Quotulatiousness

August 18, 2022

The acute lack of numbers in every climate debate

Filed under: Economics, Environment, Government, Media, Politics, USA — Tags: , , , — Nicholas @ 03:00

The Grumpy Economist notes that every discussion of laws and regulations “to tackle climate change” only ever seem to cover one side of the issue — how much your taxes will go up and how much more your life “needs” to be regulated to “save the planet”. The almost universally lacking numbers are the expected benefits of the law or regulation in climate terms:

Most legislation or regulation that spends hundreds of billions of dollars aimed at a purpose is extensively analyzed or scored to that purpose. OK, the numbers are often, er, a bit unreliable, but at least proponents go through the motions and lay out assumptions one can examine and calculate differently. Tax and spending laws come with extensive analysis of just how much the government will make or spend. This is especially true when environment is concerned. Building anything requires detailed environmental assessments. An environmental review typically takes 4.5 years before the lawsuits begin.

In this context, I’m amazed that climate policy typically comes with no numbers, or at least none that I can find readily available in major media. We’re going to spend an additional $250 billion or so on climate policies in the humorously titled “inflation reduction act”. OK, how much carbon will that remove, on net, all things included, how much will that lower the temperature and when, how much and when will it quiet the rise of the oceans?

Finally, I have seen one number, advertised in the Wall Street Journal,

    Our contributor Bjorn Lomborg looked at the Rhodium Group estimate for CO2 emissions reductions from Schumer-Manchin policies. He then plugged them into the United Nations climate model to measure the impact on global temperature by 2100. He finds the bill will reduce the estimated global temperature rise at the end of this century by all of 0.028 degrees Fahrenheit in the optimistic case. In the pessimistic case, the temperature difference will be 0.0009 degrees Fahrenheit.

Bjorn’s twitter stream on the calculation.

Maybe you don’t like Bjorn’s numbers and the IPCC model. (Not exactly a right-wing operation). Maybe you don’t like the Rhodium group’s analysis. A quick reading left me the impression its thumb might be on the wildly over-optimistic side of what this rathole of pork can produce, and of experience with what the similar past ratholes have produced:

    Our preliminary estimate is that the IRA can cut US net greenhouse gas emissions down to 31% to 44% below 2005 levels in 2030—with a central estimate of 40% below 2005 levels — compared to 24% to 35% under current policy. The range reflects uncertainty around future fossil fuel prices, economic growth, and technology costs. It will also meaningfully reduce consumer energy costs and bolster US energy security over the medium-term,

10% of 2005 levels is a lot. Subsidies reduce consumer costs, but not the cost to society overall. Clever. How one can claim that clamping down on fossil fuels and subsidizing windmills and solar panels helps energy security with the German example before us is a good question. Bjorn’s point is that even with this immense thumb on the scale, the actual climate benefit is tiny. If you disagree, fine, produce some alternates.

(BTW, politicians who tell you we need to do something about climate to turn off heat waves and stop forest fires are either lying or profoundly ignorant. Nothing even Greta Thunberg proposes will actually lower temperatures in our great grandchildren’s lifetimes. Read carefully, “reduce the temperature rise“. Not “reduce temperatures”.)

August 7, 2022

You will own nothing … and we don’t care if you like it or not, prole

Filed under: Economics, Food, Government — Tags: , , , , — Nicholas @ 03:00

David Solway, reposted at Brian Peckford’s site, gives us a glimpse of the future the Davos crowd want for all us lesser beings:

The much-circulated slogan “You will own nothing, and you will be happy” was coined by Danish MP Ida Auken in 2016 and included in a 2016 essay published by the purveyors of the so-called “Great Reset” at the World Economic Forum (WEF) headquartered in Davos, Switzerland. It is, of course, only half true. Nonetheless, the phrase is certainly apt and should be taken seriously. For once the Great Reset has been put in place, we will indeed own nothing except our compelled compliance.

The world’s farmers and cattle raisers, deprived of their livelihoods on the pretext of reducing nitrogenic fertilizers and livestock-produced methane, will own next to nothing. Meat and grain will become increasingly rare and we will be dining on cricket goulash and mealworm mash, an entomorphagic feast. We will be driving distance-limited electric vehicles rented from the local Commissariat and digitally monitored by Cyber Central — assuming we will still be allowed to drive. Overseen by a cadre of empowered financial managers who can “freeze” our assets at any time, we will possess bank accounts and credit ratings, but they will not be really ours.

Subject to a conceptual misnomer that is nothing but a vacuous abstraction, we will have become “stakeholders” — the WEF’s Klaus Schwab’s favorite word — with no real stake to hold apart from a crutch. In fact, what Schwab’s “stakeholder capitalism” really means, as Andrew Stuttaford explains at Capital Matters, is “transferring the power that capitalism should confer from its owners and into the hands of those who administer it.”

