Quotulatiousness

September 5, 2017

“So, let’s consider the concept of a ‘500-year flood'”

Filed under: Environment, Science — Tags: , , , , — Nicholas @ 03:00

Charlie Martin explains how it’s possible to have two “500-year floods” in less than 500 years:

There have been a lot of people suggesting that Harvey the Hurricane shows that “really and truly climate change is happening, see, in-your-face deniers!”

Of course, it’s possible, even though the actual evidence — including the 12-year drought in major hurricanes — is against it. But hurricanes are a perfect opportunity for stupid math tricks. Hurricanes also provide great opportunities to explain concepts that are unclear to people. So, let’s consider the concept of a “500-year flood.”

Most people hear this and think it means “one flood this size in 500 years.” The real definition is subtly different: saying “a 500-year flood” actually means “there is one chance in 500 of a flood this size happening in any year.”

It’s called a “500-year flood” because statistically, over a long enough time, we would expect to have roughly one such flood on average every 500 years. So, if we had 100,000 years of weather data (and things stayed the same otherwise, which is an unrealistic assumption) then we’d expect to have seen 100,000/500- or 200 500-year floods [Ed. typo fixed] at that level.

The trouble is, we’ve only got about 100 years of good weather data for the Houston area.

September 4, 2017

The mental health crisis on campus

Filed under: Education, Health, USA — Tags: , , , , , — Nicholas @ 04:00

In Spiked, Naomi Firsht shares the concerns of Jonathan Haidt about the rise of mental health issues at US universities:

The heightened vulnerability of college students has had a chilling effect on discussion in the academic world, and Haidt sees this in his day-to-day experience on campus. “There is a rapidly spreading feeling that we are all walking on eggshells, both students and faculty. That we are now accountable, not for what we say, but for how anyone who hears it might take it. And if you have to speak, thinking about the worst reading that anyone could put on your words, that means you cannot be provocative, you cannot take risks, that means you will play it safe when you speak… This is what I’m seeing in my classes when topics related to race or gender come up – which we used to be able to talk about 10 years ago, but now it’s painful and there’s a lot of silence.”

This is disastrous for academic life, as Haidt points out: “A university cannot function if people will not put their ideas forth, will not contest ideas that they think are wrong, will not stand up for ideas that they think are right.”
He is keen to emphasise that this is not a right-left issue. “Several people on the left are noticing that college students are less effective politically as activists, as progressives, when they have this morality and this ethos with such heavy concept creep.”

Haidt believes there is a mental-health crisis on campus: “I have never seen such rapid increase in indicators of anxiety and depression as we have seen in the past few years”, he says. But his suggested approach is unlikely to find favour with student communities fond of Safe Spaces and therapeutic puppy-petting. “If you think about it as a mental-health crisis”, he explains, “then you might be tempted to say: we need more help, more counselling, more protection for those who are suffering from mental illness. But if you look at it that way you will miss the broader pattern, which is that for 20 to 30 years now, Americans have been systematically undermining the development of resilience or toughness of their children.” Referencing the work of Lenore Skenazy, author of Free-range Kids, he concludes: “We have made our children too safe to succeed.”

In his forthcoming book Misguided Minds: How Three Bad Ideas Are Leading Young People, Universities, and Democracies Toward Failure, Haidt claims that certain ideas are impairing students’ chances of success. Those ideas being: your feelings are always right; what doesn’t kill you makes you weaker; and the world is divided into good people and bad people. “If we can teach those three ideas to college students”, he says, “we cannot guarantee they will fail, but we will minimise their odds at success”.

So how can we resolve the problem of vulnerability among young Americans? Haidt says part of the solution must begin in childhood and will require parents to give their children daily periods of “unsupervised time”. “We have to accept the fact that in that unsupervised time there will be name-calling, conflict and exclusion. And while it’s painful for parents to accept this, in the long-run it will give them children that are not suffering from such high rates of anxiety and depression.”

