I have a piece in the Aug 11th issue of Newsweek International, but Newsweek’s website does such a poor job with magazine content that it’s practically unfindable (it’s actually on the seventh screen of this series of perspectives from economists and other experts). So here it is:
Unleash The World’s Engineers
Chris Anderson believes that the price-cutting power of technology can still bring nations relief if only bureaucrats will allow it to.
Technology can be a powerful deflationary force. Thanks to Moore’s Law (the remarkable ability of computer technology to double in power for the same price, or halve in price for the same power, every 18 months) if you want a 50 percent discount on an electronic gadget, just wait 18 months. Or turn a service into software, and it’s just a matter of time before it is free.
But technology has been unable to offset some of the crucial supply issues around energy and food, both of which are at the core of today’s inflationary quandary. Nuclear power was supposed to bring electricity too cheap to meter, but our electricity bills have never been higher. The green revolution was supposed to bring an endlessly bountiful harvest, making hunger a thing of the past, but we now have rice shortages and corn nearly tripled in price over the past year. And for all of our virtual connection via cell phones, video-conferencing and e-mail, we’ve increased our driving and flying to such an extent that we’ve outstripped global oil-production capacity, driving energy prices to all-time highs.
What happened? Were we wrong to think that technology would deliver us from rising prices? Well, yes, but it’s not technology’s fault. We mostly have ourselves to blame for standing in its way.
Why are agricultural yields not keeping up with population growth? In large part because the European Union essentially banned genetically modified crops both on its own soil and in imports, thus exporting its technology-blocking regulations to trade partners in Africa and elsewhere.
Another reason food is so expensive is that fertilizer prices are also near all-time highs. That’s because the feedstock for much fertilizer is natural gas, and we don’t have enough of that, either. Not because we can’t get it out of the ground using high-tech tools, but because we can’t get it where it’s needed. Of the last 53 applications to build liquefied natural gas (LNG) ports and processing facilities in the United States, 50 were denied because of objections from the communities near where they would be located. Meanwhile we haven’t built a natural-gas pipeline from Alaska in part because of similar environmental concerns.
The shortage of natural-gas-transportation infrastructure is also in part responsible for our high electricity prices, as is the multidecade virtual moratorium on new nuclear power plants after Three Mile Island. Meanwhile, policies putting high import tariffs on foreign ethanol (to protect American corn farmers) have raised the price of gas, while a refusal to follow California’s lead on car efficiency standards has allowed national gas demand to grow faster than supply.
All this said, I believe today’s inflation will ultimately speed the adoption of technologies that can fight it. The higher prices get in the atoms economy, where things get more expensive every year, the more incentive there is to move goods and services to the bits economy, where things get cheaper. How high will airfares have to get (think they’re high now? Just wait for new carbon taxes to kick in) before you invest in good videoconference gear and skip the flight altogether? How high will gas prices get before you decide to work a few more days a week from your fully wired home office, or skip the mall and shop online from home? The best way to lower energy prices is to cut demand.
In a world where seemingly everything is getting more expensive, the price of digital technology continues to fall and the differences between those two economies are growing. If getting rich was the incentive to go digital a decade ago, saving money may be an even stronger motivation this time.
Archive for August, 2008
I really liked this
…I don’t have a lot of faith in the exact predictive powers of climate models, or for that matter economic models, but uncertainty about outcomes should make us worry more not less. Uncertainty usually has two tails, not just one.
by Tyler Cowen in the closing of his reply to a reader request “You’ve spent a lot of time studying economic models. You probably have an opinion about their overall reliability.”
This is a really excellent and useful tip sheet from statistician Nick Barrowman. Really, check it out - you’ll be glad you did…
Greg Sheridan, Foreign editor of The Australian, examines the Democratic candidate. Sheridan finds a ruthless, traditional left-liberal, obsessed, at least in his public life, with race.
BARACK Obama is a fraud. But he is a very familiar kind of fraud: a politician pretending to be something he’s not. He is not the post-partisan, post-ideological seeker of a new politics and leader of a broad social movement to redeem the soul of America.
Rather, he is a brilliantly gifted, traditional, self-seeking politician who has sought for a long time to get to the top. He is also a traditional left-liberal, obsessed, at least in his public life, with race. He has built the momentum of his campaign on the most dubious basis that can exist in a democracy for garnering political support, racial identity.
…Oddly, it is the very cynicism and skill of this exercise that suggests to me Obama could yet make an effective president.
Sheridan may be right — that the most vital characteristics for a good president are cynicism, the ability to throw any supporter or policy position under the bus whenever it advances his political power.
Personally I think the most important, non-negotiable characteristic for a good president is character — specifically personal integrity.
“My trend has been toward more rational and less romantic as the decades go by,” he says. “I keep seeing the harm done by religious romanticism, the terrible conservatism of romanticism, the ingrained pessimism of romanticism. It builds in a certain immunity to the scientific frame of mind.”
