Carbon Neutral vs Carbon Optimal

We can learn two things from Prince Charles' fancy new Carbon Neutral lifestyle:

• Hippy trends are still hip, even for squares.
• It takes the wealth of a king to achieve that lifestyle

Most of us don't have the resources required to be completely carbon neutral. Perhaps carbon optimality (The Undercover Economist, Tim Harford) is a better choice? Think about it like an economist... you should only abate your own carbon usage to the point where the marginal cost of abatement is more than total marginal benefit.

Since it can be assumed that one person's abatement has a small market presence, we can assume to the total amount of abatement needed by society is greater than the individual can achieve. Therefore, stated simply:

One should abate carbon usage until they can no longer afford additional abatement. Whether subject to time or budget constraints, this is how the rational eco-minded individual will and should act.

As always, everything in moderation.

What is a supply-demand imbalance, anyway?

This article from the Instutional Economics blog is intriguing. I generally like the argument against gold bugs that any commodity could just as easily serve as a comparison, and therefore gold is nothing special when compared to paper notes. What is interesting is the following statement:

"Commodities are becoming more expensive in terms of a broad-range of currencies because of supply-demand imbalances in the global markets where commodity prices are determined."

Fair enough. But what exactly is an "imbalance?" Furthermore, why is it that we only complain about supply-demand imbalances when things are going bad. Who is to say that the problem wasn't with the decades-long depression in the price of gold/other commodities?

An All-too-typical Assault on IP

A classic assault on law, using flawed logic and hoity-toity assertions. I'm beginning to grow tired of thinking-games and baseless declarations; perhaps I'll adopt a more scientific approach in my own philosophy.

A short update...

So I've not been writing as much recently as I would have liked, but no more lame promises to blog more. I'll write when I can. And I have news to share!

Aside from generally trying to be more productive, which I hope to write about soon, I took a big step forward in changing my life tonight.

My girlfriend and best friend of 3 years and 8 months, said "Yes!" after about two minutes of freaking out when I asked her to marry me! I asked her while we were in Wilmington, on a river boat cruise, under the Independence Day fireworks.

Of course, I ruined an uncharacteristically romantic moment by misjudging the finale of the show, so I asked Emma in the middle. She missed the rest of the fireworks. :-)

Why Gun Control via the Insurance Vehicle Isn't So Easy

This morning, I submitted my thoughts below to the author of this article. Please read over his proposal that increased personal liability insurance coverage could serve as a better gun "control."

I enjoyed a good idea as much as the next person. this article on insuring firearm owners strikes me as a method of controlling both the number of citizens owning guns and the number of "accidents," or at the least "accidents" without compensation that occur each year.

I wonder though, how such a policy would prevent violent crime in the nations most notorious crime areas (New York, Atlanta, and Chicago). I feel that any kind of gun control policy will always fall short of reducing violent crime outside the deterrent effect that widespread proliferation insures. If you don't know who has a gun on the subway, you are less likely to pull yours out in the commission of a violent crime. Unfortunately, forcing insurance coverage seems more likely to increase the cost of owning (and operating) a weapon and decrease the numbers of gun owners in particularly high-risk areas. This all but eliminates the deterrent effect.

For my thoughts on gun control, a game theory analysis that affects my reasoning for widespread proliferation, and opinion of forced insurance coverage, see these posts:

Game Theory and VT Shootings
Healthcare is Messier Than You Think

Comments are welcome and encouraged.

Quote for the Day, and my Political Affiliation

According to Political Compass I am truly a fence straddler.

But first, a pause for my quote of the day:
"Evolution explains changes in life, creation explains its origin." -- Some lackluster presidential "candidate," himself straddling the fence.

Not only am I reassuringly only slightly right (as an economist should be) but I'm nestled snugly between libertarianism and fascism. Now that's what I call rational!

Health Care is Messier than You Think

I was reading this article, from today's New York Times, wondering why the heck skyrocketing health care costs are blamed on insurance. Is it the lack of insurance? Is it the overhead? Is there some kind of incentive problem I'm missing?

The article suggests that rising health care costs are caused by an expansion of insurance coverage, not the usually cited lack of coverage. It seems to me that the costs of treating those without insurance (and those that will not pay) is more palatable to the public, but less of a problem than expanded insurance coverage.

