Archive for December 2014

Thanks for the Support of My Writing

Thanks mostly to y'all, my short story String Theory still sits in the top 25 (well, it is at exactly 25) of the Amazon Kindle science fiction and short story rankings.  One notch above John Scalzi, and just two notches below David Brin.  And one of the only entries at the top of the list that does not have a guy with ripped abs or two vampires making out on the cover.  Pretty cool.

And The Highest-Paid US Government Employee is....

...Probably Nick Saban, coach of the University of Alabama football team at around $7 million a year.  But Jim Harbaugh, recently hired by the University of Michigan for a $5 million base salary, apparently has incentives that can take that up to $9 million a year.

Apologists will argue that this is all OK and shouldn't worry taxpayers at all because these guys are paid out of the college athletic budget which is generated from sports revenue rather than taxes.  Hmm.  Any state parks agency probably generates millions or tens of millions each year in user fees.  Should we be OK with the state employee who runs those agencies making $5 million because it comes out of user fees rather than taxes?  Money is fungible.  $5 million more spent on a football coach is $5 million less that can fund other University services.

(PS - in the US Today ranking of college football coach salaries, 19 of 20 are at public institutions).

What is Normal?

I titled my very first climate video "What is Normal," alluding to the fact that climate doomsayers argue that we have shifted aspects of the climate (temperature, hurricanes, etc.) from "normal" without us even having enough historical perspective to say what "normal" is.

A more sophisticated way to restate this same point would be to say that natural phenomenon tend to show various periodicities, and without observing nature through the whole of these cycles, it is easy to mistake short term cyclical variations for long-term trends.

A paper in the journal Water Resources Research makes just this point using over 200 years of precipitation data:

We analyze long-term fluctuations of rainfall extremes in 268 years of daily observations (Padova, Italy, 1725-2006), to our knowledge the longest existing instrumental time series of its kind. We identify multidecadal oscillations in extremes estimated by fitting the GEV distribution, with approximate periodicities of about 17-21 years, 30-38 years, 49-68 years, 85-94 years, and 145-172 years. The amplitudes of these oscillations far exceed the changes associated with the observed trend in intensity. This finding implies that, even if climatic trends are absent or negligible, rainfall and its extremes exhibit an apparent non-stationarity if analyzed over time intervals shorter than the longest periodicity in the data (about 170 years for the case analyzed here). These results suggest that, because long-term periodicities may likely be present elsewhere, in the absence of observational time series with length comparable to such periodicities (possibly exceeding one century), past observations cannot be considered to be representative of future extremes. We also find that observed fluctuations in extreme events in Padova are linked to the North Atlantic Oscillation: increases in the NAO Index are on average associated with an intensification of daily extreme rainfall events. This link with the NAO global pattern is highly suggestive of implications of general relevance: long-term fluctuations in rainfall extremes connected with large-scale oscillating atmospheric patterns are likely to be widely present, and undermine the very basic idea of using a single stationary distribution to infer future extremes from past observations.

Trying to work with data series that are too short is simply a fact of life -- everyone in climate would love a 1000-year detailed data set, but we don't have it.  We use what we have, but it is important to understand the limitations.  There is less excuse for the media that likes to use single data points, e.g. one storm, to "prove" long term climate trends.

A good example of why this is relevant is the global temperature trend.  This chart is a year or so old and has not been updated in that time, but it shows the global temperature trend using the most popular surface temperature data set.  The global warming movement really got fired up around 1998, at the end of the twenty year temperature trend circled in red.

click to enlarge


They then took the trends from these 20 years and extrapolated them into the future:

click to enlarge

But what if that 20 years was merely the upward leg of a 40-60 year cyclic variation?  Ignoring the cyclic functions would cause one to overestimate the long term trend.  This is exactly what climate models do, ignoring important cyclic functions like the AMO and PDO.

In fact, you can get a very good fit with actual temperature by modeling them as three functions:  A 63-year sine wave, a 0.4C per century long-term linear trend  (e.g. recovery from the little ice age) and a new trend starting in 1945 of an additional 0.35C, possibly from manmade CO2.Slide52

In this case, a long-term trend still appears to exist but it is exaggerated by only trying to measure it in the upward part of the cycle (e.g. from 1978-1998).


Krugman on the Minimum Wage

Via Don Boudreaux:

Bluecravat found something telling that I missed a few months ago, namely, Paul Krugman explaining back in August that one potential cause of the high unemployment rate in France is that country’s “high minimum wage.”  As Bluecravat exclaims after quoting from Krugman’s August post: “Excuse me?  What was that?  Minimum wage levels impact employment?”