September 1, 2017

The complex dance of supply, demand, scarcity, and price

Filed under: Economics, Environment, Government, Law — Tags: , , , — Nicholas @ 04:00

Tim Worstall explains why laws against “price gouging” are denials of economic fact and actually work against getting urgently needed items to the people who require them:

Those little diagrams at the start of the Econ 101 class (supply, demand, price) are not optional extras to our universe, they are instead accurate descriptions of how we humans interact with it. If and when demand rises then price rises, this in turn encouraging an expansion of supply. Thus why we desire to have price flexibility in the face of either changes in supply or demand.

Consider Houston right now in the wake of Hurricane Harvey. It seems a good bet that the tapwater supply is disrupted — flooding has a tendency to do that. We would therefore assume the demand for bottled water has risen – the sensible who normally hydrate from that wondrous invention, the municipal water supply, will not be able to do so, thus increasing the demand for the bottled stuff. Equally, on the other side, there’s going to be a certain difficulty with supply at present — roads 5 feet underwater don’t exactly help trucking.

We thus desire to do two things simultaneously. We want to restrain demand to only the really important things and we want to incentivize greater supply.

Which is exactly what a price rise does for us.

With water at (just to make up a price) $99 a case, people are only going to buy it for drinking water, perhaps only in sippy cups. Which is excellent — we want whatever limited supply of potable water (we’ve really plenty of non-potable around, that’s the basic problem) there is in place to be used for that most valuable use, being potable. We’ve achieved one of our goals therefore, by allocating that scarce resource to its most valuable use: keeping people alive.

We also want to increase supply, though, and being able to sell in Houston for $99 something bought for $9.99 in Beaumont (again, just to invent an example) might well get a few boats carrying loads in – although quite possibly not from Beaumont. Thus, by allowing prices to rise, we’ve at least potentially increased supply.

Our price system, operating without constraint, is thus achieving the two things we desire, a curtailing of demand through rationing to only truly important uses, and a rise in supply.

“But,” goes the cry, “this isn’t fair!”

Indeed it isn’t, and ain’t that a shame, fairness not being a notable feature of this universe we’re struggling to inhabit. All we can do is the best we can. Which is, again, why I insist that there should be variable prices, why there should be no laws against price-gouging. Because this really is a disaster, there really are significant shortages in Houston right now, we really do want to solve them. Which means that we should be using all of the tools at our disposal.

August 31, 2017

“Harvey is not Katrina”

Filed under: Economics, Environment, USA — Tags: , , , , , , — Nicholas @ 04:00

Nicole Gelinas on the crucial differences between the situation faced by New Orleans during Hurricane Katrina and that currently faced by Houston after being inundated by Hurricane Harvey:

The Houston region has received record rain, more falling in less than a week than it usually does in a year, and at least 30 people, including a Houston police officer, have died. Harvey, however, is not Katrina. One measure of this difference is in electricity provision. After Katrina, New Orleans was almost entirely without power for weeks. In Houston, by contrast, 94 percent of customers still had power as of early Wednesday.

Though we won’t know for sure for a while, the fact that Houston has kept the power on is likely in part a legacy of infrastructure investment after previous storms. Five years ago, Hurricane Ike actually cut power to 95 percent of Houston. But, as NPR reported after the storm, the city’s power company, CenterPoint, took steps after Ike, as well as after Tropical Storm Allison in 2001, to upgrade the grid, spending $400 million. Houston, helped by $50 million in federal money, cut down tens of thousands of trees along power lines and outfitted poles with the ability to re-route electricity away from damaged routes toward undamaged ones.

With power, hospitals can continue to operate; even Ben Taub Hospital, surrounded by water, kept the power on. Stores, too, have quickly begun to reopen. Power also means that people whose homes didn’t flood can stay put, lessening the burden on police to keep neighborhoods safe from looters. If the power stays on — as it should, now that worst of the storm is over — Houston should do well. If it goes out, the city will have far more serious problems.

