Posts tagged ‘India’

Capitalism Finally Dismantling Indian Feudalism

This is a great story:

Karl Marx was wrong about many things but right about one thing: the revolutionary way capitalism attacks and destroys feudalism. As I explain in a new study,  in India, the rise of capitalism since the economic reforms of 1991 has also attacked and eroded casteism, a social hierarchy that placed four castes on top with a fifth caste—dalits—like dirt beneath the feet of others. Dalits, once called untouchables, were traditionally denied any livelihood save virtual serfdom to landowners and the filthiest, most disease-ridden tasks, such as cleaning toilets and handling dead humans and animals. Remarkably, the opening up of the Indian economy has enabled dalits to break out of their traditional low occupations and start businesses. The Dalit Indian Chamber of Commerce and Industry (DICCI) now boasts over 3,000 millionaire members. This revolution is still in its early stages, but is now unstoppable.

Consensus Science

The invaluable Carpe Diem blog has a compendium of 18 forecasts of doom that were made on or around the first Earth Day in 1970 -- all of which turned out wrong.   Here is an example:

8. Peter Gunter, a North Texas State University professor, wrote in 1970, “Demographers agree almost unanimously on the following grim timetable: by 1975 widespread famines will begin in India; these will spread by 1990 to include all of India, Pakistan, China and the Near East, Africa. By the year 2000, or conceivably sooner, South and Central America will exist under famine conditions….By the year 2000, thirty years from now, the entire world, with the exception of Western Europe, North America, and Australia, will be in famine.”

9. In January 1970, Life reported, “Scientists have solid experimental and theoretical evidence to support…the following predictions: In a decade, urban dwellers will have to wear gas masks to survive air pollution…by 1985 air pollution will have reduced the amount of sunlight reaching earth by one half….”

Participants in the global warming debate today will surely recognize the formulation of these statements as representing a consensus scientific opinion.

For those of you too young to actively follow the news in the 1970s, Mark Perry is not cherry-picking cranks.  These fearful quotations are representative of what was ubiquitous in the media of that time.

My school (Kinkaid in Houston) took speech and debate very seriously and had a robust debate program even in middle school.  In 1975-1976 the national debate topic was this:

Resolved:  That the development and allocation of scarce world resources should be controlled by an international organization

The short answer to this proposition should realistically have been:  "you have got to be f*cking kidding me."  But such were the times that this was considered a serious proposal worth debating for the entire year.  In fact, in doing research, it was dead-easy to build up suitcases of quotations of doom to support the affirmative;  it was far, far harder finding anyone who would argue that a) the world was not going to run out of everything in a few decades and b) that markets were an appropriate vehicle for managing resources.   I could fill up an hour reading different sources predicting that oil would have run out by 1990 or 2000 at the latest.

India: One Foot In, One Foot Out of the Modern World

I just filled out a tourist visa application for one of my kids going to India.  I found it intriguing that on the one hand:

  • If you are a student, you had to give employment information on your source of support, but the only options were spouse and father.  No option for mother's occupation
  • You had to specify a religion -- no option for "atheist" or "none" or "none of your freaking business"

On the other hand:

  • There was a gender option for "transgender".

Anyway, the Indian online visa process had the Italians beaten hands down.  Actually the Chinese beat the Italians as well.  And, everyone I know who is not American tells me the US is the worst about visas.

Harvard Business School and Women

The New York Times has a long article on  Harvard Business School's effort to change its culture around women.  Given that both my wife and I attended, albeit 25 years ago, I have a few thoughts.

  • I thought the article was remarkably fair given that it came from the NYT.  Men who are skeptical of the program actually are allowed to voice intelligent objections, rather than just be painted as Neanderthals
  • I would have abhorred the forced gender indoctrination program, as much for being boring as for being tangential.  I am fortunate I grew up when I did, before such college group-think sessions were made a part of the process everywhere.  I would presume most of these young folks are now used to such sessions from their undergrad days.   I would not have a problem having an honest and nuanced discussion about these issues with smart people of different backgrounds, but I thought the young man they quoted in the article said it really well -- there is just no payoff to voicing a dissenting opinion in such sessions where it is clear there is a single right answer and huge social and even administrative penalties for saying the wrong thing.
  • I went to HBS specifically because I loved the confrontational free-for-all of the classes.   It was tailor-made to my personality and frankly I have never been as successful at anything before or since as I was at HBS.   I say this only to make it clear that I have a bias in favor of the HBS teaching process.   I do think there is an issue that this process does not fit well with certain groups.  These folks who do not thrive in the process are not all women (foreign students can really struggle as well) but they are probably disproportionately women.  So I was happy to see that rather than dumb down the process, they are working to help women be more successful and confident in it.
  • It is interesting to see that the school still struggles to get good women professors.  When I was there, the gap between the quality of men and women professors was staggering.  The men were often older guys who had been successful in the business and finance world and now were teaching.  The women were often young and just out of grad school.  The couple of women professors I had my first year were weak, probably the two weakest professors I had.  In one extreme case our female professor got so jumbled up in the numbers that the class demanded I go down and sort it out, which I finally did.  I thought it was fun at the time, but now I realize how humiliating it was.
  • To some extent, the school described in the article seems a different place than when I was there.  They describe a school awash in alcohol and dominated by social concerns.  This may be a false impression -- newspapers have a history of exaggerating college bacchanalia.   At the time I was there, Harvard did not admit many students who did not have at least 2 years of work experience, such that the youngest students were 24 and many were in their 30's and 40's.  A number were married and some even had children.   To be there, they not only were paying a lot of money but they were quitting paying jobs.  The school was full of professionals who were there for a purpose.  I had heard that HBS had started to admit more students right out of college -- perhaps that is a mistake.
  • The fear by the women running the school that women would show up on Halloween wearing "sexy pirate" costumes represents, in my mind, one of the more insidious aspects of this new feminist paternalism (maternalism?) aimed at fellow women.  Feminism used to be about empowering women to make whatever choices they want for their lives.   Now it is increasingly about requiring women to make only the feminist-approved choices.
  • I actually wrote a novel where the protagonist was a confident successful female at HBS.   So I guess I was years ahead of the curve.