Should the Great Reset ever be fully implemented, we will have been diminished, as Joel Kotkin cogently argues in The Coming of Neo-Feudalism, to the condition of medieval serfs, or reduced to the status of febrile invalids, like those in Thomas Mann’s The Magic Mountain, which, as it happens, was also set in Davos. As Mann ends his novel, addressing his main character Hans Castorp: “Farewell, Hans … Your chances are not good. The wicked dance in which you are caught up will last many a little sinful year yet, and we will not wager much that you will come out whole.”

Modern-day Castorps, we will indeed own nothing, and most assuredly, we will not be happy. As Schwab writes in his co-authored Covid-19: The Great Reset, people will have to accept “limited consumption”, “responsible eating”, and, on the whole, sacrificing “what we do not need” — this latter to be determined by our betters.

What strikes me with considerable force is the pervasive indifference or cultivated ignorance of the general population respecting what the Davos cabal has in store for them. A substantial number of people have never heard of it. Others regard it as just another internet conspiracy — though it is not so much a conspiracy since it is being organized in full sight. The majority of “fact-checkers” and hireling intellectuals wave it away as a right-wing delusion.

August 4, 2022

“Klaus Schwab, it turns out, is Supervillain Thomas Friedman”

Filed under: Books, Economics — Tags: , , , — Nicholas @ 05:00

Chris Bray somehow manages to girds his loins to take on a task that most of us would run screaming from: actuall reading a book by Klaus Schwab:

Seeing roughly 4,000 references a day to Klaus Schwab and the World Economic Forum, it occurred to me late last week that I’d never gone to the source — I’ve never read a book by Klaus Schwab. So I set out to read the one the Dutch parliamentarian asked his prime minister about, the one about the Great Reset, which Schwab co-wrote with Thierry Malleret. It’s a little like saying, “Man, you know, I’ve never gone swimming in the sewer,” and then pulling on your swimsuit.

So.

First, if you weigh about ten pounds, I can report that the book is the perfect size and shape for lounging.

This is the only value the book provides to the world, and I recommend the immediate deployment of all remaining copies to the one population that can actually use them. Personal to Klaus Schwab: Give the next book a scratchy cardboard cover. Just trust me on this.

As for the book’s relationship to humans: Klaus Schwab, it turns out, is Supervillain Thomas Friedman. Being shrewd, he notices things: Did you know that a lot more people are online now than twenty years ago? Did you know that many objects are now connected to the Internet, from “electric grids and water pumps, to kitchen ovens and agricultural irrigation systems”, and that objects didn’t used to be connected to the Internet? Did you realize that this shift is causing change? When we talk about the pace of change, reader, we are talking about a term called velocity, and a lot of change happening quickly has a high velocity.

If you’ve ever worked for a corporate middle manager who held meetings to encourage the team to think outside the box, you’ve already read Klaus Schwab. We get an endless stream of tautological management-speak, encouraging leaders to embrace transformation by adopting a transformational approach, leading to transformational action and transformational policy caused by a transformational something or other. Page 63: “Innovation in production, distribution, and business models can generate efficiency gains and new or better products that create higher value added, leading to new jobs and economic prosperity.” Innovation can create things that are new, he explained, showing why he’s one of our best-known and most powerful economic experts. A warning to the world: If Kamala Harris and Klaus Schwab ever end up alone in a room together for a sustained and direct conversation, the banality will attain critical mass, and we will all die in a world-consuming implosion.

And here’s the key to the man’s power and status: He sounds like them. He talks to the governing class in language they recognize, telling them the things they already think. He went to a place where people already were, and he told them he led them there.

August 1, 2022

The fertilizer front in Justin Trudeau’s renewed war on Canada’s farmers

Filed under: Cancon, Economics, Environment, Government, Politics — Tags: , , , — Nicholas @ 03:00

In The Line‘s weekly dispatch, one of the items discussed was the Trudeau government’s decision to follow the Netherlands and Sri Lanka down the path of ensuring that millions may be at risk of starvation to mollify the global warming lobby and the WEF:

In 2020, the federal government announced a plan to reduce greenhouse gas emissions arising from fertilizer application by 30 per cent below 2020 levels within the next decade. The targets, then fairly vaguely spelled out, have been a subject of considerable consternation among farmers in the wheat belt ever since. However, as the feds moved into a consultation process, set to end by the end of August, it’s now become clear that those targets are a little more set in stone than they had previously feared. Further, the “consultation” process is looking increasingly tokenistic.

“The commitment to future consultations are only to determine how to meet the target that Prime Minister Trudeau and Minister Bibeau have already unilaterally imposed on this industry, not to consult on what is achievable or attainable,” according to a press release sent out jointly by the Alberta and Saskatchewan agriculture ministers last week.