Of course, it could be that France’s minimum wage is too high compared to the one that Krugman advocates for the U.S.  Krugman supports Pres. Obama’s call for a $10.10 hourly minimum wage.  So how does the employment-discouraging minimum wage in France compare to the allegedly prosperity-enhancing, non-employment-discouraging minimum wage that Krugman, Obama, et al., support for the U.S.?  According to Bluecravat, France’s current minimum wage, when adjusted for purchasing-power parity, is $9.30 per hour, a rate that is lower than the minimum-wage rate advocated by Krugman, Obama, et al.

The minimum wage is terrible anti-poverty policy.  The thing to remember is that A. The majority of minimum wage earners are not poor (or in the poorest 20%); and B.  The majority of the poor don't earn minimum wage.  In most cases, the poor are poor because they don't get enough hours or don't have a job at all, a situation that will only be made worse with a higher minimum wage.

Wrong Way Corrigan

I missed it, but Dan Mitchell had a good article starting from my post on Kevin Drum's unintentionally anti-Keynesian chart pair.

Readers will know from my "trend that is not a trend" series how fascinated I am by how often data referenced in the media tells exactly the opposite story as the one claimed.

Last Chance to Get My New Short Story Free on Kindle

My new short story "String Theory" is free for another 24 hours.  After that, you will have to sell some of your gold bullion and pony up $0.99.  By waiting until the last minute, you get the advantage of obtaining an updated version of the story without a typo on page one (yes, a leopard does not really change his spots in a different medium).

You can get it on Kindle here.

And my novel BMOC is still available on Kindle and as an actual dead-tree book.


Media Notices America's Grievous Shortage of Laws

Noting that the United States is currently experiencing a drastic shortage of laws, America's media (example, but many others) have finally begun to chastise the recent Congress for being, as described by the Huffington Post,  "pretty close" to "the least productive ever."  Like fishes cast ashore flopping on the beach dying for lack of oxygen, Americans are desperately begging for more laws and for more things to be made a criminal offense, and Congress is shamefully ignoring them.

Said one man interviewed on the streets of New York, "there are barely 4000 criminal offenses outlined in the Federal code.  No wonder we have so much anarchy.  We need a lot more crimes and Congress is not cooperating."

A local business woman echoed these thoughts: "With only 80,000 pages in the Federal Register, I often don't know what I should be doing.  Sometimes I go a quarter of an hour in my business making decisions for which there is absolutely no Federal guidance.  It's criminal Congress is shirking its responsibility to tell me what to do."

Said everyone, "there ought to be a law..."

My Latest Short Story Free this Week on Amazon Kindle

My latest short story is listed at $0.99 on Kindle (the cheapest one can list something for) but is available for free through December 24.  It's called String Theory and is the result of a fun discussion my daughter and I had combined with a long, boring airplane ride.

And my novel BMOC is still available on Kindle and as an actual dead-tree book. [link fixed]

I keep saying the new novel is coming soon, but it is coming soon if I can get my act together and polish a few things.

Update:  #16 #2 for Kindle reads under 45 minutes in the Science Fiction & Fantasy section.  LOL.  If we could just segment it a bit finer, I might make #1.

State Science Institute Issues Report on Rearden Metal, err, Fracking

The similarity between the the text of the recent NY report on fracking and the fictional state attack on Rearden Metal in Atlas Shrugged is just amazing.

Here is the cowardly State Science Institute report on Rearden Metal from Atlas Shrugged, where a state agency attempts to use vague concerns of unproven potential issues to ban the product for what are essentially political reasons (well-connected incumbents in the industry don't want this sort of competition).  From page 173 of the Kindle version:

[Eddie] pointed to the newspaper he had left on her desk. “They [the State Science Institute, in their report on Rearden Metal] haven’t said that Rearden Metal is bad. They haven’t said that it’s unsafe. What they’ve done is . . .” His hands spread and dropped in a gesture of futility. [Dagny] saw at a glance what they had done.

She saw the sentences: “It may be possible that after a period of heavy usage, a sudden fissure may appear, though the length of this period cannot be predicted. . . . The possibility of a molecular reaction, at present unknown, cannot be entirely discounted. . . . Although the tensile strength of the metal is obviously demonstrable, certain questions in regard to its behavior under unusual stress are not to be ruled out. . . . Although there is no evidence to support the contention that the use of the metal should be prohibited, a further study of its properties would be of value.”

