“Messrs. Obama and McCain both reveal a disturbing animus toward free markets and success.”
Indeed.
Category Archives: Economics
“Slo Mo” Disaster
Alan Boyle has an interesting story on flood prediction. Well it is to me, anyway.
Robert Criss, a professor of earth and planetary sciences at Washington University in St. Louis, agreed that the forecasts have been “remarkably accurate” – within the limits of the system, that is. He noted that the flood wave is working its way down the Mississippi River at about walking speed, giving the forecasters time to analyze the water’s course, and giviing emergency officials time to react.
“It’s like a traffic jam. The cars move slowly through the jam, and this big stuff is coming our way slowly and inexorably,” Criss said.
The damage will be in the billions. And of course, some will say that this is a sign of climate change. But the real reason that the cost of these disasters is increasing is not because the weather is any different than it has been in the past but rather because people foolishly build in flood plains, because they don’t understand the nature of statistics. There is no such thing as a “hundred year flood,” at least in the sense that you can expect that there will be one per century, and after you’ve had one, you’re safe for another hundred years. All it means is that statistically, one would expect one to occur that often, on average. Having one does not inoculate you from having another the next year (or even the next month), any more than chances that the next coin flip will be heads is increased by a previous tail. It’s fifty-fifty every flip, and it’s one in a hundred every year (assuming that the estimate is correct). This is the same kind of thinking as the guy who always carried a bomb on the plane with him, on the logic that the chances that there would be an airplane with two bombs on it were minuscule.
A perfect example is the 2004 hurricane season, which I drove over from California in early September to enjoy. I arrived in Florida just in time to put up shutters and batten down the hatches in our new house, when Frances hit us.
It was the first time a major storm had hit the area in many years, and most of the people who had lived here, even long-time residents, had gotten complacent. In fact, I recall sitting next to someone on a plane to LA earlier that summer, shortly after we’d bought the house, but before the storms. He was a real estate agent in Palm Beach County, and I mentioned that one of the things I didn’t like about moving to south Florida was the hurricanes. He waved it aside, saying, “we don’t get hurricanes here.” I just shook my head.
Anyway, three weeks later, just as we were getting power back on and cleaned up from Frances, we got hit by Jeanne, which made landfall in almost exactly the same place (up around Fort Pierce). So this was not only a “hundred year” (or perhaps a “thirty year”) hurricane, but we had two of them within a month. And of course, the cost of hurricanes will continue to grow, not because hurricanes are getting worse, but because, as in the midwest, and partly out of statistical ignorance, we continue to provide them with ever more, and ever more expensive targets.
[Update a couple hours later]
Jeff Masters thinks that climate change is causing 500-year floods to become more frequent. I don’t think we have enough data to know that for sure (particularly since things have actually been cooling down in the last few years), but as he points out, another anthropogenic effect is the draining of wetlands for farming and building of levees to protect them. Levees work fine (until they suddenly don’t) but they intensify effects down stream.
“Slo Mo” Disaster
Alan Boyle has an interesting story on flood prediction. Well it is to me, anyway.
Robert Criss, a professor of earth and planetary sciences at Washington University in St. Louis, agreed that the forecasts have been “remarkably accurate” – within the limits of the system, that is. He noted that the flood wave is working its way down the Mississippi River at about walking speed, giving the forecasters time to analyze the water’s course, and giviing emergency officials time to react.
“It’s like a traffic jam. The cars move slowly through the jam, and this big stuff is coming our way slowly and inexorably,” Criss said.
The damage will be in the billions. And of course, some will say that this is a sign of climate change. But the real reason that the cost of these disasters is increasing is not because the weather is any different than it has been in the past but rather because people foolishly build in flood plains, because they don’t understand the nature of statistics. There is no such thing as a “hundred year flood,” at least in the sense that you can expect that there will be one per century, and after you’ve had one, you’re safe for another hundred years. All it means is that statistically, one would expect one to occur that often, on average. Having one does not inoculate you from having another the next year (or even the next month), any more than chances that the next coin flip will be heads is increased by a previous tail. It’s fifty-fifty every flip, and it’s one in a hundred every year (assuming that the estimate is correct). This is the same kind of thinking as the guy who always carried a bomb on the plane with him, on the logic that the chances that there would be an airplane with two bombs on it were minuscule.
A perfect example is the 2004 hurricane season, which I drove over from California in early September to enjoy. I arrived in Florida just in time to put up shutters and batten down the hatches in our new house, when Frances hit us.