Why does this matter? Well, firstly because these emissions targets are coming on top of tariffs placed on chemical precursors to fertilizer coming out of Russia. And further because according to industry lobbyists and many farmers themselves, it’s not going to be possible to meet these kinds of emissions targets without significantly reducing fertilizer use — which is already efficiently applied owing to the fact that the stuff is expensive.

The meat of it (ha!) is that if we reduce fertilizer use further, there is significant fear that we will cut into food yields, just as the world’s growing population is facing a possible famine thanks to war. It’s not like these concerns are temporary, either. In the long run, climate change is only going to add to food insecurity; and Canada may be well-positioned in a changing climate to address the global food supply.

And, yeah, all of this is very ironic. Of course we should be doing all we can to cut emissions, but, perhaps — just hear us out, here — given the broader geopolitical realities, agriculture is not the most obvious or well-placed target for those emissions cuts. Especially considering Canada still accounts for a very small fraction of global greenhouse emissions overall. (Yes, we know our per-capita emissions are high. That’s the unfortunate consequence of living in a very cold, poorly populated expanse. However, our actual population remains low. These two facts are not coincidences!)

Now, if we were going to give the federal government some benefit of the doubt, we’d point out that we’re still in a consultation process. We’d also further point out that if the government wanted to reduce agriculture emissions, there are probably some smarter ways to go about it — equipment upgrades, for example. Investments in soil testing could go a long way to helping farmers apply nitrogen more efficiently, which could help them increase yields while maintaining profits. Win-win!

Yet, from what we’ve seen from this government since the last election, we’re not betting on sensible, win-win solutions. Farmers in the Netherlands have been so put out by similar climate-change inspired emissions cuts that they’ve engaged in convoy-like protests themselves. Further, we suspect the Trudeau government salivates at the prospect of a bunch of another round of spitting-mad, truck-driving farmers rolling into Parliament to protest climate change policies. Every pissy article in the Federalist is a win to this cabinet.

If you’re angering the right people, you’re winning, right?

And how do we imagine arcane policies like this are going to play out internationally in the next three to nine months, if we witness more and more developing countries closing borders to grain exports and significant swathes of the developing world look set to starve? How well are these climate-change policies going to sit against real, hard geopolitical realities like a frozen Europe in winter or significantly curtailed industrial production in Germany, leading to further supply chain issues and economic recession?

If this government is not careful, they’re going to drag a lot of the progressive movement — and its genuinely very noble ideals — along with it. This is a government that appears to have said “fuck it,” retreating ever deeper into self-reinforcing ideological bubbles as the world decides it has much bigger problems than those that the Trudeau government seems able to address. To put it bluntly, how are pious climate-change goals going to look if they have to be measured against piles of emaciated bodies in the developing world? Because that’s the danger. Nobody in Canada is going to starve.

July 29, 2022

“Shrinkflation” isn’t the only way companies try to sell you less for the same price

Filed under: Business, Economics — Tags: , , , — Nicholas @ 05:00

And, as Virginia Postrel points out, “shrinkflation” does get noticed for economic statistics, unlike some of the other changes many companies are making:

Original image from www.marpat.co.uk

My latest Bloomberg Opinion column is explained well in an excellent subhead (contrary to popular assumptions, writers don’t craft the headlines or subheads that appear on their work): “Packaging less stuff for the same price doesn’t fool consumers or economists. But diminishing quality imposes equally maddening extra costs that are almost impossible to measure.” Excerpt:

    If a 16-ounce box contracts to 14 ounces and the price stays the same, I asked Bureau of Labor Statistics economist Jonathan Church, how is that recorded? “Price increase”, he said quickly. You just divide the price by 14 instead of 16 and get the price per ounce. Correcting for shrinkflation is straightforward.

    New service charges for things that used to be included in the price, from rice at a Thai restaurant to delivery of topsoil, also rarely sneak past the inflation tallies any more than they fool consumers.

    But a stealthier shrinkflation is plaguing today’s economy: declines in quality rather than quantity. Often intangible, the lost value is difficult to capture in price indexes.

    Faced with labor shortages, for example, many hotels have eliminated daily housekeeping. For the same room price, guests get less service. It’s not conceptually different from shrinking a bag of potato chips. But would the consumer price index pick up the change?

    Probably not, Church said.

This phenomenon, which Doug Johnson aptly dubbed “disqualiflation” in a Facebook comment, is widespread. One example is the four-hour airport security line I chronicled in an earlier Substack post. Another is the barely trained newbie who screws up your sandwich order — a far more common experience today than four years ago. It’s the flip side of a phenomenon I wrote about in The Substance of Style and in economics columns in the early 2000s (see here and here).