“We can’t fight it. It can’t be answered,” Eddie was saying slowly. “We can’t demand a retraction. We can’t show them our tests or prove anything. They’ve said nothing. They haven’t said a thing that could be refuted and embarrass them professionally. It’s the job of a coward.

From the recent study used by the State of New York to ban fracking (a process that has been used in the oil field for 60 years or so)

Based on this review, it is apparent that the science surrounding HVHF [high volume hydraulic fracturing] activity is limited, only just beginning to emerge, and largely suggests only hypotheses about potential public health impacts that need further evaluation....

...the overall weight of the evidence from the cumulative body of information contained in this Public Health Review demonstrates that there are significant uncertainties about the kinds of adverse health outcomes that may be associated with HVHF, the likelihood of the occurrence of adverse health outcomes, and the effectiveness of some of the mitigation measures in reducing or preventing environmental impacts which could adversely affect public health. Until the science provides sufficient information to determine the level of risk to public health from HVHF to all New Yorkers and whether the risks can be adequately managed, DOH recommends that HVHF should not proceed in New York State....

The actual degree and extent of these environmental impacts, as well as the extent to which they might contribute to adverse public health impacts are largely unknown. Nevertheless, the existing studies raise substantial questions about whether the public health risks of HVHF activities are sufficiently understood so that they can be adequately managed.

Why is it the Left readily applies the (silly) precautionary principle to every new beneficial technology or business model but never applies it to sweeping authoritarian legislation (e.g. Obamacare)?

US to Normalize with Cuba -- Limiting Free Interchange with Authoritarian Regimes Only Benefits Their Leaders

I certainly am no Castro apologist, but it strikes me that 50+ years of embargoes and pointless travel restrictions have not brought his regime to heal.  So it is past time to recognize this and perhaps try something else.  So kudos to President Obama for doing something that apparently only a lame duck President who no longer has to worry about winning the Florida electoral votes can do, he is going to normalize relations with Cuba.

This should be good news for anyone who opposes the Cuban regime and its oppression. Time and again over the last 50 years, we have seen cultural and economic interchange fell more authoritarian governments than any amount of military action.  When we cut off free exchange with authoritarian regimes, we are doing their leaders a favor.

Life in the Anti-Trust World

Today Apple Computer won the class-action anti-trust case filed against them.  The plaintiffs were seeking a billion dollars in damages (after tripling) for a DRM system (Fairplay) that does not exist any more used on a device (the iPod) that Apple has pretty much phased out.  These products were such a threat to the survival of competitors that they don't even exist any more.  This is not atypical of how anti-trust often plays out in the marketplace, particularly in the technology sphere.  Any day now I will be filing my lawsuit against Commodore for suppressing competition in the home computer market.

Making Everyone a Criminal

From Atlas Shrugged:

Dr. Ferris smiled. . . . . ."We've waited a long time to get something on you. You honest men are such a problem and such a headache. But we knew you'd slip sooner or later - and this is just what we wanted."

[Hank Reardon:]  "You seem to be pleased about it."

"Don't I have good reason to be?"

"But, after all, I did break one of your laws."

"Well, what do you think they're for?"

Dr. Ferris did not notice the sudden look on Rearden's face, the look of a man hit by the first vision of that which he had sought to see. Dr. Ferris was past the stage of seeing; he was intent upon delivering the last blows to an animal caught in a trap.

"Did you really think that we want those laws to be observed?" said Dr. Ferris. "We want them broken. You'd better get it straight that it's not a bunch of boy scouts you're up against - then you'll know that this is not the age for beautiful gestures. We're after power and we mean it. You fellows were pikers, but we know the real trick, and you'd better get wise to it. There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What's there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted - and you create a nation of law-breakers - and then you cash in on guilt. Now, that's the system, Mr. Rearden, that's the game, and once you understand it, you'll be much easier to deal with."

Here is the same thing, Obama Administration style

Major U.S. corporations have broadly supported President Barack Obama's healthcare reform despite concerns over several of its elements, largely because it included provisions encouraging the wellness programs.

The programs aim to control healthcare costs by reducing smoking, obesity, hypertension and other risk factors that can lead to expensive illnesses. A bipartisan provision in the 2010 healthcare reform law allows employers to reward workers who participate and penalize those who don't.

But recent lawsuits filed by the administration's Equal Employment Opportunity Commission (EEOC), challenging the programs at Honeywell International and two smaller companies, have thrown the future of that part of Obamacare into doubt.

