Category Archives: Economics

African Goats

…and American exceptionalism:

American exceptionalism — to the extent it remains — is not the product of some sort of genetic superiority. The settlers who made something of Jamestown after Dale’s reforms were the same ones who were bowling in the streets instead of working when he arrived.

What is exceptional about America — at least, what’s been exceptional up to now — is the extent to which individuals were allowed to keep the fruits of their own labor instead of having them seized by people in power for their own purposes. The insight behind American exceptionalism is that people work harder and better for themselves, as free people, than they do as servants for some alleged communal good.

But maybe Shapiro’s right, and this insight isn’t as exceptional as I make out. After all, it’s also contained in a West African proverb, to the effect that “The goat owned in common dies of hunger.”

Human nature isn’t so different, whether you’re in 17th century North America, 19th century Africa or the 21st century United States.

What’s striking isn’t that human nature is the same, but that so many want to pretend that it’s not.

The primary project of the left, since Rousseau, has been about the denial of human nature or, if they conceded that it exists, to force it into a different Procrustean mold, and build the New Soviet Man. All in the name of fairness and compassion, of course.

Dollar Jobs

A thought experiment.

If I were an employer, I wouldn’t want “free” labor of that nature, because it can consume too many resources just trying to manage it, when you’d have no authority because it could just walk away with no penalty. It’s the same problem that people have with volunteer organizations.

I have a better, and slightly less controversial proposal. Just let the market work, and eliminate the minimum wage. It would do wonders for youth unemployment in the inner city.

Oil And Gas

The new green energy:

…as profits from wind, solar, biofuels and other alternatives consistently fell short of expectations — and as the fossil fuel business boomed — things got complicated. Venture capitalists and other investment funds started stretching the definition of clean technology almost beyond recognition in an effort to make money while clinging to their environmental ideals.

Today, clean technology investment funds are not trying to replace the fossil fuel industry, they’re trying to help it by financing companies that can make mining and drilling less dirty. The people running these funds acknowledge the apparent hypocrisy, but defend a more liberal definition of clean technology.

“Oil and gas will be with us for a long time. If we can clean that up we will do the world a great service,” says Wal van Lierop, CEO of Chrysalix, a Vancouver, Canada-based venture capital firm founded in 2001.

Shat a shock, that profits “consistently fell short of expectations.” Perhaps, like the president and his campaign-donating cronies, they had unrealistic expectations. Or more likely for the latter, they just expected the taxpayer to make up the difference.

Fifty To One

A new climate education project:

50 to 1 cuts across all the noise and fury surrounding the ‘climate debate’ and gets right to the point: Even if the IPCC is right, and even if climate change IS happening and it IS caused by man, we are STILL better off adapting to it as it happens than we are trying to ‘stop’ it. ‘Action’ is 50 times more expensive than ‘adaptation’, and that’s a conclusion which is derived directly from the IPCC’s own predictions and formulae!

Here’s a link to the Indiegogo site.

ObamaCare

Just how ignorant is its namesake about it?

Well, to be fair, he could be just lying.

[Update a while later]

Unravel it, and you get a train wreck.

Actually, you get a train wreck just in trying to implement it:

Baucus isn’t the only Capitol Hill Democrat worried about a “train wreck,” according to The Hill. Even those not yet on Capitol Hill have distanced themselves from the unpopular program. Elizabeth Colbert Busch, a Democrat running for a House seat in a South Carolina special election, called the ACA “extremely problematic.”

As 2014 draws ever closer, and the true scale of the problems of ObamaCare become apparent, expect more Democratic incumbents to commiserate with their constituents about the “extremely problematic” “train wreck” they imposed on them. They had better not expect the voters to let them off the hook, however, no matter how many times Obama tells them they have nothing to worry about.

Everyone running next year against an opponent who voted for this monstrosity should make it a focus of their campaign. Even if the opponent renounces their own vote to attempt to save their seat (that’s the polite word…), their judgment should be called into question.

The Green EU

It took an economic disaster for them to reduce their carbon output:

But the data shows that even though EU economic weakness and US natural gas are responsible for significant drops in emissions in the developed world, developing countries, led by China, continue to drive the global total higher.

This underscores the disconnect between green policies and green results. The US hasn’t checked off many items on the green wish list for domestic legislation; Europe has. But it turns out that the introduction of the euro and the subsequent economic disaster had more to do with European emissions drops than Kyoto or the shambolic carbon-trading program.

The usual suspects are headed to Bonn next week for another forlorn attempt to carve out a meaningful global climate treaty. Meanwhile in the real world, the challenge is to find a way for developing countries to continue rapid growth without driving greenhouse gasses and other pollutants to potentially dangerous levels.

