Rubin’s cube

Doomsday prophets twist and turn the facts, but they never solve any economic puzzles Instead of high oil prices driving growth down, as Jeff Rubin had predicted, low growth is driving oil prices down

You may not be aware of the Third Industrial Revolution, the one that leads “inexorably toward a nearly workerless world” and forces “a worldwide economic crisis of monumental proportions as millions lose their jobs to technological innovation, and global purchasing power plummets.” So wrote Jeremy Rifkin, global master of spectacularly wrong predictions embedded in the titles of books. In The End of Work, from 1995, Rifkin also predicted that, instead of real work, he saw the creation of “millions of new jobs in the Third Sector — civil society.”

Since 1995, the number of people doing real work around the world actually rose 30% to more than 3.1 billion. But that hasn’t stopped Rifkin from churning out more books on the Third Industrial Revolution, including his latest, The Zero Marginal Cost Society. Its subtitle says it all: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism. Since one or two other recent books proclaimed “the end of capitalism,” the “eclipse of capitalism” seems at least a bit more original and marginally less apocalyptic.

There is a big business in such titles. On my bookshelf I see: a 2000 work by Alan Rugman; also of Globalization by Princeton historian Harold James. The End of Shareholder Value by management consultant Allan Kennedy features a cover picture of the floor of the New York Stock Exchange, empty and strewn with paper. The End of Food by Paul Roberts argues that the global food system is falling apart. Roberts is also author of The End Of Oil, a 2004 book that outlined the coming peak oil crisis.

I was reminded of all this the other day when Jeff Rubin, a fellow traveller with Rifkin in the catastrophic book title industry, appeared in various media to explain the recent dramatic fall in the price of oil. Rubin is an odd choice for this particular task, since he famously declared in 2008 that the price of oil was set to rocket to US$225 or more a barrel. He was not even close, as we can see by today’s oil prices. But the fact that Rubin — a former CIBC celebrity chief economist — has been spectacularly wrong in his energy forecast apparently does not preclude his continued appearance as an expert commentator on the movement of energy prices.

In his 2012 book, The End of Growth, Rubin explained his thesis: The world is running out of oil, and oil prices are therefore on an upward march. “And this time the economic shock will be greater than we saw the last time around.” Rising oil prices, inexorably linked to extractive limits, will start squeezing the growth out of the global economy, he said. It was a variation on peak oil theory, with the peak driving the price of oil up and, subsequently, the price of oil crashing the economy. “Some people might call that an oil peak. Others might just call it the end of growth.”

Still others might call it dumb as nails. But now Rubin is back to explain why the price of oil is falling, mostly for reasons he failed to acknowledge in his doomster book. Slow growth, Rubin said. And all that cheap oil flowing out of fracked shale in places such as North Dakota, a source he failed to notice in The End of Growth. Plus there’s the matter of that little slowdown in China.

Instead of high oil prices driving growth down, as he had predicted, low growth is driving oil prices down. During a recent interview with CBC Radio’s The Current, Rubin said “All of a sudden, what makes economic sense at a certain price, doesn’t make economic sense any more.” Well, he got that right.