The lawsuits infuriated some large employers so much that they are considering aligning themselves with Obama's opponents, according to people familiar with the executives' thinking.

"The fact that the EEOC sued is shocking to our members," said Maria Ghazal, vice-president and counsel at the Business Roundtable, a group of chief executives of more than 200 large U.S. corporations. "They don't understand why a plan in compliance with the ACA (Affordable Care Act) is the target of a lawsuit," she said. "This is a major issue to our members."

At the exact same moment, one branch of the Administration is encouraging an activity that another branch is working to criminalize.

Letter to Nitin Nohria, Dean of the Harvard Business School

I wrote Dean Nohria in response to this story

Ben Edelman is an associate professor at Harvard Business School, where he teaches in the Negotiation, Organizations & Markets unit.

Ran Duan manages The Baldwin Bar, located inside the Woburn location of Sichuan Garden, a Chinese restaurant founded by his parents.

Last week, Edelman ordered what he thought was $53.35 worth of Chinese food from Sichuan Garden’s Brookline Village location.

Edelman soon came to the horrifying realization that he had been overcharged. By a total of $4.

If you’ve ever wondered what happens when a Harvard Business School professor thinks a family-run Chinese restaurant screwed him out of $4, you’re about to find out.

(Hint: It involves invocation of the Massachusetts Consumer Protection Statute and multiple threats of legal action.)

Here was the letter I sent, which was significantly more mature in tone for having waited 24 hours before writing it

My wife and I are both HBS '89 grads.  We own and actively manage a small to medium size service business.  I was encouraged at our last reunion to hear a lot of the effort HBS seems to be placing on small business and entrepreneurship.

However, I was horrified to see an HBS professor (prof Edelman) in the news harassing a small business over a small mistake on its web site.  I don't typically get worked up about Harvard grads acting out, but in this particular case his actions are absolutely at the core of what is making the operation of a small business increasingly impossible in this country.

Small businesses face huge and growing compliance risks from almost every direction -- labor law, safety rules, environmental rules, consumer protection laws, bounty programs like California prop 65, etc.  What all these have in common is that they impose huge penalties for tiny mistakes, mistakes that can be avoided only by the application of enormous numbers of labor hours in compliance activities.   These compliance costs are relatively easy for large companies to bear, but back-breaking for small companies.

So it is infuriating to see an HBS professor attempting to impose yet another large cost on a small business for a tiny mistake, particularly when the proprietor's response was handled so well.  Seriously, as an aside, I took service management from Ben Shapiro back in the day and I could easily see the restaurateur involved being featured positively in a case study.  He does all the same things I learned at HBS --  reading every customer comment personally, responding personally to complaints, bending over backwards to offer more than needed in order to save the relationship with the customer.

As for the restaurateur's web site mistake -- even in a larger, multi-site company, I as owner do all my own web work.  Just as I do a million other things to keep things running.  And it is hard, in fact virtually impossible, to keep all of our web sites up to date.  Which is why Professor Edelman's response just demonstrates to me that for all HBS talks about entrepreneurship, the faculty at HBS is still more attuned to large corporations and how they operate with their enormous staff resources rather than to small businesses.

Large corporations are crushing smaller ones in industry after industry because of the economy of scale they have in managing such compliance issues.  If the HBS faculty were truly committed to entrepreneurship, it should be thinking about how technology and process can be harnessed by smaller businesses to reduce the relative costs of these activities. How, for example, can I keep up with 150+ locations that each need a web presence when my sales per site are so much less than that of a larger corporation?  This is not impossible -- I have learned some tools and techniques over time -- and we should be teaching and expanding these, rather than spending time raising the cost of compliance for small business.

Why Do Climate Change Claims Consistently Get a Fact-Checker Pass?

It is almost impossible to read a media story any more about severe weather events without seeing some blurb about such and such event being the result of manmade climate change.  I hear writers all the time saying that it is exhausting to run the gauntlet of major media fact checkers, so why do they all get a pass on these weather statements?  Even the IPCC, which we skeptics think is exaggerating manmade climate change effects, refused to link current severe weather events with manmade CO2.

The California drought brings yet another tired example of this.  I think pretty much everyone in the media has operated from the assumption that the current CA drought is 1. unprecedented and 2. man-made. The problem is that neither are true.  Skeptics have been saying this for months, pointing to 100-year California drought data and pointing to at 2-3 other events in the pre-manmade-CO2 era that were at least as severed.  But now the NOAA has come forward and said roughly the same thing:

Natural weather patterns, not man-made global warming, are causing the historic drought parching California, says a study out Monday from federal scientists.

