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Monday, December 28, 2009

Subjective Warming

Let's say that scientists determined with certainty that pistachio is the best flavor for ice cream. Pistachio ice cream lovers everywhere would no doubt scream, "I told you so!" and many people might switch to eating only pistachio ice cream. Those of us who dislike pistachio ice might be a little skeptical of the settled science, but we probably wouldn't much care and would continue to enjoy other flavors. The pistachio ice cream lovers might then call us skeptics or deniers and look down on us from their moral high ground.

None of this would much matter, unless pistachio ice cream lovers and scientists latched onto politicians (or vice-versa) to have the government ban (or at least tax and regulate) all flavors of ice cream other than pistachio. This clearly crosses an important line since one group is now limiting the subjective choices and opportunities of the second group. Yet nobody was ever stopping anyone from eating pistachio ice cream.

Now substitute "something should be done about global warming" for "pistachio is the best flavor for ice cream". The substitution, while having elements of absurdity, works surprisingly well.

Even if one accepts that global warming is happening with certainty, and even if one accepts that the scientific consensus is that something should be done about it, once that group forces its subjective preference for doing something on the rest of us, a very serious line is crossed.

It's the line of oppression and totalitarianism.

Tuesday, December 15, 2009

My Fifteen Minutes of Fame

Well, more like two paragraphs (and the bottom picture) in The Economist:

Even pruning can be mechanised. Vision Robotics, a company based in San Diego, has demonstrated a prototype vine-pruning robot. Good pruning requires skill to balance the growth of the vine. The vines also need to be trimmed at certain locations and at precise angles to grow the best grapes for winemaking. The robot is a bit slower than a good human pruner, but it will speed up. It should be able to prune vines at about half the cost of manual labour, says Derek Morikawa, the chief executive of Vision Robotics.

The company is also developing apple- and orange-picking robots with multiple arms. These too rely on building 3-D models of trees and the fruit growing on them. Mr Morikawa thinks the crop-scouting ability of such automated machines will prove highly valuable. Supermarkets, for instance, like uniformity so if they want, say, apples of a certain size and in a particular state of ripeness, a farmer could use the model to identify exactly where such apples are growing.

Vision Robotics is the company I founded about ten (long, long, long) years ago.

I was hoping for The Cover of the Rolling Stone, but hey, a couple of paragraphs on page umpteen gazillion of The Economist is a start. It's certainly a step up from Good Fruit Growers Magazine (I'm not kidding - that's actually the name of a magazine) and the numerous other ag rags that you've never heard of and I can never remember that we've been featured in.

I'm rather hoping this isn't my company's entire 15 minutes of almost fame, but we'll see.

Thursday, November 26, 2009

Happy Thanksgiving

My thanks to the free market for delivering my free range turkey:

The activities of countless people over the course of many months had to be intricately choreographed and precisely timed, so that when you showed up to buy a fresh Thanksgiving turkey, there would be one -- or more likely, a few dozen -- waiting. The level of coordination that was required to pull it off is mind-boggling. But what is even more mind-boggling is this: No one coordinated it.

Happy Thanksgiving!

Hat Tip: MJ Perry (Carpe Diem)

Wednesday, November 25, 2009

Hide the Decline

I'm glad I posted my view of the science, economics, politics, and philosophy of Climate Change before the recent email hack of the Climate Research Unit of East Anglia. It enabled me to be a brave contrarian speaking truth to overwhelming consensus (or something like that), whereas now I seem to be just one of the majority skeptics.

I'm, of course, not even vaguely surprised by the revelations found in the emails, code, and data released by the hack. The revelations in and of themselves are not seriously damaging, in my opinion. However, they completely vindicate skeptical climate folk like McIntyre, Lindzen, Svensmark, Spencer, etc. and make it far more likely that people will listen to them now, and in the future. The tide (so to speak) is turning against climate alarmism, and just might be unstoppable.

I sure hope so.

Monday, November 16, 2009

Smart Phones and Internet Radio

Before last week, I'd never really used Internet radio. That's because if I'm working, I find music distracting, and if I'm not working, I don't want to be near a computer.

My new smart phone (Motorola Cliq) has changed all that. I'm pretty amazed by the concept: a free and customizable set of virtual "radio stations" that learn your preferences over time, with no (audio) advertising, and can be used with headphones or a home or car stereo system. I love it. It's the best thing since sliced bread.

I'm finding it takes about 100 songs to train a station (by hitting the "love" and "ban" buttons appropriately when various songs that you like or don't like play) and after that I end up liking 80 to 90% of the songs it serves up which is certainly better than standard radio (which I rarely listen to) and even most albums that I own.

The business model is pretty cool too. As the song plays, the album and other identifying information is displayed along with an unobtrusive ad at the top. In addition, if you hear a song you'd like to buy, you just hit the "buy" button and it's automatically added to your library (the cost per song is around $1). Unlike iPods, which need to be connected to a computer to download music, it happens automatically.

I realize that iPhone and other smart phone owners probably are mostly all using the Internet radio feature already, but I'm a slow adopter of technology, so it takes me a while to catch on.

Friday, November 13, 2009

House health care bill and jobs

William Jacobson had some key observations on his Legal Insurrection blog:
The message of the bill is that whatever you do, if you want to grow your business without paying the health care tax, do not add employees.

Obama does not understand these provisions. Obama gave a speech this morning in which he stated that these provisions are directed at small businesses operating on thin margins. But these provisions have nothing to do with profit margins. This is a wage-based tax.

Obama does not understand the difference between profit margins and wages. This is exactly what you would expect from someone who always has been on the receiving end of wages, and never had to meet a payroll. Wages are not profits and have nothing to do with the success of a business. Just ask the auto companies.

I don't think Obama and the other Democrats are lying about this aspect of the health care tax. They truly do not understand how the private economy works. In their blissful ignorance they are designing job-killings provisions which they do not understand.
Job losses at large establishments have slowed considerably as monetary policy has helped stem panic. Small businesses are still shedding jobs at a high rate or are failing to even form. When we see net job creation some time next year it would help if a bill like this was not in prospect. Otherwise it will be a nearly jobless recovery for longer than many people expect. It might be so anyway if regime uncertainty doesn't abate.

Betsy McCaughey explains several passages of the bill under categories such as:
What the government will require you to do

Eviscerating Medicare

Questionable Priorities
I think this article gives an appropriate overall characterization of the bill as well as the relevant accounting used for scoring versus a more realistic tally:

The bill is instead a breathtaking display of illiberal ambition, intended to make the middle class more dependent on government through the umbilical cord of "universal health care." It creates a vast new entitlement, financed by European levels of taxation on business and individuals. The 20% corner of Medicare open to private competition is slashed, while fiscally strapped states are saddled with new Medicaid burdens. The insurance industry will have to vet every policy with Washington, which will regulate who it must cover, what it can offer, and how much it can charge.

Perhaps the most unsurprising news in this drama was the collapse of the Blue Dog "deficit hawks." Enough of them always cave in the end to give Mrs. Pelosi her way. It's nonetheless worth noting the surrender of that most vocal scourge of deficits, Tennessee's Jim Cooper, who voted aye on grounds that the bill can be improved in the Senate.

But Max Baucus's Finance Committee bill includes a similar gimmick of making the numbers look good by using 10 years of new taxes to finance only seven years of spending (six in the House). The deficits explode in the second decade and beyond in both bills.

The House also contains a new government long-term insurance program that starts collecting premiums in 2011 but doesn't starting paying benefits until 2016 and then runs out of money in 2029. North Dakota Democrat Kent Conrad called it "a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of" in an interview with the Washington Post in late October. Mr. Cooper has with a single vote made his entire career irrelevant.

I saw an interview of Senator Bob Corker in which he said that a Senate Democrat agreed that if Republicans had proposed this exact same bill, Democrats would all vote it down. Hopefully a bill this bad simply dies in the Senate. Then they can start over again.