Postscript:  Below the fold is an excerpt from my novel.  In it, the protagonist Susan describes how an HBS class works and shares my advice for being successful at HBS.

Continue reading ‘Harvard Business School and Women’ »

Krugman Dead Wrong on Capital Controls

I am a bit late to the game in addressing Krugman's comments several days ago when he said:

But the truth, hard as it may be for ideologues to accept, is that unrestricted movement of capital is looking more and more like a failed experiment.

This was in response to the implosion of Cyprus banks, which was exacerbated (but not necessarily caused) by the banks being a home for a lot of international hot money - deposits so large they actually dwarfed the country's GDP.

I generally rely on Bastiat's definition of the role of the economist, which I will quote from Wikipedia (being too lazy on this Friday morning to find a better source):

One of Bastiat's most important contributions to the field of economics was his admonition to the effect that good economic decisions can be made only by taking into account the "full picture." That is, economic truths should be arrived at by observing not only the immediate consequences – that is, benefits or liabilities – of an economic decision, but also by examining the long-term second and third consequences. Additionally, one must examine the decision's effect not only on a single group of people (say candlemakers) or a single industry (say candlemaking), but on all people and all industries in the society as a whole. As Bastiat famously put it, an economist must take into account both "What is Seen and What is Not Seen."

By this definition, Krugman has become the world's leading anti-economist.  Rather than reject the immediate and obvious (in favor of the larger picture and the unseen), he panders to it.  He increasingly spends his time giving intellectual justification to the political predilection for addressing symptoms rather than root causes.  He has become the patron saint of the candle-makers petition.

I am not naive to the fact that there are pools of international hot money that seem to be some of the dumbest money out there.  Over the last few years it has piled into one market or another, creating local asset bubbles as it goes.

But to suggest that international capital flows need to be greatly curtailed merely to slow down this dumb money, without even considering the costs, is tantamount to economic malpractice.

You want to know what much of the world outside of Western Europe and the US would look like without free capital flows?  It would look like Africa.  In fact, for the younger folks out there, when I grew up, countries like China and India and Taiwan and Vietnam and Thailand looked just like Africa.  They were poor and economically backwards.  Capital flows from developed nations seeking new markets and lower cost labor has changed all of that.  Over the last decade, more people have escaped grinding subsistence poverty in these nations than at any other time in history.

So we have the seen:  A million people in Cyprus face years of economic turmoil

And the unseen:  A billion people exiting poverty

By pandering to those who want to expand politicians' power based on a trivial understanding of the seen and a blindness to the unseen, Krugman has failed the most important role of an economist.

Other thoughts:  I would offer a few other random, related thoughts on Cyprus

  • Capital controls are like gun and narcotics controls:  They stop honest people and do little to deter the dishonest.  In the case of Cyprus, Krugman obviously would have wanted capital controls to avoid the enormous influx of Russian money the overwhelmed the government's effort to stabilize the banks.  But over the last several weeks, the Cyprus banks have had absolute capital controls in place - supposedly no withdrawals were allowed.  And yet when the banks reopened, it become increasingly clear that many of the Russians had gotten their money out.  Capital controls don't work as a deterrence to money that is already corrupt and being hidden.
  • No matter what anyone says, the huge capital inflows into Cyprus had nothing to do with the banking collapse.  The banks had the ability to invest the money in a range of international securities, and the money was tiny compared to the size of those security pools.  So this is not like, say, a housing market where in influx of money might cause a bubble.   The only harm caused by the size of the Russian investments is that once the bank went bad, the huge size of the problem meant that the Cyprus government did not have the resources to bail out the bank and protect depositors from losses.
  • Capital controls are as likely to make bubbles worse as they are to make them better.  Certainly a lot of international money piling into a small market can cause a bubble.  But do capital controls really create fewer bubbles?  One could easily argue that the Japanese asset bubble of the late 80's would have been worse if all the money were bottled up in the country. When the Japanese went around the world buying up American movie studios and landmark real estate, that was in some sense a safety valve reducing the inflationary pressure in Japan.
  • Capital controls are the worst sort of government expropriation.  You hear on the news that the "haircut" taken by depositors in Cyprus might be 20% or 80% or whatever.  But in my mind it does not matter.   Because once the government put strict capital controls in place, the haircut effectively became 100%, at least for honest people that don't have the criminal ability or crony connections to beat the system.  Cyprus basically produces nothing.  Since money is only useful to the extent that it can buy or invest in something, then bottling up one's money in Cyprus basically makes it worthless.
  • Capital controls are a prelude to protectionism.   First, international trade is impossible without free flow of capital.   No way Apple is going to sell ipods in Cyprus if they cannot at some point repatriate their profits.  Capital controls can also lead to export controls.  If I can't export money, I might instead buy jets, fly them out of the country, and then sell the jets.
  • Let's not forget that the core of this entire problem is a government, not a private, failure.  Banks and investors treated sovereign euro-denominated debt as a risk-free investment, and banking law (e.g. Basil II) and pension law in most countries built this assumption into law.  Cyprus banks went belly-up because the Greeks, in whom they had (unwisely) invested most of their funds, can't exercise any fiscal responsibility in their government.  If European countries could exercise fiscal responsibility in their government borrowing, 80% of the banking crisis would not exist (housing bubbles and bad mortgage securities have contributed in some countries like Spain).  There is a circle here:  Politicians like to deficit spend.  They write regulations to encourage banks to preferentially invest in this government paper.  When the government debt gets iffy, and the banks face collapse, the governments have to bail them out because otherwise there is no home for their future debt.  The bailouts get paid for with more debt, which gets crammed back into increasingly over-leveraged banks.    What a mess.
  • All of this creates an interesting business school problem for the future:  What happens when there are no longer risk-free investments?  Throughout finance one talks about risk free rates and all other risks and risk premiums and discussed in reference to this risk-free benchmark.  In regulation, much of banking capital regulation and pension regulation is based on there being a core of risk free, liquid investments.  But what if these do not exist any more?
  • I have thought a lot about a banking model where the bank accepts deposits and provides basic services but does no lending - a pure deposit bank with absolute transparency on its balance sheet and investments.  I think about a web site depositors can check every day to see exactly where depositors money is invested and its real time values.  Only listed, liquid securities with daily mark to market.   Open source investing, as it were.  In the past, deposit insurance has basically killed this business model, but I think public confidence in deposit insurance just took a big-ass hit this week.