[…]

Empty neighborhoods and business districts invite looting. Houston had already arrested 15 people as of late Tuesday for allegedly trying to steal everything from liquor to an ATM, and for attempted robbery, as well. These arrests, plus a nighttime curfew, are a good sign; after Katrina, New Orleans police officers failed to keep control over the city, both because of the severity of the damage, which left most of the city empty and dark, but also due to their longstanding poor performance. Harris County district attorney Kim Ogg and Houston police chief Art Acevado have already set the right tone to deter wrongdoing. Ogg said Tuesday that thieves “are going to feel the full weight of the law,” and Acevedo said he would push for tough sentences for people convicted. In New Orleans, by contrast, state and local officials’ apocalyptic invocation of “martial law,” rather than calm reliance on the rule of normal law, only exacerbated the sense of chaos.

With some, though not most, Houston neighborhoods now deserted, state law enforcement have a role to play here, as well, with federal support. A competent local police force will be busy, after a storm, in helping still-populated areas. In turn, state police and the National Guard, who have less experience interacting with people on a neighborhood level, can help by patrolling and securing empty areas. To that end, Texas has already activated the National Guard, adding 12,000 people to safety efforts, as well as for rescue and food distribution.

Oh, and as Caroline Baum points out, don’t be misled by idiotic claims that hurricane damage is somehow good for the economy:

You will no doubt hear assertions that the rebuilding effort will provide a boost to contractors, manufacturers and GDP in general. But before these claims turn into predictable nonsense about all the good that comes from natural disasters, I thought it might be useful to provide some context for these sorts of events.

The destruction wrought by a hurricane and flooding qualifies as a negative supply shock. Normal production and distribution channels are destroyed or disrupted. Producers have to find less-efficient (i.e. more expensive) ways to transport their goods. The net effect is lost output and income, and higher prices.

Over the years, I’ve observed a tendency among economists and traders to view such events through a demand-side prism. They see lost income translating into reduced spending on goods and services, which might even warrant some largesse from the central bank.

Of course, that is precisely the wrong medicine. Supply shocks reduce output and raise prices. The Federal Reserve’s interest-rate medicine affects demand. Lower interest rates will increase the demand for gasoline, among other goods and services, but they have no effect on supply. An easing of monetary policy under such circumstances would increase demand for already curtailed supply, raising prices even more.

But wait. What about all the new construction and investment necessitated by the devastation? Homeowners will have to rebuild. Businesses will have to replace destroyed or damaged plants and equipment. Pretty soon, we should start to hear about a boost to GDP growth.

In the short run, yes. But focus on the prefix, “re,” as in re-building and re-placing. After a natural disaster, housing starts are bound to increase, but there will be no net addition to the supply of homes. Capital spending will increase as well, but it will not expand the nation’s capital stock.

She also provides a link to this very topical essay by Frédéric Bastiat: That Which Is Seen and That Which Is Unseen. In short, we see the spending caused by the need to repair damages (in this case from the flooding), but we don’t see what might have been done if the money hadn’t needed to be spent just to replace existing stock.

August 30, 2017

“Houston is built on what amounts to a massive flood plain”

Filed under: Environment, Science, USA — Tags: , , , , — Nicholas @ 03:00

While nobody expects 50 inches of rain to fall in one storm, Houston is still badly situated to withstand flooding even from lesser weather events due to its location on a flood plain:

Houston is built on what amounts to a massive flood plain, pitted against the tempestuous Gulf of Mexico and routinely hammered by the biggest rainstorms in the nation.

It is a combination of malicious climate and unforgiving geology, along with a deficit of zoning and land-use controls, that scientists and engineers say leaves the nation’s fourth most populous city vulnerable to devastating floods like the one caused this week by Hurricane Harvey.

“Houston is very flat,” said Robert Gilbert, a University of Texas at Austin civil engineer who helped investigate the flooding of New Orleans after Hurricane Katrina. “There is no way for the water to drain out.”

Indeed, the city has less slope than a shower floor.

Harvey poured as much as 374 billion gallons of water within the city limits, exceeding the capacity of rivers, bayous, lakes and reservoirs. Experts said the result was predictable.

The storm was unprecedented, but the city has been deceiving itself for decades about its vulnerability to flooding, said Robert Bea, a member of the National Academy of Engineering and UC Berkeley emeritus civil engineering professor who has studied hurricane risks along the Gulf Coast.

