The Un-discussed Foreign Policy Alternative

I was going to write a longer post on foreign policy vis a vis terrorism and ISIS, but I lack both the time as well as confidence in my foreign policy knowledge.

I will offer this, though:  There seem to be but two policy positions being discussed

  1. The largely Conservative position that there is a dangerous and violent authoritarian streak running through the world of Islam and that we need to saddle up the troops and go break some heads and impose order
  2. The Progressive position embodied by the Obama Administration that there is nothing abnormal going on in Islam and that what we see is random violence spurred by poverty and thus we should not intervene militarily (I consider the current AUMF proposed by Obama to be political posturing to satisfy polls rather than anything driven by true belief).

Why is there not a third alternative to be at least considered -- that there is something really broken in a lot of Islam as practiced today (just as there was a lot of sh*t broken with Christianity in, say, the 14th-16th centuries) and that Islam as practiced in many Middle Eastern countries is wildly illiberal (way more illiberal than any failings of Israel, though you wouldn't know that if you were living on a college campus).  But, that we don't need to saddle up the troops and try to change things by force.

Conservatives who can look at things like serial failures in Federal education policy and reach the conclusion that we should be skeptical about Federal initiatives on education seem unable to draw similar conclusions from serial failures in US interventions in the Islamic world.  And for its part, the Obama administration seems to be living in some weird alternate universe trying desperately to ignore the reality of the situation.

Yes, I know the first response to all folks like me who advocate for non-intervention is "Munich" and "Czechoslovakia".  So be it.  But if we sent in the military every time someone yelled "appeasement" our aircraft would be worn out from moving troops around.  And we seem to be totally able to ignore atrocities and awful rulers in Sub-Saharan Africa.

As a minimum, I would like to see a coalition of Arab states coming to us and publicly asking us for help -- not this usual Middle East BS we hear that Saudi Ariabi (or whoever) really in private wants us there but publicly they will still lambaste us.  Without this support we can win the war but we have no moral authority (as we did after WWII) in the peace.  Which is one reason so many of our interventions in the Middle East and North Africa fail.

What I Think is Going on With Greece

I want to offer a perspective on the Greek financial mess.

I am not confused about the Greek desire to get out from under their debt load - past governments have built up intolerable levels of debt which is costs a huge portion of Greek GDP to pay off.

At one time in my life I would have been confused by folks, often on the Left, who argue that the answer to Greek debt problems is ... deficit spending.  This might have seen inexplicable to me earlier in life as a wondered how the same behavior of fiscal irresponsibility that led them into debt would get them out.  But I have learned that there is no limit to the optimism Keynesians hold for the effects of government spending.  The last trillion of debt may have not done anything measurable but the next trillion is always going to be the one that turns us around.  Sort of like Cubs fans.

No, what confuses me today is the fact that other institutions and countries are still willing to buy Greek debt and even entertain some sort of debt swap where they end up with even more Greek debt.  I have heard it said by many experts that it is unrealistic to expect that lenders will get even a fraction of their principle back from these loans.  So why loan more?

The key for me in understanding this is the book "Engineering the Financial Crisis".  In that book, the authors presented the theory that the Basel capital accords, which set capital requirements for banks, had a lot to do with the last financial crisis.  Specifically, the rules allowed bank investments in two types of securities to be counted at 100% towards their capital levels.  Any other type of investment was severely discounted, so there were enormous incentives in the regulations to focus bank investments on these two types of securities.  What were they?  Sovereign debt and mortgages (and mortgage-backed securities).

In the authors' view, which I find persuasive, a lot of the last financial crisis was caused by these rules creating a huge artificial demand by banks for mortgage securities.  This created a sort of monoculture that was susceptible to small contagions spreading rapidly.  As this demand for mortgage backed securities inevitably drove down their returns, it also created a demand for higher-yielding, riskier mortgage investments that might still "count" as mortgage securities under the capital requirements.

Anyway, for the Greek crisis, we need to look at the other piece of these capital requirements that give 100% capital credit:  sovereign debt.  Now, I may have this wrong, but for Euro denominated credit, it all counts as 100% whether its German or Greek, which is a bit like saying a mortgage to Bill Gates and a mortgage to Clark Griswold's country cousins count the same, but those are the rules.

