Misanthropic Earth Hour, Redux

Hardly anyone really realizes that celebrating Earth hour is about glorifying misanthrope-hatred of mankind.

The underlying belief is that man, through free markets, cannot be trusted to be responsible or to account for his wellbeing or for his neighbors.

And thus, safekeeping environments have to be politically mandated. In other words, our behavior must be controlled politically to save the environment (Never mind if we starve to death, the important thing is to save the environment, got it? Yeah what is the environment if we are all dead anyway?)

Here is what I wrote last year….

Many of the locals have reportedly joined the celebration of Earth Hour.

Many have done so because like elections, they are there for "symbolism". It is more about social fad and peer pressure. Most of these participants hardly know of the economic and political implications and the attendant "costs" of what "earth hour" is about, and to whose benefit such policies would bring about.

Think of it, why does everyone seem to protest when prices of energy goes up, when high prices, in the real world, should spur "conservation" or a shift in consuming patterns?

So almost like everything else popular, seductive soundbites make it appear that the solution to environmental predicament is just a matter of allegorical representation or popular appeal, devoid of economic truths.

Nevertheless, we have a great example of earth hour as a permanent policy-North Korea!

According to a 2006 Daily Mail report, (picture above)

``The regime in the north is so short of electricity that the whole country is switched off at 9 p.m. - apart from the capital of Pyongyang where dictator Kim Jong-il and his cohorts live in relative luxury. But even there, lighting is drastically reduced.

``The result, as shown in this picture taken one night earlier this week, is a startling contrast between the blacked-out north and the south, which is ablaze with light, particularly around major cities and the capital, Seoul, in the north-west of the country." (bold highlights mine)

Professor Don Boudreaux makes this fitting comment ``the Dear Leader – like his father before him – works tirelessly to keep his nation’s carbon footprint to a bare minimum; in fact, if you look carefully you can see what is likely his, and only his, office light glimmering in Pyongyang.

``North Koreans show their reverence for mother nature not with a mere Earth Hour but, rather, with an entire “Earth Lifetime.”
Earth Hour, in the mainstream perspective, means bringing back societal order to the medieval eon. It means socialism. Just ask North Korea's Kim.

In short, Earth Hour represents the creed of atavism or the sham of regressing life conditions based on the paradigm of medieval times.

In addition, the Earth Hour meme represents an unwavering faith over computer based models, which has been proven majestically wrong time and again, like Japan’s failure to predict on the earthquake-tsunami-nuclear calamity.

Computer based climate models have been used as justification to grab a substantial pie of taxpayer funded privileges for the benefit of the political class. As well as, a means to expand political power which exerts control over large swathes of industries that shifts economic privileges to politically favored “green” industries (like Al Gore). In short, earth hour promotes crony capitalism and corruption. (Yes we will all be dead except for the politicians, bureaucrats and their cronies who will live this world as their own private Edens)

Remember, (noble) intent and (economic) reality are different.

Earth Hour represents no less than a big time propaganda-hoax, which tragically, many dimwits continue to fall for.

Markets Operate Under The Hayekian Knowledge Framework

Markets, acting on and coordinated by information, are likewise distinct, dispersed and localized.

Winnie Phua of Matthews International Capital Management, LLC writes about the recent closure of the popular Barbie in China, (bold highlights mine)

The sudden closure of the Barbie store left many consumers baffled. The U.S. toy maker has stated that it is reorganizing its China strategy. Others, however, argue that the store is closing because Barbie’s classic western appeal has not caught on in China where girls tend to prefer cute animated characters, such as Hello Kitty, over a womanly life-like doll. Barbie’s price point (US$15 to US$30) has also been criticized as too high, particularly for a toy with limited brand recognition or nostalgic factor for parents who hold the purse strings. Other similar dolls can be purchased online with complete wardrobe sets for as little as US$8.

Mattel’s closure of the store highlights the fact that brand power enjoyed by well-known brands in the West may not always guarantee their success in the East. It also reiterates the importance of localizing products and services when expanding in new markets. Home Depot, the U.S. retailer of home improvement and construction products, for example, entered China in 2006 but has been shuttering stores due to low demand from local residents. The “Do-it-Yourself (DIY)” concept apparently has not resonated well with Chinese consumers as migrant laborers offer easily available and cheap construction needs for many urban residents.

This reminds me of the great Friedrich von Hayek who wrote of the "The Use of Knowledge in Society" (bold highlights mine)

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources—if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.

