Thursday, November 5, 2009

Supply Siders Option
"And as the White House considers a second stimulus package, here's another thought: Go for growth. Reduce tax rates to provide growth incentives (something Team Obama has avoided like the plague). Cut the
top corporate tax rate from 35 percent to 25 percent, and accompany that with a small-business tax cut from 35 percent to 25 percent. And leave the Bush tax cuts alone. Don't let them expire in 2011. That's cap-gains, dividends and the top personal rate. Yes, this is a supply-side solution: Reducing tax rates will ignite growth incentives. And by applying it, Team Obama would be borrowing from George W. Bush, Bill Clinton, Ronald Reagan and John F. Kennedy (and Calvin Coolidge and Andrew Mellon, too). Forget about Keynesian spending multipliers, which Harvard's Robert Barrow writes are less than one. Forget about class
warfare. Forget about income redistribution. Go for growth."

On The Virtue of Competition Vice Coercion
Posted: 27 Sep 2009 01:56 PM PDT
Here's a letter that I sent to someone in Australia who insists on exporting to me - in America - his economic advice free of charge..
Mr. Mark ________
Melbourne, Australia
Dear Mr. ________:
In response to my posts in support of free trade you keep e-mailing me, and posting in the comments section of my blog Market Correction, the following:
"American economics professors - as of tomorrow your lectures will be delivered via videoconferencing screens from Asia for only 10% of your salaries.

*** [original emphasis]
I ignore the innumerable economic fallacies, and your ignorance of the data, that underlie your apparent assumption that imports from lower-wage countries impoverish citizens of higher-wage countries. And I grant that economic change and stiffer competition (including from the opening up of foreign sources of supply) often lower the pay of some domestic workers.
So I take your question at face value. My answer to it is this: I'll find a way to feed my family. I'll get another job (or jobs). I'll cut back on less-essential expenses. If I must, I'll rely on my family and close friends as I hope they would rely on me if they were in dire straits.
But I will not, under any circumstances, use my economic misfortune as an excuse to violate the freedoms of others. What right have I to demand that other people continue to pay me $X when they can get the same service elsewhere at a lower price, whether that lower price be $.99X or $.1X? It is a perverted moral creed that justifies my threatening violence against persons who once paid me handsomely but who now choose to spend their earnings differently. Such a moral creed is fundamentally inhuman, for not only does it make everyone a slave to everyone else, its widespread application would impoverish both our wallets and our character.
Donald J. Boudreaux

The Role Of Government

"The primary focus of Obama's health care reform was initially offering insurance to the uninsured, only about one in ten adults. It did not focus foremost on lower costs, improving quality and offering more security to the working and middle class. Obama repeated an old Democratic mistake. It was during Johnson's Great
Society that Democrats went from pushing federal programs that once reached the broad public, like the G.I. Bill, to programs that increasingly offered benefits to smaller constituencies. And as the Democratic mandate left behind the larger public, that public left behind the Democrats."

My take - the role of govt is to defend the rights of the individual. Rights are easy to define - my rights end where your nose and property begins (with a very few, complicated exceptions).  I believe this is the purpose for which we consent to be govorned.  I believe this is the role the Founders intended for the Federal Govt.  I wish their inspired document had served to contain government as they intended.

What is the Value of a Model That Does Not Predict?

The discussion that follows is interesting.  Scientifically speaking, until a model accurately predicts the temps, it cannot serve as proof of anything.  To date, no models have validated their assumptions through accurate predictions.

"The UK Met Office's Hadley Centre, responsible for future climate predictions, says it incorporates solar variation and ocean cycles into its climate models, and that they are nothing new."
What happened to global warming?
By Paul Hudson
Climate correspondent, BBC News

Average temperatures have not increased for over a decade -
This headline may come as a bit of a surprise, so too might that fact that the warmest year recorded globally was not in 2008 or 2007, but in 1998.  But it is true. For the last 11 years we have not observed any increase in global temperatures.  And our climate models did not forecast it, even though man-made carbon dioxide, the gas thought to be responsible for warming our planet, has continued to rise.
So what on Earth is going on?
Climate change sceptics, who passionately and consistently argue that man's influence on our climate is overstated, say they saw it coming.
They argue that there are natural cycles, over which we have no control, that dictate how warm the planet is. But what is the evidence for this?
During the last few decades of the 20th Century, our planet did warm quickly.