So here is the problem as I understand it:  Greek debt, because of its risk, paid higher returns than other sovereign debt but still counted the same against capital requirements.   So European banks loaded up on it.  Now that the debt is clearly bad, I am sure they would love to get paid for it.  But what they want even more is to continue to get credit for it on their balance sheets against capital requirements.  So what the banks need more than getting paid is for the debt to still exist and to (nominally) be current so that they can still count it on their balance sheets.  Otherwise, if the debt gets written off, that means banks need to run out and raise hundreds of billions in new capital to replace it.

Yes, I know this seems insane.  If everyone knows that the debt is virtually worthless, isn't it a sham to keep taking expensive steps (like issuing even more new debt) just to make sure the debt still appears on the books at 100%?  Yes, of course it is.  This is a problem with just about every system ever tried on bank capital requirements.  Such requirements make sense (even to this libertarian) in a world of deposit insurance and too big to fail, but they can and do create expensive unintended consequences.

Great Moments in Lobbying

A reader sent me this list of tax exemptions in the state of Washington.  Obviously people you never expected to have lobbyists have good lobbyists.  Mint farmers?  Click to enlarge:

click to enlarge

Why Large Corporations Often Secretly Embrace Regulation

I wrote the other day about how Kevin Drum was confused at why broadband stocks might be rising in the wake of news that the government would regulate broadband companies as utilities.  I argued the reason was likely because investors know that such regulation blocks most innovation-based competition and tends to guarantee companies a minimum profit -- nothing to sneeze at in the Internet world where previous giants like AOL, Earthlink, and Mindspring are mostly toast.

James Taranto pointed today to an interesting Richard Eptstein quote along the same lines (though he was referring to hospitals under Obamacare):

Traditional public utility regulation applies to such services as gas, electric and water, which were supplied by natural monopolists. Left unregulated, they could charge excessive or discriminatory prices. The constitutional art of rate regulation sought to keep monopolists at competitive rates of return.

To control against the risk of confiscatory rates, the Supreme Court also required the state regulator to allow each firm to obtain a market rate of return on its invested capital, taking into account the inherent riskiness of the venture.

Competition via Influencing Government

I have mentioned a number of times my chicken or the egg arguments with Progressives on the solution to cronyism.  Is the problem that government power exists to influence markets, and as long as it exists people will bid to control it?  Or is it possible to wield massive make-or-break government power over industry rationally, and only the rank immorality and corrupt speech of corporations stands in the way.  The former argues for a reduction in government power, the latter for more regulation of corporations and their ability to participate in the political process.

I believe this is an example in favor of the "power is inherently corrupting" argument.  No corporation lobbied for NOx rules on diesel engines.  They all fought it tooth and nail.  But once these regulations existed, engine makers are all trying to use the laws to gut their competition:

In 1991, the EPA ignored complaints from several makers of non-road engines that rivals were cheating, in order to save fuel, on emissions rules for oxides of nitrous (NOx). Then environmental groups took up the same complaint, whereupon the agency demanded face-saving consent decrees with numerous engine makers, including two Volvo affiliates.

In essence, the engine makers apologized by agreeing in 1999 to accelerate by a single year compliance with a new emissions standard scheduled to take effect in 2006.

Meanwhile, with another NOx standard looming in 2010, Navistar sued the EPA claiming rival engine-makers were seeking to meet the rule with a defective technology. In turn, Navistar’s competitors sued claiming the EPA was unfairly favoring a defective technology pursued by Navistar (these are only the barest highlights of what became a truck-makers’ legal holy war).

While all this was going on, a Navistar joint-venture partner, Caterpillar, complained that 7,262 Volvo stationary engines made in Sweden before 2006 had violated the 1999 consent decree. Now let’s credit Caterpillar with a certain paperwork ingenuity: The Volvo engines were not imported to the U.S. and were made by a Volvo affiliate that wasn’t a party to the consent decree. EPA itself happily certified the engines under its then-current NOx standard, only changing its mind four years later, prodded by a competitor with a clear interest in damaging Volvo’s business.