Bottom line: Today’s marketplace emphasizes on the importance of dispersion, uniqueness or specialization and its localized nature. This means that fundamental corporate marketing strategies must be designed around Hayek’s Knowledge framework.

More On The Krugman Inflation Spiel

In my earlier post where I argued that Paul Krugman appear to be conditioning his readers for a possible reversal in his ‘deflation’ stance, I forgot to put on some charts which Mr. Krugman has referred to.

I would like to reiterate, “Such shell game is happening NOW!”

Krugman says,

So we’re talking about a monetary base that rises 12 percent a month, or about 400 percent a year.

Does this mean 400 percent inflation? No, it means more — because people would find ways to avoid holding green pieces of paper, raising prices still further.

Let’s do away with the %. Here is the state of the adjusted Monetary Base...

…which apparently is in a VERTICAL spike! (chart from St. Louis Federal Reserve)

Here is the composition of the Fed’s balance sheets...

This from the Wall Street Journal Blog, (bold highlights mine)

Assets on the Fed’s balance sheet expanded to around $2.566 trillion in the latest week from $2.403 trillion at the end of 2010. Nearly all the additions this year have come from new Treasury purchases — some $164 billion in the past three months. The Fed announced earlier last year that it will purchase an additional $600 billion of Treasurys through June in addition to previously announced purchases with money reinvested from its MBS portfolio.

Though the overall size of the balance sheet is continuing to increase, the makeup is moving back toward the long-term trend. The MBS and agency debt holdings have steadily declined as loans are paid off or mature. The Fed still holds nearly $1 trillion in MBS, but now owns more Treasurys — over $1.28 trillion.

And here is the Wall Street Journal on what’s driving inflation expectations.... (bold highlights mine)

Inflation, once believed dead, is showing a pulse. While price increases are unlikely to become rampant, consumers are lifting their inflation expectations, and more businesses are marking up their selling prices to recoup input costs.

Signs of life for inflation come at a time when the Federal Reserve has to weigh the potential impacts from the Japan tragedy and Middle East unrest.

To be sure, Thursday’s data on the consumer price index showed inflation remains well within the Fed’s preferred target of about 2%. Total prices, pushed up by higher food and energy, increased 2.1% over the year ended in February, while core inflation — which ignores food and fuel — was up a milder 1.1%.

Even so, higher commodity costs are starting to influence the outlook.

As earlier pointed out,

True, food prices signify a minor component in the household expenditure pie for developed economies. But that doesn’t mean that rising oil, food and commodity prices won’t spillover to the rest of the economy. Eventually they will!

Regular readers of this blog know that we have been pounding the table on this pathology known as inflationism—since 2008

Such as this

Our point is simple; if authorities today see the continuing defenselessness of the present economic and market conditions against deflationary forces, ultimately the only way to reduce the monstrous debt levels would be to activate the nuclear option or the Zimbabwe model.

And as repeatedly argued, the Zimbabwe model doesn’t need a functioning credit system because it can bypass the commercial system and print away its liabilities by expanding government bureaucracy explicitly designed to attain such political goal.

Or this (2010) and this and this (stages of inflation-2009) or my $200 oil forecast (2009) and many more also here and here

False religion eventually get to be exposed. The Emperor has no clothes.

Symptoms of Crony Capitalism: Soaring US Financial Profits

This is exactly how crony capitalism looks like.

Following massive support from the US government, US financial firms posts huge profits.

From the Wall Street Journal, (bold highlights mine)

During the darkest days of the financial crisis, when Lehman Brothers and Washington Mutual went belly up and the U.S. government had to bail out other institutions, the finance sector reported an annualized loss of $65.2 billion in the fourth quarter of 2008. It was the only quarterly loss recorded in the government data.

Since then, the sector has come roaring back. The GDP report shows finance profits jumped to $426.5 billion. While profits haven’t returned to their high levels of 2006, the gain in finance profits last quarter more than offset a drop in profits posted by nonfinancial domestic industries.

After rising like the Phoenix, the financial industry now accounts for about 30% of all operating profits. That’s an amazing share given that the sector accounts for less than 10% of the value added in the economy.

Wall Street and banking critics have pointed out the finance industry enjoys government supports not given to other companies. That includes the low cost of funds from the Federal Reserve. As a result, critics say, the U.S. economy is overly skewed toward finance.