Recent research has ruled out solar influences on temperature increases
Sceptics argue that the warming we observed was down to the energy from the Sun increasing. After all 98% of the Earth's warmth comes from the Sun.  But research conducted two years ago, and published by the Royal Society, seemed to rule out solar influences.  The scientists' main approach was simple: to look at solar output and cosmic ray intensity over the last 30-40 years, and compare those trends with the graph for global average surface temperature. And the results were clear. "Warming in the last 20 to 40 years can't have been caused by solar activity," said Dr Piers Forster from Leeds University, a leading contributor to this year's Intergovernmental Panel on Climate Change (IPCC).
But one solar scientist Piers Corbyn from Weatheraction, a company specialising in long range weather forecasting, disagrees.  He claims that solar charged particles impact us far more than is currently accepted, so much so he says that they are almost entirely responsible for what happens to global temperatures.
He is so excited by what he has discovered that he plans to tell the international scientific community at a conference in London at the end of the month.  If proved correct, this could revolutionise the whole subject.
Ocean cycles.
What is really interesting at the moment is what is happening to our oceans. They are the Earth's great heat stores.
In the last few years [the Pacific Ocean] has been losing its warmth and has recently started to cool down
According to research conducted by Professor Don Easterbrook from Western Washington University last November, the oceans and global temperatures are correlated.  The oceans, he says, have a cycle in which they warm and cool cyclically. The most important one is the Pacific decadal oscillation (PDO).  For much of the 1980s and 1990s, it was in a positive cycle, that means warmer than average. And observations have revealed that global temperatures were warm too.  But in the last few years it has been losing its warmth and has recently started to cool down.  These cycles in the past have lasted for nearly 30 years.
So could global temperatures follow? The global cooling from 1945 to 1977 coincided with one of these cold Pacific cycles.  Professor Easterbrook says: "The PDO cool mode has replaced the warm mode in the Pacific Ocean, virtually assuring us of about 30 years of global cooling."  So what does it all mean? Climate change sceptics argue that this is evidence that they have been right all along.
They say there are so many other natural causes for warming and cooling, that even if man is warming the planet, it is a small part compared with nature.
But those scientists who are equally passionate about man's influence on global warming argue that their science is solid.
The UK Met Office's Hadley Centre, responsible for future climate predictions, says it incorporates solar variation and ocean cycles into its climate models, and that they are nothing new.
In fact, the centre says they are just two of the whole host of known factors that influence global temperatures - all of which are accounted for by its models.  In addition, say Met Office scientists, temperatures have never increased in a straight line, and there will always be periods of slower warming, or even temporary cooling. What is crucial, they say, is the long-term trend in global temperatures. And that, according to the Met office data, is clearly up.
To confuse the issue even further, last month Mojib Latif, a member of the IPCC (Intergovernmental Panel on Climate Change) says that we may indeed be in a period of cooling worldwide temperatures that could last another 10-20 years.

The UK Met Office says that warming is set to resume
Professor Latif is based at the Leibniz Institute of Marine Sciences at Kiel University in Germany and is one of the world's top climate modellers.  But he makes it clear that he has not become a sceptic; he believes that this cooling will be temporary, before the overwhelming force of man-made global warming reasserts itself.
So what can we expect in the next few years?
Both sides have very different forecasts. The Met Office says that warming is set to resume quickly and strongly.  It predicts that from 2010 to 2015 at least half the years will be hotter than the current hottest year on record (1998).
Sceptics disagree. They insist it is unlikely that temperatures will reach the dizzy heights of 1998 until 2030 at the earliest. It is possible, they say, that because of ocean and solar cycles a period of global cooling is more likely.
One thing is for sure. It seems the debate about what is causing global warming is far from over. Indeed some would say it is hotting up.