Why? Increasing insurance coverage increases incentives for hospitals to do risky, costly (but highly profitable) procedures. The lumbar fusion cited in this story is an excellent example. The problem is, I think, that we've hit some kind of inelasticity... that is, as coverage becomes (slowly) more available, costs increase disproportianately so that those still without insurance "can't afford treatment," and hence our current dilemma.

Follow Up: Have I Found the Liberal Economists

Wall Street also posted today in their "Informed Reader" section a short blurb about heterodox economists.

"The so-called heterodox economists question some of Adam Smith's conclusions that "markets, private property and minimal government will achieve maximum welfare," says heterodox economist David Ruccio of the University of Notre Dame. Beyond that, heterodox economists have a wide variety of positions, ranging from those who question whether humans are as rational as neoclassical economists assume to those who argue that an unequal distribution of power affects how markets work."

The article goes on to describe how their research is ignored, their ideas are gaining momentum, social mores are changing, &c. which leads me to believe that these are, in fact, the missing link--liberal economists.

But, does this logic force conservatism into the mainstream?

The Conservative Mind

Quite an interesting article today from the WSJ (click on title to view article for seven days). From the article:

"Kirk identified six elements that make the conservative mind: belief in a transcendent order that "rules society as well as conscience"; attachment to "the proliferating variety and mystery of human existence" as against the routinizing and leveling forces of modern society; the assumption that "civilized society requires orders and classes"; the conviction that "freedom and property are closely linked"; faith in custom and convention and consequently a "distrust of the 'sophisters, calculators, and economists' who would reconstruct society upon abstract designs"; and a wariness of innovation coupled with a recognition that "prudent innovation is the means of social preservation." The leading role in this mix that Kirk attaches to religion marks him as a social conservative; his insistence that religion provides the indispensable ground for individual liberty marks him as a modern conservative."

1. Belief in transcendent order to society and conscience. Check!
2. Civilized society requires order and classes. Do I herald elitism? Check!
3. Freedom and property are closely linked. Unsold.
4. Faith in custom and convention. Heck no. But its odd that this is included, because most economists are conservative, yet according to this are inherently counter-custom. Odd.
5. Wariness in innovation. Double heck no.
   
6. Try as I might, I can only count five.

According to this, I'm only 40% conservative. Far more than I'd have guessed two years ago. But look at the last sentence. When taking that into account, I can check item 4 if taken as a belief in natural order, structure beyond my own comprehension or design. Once in a while, I may be wary of innovation, if it affect my bottom line, but generally I'm in favor of it (search posts for "change" or "growth"). And the freedom and property thing... I dunno. I can be free without property (cue Buddhist mantra).

Update: And listening to Janis Joplin on 100.7 this morning, I'm reminded that "freedom is just another word for 'nothing left to lose.'"

So I'm only 40%-50% conservative. Prime range for accurately calling myself a conservative Democrat!

Don't Eat That! Daring Food Blog

A quote from the pickled pork rinds article, linked in the title of my blog post:

"I almost want to say it was like a freshly douched pork chop. But I won't. Why? Because I'm a [flipping] gentleman.

As I attempted to fish out a "good one," I couldn't help notice the alarming skin texture. For all those times I wondered what it would be like to gnaw on my grandmother's thigh, I was about to find out.

Unchecked College Liberalism: Two Sides of the Spectrum

Aside from being checkered with vulgarity and generally littered with poorly-thought-out punditry, I felt the recent article in my college newspaper needed a rational response.

Click on the title of this post to view "The Strobino File" by Tanner Kroeger.

My response to the editor:

Dear Sirs:

Moderate points of view are not sexy enough for local media, and they’re not sexy enough for a college paper.

Your article printed Friday on Mr. Dante Strobino prompted me to respond, not because its necessarily controversial, but because it embodies so much of what I think has gone wrong with college liberals in the past 30 years. Firstly, hats off to Mr. Strobino for having an opinion. That’s more than you’ll get out of most students here. Also, I’d like to point out that we can agree on more than one point, though I doubt that will earn me any points as a less evil “white man.”

People like Mr. Strobino serially disregard rational thought. The average citizen does not spit shibboleths nor espouse catchy hippy slogans. However, democracy is paramount only when we produce active, informed citizens. We fail on both counts and our governments run unchecked by citizens. Think about before you complain about the courts.

Remember, “the cops, the courts, and the banks” have built the society and institutions you so freely use to your own advantage. That is inherently where any counter-cultural movement falls apart. Those truly committed end up playing fiddle on the street and giving the finger to the “white man.” The others get married, have kids, suck it up and make a career. And they live far more comfortably that way.