The city’s flood system is supposed to protect the public from a 100-year storm, but Bea calls that “a 100-year lie” because it is based on a rainfall total of 13 inches in 24 hours.

“That has happened more than eight times in the last 27 years,” Bea said. “It is wrong on two counts. It isn’t accurate about the past risk and it doesn’t reflect what will happen in the next 100 years.”

Some of the blame (a lot of the blame) for locating vulnerable properties in flood-prone areas is due to the US government’s flood insurance program:

Texans, watch out. An aftershock is following behind the catastrophic flooding produced by Hurricane Harvey in coastal Texas: The National Flood Insurance Program (NFIP) is coming up for reauthorization.

The main lesson that the public and policymakers ought to learn from Harvey is: Don’t build in flood plains, and especially don’t rebuild in flood plains. Unfortunately, the flood insurance program teaches the exact opposite lesson, selling subsidized insurance whose premiums do not come close to covering the risks home and business owners in flood prone areas face.

As a result, the NFIP is currently $25 billion in debt.

Federally subsidized flood insurance represents a moral hazard, Kevin Starbuck, Assistant City Manager and former Emergency Management Coordinator for the City of Amarillo, argues, because it encourages people to take on more risk because taxpayers bear the cost of those hazards.

Federal Emergency Management Agency data shows that from 1978 through 2015, 3.8 percent of flood insurance policyholders have filed repetitively for losses that account for a disproportionate 35.5 percent of flood loss claims and 30.5 percent of claim payments, Starbuck says. Most of these properties were grandfathered in before the NFIP issued its flood insurance rate maps. The NFIP is not permitted to refuse them insurance or charge them rates based on the actual risks they face.

Clearly, taxpayers should not be required to subsidize people who choose to build and live on flood plains. When Congress reauthorizes the NFIP, it should initiate a phase-in of charging grandfathered properities premiums commensurate with their risks. This will likely lower the market values of affected homes and businesses and thus send a strong signal to others to avoid building and living in such risky areas.

August 26, 2017

When is an archaeological artifact merely “recyclable”?

Filed under: Bureaucracy, Europe, Government, Science — Tags: , , , — Nicholas @ 03:00

In Sweden, apparently, it’s actually becoming a common practice to discard “excess” metal artifacts for literal recycling:

One of the amulet rings from the Iron Age that archaeologists are recycling. Previously, this type of object was saved, says archaeologist Johan Runer.
(Photo from Svenska Dagbladet, caption from Never Yet Melted)

Rough translation from Swedish language article in Svenska Dagbladet:

    While the debate about burning books is raging in the media, Swedish archaeologists throw away amulet rings and other ancient discoveries. It feels wrong and sad to destroy thousands of years of ritual arts and crafts, and I’m not alone in feeling so.

    “What you do is destroy our history! Says Johan Runer, archaeologist at Stockholm County Museum.

    Amulet rings from the Iron Age, like Viking weights and coins, belong to a category of objects that, as far as Runer knows, were previously always saved.

    He tried to raise the alarm in an article in the journal Popular Archeology (No. 4/2016), describing how arbitrary thinning occurs. Especially in archeological studies before construction and road projects, the focus is on quickly and cheaply removing the heritage so that the machine tools can proceed.

    He works himself in these kinds of excavations. Nobody working in field archeology wants to get a reputation as an uncooperative “find-fanatic” but now he cannot be quiet any longer.

    “It’s quite crazy, but this field operates in the marketplace. We are doing business,” says Runer.

    Often, especially in the case of minor excavations, there is a standing order from the county administrative boards that as few discoveries as possible should be taken.

    If you think it seems unlikely, I recommend reading the National Archives Office’s open archive, such as report 2016: 38. An archaeological preamble of settlement of bronze and iron age before reconstruction by Flädie on the E6 outside Lund.

    In the finds catalog, coins, knives, a tin ornament, a ring and a weight from the Viking Age or early Middle Ages have been placed in the column “Weeded Out”.

