Posts tagged ‘US’

Thinking of the Gracchi Brothers Today

It is with mixed emotions that I greet this day.  Frequent readers will know that I long for a system of much more open immigration.  I don't think that the US Government should be limiting who can and cannot seek work or live within the US borders (setting rules for citizenship and receipt of benefits are different matters).  So I would like to see many long-time immigrants legalized today (and in fact I likely have friends and acquaintances who will benefit, though it's always been a bit awkward to ask them about immigration status).

However, I would MUCH rather see a rational process implemented than these once a decade amnesties we seem to go in for instead.

I also worry that Obama is taking these actions for all the wrong reasons, seeking to add 5 million Democratic voters rather than trying to help 5 million people who are seeking prosperity.  The reason I suspect this is that he is also seeking higher minimum wages that will likely make it harder for these folks to find work, likely something he has promised to his union allies so they won't freak out.  I have always said that Republicans want immigrants to work but not vote and Democrats want immigrants to vote but not work.

But I am much more worried about the un-Constitutional process that is going to be followed.  Of course, this is not the only Executive power grab over the last two presidencies, but it is a big one and one of the first where the President has admitted he doesn't have the power but is going to do it anyway.

Around 133BC, Tiberius Gracchus was ticked off that the Roman Republic would not consider necessary land reform.  I am going to oversimplify here, but in their conquests the Romans had grabbed a lot of new territory and by law that land was supposed to be parceled in small sections to lots of individual land holders.  Instead, powerful men (many of whom were in the Senate) grabbed the lion's share of this land for themselves in huge estates.   Gracchus rightly saw this as unfair and a violation of law, but it was also a threat to the security of the nation, as independent landowners who bought their own weapons were the backbone of the Roman army.  The shift of agriculture to huge estates staffed with slaves was not only forcing a shift in the makeup of the army (one which would by the way contribute to the rise of despotic generals like Sulla and Caeser), but also was creating social problems by throwing mobs of unlanded poor on the cities, particularly Rome.

Anyway, the short version is that Tiberius Gracchus had good reason to think these reforms were important.  But traditionally they would have to be considered by the Senate first, and he was too impatient to wait that process out, and besides (probably rightly) feared the Senate would find a way to kill them.   He was so passionate about them that he violated the (unwritten) Roman Constitution by ignoring the Senate and setting new precedents for using his position as Tribune to pass the new laws.  It was absolutely the prototype for a well-intentioned bypassing of the Constitution.  I won't go into detail, but Tiberius was killed at the behest of some Senators, but his brother picked up his mantle 10 years later and did some similar things.  Which is why we talk of the Gracchi brothers.

In the near term, the results were some partial successes with land reform.  However, in the long-term, their actions really got the ball rolling on what is called the Roman Revolution.  A hundred years later, the Republic would be gone, replaced with a dictatorship.  Step by step, the precedents often set initially with only the best intentions, were snatched up and used by demagogues to cement their own power.  In later years, what gave emperors their authority was a package of powers granted to them.  One of the most important was "tribunition" power.  In essence, the tribunition power included many of the powers first exercised aggresively by the Gracchi brothers.  More than just starting the ball rolling on the Revolution, they pioneered the use of powers that were to be the core of future emperors' authority.

Thoughts on the Japanese Economy

I would characterize long-term Japanese economic policy this way:

  • Technocratically planned economy where the government chose winners and losers and directed capital to industries favored for development (e.g. MITI with steel, autos, electronics).
  • Strong government favoritism for exports and exporters over the domestic economy -- export industries are heavily protected at the cost of raising costs for internal consumers and limiting competition in domestic markets.
  • Enormous, near Herculean commitment to deficit spending as stimulus.  With deficits consistently running in the 8% of GP range and total government debt a stratospheric levels, Japan is the poster child for Krugman's anti-austerity

To these three I would add something that is seldom mentioned, that Japan has a near Scandinavian GINI index, with income inequality well under that of the US.  Oh yes, and they were an enthusiastic adopter of CO2 limits.

And the result of all this has been... 25 years of stagnation.

I remember when every one of these three planks was enthusiastically lauded by the US elite.  I was at Harvard Business School in the late 1980's and much of the discussion was about the US needing to adopt MITI-like government industrial planning and management.  If pressed at the time, people might kind of sort of acknowledge that life wasn't so good for Japanese consumers, but we were in a Michael Porter big picture competitiveness-of-nations phase, and no one seemed to care that their definition of national success did not turn out so well for the people actually living there.

To me, Japan is a giant case study in Austrian economics.  It's like they set out to run a quarter-century test: "let's see if mispricing of credit and forced misallocation of capital is really the cause of recessions."  So it is amazing that no one seems to want to acknowledge the results of this experiment.  Paul Krugman appears weekly in the New York Times to frequently advocate for exactly this same economic plan.

Net Neutrality is Not Neutrality, It is Actually the Opposite. It's Corporate Welfare for Netflix and Google

Net Neutrality is one of those Orwellian words that mean exactly the opposite of what they sound like.  There is a battle that goes on in the marketplace in virtually every communication medium between content creators and content deliverers.  We can certainly see this in cable TV, as media companies and the cable companies that deliver their product occasionally have battles that break out in public.   But one could argue similar things go on even in, say, shipping, where magazine publishers push for special postal rates and Amazon negotiates special bulk UPS rates.

In fact, this fight for rents across a vertical supply chain exists in virtually every industry.  Consumers will pay so much for a finished product.  Any vertical supply chain is constantly battling over how much each step in the chain gets of the final consumer price.

What "net neutrality" actually means is that certain people, including apparently the President, want to tip the balance in this negotiation towards the content creators (no surprise given Hollywood's support for Democrats).  Netflix, for example, takes a huge amount of bandwidth that costs ISP's a lot of money to provide.  But Netflix doesn't want the ISP's to be be able to charge for this extra bandwidth Netflix uses - Netflix wants to get all the benefit of taking up the lion's share of ISP bandwidth investments without having to pay for it.  Net Neutrality is corporate welfare for content creators.

Check this out: Two companies (Netflix and Google) use half the total downstream US bandwidth.  They use orders and orders of magnitude more bandwidth than any other content creators, but don't want to pay for it (source)

sandvine-2h-2013

Why should you care?  Well, the tilting of this balance has real implications for innovation.  It creates incentives for content creators to devise new bandwidth-heavy services.  On the other hand, it pretty much wipes out any incentive for ISP's (cable companies, phone companies, etc) to invest in bandwidth infrastructure (cell phone companies, to my understand, are typically exempted from net neutrality proposals).  Why bother investing in more bandwidth infrastrcture if the government is so obviously intent on tilting the rewards of such investments towards content creators?  Expect to see continued lamentations from folks (ironically mostly on the Left, who support net neutrality) that the US trails in providing high-speed Internet infrastructure.

Don't believe me?  Well, AT&T and Verizon have halted their fiber rollout.  Google has not, but Google is really increasingly on the content creation side.  And that is one strategy for dealing with this problem of the government tilting the power balance in a vertical supply chain:  vertical integration.

Postscript:  There are folks out there who always feel better as a consumer if their services are heavily regulated by the Government.  Well, the Internet is currently largely unregulated, but the cable TV industry is heavily regulated.  Which one are you more satisfied with?

