Archive for November, 2006
It’s Official – Economists Think Stern’s Nuts
In this month’s issue of the Economists’ Voice, Robert Whaples, chair of the economics department at Wake Forest, reports on a survey he recently conducted in which he sent questionnaires to 210 Ph.D. economists randomly selected from the American Economic Association. His charge: to find out how much disagreement there is within the profession and a number of high profile public policy issues.
What did his respondents have to say about the impact that global warming will have on the economy?
- 19.6% agreed with the Stern Review on the Economics of Climate Change, that is, that U.S. GDP per capita would be reduced by 5% or more by the end of the 21st century if the world did nothing to address industrial greenhouse gas emissions;
- 35.7% believed that warming would reduce U.S. GDP by less than 1% and may even increase it up to 1%!;
- 21.4% agreed with Yale economist William Nordhaus in that U.S. GDP losses would be somewhere between 1-5%;
- 16.1% believed that U.S. GDP would increase by 1-5% as a consequence of warming; and
- 7.1% though U.S. GDP would increase by more than 5% because of warming!
In short, the number of economists who thought global warming would improve the U.S. economy outnumbered the number of economists who thought that global warming would harm the economy to the extent feared by the Stern Review.
Will those who demand that we bow down to the consensus of scientific opinion likewise demand the same regarding the consensus of economic opinion? Not bloody likely.
If George Did It
What if journalist Seymour Hersh, former CIA agent Valerie Plame Wilson, and former vice president Al Gore were poisoned within rapid succession of one another and strong circumstantial evidence suggested that President Bush was behind all three murders? Do you think the European political class would react a bit more intensely than they have been reacting to President Putin’s recent impersonation of Tony Soprano?
News Roundup
- Local police killed Sal Culosi by accident. The police union is now howling over mild discipline.
- Federal police pay restitution to Brandon Mayfield after telling the world he was a terrorist. Taxpayers foot the bill. No mention of agents disciplined. But unspecified “reforms” are now in place at the FBI “to avoid a similar mistake in the future.” Similar assurances followed the Richard Jewell case, but that was then.
- On the intelligence side, federal agents are fighting the Al-Masri case. Al-Masri says the CIA mistook him for a terrorist and had him “rendered” to Afghanistan, where he was imprisoned for months, abused and mistreated. When Al-Masri filed a civil suit against federal officials, the government’s response was that if this lawsuit were to proceed, government secrets would be revealed. This case is “developing,” as they say …
The Swift-Boating of Andrew Biggs
Anyone who thinks that Democrats might be prepared to work in a bipartisan manner to reform Social Security should be quickly disabused by their disgraceful treatment of Andrew Biggs, President Bush’s nominee to be the next deputy administrator of the Social Security Administration. Biggs, who once worked for me, is a distinguished economist and expert on Social Security, who has earned the respect of people on all sides of the Social Security debate. During the time we worked together, he proved to be a rigorous analyst, who followed the numbers wherever they led, always choosing facts over ideology. No one ever criticized his character or the quality of his research.
However, Biggs is an advocate of personal accounts. As a result, some Democrats in Congress, the New York Times, and the National Committee to Preserve Social Security and Medicare have embarked on a campaign to smear him and scuttle his nomination. Democrats appear to be saying that holding any opinion with which they disagree makes one unfit for public office. If that’s the course they plan to pursue in the next Congress, more than just hope for Social Security reform will go down the drain.
Filed under: General; Health, Welfare & Entitlements
We Have Work To Do
At EconLog, I point to a survey of economists by Robert Whaples. It seems as though there is a professional consensus on the libertarian side of the issues of free trade, school vouchers, and marijuana legalization. They also support raising the retirement age for Social Security, which is my favorite libertarian approach on that issue.
However, on health care, Whaples reports that a plurality–almost 50 percent–support universal health insurance.
This got me thinking about what the consensus belief among economists ought to be about health care. I think it ought to be that government should stop leading people to think that prepaid health plans are health insurance.
In any case, I think more members of the American Economic Association need to read Crisis of Abundance.
Health Wonk Review #21
Is there a happier day of the bi-week than HWR Day? Not for us health wonks. Here is this round of health policy blogging, complete with first-time hosting jitters.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Sen. Richard Lugar: Public Menace
Representatives of NATO are in Latvia this week to talk about the alliance. But no international gathering is safe from the careful eye of Sen. Richard Lugar (R-IN). On the eve of the NATO meeting, Lugar gave a speech at conference sponsored by the German Marshall Fund arguing that NATO must be capable of responding if producing states use energy “as a weapon” to cut supplies to NATO members.
