23 Jun 2015

Using Nordhaus’ Book Review to Outline Flaws in U.S. Carbon Tax Narrative

Climate Change, Shameless Self-Promotion 19 Comments

The more I study climate change economics, the more astounded I become at the chasm between reality and what has been sold to the American public. I give another example in my IER analysis of a recent book review by William Nordhaus. Here’s an excerpt:

What is fascinating is that if you go to the actual book review and read the full discussion, you will see that people like Weitzman and Nordhaus are discussing whether people should even be conducting cursory research into geoengineering options.

[New first paragraph:] What is fascinating is that if you go to the actual book review and read the full discussion, you will see that Nordhaus wonders whether scientists should even be conducting cursory experiments to learn more about geoengineering options.

Why in the world would interventionists who think the fate of humanity hangs in the balance not want scientists to broaden the options at our grandchildren’s disposal? What they fear is that if the public realizes there are techniques “on the shelf” that could very quickly and cheaply bring down global temperatures, then it would be hard to get humanity whipped up into a frenzy in spending trillions of dollars to merely reduce the probability of a future unlikely “fat tail” catastrophe.

Remember, the cutting-edge case for aggressive intervention against emissions has stopped trying to claim that a high carbon tax will likely produce large net benefits….

So already the aggressive interventionists have to make the “fat tail” argument of Weitzman and others—they have to say a disaster might occur if humans keep pumping lots of carbon dioxide into the atmosphere. But then in that case, it becomes very relevant to know that one of the leading geoengineering proposals would cost $250 million total to limit Earth’s warming. That’s less than Al Gore’s foundation is spending to “raise awareness” on the issue of climate change.

In contrast, if governments around the world implemented Nordhaus’ suggested “optimal carbon tax,” then his own model (in the 2008 calibration which I study here) shows that it would impose economic costs on the world of $2.2 trillion (see Table 4 at the link) in present-value terms.

Does anyone like that deal? Spending $2.2 trillion (in the form of forfeited conventional economic growth) merely to reduce the probability of catastrophe—because after all, we still might have a disaster even with a carbon tax—rather than waiting a bit longer to get more information, knowing that we’ve got the ability to indefinitely postpone global warming for a total cost of $250 million?

22 Jun 2015

Criticizing Robert Reich’s Video for a $15 Minimum Wage

Economics, Minimum wage, Shameless Self-Promotion 46 Comments

At Mises CA. An excerpt:

Reich then goes on to argue that if the minimum wage in 1968 had kept pace with the growth in the “average productivity” of American workers, then today it would be more than $21/hour. Although Reich doesn’t come right out and say it, he sure implies that the workers on the bottom rungs are really getting screwed, that they are producing $21/hour of output for their bosses and yet only getting paid $7.25/hour (the current federal minimum wage).

Is this remotely plausible? Surely someone who was the Secretary of Labor can’t possibly be this ignorant of how competitive labor markets work?

To give a hint, those “average productivity” figures work by taking total GDP and dividing by the number of workers. So hypothetically speaking, if developments in fracking technology allowed the same number of workers to produce more oil, then “average productivity” would go up. In terms of marginal productivity analysis, this would obviously mean increased rents for the owners of land (which had large mineral deposits), and lesser increases in the earnings of specialized drilling equipment and high-skill workers with experience working in oil fields. There would be no reason at all to expect the statistical increase in “average productivity” to correspond to the same jump in “average wages,” let alone the average wage among unskilled workers.

21 Jun 2015

Callahan on Identity Politics

Religious 85 Comments

I’ve been zinging him lately on other matters, so I wanted to shine a favorable light on Gene Callahan’s posts on the (very touchy) subject of identity politics. For example, in this post Gene writes:

The Incoherence of the Dolezal/Jenner Distinction

I am interested in the sharp distinction being made between these two cases as an example of the incoherence of the progressive worldview, and not because of the cases themselves. And commenters attempts to defend this sharp distinction in response to previous posts leaves me more convinced than ever that I am right about this incoherence.

Gene then explains why he thinks the “duh” type explanations of why these cases are allegedly so different, really don’t work.

But then Gene takes it further, to offer a theory as to why progressives were so quick to embrace Jenner but to reject Dolezal:

What is going on is this: complete sexual freedom, “anything goes so long as it is consensual,” and the identification of traditional sexual morality as a barbarous relic are cornerstones of progressive ideology. So anyone who “transgresses” those traditional boundaries is heroic, whether there is any biological basis for those transgressions or not.

On the other hand, racial identity, and in particular the racial identity of oppressed or formerly oppressed people, is an important weapon in the progressive assault on “Eurocentric” civilization. Thus, crossing those boundaries is a very, very bad sort of transgression, and the person who does it is a “fraud” and a “liar.”

Incidentally, strictly speaking this issue has nothing intrinsically to do with religion, and yet I am posting this on Sunday because in the national discussion, it seems that the two are related. I’ll let you folks hash it out in the comments if you think this is a coincidence.

