Posts tagged ‘US’

Memo to Vox: You Know How This Prosperity Was Achieved? We Let it Happen.

Vox shares what is perhaps the greatest achievement in human history, the continuing disappearance of absolute poverty:

roser_poverty_shares

 

Readers of this blog will likely  have seen this before (though it may well be new to Vox readers).  Here is the amazing thing about the Vox article:  It never once mentions capitalism, trade, economic freedom, or any synonym.  Here is a sampling of the tone of the accompanying article:

There's still much work to be done: 14.4 percent of the world amounts to 1 billion people who still need to be lifted out of extreme poverty. And making sure everyone's making at least $1.25 a day isn't the end of the fight either. The world's median income is still only $3 to $4 a day. By comparison, the poverty line in the US for a family of four is $16.61 per person per day. Once under-$1.25-a-day poverty is eradicated, the world needs to set about eradicating under-$15-a-day poverty, which will be a substantially harder task.

Vox is treating this like it is the result of some top-down effort, using the same language one might use to describe the eradication of Yellow Fever in Panama.  As if this resulted (and as if future progress depended on) some all-hands-on-deck technocratic government program.

No one "set about" eradicating poverty.  It happened because governments, at least to some extent, got out of the way and didn't stop it.  China is a great example.  Mao "set about" trying to eliminate poverty using many of the approaches likely favored by the Vox staff, and killed a few tens of millions of people in the process.

Here is my theory of the world's accelerating wealth formation that I have written on a number of times before.  This chart largely results from:

  • There was a philosophical and intellectual change where questioning established beliefs and social patterns wentfrom being heresy and unthinkable to being acceptable, and even in vogue. In other words, men, at first just the elite but soon everyone, were urged to use their mind rather than just relying on established beliefs and appeals to authority.
  • There were social and political changes that greatly increased the number of people capable of entrepreneurship. Before this time, the vast vast majority of people were locked into social positions that allowed them no flexibility to act on a good idea, even if they had one. By starting to create a large and free middle class, first in the Netherlands and England and then in the US, more people had the ability to use their mind to create new wealth. Whereas before, perhaps 1% or
    less of any population really had the freedom to truly act on their ideas, after 1700 many more people began to have this freedom.

So today's wealth, and everything that goes with it (from shorter work hours to longer life spans) is the result of more people using their minds more freely.

Short Apple?

Verizon's decision to stop subsidizing smartphone purchases in exchange for 2-year contract lock-ins is going to be a big change in the industry.  It will be interesting to see what happens to handset prices.  A while back someone I know had a Verizon iphone that they lost.  They were talking about going out and buying a new one to replace it.   I said, "uggh, an $800 hit."  They looked at me like I was crazy.  They said they had paid something like $300 for it.  I pointed out that that was likely with a 2-year contract lock-in, and that a replacement would go full price which can run over $800 depending on which version they had.

They did not believe me.  In fact they were almost indignant that I would suggest such a thing.  And went running off the the Verizon store with every confidence an iPhone 6 plus could be purchased for $200-$300.

This situation has obtained for a decade.  It will be interesting to see what happens to iPhone sales when customers are exposed to something closer to the true price.  Since most iPhones without contract go for more (substantially more in fact) than the laptops I am buying my employees, I can't help but think that iPhone revenues will suffer.  (Of course, the result could be everyone who wants a new iPhone switching to AT&T from Verizon  -- it is not at all clear Verizon's new no-subsidy rates are low enough to be a better net deal than the old rates+subsidy).

I use Verizon because my business operates in the boondocks and Verizon is almost always the last carrier standing when I drive out to our locations.  I wonder if Verizon will now be allowing unlocked phones?  I presume this will be the case -- T-Mobile is the other company that ended phone subsidies and I moved my unlocked Nexus to them.

By the way, the current T-Mobile $50 a month plan allows unlimited data and text when roaming in 120 countries, and $0.20 a minute international calls from any of these countries.  This is even better than you can do with the old method of buying an international sim card and switching when you land.   No other US carrier is even in the ballpark.  You have to pay Verizon $20 a month or so to get them to reduce international roaming text costs to 50 cents each with some paltry amount of data.  For international travelers, there is no other choice even close to T-Mobile among US carriers.

China Slashes Costs for American Consumers

My headline is probably the most accurate description of how China's devaluation of the yuan yesterday affects this country.  But I bet you will not see it portrayed that way in any other media.  What you are going to see, particularly as the Presidential election races heat up, are multiple calls to bash China in some way to punish it for being so generous to American consumers.  Why?  Because the devaluation of the yuan will negatively affect the bottom line of a few export sensitive companies.  And if we have learned anything from the Ex-Im battle, things that GE and Boeing like or hate are much more likely to affect policy than things that benefit 300 million consumers.  Make no mistake, protectionist measures are the worst sort of cronyism, benefiting a few companies and workers and hurting everyone else (look up concentrated benefits, dispersed costs).

