Quotulatiousness

October 5, 2019

Legends Summarized: El Dorado

Filed under: Americas, Economics, Europe, History — Tags: , , , , , , , , — Nicholas @ 06:00

Overly Sarcastic Productions
Published 4 Oct 2019

El Dorado! A shining golden city packed with promises of wealth, power and everlasting glory. An unspoiled paradise deep in the jungle, the PERFECT destination for treasure-hunters and anthropologists alike. Something that perfect is something EVERYONE wants to be real.

Aaaaand that’s the trick, isn’t it? Wanting something that badly isn’t healthy. Just ask the conquistadors!
(Oh wait, we can’t – because so many of them died on fruitless quests for El Dorado. And also it’s been five hundred years and they’d all be dead anyway)

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Losing our religion

Filed under: Economics, Environment, Religion — Tags: , — Nicholas @ 03:00

Arthur Chrenkoff found another report on the inverse relationship between development and religious belief:

A few weeks ago I wrote a longish blog post arguing that for many people in the developed world environmentalism has become a religion, filling up the gap in spirituality left by the decline of Christianity. I don’t claim any originality or new insight in this observation; it has been noted many times before, including by my friend, former artilleryman and now man of God, Rev Donald Sensing, and it has made an appearance quite a few times subsequent to my piece, a propos Greta Thunberg’s performance at the United Nations and the reaction it inspired around the (developed) world.

Today, I chanced upon another interesting analysis by Pew Research Center, about religious belief and commitment around the world. Results are not surprising but are nevertheless interesting, including this world map:

Unfortunately, Pew does not provide additional data on those for whom religion might be “important” or “somewhat important” so as to paint a slightly fuller picture of religious sentiment, but the results illustrated above are probably quite indicative. The developed world is well and truly secular now, with the United States and Greece being the only outliers (and by a long mile), while most of the developing world (with the notable exception of China after seven decades of communism) remains extremely religious. Thus, Pew notes that “if current trends continue, countries with high levels of religious affiliation will grow fastest. The same is true for levels of religious commitment: The fastest population growth appears to be occurring in countries where many people say religion is very important in their lives.”

As the main topic of this Pew study is the age gap in religious faith around the world, it should be noted that the younger generations in the developed world are even less religious than their elders, often significantly less, putting the already low rates across the West in an even starker perspective (by contrast, throughout most of the developing world, there is little, if any, gap in religious commitment between the young and the old).

October 4, 2019

“Economics is … the science of not being able to have your cake and eat it”

Filed under: Economics, Environment, Health — Tags: , , , — Nicholas @ 05:00

Philip Booth on Greta Thunberg’s message and its economic over-simplifications:

In many senses, economic problems are more complex than scientific problems and Thunberg is, implicitly at least, pronouncing on economic matters. Whilst knowledge about climate science is uncertain, a judgement has to be and can be made on the balance of evidence. But economic decisions involve trade-offs. Economics is, as Lionel Robbins put it, the science of not being able to have your cake and eat it. We cannot both decrease carbon emissions hugely and enjoy standards of living increasing at the rate that would have been possible if emissions were not reduced.

It is tempting the believe the green rhetoric that we will all have fluffy green jobs and a green standard of living without any hardship from reducing emissions. We cannot. Reducing carbon emissions quickly to zero means that we will have much less of everything else. We might prefer decarbonisation to other goods and services, but it is not a cost-free choice. We considering this, we should remember that the average income in the UK is ten times the average income in the rest of the world. When other people face these trade-offs the sacrifice of decarbonisation is that much greater.

One of the advantages of being richer is that we are more resilient to natural disasters. It follows from this that there is a trade-off between decarbonisation, which might lead to fewer natural disasters, and our ability to cope with them, which might reduce if we become less rich. As we have become richer, deaths from natural disasters have plummeted. The figure shows the fall in deaths in natural disasters over the last century – they have reduced by, perhaps, 90 per cent.

The use of air conditioning illustrates this trade-off in a rather stark way. In a letter on the environment written by Pope Francis in 2015 called Laudato si, the pontiff strongly criticised the adoption of air conditioning in the strongest terms. An academic paper on air conditioning in the US produced such remarkable results that the abstract is worth quoting at length:

    “the mortality effect of an extremely hot day declined by about 80% between 1900-1959 and 1960-2004. As a consequence, days with temperatures exceeding 90°F were responsible for about 600 premature fatalities annually in the 1960-2004 period, compared to the approximately 3,600 premature fatalities that would have occurred if the temperature-mortality relationship from before 1960 still prevailed. Second, the adoption of residential air conditioning (AC) explains essentially the entire decline in the temperature-mortality relationship. In contrast, increased access to electricity and health care seem not to affect mortality on extremely hot days.”