20 Jun 2015

Two Sumner Predictions: One Specific, One General

Scott Sumner 21 Comments

In a recent post at his blog, Scott gave the title, “Please, do buy. You won’t regret it.” He first linked to a post about bubble theories that were promulgated in 2009-11, and said they had recently been refuted. Then he talked about property values in Dubai. My question: Is Scott just saying “buy a house in Dubai, you won’t regret it?” or is he saying more generally, “Go ahead and buy the U.S. stock market and Treasuries, the alarmists have been crying wolf for years”?

(Incidentally, you can’t just say, “Bob, why not ask Scott what he meant?” The reasons are twofold. First, if a writer phrases things in a way that leads readers to believe he “surely” meant X, then he can’t get out of culpability if strictly speaking, technically he didn’t claim X for sure. [Krugman does this a lot–I think on purpose.] Second, Scott has said that–consistent with his weird post-modern view of what truth is–the meaning of a writer’s post depends on what the readers thought he meant, not what he intended to mean. Now it’s possible he was being tongue in cheek when he wrote such things, but it’s not my fault if he meant it as a joke and I didn’t get it–see how that works?)

Now for the more general Sumner claim that I find radically wrong, though it will be much harder to falsify because it is so open-ended. Here’s Sumner at EconLog:

My grandma was born in 1890 into a middle class family in small town Wisconsin. Her home probably lacked indoor plumbing, most home appliances, electric lights, telephone, TV, radio, car, etc., etc. Slightly improved from life in ancient Rome. She lived to see jet air travel, computers, atomic bombs, antibiotics, and died the week they landed on the moon.

I was born in a world of indoor plumbing, atomic bombs, jet air travel, home appliances, computers, cars, telephones, TV, radio, antibiotics. I’ll turn 60 this year, and live in a world of indoor plumbing, atomic bombs, jet air travel, home appliances, computers, cars telephones, TV, radio, antibiotics, plus the internet and cell phones. Yeah, I’d say change is slowing down, really fast.

!!! Meanwhile, back at the Hall of Justice, Scott Alexander recently had a post quoting from leaders in the field who thought that the danger of Artificial Intelligence turning against humanity was something that should be seriously studied. The U.S. military already has flying killer robots, and they’re working on ground-based ones too. We have seen the inventions of the blockchain and 3D printing. Sumner casually dismisses the internet and cell phones as not a big change during his lifetime, whereas I think future historians will mark that as a very significant milestone–especially if they phrase it as “smart phones” rather than cell phones. These things are always hard to see when you’re at Ground Zero–remember Krugman’s line about the internet?–but it’s arguable that the Arab spring uprising was due to social media.

20 Jun 2015

At Some Point It Would Be Nice If Rothbard’s Critics Actually Read His Article on Legal Theory

Economics 62 Comments

Gene Callahan doesn’t like my article in which I said that Rothbard had given a prima facie plausible response to critics like Steve Landsburg and David Friedman, who argued that the libertarian approach to property rights would mean that (say) your neighbor could force you to not use any electronic devices. Here’s Gene:

This argument is so bad I doubt Rothbard put it forward thinking it worked: he was merely chucking up whatever he can to rally the troops. First of all, what the hell happened to value subjectivism?! “They are therefore not really invasions of property, for we must refine our concept of invasion to mean not just boundary crossing, but boundary crossings that in some way interfere with the owner’s use or enjoyment of this property.” So, I say I can’t enjoy my property if it is all full of radio waves: How is Rothbard going to prove that is wrong?

This proves way too much. Suppose someone taps my rear bumper at a red light. I get out and say, “You moron! You just caused me $1 billion in psychic damage!” Does this example show that Rothbard has to agree that cars must be banned in a libertarian society, or that he must admit that the 1871 subjective value revolution was wrong? C’mon.

But what’s really bizarre is when Gene writes: “And Rothbard didn’t even attempt a harder case, like smoke from a BBQ, which absolutely is harmful and can definitely alter someone’s enjoyment of their property in a real, tangible way.”

Now if Gene had written “Rothbard DOESN’T even attempt” then we could just interpret that as saying, “In the short quote Bob put in his article about harmless electromagnetic waves, Bob only talked about Rothbard handling harmless magnetic waves–the type of thing Landsburg brought up in his critique.”

But no, Gene said “Rothbard DIDN’T even attempt.” That makes it sound like Gene clicked the link and actually read the discussion to see if Rothbard had the decency to handle other cases.

