Tuesday, February 23, 2010

Krugman on Oil

Krugman on Oil

Krugman now says that resource constraints (particularly oil) will be a problem when we get a recovery. So I commented:
If oil resource constraint is a problem: how will that play out in the financial market? If it looks exactly the same as the GFC then how come all the economists maintain so strongly that the GFC was not about the oil resource constraint? All the semi-fraudulent financial activity moves the money around, but what brings the problem to light is when there is less total real wealth. How do we handle that? [Part of the answer is that the inflation rate has to be about 5% higher than the decline rate. This is also true when the decline rate is negative!]
Well this is another area where we need an open, vigorous, well-funded investigation of the facts. I commented on this in response to an Unleashed by a lawyer commenting on AGW. Here's my comment:
What we need to take out of this schmozzle is this: Any time you have facts dictating public policy, with winners and losers, then the engines of disinformation will run flat out on BOTH sides. It is crucial for public confidence that there be an open, vigorous, well-funded investigation of the facts led by people with mathematical skills who have no axe to grind. This is a core thing we need to add to the democratic process in the 21st century. And let us, with due respect to Ms Tranter, keep the lawyers out of it. [Why mathematical skills? The subject matter of mathematics is: thinking clearly about problems. We need more of it.]