To complete the parody, a federal district court would later agree that the 1999 consent terms “do not clearly apply” to the engines in question, but upheld an EPA penalty anyway because Volvo otherwise might enjoy a “competitive advantage” against engines to which the consent decree applied.

As a side note, this is from the "oops, nevermind" Emily Litella School of Regulation:

Let it be said that the EPA’s NOx regulation must have done some good for the American people, though how much good is hard to know. The EPA relies on dubious extrapolations to estimate the benefits to public health. What’s more, the agency appears to have stopped publishing estimates of NOx pollution after 2005. Maybe that’s because the EPA’s focus has shifted to climate change, and its NOx regulations actually increase greenhouse emissions by increasing fuel burn.

This is the Problem With All Government "Fixes" for Supposed Market Failures

Bob Murphy on occupational licensing, via Cafe Hayek

It is a paradox of our age that the interventionists think the public is too stupid to consult Angie’s List before hiring a lawyer, and so they need politicians to weed out the really bad ones by requiring law licenses. Yet, who determines whether a person (often a lawyer!) is qualified to become a politician? Why, the same group of citizens who were too stupid to pick their own lawyers.

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.

Argumentation

I strive to treat people I disagree with as intelligent persons of goodwill.  I don't always succeed.  It helps that many, even the majority, of my friends and family disagree with me politically.

A reader sent me Evil Greedy Stupid Sheep: 4 Modern Ways to Win An Argument.  The only quibble I have is the word "modern".  I am pretty sure that if we had better historical sources we would find people accusing Ramses or Sargon of being evil and in the pay of grain merchants.

I would add a fifth category to this I would call "out-group".    I don't have to listen to you because you are from group X.  There is a famous quote from WWII from a man I believe was in the British Foreign Office, who, when asked about stories of Nazi atrocities, said that they needn't take seriously a bunch of "wailing Jews."

As I grew up, I thought we might actually be getting beyond this.  You know - the sixties and tolerance and racial understanding and all that.  But it turns out that tolerance does not mean the end of out-groups, it simply means that the out groups are changing.  "Check you privilege" is the common campus shorthand nowadays for "shut up white male."  Males, whites, the religious, the well off -- these are the new out-groups whose origins are used to automatically invalidate anything they say.

How Do I Get To Qualify for Tolerance from the Left?

The Left has absolutely bent over backwards to make sure we understand that Islamic terrorists are not representative of the Muslim religion or Islam in general.  Further, they seem really quick to excuse or at least ignore a lot of really awful illiberal behavior by Islamic nations, including systematic abuse and near-enslavement of women, execution of gays, harassment of any non-Muslims, or even of Muslims from competing sects, etc.   We need to be tolerant, dontcha know.

So why is it that all this absolute cascade of bad behavior by various Muslims is not representative of true Islam but a tiny tiny few American males who are violent sex offenders are somehow totally representative of the entire gender, such that all men have to constantly humble ourselves, avoid speaking certain facts, apologize and bear guilt, go to college re-education programs, etc?

Is The Left Finally Starting to Question Light Rail?

This is the first even mild questioning of light rail I have seen, and it is certainly welcome.  It even acknowledges that the sole advantage of light rail over much more flexible and less expensive buses is that it is more appealing to the middle and upper classes.  Via Kevin Drum:

Josh Barro thinks our cities are building too much light rail. It's expensive, often slow, and offers virtually no advantage over simply opening up a bus line. The problem, according to a 2009 report from the Federal Transit Administration, is that "Bus-based public transit in the United States suffers from an image problem."

 

 

I Hate to Say I Told You So, But Retail Sector Full-Time Work At An End

I have to say I told you so, but, from a reader, Staples threatens to fire anyone who works over 25 hours:

Part-time Staples workers are furious that they could be fired for working more than 25 hours a week.

The company implemented the policy to avoid paying benefits under the Affordable Care Act, reports Sapna Maheshwari at Buzzfeed. The healthcare law mandates that workers with more than 30 hours a week receive healthcare.

If Staples doesn't offer benefits, it could be fined $3,000 in penalties per person.