Air conditioning leads to higher carbon emissions and, most likely, higher global temperatures. But the increase in resilience arising from air conditioning is astonishing – it has led to an 80 per cent drop in deaths from heat.

September 30, 2019

QotD: Oil price volatility

Filed under: Economics, Middle East, Politics, Quotations, Russia — Tags: , , , , — Nicholas @ 01:00

Why is the price of oil so volatile? I thought I knew the answer — scarcity and OPEC — till I read Aguilera and Radetzki. They make the case that depletion has never been much of a factor in driving oil prices, despite the obvious drying up of certain fields (such as the North Sea today). Nor did OPEC’s interventions to fix prices make much difference over the long run. What caused the price of oil to rise much faster than other commodities, though erratically and with crashes, they argue, was the result of one factor in particular.

There was a wave of nationalisation in the oil industry beginning in the 1960s. Today some 90 per cent of oil reserves are held by nationalised companies. ExxonMobil and BP are minnows compared with the whales owned by the governments of Saudi Arabia, Venezuela, Iran, Iraq, Kuwait, the United Arab Emirates, Nigeria and Russia. Post-colonial nationalisation affected many resource-based industries, but whereas many mineral and metal companies were privatised in the 1990s as their grotesque inefficiencies became visible, the same has not happened to state oil companies.

The consequence is that most oil is produced by companies that are milked by politicians, and consequently starved of cash (or incentives) for innovation and productivity. Lamenting “politicians’ extraordinary ability to mess things up”, the two authors note “the severely destructive role that can be played by political fights over the oil rent and its use”.

If politicians don’t get in the way, and we have two decades of relatively cheap oil it will be bad news for petro-dictators, oil-igarchs, ISIS thugs, and the promoters of wind power, solar power, nuclear energy and electric cars. But it is good news for everybody else, especially those on modest incomes.

Matt Ridley, “Low oil prices are a good thing”, The Rational Optimist, 2016-02-14.

September 29, 2019

QotD: Crony capitalists and corrupt politicians love tariffs

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

Any survey – and certainly any careful study – of the history and reality of tariff policy confirms that tariffs (and other trade restrictions) are almost always dispensed, not for any plausible public-interest reasons, but to satisfy the private interests of rent-seekers. Even if, contrary to fact, economic journals and textbooks were filled with several plausible scenarios under which trade restrictions can improve the economic well-being of home-country residents, the actual history of trade policy is that this policy is one in service to domestic plunderers.

Many who agree with me here will nevertheless scold me for using, à la Bastiat, the provocative word “plunderers.” But I stick to my choice of words.

“Plunderers” is descriptive, for plunder is in fact what trade restrictions are all about. For two and a half centuries now we proponents of free trade have played mostly on the rhetorical turf of protectionists. On this turf there are language biases galore, such as “trade deficit,” a lowering of home-country tariffs described as “concessions” to foreign countries, the arrival in the home country of especially low-priced imports condemned as “dumping,” and, indeed, the word “protection” itself. Also, don’t forget the constant, clanking parade of inapposite military and sports metaphors.

For two and a half centuries now we proponents of free trade have typically treated the efforts of rent-seekers and rent-dispensers to portray their use of the state to enrich themselves at the expense of others with intellectual and moral respect. Why?

No one attempts to intellectually rationalize the theft and violence committed by street gangs. No one attempts to rationalize shoplifting, vandalism, armed robbery, arson, or rape. (It would, do note, be child’s play for a competent economics graduate student to develop a coherent theory of “optimal gang violence” that shows that, under just the right set of circumstances, there is an “optimal” amount of gang violence that improves the national welfare.) We call these destructive exercises of theft, coercion, and violence “theft,” “coercion,” and “violence.” We call these predatory activities what they really are.

By calling protectionism what it really is – the plunder of the many by the politically powerful few – we more vividly and widely expose protectionism’s ugly and cruel reality.

Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2019-08-04.

September 28, 2019

How the Federal Reserve Works: After the Great Recession

Filed under: Economics, Government, USA — Tags: , , , — Nicholas @ 02:00

Marginal Revolution University
Published on 3 Apr 2018

In response to the Great Recession, the Federal Reserve has implemented some new instruments and policies – including quantitative easing, paying interest on reserves, and conducting repurchase (and reverse repurchase) agreements. In this video we cover how these tools work, and why they matter.