Wednesday, November 04, 2009

Imagine that - creating a distraction

Bruce McQuain at Q and O points to an Arnold Kling post
I think there is something even more sinister going on. I interpret the pay czar in terms of Murray Edelman's symbolic uses of politics. The idea is to focus on a symbol of the cause of taxpayer losses--bonuses of the executives of bailed out firms--in order to distract attention from the substance. The substantive issue is the extent to which the losses were caused by political actions and the extent to which they are concentrated at Freddie Mac and Fannie Mae.

The further into this crisis we go, the greater the share of subprime loans and mortgage losses are turning out to be located at Freddie and Fannie. Even one year ago, if you had asked me, I would have told you to expect at least 2/3 of the losses to be at companies like Citi and Bear, with less than 1/3 at Freddie and Fannie. It now looks quite different. Conservatively, 3/4 of taxpayers losses will be at Freddie and Fannie. Perhaps as much as 90 percent of taxpayer losses will be there.

Given the large role of Freddie and Fannie, it makes sense for politicians to create as large a diversion as possible. Hence, the brouhaha over bonuses at bailed-out banks.

Incidentally, the debate over the "public option" in health reform also can be viewed as an exercise in symbolic politics and diversion. The point is to divert attention away from the bankruptcy of Medicare.

The aggressive government push for expanded home ownership and affordable housing in the form of easy credit made a huge contribution to the mess:

Since the early 1990s, the government has been attempting to expand home ownership in full disregard of the prudent lending principles that had previously governed the U.S. mortgage market..

Thus, almost two-thirds of all the bad mortgages in our financial system, many of which are now defaulting at unprecedented rates, were bought by government agencies or required by government regulations.

More F&F reform is needed:
All the debate of the last several weeks on changes to the financial regulatory system has omitted any discussion over reforming the entities at the center of the housing bubble and financial meltdown: Fannie Mae and Freddie Mac.

Total losses from the bailout of Fannie and Freddie are likely to exceed $250 billion — as much as the cost to the taxpayer of all bank failures in American history combined.

Note: F & F bailout loss estimates now exceed $350 billion.

Fannie and Freddie infected capital markets and spread through every sector of the banking system. Before the bursting of the housing bubble, holdings of government-sponsored enterprise (GSE) securities — bonds and mortgage-backed securities as well as preferred stock — constituted more than 150% of core capital for insured banks.

It was not only the commercial banking system that was stuffed with toxic GSE holdings; it was also many of the investment banks. More than 50% of Maiden Lane One, the toxic assets that the Federal Reserve guaranteed in order to persuade JPMorgan to buy Bear Stearns, are GSE securities.

Additionally, more than 40% of money market mutual fund holdings were in the form of GSE securities.

At the height of the bubble, Fannie and Freddie purchased more than 40% of the private-label subprime mortgage-backed securities. Between the two of them, they were the largest single source of liquidity for the subprime market.

Interestingly enough, the very vintages of subprime loans that performed the worst — 2006 and 2007 — were the years in which Fannie and Freddie entered the market in force.

With their massive leverage, Fannie and Freddie were levered more than 100-to-1 — a disaster waiting to happen.

Why then were foreign investors so willing to trust their money to Fannie and Freddie? Quite simply, they were assured by U.S. Treasury officials that their losses would be covered.

Ultimately, Fannie and Freddie were not bailed out in order to save our housing market; they were bailed out in order to protect the Chinese Central Bank from taking losses. Without the implicit federal guarantee of Fannie and Freddie, trillions of dollars of global capital flow would not have been funneled into the U.S. subprime mortgage market.

Some might argue that the problem with Fannie and Freddie was fixed with last year's regulatory reform bill. That bill created a new regulator, one with increased supervisory powers, including the ability to wind down a GSE, and independence from the congressional appropriations process, letting the regulator raise additional funding.

Nothing could be further from the truth. As one of the drafters and negotiators for that bill while on the staff of the Senate Banking Committee, I can say that there was a shared awareness by all parties that the bill was insufficient to prevent the failure of Fannie and Freddie.

It was not the best bill that could be crafted. It was the best bill that could pass, given the continued strength of Fannie and Freddie apologists in Congress.

Most of the worst economic and financial crises in American history have involved real estate. Such is likely to be the case in the future. Reform of Fannie and Freddie is imperative so that American taxpayers will not be on the hook for hundreds of billions of dollars for the next real estate bubble.

There were many contributions by private players but there were also other very large contributions from governmental players.

Sunday, November 01, 2009

The Burden of Taxes

A common belief is that levying additional income taxes on those with high incomes has negligible adverse impacts on the poor. In this post, for a hypothetical economy, I will show why this isn't true. In future posts, I will discuss how this result for the hypothetical economy still has at least some relevance to the real world.

Assume the following:
1. All people have exactly equal talent and capabilities.
2. All markets are perfectly efficient and fair.
3. Return on Investment (ROI) for all occupations is exactly equal, where the definition of "Investment" is non-standard and includes the following:
a. Cost (Money & Opportunity Cost) of Education.
b. Difficulty/Stress/Unpleasantness of the job.
c. Negative of the Satisfaction produced by the job.
d. Other similar considerations.
Note that (b), (c) and (d) have a strong subjective component and even (a) has a significant subjective component via an individualized Discount Rate (a rate of interest that relates the value of future income to current income to a given individual). Because of the differing "Investments" required for various occupations, there would be significant differences in compensation for those occupations since the ROI for all occupations is constrained to be equal.

This means that only those occupations that provide adequate value to justify the ROI will exists. In other words, if an occupation requires a great deal of "Investment" and therefore requires a high wage according to the ROI constraint, but nobody is willing to pay for the goods or services that this occupation would provide at that wage level, the occupation won't exist.

The ROI is an after-tax ROI. In this hypothetical world, nobody cares what their compensation is before taxes and instead they focus on their after tax compensation.

Consider the effect of increasing taxes on a given occupation while leaving the taxes on all other occupations the same. It doesn't matter if it's an occupation with high or low compensation, the effect is the same. If everybody with the occupation stayed in it, the after tax ROI for that occupation would be reduced. However, this violates the ROI constraint, so enough people would leave this occupation and do something else until the supply of people working at this occupation is reduced enough so that supply and demand balance to drive the after tax ROI for this occupation back up to nearly its original level.

Since people have left this occupation and are now competing in other occupations, all occupations' ROIs are slightly reduced (including this occupation with its additional tax burden). Taxes and regulation essentially have the effect of reducing our ROI for the work we do.

That's the first interesting effect. All ROIs are reduced by the same amount. Any attempt at making income taxes progressive is completely thwarted. The ROIs for the occupations with the highest and lowest compensations remain equal after the tax increase.

Since the occupation with the new tax burden has similar after tax compensation, the pre-tax compensation must be higher. That means that the production of goods and services dependent on this occupation incur greater cost, which implies that everybody will end up paying a higher prices for these goods and services. Again, any attempt at making income taxes progressive is lost, since everybody, rich or poor, will pay the same increased cost for these goods and services.

In this hypothetical economy, it is impossible for income taxes, regardless how progressive by design, to actually be progressive in effect. Since the poor feel the burden of reduced ROI and higher prices most acutely, the poor feel the burden of higher taxes more than anyone else.

In future posts I'll argue why the real economy bears significant resemblance to this hypothetical economy in regards to taxation.

Wednesday, October 28, 2009

Gee, just wondering...

Regarding the latest wrinkle in the health care/insurance debate, Michael Cannon points out:
Like the three “public options” we’ve already got – Medicare, Medicaid, and the State Children’s Health Insurance Program – Fannie Med would drag down the quality of care for publicly and privately insured patients alike. Yet despite offering an inferior product, Fannie Med would still drive private insurers out of business because it would exploit implicit and explicit government subsidies. Pretty soon, Fannie Med will be the only game in town – just ask its architect, Jacob Hacker.
Even those who can maintain their private coverage face this:

The story is largely the same from state to state, though the increases are smaller in the few states that have already adopted the same mandates and regulations that Democrats want to impose on all states. For the average small employer in high-cost New York, for instance, premiums would only rise by 6%. But they'd shoot up by 94% for the same employer in Indianapolis, 91% in St. Louis and 53% in Milwaukee.

