Emanuel Derman looks at the “physics of an economic crisis” and explains the difference between economic theories and economic models. I had originally quoted a few passages from the article, but the site forbids re-use without written permission.
November 8, 2011
The difference between economic models and theories
Comments Off on The difference between economic models and theories
October 15, 2011
It’s not as stirring a rallying cry to say that the 99% earn 80% of the income
Lorne Gunter can, if he holds his mouth right, kind of agree with the “Occupy Wall Street” protesters, but he says they do themselves no favours by mixing in fake “facts”:
The protesters’ main point also is obscured by all the lefty, social justice, union-financed trash they have heaped on it. The Occupy movement has proclaimed itself in favour of animal rights, a guaranteed living wage, free health care and education, and an end to the “poisoning” of the food supply.
Nor can the protesters help repeating a lot of class-warfare myths, such the “fact” that 1% of the population controls almost all of the wealth. According to Internal Revenue Service statistics in the United States, the “99 per centers” — as OWS types like to call themselves — earn about 80% of all income and control over two-thirds of the personal wealth (both percentages are slightly higher in Canada), while the “one per centers” earn about 20% of income and control about 32% of wealth.
It’s true that the top 1% of earners are taking a greater share of the pie than at any time since the 1950s, when reliable family income figures first became available. But it is also true that even the bottom 20% of earners are better off than they were then — not as much better off than the top 1%, but better off than they were in the mid-20th century.
[. . .]
But the biggest problem with the OWS movement is what they want to do about the problems they see. Because they view most corporate activity as bad and most government programs as good, the Occupiers have convinced themselves the only way to a fairer society lies through bigger government, more public spending and much higher taxes, all of which would only make our economic problems worse, while alleviating none of the disparity protesters believe is so corrosive to democracy.
Comments Off on It’s not as stirring a rallying cry to say that the 99% earn 80% of the income
October 14, 2011
Green beliefs, but brown realities
Patrick J. Michaels reviews a new book by Todd Myers, Eco-facts:
Just about every organo sacrament withers under Myers’ scrutiny. “Buying local” often means more dreaded greenhouse gas emissions from inefficient short-term shipment compared to the economies of scale when carloads of spuds ride the Burlington Northern Santa Fe across the country. “Certified Organic” means so much paperwork and oversight that mom-and-pop farms (another organo icon) get pushed out by corporate agriculture, which can afford to spend the time and resources satisfying bureaucrats.
Then there are “green jobs.” Solyndra is no outlier; governments are just very bad at picking winners and losers in the energy world. Myers documents the decline and fall of biofuel plants throughout the northwest. Inefficiencies destroy jobs. The Teanaway “Solar Reserve”, supported by an ever-increasing feed of taxpayer dollars, was supposed to be the “world’s largest”, supplying power to a grand total of 45,000 homes. That’s all you get?
John Plaza, CEO of the failed biofuel facility Imperium Renewables (you would think a better name would have helped) thinks it’s all the government’s fault. “What the industry needs,” he said, “is a two-fold support, a mandated floor, and incentives and tax policy to get the outcomes we’re trying for.” In other words, more expensive energy subsidized by you and me, and the government rigging the market. That will create jobs!
What is missing here (and everywhere else) is a comprehensive analysis of how much money the organo fads, follies and delusions cost us. Hopefully that will be in Myers’ next book. The incredible constellation of policy errors, wrongheaded logic and downright stupidity has to be extracting a dear cost from our very sick economy. It’s time to stop this. It’s time for you to read this book.
Comments Off on Green beliefs, but brown realities
September 14, 2011
August 22, 2011
August 8, 2011
Subsidized flights from remote locations
Steve Chapman knows where to get the “best” deal in government subsidy of domestic flights:
As a resident of Illinois, I’d never had any particular desire to fly from McCook, Nebraska, to Denver. But lately, I’ve been looking for an opportunity. Turns out the federal government is willing to pay me a handsome fee to do it.
Oh, I wouldn’t get the cash directly. But the Department of Transportation provides more than $2 million to subsidize that particular route, which works out to about $1,000 for every passenger. My fare, meanwhile, would be less than $150.
I could get an even bigger hand on the hop from Lewistown, Montana, to Billings—$1,343. But if I’m feeling the need for indulgence, there is nothing to beat the flight from Ely, Nevada, to Denver, for which Washington will kick in $3,720. For that sum, of course, it could buy me a perfectly functional used car.
