Check out this 20 minute presentation by a gentleman named Hans Rosling on "TED Talks." Dr. Rosling is a doctor does research in the medical profession on public health in the "Developing Wolrd" and maintains an analysis tool known as "Gapminder." One interesting contribution he makes is his ability to express trends in data in a very intuitive, visual way.
The econometrician inside of me has about a thousand "buts" for the presentation, but it represents a great start- it does the essential surface "strip mining" that helps us see what things need better testing, and which things can be used as controls. It reminds me of something I learned from Roger Koenker: "If you torture the data enough, it will confess." In Dr. Rosling's case, he sheds quite a lot of light on the nature of health and wealth with very little of the usual waterboarding that economists usually do.
The most intersting part of it is that growth does not seem to "trickle down" to aspects of welfare such as life expectancy, infant and child mortality, etc. on average. Conversely, it seems to be the case that things like public health, evolution in institutions and society, etc. act as a precursor to growth, something about which Daron Acemoglu has been on the economics profession's case for some time now. And, it shouldn't be surprising-- the industrial revolution in Britain followed a similar pattern, as I've mentioned here before.
Yet, Dr. Roslings conclusions are similar to those that economists, even the most neoclassically trained among us, would readily agree with. First, that things like trade and markets are helping a number of countries pull themselves out of despair and poverty; second, that political institutions and good government play a critical role in ensuring that the benefits of growth are distributed in a way that respects the median citizen; third, that these factors HAVE contributed to a considerable normalization and flattening in the distribution of world income over the last half-century.
Friday, October 26, 2007
Monday, October 22, 2007
Negative Loss = Positive Gain?
Check out this article from Popular Science's Brilliant 10 for '07. Basically it's about some of the cognitive similarities between monkeys and humans, and whether we seem to "miscalcuate" expectation in the same way. First, let me say that my only experience with the brains of monkeys is in the first person-- i.e. my own relatively unevolved mind. But, the article is interesting because the monkeys are put in 2 scenarios: In scenario 1 they "pay" 1 token for 1 slices of apple, but are given 2 with probability 0.5; In scenario 2 they "pay" 1 token for 2 slices of apple, but are only given 1 with probability 0.5. In both scenarios they can expect 1.5 slices. It is unclear to what extent the monkeys understand the "rules" before hand, or what group is used as a control, but scenario 1 seemed to be much preferred by the monkeys, and it seems it is more preferred by the more evolved primates that have opposable thumbs. I would guess that playing the game many many times with the monkeys would converge to a more uniform reaction in terms of "monkey mood."
But, people are the same way, at times, especially when uncertainty is involved. I'm not sure what the appropriate economic explanation, but there seems to be some argument here for a more integrated role of psychology in explaining economic behavior, and may explain some of the puzzles in economics. Small deviations from "full rationality" at the micro level can easily perpetuate persistent deviations from the rational equilibria that are used in neoclassecal macro/finance mondels. Mostly, I'm looking for comments and/or discussion.
But, people are the same way, at times, especially when uncertainty is involved. I'm not sure what the appropriate economic explanation, but there seems to be some argument here for a more integrated role of psychology in explaining economic behavior, and may explain some of the puzzles in economics. Small deviations from "full rationality" at the micro level can easily perpetuate persistent deviations from the rational equilibria that are used in neoclassecal macro/finance mondels. Mostly, I'm looking for comments and/or discussion.
Tuesday, October 16, 2007
Choking on Growth, or Choking on Bad Government
In a recent NY Times Series, the issue of the environment and economic growth in China has come into question. Just the standard fallacy of blaming capitalism at work here. The only next-step fallacy is to blame open-market economics for the abhorrent degradation of the environment that is the current tragedy in China. What a shame. There is a clear political impetus for a change in environmental policy in China, but that movement has no voice in the political process because of the over-extended will of an oppressive state. The unfortunate part of the whole situation is that for this movement to gain critical mass and momentum, the only solution is to continue to grow economically. Historically, economic growth has been the primary engine for a change in social conscience. During the Industrial Revolution, even as conditions grew better and the average Englishman's lot improved, issues of poverty, education, child labor, and even the environment became more and more scrutinized, whereas in continental Europe, many of these conditions, while far worse in their relative magnitude to the same conditions in England, went ignored because the political systems were largely authoritarian or monarchic. In such cases it takes revolution and collapse to correct the system, which will probably be necessary in China today.
Friday, October 12, 2007
College Loans
I don't get it. Here I am, teaching business and economics thinking one of the biggest points of getting a college education (note: I don't use "degree") is to signal value to the labor market and win a job that pays a higher salary. Now, there's a proposal on the table to "forgive" federal college loans if students go into fields (jobs) that "serve the public good" in some sense for ten years. I really hope kids don't fall into this trap unless they get some personal satisfaction from the service they choose. Otherwise it just doesn't make sense to take a job in the public sector that puts your earnings potential 10-20,000 lower than what you might make in the private sector. The economical choice is to pay off the extra 10-15,000 that you have to take out in college loans over the normal maturity. Trading 10-15,000 over the 4 years prior to your working career for the 10-20,000 extra you can rake in working for private industry for those 10 years is seemingly a no-brainer, or is my calculator just broken?
Wednesday, September 26, 2007
Today my Head Wants to Explode
So, besides the subsiding sinus pressure of the traditional Back-to-School bug that tends to bite the faculties of America's colleges and universities, there are other things making my head want to explode. An article appeared today in the NY Times indicating that companies that rated the securites that were purchased with subprime mortgages as collateral were inappropriately inflating those securities' ratings to make them look better on paper. It's unclear whether Bear Stearns, et al. asked the ratings agencies to do this for them, but this is really bad.