"It's important to note that California's drought, while extreme, is not an uncommon occurrence for the state," said Richard Seager, the report's lead author and professor with Columbia University's Lamont Doherty Earth Observatory. The report was sponsored by the National Oceanic and Atmospheric Administration. The report did not appear in a peer-reviewed journal but was reviewed by other NOAA scientists.

"In fact, multiyear droughts appear regularly in the state's climate record, and it's a safe bet that a similar event will happen again," he said.

The persistent weather pattern over the past several years has featured a warm, dry ridge of high pressure over the eastern north Pacific Ocean and western North America. Such high-pressure ridges prevent clouds from forming and precipitation from falling.

The study notes that this ridge — which has resulted in decreased rain and snowfall since 2011 — is almost opposite to what computer models predict would result from human-caused climate change.

There is an argument to be made that this drought was made worse by the fact that the low precipitation was mated with higher-than average temperatures that might be partially attributable to man-made climate change.  One can see this in the Palmer drought severity index, which looks at more factors than just precipitation.  While the last 3 years was not the lowest for rainfall in CA over the last 100, I believe the Palmer index was the lowest for the last 3 years of any period in the last 100+ years.  The report did not address this warming or attempt to attribute some portion of it to man, but it is worth noting that temperatures this year in CA were, like the drought, not unprecedented, particularly in rural areas (urban areas are going to be warmer than 50 years ago due to increasing urban heat island effect, which is certainly manmade but has nothing to do with CO2.)

Update:  By the way, note the article is careful to give several paragraphs after this bit to opponents who disagree with the findings.  Perfectly fine.  But note that this is the courtesy that is increasingly denied to skeptics when the roles are reversed.  Maybe I should emulate climate alarmists and be shouting "false balance!  the science is settled!"

If You Like Your Health Plan...

We received a letter from Blue Cross / Blue Shield of AZ saying we could keep our plan, but the cost goes from about $579 a month to $739 a month in January of 2015 (a 27.6% increase).  Note that this is for a pretty high deductible health plan, something like $5000.  We wrote to our broker to explore options.  We got this response:

Crazy as this latest BC [Blue Cross] rate increase is it is a lot better than Obamacare.  I ran the same plan under the Affordable Care Act with BC and the rate for 1/1/15 would be $963.70 a month and if you went to the $6300 deductible plan the rate would still be $914 a month.  So I guess we are all lucky to be out of ACA until we are forced into it.  Now there is one variable that could lower your cost and that is if your household income in 2015 will be under $92k you could go into the Marketplace for premium assistance from our wonderful Federal government. If it is going to be higher than that be grateful you are where you are!

As predicted in advance, Obamacare and the exchange are not about saving money.  The only people who are saving money are those getting taxpayer subsidies in the exchange.

Trend That is Not A Trend: Sexual Assaults on Campus

In response to the twin notions that sexual assaults are a) increasing and b) particularly prevalent on college campuses where a "rape culture" supposedly exists, comes this recent report from the DOJ on sexual assault prevalence among college aged women.



Update:  For a university the size of UVA (20,000 students, presumably 10,000 women) these data imply about 200 of the current students will be sexually assaulted over their four years.  This is a depressingly large number, and makes one wonder with this many examples to choose from how Rolling Stone managed to find one case that was so obviously heavily embellished (at a minimum) or fraudulent.  200 is, however, an order of magnitude smaller than the 2000 that would be predicted by the "1 in 5" number which is repeated so uncritically by public figures.

As to the declining trend, I understand the issue of under-reporting, though most folks in the know seem to think this type of study (which includes unreported cases) is more accurate than reported crime figures.  But for under-reporting to affect the trend (rather than the absolute numbers) one would have to argue that the reporting percentage is declining, something for which I have never seen evidence and which is a proposition that defies common sense.  Over the last decades, sexual assault victims have gone from being shamed to being protected to being put on a pedestal (given our current fetishization of victimization).  It is hard in this environment to imagine sexual assault reporting rates going down.

Techniques to Aid Authoritarians: The Supposed Statute of Limitations on Outrage

In the Fast and Furious and IRS scandals, the Administration has purposefully dragged its feet on disclosures.  The strategy is to let as much time pass so that when bad revelations eventually come out, the heat from the original scandal is gone.  Defenders of the Administration will then argue the revelations are "old news", as if there is some statute of limitations on outrage.  This strategy has driven Republicans crazy.