It was the first time a major storm had hit the area in many years, and most of the people who had lived here, even long-time residents, had gotten complacent. In fact, I recall sitting next to someone on a plane to LA earlier that summer, shortly after we’d bought the house, but before the storms. He was a real estate agent in Palm Beach County, and I mentioned that one of the things I didn’t like about moving to south Florida was the hurricanes. He waved it aside, saying, “we don’t get hurricanes here.” I just shook my head.
Anyway, three weeks later, just as we were getting power back on and cleaned up from Frances, we got hit by Jeanne, which made landfall in almost exactly the same place (up around Fort Pierce). So this was not only a “hundred year” (or perhaps a “thirty year”) hurricane, but we had two of them within a month. And of course, the cost of hurricanes will continue to grow, not because hurricanes are getting worse, but because, as in the midwest, and partly out of statistical ignorance, we continue to provide them with ever more, and ever more expensive targets.
[Update a couple hours later]
Jeff Masters thinks that climate change is causing 500-year floods to become more frequent. I don’t think we have enough data to know that for sure (particularly since things have actually been cooling down in the last few years), but as he points out, another anthropogenic effect is the draining of wetlands for farming and building of levees to protect them. Levees work fine (until they suddenly don’t) but they intensify effects down stream.
Throw In A Lube Job, Too
Bruce Webster has an idea for a campaign to get Congress’ attention.
I’m Sure It’s Just A Coincidence
Another jump in oil prices.
Think it has anything to do with the fact that both presidential candidates favor a hidden tax on energy and oppose expanding domestic oil production?
You know, in the past, when I’ve said that prices in this range are not sustainable, I always assumed that, at least at some point, sanity would reign in Washington. What a dumb assumption.
[Thursday morning update]
Wise words from Lileks:
…there’s hope. An article in the paper last week said that the gyrations in the oil market may indicate that the laws of supply and demand no longer apply. Well, clever us, to live in an age where immutable laws are abolished with ease; no doubt faster-than-light travel is now possible as well. Whenever someone says that the old laws no longer apply, it’s a sure sign that the laws are about to reassert themselves with brutal force.
Three-buck gas by October? Likely.
As Carl notes in comments, even when you know you’re in a bubble, you don’t know when it’s going to pop.
[Update a few minutes later]
Anyone wondering why U.S. energy policy is so dysfunctional need only review Congress’s recent antics. Members have debated ideas ranging from suing OPEC to the Senate’s carbon tax-and-regulation monstrosity, to a windfall profits tax on oil companies, to new punishments for “price gouging” – everything except expanding domestic energy supplies.
Amid $135 oil, it ought to be an easy, bipartisan victory to lift the political restrictions on energy exploration and production. Record-high fuel costs are hitting consumers and business like a huge tax increase. Yet the U.S. remains one of the only countries in the world that chooses as a matter of policy to lock up its natural resources. The Chinese think we’re insane and self-destructive, while the Saudis laugh all the way to the bank.
And unfortunately, both presidential candidates are economic ignorami:
Recent weeks have seen some GOP stirrings on Capitol Hill, but John McCain has so far refused to jettison his green posturings, such as his belief in carbon caps and his animus against offshore development. A good reason for a rethink would be $4 gas. At present, it is charitable to call Mr. McCain’s energy ideas incoherent, and it may cost him the election.
Of course, Obama’s even worse, but even if McCain wins, it will be a lot closer than it need be. And prices will continue to soar. Needlessly.
I’m Sure It’s Just A Coincidence
Another jump in oil prices.
Think it has anything to do with the fact that both presidential candidates favor a hidden tax on energy and oppose expanding domestic oil production?
You know, in the past, when I’ve said that prices in this range are not sustainable, I always assumed that, at least at some point, sanity would reign in Washington. What a dumb assumption.
[Thursday morning update]
Wise words from Lileks:
…there’s hope. An article in the paper last week said that the gyrations in the oil market may indicate that the laws of supply and demand no longer apply. Well, clever us, to live in an age where immutable laws are abolished with ease; no doubt faster-than-light travel is now possible as well. Whenever someone says that the old laws no longer apply, it’s a sure sign that the laws are about to reassert themselves with brutal force.
Three-buck gas by October? Likely.
As Carl notes in comments, even when you know you’re in a bubble, you don’t know when it’s going to pop.
[Update a few minutes later]
Anyone wondering why U.S. energy policy is so dysfunctional need only review Congress’s recent antics. Members have debated ideas ranging from suing OPEC to the Senate’s carbon tax-and-regulation monstrosity, to a windfall profits tax on oil companies, to new punishments for “price gouging” – everything except expanding domestic energy supplies.