Postscript:  I don't want to fall into a Godwin's law trap here, but I am currently reading Eichmann in Jerusalem and it is impossible for me to ignore the role strict capital controls played in Nazi Germany's trapping and liquidation of the Jews.

PS#2:  Oops, Hayek beat me by about 70 years to the postscript above

The extent of the control over all life that economic control confers is nowhere better illustrated than in the field of foreign exchanges. Nothing would at first seem to affect private life less than a state control of the dealings in foreign exchange, and most people will regard its introduction with complete indifference. Yet the experience of most Continental countries has taught thoughtful people to regard this step as the decisive advance on the path to totalitarianism and the suppression of individual liberty. It is, in fact, the complete delivery of the individual to the tyranny of the state, the final suppression of all means of escape—not merely for the rich but for everybody.

Wow

This is one of the more amazing things I have read of late.  Environmentalist recants his opposition to GMOs.  Good, I hope Greenpeace is listening and will reconsider its absurd and destructive opposition to golden rice.

As an environmentalist, and someone who believes that everyone in this world has a right to a healthy and nutritious diet of their choosing, I could not have chosen a more counter-productive path. I now regret it completely.

So I guess you’ll be wondering – what happened between 1995 and now that made me not only change my mind but come here and admit it? Well, the answer is fairly simple: I discovered science, and in the process I hope I became a better environmentalist....

So I did some reading. And I discovered that one by one my cherished beliefs about GM turned out to be little more than green urban myths.

I’d assumed that it would increase the use of chemicals. It turned out that pest-resistant cotton and maize needed less insecticide.

I’d assumed that GM benefited only the big companies. It turned out that billions of dollars of benefits were accruing to farmers needing fewer inputs.

I’d assumed that Terminator Technology was robbing farmers of the right to save seed. It turned out that hybrids did that long ago, and that Terminator never happened.

I’d assumed that no-one wanted GM. Actually what happened was that Bt cotton was pirated into India and roundup ready soya into Brazil because farmers were so eager to use them.

I’d assumed that GM was dangerous. It turned out that it was safer and more precise than conventional breeding using mutagenesis for example; GM just moves a couple of genes, whereas conventional breeding mucks about with the entire genome in a trial and error way.

Bravo Mr Lynas.  It is hard to admit one was wrong.  It is even harder, though, for a man like Lynas to declare himself on the "wrong" side of a "progressive" issue like this.  He has now likely put himself into a category along with black Republicans who will incur special wrath and disdain from progressives.

Speaking of the need for a little science in the environmental movement, I was channel surfing over Bill Moyer's show yesterday on PBS (actually I was navigating to our local PBS station to  make sure Downton Abbey was set to record later in the day) when I heard Moyer whip out a stat that even with a carbon tax, the world will warm over 6 degrees this century.  Now, I don't know if he was talking in degrees F or C, but in either case, a 6 degree number far outstrips the climate sensitivity numbers used even by the IPCC, which many of us skeptics believe has exaggerated warming estimates.  It is constantly frustrating to be treated as an enemy of science by those who display such a casual contempt for it, while at the same time fetishizing it.

I Like to Hear This

In the past I have been critical of First Solar, like I have most solar companies, for having business models that were almost entirely dependent on huge government subsidies, particularly in Europe.  When these go away, the businesses start to crash.

I have not had time to dig into their financials to look for shenanigans, and to parse out how much is still dependent in some way on either direct subsidies of solar projects or incentives that cause utilities to buy solar electricity at above market rates, but First Solar reversed their large losses to a profit in the last quarter.  I am not sure if this is BS or not, but I like this attitude if true:

The company's cost per watt is the lowest in the industry, but it increased slightly during the quarter, to 72 cents per watt, because of the under utilization of its factories. If the factories had run more, the cost would have gone down, officials said.

Hughes said First Solar is making headway on its plan to target regions of the world with ample sunshine and a need for electricity, where solar power can compete without subsidies that make it cost-effective when compared with traditional energy sources.

Those places include Australia, India, the Middle East and other regions, he said.

That would be terrific.  I would love to see a solar boom driven by real economics and not taxpayer largess.

And We Climate Skeptics Get Called Evil

From the Gaurdian via Bishop Hill

The Guardian is reporting that UK climate change aid money has been used to fund forced sterilisation programmes in India.

Tens of millions of pounds of UK aid money have been spent on a programme that has forcibly sterilised Indian women and men, the Observer has learned...

Court documents filed in India earlier this month claim that many victims have been left in pain, with little or no aftercare. Across the country, there have been numerous reports of deaths and of pregnant women suffering miscarriages after being selected for sterilisation without being warned that they would lose their unborn babies.

Yet a working paper published by the UK's Department for International Development in 2010 cited the need to fight climate change as one of the key reasons for pressing ahead with such programmes. The document argued that reducing population numbers would cut greenhouse gases, although it warned that there were "complex human rights and ethical issues" involved in forced population control.

A Small Victory

A small victory against the relentless march of the state regulators and licensors

Eyebrow threading to remove facial hair, a practice which has ancient roots in Eastern countries such as India and Iran, is gaining popularity around the country.