    During the 2000s and 2010s, inflation was probably overstated because of unmeasured quality increases. Now there’s the opposite phenomenon. Quality reductions have become so pervasive that even today’s scary inflation numbers are almost certainly understated.

If you can read the column at Bloomberg, please do. But if you run into the paywall, which allows a few articles a month, you can use this link to the WaPo version, which doesn’t have links.

July 27, 2022

Baghdad Biden speaks

Filed under: Bureaucracy, Economics, Government, USA — Tags: , , , — Nicholas @ 05:00

Chris Bray recounts the story of a local government attempting and — for a while — succeeding with the Baghdad Bob blanket denial strategy:

In the Deep Blue suburban town where I live, our city government has been stumbling through a series of crises. For a couple of years, employees fled from City Hall like the building was on fire, and nowhere was the crisis more acute than in the finance department — where we had five directors in a little over two years, and lost most of the other staff, including one who sued the city over her departure. There was a year when we couldn’t pass a budget, because the budget proposal was such a shambles, and a discussion at a meeting of an advisory commission in which a commissioner asked one of the many finance directors if the numbers in the city’s bank accounts matched the numbers in the city ledger. (Try to guess the answer.)

Recently, an ad hoc committee of local citizens — all finance professionals — wrote a report on the period of crisis, and presented our city council with a recommendation that they hire someone to do a forensic audit of the city’s accounting during those years. The council scheduled the report as a “receive and file” item, placing it on a 28-item agenda as, you’ll never guess, item #28. Then, in a brief discussion that began after midnight, they said that the report was nonsense and hearsay. The end.

So, yes, there was no financial crisis in our city during the years when we had five finance directors, when “permanent” finance directors left after a few months, when we lost most of the finance department staff, when we couldn’t pass a budget, and when we had no idea how much money we were actually supposed to have in the bank. Our city council says so. “These are not the ‘droids you are looking for.”

Meanwhile, we’re not in a recession, or even facing the risk of a recession, because that’s not Joe Biden’s view, and because the technical definition of a recession is very complicated.

Also, the inflation of 2021 was transitory. Zipped right by! Also, Joe Biden has a plan to shut down the virus.

The war in Ukraine is SHUT UP SHUT UP SHUT UP, the economy is SHUT UP SHUT UP SHUT UP, the continuing Covid-19 “emergency” is SHUT UP SHUT UP SHUT UP, and the mRNA injections are REALLY REALLY SHUT UP. Actually, the way experts measure this is really complicated, and technically …

July 5, 2022

Dijon mustard … made from Canadian and Ukrainian mustard seeds

Filed under: Cancon, Economics, Food, France — Tags: , , , — Nicholas @ 03:00

In the New English Review, Theodore Dalrymple explains why Europeans have been experiencing higher shelf prices and shortages for Dijon mustard recently, over and above the ordinary supply chain disruptions of the pandemic years we’ve all had to get used to:

Among myriad smaller consequences of that war is an acute mustard shortage in France. Mustard has all but disappeared from supermarket shelves, having first increased in price dramatically. This has surprised everyone who lazily assumed that Dijon mustard came from Dijon. Why should a war waged in Ukraine lead to the disappearance of mustard throughout France? After all, the famous brands, familiar to everyone, proudly announce on their labels that they are Dijon mustard. Can there be anything more French than Dijon mustard?

Perhaps the mustard is elaborated in Dijon, but the mustard seed, it turns out to everyone’s surprise, is imported from Canada and Ukraine. Apparently, Canada has seen a disastrous harvest of mustard seed, while there is no need to explain the shortage in Ukraine. Dijon mustard is about as local to Dijon as a modern soccer team is local to the city in which it has its stadium.

What is striking about this mustard crisis, unimportant except to those trying to make a proper vinaigrette or lapin à la moutarde, is its revelation of a perennial aspect of social psychology: namely, a resort to conspiracy theory. For some say that there is not really any mustard shortage at all — that mustard has disappeared from supermarket shelves because the supermarket chains are hoarding it, that they have a plentiful supply in their warehouses and will release it little by little, thereby profiteering by the resultant high prices. The war in Ukraine is only a pretext.

This is an old, indeed medieval, trope in times of shortage. There may well have been times, of course, when people really did hoard for the purposes of profiteering, but people rarely hoard something that is in abundant supply.

Yet many people require no evidence or proof to believe in the hoarding story. Does it not, after all, stand to reason? Do not merchants try to maximize their profits, and is hoarding not an easy way to do so? Practically all the mustard in France is sold in supermarkets — themselves a cartel that could easily agree to remove the product from the shelves. Surely no further evidence is needed.

