Chris Suellentrop offers some timely advice on becoming the next world-famous Evil CEO. Finally, a reporter delivers a handy how-to guide in a simple, easy-to-read format. I smell Pulitzer.
Bill Quick has a post on medical residencies that I think is interesting. I've commented there on the economics of it, but I just want to say that this is a law I'm actually in favor of.
For those who aren't aware of it, medical residents work shifts between 24 and 48 hours, even though they're technically not supposed to. I've had doctors I know argue about how this isn't so bad and the doctors are used to it. My Aunt Fanny. I've worked 24 and 48 hour shifts, and I don't care who you are or how well trained you may be, after you've been awake for 36 hours you are stupid. It takes longer to make decisions. You get easily distracted and confused. You forget things. You get short-tempered and don't think things through.
But Jane, you say, you did it.
Okay, but I was working on a box of bolts. If I made a mistake, the worst thing that happened was I had to reboot and try again. If doctors make mistakes, people die. Miserably fighting exhaustion is not the condition I want my doctor in.
Moreover, the reason that residents are in that condition is that they are victims of a cartel. They work these outrageous shifts for low pay because there is no Option B except writing off the $100K of debt they've acquired and joining Uncle Fred in the air-conditioning business. If hospitals actually had to compete for residents, these conditions would disappear. But because they engage in what is essentially a wage-fixing cartel, the residents have to work hours that put our lives in danger.
So for everyone who wondered if there are any laws that Jane supports, here's one: down with the medical monopoly! Long live the market!
I've gotten several angry emails claiming that I called Brad DeLong a partisan hack, with tedious defenses of his economic work.
I don't think that Brad DeLong did anything wrong by talking up the stuff he worked on. Presumably he believed in what he was working on; one assumes that that's why he did it.
Nor do I think Krugman did anything particularly wrong by citing him on the topic. But in the same way that you wouldn't mention Ken Lay's opinion on energy deregulation without mentioning he headed a company that stood to benefit from it, you don't cite someone on the subject of work they did without mentioning they're the author. "Jane Galt of New York calls Live from the WTC without a doubt the finest web site in existence." More compelling if you don't know I'm the author, no?
It's not a mortal sin. But it's nonetheless true that he should have mentioned it.
It's gotten kind of petty. I mean, he's partisan, but hey, so am I, at least until the Bush administration does one more protectionist thing, at which point I'll be joining the Kruggy brigade as we light up the torches and head for the castle. So I'm not going to pick on the cheap shots or petty partisanship, or dissect the column line by line; I'm going to present the highlights (things I liked) and the lowlights (unspinning the spin). Then I'm going to assess predictive validity on the following scale:
0 Does not single out Republicans or the Bush administration for ridicule over Democrats .5 Blames Republicans and/or conservatives for a substantial portion of ills in our society, but does not name names 1 Singles out specific Republican politicians or the Administration to blame for a substantial portion of ills in our society, while wholly or partially absolving Democrats from similar sins.
We also have - .5 Blames Democrats and/or liberals for a substantial portion of ills in our society, but does not name names - 1 Singles out specific Democrat politicians to blame for a substantial portion of ills in our society, while wholly or partially absolving Republicans from similar sins.
But since this hasn't happened in the history of the column, I wouldn't bother to remember it.
Summary Inequality is increasing in our society. We should be worried.
Highlights It's an interesting topic, and certainly, it could be worriesome.
Lowlights -- Where's the beef? The whole article is a complaint about the inflation of CEO pay, based on the pay of the top 10 CEO's from 1980 to now. But there's no sense of whether this is a class-wide phenomenon, or simply a couple of guys who got very lucky. The top CEO's he cites have an annual income not that much greater than Michael Jordan's. Is Michael Jordan the harbinger of a new plutocracy?
Perhaps, but there's no other data. It's like deciding that society is doomed because the income gap on your block has widened; on the one hand, Bill Gates now lives on your street, and on the other hand, your neighbor's brother Bob is out of rehab and living in the Gazebo. Does this portend a crisis, or a statistical anomaly? Who knows.
-- What about inflation? CEO pay, if left unchanged from its $3,500,000 height, would be over $7,000,000 today -- which is not $154 mil, but not chicken feed either. Likewise, if left unchanged until 1988, it would have been $4,825,000. These are not inconsiderable gains.
-- What about growth? I couldn't, in my quick scan of the net, find a good chain-weighted measure of the change in median income, but per capita GDP has increased by about 50%. So even if our CEO had gotten no net increase except inflation and GDP growth, he'd be making around $10,500,000. So the correct inflator is not 43 times (and doesn't 4300% sound so much scarier than 43x?) but around 10 times.
-- Most of that extra income is in stock. Those CEO's did well because their companies did well.
And of course, now some of those companies aren't and the CEO's are parachuting away. And it's tempting to say "there ought to be a law". But fer goshsakes, what law? No estate tax is going to make these CEO's any less feckless, nor can you pass a law against bad judgement; you'd freeze the economy in its tracks, as everyone refused to take any risk or make any decisions. And a law telling CEO's not to be such screw-ups wouldn't prevent these golden parachutes they've written themselves.