By the way, aren't the worldwide competitive devaluation sweepstakes amazing?  If everyone is doing it, then devaluations have no substantive effect on trade (except to perhaps decrease its magnitude in total), which just adds to the utter pointlessness of the game.  And it is hilarious to me to see US elected officials criticizing China for "manipulating" its currency, as if the US Fed hasn't added several trillion dollars to its balance sheet over the last few years in a heroic attempt to manipulate the value (downwards) of our own currency.

I am Trying Really Hard to Be Open-Minded About the Iran Deal, But....

...the President and his supporters sure make it hard.  In his speech last week at American University he said:

Just because Iranian hardliners chant “Death to America” does not mean that that’s what all Iranians believe. (Applause.) In fact, it’s those hardliners who are most comfortable with the status quo. It’s those hardliners chanting “Death to America” who have been most opposed to the deal. They’re making common cause with the Republican caucus. (Laughter and applause.)

That last part seems to have gotten the Conservatives in an uproar, and I suppose I can see why, though I am reluctant to join in the usual Internet rush to burn someone over what may have been a ham-handed joke.

It is actually the first sentence that floors me.  Either the President is straight-out being deceptive, or he is a total foreign policy naif.  Iran is not like the US.  People in Iran are not allowed to consistently chant messages with which the rulers do not agree.  As a minimum, they are met with violence and arrest (e.g. in 2009 with the Green movement).  So if anyone is chanting "Death to America" at public events, it is with the tacit approval of the nation's rulers.  It may very well be that the mass of Iranians don't agree with that message, but in Iran, what the mass of Iranians believe is largely irrelevant.

Dodd-Frank a Disaster for the Poorest People in Africa

Yeah, that headline seems a bit odd -- Dodd-Frank is about banking, right?  Well, apparently buried within Dodd-Frank are conflict minerals rules which I suppose were spurred by the efforts of a few dim-bulb celebrities who have a knack for latching onto poorly thought out "solutions" for Africa that tend to have staggering unintended consequences.

In this case, the logic was that minerals sales to western companies were  propping up dangerous warlords and militias, particularly in the Congo.  The law imposed huge penalties on American companies that did not purge their supply chain eight, ten, twelve steps deep of any suspected bad actors in the mineral world.

The problem for US companies is that this imposes a ton of cost, and is very hard to do.  So hard that the US government has not been able to successfully differentiate conflict from non-conflict suppliers.   However, as we learned on issues like cybersecurity, the US Government is still more than willing to impose enormous penalties on private businesses for failing at tasks the government can't even do itself.  So companies play it safe and don't buy from any source anywhere near places like Congo, even avoiding neighboring countries that have no such conflict issues.

Because what Progressive supporters forgot in patting themselves on the back for their sensitivity in passing such laws is that minerals extraction and related labor is about the only source of income for citizens of these countries, which are among the poorest in the world.  We may cut have off some of the money flowing to warlords (though not much as they turn out to do pretty well in the new bootlegging environment), but we are cutting off all the money that went to the struggling population.   Further, by driving the trade underground, it becomes impossible to impose event he most basic rules on the trade.   Dodd-Frank turned the mineral trade in these countries into the cocaine trade.

Via Overlawyered, from the CEI

The 2010 Dodd-Frank Act increased violence in the Congo by 143 percent (and looting by 291 percent) through its “conflict minerals” rule, which has backfired on its intended beneficiaries. So concludes a new study by Dominic Parker of the University of Wisconsin and Bryan Vadheim of the London School of Economics.

As we noted earlier, Dodd-Frank conflict minerals regulations have also caused starvation in the Congo, harmed U.S. businesses, and resulted in increased smuggling—even as they punish peaceful neighboring countries in Africa just for being near the Congo, whose civil wars have killed millions over the last 20 years. They have inflicted great harm on a country that was just beginning to recover from years of mass killing and had the world’s lowest per capita income. The new study is consistent with a 2013 paper by St. Thomas University law professor Marcia Narine that criticized the conflict minerals rule for its dire consequences for the Congolese people.

To his credit, David Aronson was on this four years ago:

For locals, however, the law has been a catastrophe. In South Kivu Province, I heard from scores of artisanal miners and small-scale purchasers, who used to make a few dollars a day digging ore out of mountainsides with hand tools. Paltry as it may seem, this income was a lifeline for people in a region that was devastated by 32 years of misrule under the kleptocracy of Mobutu Sese Seko (when the country was known as Zaire) and that is now just beginning to emerge from over a decade of brutal war and internal strife.

...

Meanwhile, the law is benefiting some of the very people it was meant to single out. The chief beneficiary is Gen. Bosco Ntaganda, who is nicknamed The Terminator and is sought by the International Criminal Court. Ostensibly a member of the Congolese Army, he is in fact a freelance killer with his own ethnic Tutsi militia, which provides “security” to traders smuggling minerals across the border to neighboring Rwanda.

...

The people of eastern Congo agree that it would be beneficial to bring greater clarity and transparency to the mineral trade. A variety of local and international initiatives to do so were under way when the embargo hit. Those efforts may now become a casualty of the Dodd-Frank law.