A family of four with average health in those same cities would all face cost increases of 122% buying insurance on the individual market. And it's important to understand that these are merely the new costs created by ObamaCare—not including the natural increases in medical costs over time from new therapies and the like.

Can the gubmint do for affordable health care coverage what it did for affordable housing? I'd rather not find out.

Sunday, October 18, 2009

Not Evil, Just Wrong

I just watched the premiere showing of the movie "Not Evil, Just Wrong", a movie/documentary focused on the negative consequences of radical environmentalism.

It's mostly just preaching to the choir, but they were innovative in their approach:
The film highlights the tragic consequences of the first triumph of the environmental movement, the ban on DDT, which has needlessly resulted in the deaths of more than 40 million children and adults in the developing world.
Actually, I'd say the movie more than just highlights the consequences of the DDT "ban". More than 20 minutes were devoted to it with many graphic scenes of children dying of malaria interspersed with seemingly clueless rich white environmentalists saying how important the prohibition on the use of DDT is. While powerful, the case against the environmental movement and the claim of 40 million deaths seems significantly overstated.

Continuing on, the case against Climate Change Alarmism is straight forward. It basically amounts to saying, "See the catastrophe that happened the last time the environmentalist had their way? We'd better stop them from taking action against Global Warming or really bad things will happen again!"

The choir will no doubt eat that up, but those who belong to the Church of Warming are unlikely to buy into this logic since they very likely consider the reduction in the use of DDT a huge success, even to this day.

People who have not yet made up their minds, however, may be swayed because the malaria scenes are compelling. If the Warmenists are not able to produce enough evidence or propaganda in the media to convince those still deciding that much of the movie is untrue, the movie might convert a few more people to the skeptics side.

I hope it does.

Friday, October 16, 2009

Keeping things straight

The other night I was sitting with my youngest child eating ice cream and talking. He mentioned something, I can't remember specifics, that was germane to the postmodern mindset and blurring of important distinctions. I replied with the lessons from this by Mark Steyn:

Half a decade or so back, I wrote: “Its a good basic axiom that if you take a quart of ice-cream and a quart of dog feces and mix ’em together the result will taste more like the latter than the former. That’s the problem with the U.N.”

Absolutely right, if I do say so myself. When you make the free nations and the thug states members of the same club, the danger isn’t that they'll meet each other half-way but that the free world winds up going three-quarters, seven-eighths of the way.

But, if you’re on an Indian Ocean island when the next tsunami hits, try calling Libya instead of the United States and sees where it gets you.

This isn’t a quirk of fate. The global reach that enables America and a handful of others to get to a devastated backwater on the other side of the planet and save lives and restore the water supply isn’t a happy accident but something that derives explicitly from our political systems, economic liberty, traditions of scientific and cultural innovation, and a general understanding that societies advance when their people are able to fulfill their potential in freedom. In other words, America and Libya are defined by their differences.

What happens when you pretend those differences don’t exist? Well, you end up with the distinctively flavored ice cream I mentioned at the beginning. By declining to distinguish between the foreign minister of Slovenia and the foreign minister of, say, Sudan, you normalize not merely the goofier ad libs of a Qaddafi but far darker pathologies.

Ahmadinejad & co aren’t Holocaust deniers because of the dearth of historical documentation. They do so because they can, and because it suits their own interests to do so, and because in the regimes they represent the state lies to its people as a matter of course and to such a degree that there is no longer an objective reality only a self-constructed one. In Libya and Syria and far too many “nations,” truth is simply what the thug in the presidential palace declares it to be. But don’t worry, Obama assures them, we’re not “defined by our differences.” Hey, that’s great, isn’t it? Yet, if you can no longer distinguish between the truth and a lie, why be surprised that the lie metastasizes and becomes, if not yet quite respectable, at least semi-respectable and acceptable in polite society?
He's a pretty sharp kid and he "got it" quite clearly. As a teenager he appreciated the humor as well.

Friday, October 09, 2009

Catastrophic Anthropogenic Global Warming - A High Level View

Instead of just looking at the science of climate change, I've analyzed it from several different perspectives. In a nutshell, this is what I've found.


Common sense tells me that the fact that we exist and are the result of life having evolved over billions of years indicates that the climate is quite stable as far as life forms are concerned. This is especially true given that "[f]ive hundred million years ago carbon dioxide was 20 times more prevalent than today"[1] and that the climate has been adequately stable to support evolution and ecosystem diversity through catastrophic disasters such as meteor strikes and massive volcanic eruptions.

It is true that common sense isn't always correct. However, when a proposition defies common sense, I require an especially rigorous burden of proof on those making the proposition. That burden of proof is nowhere close to being met.

Global temperatures are affected by the concentration of CO2 in the atmosphere. All else being equal, a doubling of the concentration of CO2 will increase the average global temperature by 1.2 degrees Celsius[2]. An increase of 1.2 degrees Celsius is very unlikely to be catastrophic.

The scientific case for catastrophic man-made global warming rests on a set of computer models called General Circulation Models (GCMs). These models incorporate positive feedbacks that amplify the warming due to CO2. In other words, a little bit of warming due to CO2 becomes much more warming because of hypothesized effects such as increased water vapor (water vapor also traps heat). Instead of 1.2 degrees Celsius for a doubling of CO2, the GCMs, with the positive feedbacks predict much larger warming, in the range of 1.5 to 4.5 degrees Celsius per CO2 doubling[3].

These feedbacks, while plausible, are not proven. Indeed, some of the effects expected by the GCMs from such feedbacks have not been observed in the real world. For example, while the models predict the warming of the tropical troposphere to be 2 to 3 times larger than the warming of the surface, this relationship has not been observed[4]. In fact, recent research[5] based on measured Sea Surface Temperatures and measured outgoing radiation indicate an overall negative feedback which means that there could be substantially less than 1 degree increase in temperature resulting from a double of CO2. Also, using finer cloud simulations within the existing GCMs seems to reduce the predicted temperature increases[6]. The above are just a sampling of numerous articles that cast doubt on the more extreme global warming predictions.

There are other plausible explanations for whatever warming occurred last century. For example, changes in solar activity may have significant impact on cloud formation[7] in addition to its small, direct effect on temperature. To date, relatively little effort has been expended on researching these alternate explanations, but they are, in my opinion, plausible, and not disproved.

In summary, the science of Catastrophic Global Warming defies common sense, has not been proven, and alternate explanations have been neither adequately researched nor disproved.


Any significant climate change (in either direction) will produce winners and losers, both in terms of life forms in general and human life in particular. However, given the observation that the density of both life and humanity are much higher in very warm climates than very cold climates coupled with the fact that the GCMs predict that most of the warming will occur in colder climates[8] leads me to doubt predictions of severely adverse economic impacts from global warming.

One of the most dire and well known economic analyses of climate change is The Stern Review[9]. It concludes that we should immediately begin investing at least 1% of global GDP in order to reduce CO2 emissions and that an investment of this magnitude (over $400 billion per year) will produce positive future returns by reducing the impact of climate change.

However, in my opinion, the Stern Review and other economic analyses with similar findings are seriously flawed. First, the Review "depends decisively on the assumption of a near-zero time discount rate combined with a specific utility function. The Review’s unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today’s marketplace real interest rates and savings rates."[10]. In other words, the Review assumes far, far lower interest rates than can be found in the real world. Spending large sums of money on preventing CO2 emissions will adversely affect billions of people now, miring substantial numbers of those in prolonged poverty. Note that this spending, to be effective, also assumes some level of efficiency. Unfortunately, governments are not particularly good at efficiency.