I have a previous post on this that talks about moral hazard, but this story on the security rating agencies adds a completely new layer to the insanity. Basically, what comes out of it is two-sided moral hazard where both parties to a contract have an apparent incentive to deliberately engage in bade behavior. We're waaaaay past supply and demand here. What makes this stuff mind blowing is that the existence of a stable equilibrium is usually not very likely in general terms-- usually only for certain numerical examples with restrictive assumptions. Second, optimal contracts that can overcome the moral hazard problem tend to be characterized partially, and the contractual relationship has to be repeated in order for the contract to carry much weight. There's lots of really hard math involved in the theoretical excursions into this area, hence head explosion.
Bottom line-- the more layers of moral hazard you add to a problem the more chaotic and unpredictable the result, and the more likely it is that bad things happen. Bad things happened.
I have a previous post on this that talks about moral hazard, but this story on the security rating agencies adds a completely new layer to the insanity. Basically, what comes out of it is two-sided moral hazard where both parties to a contract have an apparent incentive to deliberately engage in bade behavior. We're waaaaay past supply and demand here. What makes this stuff mind blowing is that the existence of a stable equilibrium is usually not very likely in general terms-- usually only for certain numerical examples with restrictive assumptions. Second, optimal contracts that can overcome the moral hazard problem tend to be characterized partially, and the contractual relationship has to be repeated in order for the contract to carry much weight. There's lots of really hard math involved in the theoretical excursions into this area, hence head explosion.
Bottom line-- the more layers of moral hazard you add to a problem the more chaotic and unpredictable the result, and the more likely it is that bad things happen. Bad things happened.
Sunday, September 23, 2007
Stop China-bashing
So, it's not China that's secretly sabotaging our toys to kill our babies and take over our country. Apparently our own designers and managers in the US that are not doing their jobs. In a statement issued under cover of darkness (how's Friday afternoon/Saturday morning gonna grab Lou Dobbs' attention?), Mattell admitted what many of us suspected all along: the lead in the toys was the fault of management and design teams (KC Star).In a related story, recalled cribs made in China by Graco are also a result of faulty design-- by good ole American design workers. (Video: here, courtesy of YouTube.) It is interesting how the fact that the cribs were made in China takes the headline over the fact that the design flaw had nothing to do with China, offshoring, globalization, Lou Dobbs' War on the middle class, or the price of tea. Just a plain combination of sloppy or unscrupulous decisions by designers and managers. But, as they say, iiit runs downhill, and China (foreigners generally) are at the bottom of the social hill. I'll be tilting if someone will be my windmill.
Oh well I guess it doesn't sell newspapers to report that thousands of poor people in China did their jobs and your good ole American white-bred neighbor screwed up his and killed a few babies.
Oh well I guess it doesn't sell newspapers to report that thousands of poor people in China did their jobs and your good ole American white-bred neighbor screwed up his and killed a few babies.
Baby Crib Recall
China and TRADE HAVE NOTHING TO DO WITH THIS! It's a design flaw by US designers and managers!
Wednesday, September 12, 2007
Equal Time for Stupid Democrats
I just want to take a moment to call out the Democrats on Iraq, because they're not any smarter when it comes to making logical arguments about their positions on Iraq than those other guys. Every time a democrat argues that we should get out because we should have never gone in to begin with s/he is making the same fallacy in judgement as the Republicans who say we should stay there because we did decide to go. The decision to have gone in the first place is a foregone conclusion, and all of these twits need to learn from the past without re-arguing it. No decision about how best to proceed should be based on anything other than weighing the present and future gains to our National and global security against the marginal consequences and costs of those proposals.
Tuesday, September 11, 2007
Iraq and the Sunk-Cost Trap
Just a quickie today. I'm calling out Mike Huckabee and half of the Republican field for falling into what anyone with an undergraduate business degree knows to be a "sunk cost trap." Regardless of how you weigh the costs and benefits of various alternatives to how we should move forward in Iraq, it is a disservice to our troops to stay the course simply because we decided to go in the first place. To me, continuing a policy (whether that policy is good, bad or ugly) on the basis of events already behind us is a sad mistake in how to move forward in an optimal fashion.
The argument I'm calling out is the "honor" argument, which basically stakes the claim that changing course, redeploying, etc. is not an option because so many service men and women have already made the ultimate sacrifice. What bigger disservice could we do to their memory than to not learn from their sacrifice? Would it not be appropriate to allocate the lives of the men and women who carry the flag behind the fallen in a way that best serves our National Interest instead of squandering their service to a failed policy? In otherwords, the lives lost, are sadly and tragically already lost-- they are a "sunk cost" that can never be recovered. Let's ensure that any additional loss in life maximizes the benefit of security obtained from those future casualties.
The argument I'm calling out is the "honor" argument, which basically stakes the claim that changing course, redeploying, etc. is not an option because so many service men and women have already made the ultimate sacrifice. What bigger disservice could we do to their memory than to not learn from their sacrifice? Would it not be appropriate to allocate the lives of the men and women who carry the flag behind the fallen in a way that best serves our National Interest instead of squandering their service to a failed policy? In otherwords, the lives lost, are sadly and tragically already lost-- they are a "sunk cost" that can never be recovered. Let's ensure that any additional loss in life maximizes the benefit of security obtained from those future casualties.
Sunday, September 9, 2007
Poverty and Immigration
This week, Washington Post columnist Robert Samuelson set forth the claim that the United States is Importing Poverty. In it, he argues that immigration has increased poverty in the U.S. because the hispanics who disproportionately migrate here also happen to fall disproportionally below the poverty line. A number of critics could easily read this article to mean that we should cut off immigration, but that would just be another way to lie with statistics.
I would pose the question this way: What impact does immigration have on (1) The immigrants who come here; (2) Those currently at or near the poverty line in the U.S., and; (3) Those living in poverty in Mexico.
The first group are almost unambiguously better off. Otherwise, why give up the life you lead in Mexico, Guatemala, or elsewhere? Although immigrants often earn less and work harder than their native cohort in the U.S., they are glad to be "exploited" in this sense so that they can use some of their repatriated savings to purchase land or improve the lives of their families in their home country.
