Economist fail

No, not “an economist”, the magazine.  In a long discussion of winners and losers from low oil prices, we find what has to be the stupidest assertion in a mainstream publication this month, maybe even ever, who knows:

But the overall economic effect of cheaper oil is clearly positive.

Really. This is hard to even talk about without insulting the intelligence of our readers, but it’s in The Economist, for Pete’s sake. How does that work? Does The Economist think ‘overall economic effects’ just end in a few decades, before the, um, economic effects of climate change really kick in? Has a radical Christian sect with a line on the rapture schedule taken them over?  Or has the law of demand been repealed when we weren’t looking, so lower prices cause people to use less instead of more?


Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

4 thoughts on “Economist fail”

  1. I think the article is pretty clearly talking about short/medium-term economic effects in which pricing based on supply/demand rather than the long-term sustainability of an international cartel is more efficient. I'm as pro-do-something-serious-about-climate-change-right-now as anyone, but whether or not extracting and burning all the oil ASAP is a net plus or minus for the economy in the long term is impossible to project… in that you can make more-or-less reasonable assumptions and come down on either side. I think basically all effort towards calculating economic costs/benefits of climate change out hundreds of years is a huge waste of time, so I don't expect every economic perspective on America/Canada V. OPEC beef to partake in it.

    1. On what assumptions does it come out OK when you burn all the oil and coal? The models for that aren't on-the-one-hand-this and on-the-other-hand-that : they point unambiguously to an unliveable world. It's no part of the expertise of climate scientists, but catastrophic impacts on the world food supply would challenge human civilisation (including that part of it we call the economy), It's possible we could get the end of human life, if the positive feedbacks go the wrong way. If we are lucky the collapse of industrial civilisation and mass death will precede the locking-in of completely unliveable consequences, so a few million subsistence farmers may survive, We are talking either way about the death of billions of people.

  2. Yeah, just re-write is as: "But the overall "SHORT-TERM" economic effect of cheaper oil is clearly positive." And delete the "clearly."

  3. If it means they shut down the bitumen tar sands plants that take what 6 barrels of water and how much natural gas produced by fracking of course to make one barrel of oil at a net cost about $75 a barrel, then yes, it could be a good thing

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