Now, think about this for a minute. Lugar is implying that if A decides not to sell to B, then B has the right to shoot A in the head. If A decides to sell less to B than B might like, B is apparently also justified in shooting A in the head.
Sometimes, however, military retaliation might be a bit over the top — even for Sen. Lugar. In those cases, Sen. Lugar proposes that consumers diversify their sources of supply as a preventative measure. Apparently, this would never occur to market actors. This would only occur to United States Senators.
And now, let’s toast the new Democratic majority in the Senate ….
Filed under: Energy and Environment; Foreign Policy and National Security; General
Global Warming? Let’s Hope So …
If the climate researchers at the Russian Academy of Sciences are right, global warming might turn out to be a blessing. Based on their analysis of solar cycles, scientists there are increasingly worried that a mini ice-age is around the corner. Warming might be the only thing standing between us and a glacial blitzkrieg due around 2055.
Just throwing that out there ….
Enviro Myth-Making about Easter Island
If you pay attention to the enviro press, you’ll find a lot of references these days to Jared Diamond, author of Collapse: How Societies Choose to Fail or Succeed. Time after time, we’re told, human societies have collapsed upon themselves because they didn’t pay enough attention to what they were doing to Mama Earth. Past is prologue, so if we don’t start paying attention to the Green doomsayers, we might as well kiss our butts goodbye.
But is it true? Take, for instance, the example of Easter Island, one of the main exhibits in this enviro show trial. Did the natives really go nuts strip-mining that island of resources? It turns out that the answer is no. According to a new study forthcoming in the Journal of Archaeological Science, the entire Diamond narrative is bunk:
Easter Island (Rapa Nui) has become the paragon for prehistoric human induced ecological catastrophe and cultural collapse. Today a popular narrative recounts an obsession with monumental statuary – a mania for moai – that led to the island’s ecological devastation and the collapse of the ancient civilization. Scholars offer this story as a parable for our own reckless destruction of the global environment.
In this paper, I critically examine the historical and popular narrative of human-induced environmental change, its causes and consequences, for Rapa Nui. I review new and emerging Rapa Nui evidence, compare ecological and palaeo-environmental data from the Hawaiian and other Pacific Islands, and offer some perspectives for the island’s prehistoric ecological transformation and its consequences. I argue here that a revised, later chronology for Rapa Nui calls into question aspects of the current model for the island’s ecological history. A critical examination of the paleo-environmental and archaeological records also reveals a more complex historical ecology for the island; one best explained by a synergy of impacts, rather than simply the reckless over-exploitation by prehistoric Polynesians. While my focus is on the palaeo-environmental record, it is essential to disentangle the related notion of prehistoric “ecocide” with the demographic collapse (i.e., post-contact genocide) that would come centuries later with European disease, slave-trading, and the other abuses heaped upon the Rapanui people. Contrary to the now popular narratives (e.g., Diamond, 1995 and Diamond, 2005), prehistoric deforestation did not cause population collapse, nor was it associated with it. Such an argument can be based only on facile assumptions and an uncritical faith in contradictory accounts from the island’s oral histories; but this is a critical subject worthy of detailed, continued examination (see Metraux, 1957, Peiser, 2005 and Rainbird, 2002).
There’s a reason people like me are deeply suspicious of virtually everything environmentalists have to say. After you run across this and similar vignettes hundreds of times over, you get to the point where you don’t believe a word these people say. They might be right here and there, but you’ll never know for sure unless you check it out for yourself.
Adler on Global Warming and SCOTUS
Jonathan Adler, the author of Cato’s amicus brief in the much-watched Massachusetts v. EPA case, which is being argued at the Court today, has an op-ed on the case in USA Today. Cato’s brief is here. My previous post on this case is here.
Filed under: Energy and Environment; General; Law and Civil Liberties
Dasgupta vs. Stern
The academic criticisms of the Stern Review on the Economics of Climate Change keep pouring in. Prof. William Nordhaus’ trenchant critique is echoed by Prof. Partha Dasgupta, the Frank Ramsey professor of economics at Cambridge. Dasgupta, like Nordhaus, finds that the difference between Nicholas Stern’s calculations regarding the future costs associated with global warming and the far less alarmist calculations that characterize the academic literature has little to do with new facts about warming, better computer models, or anything of the kind. It’s all about discount rates.