August 25, 2017

The End of the Bronze Age

Filed under: Greece, History, Middle East, Science — Tags: , , , , , — Nicholas @ 02:00

Published on 28 Sep 2015

Around 1200 BC, the countries of the Eastern Mediterranean went into major cultural decline: The Late Bronze Age came to a sudden end.

Kingdoms that had wielded immense power completely disappeared. For several centuries after this, agriculture was people’s only means of subsistence. These were pivotal changes in history. Explaining them remains one of the big challenges in Mediterranean archaeology.

In this video, the foundation Luwian Studies presents a comprehensive and plausible scenario of what might have happened.

August 23, 2017

Playing with fire – James May Q&A Extras (Ep36) – Head Squeeze

Filed under: Humour, Science, Technology — Tags: , , , — Nicholas @ 02:00

Published on 30 Aug 2013

James May reminisces about his misspent youth playing with matches and debates the merits of using foam to put out flames from petrol.

August 22, 2017

QotD: Writing about the past

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

If you’re writing in the past — or even if you are just living in the present — you should have an idea of how the past was different, and the factors that shaped that.

If you assume the past was just like the present only less “enlightened” you’re presupposing history comes with an arrow, and that today is of course more “advanced” than the past. While this is true of science — of course — it’s not always true of what was inside people’s heads. In many ways because even the poorest of us struggle less than in the Middle Ages, it’s become easier to develop mental habits of laziness and other “rich person” vices. What you think is enlightenment might be considered sheer nonsense by your descendants. For instance the enlightened thing at one time (even Heinlein has a whiff of it) was genetic culling. Now we’re finding that what we know about genes isn’t that straightforward. Throw in epigenetics and someone with a gene to be a “moron” can turn out to be a genius. More, even overtly bad disease genes are linked to genes we need and can’t survive without. BUT the enlightened opinion in the early twentieth century was to improve humanity and save human suffering by culling out the sick and the lame and the “inferior races.” (No, Hitler didn’t invent that.)

Some of our concepts (and I’m not going to name any because it’s a fight I don’t need, but I’m sure you can think of some) will prove just as monstrous to our descendants.

If you don’t have a sense of that, you don’t have a sense of the past, which unfortunately means you don’t have a sense of the present.

If you think that there is an objective way to end poverty or stop drug use, or whatever, and it’s ONLY your way, and even your opponents think your way is right and are being villainous and “evil” by opposing it you not only shouldn’t be writing historical fiction, you definitely shouldn’t be voting. You should find the nearest kindergarten and use it as a safe space.

Because out here in the real adult world, the past and the present and complicated places, with different modes of arranging life that worked with the circumstances at that time, even if they now set our teeth (or our hair) on edge.

If you can’t accept your ancestors were different from you, thought differently and responded to different necessities, you have no business preaching multiculturalism.

Because what makes a culture different is not the hairstyles, the dresses or what they ate, but how one must live to survive. And yes, some cultures are factually worse than others at providing their people with the necessities (or the luxuries) of life. Arguably most past cultures were (barring our finding some atlantian high-developed scientific culture we’ve heard nothing about.)

That doesn’t give you the right to to stomp your feet and rewrite the past to justify your boorish self-regard in the present.

Your ancestors were both more and less enlightened than you in ways you can’t even understand, and your superimposing your beliefs on them is the act of a mental midget standing on the shoulders of giants and peeing down.

Sarah A. Hoyt, “What Has Gone Before Us”, According to Hoyt, 2015-08-03.

August 17, 2017

Safe injection sites go rogue … to save lives

Filed under: Cancon, Health, Law — Tags: , , , , — Nicholas @ 03:00

In the National Post, Chris Selley wonders why the federal government has been so slow to come around to accepting the overall harm reduction offered by legal safe injection sites:

I suspect this generation of policymakers, and the previous one especially, will struggle to explain to their grandchildren just what on earth they thought they were doing about opioid addiction. I don’t mean the likes of Donald Trump, who seems to think a get-tough policing approach — a “war on drugs,” perhaps — might get the job done. I mean smart, reasonably compassionate Canadians, by no means all conservatives, whose worries about safe injection sites in particular look bizarre even today, when people are still using them.

