03 May 2018


Potpourri 6 Comments

==> I just became aware of this being available–it’s my QJAE article saying that Roger Garrison’s framework is compatible with neoclassical growth theory.

==> The latest Lara-Murphy Show tackles some tough objections, like, “If I expect a dollar crash, why do I want life insurance?”

==> Other people critique Krugman too, from National Review and then Quillette.

==> Texas Public Policy Foundation critiques a carbon tax, citing work from *this guy*.

6 Responses to “Potpourri”

  1. Harold says:

    The carbon tax article
    “Observed temperatures by sophisticated technologies greatly and consistently conflict with today’s widely accepted, although highly questionable, scientific consensus about the effects humans have on climate change.”

    They lost it there I am afraid. Discuss economics by all means, but they are questioning the science and setting themselves up as more knowledgeable than the real experts in the field. If the results really conflicted greatly with the consensus there would not be a consensus.

    “Unfortunately, a tax on carbon means a tax on energy…” That is not correct. It is a tax on carbon. Any energy that is produced without generating carbon is not taxed. A tax on carbon means a tax on carbon and a tax in energy means a tax on energy.

    “the true free market, which unencumbered allows for suppliers and consumers to voluntarily exchange and mutually benefit rom an efficient allocation of resources.” Wrong again. An unencumbered market is not the same a a perfect market. Externalities mean that an unencumbered market will not produce efficient allocation of resources as defined by a perfect market.

    So many things wrong in the opening section it hardly seems worth going further. This is clearly a biased piece of propaganda that does not deserve serious attention. However, to continue.

    “Flawed Assumption: Anthropogenic Carbon Dioxide Emissions Drive Climate Change” It is a bizarre assumption that natural CO2 would drive climate but anthropogenic CO2 would not, which is what these people are asking you ti believe. There is no way we can explain the climatic change over millions of years without invoking CO2 as a driver. Just check the literature, there are thousands of papers describing how CO2 caused climate to change in the distant past and zero papers that can explain the changes without CO2. Literally zero.

    “Flawed Assumption: Carbon Dioxide Emissions Are a Costly Pollutant
    Carbon dioxide is necessary or lie on earth. Without it, plants, animals, and humans alike would not exist.”

    That explains why floods do not have costs, because water is a necessary for life on Earth and without it life would not exist.

    “politics and methodological bias have become two primary drivers o climate science” Evidence? Oh no, of course not. Lets just make assumptions that the science is biased because we don’t like the results. This is a conspiracy theory.

    “A discount rate not based on market rates is a poor measure because it can highly exaggerate the SCC that can lead to costly policies.”

    This goes against pretty much everything I have read in discounting for intergenerational effects. There is active debate about this, but I am pretty sure that use of market rates is not considered the best way to discount these long term effects. I have read several discussion papers, including one chaired by Kenneth Arrow* whose work has been much under discussion here recently. which concluded among other things “We also agree that theory provides compelling arguments for a declining certainty-equivalent discount rate.”

    *Full panel was Kenneth J. Arrow, Maureen L. Cropper, Christian Gollier, Ben Groom, Geoffrey M.
    Heal, Richard G. Newell, William D. Nordhaus, Robert S. Pindyck, William A. Pizer, Paul R. Portney, Thomas Sterner, Richard S. J. Tol, and Martin L. Weitzman, Paul R. Portney, Thomas Sterner, Richard S. J. Tol, and Martin L. Weitzman.

    Certainly Arrow, Nordhaus and Tol are very familiar to me in this context and it is a brave soul who would disregard them.

    • Dan says:

      “That is not correct. It is a tax on carbon. Any energy that is produced without generating carbon is not taxed. A tax on carbon means a tax on carbon and a tax in energy means a tax on energy.”

      You feel good about that comment? Like you wrote that and thought you were making a valid distinction?

      • Josiah says:

        Of course it’s a valid distinction. For example, the carbon emissions for natural gas powered electricity are about half of what they are from coal powered electricity, per unit of energy, while carbon emissions for nuclear power are negligible. So producing the same amount of energy will result in widely different carbon tax liabilities.

  2. Harold says:

    The discussion document on discount rates is here, should anyone be interested. It is very useful for non experts like me as it not an academic paper but written to inform non experts and tries to be inclusive of all the arguments.

  3. Steven says:

    I can’t remember if it was this episode of LMR or the last one, but you mentioned that a common objection to IBC is “At death, I don’t get the Cash Value. I only get the Death Benefit”. I have a theory on where this objection comes from: With a Universal Life, you can choose from two (or more) Death Benefit Options, where one is usually Face Amount and the other is Face Amount plus Cash Value. For a Universal Life, all this means is that if you choose option two, your COI charges are based on a higher amount, but I can see how a dishonest marketer would try to make it sound like this is a feature that is missing from IBC.
    The fact of the matter is that you don’t want to use IBC with a UL policy. You should use a participating Whole Life insurance policy, preferably from a mutual insurance company.

    • Bob Murphy says:

      Thanks Steven. You might be right that that is one avenue generating the complaint, but I’ve explicitly seen it when people do a “Buy Term and Invest the Difference” head-to-head comparison. They point out that if you die with the Dave Ramsey approach (or whatever), you get your death benefit plus whatever’s in the mutual fund.

Leave a Reply