What would? Who are these yahoos hurting? The shareholders. Who could have prevented them from writing themselves sweetheart deals with captive boards? The shareholders. And why didn't they? Because the little shareholders don't have a clue, and don't know that they don't have one, and the large shareholders are often short-timers. The institutional investors that hold these stocks could get serious and start demanding some long term value from the CEO's.
But how do you make them do it? Mutual funds and pensions are already some of the most regulated entities this side of kiddie porn. It hasn't made them any more sensible either, at least not to judge from my last Fidelity statement. And again, the law would be worse than the problem it's designed to replace; telling mutual fund advisors "If you don't do the right thing -- no, we don't know now what the right thing is, but you can be sure we will, after you've made your decision and we see what happens" would paralyze the capital markets.
-- "First we will hear that vast fortunes are justified because they are the reward for vast achievement. Here's where that table comes in handy, because it tells you what achievements actually get rewarded. Only one of the 10, Tyco's Dennis Kozlowski, has actually been indicted."
The implication being that the rest are but one bad stock trade from the pokey. But I don't know of any evidence to that effect. Neither, it seems, does Paul Krugman; he moves quickly on.
"But of the rest, three — four, if you count John Chambers of Cisco — were Andy Warhol C.E.O.'s: their companies were famous for 15 minutes, just long enough for the executives to cash in their stock options. The list also includes Gerald Levin, who engineered Time Warner's merger with AOL at the top of the Internet bubble; even at the time it seemed obvious that he was trading half his original shareholders' birthright for a mess of cyber-pottage. "
Cisco's not exactly in the same class as Global Crossing, and Gerald Levin did actually run Time Warner for many years before the merger, and in fact, built it up quite a bit before then. The merger was a capitally bad idea, but he was hardly the only person in America to buy into the peak of the internet bubble. Of course, the golden parachute's upsetting -- but that's discussed above.
-- There's the standard Paul Krugman plaint about the estate tax. And maybe this is the argument that will change my mind about the tax -- I, for one, had no idea that the estate tax could be used to prevent companies from paying their CEO's nine-figure salaries. The mechanism is unclear from the article, but it's certainly an exciting development.
More to the point, for all his maundering about the estate tax, it hasn't done anything to break up the great fortunes of our era.
You are confused. You know that the estate tax did break up many of the robber baron fortunes, or at least make them more modest.
Actually, inflation did a lot of that, and the 1929 crash. The estate tax helped, but it's a one-trick pony. Before the estate tax, there were no estate planning services. Why would there be such a thing? Oh, there were trust and will departments, but there were not legions of accountants who did nothing but sit around all day thinking up clever ways to cheat the tax man out of his death duty. Now that there are, it isn't going away. The only people you get significant estate tax out of are people who are either too ignorant or too illiquid to plan around it. You can change the tax around all you want, but the instant you do the financial planners will be on it like white on rice.
Oh, the superrich pay something. But Krugman offers a datum that is misleading in the extreme: "I've even been assured by some correspondents that inheritance taxes on the very rich are impractical, that they will always be evaded — this in spite of the fact that in 1999 the estate tax raised about $15 billion from estates worth more than $5 million."
Hold on there. The estate tax raises about $50 billion a year. By my estimates, that means that $35 billion is raised from estates under $5 million; I don't think Ken Lay or Gerald Levin qualifies. In other words, the majority of the revenue from the estate tax comes not from the superrich but from moderately high-income savers with small businesses or appreciated assets. The owner of your local 7-11 is paying this thing while Jon Corzine's heirs toss some pocket change at the tax man and stroll away.
But the net effect is not to break up the estates; it's to put them into irrevocable trusts beyond the tax man's reach. The lives of the heirs may have been made marginally more inconvenient, their holdings more illiquid; they may even have to show up at a charity office once a week to justify their six-or-seven figure annual salary. But they are not impoverished by it. The estate tax is much more effective at gutting the upper middle class than the ultra-wealthy. And I don't think that Krugman is trying to get us hysterical about the coming rule of the lawyer-and-accountant aristocracy; even if he buys it, those folks are his readers.
Howlers
" But the Gilded Age looked positively egalitarian compared with the concentration of wealth now emerging in America. Pretty soon denial will no longer be possible. What will the apologists say next? "
On the contrary, we live in the most egalitarian age in history. Think about it: how much better is Bill Gates' life than Andrew Carnegie's?
He's healthier and will probably live longer. But is his house more comfy? His art better? His life more convenient? His clothing better quality? His food tastier and better prepared?
Nope. Healthcare and Gadgets aside, Bill Gates and Andrew Carnegie have little between them.
Now compare the worst paid guy in Carnegie's empire to the worst paid guy in Bill's.
The worst paid guy in Carnegie's empire lives in a couple of rooms with his wife, several children, and extended family. He eats meat once or twice a week. He owns one or two sets of work clothing and a good suit, probably the one he was married in. He has an ordinary hat, a good hat, and some seasonal apparel. He works twelve hours a day. He has no personal transportation; he walks or takes a horsecar. He does not vacation. He cannot afford books, plays, or other entertainment. His entertainment is church, conversation, and possibly music. He probably cannot read.