That’s assuming that the high levels of the “other” “pollutants” is more dangerous than slow economic growth, of course. And meanwhile, it turns out that the US has twice as much oil, and three times as much gas as we thought. And “peak oil” continues to recede into the future, to the tears of the Malthusians. Which are delicious.

[Update a while later]

Gazprom (and the Russian economy) are in trouble, too:

The US has begun exporting gas to Europe, and has also ramped up coal exports by more than 250 percent since 2005. The net result has been to knock Gazprom back on its heels. The WSJ reports that the negotiations with Bulgaria were heated, with Gazprom’s negotiators shouting in frustration on several occasions.

In public statements, however, the Russian company remains defiant (and perhaps in a state of denial) about the implications of the shale gas boom…

Well, that’s one tactic, I guess. Not one I’d recommend, though.

The Paradox Of Consensus

This is the essay I’ve been meaning to write, but not taken the time. Fortunately, someone else did:

Consensus, in and of itself, is not necessarily a bad thing. The more easily testable and verifiable a theory, the less debate we would expect. There is little disagreement, for example, about the sum of one plus one or the average distance of the earth from the sun. But as a question becomes more complex and less testable, we would expect an increasing level of disagreement and a lessening of the consensus—think: the existence of god, the best band since the Beatles, or the grand unified theory of physics. On such topics, independent minds can—and should—differ.

We can use a simple formula to express how an idea’s popularity correlates with its verifiability. Let us introduce the K/C ratio—the ratio of “knowability,” a broad term loosely encapsulating how possible it is to reduce uncertainty about an idea’s correctness, to “consensus,” a measure of the idea’s popularity and general acceptance. Topics that are easily knowable (K ~ 1) should have a high degree of consensus (C ~ 1), whereas those that are impossible to verify (K ~ 0) should have a low degree of consensus (C ~ 0). When the ratio deviates too far from the perfect ratio of 1, either from too much consensus or too little, there is a mispricing of knowledge. Indeed, in cases of extreme deviations from the perfect ratio, additional support for a concept with such a lopsided K/C ratio increasingly subtracts from its potential veracity. This occurs because ideas exist not simply at a single temporal point, but rather evolve over the sweep of time. At the upper reaches of consensus, there is less updating of views to account for new information—so much so that supporters of the status quo tend to suppress new facts and hypothesis. Government agencies deny funding to ‘sham’ scientists, tenure boards dissuade young researchers from pursuing ‘the wrong’ track, and the establishment quashes heretical ideas.

…To see how this works in practice, we turn to the evergreen topic of climate change. Notwithstanding the underlying ecological threat of climate change itself, the debate about how to confront human-caused global warming has spawned unprecedented financial, political, and social risks of its own. Entire industries face extinction as the world’s governments seek to impose trillions of dollars of taxes on carbon emissions. The New York Times’s Thomas Friedman approvingly writes that Australian politicians—not to mention public figures through the world—now risk “political suicide” if they deny climate change. But if carbon dioxide turns out not to be the boogey-man that climate scientists have made it out to be, tens of trillions will be wasted in unneeded remediation. Much of the world—billions of humans—will endure a severely diminished quality of life with nothing to show for it. The growth trajectory of the world in the twenty-first century may well depend more on the “truth” of climate change ex ante than ex post.

With climate change, as in many areas of scientific complexity, we can (and do) use models to understand the world. But models have their problems. This is particularly true when dealing with complex, non-linear systems with a multitude of recursive feedback loops, in which small variations produce massive shifts in the long-term outcome. Pioneered by the mathematicians Edward Lorenz and Benoit Mandelbrot, chaos theory helped explain the intractability of certain problems. Readers of pop science will be familiar with the term the “butterfly effect,” in which “the flap of a butterfly’s wings in Brazil set[s] off a tornado in Texas.” The earth’s climate is one such dynamic, chaotic system and it is within the whirling, turbulent vortex of unpredictability that the modern climate scientists must tread.

And boldly have they stepped into the breach. The scope of agreement achieved by the world’s climate scientists is breathtaking. To first approximation, around 97% agree that human activity, particularly carbon dioxide emissions, causes global warming. So impressed was the Norwegian Nobel Committee by the work of the Inter-governmental Committee on Climate Change and Al Gore “for their efforts to build up and disseminate greater knowledge about man-made climate change, and to lay the foundations for the measures that are needed to counteract such change” that it awarded them the 2007 Nobel Peace Prize. So many great minds cannot possibly be wrong, right?

Wrong.