My Family, My Government
He notes, for instance, that the national health insurance movement rose alongside a larger transfer of responsibility from the family to the state: "Every time the state assumes an additional function such as health insurance, child care or benefits for the aged, the need for close family ties becomes weaker."
But even the state must bond: "It may be that one of the most effective ways of increasing allegiance to the state is through national health insurance." This would have been Bismarck's purpose. "We live at a time when many of the traditional symbols and institutions that held a nation together have been weakened and fallen into disrepute. A more sophisticated public requires more sophisticated symbols, and national health insurance may fit that role particularly well." Updating the public symbols, Mr. Obama says health care is one of the two "pillars" of U.S. prosperity in the 21st century.

"Medicare is our deficit problem"

"President Obama seems to agree. He recently said: "If we do nothing to slow these skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined. Put simply, our health care problem is our deficit problem. Nothing else even comes close.""

It's good to know the President understands this, but puzzling why he thinks doing more of what got us into this problem in the first place is going to solve the problem.

Huber's Insight

Combine the insight on this piece with the insight from Lomborg - powerful tools for prosperity.
BLUF: We were screwed, again, as always, by bad government policy, but the potential for natural gas to replace oil in automobiles is high, and with both financial and carbon emissions upsides (if you care about that sort of thing).
I bet the government gets it wrong again and keeps chasing after pointless carbon emission restrictions and fuel efficiency mandates that will be wasteful, expensive, ineffective in reducing carbon emissions, and will make it all the harder for the poor people (of which there will be more, not fewer) all over the world.
One excerpt: "It's often suggested that if America just sets the right carbon example, the rest of the world will follow. But most of the rest of the world is still far more interested in saving money. Most of the planet's grids will be lit mostly by coal for most of this century because coal is so abundant and cheap. More uranium -the example that the rest of the world is setting and we are largely ignoring-is the one proven, cost-competitive way to boot a lot of coal, and thus carbon, off the grid. Using gas to beat oil is the best carbon strategy because it costs less, not more, so the 80 percent of the planet that emits more than half of the greenhouse gas can embrace it, too. The developing world is setting the example here too, wherever it pumps natural gas into its heavy iron. For now, the only American example the world's poor are clearly eager to emulate is the one featuring five cars and two trucks for every ten citizens.
By throttling the gas market for so long, bad policy did much to establish oil's lock on U.S. transportation, and oil might yet lock up much of the rest of the world's, as well. Oil owns our wheels because we got started much earlier, our great-grandparents preferred liquids, the authorities throttled gas when our grandparents and parents were buying cars, and we now have a couple of trillion dollars tied up in liquid wheels. Nobody will deliver gas to gas stations until there are vehicles to buy it, and few will buy the vehicles until there's gas everywhere to buy."

Wednesday, November 4, 2009

Quoting Hayek

"The curious task of economics is to demonstrate to men how little they
really know about what they imagine they can design."
F.A. Hayek, The Fatal Conceit

You say you saw some journalism on TV? Where?
"White House communications director Anita Dunn said that Fox is "opinion journalism masquerading as news." What a joke - the news entertainment business hasn't been something to take serious for a long time, if ever. They report to entertain, to get ratings, to make money. And that's fine, since that's exactly what we want as evidenced by the ratings. Singling out Fox, that's just comic; when I was growing up there was no alternative to the liberal slant of national media, now there is and the old winners don't like the competition.

"Health Care" - What Does It Mean?

"Allen, Actually, the U.S. is a more hostile environment to certain groups, for example young African American males. The death rate from homicide and accidents in the U.S. is quite high, and this is reflected in a lower life expectancy for the U.S. as a whole (younger deaths weigh more heavily on live expectancy). If you look at life expectancy at age 50 (ie. at what age will a 50 year old die on average) the U.S. number is actually higher than every other country, including Japan.

Which is the more accurate measure of the effectiveness of a system in the treatment of disease? How do deaths from accident and homicide reflect on a country's ability to provide health care?