Like Nordhaus, Dasgupta thinks that Stern’s moral admonition to treat generations the same across time is demonstrably ridiculous no matter how superficially attractive the idea might be at first blush. Assume, for instance, that we apply a 0.1% discount rate for future investment and assume a social rate of return on investment of 4% a year.
It is an easy calculation to show that the current generation in that model ought to save a full 97.5% of its GDP for the future! You should know that the aggregate savings ratio in the UK is currently about 15% of GDP. Should we accept the Review’s implied recommendations for this country’s overall savings? Of course not. A 97.5% savings rate is so patently absurd a figure that we must reject it out of hand. To accept it would be to claim that the current generation in the model economy ought literally to impoverish itself for the sake of future generations.
As economist Stephen Landsburg once famously wrote at Slate, anyone honestly concerned about equity would happily confiscate as much of the wealth from future generations that they could get their hands on. Anyway, read Dasgupta’s paper here.
Nordhaus vs. Stern
When the Stern Review on the Economics of Climate Change was released a few weeks back, I got a bevy of calls from reporters asking what I thought of it. Of course, it’s hard to say anything intelligent about a 700+ page report that was released only hours earlier, so all I could do was quickly peruse the executive summary, speed-glance through the most pertinent sounding chapters, and opine like the wind. While I thought I did a reasonable enough job summarizing the main issues at hand given the circumstances, the experience demonstrates a fundamental problem with journalism that is unlikely to ever go away. To wit, reporters demand an immediate reaction when some new study or paper comes out, and the news cycle doesn’t last long enough to allow for particularly informed and/or careful review of many of these said studies or papers. By the time that informed and careful response is ready, reporters have moved on to something else. The deck is stacked in favor of the authors, who seldom have to defend against anything but superficial or relatively poorly-informed criticism in the popular press.
One of the things I was most interested in at the time was what economists who specialized in the economics of climate change had to say about the Stern Review. The leading academic on this subject is William Nordhaus, an economist at Yale (another is Prof. Robert Mendelsohn at the same university. Prof. Mendelsohn’s response to the Stern Review will be published in the next issue of Cato’s Regulation magazine). When I emailed Prof. Nordhaus about the Stern Review, I got a rather short and vague reply. Nicholas Stern is a good economist, Prof. Nordhaus said, and the report looked like a serious undertaking; the right questions were asked and the answers provided looked interesting. Beyond that, little else. Reporters I talked to told me this is what he had sent them as well. Apparently, Nordhaus was not ready to jump into the discussion yet.
Reporters moved on, but Nordhaus did not. Over the next several weeks, he apparently went to work on the document and by last week he was ready to offer up some thoughts. Despite the fact that this highly credentialed economist finds that ”it is impossible for mortals outside the group that did the modeling to understand the detailed results of the Review,” his analysis is illuminating. While no reporter is likely to write about Nordhaus’ take on Stern now, it is worth your time if you wonder whether an economic disaster of epic proportions really awaits us lest we do something drastic to reduce greenhouse gas emissions. The answer; probably not.
Filed under: Energy and Environment; General; Government and Politics
New Mexico: Land of Dependence
Found on a New Mexico state web site…
My father-in-law runs the Santa Fe chapter of Habitat for Humanity, a voluntary charity that measures success in terms of how many people it helps to achieve financial independence. Odd that the state government appears to take pride in doing the opposite.
The Free Lunch Project may have found its new home. Crescit eundo, indeed.
Filed under: General; Government and Politics; Health, Welfare & Entitlements; Political Philosophy; Trade and Immigration
The Unbearable Meaninglessness of “School Choice”
The National Center for Education Statistics has just released a report titled “Trends in the Use of School Choice: 1993 to 2003.” One of the highlights in the news release is the statistic that only 17 percent of students “attended a school other than their parent’s first-choice school.”
Wow! Isn’t that great!?! 83 percent of American kids are attending the schools their parents most want them to attend! School choice is here! We can declare victory and go home! (I’m out of a job!)
Er. Not so fast. Let’s say you’re approached by a stranger who wants to offer you a holiday greeting, and the two greeting choices are: a poke in the eye with a sharp stick, and a kick in the shin. Almost everyone would presumably chose the kick, and if 83 percent of them got it, they’d have their first choice. Hurray! Not.
Obviously, most people would rather be greeted by, “happy holidays,” “season’s greetings,” or any of a variety of religious holiday wishes. But if those options are not available to them, they’ll make a choice from among the options that are.
The moral of the story is that it is senseless to speak of someone’s “first choice” of school in the context of a roughly 90 percent government monopoly. In the absence of that monopoly, the range of options would be vastly greater, and it is likely that many parents would find schools that appealed to them more, and served them better, than any of the existing options.
