Friday, September 02, 2005

New New Orleans

Louisiana native Fred Smith, the man who combined free market policy analysis with performance art to create the Competitive Enterprise Institute, offers some wise words on the rebuilding of New Orleans.

Personal note: I've been a member of a lot of odd sets, from the International Brotherhood of Electrical Workers to Our Lady's Rosary Makers. One of the most enjoyable and rewarding, and certainly the one with the most eminent fellow members, is "People Who Used to Work for Fred Smith." Only there can I presume to have something substantially in common with the likes of Jonathan Adler, Sasha Volokh, and Michael Fumento.

Global Warming and Tropical Storms

In today's edition of Tech Central Station, Dr. Roy Spencer, Principal Research Scientist at the University of Alabama and one of the world's top climatologists, considers the arguments that global warming is causing more frequent and intense tropical storms:

There is some recent research that suggests that of all Atlantic and West Pacific tropical cyclones measured since the 1970's, a warming trend in sea surface temperatures has been accompanied by stronger and longer-lived storms. In fact, the increase in the total power generated by the storms that the study computed was actually much larger than could be accounted for by theory, suggesting changes in wind shear or other processes are operating in addition to just increased temperatures. (Unpublished results by the same researcher suggests, however, that this trend was not apparent in land falling hurricanes since the 1970's).

Given the recent work, how should we view the role of global warming? First, we know that category 4, and even category 5, storms have always occurred, and will continue to occur, with or without the help of humans, as the above examples demonstrate. Therefore, if we are prepared for what nature can throw at us, we will be prepared for the possible small increase in hurricane activity that some studies have suggested could occur with man-made global warming. To suggest that Katrina was caused by mankind is not only grossly misleading, it also obscures the real issues that need to be addressed, even in the absence of global warming. From a practical point of view, there is little that we can do in the near term to avert much if any future warming anyway, no matter what you believe that warming will be, including participating in the Kyoto Protocol. So why even bring it up (other than through political, philosophical, or financial motivation)?

Texas Tea, Baby. But Not in Texas.

Rich! We're rich I tell ya!

That is, if the enviro-donkies don't prevent us from tapping the vein.

Here's a little taste of the big story:

The United States has an oil reserve at least three times that of Saudi Arabia locked in oil-shale deposits beneath federal land in Colorado, Utah and Wyoming, according to a study released yesterday.

(HT: Instapundit)

Thursday, September 01, 2005

A Tale Of No City (Anymore)

Dereliction of my duty, you say? Perhaps you are right.

I have been remiss in not alerting my friends to the story that I reported in today's American Spectator. It takes us out a half-step ahead of the loop, while TV is still walking us through the gasping-but-not-grasping stage of gawking at the events. The stories usually emerge some time later, as selves are progressively collected. Here is a tale of woe, of awe, of horror, of desperation and, eventually of courage and heroism, even flashes of joy.

A human episode.

Ptolenomics

What was the big deal with Copernicus and Galileo, really? I mean, if you live on the Earth's surface, what difference does it make if the earth or the sun or some other spot is the center of the universe? What difference does it make if the sun and planets move around the Earth in epicycles on crystal spheres or if Tycho Brahe was right and Kepler was wrong. You can hold these views and still explain anything you'd be likely to observe. Stick ellipses on Tycho and you can even explain the phases of Venus. There really is no reason for such a person to prefer modern cosmology to Ptolemy, is there?

In fact, there's a good reason for such a person to reject modern cosmology. The Ptolemaic system doesn't require you to accept the obviously ludicrous notion that the earth is moving. Only some ivory tower mooncalf, with no knowledge of the real world, could possibly believe a theory that requires the obviously still and solid world to be hurtling through space.

Now replace "Copernicus and Galileo" with "modern economists" and "Ptolemy" with "certain commenters in the 'I Am Speechless' threads" and I think you'll see where I'm going.

