Common Cents & Cow Killing on February 14, 2020

“Without reflection, we go blindly on our way, creating more unintended consequences, and failing to achieve anything useful.”

Margaret J. Wheatley


A few weeks ago, I wrote about how well-intentioned actions can have unintended economic reactions, usually negative. This was in response to the ‘eliminate fossil fuels now’ approach climate change activists, like Greta Thunberg, have adopted. Since the US Energy Information Administration estimates US energy expenditures reached 5.8% of GDP in 2017, most of it on fossil fuels, such a sharp shift in behavior would have, shall we say, catastrophic economic consequences. That is just on energy; never mind the fact we use crude oil for other things like plastics, asphalt, lubricants, paint, cosmetics, film, etc. While these are, admittedly, more minor uses of Jed Camplett’s ‘Texas Tea,’ they represent, what I would consider, significant unintended consequences.

Then there is the aspect of all those people and all those jobs attached to the fossil fuel industry, directly and indirectly. And what of the folks who work at jobs which require dependable, efficient, cost-effective levels of extreme heat like iron & steel, plastics, rubber, and cement production? After all, it takes a lot of energy to melt rocks and galvanize stuff. Renewable sources are ‘getting there,’ but the word ‘now’ demands immediacy, doesn’t it?

Recently, I have seen and read more about activists demanding ‘we’ shift to a plant-based diet. After all, hooved animals, of all varieties (but mostly assumed to be cattle), generate anywhere from 18-50% of the world’s greenhouse gases…depending on the source and report. To that end, a full-grown cow can generate anywhere from 250-500 liters of methane per day, or so I have read, with some estimates as high as 1,000! Punnily, that is a lot of hot air, and I am glad I am not the one tasked with measuring such things.

So, what would the world look like IF we no longer consumed animal protein? What if we ‘outlawed’ Elmer, Elsie, Clarabelle, and Ferdinand the Bull?

According to the USDA/Foreign Agricultural Service, there were 1,001,841,000 head of cattle in the world in 2018. Even at the minimum estimate, that would equate to 250 billion liters of methane emission per day. For the metrically challenged, that works out to be roughly 66 billion US liquid gallons. And my wife thought I was bad! No wonder things are heating up all over, huh?

Perhaps not surprisingly, India had the largest herd at an estimated 305 million, as the killing or slaughter of cattle is illegal throughout much of the country. Brazil was second with 232.35 million. China came in third with 96.85 million, and the US was fourth at around 94.40 million. Interestingly, Brazil, Argentina, and Uruguay (all in the Top 15) had more bovines than people. While I am not a mathematician, I have a hunch cattle raising is an important part of those countries’ economies. You think?

Now, for all you folks who make good use of their cuspids, imagine waking up one morning to no more cheeseburgers, steaks, spaghetti Bolognaise, Mongolian Beef, shepherd’s pie, beef stroganoff, ground beef tacos, nachos supremos, and so on and so forth. Shoot, without any more cows and other hooved animals to pollute the atmosphere, I suppose we would have to say adios and adieu to queso dip, macaroni & cheese, mozzarella sticks, again with the nachos, grilled cheese sandwiches, quiche, cheese enchiladas, chocolate, chocolate milk, ice cream, butter, cream cheese (sorry bagels), gelato, yogurt, infant formula, poutine, sour cream, sausage gravy, Jell-O, marshmallows, and, gasp, pizza. Trust me, neither of these are exhaustive lists.

Those are just some of the foods we would have to live without. However, ‘we’ only eat anywhere from 51-60% of a processed cow, depending on the estimate. Even so, very little goes to waste. From bones, horns, and hooves, we get things like piano keys, photographic film, bone china, cellophane, dog biscuits, cold cream, adhesives, and items using collagen, gelatin, and glycerin, to name a few. The hair and hide provide leather, clothing, footwear, artist brushes, felt, upholstery, asphalt binder, and insulation. Cow fat and fatty acids are present in things as diverse as explosives to antifreeze to lubricants to pet food to hand cream to ceramics to shampoo & conditioner. The intestines are good for instrument strings, surgical sutures, and racquet strings. Finally, cow manure is an excellent fertilizer…which would be needed if ‘we’ had to cultivate more land for food production.

Then there is the simple fact cows are kind of cute, particularly baby cows…also known as calves.