Update:  OK, after a lot of comments and emails, I am willing to admit I am conflating multiple issues, some of which fit the strict definition of net neutrality (e.g.  ISP A can't block Planned Parenthood sites because its CEO is anti-abortion) with other potential ISP-content provider conflicts.  I am working on some updates as I study more, but I will say in response that

  1. President Obama is essentially doing the same thing, trying to ram through a regulatory power grab (shifting ISPs to Title II oversight) that actually has vanishly little to do with the strict definition of net neutrality.   Net neutrality supporters should be forewarned that the number of content and privacy restrictions that will pour forth from regulators will dwarf the essentially non-existent cases of net neutrality violation we have seen so far in the unregulated market.
  2. I am still pretty sure the net effect of these regulations, whether they really affect net neutrality or not, will be to disarm ISP's in favor of content providers in the typical supply chain vertical wars that occur in a free market.  At the end of the day, an ISP's last resort in negotiating with a content provider is to shut them out for a time, just as the content provider can do the same in reverse to the ISP's customers.  Banning an ISP from doing so is like banning a union from striking. And for those who keep telling me that this sort of behavior is different and won't be illegal under net neutrality, then please explain to me how in practice one defines a ban based on a supply chain rent-division arguments and a ban based on nefarious non neutrality.

Poverty and the Minimum Wage

Mark Perry had this chart on the demographics of income distribution.  From it, I want to draw a couple of conclusions about minimum wage and poverty

Click to Enlarge

Note the household income per earner for the lowest quintile.  It equates to something over $14 an hour, well above minimum wage almost everywhere in the US and nearly as high as the $15 national minimum wage proposed as an anti-poverty program.

The problem with most poor households is not wage rate, it is getting full time work.  The household income per earner is nearly as high as the average income of the second quintile.  The problem is that most poor households do not have full-time earners.   The key stat is that only 16% worked full-time and only 30% had any sort of job at all.

This is what always amazes me about the minimum wage discussions.  An increased minimum wage doesn't address the root problem of poverty at all, and in fact will tend to make it worse by pricing the 85% of the poor who need a job or need more hours out of the job market.  If they can't find a job at $8, it is the purest insanity to think they will have a better chance with their limited skills of finding a job at $15.**

 

**Postscript:  I suppose there is one set of facts that would lead to a minimum wage increasing employment in this lowest quintile:  If people who don't work in this quintile are not seeking work because they are happy to live on government benefits and other sources of charity.  This would imply that the reason they are not working full-time is not because no work is available but because they choose indolence.  If this were the case, then a rising minimum wage would provide enough incentive, I suppose, for some to get off the couch and go to work.  I am reluctant to buy into this explanation, but I am SURE that those on the Left who promote the idea of rising minimum wages increasing employment would not accept these assumptions.

More on the US Forest Service Commercial Photography Ban

Yesterday, when writing about the US Forest Service (USFS) restrictions on commercial photography in wilderness areas, I discussed the contradictions that make their policy problematic

The USFS has undermined their own argument by making exceptions based on the purpose of the filming.  Apparently only commercial filming hurts ecosystems, not amateur photography.  And apparently commercial filming that has positive messages about the USFS are OK too.  Its just commercial filming that goes into a beer company ad that hurts ecosystems.  You see the problem.  If it's the use itself that is the problem, then the USFS should be banning the use altogether.  By banning some photography but not all based on the content and use of that photography, that strikes me as a first amendment issue.

Despite working with the USFS on lands management every day, this policy was new to me.  I hypothesized

[There is a] large group in the USFS that is at best skeptical and at worst hostile to commercial activity.  They would explain these rules, at least in private, by saying that anything commercial is by definition antithetical to the very concept of wilderness that they hold in their heads, and that thus all commercial activity needs to be banned in the wilderness because it is inherently corrupting.

Reading Overlawyered, I saw this US Forest Service quote from the Oregonian to explain their position on commercial photography:

Liz Close, the Forest Service's acting wilderness director, says the restrictions have been in place on a temporary basis for four years and are meant to preserve the untamed character of the country's wilderness.

Close didn't cite any real-life examples of why the policy is needed or what problems it's addressing. She didn't know whether any media outlets had applied for permits in the last four years.

She said the agency was implementing the Wilderness Act of 1964, which aims to protect wilderness areas from being exploited for commercial gain.

"It's not a problem, it's a responsibility," she said. "We have to follow the statutory requirements."

So it appears that the purpose of the Wilderness Act is interpreted by the USFS as "protect wilderness areas from being exploited for commercial gain."

But the Wilderness Act makes just a brief mention of commercial activity (It was written back in the day when laws did not have to be 2000 pages long, so you can read the who thing here).  Its main purpose is to keep the lands wild and the ecology as free as possible from man's intervention

In order to assure that an increasing population, accompanied by expanding settlement and growing mechanization, does not occupy and modify all areas within the United States and its possessions, leaving no lands designated for preservation and protection in their natural condition, it is hereby declared to be the policy of the Congress to secure for the American people of present and future generations the benefits of an enduring resource of wilderness. For this purpose there is hereby established a National Wilderness Preservation System to be composed of federally owned areas designated by the Congress as "wilderness areas," and these shall be administered for the use and enjoyment of the American people in such manner as will leave them unimpaired for future use and enjoyment as wilderness, and so as to provide for the protection of these areas, the preservation of their wilderness character, and for the gathering and dissemination of information regarding their use and enjoyment as wilderness...

A wilderness, in contrast with those areas where man and his works dominate the landscape, is hereby recognized as an area where the earth and its community of life are untrammeled by man, where man himself is a visitor who does not remain. An area of wilderness is further defined to mean in this Act an area of undeveloped Federal land retaining its primeval character and influence, without permanent improvements or human habitation, which is protected and managed so as to preserve its natural conditions and which (1) generally appears to have been affected primarily by the forces of nature, with the imprint of man's work substantially unnoticeable; (2) has outstanding opportunities for solitude or a primitive and unconfined type of recreation; (3) has at least five thousand acres of land or is of sufficient size as to make practicable its preservation and use in an unimpaired condition; and (4) may also contain ecological, geological, or other features of scientific, educational, scenic, or historical value.

There is nothing in this that in any way shape or form should be affected by photography (unless the photography has some sort of heavy footprint, like making a Hollywood movie with hundreds of people and equipment and catering trucks, etc.).

The Wilderness Act is not primarily about protecting the Wilderness from commercial gain.  It is about protecting the natural operation of ecosystems from intervention of any sort by man.  Commercial activity is barely mentioned, and only as a minor aside deep into the legislation.  But many US Forest Service employees have an antipathy to commercial activity and have sort of reinterpreted it in their mind as being an anti-commercialism act.  Here are the only mentions of commercial activity in the law:

Except as specifically provided for in this Act, and subject to existing private rights, there shall be no commercial enterprise and no permanent road within any wilderness area designated by this Act and except as necessary to meet minimum requirements for the administration of the area for the purpose of this Act (including measures required in emergencies involving the health and safety of persons within the area), there shall be no temporary road, no use of motor vehicles, motorized equipment or motorboats, no landing of aircraft, no other form of mechanical transport, and no structure or installation within any such area. ...

Commercial services may be performed within the wilderness areas designated by this Act to the extent necessary for activities which are proper for realizing the recreational or other wilderness purposes of the areas.