September 27, 2019

How the Federal Reserve Worked: Before the Great Recession

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 02:00

Marginal Revolution University
Published on 13 Mar 2018

The Federal Reserve has massive influence over the United States and global economy. But how the Fed uses its tools to stimulate or shrink aggregate demand has changed since the Great Recession. We’ll start by covering how it was done prior to 2008.

September 26, 2019

QotD: Preventing “price gouging” is counter-productive in an emergency

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

During an emergency like a hurricane, many different categories of goods and services experience supply-demand shocks. The shock may be because of a fall in supply (e.g. oil companies can’t get gasoline into the area) or a spike in demand (e.g. for generators or plywood) or a combination of both. In a free market, prices will rise to help match supply and demand. Higher prices cause people with less valuable or more frivolous uses of the scarce goods to defer purchase, and can cause suppliers to expend extra effort to get product into the area, even diverting supplies from other areas.

When the government institutes price gouging laws in an emergency, the supply-demand mismatch that leads to the rising prices isn’t magically eliminated. First, without higher price incentives, all the incentives to get more supply into the area are lost. Supply and demand under these regulations can only be matched by rationing demand, and typically this is through queuing and increasing search costs (e.g. driving around all over the place looking for a station that is open and has gas). People who gain the limited supplies in this regime are thus those with a lot of time on their hands, where the marginal cost of queuing and driving around does not impose a lot of cost. Think about a roofer scrambling to repair roofs after the a storm — do they have time to have their trucks and crews sitting dormant in gas lines? Thus, price gouging laws tend to ensure that scarce goods in an emergency flow to those with the least use for them.

Warren Meyer, “Price Gouging Laws: Allocating Goods in An Emergency To People Who Have Nothing Much Valuable to Do”, Coyote Blog, 2017-08-26.

September 25, 2019

The Money Multiplier

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 02:00

Marginal Revolution University
Published on 25 Jul 2017

When you deposit money into a bank, do you know what happens to it? It doesn’t simply sit there. Banks are actually allowed to loan out up to 90% of their deposits. For every $10 that you deposit, only $1 is required to stay put.

This practice is known as fractional reserve banking. Now, it’s fairly rare for a bank to only have 10% in reserves, and the number fluctuates. Since checkable deposits are part of the U.S. money supplies, fractional reserve banking, as you might have guessed, can have a big impact on these supplies.

This is where the money multiplier comes into play. The money multiplier itself is straightforward: it equals 1 divided by the reserve ratio. If reserves are at 10%, the minimum amount required by the Fed, then the money multiplier is 10. So if a bank has $1 million in checkable deposits, it has $10 million to work with for stuff like loans and reserves.

Now, typically, the money multiplier is more like 3, because banks can always hold more in reserves than the minimum 10%. When the money multiplier is higher, like during a boom, this gives the Fed more leverage to move M1 and M2 with a small change in reserves. But when the multiplier is lower, such as during a recession, the Fed has less leverage and must push harder to wield its indirect influence over M1 and M2.

Next up, we’ll take a closer look at how the Fed controls the money supply and how that has changed since the Great Recession.

September 24, 2019

1963 – The Beeching Report

Filed under: Britain, Economics, History, Railways — Tags: , , — Nicholas @ 02:00

LMS4767
Published on 27 Mar 2019

September 20, 2019

The reason we don’t have – and will never have – an Economists Party

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

Andrew Coyne points out that the study of economics probably disqualifies you from being an effective politician, because achieving success in the sausage factory of politics requires you to ignore or even work against economic facts:

A Mises Institute graphic of some of the key economists in the Austrian tradition (Carl Menger, Ludwig von Mises, Friedrich Hayek, Murray Rothbard, and Hans-Hermann Hoppe.
Mises Institute via Wikimedia Commons.

I believe I was the first to propose the creation of an Economists Party, a political movement that would advocate for the sorts of policies favoured by people who study economics for a living, based on the principles at its core.

It could not happen, of course, any more than the existing parties are likely to suddenly embrace the teachings of economists they have so cheerfully ignored until now, and for the same reason: because politics is, at its core, the opposite of economics.

The basic principle of economics is that everything is scarce. The basic principle of politics is that nothing is scarce. Economics teaches that more of one thing can only be had at the expense of less of another. Politics teaches that we can have more of both things, and of everything else besides.

Since more of one thing means less of another, economics tells us there is no point in favouring one part of the economy over another: the resources diverted to one firm, industry or region are simply resources denied to all the rest. Whereas politics is all about such transfers: a perpetual merry-go-round of redistribution, not from rich to poor, which is appropriate, but from everybody to everybody, which is impossible.