And threaders can now operate freely in the state without a cosmetology license after an October court settlement determined that the Arizona Board of Cosmetology would no longer regulate the trade.

The consent judgment resulted from a lawsuit filed in Maricopa County Superior Court by five threaders, including Gutierrez.

The threaders argued that the Board of Cosmetology was merely trying to help more traditional hair removal outfits remove a source of low-cost competition.  The threaders were represented by the IJ, who do great work for economic liberty

Speaking of Income Distribution

This chart, from a book by Branko Milanovic via Carpe Diem reinforces a point about income distribution I make all the time -  for all we talk about income distribution in this country, our poorest 20% would be middle class in many countries of the world.  While I would love to see our poor doing even better, it begs the question of whether distribution or absolute prosperity is more important.

Just to give you a feel for reading the chart, the US's lowest ventile, or bottom 5%, have income that would put them in the 68th percentile worldwide.    Our poorest 20% (the first 4 ventiles) would be upper middle class or better in Brazil, China, and India.

When comparing to European social democracies, it turns out that while the US's income distribution is wider, that is almost entirely due to the top end being higher.  The poorest 10% make about the same as the poorest 10% in Europe, and I would argue that this analysis (from a leftish think tank) actually underestimates a quality of life advantage for American poor, who come out higher even than the middle class in Europe on things like living space and appliance ownership.

Perhaps more importantly than income inequality, income mobility remains high in this country. More on income inequality concerns here.

A New Scientific Low

I am really just amazed by these remarks by NCAR's Dr. Ken Trenberth to be given, apparently planned for the American Meteorological Society gathering this month.   The pdf is here and Anthony Watt has reprinted it on his blog.

It is hard to know where to start, but the following excerpt is an outstanding example of climate science process where 1.  Conclusions are assumed; 2.  Conclusions are deemed unequivocal by reference to authority; 3. Debate rules are proposed wherin it is impossible to refute the conclusion; 4.  All weather events that make the news are assumed to be caused or made worse by man-made warming, and thereby, in circular fashion, further prove the theory.

Normally, when I cite the above as the process, I get grief from folks who say I am mis-interpreting things, as usually I am boiling a complex argument down to this summary.   The great thing about alarmist Trenberth's piece is that no interpretation is necessary.   He outlines this process right in a single paragraph.  I will label the four steps above

Given that global warming is “unequivocal” [1], to quote the 2007 IPCC report [2], the null hypothesis should now be reversed, thereby placing the burden of proof on showing that there is no human influence [3]. Such a null hypothesis is trickier because one has to hypothesize something specific, such as “precipitation has increased by 5%” and then prove that it hasn’t. Because of large natural variability, the first approach results in an outcome suggesting that it is appropriate to conclude that there is no increase in precipitation by human influences, although the correct interpretation is that there is simply not enough evidence (not a long enough time series). However, the second approach also concludes that one cannot say there is not a 5% increase in precipitation. Given that global warming is happening and is pervasive, the first approach should no longer be used. As a whole the community is making too many type II errors [4].

Are you kidding me -- if already every damn event in the tails of the normal distribution is taken by the core climate community as a proof of their hypothesis, how is there even room for type II errors?  Next up -- "Our beautiful, seasonal weather -- proof of global warming?"

Remember that the IPCC's conclusion of human-caused warming was based mainly on computer modelling.  The IPCC defenders will not admit this immediately, but press them hard enough on side arguments and it comes down to the models.

The summary of their argument is this:  for the period after 1950, they claim their computer models cannot explain warming patterns without including a large effect from anthropogenic CO2.  Since almost all the warming in the latter half of the century really occurred between 1978 and 1998, the IPCC core argument boils down to "we are unable to attribute the global temperature increase in these 20 years to natural factors, so it must have been caused by man-made CO2."  See my video here for a deeper discussion.

This seems to be a fairly thin reed.  After all, it may just be that after only a decade or two of serious study, we still do not understand climate variability very well, natural or not.  It is a particularly odd conclusion when one discovers that the models ignore a number of factors (like the PDO, ENSO, etc) that affect temperatures on a decadal scale.

We therefore have a hypothesis that is not based on observational data, and where those who hold the hypothesis claim that observational data should no longer be used to test their hypothesis.    He is hilarious when he says that reversing the null hypothesis would make it trickier for his critics.  It would make it freaking impossible, as he very well knows.  This is an unbelievingly disingenuous suggestion.  There are invisible aliens in my closet Dr. Trenberth -- prove me wrong.  It is always hard to prove a negative, and impossible in the complex climate system.  There are simply too many variables in flux to nail down cause and effect in any kind of definitive way, at least at our level of understanding  (we have studied economics much longer and we still have wild disagreements about cause and effect in macroeconomics).

He continues:

So we frequently hear that “while this event is consistent with what we expect from climate change, no single event can be attributed to human induced global warming”. Such murky statements should be abolished. On the contrary, the odds have changed to make certain kinds of events more likely. For precipitation, the pervasive increase in water vapor changes precipitation events with no doubt whatsoever. Yes, all events! Even if temperatures or sea surface temperatures are below normal, they are still higher than they would have been, and so too is the atmospheric water vapor amount and thus the moisture available for storms. Granted, the climate deals with averages. However, those averages are made up of specific events of all shapes and sizes now operating in a different environment. It is not a well posed question to ask “Is it caused by global warming?” Or “Is it caused by natural variability?” Because it is always both.

At some level, this is useless.   The climate system is horrendously complex.  I am sure everything affects everything.  So to say that it affects the probability is a true but unhelpful statement.   The concern is that warming will affect the rate of these events, or the severity of these events, in a substantial and noticeable way.

It is worth considering whether the odds of the particular event have changed sufficiently that one can make the alternative statement “It is unlikely that this event would have occurred without global warming.” For instance, this probably applies to the extremes that occurred in the summer of 2010: the floods in Pakistan, India, and China and the drought, heat waves and wild fires in Russia.