QotD: The Great Enrichment

Filed under: Economics, Europe, History, Liberty, Quotations — Tags: , , , — Nicholas @ 01:00

The explanation of the Great Enrichment is people. Paul Romer says so, as do a few others, among whom are some students I did not teach price theory to at the University of Chicago. On the other hand, Paul sets it down to economies of scale, which mysteriously drop down on England in the 18th century and gradually on us all. Yet China had peace, science, and enormous cities when Europeans were huddled in small groups inside town walls, or isolated villae.

In particular, it is ideas that people have for commercially tested betterment that matter. Consider alternating-current electricity, cardboard boxes, the little black dress, The Pill, cheap food, literacy, antibiotics, airplanes, steam engines, screw-making machines, railways, universities, cheap steel, sewers, plate glass, forward markets, universal literacy, running water, science, reinforced concrete, secret voting, bicycles, automobiles, limited access highways, free speech, washing machines, detergents, air conditioning, containerization, free trade, computers, the cloud, smart phones, and Bob Gordon’s favorite, window screens. …

And the Great Enrichment depended on the less famous [but] crucial multitudes of free lunches prepared by the alert worker and the liberated shopkeeper rushing about, each with her own little project for profit and pleasure. Sometimes, unexpectedly, the little projects became big projects, such as John Mackey’s one Whole Foods store in Austin, Texas resulting in 479 stores in the U.S. and the U.K., or Jim Walton’s one Walmart in Bentonville, Arkansas resulting in 11,718 stores worldwide.

Letting people “have a go” to implement such ideas for commercially tested betterment is the crux. It comes, in turn, from liberalism, Adam Smith’s “obvious and simple system of natural liberty”, “the liberal plan of [social] equality, [economic] liberty, and [legal] justice”. Liberalism permitted, encouraged, honored an ideology of “innovism” — a word preferable to the highly misleading word “capitalism,” with its erroneous suggestion that the modern world was and is initiated by piling up bricks and bachelors’ degrees.

Dierdre McCloskey, “How Growth Happens: Liberalism, Innovism, and the Great Enrichment (Preliminary version)” [PDF], 2018-11-29.

July 4, 2022

(Very expensive) roads, bridges, and railways to nowhere

Filed under: Economics, Environment, Government, Railways, USA — Tags: , , , , , — Nicholas @ 03:00

In Palladium, Brian Balkus wonders why American can’t build anything any more:

Construction of the Fresno River Viaduct in January 2016. The bridge is the first permanent structure being constructed as part of California High-Speed Rail. The BNSF Railway bridge is visible in the background.
Photo by the California High-Speed Rail Authority via Wikimedia Commons.

Sepulveda’s cost and schedule overrun aren’t even the worst of it. Just as unattainable as a shortened commute is the Californian dream of building a bullet train that could take you from Los Angeles to San Francisco in under three hours. In 2008, a year before the Sepulveda project began, the state tried to turn this dream into a reality after voters approved a 512-mile high-speed rail (HSR) project. Amid failing overseas wars and financial crises, at the time it could’ve become a symbol of renewal not just for California but the entire country. Instead, it came to exemplify a dysfunctional government that lacks the capacity to build.

At the time California began accelerating the development of its HSR system it only had 10 employees dedicated to overseeing what was the most expensive infrastructure project in U.S. history. It ended up 14 years (and counting) behind schedule and $44 billion over budget. Incredibly, the state has not laid a single mile of track and it still lacks 10 percent of the land parcels it needs to do so. Half of the project still hasn’t achieved the environmental clearance needed to begin construction. The dream of a Japanese-style bullet train crisscrossing the state is now all but dead due to political opposition, litigation, and a lack of funding.

Despite its failure, the HSR project inaugurated the U.S.’s megaproject era. Once a rare type of project, by 2018 megaprojects comprised 33 percent of the value of all U.S. construction project starts. An alarming number of these have spiraled out of control for many of the same reasons that killed the California bullet train. The decade that followed the financial crisis was a kind of inflection point in the industry; this was when construction projects became noticeably worse and when the long-term implications could no longer be ignored. One of the most cited studies of the U.S.’s declining ability to build reviewed 180 transit megaprojects across the country, revealing that today, U.S. projects take longer to complete and cost nearly 50 percent more on average than those in Europe and Canada.

Having joined Kiewit in 2010, I witnessed these changes first-hand. I have since moved on, but have remained in the broader industry, including working on what are called “strategic pursuits” — the process by which companies compete for megaprojects. This experience has provided insight into the mechanics of how these projects are awarded and why they so frequently fail.

Even if the construction had proceded close to schedule, the economic justification for California’s high speed rail line was never strong … and it’s unlikely the service would have come close to breaking even. It almost certainly would have added significant ongoing costs to Californian taxpayers, and due to the nature of high speed rail services, been effectively a subsidy from working-class Californians to the laptop elites of Los Angeles and the San Francisco Bay area.