A second problem is that the Review seriously underestimates future innovations which will mitigate the impact of climate change. If one considers the technological progress that has been made in the last century and projects it forward to the next hundred years, it seems nearly certain that humanity will be ever more connected, mobile, and able to cope with the environment. It's also far from clear that CO2 emissions will continue to increase as predicted. Other technologies such as solar, geothermal, nuclear fission and fusion, etc., will continue to become more cost effective and may displace fossil fuels as energy sources anyway.

In addition, there are likely to be some benefits to warming and these benefits are downplayed in the Stern Review. For example, other economic studies conclude "that moderate warming is an overall benefit to mankind because of higher agricultural yields and many other reasons."[11] This fits with the observation that mankind does better where it's very warm rather than where it's very cold.


Even if the upper end of the predicted warming occurs and even if the economic analyses like the Stern Review are accurate, it's far less clear that it's useful to take action if only a few rich countries are willing to do anything about.

India and China have flat out refused to reduce future emissions with India even questioning the science of global warming[12][13]. As these countries represent nearly ½ the global population, it make little sense for much smaller countries such as the United States to live substantially less well in order to slightly slow the rate of increase of CO2, especially given that the per capita increase in CO2 emissions in the United States is slowing anyway[14].

There is no reason to get governments involved. If taking action is such a good idea, people can act individually and in non-government groups in order to reduce their carbon footprints. If there are only a few skeptics who don't follow, those few skeptics will have limited impact. In other words, if you think reducing carbon footprints is a good idea, by all means, reduce yours.

There's very little evidence that the world will be able to take significant concerted action anyway. For example, Lomborg[15] shows that the Kyoto Treaty (if the signatories had actually lived up to there promises) would have only delayed the climate change due to CO2 emissions by six years out of 100.


Catastrophic Global Warming has all the trappings of a religion. The god is “Gaia”, the pope is Al Gore, the priests are (most) climate scientists, they know the Truth (with a capital “T”) with certainty, the message is essentially “Repent or the end is nigh!”, Creationism is alive and well since “Gaia” is apparently supposed to have a specific CO2 level and associated climate, and heretics are dealt with nastily.

As such, Catastrophic Global Warming should be subject to the same Separation of Church and State doctrine as other religions. The believers should, of course, be free to proselytize and live their own lives according to their beliefs, but should not be allowed to impose their beliefs on the rest of us via government taxes and regulation, and should not be free to proselytize in our children's schools.

The concept that if we don't take action against CO2 emissions then we're immoral is not fundamentally different than any other religion that claims that you're immoral if you don't believe in God and live your life according to the Dogma of that religion. There is no objective morality here, Carbon Dioxide has no morally correct level, and there is no morally correct global temperature or climate.

Furthermore, when subjective opinions are stated as objective fact with the goal to control the behavior of others, that is a significant evil. When the majority or even a vocal minority imposes its subjective beliefs on others, that is tyranny and is a major evil.


Taking action to reduce CO2 emissions in the United States in order to prevent the possibility of Catastrophic Anthropogenic Global Warming makes little sense from any rational perspective. The science is not adequately well understood, economically it makes little sense, and it's not politically possible on a global scale. If people wish to choose that as a religion, that's fine, as long as their beliefs aren't imposed on the rest of us.



[2] Committee on the Science of Climate Change, National Research Council. Climate Change Science: An Analysis of Some Key Questions, pp 6-7.

[3] Intergovernmental Panel on Climate Change (IPCC). Climate Change 2007: Synthesis Report, p 38.

[4] Lindzen, R.S. (2007) Taking Greenhouse Warming Seriously, Energy & Environment, 18, pp 937-950.

[5] Lindzen, R.S., Choi, Y.S. (2009) On the Determination of Climate Feedbacks from ERBE Data, Geophysical Research Letters, Vol. 36, No. 16. (26 August 2009), L16705.

[6] Wyant, M.C., Khairoutdinov, M. & Bretherton, C.S., 2006. Climate sensitivity and cloud response of a GCM with a superparameterization. Geophys. Res. Lett, 33, L06714.

[7] Svensmark, H., T. Bondo, and J. Svensmark (2009), Cosmic ray decreases affect atmospheric aerosols and clouds, Geophysical Research Letters, Vol. 36 L15101.

[8] Houghton, J.T., Ding, Y. et al, (2001): Climate Change 2001: The Scientific Basis, Publications of the IPCC, p 384.

[9] Stern, N., (2008): The Economics of Climate Change: The Stern Review, Cambridge University Press.

[10]Nordhaus, W., (2007): The Stern Review on the Economics of Climate Change, Journal of Economic Literature Vol. XLV, pp. 686–702

[11]Happer, W. (2009): William Happer Testimony to Senate Energy Committee, February 25, 2009

[12] Lamont, J. et al. (2009): India Widens Climate Rift with West, Financial Times, July 23, 2009

[13] Taylor, P. (2009): China, Russia, Now India: Reject Global Climate Controls,
Los Angeles Examiner

[14] Energy Information Administration (2001): World Energy Use and Carbon Dioxide Emissions, 1980-2001, Department of Energy

[15] Lomborg, B. (2001): The Skeptical Environmentalist, Cambridge University Press, p. 302

Being There

Is Nobel Prize winner Obama related to Chauncey Gardiner?

It seems he has only to show up in order to have (once) great prizes bestowed upon him.

As always, the Truth is stranger than Fiction.

Wednesday, September 30, 2009

How Much Can We Borrow?

If your left hand borrows $1 billion from your right hand, would you, as a whole, be bankrupt?

Of course not.

You might wonder where your right hand got the money to loan your left hand. Assume that your left hand is able to create money, more or less like our central bank, the Federal Reserve. Your left hand, over time, gave the money to your right hand, which then lent it back to your left hand.

In this closed-system scenario, no matter how much your left hand borrows, no matter what the interest rate, you, as a whole, will never be bankrupt. Your left hand could choose to default on its debt, but it would never have to default.

Large debt and continued borrowing can potentially cause accelerating inflation. However, there is no inherent hard limit at which that occurs because the demand for consumption and investment in the private sector are equally important factors. Those factors will be the subject of another post.

Wednesday, August 26, 2009

The Politics of the Current Health Care Reform Debate

This post is a followup to Bret's earlier post.

Opposition to proposed changes to medical care/insurance programs has been growing and getting more and more vocal. Even though most people are at least somewhat satisfied with their circumstances they are willing to consider changes that make sense and don't seem fishy:
Yes, the current health care program does have problems. To fix them requires a series of repairs -- tort reform, portability, elimination of prior conditions as an impediment to insurance, and a safety net for people who don't have insurance or lose their jobs.

Health reform does not require a complete remaking of the system. If all that Obama wanted were to insure those who fall between the cracks, he could put them into the same wonderful program that Congress created for itself by subsidizing their premiums. This would neither require a thousand pages of legislation nor a new series of bureaucracies.

But building a new power base resulting from the mobilization of the political and economic periphery requires redefining the nation's health problems as the nation's health catastrophe.

Health reform is Chicago politics on a national level. Welcome to the city.

Also, when the president talks about competition he seems to mean something different than my notion of competition:
"Choice, competition, reducing costs — those are the things that I want to see accomplished in this health reform bill," President Obama told talk-show host Michael Smerconish last week.

Choice and competition would be good. They would indeed reduce costs. If only the president meant it. Or understood it.

In a free market, a business that is complacent about costs learns that its prices are too high when it sees lower-cost competitors winning over its customers. The market — actually, the consumer — holds businesses accountable and keeps them honest. No "public option" is needed.

So the hope for reducing medical costs indeed lies in competition and choice. Today competition is squelched by government regulation and privilege.

But Obama's so-called reforms would not create real competition and choice. They would prohibit it.

Competition is not a bunch of companies offering the same products and services in the same way. That sterile notion of competition assumes we already know all that there is to know.

Well-meaning politicians have created untold misery by assuming they and their experts know enough already.