In this usage (I am not an attorney so there is likely a long history of how the term "commercial enterprise" is understood in the law) my sense is this means that people are not to be conducting commerce -- trading goods and services for money-  within the boundaries of the wilderness area. Essentially, they don't want a gift shop or McDonald's there.   Grouped with the bit about roads, this is a paragraph about facilities and equipment and having a footprint.

So is a lone person taking pictures a commercial enterprise within the area? I doubt it. The actual commerce is conducted outside the park and there is nothing about photography that impairs the wilderness nature of the park.   My interpretation is that taking pictures is OK but setting up a photography store is forbidden.  But by the US Forest Service's definition, I suppose they should also ban people from collecting material for a book. If I walk through the wilderness area taking notes for a book I want to write, and then leave the area and write it and sell it, I am not sure how this is any different from commercial photography. And does this mean that I can't wear any clothes or bring any equipment into the wilderness area that I purchased commercially?

PS-  Beyond a skepticism about capitalism, there is an other reason public lands people might want to shortcut the Federal Wilderness Act as "preventing commercial activity" -- it lets them off the hook.  The Wilderness Act was about preventing meddling in the ecosystem (an impossible goal, but we will leave that for another day) and this applied to all groups -- commercial, government, educational.  By shortcutting the Act as being about commerce, it helps folks forget that the same strictures should apply to agency personnel as well.  I was up in Yellowstone listening to discussions of reintroduction of the wolf and the ongoing killing of thousands of non-native fish in Yellowstone Lake and various streams.  The goal of these interventions is to reverse past interventions, but even so they strike me as violations of the Federal Wilderness Act.

Is the Forest Service Requiring Permits for Photography? Yes and No.

A follow-up to this article is here.

The news has been zooming around the Internet that the US Forest Service (USFS) is going to require permits to take pictures on public lands.   It was the first I had heard of this, which is odd in one sense because I actually operate tens of thousands of acres of US Forest Service lands, and in fact operate the ones with the most visitation (on the other hand, we are often the last to hear anything from the USFS).

So, knowing that the Internet can be a huge game of "telephone" where messages quickly get garbled, I went to the regulation itself.  As usual, that did not help much, because it is so freaking hard to parse.  Reading between the lines, here is what I think is going on:

  • The regulations don't apply to all USFS lands, but to the federally-designated wilderness areas they manage.  Even this is confusing, since the permitting authority does not apply just to wilderness areas, but to anywhere in the USFS.   But even the wilderness areas constitute a lot of land, and often the most scenic.
  • Apparently, the regulations have been in place for 4 years and this is just an extension and clarification
  • Ostensibly, the regulations apply only to commercial filming, but how the USFS is going to distinguish between a commercial photographer and well-equipped amateur, I have no idea.  The distinction seems to lie in what the photography will be used for, and since this use happens long after the individuals have left the land, I am not sure how the USFS will figure this out.  Is the US Government going to start suing magazines for nature pictures, claiming a copyright on the scenery?  What happens if I take it for my own use, then discover I have an awesome picture and decide to sell it.  It is hard to write laws that depend on reading people's minds in determining if an act is legal.

The Federal Wilderness Act gives the government a lot of power to limit uses in a designated wilderness area.  Motorized vehicles and tools are banned, as were bicycles more recently.  My company operates in only one wilderness area, a canoe run at the Juniper Springs recreation area in Florida.  If a tree falls across the stream, we have to float down in canoes and take it out with hand axes.  We have to open and inspect coolers of those going down the run to make sure no banned items are in them.  In other words, wilderness areas definitely have a higher level of restrictions than the average public land.

As to the First Amendment issues, well folks like Ken White at Popehat have taught me that it is very very dangerous for the uniformed (ie me) to pontificate on complex First Amendment issues.  I am sure the USFS would say that they are not interfering with free expression, just banning a use that could be dangerous in the wilderness.  There are a few problems with this:

  • The USFS hasn't explained why taking pictures threatens the natural operation of ecosystems
  • The USFS has undermined their own argument by making exceptions based on the purpose of the filming.  Apparently only commercial filming hurts ecosystems, not amateur photography.  And apparently commercial filming that has positive messages about the USFS are OK too.  Its just commercial filming that goes into a beer company ad that hurts ecosystems.  You see the problem.  If it's the use itself that is the problem, then the USFS should be banning the use altogether.  By banning some photography but not all based on the content and use of that photography, that strikes me as a first amendment issue.The best parallel I can think of is in Venezuela.  There, the government claimed a paper shortage required it to shut down certain printing to conserve paper, and then proceeded to shut down only the newspapers it did not like.  I suppose it could claim that it was not censoring anyone, just taking steps to deal with the newsprint shortage.  Similarly the USFS claims it is not limiting anyone's first amendment rights, it is just protecting the wilderness form a dangerous use.

A few years ago, the USFS tried to reverse an expensive mistake it had made.  The US government issues lifetime senior passes that allow free entry and half off camping for seniors.  This is an expensive giveaway, paid for by taxpayers.  But the USFS had gone further, requiring that concessionaires like our company also accept the pass and give half off to seniors.  While giving half off to seniors at government-run campgrounds had to be funded by taxpayers, concessionaires only have use fees to fund operations.  So to give half off to seniors, prices have to be raised to everyone else.  The senior discount requirement was raising prices (and still does) $4-$5 a night for every other camper.

Well, long story short (too late!) the US Forest Service folded under the organized pressure of senior groups.  And my guess is that they will do so again here.  Unlike with the National Park Service which has a clear mandate and strong public support, few people get misty-eyed about the USFS, which means they are always sensitive to bad news that might hurt them in the next budget fight.

PS -- Is someone going to go back and bill Ansel Adams' estate?  Isn't he exactly the sort of commercial nature photographer that this rule is aimed at?

Update:  I have talked to a number of people in the know on this.  Apparently what began as a desire merely to stop high impact filming in the wilderness -- full Hollywood movie sets with catering trucks, etc. -- has gotten taken over by a large group in the USFS that is at best skeptical and at worst hostile to commercial activity.  They would explain these rules, at least in private, by saying that anything commercial is by definition antithetical to the very concept of wilderness that they hold in their heads, and that thus all commercial activity needs to be banned in the wilderness because it is inherently corrupting.

Thoughts On Campus Speech 2: Why Libertarian Kids Get the Most for their College Money

I hear Conservatives lamenting all the time that their kids can't get a good college education because academia is dominated by Liberals and liberal assumptions.  I think just the opposite is true.  Leftist parents should be asking for their money back.

I have spoken on campus a few times about topics such as climate and regulation.  One thing I have found is that students have often not heard the libertarian point of view from a libertarian.   I have done any number of campus radio station interviews as a climate skeptic, and I have similarly found is that the students I talk to have a very muddled understanding of what skeptics believe.  In most cases, I was the first skeptic they had ever talked to or read - everything they knew previously about skeptics had come from our opposition (e.g. what Bill McKibbon says skeptics believe).  This is roughly equivalent to someone only "knowing" why liberals believe what they do from Rush Limbaugh.   My son encountered a college woman last week who despised the Koch brothers, but actually knew almost nothing about them and had never actually seen their work or read their views.  Harry Reid and others she considered authorities said the Kochs sucked so suck they do.

This is just incredibly unhealthy.  Living in an echo chamber and only encountering opposing or uncomfortable positions as straw men versions propped up to be knocked down.  What a crappy education, but that is what most liberal kids get.