Well, for what it’s worth, on literally the page before Rothbard talks about radio waves (page 80 here), he brings up the distinction trespass and nuisance. Here’s part of that discussion:

On the other hand, ‘‘contact by minute particles or intangibles, such as industrial
dust, noxious fumes, or light rays, has heretofore generally been
held insufficient to constitute a trespassory entry, on the ground
that there is no interference with possession, or that the entry is not
direct, or that the invasion failed to qualify as an entry because of
its imponderable or intangible nature.”55

These more intangible invasions qualify as private nuisances and
can be prosecuted as such. A nuisance may be, as Prosser points

“an interference with the physical condition of the land itself, as by
vibration or blasting which damages a house, the destruction of
crops, flooding, raising the water table, or the pollution of a
stream or of an underground water supply. It may consist of a
disturbance of the comfort or convenience of the occupant, as by
unpleasant odors, smoke or dust or gas, loud noises, excessive
light or high temperatures, or even repeated telephone calls…”

Prosser sums up the difference between trespass and nuisance:

“Trespass is an invasion of the plaintiff’s interest in the exclusive
possession of his land, while nuisance is an interference with his
use and enjoyment of it. The difference is that between. . . felling
a tree across his boundary line and keeping him awake at night
with the noise of a rolling mill.”57

But what precisely does the difference between “exclusive
possession” and ‘‘interference with use” mean? Furthermore, the
practical difference between a tort action for trespass and for
nuisance is that a trespass is illegal per se, whereas a nuisance, to be
actionable, has to damage the victim beyond the mere fact of invasion
itself. What, if any, is the justification for treating a trespass
and nuisance so differently?

You might say, “Well c’mon Bob, how was Gene supposed to know that Rothbard had placed the specific example of radio waves in a broader discussion of legal theory, especially the distinction between trespass and nuisance?” My answer would be, Because I specifically said that in the original article.

To be clear, I am not saying Rothbard solved all of the problems in this arena. What I’m saying is that it’s frustrating to see people coming up with thought experiments and other objections that (they claim) are crippling blows to the Rothbardian approach, without even bothering to see whether Rothbard talked about these specific things.

For an analogy, I am a critic of the pure time preference theory of interest. But if someone said: “And get this, Rothbard thinks interest is about present goods being preferred to future goods–but what about ice in the winter vs. summer? Idiot.” then that wouldn’t be a great critique.

19 Jun 2015

Music City Friends of Liberty Performs “Come Together”

Shameless Self-Promotion 18 Comments

Not sure if you guys here at the blog know about this, but I’m part of the Music City Friends of Liberty (here’s our Facebook page). Last night we unveiled this ditty at The 5 Spot in Nashville:

17 Jun 2015

At This Point Steve Landsburg Must Classify Me as a “Nuisance”

Economics, Shameless Self-Promotion 112 Comments

I wanted to push back against Steve Landsburg casually saying that libertarian property rights theory doesn’t work. I thought Rothbard probably handled this type of thing, but I was pleasantly surprised to see just how specific it was. Here’s Rothbard:

Consider the case of radio waves, which is a crossing of other people’s boundaries that is invisible and insensible in every way to the property owner. We are all bombarded by radio waves that cross our properties without our knowledge or consent. Are they invasive and should they therefore be illegal, now that we have scientific devices to detect such waves? Are we then to outlaw all radio transmission? And if not, why not?

The reason why not is that these boundary crossings do not interfere with anyone’s exclusive possession, use or enjoyment of their property. They are invisible, cannot be detected by man’s senses, and do no harm. They are therefore not really invasions of property, for we must refine our concept of invasion to mean not just boundary crossing, but boundary crossings that in some way interfere with the owner’s use or enjoyment of this property. What counts is whether the senses of the property owner are interfered with.

But suppose it is later discovered that radio waves are harmful, that they cause cancer or some other illness? Then they would be interfering with the use of the property in one’s person and should be illegal and enjoined, provided of course that this proof of harm and the causal connection between the specific invaders and specific victims are established beyond a reasonable doubt. (emphasis added)

Now for those of you getting snarky with me about my unwillingness to grapple with the “obvious” implications of my property rights worldview–I’m thinking of you, Josiah Neeley–I’m sure you will apologize in light of this stunning revelation.

17 Jun 2015

On the Minimum Wage “Experiments”

Economics, Shameless Self-Promotion 54 Comments

I wonder if minimum wage workers feel comfortable reading Noah Smith. An excerpt:

The early evidence said that minimum wage laws reduce employment growth–just as the textbooks and intro classes taught students for decades.

Then, there was a wave of studies in the 1990s that challenged this orthodoxy, including the famous Card-Krueger paper in 1994. Furthermore, these new studies also found that regions with higher minimum wages tended to have lower employment growth. But if you included a bunch of other factors, then the effects of the minimum wage variable lost independent explanatory power. It seemed like maybe it was just a coincidence that states that had slower employment growth (for various reasons) also tended to have legislatures that passed more aggressive minimum wage hikes.

Also, all (to my knowledge) of the empirical studies finding that minimum wage hikes have no ill effect on employment growth are talking about a modest hike, not the ridiculous hikes that are being now implemented. (For more on the scholarly debate, see my EconLib article.)