I contend, as I note in the links ( ), that the excellence of disease care in the U.S. contributes to the higher cost of health care here. This is an indictment of our HEALTH, and our empty-scrotum PUBLIC HEALTH policies, not of our medical care. We are simply better at keeping fat, drunk, 3-pack-a-dayers alive than any other country.  Comment #137 - Posted by: bingo at November 3, 2009 2:41 PM"  from

Big Foot Economics

Big-Foot Economics  Posted: 28 Oct 2009 11:06 AM PDT
Here's a letter that I sent today to the Boston Globe:
Jeff Jacoby masterfully exposes as self-serving the American Booksellers Association's complaint about the low prices charged for books by Wal-Mart and Target ("The war against affordable books <> ," October 28).
It's sad but predictable that many business people oppose competition in their own industries. Rather than work harder to earn consumers' dollars, businesses have a long and sordid history of protecting their profits by demanding that government hamstring their more entrepreneurial rivals.
Of course, these demands always are presented as noble quests to protect consumers from "predatory pricing" - price-cutting today that allegedly results in monopoly power for the price-cutters tomorrow. But despite the (also sad but predictable) fact that politicians and academics take concerns about "predatory pricing" seriously, history offers not a single clear example of price-cutting today, by private firms, leading to consumers being harmed by monopoly power tomorrow.
Reported sightings of predatory pricing are as credible as are reported sightings of Big Foot.
Donald J. Boudreaux

A Curious Fatality - from Cafe Hayek

A Curious Fatality
Posted: 28 Oct 2009 06:45 AM PDT
Here's a letter that I sent yesterday to the New York Times:
David Brooks's column today is entitled "The Fatal Conceit <> ." That's the title also of the last book written by the late Nobel laureate economist F.A. Hayek <> . On page 76 of that 1988 book <> , Hayek notes that "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
That so many economists today have abandoned this task is unfortunate. The scholars best able to expose the vanities and delusions of those who believe that fantasy can be engineered into reality if only enough centrally directed coercion is employed are falling down on the job. Let us hope that the result isn't fatal.
Donald J. Boudreaux

"I'll be gone like a cool breeze."
This thing is too cool for words. One of the engineers used to train with me in karate. And to Gregor I say you always were a delight to be around and I wish you continued success with this project!! 


One should never make too much of an article summary, but this one is particularly thin on thought. The correllation verus causation issue is never even discussed. One question every reader should think immediately is "how do they know the high temps are not driving the higher CO2 levels?" That appears to be what in fact happens. CO2 levels rise AFTER temps increase. That also makes sense - as the oceans warm, they off-gas CO2. As they cool, they absorb CO2.
In order to prove this relationship - empirically observed - is incorrect, the 'scientists' would have to prove that CO2 levels drive temps. The 'scientists' are currently trying to do that by modeling - their only option to prove their conjecture - but have failed. I think they will continue to fail because I think their assumptions are incorrect.
As my friend Dr. Jeff Glassman stated ( "Scientific consensus is to science what CO2 levels are to global warming - a trailing indicator."

Dr. Glassman's other potent insight is that the ice core data they are presenting as evidence that current CO2 levels are above historical norms represents a sampling error rate that is very high - the probability the cores they've measured actually capture historical highs is about 3%.
'Scary' climate message from past
By Richard Black
Environment correspondent, BBC News website