I can tell you from personal experience that $3000 is a staggering penalty.  For a full time worker at $8 an hour, this is over 2 months pay -- 2 months pay extra the company has to pay but the worker never sees.

As I have written before, we have moved heaven and Earth to get every employee we can in our company converted to part-time.  We had absolutely no alternative -- after seeking quotes from about 20 places, no one would offer our company any sort of health insurance plan at any price**.  So no matter what we did, we were facing the $3000 penalty for each full-time workers, so all we could do to manage the situation was convert full-time workers to part-time.

 

** We have seasonal workers, which makes insuring us awkward and expensive because there are high administrative costs with people constantly going on and off the plan.  We also have a very old work force.  Obamacare prevents insurers from charging the much higher premiums to older people that our costs might justify -- it milks younger people with prices well above their cost to serve to pay for subsidizing older people.  Insurers would be crazy to voluntarily add groups that are purely old people, they would lose their shirt.  So they refuse to quote us.

My Votes for NBC Newsreader

I am not sure why someone has to have journalist credentials to read from a teleprompter every night for 25 minutes.  I never watch the evening news -- haven't since I was a kid.  Honestly, I think the Huntley-Brinkley Report was the last network news I watched regularly, so that will give you some idea.  But I do hear it sometimes, because my wife still likes to watch and I hear it in the next room, or while I am having a glass of wine with her.

So I vote for a good voice, and since I am male I vote for a sexy female voice.  My two favorites were both Bond girls or one sort or another:

  • Lois Chiles (have no idea how she sounds today, but in Moonraker listening to her was absolutely the only reason to watch that movie)
  • Eva Green

Update:  If he were still alive, I would vote for John Facienda, preferably doing the news in verse

Hey, I Started a Meme!

Thoughts on the Minimum Wage

Mike Rowe has some thoughts that sound like what I have been saying of late:

From the business owners I’ve talked to, it seems clear that companies are responding to rising labor costs by embracing automation faster than ever. That’s eliminating thousands of low-paying, unskilled, entry level positions. What will that mean for those people trying to get started in the workforce? My job as an usher was the first rung on a long ladder of work that lead me to where I am today. But what if that rung wasn’t there? If the minimum wage in 1979 had been suddenly raised from $2.90 to $10 an hour, thousands of people would have applied for the same job. What chance would I have had, being seventeen years old with pimples and a big adams apple?

Bill Maher, Living in an Echo Chamber

I refuse to assume (contrary to the modern practice) that someone who disagrees with me is either stupid or ill-intentioned or both [OK, I did call people idiots here -- sorry, I was ranting].  Intelligent people of goodwill can disagree with each other, and the world would be a better place if more people embraced that simple notion.

Anyway, I won't blame lack of intelligence or bad motivations for the following statement from Bill Maher.  He seems to be a smart guy who is honestly motivated by what he says motivates him.  But this statement is just so ignorant and provably false that it must be the result of living in a very powerful echo chamber where no voices other than ones that agree with him are allowed.

HBO’s Bill Maher complained that comparing climate change skepticism to vaccine skepticism was unfair to vaccine skeptics before attacking GMOs on Friday’s “Real Time.”

“The analogy that I see all the time is that if you ask any questions [about vaccines], you are the same thing as a global warming denier. I think this is a very bad analogy, because I don’t think all science is alike. I think climate science is rather straightforward because you’re dealing with the earth, it’s a rock…climate scientists, from the very beginning, have pretty much said the same thing, and their predictions have pretty much come true. It’s atmospherics, and it’s geology, and chemistry. That’s not true of the medical industry. I mean, they’ve had to retract a million things because the human body is infinitely more mysterious” he stated.

Climate science is astoundingly complex with thousands or millions of variables interacting chaotically.  Separating cause and effect is a nightmare, because controlled experiments are impossible.  It is stupendously laughable that he could think this task somehow straightforward, or easier than running a double-blind medical study  (By the way, this is one reason for the retractions in medicine vs. climate -- medical studies are straightforward enough they can be easily replicated... or not, and thus retracted.  Proving cause and effect in climate is so hard that studies may be of low quality, but they are also hard to absolutely disprove).