The health care bills are perfect examples. If competition is a discovery process, the congressional bills would impose the opposite of competition. They would forbid real choice.

People who would be willing to make changes see all of this and the behavior of the political class and they are getting angry and losing trust:

Americans didn't vote for big government last November. They voted for a guy who looked like he could keep his cool in the heat of battle. If Obama wants to regain that cool, he needs to rein in the power-grabbers in Washington.

Actually they did vote for bigger government without intending to, but that's another subject. Here is how I would describe the growing opposition to any change at this time: they are calling a time-out on the political class until they start behaving in a trustworthy manner.

Saturday, August 22, 2009

Irrational Debate

Many Democrats are upset with the current tone of the Health Care debate. In their opinion, those who oppose Health Care Reform are being noisy, disruptive, and irrational. For example, someone I know wrote the following on another forum I frequent:
"I don't have a problem with rational arguments and debate on these issues. One of my previous posts suggested that Reps [Republicans] choice [sic] to use lies and fear probably guaranteed a poorer final result than the decision for them to present rational arguments and advance the solution in a positive way."
The Health Care debate starts with assumptions about how the world works (for example, what motivates different people) and even more importantly, personal subjective preferences. Rationality and reason have little to do with either of those, especially the latter. Since there is little common ground between liberals and conservatives on these premises, it's no surprise that the conclusions are totally opposite as well.

Just to be clear, both liberals and conservatives want peace on earth, good will to men, prosperity and happiness for all, etc., etc., yadda, yadda. So it might seem like there is substantial common ground, at least regarding the desirability of various Ends.

However, where there is precious little common ground is whether or not it's possible to achieve any of these desirable Ends or anything close. Note that a belief that such Ends are unachievable precludes rational discussion about the path to get there. There often simply isn't one, in my opinion.

My observations of politics coupled with trading futures (which led to a large number of hours studying economics and public choice theory) have completely convinced me that, on average, new and expanded government programs, taxes, and/or regulations hurt me and my family (and others) in the short term and the vast majority of people in the longer term.

As a result, from my point of view, there really isn't any point to "rational" discussion. That's because the rational discussion is inherently limited to those details that can be reasonably foreseen. What can't be rationally discussed is all of the unforeseen problems that will ultimately occur because nobody knows what they'll end up being. The foreseen effects of a 1,000+ page policy are just the tip of the iceberg. It's the huge mass of problems lurking below the surface about which we're currently clueless that will be the real problem and there can't be meaningful debate about that which is unknown by all.

In fact, stooping to rationally debate what's known is counterproductive. It requires a certain level of buy-in to the program that isn't warranted.

I reject the Health Care Reforms being proposed, but I have no rational reason for doing so.

Monday, August 17, 2009

Government Versus Growth

This chart says it all:

(HT: Carpe Diem)

If want a better future for your children and grandchildren, keep total government expenditures under 25%.

Friday, July 31, 2009

Priests of Warmenism

In a comment on a totally unrelated topic, Peter Burnet wrote:
Hardly anybody is qualified to build or interpret climate models. We are all beholden to what the experts say. Even if a layman sets out to study the competing claims of climate scientists carefully, he still is pretty much restricted to comparing theories/conclusions and has a hard time critiquing their underlying methodologies systematically by measuring them against experience.
The "experts" want you to be beholden to what they say and Peter has closed his eyes and walked blindly into their trap.

Virtually all of climate science is based on typical everyday experience and a few minor and easily understood bits of physics. We've all noticed that sunlight (also called visible radiation) makes objects warmer when it strikes them and that when those heated objects are moved out of the sun they begin to cool but we can't visibly see the warmth emanating from them. We've all noticed that hot air rises (in a hot-air balloon, thermal, etc.) and that when the hot air is also moist (humid) that clouds form when it cools sufficiently as it rises. Etc., etc.

The climate is difficult to predict not because the physics is difficult, but because it is so chaotic. All the bits of earth, ocean, and atmosphere heating and mixing at different rates and interacting with each other produces really, really complex responses that are impossible to characterize analytically. So scientists make statistical climate models to try and mimic the past and predict the future. They are really little more than software hackers and statisticians and know little more science (physics) of relevance to their task than the average layman.

So no, we aren't beholden to the priests of warmenism unless we want to be.

The Road to Serfdom by VDH

From an article by Victor David Hanson:
Otherwise we know the ultimate end of the present road: a vast bureaucracy of non-taxpaying incompetents, damning the estranged few for not producing ever more to be taxed, convinced that they are geniuses—and only due to some sort of unfairness have been surpassed by others.
Sounds like he's channeling Hayek's Road to Serfdom. But that does seem to be where it always ends up in the long run. Personally, I'm thinking of joining the vast bureaucracy of non-taxpaying incompetents. It looks like that's where the money will be in the future.

Friday, July 24, 2009

The jobs fairy

When thinking about practical understandings of economic matters the matter of jobs is pretty meaningful to most people. Shannon Love provides illumination over at Chicago Boyz:

We talk about jobs as if they are physical objects. We find jobs. We lose them. We trade them. We save them. We export them by shipping them overseas. Occasionally, we believe they are stolen. Metaphors are common in language and usually harmless, but sometimes we seem to forget that they are metaphors. This in turn causes us to misunderstand the phenomenon under discussion.

In the case of jobs, the metaphor stops us from asking what physical event actually occurs when jobs “go away” and “don’t come back.” Examining this metaphor tells us something that is very important and ignored in most political discussions.

First, what is a job? A job is a task you perform for someone else’s benefit in return for compensation of some kind. If you mow your own yard it’s not a job. If you mow your neighbor’s for $10 it is. If you grow food for your own consumption, that’s not a job. If you grow food and sell it for money, then it is. A job requires that an economic exchange for the results of labor occur between two or more people.

Here we see the limits of metaphor. In the metaphor jobs are treated as objects, but in reality a job is an event or an action. It is the act of exchanging labor for money. The word job should be a verb instead of a noun.

When we talk about jobs leaving, moving, shifting etc., or being exported, we’re really talking about a particular subset of people leaving, moving, shifting etc. Who are these people? They are the job makers.

For example, a job in a factory does not exist before someone invents the technological item to be manufactured, designs the assembly line, buys the land, builds the factory and does all of the other thousands of tasks necessary to make, distribute and sell a product in the modern world. Until a job maker does all of that creative work, no job exists.

The ugly truth is that although we work hard, most us don’t create jobs for ourselves or others. Instead we rely on a small minority of job makers to create tasks that we can perform in exchange for a living. Only about 20% of us make any jobs at all. Of those 20%, about half, 10% of the total, are self-employed and make a job only for themselves. The remaining 10% make all the jobs for the rest of us. We rely on this small minority to identify solutions to problems and to create organizations that can implement those solutions. They then hire us to carry out the tasks associated with that solution. Without them, the rest of us would still be subsistence farmers.

When jobs “go away” it’s really the job makers, as living and breathing humans, who go away.

It’s easy to see why leftists would eagerly adopt the metaphor of jobs as objects. It lets them ignore the fact that a small minority of economically creative people create jobs for the rest of us. In turn, this lets them advocate policies that drive away job makers, without being held responsible for the loss of the jobs the job makers create.

The leftmost 25% of the American political spectrum do not for the most part consider themselves Marxist but they clearly work from a model strongly influenced by Marxist thought. Marx asserted that the economy and technology were the results of impersonal natural forces. No human created a job or any other economic good. Instead, the jobs and goods just happened, and a minority of evil people unjustly claimed the lion’s share of the benefit of these natural resources for themselves by shear brute force. The entire intellectual and moral argument for Marxism stands upon the idea that business people don’t actually create anything. This is why contemporary leftists honestly don’t understand why taxing and over-regulating the economically creative destroys the jobs of the economically uncreative. They think jobs just happen like the rain, and that the only real decision to be made is how we distribute the benefits of those jobs.