“It’ll attract rubadubs” — as if Vancouver’s Downtown Eastside was a middle-class utopia before Insite set up shop. “There’ll be needles in the streets” — more than if the safe injection site weren’t there, you mean? And, of course: “Addicts should go to treatment instead” — as if people haven’t been trying and failing to get and stay clean this whole time; as if the alternative, on a day to day basis, might be not waking up the next morning to go get treatment.

To its credit, the Liberal government in Ottawa has loosened the regulatory reins. There are nine approved “supervised consumption sites” up and running across the country: five on the Lower Mainland, one in Kamloops, and three in Montreal. Six more, in Victoria, Ottawa, Toronto and Montreal, are approved and awaiting inspections. An additional 10 are in the approval process; four in Edmonton applied more than three months ago; one in Ottawa has been in the works, officially, since February.

This looks like progress, and to a great extent it is. But on Sunday, a group of activists in Toronto implicitly asked another trenchant question: why does it take so bloody long to set up a supervised injection site? Why are we waiting? It’s just clean needles, chairs and tables, overdose treatment medication, a nurse and a phone.

August 13, 2017

QotD: The measurement problem in government

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

Now take health insurance. (Or, if you live, like me, in a country with a national healthcare system that has a single comprehensive payer, the health system.) There are periodic suggestions that we should punish bad behaviour, behaviour that increases medical costs: Scotland has an alcoholism problem so we get the Alcohol (Minimum Pricing)(Scotland) Act, 2012. Obesity comes with its own health risks, and where resource scarcity exists (for example, in surgical procedures), some English CCGs are denying patients treatment for some conditions if they are overweight.

It should be argued that these are really stupid strategies, likely to make things worse. Minimum alcohol pricing is regressive and affects the poor far more than the middle-class: it may cause poor alcoholics to turn the same petty criminality observed among drug addicts, to fund their habit. And denying hip replacements to overweight people isn’t exactly going to make it easier for them to exercise and improve their health. But because we can measure the price of alcohol, or plot someone’s height/weight ratio on a BMI chart, these are what will be measured.

It’s the classic syllogism of the state: something must be controlled, we can measure one of its parameters, therefore we will control that parameter (and ignore anything we can’t measure directly).

Charles Stross, “It could be worse”, Charlie’s Diary, 2015-10-09.

August 8, 2017

QotD: The next “Carrington Event”

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

The last one happened in 1859. The Earth was hit by a cloud of magnetized plasma from a “coronal mass ejection” — something that our Sun often does. Most fly off in other directions; the last that barely missed us was in July, 2012. (You can tell it missed from the fact that the Internet still exists.) The last bullseye on our beloved planet was named after the brilliant English amateur astronomer, Richard Carrington (1826–75), who, in the course of figuring out what happened, demonstrated the existence of “solar flares.”

He was trying to explain why telegraph operators all over the world, on the 1st of September, 1859, were suddenly getting electric shocks; and then, prior to the whole cable system going down, why some had been able to send and receive messages even after disconnecting their power. Too, why auroras had lit up the night sky at temperate latitudes so bright people could read newspapers by it; or why those at higher elevations near the equator could enjoy the aurora borealis and the aurora australis — simultaneously.

Now, the world a sesquicentury ago was not so dependent upon electricity as it is today. And the system of telegraphy was so ridiculously simple, that it was soon repaired. I daresay Morse Code is worth learning in preparation for the next Carrington Event — which, when it comes, we will be able to predict, at best, a few hours in advance. (Other cosmic events might impinge on our lifestyles meanwhile, but I like to consider my apocalypses one at a time.)

Gentle reader may do a mental inventory of the gizmos in his environment that are connected directly or indirectly to the power grid. Then add in anything that contains a computer chip, whether it happened to be “on” or “off” when the Earth’s magnetic field was impacted. For I assume it will all turn “on” of its own, for a brief but memorable interval.