Data came from samples brought up by the drilling ship Joides Resolution A new historical record of carbon dioxide levels suggests current political targets on climate may be "playing with fire", scientists say. Researchers used ocean sediments to plot CO2 levels back 20 million years.
Levels similar to those now commonly regarded as adequate to tackle climate change were associated with sea levels 25-40m (80-130 ft) higher than today.
Scientists write in the journal Science that this extends knowledge of the link between CO2 and climate back in time.
The last 800,000 years have been mapped relatively well from ice cores drilled in Antarctica, where historical temperatures and atmospheric content have left a series of chemical clues in the layers of ice.
But looking back further has been more problematic; and the new record contains much more precise estimates of historical records than have been available before for the 20 million year timeframe.
Sustained levels
The new research was able to look back to the Miocene period, which began a little over 20 million years ago.
At the start of the period, carbon dioxide concentrations in the atmosphere stood at about 400 parts per million (ppm) before beginning to decline about 14 million years ago - a trend that eventually led to formation of the Antarctic icecap and perennial sea ice cover in the Arctic.
If anyone still doubts the link between CO2 and climate, they should read this paper
Jonathan Overpeck
University of Arizona
The high concentrations were probably sustained by prolonged volcanic activity in what is now the Columbia River basin of North America, where rock formations called flood basalts relate a history of molten rock flowing routinely onto the planet's surface.
In the intervening millennia, CO2 concentrations have been much lower; in the last few million years they cycled between 180ppm and 280ppm in rhythm with the sequence of ice ages and warmer interglacial periods.
Now, humanity's emissions of greenhouse gases are pushing towards the 400ppm range, which will very likely be reached within a decade.
"What we have shown is that in the last period when CO2 levels were sustained at levels close to where they are today, there was no icecap on Antarctica and sea levels were 25-40m higher," said research leader Aradhna Tripati from the University of California at Los Angeles (UCLA).
"At CO2 levels that are sustained at or near modern day values, you don't need to have a major change in CO2 levels to get major changes in ice sheets," she told BBC News.
The elevated CO2 and sea levels were associated with temperatures about 3-6C (5-11F) higher than today.
No doubting
The data comes from the ratios of boron and calcium in the shells of tiny marine organisms called foraminifera.
The ratio indicates the pH of sea water at the time the organisms grew, which in turn allows scientists to calculate the carbon dioxide content of the atmosphere.
The shell fragments came from cores drilled from the floor of the Pacific Ocean.
According to Jonathan Overpeck, who co-chaired the Intergovernmental Panel on Climate Change (IPCC) work on ancient climates for the organisation's last major report in 2007, this provides a more accurate look at how past CO2 values relate to climate than previous methods.

The Boxer-Kerry bill envisages stabilisation at 450ppm "This is yet another paper that makes the future look more scary than previously thought by many," said the University of Arizona scientist.
"If anyone still doubts the link between CO2 and climate, they should read this paper."
The new research does not imply that reaching CO2 levels this high would definitely result in huge sea level changes, or that these would happen quickly, Dr Tripati pointed out - just that sustaining such levels on a long timescale might produce such changes.
"There aren't any perfect analogies in the past for climate change today or in the future," she said.
"We can say that we've identified past tipping points for ice sheet stability; the basic physics governing ice sheets that we've known from ice cores are extended further back, and... I think we should use our knowledge of the physics of climate change in the past to prepare for the future."
Averting danger
At the Rio Earth Summit of 1992, governments pledged to stabilise greenhouse gas concentrations "at a level that would prevent dangerous anthropogenic interference with the climate system".
What that level is has been the subject of intense debate down the years; but one figure currently receiving a lot of support is 450ppm.
On Tuesday, for example, the International Energy Agency (IEA) released its prescription for tackling climate change, which sees concentrations of greenhouse gases peaking at the equivalent of 510ppm of CO2 before stabilising at 450ppm.
The Boxer-Kerry Bill, which has just entered the US Senate, also cites the 450 figure.
"Trouble is, we don't know where the critical CO2 or temperature threshold is beyond which ice sheet collapse is inevitable," said Dr Overpeck.
"It could be below 450ppm, but it is more likely higher - not necessarily a lot higher - than 450ppm.
"But what this new work suggests is that... efforts to stabilise at 450ppm should avoid going up above that level prior to stabilisation - that is, some sort of 'overshoot' above 450ppm on the way to stabilisation could be playing with fire."
Because of concerns about short-term sea level rise, the Association of Small Island States (Aosis), which includes low-lying countries such as The Maldives, Palau and Grenada, is pushing for adoption of the much lower figure of 350ppm.
But with concentrations already substantially higher, political support for that is scanty outside Aosis members.