Of black swans and greedy oilmen

It is not often that a school of thought comes along at exactly the right time that markets, economists and policymakers are worried about a specific event or crisis. When a book setting out these new views does come along, it is usually ignored, then quietly buried, and then only is quoted by increasingly esoteric sources until the work is driven to the point of irrelevance.

Such a fate is quite likely for two outstanding books released in 2007 – Black Swan and Zoom – both of which capture some original thinking on the state of the markets and the underlying

economic structure that supports market mechanisms. While the authors did not in all probability set out to collaborate per se, they may have just produced classically symbiotic tomes.
Zoom: The Global Race to Fuel the Car of the Future by Iain Carson and Vijay V Vaitheeswaran focuses its attention on the car and oil industries. Much of what is written in the book is already well known, but to string the pieces together the way the authors have done must really have taken significant discipline and imagination.

Starting with a catchphrase that “Oil is the problem, cars are the solution”, the authors dismiss any notions of replacing the current way of life enjoyed by the US and Europe in the name of global warming. In other words, the only thing that will change is the how cars are fueled, rather than the total volume of cars sold and used on a daily basis. Many of the arguments laid out by the authors will be familiar to Asia Times Online readers (How central bankers could save the world” Asia Times Online, December 8, 2007) but perhaps not to readers of American and European mainstream publications.

The insider’s view on how oil and car lobbies help to reverse every tentative step suggested by governments and consumers, not to mention discrediting those arguing about climate change, is alone worth the price of admission on this book.

By itself, Zoom represents strong arguments in favor of governments acting today to properly price the negative economic good of air pollution caused by the use of fossil fuels. It lays bare the structure of the oil industry’s lobbies, how the Seven Sisters relate to the national oil companies and what the most likely avenues for solving over-dependence on oil are. For a change, the authors do not assume that alternative fuels such as wind and solar power can be taken for granted; indeed they point out that depletion of proven oil reserves may expand the use of other fossil fuels such as shale and tar sands, in turn triggering even higher pollution from the extraction and refinement processes to continued use of fossil fuels.

The behavior of Asian governments and consumers is paramount in all this. If the billion or so cars that enter the roads of China and India in the next three decades are powered by fossil fuels, the world will be one hot and sooty place. If instead fuel cells and electric batteries power them, the outlook improves dramatically. Make no mistake; Asia is very much the battleground where the forces pushing or reversing global warming will need to win.

Asia Times