The “beauty” (as they say in Cape Breton) is that we have no back-up system, and moreover, there can be no back-up, except what we can rig from horse, or paddle. For we have made ourselves totally dependent upon sparks.

On the plus side, the environmentalists may exult, because the quick reduction of the world’s population to post-Plague mediaeval levels could prove a lucky break for the other endangered species.

It will, even more happily, improve national security for the survivors in USA. For the same magnetic storm that makes the cities (and towns) of America uninhabitable will also have disabled the military capacities of Russia, China, and Iran. If they want to come at us they will have to do so in sailing ships. Moreover, the depopulation of Mexico will probably reduce the invasion threat from there, whether or not Donald Trump is President.

David Warren, “The highest tech”, Essays in Idleness, 2015-08-22.

July 31, 2017

Patents, Prizes, and Subsidies

Filed under: Economics, Science, Technology — Tags: , , , , , — Nicholas @ 02:00

Published on 17 May 2016

Growth on the cutting edge is all about the creation of new ideas.

So, we want institutions that incentivize such creation. How do we do this? The answer is somewhat tricky.

The first goal for good ideas is for them to spread as freely as possible. The further the reach, the greater the gains. The problem is, if just anyone can use ideas, then why would we ever pay for them? And without the right incentives, why would innovators create new ideas at all?

Imagine yourself as the creator of a new drug. Typically, it costs about a billion dollars to do this, not counting the time and effort needed to get the drug FDA-approved.

Now, if there were no protections in place, then theoretically, once the formula’s known, everyone could just copy the make-up of your new drug. See, the thing about pharmaceuticals is, once the formula’s known, production is relatively cheap. Given that, let’s assume imitations start flooding the market.

Predictably, the price of your new drug will plummet.

Once prices hit rock-bottom, you’ll have no way to recoup the $1 billion you spent on R&D.

Given that kind of result, we reckon you probably won’t want to develop more good ideas.

The US founding fathers anticipated this problem. Knowing that innovators needed incentives to have good ideas, the founders wrote a protection mechanism into the Constitution.

They gave Congress the ability to grant exclusive rights to inventors — rights to use and sell their inventions, for a limited period of time. This exclusive right, is what we call a patent. Patents grant inventors a temporary monopoly over the use and sale of their intellectual property.

Now, as nice as this is, patents are a thorny subject.

For one, how long should patents last? Also, how much innovation is considered enough to merit a patent grant? Not to mention, are patents the only way to reward good ideas?

The answer is no.

There are two more incentive options here: prizes, and subsidies.

Let’s start with subsidies. University and research subsidies are particularly effective in the basic sciences. Since innovations in this space are rather abstract, subsidies incentivize research without requiring the applications of the research to be explicitly named. The problem is, when we’re incentivizing just research, then researchers might pick directions that are interesting, but not particularly useful.

This is why the third incentive option — prizes — exists.

Prizes reward the output of solving a certain problem. Another plus, is that prizes leave solutions unspecified. They provide a problem to work on, but give quite a lot of leeway as to how the problem is solved.

Now, knowing the complexity inherent in patents, you might think that prizes and subsidies are good enough alternatives. But none of these incentives for ideas, are inherently better than any of the others. Patents, prizes, and subsidies all involve their own tradeoffs and questions.

For example, who decides what gets subsidized? Who decides which goals merit a prize?

It’s hard to determine what mix of institutions, will best incentivize the production of good ideas. Patents, prizes, and subsidies all navigate these conflicting goals, in their own way.

And yes, all this talk of incentives and conflicting goals and tradeoffs might be like walking a tightrope. But, it’s a tightrope we can’t opt out of. Certainly not if we want the economy to keep growing.

In our next release, you’ll watch a TED talk from a certain economist that elaborates further on ideas. And then, we’ll wrap up this course segment with the Idea Equation. Stay tuned!