So what do Conservatives do when the torture report comes out after months and months of foot-dragging trying to prevent its release? You got it, they scream "old news".  Scott Johnson:

I confess that I do not understand the rationale supporting the publication of the Democrats’ Senate Select Committee study of the CIA’s detention and interrogation program. On its face, it seems like ancient history (of a highly tendentious kind) in the service of a personal grudge. It is not clear to me what is new and it is not clear that what is new is reliable, given the absurd limitations of the committee’s investigation.

By the way, I want to make one observation on this line from attorney John Hinderaker:

Similarly, the report confirms that the Agency’s enhanced interrogation techniques were used on only a small number of captured terrorists, 39 altogether. These enhanced techniques include the “belly slap” and the dreaded “attention grasp.”

Most important, it appears that waterboarding really was the most extreme sanction to which any of the terrorists were subjected (and only three of them, at that). Given all the hoopla about CIA “torture,” one might have expected to learn that far worse happened at the Agency’s dark sites. But, as far as the report discloses, the Agency stuck almost exclusively to its approved list of tactics, all of which the Department of Justice specifically found not to be torture.

Were some of the captured terrorists treated roughly? Absolutely. Their lives must have been miserable, and deservedly so. Some of the 39 were placed in stress positions for considerable lengths of time, doused with water, fed poor diets, left naked in cells. In one instance, a terrorist was threatened with a power drill. In another case, an interrogator told a terrorist that his children may be killed. There were two instances of mock execution.

A few observations:

  • The fact that they were "terrorists" seems to justify the mistreatment for him.  But how do we know they were terrorists?  Because the Administration said so.  There was no due process, no right of appeal, no ability to face witnesses, no third party review, none of that.  A branch of the Administration grabbed the guy, said you are a terrorist, and started torturing them.  I am not saying that they did this without evidence, but I am sure Mr. Hinderaker know from his own experience that every prosecutor thinks every person he or she tries is guilty.  That is why both sides get to participate in the process.
  • "Terrorist" is an awfully generic word to give us automatic license to torture people.  My sense is that there are all kinds of shades of behavior lumped under that word.  Conservatives like Mr. Hinderaker object, rightly, to a wide range of sexually aggressive actions from unwanted kissing to forced penetration being lumped under the word "rape".  But my sense is we do the same thing with "terrorists".
  • In my mind the casualness with which he can accept these kinds of treatments for people he does not like is morally debilitating.  It is a small step from accepting it for one to accepting it for many.  It is like the old joke of a debutante asked if she would have sex for a million dollars and saying "yes", then getting asked if she would have sex for $20 and responding "what kind of girl do you think I am?"  We've already established that, we are just haggling over price.
  • For those on the Right who say that all this stuff about due process does not apply because the "terrorists" were not citizens, then welcome to the Left!  Individual rights are innate -- they are not granted by governments (and thus by citizenship).  The Right generally says they believe this.  It is the Left whose positions imply that rights are favors granted by the state to its citizens.

How Is This Even A Question? Oil Price Drop is Great

The recent drop in oil prices has been met with a surprising amount of negativity, as if something bad is happening.  This strikes me as insane.  The world uses 90 or so million barrels of oil a day.  The recent $30+ price drop in oil thus equals a world savings of $1 trillion a year.

Sure, oil companies and their suppliers are worse off (and believe me, I care -- a lot of my portfolio was invested in such things when oil started dropping).  But the economy as a whole is clearly better off and wealthier.

To understand why, the analysis we need to undertake is an exact parallel of the broken window fallacy analysis.  Its sort of a healing window analysis.

After the oil price drop, consumers have a trillion dollars more and oil producers have a trillion dollars less.  Even right?  Actually, not.  Because consumers then spend that trillion on other things.  Those other manufacturers and producers get the trillion dollars lost to the oil industry.  Still even, right?  No.  Think of it this way:

Before the price drop

  • Oil companies have $1 trillion extra revenue
  • Other producers have no extra revenue
  • Consumers have 90 million barrels a day of oil

After the price drop

  • Oil companies have no extra revenue
  • Other producers have $1 trillion extra revenue
  • Consumers have 90 million barrels a day of oil AND $1 trillion of extra stuff (goods, service, savings, etc)

The world in the second case is wealthier.  And this is assuming all the people involved are private parties.   In fact, much of the oil revenue drop comes out of the hands of  value-destroying governments so that in fact the wealth increase in the price drop scenario is actually likely even greater than in this simplistic analysis.

