Rising Energy Costs Show Naïve Virtue Signaling Has A Serious Price

InsightSpencerFernando

It’s easy to go along with the trendy viewpoints when it seems like ‘others’ will deal with the cost. Now, that cost is going to hit all of us.

Gas prices are up.

Home heating costs are up with colder temperatures approaching.

You would think that a nation like Canada would be spared much of the impact, given our gargantuan energy reserves.

Think again.

Governments around the planet are in effect squeezing their citizens from three sides.

First, massive money printing has devalued currencies, leading to inflation.

Second, continued lockdowns and restrictions have devastated supply chains, which combined with inflation means more dollars chasing fewer goods.

Third, nations like Canada which have embraced carbon taxes and have hamstrung their energy sector find themselves in a weakened position at the worst possible time.

Dan McTeague explained it well on Twitter:

“The financial implications for Canadians has not quite sunken in. Record costs for everything is the new reality of two threats to the high living standard Cdns have taken for granted: long term economic and social damage wrought by Covid and a mad rush to transition to Net Zero”

The fact that many take our living standard for granted, as McTeague noted, is an essential point to understand how Canada has gotten into this situation.

Winning the economic war

While big historic battles get most of the attention in the analysis of war, victory or defeat comes down to something far more mundane:

Supply chains.

In World War Two, the Allies, particularly the US, Canada, and the UK, had the best supply chains, while the supply chains of the Axis powers were a mess, and became worse and worse over time as bombing raids took a growing toll.

Modern militaries rely heavily on supply chains, and extending their supply chains over a vast distance.

It’s no coincidence that China is building huge numbers of long-range missile installations on an ever-growing number of artificial islands, as this will push the US farther and farther away. This gives China an advantage due to the fact their supply chain has a lesser length to travel to reach places like Taiwan & Japan.

In short, if you can cripple an opposing military’s supply chain, you can cripple that military.

And the same is true with our standard of living.

It depends upon what is effectively a civilian version of a military supply chain, with similarities right down to the heavy use of trucks, trains, and ships to bring a large amount of goods to a specific place, at a specific time.

The perfection of supply chains over time has been so dramatic that many now assume that this is simply how life works.

You want something.

You go somewhere.

They have what you want.

You get it.

To millions of people in Canada and many more around the world, this is the basic expectation of things.

But the complexity of the system, and the importance of free enterprise has been ignored.

The supply chains we have today are stunningly complex, far more than the military supply chains of the past.

The sheer number of goods and components that have to arrive at an exact time, in an exact place is mind-boggling.

That makes the system amazing, but also vulnerable.

We saw a bit of that at the beginning of the covid crisis, when people were unable to procure toilet paper and hand-sanitizer as easily as they were accustomed to. Turns out, the system worked for a normal level of demand for those items, and quickly buckled when demand increased.

Now, the strains on the system are adding up once again, and much of it has been caused directly by government action.

For example, while initially paying people to stay home was justified given that the government had imposed lockdowns, ongoing lockdowns, and ongoing payments are hollowing out the economy.

You can’t sustain an economy where the government increasingly pays people not to work. Perhaps one day, when automation hits some high threshold things will be different, but much of our economy still requires human action to make it function.

Here we see two kinds of ignorance merging:

Ignorance of our financial/monetary system, and ignorance of our supply chains.

That ignorance is fostered by governments, since they benefit from a populace that feels helpless and dependent, rather than knowledgeable and empowered.

Consider what people are experiencing now:

Everything is more expensive.

Money doesn’t go as far as it did.

Energy costs are surging as winter nears.

Some things are getting tougher and tougher to find.

This is what a declining standard of living looks like.

This is what happens when government officials demand more and more power, reduce freedom, impose restrictions on commerce, and try to reengineer the economy to fit into some virtue-signaling worldview.

The economy of a relatively free country is simply way too complex for a centralized institution to effectively manage or control.

History has shown that the most successful economies are those that respect individual freedom and economic freedom, which leads to immense innovation and wealth creation.

Going back to our World War Two example, the United States and Canada both had a large private enterprise role in military production, which led to shockingly fast increases in productivity and raw production, dwarfing the production of the more centralized Axis & Soviet economies. The Soviets used a centralized system largely consisting of slave labour, yet ended up dependent on the US, Canada, and the UK for most of their trucks, many of their uniforms, bullets, food, and more.

The Axis powers were also highly centralized, with their power-obsessed leaders often micromanaging to the point of influencing minute details of military design. They ended up being outproduced by a hilarious margin.

The same is true today.

When governments step back and respect individual initiative and free enterprise, we see amazing innovation, efficiency, productivity, and growth.

And this ends up solving problems without any centralized effort.

Consider that emissions have fallen far faster in the United States without carbon taxes and centralized government authority than they have in Canada, despite our nation imposing carbon taxes and trying to snuff out our own energy sector.

Because of the embrace of innovation and freedom in much of the US, they have grown faster than Canada while being better at reducing emissions.

Will people choose their virtue-signaling or their standard of living?

In Canada, and in much of the world, people are now going to face a choice:

Will we continue to double and triple-down on naïve virtue-signaling, or will we protect our standard of living by standing up for the values and principles that made our standard of living possible?

Will we continue to demonize our energy sector, or will we realize what a tremendous gift our abundant oil and gas is for our country, and unchain that sector and show respect to the energy sector workers who have built so much of our country?

Will we watch as other nations profit and benefit at our expense, or will we wake up and realize that we are in an economic competition and our standard of living and lifestyle is at risk?

And finally, will we continue to give in to government fear-mongering and let politicians increase our taxes and keep imposing restrictions, or will we re-embrace individual freedom and free enterprise, trusting that innovation and wealth creation is best served by getting government out of the way?

The answers to those questions will determine whether Canada maintains our standard of living, or watches wealth and prosperity leave our country for more promising lands.

Spencer Fernando

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