Of course, you could argue we could get the necessary triglycerides and esters for glycerol from soybeans or palm trees. I suppose you could use fish by-products for some of the gelatin needs, and nut and other plant milk has been gaining popularity. Unfortunately, getting rid of fossil fuels AND livestock animals would put a real strain on the garment industry, as many (if not most) synthetic fibers, like polyester, are petroleum-based. The same could be said for surgical sutures. Brother. It seems like dead dinosaurs (aka fossil fuels) and dead bovines have a lot of applications for humankind.

To be certain, human beings existed a long time without synthetic fibers, electricity, automobiles, photographic film, bone china, and tennis racquet strings. We could physically exist without most of the stuff climate control activists want us to eliminate. However, what is the old expression? For every action there is a reaction? In this instance, what are ‘we’ willing to give up to fight climate change? How would this impact our livelihoods and economies? Would you be willing to consume less? Would your neighbor? Would theirs?

In and of themselves, fossil fuels don’t harm the environment. Our consumption of them does. Cows and other livestock animals aren’t cognizant of the fact their flatulence potentially harms the environment. Regardless, our consumption of these animals means their numbers are undoubtedly higher than they would be in the proverbial wild, with the possible exception of India. Taken together, it is ‘our’ consumption of fossil fuels and livestock animals which is the problem, because we demand more than the environment would produce on its own, if you will.

So, consumption is the problem, and people tend to consume more the wealthier they become. Since the world is becoming wealthier, ‘we’ are consuming more. This is hurting the environment in a variety of ways. As such, it seems the answer to combat climate change is simply to consume less.

Although people have taken issue with what I am about to write, I have yet to have anyone prove me wrong. I would contend the only 100% failproof way to reduce our propensity to consume, and therefore humankind’s negative impact on the environment, and I mean failproof, is to reduce the number of people who consume. Since every living thing consumes something, the most efficient and effect way to reduce ‘our’ impact on the environment is to, well, reduce the number of people. Everything else is a partial solution or best guess.

I have a secret for you: I am not going to volunteer to ‘go first.’ I am also not going to volunteer my friends, family members, or anyone I know or know of. Heck, I am not going to volunteer anyone, no one at all…not even the worst person on the planet, because someone could say the same of me.

All of this has a point, finally.

Investing is essentially making a bet on future consumption. How much will people demand of a particular good, technology, or service? From an individual company or sector? How much will they consume and how much will the companies have to consume themselves in order to deliver the necessary supply? How much will governing entities restrict supply or otherwise alter free consumption patterns? How much of shift in consumption patterns will there be? Etc.

Obviously, more consumption is usually better than less, and I can think of very few things which don’t have a cost or price of some sort. As such, if we consume less fossil fuel, how much will the alternative cost us…because there will have to be an alternative? If we consume fewer animals, how much will we have to pay to replace what all we get from them, if even possible? If the costs are significantly higher, are we truly better off…now that we have less money to spend on other goods and services? If that is the case, less money to spend on other goods and services, are we creating wealth in the economy or are we simply creating wealth in a select few industries?

If the latter, who gets to decide? It would seem the people who are demanding ‘we’ consume less of what we currently are. That which we pay for with the fruits of our labors…past, present, and future. If this is indeed the case, they would be first in line to benefit, economically and/or politically, from the mandated changes in consumer consumption patterns. Or so it would seem. As a result, I am usually leery of anyone who demands I/we do anything contrary to what I am currently doing, because I haven’t met many folks with strong public opinions who didn’t have an agenda of some sort…myself included.

Then, again, my friend Wesley has said I was a cynic even in the first grade and I haven’t changed a bit since then.

In the end, I admit I take a jaundiced eye when I read someone DEMANDS a specific type of behavior, or that ‘we’ must do something NOW. Unfortunately, I am reading about demands and doing things now more frequently than ever, so my eyes must be turning yellow. Still, I have yet to see what I would consider a thorough examination of the economic ramifications of these demands, let alone a sober prediction of what would happen given a sudden, sharp shift in mandated consumption patterns.

If and when I do see these things, I will be interested I reading them and listening to the various demands. After all, we are always looking for a way to make the extra buck for our clients…and accurately predicting future consumer behavior is a great way of doing so. With that said, there is often a pile of money to be made in exploiting ‘unintended results.’

Have a great weekend

John Norris

Managing Director

Chief Economist


As always, the thoughts and opinions expressed in this newsletter are mine and mine alone. They do not necessarily reflect the views and opinions of Oakworth Capita l Bank and any other of its associates, directors, and shareholders. As my wife will tell you, I am prone to change my mind without warning, so there is that. Also, nothing in this newsletter should be considered or otherwise construed to represent an offer to buy or sell any form of investment service and/or product.