Aside from the bailouts and behest loans, the Federal Reserve’s QE programs have had a big influence on this swelling of corporate profits.

Writes Peter Schiff, (bold highlights mine)

But another very large chunk of Treasuries go to "primary dealers," the very large financial institutions that are designated middle men for Treasury bonds. In a late February auction, these dealers took down 46% of the entire $29 billion issue of seven year bonds. While this is hardly remarkable, it is shocking what happened next.

According to analysis that appeared in Zero Hedge, nearly 53% of those bonds were then sold to the Federal Reserve on March 8, under the rubric of the Fed's quantitative easing plan. While it's certainly hard to determine the profits that were made on this two week trade, it's virtually impossible to imagine that the private banks lost money. What's more, knowing that the Fed was sure to make a bid, the profits were made essentially risk free. It's good to be on the government's short list.

So what we essentially have is a redistribution of resources from the real economy to the financial sector.

This is rent-seeking.

The essence of which is, as explained by Alfred Nobel Prize winner Professor James M. Buchanan,

“it extends the idea of the profit motive from the economic sphere to the sphere of collective action. It presupposes that if there is value to be gained through politics, persons will invest resources in efforts to capture this value. It also demonstrates how this investment is wasteful in an aggregate-value sense.

Such is the essence of government interventions or the political distribution of resources via state capitalism. Winners are the politically endowed (concentrated) while losses are distributed throughout the system.

The Inflation Spiel From Paul Krugman

Keynesian high priest (and Nobel awardee) Paul Krugman appears to be conditioning the public of a possible turnaround in his outlook!

He writes,

The Fed could directly finance the government by buying debt, or it could launder the process by having banks buy debt and then sell that debt via open-market operations; either way, the government would in effect be financing itself through creation of base money. So?

Well, the first month’s financing would increase the monetary base by around 12 percent. And in my hypothesized normal environment, you’d expect the overall price level to rise (with some lag, but that’s not crucial) roughly in proportion to the increase in monetary base. And rising prices would, to a first approximation, raise the deficit in proportion.

So we’re talking about a monetary base that rises 12 percent a month, or about 400 percent a year.

Does this mean 400 percent inflation? No, it means more — because people would find ways to avoid holding green pieces of paper, raising prices still further.

I could go on, but you get the point: once we’re no longer in a liquidity trap, running large deficits without access to bond markets is a recipe for very high inflation, perhaps even hyperinflation. And no amount of talk about actual financial flows, about who buys what from whom, can make that point disappear: if you’re going to finance deficits by creating monetary base, someone has to be persuaded to hold the additional base.

At this point I have to say that I DON’T EXPECT THIS TO HAPPEN — America is a very long way from losing access to bond markets, and in any case we’re still in liquidity trap territory and likely to stay there for a while.

Krugman admits that the Fed can directly “finance the government by buying debt” and indirectly “launder the process by having banks buy debt” which can cause HIGH inflation.

But yet he engages in subtle sophism by saying this won’t happen for as long as the US has access to bond markets—”very long way from losing access to bond markets”.

Obviously losing access to bond markets isn’t the issue, if the Fed continues to buy US debts!

And that’s exactly what the Quantitative Easing (QE) programs are for. And QE represents no more than a shell game. In other words, such shell game is happening NOW!

Here is the statement of the US Federal Reserve announcing QE 2.0 last November (CNN Money)

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

The point is as Krugman continues to talk of inflation he prepares the public for that dramatic announcement where he’d probably mimic his idol, “When the facts change, I change my mind. What do you do sir?”

This should represent another MAJOR failure of the macroeconomic paradigm.

Graphic: Rule Of Law

Again from the ever creative mind of Jessica Hagy, a wonderful graphic depiction of social cooperation based on the rule of law. (From Indexed Be Nice; Stop plundering and looting)

Markets In Everything: Booming Sales of Underground Shelters

Markets always find ways to address people's demand for almost anything, such as demand for safety from fear of catastrophe or war.

The video below (from CNN/Mark Slavo) shows of the booming sales for bunker shelter....

The Politics Behind The UN’s No Fly Zone On Libya

The Economist has a dainty interactive graph which spells out on the diversified political incentives (interests) by nations that has participated in enforcing the UN’s No Fly zone

FRANCE and Britain led the diplomatic push for military action against Libya. The Arab League's vote, on March 12th, to call on the United Nations to enforce a no-fly zone was crucial in securing international legitimacy. The Americans were initially hesitant but were eventually won around. So much is familiar to observers of the unfolding Libya story.