It is funny of course that he would also say that all of climate scientists predictions have come true.  Pretty much none have come true.  They expected  rapidly rising temperatures and they have in fact risen only modestly, if at all, over the last 20 years or so.  They expected more hurricanes and there have been fewer.  They called for more tornadoes and there have been fewer.  The only reason any have been right at all is that climate scientists have separately forecasts opposite occurrences (e.g. more snow / less snow) so someone has to be right, though this state of affairs hardly argues for the certainty of climate predictions.

By the way, the assumption that Bill Maher is an intelligent person of goodwill who simply disagrees with me on things like climate and vaccines and GMO's is apparently not one he is willing to make himself about his critics.  e.g.:

Weekly Standard Senior Writer John McCormack then pointed out that there are legitimate scientists, such as Dr. Richard Lindzen, who are skeptical of man-made climate change theories, but that there were no serious vaccine-skeptic professors, to which Maher rebutted “the ones who are skeptics [on climate change], usually are paid off by the oil industry.”

I will point out to you that the Left's positions on climate, vaccines, and GMO's have many things in common, as I wrote in a long article on evaluating risks here.

"Dysfunctional Congress"

This weekend I went to a one-day university and saw four different lectures (as usual, about half were good, one was OK, and one was a soft-of WTF).  In one of those lectures, a Brown professor kept talking about Congress being "dysfunctional".

It strikes me that it is time to demand that people define what they mean by this.  A lot of people, I think, would answer that they mean that Congress is dysfunctional because it has not passed X, where X is immigration reform or climate change legislation or a repeal of Obamacare or a list of many other things.  But in these cases, I am not sure it is fair to say that lack of Congressional action really represents dysfunctionality when the public itself is sharply and somewhat evenly divided on the issues themselves.

No one can best me in a competition of disdain for elected officials.  But I am always suspicious that folks using the whole dysfunctional Congress meme are really using it as a proxy for a strong desire to keep expanding government.  After all, are we really facing a shortage of laws that Congress desperately needs to address?  Is Congress somehow greedily hording laws in a time of need?

In the spirit of defining terms, I will say what I think is dysfunctional about Congress:  When it fails to fulfill its Constitutionally-mandated roles.  It is not required to pass immigration legislation, but it is required to pass a budget and give up and down votes on appointments.  Neither of these tasks have been accomplished very well over the last few years.   Again, Congress is not required to give the President what he wants (as the media seems to imply, at least when the President is a Democrat), but they are required to pass some sort of budget and take a vote in a reasonably timely manner on appointments.

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.

@kevindrum Finds Absolutely Ubiquitous Feature of Regulation to be Mysterious

Kevin Drum simply does not understand why Wall Street might be piling into broadband stocks despite proposed "tough new regulations."  He posits a number of hypotheses -- that Wall Street expected the rules to be worse than they turned out to be.  But this can't be it because the hundreds of pages of rules are still a secret.  He also hypothesizes there might be some nefarious secret loophole buried in the rules Wall Street knows about but we don't.

This is crazy!  How can a reasonably bright person like Drum who writes about the political economy not understand the issue of regulatory capture?  Seriously, I have always figured that the Left, which has a seemingly infinite appetite for regulation, must favor regulation because they find the benefits to out-weight the crony-ist downsides.  Is it really possible Drum is unfamiliar with the downsides altogether, or is he just being coy?

Here is what regulation, particularly utility-style regulation, tends to do -- it locks in current business models and competitors.  It makes it really hard for new entrants to challenge incumbents with innovative new business models or approaches, because regulations have been written based on the old business model and did not take the new one in account.  So a new entrant must begin business by getting regulators to allow their new model, which never happens because by this time incumbents have buildings full of lobbyists aimed at the regulatory process.  Go ask Tesla and Uber and Lyft about how easy it is to enter a heavily regulated business even with a superior new business model.

This is particularly true in the technology world.  The biggest threat to incumbency is someone with a new technology or approach to the technology.  Don't believe me?  I suggest you go to the offices of Netscape or AOL or Lycos or Borders or Circuit City or Radio Shack and interview them about the security of their multi-billion dollar businesses in the face of new online technologies.  At best, regulators put a huge speed bump in the way of competitors, costing them time and money to get their alternative business model approved.  At worst, regulators block new competitors altogether.