All of that, however, are merely additional reasons to believe the project was doomed from inception. Broadly speaking, all major infrastructure projects in the United States are struggling with paperwork and compliance requirements mostly driven by state and federal environmental regulations passed with the best possible intentions (as the saying goes):

Sepulveda’s numerous lawsuits and stakeholder conflicts are an example of a phenomenon that can be traced back to the passage of the National Environmental Policy Act (NEPA) in 1969. NEPA mandates developers to provide environmental impact statements before they can obtain the permits necessary for construction on huge swathes of infrastructure.

Shortly following the passage of NEPA, California’s then-governor Ronald Reagan signed the California Environmental Quality Act (CEQA) into law, which required additional environmental impact analysis. Unlike NEPA, it requires adopting all feasible measures to mitigate these impacts. Interest groups wield CEQA and NEPA like weapons. One study found that 85 percent of CEQA lawsuits were filed by groups with no history of environmental advocacy. The NIMBY attitude of these groups has crippled the ability of California to build anything. As California Governor Gavin Newsom succinctly put it, “NIMBYism is destroying the state”.

It is also destroying the U.S.’s ability to build nationally. The economist Eli Dourado reported in The New York Times that “per-mile spending on the Interstate System of Highways tripled between the 1960’s and 1980’s.” This directly correlates with the passage of NEPA. If anything, the problem has gotten worse over time. Projects receiving funding through the $837 billion stimulus plan passed by Congress in the aftermath of the financial crises were subject to over 192,000 NEPA reviews.

The NEPA/CEQA process incentivizes the public agencies to seek what is often termed a “bulletproof” environmental compliance document to head off future legal challenges. This takes time, with the average EIS taking 4.5 years to complete. Some have taken longer than a decade. A cottage industry of consultants is devoted to completing these documents, earning themselves millions in fees.

July 1, 2022

Trust “the experts”

Filed under: Economics, Government, Health, Media, USA — Tags: , , , , , , — Nicholas @ 03:00

Chris Bray on the appalling track record of so many of our modern-day “experts”:

So the public health experts are baffled by the consistent failure of their predictive models, and the economic experts are baffled by the consistent failure of their predictive models. It’s like a chef who keeps trying to grill a steak, only to find that he’s burnt another lemon pie. “I SWEAR TO GOD I THOUGHT THIS ONE WAS A BEEF THING.”

These people aren’t stupid, but they’re stupid in practice because they show up to the game with the weight of what they know people in their position are supposed to say and think. Fashionable experts, in-group leaders in their status-compliant position in a field, aren’t reviewing the evidence — ever — but are instead reviewing a performative checklist dotted with social status land mines.

They’re on a team, so they say the team slogans.

[…]

If that’s how expertise works, we no longer have have any. We have actors who play the brow-furrowing expert role, but have no real job beyond intoning the message of the day. It says on this card that we recommend even more Covid vaccines for everyone. Let’s break for lunch!

But, mercifully, that’s not invariably how expertise works. And this is why politicians and trend-policing media figures are so completely baffled by experts like Robert Malone or Ryan Cole, or Geert Vanden Bossche or Clare Craig or Peter McCullough, experts who follow the evidence wherever it goes. Tone and social reception tells you a lot: Does an expert say things that aren’t comforting, that sound a little … not on the team? That person clears the first barrier, and you can start assessing the specifics of what they say. Look for journalists who are offended and triggered, and try to find the person who hurt their feelings. That person may turn out to be wrong, but he won’t turn out to be Paul Krugman wrong.

QotD: The CBC doesn’t want to do economic journalism

Filed under: Cancon, Economics, Media, Quotations — Tags: , , — Nicholas @ 01:00

[The] CBC’s attitude towards economics journalism is the same as a teenager’s attitude towards household chores: If they do it badly enough, they won’t be asked to do it again.

Stephen F. Gordon, Twitter, 2019-05-06.

June 28, 2022

QotD: The economic pie fallacy

Filed under: Economics, Quotations — Tags: , , , , — Nicholas @ 01:00

A surprising number of people retain from childhood the idea that there is a fixed amount of wealth in the world. There is, in any normal family, a fixed amount of money at any moment. But that’s not the same thing.

When wealth is talked about in this context, it is often described as a pie. “You can’t make the pie larger,” say politicians. When you’re talking about the amount of money in one family’s bank account, or the amount available to a government from one year’s tax revenue, this is true. If one person gets more, someone else has to get less.