This is yet another reason why it is preferable, when possible, to speak of free education markets rather than “school choice” — the latter term being vague to the point of meaninglessness.
Atlanta Woman, 88, Shot Dead in Drug Raid
Today’s New York Times reports on another drug raid gone awry. Kathryn Johnston thought criminals were breaking into her home–so she retrieved a handgun and shot at the people who were at her front door. As it turns out, the men at the door were cops on a drug raid. The officers were wounded, but they returned fire and killed Ms. Johnston. According to the Times report, the cops involved may have lied to get the search warrant and may have lied about the shooting afterward. These incidents are far more common than most people believe, as this Cato raidmap shows.
Global Warming Showdown
The media is increasingly embracing the idea that anyone in the scientific community who doesn’t wet their bed over the prospect of future warming is some sort of (a) flat-earth know-nothing, or or (b) a cynical money grubber who allows oil and coal companies to buy their expertise despite knowing full well that doom is on the horizon.
Well, today you can judge for yourself. At a conference co-sponsored by the Western Business Roundtable and the Business Industry Political Action Committee (BIPAC), Cato senior fellow Patrick J. Michaels (who, more relevantly, is a professor of environmental science at the University of Virginia and a member of the International Panel on Climate Change) will debate Klaus Lackner, a professor of geophysics at the Earth Sciences center at Columbia University. The debate begins at 1:30 Mountain Standard Time and will be webcast live for all interested. If you count yourself among them, you can go sign up here to listen.
SCOTUS Rebuffs Maine School Voucher Case
This morning, the U.S. Supreme Court declined to hear a case seeking to overturn the exclusion of religious schools from Maine’s school voucher (a.k.a., “tuitioning”) program.
Maine’s tuitioning program was created in 1873, and until 1980 it allowed families whose towns did not operate their own public high schools to choose any public or private school, using funds allocated for their education by the local taxing authority.
In 1980, then-Attoney General Joseph Brennan (D), ruled that the inclusion of religious schools violated the First Amendment of the federal Constitution, and religious schools were subsequently expelled from the program. That prohibition has persisted to this day, even in the wake of the 2002 U.S. Supreme Court ruling, Zelman v. Simmons-Harris, that found vouchers for religious schools to be constitutional.
The case was filed by 8 families whose children are not eligible for tuition assistance solely because their children attend religious schools. They were represented by the Institute for Justice which would have argued that the exclusion of religious schools was itself an unconstitutional act of discrimination against religion by the state.
There is certainly something to be said for this argument. Under the federal constitution, as interpreted by the Supreme Court, governments must strive to remain neutral with respect to religion, and clearly parents who chose religious schooling in this case are being denied an opportunity afforded to all other parents. That is not neutrality.
The proscription against religious schools is not only legally dubious, but socially divisive, as well. Parents who wish to send their children to religious schools are taxed to pay for services they cannot themselves use — a recipe for social tension. There is, however, a school choice system capable of ensuring that all families have an unfettered choice of schools for their children without anyone being forced to pay for schooling to which they object: the education tax credit.
By offering personal use tax credits (essentially targeted tax cuts) to parents who pay for their own children’s education, as well as tax credits for donations to private scholarship organizations (that in turn subsidize education for low income families) a system of private funding could be created that would ensure universal school choice without compelling anyone to fund schooling to which they objected.
Such a system would achieve the goals of public education far more ably than our current system of state-run schooling, while avoiding most of the legal problems that beset government-funded voucher programs.
Why would anyone oppose such a system, except perhaps because they wish to make it artificially difficult for families to obtain religious schooling, or because they wish to protect the lucrative monopoly for the public school employee unions?
Filed under: Education and Child Policy; General; Law and Civil Liberties
What Is Health Insurance?
Over at the Health Affairs Blog, Mark Smith, president of the California HealthCare Foundation, offers the following assessment of that which we call “health insurance”:
When you ask people why they want health insurance, they will give you one of four answers. . . . (1) “What if I’m hit by a bus?”; (2) “I need to be covered for my preventive services”; (3) “I can’t afford to go to the doctor, or to get my medicine”; and (4) “I’ve got a chronic disease, for which I can’t afford to pay over time.” . . .
Please note: Only the first of those is insurance, in the sense in which anyone would understand that term — that is to say, protection of financial assets against the rare, unpredictable, catastrophic event . . .