Not so my son the libertarian.  He is forced to encounter and argue against authoritarian ideas with which he disagrees in every class and in every social interaction.   Not just in economics and domestic policy -- there is still a lot of interventionism and authoritarianism taught in foreign policy and even in history.  Name one US president from academic lists of great presidents who did not get us in a war?

Thoughts On Campus Speech 1: Hitler Would Have Been The Most Valuable Campus Speaker

Yesterday,  Yale did not cave to pressure from certain parts of the student body and Ayaan Hirsi Ali spoke on campus.  As with many controversial speakers, mostly consisting of folks not on the political Left, a number of campus groups tried to force Yale to cancel her speech because they expressed themselves offended by her.   Among politically correct colleges, there has been a growing trend towards enforcing a right not to be offended, though this enforcement tends to be asymmetric -- Muslims apparently have a right not to be offended, but Christians do not.  Women have it but men do not.  Greenpeace has it but Exxon does not.

People of prominence who offend us or with whom we violently disagree should not be the least but the most welcome speakers on campus.  I will demonstrate this by using the most extreme of all possible examples:  An imaginary speaking tour by Adolph Hitler, say in December of 1938.  Could there be a more distasteful person, the leader of Nazi Germany just weeks after the Reichskristallnacht?  But I think he would have been the most valuable speaker I could possibly imagine.

If he were honest, which Hitler likely couldn't have stopped himself from being, what valuable insights we could have gained.  The West made numerous mistakes in the late thirties and even into the forties because it just could not believe the full extent of Hitler's objectives and hatreds**.   Perhaps we would have understood sooner and better exactly what we were dealing with.

Even if he were dishonest, and tried to "convert" the office without discussing specific plans, that would still be fascinating.  What arguments did he use?  Could we get insights into why he struck a chord among the German people?  Would his rhetoric be compelling to American audiences?  I despise the guy and almost everything he stood for but I would have loved to have him on campus as a speaker.

I will tell one of my favorite stories about the rise of Hitler.   You have heard the story of Jesse Owens at the Berlin Olympics.   Supposedly this was a slap in the face to Hitler, to have a black man winning medals.  But one of the last events of the games was a four man relay race.  The US was certainly going to win.  But one of the US runners was Jewish and the US pulled the runner from the race and substituted Owens.  The US didn't want to embarrass Hitler by making him hand a medal to a Jew.  This sounds odd to put it this way, but one of the problems we had in really taking the worst of the Holocaust seriously as it was happening is that we were not able to see that Hitler's anti-semitism was so much more dangerous than the ubiquitous and run-of-the-mill anti-semitism that obtained all over Britain and America.  We should always have a policy of letting even the most extreme people talk as much as they like.  We might learn that they have a point and adjust our thinking on something, or we might learn that they are even batshit crazier than we thought.  Either outcome is useful.

Because Money Isn't Everything

One of the mistakes people make in economic analysis, IMO, is that they sometimes miss non-monetary benefits.  A great example is how labor law and the minimum wage is structured -- there are many benefits of a having job to a young, unskilled, unemployed person.  That job may teach valuable industry-related skills and will almost certainly help teach some basic life skills (like how to show up on time every day and how to work with others in an organization toward shared goals).  For my kids when they were 15 or 16, these non-monetary benefits dominated, and I would have been happy if they worked for free in exchange for such skills.  That used to be the whole point of unpaid internships, until the government started essentially banning them.  Unfortunately, the government considers only money in computing the minimum wage, and ignores all these non-monetary benefits.

Mark Perry had what I think is another good example a while back, quoting from the Priceonomics blog:

If you want to dine at State Bird Provisions, you’ll have to get in line. The small restaurant, winner of the James Beard Award for Best New Restaurant (2013) and a Michelin Star, only accepts a few reservations that are snapped up as soon as they are released — at midnight, sixty days in advance. So nearly every day, people line up on Fillmore Street in San Francisco an hour or more before State Bird’s 5:30pm opening time to score a table.

It may seem silly to line up for State Bird Provisions in a city full of renowned restaurants and good food. But as anyone who has eaten brunch in the city knows, San Franciscans view long restaurant lines as social proof more than as a deterrent. Besides, State Bird offers determined diners a relative bargain. While its offerings are not cheap — even without indulging on wine, bills can reach $50 per person — State Bird’s prices are more modest than almost any other local Michelin Star restaurant.

This makes State Bird something of an economic mystery.If economists owned popular restaurants like State Bird, they would take one look at the long lines and raise prices.After all, the overwhelming demand is pretty clear. Or at the very least, given how reservations disappear like Coachella tickets, they would start charging for them. In fact, since restaurants do not do this, a number of startups in San Francisco and New York City have started to sell reservations to users, often by reserving tables and scalping them.

In contrast to the executives who run large restaurant chains, the restaurateurs behind celebrated restaurants and local favorites are often chefs first rather than professional managers. This raises the question: Are restaurants like State Bird Provisions, which seems to resist simple economic analysis, the exception or the norm? And if they are the norm, is that because it is somehow self-defeating to raise prices even at booming restaurants? Or are chef proprietors a unique breed in the business world, immune to supply and demand and content to leave money on the table?

I believe that many of these high-end chefs are not driven entirely by money.  Their personal reward system also depends a lot on prestige and recognition.  Making a good profit in a restaurant gets you no recognition in the the circles where chef's crave it.  Name the three most profitable restaurants in town -- you have no idea, do you?  What get's these chef's recognition is being the hot place to dine that is so in demand it is impossible to get a table.  So one makes the restaurant a little too small and keeps the prices a little too low and one trades a bit of money for something that is more valuable:  prestige.

One can see this same effect among, say, US Senators.  In our current corporate, crony state, US Senators can expect a huge spike in income once they leave Congress, getting paid by some large corporation lobbying firm.  The economically rational decision, then, if one were only interested in money, would be to serve just one term, then leave and make some bank.   But you never see that.  Senators stay and stay, even when it is an enormous hassle to do so.  They are essentially collecting and spending millions every election to keep their income low.  Why?  One big reason is prestige.

Going back to the restaurant example, let's consider a famous chef who pretty clearly does care about money:  Wolfgang Puck.  I have never seen this written, but here is what I observe to be Puck's approach.  He creates a small restaurant and lavishes it with a lot of his personal attention.  These restaurants do not have much seating and become the hot places to dine, leading to long lines and difficult reservations.  The difficulty of getting a table generates an elite buzz around the restaurant.  After some time, Puck will buy a huge new location nearby with many times more seating.  He formula-izes his recipes so he no longer has to be involved, and then shifts the operation onto auto-pilot in the new large location.  Perhaps he even franchises it.  The new location cranks out a bunch of money, while he moves on to create a new elite concept.  He also leverages the original buzz in his personal brand, which is applied to all kinds of other items.  In a sense, he is banking prestige in the early venture and then monetizing it later.

It is Historically Unusual for China NOT to be the Largest Economy on Earth

A couple of quick thoughts on this map from this Vox article edited by Matt Yglesias

click to enlarge

  1. I hate to diss my old cohorts at McKinsey, but isn't this entirely arbitrary to how you draw the map?  If you made the map break in, say, the Atlantic Ocean with the Ivory Coast on the far left of the map and Newfoundland on the far right, won't this look different?
  2. People seem to want to get freaked out about China passing the US in terms of the size of its economy.  But in the history of Civilization there have probably been barely 200 years in the last 4000 that China hasn't been the largest economy in the world.  It probably only lost that title in the early 19th century and is just now getting it back.  We are in some senses ending an unusual period, not starting one.

