Surely Just Coincidence

When Obama announced that he would travel to Massachusetts to campaign for Coakley against Scott Brown, her probability of winning the election according to Intrade's prediction markets plunged from 80% to 40% in the approximately 48 hours following the announcement. I'm sure it's just a coincidence. Surely Obama's presence could only help?

Wrongheaded even before the drift

In response to a comment to the previous post, presenting a David Hogberg review of the latest book by Thomas Sowell:

With his new work, Intellectuals and Society, Sowell has finally made good on his 20-year-old promise to write about intellectuals. He has also made good on his threat. Sowell takes aim at the class of people who influence our public debate, institutions, and policy. Few of Sowell’s targets are left standing at the end, and those who are stagger back to their corner, bloody and bruised.

Sowell defines intellectuals as an occupation, as people whose “work begins and ends with ideas.” This includes academics, especially those in the humanities and social sciences, policy wonks, and, to a certain extent, journalists. This distinguishes them from occupations in which the work begins with ideas and ends with the application of ideas. Physicians or engineers usually start with ideas about how to approach their work, but eventually they have to put them into practice by treating patients or constructing bridges.

As a result, intellectuals are free from one of the most rigorous constraints facing other occupations: external standards. An engineer will ultimately be judged on whether the structures he designs hold up, a businessman on whether he makes money, and so on. By contrast, the ultimate test of an intellectual’s ideas is whether other intellectuals “find those ideas interesting, original, persuasive, elegant, or ingenious. There is no external test.”

An intellectual’s reputation, then, depends not on whether his ideas are verifiable but on the plaudits of his fellow intellectuals.

Intellectuals, of course, have expertise — highly specialized knowledge of a particular subject. The problem, according to Sowell, is that they think their superior knowledge in one area means they have superior knowledge in most other areas. Yet knowledge is so vast and dispersed that it is doubtful that any one person has even 1 percent of the knowledge available. Even the brightest intellectuals cannot possibly know all the needs, wants, and preferences of millions of people. Unfortunately, they have considerable incentive to behave as if they do.

Reinforcing these incentives is what Sowell dubs the “Vision of the Anointed.” Intellectuals’ belief in their own superior knowledge and virtue leads to a belief that they are an anointed elite who are qualified to make decisions for the rest of us in order to lead humanity to a better life. Under this vision problems such as poverty, injustice, and war are not due to inherent human weaknesses, but are the products of society’s institutions. Solving those problems requires changing those institutions, which requires changing the ideas behind the institutions. And who is better suited for that task than those whose work begins and ends with ideas?

“There could hardly be a set of incentives and constraints more conducive to getting people of great intellect to say sweeping, reckless or even foolish things,” Sowell states. He warns that if “no one has even 1 percent of the knowledge currently available . . . the imposition from the top down of the notions favored by the elites, convinced of their own superior knowledge and virtue, is a formula for disaster.”

The most telling portions of Intellectuals and Society are the ones in which Sowell chronicles the disasters that occur when intellectuals succeed in getting politicians, judges, and other policymakers to impose their vision on society.

Sowell writes that it “was part of a long-standing assumption among many intellectuals . . . that it is the role of third parties to bring meaning into the lives of the masses.”

Sowell also emphasizes the fact that intellectuals take their beliefs as axiomatic truths rather than hypotheses to be tested.

Since the 1980s, conservatives and libertarians have pushed back to the point that intellectuals’ “overwhelming dominance has been reduced somewhat.” Yet he warns that the intellectuals’ vision is still dominant: “Not since the days of the divine right of kings has there been such a presumption of a right to direct others and constrain their decisions, largely through expanded powers of government.” But now that Sowell has given us a penetrating analysis of that vision, perhaps it will be easier to fight it.

A previous post dealt with the folly of intellectuals presumed divine right.

Drifting Elites

The intellectual elites have always lived in their own bubble of ideas, quite apart from the rest of us. That bubble has been drifting away quite rapidly and looks set to continue to do so.



The above graph, courtesy of Charles Murray, shows political attitudes from the General Social Survey of non-Latino whites ages 30–49 in the survey year. What it shows quite clearly is that while most of the country (at least the white part) is mildly trending towards being more conservative, the "intellectual uppers" are heading off the charts on the liberal end (for more details on the chart visit Murray's post).

This ties in well with a recent New York Times column by David Brooks where he whines that, "Every single idea associated with the educated class has grown more unpopular over the past year." Perhaps that's because the "educated class" (or "intellectual uppers") have ideas that are so far removed from the reality that the rest of us experience that those ideas simply don't make any sense to us commoners anymore.

The Foundation of the Blue State Blues

Some Blue States, like California (my home State), are really hurting. Not only do they face never ending fiscal crises, but people, especially people in their most productive years, are starting to leave these States in droves.

California was once a really great place to live. It had (and still has) great weather, beautiful terrain, and bountiful natural resources.

The typical conservative explanation is that all this wealth attracted leaching liberals who took over the government and taxed and regulated the State from prosperity into its current mess.

There may be a grain of truth to that, but the question is why did everybody else (besides the leaching liberals) let this happen. The answer, in my opinion, is that changes in Federal Tax law deserves a substantial part of the blame.