Now he has gone totally off the scientific reservation into astrology or the occult or something.   He is saying that there is a high probability that if CO2 levels were 120ppm lower that, for example, the floods in Pakistan would not have occurred.  This is pure conjecture, absolutely without facts, and probably bad conjecture at that.  After all, similar events of similar magnitude have occurred through all of recorded history in exactly these locations.

Some Notes

1.  For those unfamiliar with the issues, few skeptics deny that man's CO2 has no effect on warming, but believe the effect is being enormously exaggerated.  There is a bait and switch here, where the alarmist claims that "man is causing some warming" is the key conclusion, and once accepted, they can head off and start controlling the world's economy (and population, as seems to be desired by Trenberth).   But the fact that CO2 causes some greenhouse warming is a trivial conclusion.  The hard part is, in the complex climate system, how much does it cause.  There is a an argument to be made, as I have, that this warming is less than 1C over the next century.  This number actually has observational data on its side, as actual warming over the last century, given past CO2 increases, is much more consistent with my lower number than various alarmist forecasts of doom.  Again, this is discussed in much more depth here.

2.  One interesting fact is that alarmists have to deal with the lack of warming or increase in ocean heat content over the last 12 years or so.  They will argue that this is just a temporary aberration, and a much shorter time frame than they are working on.  But in effect, the core IPCC conclusions were really based on the warming over the 20 years from 1978-1998.  So while 12 years is admittedly short compared to many natural cycles in climate, and might be considered a dangerously short period to draw conclusions from, it is fairly large compared to the 20 year period that drove the IPCC conclusions.

Update: More thoughts from the Reference Frame.

Layout Progress: Base & Initial Trackwork

This is part of a recurring series on the evolution of my n-scale switching layout.  More after the break...

Continue reading ‘Layout Progress: Base & Initial Trackwork’ »

Mark Perry on US Manufacturing

I could link Mark Perry almost every day, and have to restrain myself.  If you like my blog, you should be reading his too.  Anyway, here is his take on US manufacturing figures:

If the U.S. manufacturing sector were a separate country, it would be tied with Germany as the world's third largest economy. It would also be larger than the entire economies of India and Russia combined. As much as we hear about the "demise of U.S. manufacturing," and how we are a country that "doesn't produce anything anymore," and how we have "outsourced our production to China," the U.S. manufacturing sector is alive and well, and the U.S. is still the largest manufacturer in the world.

The Copenhagen Income Redistribution Conference

One of the great appeals of catastrophic anthropogenic global warming theory in certain sectors is the fact that what it takes to fight the imagined threat  (reduced trade, reduced economic growth, government controls on the economy, populist hammering of energy companies, micro-controls on individual decision-making) are exactly the things the socialists wanted to do before their schtick became tired.  Global warming has become the back-door to state control, combining some exaggerated science with a lot of folks' uninformed desire to "do the right thing", to create a new vector for old objectives.

Today, 56 newspapers  are all allowing some global warming activist to take over their newspapers to run the same panicky plea.   Bruce McQuain picks up the story:

In reality, I've come to understand this isn't about "climate change", this is about the politics of income redistribution. I've spoken of it in the past. This has been a goal of the third-world debating club, also known as the UN, since it has come into existence. The IPCC is just a convenient vehicle on which to base their claims and put them forward to the industrialized countries for fulfillment. The underlying "science", like a wet paper box, is coming apart at the seams. And not a single mention in the editorial. But it becomes clear, the further you get into it, that it is about what I contend it is about:

Social justice demands that the industrialised world digs deep into its pockets and pledges cash to help poorer countries adapt to climate change, and clean technologies to enable them to grow economically without growing their emissions. The architecture of a future treaty must also be pinned down "“ with rigorous multilateral monitoring, fair rewards for protecting forests, and the credible assessment of "exported emissions" so that the burden can eventually be more equitably shared between those who produce polluting products and those who consume them. And fairness requires that the burden placed on individual developed countries should take into account their ability to bear it; for instance newer EU members, often much poorer than "old Europe", must not suffer more than their richer partners.

If you were playing buzz word bingo with this paragraph you'd be at the prize table right now picking one out. It hits all of the favorite themes of income redistributionists. And its blatancy should scare you. This is about your wallet, your money and the rest of the world making a claim on it. This is the third world's dream come true.

I have to object somewhat to his last line.  This is the third world leader's dream come true, as I think most adults understand from past experience that aid like this gets siphoned off by the ruling regime.  What the Third World's people really need is what Southeast Asia and India and China have - real private investment making for real economic growth (to be fair, I think Bruce would accept this correction).

I thought this bit was hilarious:

It is in that spirit that 56 newspapers from around the world have united behind this editorial. If we, with such different national and political perspectives, can agree on what must be done then surely our leaders can too.

Apparently we are supposed to be dazzled that 56 institutions that all, in unison, blindly cling to the same 150-year-old failed business model, hoping that some other group can be prevailed upon to bail them out, would actually think alike about some issue.  Amazing!

Thought for the Day

I am sick and tired of so many people treating the economic growth of India and China like it is bad news.  The astounding numbers of people emerging from almost unimaginable poverty is fabulous news, and perhaps one of the ten greatest events in all of world history.  Too many people -- from neo-Malthusians to global warming alarmists to cold warriors looking for the next enemy to trade protectionists -- treat these countries' emerging wealth like it is some sort of disaster.

Hard To Believe For Anyone Who Trusted The Media in the 1970s

The media in the 1970's was filled with Club-of-Rome, the world is over-populated and running out of everything, Paul Ehrlich Population Bomb, end of the world stuff.  We know they were wrong on resources and pollution, but it turns out they were wrong on population too.  Again, the power of growth and wealth:

"When people got richer, families got smaller; and as families got smaller, people got richer. Now, something similar is happening in developing countries. Fertility is falling and families are shrinking in places"” such as Brazil, Indonesia, and even parts of India"”that people think of as teeming with children. As our briefing shows, the fertility rate of half the world is now 2.1 or less"”the magic number that is consistent with a stable population and is usually called "˜the replacement rate of fertility'. Sometime between 2020 and 2050 the world's fertility rate will fall below the global replacement rate."