In human terms, it may be a rich life. In material terms, it wouldn't do a modern welfare mother for a camping weekend.
I don't think I need to itemize the fate of Bill Gates' mail boy for you to see the difference.
The rich were comfortable then and are comfortable now; the improvements are strictly marginal. The poor, on the other hand, have improved their lot immensely. Plutocracy, my Aunt Fanny.
Now, in fact, I am under the impression that inequality is increasing broadly. The problem is that Krugman knows as well as I do why that is: technology puts a higher premium on skilled than unskilled labor. If all you're good for is your muscle power, a machine will work cheaper and quicker and won't unionize. Bye bye human draft horses.
Neither the estate tax nor any other law man can make will remedy this. Only three things might: a subsidy to employers to hired unskilled labor, which is massively unproductive and distortionary, and would involve rolling back productivity increases in some industries; training, which has a dismal record last time I looked; or a negative income tax combined with a repeal of the minimum wage, enabling workers to labor with dignity at a price they are worth. As you can see from the spin, that last is my prescription.
PV He singled out a Bush adminstration guy; that should be a 1, but on the other hand, he's an economist, which is fair game; but on another hand entirely, he didn't treat his analysis all that fairly (it's flawed, but not that flawed). The kicker is, he mentioned that this guy was associated with the last Bush administration, which is irrelevant. .5 on the bias watch (hey, it's subjective.) PV now stands at 7 out of 9, or 78%.
Krugmanwatch never sleeps: Thomas Maguire points out something I should have noticed, which is that Krugman cites Brad DeLong on the subject of government initiatives he worked on while he was at Treasury without mentioning that fact.
Maguire also points out that DeLong testified on statistical questions of whether some ballots should be thrown out in Florida.
Which reminds me of a story. I don't know if it was the same trial; there were so many of them! But Kevin Murphy, who is a frighteningly brilliant man whose class I desired to take while I was at Chicaago, but was unable to attend because of a conflict with a class I had to take in order to graduate, testified at one of these trials. Yes, he testified for Bush. But I find it hard to believe accusations of bias against him. When you go to Chicago, one of the neat things is that you get to speculate about which of your professors will be the next Chicago economist to get a Nobel; it happens with some regularity. Well, the next guy isn't going to be Murphy; it's probably going to be a chap named Eugene Fama, who is also brilliant and also teaches classes which are sparsely attended because MBA's are in deep fear of the power of his mind. But Murphy is expected to be the guy after Fama. He's already got the John Bates Clark medal, which is actually more prestigious than the Nobel; it's awarded only every two years, to an economist under the age of 40. Of course, so does Paul krugman, so it's not a guarantee against partisanship.
Nonetheless. Paul Krugman doesn't allow partisanship to affect the main body of his work on international trade and monetary policy; he confines his misstatements to areas he doesn't know much about, like energy economics. Nor would Murphy; it's inconceivable that an economist of that stature would allow partisanship to tamper with his work. So generally, when he testifies, as in the Microsoft trials, you can take it to the bank.
Anyway, so Murphy was testifying for the Bush team on statistical analysis of the ballots. I have no idea who the other side's hired gun was, whether it was Brad DeLong or not, though it certainly might have been; the point is, Murphy had the goods. It's a long, boring explanation, so I'll skip it, but while the Gore guy was putting forth speculative statistical theories, the Bush side had done some legwork and had actual counts of the ballots in dispute, as well as statistical evidence, that was going to blow the Gore guy's theory that the ballots in dispute might have put him over the top, out of the water.
So the Gore guy was up on cross, and getting hammered by the very well prepped Bush lawyer, who led him step by step through all the holes in his theory. And then the lawyer asked him, "So do you still believe your theory?"
Allegedly, the Gore guy looked at Murphy sitting in the courtroom. And Murphy, his arms folded across his chest, slowly shook his head. The Gore guy lost it.
"No," he said. It was all over.
There's no point to this story. I just like it, that's all. That's the power of being the best. Power, I might add, that I will never feel.
What a terrible thought. Bad enough that a stranger would abduct your child, but to think that your family might have harbored some evil person who plotted and planned to steal a young girl they knew and were supposed to love. . .
John Cole's looking for some links. He's had an awful month that's kept him from posting. So go give his site some love. Start with this and work down from there.
I could get all hurt and defensive and whiny about this, and call Rabbit a bad name that rhymes with "slitch" and say that she may be having fun now but there's the kind of girl men like to have fun with and the kind they want to marry and we'll see how much fun she's having in ten years when everything starts to sag, and oops! I've stumbled into a Lana Turner movie again.
Instead I'm just going to be hurt, because I love Rabbit. I'm giving myself carpal tunnel syndrome checking her blog every hour, on the hour, for her updates. And all I want to say is that just because some people write for NPR, and some people are about a million times funnier than me, doesn't mean that some people couldn't be a little kind once in a while. And if I should happen to be found floating in, say, the Hudson River, with, say, a laminated card stapled to my lifeless carcass reading "Take that, Rabbit!", I just hope that some people will take that valuable opportunity to rethink their life and the way they treat people. That's all I'm saying.