There is, really, no reason for the vast majority of people, even successful business people, to think in the way economists think. It is not necessary for them to interpret the world with our concepts in order to make and sell products. They can happily take as given and fixed all the information that economists know is being constantly generated and recalibrated through interactions in the market. They can make decisions using this information, without being aware of their own role in changing and generating new information.

They can even believe they are putting one over on their customers -- that they are, for instance, selling them goods purposely designed to wear out "too fast" and thereby sell more and earn more than if they made the sturdy, quality products the customers really want. They can believe this even while the relative prices for durable and disposable goods are reflecting consumers' time preferences and discount rates with exquisite precision, leading the businessman to supply exactly the mix of goods the consumers desired.

I've never quite understood, though, what was the point of getting so shirty when economists explain what's really going on. But then, Galileo got a few goats in his day too.

"Just Give Them What They Want, and They'll Stop Fighting"

In his latest column, the Boston Globe's Jeff Jacoby writes about the conclusion of Israel's withdrawal from Gaza, and what it means:

[I]f Sharon and the supporters of unilateral withdrawal are right, the departure from Gaza should mean fewer terrorist attacks like the one that cost Elkanah Gubi his life. No longer obliged to defend a Jewish presence there, physically separated from the Palestinians by a security fence, Israelis ought to be more secure without Gaza than they ever were with it.

For years, Israel has been told much the same thing by its critics: Since the "occupation" of Gaza and the West Bank is the cause of Arab terrorism, the way to end Palestinian terrorism is to end Israel's presence in the territories.

But far from reducing the terrorists' bloodlust, Israel's retreat from Gaza has only inflamed it. In just the past two weeks, a Palestinian knifed a Jewish student to death in Jerusalem's Old City, an Israeli policemen was stabbed in the throat by an Arab in Hebron, Kassam rockets were fired from Gaza into the southern Israeli town of Sderot, a suicide bomber blew himself up in Beersheba's crowded bus station, a Katyusha missile launched from Lebanon exploded in the Israeli village of Margaliot, a firebomb was thrown at an Israeli vehicle on a highway outside Jerusalem, and a 14-year-old boy from Nablus was caught with three bombs.

In a videotape circulated by Hamas this week, archterrorist Mohammed Deif vowed that Israel's departure from Gaza would mean more of the same.

"Today you leave Gaza in humiliation," he taunted the Israelis. "You are leaving hell. We promise that tomorrow, with Allah's help, all of Palestine will be hell for you." For the umpteenth time, an Israeli government spokesman urged the Palestinian Authority to disarm and dismantle Hamas, as required by the international "road map" it has agreed to.

If Jacoby is correct, as I believe him to be, the implications regarding U.S. efforts in Iraq are clear.

Widespread Dissatisfaction

The recovery of survivors from New Orleans has left a lot to be desired. A friend wrote me outraged that babies are dying for lack of adequate food, shelter, etc. How can this be in the richest, most creative, most powerful nation in the world?

I think the answer is as follows: We haven't had a disaster like this in a long, long time and when it happened in the past, the vast majority of victims died rather than surviving. We have not been faced with something of this magnitude spread over such a great geographic area, probably ever. Certainly, we haven't seen a major inner city area suddenly and violently reclaimed by nature.

FEMA probably had enough water, food, drugs, and bandages ready, but not the kind of massive mobilization of search and rescue workers needed for a disaster like this. It was simply incomprehensible.

We don't keep an army of rescue workers waiting around for something like Katrina. I'm not sure we could even afford to do so. But the situation is grave and what must be considered is something new. We can't let the victims die. We have to mobilize. That means it may be time to consider conscription of boats, buses, helicopters, etc. Maybe even the conscription of men if volunteers can't be found. I know I'm offending libertarians. But it may be time to think on those lines. Actually, it simply is time.

The End of New Orleans?

Throughout the coverage of the disaster that has befallen New Orleans, it seems one thing has been assumed throughout: the rebuilding of New Orleans. Much depends on how long it will take to get rid of the water, engage in massive repair and new construction, and how much of the city's tax base sticks around.

