Tag Archives: Ronald Bailey

Left’s Pandemic Response: Politics As Usual

17 Tuesday Mar 2020

Posted by in Health Care, Pandemic, Regulation

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The Left asserts that President Trump dismissed and dismantled the nation’s Pandemic Response Team. That’s bullshit. So is the claim that the CDC was defunded. The news media and certain pundits have helped to feed this narrative. Or, as Glenn Reynolds calls those pundits, “Democrat operatives with bylines”.

First of all, the team in question was not at the CDC, a fact that hasn’t always been clear from the commentary on this issue. It was a team of White House overseers at the National Security Council’s “Directorate for Global Health Security and Biodefense”. What happened was this: the senior director of that team resigned after John Bolton was appointed to head the NSC. Bolton might have wanted him out, but what we know is the director resigned. Subsequently, that team was folded into another directorate as part of an long-overdue consolidation. Health experts from the team remain on the NSC staff today. Yet Sen. Sherrod Brown (D-OH)—and many others since—had the temerity to charge that Trump had fired “the entire Whilte House pandemic team”. Well, at least he didn’t imply that it was the CDC.

Tim Morrison wrote the following in the Washington Post yesterday:

“Because I led the very directorate assigned that mission, the counterproliferation and biodefense office, for a year and then handed it off to another official who still holds the post, I know the charge is specious. …

When I joined the National Security Council staff in 2018, I inherited a strong and skilled staff in the counterproliferation and biodefense directorate. This team of national experts together drafted the National Biodefense Strategy of 2018 and an accompanying national security presidential memorandum to implement it; an executive order to modernize influenza vaccines; and coordinated the United States’ response to the Ebola epidemic in Congo, which was ultimately defeated in 2020.”

This assessment at Brietbart.com quotes former senior NSC official Richard Goldberg:

“Weird. A year later I was inside the NSC working with talented global health/biodefense professionals who coordinated an incredibly effective response to Ebola. They’re still there. Working hard. On .”

It’s true that Bolton sought to eliminate red tape, duplication, and bureaucracy within the NSC, and that was wholly justified. According to Morrison, the NSC staff quadrupled from the 1990s through the second Obama term. Pandemics are supposed to be the CDC’s purview, but the proliferation of administrative layers is what happens as government grows uncontrollably. Leslie Eastman at Legal Insurrection questions whether the U.S. needs a permanent “Pandemic Response Team” in the White House. She quotes GOP Chairwoman Ronna McDaniel:

“JAN 7: CDC established a coronavirus incident management system, two days before China announced the outbreak. … Pelosi began Week 3 of withholding her sham impeachment articles. 

JAN 21: The CDC activated its emergency operations center to provide ongoing support to confront coronavirus. …What were Congressional Democrats focused on? Writing their opening arguments for their bogus impeachment trial.”

Well, bully for the CDC. As for “defunding the CDC”, the facts are this: the proposed budget submitted to Congress by the Trump Administration in February, but never passed, did indeed include cuts to the CDC’s budget, which has grown over the years as it expanded its mission from fighting infectious diseases to matters like obesity, racism, and questions of social justice. The cuts proposed by Trump, however, were primarily to state grants. Actually, the proposal called for increased CDC staffing, and it funded all programs related to infectious diseases. But no matter, because that proposal is unlikely to become part of any appropriations bill that would pass Congress.

True to form, the Left plays politics in the middle of a national crisis. When the Trump Administration told airlines that it was considering banning flights from China in late January, it was called racist. Now, of course, he hasn’t done enough. A huge irony, however, is that Trump’s biggest mistake was in trusting the FDA and the CDC’s authority to develop and regulate testing for the coronavirus. They botched it. In a classic case of over-regulation, they prohibited hospitals and labs from conducting tests developed privately or by academic researchers, insisting that everyone wait for the “approved” test to be distributed. Then, the test they released in early February was flawed, costing additional weeks before testing was available.

 

Mr. Musk Often Goes To Washington

31 Monday Jul 2017

Posted by in Automation, Labor Markets, Technology

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Elon Musk says we should be very scared of artificial intelligence (AI). He believes it poses an “existential risk” to humanity and  calls for “proactive regulation” of AI to limit its destructive potential. His argument encompasses “killer robots”: “A.I. & The Art of Machine War” is a good read and is consistent with Musk’s message. Military applications already involve autonomous machine decisions to terminate human life, but the Pentagon is weighing whether decisions to kill should be made only by humans. Musk also focuses on more subtle threats from machine intelligence: It could be used to disrupt power and communication systems, to manipulate human opinion in dangerous ways, and even to sow panic via cascades of “fake robot news”, leading to a breakdown in civil order. Musk has also expressed a fear that AI could have disastrous consequences in commercial applications with runaway competition for resources. He sounds like a businessmen who really dislikes competition! After all, market competition is self-regulating and self-limiting. The most “destructive” effects occur only when competitors come crying to the state for relief!