The third group is also usually better off. For the most part, the emigration of moderately-skilled hispanics to the United Statess, along with the FDI attracted by the relative abundance of unskilled labor, has tended to increase wages. And that's before accounting for the impact of repatriated wealth from emigrant family members.
The tricky middle is the second group. There is some evidence that immigration has worsened wages in the labor market for the least-skilled and least-experienced U.S. natives. But, at the same time immigration has tended to leave all other groups' welfare unchanged or improved.
To me, the argument comes down to how, not if we show concern for those who are poor. I would argue that if we are concerned with poverty, we should not just be concerned with the absolute headcount below some artificial poverty line, but also with the severity of the poverty that those folks live in. In addition, if our intentions are altruistic (and not just "us against them"), we should be concerned with those living in the most abject of poverty conditions, not just those living here, and the most poor folks out there are generally living outside our (increasingly gated) borders. I would only weigh those small losses to our own citizens against the huge gains to those who would come here and not treat them as One Fifth of One American.
I would pose the question this way: What impact does immigration have on (1) The immigrants who come here; (2) Those currently at or near the poverty line in the U.S., and; (3) Those living in poverty in Mexico.
The first group are almost unambiguously better off. Otherwise, why give up the life you lead in Mexico, Guatemala, or elsewhere? Although immigrants often earn less and work harder than their native cohort in the U.S., they are glad to be "exploited" in this sense so that they can use some of their repatriated savings to purchase land or improve the lives of their families in their home country.
The third group is also usually better off. For the most part, the emigration of moderately-skilled hispanics to the United Statess, along with the FDI attracted by the relative abundance of unskilled labor, has tended to increase wages. And that's before accounting for the impact of repatriated wealth from emigrant family members.
The tricky middle is the second group. There is some evidence that immigration has worsened wages in the labor market for the least-skilled and least-experienced U.S. natives. But, at the same time immigration has tended to leave all other groups' welfare unchanged or improved.
To me, the argument comes down to how, not if we show concern for those who are poor. I would argue that if we are concerned with poverty, we should not just be concerned with the absolute headcount below some artificial poverty line, but also with the severity of the poverty that those folks live in. In addition, if our intentions are altruistic (and not just "us against them"), we should be concerned with those living in the most abject of poverty conditions, not just those living here, and the most poor folks out there are generally living outside our (increasingly gated) borders. I would only weigh those small losses to our own citizens against the huge gains to those who would come here and not treat them as One Fifth of One American.
Friday, September 7, 2007
Lou Dobbs, Hater
Yesterday, my old nemesis Lou Dobbs was back on the anti-immigration warpath. His topic: H1-B visas and the support among presidential candidates for more of them at the expense of hard-working middle-class "Americans." I guess he's either hoping that you don't know what H1-B visas are, that you don't know who's most adversely affected by immigrants coming to the US, or that you don't know who the middle class is.
1. What is an H1-B visa? It is a visa for immigrants with a minimum of a bachelors degree, usually with some degree of specialization in some technical field. Do the visas uniformly get allocated to the most qualified or most in-demand? NO! But, I can only imagine how hot Lou would be at the administrative cost of our Citizenship and Immigration Services (formerly INS) if they tried to evaluate each of the hundreds of thousands of applications to try to evaluate which ones were the best-suited to help our economy grow.
2. Who's most adversely affected by immigration? Not the middle class! The only group that has been shown (in empirical studies of the economy by well qualified econometricians) to be adversely affected by immigration (legal or otherwise) is the lower-tail, i.e. those with low education (high school dropouts) and low experience (18-25 years old). I don't dispute that these, less fortunate groups should be looked after, but I do think that there are better ways to do it than by cutting off the flow of immigrants who help our economy be the leader in innovative technologies.
3. Who is the middle-class anyway? Well, the median household in the US earns about $55,000. Last time I checked, the gardener who does upkeep around my townhouse or the carpenter putting up new units accross the way isn't pulling down anything near that. So, are the immigrants we're most worked up about really killing the middle class? I don't think so-- I really don't think that they're competing in the same labor markets as the "middle" class.
1. What is an H1-B visa? It is a visa for immigrants with a minimum of a bachelors degree, usually with some degree of specialization in some technical field. Do the visas uniformly get allocated to the most qualified or most in-demand? NO! But, I can only imagine how hot Lou would be at the administrative cost of our Citizenship and Immigration Services (formerly INS) if they tried to evaluate each of the hundreds of thousands of applications to try to evaluate which ones were the best-suited to help our economy grow.
2. Who's most adversely affected by immigration? Not the middle class! The only group that has been shown (in empirical studies of the economy by well qualified econometricians) to be adversely affected by immigration (legal or otherwise) is the lower-tail, i.e. those with low education (high school dropouts) and low experience (18-25 years old). I don't dispute that these, less fortunate groups should be looked after, but I do think that there are better ways to do it than by cutting off the flow of immigrants who help our economy be the leader in innovative technologies.
3. Who is the middle-class anyway? Well, the median household in the US earns about $55,000. Last time I checked, the gardener who does upkeep around my townhouse or the carpenter putting up new units accross the way isn't pulling down anything near that. So, are the immigrants we're most worked up about really killing the middle class? I don't think so-- I really don't think that they're competing in the same labor markets as the "middle" class.
Tuesday, September 4, 2007
Presidential Energy Records, Part III
So, first of all, from reading the actual record it's apparent that the big issue is OIL. Also, there is a real dialectic between the parties on this topic: Republicans want to solve the energy issue by expanding production of oil and gas, whereas Democrats favor policies that curtail consomption. So by now you may be wondering, "As an 'expert' economist who do you think is right?" Well, I'm a two handed economist-- On the one hand they're both right, and on the other hand they're both wrong. Both stategies will help extend our ability to fuel our cars and heat and cool our homes in the short to medium run. Yet, both strategies are very costly, and neither strategy promises to be very effective in the long run.
