Tuesday, March 29, 2011


If Obama had moved early on Libya, it would be easy to condemn him for bogging us down in another armed conflict. There would be no counterfactual available to demonstrate hundreds would have been killed if the rebels weren’t protected via No-Fly Zone.

If Obama does nothing, Gaddafi eventually retakes all of Libya and those areas/peoples opposing him would be subject to massive reprisals. Obama is condemned for allowing a massacre to unfold.

Solution: Obama lets enough slaughter to go down that the media supports intervention. His opposition is split, now deriding the decision for a new entanglement after having first protested his lack of action in Libya. You think maybe they had one of those big thermometers stuck to the wall of the Oval Office like they have at fundraisers, waiting for the mercury to hit 2,000 before sending in the Air Force? 2,000 lives for about +/- 4 points in the polls is a pretty solid bargain. Well done, Mr. President, well done.

Saturday, March 26, 2011

This video has been making the rounds on the internet and stirring up more sentiment against the formal Libyan Government:

I struggle with not wanting to diminish the harm done, and recognizing how insignificant the event really was. You can reasonably assume hundreds of women have encountered mistreatment in Libya since fighting began in February. Absent a quick reunification and proper rule of law, thousands more will follow. Rape is what happens when regions suffer destabilization, but I don't think we like to talk about it because it makes us feel icky. Anyway, body counts aren't always the best way to measure the impact of armed conflict, but these types of externalities never make it into the broader conversation surrounding military engagement.

Wednesday, March 23, 2011

Social Memo

Finally put Shobita's PP585 memo writing class to use

Happy Post

Saturday, March 19, 2011

Environmental(ist-induced) Disasters

Unintended consequences are a wonderful source of intrigue and entertainment to me. I absolutely love them. At night, we cuddle up (we alternate big spoon) and I whisper sweet nothings into their ear. I’ve got a thing for the study of unintended consequences.

In the realm of environmental policy, we saw a cap-and-trade measure* implemented under Bush I to reduce SOx emissions actually increase the usage of older, inefficient, and highly polluting plants than would have otherwise occurred in the free market. This was because older plants were grandfathered in, and did not have to be compliant with the new rules – only new plants did. This made new plants comparatively more expensive under the regulated system, even though they would have been cleaner. Although we benefitted long-term, the short-term result was actually more pollution.

While a reasonable person could have guessed this would have been the case, not all policymakers are reasonable. It’s relevant because pushback against nuclear power is occurring in both the United States and abroad (think Germany) following the horrific events in Japan. As can be expected, the immediate pushback has been to make new construction of nuclear power more difficult.

There are two problems with this – one specific to the nuclear industry, and the other for the energy sector as a whole. For nuclear power, it would be one thing if this were to cause us to start shutting down nuclear plants. But aside from New York Governor Cuomo’s push to shut down Indian Point (long a goal of his), I’m not hearing much push for this – more attention is being focused on moving away from constructing new nuclear power. However, if we make it more difficult to build new plants, we’re left with the crappy, unsafe ones. This is the exact opposite we want. The safest plants will always be new ones built by engineers privy to materials and information not available 40 or 50 years ago.

The second item to consider is that if we do start phasing out these old plants because we don’t trust them, how do we replace the lost electricity production? NIMBYism has prevented us from building wind turbines, coal-fired plants, dams, large-scale solar, and just about any other power production source you can think of. The outcome of this situation is more expensive energy, which kills economic growth. Uber-environmentalists may get excited about this, but they fail to consider that our replacement power is going to be coming from those old, nasty coal-fired plants and current peaker plants. This would also reduce the reserves that can be brought online in the event of increased demand, resulting in blackouts and their associated dangers (think Enron’s manipulations of the California energy market the impacts on the elderly stuck in unairconditioned apartments once the power goes out). That’s how unintended consequences work.

Full Disclosure: despite Brian Adornato’s attempts to dissuade my position, I want some more nuclear up in this bitch.

*For platitudinal conservatives, I hope this information doesn’t make your head explode. Yes, cap-and-trade was implemented in the early 1990s to reduce sulfur emissions from coal burning power plants under a Republican President by enforcing the EPA’s Clean Air Act. The final cost was ten times less than industry estimated it would be, and we made leaps and bounds in reducing acid rain while achieving millions of dollars in health care costs savings by reducing the incidences of asthma, bronchitis, and other respiratory diseases. Yeah, that actually happened.

Saturday, March 12, 2011

My Library List is Smarter Than Yours

The items are listed under the addresses of the libraries that own them. If you have a question about an item, please call the owning library.