When the job makers leave, and the non-economically creative no longer have work, leftists do not wonder what they did to drive the job makers away. Instead, they treat the loss of jobs-as-objects like some act of God or natural disaster.

The rest of us should have that conversation. We should stop talking about impersonal and abstract “businesses” as creating jobs, and instead make explicit that a small and valuable minority of individual human beings creates the jobs and and wealth that the rest of us depend on. We should make it clear that the proper role of government economic policy is to support the creativity of such individuals, and it should do so mostly by getting out of their way.

The world has become “flat” in the sense that the geographical advantages no longer exist that once made one region inevitably wealthy and another inevitably poor. Today, one can build a factory or almost any job-creating system almost anywhere in the world. Today, prosperity simply requires that you have a sufficient mass of economically-creative job-makers. The great tragedy of Michigan, the other rust belt states and California is that nothing physical or material whatsoever prevents them from becoming economic powerhouses again. All they need do is change their political culture and laws such that instead of vilifying, hounding and looting job makers, they encourage them to create. If the states do that, then nothing can stop their rise to prosperity.

If they do not, then nothing can save them.

In my discussions over the years, most people seem unaware of the importance of the economically creative people who provide them with opportunities. The jobs fairy is my fun little rhetorical device for labeling the vital few but it also captures the common mistaken notion that jobs mysteriously appear out of thin air.

Additional info.: America Runs on Small Business

Thursday, July 23, 2009

Did he realize what he said?

This is a bit old by now in terms of the news cycle. Nonetheless, it's still a teachable moment. (see here also video)
The Administration is "trying to tamp down talk that it didn't get it quite right -- talk created by Vice President Biden," who told ABC's George Stephanopoulos that the Administration "misread the economy." Obama "tried to modulate the impact of the vice president's words." Obama said, "No, no, no, no, no. Rather than say 'misread,' we had incomplete information."
Which is almost always the case on anything of consequence regarding the economy. Fortunately, Hayek is available to help:
The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.
However, only someone with an open mind can grasp this idea if it is in conflict with their existing beliefs!

Monday, July 20, 2009

Self-Healing Bicycle Tires

I find it funny that often inventions that have a really positive impact on my life come from completely unexpected places. The latest example of this is self-healing tubeless bicycle tires. I'm not what you would call an avid bicyclist, but I probably ride around 1,000 miles in a given year, nearly all of that on a mountain bike.

The Southwestern United States is infested with the goathead thorn (Tribulus terrestris). These thorns are intensely sharp and hard and can penetrate just about anything that you could make a bicycle tire out of including kevlar and steel belts. As a result, for most bicyclists out here, even (or especially) mountain bicyclists with their heavy duty tires, frequent flats are an inescapable part of life.

Or so I thought until a guy at the bicycle shop recommended (and then installed) a kit that turns regular tires and rims into self-healing tubeless tires. Basically, a special rim strip is installed, the tube is removed and discarded (or saved for an emergency), and a liquid sealant is added to the tire. The liquid sealant is distributed all through the outside of the tire while the bicycle is being ridden because of the force due to the rotation of the wheel. When something penetrates the tire, the sealant is forced into the hole by the tire's air pressure, and immediately heals the tire.

The most impressive recovery was when I somehow managed to get more than 10 goathead thorns in both my front and rear tires at the same time (it looked very much like the picture above). I only ever carry one spare tube, I didn't have ten patches left, and I was riding alone, so it would've been a long, long walk home if I had still been using tubes. But I just pulled all of the thorns out of the tires, the holes bubbled for 10 seconds or so then stopped, I got back on the bike, and rode off with no loss of pressure and no problems.


I have to admit that I particularly like the philosophy of the approach1. The alternative of trying to design impregnable super tires seems rigid and Statist to me. In that case you have to foresee everything that can make a flat and design solutions to protect against them. You end up with somewhat better protection against flats than standard tires, but at higher cost and lower performance (such tires tend to be heavier and more rigid so they don't grip as well). And such tires still are susceptible to flats from goatheads.

On the other hand, Self-Healing Bicycle Tires are a Resilient Approach. Instead of trying to prevent a situation, allow the damage to happen and then recover quickly. It doesn't matter if the damage is from a 3 inch diamond spike or a piece of glass or a tiny sliver or whatever.

Recover and just keep truckin'.

1Note that this particular approach is apparently not for everybody as shown by a few of the reviewers.

Tuesday, July 14, 2009

Supreme Court nomination hearings past

Activity surrounding current nomination hearings make me think back to a past hearing. Michael Barone recalls:
He is a man who says he does not read newspapers and seldom if ever watches newscasts. If true, it’s probably a good thing, because he has been the center of political controversy since his confirmation hearings in 1991 and the object of patronizing and dismissive commentary by many legal scholars. But though he was confirmed by the Senate by a slim 52-47 margin, he holds a lifetime appointment and has said that he intends to serve for 40 years — longer than any previous justice.

Thomas’s confirmation and role on the court are of special interest as the Senate Judiciary Committee begins its hearings tomorrow on the nomination of Judge Sonia Sotomayor to succeed the retired Justice David Souter. The vetting of Sotomayor promises to be a tame affair compared with the tumultuous and controversial grilling of Thomas in 1991, which he characterized as a “high-tech lynching.”

Sotomayor seems to share the views of Hispanic politicians and advocacy organizations and will face a committee controlled by the party of the president who nominated her. Thomas, by contrast, appeared before a hostile committee majority as a nominee who had disagreed with the views of most black politicians and civil rights organizations.

Thomas told the story of his life up to the time he took his seat on the court in his best-selling memoir “My Grandfather’s Son.” It’s a dramatic story, of growing up in the segregated Deep South, raised by a stern and hard-working grandfather (“the greatest man I have ever known”), of rebelling against him and rejecting his church (“I was an angry young black man”), of academic achievement and personal failings. At Yale Law School he took tax and corporation classes and did better than his detractors have suggested; tax law professor Boris Bittker every year set aside several anonymous exam bluebooks as examples of good work, and one year one of those bluebooks was Clarence Thomas’.

Having recently read Justice Thomas's memoir, I'm reminded of the appalling indecency with which the man was treated in his hearing. Fortunately he had the courage and the will to defend himself appropriately.

Monday, July 13, 2009

Text Message: Your Time's Up

This is kinda cool: the IDF (Israeli Defense Force) is deploying new technology to warn people about incoming rocket attacks:
Code Red (early warning radar system) to your cellular device? This will become a reality two years from now, according to the plans of the Home Front Command. For the past year, the IDF Home Front Command has been working on warning civilians of rocket attacks via cellular devices. [...]

The Cellular Broadcasting Technology works according to the device's location. When a warning about a missile attack is received in a certain area, a warning message will be sent to whoever is in the zone.
Whereas this will clearly be very useful in Israel as soon as it's ready, I think it will be readily adopted in the United States as well given the proliferation of nuclear missiles to regimes such as North Korea. I expect the text message will look something like:
A nuclear missile will land in your vicinity in the next 90 seconds. Please go indoors, sit on a chair away from any windows, place your head firmly between your legs -- and kiss your ass goodbye!
At least we'll have some warning.

(HT: Israel Matzav)

Hurricanes Versus Bill Gates

Question: What's the difference between Bill Gates and God?
Answer: God doesn't think he's Bill Gates.

Gates' latest area of playing God involves the simple matter of stopping hurricanes:

Recent patent filings have shown Bill Gates and his friends exploring subjects as diverse as electromagnetic engines and beer kegs. Now they're thinking even bigger -- trying to stop hurricanes.

Microsoft's chairman is among the inventors listed on a new batch of patent applications that propose using large fleets of vessels to suppress hurricanes through various methods of mixing warm water from the surface of the ocean with colder water at greater depths. The idea is to decrease the surface temperature, reducing or eliminating the heat-driven condensation that fuels the giant storms.

The filings were made by Searete LLC, an entity tied to Intellectual Ventures, the Bellevue-based patent and invention house run by Nathan Myhrvold, the former Microsoft chief technology officer. Myhrvold and several others are listed along with Gates as inventors.