And if, for some reason, a politician were to resist this impulse, he would shortly find himself out of work. For whereas the benefits of a given intervention are typically concentrated on this or that group, the costs are spread widely; its beneficiaries, accordingly, have every incentive to organize and agitate on its behalf, while those footing the bill — consumers, taxpayers, or both — have comparatively little at stake as individuals. They may not even know who they are.

Thus it is that politics inclines, more or less inevitably, to prefer the narrow interest over the broad; producers over consumers; the present over the future. The only difference between the parties is whether this bias to the expedient is dressed up as a philosophy and celebrated as a positive good, or merely yielded to.

September 17, 2019

“Clean” alternative energy sources are not free … in fact, they’re quite expensive

Filed under: Economics, Environment, Technology — Tags: , , , , — Nicholas @ 03:00

Earlier this month in Foreign Policy, Jason Hickel wrote about the requirements for expanding current renewable energy generation (wind and solar):

The phrase “clean energy” normally conjures up happy, innocent images of warm sunshine and fresh wind. But while sunshine and wind is obviously clean, the infrastructure we need to capture it is not. Far from it. The transition to renewables is going to require a dramatic increase in the extraction of metals and rare-earth minerals, with real ecological and social costs.

We need a rapid transition to renewables, yes — but scientists warn that we can’t keep growing energy use at existing rates. No energy is innocent. The only truly clean energy is less energy.

In 2017, the World Bank released a little-noticed report that offered the first comprehensive look at this question. It models the increase in material extraction that would be required to build enough solar and wind utilities to produce an annual output of about 7 terawatts of electricity by 2050. That’s enough to power roughly half of the global economy. By doubling the World Bank figures, we can estimate what it will take to get all the way to zero emissions — and the results are staggering: 34 million metric tons of copper, 40 million tons of lead, 50 million tons of zinc, 162 million tons of aluminum, and no less than 4.8 billion tons of iron.

In some cases, the transition to renewables will require a massive increase over existing levels of extraction. For neodymium — an essential element in wind turbines — extraction will need to rise by nearly 35 percent over current levels. Higher-end estimates reported by the World Bank suggest it could double.

The same is true of silver, which is critical to solar panels. Silver extraction will go up 38 percent and perhaps as much as 105 percent. Demand for indium, also essential to solar technology, will more than triple and could end up skyrocketing by 920 percent.

And then there are all the batteries we’re going to need for power storage. To keep energy flowing when the sun isn’t shining and the wind isn’t blowing will require enormous batteries at the grid level. This means 40 million tons of lithium — an eye-watering 2,700 percent increase over current levels of extraction.

That’s just for electricity. We also need to think about vehicles. This year, a group of leading British scientists submitted a letter to the U.K. Committee on Climate Change outlining their concerns about the ecological impact of electric cars. They agree, of course, that we need to end the sale and use of combustion engines. But they pointed out that unless consumption habits change, replacing the world’s projected fleet of 2 billion vehicles is going to require an explosive increase in mining: Global annual extraction of neodymium and dysprosium will go up by another 70 percent, annual extraction of copper will need to more than double, and cobalt will need to increase by a factor of almost four — all for the entire period from now to 2050.

Wind turbines require a lot of concrete to stabilize them on site (hundreds of tons of it), and that concrete is very carbon-intensive to create in the first place (nearly 930 Kg of CO2 per 1,000 Kg of cement), but even those huge turbine blades have a limited working lifespan and can’t be easily recycled into anything economically, so they generally end up in landfills.

QotD: Rent-seeking

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

[Progressives] should also be delighted by public choice scholars’ development of the theory of privilege-seeking (or “rent-seeking“). It’s an old observation, really: when the state’s personnel have favors to dispense, people in the private sector will invest resources to obtain them. Such favors are by nature impositions on third parties. They may take the form of cash subsidies, taxes and regulations that hamper or quash competition and raise incomes in a non-market manner, and other devices. But the principle is the same: private- and government-sector individuals collude to use the state’s coercive power to obtain what they could not obtain through voluntary exchange for mutual benefit. It’s a theory of exploitation the good-faith left should embrace.

By the same token, the state’s personnel, seeing opportunities to sell favors, are just as likely to initiate the privilege-seeking process. In this sense, public choice scholars are right when they see the political arena as a series of exchanges. The big difference with the marketplace, however, is that in the political arena the largest group of people is forced to participate.

The bottom line on privilege-seeking, which should interest the left, is this: the people with the greatest access to power will not be those the left cares most about, but those who run Boeing and ExxonMobil and GE and Lockheed Martin. Wealth transfers will tend overwhelmingly to be upward.

Sheldon Richman, “TGIF: What the Left Should Like about Public Choice”, The Libertarian Institute, 2017-07-28.