Several prominent tech leaders and AI experts have disputed Musk’s pessimistic view of AI, including Mark Zuckerberg of Facebook and Eric Schmidt, chairman of Google’s parent company, Alphabet, Inc. Schmidt says:

“My question to you is: don’t you think the humans would notice this, and start turning off the computers? We’d have a race between humans turning off computers, and the AI relocating itself to other computers, in this mad race to the last computer, and we can’t turn it off, and that’s a movie. It’s a movie. The state of the earth currently does not support any of these scenarios.“

Along those lines, Google’s AI lab known as “DeepMind” has developed an AI off-switch, otherwise known as the “big red button“. Obviously, this is based on human supervision of AI processes and on ensuring the interruptibility of AI processes.

Another obvious point is that AI, ideally, would operate under an explicit objective function(s). This is the machine’s “reward system”, as it were. Could that reward system always be linked to human intent? To a highly likely non-negative human assessment of outcomes? Improved well-being? That’s not straightforward in a world of uncertainty, but it is at least clear that a relatively high probability of harm to humans should impose a large negative effect on any intelligent machine’s objective function.

Those kinds of steps can be regarded as regulatory recommendations, which is what Musk has advocated. Musk has outlined a role for regulators as gatekeepers who would review and ensure the safety of any new AI application. Ronald Bailey reveals the big problem with this approach:

“This may sound reasonable. But Musk is, perhaps unknowingly, recommending that AI researchers be saddled with the precautionary principle. According to one definition, that’s ‘the precept that an action should not be taken if the consequences are uncertain and potentially dangerous.’ Or as I have summarized it: ‘Never do anything for the first time.’“

Regulation is the enemy of innovation, and there are many ways in which current and future AI applications can improve human welfare. Musk knows this. He is the consummate innovator and big thinker, but he is also skilled at leveraging the power of government to bring his ideas to fruition. All of his major initiatives, from Tesla to SpaceX, to Hyperloop, battery technology and solar roofing material, have gained viability via subsidies.

But another hallmark of crony capitalists is a willingness to use regulation to their advantage. Could proposed regulation be part of a hidden agenda for Musk? For example, what does Musk mean when he says, “There’s only one AI company that worries me” in the context of dangerous AI? His own company(ies)? Or another? One he does not own?

Musk’s startup OpenAI is a non-profit engaged in developing open-source AI technology. Musk and his partners in this venture argue that widespread, free availability of AI code and applications would prevent malicious use of AI. Musk knows that his companies can use AI to good effect as well as anyone. And he also knows that open-source AI can neutralize potential advantages for competitors like Google and Facebook. Perhaps he hopes that his first-mover advantage in many new industries will lead to entrenched market positions just in time for the AI regulatory agenda to stifle competitive innovation within his business space, providing him with ongoing rents. Well played, cronyman!

Any threat that AI will have catastrophic consequences for humanity is way down the road, if ever. In the meantime, there are multiple efforts underway within the machine learning community (which is not large) to prevent or at least mitigate potential dangers from AI. This is taking place independent of any government action, and so it should remain. That will help to maximize the potential for beneficial innovation.

Musk also asserts that robots will someday be able to do “everything better than us”, thus threatening the ability of the private sector to provide income to individuals across a broad range of society. This is not at all realistic. There are many detailed and nuanced tasks to which robots will not be able to attend without human collaboration. Creativity and the “human touch” will always have value and will always compete in input markets. Even if robots can do everything better than humans someday, an absolute advantage is not determinative. Those who use robot-intensive production process will still find it advantageous to use labor, or to trade with those utilizing more labor-intensive production processes. Such are the proven outcomes of the law of comparative advantage.

The Taxing Logic of Carbon Cost Guesswork

11 Saturday Mar 2017

Posted by in Environment, Taxes, Uncategorized

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An article by three prominent economists* in the New York Times this week summarized the Climate Leadership Council’s Conservative Case for Climate Action“. The “four pillars” of this climate plan include (1) a revenue-neutral tax on carbon emissions, which are used to fund… (2) quarterly “carbon dividend” payments to all Americans; (3) border tax adjustments to account for carbon emissions and carbon taxes abroad; (4) eliminating all other regulations on emissions of carbon. The “Case” is thus a shift from traditional environmental regulation to a policy based on tax incentives, then wrapped around a redistributive universal income mechanism.