Albany Public Library
161 Washington Avenue
Albany, NY 12210-2398

The following items, which are owned by Albany Public Library, are due in two days. Please renew them or return them to your local library on or before the due date.

Title: The myth of the rational voter why democracies choose bad policies
Author: Caplan, Bryan Douglas, 1971-
Call No: 320.6 C
Due Date: March 14, 2011
Barcode: 31182017843136

Title: The J curve a new way to understand why nations rise and fall
Author: Bremmer, Ian, 1969-
Call No: 320.3 B
Due Date: March 14, 2011
Barcode: 31182017345223

William K. Sanford Town Library
629 Albany Shaker Road
Loudonville, NY 12211-1196

The following items, which are owned by William K. Sanford Town Library, are due in two days. Please renew them or return them to your local library on or before the due date.

Title: Economic gangsters corruption, violence, and the poverty of nations
Author: Fisman, Raymond
Call No: 364.1 FIS
Due Date: March 14, 2011
Barcode: 0000281847

Thursday, March 3, 2011

More Economic Fact-Busting: Commodities v. Grocery Bills

Commodity prices have a big impact on food prices, but not in the way you think. It costs more to transport your box of cereal from Battle Creek, MI to Concordia, KS than the actual corn in the box did. According to the USDA, for every dollar we spend on food, farmers get about 16 cents from the sales of raw food commodities. This is because we like our food really, really refined. And then truck it all over the country. There really is nothing worse than unprocessed foodstuffs.

The above is very valid. However, the story changes as we move into more developing markets. In those countries that rely on more basic grains for their consumption without all the fructose, packaging, and marketing, the raw price of commodities becomes a significant portion of food sales.

I think this is an important distinction that no one is willing to make. The ethanol opposition decries biofuels as the reason for the rising cost of food in the grocery store if wheat goes up $3/bushel. Fortunately for us, bread only increases four cents a loaf – a fairer villain is oil speculators betting on Libyan politics. Yet ethanol supporters can’t wash their hands of food riots in developing nations using this same logic. When you purchase wheat and corn directly to make flour and tortillas, a 50% increase in crop commodities means your food bill just went up 50%. That’s a lot when you make less than $2.50/day (see: 50% of the world).

Conclusion: be thankful you live in a developed country whenever soybean prices spike, because their fluctuations don’t impact people nearly as much in the U.S. as they do in Nicaragua. I don’t like people who are ignorant about the real impacts of crop commodity prices on their grocery bill.

Wednesday, March 2, 2011

Rail: More Dishonest Arguments

Funding for Amtrak is getting interesting as conservative state officials have been taking a stand and rejecting federal funding for rail infrastructure projects. Governors in Wisconsin, Ohio, and now Florida have all rebuked the DOT by saying the state match required to accept the grants isn’t worth the cost. All three follow Democratic predecessors that originally accepted the planned transfers to their states. This is creating some delicious drama as two New York state legislators (a Dem AND a Republican) recently wrote a letter to (DOT Director) Ray LaHood requesting the money other states turned down, and the Governor of Florida is actually being sued by his legislative counterparts for refusing the federal project (also by a Dem/GOP combo).

However, this blog soars above political gossip. I serve merely to examine the economics of an idea. (Please ignore that my most common tag is politics.) And what myth am I here to dispel today? The idea that Amtrak should be shuttered because it’s not self-sustaining.

Assuming any mode of transportation should pay for itself is one thing, but we as a society refuse to apply this principle universally. The airline industry has become a public good due to heavy federal subsidization, and the government spends a few hundred billion dollars every year to provide the cheapest oil in your car and paved roads for public use. Your commute is not a self-sustaining entity – it is subsidized by millionaires paying taxes. In short: the airline industry isn’t self-sustaining. Commute by car isn’t self-sustaining. The idea that rail transportation should be is a blatant double-standard.

Once we acknowledge the fallacy offered above, we must still address the economic efficiency of rail versus roads. From an environmental standpoint, rail typically wins (and incurs nice health externalities in the process – saving us money on healthcare). But how well does it foster business? Roads facilitate the transportation of goods that allows our economy to grow. So does rail. They also allow travel for business and networking. Ditto for rail. The interstate provides opportunity for simple travel and leisure. Rail also gins the vacation industry.

End game: Rail and roads are kinda substitutes, with different people and businesses assuming preferences for one or the other. They both cost more than users pay for them. We justify federal welfare for each because we value connected communities and believe facilitating travel increases economic growth. I can demonstrate why our approaches to both should be changed, but that's a conversation for another day. What's important is recognizing the notion that we should stop funding one because it doesn’t support itself while ignoring the other’s failings is a rather dishonest starting point.