Equal Protection Under the Law?

Equal protection means that the same law applies to everyone, at least in theory.  But compare these two stories:

1. Exxon fined $600,000 for 85 bird deaths in five states over five years

Exxon Mobil has agreed to pay $600,000 in penalties after approximately 85 migratory birds died of exposure to hydrocarbons at some of its natural gas facilities across the Midwest.

The fine amounts to about $7,000 per dead bird.

The oil company pleaded guilty to causing the deaths of waterfowl, hawks, owls and other protected species, which perished around natural gas well pits or water storage areas in Wyoming, Kansas, Oklahoma, Colorado and Texas over the last five years....

“We are all responsible for protecting our wildlife, even the largest of corporations,” said David M. Gaouette, the United States attorney in Colorado, in a statement accompanying the Justice Department’s announcement.

We are all responsible for protecting our wildlife... except if we are politically-favored solar companies with strong ties to the Obama White House

2. No fines for solar power plant that may be killing 28,000 birds a year

A common sight in the sky above the world's largest solar thermal power plant is a "streamer," a small plume of smoke that occurs without warning. Closer inspection, however, reveals that the source of the smoke is a bird which has inadvertently strayed into the white-hot heat above the plant's many reflecting mirrors. Because the BrightSource Energy plant near Ivanpah uses supercritical steam rather than photovoltaic energy, the sun's heat is reflected off more than 300,000 mirrors to a single point, which is used to drive a steam turbine. The downside of that, of course, is that it's lethal for any wildlife that strays into the picture -- a problem that was recognized well before the facility opened, but now the government has gotten involved.

Government wildlife inspectors believe that insects are drawn to the highly reflective mirrors, which in turn lures local birds to their doom. BrightSource feels that the issue has been overblown, claiming that only 1,000 living creatures will die in a year, but the Center for Biological Diversity believes the actual figure is closer to 28,000. The US Fish and Wildlife service is pushing for more information and an accurate calculation of the deaths before California grants the company any more permits for solar plants.

You can see from the last line that the Feds don't seem to be even considering a penalty, but are just considering whether they should permit such plants in the future.  If the 28,000 figure is correct, this company should be getting $196 million in fines (the Exxon rate of $7000 per bird)  if there was any such thing as equal protection.  Even the company's admitted figure of 1,000 a year is almost 60 times as high as Exxon was penalized for, despite the fact that Exxon experienced the deaths across hundreds of locations in five states and this is just one single solar plant.

The same alternate standard is being applied to the wind energy industry, as I wrote a while back here.

For A Brief Moment I Almost Agreed With Kevin Drum, Then I Got Over It

Kevin Drum seems here to be making the case for Federalism

Via Vox, here's a colorful map from Broadview Networks that helps illustrate one reason that policymaking in Congress often seems so disconnected from the real world. It's because policymakers tend to be pretty well-off folks living in a pretty well-off region that shelters them from the problems many of the rest of us encounter. If you live in Missouri, you might be annoyed [about a local problem].  But if you live in Washington DC or northern Virginia, guess what? [Your local situation is much better]! Virginia is ranked #1 in the nation, and DC is right behind it. So is it any wonder that this really doesn't seem like a pressing problem in Congress?

Wow, this seems like a great argument for Federalism, as well as a number of libertarian critiques of government in general.   Good going, Kevin!

But then I realized he doesn't really believe this.  Drum is as much a supporter as anyone on the Left of Federal mandates over local action (e.g. Common Core).

Further, I realized that he was essentially nuts.  Because the issue he is lamenting is Internet speeds.  Some people have faster Internet than others, and he is just so frustrated that Congress does not realize this.  He actually seems to be hoping Congress will somehow intervene to equalize Internet speeds.  I would love to know, in these people's minds, if there are any issues to trivial for Congress to wade into.

By the way, if Congress had stepped into Internet regulation, we would still probably be surfing at 1200 baud.  After all, all that high speed Internet stuff might kill jobs at Hayes and US Robotics (makers of old telephone modems for those too young to remember).  Look at how long it took to get a political/corporate consensus on HD TV standards.  Ugh, we would probably all have that goofy French TV-computer solution the Left wanted to force on the United States 15 years or so ago.

Postscript:  The UN ITU spent a lot of time driving phone manufacturers to using micro-USB in a bid at government-led standardization.  The only problem is that micro-USB sucks.  It is ubiquitous, which is nice, but from a form and function standpoint is far harder to use and plug in than Apple's lightning connector, which is much easier to insert, less prone to damage, and can be inserted in either direction.  Perhaps young people with better eyes do not notice but I spend a lot of time jamming micro usb cables in the wrong way.  I hate having to put on my glasses just to plug in my phone, which is why I like my Nexus 5 with wireless charging.

A Bad Sign for the Economy

I don't think readers will be surprised to learn that I don't have any particular moral problem with tax inversions, reverse acquisitions that allow companies to take advantage of lower foreign tax rates.  The US has perhaps the most costly and unwieldy tax code in the world, made worse by our unique insistence on double taxation of foreign earnings that prevents companies like Apple from repatriating billions of dollars.  My tax plan begins with the elimination of corporate income taxes altogether, not only as an efficiency and growth step but as a huge step in fighting cronyism.

So I certainly don't share all this creepy Leftist desire for loyalty oaths and such from corporations.  But I do have a concern about the economy.  Over the past couple of years, it appears that a lot of corporate borrowing has been to:

  1. Buy back their own stock
  2. Reduce their tax rate, in part through inversions (apparently over 2/3 of 2014 M&A volume is inversions)

When the two best investments a company can find are in its own stock and in reducing tax rates, then there appears to be a problem with the underlying universe of investment opportunities.

Actually, the best investment our company has found this year is in closing operations in California and escaping that regulatory and litigation mess.

 

Bubble Prices are not Wealth

Conservative sites are running with this story:

OBAMANOMICS IN ACTION: Typical US Household Worth One-Third Less Than Under Bush

Seriously?  The bursting of the housing bubble, which actually began under Bush, is Obama's fault?  Because that is what likely drove middle class household worth down (while the Fed-sponsored asset boom in financial instruments drove up wealth of the top 1%).  I suppose one could say that the Republicans sponsored a bubble that helped the middle class while Obama is sponsoring a bubble that helps the wealthy.

I won't say this stuff is meaningless to the economy, because clearly they affect people's perception of wealth and thus spending and optimism.  But sound long-term economic growth has got to come from stable and rational monetary policy that allows interest rates and financial assets to find their correct level.  Getting political mileage out of bubble pricing of assets only creates incentives for politicians such that they will never stop fiddling with interest rates and credit.

Reconciling Seemingly Contradictory Climate Claims

At Real Science, Steven Goddard claims this is the coolest summer on record in the US.

The NOAA reports that both May and June were the hottest on record.

It used to be the the media would reconcile such claims and one might learn something interesting from that reconciliation, but now all we have are mostly-crappy fact checks with Pinocchio counts.  Both these claims have truth on their side, though the NOAA report is more comprehensively correct.  Still, we can learn something by putting these analyses in context and by reconciling them.