Some component of what we call health insurance is that “what if I’m hit by a bus” concept. But the difficulty, we think, in trying to find a method of coverage which is acceptable to the various constituencies who are involved in health insurance . . . is that this thing we call health insurance is actually four different market items put together in one financial instrument which is increasingly unaffordable. . . .
To the extent that insurers and providers both see the problem of the uninsured as a revenue problem — which is to say, there are all these people out there who aren’t part of our system, and we need to find a way to buy them into our system at more or less our system’s price, at more or less our system’s configuration, and more or less maintain the incomes of everybody in our system — that is a very different question from how can we make the underlying asset more affordable. . . .
My point, therefore, is not [we] shouldn’t continue with the quest for expanded insurance coverage but that in so doing, we try to understand what it is we mean by insurance in the first place, and the extent to which combining these functions in one financial package creates a package which is simultaneously attractive for some people and unattractive for others. And in a voluntary market you create this mismatch, because for instance, how many people would pay money to protect their assets if they don’t have assets to protect? Most of the uninsured are low income; most low-income people don’t have huge amounts of assets to protect. They know that the hospital won’t come after them in quite the same way as the department store will, even for the same bill, and so asking them to pay money every week or every month, to protect assets that they don’t have, in case of an experience which will probably not occur to them, strikes us as not a very likely way to expand coverage among that population.
Filed under: General; Health, Welfare & Entitlements
Hagel Makes the Case for an Exit Strategy
Sen. Chuck Hagel (R-NE) penned an important op ed in Sunday’s Washington Post Outlook section calling on President Bush to fashion an exit strategy from Iraq.
Hagel’s candor is refreshing, but I have come to expect this from Hagel. Equally impressive is his brevity. He manages to say in a short 739 words what so few of his fellow senators have been willing or able to articulate in twice or three times as many: “The United States must begin planning for a phased troop withdrawal from Iraq.”
The gist of the editorial explains that we must exit Iraq because it is in our interest to do so. He notes the “devastating” costs “in terms of American lives, dollars and world standing.” He points out that ”We are destroying our force structure, which took 30 years to build.” This cost to our military – and therefore to our national security — cannot be quantified. Neither can the cost in lives. But this much we do know: in dollar terms alone, war costs now exceed $300 billion, and are accumulating at a rate of $8 billion per month.
As to Hagel’s pragmatic understanding of the limitations of military force to achieve noble ends, the following passages are instructive:
Militaries are built to fight and win wars, not bind together failing nations. We are once again learning a very hard lesson in foreign affairs: America cannot impose a democracy on any nation — regardless of our noble purpose.
We have misunderstood, misread, misplanned and mismanaged our honorable intentions in Iraq with an arrogant self-delusion reminiscent of Vietnam. Honorable intentions are not policies and plans.
Well said, Senator Hagel. Here’s hoping that some of your fellow senators took time off from leftover turkey and stuffing to read the newspaper.
Filed under: Foreign Policy and National Security; Government and Politics
The Results of Defending Freedom of Religion and Referring to “This Man” in Turkey?
A respected political scientist, Dr. Atilla Yayla of the Gazi University of Ankara, Turkey, has been dismissed from his teaching position and pilloried in the press in Turkey for daring publicly to make critical remarks about the legacy of Mustafa Kemal Atatürk, whose version of “secularism” has meant state control of and suppression of religion.
Kemalist secularism is not well understood by Americans and Europeans. As Dr. Yayla put it some years ago (about 10, I think) at a seminar on Islam and civil society I organized for him at the Cato Institute, “People say that you have separation of church and state in America and we have separation of mosque-and-church and state in Turkey. In America, that means freedom of religion. In Turkey, it means freedom from religion. There is a great difference between the two.” Private property, contract, and limited government, he argued, should create the framework for people to decide on their own, through voluntary cooperation, whether and how to build a mosque, a church, a synagogue, or anything else. Such decisions should not be made by state officials.
Atilla was calm during the hot discussion that followed and offered a voice of reason and true liberalism, as passionate secularists and Islamists around the seminar table argued against each other, the former for suppressing and controlling religion by force and the latter for imposing it by force. One secularist even showed a calculation of how many square meters a Muslim needs to pray, multiplied it by the Muslim population of Turkey, calculated the number of square meters of Mosque space in Turkey, and concluded that Turkey had a 50 percent surplus capacity of Mosque space, and therefore that no more should be allowed to be built. Dr. Yayla suggested that that decision should be left to the religious devotion of the faithful, whether Christian, Jewish, Muslim, or otherwise, and calmly appealed for peace by promoting freedom of religion: religion should be neither suppressed nor supported by the state.
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