Category Archives: Economics

Business, Economics, Political Commentary

A Sweet Deal

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Not for the taxpayers or sugar consumers, though:

That’s right: The federal government protects the sugar industry, lends it money after promising that the loans wouldn’t cost anything to taxpayers, and after all that still ends up having to buy part of its sugar production because borrowers can’t repay the loans. Customers pay higher prices for sugar, and then they pay again when their tax dollars are used to buy over-priced sugar and bad loans. And yet, lawmakers on the Hill continue to support farm interests in spite of the unfairness and inefficiency of the whole system.

This is the opposite of good government.

Business, Economics, Media Criticism, Political Commentary, Social Commentary

Food Stamps And Farms

This is long overdue:

The plan being contemplated by Cantor closely tracks an earlier proposal by Indiana Republican Marlin Stutzman. In a press release issued last week, Stutzman pointed out that “Eighty percent of the spending goes toward food stamps” in the original farm bill. He called on the House to “do our work in the full light of day by splitting this bill and having serious debates on both farm and welfare policy.”

It’s a shame that Congress doesn’t seem capable of having a serious debate about anything.

Business, Economics, Media Criticism, Political Commentary, Science And Society, Social Commentary, Technology and Society

Limits To Growth

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The authors of the report were wrong about everything:

The Limits of Growth got it so wrong because its authors overlooked the greatest resource of all: our own resourcefulness. Population growth has been slowing since the late 1960s. Food supply has not collapsed (1.5 billion hectares of arable land are being used, but another 2.7 billion hectares are in reserve). Malnourishment has dropped by more than half, from 35 percent of the world’s population to under 16 percent.

Nor are we choking on pollution. Whereas the Club of Rome imagined an idyllic past with no particulate air pollution and happy farmers, and a future strangled by belching smokestacks, reality is entirely the reverse.

In 1900, when the global human population was 1.5 billion, almost 3 million people – roughly one in 500 — died each year from air pollution, mostly from wretched indoor air. Today, the risk has receded to one death per 2,000 people. While pollution still kills more people than malaria does, the mortality rate is falling, not rising.

Nonetheless, the mindset nurtured by The Limits to Growth continues to shape popular and elite thinking.

Because it gives them an excuse to run our lives for us.

[Update a couple minutes later]

I agree with Glenn: “Personally, I’ll be more impressed if we’re ever warned of a pending doom whose aversion won’t require giving a lot of power to bureaucrats, technocrats, and other hangers-on while being left poorer and more constrained ourselves. Because no matter what the crisis being propounded, the remedy always seems to be the same…”

Business, Economics, Media Criticism, Political Commentary, Science And Society

Obama’ Idiotic Energy Speech

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He’ll only approve the pipeline if it won’t add to “carbon pollution.”

It’s a stupid question. Of course it won’t “add to carbon pollution.” Only in a fanciful, unicorn-fart world in which the oil that will be flowing through the pipeline will be left in the ground if it isn’t built is this an issue. We know that the Canadians are already cutting deals to sell the oil to China. In that case, moving it there in ships will generate even more carbon than moving it through a pipeline (not to mention increasing the chances of oil spills on the Pacific coast). So if you’re really worried about carbon, and you’re smart, you should be urging the construction of the pipeline. But we know that for opponents of the pipeline (possibly including the president) at least one, and possibly both of those conditions don’t apply.

Business, Economics, Mathematics, Media Criticism, Political Commentary, Science And Society

What To Do About Global Warming/Cooling

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I see a problem with this approach, I think, unless I’m missing something:

1. Are global temperatures warming?
2. Do the negative consequences of the change outweigh the positive consequences?
3. Can we do anything that will reverse the change?
4. Do the positive consequences of the action outweigh the negative consequences of doing nothing?

Notice, the steps have nothing at all whatsoever to do with whether or not global warming is anthropogenic. The climate’s “naturalness” is actually irrelevant. If a 10 kilometer-wide asteroid were hurling toward earth at 100,000 km per hour, it would be a completely natural event. However, just because the meteor wasn’t anthropogenic doesn’t mean that we wouldn’t take actions to deflect it.

Notice also, that we could change question 1 from “warming” to “cooling” and the four-step approach still works. And quite frankly, cooling is probably a more historically problematic situation.

If the answer to any one of the above four questions is “No,” then we should do absolutely nothing about a changing climate. If the answer to all of the questions are “Yes,” then, and only then, should we take any actions.

The first problem is in step 3. It doesn’t seem to account for cost. Suppose there is something that we can do (at least in theory) to reverse the change, but it would result in the loss of (say) a quadrillion dollars in global economic growth over the next century. And that points out the problem with Step 4. Rather than comparing the positive aspects of the action to the negative consequences of doing nothing, we need to compare the positive consequences of the action to their cost. For example, Wikipedia (FWIW) says that the gross world product is about seventy trillion dollars. If we were to get a growth rate of 4 percent over a century, that would mean that in 2113, the GWP would be (1.04)**(100), or about fifty times that amount, or about 3.5 quadrillion dollars. If by arbitrarily making energy more expensive with carbon taxes or caps, we were to reduce that growth rate by a mere half a percent (which is probably a conservative estimate — many of the proposals would do much more economic damage), that would reduce the factor of growth after a hundred years to about thirty, instead of fifty. That is, the world would be 20 times seventy, or 1.4 quadrillion dollars poorer over that period of time. You can buy a lot of mitigation against climate issues with that kind of money.

This is the kind of rational analysis that Bjørn Lomberg has been doing, and it’s why we need a real regret analysis.