On the other hand, I look at the blog, and it's global warming this and monetary policy that and where's the fun? Unfortunately, I'm an MBA, and I don't really know anything about fun. If you know anything about fun, you don't have time to get the job that gets you into business school. MBA's think they know a lot about fun, but the things they think they know usually involve throwing large parties that bear a suspicious resemblance to the ones thrown by the fraternities that wouldn't let them in when they were undergraduates.
On the other hand -- um, out of hands, just use your big toe for now -- I was an English major. English major's know a lot about fun. Well, some English majors, anyway. The kind of English major that droops around in all black, or flowing poetic dresses that drape around their figure like a burlap sack and isn't that a blessing -- those people do not know about fun. Those people are busy being melancholy, because they've read so much about it and it seems interesting. There is nothing in the entire world as tedious as affected misery. Really miserable people eventually get bored with it and lighten up. People who are just being miserable because they think it makes them cool never know when to stop.
No, for fun English majors, you want the kind of English major who is an English major because being an English major leaves them more time for fun. Unexpected things happen when you are around this kind of English major; spontaneous, amusing events, like contests to see who can eat the most jalapeno peppers or get the most phone numbers from doctors in the intensive colon care unit, sudden trips to Mississippi to see if it's really there, or applications to business school.
And what do you do with this, particular, fun English major? Is this English major fun, or is she still carrying a heavily annotated copy of The Bell Jar everywhere she goes? Well, I'm afraid to find out, you're going to have to come to Blogapalooza 2002. All I can say for now is, don't forget your slinky.
Japan is vindication of Keynes to this extent: it turns out that Keynes was right about at least one thing.
The basic idea is this: for various reasons, people decide to put off spending into the future. The technical term for this in economics is "saving".
[This is all vastly simplified because I'm writing a website, not a Macro textbook. 'Kay?]
Because you (and 120 million other consumers) aren't buying things, factories produce less. This throws people out of work. This produces even less current demand for goods, which means factories produce less . . .
Keynes theorized that an economy could essentially stall out; for it to pick up, people would need to start buying things, but they would refuse to do so, because of deflationary expectations, uncertainty about the future, and other sundries. With this vicious circle in operation, production would get permanently stuck at an artificially low level, like the car you had to sell because it wouldn't shift to second gear.
It also turns out that Keynes was wrong to this extent: his solution doesn't work. The Keynsian solution to this is government spending. Japan has a deficit of 7% of GDP and debt approaching 150% of national income, and a very large number of roads going nowhere, government buildings where nothing happens, and bridges connecting two places that were already quite well served by the bridges they had. Yet the stagnation drags on.
The monetarist solution is lowering interest rates. Also didn't work; the Japanese government is practically begging people to take these yen off their hands -- take as much as you like! Are you sure you don't want thirds? -- and the economy's still moribund.
There are some people arguing that they should just start printing money, but it's not clear that that would work either; Japan's credit is already on the rocks, and people seem to suck up any excess liquidity in the system by sticking it under their mattress with the rest of their cash.
So what the hell's going on?
Japan seems to have four overlapping problems.
The first, and probably the most important, is the demographic crisis. Japan averages 1.3 children per mother, far below replacement rate. Women in their 20's and 30's are refusing to get married, because the familial structure of Japanese marriages seems to be somewhat onerous. Whatever the reason, the population is aging fast. People alive today know that there are not enough people in the workforce to support a public pension; they're trying to sock it away for their retirement. Unfortunately, all this saving, much of which goes into government bonds for boondoggle construction projects with a negative net return, is killing their economy now, which doesn't improve the future outlook. And since the outlook is so grim, they figure they'd better put some money away. . .
This both feeds into, and off of, deflationary pressures. Deflation is the opposite of inflation; it means a dollar tomorrow will buy more than a dollar today. Since we're all raised on a 70's fear of inflation, this sounds like a good thing. But deflation has problems. For starter's, it was a major cause of the Great Depression. Deflation crushes borrowers, who have to pay each loan installment with ever-more-expensive money. While it makes people eager lenders, it makes reluctant borrowers. While theoretically, interest rates should move to equialize demand for savings and demand for investment, interest rates cannot go below zero. Therefore, when deflation gets too bad, the monetary policy of the central bank can't use the usual means to stop it. Think of it this way: if I offer to just give you five bucks on the condition that you pay it back in a week, and in a week you know that you'll be able to buy 20% more stuff with the five bucks, this is not, for you, a good deal; it's an effective interest rate of 20%. And you can't lower it any more unless I offer to pay you to take my money.
Japan has a lot of people willing to lend (save) but no one who wants to take them up on it; it's just too expensive.
Which leads us to the third major problem: the banks.
The banking system is a disaster. Large parts of it appear to be insolvent; only the willingness of the central bank to prop them up through a combination of bad loans and bad accounting is keeping them afloat. But no one really knows, because Japan Inc. didn't, apparently, thrive on transparency.
Banks are the primary vehicle of money creation in a modern economy. The central bank pumps in liquidity; the banks make loans; the loans expand the money supply. Only any money that goes into the banking system goes to prop up the disastrous balance sheets. And no one wants to borrow any money, anyway, because the future doesn't look so bright, which is not a good time to start a new business, and the deflation means the interest rates are too high, and besides, the potential borrowers all busy saving for retirement.
