Potpourri
==> This is an old but very interesting post from Mark Bahner on atmospheric CO2 and how quickly it could be removed if need be.
==> A very interesting post from David Beckworth on the yield curve (HT2 Scott Sumner). But most important–look at this analysis from Ben Bernanke back in 2006!! Not only was the Bernank totally wrong, but his wrongness is relevant to right now.
==> An interview with Stan Bush, who was instrumental in one of the greatest scenes in American movie history.
==> On the latest Contra Krugman: How to Unwind the Welfare State.
==> A petition to free Ross Ulbricht.
==> Venezuela’s annual price inflation rate is apparently more than 1 million percent…
==> I raise concerns about the Curbelo carbon tax bill, and Veronique de Rugy criticizes carbon taxes too.
==> I was amazed to see this letter to Nature (keep in mind that “climate mitigation” means “government policy actions taken to slow climate change”):
Our analysis shows that by 2050, the potential for a sizeableincrease in the risk of hunger is higher in the RCP2.6 scenariosunder climate mitigation than in the RCP6.0 scenarios withoutmitigation in all socio-economic futures and economic mod–els, despite the fact that RCP6.0 scenarios have more severe cli–mate change and greater reductions in crop yields (Fig. 1a–c;Supplementary Fig. 11). With the SSP2 socio-economic backdrop,the population at risk of hunger in 2050 increases by 24 million(2–56 million: the range represents variation across models here–after) with the climate impacts of the RCP6.0 scenario, comparedwith the baseline scenario. This number increases by around78 million (0–170 million) people with the combined climateimpacts and emissions mitigation policies of the RCP2.6 scenario(Fig. 1a and Supplementary Fig. 14 for the global and regionalbaseline scenario). Most of the increase in hunger in the RCP2.6scenarios is caused by the implementation of climate mitigationpolicies, not the climate change impacts.
That’s quite interesting. There’s some stuff you overlook though in terms of how politics and human nature works.
Sure the numbers add up in terms of offering moderately wealthy people the chance to buy their way out of servitude to the Social Security system, but government is NOT about getting the numbers to add up (if it was, then we wouldn’t be talking about this unfunded liability problem right now). Government is about good optics, and can you imagine the feeling, if you were in front of a big room of people explaining the benefits of whole life insurance policies as a long term “home for your money” while some other guy is explaining why it happens to be good value for individuals to pay the insurance company a lump sum to close their policy and walk away? Hard to convince people that the investment is not a rip off when wealthy people pay money to avoid this.
So there is no politician who would be willing to suffer the bad optics of admitting that Social Security is a total rip off and probably always has been since day one. You might argue that well, for poor people Social Security isn’t so bad, maybe they want to stay in, but remember Captain James Cook and his journey around the world. Sounds like I’m coming out of left field here, but Captain Cook wanted to avoid scurvy (caused by Vitamin C deficiency) so he took pickled cabbage on the journey (it’s cheap, easy to transport, and nutritious) but Cook started the journey feeding the cabbage only to officers. Pretty soon the crew also demanded to eat it, which was expected because people at the bottom end of society typically want to do whatever they see the higher ranking people doing. This happens even when the poor people would be worse off, consider that for thousands of years Asians were happy with brown rice (also very nutritious), but a small number of wealthy people started eating polished white rice (which is WORSE in terms of a diet) and then the poor people demanded they also eat white rice, now almost everyone eats it. The same effect from the reverse direction happened in Korea when government started feeding Kong Bap (mixed beans and rice) to prisoners then regular people started avoiding a perfectly good food because of the stigma of being associated with prison food.
Getting back to Social Security: if people see the well-off segments of society opting out, then it will become some sort of social luxury good to be able to say you are oped out of Social Security… everyone will want to do it, even those who would be worse off. You may think, “Great! My plan to end Social Security is working!!” but the politician thinks, “Holy crap! I’m going to look like a complete turkey because for years I’ve been telling everyone that the entire Social Security system is very safe and completely self funded. This is a disaster for my public image.”
Just reading that back, maybe I should clarify that I do think a whole life insurance policy is a MUCH BETTER choice of long term investment that the Social Security scheme, and I was not trying to equate one with the other. Heck, the US Social Security scheme is an appallingly bad investment, so almost anything would be better.
I was only offering a hypothetical example, pointing out that in the same way Bob is trying to get people interested in these whole life policies, and if he ever found out there was a problem it would make him look bad; so too the politicians have been selling Social Security to the American people and have a strong vested interest in not admitting a problem.
The CO2 thing is interesting. I was at a livestock conference recently and it was pointed out by several presenters that the CO2 issue could be resolved if only the US or a significant portion of it engaged in quality range management practices. Cattle and other livestock can be used to greatly increase the carbon holding abilities of all soils. It was also pointed out the the methane issue the press likes to rail about is a sub cycle of the carbon cycle and is mainly the result of septic/manure ponds at various livestock facilities and not the cattle themselves or not directly.. A lot of misinformation and presumptions out there.
I fall into the skeptic category. I certainly believe climate changes, we were once a molten blob. My biggest concern is people screaming for government to do something effectively giving them control over absolutely everything in the name of saving us from ourselves.
The removal of carbon from the atmosphere is likely to be expensive. The easiest place to remove CO2 is where the concentration is high and it is in a defined stream – that is flue gas. Removal of CO2 at a concentration if 400ppm is going to be more difficult and expensive than removing it from a concentration of 20%.
The model he uses if spending 1-% of GDP to achieve this. This is far higher than plans to reduce adding the CO2 in the first place.