Globalization and Start-Ups

In a comment on this article about declining startup activity and the growing average size of businesses, a commenter wrote:

The high foreign trade deficit is also a barrier to the formation of small new companies. The annual trade deficit of the US is greater than the rate of GDP growth, which explains a lot of things. Probably more companies are being destroyed than created in the US. Legislate and reverse the foreign trade deficit and there will be a massive surge in small companies.

I wrote in return

As for wolf-dogs comment on the trade deficit, I think this is totally wrong. Most of the trade imbalance is with stuff like cars and steel which are unlikely startup businesses. The easy availability of Asian manufacturing sources for nearly anything you want to make or can dream up facilitates startups and entrepreneurship. My gut feel, just seeing what entrepreneurs around me are doing but not from any hard data, is that globalization and easy international sourcing is a net positive for small business formation.

I have never seen any data on this though.  Thoughts?

I Have Been Wondering This Same Thing

In an article on an incipient bank run in Greece, Zero Hedge wonders, "What is perhaps more shocking is that anyone still had money in Greek banks at all..."  I agree.  With talk for weeks of capital controls and the example of raids on depositor funds (even supposedly insured deposits) in Cyprus, my money would have been long gone.  Even in the US in 2008-2010, I took our corporate funds out of the main Bank of America account and spread them all over.  It was a pain in the butt to manage but even facing much smaller risks than in Greece, I thought it was worth it.

Obama Extends War With Eastasia Hours After Declaring He Has Never Been At War With Eastasia

Via Zero Hedge:

Just when we thought the absurdity that marks every single day of Obama's reign could not possibly be surpassed, we learned that 4 hours (3 hours and 47 minutes to be precise) after the US president vowed to sign a new law banning bulk data collection by the NSA (named, for purely grotesque reasons, the "USA Freedom Act"), the Obama administration asked the secret Fisa surveillance court to ignore a federal court that found bulk surveillance illegal and to once again grant the National Security Agency the power to collect the phone records of millions of Americans for six months.

Or, as the Guardian's Spencer Ackerman, who spotted this glaring page out of Josef Stalin's playbook, summarized it:

According to Ackerman, this latest travesty by the administration "suggests that the administration may not necessarily comply with any potential court order demanding that the collection stop."

Has The US Undermined European Self-Reliance?

Kevin Drum featured this really interesting Pew poll.

blog_nato_defense

This is pretty amazing.  Few European citizens support their country fulfilling its NATO treaty obligations to their neighbors, perhaps because most expect the US to do it for them.

Media: Please Be Clearer. Was it China, or Chinese Hackers?

The WSJ, like many other media sites, has a headline today that says "U.S. Suspects China in Huge Data Breach of Government Computers."  Then, when you read the article, it says "Chinese hackers" or "hackers in China".

There is an enormous difference between saying China is responsible and saying hackers in China are responsible.  The first would be a very serious affair, implying the Chinese government was engaged in hacking of US Government records.  The latter is virtually meaningless.   It simply means that the hackers happened to be Chinese.  They could have easily been Russian or American.

The media claims to be largely pacifist, but has anyone else noticed that they sure seem to be trying to stir up Americans in some sort of anti-China fever of late?

"Man-Made" Climate Change

Man has almost certainly warmed the world by some tenths of a degree C with his CO2, though much of this warming has hit night-time lows rather than daily highs.  Anyway, while future temperature rise forecasts are often grossly exaggerated by absurdly high assumptions of positive feedback, there is at least a kernel of fact in there that CO2 is likely warming the world somewhat.

However, the popular "science" on climate change is often awful, positing, for example, that hurricanes are being increased by man right in the midst of the longest hurricane drought we have seen in the US for a hundred years.

Inevitably, the recent severe California droughts have been blamed on manmade CO2.  As a hopefully useful adjunct to this debate, I have annotated a recent chart from the San Jose Mercury News on the history of California droughts to reflect the popular global warming / climate change narrative.  You be the judge of the reasonableness:

click to enlarge

When "Pro-Science" Environmentalists Fall For Idiotic Technologies: Solar Roads Edition

I am mostly inured to being told I am "anti-science" for thinking manmade global warming will be less than catastrophic.  In debate situations (which are increasingly rare, since most colleges where I do most of my speaking no longer want a second side in climate discussions) I usually can demonstrate I know a hell of a lot more about the science than my opponent in the first 3 minutes or so.

But the whole "pro-science" pose of environmentalists is especially funny when they get really excited about some very stupid technology.  Environmentalists' support for corn ethanol is a good case in point.  Most of them have retreated on this, and the media has pretty much allowed them to pretend they were never really vociferous supporters of this technology that most now consider (and I considered from the beginning) to be environmentally damaging.

Here is the new, latest, greatest example.  From Think Progress, where else, but the story has been reprinted all over the hip environmental Left:

The World’s First Solar Road Is Producing More Energy Than Expected

DSC8910_kinderenvanboven2-638x424

In its first six months of existence, the world’s first solar road is performing even better than developers thought.

The road, which opened in the Netherlands in November of last year, has produced more than 3,000 kilowatt-hours of energy — enough to power a single small household for one year, according to Al-Jazeera America.

