gittins blowing smokeEconomics editor of the Sydney Morning Herald Ross Gittins is a man possessed not merely of firm opinions but, by his own estimation, something of a gift for prophecy. It was on display once again this week, when he went to press with the news that “coal’s days are numbered” and we should therefore leave it in the ground. This would be doing right by both the economy and the planet, which will be in Australia’s debt for not being burdened with all those CO2 emissions. No surprises there. Gittins is, after all, a Fairfax columnist, so irrational hanky-wringing about Gaia’s torment is to be expected, as is a refusal to acknowledge that the past 18-plus years have seen no global temperature increase worth measuring. Why let the facts get in the way of a good, green story?

The thing about prophets, though, is that their pronouncements need to stand up over time, and in this respect Gittins has much in common with John Nash — not the troubled mathematician of A Beautiful Mind but the Adelaide clairvoyant who, in January, 1976, predicted a tidal wave would roll ashore at Glenelg and sweep the city on the Torrens from the face of the globe. Adelaide remains in place and so, for the moment, does the SMH and its resident soothsayer, whose latest prediction is best viewed in the context of his past visions:

July, 2008: I’ll be amazed if, by 2016, the price of petrol is anything like as low as $2.26 a litre.

In Melbourne today, petrol could be purchased for as little as $1.21 per litre. True, 2016 is not yet upon us and the price fluctuates quite dramatically. But $2.26 by next year? There is a far greater likelihood of Fairfax Media being in the hands of the receivers by then.

A determined prophet — not necessarily a competent one — stands by his visions, which is what Gittins was doing in May, 2012. The quest for fresh reserves of energy would become harder and more costly, he wrote, and the consequences dire:

If oil and its substitutes are now to be very much more expensive, this spells significant cost, economic disruption, social hardship and weaker growth.

Generally, economists incline to the view that increasing supply prompts lower prices, not higher. In the unlikely event that there are practioners of the Dismal Science who fancy jobs with Fairfax, they should set that yen aside. They just wouldn’t fit in.

Of course it is a prophet’s lot to be ignored, which is what economist Steve Keen tried to do but failed. As he wrote in Business Spectator:

Economists are wont to criticise habits as a sign of irrationality, but they’re often a sensible rule of thumb that stops us doing other things we’ll later regret. A case in point: over the years, I’ve developed the habit of not reading Ross Gittins. Last week I broke that habit, and the experience reminded me of how sensible that habit was.

Keen can be read in full in full via the link below

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