Meanwhile, the deflation and the crappy economy, which are caused by. . . the deflation and the crappy economy, are eating away at the bank's balance sheets because each bout of deflation/crappiness produces more borrowers who can't meet their loan payments, and the deflation means that whatever was securing the loan is probably now worth less than the loan so there's no point in foreclosing; the banks string them along hoping they'll be able to pay at some unspecified point in the future. Meanwhile, the banks can't afford to make new loans because they're insolvent, and even the banks that are solvent have difficulty finding loans to make because people don't want the money, but also because the uncertain economic outlook makes such loans risky. Which causes. . . deflation and a crappy economy.
On top of all this, the only people in Japan who are spending any money are the aforementioned young single women who are rapidly driving the nation to its demographic doom. Everyone else has developed a mania for making do with less. If there's anything a nation in a deflationary crisis needs less than a "Back to Basics" movement, it's hard to imagine what it could be, but that's exactly what Japan has developed; it's a thriving fad to find out exactly how little you can spend.
So what to do? People are fresh out of ideas. Something has to be done to force consumers to digorge their cash in favor of consumer goods. But what can they do? Create inflation, somehow. But other than operating the printing presses on a Weimar Republic scale (which is what Paul Krugman, among others, has advocated and who knows, maybe it's the answer), how do they do it? The ex-boy's father was an economist specializing in Japan, and his particular prescription was announcing a sales tax to be phased in over a number of years; it's as good a thought as any, I suppose, though the political fallout is apparently unacceptable. But now, with the debt downgraded and the risk of default looming, perhaps they'll try such a scheme. They've got to try something.
And why should you care? Because we're going to have ANOTHER GREAT DEPRESSION RIGHT NOW! No, that's not why, although I did recently read a hysterical article claiming it was so. Rather, because Japan is the canary in the gold mine.
No large industrial society in history has attempted to cope with the kind of massive demographic shift that's occuring in all Western countries, with the old living longer past their productive years, and fewer and fewer young people to support them. Japan is the first nation to hit that shift, because its diet makes people longer lived, and its birthrate is extraordinarily low. Even absent the banking crisis, this kind of deflationary pressure may result when our own crisis hits, as people desperately try to save for future consumption, and thereby tank the economic growth that could provide that consumption. Japan's crisis may be unique in the conflation of a banking disaster, but that doesn't mean we shouldn't be taking a long, hard look in the mirror.
Poland's having trouble. Growth has slowed, and now people, threatened with unemployment (my Polish coworker claims it's 35% in some areas), they're looking to statism to bail them out.
The problem with this is that it doesn't work. As this moving article points out, the drive to industrialize the Soviet union used, at one point, 20% of the workforce as slave labor. The other countries that have managed to improve their standards of living significantly through statism were either using massive technology transfer from the West (if you're an agrarian country with $100 per capita GDP, the only way to go is up), or massive financial transfer from the Soviet Union. Scandinavia, which is usually cited as the evidence that social democracy breeds success, doesn't work either; Norway is surviving on its natural resources, not its productivity, and Sweden seems to have been cannibalizing its earlier free market revolution. If Poland re-nationalizes, the evidence says they'll have slower growth. And they'll have no one to blame but themselves.
It seems like every time I post anything these days, whether it be my opinion that Bush's popularity ratings are holding up better than I would have expected, or a wee bit o' number crunching on global warming, I get someone emailing to say "but that's not peer reviewed data" or "where are the studies you used to get that result?". Okay, I don't know how I gave people the impression that I sit around with my supercomputer, feeding various analyses into it and then reporting the results with a modicum of trenchant wit, but my analytical equipment consists of Excel (and I don't even know how to use most of Excel's statistical functions; I'm a Minitab gal) and whatever's on the internet. Nothing I write here is going to be published in the Journal of Galt, or what have you. For one thing, I have a job, which does not leave me the weeks and weeks I would need to construct a rigorously controlled model for every single thing I say.
So let me state, before I start, that this is my opinion.
Ted Barlow, who is always food for thought, had an interesting debate raging about global warming, and since I addressed the topic myself, I thought I'd weigh in.
He made a wonderful comment:
For example, many on the left are motivated by the wish for full racial equality. This is well and good; the civil rights movement is one of the most beautiful stories of the 20th century, and racial minorities still need vocal advocates at least as much as, say, Microsoft. But too many people on the left assume that their political opponents must, by definition, feel the opposite way about racial equality. Too many assume that "right-wing" means "racist". It's not true. It's an insulting argument that does a huge disservice to racial issues. Furthermore, it's one of the most effective ways to make conservatives stop listening to liberal arguments. If I was being called a racist, I would stop listening, too.
But then undercuts it:
Similarly, I keep coming across the assumption from bloggers on the right that "environmentalism" is just anti-capitalism by other means. People who want cars to be more fuel-efficient, or want clean air or water, or don't want the tops of mountains dumped into rivers- i.e., the large majority of Americans- aren't motivated by the wish to live longer lives with fewer environmental toxins, or by a love of nature, or by the wish to forestall disaster by delaying the exhaustion of irreplaceable natural resources. Rather, they must be motivated by a loathing of capitalism, progress, and success. What else could it be?