Amid $135 oil, it ought to be an easy, bipartisan victory to lift the political restrictions on energy exploration and production. Record-high fuel costs are hitting consumers and business like a huge tax increase. Yet the U.S. remains one of the only countries in the world that chooses as a matter of policy to lock up its natural resources. The Chinese think we’re insane and self-destructive, while the Saudis laugh all the way to the bank.
And unfortunately, both presidential candidates are economic ignorami:
Recent weeks have seen some GOP stirrings on Capitol Hill, but John McCain has so far refused to jettison his green posturings, such as his belief in carbon caps and his animus against offshore development. A good reason for a rethink would be $4 gas. At present, it is charitable to call Mr. McCain’s energy ideas incoherent, and it may cost him the election.
Of course, Obama’s even worse, but even if McCain wins, it will be a lot closer than it need be. And prices will continue to soar. Needlessly.
This Seems Like Good Economic News
Is the “wealth effect” a myth?
If so, it means that the popping of the housing bubble won’t have the dire effect on economic growth that many have predicted.
Never Attribute To Malice
…that which can be accounted for by stupidity and ignorance. I agree with this commenter:
If you were referring to almost any other sitting Senator, I would agree. Boxer, however, may very well believe everything that she said. She’s 18 different ways of stupid.
He’s being unkind. I can think of several other Senators about as bad. Because the bill doesn’t explicitly specify a price, she probably really does believe that it won’t result in a price change, because people like her really do believe that they can, through legislation, outlaw the laws of economics. No doubt she also believes that if Congress were to simply pass a law making gasoline two bucks a gallon, it would work just fine. And I suspect that Joe Lieberman, bless his neoconservative heart, believes it as well.
Stupid Idea Alert
No, even the premise was crazy:
While the premise of the 55mph speed limit was a perfectly valid one, the effectiveness of the rule was debatable. There is certainly no doubt that driving at a lower speed would consume less energy. The problem lies in the fact that the national 55mph speed limit was perhaps the most universally ignored law in history apart from prohibition.
Just what was it about the premise that was “valid”? That if everyone drove fifty five instead of seventy that it would save gas? Well, I guess. But so what? Why fifty five? Why not fifty? Why not forty five?
I have never seen any kind of quantitative analysis that provided a rationale for any particular speed limit (at least one designed to save gas and lives). What’s magic about the double nickel? (In this regard, it is subject to the same reductio ad absurdum as the minimum wage). Hey, I have an idea that would save a lot of gasoline. Let’s ban cars, motorcycles and trucks from the highways. Don’t allow anything on them with an internal combustion engine. That would solve the problem. And it makes just as much sense as an arbitrary federal speed limit. The only difference is that the absurdity of the proposal is much more obvious.
Despite their lack of analysis, proponents also claimed that arbitrarily capping legal speeds at fifty five promoted “safety.” The only rationale for this notion basically boiled down to “speed kills,” which is a pithy phrase, marred only by the fact that it doesn’t correspond to empirical reality. Even ignoring the very real fact that there was no significant increase in traffic fatalities after the idiotic law was repealed in the nineties (in fact, I think they went down), it doesn’t take into account the fact that time is money. If truckers followed the law, it would add a day to a cross-country trip, which means a day’s delay in the delivery of needed goods, and either more cost for the driver’s time, if he’s paid by the hour, or a cut in his profits if he’s paid by the mile. If a long-distance commuter did so, it might add fifteen or twenty minutes each way. He might have to get up earlier, so the extra time spent behind the wheel might come out of sleep time, thus increasing the possibility of an accident due to drowsiness. Also, slower speed means longer trip times, which might mean driving later into the night to get to the same destination, again increasing the chance of drifting off.
At four dollars a gallon, if gas is really saved at fifty-five, there is plenty of incentive for individual people to slow down on their own, if it makes sense to do so overall. But they’re in a position to make the trade off in a way that no legislator in Washington can ever be. We had a couple of decades in which to experiment with this foolish notion, and it was found wanting. Like Prohibition, let’s leave it in the dustbin of history.
One other point. I remember when the Republicans won the Congress back in 1994. I had some hope that there would be at least some rollback from a lot of the statist nuttiness that had been accumulating since The New Deal and The Great Society. Those hopes were mostly forlorn, with the rare exception of welfare reform, and George Bush has put the final nails in the coffin of the Gingrich revolution. But one other rare exception was the repeal of the fifty-five speed limit. If that particular bit of idiocy is reinstated, I’ll really feel that it was all for naught.
The Politics Of Shale Oil
You know, it’s almost like they don’t want us to increase the supply. If the Republicans were smart, they could make this a potent campaign issue in the fall. Of course, if the Republicans were smart, I’d probably be a Republican.