Expanding production is problematic because many of the policies involve huge subsidies to corporations. Also, it is myopic because there oil reserves are relatively fixed, and sustaining current energy consumption may not be environmentally sustainable. Yes, Virginia, there is Global Warming.
Curtailing consumption is equally problematic because these policies also involve high costs, although the costs are somewhat more disguised. Regulations, like CAFE standards will serve to raise the prices of certain big-ticket goods, and may place undue burden on households and firms. Secondly, they may not serve their intended purpose, because markets are notoriously good at subverting rigid regulations governing quantity or price.
What is particularly frustrating looking at these positions is that there is an abysmally thin record on alternative energy- one vote here on biofuels and one on hydrogen cars there, and probably a bunch of blind "yeas" for ethanol to "support hard-workin' American farmers" and that's all. Realistically, since oil is what we actually use, finding ways to manage that resource is something we must do, but what will it take to start a real Political debate over energy alternatives that will be sustainable and compatible with a cleaner environment?
Expanding production is problematic because many of the policies involve huge subsidies to corporations. Also, it is myopic because there oil reserves are relatively fixed, and sustaining current energy consumption may not be environmentally sustainable. Yes, Virginia, there is Global Warming.
Curtailing consumption is equally problematic because these policies also involve high costs, although the costs are somewhat more disguised. Regulations, like CAFE standards will serve to raise the prices of certain big-ticket goods, and may place undue burden on households and firms. Secondly, they may not serve their intended purpose, because markets are notoriously good at subverting rigid regulations governing quantity or price.
What is particularly frustrating looking at these positions is that there is an abysmally thin record on alternative energy- one vote here on biofuels and one on hydrogen cars there, and probably a bunch of blind "yeas" for ethanol to "support hard-workin' American farmers" and that's all. Realistically, since oil is what we actually use, finding ways to manage that resource is something we must do, but what will it take to start a real Political debate over energy alternatives that will be sustainable and compatible with a cleaner environment?
Presidential Energy Records, Part II
Part II of Saturday's post: the republicans on energy and oil from http://www.ontheissues.org/.
Sam Brownback
Voted NO on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted NO on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted NO on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted NO on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted NO on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted YES on drilling ANWR on national security grounds. (Apr 2002)
Voted YES on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Rudy Guiliani
No formal record on energy, but formal statements include:
Accept global warming & work toward energy independence. (Jun 2007)
Signing Kyoto would just move CO2 emissions to China & India. (Mar 2007)
No new energy tax; focus on alternatives instead. (Mar 2007)
Nuclear power is dangerous, but nobody's died from it. (Mar 2007)
Develop energy-independent technology, but not wind power. (Mar 2007)
Open Strategic Petroleum Reserve to battle high oil prices. (Feb 2000)
Oil crisis is “compelling justification” to use Reserves. (Feb 2000)
Mike Huckabee
Kyoto was a mistake, but "Earth in the Balance" is not. (Jan 2007)
Shouldn't limit oil production while increasing consumption. (Jan 2007)
Explore ways to harness nuclear power. (Jan 2007)
Promote alternative fuel technology. (Nov 2002)
Voluntary partnerships reduce greenhouse gases economically. (Aug 2000)
Kyoto Treaty must include reductions by all countries. (Aug 2000)
More funding to develop domestic energy supplies. (Sep 2001)
Use federal funds for nuclear cleanup, with state input. (Sep 2001)
Share offshore oil development revenue with states. (Sep 2001)
Duncan Hunter
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted YES on authorizing construction of new oil refineries. (Oct 2005)
Voted YES on passage of the Bush Administration national energy policy. (Jun 2004)
Voted YES on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
John McCain
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted NO on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted NO on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted NO on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Ron Paul
Voted NO on criminalizing oil cartels like OPEC. (May 2007)
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted NO on passage of the Bush Administration national energy policy. (Jun 2004)
Voted NO on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
Mitt Romney
No-regrets policy: biofuel, nuclear power, drill ANWR. (Jun 2007)
Big Oil should reinvest profits in oil refineries. (Jun 2007)
Develop alternative energy but also drill in ANWR. (Dec 2006)
Tom Tancredo
Voted NO on criminalizing oil cartels like OPEC. (May 2007)
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted YES on authorizing construction of new oil refineries. (Oct 2005)
Voted YES on passage of the Bush Administration national energy policy. (Jun 2004)
Voted YES on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
Fred Thompson
Voted YES on drilling ANWR on national security grounds. (Apr 2002)
Voted YES on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Sam Brownback
Voted NO on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted NO on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted NO on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted NO on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted NO on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted YES on drilling ANWR on national security grounds. (Apr 2002)
Voted YES on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Rudy Guiliani
No formal record on energy, but formal statements include:
Accept global warming & work toward energy independence. (Jun 2007)
Signing Kyoto would just move CO2 emissions to China & India. (Mar 2007)
No new energy tax; focus on alternatives instead. (Mar 2007)
Nuclear power is dangerous, but nobody's died from it. (Mar 2007)
Develop energy-independent technology, but not wind power. (Mar 2007)
Open Strategic Petroleum Reserve to battle high oil prices. (Feb 2000)
Oil crisis is “compelling justification” to use Reserves. (Feb 2000)
Mike Huckabee
Kyoto was a mistake, but "Earth in the Balance" is not. (Jan 2007)
Shouldn't limit oil production while increasing consumption. (Jan 2007)
Explore ways to harness nuclear power. (Jan 2007)
Promote alternative fuel technology. (Nov 2002)
Voluntary partnerships reduce greenhouse gases economically. (Aug 2000)
Kyoto Treaty must include reductions by all countries. (Aug 2000)
More funding to develop domestic energy supplies. (Sep 2001)
Use federal funds for nuclear cleanup, with state input. (Sep 2001)
Share offshore oil development revenue with states. (Sep 2001)
Duncan Hunter
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted YES on authorizing construction of new oil refineries. (Oct 2005)
Voted YES on passage of the Bush Administration national energy policy. (Jun 2004)
Voted YES on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
John McCain
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted NO on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted NO on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted NO on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Ron Paul