Et tu, Ted? People who disbelieve global warming or other environmental disaster predictions belong to that majority of Americans who do not want polluted water, ravaged landscapes, or the earth's mean temperature increased above the boiling point of water. No matter how much it may feel like it, neither side has staked out the "against" position in the "total destruction of life as we know it" debate. Everyone is for the environment, in abstract, just as everyone is for mother love and puppies. It's not a question of whether or not most Americans are against those things, but of what they are willing to pay to avoid them.
I think the biggest problem is the knowlege gap on both sides. We all like information that confirms ideas we already have; we seek it out. We underweight disconfirming information. Now, I know I may not have a ton of new readers, but anyone who did not read my piece on global warming, answer a few questions for me. Jot the answers down on a piece of paper, to avoid the temptation to fudge:
How much do you think Kyoto would cost, as a percentage of GDP?
How much do you think Kyoto would reduce global warming, in degrees (i.e. 1 degree, 2 degrees, 3.5 degrees, etc.)?
How much do you think Kyoto would reduce global warming, as a percentage of total warming? (i.e. 1%, 10%, 100%)?
Are you for or against Kyoto?
If you are for Kyoto, are you against even stronger measures than Kyoto?
How much of your personal income would you, personally, be willing to give up to stop global warming?
By what percentage do you think national income would have to be reduced to stop global warming?
You can check out the answers here. Do it before you read any further.
Funny, huh? I'll bet you that most of you who are supporters of the "Global warming is real and dangerous" side of the debate drastically underestimated the cost of reducing emissions, and overestimated how much Kyoto would do to reduce global warming. And I'll bet equally that most of you who are against the "Global warming is real and dangerous" side of the debate overestimated the costs of reducing emissions, and underestimated what Kyoto would do. C'mon, admit it. There's no one here but us chickens. A little biased, right? That's okay. We're all a little biased. The problem is that we all carry around these beliefs we've acquired and nurtured, and very seldom stop to do a quick reality check on them. It makes it a little hard to get a dialogue going.
My personal take on what is going on in the environmental argument (WARNING: NON PEER-REVIEWED OPINION BACKED UP BY NO STATISTICAL ANALYSIS) is that one side has seized on one set of costs, while the other side has seized on a different set of costs, and both are busily screaming about their set of costs while ignoring what the other side has to say.
GW believer groups have some science to back up the conclusion that there is anthropogenic global warming. They hurt their scientific credibility, however, because they seem to believe every single report put out by a climatologist, no matter how tenuous its conclusions.
GW non-believer groups have considerable data to back up the conclusion that halting anthropogenic global warming would be disastrously costly. They hurt their scientific credibility, however, by resisting comparison with the costs of global warming.
GW believers ignore or minimize the costs associated with reducing global warming, displaying a monolithic ignorance of economics or engineering. They either assume that it will be possible to maintain something close to our standard of living while drastically cutting our energy usage, or they are a member of the small minority who thinks it would be fun to re-enact Little House on the Prairie, for real. (But we won't deal with the latter group here, they're not the majority, and most of them get over it when the buzz wears off). The assumption that we can cut our energy use but maintain our economy is either based on ignorance of the engineering involved, or ignorance of the economics. The latter group doesn't understand that the largest part of GDP is composed of energy-intensive products, and that the products that are most vital, such as air conditioning, heating, food production, and transportation of goods, are also the most energy intensive. Most of the scientists pushing for radical changes fall into this group; they imagine running an industrial economy is only slightly more complicated than running the Physics department.
The former group doesn't understand the physical limitations on conservation. They either think that renewables are viable, because they don't realize the physical requirements of renewables (where are you going to put the solar panels for New York?), the storage issues (you can't produce base-load electricity with a variable power source, such as wind or solar), the transmission issues (electricity doesn't travel well), or the chemical properties (fuel cells take more energy to produce the hydrogen for the fuel cells than they give off in your car or house). Or they do not understand the limits to efficiency presented by the physical properties of heat engines. They think, for example, that auto fuel efficiency is going to increase on a trendline, like this:
(Note: I have no idea what actual average efficiency looks like. This is a made up graph. For illustration purposes only.)
Which is not true. Engine efficiency has physical limits, set by the laws of thermodynamics and the properties of the metal, of about 30% for an internal combustion engine. Easier, bigger efficiency increases are made earlier. So efficiency increases asymptotically to the theoretical limits, like this:
Now, when GW believers say things that the engineering or economics savvy know aren't true, like "minor increases in engine efficiency can take care of a large part of our emissions problem", those who are cost-aware get hopping mad and decide that the people on the other side are idiots. Since they, being cost aware, would already like very much for GW to go away, they seek out information that confirms their beliefs, and discount information that doesn't. So when a lone study appears to cast doubt on the weight of global warming evidence, they believe the study. They make arguments about the magnitude of anthropogenic v. non-anthropogenic warming that they would never dare to make in a budget meeting. Saying that the largest part of the earth's temperature comes from the sun, and therefore we shouldn't do something about the 5% that won't, no matter how costly that 5% might be, is like arguing that since you can't do anything about 95% of your fixed costs, there's no reason to bother lowering the 5% that's within your control. Or they simply choose to disbelieve the science, even though they have little ability to evaluate it on scientific terms.
