Monthly Archives: July 2010

Short run Stimulation: Fault Lines by Raghuram Rajan – Fault Lines by Raghuram Rajan

Our economic problems seem to be more than just lack of demand, also lack of supply of some resources.  Labor is not a lump but divided into groups with different skills.  This may reduce the ability of Keynesian policy to work.  We need to avoid creating the basis for a new crisis in responding to this one.

From Fault lines:

First, as much as a shortfall in aggregate demand, the United States seems to have a problem with supply. The pre-crisis boom exaggerated demand for housing (as well as commercial real estate), for durable goods, as well as for financial services. Many of the unemployed were employed in housing related activities, many of them relatively low skill jobs like construction. They need to move to find jobs elsewhere, and perhaps need to be retrained. Newspapers are full of stories about how many high skilled jobs are going a begging because there are not enough people trained to fill them. So unlike the ordinary recession, just boosting demand may not do the trick unless the intent is to recreate the unsustainable patterns that prevailed before the crisis… Bottom line: The United States probably needs more structural transformation, including improving the quality of its rundown infrastructure, and more investment in improving education and retraining. More crisis spending could have been oriented towards these goals. Unfortunately, there is little appetite now for even sensible additional spending.

Chicago Booth Blog: Fault Lines by Raghuram Rajan – Fault Lines by Raghuram Rajan.

This Is America, I Keep Thinking « The Erstwhile Conservative: A Blog of Repentance

This Is America, I Keep Thinking « The Erstwhile Conservative: A Blog of Repentance.

The Gulf’s Invisible Villain: Natural Gas | Mother Jones

For some time I’ve wondered about this.  The gas had to be a major part of the gulf spill.  After all the drilling rig was apparently destroyed by a gas explosion.  The gas has been an invisible partner of the oil roaring into the golf.

Surely that couldn’t be a good thing could it?  Here’s some confirmation of my fears.

At the point of exit from the well, the gas and oil are combined, but in the water they quickly separate. While BP has asserted that most of the gas surfaces and dissipates into the atmosphere, the research of John Kessler, a professor of earth system science at Texas A&M University, shows otherwise. Kessler has found that at the surface, levels of methane—the primary component of the natural gas—have remained normal, but they’ve skyrocketed at lower depths, indicating that most of the gas is still in the water.

In the 10-mile radius around the well site, research teams have measured methane levels in the water averaging 100,000 times normal levels. Kessler says levels are up to a million times normal in parts of the Gulf immediately surrounding the spill site. “This is the highest concentration I’ve ever seen in ocean waters, easily,” says Kessler. He believes it could take years—possibly decades—for the gas levels in the ecosystem to return to normal.

In the meantime, the leaked gas could dramatically change the chemistry of the Gulf. When natural gas is present, certain bacteria that digest it flourish out of control and can quickly deplete the oxygen in the surrounding waters, creating “dead zones” where little can exist.

via The Gulf’s Invisible Villain: Natural Gas | Mother Jones.

Global Warming and Luggage Stealing Robots: Beneath The Waves, Ctd – The Daily Dish | By Andrew Sullivan

Global warming is like a scary movie.  It may be most scary when you fear that something MAYBE is going to happen.  The anticipation is the worst part.

On the daily dish, this was explored.  Particulary worrisome:

The ocean absorbs 40% of the CO2 humans emit. Phytoplankton, in turn, convert that CO2 into oxygen or die and bury it at the bottom of the ocean. If the phytoplankton are disappearing, Richardson says, “the ocean as a carbon sink is declining, and what that means is ultimately more CO2 will stay in the atmosphere instead of being dissolved in the ocean.” That will translate into a warmer world, which will wipe out even more phytoplankton.

Its hard not be in the back of your mind be uneasy.  Many of the feedback loops may make the problem worse than we think, and the research is still in progress.  But does that say throw resources against this threat as opposed to others?  Maybe not.

There maybe a serious problem.  But there are a lot of possible scary problems like nuclear terrorism, acidification of the oceans, effects of hormones in the water supply, and so on.  Certainly, we know that eventually a large meteorite will again strike the earth.  The cause for throwing resources against these things is likely as good or better than for global warming.  Also using resources for more mundane issues like clean water may have a higher ratio of cost to benefit than reducing carbon emission.

I’m not sure that Global warming is trumped by these issues.  But the great Steve Martin once mused that he feared his luggage was being stolen by robots.  I don’t know that that isn’t true either, but I’m not doing anything about it.