I’ll dispense with the latter “feature” by referencing my recent post on the universal basic income: bad idea! The economists advocate for the carbon dividend sincerely, but also perhaps as a political inducement to the left and confused centrists.

The Limits of Our Knowledge

The most interesting aspect of the “Case” is how it demonstrates uncertainty around the wisdom of carbon restrictions of any kind: traditional regulations, market-oriented trading, or tax incentives. Those all involve assumptions about the extent to which carbon emissions should be restricted, and it’s not clear that any one form of restriction is more ham-handed than another. Traditional regulation may restrict output in various ways. For example, standards on fuel efficiency are an indirect way of restricting output. A carbon market, with private trading in assigned “rights” to emit carbon, is more economically efficient in the sense that a tradeoff is involved for any decision having carbon implications at the margin. However, the establishment of a carbon market ultimately means that a limit must be imposed on the total quantity of rights available for trading.

A carbon tax imputes a cost of carbon emissions to society. It also imposes tradeoffs, so it is similar to carbon trading in being more economically efficient than traditional regulation. A producer can attempt to adjust a production process such that it emits less carbon, and the incidence of the tax falls partly on final consumers, who adjust the carbon intensity of their behavior accordingly. For our purposes here, a tax is more illuminating in the sense that we can assess inputs to the cost imputation. Even a cursory examination shows that the cost estimate can vary widely given reasonable differences in the inputs. So, in a sense, a tax helps to reveal the weakness of the case against carbon and the carbon-based rationale for allowing a coercive environmental authority to sclerose the arteries of the market system.

The three economists propose an initial tax of $40 per metric ton of emitted carbon. The basis for that figure is the so-called “social cost of carbon” (SCC), a theoretical construct that is not readily measured. Economists have long subscribed to the theory of social costs, or negative externalities, and to the legitimacy of government action to force cost causers to internalize social costs via corrective taxation. However, the wisdom of allowing the state to intrude upon markets in this way depends on our ability to actually measure specific external costs.

Fatuous Forecasts

The SCC is based on the presumed long-run costs of an incremental ton of carbon in the environment. I do not use the word “presumed” lightly. The $40 estimate subsumes a variety of speculative assumptions about the climate’s response to carbon emissions, the future economic impact of that response, and the rate at which society should be willing to trade those future costs against present costs. The figure only counts costs, without considering the huge potential benefits of warming, should it actually occur.

Ronald Bailey at Reason illustrates the many controversies surrounding the calculation of the SCC. He notes the tremendous uncertainty surrounding an Obama Administration estimate of $36 a ton in 2007 dollars. It used an outdated climate sensitivity figure much higher than more recent estimates, which would bring the calculated SCC down to just $16.

A discount rate of 3% was applied to projected future carbon costs to produce an SCC in present value terms. The idea is that today’s “collective” would be indifferent between paying this cost today and suffering the burden of future costs inflicted by carbon emissions. This presumes that 3% is the expected return society can earn for the future by investing resources today. Unfortunately, the SCC is tremendously sensitive to the discount rate. Together with the more realistic estimate of climate sensitivity, a discount rate of 7% (the Office of Management and Budget’s regulatory guidance) would actually make the SCC negative!

Another U.S. regulatory standard, according to Bailey, is that calculations of social cost are confined to costs borne domestically. However, the SCC attempts to encompass global costs, inflating the estimate by a factor of 4 to 14 times. The justification for the global calculation is apparent righteousness in owning up to the costs we cause as a nation, and also for the example it sets for other countries in crafting their own carbon policies. Unfortunately, it also magnifies the great uncertainties inherent in this messy calculation.

Lack of Evidence

This guest essay on the Watts Up With That? web site by Paul Driessen and Roger Bezdek takes a less gracious view of the SCC than Bailey, if that is possible. As they note, in addition to climate sensitivity, the SCC must come to grips with the challenge of measuring the economic damage caused by each degree of warming. This includes factors far into the future that simply cannot be projected with any confidence. We are expected to place faith in distant cost estimates of heat-related deaths, widespread crop failures, severe storm damage, coastal flooding, and many other calamities that are little more than scare stories. For example, the widely reported connection between atmospheric carbon concentration and severe weather is demonstrably false, as are reports that Pacific islands have been swallowed by the sea due to global warming.