In any case, Mr. Strobino, your opinion matters most to me because I don’t agree with it. You generate controversy and good social dialog arises from controversy. Through the opposite ends of the spectrum, heated, active political debate can bring to light the sobriety and virtue of the moderate point of view. Let’s have lunch and it; I’m sure we’ll both be enlightened.

Sincere thanks:
Jeff Horn
Senior, Economics

Game Theory and the VT Shootings

A one-round, two player game:

Let's say you and I have the option to carry. Either we both carry, one of us carries, or neither of us carries.

The Nash equilibrium in this case is that we both carry, because when one of us carries and the other doesn't, the one that doesn't feels unsafe. Independently picking our strategies, we both decide to carry.

Unfortunate effects of restricted-carry areas:
We end up in an unstable situation when we're prevented from carrying because the people that wish us ill will always find a way to carry a gun.

The same situation follows when no one is allowed to carry guns--law abiding citizens do not carry and criminals do not care, leaving good citizens at a serious threat.

Halt! Hammerzeit!

Two MC Hammer jokes I stumbled across on the Internet. I don't know why these are funnier than most other jokes I see on the net, but they had me laughing for a while.

Random Question for the Day

Where do all the bums get Sharpies? And with what money!?

And where did he get the money if he didn't already have a sign?

Which came first, the bum or his sign?

Externalities in a Nutshell (Are Shells a Negative Externality?)

A recent exchange, which proves that economists answer questions with at least twice as many words as necessary.

A question from a friend:

Positive externalities, such as education or advances in technology - do they precipitate government intervention in order for the market to reach equilibrium? It seems a bit counter-intuitive that advances in technology would produce a surplus rather than a shift in the supply curve. (pardon me if I manage to mince my terms - I'm in only my first econ course)

My response:

Yes, it does seem counterintuitive. Let me explain negative externalities first, without a graph, if it's possible!

Let's say pollution is a negative externality. It is an externality because its total cost to society is not realized by the producers (i.e. they don't have to pay to pollute). In fact, the people that often pay for pollution are the people that breathe the polluted air or those that have to treat the polluted water. This makes the plant's profits artificially high, so they produce too much (at least more than they would if they had to pay for pollution).

Now think about positive externalities. Both education and advances in technology produce positive side effects. Because people often can't say how much better off they are because you are smarter, they don't realize the benefits. That is to say, if you are smarter or have a good technology, most people won't even realize that you are improving their life, much less quantify how much they'd be willing to pay for you to use that tech/knowledge (this is how we determine how much the benefit is worth). Since people don't realize how much they benefit, and remembering that a negative externality causes overproduction, it should be easy to see that in the case of education, people will not allocate enough money/resources to achieve optimal education for the society.

So yes, governments can intervene to help the market reach what we call "social equilibrium." In the case of pollution, they can tax the plant for CO2 emissions or create a tradeable permit scheme (which has benefits we'll discuss another time). In the case of education, the government can subsidize public education to make it more widely available. In one case, the government taxes, in the other, it pays out. If we were all smart enough (i.e. omniscient) we could effectively allocate all resources, and government taxing and spending would be a wash.

To you last point, yes, technology and education do shift the supply curve to the right--everyone gets to consume more at a lower price! But because they are positive externalities, we don't all benefit as much as we could if we had more tech or knowledge. Very fascinating stuff. If you still wanna chat about it, let me know!

So I Lied... Final Final Thought

From David Plotz' Blogging the Bible:

"Job says these terrible things about God, yet they don't seem to count as curses for the purposes of God's bet with Satan. Why? Perhaps we are to conclude that even though Job is angry at God, he still accepts His authority. Job still appeals to God, still assumes that God can act to make it right. Truly cursing God would be abandoning him. Job never gives up: He begs, berates, insists, and screams that God do better. But he always accepts that God is the decider."

Always.

Last Thought for the Evening

CS Lewis writes in "Mere Christianity" his thoughts and rationales for growing in his faith after being a proclaimed atheist. My understanding of his writings:

As humans we judge what is right-or-wrong based on our morals. Morals vary widely individually but from culture to culture, "moral threads" or "truths" constantly reoccur. So we judge, with our rational mind, consequences and morality or a decision. And those without faith still label that which is right, right and that which is wrong, wrong. But those with faith find a reason why they do that.