The NOAA temperature data for the globe does indeed show May and June as the hottest on record.  However, one should note a couple of things

  • The two monthly records do not change the trend over the last 10-15 years, which has basically been flat.  We are hitting records because we are sitting on a plateau that is higher than the rest of the last century (at least in the NOAA data).  It only takes small positive excursions to reach all-time highs
  • There are a number of different temperature data bases that measure the temperature in different ways (e.g. satellite vs. ground stations) and then adjust those raw readings using different methodologies.  While the NOAA data base is showing all time highs, other data bases, such as satellite-based ones, are not.
  • The NOAA database has been criticized for manual adjustments to temperatures in the past which increase the warming trend.  Without these adjustments, temperatures during certain parts of the 1930's (think: Dust Bowl) would be higher than today.  This was discussed here in more depth.  As is usual when looking at such things, some of these adjustments are absolutely appropriate and some can be questioned.  However, blaming the whole of the warming signal on such adjustments is just wrong -- satellite data bases which have no similar adjustment issues have shown warming, at least between 1979 and 1999.

The Time article linked above illustrated the story of these record months with a video partially on wildfires.  This is a great example of how temperatures are indeed rising but media stories about knock-on effects, such as hurricanes and fires, can be full of it.  2014 has actually been a low fire year so far in the US.

So the world is undeniably on the warm side of average (I won't way warmer than normal because what is "normal"?)  So how does Goddard get this as the coolest summer on record for the US?

Well, the first answer, and it is an important one to remember, is that US temperatures do not have to follow global temperatures, at least not tightly.  While the world warmed 0.5-0.7 degrees C from 1979-1999, the US temperatures moved much less.  Other times, the US has warmed or cooled more than the world has.  The US is well under 5% of the world's surface area.  It is certainly possible to have isolated effects in such an area.  Remember the same holds true the other way -- heat waves in one part of the world don't necessarily mean the world is warming.

But we can also learn something that is seldom discussed in the media by looking at Goddard's chart:

click to enlarge

First, I will say that I am skeptical of any chart that uses "all USHCN" stations because the number of stations and their locations change so much.  At some level this is an apples to oranges comparison -- I would be much more comfortable to see a chart that looks at only USHCN stations with, say, at least 80 years of continuous data.  In other words, this chart may be an artifact of the mess that is the USHCN database.

However, it is possible that this is correct even with a better data set and against a backdrop of warming temperatures.  Why?  Because this is a metric of high temperatures.  It looks at the number of times a data station reads a high temperature over 90F.  At some level this is a clever chart, because it takes advantage of a misconception most people, including most people in the media have -- that global warming plays out in higher daytime high temperatures.

But in fact this does not appear to be the case.  Most of the warming we have seen over the last 50 years has manifested itself as higher nighttime lows and higher winter temperatures.  Both of these raise the average, but neither will change Goddard's metric of days above 90F.  So it is perfectly possible Goddard's chart is right even if the US is seeing a warming trend over the same period.  Which is why we have not seen any more local all-time daily high temperature records set recently than in past decades.  But we have seen a lot of new records for high low temperature, if that term makes sense.  Also, this explains why the ratio of daily high records to daily low records has risen -- not necessarily because there are a lot of new high records, but because we are setting fewer low records.  We can argue about daytime temperatures but nighttime temperatures are certainly warmer.

This chart shows an example with low and high temperatures over time at Amherst, MA  (chosen at random because I was speaking there).  Note that recently, most warming has been at night, rather than in daily highs.

Quick: From Media Reporting and Obama Speeches, What Is Your Impression of Wildfire Severity This Year

Wildfires are becoming a perennial favorite of our "Trend that is not a trend" series, showing how media creates trends out of single data points and even out of thin air.  Often, the evidence behind trends in media stories tends to be ... the increasing volume of media stories on that topic.  Thus the "Summer of the Shark" media fiasco.

About 98 out of 100 people I might ask would say that this is a record year for wildfires in the US.  In fact, it is, so far, one of the slowest wildfire seasons in recent memory.

Here is a screencap of the data from the National Inter-agency Fire Center.  Here is the link so you can see for yourself (though of course the data will be different over time since it shows year to date data for the day you check).

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Note that there is no apples to oranges BS here -- all data for all years are for Jan 1 to July 24 of that year.  So far this year, the number of fires is 31% below average and the total acres burned is nearly 60% below average.

Postscript:  By the way, I have every reason to hate wildfires.  A wildfire in the Sedona area shut down my largest business for the year, pretty much wiping out our company's earnings for the year.

Postscript #2:  There is clearly a trend in the data for acres burned (see whole database here).  I am not denying the trend, though we can argue how much is climate and how much is forest management and how much is simply more human contact with the wilderness.   What I object to is using individual events, particularly individual events in below-average years, as proof of the trend

 

When Regulation Makes Things Worse -- Banking Edition

One of the factors in the financial crisis of 2007-2009 that is mentioned too infrequently is the role of banking capital sufficiency standards and exactly how they were written.   Folks have said that capital requirements were somehow deregulated or reduced.  But in fact the intention had been to tighten them with the Basil II standards and US equivalents.  The problem was not some notional deregulation, but in exactly how the regulation was written.

In effect, capital sufficiency standards declared that mortgage-backed securities and government bonds were "risk-free" in the sense that they were counted 100% of their book value in assessing capital sufficiency.  Most other sorts of financial instruments and assets had to be discounted in making these calculations.  This created a land rush by banks for mortgage-backed securities, since they tended to have better returns than government bonds and still counted as 100% safe.

Without the regulation, one might imagine  banks to have a risk-reward tradeoff in a portfolio of more and less risky assets.  But the capital standards created a new decision rule:  find the highest returning assets that could still count for 100%.  They also helped create what in biology we might call a mono-culture.  One might expect banks to have varied investment choices and favorites, such that a problem in one class of asset would affect some but not all banks.  Regulations helped create a mono-culture where all banks had essentially the same portfolio stuffed with the same one or two types of assets.  When just one class of asset sank, the whole industry went into the tank,

Well, we found out that mortgage-backed securities were not in fact risk-free, and many banks and other financial institutions found they had a huge hole blown in their capital.  So, not surprisingly, banks then rushed into government bonds as the last "risk-free" investment that counted 100% towards their capital sufficiency.  But again the standard was flawed, since every government bond, whether from Crete or the US, were considered risk-free.  So banks rushed into bonds of some of the more marginal countries, again since these paid a higher return than the bigger country bonds.  And yet again we got a disaster, as Greek bonds imploded and the value of many other countries' bonds (Spain, Portugal, Italy) were questioned.

So now banking regulators may finally be coming to the conclusion that a) there is no such thing as a risk free asset and b) it is impossible to give a blanket risk grade to an entire class of assets.  Regulators are pushing to discount at least some government securities in capital calculations.

This will be a most interesting discussion, and I doubt that these rules will ever pass.  Why?  Because the governments involved have a conflict of interest here.  No government is going to quietly accept a designation that its bonds are risky while its neighbor's are healthy.  In addition, many governments (Spain is a good example) absolutely rely on their country's banks as the main buyer of their bonds.  Without Spanish bank buying, the Spanish government would be in a world of hurt placing its debt.  There is no way it can countenance rules that might in any way shift bank asset purchases away from its government bonds.