Voted NO on criminalizing oil cartels like OPEC. (May 2007)
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted NO on passage of the Bush Administration national energy policy. (Jun 2004)
Voted NO on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
Mitt Romney
No-regrets policy: biofuel, nuclear power, drill ANWR. (Jun 2007)
Big Oil should reinvest profits in oil refineries. (Jun 2007)
Develop alternative energy but also drill in ANWR. (Dec 2006)
Tom Tancredo
Voted NO on criminalizing oil cartels like OPEC. (May 2007)
Voted NO on removing oil & gas exploration subsidies. (Jan 2007)
Voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted YES on scheduling permitting for new oil refinieries. (Jun 2006)
Voted YES on authorizing construction of new oil refineries. (Oct 2005)
Voted YES on passage of the Bush Administration national energy policy. (Jun 2004)
Voted YES on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted NO on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted NO on prohibiting oil drilling & development in ANWR. (Aug 2001)
Voted NO on starting implementation of Kyoto Protocol. (Jun 2000)
Fred Thompson
Voted YES on drilling ANWR on national security grounds. (Apr 2002)
Voted YES on terminating CAFE standards within 15 months. (Mar 2002)
Voted YES on preserving budget for ANWR oil drilling. (Apr 2000)
Presidential Energy Records, Part III
So, first of all, from reading the actual record it's apparent that the big issue is OIL. Also, there is a real dialectic between the parties on this topic: Republicans want to solve the energy issue by expanding production of oil and gas, whereas Democrats favor policies that curtail consomption. So by now you may be wondering, "As an 'expert' economist who do you think is right?" Well, I'm a two handed economist-- On the one hand they're both right, and on the other hand they're both wrong. Both stategies will help extend our ability to fuel our cars and heat and cool our homes in the short to medium run. Yet, both strategies are very costly, and neither strategy promises to be very effective in the long run.
Expanding production is problematic because many of the policies involve huge subsidies to corporations. Also, it is myopic because there oil reserves are relatively fixed, and sustaining current energy consumption may not be environmentally sustainable. Yes, Virginia, there is Global Warming.
Curtailing consumption is equally problematic because these policies also involve high costs, although the costs are somewhat more disguised. Regulations, like CAFE standards will serve to raise the prices of certain big-ticket goods, and may place undue burden on households and firms. Secondly, they may not serve their intended purpose, because markets are notoriously good at subverting rigid regulations governing quantity or price.
What is particularly frustrating looking at these positions is that there is an abysmally thin record on alternative energy- one vote here on biofuels and one on hydrogen cars there, and probably a bunch of blind "yeas" for ethanol to "support hard-workin' American farmers" and that's all. Realistically, since oil is what we actually use, finding ways to manage that resource is something we must do, but what will it take to start a real Political debate over energy alternatives that will be sustainable and compatible with a cleaner environment?
Expanding production is problematic because many of the policies involve huge subsidies to corporations. Also, it is myopic because there oil reserves are relatively fixed, and sustaining current energy consumption may not be environmentally sustainable. Yes, Virginia, there is Global Warming.
Curtailing consumption is equally problematic because these policies also involve high costs, although the costs are somewhat more disguised. Regulations, like CAFE standards will serve to raise the prices of certain big-ticket goods, and may place undue burden on households and firms. Secondly, they may not serve their intended purpose, because markets are notoriously good at subverting rigid regulations governing quantity or price.
What is particularly frustrating looking at these positions is that there is an abysmally thin record on alternative energy- one vote here on biofuels and one on hydrogen cars there, and probably a bunch of blind "yeas" for ethanol to "support hard-workin' American farmers" and that's all. Realistically, since oil is what we actually use, finding ways to manage that resource is something we must do, but what will it take to start a real Political debate over energy alternatives that will be sustainable and compatible with a cleaner environment?
Saturday, September 1, 2007
Presidential Energy Records, Part I
I'm feeling a little lazy, so I'll just publish some records of presidential candidates on energy and oil (from: www.ontheissues.org). Part I: The Democratic Primary Candidates for President. For the most part the policies reflect a strong concern over the environment (especially for global warming), which may be the larger issue anyway. (As I've mentioned before, energy itself will be available to fuel our cars for the foreseeable future using what's in the sands of Northern Alberta once the embarrassingly cheap reserves in the Middle East dry up.) Like we would expect from the Left, they are generally opposed to corporate subsidies.
Joe Biden:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Hillary Clinton:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on making oil-producing and exporting cartels illegal. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted NO on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Chris Dodd:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
John Edwards:
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Mike Gravel:
No recent record on energy. Strongly opposed to nuclear power because of waste issues. No strong record on energy alternatives per se. Focuses on Global Warming and waste issues.
Dennis Kucinich:
Voted YES on criminalizing oil cartels like OPEC. (May 2007)
Voted YES on removing oil & gas exploration subsidies. (Jan 2007)
Voted YES on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted NO on scheduling permitting for new oil refinieries. (Jun 2006)
Voted NO on authorizing construction of new oil refineries. (Oct 2005)
Voted NO on passage of the Bush Administration national energy policy. (Jun 2004)
Voted NO on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted YES on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted YES on prohibiting oil drilling & development in ANWR. (Aug 2001)
Barack Obama:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on making oil-producing and exporting cartels illegal. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Joe Biden:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Hillary Clinton:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on making oil-producing and exporting cartels illegal. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted NO on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Chris Dodd:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on targeting 100,000 hydrogen-powered vehicles by 2010. (Jun 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
John Edwards:
Voted YES on Bush Administration Energy Policy. (Jul 2003)
Voted YES on removing consideration of drilling ANWR from budget bill. (Mar 2003)
Voted NO on drilling ANWR on national security grounds. (Apr 2002)
Voted NO on terminating CAFE standards within 15 months. (Mar 2002)
Mike Gravel:
No recent record on energy. Strongly opposed to nuclear power because of waste issues. No strong record on energy alternatives per se. Focuses on Global Warming and waste issues.