Quickbooks -- Steadily Worse Each and Every Year

A quick note to many small businesses out there that use Quickbooks.  I know that most of us are cynical about annual upgrades from people like Microsoft as they seldom add any new functionality one actually needs, so they are seldom worth the price.  But there is an additional reason not to upgrade Quickbooks.  Every single version, since at least 2004 and up to and including 2009 has been worse than the previous year's version.  Somewhere around 2006 we got data file bloat, where the size of the company data file mushroomed 10-fold.  Around 2008 we got a goofy and intrusive place-a-phonecall-to-India authorization process.  In 2009 most of the online banking features were broken.

It is kind of funny to read Quickbooks reviews on Amazon, with each successive generation getting fewer stars.  Every version is dominated by reviews that begin with "worst quickbooks version yet."   Quickbooks 2009 right now is at about 2 stars, and is buoyed that high only by an aggressive campaign by Intuit employees to post 5-star reviews.  I stopped upgrading my business version around 2006 (and wish we had stopped earlier) but one of the non-profits I do the books for upgraded to 2009 and it is a mess.  Unfortunately, if you use the online banking functions or payroll service (we do not) Intuit forces your company to upgrade as there is apparently a 3-year clock built into the software that shuts down and forces an upgrade.

Its time for those market forces to get to work and make someone rich by bringing out an alternative.  Intuit is right for the plucking, if someone has the right product.

A Tribute to Norman Borlaug

Norman Borlaug, the founder and driving force behind the revolution in high-yield agriculture that Paul Ehrlich predicted was impossible, has died at the age of 98 95.  Like Radley Balko, I am struck by how uneventful his passing is likely to be in contrast to the homage paid to self-promoting seekers of power like Ted Kennedy who never accomplished a tiny fraction of what Borlaug achieved.  Reason has a good tribute here.  Some exceprts:

In the late 1960s, most experts were speaking of imminent global famines in which billions would perish. "The battle to feed all of humanity is over," biologist Paul Ehrlich famously wrote in his 1968 bestseller The Population Bomb. "In the 1970s and 1980s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now." Ehrlich also said, "I have yet to meet anyone familiar with the situation who thinks India will be self-sufficient in food by 1971." He insisted that "India couldn't possibly feed two hundred million more people by 1980."

But Borlaug and his team were already engaged in the kind of crash program that Ehrlich declared wouldn't work. Their dwarf wheat varieties resisted a wide spectrum of plant pests and diseases and produced two to three times more grain than the traditional varieties. In 1965, they had begun a massive campaign to ship the miracle wheat to Pakistan and India and teach local farmers how to cultivate it properly. By 1968, when Ehrlich's book appeared, the U.S. Agency for International Development had already hailed Borlaug's achievement as a "Green Revolution."

In Pakistan, wheat yields rose from 4.6 million tons in 1965 to 8.4 million in 1970. In India, they rose from 12.3 million tons to 20 million. And the yields continue to increase. Last year, India harvested a record 73.5 million tons of wheat, up 11.5 percent from 1998. Since Ehrlich's dire predictions in 1968, India's population has more than doubled, its wheat production has more than tripled, and its economy has grown nine-fold. Soon after Borlaug's success with wheat, his colleagues at the Consultative Group on International Agricultural Research developed high-yield rice varieties that quickly spread the Green Revolution through most of Asia.

The contrast to Paul Ehrlich is particularly stunning.  Most folks have heard of Ehrlich and his prophesies of doom.   But Ehrlich has been wrong in his prophesies more times than anyone can count.  Borlaug fed a billion people while Ehrlich was making money and fame selling books saying that the billion couldn't be fed -- but few have even heard of Borlaug.   Today, leftists in power in the US and most European nations continue to reject Borlaug's approaches, and continue to revere Ehrlich (just this year, Obama chose a disciple of Ehrlich, John Holdren, as his Science czar).

Continuing proof that the world moves forward in spite of, rather than because of, governments.

Update: More here.

Update #2: Penn and Teller on Borlaug

My Greatest Fear on the Health Care Bill

There are a lot of problems with the health care bills in Congress.  At the end of the day, I will endure most of them, as I have every other indignity thrown at me by the Feds.  If they charge me 8% of my company's payroll as a health care tax, well, we can probably raise prices, particularly in the inflationary spiral the Fed has set us up for.  I will be sad to see the most successful in this country punished with high new taxes, but these taxes mostly won't apply to our family.  And I will find some way to get my family the health care it needs, even if we have to fly to India to do it.

But my biggest fear is for individual liberties, with the effect I have called "the health care Trojan Horse for fascism."  We all know that the government has developed a taste for meddling in the smallest details of our lives.  But as more of the nation's health care spending flows though government hands, nearly every decision you make will suddenly affect the government's budget.  What you eat, how heavy you are, whether you smoke, whether you play an athletic sport where you can get hurt, whether you pursue dangerous hobbies like rock climbing or skiing, whether you wear a bike or motorcycle helmet, whether you have a seat belt on, whether you drink alcohol, whether you like to use dangerous power tools -- all these become direct inputs into government spending via medical bills the government is paying.  And if you think that Congress will avoid legislating on these activities once it inevitably gets in financial trouble with health care, you have not studied much history.

And all this avoids discussion of other powerful individual liberty-related topics, such as the ability to get the end of life care you want or whether the government will even allow you to go "off plan" with your own money if you disagree with its Commissar's rulings on what care you should and should not receive.

It's fascinating for me to watch all these children of the sixties in the Democratic Party, most of whom screamed (rightly) at George Bush continuing to implement new plans where we give up individual liberties for security.  But here come those exact same people, with the exact same message - because this is what health care reform is about, at its core - giving up individual liberties in exchange for a (perceived) increase in security.

