesutto say they concluded they must act after listening to climate sermons from their teenage daughters, which were canalised from teachers in their private schools. This, a fractured thread from climate science to political action, is representative of a broader march of the green left through educational institutions as well as those of media and the civil service.

The susceptibility of politicians to climate hyperbole is heightened as a result of their assigned role to combating it. For the first time outside of war-like conditions, they have an issue that offers them a hero’s role, one far more attractive than buying support by addressing mundane local matter and balancing budgets.

The theme’s potency is much enhanced by the numerous, much publicised international meetings which place the seal of approval to proposals crafted by hand-picked bureaucrats..

Hence, outside of the US there are few politicians who have not bought the narrative. Even Britain’s Conservative Party’s leader-in-waiting, Lord Frost, argues that current policies are ‘hurtling towards Net Zero at any cost’, instead of recognising the energy ‘transition’ to wind/solar as a constantly receding mirage. He says he believes that the UK is simply proceeding towards the renewables ‘transition’ too quickly. For his part, Mr Albanese is linking his own policy to a reinforcement of the American alliance alongside access to US subsidies.

And the thread wends its way throughout national fabrics. Authorities and sloganeers alike are almost unanimous in seeing the elimination of coal as one essential building block of future economic sustainable prosperity.