…The times I’ve been wrong is when I assume there’s a brittleness in a complex system that turns out to be way more resilient than I thought.”– Stewart Brand, 2007
It takes serious courage to turn against your social and intellectual circle. I was very impressed when Steward Brand “came out of the closet” to support nuclear power. Similarly for Greenpeace founder Patrick Moore, who wrote a concise summary of why nuclear energy must be part of the low-carbon portfolio for WaPo in 2006. Moore includes a short debunking of the main nuclear power myths that are promoted by anti-nuclear forces [which includes the current Greenpeace leadership].
In the early 1970s when I helped found Greenpeace, I believed that nuclear energy was synonymous with nuclear holocaust, as did most of my compatriots. That’s the conviction that inspired Greenpeace’s first voyage up the spectacular rocky northwest coast to protest the testing of U.S. hydrogen bombs in Alaska’s Aleutian Islands. Thirty years on, my views have changed, and the rest of the environmental movement needs to update its views, too, because nuclear energy may just be the energy source that can save our planet from another possible disaster: catastrophic climate change.
I also recommend Moore’s Congressional testimony from April 2005. In his testimony Moore outlined Environmental Extremism — a further demonstration of courage. Moore probably does not get invited to many Manhattan cocktail parties any more:
It is this effort to find consensus among competing interests that has occupied my time for the past 15 years.
…Not all my former colleagues saw things that way. They rejected consensus politics and sustainable development in favor of continued confrontation and ever-increasing extremism. They ushered in an era of zero tolerance and left-wing politics. Some of the features of this environmental extremism are:
Environmental extremists are anti-human. Humans are characterized as a cancer on the Earth. To quote eco-extremist Herb Hammond, “of all the components of the ecosystem, humans are the only ones we know to be completely optional”. Isn’t that a lovely thought?
They are anti-science and technology. All large machines are seen as inherently destructive and unnatural. Science is invoked to justify positions that have nothing to do with science. Unfounded opinion is accepted over demonstrated fact.
They are anti-business. All large corporations are depicted as inherently driven by greed and corruption. Profits are definitely not politically correct. The liberal democratic, market-based model is rejected even though no viable alternative is proposed to provide for the material needs of 6 billion people. As expressed by the Native Forest Network, “it is necessary to adopt a global phase out strategy of consumer based industrial capitalism.”
I think they mean civilization.
And they are just plain anti-civilization. In the final analysis, eco- extremists project a naive vision of returning to the supposedly utopian existence in the garden of Eden, conveniently forgetting that in the old days people lived to an average age of 35, and there were no dentists. In their Brave New World there will be no more chemicals, no more airplanes, and certainly no more polyester suits.
…What does environmental extremism have to do with nuclear energy?
I believe the majority of environmental activists, including those at Greenpeace, have now become so blinded by their extremism that they fail to consider the enormous and obvious benefits of harnessing nuclear power to meet and secure America’s growing energy needs.
These benefits far outweigh any risks.
Another famous environmentalist leader, the late Rt Rev Hugh Montefiore, was “excommunicated” from the society he founded, Friends of the Earth, when he came out of the closet in favor of nuclear power.
As a theologian, I believe that we have a duty to play our full part in safeguarding the future of our planet, and I have been a committed environmentalist for many years. It is because of this commitment and the graveness of the consequences of global warming for the planet that I have now come to the conclusion that the solution is to make more use of nuclear energy.
This belief, and my wish to make it clear in this article, has led me to sever my ties with the campaign group Friends of the Earth. I have been a trustee of Friends of the Earth for 20 years and when I told my fellow trustees that I wished to write on nuclear energy, I was told that this is not compatible with being a trustee. I have therefore resigned because no alternative was open to me. The future of the planet is more important than membership of Friends of the Earth.
…The real reason why the Government has not taken up the nuclear option is because it lacks public acceptance, due to scare stories in the media and the stonewalling opposition of powerful environmental organisations. Most, if not all, of the objections do not stand up to objective assessment…
Returning to Stewart Brand [seen left in 1973, courtesy the New York Times], I first discovered Brand’s conversion reading MIT Technology Review in 2005, where he wrote “Environmental Heresies”
Over the next ten years, I predict, the mainstream of the environmental movement will reverse its opinion and activism in four major areas: population growth, urbanization, genetically engineered organisms, and nuclear power.
Don’t miss his lecture to the 2006 Nuclear Energy Assembly, where he coaches nuclear execs on how to enlist the support of environmentalists. See also this John Tierney piece on Brand’s changing-of-mind in the New York Times February 2007.
…He divides environmentalists into romantics and scientists, the two cultures he’s been straddling and blending since the 1960s. He was with the Merry Pranksters and the Grateful Dead at their famous Trips Festival in San Francisco, directing a multimedia show called “America Needs Indians.”
…Mr. Brand, who is now 68 and lives on a tugboat in Sausalito, Calif., has stayed ahead of the curve for so long — as a publisher, writer, techno-guru, enviro-philosopher, supreme networker — that he’s become a cottage industry in academia.