Waxman-Markey

Though I disagree with McArdle on the magnitude of potential warming, I think her assessment of Waxman-Markey is dead on:

But the real question, I think, is whether the low cost is a feature or a bug.  The only way a bill is going to have an impact is if it causes real financial pain to American households--enough to get them to change their behavior.  Waxman-Markey obviously is not going to do that.  And indeed, the projections of its effect on global warming are entirely negligible.

So the reason to get this mad about Waxman-Markey is either that you think it provides a framework for future action, or that you think it will persuade China and India to get on board.  The latter is, I think, entirely wishful thinking on the part of American environmentalists.  China is not going to let its citizens languish in subsistence farming because 30 years from now, some computer models say there will be some not-well-specified bad effects from high temperatures. Nor is India.  Global warming isn't even high on the list of environmental concerns they'll want to attack as they get rich; local air pollution is far more pressing.  Thinking that we're somehow going to lead them by example is like thinking that poor rural teens are going to buy electric cars because Ed Begley jr. has one.

No, I think the argument has to rest on the notion that Waxman-Markey gives us a framework to advance.  And it might.  But then again, Europe's much-vaunted system has had multiple spectacular failures, and the only reductions it has actually achieved seem to come largely from controversial offsets with large auditing problems.

Cortlandt Homes

In India, Tata corp.  has a plan to build condos that would sell for as little as $8000 a unit.  Which got me thinking about the cost of regulation in the US.  Take California, a state that has an explicit government goal to promote affordable housing.  My bet is that the permitting alone would cost more than $8000 a unit, and building code mandates would certainly make such a figure impossible.

I have always thought it funny that residents of the San Diego coast, with perhaps the mildest climate in the country, have the most onerous requirements in the country for insulation and air conditioning efficiency.  Its like requiring residents of Seattle to put on sun screen every day.

Wealth and the Olympics

One of Megan McArdle's readers wonders why India, which in population is larger than any other country save China, has so few Olympic medalists.  I think the answer is fairly easy:  wealth.

It's a situation very parallel to the Italian Renaissance.  Then, the issue was the proliferation of so many great artists rather than athletes, but the fundamentals were fairly similar.  For a society to be able to give up its strongest and most talented youth to non-productive (meaning they don't contribute to food, clothing, or shelter) occupations like painting or competitive swimming requires a lot of wealth and leisure time.  Subsistence farmers can't give up a strong back from the fields, much less pay any kind of specialized training costs.  The explosion of artists in the Italian Renaissance was made possible
by an explosion of wealth in the great Italian city-states of Florence
and Venice and the like.   Further, wealth also means better neo-natal care and better childhood nutrition which leads to bigger and stronger adults. 

As with Renaissance painters, modern Olympic athletes need either a family that is wealthy enough to give up their labor and support him or her; or, they need a wealthy patron; or, they need support of the government.  US Olympic athletes generally have some of all three, though the role of the government is smaller than in other nations thanks to corporate patrons and the relative wealth of the American middle class.  China, and before it Russia, were successful because, lacking the first two, they had the government shoulder the entire burden.  India has chosen not to go the government route, which is fine.  It will have its successes in time, as the exploding middle class will raise kids who have the time and money to pursue excellence in various sports.

The Carbon Offset Sausage Factory

For quite a while, I have been arguing that cap-and-trade schemes are inferior to straight carbon taxes because of their susceptibility to rent-seeking and manipulation.  At the top of the list of problems is the carbon offset issue, the notion that someone can create and sell an offset to cap limits by reducing CO2 emissions in some novel way.  The offset products that exist to day are tremendously suspicious, as I wrote here and here.  In particular, the ability to resell the same emission reduction multiple times is a real danger.

The Guardian has an interesting look at the offsets being created by that bastion of good governance and management science, the United Nations.

The world's biggest carbon offset market, the Kyoto Protocol's clean
development mechanism (CDM), is run by the UN, administered by the
World Bank, and is intended to reduce emissions by rewarding developing
countries that invest in clean technologies. In fact, evidence is
accumulating that it is increasing greenhouse gas emissions behind the
guise of promoting sustainable development. The misguided mechanism is
handing out billions of dollars to chemical, coal and oil corporations
and the developers of destructive dams - in many cases for projects
they would have built anyway.

According to David Victor, a
leading carbon trading analyst at Stanford University in the US, as
many as two-thirds of the supposed "emission reduction" credits being
produced by the CDM from projects in developing countries are not
backed by real reductions in pollution. Those pollution cuts that have
been generated by the CDM, he argues, have often been achieved at a
stunningly high cost: billions of pounds could have been saved by
cutting the emissions through international funds, rather than through
the CDM's supposedly efficient market mechanism.

The key problem, as I have pointed out before, is how do you know the reduction is truly incremental?  How do you know that it would not have occured anyway:

The world's biggest carbon offset market, the Kyoto Protocol's clean
development mechanism (CDM), is run by the UN, administered by the
World Bank, and is intended to reduce emissions by rewarding developing
countries that invest in clean technologies. In fact, evidence is
accumulating that it is increasing greenhouse gas emissions behind the
guise of promoting sustainable development. The misguided mechanism is
handing out billions of dollars to chemical, coal and oil corporations
and the developers of destructive dams - in many cases for projects
they would have built anyway.

According to David Victor, a
leading carbon trading analyst at Stanford University in the US, as
many as two-thirds of the supposed "emission reduction" credits being
produced by the CDM from projects in developing countries are not
backed by real reductions in pollution. Those pollution cuts that have
been generated by the CDM, he argues, have often been achieved at a
stunningly high cost: billions of pounds could have been saved by
cutting the emissions through international funds, rather than through
the CDM's supposedly efficient market mechanism....

