The 1980s were the decade of the conservative supply side economics scams. As an over-simplification that was the decade where gullible citizens were taught that total de-regulation of business was good, and government oversight of anything was bad. Unfettered free market capitalism would be the solution to everything. Everyone would prosper, as "trickle down" economics would ensure that if you let the wealthiest in society get richer, well they would then create more jobs and wealth would trickle down to those less wealthy. This movement was headed by leaders like Ronald Reagan in the US, Margaret Thatcher in Great Britain, Brian Mulroney in Canada, and Grant Devine in Saskatchewan. In reality it was the first big step in restructuring society so the wealthiest would prosper more rapidly at the expense of the middle class. It was the decade of greed, as portrayed by the character Gordon Gekko in the movie Wall Street.
The 1990s were the decade of the .com scams. Windows 95 simplified computers for the public, and 1995 was also when people really started connecting to the internet. By the end of the 1990s people had been convinced that the digital age was the solution to everything. All you had to do was form a company with .com on the end and you could become an instant multi-millionaire. Or you could just sit at home in your underwear and become a stock day trader and just become an ordinary millionaire. We all know how that ended. Sometimes violently.
After the .com crash in 2000, I heard people everywhere stating they were buying real estate because "housing never goes down". My blog site is dedicated to the theme of gullibility, but the concept that housing never goes down is just plain stupid. Every house will go to a price of zero if you don't maintain it, or for various other reasons. The absolute most gullible people on the face of the earth in this decade had to be those in southern California. They just had a housing bust in the early 1990s. But most of them repeated the laughably false mantra about housing being a good investment. Sheesh! Desert dwellers without sufficient local water supply = no long term future. And we don't know how the housing bust ended because we're not near the end yet. But Americans came to the sad realization that national prosperity can't come from its citizens buying and selling over-priced houses. Canadians haven't learned that lesson yet, but they are about to very soon, likely not in as severe a form as the Americans.
Throughout those three decades the Wall Street banksters got stronger and wealthier, as did corporations and corporate executives. But wages of the bottom 80-90% did not grow as fast as the economy, and not nearly as fast as those in the top 10-20%. But people had been convinced that they were getting wealthier. The reasons were simple. For three decades interest rates dropped from extremely high levels, credit was expanded, and energy (with the exception of short term price spikes) remained cheap and plentiful. People were purchasing everything on credit at low rates.
Now interest rates have bottomed, credit is contracting, and energy is less cheap (but still cheap). Gee, what could that lead to?
Our entire prosperity in North America is due to the availability cheap energy. Oil is the main energy price driver, and right now it is priced at a level that precludes any significant growth in the US. I calculate that at roughly $85 oil, it is impossible for the American economy to grow, and obviously with oil priced above $85 the economy will contract. Almost every recession in the last 40 years has been preceded by an oil price spike. As oil prices rise, almost everything we purchase goes up in price, and we have less money for other things. We're at the verge of permanent recession.
This will be the decade of the energy scams where trillions will be swindled from North American citizens. You won't have to seek out the scams; they will come to you, and you won't always recognize them for what they are. Americans are stressed financially (Canadians a little less so) and believe energy costs are too high. They want a solution to these perceived high energy costs, and feel there are easy solutions out there, and that those solutions are being suppressed by various interests. They believe there is a new technology somewhere just around the corner, so all will be well again soon.
So we have one of the two essential ingredients for my definition of gullibility -- people with a strong emotional state, in this case strong antipathy towards high energy prices. The second essential ingredient is a poor understanding (ignorance) of the thing the scam is based on. Is it possible North Americans are ignorant about energy? Absolutely! They know almost nothing about energy. You could write volumes of thick books about what the average North American doesn't know about energy. Conversely you could reduce what they do know to the back of an envelope.
Think I'm being harsh? Think about what Americans knew about housing. They lived in them from an early age, saw them every day. Everyone has seen houses built, and most people have helped build or renovate one or more. And yet, somehow they believed that median house prices at 10 times median annual household income (like Vancouver today) was a reasonable price, even if they could rent the same house for less than half the mortgage payment. Gullibility in action! And the same applies to the citizens of most other nations of the world who experienced a housing bubble as a result of the worldwide credit expansion. Hundreds of millions of people worldwide mistook a house for a retirement plan, a mutually shared delusion.