Ignoring the Benefits

The SCC makes no allowance for the real benefits of burning fossil fuels, which have been a powerful engine of economic growth and still hold the potential to lift the underdeveloped world out of poverty and environmental  distress. The benefits of carbon also include fewer cold-related deaths, higher agricultural output, and a greener environment. It isn’t surprising that these benefits are ignored in the SCC calculation, as any recognition of that promise would undermine the narrative that fossil fuels are unambiguously evil. Indeed, an effort to calculate only the net costs of carbon emissions would likely expose the entire exercise as a sham.

The “four pillars” of the Climate Leadership Council‘s case for climate action rest upon an incredibly flimsy foundation. Like anthropomorphic climate change itself, appropriate measurement of a social cost of carbon is an unsettled issue. Its magnitude is far too uncertain to use as a tool of public policy: as either a tax or a rationale for carbon regulation of any kind. And let’s face it, taxation and regulation are coercive acts that better be undertaken with respect for the distortions they create. In this case, it’s not even clear that carbon emissions should be treated as an external cost in many applications, as opposed to an external benefit. So much for the corrective wisdom of authorities. The government is not well-equipped to centrally plan the economy, let alone the environment.

  • The three economists are Martin Feldstein, Ted Halstead and Greg Mankiw.

How We Hinder Mobility

06 Monday Feb 2017

Posted by in Labor Markets, Mobility

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A plethora of regulations and subsidies established by governments at all levels is making it more difficult for Americans to move, especially from one state to another. Yale Law Professor David Schleicher identifies these barriers to mobility and writes that they compromise the nation’s ability to match jobs with workers. Thus, these laws beget economic immobility as well. His paper, “Stuck in Place: Law and the Economic Consequences of Residential Stability“, describes a number of the barriers:

“Land-use laws and occupational licensing regimes limit entry into local and state labor markets; differing eligibility standards for public benefits, public employee pension policies, homeownership subsidies, state and local tax regimes, and even basic property law rules reduce exit from states and cities with less opportunity; and building codes, mobile home bans, federal location-based subsidies, legal constraints on knocking down houses and the problematic structure of Chapter 9 municipal bankruptcy all limit the capacity of failing cities to ‘shrink’ gracefully, directly reducing exit among some populations and increasing the economic and social costs of entry limits elsewhere.“

To get a sense of the magnitude of declines in mobility over the past three decades, see Figure 3 in this discussion about mobility by Richard Florida at CityLab. The percentage of homeowners who move declined from almost 10% annually in the late 1980s to about 5% in 2016. The biggest declines occurred during the periods of economic weakness in 2001 and 2008. For renters, the percentage of movers declined from just above 35% in 1988 to less than 24% in 2016.

Workers who might otherwise migrate to jurisdictions with better economic opportunities often cannot do so. Schleicher notes that low-income workers suffer the most from these obstacles, which he divides into entry and exit barriers. Most of the obstacles he cites are compelling, though at times his emphasis veers toward enabling more effective government management of the macroeconomy, which is very unappealing to my libertarian instincts.

Entry Barriers

Schleicher emphasizes two major ways in which entry barriers are created. One is the spread and severity of land use restrictions such as zoning and construction laws, which have become so severe in some areas of the country that they have led to drastic inflation in housing prices. In a review of Schliecher’s paper, Ronald Bailey at Reason.com illustrates the disparities created by this process:

“According to the Trulia real estate market analysis, the median house price in San Francisco is $1.2 million, with a median rent of $4,100 a month; in Youngstown it’s $93,000, with a median rent of $650. In other words, a Youngstown worker who sold his home for full price would receive enough money to rent a place in San Francisco for 22 months.“

The contrast in the economies of these two cities is stark. The San Francisco Bay Area has experienced vibrant job growth over the past several years, while Youngstown has been struggling for decades. Given the difference in housing prices and rents, it would be almost impossible for a worker from Youngstown to pursue an opportunity in the Bay Area without a accepting a severe decline in their standard of living. Joel Kotkin makes a similar point in discussing the high cost of housing in some areas, but his focus is on the difficult prospects for economic mobility and homeownership among Millennials.