September 14, 2019

Stalin’s 5 Year Plan for Economic Mass Murder | BETWEEN 2 WARS I 1932 Part 1 of 4

Filed under: Economics, History, Russia — Tags: , , , , , — Nicholas @ 06:00

TimeGhost History

Stalin has to deal with the consequences of forcibly changing the Soviet Union from an agrarian economy into a modern industrialized society as his first five-years plan reaches its final year.

Join us on Patreon: https://www.patreon.com/TimeGhostHistory

Hosted by: Indy Neidell
Written by: Spartacus Olsson and Naman Habtom
Directed by: Spartacus Olsson and Astrid Deinhard
Executive Producers: Bodo Rittenauer, Astrid Deinhard, Indy Neidell, Spartacus Olsson
Creative Producer: Joram Appel
Post-Production Director: Wieke Kapteijns
Research by: Naman Habtom
Edited by: Daniel Weiss en Wieke Kapteijns
Sound design: Marek Kaminski

A TimeGhost chronological documentary produced by OnLion Entertainment GmbH.

From the comments:

TimeGhost History
1 hour ago (edited)
Debating the concepts, definition and framework of Marxism, Communism and Socialism is something that historians don’t seem to get enough of, much like applying these theories to historical and contemporary phenomena. The study of how these theories turned into ideology and what effect that had on nations, cultures, peoples and wars is a very interesting field of history, which can be debated to great lengths, which we ourselves also like to engage and participate in. However, we want to once again emphasise that we will only allow debate within the generally accepted rules of academic debate. Keep it civil, substantiated, name your sources whenever possible and stay away from pseudo-science and contemporary politics. We are fierce believers in the benefits of academic debate and don’t want to resort to turning off the comments, as other channels might do when talking about subjects like the 5-year plan or the Holodomor.

Cheers, Joram

September 13, 2019

NDP leader Jagmeet Singh gets his tax plans vetted by the Parliamentary Budget Office

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

A recent innovation for political campaigns is that they can ask the Parliamentary Budget Office to provide an estimate for the impact of any taxation proposals, and NDP leader Jagmeet Singh was the first out of the gate to have his “super-wealth tax” evaluated. The PBO estimates that the levy would net out some $6 billion in the first full year of implementation. Sounds like a lot of money! Colby Cosh explains why it’s not quite what it might seem:

Federal NDP leader Jagmeet Singh taking part in a Pride Parade in June 2017 (during the leadership campaign).
Photo via Wikimedia.

Alas, the bean-counters always swoop in to spoil things. Singh’s wealth-tax scheme is instructive not only because he availed himself of PBO costing, but because it usefully reveals the limits of what the PBO or any other economic modeller can do. Look, in other words, at the fine print.

The PBO’s job was to estimate what you can extract from “an annual net wealth tax on Canadian resident economic families equal to one per cent of net wealth above $20 million.” In the PBO model this is a simple multiplication, but the roughly $6 billion take is arrived at only by reducing the revenue by 35 per cent to correct for “behavioural response” — that is, lawful (and unlawful) tricks employed to avoid the new tax by the rich targets. The net revenue is what’s left after you deduct another two per cent to cover administrative costs.

And, as the PBO immediately insists, “the estimate has high uncertainty” on both counts. This means they’re educated guesses. Jennifer Robson, a social policy prof at Carleton University’s Arthur Kroeger College, pointed out on Twitter that right now we don’t tax economic families per se and we don’t report assets and debts routinely to Revenue Canada. Ideas for pure wealth taxation (which is rare in practice) are predicated on the creation of, essentially, a new tax system — one which would have to detect and perpetually update how much, for example, the furniture in your house costs. The 35 per cent loss from behavioural response is at the high end of historic estimates from real-world examples. Even within our current tax system, Robson observes, we only get two extra dollars for every one we spend on expanding collections and compliance against the existing tax base.

As a practical matter, a wealth tax would mostly be, or would act most efficiently as, a tax on bank balances and investment accounts. Of course, there is always real estate. The super-rich seem to have a lot of that, and it is relatively easy to tax, and the resentment of Torontonians and Vancouverites who don’t own some is, for better or worse, a major reason the NDP is trying to weaponize envy.

But this reminds us that property taxes and taxes on property transfers perform a similar function, although they are not used primarily for income redistribution as such here — and in Canada ours are relatively high. The OECD does a little league table of tax structures, and compared with other industrialized countries Canada’s take from property taxes is about double the average. In a 36-country list we are near the bottom (33rd) in our dependence on taxing goods and services, and about average (12th) in dependence on corporate taxation, but fifth highest in dependence on personal taxation — and third in dependence on property taxes.

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