“If we translate this to an annual yield, we expect more than the 70kwh per square meter per year,” Sten de Wit, a spokesman for the project — dubbed SolaRoad — told Al Jazeera America. “We predicted [this] as an upper limit in the laboratory stage. We can therefore conclude that it was a successful first half year.”

De Wit said in a statement that he didn’t “expect a yield as high as this so quickly.”

The 230-foot stretch of road, which is embedded with solar cells that are protected by two layers of safety glass, is built for bike traffic, a use that reflects the road’s environmentally-friendly message and the cycling-heavy culture of the Netherlands.

In the US, we pay about 12 cents a KwH for electricity  (the Dutch probably pay more).  But at this rate, in 6 months, the solar sidewalk has generated... $360 of electricity.  Double that for a year, and we get $720 of electricity a year.

How much did the sidewalk cost?  The article doesn't say.  You will find this typical of wind and solar articles.  If they quantify the installation cost, they will not quantify the value of power produced.  If they quantify the power produced, they will never quantify the installation cost. This article says the installation cost was $3.5 million, though I suppose one should subtract from that the cost to build a similar length concrete bike path, but that can't be more than $100,000 for 230 feet.  They say they are getting 70kwh per year per square meter, which is $8.40 worth of electricity per square meter per year.  Since regular solar panels - without all the special glass overlays and installation in the ground and inverters and wiring - cost about $150-$200 per square meter, you can see this is a horrible investment.

Part of the reason this is a bad investment is that solar panels are simply not efficient enough and cheap enough to be cost effective -- I think they will be someday, but not now.   But this project has special problems:

  • The panels are actually in the ground with people driving over them.  Honestly, could one actually choose a worse spot for a solar panel?  This installation location, vs. say a roof, adds incredible cost to toughen the panels for wear.  Also, it increases their maintenance costs and likely reduces their life.
  • Even worse, the panels have to sit flat on the ground, which is not the most efficient place for them.  Panels are most efficient if tilted at an angle and (in the case of Holland) facing south.  Further, they are more efficient up in the air where they do not get shaded by trees or buildings.

This is just stupid, stupid, stupid.  Perhaps if solar becomes more efficient and we have run out of space on every roof in the world, one might possibly maybe (but probably not) consider this.  But despite the inherent inanity of this idea, look at all the articles on Solaroad -- Think Progress, the Huffington Post, Engadget, Tree Hugger, Extreme Tech, NPR, Sustainable Business -- they all have multiple, gushing, unrelentingly positive articles about this.  Look at all the positively fawning comments on Think Progress.  I can't find a single article on the web that is even slightly skeptical.

 Update:  A reader sends me this epic video takedown of this stupid idea.  He did this in advance of the article today.  He finds it to be complete BS, despite the fact that he overestimates electrical production by a factor of 2.

The Federal Government's Minimum Wage Hypocrisy

Diana Furchtgott-Roth and Jared Meyer have an article in the Federalist discussing the hypocrisy of members of Congress who advocate for higher minimum wages while paying their interns nothing.  It is worth a read, but rather than excerpt it, I wanted to add another example.

The example comes from the world of private operation of public parks, the business my company is in.  We keep parks open by operating much less expensively than can the government, usually using only the fees paid by park users without any additional tax dollars.

Last year, Barack Obama issued an order raising the minimum wage of Federal contractors to $10.10 an hour.  Though concessionaires like us are normally thought of legally as tenants of the government rather than contractors, the Department of Labor wrote the rules in such a way that this wage order would apply to concessionaires that operate Federal parks, such as those in the US Forest Service's campground concession program.

As a result of this order and similar minimum wage increases by the State of California, a concessionaire (not our company) that ran campgrounds in the Tahoe National Forest in California informed the Forest Service that it would need to raise camping rates to offset these minimum wage increases.  As an aside, wages and benefits that are tied to wage rates (e.g. workers comp and payroll taxes) make up about 50% of a private concessionaire's costs.  So if minimum wages go up, say, 20%, then (given the very low margins in the business) a 10% price increase is necessary just to stay even.

The Tahoe NF rejected the fee increase request, despite the fact that the concessionaire turned over its books to show that it was losing money at the higher minimum wage rates.

So what did the Tahoe NF do?  It took over operation of the campgrounds itself, ending a successful 30-year partnership with private operators.  How did it solve the minimum wage issue?  Simple!  Minimum wage laws don't apply to the Federal government.  So it will use dozens of volunteers who are paid nothing to operate the campground.

In other words, at a time when the President believes it is a burning priority to make sure every campground worker makes at least $10.10 an hour, the US Forest Service is firing private, paid workers and replacing them with volunteers.

By the way, even using volunteers, the US Forest Service will STILL be paying more to operate the campgrounds than it did with the concessionaire.  Under the private partnership, the private operator paid all expenses and paid the US Forest Service a concession fee, essentially rent.  The campground's operation and maintenance were paid for entirely with user fees, and the USFS actually made money from the operation.  Now, even with volunteers, the USFS operating plan shows it using $2 million of taxpayer money over the next five years in addition to user fees to keep the parks open.