The second major entry barrier discussed by Schleicher takes the form of occupational licensing laws. They differ across states but have multiplied since the 1950s. According to Richard Florida (linked above), the share of American workers subject to some form of licensing requirement rose from just 5% in the 1950s to 25% by 2008. Schleicher cites low rates of interstate mobility among professions that typically require a license to practice. Veterans of those occupations tend to have an established book of business, however, so it’s reasonable to expect fewer distant moves. Nevertheless, the cost of obtaining a license in a new state and differing licensure requirements are likely to inhibit the mobility of licensed professionals.

Exit Barriers

One of the most interesting sections in Schleicher’s paper is on exit barriers. Locations are always “sticky” to the extent that local ties exist or develop over time, both between people and between people and local institutions. But some institutions create ties that are severely binding. For example, state and local government employees are often enrolled in defined benefit plans with lengthy vesting periods. Remaining in one system throughout a career can be a huge advantage. Other exit barriers involve differences in eligibility and levels of aid under federal programs managed by states such as Medicaid, Temporary Assistance to Needy Families (TANF), and the Supplemental Nutrition Assistance Program (SNAP — food stamps). Beyond the actual benefits at stake, administrative costs and delays in re-enrollment might hinder a needy family’s attempt to make an interstate move.

Local and state law on property transfers can also impinge on mobility. Real estate transfer taxes in some states certainly create an incentive to stay put. Also, while tax reassessments occur with regularity in most jurisdictions, some impose limits on the amount of the annual change in valuation, requiring a full tax revaluation on resale, so a seller must forego such a tax discount. Rent controls reward renters who stay in place, creating another exit barrier. And rent controls prevent entry as well, as they invariably reduce the supply of quality housing, thereby inflating the rents of vacated apartments available to new residents.

Finally, federal policies designed to encourage homeownership create exit barriers across the country. Ownership of a residence increases the “stickiness” of any locale, but the loss of a mortgage interest income-tax deduction adds to the sacrifice of a move to a rental unit in a more expensive location. So does the interest rate subsidy inherent in the implicit federal guarantee against default on mortgages securitized by Fannie Mae and Freddie Mac. Finally, when local economies are in a state of decline, home prices usually follow. Consequently, owners are likely to suffer reduced or negative equity in their homes and may be “locked in”, unable to pay off their mortgage on a sale, and therefore unable to leave their current residence.

Rent Seeking and Good Intentions

Some of the policies discussed above are the handiwork of those powerful enough to enlist government power in their own self-interest. That includes zoning laws, by which property owners can prevent land uses they deem undesirable. It also includes occupational licensing, a political avenue through which established business interests limit competition by new entrants. Of course, licensure is typically sold to voters as consumer protection, a claim that is often dubious.

Other policies that hinder mobility can be characterized as well-intentioned, like the old-style, defined benefit plans still in use by many state and local governments, or federal subsidies for homeownership. Many such policies are, or have been, promoted on the basis of the obvious gains they create for individuals, with little thought given to the “unseen” but damaging economic consequences. Rent controls fall into this category as well, but are very damaging in the long-term.

The Labor Market Ossified

All of the mobility-limiting policies discussed by Schleicher have a detrimental effect on the performance of labor markets. Workers tend to get stuck in depressed areas, where their value as human resources is diminished even while employers in other markets face limited supplies of qualified labor. This leads to higher structural unemployment, lower growth in output, and more difficulty for the private sector in meeting the needs of consumers than otherwise be possible.

I haven’t dealt with one other national policy dealing explicitly with geographic mobility: immigration. Restrictions on legal immigration and the issuance of green cards are often sought by interests hoping to protect Americans from competition for jobs. Suspending competition is never a good idea, however, as it leads to higher prices and undermines consumer interests. To the extent that businesses face a shortage of qualified talent to fill particular jobs, as is often the case, such restrictive policies are unequivocally damaging to the economy for the same reasons as barriers to interstate migration. Liberalized immigration allows more foreigners with peaceful, productive and often entrepreneurial intent to contribute to the country’s ability to create wealth.

Prescriptions

What can be done to promote interstate mobility? Here is a list that is undoubtedly incomplete: encourage state and local governments to end rent controls; liberalize zoning laws; reevaluate construction restrictions; liberalize occupational licensing; reduce real estate transfer taxes and smooth the timing of tax revaluations. Governments should also transition from defined benefit to defined contribution benefit plans, a step that would also allow them to avoid persistent overoptimism about their ability to meet future pension obligations. As long as states manage federal aid programs and have leeway in setting eligibility requirements and their share of benefits, there will be exit barriers to low-income recipients. Perhaps states should be required to coordinate benefits, with strict time limits, when recipients move interstate to pursue employment opportunities. Finally, subsidies encouraging homeownership should be phased out, including the federal tax deduction for mortgage interest and full privatization of Fannie Mae and Freddie Mac. A neutral stance with respect to homeownership would allow the market to seek an optimal balance in residential property ownership without creating excessive locational anchors.