Dennis Kucinich:
Voted YES on criminalizing oil cartels like OPEC. (May 2007)
Voted YES on removing oil & gas exploration subsidies. (Jan 2007)
Voted YES on keeping moratorium on drilling for oil offshore. (Jun 2006)
Voted NO on scheduling permitting for new oil refinieries. (Jun 2006)
Voted NO on authorizing construction of new oil refineries. (Oct 2005)
Voted NO on passage of the Bush Administration national energy policy. (Jun 2004)
Voted NO on implementing Bush-Cheney national energy policy. (Nov 2003)
Voted YES on raising CAFE standards; incentives for alternative fuels. (Aug 2001)
Voted YES on prohibiting oil drilling & development in ANWR. (Aug 2001)
Barack Obama:
Voted YES on removing oil & gas exploration subsidies. (Jun 2007)
Voted YES on making oil-producing and exporting cartels illegal. (Jun 2007)
Voted YES on factoring global warming into federal project planning. (May 2007)
Voted YES on disallowing an oil leasing program in Alaska's ANWR. (Nov 2005)
Voted YES on $3.1B for emergency oil assistance for hurricane-hit areas. (Oct 2005)
Voted YES on reducing oil usage by 40% by 2025 (instead of 5%). (Jun 2005)
Voted YES on banning drilling in the Arctic National Wildlife Refuge. (Mar 2005)
Thursday, August 30, 2007
Sub-Prime Lending
Quick comment on subprime lending. Today, the NYTimes ran a report describing the ruling in bankruptcy court that denied Bear Stearns (based in the Caymans) bankruptcy.
I've heard about every story on who's to blame-- some people say it's all Bear Stearns, others say it's the people who took out the loans in the first place, others still say it was the people who agreed to take the mortgages as collateral in securities transactions, borrowers began defaulting as interest rates rose, the securities bombed and the collateral was worthless. Which leads back to Bear Stearns. Then, somebody I know tried to goat the government for it because they tried to create more opportunities for lower-income families to take out loans. When in doubt blame Uncle Sam.
This whole mess is more or less on Bear Stearns. I have to hold them responsible for making risky loans to folks without the means to keep making payments once rates rise and monthly payments double. They knew what they were doing, if anyone did. The borrowers screwed up, but they weren't motivated by greed. And now the judge is making them pay their own debts. Good.
I've heard about every story on who's to blame-- some people say it's all Bear Stearns, others say it's the people who took out the loans in the first place, others still say it was the people who agreed to take the mortgages as collateral in securities transactions, borrowers began defaulting as interest rates rose, the securities bombed and the collateral was worthless. Which leads back to Bear Stearns. Then, somebody I know tried to goat the government for it because they tried to create more opportunities for lower-income families to take out loans. When in doubt blame Uncle Sam.
This whole mess is more or less on Bear Stearns. I have to hold them responsible for making risky loans to folks without the means to keep making payments once rates rise and monthly payments double. They knew what they were doing, if anyone did. The borrowers screwed up, but they weren't motivated by greed. And now the judge is making them pay their own debts. Good.
Tuesday, August 28, 2007
The Dirty Secret Behind "The Dirty Secret Behind America's Energy Future"
Jeff Godell's book, "Big Coal: The Dirty Secret Behind America's Energy Future," has gotten a resurgence of media attention in recent days because of the events that have transpired in the Utah mine tragedy and the more recent tragedy of a similar nature in China. One of the things Godell blasts the coal industry for is safety (hence the newfound media attention). Now, if you've read my other posts on energy, you'll know that I'm no blind defender of Big Coal. I am, however, a big fan of making sure that if I'm going to pour my outrage, and that I target it where it will do the most good.
Around the time of a BIG EVENT with LOTS OF MEDIA, nearly every politician has to make sure they are on the public record "saying the right thing," and showing the appropriate amounts of outrage over the incident, resolve to do more from now on, and contrition that nothing was done sooner that would have saved the lives of the noble citizens who met their ultimate demise. But do we mete out our attention, sympathy, outrage and action equally? Well, OF COURSE NOT. It's a "law of small numbers" thing (the principle comes from the properties of the Poisson Distribution of statistics and referenced in Thomas Pynchon's fictional novel, "Gravity's Rainbow"). Basically, the way I'm going to apply it is to say that because certain events are so unexpected generally, that when they do occur they tend to grab our attention and affect behavior disproportionately to their risk of occuring again. My point is, there are hundreds of on-the-job fatalities every year (over 1400 in manufacturing) and almost none of them make Headline News. Why? They're just too damn common to be newsworthy! Hence, there is almost no public outcry for the government to take action. It's kind of like flying versus driving-- people are terrified of planes even though it's widely known that driving is statistically much more risky. (Again, there are so many damn car wrecks there's no way the news is going to start sending crews to them...) Does the fact that a certain type of fatality is more "common" or "mundane" make it less tragic?
Back to mining... Have I mentioned that economists like to back stuff up with data? So, the Coal mining industry actually has a much LOWER incidence of on-the-job fatality than the general manufacturing sector (according to the Bureau of Labor Statistics, manufacturing had about 3 fatal incidents per 1,000 workers in 2006 whereas coal had about 0.8 per 1000 workers). So, even if, as Mr. Godell asserts, coal accidents increase drastically over the next several years, it is unclear that our regulatory efforts are best-placed in that sector. It is conceivable that many more lives would be saved by fortifying safety regulations in a more general way rather than targeting coal. Not only that, it seems to me that the dangers of mining coal underground are not unforseen, so miners who choose that line of work are making an informed choice-- and are compensated for the perceived risk. In fact, despite a lower incidence of fatalities, COAL miners out-earn their colleagues in the manufacturing sector by about $7 per hour.