The reality is that the entire professional class or a large portion thereof will relocate because they are unable to wait for the new city to rise. Many businesses will take a hard look at the New Orleans operation and decide they can't let resources like fallow that long. Expect a major migration of many branch offices and probably some headquarters locations.

Even the poor citizens of the town whom we have seen engaged in remarkable suffering as all rescue efforts pale before their plight may never come back to town. As many of them are long term clients of government programs, they will probably have the option to spend time in ultra-ultilitarian state and federal camps or to resettle elsewhere with the help of social workers and/or family members in other cities.

Unless someone can show me otherwise, I don't think there should be any assumption that New Orleans is going to continue as a major metropolitan area in the United States. It may just be a ghost living a marginal existence. Galveston never truly recovered from the great hurricane that leveled the town and killed so many. New Orleans may not rise even so high as the old Wall Street of the West on the Texas coast.

The Way the World Worked

As Hunter Baker posted below, Jude Wanniski unexpectedly passed away Monday afternoon after he suffered a massive heart attack. I've heard our esteemed co-blogger Alan Reynolds tell many stories about Mr. Wanniski and Polyconomics, but I'll let Alan tell those stories himself if he's so inclined. I want to tell a story about the effect a small group of men, including Alan and Jude, had on my generation of economists, social scientists, and policymakers.

When I started graduate school in the fall of 1980, it looked very much as though the country would be run by Jimmy Carter for four more years. When I looked back over my life from what then seemed the impossibly mature vantage point of 22 years on earth, I saw little but anxiety, conflict, and pessimism. I started paying attention to the outside world at about age ten, so my memories were bookended by Soviet tanks in Czechoslovakia and Soviet tanks in Afghanistan. Sandwiched in between were domestic political assassinations, oil embargoes, hostages in Iran, Watergate, double digit inflation, double digit unemployment, and the bankruptcy of New York City. I don't even remember now why I wanted to be an economist then. Economists were responsible for the splitting of ever smaller pies at home, and negotiating surrender to whichever economy would overtake us abroad.

Then Reagan beat Carter at the last minute. And we discovered that some of our professors were closet free market libertarians. Austrian School, even, a couple of them. They started lobbing ideas among themselves, and then at us, that first seemed silly, and then subversive. Critiques of Keynes, Samuelson, Kuznets, and Myrdal that undermined everything we’d learned as undergrads. Hints that macroeconomics would never be intellectually solid until it was reintegrated with microeconomics. Proposals that all sorts of behavior, not just commerce, could be explained with economic principles.

We starting passing a few books around among ourselves, on the QT; we were a little abashed that we were studying popular works instead of articles from JPE and Econometrica. But the stuff made sense, and kept on making sense the farther we pushed it: Thomas Sowell’s Knowledge and Decisions. George Gilder’s Wealth and Poverty. Julian Simon’s The Ultimate Resource. But before all those, anticipating them and paving the way, was Jude Wanniski’s The Way the World Works. These books opened our eyes to an economics that was hopeful and exuberant, that placed human creativity at the center of wealth creation, and that gave the economist something valuable to do: help arrange civil society so that creative force can be free to make things better.

And things did get better, all through the 1980s. It was men like Alan Reynolds and Larry Kudlow who gave us the proof that Sowell and Gilder and Wanniski were right, by putting those ideas to work during the Reagan years.

Twenty-odd years later, even though I've spent few of those intervening years working as a professional economist, I've never again forgotten why I wanted to be an economist in the first place. Rest in peace, Jude Wanniski. Your place in this world is secure, go forth into the next.

Wednesday, August 31, 2005

Glassman: Exploiting Disasters for Political Gain Is "Disgusting"

In today's edition of TechCentralStation (a site for which this author writes regularly), James Glassman, who lived in New Orleans for several years and has strong ties to the community (including family members living there), writes about the efforts of some writers and public advocates to tie Hurricane Katrina to their political agenda:

[T]he response of environmental extremists fills me with what only can be called disgust. They have decided to exploit the death and devastation to win support for the failed Kyoto Protocol, which requires massive cutbacks in energy use to reduce, by a few tenths of a degree, surface warming projected 100 years from now.