Update:  Despite the original (stated) reason for taking over the campground, and despite using dozens of unpaid laborers, the USFS still had to raise customer rates in the end -- higher than the original private concessionaire proposed!

Celebrate the Strong Dollar

We are already seeing articles bemoaning the strong dollar as somehow a threat to the American economy.  Don't believe it.  Maintaining a weak dollar is yet another crony government program that benefits a tiny minority of admittedly vocal and politically connected Americans.

First, a bit of an aside.  It is amazing to me that the US dollar can be strong at all right now, given the actions of the Fed.  With its near infinite QE and zero-interest rate programs, one would expect the dollar to be weak (Oversimplifying, driving down the returns on financial assets reduces the overseas demand for them, thus reducing the demand for dollars, driving down the price of dollars).  But it turns out that the rest of the world (esp. Japan and the EU) are actually working twice as hard to trash their own currencies (they are actually heading into negative interest rate territory, not just zero) and thus on a relative basis, the dollar is stronger.

Companies that export or compete a lot with manufacturers in other countries hate the strong dollar.  It makes their domestically produced products more expensive vis a vis products manufactured in other countries.  Many of these companies have powerful political voices, and some have large unions with even more powerful political voices.  They lobby for a weaker dollar.  Part of that lobbying is often to portray other countries as nefariously "manipulating" their currencies to hurt the US.

What these countries that are weakening their own currencies are actually doing is trashing the prosperity of the vast majority of their citizens to protect the earnings of a few politically powerful producers.  Japan is a great example.  Japan is a country in which consumers have been stomped on from decades in order to reduce the price of the country's exports.  Japanese consumers pay far more for everything than we do, all so their exporters can lower their prices in the US.

This is the same in China.  We frequently host visiting Chinese students.  You know what every one of these kids do on their trip to the US?  They bring an empty suitcase that they fill up with electronic and fashion goods they buy here, many of which were actually manufactured in China  (I have never, ever have hosted a Chinese student that did not buy at least one Chinese-manufactured iPhone here).

So, we must oppose this currency "manipulation" that impoverishes Japanese, Chinese, and European citizens in favor of giving much lower prices to Americans -- Why?

We should celebrate the strong dollar.  It makes every one of us richer.  Not just when we buy Chinese electronics, but even when we buy American-made products that now must be less expensive to compete with foreign products and which benefit from cheaper inputs in their own manufacturing.

Years and years ago I wrote a hypothetical post about Chinese interventions to maintain a trade surplus form a Chinese consumer's perspective in a post from our sister publication Panda Blog.  I think it holds up really well.  It said in part:

It is important to note that each and every one of these government interventions subsidizes US citizens and consumers at the expense of Chinese citizens and consumers.  A low yuan makes Chinese products cheap for Americans but makes imports relatively dear for Chinese.  So-called "dumping" represents an even clearer direct subsidy of American consumers over their Chinese counterparts.  And limiting foreign exchange re-investments to low-yield government bonds has acted as a direct subsidy of American taxpayers and the American government, saddling China with extraordinarily low yields on our nearly $1 trillion in foreign exchange.   Every single step China takes to promote exports is in effect a subsidy of American consumers by Chinese citizens.

Nestle: Private Company Getting Blamed for Government Incompetence

The story begins with a discovery that the permit under which Nestle's Arrowhead Water has been collecting water in the San Bernardino National Forest expired in 1988.  LOL, oops.  Environmental and other Leftish sites are calling for Nestle's head and somehow blaming Nestle for this.

As a permittee with the US Forest Service (USFS) in California and across the country, I can guess with pretty high confidence exactly what happened here.  For years I was head of a trade group of recreation concessionaires (think lodges and guides and such) who do business in the USFS under permit.  Most of these were located in California.  For years, the biggest problem we have had with the USFS in California is that they are years and years behind in nearly all their permit renewals.  There are literally hundreds of expired permit in the USFS in California alone.

For reasons that probably go to bureaucratic incentives, despite the Forest Service's huge budget, they are loath to allocate resources to renewing these permits -- they want to fill their organization with biologists and archaeologists and arborists, not contracts people.  Making the situation worse, Forest Service and other Federal rules have burdened the permit renewal process with so many legal requirements that each one, even if trivial in size and impact, is absurdly time-consuming to complete.

This is not a new situation -- it has obtained for years.  Almost five years ago I met personally with the Chief of the Forest Service in DC and begged for more resources to be assigned to permit renewals, but to no avail.   I did the same in a meeting barely a month ago with the head of the USFS's Region 5 (basically California).   All of us permittees have been vociferously complaining about this for years.

When you look at these situations, then, what you will see is not some evil private business trying to get over on the public, but a business that is literally screaming in frustration, year in and year out, begging the US Forest Service to address its permit renewal.   Generally, local Forest Service staff will give the company verbal assurances that they should keep operating, so they do, continuing to pay their fees and operate within the guidelines of the old, expired contract.

I would be willing to bet a fair amount of money that this is exactly what happened to Nestle.