So, with all of this in mind, where should we spend our regulatory dollars? In coal, where there were just 78 fatalities in 2006, and incidents were relatively rare, or in the manufacturing sector or in a more general way altogether, where there are far more fatalities (and lives that could potentially be saved), but far less media attention? Should the media's crocodile tears and misinformation dictate where our tax dollars are spent? Maybe I'm a jerk, but as my students know, I want to make sure that I get the most "Bang" for my buck.
Around the time of a BIG EVENT with LOTS OF MEDIA, nearly every politician has to make sure they are on the public record "saying the right thing," and showing the appropriate amounts of outrage over the incident, resolve to do more from now on, and contrition that nothing was done sooner that would have saved the lives of the noble citizens who met their ultimate demise. But do we mete out our attention, sympathy, outrage and action equally? Well, OF COURSE NOT. It's a "law of small numbers" thing (the principle comes from the properties of the Poisson Distribution of statistics and referenced in Thomas Pynchon's fictional novel, "Gravity's Rainbow"). Basically, the way I'm going to apply it is to say that because certain events are so unexpected generally, that when they do occur they tend to grab our attention and affect behavior disproportionately to their risk of occuring again. My point is, there are hundreds of on-the-job fatalities every year (over 1400 in manufacturing) and almost none of them make Headline News. Why? They're just too damn common to be newsworthy! Hence, there is almost no public outcry for the government to take action. It's kind of like flying versus driving-- people are terrified of planes even though it's widely known that driving is statistically much more risky. (Again, there are so many damn car wrecks there's no way the news is going to start sending crews to them...) Does the fact that a certain type of fatality is more "common" or "mundane" make it less tragic?
Back to mining... Have I mentioned that economists like to back stuff up with data? So, the Coal mining industry actually has a much LOWER incidence of on-the-job fatality than the general manufacturing sector (according to the Bureau of Labor Statistics, manufacturing had about 3 fatal incidents per 1,000 workers in 2006 whereas coal had about 0.8 per 1000 workers). So, even if, as Mr. Godell asserts, coal accidents increase drastically over the next several years, it is unclear that our regulatory efforts are best-placed in that sector. It is conceivable that many more lives would be saved by fortifying safety regulations in a more general way rather than targeting coal. Not only that, it seems to me that the dangers of mining coal underground are not unforseen, so miners who choose that line of work are making an informed choice-- and are compensated for the perceived risk. In fact, despite a lower incidence of fatalities, COAL miners out-earn their colleagues in the manufacturing sector by about $7 per hour.
So, with all of this in mind, where should we spend our regulatory dollars? In coal, where there were just 78 fatalities in 2006, and incidents were relatively rare, or in the manufacturing sector or in a more general way altogether, where there are far more fatalities (and lives that could potentially be saved), but far less media attention? Should the media's crocodile tears and misinformation dictate where our tax dollars are spent? Maybe I'm a jerk, but as my students know, I want to make sure that I get the most "Bang" for my buck.
Monday, August 27, 2007
All New Meaning to "Cost of Living"
Several days ago, I was on a rant about Lou Dobbs calling economists "idiots" and "jackasses." But, while we tend to know what we are talking about a good deal of the time (usually with data and ituition to back up our stories), we are also really big jerks. Case in point: most "normal" people would hear the phrase, "you can't put a price on a human life" and agree without a second thought. Eonomists hear this, and ask, "can you back that claim up with data?" In fact, human life does have a price put on it, and economists aren't to blame.
Economists have actually done calculations to try to infer the cost of dying using data that are readily available. Frank Ackerman has "priced" a number of things, including death, in his pamphlet, "Pricing the Priceless." So how much is a human life worth? On average, between 1 and 6 million, depending on certain characteristics. But here's the catch: Computations aren't entirely made on the basis of earnings, life expectance at birth, etc.-- They're made by observing and evaluating our own behavior. If you feel this cheapens your worth as a person, you have yourself to blame. Here's one approach that's been used. Take construction workers, and survey their hourly earnings. Now survey the compensating differential between working on the first floor and working on the thirtieth floor. Next, calculate the increase in the risk of dying on the job, and there you have it. The price these construction workers have voluntarily put on their own lives using this back-of-the-napkin approach is about 2 million dollars.
So, the next time you run a red light,. think about the 30 seconds it saves you, the risk of dying you assume by doing it, and the fact that somewhere an economists might be watching.
Tomorrow, I will focus on the information distortion we get from the media-- are we evaluating the risk of death or disaster appropriately when we weigh whether or not to fly vs. drive, or in measuring our level of outrage for government action for things like mining regulations, bird flu precautions, etc.
Economists have actually done calculations to try to infer the cost of dying using data that are readily available. Frank Ackerman has "priced" a number of things, including death, in his pamphlet, "Pricing the Priceless." So how much is a human life worth? On average, between 1 and 6 million, depending on certain characteristics. But here's the catch: Computations aren't entirely made on the basis of earnings, life expectance at birth, etc.-- They're made by observing and evaluating our own behavior. If you feel this cheapens your worth as a person, you have yourself to blame. Here's one approach that's been used. Take construction workers, and survey their hourly earnings. Now survey the compensating differential between working on the first floor and working on the thirtieth floor. Next, calculate the increase in the risk of dying on the job, and there you have it. The price these construction workers have voluntarily put on their own lives using this back-of-the-napkin approach is about 2 million dollars.
So, the next time you run a red light,. think about the 30 seconds it saves you, the risk of dying you assume by doing it, and the fact that somewhere an economists might be watching.
Tomorrow, I will focus on the information distortion we get from the media-- are we evaluating the risk of death or disaster appropriately when we weigh whether or not to fly vs. drive, or in measuring our level of outrage for government action for things like mining regulations, bird flu precautions, etc.
Wednesday, August 22, 2007
An Immigration Story (Part III)
Today's post arrives late, and tomorrow will probably pass without new information, but SAY-LAH-VEE as the French say. 8-hour department meetings to prepare to greet the new academic semester do not leave much time for me to go on my usual rail about economics on my blog.