Katrina has nothing to do with global warming. Nothing. It has everything to do with the immense forces of nature that have been unleashed many, many times before and the inability of humans, even the most brilliant engineers, to tame these forces.

After recounting some of the activists' statements, which have received much attention in the news, Glassman addresses their claims directly:

The Kyoto advocates point to warmer ocean temperatures, but they ought to read their own favorite newspaper, The New York Times, which reported yesterday:

"Because hurricanes form over warm ocean water, it is easy to assume that the recent rise in their number and ferocity is because of global warming. But that is not the case, scientists say. Instead, the severity of hurricane seasons changes with cycles of temperatures of several decades in the Atlantic Ocean. The recent onslaught 'is very much natural,' said William M. Gray, a professor of atmospheric science at Colorado State University who issues forecasts for the hurricane season.'"

Finally, Glassman points out that the very premise that tropical storms are increasing in intensity is entirely unsupported:

[T]here is no evidence that hurricanes are intensifying anyway. For the North Atlantic as a whole, according to the United Nations Environment Programme of the World Meteorological Organization: "Reliable data…since the 1940s indicate that the peak strength of the strongest hurricanes has not changed, and the mean maximum intensity of all hurricanes has decreased."

Yes, decreased.

Not only has the intensity of hurricanes fallen, but, as George H. Taylor, the state climatologist of Oregon has pointed out, so has the frequency of hailstorms in the U.S. (see Changnon and Changnon) and cyclones throughout the world (Gulev, et al.).

Glassman makes a powerful case. Read it here.

Jude the Not So Obscure

Jude Wanniski has died. He was one of the great names of modern conservatism and will be remembered in the canon of that movement as long as it exists. I didn't know him, but our Alan Reynolds did and apparently quite well according to this article by James Glassman.

The Rev. RFK, Jr.

According to RFK, Jr.: God Hates Haley Barbour

You see, because Haley was insufficiently invested in environmental regulation, the Lord redirected Katrina from New Orleans and decided to slam Mississippi.

Look out, Haley. Greenpeace has a direct line to heaven.

Because the politician in question's last name is Kennedy (and you know that's not as in D. James Kennedy), he will receive somewhat different treatment for this pithy statement than he would have if he were surnamed Falwell or Robertson.

Tuesday, August 30, 2005

I Am Speechless Still

Sigh. Do we really need to teach Economics 1 here at Reform Club University Graduate School? Well, I see that indeed we do, as certain of our stalwarts seem to have swallowed various versions of the Broken Window fallacy (see my post below) whole, washed down with the old "planned obsolescence" chestnut.

Disasters cannot yield economic growth (that is, a bigger economy, or to say the same thing, greater aggregate wealth) because the resources used to repair the attendant physical damage---put aside the human suffering that cannot be redeemed at all---otherwise would have been used to produce other goods valued by individuals. Accordingly: Disasters must make the economy smaller in the aggregate. Yes, certain sectors (e.g., construction) will be bigger, and owners of inputs (labor and capital) in those sectors will be wealthier than otherwise would have been the case; but other sectors will be smaller, owners of inputs in those sectors will be poorer, and it is unambiguously the case that the losses exceed the gains, because in the absence of the disaster we would have both the housing and other physical capital as well as the other goods. Period. And please note that while owners of inputs in such sectors as construction might become wealthier, that does not mean that they are made better off (or happier) by the disaster, in that they might lose loved ones as well.