By the way, the usual groups seem to be piling on Nestle about bottled water from the Sacramento tap water system.  A couple of comments:

  • Environmentalists seem to obsessively hate bottled water, but ignore what a trivial, trivial percentage of total water use is bottled.
  • Critics are accusing Nestle of making obscene profits on Sacramento tap water.  But if they really think the spread between tap water and bottled water is too large, isn't the real issue that Sacramento is under-pricing its tap water?  After all, Nestle is paying what everyone else in the town is paying for water.
  • Environmentalists have a misguided fetish for local foods, often ignoring that transportation costs and energy are a tiny percentage of most food production costs  (a percentage small enough to be dwarfed by differential productivity of soils and climates).  But here, all they can possibly accomplish is to chase Nestle's bottling plant out of California and then have the water trucked back into the state.  This might be a net gain depending on the differential value of California water vs. fuel, but we can't know that because California water pricing is so screwed up.

The Left and Original Sin

Check your privilege.  You are one of the white oppressors.  You are part of the patriarchy.   These are all frequent rhetorical flourishes from the Left today.  What do they have in common?  Well, beyond the fact that they are all ad hominem and have nothing to do with a person's actual arguments or even character, they all work under an assumption of original sin -- that the sins of past generations somehow accrue to individuals of this generation.  If you are male, you are born guilty for the infractions of all past males.  Your maleness or whiteness or the bank balance of your parents creates a stink that can't be washed off.

There is a certain irony to all this, particularly on gender issues, since many of were often justified on Biblical notions of original sin stemming back to the Garden of Eden.  Which all goes, by the way, to demonstrate my contention that "tolerance" today is not about ending out-groups but about shifting the out-group tag to different people.

Don't believe me?  Well, how else to explain this story about Ben Affleck:

Last week we learned that distinguished Harvard professor Henry Louis Gates Jr. compromised his integrity when actor Ben Affleck — a guest on “Finding your Roots,” the PBS documentary on celebrity lineages that Gates hosts — asked Gates to omit a portion of his ancestry.

Affleck, soon to be seen as Batman on the big screen, learned he had a slave-owning ancestor and promptly pushed Gates to spike that detail.

“We've never had anyone ever try to censor or edit what we found,” Gates wrote in an email to Michael Lynton, chief executive of Sony Entertainment, adding: “He's a megastar. What do we do?”

Perhaps I might try to whitewash a story about my parents.  I barely knew my grandparents and can't imagine trying to whitewash their history.  But for what conceivable reason would I whitewash my family history 4 or 5 generations back?  How in the world, unless I were to accept some notion of original sin, would the crimes of a relative more than 150 years ago accrue to me?

A few other thoughts:

  • This concern is also pretty selective.   So an ancestor held opinions about slavery we all would find horrifying today.  But given the times, I can bet that pretty much every relative of Affleck's of that era, slaveholder or no, held opinions (say about women) that we would likely find offensive today.
  • Congrats to Affleck for achieving some negative alchemy here.  He took an issue (his ancestor's slave-holding) that did not reflect on him at all and converted it via some "I am a star" douchebaggery into something that makes him look like a tool.
  • PBS often makes the argument that they somehow have the moral high ground because they are non-commercial and publicly-funded.  Uh, right.  Look at how quickly they caved here.
  • I find it hilarious that any kids in the US feel the ability to say "check your privilege" to someone else.  Even someone at the 20th percentile in the US would be among the richest 20% in many countries.  From the world's perspective, we are all affluent here.

Kevin Drum Claims "We" Haven't Learned Anything from Deepwater Horizon. What you mean, "we," Kemo Sabe?'

Kevin Drum claims that "we" haven't learned anything from the Deepwater Horizon disaster (the BP oil rig that exploded five years ago in the Gulf, killing a number of people and creating a large oil spill).

What is his evidence?  Has he looked at oil company drilling practices and found them unchanged since the disaster?  No, he does not mention any evidence based on observed drilling practices one way or another.  His sole evidence that "we" have not learned anything is that the US Government has not shut down drilling in the Gulf and has not passed any new laws.

This is almost a caricature of progressive thinking -- nothing matters except what the government does.  But presumably oil companies have been influenced by the cost of the disaster on BP.  So far BP has paid out about $30 billion (billion with a B) in reparations and restoration expenses and may be facing another $20 or so billion in fines based on a 2014 court decision.  All this ignores the loss of the platform itself, of access to the resource below the platform, and of BP's reputation.

One would presume that the prospect of losing $50+ billion would be enough to get the attention of private companies and cause them to make changes to their procedures.  I suppose it is also possible that they completely ignored this, but Drum offers no evidence one way or another.  To him, anything not done by the government is irrelevant.

Two Steps Back for Free Speech in Nevada

Until now, Nevada has had one of the strongest anti-SLAPP protection laws in the US.  As a reminder, SLAPP suits are ones aimed at silencing speech by intimidating it with legal threats and overwhelming it with legal defense costs.  Anti-SLAPP laws provide legal protection to speech through a variety of means, including the ability to get quick dismissals of suits whose sole intention is to quash legal speech and in the best cases reimbursement of attorneys fees.