When GW believers hear non-believers make these sorts of arguments, they decide that everyone on the other side is an irrational idiot. They therefore dismiss everything the other side says about the potential costs as so much carping from People Who Don't Care About Our Planet and Our Future, even though they almost never have the ability to evaluate the arguments on economic or engineering terms. Since they are already predisposed to believe in global warming, they don't examine disconfirming evidence from their own side, while ignoring the weight of economic evidence from the other side in favor of lone, non-peer reviewed studies that don't pass even elementary common sense tests. (Study shows that environmental regulations actually increase GDP because of all the new jobs created in environmental cleanup industries!)
This, of course, makes the other side hopping mad, and the entire cycle begins anew. Is it any wonder that the two sides are talking past eachother?
Not that closing the information gap means we'll all agree on exactly what we should do. Part of this is a value judgement: do you value pristine streams a couple thousand miles away more highly than your own creature comforts? But it's certainly a start. And it starts with looking at the good evidence from both sides. If you're single sourcing your data from either Pro- or Anti- GW people, you're getting a skewed picture. And reading a single article in National Review which you hurl across the room because it's author is so obviously wrong about GW does not count as broadening your knowlege.
A value gap we can deal with -- we hammer out such compromises all the time. But the information gap is fatal to a sensible solution.
James Glassman has a great piece on earnings growth. You should read it before you buy your next stock. And some scientists explain what I've been saying about renewables, but with more science.
I love this man. I know you're not supposed to love someone you've never met, but whoever said that had obviously never seen Professor Xavier Sala-i-Martin's web page. And he's -- sigh a mere twenty blocks, a meager mile, from my house.
Okay, I admit, I thought the keyboard thing was funny. And swiping souvenirs from Air Force one is hardly unexpected; I'd be tempted to take an ashtray or something too, if I'd served in the administration.
But the rest of the White House vandalism is juvenile, destructive, and quite frankly, unbelievable for people who are supposed to be mature enough to have their hands on the executive branch of the country. I'm actually shocked -- no, really -- at the pettiness of it. And the GAO says that yes, it really happened.
When I find myself agreeing with Richard Cohen and Nicholas Kristof on the same day, I begin to wonder whether it's possible that the Harmonic Convergence, whereby everyone in America comes together in one big bi-partisan hugfest, is not imminent. But I do have to take issue with one statement in his otherwise good column:
George Bush clearly has his work cut out for him. Much of Europe still sees him as a unilateralist, the president who came into office determined to abrogate this or that treaty and who, either in word or manner, considered Europeans to be wimps.
What's more, the Continent is suffering from an inferiority complex. For years, it was so stingy with defense funding that its militaries were almost entirely ignored in the planning -- not to mention the execution -- of the war in Afghanistan.
Still, Europe cannot be ignored.
Which begs the question: why not? And Cohen doesn't offer any good answer; it's just our habit. Like smoking. We're so used to paying attention to Europe that it never really occurs to us to stop.
But seriously: why not? And I mean it. Readers who think we should pay attention to Europe, offer your arguments. Those who think we should ignore them, do the same. To heck with consensus: let's argue!
Meanwhile, I was perusing the rest of the Times, and my eye was caught by a couple of things:
First, this headline:
Monday's announcement on the alleged plot to build a "dirty" bomb seemed to reinforce the Bush administration's repeated warnings that Al Qaeda remains a threat.
Sample New York Times headlines:
"Hitler's Invasion of Poland Seems to Indicate Germany may plan to expand."
"Vote counts from 1984 election seem to indicate that American Public likes Reagan."
"Fall of the Berlin Wall seems to indicate that Communism may not have worked as well as we thought."
Write your own -- it's fun!
And then, this line from a Nicholas Kristof editorial:
At Harvard, many students and faculty members are hostile to military and R.O.T.C. training because the military discriminates against gays. It's a fair point, and the discrimination is worth fighting. But it was the American military that deposed the Taliban, the most viciously anti-gay regime in the world, one that executed gays by knocking over walls on top of them. America's military does discriminate against gays and is a bastion of anti-gay attitudes, but it has also done more for gay rights — albeit in Afghanistan — then all the gay organizations in the Ivy League put together.
Of course, I applaud the realization that yes, freedom in the world is actually and truly maintained in part by a willingness to kill bad guys who want to take it away. But that's not what I want to talk about. What I want to know, is, who the hell kills someone by toppling a wall on them?
[Before you begin mentally composing your angry emails, please note that the editorial position of Live From the WTC is firmly against executing people for their sexual proclivities, unless those proclivities involve living creatures incapable of giving consent, such as children or animals. Taliban=Unspeakably Evil for so many reasons, including this. But I've already beaten that subject to death, so now it's on to Methods and Means.]
I mean, first of all, it's bad for the nation's capital infrastructure. And in a country like Afghanistan, walls are a pretty major part of their physical plant. Why go around knocking them down?