Schleicher devotes a large part of his paper to the implications of reduced mobility for macroeconomic stabilization policy. In particular, he contends that measures intended to stimulate the economy cannot be as effective when labor supplies are inflexible. That might be true, but I’m loath to endorse Keynesian activism. Still, there is no doubt that geographic stasis of the kind described by Schleicher contributes to immobility in incomes as well. The main conclusion I draw from his paper is that governments ought to be very cautious about interfering in market transactions, even when convinced that their cause is noble. The law of unintended consequences has a way of foiling the best laid plans of social engineers.

Markets, Ingenuity and Genuine Sustainability

22 Thursday Dec 2016

Posted by in Environment, Markets, Scarcity

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Will mankind drain the world of resources and ruin the environment? Must we curtail economic growth in order to ensure our long-term survival? Only if we give up on markets and give-in to central economic direction and control. Ronald Bailey at Reason.com covers the technical assumptions underlying a recent piece of neo-Malthusian “research” purporting to demonstrate the impossibility of environmentally-sustainable economic growth. Bailey’s article makes a great follow-up to my last post, “The Greening-Carbon Nexus“, in which I discussed the bloom in vegetation taking place around the globe attributable to greater levels of atmospheric CO2.

Bailey describes the concept of “decoupling” resource use from economic growth as fundamental to long-term environmental sustainability. This is another twist on good old-fashioned growth in factor productivity. In the new research cited by Bailey, Australian hydrologist James Ward and his co-authors assert that population growth and consumption will eventually overwhelm technological advance. However, it has long been recognized by demographers that freedom from need and growth in material comfort reduces fertility. Bailey notes that world population growth has been decelerating for many years, and the global population is likely to stabilize within a couple of decades.

Ward, et al lean heavily on assumptions about how various classes of resources are not substitutable, and that mankind will run-up against hard production requirements for minimum resource use, a point at which many tradeoffs become impossible. Bailey summarizes their results:

“They crank the notion that there are nonsubstitutable physical limits on material and energy resources through their equations until 2100, and they find that eventually consumption of both rise at the same rate as economic growth. QED: Economic growth is unsustainable. Or as they report, ‘Permanent decoupling (absolute or relative) is impossible for essential, non-substitutable resources because the efficiency gains are ultimately governed by physical limits.’“

Bailey proceeds to pick apart the assumptions made by Ward and his co-authors. First, even if true, those assumptions would apply with much more force to physical outputs, as opposed to service outputs. The latter are likely to continue on a path garnering an increasing share of world output over time. More fundamentally, Ward, et al give short-shrift to the limitless potential of human ingenuity. A few specific examples of the physical limits they contemplate are already verifiably false, having been overcome by technological breakthroughs. This includes agricultural productivity related to enhancements in plant photosynthesis, new manufacturing methods requiring dramatically fewer raw materials, and methods of energy production that are already available, if not yet heavily relied upon. A glaring assumption made by Ward, et al is that the use of fossil fuels will continue to grow through at least the year 2100. In fact, existing alternatives such as nuclear power might well be more economical. Ironically, greater adoption of nuclear power is held hostage by the political resistance of groups who oppose the burning of fossil fuels.

Bailey also cites the work of Jesse Ausubel, whom I cited at length in a post on “rewilding” in 2015. Ausubel’s work shows that Americans’ use of a variety of productive inputs already has “decoupled absolutely” from production, or is approaching that point. That includes farmland, water, timber, plastics, aluminum and steel. Our use of all of those things has peaked and is now in decline. Ausubel’s work implies that “decoupling” is just a matter of time for many other resources for which use is growing at rates declining relative to production. These trends will spread overseas with continued economic development.

Efficiencies like these are a direct effect of technological advance, but the process of technical change is dependent on incentives, which are, in turn, dependent on market prices, profit opportunities, and secure property rights. First, the funding of research into new techniques and methods is driven in large part by market incentives. That’s the real mechanism at play when we marvel that “necessity is the mother of invention”. Necessity, of course, is often manifest in scarcity of existing productive inputs and high input prices.