I can remember believing, as a child, that if a few rich people had all the money, it left less for everyone else. Many people seem to continue to believe something like this well into adulthood. This fallacy is usually there in the background when you hear someone talking about how x percent of the population have y percent of the wealth. If you plan to start a startup, then whether you realize it or not, you’re planning to disprove the Pie Fallacy.

What leads people astray here is the abstraction of money. Money is not wealth. It’s just something we use to move wealth around. So although there may be, in certain specific moments (like your family, this month) a fixed amount of money available to trade with other people for things you want, there is not a fixed amount of wealth in the world. You can make more wealth. Wealth has been getting created and destroyed (but on balance, created) for all of human history.

Suppose you own a beat-up old car. Instead of sitting on your butt next summer, you could spend the time restoring your car to pristine condition. In doing so you create wealth. The world is — and you specifically are — one pristine old car the richer. And not just in some metaphorical way. If you sell your car, you’ll get more for it.

In restoring your old car you have made yourself richer. You haven’t made anyone else poorer. So there is obviously not a fixed pie. And in fact, when you look at it this way, you wonder why anyone would think there was. *

Kids know, without knowing they know, that they can create wealth. If you need to give someone a present and don’t have any money, you make one. But kids are so bad at making things that they consider home-made presents to be a distinct, inferior, sort of thing to store-bought ones — a mere expression of the proverbial thought that counts. And indeed, the lumpy ashtrays we made for our parents did not have much of a resale market.

    * In the average car restoration you probably do make everyone else microscopically poorer, by doing a small amount of damage to the environment. While environmental costs should be taken into account, they don’t make wealth a zero-sum game. For example, if you repair a machine that’s broken because a part has come unscrewed, you create wealth with no environmental cost.

Paul Graham, “How to Make Wealth”, Paul Graham, 2004-04.

June 25, 2022

The Public Choice Model in … grand strategy?

Filed under: Books, Economics — Tags: , , , — Nicholas @ 05:00

One of the readers of Scott Alexander’s Astral Codex Ten has contributed a review of Public Choice Theory and the Illusion of Grand Strategy by Richard Hanania. This is one of perhaps a dozen or so anonymous reviews that Scott publishes every year with the readers voting for the best review and the names of the contributors withheld until after the voting is finished:

[In Public Choice Theory And The Illusion Of Grand Strategy], Richard Hanania details how a public choice model (imported from public choice theory in economics) can explain the United States’ incoherent foreign policy much better than the unitary actor model (imported from rational choice theory in economics) that underlies the illusion of American grand strategy in international relations (IR), in particular the dominant school of realism. As the subtitle “How Generals, Weapons Manufacturers, and Foreign Governments Shape American Foreign Policy” suggests, American foreign policy is driven by special interest groups, which results in millions of deaths for no good reason.

In the unitary actor model, the primary unit of analysis of inter-state relations is the state as a monolithic agent capable of making rational decisions (forming coherent, long-term “grand strategy”) from cost-benefit analysis based on preference ranking and expected “national interest” maximisation.

In the public choice model, small special-interest groups that reap a large proportion of the benefits from a policy (concentrated interests) are much more incentivised to lobby for a policy than the general public who pay for a negligible portion of the cost of the policy (diffused interests) are incentivised to lobby against. The former can coordinate much easier than the latter that has to overcome rational ignorance (the cost of educating oneself about foreign policy outweighs any benefit an one can expect to gain as individual citizens cannot affect foreign policy) and the society-wide collective action problem (irrational for every citizen to cooperate in the prisoner’s dilemma especially if individual gain is negligible) resulting in inefficient (not-public-good-maximising) policymaking i.e. government failure.

And more specifically on the use of Public Choice Theory:

Public choice theory was developed to understand domestic politics, but Hanania argues that public choice is actually even more useful in understanding foreign policy.

First, national defence is “the quintessential public good” in that the taxpayers who pay for “national security” compose a diffuse interest group, while those who profit from it form concentrated interests. This calls into question the assumption that American national security is directly proportional to its military spending (America spends more on defence than most of the rest of the world combined).

Second, the public is ignorant of foreign affairs, so those who control the flow of information have excess influence. Even politicians and bureaucrats are ignorant, for example most(!) counterterrorism officials — the chief of the FBI’s national security branch and a seven-term congressman then serving as the vice chairman of a House intelligence subcommittee, did not know the difference between Sunnis and Shiites. The same favoured interests exert influence at all levels of society, including at the top, for example intelligence agencies are discounted if they contradict what leaders think they know through personal contacts and publicly available material, as was the case in the run-up to the Iraq War.

Third, unlike policy areas like education, it is legitimate for governments to declare certain foreign affairs information to be classified i.e. the public has no right to know. Top officials leaking classified information to the press is normal practice, so they can be extremely selective in manipulating public knowledge.