Press on the country and the explanation appears.

In my view, the biggest incentive is this…

Graph also from the Economist

Outside the Arab League, perhaps the strongest incentive to intervene in Libya’s internal strife has been about oil geopolitics.

The other possible reason could be due to the earlier faux pas in foreign policy by some of the major participants.

Celebrating The Declining Influence of Luddism and Blogging

I will be blogging a little lot less over the coming days as two of my children will be having their graduation rites and I will be entertaining my mother who is a resident of Hong Kong and who also came to attend these ceremonies.

Nevertheless here is a quote from Professor Don Boudreaux on the declining influence of Luddism (bold emphasis mine)

This year marks the 200th anniversary of the birth of Luddism. In the early 19th century, many Brits worried that increasing mechanization of the textile industry posed an unfair disadvantage to flesh-and-blood workers. Many of these technology skeptics, known as "Luddites," destroyed machinery in an effort to protect flesh-and-blood workers from the competition of Technologia's workers.

Luddism, thankfully, is today embraced only by a small group of delirious romantics longing for imaginary pastoral bliss.

Hopefully, protectionism will soon go the way of Luddism, freeing us from the superstition that trade with foreigners is less enriching than is trade with fellow citizens.

As people get to realize and adapt more of what represents as a genuine workable way to prosperity via free trade, protectionism grounded on the fantasies of Luddism will hopefully fade away too.

Video: Understanding The Difference Between Private and Public Enterprises

Dr. Robert Murphy explains the fundamental difference between private businesses and public enterprises.

Falling US Home Sales Points To QE 3.0

The Reuters reports,

Sales of new U.S. homes sank to a record low in February and prices were the weakest since December 2003, showing the housing market slide was deepening.

The Commerce Department said on Wednesday sales of new single-family homes dropped 16.9 percent to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after a 301,000-unit pace in January.

The following charts from Northern Trust....

As I earlier wrote

Under enfeebled housing conditions, a failure to continue with the QE amplifies the risks of falling housing prices thereby jeopardizing the fragile state of the US banking system

Looks like Quantitative Easing (QE) 3.0 is underway

Global Equity Markets: China Grabs Second Spot (In Terms Of Market Cap)

In February of this year, China surpassed Japan as the second largest economy in the world.

Recent events have likewise altered China’s ranking in the global equity markets (in terms of market capitalization) where China has snatched the second place from Japan.

The US remains on top as the largest equity market in the world, but has seen a steady decline in terms of market share. Most of this decline has been due to the outperformances of many emerging market bourses.

According to Bespoke Invest, (table and charts from Bespoke)

Japan's stock market declined nearly 20% in the days immediately following the tragic earthquake that hit the country on March 11th. While Japanese equities have bounced back a bit, the fall allowed China to surpass Japan in terms of percentage of world market cap.

...As shown, the US continues to hold onto the number one spot by a wide margin at 30.43%. Japan had the second largest market cap in the world at the start of the year, but China has now surpassed Japan and currently ranks second. China currently makes up 7.38% of world market cap, while Japan makes up 7.05%. The UK ranks fourth at 6.49%, followed by Hong Kong (4.77%), Canada (4.38%), and France (3.59%).

The following charts depict on the long process of how China surpassed Japan...

Basically the divergent performances can be seen as Japan’s stagnation vis-a-vis the Chinese juggernaut.

China’s elevated ranking in the global equity markets has aligned with her economic standing relative to the world--a manifestation of shifting wealth distribution.

Rising Inflation Expectations: Why Macro Economists Can’t See It Coming

This is an example why macro-models used by mainstream experts don’t get it.

From the Wall Street Journal Blog (bold emphasis mine)

The Federal Reserve expects higher price pressures to be “transitory.” But other economic players aren’t so sure.

A new survey of finance professionals done by J.P. Morgan shows core inflation expectations are rising around the world.

In the U.S. specifically, the mean response is that core inflation, as measured by the consumer price index excluding food and energy, will be running 1.8% a year from now. That is up from 1.4% when the survey was last done in November and up from February’s actual reading of 1.1%. The survey polled about 750 respondents, with about 40% from North America.

The report notes the recent jump in oil prices and the longer-running increase in commodity prices may be skewing responses. But the report notes core inflation rates have already been rising in the U.S. and the U.K.