As you can imagine, politicials, the wealthy, and the powerful don't like these suits.  Nevada is in the process of gutting these protections.  Ken White has the story.

I have a new-found interest in such matters, as I was threatened by a major corporation this week with a libel suit if I did not remove my negative reviews of them on Yelp and on this blog.  More on that in the next post.

 

Everything You Need to Know About California Water Pricing

California is the #2 rice grower in the nation, with 22% of US production.

There is a debate growing in California about whether crops like almonds (that use a lot of water) should be allowed.  But all that authoritarian command and control debate about "allowing" certain activities is unnecessary.  Just raise prices to some sort of supply and demand matching level (it is a bit awkward to do this because there is not a true free market in water supply but any attempts have got to be better than the current absurdly low prices).  Then the almond growers themselves, and the rice growers, and the golf courses, and everyone else will decide if they can still operate in CA or not.  No politicians' commands necessary.

Raising prices also creates a secondary benefit over government-imposed rationing -- it provides incentives for people to seek out and invest in new sources of supply.  Desalinization, any one?

We Still Haven't Figured Out How to Measure Prosperity

The previous chart on beer availability reminds me of an issue I have been thinking about for a while -- that we do no know how to measure prosperity.

GDP growth and unemployment reduction are terrible measures.  Just to give one example, these measures looked fabulous in WWII.  But the average person living in the US had access to almost nothing -- they couldn't buy anything under rationing, they couldn't travel for leisure, etc.   GDP looked great because we were building stuff and then blowing it up, the economic equivilent of digging a hole and filling it in (but worse, because people were dying).  And unemployment looked great because we had drafted everyone and sent them off to get shot.

But median income and net worth numbers fail to measure prosperity as well.  The reason was described in this post here way back in 2007.

The home on the left was owned by Mark Hopkins, railroad millionaire and one of the most powerful men of his age in California.  Hopkins had a mansion with zillions of rooms and servants to cook and clean for him, but he never saw a movie, never listened to music except when it was live, never crossed the country in less than a week.  And while he could afford numerous servants around the house, Hopkins (like his business associates) tended to work 6 and 7 day weeks of 70 hours or more, in part due to the total lack of business productivity tools (telephone, computer, air travel, etc.) we take for granted.  Hopkins likely never read after dark by any light other than a flame.

If Mark Hopkins or any of his family contracted cancer, TB, polio, heart disease, or even appendicitis, they would probably die.  All the rage today is to moan about people's access to health care, but Hopkins had less access to health care than the poorest resident of East St. Louis.  Hopkins died at 64, an old man in an era where the average life span was in the early forties.  He saw at least one of his children die young, as most others of his age did.  In fact, Stanford University owes its founding to the early death (at 15) of the son of Leland Stanford, Hopkin's business partner and neighbor.  The richest men of his age had more than a ten times greater chance of seeing at least one of their kids die young than the poorest person in the US does today.

How do we take into account that even if a person has the same income as someone in 1952, they are effectively wealthier in many ways due to access to medical procedures, travel, entertainment, electronic devices, etc?

Somehow we need to measure consumer capability -- not just how much raw money one has but what can one do with the money?  What is the horizon of possibilities?  Deirdre McCloskey tends to eschew the term capitalism in favor of "market-tested innovation."  I think that is a pretty powerful description of our system.  But if it is, we really are only measuring the impact of productivity and cost-reduction innovations.  How do we measure the wealth impact of consumer-empowerment innovations like iPhones?  Essentially, we don't.  Which, by the way, may be one reason our current crappy metrics say we have growing income inequality.  With our current metrics, Steve Jobs' increase in wealth is noted in the metrics, but the metrics don't show the rest of us getting any wealthier by the fact that we can now have iPhones (or the myriad of competitors the iPhone spawned).  The consumer surplus from iPhones undoubtedly dwarfs the money Jobs made, but it doesn't show up in any wealth calculations.

A few years ago I told a youth group that there were still many things left to discover in the mundane world -- by this I meant the everyday world we encounter and not just at the limits of the universe or at the scale of quarks.  The example I gave at the time is that there is a lot of room for better techniques to tease out causality in complex systems -- e.g. how much did the stimulus really affect the economy or how much does CO2 really affect temperatures.  I would add this question of measuring prosperity as a second item in this category.

The Dangers of Bipartisanship

The media loves to talk about the joys of bipartisanship, but libertarians run for the hills whenever we hear that word.  Because it means that true legislative suckage is probably on the way.   The horrendous war on drugs is just one example.

Here is another -- freedom to buy alcohol where it is most convenient.  Living in AZ, I have come to expect that I can buy some tequila at my grocery store, but apparently this is a very limited freedom in the US:

AlcoholGroceryStores_Liquor4

There are two reasons.  First, this is where you get one of those left-right coalitions, with Republican social conservatives wanting to limit liquor availability and Democratic big government types wanting to keep sales to a small group that can be tightly regulated (and strip-mined for campaign donations), or even better, to state-run liquor stores.  The second reason is that once any regulation is in place that restricts sales, the beneficiaries of those restrictions (e.g. liquor stores or unionized employees at state-run stores) fight any liberalization tooth and nail to protect their crony rents.