These extravagances are part of the Essential Air Service initiative, which is part of the reason for the recent congressional impasse over a bill to keep the Federal Aviation Administration operating.
June 11, 2011
They “buried the ban in the 300-plus pages of the 2007 energy bill, and very few talked about it in public”
Virginia Postrel talks about the looming ban-that-isn’t-a-ban on incandescent lightbulbs:
One serious technophile, University of Tennessee law professor Glenn Reynolds, spent much of 2007 flogging compact fluorescents on his popular Instapundit blog, eventually persuading more than 1,900 readers to swap 19,871 incandescent bulbs for CFLs. To this day, the Instapundit group is by far the largest participant at OneBillionBulbs.com, a bulb-switching campaign organized by the consulting firm Symmetric Technologies. But Reynolds himself has changed his mind.
“I’m deeply, deeply disappointed with CFL bulbs,” he wrote last month on his blog. “I replaced pretty much every regular bulb in the house with CFLs, but they’ve been failing at about the same rate as ordinary long-life bulbs, despite the promises of multiyear service. And I can’t tell any difference in my electric bill. Plus, the Insta-Wife hates the light.”
That was our experience with the early CFL bulbs, too: they didn’t come close to achieving the longevity we were supposedly paying all the extra money for. And, as I’ve posted before, they’re not as easy to clean up after breakage as the older bulbs.
So the activists offended by the public’s presumed wastefulness took a more direct approach. They joined forces with the big bulb producers, who had an interest in replacing low-margin commodities with high-margin specialty wares, and, with help from Congress and President George W. Bush, banned the bulbs people prefer.
It was an inside job. Neither ordinary consumers nor even organized interior designers had a say. Lawmakers buried the ban in the 300-plus pages of the 2007 energy bill, and very few talked about it in public. It was crony capitalism with a touch of green.
Crony capitalism is what the general public is coming to think is the only kind of capitalism, because they have seen so much of it during the last few presidencies. Your business can be plagued with petty regulators enforcing nitpicking rules, while Congress showers money and special privileges on big businesses and banks.
But, as she points out, it’s not technically a true ban:
Now, I realize that by complaining about the bulb ban — indeed, by calling it a ban — I am declaring myself an unsophisticated rube, the sort of person who supposedly takes marching orders from Rush Limbaugh. In a New York Times article last month, Penelope Green set people like me straight. The law, she patiently explained, “simply requires that companies make some of their incandescent bulbs work a bit better, meeting a series of rolling deadlines between 2012 and 2014.”
True, the law doesn’t affect all bulbs — just the vast majority. (It exempts certain special types, like the one in your refrigerator.) The domed halogen bulbs meet the new standards yet are technically incandescents; judging from my personal experiments, they produce light similar to that of old- fashioned bulbs. They do, however, cost twice as much as traditional bulbs and, if the packages are to be believed, don’t last as long.
I keep hoping that LED lights will be able to produce the kind of long-life that we used to be able to depend upon from incandescents, as CFLs and halogen bulbs have not come close to living up to the promises. However, LEDs have not yet managed that trick in commercial applications.
So, aside from allowing lobbyists to flex their muscles, what is the ban attempting to achieve? That’s not quite clear-cut:
Though anti-populist in the extreme, the bulb ban in fact evinces none of the polished wonkery you’d expect from sophisticated technocrats. For starters, it’s not clear what the point is. Why should the government try to make consumers use less electricity? There’s no foreign policy reason. Electricity comes mostly from coal, natural gas and nuclear plants, all domestic sources. So presumably the reason has something to do with air pollution or carbon-dioxide emissions.
But banning light bulbs is one of the least efficient ways imaginable to attack those problems. A lamp using power from a clean source is treated the same as a lamp using power from a dirty source. A ban gives electricity producers no incentive to reduce emissions.
July 22, 2009
QotD: Republican government
Republican government is impossible in an age where not only are the bills too long for a reasonably engaged citizen to read, not only are they too long for a legislator to read, but they’re too long to write down before they’re passed into law. We just have to trust our rulers, and they just have to trust whichever aides negotiated whichever boondoggles with whichever lobbyists.
Mark Steyn, “Jacksonian America”, National Review, 2009-07-20
Comments Off on QotD: Republican government