I will give you a thought experiment.  Let's say these exact same rules were adopted in the year 2000, when AOL and Earthlink dial-up ruled the internet access world.  Would cable and satellite and DSL have grown as quickly?  I can see the regulators now -- "hey, all the rules specify phone dial up.  There's nothing here about cable TV.  Sorry [Cox, Comcast, whoever] you are going to have to wait until we can write new rules.

The other thing that happens with utility-style regulation is that companies in the business tend to get their returns guaranteed.  Made a bad investment in a competitive market?  Well good luck getting customers to pay extra to bail you out from your bad decision when they have other options.  But what happens when your local power company wastes $10 billion on a nuclear plant that never opens -- it gets built into your rate base!

In the cast of broadband, they are locked in what business school students would see as a classic supply chain battle.  Upstream companies like Netflix supply content via downstream broadband companies.  Consumers are only willing to pay a certain amount for this content, so the upstream and downstream fight a lot over who gets what share of that consumer $.    This happens everywhere in the business world, from Cable TV to oil refining to selling TV's at Wal-Mart.  There is a real danger that broadband will lose this fight in the future -- but not now.  Regulated industries never die, they appeal to their regulators for help.

As of yesterday, Wall Street is looking at broadband companies and realizing that they are now largely immune from competition and some level of minimum returns are likely now gauranteed forever.  Consumers should hate this, but what's not to love for Wall Street?

Postscript:  Kevin Drum describes the new regulation this way:  "Basically, under Wheeler's proposal, cable companies would no longer be able to sign special deals to provide certain companies with faster service in return for higher payments."  This is a bit like describing the Patriot Act as a law to force people to take their shoes off at the airport.  Yes, it does that narrow thing, but it does a LOT else.  The proposal is hundreds of freaking pages long.  It does not take hundreds of pages to do the narrow little niche thing Drum (like most neutrality supporters) wants.

This Administration has cleverly taken this one tiny concern people have and have used it as an excuse to do a major regulatory takeover of the Internet.  This is a huge Trojan Horse. But I have already ranted about the details of that and you can read that here.

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?

Sort of Sad, But Inevitable I Guess

CBE is closing its open outcry pits (e.g. the type of trading portrayed in the movie Trading Places).  Time to short the manufacturers of brightly covered jackets (from my very very limited experience observing the pit in Chicago, one unreality of Trading Places is that the traders are all wearing fairly normal business attire).

Donating Money to Candidates After They Have Already Won the Election

I am a big absolutist on allowing campaign donations as an essential part of free speech largely without restriction.  However, I have always wondered why we treat campaign donations after the election is over, made to the winning candidate, as anything but an outright bribe.  I guess in theory one can argue that the candidate does not get access to it personally (it used to be that retiring public officials could personally keep the remnants of their campaign funds when they retire;  the elimination of this rule spurred one of the last big incumbent turnovers in Congress as our elected officials rushed to beat the deadline and personally bank those leftover contributions.)  However, many candidates lend money to their own campaigns or borrow money with their personal guarantee, and so money paying off these loans does indeed benefit the candidate directly. And candidates have numerous ways to shift campaign cash to benefit friends and family.

Avoiding McDonald's

Watching the Superbowl, and seeing the McDonald's commercial where the company announced a policy that they will ask their customers to do various kinds of performance art rather than pay, I said to my kids, "well, I guess I am avoiding McDonald's for a while."  Not only do I not want to sing a song to avoid paying my $5 bill, I probably would pay them $50 to shut up and just give me my damn food.

My kids acted like I was being a curmudgeon, but apparently I am not alone:

Early on Monday morning I paid a visit to the Golden Arches while traveling through Union Station in Washington, D.C. After a moment’s wait I placed my order with an enthusiastic cashier, and started to pay.

Suddenly the woman began clapping and cheering, and the restaurant crew quickly gathered around her and joined in. This can’t be good, I thought, half expecting someone to put a birthday sombrero on my head. The cashier announced with glee, “You get to pay with lovin ’!” Confused, I again started to try to pay. But no.