Let me explain.

From FDR's administration until after Reagan was elected, the top Federal Tax Rates were always above 70% and even exceeded 90% at points. But State Income tax was deductible. During that period, in those States with a preponderance of high income earners, both the earners and the rest of the State could benefit from instituting high State income tax rates for the high income earners and returning part of those taxes as services.

To illustrate, let's consider an example. Let's say your marginal Federal Tax rate is 90%. Then for each dollar the State taxes and receives from you (which you then deduct from your Federal taxable income), your total income tax bill (State plus Federal) rises only 10 cents. The State then provides 15 or 20 cents in services to you, a bit goes to help the poor in your State, and the rest is pocketed by the bureaucrats and lobbyists. Everybody wins! Well, everybody but the poor and middle class in all States who have to pay more to provide the revenue needed by the Federal government.

California leveraged that situation wonderfully well. They built great infrastructure (like the University of California), provided great services and funded fabulous levels of graft and corruption. Everybody assumed this gravy train would run forever.

However, two things happened that ended the free ride fairly abruptly. Federal income taxes were slashed by Reagan and the Alternate Minimum Tax (AMT) scheme was instituted which greatly reduced the ability to deduct State income tax. Suddenly paying State income taxes was a big net negative for the taxpayer. A dollar of revenue to the State was pretty much a dollar out of the pocket of the high income taxpayer.

Suddenly the services to the high income tax payers couldn't possibly make it worth it to pay the tax (that's why high income earners are leaving in droves), the programs for the poor couldn't be lavishly funded, infrastructure couldn't be maintained, and, worst of all, the fabulous levels of graft and corruption to which so many people had become so addicted could only be maintained by massive and unsustainable borrowing. Since graft and corruption are the lifeblood of politicians and lobbyists, the massive and unsustainable borrowing is a given.

This is simply a case of people responding to incentives created beyond their control. Unfortunately, bureaucracies can generally only expand, so it can't really be undone at this point until the Blue States go hopelessly bankrupt. It's a bit like a Roach Motel - or for my State, "Welcome to the Hotel California."

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.

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.

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)

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.

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.

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.

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.

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.

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.

That Explains It!

In case you hadn't seen this:



(Hat Tip: Don Luskin)

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.

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: “It’s 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.

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.

Science

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.

Economics

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.

Politics

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.

Religion

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.

Summary

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.

References

[1] http://en.wikipedia.org/wiki/Carbon_dioxide

[2] Committee on the Science of Climate Change, National Research Council. Climate Change Science: An Analysis of Some Key Questions, pp 6-7.
http://www.nap.edu/openbook.php?record_id=10139&page=6

[3] Intergovernmental Panel on Climate Change (IPCC). Climate Change 2007: Synthesis Report, p 38.
http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr.pdf

[4] Lindzen, R.S. (2007) Taking Greenhouse Warming Seriously, Energy & Environment, 18, pp 937-950.
http://www-eaps.mit.edu/faculty/lindzen/230_TakingGr.pdf

[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.
http://www.leif.org/EOS/2009GL039628-pip.pdf

[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.
http://eos.atmos.washington.edu/pub/breth/papers/2006/SPGRL.pdf

[7] Svensmark, H., T. Bondo, and J. Svensmark (2009), Cosmic ray decreases affect atmospheric aerosols and clouds, Geophysical Research Letters, Vol. 36 L15101.
http://www.agu.org/pubs/crossref/2009/2009GL038429.shtml

[8] Houghton, J.T., Ding, Y. et al, (2001): Climate Change 2001: The Scientific Basis, Publications of the IPCC, p 384.
http://www.ipcc.ch/ipccreports/tar/wg1/384.htm

[9] Stern, N., (2008): The Economics of Climate Change: The Stern Review, Cambridge University Press.
http://www.hm-treasury.gov.uk/stern_review_report.htm

[10]Nordhaus, W., (2007): The Stern Review on the Economics of Climate Change, Journal of Economic Literature Vol. XLV, pp. 686–702
http://nordhaus.econ.yale.edu/stern_050307.pdf

[11]Happer, W. (2009): William Happer Testimony to Senate Energy Committee, February 25, 2009
http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=84462e2d-6bff-4983-a574-31f5ae8e8a42

[12] Lamont, J. et al. (2009): India Widens Climate Rift with West, Financial Times, July 23, 2009
http://www.ft.com/cms/s/0/c2896b88-77bd-11de-9713-00144feabdc0.html?nclick_check=1

[13] Taylor, P. (2009): China, Russia, Now India: Reject Global Climate Controls,
Los Angeles Examiner
http://www.examiner.com/x-3089-LA-Ecopolitics-Examiner~y2009m7d6-China-Russia-Now-India-Reject-Global-Climate-Controls

[14] Energy Information Administration (2001): World Energy Use and Carbon Dioxide Emissions, 1980-2001, Department of Energy
http://www.eia.doe.gov/emeu/cabs/carbonemiss/index.html

[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.

Yes We Can!

Image of the day (week/month/year):












Hat tip: Israel Matzav

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.