The "planned obsolescence" argument---as old as it is silly---assumes away the marginal cost of added quality, in this case added longevity. Consider the simple case of a razor blade that lasts forever; if we ignore such irrelevant complications as present value calculations (more on this below), risk aversion, and the like, consumers would be willing to pay for an infinite-life razor blade the expected lifetime purchase cost of ordinary razor blades. If the marginal ("extra") cost of producing such a blade is less than (or in the simple case, equal to) the added value of the blade to consumers, then profit-maximizing firms will produce the blade. If it is not, then the firms will not produce it, and that outcome is wholly efficient, that is, consistent with the interests of consumers, because the extra resources needed to produce the infinite-life blade would yield greater value for consumers in the production of other goods.

Only if the discount rate used by producers to calculate present values is higher than that applied by consumers might some version of the planned obsolescence argument make any sense at all, and that outcome would not necessarily be inefficient. And, anyway, I rather doubt that the "planned obsolescence" crowd has anything quite so sophisticated in mind; their goal is to attack capitalism, however mindlessly. Precisely why would producers discount the future more heavily than consumers (on the margin)? The only plausible argument is the corporation income tax, which in a nutshell forces the corporate sector to discount the future more heavily than other sectors. Is the "planned obsolescence" argument really a left-wing call for fundamental tax reform? Please...

I Am Speechless

Well, not literally speechless; that would be so not Zycher. But in today's Wall Street Journal we are informed by some poor soul---oops, a journalist---writing about Hurricane Katrina that "amid the grief and heartbreak, it should be noted that growth often follows such catastrophe. Hurricanes Andrew in 1992 and Floyd in 1999, for example, both ended up boosting local and national growth rates as rebuilding efforts created jobs and increased spending."

If this is not the classic manifestation of the old broken-window fallacy, I know not what is. Why not nuke the whole eastern seaboard---I'd say California, but I live there---so that we can expand employment and spending in a rebuilding effort? Is this guy a moron? Or does he merely need to fill up twenty column inches with, well, whatever? That modern journalists are the political equivalent of hurricanes destroying public discourse everywhere they set foot would be amusing were their ignorance not so appalling.

The Political Usefulness of Disasters

One of the major techniques of modern politics is to take every important event and tie it to the back of one's own particular hobby horse. One of the more ludicrous examples was the utterly absurd claims that the Asian tsunami was caused by global warming. Hence it was inevitable that we would begin to see articles today with titles such as "Brace for more Katrinas, say experts," from today's edition of Agence Press France. The anonymous author correctly observes that hurricane activity has intensified and looks likely to remain so for a while:

"Earlier this month, Tropical Storm Risk, a London-based consortium of experts, predicted that the region would see 22 tropical storms during the six-month June-November season, the most ever recorded and more than twice the average annual tally since records began in 1851."

The piece also notes,

"Already, 2004 and 2003 were exceptional years: they marked the highest two-year totals ever recorded for overall hurricane activity in the North Atlantic."

That is all quite true. Then the article moves on to consider a possible relationship to global warming, as has been posited by advocates of controls over greenhouse gas emissions:

"This increase has also coincided with a big rise in Earth's surface temperature in recent years, driven by greenhouse gases that cause the Sun's heat to be stored in the sea, land and air rather than radiate back out to space."

The characterization of the rise in the planet's surface temperature in recent years as "big" is certainly an exaggeration. However, the article does go on to point out that hurricane activity is cyclical and almost certainly always has been:

"But experts are cautious, also noting that hurricane numbers seem to undergo swings, over decades.

"About 90 tropical storms -- a term that includes hurricanes and their Asian counterparts, typhoons -- occur each year.

"The global total seems to be stable, although regional tallies vary a lot, and in particular seem to be influenced by the El Nino weather pattern in the Western Pacific."

These are very important observations. The article then outlines, at some length, the arguments of global-warming advocates who claim that g.w. is creating more intense hurricanes, if not more such storms overall:

"On the other hand, more and more scientists estimate that global warming, while not necessarily making hurricanes more frequent or likelier to make landfall, is making them more vicious."