On The Steven Goddard Claim of "Fabricated" Temperature Data

Steven Goddard of the Real Science blog has a study that claims that US real temperature data is being replaced by fabricated data.  Christopher Booker has a sympathetic overview of the claims.

I believe that there is both wheat and chaff in this claim, and I would like to try to separate the two as best I can.  I don't have time to write a well-organized article, so here is just a list of thoughts

  1. At some level it is surprising that this is suddenly news.  Skeptics have criticized the adjustments in the surface temperature database for years
  2. There is certainly a signal to noise ratio issue here that mainstream climate scientists have always seemed insufficiently concerned about.  Specifically, the raw data for US temperatures is mostly flat, such that the manual adjustments to the temperature data set are about equal in magnitude to the total warming signal.  When the entire signal one is trying to measure is equal to the manual adjustments one is making to measurements, it probably makes sense to put a LOT of scrutiny on the adjustments.  (This is a post from 7 years ago discussing these adjustments.  Note that these adjustments are less than current ones in the data base as they have been increased, though I cannot find a similar chart any more from the NOAA discussing the adjustments)
  3. The NOAA HAS made adjustments to US temperature data over the last few years that has increased the apparent warming trend.  These changes in adjustments have not been well-explained.  In fact, they have not really be explained at all, and have only been detected by skeptics who happened to archive old NOAA charts and created comparisons like the one below.  Here is the before and after animation (pre-2000 NOAA US temperature history vs. post-2000).  History has been cooled and modern temperatures have been warmed from where they were being shown previously by the NOAA.  This does not mean the current version  is wrong, but since the entire US warming signal was effectively created by these changes, it is not unreasonable to act for a detailed reconciliation (particularly when those folks preparing the chart all believe that temperatures are going up, so would be predisposed to treating a flat temperature chart like the earlier version as wrong and in need of correction.
    1998changesannotated
  4. However, manual adjustments are not, as some skeptics seem to argue, wrong or biased in all cases.  There are real reasons for manual adjustments to data -- for example, if GPS signal data was not adjusted for relativistic effects, the position data would quickly get out of whack.  In the case of temperature data:
    • Data is adjusted for shifts in the start/end time for a day of measurement away from local midnight (ie if you average 24 hours starting and stopping at noon).  This is called Time of Observation or TOBS.  When I first encountered this, I was just sure it had to be BS.  For a month of data, you are only shifting the data set by 12 hours or about 1/60 of the month.  Fortunately for my self-respect, before I embarrassed myself I created a spreadsheet to monte carlo some temperature data and play around with this issue.  I convinced myself the Time of Observation adjustment is valid in theory, though I have no way to validate its magnitude  (one of the problems with all of these adjustments is that NOAA and other data authorities do not release the source code or raw data to show how they come up with these adjustments).   I do think it is valid in science to question a finding, even without proof that it is wrong, when the authors of the finding refuse to share replication data.  Steven Goddard, by the way, believes time of observation adjustments are exaggerated and do not follow NOAA's own specification.
    • Stations move over time.  A simple example is if it is on the roof of a building and that building is demolished, it has to move somewhere else.  In an extreme example the station might move to a new altitude or a slightly different micro-climate.  There are adjustments in the data base for these sort of changes.  Skeptics have occasionally challenged these, but I have no reason to believe that the authors are not using best efforts to correct for these effects (though again the authors of these adjustments bring criticism on themselves for not sharing replication data).
    • The technology the station uses for measurement changes (e.g. thermometers to electronic devices, one type of electronic device to another, etc.)   These measurement technologies sometimes have known biases.  Correcting for such biases is perfectly reasonable  (though a frustrated skeptic could argue that the government is diligent in correcting for new cooling biases but seldom corrects for warming biases, such as in the switch from bucket to water intake measurement of sea surface temperatures).
    • Even if the temperature station does not move, the location can degrade.  The clearest example is a measurement point that once was in the country but has been engulfed by development  (here is one example -- this at one time was the USHCN measurement point with the most warming since 1900, but it was located in an open field in 1900 and ended up in an asphalt parking lot in the middle of Tucson.)   Since urban heat islands can add as much as 10 degrees F to nighttime temperatures, this can create a warming signal over time that is related to a particular location, and not the climate as a whole.  The effect is undeniable -- my son easily measured it in a science fair project.  The effect it has on temperature measurement is hotly debated between warmists and skeptics.  Al Gore originally argued that there was no bias because all measurement points were in parks, which led Anthony Watts to pursue the surface station project where every USHCN station was photographed and documented.  The net results was that most of the sites were pretty poor.  Whatever the case, there is almost no correction in the official measurement numbers for urban heat island effects, and in fact last time I looked at it the adjustment went the other way, implying urban heat islands have become less of an issue since 1930.  The folks who put together the indexes argue that they have smoothing algorithms that find and remove these biases.  Skeptics argue that they just smear the bias around over multiple stations.  The debate continues.
  5. Overall, many mainstream skeptics believe that actual surface warming in the US and the world has been about half what is shown in traditional indices, an amount that is then exaggerated by poorly crafted adjustments and uncorrected heat island effects.  But note that almost no skeptic I know believes that the Earth has not actually warmed over the last 100 years.  Further, warming since about 1980 is hard to deny because we have a second, independent way to measure global temperatures in satellites.  These devices may have their own issues, but they are not subject to urban heat biases or location biases and further actually measure most of the Earth's surface, rather than just individual points that are sometimes scores or hundreds of miles apart.  This independent method of measurement has shown undoubted warming since 1979, though not since the late 1990's.
  6. As is usual in such debates, I find words like "fabrication", "lies",  and "myth" to be less than helpful.  People can be totally wrong, and refuse to confront their biases, without being evil or nefarious.

Postscript:  Not exactly on topic, but one thing that is never, ever mentioned in the press but is generally true about temperature trends -- almost all of the warming we have seen is in nighttime temperatures, rather than day time.  Here is an example from Amherst, MA (because I just presented up there).  This is one reason why, despite claims in the media, we are not hitting any more all time daytime highs than we would expect from a normal distribution.  If you look at temperature stations for which we have 80+ years of data, fewer than 10% of the 100-year highs were set in the last 10 years.  We are setting an unusual number of records for high low temperature, if that makes sense.

click to enlarge

 

Where's Coyote?

As most of you may know, our company privately operates public parks.  Just before Memorial Day, our largest contract (which covers a lot of our overhead) was shut down by a fire in the Sedona area.  Since that time, our landlord the US Forest Service has announced it is going to keep all of these locations closed indefinitely out of fear of flash flooding (fire-damaged hillsides create a lot more runoff in eve light rain due to loss of ground cover and chemical changes in the soil that make it less permeable).  I think they are over-reacting, but it is not my decision to make.

The result of this is I have been in total operational scrambling mode and may remain so for a while, reducing the amount of blogging I do.

Bizarre Payback Analysis Being Used for Alternate Energy

Check out this payback analysis that is being trumpeted for wind power:

US researchers have carried out an environmental lifecycle assessment of 2-megawatt wind turbines mooted for a large wind farm in the US Pacific Northwest. Writing in the International Journal of Sustainable Manufacturing, they conclude that in terms of cumulative energy payback, or the time to produce the amount of energy required of production and installation, a wind turbine with a working life of 20 years will offer a net benefit within five to eight months of being brought online.