One glaring signal that many of the projects being approved by the
CDM's executive board are non-additional is that almost three-quarters
of projects were already complete at the time of approval. It would
seem clear that a project that is already built cannot need extra
income in order to be built.

LOL, yes that might be a good indicator something is amiss.  The other problem, beyond the staggering amount of outright corruption one would expect from any UN-operated enterprise, is this oddity:

Any type of technology other than nuclear power can apply for credits.
Even new coal plants, if these can be shown to be even a marginal
improvement upon existing plants, can receive offset income. A massive
4,000MW coal plant on the coast of Gujarat, India, is expected soon to
apply for CERs. The plant will spew into the atmosphere 26m tonnes of
CO2 per year for at least 25 years. It will be India's third - and the
world's 16th - largest source of CO2 emissions.

So nuclear plants, the one proven economic and scalable power technology that is free of CO2 emissions is the one technology that is excluded from the program?  But 4,000MW coal plants that can proves they are marginally more efficient than they might have been are A-OK?

Clintons: Welcome to 1905

Bill Clinton is at least honest to some extent in saying that cutting back on CO2 emissions will requires us to throttle back the economy:

In a long, and interesting speech, he [Bill Clinton] characterized what
the U.S. and other industrialized nations need to do to combat global
warming this way: "We just have to slow down our economy and cut back
our greenhouse gas emissions 'cause we have to save the planet for our
grandchildren."

But how much?  Activists try to make the average person feel like the amount is "not much" by spinning out rosy stories of 3rd graders fighting global warming by recycling.  But in fact Bill's wife Hillary makes the degree of cuts clearer:

...[Clinton's] plan would reduce greenhouse gas emissions by 80 percent from 1990 levels by 2050 to avoid the worst effects of global warming...

And recognize, this is the typical figure being cited by global warming catastrophists for "necessary" US cuts.  So how much is 80%?  With current technology, an almost unimaginable cut.  Its hard to get good Co2 data, but here is a chart from some place called the Carbon Dioxide Information Analysis Center that purports to show US historic CO2 production from man-made sources:
Usaco2_2

The chartsmanship sucks here, but 1990 looks like about 1.35 billion metric tons.  20% of that would be 0.27 billion metric tons.  That appears to be the level we hit in about ... 1905.  So, apparently without using nuclear power (since Clinton opposed nuclear expansion in one of the debates, I think in Nevada)  she wants us in the next 42 years to get back to the energy production of about 1905.  Now this is a bit unfair, since efficiencies and GDP per ton of CO2 have improved substantially since 1905.  So to be fair she may only want to take us back to about 1930.

While this is scary, what Clinton and other global warming crusaders want to do to the third world is even scarier.  Right now, close to a billion people who have been in poverty forever are posed, via growth in China, India, and SE Asia, to finally exit poverty.  Global warming crusaders want this to stop.  For example, here is the former World Bank chief economist Nicholas Stern says that India must stay poor:

Mr
Stern, the former chief economist of the World Bank, sends out a very
clear message: "We need to cut down the total amount of carbon
emissions by half by 2050." At current levels, the per capita global
emissions stand at 7 tonnes, or a total of 40-45 gigatonnes. At this
rate, global temperatures could rise by 2.5-3 degrees by then. But to
reduce the per capita emissions by half in 2050, most countries would
have to be carbon neutral. For instance, the US currently has, at 20-25
tonnes, per capita emissions levels that are three times the global
average.

The European Union's emission levels stand at 10-15
tonnes per capita. China is at about 3-4 tonnes per capita and India,
at 1 tonne per capita, is the only large-sized economy that is below
the desired carbon emission levels of 2050. "India should keep it that way and insist that the rich countries pay their share of the burden in reducing emissions," says Mr Stern.

No cars for these folks either!

Staggering Arrogance

This is a story that most people who care for humanity would consider good news:

After years of secret preparation, the world's cheapest car will be unveiled in Delhi this week...At 100,000 rupees (£1,290), the People's Car, designed and
manufactured by Tata, is being marketed as a safer way of travelling
for those who until now have had to transport their families balanced
on the back of their motorbikes.

Ratan Tata, 70, chairman of the
family-run business, who has spearheaded the race for a cut-price car,
wrote on the company website: 'That's what drove me - a man on a
two-wheeler with a child standing in front, his wife sitting behind,
add to that the wet roads - a family in potential danger.'

But Tata hopes also to create a 'new market for cars which does not
exist', making them accessible to India's booming middle classes made
recently rich by an economy growing at around 9 per cent a year. ...

Last
year just over one million cars and seven million motorbikes were sold
in India. Tata wants to transform some of those motorbike buyers into
car owners and believes that the company can eventually sell up to a
million People's Cars a year. Analysts say the project could
revolutionise car prices, not just in India, but globally. Several
other manufacturers have similar products in the pipeline.

Awesome.  This is a story about three quarters of a billion people who have lived in poverty, well, forever, starting to join the middle class.

But many environmentalists, about 100% of whom I would venture to say own a car themselves, oppose this transition to prosperity:

'There is this mad rush towards lowering the prices to achieve mass
affordability,' said Anumita Roychoudhury, of the Centre for Science
and Environment in Delhi. 'If vehicle ownership increases very rapidly,
we'll have a time bomb ticking away. When you lower the price that
drastically, how will you be able to meet the safety and emissions
standards? There are no clear answers yet.'

I would challenge this person to design a car that doesn't crash test better than a motorbike.  This is just incredible arrogance, attempting to deny millions of people the prosperity which western environmentalists already share.  (via Maggies Farm)

Postscript: The fact is that environmental quality in every developing nation tends to follow a J-curve.  Early stage development tends to muck things up a bit (think air quality in 1018th century Pittsburg or in China today) but things improve as people get wealthier.  Places like China and India are in some of the lowest reaches of that J-curve.  Attempting to freeze their development in place not only arrogantly denies these folks prosperity, but also cuts off future environmental gains that come with wealth.