The idea is actually pretty simple. Large tubes from the surface of the ocean to some depth are attached to floating platforms. Waves slosh over the edge of the platform and the warm surface water from the waves run down the tube to the depths, requiring no external energy source. Build a gazillion of them, stick them in the possible path of a serious hurricane, and presto!, the hurricane is downgraded a couple of notches relative to what it would've been since it no longer has access to that very warm surface water that would fuel it.

Since these could be completely passive devices, it wouldn't cost all that much to build them. The only question is could you actually build and deploy enough of them to make a significant difference.

Oh! And in the long term, there'd be even more heat and energy in the ocean which would mean even more intense and destructive hurricanes. But hey, that's for another generation to worry about.

Wednesday, July 08, 2009

Where's the Buzz?

On June 2nd, Richard Lindzen, Alfred P. Sloan Professor of Atmospheric Sciences at MIT, made a presentation at a conference showing empirically that the climate sensitivity to a doubling of CO2 is 0.5 degrees Celsius. Since the climate models show a sensitivity that is 3 to 10 times larger, if Lindzen's findings are accurate, this would simultaneously invalidate the results of the climate models and eliminate the possibility of catastrophic man-made global warming. Indeed, at the end of his presentation, Lindzen states:
However, for the low sensitivity obtained from the actual climate system, we see that sensitivity is narrowly constrained to about 0.5C, and strongly implies that there is little to be concerned about.

In a normal field, these results would pretty much wrap things up, but global warming/climate change has developed so much momentum that it has a life of its own – quite removed from science. One can reasonably expect that opportunism of the weak will lead to efforts to alter the data (though the results presented here have survived several alterations of the data already).
It seems to me like this should be fairly big news. Lindzen is well known, with a long track record, from a relatively prestigious institution, with astounding results.

But there is remarkably little buzz. There's no mention that he's going to submit these results in a paper for peer review. The global warming skeptics don't seem to have much noticed these appealing results. The global warming believers haven't bothered to refute it.

The quiet seems strange to me. The debate has never lacked volume before.

Monday, July 06, 2009

Boy Am I Jetlagged

We're back safe and sound from London and France with no significant glitches in the entire trip.

The jetlag due to the 9 hour time difference is really bad though. It was bad going the other way too. I'm gettin' too old for that kind of travel.

I'm so jetlagged that I accidently clicked the 'Publish' button instead of the 'Save Draft' button on some notes I was making for a future post. So if your feed aggregator shows you a post titled 'I Shrugged', ignore it, it wasn't meant to be seen and I've since deleted it.


Thursday, July 02, 2009

Key points in the health care debate

Much of the public discussion does not even grapple with determining the most important criteria in determining policy changes. That can be the subject of another post. George Newman goes bowling, lining up several nonsensical shibboleths and knocking them down:(here)

The health-care debate continues. We have now heard from nearly all the politicians, experts and interested parties: doctors, drug makers, hospitals, insurance companies, even constitutional lawyers (though not, significantly, from trial lawyers, who know full well "change" is not coming to their practices). Here is how one humble economist sees some of the main arguments, which I have paraphrased below:

- "The American people overwhelmingly favor reform."

If you ask whether people would be happier if somebody else paid their medical bills, they generally say yes. But surveys on consumers' satisfaction with their quality of care show overwhelming support for the continuation of the present arrangement. The best proof of this is the belated recognition by the proponents of health-care reform that they need to promise people that they can keep what they have now.

- "Forty-five million people in the U.S. are uninsured."

Even if this were true (many dispute it) should we risk destroying a system that works for the vast majority to help 15% of our population?

- "The cost of treating the 45 million uninsured is shifted to the rest of us."

So on Monday, Wednesday and Friday we are harangued about the 45 million people lacking medical care, and on Tuesday and Thursday we are told we already pay for that care. Left-wing reformers think that if they split the two arguments we are too stupid to notice the contradiction. Furthermore, if cost shifting is bad, wait for the Mother of all Cost Shifting when suppliers have to overcharge the private plans to compensate for the depressed prices forced on them by the public plan.

- "A universal plan will reduce the cost of health care."

Think a moment. Suppose you are in an apple market with 100 buyers and 100 sellers every day and apples sell for $1 a pound. Suddenly one day 120 buyers show up. Will the price of the apples go up or down?

- "We need a public plan to keep the private plans honest."

The 1,500 or so private plans don't produce enough competition? Making it 1,501 will do the trick? But then why stop there? Eating is even more important than health care, so shouldn't we have government-run supermarkets "to keep the private ones honest"? After all, supermarkets clearly put profits ahead of feeding people. And we can't run around naked, so we should have government-run clothing stores to keep the private ones honest. And shelter is just as important, so we should start public housing to keep private builders honest. Oops, we already have that. And that is exactly the point. Think of everything you know about public housing, the image the term conjures up in your mind. If you like public housing you will love public health care.

There are many more gems in the article!!

Wednesday, June 24, 2009

Lessons learned

The late Peter Bernstein had much to offer...

Jason Zweig had this to say (excerpts):

Investing has yielded a few stars so famous they are known by first name. Warren Buffett is one. Peter L. Bernstein -- the economist, investment consultant and prolific author who died on June 5 at 90 -- was another.

In his almost 70-year career, he taught economics at Williams College, worked as a portfolio manager at Amalgamated Bank and ran the investment-counseling firm of Bernstein-Macaulay, co-founded by his father and Frederick Macaulay, who invented the modern discipline of bond investing.

In 1974, as Wall Street was suffering its worst market decline since 1929, Mr. Bernstein co-founded the Journal of Portfolio Management to improve risk management with insights from academic research.

In 1970, he asked rhetorically, "What are the consequences if I am wrong?" and said "no investment decisions can be rationally arrived at unless they are [based upon] the answer to this question." He counseled investors to take big risks with small amounts of money rather than small risks with big amounts of money.

The same focus on the consequences of error was one of the main themes of "Against the Gods," which he published more than a quarter-century later.

Also in 1970, Mr. Bernstein wrote: "We simply do not know what the future holds." Over the ensuing decades, he returned again and again to that phrase in his speeches, articles and books, because he felt it captured the central truth about investing.

Asked in 2004 to name the most important lesson he had to unlearn, he said: "That I knew what the future held, that you can figure this thing out. I've become increasingly humble about it over time and comfortable with that. You have to understand that being wrong is part of the [investing] process."

I've read many books and articles over the years written by Mr. Bernstein and always felt fortunate that he shared his thoughts and insights. The willingness to accept uncertainty in the realm of investing (and life in general) is a valuable lesson.

( re: uncertainty see also here here here and here)

There were many who did not ask the question: what if I am wrong?

I can not predict, but I can observe. The trick is learning what observations are worth making and then using that information to construct workable contingencies.

Sunday, June 14, 2009

I See London, I See France...

Off to London, Paris, and Southern France for three weeks to give the kids a chance to see a bit of the world.

No blogging for me during that period, but maybe my coblogger will step up to the plate.

Thursday, June 11, 2009

What's News?

I'm sorry, but the entire punditocracy has missed the point.

It is NOT news that someone in show business makes an intensely rude, crude, lewd, insulting, disgusting and/or despicable comment regarding an entirely inappropriate subject. Indeed, if we demanded an apology every time that happened, we'd never get anything else done.

The point is that Letterman's comment is a shot across the bow. He is saying, "Governor Palin, if you so much as poke your nose outside the great State of Alaska, we will insult and smear and humiliate and hound you and your family and your community and anybody who thinks or even looks like you until you feel so degraded and miserable that you run back home with your tail between your legs and never, ever come back. We hate you, we fear you, we loathe you, and we will stop at nothing to destroy you."

That's the news.