July 30, 2017

It’s time to eliminate the ethanol fuel mandate (and all those corporate welfare subsidies)

Filed under: Business, Environment, Government, USA — Tags: , , , , , — Nicholas @ 05:00

Paul Driessen explains why now might be the best time to get rid of the Renewable Fuel Standard (RFS) which requires a proportion of ethanol be incorporated/blended into almost all petroleum fuels in the US (Canada has similar requirements):

The laws require that refiners blend steadily increasing amounts of ethanol into gasoline, and expect the private sector to produce growing amounts of “cellulosic” biofuel, “biomass-based diesel” and “advanced” biofuels. Except for corn ethanol, the production expectations have mostly turned out to be fantasies. The justifications for renewable fuels were scary exaggerations then, and are absurd now.

Let’s begin with claims made to justify this RFS extravaganza in the first place. It would reduce pollution, we were told. But cars are already 95% cleaner than their 1970 predecessors, so there are no real benefits.

The USA was depleting its petroleum reserves, and the RFS would reduce oil imports from unstable, unfriendly nations. But the horizontal drilling and hydraulic fracturing (fracking) revolution has given the United States at least a century of new reserves. America now exports more oil and refined products than it imports, and US foreign oil consumption is now the lowest since 1970.

Renewable fuels would help prevent dangerous manmade climate change, we were also told. This assumes climate is driven by manmade carbon dioxide – and not by changes in solar heat output, cosmic rays, ocean currents and other powerful natural forces that brought ice ages, little ice ages, warm periods, droughts and floods. It assumes biofuels don’t emit CO2, or at least not as much as gasoline; in reality, over their full life cycle, they emit at least as much, if not more, of this plant-fertilizing molecule.

[…]

A little over 15 billion gallons of corn-based ethanol were produced in 2016 – but only 143 billion gallons of gasoline were sold. That means using all the ethanol would require blends above 10% (E10 gasoline) – which is why Big Ethanol is lobbying hard for government mandates (or at least permission) for more E15 (15% ethanol) gasoline blends and pumps. Refiners refer to the current situation as the “blend wall.”

But E15 damages engines and fuel systems in older cars and motorcycles, as well as small engines for boats and garden equipment, and using E15 voids their warranties. You can already find E15 pumps, but finding zero-ethanol, pure-gasoline pumps is a tall order. Moreover, to produce ethanol, the United States is already devoting 40% of its corn crop, grown on nearly 40 million acres – along with billions of gallons of water to irrigate corn fields, plus huge amounts of fertilizer, pesticides and fossil fuels.

Much of the leftover “mash” from ethanol distillation is sold as animal feed. However, the RFS program still enriches a relatively few corn farmers, while raising costs for beef, pork, poultry and fish farmers, and for poor, minority, working class and African families. Ethanol also gets a third less mileage per gallon than gasoline, so cars cannot go as far on a tank of E10 and go even shorter distances with E15.

The problem with getting rid of targeted subsidy programs is that the benefits are highly concentrated while the costs are widely dispersed. As a whole, the North American economies would benefit greatly from eliminating the RFS mandates, lowering overall fuel costs, improving international food availability, and reducing or eliminating crony capitalist benefits to “Big Ethanol”, but most individuals’ gains would be small — too small to gain much active support — and the current beneficiaries would have vast incentives to fight to the death to keep those subsidies flowing.

QotD: Orwell on climate change since Shakespeare’s day

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

To the lovers of useless knowledge (and I know there are a lot of them, from the number of letters I always get when I raise any question of this kind) I present a curious little problem arising out of the recent Pelican, Shakespeare’s England. A writer named Fynes Morrison, touring England in 1607, describes melons as growing freely. Andrew Marvell, in a very well-known poem written about fifty years later, also refers to melons. Both references make it appear that the melons grew in the open, and indeed they must have done so if they grew at all. The hot-bed was a recent invention in 1600, and glass-houses, if they existed, must have been a very great rarity. I imagine it would be quite impossible to grow a melon in the open in England nowadays. They are hard enough to grow under glass, whence their price. Fynes Morrison also speaks of grapes growing in large enough quantities to make wine. Is it possible that our climate has changed radically in the last three hundred years? Or was the so-called melon actually a pumpkin?

George Orwell, “As I Please”, Tribune, 1944-11-03.

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