…He’s also looking for green nuclear engineers, and says he feels guilty that he and his fellow environmentalists created so much fear of nuclear power. Alternative energy and conservation are fine steps to reduce carbon emissions, he says, but now nuclear power is a proven technology working on a scale to make a serious difference.
Stewart Brand is one of my personal heroes, and not just for his own heroism and critical thinking. Brand is also one of the guiding lights of the Long Now Foundation. We look forward to every podcast from the SALT lectures - Seminars on Long Term Thinking.
The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac — which together have issued more than $1.5 trillion in outstanding debt — is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
Well, I’m pleased to see the Yanks are getting serious about the GSEs.
Oops — that New York Times report is from September 11, 2003. So this is another one of those stupid Bush proposals… Like the stupid Bush health care reform of 2007. In the NYT piece we learn more about who stopped the reform:
…Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Well Barney, you got what you wanted. Thanks heaps to Greg Mankiw for the link.
Megan McArdle links to Mickey Kaus discovering some chinks in the Democrats love affair with the teacher’s unions:
…So the schools have a gigantic, powerful bargaining bloc. Who doesn’t have a bargaining bloc? The kids.
Of course, the customers of corporations don’t bargain with unions either–but they have the right of exit, which is what prevents the unions (or their corporate bosses) from turning them upside down and shaking them until the last nickel falls out of their pockets. Unsurprisingly, the schools in this country that function worst are the ones where the kids have no realistic ability to exit. So for whom are those schools run? The teacher’s unions, the principal’s unions, the janitor’s unions, the friends and relations of people with seats on the school board. The children have the least powerful voice. Which is why, as far as I can tell, every single thing that is proposed by any of these groups “for the children” has the primary side effect of employing more teachers/janitors/principals, paying same more, or making their jobs more pleasant.
Moreover, if you talk to reformers in urban schools–ardent Democrats all!–every single one of them will say that they can’t get anything done with the unions blocking them. Nor are they merely looking for an excuse. They always come armed with ample, and chilling, cases in point.
Technorati Tags: School Choice
The digital divide is beginning to close. The flow of digital information – through mobile phones, text messaging, and the Internet – is now reaching the world’s masses, even in the poorest countries, bringing with it a revolution in economics, politics, and society.
Extreme poverty is almost synonymous with extreme isolation, especially rural isolation. But mobile phones and wireless Internet end isolation, and will therefore prove to be the most transformative technology of economic development of our time.
The digital divide is ending not through a burst of civic responsibility, but mainly through market forces. Mobile phone technology is so powerful, and costs so little per unit of data transmission, that it has proved possible to sell mobile phone access to the poor. There are now more than 3.3 billion subscribers in the world, roughly one for every two people on the planet.
Economist Jeff Sachs — one of the first articles I’ve seen from Jeff that doesn’t call for huge increases in foreign aid.
If you tax something less, you get more of it — part 141:
Recent research on President Bush’s tax relief in 2001 and 2003 has found that the lower tax rates induced taxpayers to report more taxable income. In particular, the reduction in the top two tax rates induced taxpayers to report more taxable income—an increase in the size of the tax base—to such an extent that this positive behavioral response likely offset roughly 25 percent to 40 percent of the static revenue loss of lowering the top two tax rates. This research illustrates that, while the lower tax rates have not paid for themselves, they do provide important economic benefits and can expand the tax base to such an extent that they cost the federal government substantially less revenue than the casual observer might think. Moreover, this research may provide valuable insights into the harmful effects of high tax rates as the Presidential candidates’ tax plans are evaluated.
From the Tax Foundation — RTWT.
…Ayers was a terrorist in the late 1960s and 1970s whose radical group set bombs at the Pentagon and U.S. Capitol.
You might wonder what Obama was doing working with a character like this. And you might wonder how an unrepentant terrorist got a huge grant and cooperation from the Chicago public school system. You might wonder—if you don’t know Chicago. For this is a city with a civic culture in which politicians, in the words of a story often told by former congressman, federal judge, and Clinton White House counsel Abner Mikva, “don’t want nobody nobody sent.” That’s what Mikva remembers being told when he went to a Democratic ward headquarters to volunteer for Adlai Stevenson in the 1950s, and it rings true. And it’s a civic culture in which there’s nobody better to send you than your parents.
That’s how William Ayers got where he was. When he came out of hiding because the federal government was unable to prosecute him (because of government misconduct), he got a degree in education from Columbia and then moved to Chicago and got a job on the education faculty of the University of Illinois-Chicago Circle. How did he get that job? Well, it can’t have hurt that his father, Thomas Ayers, was chairman of Commonwealth Edison (now Exelon) and a charter member of the Chicago establishment. As Mayor Richard M. Daley said recently, in arguing that the Ayers association should not be held against Obama, “His father was a great friend of my father.”
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