Second of all, there must be a limited supply of walls, at least ones that aren't holding up something you don't want to fall down, like a roof. What do you do when you run out?
And third of all, it's bizarrely complicated and inefficient, like those death plots in James Bond movies. ("I am not going to shoot you now, Movie Spy Hero, even though I have a gun, because that would not fit in with my Evil Movie Villain plans. Instead I am going to smear you with Alpo and toss you into this pit full of ravenous golden retriever puppies, who will lick you to death while I make my escape. While you are slowly dying, you may meditate on my Evil Plan, which I will disclose to you now: I am going to assassinate the assistant comptroller of Columbus, Ohio, and thereby unleash financial ruin on the world!!!! Bwa-ha-ha-ha-ha!) You could stone the person to death. You could smack them in the side of the head with a big rock. You could push them off a cliff. All of these things would have pretty much the same physical effect on the perpetrator, without involving time consuming wall-pushing-down-arrangements, or accelerated depreciation of capital assets. So why the wall?
No wonder Afghanistan is poor; with classic government-imposed regulatory regimes like this one, the market for executions is sucking up resources that could otherwise be productively invested elsewhere. Humanitarian aid is good and all, but I think they also need some economists.
Meanwhile, I was perusing the rest of the Times, and my eye was caught by a couple of things:
First, this headline:
And then, this line from a Nicholas Kristof editorial:
At Harvard, many students and faculty members are hostile to military and R.O.T.C. training because the military discriminates against gays. It's a fair point, and the discrimination is worth fighting. But it was the American military that deposed the Taliban, the most viciously anti-gay regime in the world, one that executed gays by knocking over walls on top of them. America's military does discriminate against gays and is a bastion of anti-gay attitudes, but it has also done more for gay rights — albeit in Afghanistan — then all the gay organizations in the Ivy League put together.
Of course, I applaud the realization that yes, freedom in the world is actually and truly maintained in part by a willingness to kill bad guys who want to take it away. But that's not what I want to talk about. What I want to know, is, who the hell kills someone by toppling a wall on them?
[Before you begin mentally composing your angry emails, please note that the editorial position of Live From the WTC is firmly against executing people for their sexual proclivities, unless those proclivities involve living creatures incapable of giving consent, such as children or animals. Taliban=Unspeakably Evil for so many reasons, including this. But I've already beaten that subject to death, so now it's on to Methods and Means.]
I mean, first of all, it's bad for the nation's capital infrastructure. And in a country like Afghanistan, walls are a pretty major part of their physical plant. Why go around knocking them down?
Second of all, there must be a limited supply of walls, at least ones that aren't holding up something you don't want to fall down, like a roof. What do you do when you run out?
And third of all, it's bizarrely complicated and inefficient, like those death plots in James Bond movies. ("I am not going to shoot you now, Movie Spy Hero, even though I have a gun, because that would not fit in with my Evil Movie Villain plans. Instead I am going to smear you with Alpo and toss you into this pit full of ravenous golden retriever puppies, who will lick you to death while I make my escape. While you are slowly dying, you may meditate on my Evil Plan, which I will disclose to you now: I am going to assassinate the assistant comptroller of Columbus, Ohio, and thereby unleash financial ruin on the world!!!! Bwa-ha-ha-ha-ha!) You could stone the person to death. You could smack them in the side of the head with a big rock. You could push them off a cliff. All of these things would have pretty much the same physical effect on the perpetrator, without involving time consuming wall-pushing-down-arrangements, or accelerated depreciation of capital assets. So why the wall?
No wonder Afghanistan is poor; with classic government-imposed regulatory regimes like this one, the market for executions is sucking up resources that could otherwise be productively invested elsewhere. Humanitarian aid is good and all, but I think they also need some economists.
Good postfrom Alex Whitlock about the two-party system and why it isn't as bad as we used to think back when we were idealistic undergrads full of cheap wine and glib ideas.
But I think there's a possibility he misses: that a 3-Party system can consist not only of left/right/center, but of either the left or the right split into two parties, with one party on the other side. Such as Canada, with it's right in disarray. Or our own 2000 election. Whether or not you think this is bad, of course, depends on whether or not your horse came in first in the last election. Canadian liberals think it's just ducky. And conservatives here aren't weeping too hard about the Nader Effect.
Tee-hee! Partisan hacks claiming that the issue isn't that they're partisan hacks, but that the other side is the American reincarnation of Darth Vader, always make me laugh. Bill "That's one order of Filet of Soul for $7.50, and would you like a side order of fries with that?" Clinton praising David Brock for revealing that the Vast Right Wing Conspiracy was populated with Soulless Corporate Demons determined to bring down ol' Pure of Heart and Brave of Deed Bill -- I haven't laughed so hard since I heard Rush Limbaugh proclaim that democracy was in mortal danger because a secret cabal of feminist and race-baiters was plotting to destroy him so that they could pursue their Perfidious Agenda unfettered by The Truth. Unfortunately, as I was rolling around on the floor, writing with uncontrollable laughter, I smacked my head against my fully aluminated beverage cooler, and became so disoriented that I actually registered with the Green Party. Now Ralph Nader won't stop calling me, and I'm signed up to hold the megaph