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.

Skeptics: Please Relax on the Whole "Greatest Scientific Fraud of All Time" Thing

Climate skeptics are at risk of falling into the same exaggeration-trap as do alarmists.

I have written about the exaggeration of past warming by questionable manual adjustments to temperature records for almost a decade.  So I don't need to be convinced that these adjustments 1) need to be cleaned up and 2) likely exaggerate past warming.

However, this talk of the "Greatest Scientific Fraud of All Time" is just crazy.  If you are interested, I urge you read my piece from the other day for a more balanced view.  Don't stop reading without checking out #4.

These recent articles are making it sound like alarmist scientists are simply adding adjustments to past temperatures for no reason.  But there are many perfectly valid reasons surface temperature measurements have to be manually adjusted.  It is a required part of the process.  Just as the satellite data must be adjusted as well, though for different things.

So we should not be suspicious of adjustments per se.  We should be concerned about them, though, for a number of reasons:

  • In many parts of the world, like in the US, the manual adjustments equal or exceed the measured warming trend.  That means the"signal" we are measuring comes entirely from the adjustments.  That is, to put it lightly, not ideal.
  • The adjustments are extremely poorly documented and impossible for any third party to replicate (one reason the satellite record may be more trustworthy is all the adjustment code for the satellites is open source).
  • The adjustments may have a bias.  After all, most of the people doing the adjustments expect to see a warming trend historically, and so consider lack of such a trend to be an indicator the data is wrong and in need of adjustment.  This is not a conspiracy, but a normal human failing and the reason why the ability to replicate such work is important.
  • The adjustments do seem to be very aggressive in identifying any effects that might have artificially created a cooling trend but lax in finding and correcting effects that might have artificially created a warming trend.  First and foremost, the changing urban heat island effect in growing cities seems to be under-corrected  (Again there is debate on this -- the proprietors of the model believe they have fixed this with a geographic normalizing, correcting biases from nearby thermometers.  I and others believe all they are doing is mathematically smearing the error over a larger geography).

Again, I discussed all the pros and cons here.  If pushed to the wall, I would say perhaps half of the past warming in the surface temperature record is due to undercorrection of warming biases or overcorrection of cooling biases.

Adjusting the Temperature Records

I have been getting inquiries from folks asking me what I think about stories like this one, where Paul Homewood has been looking at the manual adjustments to raw temperature data and finding that the adjustments actually reverse the trends from cooling to warming.  Here is an example of the comparisons he did:

Raw, before adjustments;

puertoraw

 

After manual adjustments

puertoadj2

 

I actually wrote about this topic a few months back, and rather than rewrite the post I will excerpt it below:

I believe that there is both wheat and chaff in this claim [that manual temperature adjustments are exaggerating past warming], 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.  For example, 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 result 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.

To these I will add a #7:  The notion that satellite results are somehow pure and unadjusted is just plain wrong.  The satellite data set takes a lot of mathematical effort to get right, something that Roy Spencer who does this work (and is considered in the skeptic camp) will be the first to tell you.  Satellites have to be adjusted for different things.  They have advantages over ground measurement because they cover most all the Earth, they are not subject to urban heat biases, and bring some technological consistency to the measurement.  However, the satellites used are constantly dieing off and being replaced, orbits decay and change, and thus times of observation of different parts of the globe change [to their credit, the satellite folks release all their source code for correcting these things].   I have become convinced the satellites, net of all the issues with both technologies, provide a better estimate but neither are perfect.

Question for Keynesians: What Are You Doing To Prepare for the Next Cycle?

When I was in school learning macro 101 from Baumol and Blinder, my memory is that the theory of Keynesian stimulus and managing the economic cycle was that deficits should be run in the bottom part of the economic cycle, paid for with surpluses in the top half.   So we are now almost certainly in the top half of the cycle.  But I don't hear any Keynesians seeking to run a surplus, or even to dial back on government deficits or spending.  In fact, our Keynesian-in-chief says he is done with "mindless austerity" and wants to start spending even harder in 2015.

Its enough to make one suspicious that all the stimulus talk is just a Trojan Horse for a desire to increase the size and power of government.

But for Keynesians who really believe what they are saying, that deficit spending somehow saved us from a depression in 2009 and 2010, then I ask you -- what are you going to do next time?  It appears that when we enter the next recession in this country, that US debt as a percentage of GDP is going to be almost twice what it was entering the last recession.  Don't you worry that this limits your flexibility and ability to ramp up deficit spending in the next recession?

The situation in the US is the same as it is worldwide.  While those evil private short-term-focused private actors have used the improving economy to de-leverage back below 2007 levels, governments have increased their debt as a percentage of GDP by just over 50% since just before the last recession.

20150205_debt1

 

Since 2007, according to my old friends at McKinsey, global government debt has risen by $25 trillion since 2007.  If you really care about Keynesian stimulus in recessions, and not just "mindlessly" (I can use that term too) increase government spending, wouldn't you want to be building up some reserves for next time?