Duh?!

Core inflation expectations have long been rising around the world! Don’t these experts see that the REVOLTS in the Middle East have partly been triggered by record food prices??!!!

Chart from Business Insider

Next, price pressures are “transitory”???!!!

The IMF even says that people should get used to high food prices for all other reasons except macroeconomic government policies. The IMF is part of mainstream macro.

From the Bloomberg,

Consumers should get used to paying more for food, after prices rose to a record, because farmers will take years to expand production enough to meet demand and drive down costs, the International Monetary Fund said.

People in developing countries are becoming richer and eating more meat and dairy, meaning more grain for livestock feed and land for grazing animals, Thomas Helbling, an adviser for the IMF’s research department, and economist Shaun Roache wrote in an article. Rising demand for biofuels and bad weather also tightened supply, they said.

“Rising food prices may be here to stay,” Helbling and Roache wrote in the article published in the agency’s Finance & Development magazine. “The main reasons for rising demand for food reflect structural changes in the global economy that will not be reversed.”

True, food prices signify a minor component in the household expenditure pie for developed economies. But that doesn’t mean that rising oil, food and commodity prices won’t spillover to the rest of the economy. Eventually they will!

Chart from Northern Trust

When models try to isolate variables from people’s action (like isolating food and energy from inflation index as shown above-right window), then experts tend to underestimate real social activities, like inflation.

People do not act based on one or two or select variables. Our actions are bundled, as I previously wrote

We cannot isolate one variable from the other. People’s actions are responses to an ever dynamic “bundled” environment shaped by laws, markets, culture, environment, etc...

Bottom line: macroeconomics tends to deal with superficial issues that are bottled up in laboratory environment models rather than lay blame on what truly causes CPI inflation—inflationism (low interest rates and money printing) and interventionism (price controls, subsidies and etc..).

Quote of the Day: The Failure of Macro Economic Policies

From Columbia University Professor Joseph Stiglitz writing on the IMF Blog, (bold emphasis his) [hat tip: Greg Ransom]

The most remarkable aspect of the recent conference at the IMF was the broad consensus that the macroeconomic models that had been relied upon in the past and had informed major aspects of monetary and macro-policy had failed. They failed to predict the crisis; standard models even said bubbles couldn’t exist—markets were efficient. Even after the bubble broke, they said the effects would be contained. Even after it was clear that the effects were not “contained,” they provided limited guidance on how the economy should respond. Maintaining low and stable inflation did not ensure real economic stability. The crisis was “man-made.” While in standard models, shocks were exogenous, here, they were endogenous.

In short, math models fail to predict the complexities of human action.

The Daily Show Explains US Foreign Policy On Libya

Hilarious but politically poignant stuff from Jon Stewart (HT Bob Murphy)

The Daily Show - Odyssey Dawn - Unconstitutional War
Tags: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Seth Godin On The Diminishing Force Called Gatekeepers

From my favourite marketing guru Seth Godin, (bold highlights mine)

Amanda Hocking is making a million dollars a year publishing her own work to the Kindle. No publisher.

Rebecca Black has reached more than 15,000,000 listeners, like it or not, without a record label.

Are we better off without gatekeepers? Well, it was gatekeepers that brought us the unforgettable lyrics of Terry Jacks in 1974, and it's gatekeepers that are spending a fortune bringing out pop songs and books that don't sell.

I'm not sure that this is even the right question. Whether or not we're better off, the fact is that the gatekeepers--the pickers--are reeling, losing power and fading away. What are you going to do about it?

Read the rest here.

Whether applied to commerce, music or politics, the forces of technology aided decentralization appear to be rapidly eroding the power of centralized “gatekeepers”.

Gaddafi Financing Libya’s War With Gold

If there is one way to go around sanctions, then having a pile of gold could make the difference. Well, that’s how Libya’s Muammer Gaddafi has reportedly been able to finance his war.

From the Financial Times,

The international community has hit Muammer Gaddafi with a raft of sanctions and asset freezes aimed at cutting off his funding. But the embattled Libyan leader is sitting on a pot of gold.

The Libyan central bank – which is under Colonel Gaddafi’s control – holds 143.8 tonnes of gold, according to the latest data from the International Monetary Fund, although some suspect the true amount could be several tonnes higher.