Fourth, it’s difficult to know who possesses genuine expertise, so foreign policy discourse is prone to capture by special interests. History runs only once — the cause and effect in foreign policy are hard to generalise into measurable forecasts; as demonstrated by Tetlock’s superforecasters, geopolitical experts are worse than informed laymen at predicting world events. Unlike those who have fought the tobacco companies that denied the harms of smoking, or oil companies that denied global warming, the opponents of interventionists may never be able to muster evidence clear enough to win against those in power with special interests backing.

Hanania’s special interest groups are the usual suspects: government contractors (weapons manufacturers [1]), the national security establishment (the Pentagon [2]), and foreign governments [3] (not limited to electoral intervention).

What doesn’t have comparable influence is business interests as argued by IR theorists. Unlike weapons manufacturers, other business interests have to overcome the collective action problem, especially when some businesses benefit from protectionism. By interfering in a foreign state, the US may build a stable capitalist system propitious for multinationals, but can conversely cause a greater degree of instability and make it impossible to do business there; when business interests are unsure what the impact of a foreign policy will be for their bottom line, they should be more likely to focus their lobbying efforts elsewhere.

June 16, 2022

QotD: The Guardian and “capitalism”

Filed under: Britain, Economics, Humour, Media, Quotations — Tags: , — Nicholas @ 01:00

The displacement of responsibility is a Guardian staple, with society or capitalism (or “late capitalism”, or “neoliberalism” or whatever) being blamed for the columnist’s own hang-ups and incontinence. Tanya Gold did it two or three times during her time at the paper, as did Madeleine Bunting, Oliver James, VJD Smith and God knows how many others. Diane Abbott once claimed that capitalism is the reason she got fat, and still is.

It’s practically a rule. If a Guardian contributor drinks too much, eats too much, buys too many shoes … well, obviously, they’re the victim because consumerist peer pressure somehow made them do it against their will, such as it is. The premise is generally “capitalism made me fat”, followed by “capitalism made me anxious about being fat”, followed by “tax such-and-such to buggery, or ban it altogether, and then I’ll be thin”.

David Thompson, from the comments to “Reheated (55)”, DavidThompson.com, 2019-04-01.

June 15, 2022

QotD: The gobsmacking magnitude of “The Great Enrichment”

Filed under: Economics, History, Quotations — Tags: , , — Nicholas @ 01:00

Serious growth happened only after 1800, at first in northwestern Europe, 2% per capita in PPP [purchasing power parity] conventionally adjusted for inflation, as in the USA 1800–present, and now the world. Its magnitude is enormous, the Great Enrichment. It was a rise from $2 or $3 a day to over $100, a factor of 30. (I recently had to explain to a justly famous anthropologist that [(30–1) / 1] x 100 is 2,900%, or about 3,000%. He said that he could believe a factor of 30 … but not 3,000%.)

The exactitude, of course, is inessential. In Japan and Finland it was roughly the factor of 30. But it could be the worldwide factor since 1800 of 10 only, about $2 or $3 to $30 a day (to $10,000 a year, the level of Brazil now, to fix ideas), and still be utterly novel. As a Brit might say, the Great Enrichment was gobsmacking.

The enrichment was actually much greater than the factor of 30, because price indices, especially recently, do not adequately reflect improvements in quality, as was determined in the early 1990s by the Boskin Commission … Consider your cell phone, your auto tires, your medical treatment — all greatly better, recently. Even economic facts and analyses are better. (Well, sometimes.) The downward bias from inadequately deflating money prices for improved quality is not far from 2% per year, which would double recent growth rates in the rich countries.

Its magnitude, novelty, recency, and location are all crucial to explaining the Great Enrichment, because together they strongly suggest that there was something deeply peculiar about Britain in the 18th century, and that afterwards the peculiarity spread to the rest of the world. Such facts make “run-up” theories such as in Stephen Broadberry et alii look implausible, because they depend on a metaphor of an airplane taking off, with little else by way of explanation for why the Industrial Revolution (a factor of 2) happened or, especially, its follow-on the Great Enrichment (a factor of 20 or 30). Likewise, it is dubious to attach the Great Enrichment to remote causes within Europe, such as the Black Death — which originated in China, with similar terrors, and yet yielded no Great Enrichment there. Also dubious is the Eurocentric belief, prominent in conservative circles, of some ancient superiority of melanin-challenged Volk back in the Black Forest. (Did you know, for example, that all European countries had common law in the Middle Ages, that is, judge-found-and-made, not legislated or codified?)

The Great Enrichment is the second most important secular event in human history, second only to the domestication of plants and animals making for cities and literacy.

Dierdre McCloskey, “How Growth Happens: Liberalism, Innovism, and the Great Enrichment (Preliminary version)” [PDF], 2018-11-29.

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