Fire up the Skeptics

Everyone is a Skeptic when it comes to religion. There are so many religions that it is impossible to be a believer in all of them so we are Skeptical about at least some of them. For the most part, we keep our Skepticism to ourselves because there is limited downside to letting others believe in whatever they choose to believe in as long as their attempts to convert the rest of us to their beliefs are kept within reasonable bounds.

However, if a religion exceeds those bounds, Skeptics will come out of the woodwork to attack that religion. Nobody wants to belong to a church that they believe is False. The propensity to not belong to someone else's church is so strong that wars have been fought over this sort of thing.

The Church of Human Induced Catastrophic Global Warmenism has exceeded reasonable bounds in trying to convert us all. This Church wants to use the full force and authority of the governments worldwide to force us to join. They want to limit our economic and political freedoms to force us to at least behave as if we believe.

To a great number of people, this is simply not acceptable and, sure enough, there is surge of Skeptics appearing all over the world.

I am one of those Skeptics. The science and economics on which the Church rests is full of holes, and unless that religion is one you wish to subscribe to, it may be safely ignored. If you do wish to subscribe to Global Warmenism, by all means please do so and limit your own energy usage and material consumption as you see fit.

Just don't impose your religion on the rest of us. Thanks.

Monday, June 01, 2009

Radical Christianists

Though not personally religious, I've argued numerous times that Christianity post-reformation is a peaceful and constructive religion.

Murders like this one undermine my argument.

Wednesday, May 20, 2009

California's Woes

I like living in California and I hope to continue to be able to live in California. However, if taxes are raised enough, I will feel compelled to leave for a lower tax jurisdiction in order to better provide for my family.

California is having some serious problems governing itself. As Megan McArdle wrote:
California is completely, totally, irreparably hosed. ... You can blame Republicans who won't pass a budget, or Democrats who spend every single cent of tax money .... You can blame the initiative process, and the uneducated voters who try to vote themselves rich by picking their own pockets. Whoever is to blame, the state was bound to go broke one day, and hey, today's that day!
We had a bunch of ballot initiatives to vote on yesterday, and while I got held up and didn't make it to the polls before they closed, I would've voted with the "uneducated" majority against tax increases had I been more timely. To vote for tax increases would mean that I'd be more likely to have to move so it would seem rather pointless to me.

I feel that the voters should set the budget and then the governator and legislature should figure out how to operate within that budget. They should choose which jobs and services to cut and they should get started now. Far fewer teachers, police, firemen, bureaucrats, etc. That I'm willing to live without.

Tuesday, May 19, 2009


Here's a puzzle.

Suppose I made you an offer. I have two check made out to you. One check is hidden in my left hand and one check is hidden in my right hand. One of the checks is for an arbitrary, positive, non-zero amount and the other check is for an amount either ten times larger than the other check or one-tenth the amount of the other check. The amounts have arbitrary precision (i.e., the amounts can contain fractions of a penny). It is random which hand contains the larger check.

Here's the deal.

You can pick the check in either hand. After you look at the check in the hand you picked (but you're not allowed to see the other check), you have to decide which check you want: the check that you've seen in the hand you've picked or the other check that you haven't seen. The game is then over and you walk away with your check.

Here's the puzzle.

Common sense would tell you that since the contents of my hands are random and unknown, it shouldn't matter what you do. Pick the check in either hand and be done with it, or pick either hand and then choose the check in the second hand - shouldn't matter.

Common sense would be wrong.

Let's say you've chosen a hand and find that the check is for $10. The other check is therefore either $100 or $1. The expected value is ($100 + $1) / 2 = $50.50 which is substantially better than the $10 you hold. So you should always go for the second hand after looking at the check in the first.

Which, of course, makes no sense since it's random.

What's the explanation?

The answer to this question is also the key to the secrets of the universe.

Friday, May 15, 2009

Too Big to Fail

"Power tends to corrupt, and absolute power corrupts absolutely. " Lord Acton

Being too big to fail, if true, couples a concentration of power (bigness) with a corruption of the free market ideal. The same concentration of power seems to inherently lead to other corruption as well. Mancur Olson's research and thought regarding the nature of special interests groups makes it seem inevitable to me that mega-corporations, especially in slow changing industries, will (continue to) form symbiotic relationships with the State that further strengthens both the mega-corporation and the State, to the detriment of the rest of the citizenry. We're seeing exactly that with GM, Chrysler, Steel protectionism, banks, etc., etc., etc.

So, given this seemingly inevitable sequence away from an ideal free market economy and towards Corporatism, exacerbated by the existence of huge business, is there anything that can be done to slow it down?

I think that reducing the number and size of large corporations would be helpful. However, giving the Federal government the directive to do such a thing by fiat would be a cure far worse than the disease. The method of reducing the number of large corporations, in order to avoid even more corruption and waste, would have to be formulaic and not subject to the whims of the President, Congress or regulatory agency bureaucrats.

The devil's in the details, but I'm imagining there might be a way to tax bigness such that the shareholders of large corporations would split the corporations into smaller entities, unless the bigness really was so advantageous, because of some manufacturing efficiencies or something like that, as to outweigh the increased tax burden.

What do you think?

Thursday, May 07, 2009

Radical Libertarianism

I've been pretty disappointed with Cafe Hayek because the bloggers and commenters there purposely ignore both the real world considerations of government and the fact that the vast majority of the people in the United States are not even vaguely interested in Libertarian ideals. Part of my disappointment is that, for at least a while, I fancied myself as "Libertarian leaning", but they've convinced me (and not politely either) that I'm nothing of the sort.

Conveniently, the following excerpts from Libertarian Democraphobia relieve me of the effort of having to describe in my own words what I think are some of the fundamental problems of Libertarianism:
The libertarian non-coercion principle is a good abstract first approximation of the liberal presupposition that persons are free and equal. No one has a natural right to rule over another, and no one has a natural duty to obey. The liberal presupposition sets a high bar for the justification of coercion, and thus the justification of the state. Many libertarians think there is no justification. Therefore the only acceptable rule of collective choice is unanimity or full consensus. This is one focus of the debate between anarchist and limited-statist libertarians. On the anarchist side, political power cannot get off the ground, and thus the design of mechanisms to control political power is a non-issue. On the limited-statist side, political power does get off the ground, and thus so does the design of constitutions and democratic institutions. [...]

In any case, libertarians often display a confusing or confused reaction to democracy as it actually exists. The scheme laid out in most libertarian ideal theory is so distant from actual democratic practice that the whole existing system can seem by comparison a comprehensive injustice. When one’s ideal theory implies that politics is by its nature illegitimate and corrupt, one tends to develop a sharply disapproving attitude toward participation in politics. Lots of libertarians, for example, think it’s morally wrong to vote. (There are many structural reasons the Libertarian Party is hopeless, but here’s one reason libertarians tend to be at best half-hearted political activists.) Likewise, incrementalist approaches to policy can never be adequately pure from the perspective of radical libertarian ideal theory. School vouchers are still tax-financed; a system of mandatory personal retirement accounts has a restriction on economic liberty at its heart; and so on. So, not only is politics corrupt and corrupting. There are few democratically feasible libertarian policies that merit support. The public does not want libertarianism. Which means that the public does not want a system that respects fundamental rights. So much the worse for the public, the thinking tends to go. [...]

If libertarians are going to shift the politics of the countries we live in, we’ve got to get it through our thick skulls that many people have considered libertarian ideas and have rejected them for all sorts of decent reasons. We’ve got to take those reasons, and those people, fully seriously and adequately address them. Otherwise, we should probably just accept that libertarianism is a niche creed for weird people and reconcile ourselves to impotent, self-righteous grousing.
Cafe Hayek (especially blogger Don Boudreaux) is, in my opinion, completely mired in "impotent, self-righteous grousing".

The irony is that The Fatal Conceit by Hayek is proudly displayed on their website, and the fundamental concept of The Fatal Conceit is that sweeping away all of society's institutions in order to remake society according to better principles is a really, really bad idea, yet this is exactly what the Cafe Hayek bloggers would do in an instant if given the chance.