Let's get down to the basics. The average North American knows just enough about energy to be a danger to themselves. Their fundamental ignorance leaves them unable to make objective comparisons between various forms of energy supply, and rampant innumeracy leaves them hopelessly unable to do any cost analyses. In addition many energy sources are complicated and difficult to understand without an engineering background, or at least a few hours (or days) research. Many people have never heard of the Laws of Thermodynamics, and the constraints those laws place on energy production, conversion, or transfer. So they will be reliant on various "experts" for advice in their decision making.
As Shakespeare's Hamlet would say, "Ah, there's the rub." A poorly informed public will fall prey to repetitive scams because many of the "experts" that they will rely on for advice will be shills working for the scammers. A simple example of a shill assisting a scammer would be in the well known scam of three-card monte. It never goes out of style.
What energy scams are we talking about here? They will range from simple devices to supposedly increase your car mileage, to the biggest one of all, the global carbon Cap and Trade system. Every good scam has an element of truth in it, perhaps substantial amounts of truth, but there is always a twist of some sort that the "mark" (that would be you or me, or our municipal, provincial or federal government) is not likely to discover until after an unwise transfer of money has taken place.
When a person with experience meets a person with money, the person with experience leaves with more money, and the person with the money leaves with more experience.
There is little that can be done with the largest scams like Cap and Trade, so there is no point dwelling on them. They are government mandated (like the corn ethanol scam) and the Wall Street banksters are already geared up to clean house on carbon trading.
Not every energy solution put forward will be a scam intended to deceive. Many of them will be legitimate attempts to deliver a viable product, but the promoter will have unrealistic expectations. I would possibly put the recently hyped Bloombox in that category. I haven't researched it fully but I have a negative opinion on it based on a quick review of this piece of junk infomercial that appeared on "60 minutes" and the company's website. Both are riddled with deceptive statements. I don't think I spotted any blatent falsities, just misdirections, omissions of material facts and deceptive wording, all designed to make the product appear to be something it isn't. Anyone who markets in this manner should not be trusted.
If anyone is interested in this product, review the video and company website, and see how many things you find questionable. I'll do a separate blog post with my analysis of the Bloombox after more review, perhaps over the weekend.
Here's another piece of poor reporting on a supposedly revolutionary technology that was all over the news last year. It's the Genepax "water powered car". I almost wet my pants laughing at the video due to the absurdity of the claims made. It was obviously an outright hoax and the Reuters reporter should have qualified for the Dumbest Reporter Worldwide for 2009. Some weeks later I hunted down the Genepax web site, and ferreted out the elements of the hoax.
I informed the guy who posted this video link on a popular trading blog that he was highly gullible. He didn't take it well, considering he is a physician with a previous PhD in the sciences. But he is a good example of something every scam artist knows well -- highly educated people are the easiest to scam. That's why doctors and dentists are at the top of every bucket shop operator's list of "marks". This is so well known it was even used in a scene of the movie Boiler Room. Education does not guarantee good judgement when you get into areas outside the realm of the person's education. I speak from personal experience here.
One of the most common fuel scams on the internet is the Water4Gas hoax, alternatively marketed as an HHO generator, "Brown's gas", hydrogen generator, water fuel, etc. The element in common to all these is that they electrolyze water, then run the hydrogen and oxygen into your vehicle's air intake. It sounds so wonderful and high tech unless you have actually taken high school chemistry and understand the laws of thermodynamics. Then the claims of improved gas mileage sound ludicrous, because they cannot possibly be true. Judging by the numerous videos on YouTube, there are great numbers of gullible people buying these kits/kit plans, and/or marketing them to other gullible people. Some marketers get the assistance of a local TV news crew who are totally clueless as in this video. Check out his method of measuring the effectiveness of his contraption -- hilarious! I'm guessing that millions of dollars have been wasted on this junk, and quite possibly some engines damaged as well.
One very popular shared delusion in America is the concept of weaning itself off foreign oil, or at least becoming much less reliant on foreign oil. It's not a feasible concept. T. Boone Pickens has been promoting a pie-in-the-sky concept of replacing natural gas power plants with wind farms, then using the natural gas in vehicles, thereby cutting back on oil imports. There are only two problems with the Pickens Plan:
- Pickens (who I greatly distrust due to his past endeavours); and
- The Plan (which is riddled with optimistic assumptions and omissions of critical information).
Those are many energy concepts out there, all designed to sell us some energy "solution", but which are unfeasible for one reason or another, or which are outright scams like Water4Gas.
Beware the panderers of energy solutions that sound too good to be true.