New technologies present profit opportunities by promising lower input costs, greater production, or other competitive advantages. The adoption of a new technology nearly always entails short-run costs and long-term rewards, both of which are driven by market prices. As the pace of adoption accelerates, the costs of new technologies tend to decrease along with scale economies and sheer experience, reinforcing the process of diffusion. The driving force in all cases is the competitive market and freedom to trade for one’s own benefit. The increasing efficiency of resource use embodied in the “decoupling” phenomena is dependent on the existence of accurate market incentives and secure rights to the rewards that efficiencies in production can bring.

And what if government responds to political pressure by imposing bureaucratically-established production limits, market quotas, efficiency standards, process rules, regulatory reporting, and tax penalties. Apart from direct confiscation and the additional confiscatory risk these actions entail, compliance requires producers to ignore market incentives to one degree or another. These measures force adoption of  less efficient technologies than the market would dictate and add resource costs that would otherwise be absent. The inescapable fact is that market incentives are blunted or destroyed in the process; the consequent waste of resources prevents the kind of natural improvements in factor productivity that lead to decoupling and sustainability.

Sadly, such regulatory actions are often borne out of private rent-seeking efforts. Dominant market players believe that smaller competitors will struggle under the compliance burden created by regulation, so they work with government officials in an effort to have these rules promulgated. This adds a greater degree of market concentration and monopoly power, which implies an efficiency loss relative to competition. Under the protection of regulators, dominant players can survive for too long using wasteful techniques and inputs. Fortunately, with time, new technologies often outpace even these dominant players and the outmoded regulatory rules they rely upon.

Just as wasteful are authoritarian efforts to promote new technologies before the market is ready to adopt them. Picking technological winners and losers is fraught with peril for society. The government usually lacks the foresight possessed by the market, forcibly redirecting resources from one use to another with little consequence for failure except at the taxpayer’s expense. The premature investment is prone to burdening society with stale or defective early versions of new technology. This is not a reliable way to achieve efficiency in resource use. One of the sure signs that such efforts entail waste is the propensity for insiders to be awarded subsidies for promoting politically-favored technologies. Government is invariably drawn to such opportunities for graft.

I conclude with a quote of my earlier post on Ausubel’s work (linked above):

“It’s worth emphasizing that the nature rebound already taking place in the developed world is largely a product of free market capitalism and the growth in wealth and technology they have made possible. A great benefit of secure property rights for society, and for the environment, is that owners have powerful incentives to husband their resources. Likewise, the profit motive gives producers strong incentives to reduce waste and improve productivity. As economic development becomes more widespread, these incentives are promoting a healthier balance between man and nature.“

 

Manipulating Temperatures, People & Policy

21 Friday Aug 2015

Posted by in Global Warming, Tyranny

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The heavily-manipulated global surface temperatures quoted by NOAA and NASA point to another “hottest month on record” in July, but the satellite temperature measurements do not agree. Nor do several other widely-followed global temperature series maintained elsewhere, such as the UK Meteorological Office (UK Met Office). I wrote about the manipulation of surface temperatures by NOAA and NASA in January in “Record Hot Baloney“, and in “Fitting Data To Models At NOAA” in June:

“If the facts don’t suit your agenda, change them! The 18-year “hiatus” in global warming, which has made a shambles of climate model predictions, is now said to have been based on “incorrect data”, according to researchers at National Oceanic and Atmospheric Administration (NOAA). Translation: they have created new data “adjustments” that tell a story more consistent with their preferred narrative, namely, that man-made carbon emissions are forcing global temperatures upward, more or less steadily.“

The last link provides detail on the nature of the manipulations. Perhaps surprisingly, rather large downward adjustments have been made to historical temperature data, reinforcing any upward trend in the late 20th century and hiding the current 18-year pause in that trend. Suffice it to say that the “adjustments” made by these agencies are at fairly detailed levels; some of the before-and-after comparisons shown by gifs at this link are rather astonishing. Some climate researchers have started to refer to the temperature series as “reconstructions” instead of “data”, out of respect for the legitimacy of actual data.

In the meantime, the “warmist” propaganda keeps flowing from NOAA and NASA, and it is hungrily swallowed and then regurgitated by media alarmists. The media love a good scare story. They are so complicit in reinforcing the warmist narrative they will ignore the revelation of a faulty temperature sensor at National Airport in Washington, D.C. (another hat tip to John Crawford). It has been recording temperatures averaging 1.7 degrees Fahrenheit too warm for the past 19 months. Now that the sensor has been changed, NOAA states that it will not make any adjustments to the past 19 months of recorded temperatures from the National weather station, despite the fact that they have routinely made many other changes, often without any real explanation.