So of all the scarce resources that go into producing wind power, if you look at only one of these (energy), then the project pays itself back in less than a year.  This is stupid.  Yes, I understand that there are some "green" energy sources (*cough* corn ethanol *cough*) that cannot even produce more energy than they consume, so I suppose this finding is a step forward from that.  But what about all the other scarce resources used in producing wind power-- steel, labor, engineering talent, concrete, etc?  This is roughly like justifying the purchase of an 18-wheeler truck by saying it will pay off all the vanadium used in its production in less than a year.

Environmentalists seem to all feel that capitalism is the enemy of sustainability, but in fact capitalism is the greatest system to promote sustainability that has ever been devised.  Every single resource has a price that reflects its relative scarcity as compared to demand.  Scarcer resources have higher prices that automatically promote conservation and seeking of substitutes.  So an analysis of an investment's ability to return its cost is in effect a sustainability analysis.  What environmentalists don't like is that wind does not cover the cost of its resources, in other words it does not produce enough power to justify the scarce resources it uses.  Screwing around with that to only look at some of the resources is just dishonest.

The one reasonable argument is that the price of fuels does not adequately reflect the externalities of Co2 production.  I don't think these are high but obviously there are those who disagree.  The right way to do this analysis is to say that wind power provides a return only if electricity prices are X (X likely being well above current market rates) which in turn reflects a Co2 cost of Y $/ton.  My gut feel is that it would take a Y -- a cost per ton of CO2 -- way higher than any of the figures that are typically bandied about even by environmentalists to make wind work.

Postscript:  I did not critique the analysis of energy payback per se, but if I were to dig into it, I would want to look at two common fallacies with many wind analyses.  1) They typically miss the cost of standby power needed to cover wind's unpredictability, which has a substantial energy cost.  In Germany, during their big wind push, they had to have 80-90% of wind power backed up with hot fossil fuel backup.  2)  They typically look at nameplate capacity and not real capacities in the field.  In fact, real capacities should further be discounted for when wind power produces electricity that the grid cannot take (ie when there is negative pricing in the wholesale market, which actually occurs).

D-Day More Important in Containing the Soviets than Defeating the Nazis

Over time, my understanding of the importance of the D-Day invasions has shifted.  Growing up, I considered these events to be the single key event in defeating the Nazis.  Listening to the radio this morning, this still seems to be the common understanding.

Over time, I have had to face the fact that the US (or at least the US Army) was not primarily responsible for defeating Germany -- the Russians defeated Germany, and what's more, would have defeated them whether the Allies had landed in France or not.  Check out the casualties by front, from Wikipedia:

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The Russians defeated Germany.  Period.   And I don't think the western allies would ever have had the stomach to inflict the kind of casualties on Germany that were ultimately necessary to defeat her without Russian help.  To me, this is the great irony of WWII, that it was not ultimately a victory for democracy.  Only totalitarian Russia could defeat totalitarian Germany.  This thought often bothers me a lot.  It doesn't fit with how we want to view the war.

However, D-Day did have an important effect -- it kept Western Europe out of Soviet hands.  We did not know it at the time, but I would argue in retrospect that from mid-1944 on we were competing with Russia to see how Europe would get divided up after the war.  D-Day allowed the western allies to overrun most of Western Europe and keep it out of Soviet hands, perhaps an even more important outcome than just speeding the defeat of the Germans.  Sure, FDR gets grief for giving the farm away to Russia at Yalta, but what could he do?  The Soviet occupation of Eastern Europe at that point was a fait accompli.  What would have been FDR & Churchill's negotiation position at Yalta if their armies were not even on the continent (excepting Italy, where we might still be fighting in 2014 and getting nowhere)?

Even an Influential Chart Can Be A Graphics Fail

Presumably most of you have seen this chart frm a study that says that not only do Americans not know where the Ukraine is, but that desire for US intervention there is correlated with such knowledge or lack thereof (the less people understand where it is, the more they support intervention).

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I find the study results both depressing and unsurprising, so I won't comment on them per se.   Though I suppose if you confuse the Ukraine with the Yukon (as a number of respondents seem to), interventionism might make more sense.  My only question is:  where were such studies of domain knowledge vs. policy recommendations in the health care or minimum wage debate?

However much impact this chart has had, though, it is still a graphics fail in my mind.  Why?  Because the author attempts to portray a second variable by the dot color.  But the variable he or she chooses to portray is the distance of the point from the correct location (red being more correct, blue less).  But that is easy to see without the variation in color.  It is redundant information.

A much better chart would have been to color code each dot with that respondent's Ukraine prescription, from blue = intervention to red = non-intervention.  This way the chart would have supported the full findings of the study (link between geographical knowledge and policy prescription) rather than just one aspect (quality of geographic knowledge).

Update:  If so many people got the Ukraine and the Yukon confused, God help us if the next Russian crisis is in Georgia.

Is Their a Guinsess Record for the Longest Correction?

This correction by Michel Taylor of something called the Australian Independent Media Network has got to be the longest correction in history.  You know it is an incredible correction when this is just a tiny part of the errors admitted:

  • Evans does not believe, and has never believed, that 9/11 was an inside job perpetrated by the Rothschild family, that US President Barack Obama is a secret Jew, that the Holocaust never happened or that Jewish bankers and the Rothschild family have assassinated at least two US Presidents.

The author also admits to getting Evans' education, occupation, organization, and sources of funding wrong.

In part I suppose kudos are owed to Mr. Taylor for being so honest, but seriously, how can one be so comprehensively wrong? (I will actually explain why in a minute).  The correction runs on so long in part because he Taylor also has to correct an earlier correction where he blamed one of his original sources for being intentionally misleading.  He also apologizes for that.

I would likely have posted this anyway just because it is sort of funny.  But it just so happens to tie into what I wrote yesterday here.  Because it is clear that Mr. Taylor's core mistake is that he researched the positions of a climate skeptic (Mr. Evans) solely by asking climate alarmists (and climate alarmist web sites) what this skeptic believed.  He felt no need to hear the skeptic case from the skeptic himself.  And what do you know, the descriptions of Mr. Evans' beliefs as portrayed by his ideological enemies were full of errors, exaggerations, straw men, and outright lies.  Who would have thought?

We can laugh at Mr. Taylor, but at least he admitted his mistakes in great depth.  But outlets such as the LA Times and the BBC have recently made it a rule they will never allow skeptic voices into their reporting.  They have institutionalized Mr. Taylor's mistake.

Trying, And Failing to Get Transparency About the Government Shutdown of Private Park Operators

Hans Bader submitted a FOIA on October 9 about US Forest Service and Dept. of Agriculture decision-making leading up to the unprecedented shutdown of private operations on US Forest Service land.  I have seen the FOIA results and -- almost laughably -- virtually all of the documents relate to the end of the shutdown, and all of the documents are dated after the date of his FOIA.  In other words, the US Forest Service essentially ignored the documents requested by the FOIA request and submitted a stacks of unrelated documents.

More from Mr. Bader here

The World's Most Famous Investor Is Now Investing in...

...government access.  Clearly Warren Buffet saw the writing on the wall in 2009, that the way to make money in the US was no longer to build products and factories but to invest in lobbying to get crony advantages and giveaways.

click to enlarge

This Administration and Senate makes all kinds of progressive noises, but all the while they are running perhaps the greatest expansion of cronyism in US history.  And the smart money knows it.