I wouldn’t need money today, she explained, as I had been randomly chosen for the store’s “Pay with Lovin’ ” campaign, the company’s latest public-relations blitz, announced Sunday with a mushy Super Bowl TV commercial featuring customers who say “I love you” to someone, or perform other feel-good stunts, and are rewarded with free food. Between Feb. 2 and Valentine’s Day, the company says, participating McDonald’s locations will give away 100 meals to unsuspecting patrons in an effort to spread “the lovin’.”

If the “Pay with Lovin’ ” scenario looks touching on television, it is less so in real life. A crew member produced a heart-shaped pencil box stuffed with slips of paper, and instructed me to pick one. My fellow customers seemed to look on with pity as I drew my fate: “Ask someone to dance.” I stood there for a mortified second or two, and then the cashier mercifully suggested that we all dance together. Not wanting to be a spoilsport, I forced a smile and “raised the roof” a couple of times, as employees tried to lure cringing customers into forming some kind of conga line, asking them when they’d last been asked to dance.

The public embarrassment ended soon enough, and I slunk away with my free breakfast, thinking: Now there’s an idea that never should have left the conference room.

It didn't look touching on TV, it looked awful.  I had already decided to avoid McDonald's for the time being based on the commercial but my thanks to the author for confirming it.

Authoritarian Quote of the Day

From San Francisco Board of Education member Sandra Fewer:

“Choice is inherently inequitable”

Because some people make choices that their betters, like Ms. Fewer, do not agree with, government needs the power to override individual decision-making.  We will come back to this, but it turns out the problem here may not be too much choice, but too little.

The entire article is about school choice (defined VERY narrowly as the ability to pick what monopoly government school you want to attend, not the ability to take a voucher and pick any school) leading to a greater racial sorting, rather than mixing, in San Francisco schools.

I have no idea why that would be.  And I still have no idea, because the article presented absolutely no facts.  Oddly, my first guess -- that racial sorting of schools might match racial sorting of neighborhoods since people want to send their kids to a school that is close with kids and parents they know -- is not even mentioned until, in passing, it comes up around the 35th paragraph.

One of the issues that seems to be confusing the author is that people sometimes express preferences they don't act on.  You see that in the very examples in the article.  All the parents interviewed say they want a multi-cultural school, perhaps because they are really passionate about that or perhaps because they know they are supposed to say that, but it is not hard to see that these folks care more about having a school nearby with kids and parents with whom they are culturally comfortable.   I find it a little weird that the city with possibly the most famous ethnic neighborhood in the country (ie Chinatown) has trouble understanding that there are totally non-racist reasons why ethnic groups, particularly those who speak other languages, might voluntarily sort.

One funny thing in the article that I have pointed out in other contexts: in the absence of facts people like to explain bad trends (and it is not even established that this is necessarily a bad trend, just a trend that planners don't like) with whatever they were against before the trend revealed itself.  Teachers don't like the school choice system, so school choice is to blame.  Social activists are concerned with income inequality, so they blame the problem on income inequality.

In fact, a lot of the article pursues the inequality thesis, but the interesting lede, in my mind, was buried way way down in the article:

Though the number of racially isolated schools jumped by 22 percent over three years, according to a district study, to date none are more than 60 percent white. Yet in a broader sense, white children are the most isolated in the city.

Whites are 42 percent of the city’s overall population, 33 percent of the children but only 12 percent of public school students. Why aren’t more white children in public school? Again, money appears to be the key factor: The average white San Franciscan makes three times more money than the average black resident. Whites on average also make 66 percent more money than Latinos, and 44 percent more than Asians. Possibly as a result of this wealth, white children are much more likely to be enrolled in private schools than other racial groups.

So the reason public schools are sorting into minority-majority  schools is that whites have mostly bailed from the school system altogether.   My response to this is not that "choice" has created inequality but that choice hasn't gone far enough.  Don't just give public school kids a choice of which crappy public school they want to attend, but hand them the public money the system was going to spend on their education and let them go anywhere for school, just like rich kids.