Those reserves, among the top 25 in the world, are worth more than $6.5bn at current prices, enough to pay a small army of mercenaries for months or even years.

While many central banks hold their gold reserves in international vaults in London, New York or Switzerland, Libya’s bullion is in the country, said people familiar with the country’s activities in the gold market.

As I earlier pointed out, part of gold role’s in the Middle East crisis has been as “alternative ways to shelter assets”.

More from the same article,

The political turbulence in the Middle East – besides boosting the price of gold to a record $1,444 a troy ounce – has highlighted the property that has for centuries made gold so appealing to criminals, investors and dictators alike: it does not rely on a government for its value.

Following the revolution in Egypt, the country banned gold exports for four months in order to prevent officials of the former government from moving their wealth abroad.

At the same time, Iran has been quietly stocking up on gold in recent years, in an apparent attempt to shift away from the US dollar and thus protect its reserves from risk of seizure. Other significant buyers of gold include China, Russia and India.

Maverick governments are learning to see the role of Gold as an anti-establishment currency.

More signs of Gold gradually reacquiring its lost role as money.

Japan’s Calamity: Costliest Disaster Ever

Japan’s recent 1-2-3 calamity has been reported to be the costliest disaster ever.

The Economist writes,

JAPAN is still reeling from the earthquake and tsunami that struck its north-east coast on March 11th, with the government struggling to contain a nuclear disaster and around 10,000 people still unaccounted for. Provisional estimates released today by the World Bank put the economic damage resulting from the disaster at as much as $235 billion, around 4% of GDP. That figure would make this disaster the costliest since comparable records began in 1965. The Indian Ocean tsunami in 2004, which caused some 250,000 deaths, does not feature on this chart. Economic losses there amounted to only $14 billion in today’s prices, partly because of low property and land values in the affected areas.

This is an example where the losses from natural disasters are narrowly viewed in monetary terms. I am not sure if the estimates have quantified casualties in money terms (any estimates will likely be inaccurate and underestimate the value of human lives)

While the $ based losses may be huge, Japan’s disaster seems only a fraction of the 2004 Indian Ocean tsunami in terms of deaths.

For me, lives lost, injuries, displacement and trauma from the disasters are more important (or cost more) than $ based property damages.

Reinventing Nuclear Energy: Thorium

Prolific author Matt Ridley is for Thorium, in lieu of Nuclear reactors. (From Wall Street Journal-all bold highlights mine)

Against this formidable competitor, uranium will struggle for many years to come—especially with the extra cost and political handicap that Fukushima is bound to add. So nuclear needs to reinvent itself. Because nuclear reactors were developed by governments in a wartime hurry, the best technological routes were not always taken. The pressurized-water design was a quick-and-dirty solution that we have been stuck with ever since. Rival ideas withered, among them the thorium liquid-fuel reactor, powered by molten fluoride salt containing thorium.

Thorium has lots of advantages as a nuclear fuel. There is four times as much of it as uranium; it is more easily handled and processed; it "breeds" its own fuel by creating uranium 233 continuously and can produce about 90 times as much energy from the same quantity of fuel; its reactions produce no plutonium or other bomb-making raw material; and it generates much less waste, with a much shorter half life until it becomes safe, so the waste can be stored for centuries rather than millennia.

A thorium reactor needs neutrons, and both ways of supplying these subatomic particles are relatively safe. They can be introduced with a particle accelerator, which can be turned off if danger threatens. Or they can be introduced with uranium 235, which in this process has a much lower risk of an uncontrolled reaction than it does in today's nuclear plants. The fuel cannot melt down in a thorium reactor because it is already molten, and reactions slow down as it cools. A further advantage of this design is that the gas xenon is able to bubble out of the liquid fuel rather than—as in normal reactors—staying in the fuel rods and slowly poisoning the reaction.

Nobody knows if thorium reactors can compete on price with coal and gas. India has been working on thorium for some years, but the technology is as different from today's nuclear power as gas is from coal, and very few nuclear engineers even hear about liquid fuel during their training, let alone get to work on it.

New technologies always struggle to compete with well-entrenched rivals whose costs are already sunk. The first railways couldn't rival canals on cost or reliability, let alone lobbying power.

Now is the time to start to find out about thorium's potential.

At the end of the day, energy is about economics.

Video: Hans Rosling On How The Washing Machine Enhances Our Lives

Fascinating talk by Hans Rosling. (hat tip: Steve Horwitz)