Postscript:  OK, yes I am ignoring any cost of carbon pollution.  But the market is not set up to price that, and readers will know that I am skeptical that the cost is that high.  Never-the-less, this is a separate issue that if it needs to be dealt with should be dealt with as a carbon tax on fuels.  The price drop should not affect the value of that tax.  Or another way to put it, if one thinks the tax should be $30 per ton based on a $30 cost of carbon, it should be $30 per ton at $100 oil and $30 per ton at $60 oil.

Trend That is Not A Trend: Increase in Typhoons and Hurricanes

The science that CO2 is a greenhouse gas and causes some warming is hard to dispute.  The science that Earth is dominated by net positive feedbacks that increase modest greenhouse gas warming to catastrophic levels is very debatable.  The science that man's CO2 is already causing an increase in violent and severe weather is virtually non-existent.

Seriously, of all the different pieces of the climate debate, the one that is almost always based on pure crap are the frequent media statements linking manmade CO2 to some severe weather event.

For example, Coral Davenport in the New York Times wrote the other day:

As the torrential rains of Typhoon Hagupit flood thePhilippines, driving millions of people from their homes, the Philippine government arrived at a United Nationsclimate change summit meeting on Monday to push hard for a new international deal requiring all nations, including developing countries, to cut their use of fossil fuels.

It is a conscious pivot for the Philippines, one of Asia’s fastest-growing economies. But scientists say the nation is also among the most vulnerable to the impacts of climate change, and the Philippine government says it is suffering too many human and economic losses from the burning of fossil fuels....

A series of scientific reports have linked the burning of fossil fuels with rising sea levels and more powerful typhoons, like those that have battered the island nation.

It is telling that Ms. Davenport did not bother to link or name any of these scientific reports.  Even the IPCC, which many skeptics believe to be exaggerating manmade climate change dangers, refused in its last report to link any current severe weather events with manmade CO2.

Roger Pielke responded today with charts from two different recent studies on typhoon activity in the Phillipines.  Spot the supposed upward manmade trend.  Or not:




I am not a huge fan of landfalling cyclonic storm counts because whether they make landfall or not can be totally random and potentially disguise trends.  A better metric is the total energy of cyclonic storms, land-falling or not, where again there is no trend.

Via the Weather Underground, here is Accumulated Cyclonic Energy for the Western Pacific (lower numbers represent fewer cyclonic storms with less total strength):



And here, by the way, is the ACE for the whole globe:



Remember this when you see the next storm inevitably blamed on manmade global warming.  If anything, we are actually in a fairly unprecedented (in the last century and a half) hurricane drought.

Morally Lost

Much of the Conservative pushback on the torture report today has been to argue that the torture was actually much more useful in terms of information gathering than the Senate report concludes.  Who gives a cr*p?  Are these really the same folks who lecture me about morality for wanting to allow gay men to marry, but are A-OK with torture?

In the rape discussion, those who show skepticism about false stories of rape are considered, unfairly, rape apologists.  But these folks I am hearing today are truly torture apologists.  It is sickening.  If Conservatives were truly just in a Bismarkian blood and iron mode, I guess at least they would be internally consistent.  But many of these guys are neo-Conservatives, who are essentially advocating torture as a means to spreading our positive values around the world.

Conservatives, correctly I think, criticized the Obama Administration for blaming the Libyan embassy attack on YouTube video.  They argued that he should have been standing up in front of the world and explaining free speech and educating the world on why we don't punish folks for its exercise, even when we disagree with them.  All fine, except how does advocating for torture play into this bully pulpit theme?

Scottsdale Police Union Charity: Less than 5 Cents of Each Donated Dollar Actually Getting Used For Charity

These guys hassle me constantly for money and I generally duck them.  Which is good, because if I had actually given money, I would be pissed:

The Scottsdale police union known as POSA -- the Police Officers of Scottsdale Association -- stages several events every year to help bring police and the community closer together. Over the next two weeks, 500 Scottsdale children will go holiday shopping with $150 in their pockets in the annual Shop with a Cop event.

But a closer look at POSA's federal tax filings shows just pennies of every dollar you donate reaches the community.


The union's most recent federal tax filings, for 2012, show about a million dollars in donations. For every dollar donated, professional fundraising services kept 81 cents -- about $814,000, records show.

A little more than 6 cents of every dollar went toward the $62,000-a-year salary of POSA director Cindy Hill. Hill is also the wife of union leader Jim Hill.