By what standard does man judge something moral? Something that must be above morality, something that must be above right-and-wrong, a universal truth. Something super-real. The apple is not judged red because red is an inherent property of the apple. Red is a, albeit arbitrary, fact, and exists outside the realm of the apple.

Something judged as (im)moral must be judged by something outside its own realm.

Brain Damage Rationalizes Morals?

A short excerpt:

"Philosophers have a name for this calculating logic: utilitarianism. They've been debating it for 200 years. Some says it's sensible; others say it's ruthless. Lately, however, the debate has been overrun by neuroscience. According to the neuroscientists, philosophers on both sides are wrong, because morality doesn't come from God or transcendent reason. It comes from the brain.

Three years ago in the journal Neuron, the neuroscientists illustrated their point. Using brain scans, they showed that utilitarian decisions involved "increased activity in brain regions associated with cognitive control." From this and other data, they surmised that the moral debate "reflects an underlying tension between competing subsystems in the brain." On one side are "the social-emotional responses that we've inherited from our primate ancestors." On the other side is a utilitarian calculus "made possible by the more recently evolved structures in the frontal lobes." The war of ideas is a war of neurons."

Whirlwind synopsis:

A social-emotional being has everything needed, then chooses rationality as a substitute for providence, leading to the evolution of a utilitarian part of our brain that removes moral considerations from decisions. Normal people have both... people like Paul, who struggled. Why would something evolve unless it was need for survival; if we weren't created with a rational organ, we didn't need it; something in our environment changed. A Fallen World creates a socio-economic system whereby those that are dumb (lack common sense) but emotionally and morally sound die. Natural selection a la brain. Those that can think rationally flourish. Rationality is the byproduct of a Fallen World where pure morality is a liability (see post on science). Rationality is the Knowledge of Good and Evil, as opposed to experiencing the former by default.

A long-winded, arrogant and smarter-than-thou rant:
So morality doesn't come from God? And we inherited social-emotional responses from distant ancestors, compared with more recently-evolved utilitarian frontal lobes? So taking that to be true, as I've never been one to dispute good science I know nothing about...

As my faith leads me to believe, our distant ancestors lived in harmony with God. They needed nothing more than their providence, and sought nothing more than God... eeeeeexcept for that whole fall thing.

Jive-check to this point: Social-emotional beings? Check. Reasoning? Not yet.

So the creation is fallen... its made imperfect by the presence of a being antithetical to the perfect nature of God. Our earliest ancestors buy into this... they decide God's providence isn't enough, so they seek knowledge (read: rationality). God? He's pissed. Revokes providence. Now humans form societies because they can't do as well on their own. They rebuild wealth, enjoying the fruits of their own success (read: they become secular humanists).

Jive-check: Social-emotional? Check. Reasoning? It appears so.

Flash forward thousands of years into the future. Now they don't know if God exists. But where does moral behavior come from? The brain! Aha, so moral behavior is a vestige of ancient ancestors more closely connected with God. Uh-oh... that means we must have been that way by default.

If One More Person Uses Nazi as a Suffix...

My head will pop. Why isn't anyone asking how horrible the Japanese were? How about killing twice as many Chinese as the Germans did Jews? Raping and torturing thousands of Dutch East Indians?

Why did the US ignore the slaughter of thousands of troops in the Pacific Rim? Where were the reinforcements?

Why did we ignore it? What was our incentive? Why isn't it in our history books, or the books of Japanese school children? Who benefits from its covering-up?

YouTube's "Blasphemy Challenge"

I can't collect my thoughts at the moment, they're coming in fragments. Free speech is good. I'm glad some don't believe in God, because they're exercising a choice that makes my belief more precious. Those that use religion to kill are doing more harm than good, driving good people away from an institution that promotes the reflection of things greater than one's self. Haha, in one segment a fifteen year old girl starts with "I'm a self-proclaimed atheist..." then one minute later says "I've decided to be a Buddhist." After realizing her mistake, she claims she won't worship Buddha. Obviously, this worship thing troubles her a bit... but no Buddhist I know has ever had to disclaim worshiping anything. Paranoid much? A quote comes to mind "those most interested in sharing their religious beliefs with you are most uninterested when you share yours." I only share with those that ask, whether it be economics, my faith, or my politics. And I don't ask for yours.

Isn't the Internet a fine macrocosm of microculture?