The Parasite Economy

I had an argument with someone of the Left last night.  We both agreed that crony government protections and favors of businesses were one of the worst problems in the country.  But we couldn't agree on solutions.   It was a chicken and egg thing.  She thought corporations were at fault for seeking them.  I argued that the problem was given the government the power in the first place to grant such requests.  She thought the only way to fight it was by empowering government to put more restrictions on business.  My argument was that increasing the power of government to intervene in the economy only increased the problem.    No resolution.  I run into this all the time and need to think my way through a better way of expressing my concerns.

Anyway, I am reminded of all this because Stossel has a nice piece on the parasite economy and cronyism.

Postscript:  I can say from this discussion that OFA and Media Matters and Common Cause and the like have really done their job on the Kochs because this particular person was absolutely convinced the #1 best thing we could do to improve the future of America was to shut the Kochs up and prevent them from spending any more money on politics and speech.   My son says that is nearly impossible to argue any issue at all on campus without someone laying into the Kochs at some point in the conversation.   I find this whole tendency to conduct politics by vilifying individuals rather than discussing issues -- individuals with absolutely no political position -- totally depressing.  But it must work, because the Republicans did it too, in fact really pioneered this when they went after George Soros and made him the the secret villain behind everything Conservatives hated.   People like Rush Limbaugh may get on the Left nowadays for vilifying the Kochs but go listen to his radio shows from 5 or 10 years ago -- he couldn't go three sentences without saying "Soros".

Infrastructure Bait and Switch

President Obama wants to spend something like a half trillion incremental dollars on "infrastructure".  I have found that these initiatives to sell infrastructure tend to be great bait and switch programs.  Infrastructure is generally the one type of government spending that polls well across all parties and demographics.  So it is used by government officials to pass big spending increases, but in fact what really happens is that the government takes a wish-list of stuff that most of the public would not be OK with increasing spending on, then they put a few infrastructure projects on top like a cherry to sell the thing.  They call it an "infrastructure" program when in fact it is no such thing.

Obama would never do that, right?  Hope and change?  In fact, he already has.  The first time around he sold the stimulus bill as mainly an infrastructure spending bill -- remember all that talk of shovel-ready projects?   Only a trivial percentage of that bill was infrastructure.  At most 6% was infrastructure, and in practice a lot less since Obama admitted later there were no shovel-ready projects.   (also here).  The rest of it was mainly stuff like salary support for state government officials.  Do you think he would have as easily sold the "wage support for state government officials" bill in the depth of a recession?  No way, so he called it, falsely, an infrastructure bill.

The other bait and switch that occurs is within the infrastructure category.  We have seen this at the state level in AZ several times.  Politicians love light rail, for some reason I do not understand, perhaps because it increases their personal power in a way that individual driving does not.  Anyway, they always want money for light rail projects, but bills to fund light rail almost always fail.  So they tack on a few highway projects, that people really want, call it a highway bill and pass it that way.  But it turns out most of the money is for non-highway stuff.  That is the other bait and switch that occurs.

Expect to see both of these with the new infrastructure proposal.

By the way, Randal O'Toole has a nice summary of the drawbacks of light rail and trolley spending

For the past two decades or so, however, much of our transportation spending has focused on infrastructure that is slower, more expensive, less convenient, and often more dangerous than before. Too many cities have given up on trying to relieve congestion. Instead, they have allowed it to grow while they spend transportation dollars (nearly all paid by auto users) on other forms of travel such as rail transit. Such transportation is:

  • Slower: Where highway speeds even in congested cities average 35 miles per hour or more, the rail transit lines built with federal dollars mostly average 15 to 20 mph.
  • More expensive: In 2013, Americans auto users spent less than 45 cents per vehicle mile (which means, at average occupanies of 1.67 people per car, about 26 cents per passenger mile), and subsidies to roads average under a penny per passenger mile. By comparison, transit fares are also about 26 cents per passenger mile, but subsidies are 75 cents per passenger mile.
  • Less convenient: Autos can go door to door, while transit requires people to walk or use other forms of travel, often at both ends of the transit trip.
  • Less safe: For every billion passenger miles carried, urban auto accidents kill about 5 people, while light rail kills about 12 people and commuter trains kill 9. Only subways and elevateds are marginally safer than auto travel, at 4.5, but we haven’t built many of those lately.