Less than a nickel of every dollar -- about $45,000 -- was spent on events like Shop with a Cop.

To be fair, this is probably about the same percentage of union dues that gets spent for their stated purpose, so these guys probably don't see anything amiss.

A Small Silver Lining in the Very Black Torture Cloud

Well, the Senate torture report is out and it is every bit as bad, perhaps worse, than expected.   There are summaries all over but this one seems as good as any.  And here. Essentially the CIA:

  • Tortured and detained more people than they ever admitted
  • Were more brutal than they ever admitted
  • Were more haphazard and incompetent than can be believed (losing suspects, outsourcing torture to a couple of outside psychologists with no interrogation experience or credentials)
  • Achieved far less than they bragged from the torture, with results that now appear to approximate zero
  • Lied about everything to everyone, up to and including Congress and the President

The CIA needs a forced enema of its own, though I am skeptical they will get it.

I will say that there is nothing really particularly surprising here to a libertarian.  This sort of lawlessness often occurs in fairly transparent government agencies (think VA) so it should be no surprise that it occurs in an agency like this that has zero accountability (because it can yell "classified" as the drop of a hat).  An agency empowered to hide stuff and keep secrets is going to hide stuff and keep secrets.  I am not even sure that if we really could turn the CIA upside down that this would be the worst thing we would find.

At the risk of diluting the totally appropriate horror with which this report should be received, I will observe a couple of positives:

  1. Three cheers for partisanship and divided government.  They get a bad rap because gridlock, but without confrontational, competitive, even polarized rivals for power, this sort of thing would never have come out.  You can see pretty clearly from the minority comments that Republicans would have buried this had they controlled the Senate.
  2. One cheer for American exceptionalism.  Yes, the hubris and arrogance that often accompanies American exceptionalism went a long way to contributing to these errors.   But there are not many countries in the world that would publish this report.  Forget for a minute Russia or China or Mali.  Even among western democracies there are not many countries that would voluntarily call for penalty strokes on themselves.  I can't imagine, for example, France ever making such an admission (and not, I think, because the DGSE's hands are particularly clean).

Kevin Drum Inadvertently Undermines His Own Keynesianism

This is a follow-up from a post this morning here.  Kevin Drum is a Keynesian who thinks that the government is committing economic suicide if it does not increase its spending substantially during and after a recession.  Kevin Drum is also a fierce partisan who wants to defend President Obama against his detractors.  Unfortunately, trying to do the two simultaneously has led to what I think may be an embarrassing result for him.

In the chart below, I combine two graphs of his.  The one on the left is a chart from last year in a Mother Jones cover story blasting "austerity" and lamenting how dumb it was to decrease spending in the years after a recession.  The chart on the right is from the other day, when Drum is agreeing with Paul Krugman that the recession recovery under Obama has been much stronger than the one under Bush II.  The result is a juxtaposition that seems to undermine his Keynesian assumptions - specifically, the recession where we had the "austerity" was the one with the better recovery.  The only thing I have done to his charts is removed lines in the left chart for other past recessions and changed the line colors on the two charts to match.   You can click to enlarge:

click to enlarge

The blue line is the Bush II recession, the red line is the Obama recession.  I believe the start dates are consistent in both charts.  All the numbers and choice of start dates and measurement scales are Drum's.  Don't yell at me for something in the chart construction being unfair -- they are his choices.

The conclusion?  Higher government spending seems to inhibit recovery.  Thanks Kevin!

Am I Reading This Right?

This seems to claim to be able to take photos fast enough to capture the movement of light.  Is that really possible?  Reminds me of watching sunrise on Discworld.

Economic Drivers I Had Not Considered Before

Geographic mobility costs are a drag on the economy, because they slow and/or truncate relocation of labor to shifting areas of demand (a good example is the fact that North Dakota currently can't get enough workers because people can't/won't move there to take advantage of the opportunities.

Apparently, there are economists who make the argument that one reason for the post-WWII boom is that the war increased mobility for a variety of reasons, not the least of which was the forced extrication of young men from their homes via the draft.  Apparently Hurricane Katrina may have had the same effect, blasting people out of the moribund New Orleans economy and forcing them to move to more dynamic areas.

This is probably true, but also one of those areas where economic analysis falls short of total well-being analysis (for lack of a better term).  I know folks from New Orleans and they often seem to be deeply tied to the New Orleans culture and miss it when they have moved away.   Many move back.  So just because someone is better off economically with a job in Houston does not necessarily mean they consider themselves better off.