Here is a recent opinion from Duke University Professor Robert Brown on the divergence of satellite and NASA/NOAA surface temperatures and the adjustments to the latter:

“The two data sets should not be diverging, period, unless everything we understand about atmospheric thermal dynamics is wrong. That is, I will add my “opinion” to Werner’s and point out that it is based on simple atmospheric physics taught in any relevant textbook. …

This does not mean that they cannot and are not systematically differing; it just means that the growing difference is strong evidence of bias in the computation of the surface record.“

Every new report issued by NOAA/NASA on record warm temperatures should be severely discounted. They are toiling in the service of a policy agenda; it will cost you dearly, and it will severely punish the less fortunate here and especially in less developed parts of the world; and it will reward the statist elite, bureaucrats and Green crony capitalists. Ronald Bailey in Reason recently weighed in on the consequences of this “apocalyptic anti-progress ideology“. Or read the wise words of Matt Ridley on “The recurrent problem of green scares that don’t live up to the hype“. Hey greens, relax! And don’t waste our resources and our well being on precautions against exaggerated risks.

Human Achievement, Comfort and Joy

28 Saturday Mar 2015

Posted by in Human Welfare

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2015’s Human Achievement Hour (HAH) starts at 8:30 p.m. on Saturday, March 28. That’s tomorrow night! It starts at 8:30  p.m. in every time zone, so it’s a rolling celebration. But you can celebrate human achievement for a full 24 hours, starting Saturday at about 2:30 a.m. Central Daylight Time, when it will be 8:30 p.m. Saturday in Tonga, just over the international date line. It’s coming up soon! This will be my third year of celebrating HAH. To mark the occasion I just might start celebrating with the Tongans. Here is the Facebook event page for HAH. The Competitive Enterprise Institute is the sponsor of HAH. Here is the first part of their description, followed by their suggestion for how to celebrate.

“Observing Human Achievement Hour is about paying tribute to the human innovations that have allowed people around the globe to live better, fuller lives, while also defending the basic human right to use energy to improve the quality of life of all people.” “In order to celebrate with CEI and friends worldwide, we invite you to enjoy the benefits of energy, capitalism, and human innovation by utilizing your favorite innovation or human advancement…“

Once again this year, I will illuminate every lightbulb in my home to pay homage to the wonder of widely distributed electricity and the tremendous benefits derived from our ability to harness the power of fossil fuels. In a review of Alex Epstein’s The Moral Case for Fossil Fuels, Ronald Bailey of Reason says:

“As humanity burned more fossil fuels and increased carbon dioxide in the atmosphere, human lives dramatically improved. ‘Weather, climate, and climate change matter—but not nearly as much as they used to, thanks to technology,’ Epstein writes. For example, the death rate from extreme weather events has dropped 98 percent since 1920. Indeed, the chief benefit of burning fossil fuels has been longer and healthier human lives. The central idea of Epstein’s book is that ‘more energy means more ability to improve our lives; less energy mean less ability—more helplessness, more suffering, and more death.’“

Matt Ridley adds his thoughts on the benefits of fossil fuels at The Rational Optimist blog. Both Ridley and Bailey are confident that humans will one day achieve such efficiencies in the production of energy from renewable sources as to be competitive with fossil fuels. That will be worth celebrating. We are not there yet, however, and we do ourselves no favor in attempting to restrict fossil fuel consumption in the meantime. In fact, the risks of anthropomorphic global warming are far less severe than climate activists insist. Moreover, a warmer climate would not be unambiguously bad for people.

It is no accident that HAH is scheduled to coincide with Earth Hour, a “celebration” that stands in stark contrast to HAH in its antipathy for free market institutions and its condemnation of humankind’s relatively recent success in adapting to our planet’s environment. But there is no doubt that our progress in reducing poverty has hinged on the complementary nature of human ingenuity and the free market, the latter being a fairly recent (on historical scales) and most powerful innovation for promoting voluntary human cooperation and enrichment. Here is a recent Ridley post in which he elaborates on reasons for continued optimism. A quote:

“For 200 years, pessimists have had all the headlines-even though optimists have far more often been right. There is immense vested interest in pessimism. No charity ever raised money by saying things are getting better. No journalist ever got the front page writing a story about how disaster was now less likely. Pressure groups and their customers in the media search even the most cheerful statistics for glimmers of doom. Don’t be browbeaten-dare to be an optimist!“

Let’s celebrate for the right reasons. The flourishing of human welfare in the face of a harsh natural environment is real achievement.