At this point, I don’t think that warming temperatures take priority over other concerns, but because of free floating anxiety that it is worse than we know.

We need to take climate change seriously.  It is getting warmer, and total denial of that is undeniable, but our actions must reflect what we know not fear of the robots.

Beneath The Waves, Ctd – The Daily Dish | By Andrew Sullivan.

The U.S. Economy’s Lost Decade

The legacy of George Bush.

The Big Picture

via The U.S. Economy’s Lost Decade.

Austerity debate

Managerial Econ

via Austerity debate.

The real numbers on illegal immigration : The New Yorker

The real numbers on illegal immigration : The New Yorker.

Where is the Future?, Arnold Kling | EconLog | Library of Economics and Liberty

Another is the future a disappointment once you realize you’re in it?

I keep wondering where my flying car is, and where my *)*)*()&*7987^ robot must have gotten too.

Some of you may remember the 21st Century, with Walter Cronkite.

I recall that it suggested robots that aren’t here, bases on the moon that are almost certain not to be built in my lifetime, and supersonic commercial travel, that with the concord out of service is available, and abundant leisure, that unless you’re unemployed nobody has.

On the other hand it predicted medical treatment that would become more and more advanced, but that we might not be able to afford, that seems spot on.  It also predicted person communications, wide use of computers and newspapers delivered electronically.  Those are all spot.

This article I thought had an interesting take on the internet.

From Arnold Kling:

I am reminded of a quote from William Gibson: “The future is here, it is just unevenly distributed.” I think that the economy has not yet adapted to the Internet, just as in 1930 it had not yet adapted to the automobile. I think that ultimately the Internet will yield high productivity, but for now it is creating a mix of winners and losers…

I am reminded of a quote from William Gibson: “The future is here, it is just unevenly distributed.” I think that the economy has not yet adapted to the Internet, just as in 1930 it had not yet adapted to the automobile.

I think that ultimately the Internet will yield high productivity, but for now it is creating a mix of winners and losers.

via Where is the Future?, Arnold Kling | EconLog | Library of Economics and Liberty.

Cap and Trade Good Policy Even if not for Climate

I think that reducing carbon emission in response to warming may not be wise.  While it is clear the climate is getting hotter, that policy induced reductions in carbon emissions are wise isn’t.

There may be none CO2 effects that are warming the climate.  Chief among these is trends in solar activity.  Though I think the support for these is becoming weaker.

The effect of mild warmer are not known.  Some may be positive.  The UN estimates of the cost of Global warming are moderate to small.

Even if we conclude warmer needs to be reduced, there may approaches such as intentional introduction of SO2 into the atmosphere that may more cost effectively reduce level of warming to acceptable levels.

I will take exception to dismissing the tools embodied in the cap and trade proposal however.  The point of Cap and Trade is to establish a market in the scarce carrying capacity for carbon of the atmosphere.  The establishment of property rights of a scarce good is not not “socialism”.  The question here is the carbon carrying capacity of the Earth truly scarce?   For the reason I just cited this is not established yet.  But the use of limited rights to pollute is good economics.

Other economists have made the same point:

To reject this legacy and embrace the failed 1970s policies of one-size-fits-all regulatory mandates would signify unilateral surrender of principled support for markets. If some conservatives oppose energy or climate policies because of disagreement about the threat of climate change or the costs of those policies, so be it. But in the process of debating risks and costs, there should be no tarnishing of market-based policy instruments. Such a scorched-earth approach will come back to haunt when future environmental policies will not be able to use the power of the marketplace to reduce business costs.

Virtually all economists agree on a market-based approach to reduce carbon dioxide emissions. Some favor carbon taxes combined with revenue-neutral cuts in distortionary taxes, whereas others support cap-and-trade mechanisms — or “cap-and-dividend,’’ with revenues from auctioned allowances refunded directly to citizens.

The rest of the article is here.

Harvard University – Belfer Center for Science and International Affairs – An Economic View of the Environment » Blog Archive » Beware of Scorched-Earth Strategies in Climate Debates.

Climate Change: The Scientific Debate

I felt like I really got a handle on claims and couterclaims on climate change from this.

That warming is happening is almost undeniable, and likely human caused.  That still leave the question of should we curtail carbon based fuel use, or can we live with the effects of warming.  That seems less resolved in my mind.

The science is fascinating.

The Big Picture

via Climate Change: The Scientific Debate.