The evidence the article adduces for this argument is coincidental and not causal, however, and is clearly highly speculative at this point. The piece says, for example, "'The intensity of and rainfalls from hurricanes are probably increasing, even if this increase cannot yet be proven with a formal statistical test,' Trenberth wrote in the US journal Science in June. He said computer models 'suggest a shift' toward the extreme in in hurricane intensities." That is to say, Trenberth believes it although there is no statistical evidence for it.

The article ends on that note, which is a pity because there is more to the story than that. Readers are not told, for example, that as an article in the forthcoming October issue of Environment and Climate News mentions, a group of prominent climatologists and other experts on climate change has noted, "according to a century of National Hurricane Center reports, the decade with the largest number of hurricanes to come ashore in the United States was the 1940s, and that hurricane frequency has declined since then. They also cited data from the United Nations Environment Programme of the World Meteorological Association that hurricane frequency has declined since the the 1940s."

The ECN story, unlike the APF one, quotes the environmental scientists as observing that "centuries-old evidence, as well as computer models, suggest warmer periods may actually generate a decline in the number or severity of such storms."

The ECN story quotes James J. O’Brien, director of the Center for Ocean-Atmospheric Prediction Studies at Florida State University, as arguing that "the more likely cause of hurricane frequency might be found in variations in the Atlantic Ocean Conveyer, the movement of the warm Gulf Stream whose waters, taken from the South Atlantic, replace the cooler, sinking water in the North Atlantic.

"When the Conveyer is strong, O’Brien said, historic records have shown an increase in Atlantic hurricanes; when it is weak, so are the hurricane seasons. For a hurricane to grow stronger, it must keep moving over waters warmer than 80 degrees F, which leads some people to link global warming and the storms. But, he said, there’s no scientific evidence to show that such areas of warm water are increasing in size."

Casting a Spell

Hoosiers cannot win for losing with the mainstream press. The Washington Post et al. have been making fun of Dan Quayle for thirteen years because he can't spell. Now the New York Times is making fun of John Roberts because he spells too well.

And just in case being a Grammar Nazi isn't enough to derail the Roberts nomination, the Washington Post has decoded a 20-year-old first draft to conclude that Roberts is a crypto-secessionist (Hat Tip: Bench Memos.) You could stand in rebel territory and hit the Washington Post Building with a well-pitched rock, so I'm surprised I have to inform the staffers that Southerners do not call the Civil War The War Between the States, they call it The War of Northern Aggression.

Monday, August 29, 2005

Store My Article

For those cavemen (and women) whose club is Reform, here is a preview of my man-on-the-spot report on Katrina's Florida vacation.

Assault (And Searing Battery) On Good Taste

In possibly the most tasteless and inappropriate pun of all time, Jefferson County Parish President Aaron Broussard said of those who refused to evacuate New Orleans in the face of Hurricane Katrina: "I'm expecting some of the die-hards to die hard."

Sunday, August 28, 2005

Here Comes the Real News

The Cindy Sheehan story reached its official terminus a few hours ago.

I remember Krugman saying Enron would be a bigger story than Sept. 11. Enron is going to be a footnote compared to Hurricane Katrina.

The Dictatorship of the Enlightened

Now listen up. This is some major league B.S. censorship nanny-state crapola.

The University of California system is refusing to take students from a Christian high school that teaches unorthodox views of biology and history. They say the students will be "unprepared."

I'm not sure when I've heard anything quite so insincere. It doesn't matter whether you slept through biology in high school, you will be aware of Darwin. In fact, these Christian students will have heard of Darwin and his theory, if only in the manner of refutation. Having been taught the "correct" version of the theory of origins has zero to do with one's eventual performance at the university.

Imagine this scenario: Benighted, fundamentalist Christian student goes to a school teaching a highly Christocentric version of history, science, etc. He also happens to be quite intelligent and trots out an SAT score around 1450.

Question: Will this young man have any trouble putting up A's in the University of Californa institutions? Noooooooooooooooooooooo.

Given that is the case, there can be only one reason for the policy recently announced. Intimidation. Welcome to secular totalitarianism lite.

(HT: Ted Olsen at Christianity Today on the web)