In my last two episodes we learned something of how my family came to the United States as immigrants from Denmark. Two days ago we learned about an old spinning wheel that my great great grandfather used as a gerry-rigged bellows, and had become worn out from hard work (much like the immigrants themselves who come here). Yesterday we learned that my ancestors came to this country somewhat casually, and not necessarily in a fully formalized way by first entering Canada, then following what work was available along the St. Lawrence River and then Sault Ste. Marie, MI, eventually landing in Plano, IL. Not only that, but they didn't all speak English from day one! The nerve! Today we will hear the story of how they built their life and eventually became landowners in Nebraska, the eventual home to most of my extended family today.
Stories of homesteads and cheap land in Nebraska were the motivation necessary to bring them to this state in February, 1880. Grandpa and his family and John Andersen and his family plus three other Danes loaded everything they had on two railroad cars and then got aboard these cars themselves and travelled to the end of the line which at that time was Lowell, Nebraska.
Uncle J*** said that Grandpa used to recall that when he looked south from Lowell and saw nothing but sandhills he said that if they did not find anything better than that they would go back to Illinois. However, they travelled to a place seven miles south of where Minden [Nebraska, ed.] is now located and there made their home.
Although homesteads were still available, Grandpa decided to buy an “improved quarter” rather than hunt for a good homestead location. He paid $400 for this farm. However, the improvements included only a one-room, dirt floor dugout on the west side of a draw and dug well on the east side.
Because Minden had not been founded it was necessary to go to Gibbon [NE, ed.] or Kearney [NE, ed.] to sell produce and to buy needed provisions. This was a hard two-day trip with a team of horses, in that it was 29 miles to Gibbon and 27 miles to Kearney. When Grandpa made these trips it left Grandma alone with a young family. However, Uncle J*** said that Grandma did not worry about anything except the possibility of an animal or a herd of animals falling through the roof of the dugout which was ground level on one side. There were some wild cattle, wild horses, and some buffalo in the area at the time.
Crops were good in those early years, but one of the first winters caught Grandpa and Grandma without a fuel supply. Fuel was very hard to find in that there was little wood available, because every year for hundreds of years prairie fires had burned all trees except those in sheltered spots at a crook of a stream. When the early snow came it became necessary for Grandpa to take a shovel and a length of rope and go to the corn field to find fuel. He would uncover corn stalks, cut them off, lay them over the rope, and when he had gathered a large bundle he would tie them up and carry them home.
The good crops enabled them to make good progress. After two years in the dugout they built a sod house. By 1892 they had a frame house, they had outbuildings and a good orchard and garden. In 1904 a fine addition to the house was completed. Uncle J*** said that Grandpa was proud that his former employer from Illinois, J*** L****, and his wife came to visit them one year and spent a while month in their home.
To return once more to the spinning wheel. Uncle Jim said that spinning wheel was one of their best toys when he was a kid. He said they would run it by the hour, and that along with the fun it provided it was often the cause of a fight when a brother or sister would cause the belt to come off.
In my last two episodes we learned something of how my family came to the United States as immigrants from Denmark. Two days ago we learned about an old spinning wheel that my great great grandfather used as a gerry-rigged bellows, and had become worn out from hard work (much like the immigrants themselves who come here). Yesterday we learned that my ancestors came to this country somewhat casually, and not necessarily in a fully formalized way by first entering Canada, then following what work was available along the St. Lawrence River and then Sault Ste. Marie, MI, eventually landing in Plano, IL. Not only that, but they didn't all speak English from day one! The nerve! Today we will hear the story of how they built their life and eventually became landowners in Nebraska, the eventual home to most of my extended family today.
Stories of homesteads and cheap land in Nebraska were the motivation necessary to bring them to this state in February, 1880. Grandpa and his family and John Andersen and his family plus three other Danes loaded everything they had on two railroad cars and then got aboard these cars themselves and travelled to the end of the line which at that time was Lowell, Nebraska.
Uncle J*** said that Grandpa used to recall that when he looked south from Lowell and saw nothing but sandhills he said that if they did not find anything better than that they would go back to Illinois. However, they travelled to a place seven miles south of where Minden [Nebraska, ed.] is now located and there made their home.
Although homesteads were still available, Grandpa decided to buy an “improved quarter” rather than hunt for a good homestead location. He paid $400 for this farm. However, the improvements included only a one-room, dirt floor dugout on the west side of a draw and dug well on the east side.
Because Minden had not been founded it was necessary to go to Gibbon [NE, ed.] or Kearney [NE, ed.] to sell produce and to buy needed provisions. This was a hard two-day trip with a team of horses, in that it was 29 miles to Gibbon and 27 miles to Kearney. When Grandpa made these trips it left Grandma alone with a young family. However, Uncle J*** said that Grandma did not worry about anything except the possibility of an animal or a herd of animals falling through the roof of the dugout which was ground level on one side. There were some wild cattle, wild horses, and some buffalo in the area at the time.
Crops were good in those early years, but one of the first winters caught Grandpa and Grandma without a fuel supply. Fuel was very hard to find in that there was little wood available, because every year for hundreds of years prairie fires had burned all trees except those in sheltered spots at a crook of a stream. When the early snow came it became necessary for Grandpa to take a shovel and a length of rope and go to the corn field to find fuel. He would uncover corn stalks, cut them off, lay them over the rope, and when he had gathered a large bundle he would tie them up and carry them home.
The good crops enabled them to make good progress. After two years in the dugout they built a sod house. By 1892 they had a frame house, they had outbuildings and a good orchard and garden. In 1904 a fine addition to the house was completed. Uncle J*** said that Grandpa was proud that his former employer from Illinois, J*** L****, and his wife came to visit them one year and spent a while month in their home.
To return once more to the spinning wheel. Uncle Jim said that spinning wheel was one of their best toys when he was a kid. He said they would run it by the hour, and that along with the fun it provided it was often the cause of a fight when a brother or sister would cause the belt to come off.
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